Ladies and gentlemen shareholders, good afternoon. We are meeting here today in an ordinary and extraordinary shareholders' meeting so that we may deliberate on the items on the agenda that will be read to you later on. I have next to me Mr. Benoit Bazin, the Chief Operating Officer; Madame Claire Pedini, Senior Vice President in charge of Human Resources and Digital Transformation; Mr. Sreedhar, our Financial Officer; and Mr. Antoine Vignial, General Secretary in charge of CSR. Before beginning this shareholders' meeting, Mr. Vignial will give you the safety instructions of the Palais des Congrès.
Thank you very much, Pierre-André. Good afternoon. Security is our top priority in the Saint-Gobain Group that is holding today its shareholders' meeting. Before beginning the meeting, I therefore would like to tell you about the safety instructions in this room.
Should there be a problem, you will hear a message that will be followed by an alarm, and you must then, as calmly as possible, make your way to the closest emergency exits. You can see them marked on the map that is behind me. Please make your way to the collection points that are to be found on both sides of the room. You must follow the instructions of the safety personnel. Thank you.
I now move to constitution of the bureau and the reading of the agenda. Constituting the bureau. As Chairman of the Board, it is an honor for me to preside over this shareholders' meeting. The functions of tellers will be carried out by two shareholders who have the largest number of votes. These two shareholders are respectively the Group Savings Fund, represented by Mr. Jacques Pestre, and Amundi, represented by Mr.
Dominique Barry. With the approval of the tellers, I will appoint Mr. Antoine Vignial as Assembly Secretary, and I will give him now the floor. Antoine, please.
Thank you very much. On the agenda that we are to deliberate on today, we have, first of all, the ordinary resolutions: approval of the accounts, allocation of the financial results and determining the dividends, renewal of the term of office of four directors, voting on compensation of Mr. Pierre-André de Chalendar, who is the CEO for 2018, what we call the Say-on-Pay ex-post, voting on compensation policies of the CEO and of the COO for 2019, Say-on-Pay ex-ante, approval of the related party agreements taken for Mr. Benoit Bazin, who is the Chief Operating Officer, and also the share buyback program.
We move on to the extraordinary part of the meeting: capital increase with preferential subscription rights, capital increase by issuance without preferential subscription rights, and the right to have a priority delay, capital increase without preferential subscription rights, options on allocation, capital increase for remuneration in kind, increase in capital incorporating the premier reserves or other forms of advantages, establishment of gripes without preferential subscription rights through a public or private issuance, capital increase for the members of the Group Savings Plan and to certain categories of beneficiaries, attribution of shares and subscription to employees and directors and officers, decrease of capital through cancellation of shares, and powers to carry out formalities.
Having read the agenda, we may now state that this assembly is a regular one. This is taking place on first notice.
We need a quorum of 20% for the first ordinary resolutions, and we also need a quorum of 25% of shareholders with voting rights necessary for the extraordinary part. The information we have on the attendance list, which is being controlled, shows that more than 25% of shares with voting rights are already present, so we have therefore attained our quorum. In the file that is on the desk in front of me, we have the necessary legal documents for the holding of this shareholders' meeting, all of the documents referring to the notice of the meeting, board reports, auditors' reports, text of the resolutions, an example of the company's bylaws, and the list of registered shares. The documents and the information that are necessitated by law has been made available to the shareholders in compliance with legal and regulatory provisions.
This assembly, thus, is validly constituted and may deliberate. Just for your information, this is how we will proceed in the shareholders' meeting. First of all, we will listen to Mr. Benoit Bazin, the COO, on the strategy, outlook, and transformation of the group, followed by the presentation of our financial results by [inaudible] Sreedhar There will be a roundtable on the advantages of digital transformation in Saint-Gobain that will be facilitated by Mrs. Claire Pedini, who is Senior Vice President in charge of Human Resources and Digital Transformation, as well as Madame Montserrat De La Fuente , who is Director of Industrial Excellence Programs, and Madame Mathilde Barthe , who is Assistant Director of Marketing for the group, and Benoit Melonio in charge of Saint-Gobain projects for construction distribution in France.
We will have Madame Anne-Marie Idrac for the Committee on Compensation and Nominations, Monsieur Jean-Dominique Senard, who is the lead director, Madame Cécile Saint-Martin for the College of Auditors, and the presentation of the resolutions by Mr. Antoine Vignial, followed by questions, the reading of the final quorum, and the closing of the assembly. I therefore, afterwards, suggest that we meet together for a cocktail.
Chers actionnaires, Mesdames et Messieurs.
Ladies and gentlemen, shareholders. 2018 has been a particularly good year for Saint-Gobain. As I said to you last year, the group has accelerated its transformation to become much more agile and to be able to take advantage of all of the positive aspects in this ever-changing world. We have ambitiously reviewed our asset portfolio so that it is more consistent, and we have improved its potential for growth. We have also fundamentally transformed our organization so that we are even closer to our customers and so that we can take advantage of our unique position in a value chain that has been transformed by digital. The name of this program, Transform & Grow, sums up our objectives: transforming the group to accelerate its growth to the advantage of all of our stakeholders.
This transformation has been done extremely dynamically and with great determination by all of those working in the group. I would like to take this opportunity to thank them before you today for their involvement, for their reactivity, their commitment, and above all, their creativity. Within this reorganization, Benoit Bazin has been appointed Chief Operating Officer for the group in charge of implementing this transformation program. This nomination follows logically an exemplary career within our group. He was recently in charge of our construction product sector. He also had been manager of the distribution sector, and he was Financial Director as well. I am very happy to have him beside me today. Before going into our outlook, our strategy, I would like to begin by taking a look at the highlights of last year.
First of all, our financial results, but we will do this—I will do this very quickly. You can look at them very quickly because our financial director will be going into them in greater detail later. You can see that if there were just a few figures, we have an increase in sales growth of 4.4% on a like-for-like basis, 4.5% increase in our operating income. We are up 6% for the recurring net income. These excellent, solid results, with quite a notable improvement in the second semester, have led your board to propose a dividend that will be increased to EUR 1.33 per share. Despite this very good overall performance of the group in 2018, the 2018 Saint-Gobain share price has been disappointing.
It is all of the construction and construction materials sector that has suffered in 2018, where there has been the record bad stock market result in Europe because of certain unfavorable macroeconomic and sectoral outlooks. Very bad weather as well in our main markets have particularly hit Saint-Gobain, particularly during the first half of 2018. Since the beginning of 2019, we've seen a strong leap in sales, and the share price has begun to recover, although it still today does not, as far as I'm concerned, truly reflect the group's evolution and its very dynamic activities. Quite apart from our financial results, we in 2018 have also seen very strong acceleration in the area of corporate social responsibility. We have stuck to the extremely ambitious roadmap that we drew up for ourselves.
This roadmap is one that is enshrined in the United Nations Sustainable Development Goals for sustainable and inclusive growth in our planet and for civil society. This roadmap is, of course, founded on our values, values that have been passed on through our history and that are today enshrined in our principles for conduct and action, which are in turn enshrined in our ethical charter. With this in mind, we stand side by side with our employees in order to help them to take decisions that are just and responsible, thanks to the way the group is fully committed, management is fully committed to very targeted training programs, and to continuing with our policy of absolute respect for law and regulations that govern the countries in which we are present.
I would like to come back to one or two more precise things that we saw in 2018. First of all, in the area of health and safety of our employees, all of those who are working in our sites, everybody working for Saint-Gobain, 2018 has been a better year. Over eight years, we have managed to decrease the number of our accidents with and without time off by 76%. However, our principal objective is to have zero accidents and zero occupational illness. We strive for that every day. As far as countering climate change, we have also significantly decreased our environmental footprint this year, and we are on track with the very ambitious objectives that we have laid down for the carbon dioxide emissions for 2025.
I'm very happy that our objective to decrease our hothouse emissions has been validated by a science-based target initiative, and Saint-Gobain today is on the A-list of the leaders striving to counter climate change throughout the world. Our efforts to develop the circular economy have also been quite significant this year. We are forever developing our products and solutions so that we can, to the best of our ability, integrate or have material that is recyclable or renewable. We are trying to aim for zero non-treated waste. We will continue to intensify our efforts because we're aware of the importance of a circular economy for the planet, and particularly in construction, Saint-Gobain is a prime player that can set the example by accelerating a transition towards a much more responsible value chain. We also want to be responsible citizens wherever we work by creating inclusive and local values.
Wherever we are present, we are acting, factoring in environmental and social elements with the local communities with whom we are interacting. We are also developing our patronage activities. I spoke at great length on those last year when it was the 10-year anniversary of our foundation. We are also doing our best to enhance inclusion and diversity in our human resource policies, but also in all of our activities on a day-to-day basis. This year, again, the quality of our work environment and our HR policies have meant that Saint-Gobain has been acknowledged by being granted the top employer label worldwide, and there are only 14 groups in the world that have that.
Our CSR roadmap corresponds to the six pillars that you have just seen, is closely monitored by our board, and it is also closely accompanied by indicators that are taken into account in the compensation of the group's managers. Our financial and extra-financial results reflect the rolling out of our strategy, which we have never wavered from. You know that we always make a promise to our clients. We promise to offer them materials that change life. For this, we in Saint-Gobain, we design, produce, and distribute materials and solutions that have been thought out for the well-being of all and the future of all. This mission that we have shouldered, along with our behavioral principles and our CSR roadmap, are the very foundations that Saint-Gobain has been building on over the last few years.
We are very receptive to expectations of our stakeholders, and we can always formalize, when necessary, our thoughts thanks to this foundation. I suggest now that we watch a small film that shows us exactly how we can put our capacity to innovate at the service of this vocation. We are the invisible ones. We are the first breath of life, and everything begins. We advance day after day, even through trials and tribulations. We grow until we find our place in a world that we create in our own image. Even if sometimes it is difficult, we can always change things by extending our limits until we realize that there are no limits; they can all be surpassed. It is simply up to us to work together to rebuild the world such as we would like to see it. We are the invisible ones.
We are all around you. We are in the walls. We are in the glass. We are in the services. We are in research. We are every essential innovation that Saint-Gobain invents every day to make your life so agreeable that you will live it to the full. We are Saint-Gobain.
Comme vous venez de le voir...
As you've just seen, Saint-Gobain Material Solutions are there beside us all throughout our lives. In the years to come, there are going to be three main trends that we will lean towards: well-being, sustainable development, and looking for productivity and performance. I would like to talk to you very briefly about each three of those points.
First of all, innovating for the comfort and the well-being of all, the quality of the air that we breathe, thermal comfort or acoustic comfort, or the aesthetics of the places where we live, the places where we work, are essential to the well-being of each and every one of us. We have more and more demands in those sectors, not just in developing countries, but also in emerging countries, where year after year, greater numbers of people join the middle classes. We are there to answer their expectations with more and more innovation. Our eight R&D centers throughout the world are there to serve all of our core businesses. We have essential subjects such as heating or our skills in insulation and mortar in flat glass or in wool glass helps us to accelerate the rhythm with which we innovate.
As I've already mentioned, we want to protect the environment. We want to pull in favor of energy transitions and the circular economy. That is part and parcel of the group's DNA. Saint-Gobain is improving its environmental footprint but is also giving its customers sustainable solutions. You know that construction accounts for about 40% of hothouse gas emissions throughout the world. We must, in the heating or in hot water, try to find solutions to this. I do believe that Saint-Gobain's solutions play a major role in the decarbonation of the construction world. This is the case for insulation or flat glass, which has quite significantly improved the energy record of our buildings. It is also true for our construction solutions that we are continuing to develop, adapted to different countries. They use far fewer resources than traditional construction methods did.
We have markets today that prove that. We are investing, and I'm all too happy to be investing in France. For example, we're in the process of doubling our wool glass plants in Maine-et-Loire so that we will be able to have more wool glass for the insulation of loft space that has been up until now unused. The third thing we want to do is to save time, to improve productivity, to improve our performance. These are things that are essential for our professional clients, be they industrial or professionals in the construction sector. In that construction sector, our clients have to tackle productivity that is stagnating. Not much has changed over the last 30 years, and in most of our countries, labor is becoming scarce.
Our vocation in Saint-Gobain is to offer them new solutions that will help them to enhance their productivity, sometimes revolutionize their productivity, all for the benefit of their clients. In high-performance solutions, this continual search for high performance can be seen by the co-development projects that we do with our clients to offer them better solutions. On this slide, you have the example of the health market with Dexon, which is an American company. With Dexon, we have developed, with our high-performance plastic, a system of measuring components for people suffering from diabetes. Quite apart from these fundamental tendencies in our profession, we are also today having to cope with a lot of opportunities that we must seize because they stem directly from digitalization.
First of all, and I talked about this at great length last year, the final users of our products are more and more informed and more and more influencing. They have a great influence. We have to take that into account. We have to take advantage of what they can impart to us. Secondly, we also need to have more tailor-made solutions. That is what they want. These are solutions that it is much easier for us to satisfy thanks to new technologies that have been adopted in our factories. Claire Pedini later will come back to the opportunities that Saint-Gobain's unique position and a value chain offers. A value chain today that has been completely revolutionized by the digital world. In order to meet those opportunities, to seize them, we have designed this new program that we have called Transform & Grow.
This program is a new step in the transformation that I began for the group several years ago to make Saint-Gobain a group that is even more client-focused, even more agile, and much more capable of seizing all digital opportunities. We are convinced that Transform & Grow will allow us to use Saint-Gobain's strengths to enhance our competitiveness and to free up our potential for growth. This program is twofold. First of all, there will be a radical modification of how we are organized and a very dynamic gestion of our asset portfolio. I'll now give the floor to Benoit Bazin, who is going to explain exactly how we are setting up this new transformation, which is linked to our new organization.
Merci, Pierre-André. Merci pour ta confiance. Je remercie aussi l'ensemble des.
Thank you, André. Thank you for your trust in me. Thank you to the shareholders.
Ladies and gentlemen, I'm very happy to meet you. I have those new duties, and I'm very proud to have dedicated 20 years of my professional life to your group, which should increase in the future its growth and improve its profitability. The duty that has been given to me is very important, and I would like to perform this duty as best as I can in the interest of your group and all the stakeholders. Our organization has been set up and has been operational since the 1st of January 2019. We have made two main choices. First of all, we wanted to focus our organization on our customers' requirements, local in the construction business and worldwide for our industrial partners and customers.
We have decided to organize our business in four regions in each country to serve the local markets of construction with country managers in each country that have all authority on the products offered by Saint-Gobain for construction purposes, whether plasterboards, flat glass, insulation, ceilings, mortars, and material distribution. To serve the worldwide market, we have organized our group in business units, markets, life sciences, mobility, cars, and aircraft with market country managers who are decision-making concerning the products that are offered on the market. The second choice that we've made is to have a lean and agile organization with clear-cut line management. Those managers are autonomous, and they may take very fast decisions, for instance, for resource allocation in order to take all the growth opportunities on the market. Finally, this new organization is based on three main expertise functions.
The first is expertise, research and development, then marketing, and then development and distribution and industrial performance. Those expert teams serve the markets and the various countries, and it makes it possible to draw advantage of the expertise accumulated by Saint-Gobain in order to implement new digital and business practices, in order also to develop new R&D solutions jointly for several lines of product, optimize our procurement unit, or even roll out our expertise in order to offer better products. Our organization aims at stepping up our growth. In a very simple way, we want to mobilize in a very operational way all our synergies between the business lines. A few examples. First of all, we want to achieve better business efficacy. For instance, in Brazil, we have reorganized our sales forces in three channels. First, advice, distribution, and digital. Three channels.
During the first quarter of 2019, we have increased the number of customers by 400. 400 new clients representing an additional 1.5% sales. We also wanted to enhance our offering and the range of products. For instance, in India, we have a very strong position in flat glass, opening the doors to our architects to major project managers in gypsum and mortars and to opinion leaders. We also want to foster innovation, particularly for flat glass and road domes, and it makes it possible to better know our client requirements and pool our co-development capabilities. Let's look at the video now.
The new aerospace business unit is a perfect example of the opportunities driven by Transform & Grow. Very quickly, we have identified commercial and technical opportunities and synergies both for our new aircraft and aftermarket businesses.
Companies like Airbus, Embraer, and Dassault are dealing with programs which are more than 40 years long. They are looking for reliable partnerships, and clearly, Saint-Gobain Aerospace embodies such sustainability. Because we are enlarging our product and IP portfolio, we are now seen as a more powerful player by aircraft manufacturers. Now, under the Saint-Gobain umbrella, we are a stronger force in which they can trust. The foundations that we're setting today within the aerospace business unit will bring revenue streams to Saint-Gobain for the next 20 years. Internally, being part of a new aerospace organization really gives us a sense of purpose and belonging. Saint-Gobain Aerospace, as a comprehensive business, is much more attractive for talents coming from the aero world. They are often very passionate about this market.
Parmi d'autres de croissance.
Those are good examples of growth amongst others if we pool all the forces within our group. Our new organization, of course, has to support our investment policy, and it has to be focused on growth. A new organization is a good driver to target investments in emerging countries. For instance, recently, we have inaugurated in China a new plasterboard factory, a new flat glass float in Indonesia, and also a fourth mortar factory in Vietnam. It makes it also possible to dedicate the right resources to the most buoyant market and promising market. This is the case with the life sciences department in the United States. We have a high-performance plastics facility in Dividend. Our group has initiated a lot of initiatives in the digital business. It concerns the whole group portfolio with a lot of customer services all along the construction value chain.
It's also true in our industrial processes with the Industry 4.0, with good cooperation between our teams. Claire Pedini has been requested to support this digital ambition within the group, but she's going to take the floor later. Of course, our group continues to be supported by our operational excellence foundations, and those are even enhanced in this new organization by the Industrial Performance Directorate, which pools all our experts centrally. We continue to adapt our world-class manufacturing program with a lot of productivity, augmented reality. We also invest in digital tools and in logistics, which is a way to make a difference with our competitors in terms of cost and services to our customers. We invest in distribution with the robotization of our large logistical centers in the Nordic countries.
In France, for the building platform, we have invested in services for our small clients living in the city centers. We want to continue to deliver EUR 300 million in savings each year. I think you've understood that the transformation of your group has been set up very fast, with new teams supported by more than 80% national managers in the countries where they operate, and this organization has been set up since the 1st of January. Those teams have started to work with a lot of enthusiasm, very energetically, and they have increased the levels of growth, drivers for growth, and this makes me very confident concerning the achievement of our goal: EUR 250 million additional savings by 2021, more than additional EUR 50 million in savings since 2019. Let's take the example of Romania, which is a significant country for us.
To improve the customer experience with us from being organized on product lines into being organized based on market segments and of customer groups, we have now specific teams looking after specifiers, contractors. We have a common DIY team among gypsum insulation and mortar activity in this case, but also to leverage the know-how from one business unit or another. We already see a lot of benefits after grouping the gypsum and insulation together. The Net Promoter Score, for example, has increased in all target groups: 16 points for trading partners and 15 points by contractors.
Mesdames et messieurs les actionnaires, la réussite de la transformation de votre groupe, elle repose d'abord et avant tout sur les femmes et les hommes de Saint-Gobain, sur leur talent.
The performance of your group will rely on the performance of the men and women working at Saint-Gobain.
We have very strong managerial principles. Cooperation is one of them, cooperation between the teams in order to implement synergies between the business line. One of those principles is the empowerment of each employee concerning those priorities in order to serve a more transparent organization. Of course, confidence, confidence in all of the people working in the group in order to succeed and make progress. All those principles are accepted, fully accepted by the employees and the teams working at Saint-Gobain. Those principles have made it possible for those teams to work as best as they can for Saint-Gobain. Of course, this very fast transformation is carried out in compliance with the values and principles of Saint-Gobain, whether it's about the health of our employees, environmental protection, or all our other values.
I am very confident in the operational progress of our group, and I am also very confident in the growth potential and profitability potential in our group that we are going to foster thanks to our transformation.
Merci, Benoit.
Thank you, Benoit. As you can see, we are rolling out our new organization very fast indeed and in a stringent way. We want also to take all our employees with us in this transformation. I would like now to talk about the second part of our transformation, which is the dynamic management of our activity or business portfolio. Last year, I had already mentioned our will to step up our progress in order to focus our business within the group on growth and consistency, complementarity of our business lines.
This is the purpose of our acquisition policy, which strengthens the assets of our group and positions our group on more and more promising markets. This acquisition policy is based on three pillars, as you can see on the slide. The first direction, the first pillar aims at adding niche technologies that we can operate on a worldwide basis. The second pillar or second direction is to have access to new promising countries. Finally, the third pillar is to take advantage of consolidation opportunities on the markets where we already have very strong positions. On the whole, in 2018, we have carried out 27 acquisitions for an amount of EUR 760 million, and we have created value very fast.
We have gone on with our policy in 2019, particularly with the acquisition of a plasterboard factory in gypsum in Mexico, or the acquisition of Norton Ceilings in the United States after the acquisition of Hunter Douglas in 2018. At the same time, we had announced a program of disposals of activities representing more than EUR 3 billion at the end of 2019. We have almost overachieved that objective. At least we have achieved 80% of that aim with about 10 transactions, for instance, the sale of a pipes factory in China and also our silicon carbide business and building distribution in Germany. We are going to go on with a strategic review in the framework of that new organization, and we will assess our activities in each country and each business unit. Now, let's come to our short-term prospects and/or outlook.
The growth in the first quarter was quite strong, and I would say that for the next few months, the trend is brisk and positive for the majority of our markets in spite of the Brexit in the U.K. or in spite of the trend in the carmaking industry. The rehabilitation industry is very strong in the developed market, and it's quite buoyant, particularly driven by rehabilitation for energy savings purposes. The emerging countries are on the right track, and I can confirm today with a great deal of confidence that the objective that we had set in the beginning of the year is about to be achieved, which is an increase on a lump-for-lump basis of our operating income. We're making progress supported by our buoyant strategic position, supported by this new transformation of the group, supported by promising markets, brisk markets.
We're making progress also supported by all the group's employees, supported as well by the Board of Directors, which is high quality and very demanding, and which prompts us to even more discipline and excellence. We are also making progress with you, ladies and gentlemen, the shareholders. You trust us. You're faithful to us. Thank you for your loyalty and your commitment. As far as we are concerned, we can rely on our determination, unwavering determination in order to secure together the future of the group. Benoît and myself, we thank you.
Je donne maintenant la parole à.
I'm going to give the floor to Mr. Sreedhar, our new CFO. He's going to give you the details about our financial results.
Merci, Pierre-André.
Thank you, Pierre-André. Ladies and gentlemen, it's me an honor to be the first CFO who is not a French citizen. And I serve this group.
I've been serving this group for 25 years, and this group is very dear to my heart. I am committed to work relentlessly to contribute to the success of Saint-Gobain. I am also very happy to be able to present the group results for the year 2018. I'm very happy to have this opportunity to have an exchange of views with you. First of all, 2018 has been globally, on the whole, a positive year. It's been, on the whole, a positive year in spite of operational difficulties during the first quarter. As you can see on the slide, the first indicators show that the trend has been positive. The internal growth for the group sales has increased by 4.4%. The operating income, 4.5%, with a sharp improvement in the second half of the year, 7.2%.
The net income for the group has been impacted by EUR 2 billion in impairment, but the net current income, excluding exceptional items, has progressed by 6%. The operating margin and the ROCE have also improved. Now, a few specifications concerning the sales. On the left-hand side, you have the 4.4% of internal growth and organic growth I've just mentioned. The sales trend on a lump-for-lump basis has been impeded by the negative exchange impact, particularly because of the depreciation of the U.S. dollar versus the euro. The acquisitions represent 0.9%. Our strategy has been to increase the sales prices against the backdrop of strong inflation of the cost of commodities and energy costs. It has been successful. This strategy has been successful.
On the right-hand side, on the graph, you can see an increase in the prices in the second half of 2018, and it was very helpful in order to have a good start in 2019. A few comments concerning the business lines and the results. Innovative materials improvement by 4.8%, of which 7.2% for high-performance materials and of which 2.8% for flat glass. Flat glass had to face operational difficulties during the first half of the year, and it had an impact on our results. However, during the second half of this year, there was a rally of the flat glass profitability by 10% against the backdrop of improvement of the industrial performance and price increase. Concerning the high-performance materials, 2018 has been a record year with a 16.3% profitability thanks to dynamic volumes, particularly in ceramics.
We also draw on the advantages from our capital allocation policy towards technological niche and high-growth markets. On the whole, innovative materials had posted a high profitability for the second consecutive year. Concerning the building products, the year has been positive with a significant growth of profitability and sales driven by the price increases. On the whole, a fine performance, even if it's a mixed one between interior and external solutions. Interior solutions have posted a fine progression of the margin, which has increased by one point at the highest level since 2007. Concerning external solutions, we have suffered during the first half of the year because the price of the commodities has increased with a strong inflation, high inflation, high level of inflation. During the second half, the situation improved thanks to a successful policy of price increases.
The pipes business has increased over the whole year because we've stepped up the reorganization of our production facilities, and we've closed our Chinese and German facilities. Finally, the building distribution has posted a strong 3.6% growth. This business line had a lower profitability but a lighter assets basis. The profitability of the distribution platform has slightly decreased, mainly because of the U.K. with the Brexit problem and in a difficult competitive situation, and Le Perre still has difficulties. Interestingly, in France and in the Nordic countries, the margin has continued to increase against a backdrop of digital investment. Now, I would like to look at our results for each geographical area.
You can see a strong performance with a margin increase in all the regions except the other countries in Western Europe, where we have experienced some difficulties, particularly in the distribution business line in the United Kingdom, as I have told you before. In 2018, Saint-Gobain has proved that it was able to be very disciplined, financially disciplined. This year, we have saved EUR 300 million thanks to our operational excellence program. We have continued to manage our working capital requirements in a very stringent way, disciplined way, and we have kept it at a very low, exceptionally low level, 30 business days. Our cash flow has slightly increased. Finally, our balance sheet and our credit rating remain strong. Strategically, 2018 has been an ambitious year.
It has been a year of renewed ambition and investment for Saint-Gobain's future, thanks to R&D, thanks to fine acquisitions of small and medium-sized companies, and thanks to our growth investments dedicated to or focused on Asia and emerging countries. As you know very well, we also have acquired 10% of the share capital of Sika, with a positive impact for the group sales of EUR 7.81 million. This investment has been carried out in very good financial conditions. Our group has paid EUR 930 million for a stake, which is at present valued at more than EUR 2 billion of market value. Now, I would like now to talk about the first 2019 quarter within the new organization that has been presented to you. The beginning of this year has been quite a good one with an internal growth of 5.7%. All the segments are growing.
The volume effect is in strong progression. It has been supported by a less challenging comparison basis compared to the first 2018 quarter in Europe. We have also benefited from the price effect, and the industrial performance remains good. Concerning the dividends, the 2018 results that I've just presented to you make it possible to your board of directors to propose a dividend increase to EUR 1.33 per share. That is a payout rate of 42%. This dividend is going to be paid out on the 12th of June and just as last year, entirely in cash. Finally, in a nutshell, your group remains fundamentally very strong. In the framework of this transformation program, I'm very confident that your group in the future will be even more solid, stronger, and even more buoyant. Thank you for your confidence and for your attention.
Merci, Sreedhar.
Thank you, Sreedhar.
I'm going to give the floor to Claire Pedini, Deputy Director for Human Resources and Digital Transformation. She's going to be the moderator of a roundtable concerning the benefits drawn from the digital transformation at Saint-Gobain. Ladies and gentlemen, good afternoon.
Partager avec vous.
Ladies and gentlemen, I am now going to be inviting some of my colleagues to join me on the stage, and in a few minutes, we're going to talk about the advantages of the digital transformation for your company. We all are living this with our tablets, with our mobile phones. We all know that this is a change that is even more important for the life of any company. It's a change because this change is in a world of hyperconnection, a world based on mobility.
It's a world where access to know-how is instantaneous, no matter where you are, no matter what you are doing, no matter what time of the day or night it is. It is all the more personalized thanks to algorithms. This digital transformation is completely overhauling the value chains as well in which companies are operating because, as Pierre-André explained earlier, the final consumer is placed at the very center of the value chain. They are the ones who now have access to information. They have more and more information. This digital transformation is a much more intelligent way of processing, particularly for our industrial processes. For Saint-Gobain, this is an opportunity. It's an opportunity to satisfy our customers, but also an opportunity to enhance our operational efficacy. Digital transformation today, how does this go on in Saint-Gobain?
Madame Montserrat De La Fuente , who is a Director of Industrial Excellence Programs. For example, we have daily activities that allow us to share information and to manage activities in a completely different way thanks to this digital transformation. This is the case of Onboard, which is a tool that gives us instant access to updated data, or eTag, which is an app that allows you to actually capture some of the tasks that have to be done. All of these tasks are simplified, and connectivity makes us much more agile. In Saint-Gobain today, we have more than 100 plants that can actually use these new systems. If I turn now more downstream, closer to the customer, there too, thanks to digitalization, we can improve our performances. Good afternoon, Benoît Melonio. You are the Digital Manager in Saint-Gobain Construction Distribution in France.
Does digitalization truly make your consumers all that much better at performing? The answer is yes. We're making all of the craftsmen much more performant. That is what we're trying to do. That's the objective in the Saint-Gobain's distribution. In our program, Generation Craftsmen of POINT. P, this ambition is based on three things. I develop my activity, I progress, and I make my day-to-day life that much easier. They are all participating very actively in this. In order to achieve these objectives, we're offering them digital services such as Homly You that finds clients, Solu+ that can quote worksites, Tolteck that can also come up with a quote. Tolteck is a startup that integrated Saint-Gobain from a very young age at the end of 2017, and they're doing very well. They have about 4,000 paying clients today, and we're talking about it.
Situé à Saint-Gobain-de-la-Herre, à côté de Oudan. Client.pay Oudan, je suis une petite société installée depuis.
My name is Benoit. This is an app that is very simple. When you don't know how to use computer tools such as myself, five years ago I didn't know how to use one. All I do is I click on this, I click on Génération Artisan, and I've got everything: Solu+, Tolteck. I only use a few; maybe I'll use more later. I use Solu+, Homly You, Valéo Services, and Tolteck a lot. I use Solu+ to help me on things that I don't know how to quote. Tolteck is something that I use every day. When I'm with my customers, I've got all of my quotes, my invoices. It's an extremely simple thing. For my clients, I get direct access to their information. It's a wonderful app.
Homly You gives me some very interesting worksites, work projects. It works very well, POINT. P. These tools are being more and more used. Solu+, for example, as you've just heard, is 20,000 quotes every year for our clients or our sellers. It is also a productivity tool that is very important for our own employees.
Thank you very much, Benoit. It is beneficial for our actual craftsmen, our artisans, but it is also very beneficial for others such as the contractors, architects. In the area of construction, one of the great revolutions in digitalization is BIM, the digital mockup. Mathilde Barthe , you are the Client Experience and Digital Marketing Director in Saint-Gobain. Tell us a little bit about this revolution when you're working with when you're doing the big public works.
BIM, Building Information Modeling, is a collaborative process that consists in compiling in a structured way within a digital model all of the data that refers to one particular building. This model, this mockup, can be shared between all of the actors of a project. It's a bit as if you were virtually building before actually building. Placo in France gives its contracting clients services that are adapted based on what they do and how their business is changing. I think that we should discover together by looking at a real case exactly how these digital tools can work. This is a hotel in Paris. BIM is a new way of working. Everybody cooperates on one single tool, which will be the digital model. This is a new service offer destined for everybody involved in a building project.
We're accompanying the different companies on a bespoke way. We come to do a 3D report. We come up with these points, and we can then do images so that we can actually cut our plasterboard to the exact sizes necessary. Cutting, adapting the plasterboard, it's much less tiring and therefore a much better yield. This is technology that architects who have actually built the new Saint-Gobain Tower that we're going to be moving into at the end of the year, that they use this in order to come up with their interior design plans. Now, obviously, to ensure that all of this actually works, you have to have very powerful software and a lot of data. This famous data that is a bit like the petrol in our modern economy. Now, for plants, this is what we call Industry 4.0. How does that work for you?
In our plants, there are millions of data that up until today have been unexploitable. Today, we can connect the machines between themselves, analyze the data, and react accordingly. We can be much more proactive. We can improve the way we control our machines and our processes. The direct result is an improvement of the quality of our products. We are much more efficient, as you can see in this film. Saint-Gobain Sekurit does glass work for the automobile company. Sekurit has been chosen as the 4.0 competence center for the Saint-Gobain Group. On an assembly line, we collect TB of data on the process and the quality produced 24 hours a day, 7 days a week. This data means that we can decrease the tolerance of our products, we can improve the product quality, and improve the yield of the line.
Instantaneous direct access to the data means that our operators are much more efficient. In the case of a problem, we have a centralized team of experts, and you can contact them in real time. We can see in this example that the time saving, the quality improvement, and the economies that can be made, the savings that can be made, are very visible in the daily life of our plants. Benoit, this data is also used to better know your clients in distribution. Yes, this data today is the vital lifeblood of distribution. We have to know our customer and their needs so that we can better offer bespoke solutions. Saint-Gobain has a lot of exceptional aces up its sleeve.
In our sector, the frequency of purchasing of the professional clients is very high so that we do know our clients much more closely than normally they would in mass distribution. Because Saint-Gobain is a leader in France, or in Scandinavia, or Great Britain, we have much richer data in every sector. To understand quite concretely how this data can be treated, can be processed in our different shops, take a look at OPP Plus, which is our commercial recommendation algorithm. OPP was designed for our salespeople. There are 2,000 in France, and they meet between five to 10 clients a day. The algorithm is going to analyze the customer orders, and then it will be possible to offer these customers other comparable products.
This means as well that we can enhance our customers' loyalty, that we can come up with an offer for them that is much more segmented and tailor-made.
Mathilde, these algorithms, they're also extremely useful. You can see this every day as well for creating virtual images, virtual reality, augmented reality. That is also digital for our major customers.
Yes, for the major architectural projects, we have to actually build physical mockups, but they are small, they are expensive, and they take a long time. GlassPro Live is a service that means that our clients can actually have a visualization of the building and the façade of the building before it is built. All of this can be done in three dimensions. These images are calculated based on the physical properties of glass, and sometimes you can see very, very fine variations in the different colors.
GlassPro Live is a choice. It is a choice for those working with flat glass and who are concerned technically and aesthetically with the visions that architects and owners want for their building.
Thank you, Mathilde. Ladies and gentlemen, you can see that digital is truly at the heart of what we do every day in Saint-Gobain. It is at the heart of our processes, our customer relations, our ways of traveliing, as Benoit was pointing out earlier. In order to do this, we are doing the necessary. We are giving ourselves the wherewithal. We are training our employees in digital processes. We hired more than 300 digital experts last year, managers, specialists in big data, people with masters, 300 people. That represents about 12% of the total hirings in Saint-Gobain.
That is quite significant, which means that Saint-Gobain's digital community today is represented by some 1,700 people representing more than 60 different nationalities, and they are to be found in all of our countries and across all of our business lines. This year, in 2019, we are going to be recruiting more than 28,000 people worldwide. Thirty-eight of them will be less than 26 years old. You can see that a vast majority of our employees were born in a digital world. They have lived with it every day and are quite familiar with it. To sum up, this digital transformation is a wonderful opportunity for Saint-Gobain. I'll give you two opportunities. First of all, it is a wonderful opportunity for growth of our activity, of our sales, because it is going to allow us to launch new business models, new services, and this quite regularly.
It means that we're going to be able to continue to improve our products and our solutions, and we will know our clients much better because of this data that we've just been talking about. At the same time, digitalization is going to enable us to significantly enhance the operational efficiency of the group thanks to the use of big data. We've seen in our production lines or in KYC, this data means that we will be able to take much better decisions, and we will be able to accelerate our processes and our management methods. To sum up, digitalization is a wonderful opportunity at the service of performance. Thank you very much.
Merci beaucoup, Claire.
Thank you very much, Claire. I would now give the floor to Anne-Marie Idrac, who is the Chair of our Committee of Nominations and the Compensation and Nomination Committee.
Thank you very much, ladies and gentlemen, shareholders. It is up to me now to give you the—to talk to you about the proposals that the board has made concerning its own composition and also proposals concerning the compensation of your directors and officers. Here on the board of directors, you have a certain number of figures. There are 14 of us. 73% are independent directors. You have 42% that are women. We have a lead independent director, Jean-Dominique Sénard. We have two employee directors and one director representing the employee shareholders. All of this is fully compliant with the AFEP- MEDEF code that your group adheres to. Just one or two more pieces of information concerning the director's skills and experience. You can see that we have a lot of varied experience. It's on this slide.
You've got people specialized in distribution and management going via digital and innovation. I'd like to stress that we are very internationally represented. 27% of our directors are non-French. Actually, they are three women, but we all have a lot of experience abroad. What about the diversity policy at the board? In the context of future appointments, we would like to strengthen the skills concerning distribution, digital, and e-commerce. We would also like to increase internationalization and continue to lower the average age of the board while maintaining a very good balance between directors that have greater seniority and experience than the more recently appointed directors. We also want to maintain the proportion of executive directors who hold office in another large group or who have experience of that nature. The renewal of our colleague, Ms.
Dominique Leroy, who was co-opted in November 2017 as an independent director, and which you will be voting upon later, fully satisfies these objectives. Our board of directors is made up of three committees. We have the Audit and Risk Committee, presided over by Philippe Varin. The Strategic and CSR Committee, presided over by Jean-Dominique Sénard, and the Nomination and Remuneration Committee, presided over by yours truly. If we move now to the proposed renewals of the director's term of office, I will do this in alphabetical order. First of all, the proposed renewal of my own mandate. You have my biography on page 19 of your brochure and also on the slide. The proposed renewal of the director's term of office of Mrs.
Dominique Leroy, who is CEO of Proximus and member of the supervisory board of Ahold Delhaize , and already an independent director because she was co-opted in November 2017. Dominique Leroy is a Belgian citizen and quite apart from her skills in management. She has a lot of skills in the distribution sector and in digital transformation matters, and her biography is also available in the brochure. Continuing in alphabetical order, we have Mr. Jacques Pestre, Senior Vice President of SGDB France, in charge of POINT. P. He's a director representing the employee shareholders and has been since 2011. He has very in-depth knowledge of the group, particularly in the building distribution sector, as well as in CSR and management. The last in alphabetical order concerns Denis Ranque, Chairman of the Board of Directors of Airbus, Director of CMA CGM.
Denis Ranque is an independent director and has been since 2003. He has a lot of experience internationally and in the industrial sector, as well as finance, management, and strategy. These are the proposals that will be made later for the renewals of terms of offices. If I move on now to the actual compensation policies, let me mention the underlying principles of the compensation policy for directors and officers. This is a compensation policy that is decided upon by the board of directors upon proposal put forward by the Nomination and Compensation Committee. This remuneration reflects the group's strategy and aims at aligning itself with the compensation of the executive corporate officers with the group's performance and the long-term interests of its shareholders. We ensure that compensation complies with the recommendations of the AFEP-MEDEF code and meets transparency and performance measurement requirements.
We make sure that compensation takes into account the group's performance, market practices, other benchmarks of the CAC 40 companies, or comparable companies in terms of sales, workforce, and international scope of operations. CSR, this is one of the qualitative objectives of the executive corporate officers' variable compensation and has been since 2013 for the Chairman and the Chief Executive Officer, and this is part of the criteria applicable to the long-term compensation since 2017. How do we practically apply this? In 2018, this is Say-on-Pay ex post, and only concerns our CEO, Pierre-André de Chalendar. You have here on this table different figures. First of all, fixed compensation that is a reflection of his experience and his responsibilities. It is EUR 1.2 million, and this amount was decided upon when his term of office was renewed and will not change throughout that term of office.
That is followed by the annual variable compensation, and I will come back to that a little further on, as well as stock options and performance shares, and I will also come back over those and how we calculate them. You have the total. Given all of those fixed, variable, and options, you have a total that amounts to EUR 3.5 million, EUR 3.514426 million, which is a decrease of 23.5% over 2017 because of changes in variable compensation. If we look now at variable compensation, you have the main items that make it up here in the table.
The quantifiable objectives are things such as ROCE, the group operating income, the group recurring net income per share, the OFCF, and on the other side, you have the qualitative objectives that account for one-third of the fixed compensation, and that reflects the group's strategic orientations, the implementation of CSR policies, and continuation of the group's development strategy. These give us, as far as the quantifiable objectives are concerned, we end up with an achievement rate of 42.5%, and for qualitative objectives, the board has estimated its achievement rate as around 78.33%, which gives us an overall achievement rate of 54.44%. I'm still referring to 2018, that is Say-On-Pay ex post, long-term compensation paid. The previous slide was showing you the amounts and how we actually compensated in accordance with IFRS accounting standards. Here you have the ROCE performance conditions.
You've got the Saint-Gobain ROCE, which is 65%, the performance of the stock price versus the CAC 40 stock market index, and also the CSR indexes. We have a cap of 85% of total maximum gross compensation, limited to 10% of the overall grant of performance shares and performance units. All of these figures are extremely stringent. There is also one other stringent obligation, and that is to retain these stock options for five years. For 2019, and I'm still here referring to compensation, but this time it is Say-On-Pay ex ante. This year, there are two people concerned by this because two directors are subject to this: the CEO on the one hand and Benoit Bazin on the other hand, Benoit Bazin, who is the COO. Fixed compensation, therefore, EUR 1.2 million, no changes for Pierre-André, and EUR 750,000 for Benoit Bazin. This is fully in line.
It is on an average of the CAC 40 companies that can be compared to Saint-Gobain. The caps are different, as you can see on the table, and the distribution, you have two-thirds that are quantifiable, one-third that is qualitative for both these directors. The same thing applies concerning the long-term compensation caps: 85% of his 2019 total maximum gross compensation for Pierre-André, and 85% also for Monsieur Bazin, but 50% of the grants will be made to the Chairman and the Chief Executive Officer. Again, all of this is done on a pro rata basis. Just one or two clarifications, should you need any. There is no variable deferred compensation. There is no multi-annual variable compensation that's covered by long-term compensation. There is no exceptional compensation, and there are no attendance fees in the board meetings of the group's companies.
One additional thing that will be subject to your approval this year are the undertakings given to the COO to be approved by you, and I remind you that Benoit was appointed as of the 1st of January 2019 as Chief Operating Officer. Pierre-André reminded you himself that Benoit has a lot of experience and has worked his way up through the different activities of the Saint-Gobain group. His work contract will be suspended as from the 1st of January 2019 during the duration of his office term as Chief Operating Officer, and this explains the very specific decisions that we have to take today. First of all, we have to decide upon a severance indemnity. Normally, in conformance with the AFEP- MEDEF, this will be capped at two years of gross annual total compensation, and also it will be subject to performance condition.
The variable compensation must have been at least equal to, on an average for the last three, four fiscal years, 50% of its average maximum account. Non-competition indemnity equal to one year's total gross compensation, again within those two years that I talked about earlier, knowing that the board may waive the application of this non-competition indemnity provision. Benoit Bazin will continue to benefit from the supplementary pension plan. That is a plan that was set up in 2012, subject to performance conditions and service conditions, and the performance conditions are identical to that of the compensation for loss of office. Lastly, Benoit Bazin will also continue to benefit under the group health and personal risk insurance contract that is applicable to employees of the Saint-Gobain company, and all the details of this are in the brochure, in the notice of meeting that you received.
Before ending, I would like to thank all of those who worked in the Nomination and Compensation Committee and say that they have all worked extremely usefully and ensured that the quality of our work was exceptional. Thank you.
Merci, Anne-Marie. Je donne maintenant la parole.
Thank you, Anne-Marie. I give the floor to Dominique Sénard, our lead director.
I'm very happy to be with you today to report about the work carried out by our board and the quality of that work. I would like to talk about that work by our board. In a nutshell, I would like to talk about the way the board of directors works and operates. That's what we do on a regular basis, and I would like to talk about other activities. As a lead director, I have to deal with those activities more specifically.
When we are talking about work, of course, there are various kinds of work. First of all, work concerning the organization and strategy of the group. Of course, in 2018, we have worked a lot and thought a lot about the new organization. Benoit Bazin has described this new organization. He has been appointed COO, and we have exchanged a lot of views, and we've worked a lot on the future of this organization and the terms of its implementation. We have monitored the progress of Transform & Grow, and I can tell you that the members of the board have been focused on this program, Transform & Grow. We have been able to follow this program right from the start. Talking about strategy, practically during all our meetings at the board, we have talked about the strategy.
Reports, very in-depth reports, have been prepared by the CSR committee of which I'm the chairman, and all those items have been deliberated and discussed with all the board members, and this, of course, has resulted in very interesting debates and very lively debates. We talk about that practically during all our meetings and more intensively during our yearly seminar when we meet a certain number of group managers presenting their strategy in order to analyze the consistency of the programs. We talk about all the acquisition and sales and disposal projects in detail. We benchmark with our competitors. It's important to be able to do that in a very specific way. We've just done that during the last board meeting, just before this general assembly meeting, in order to better understand the strategy of the group in this very fast-changing world.
Of course, we have a strategic plan that we discuss, and we also discuss digital transformation. It's a good illustration of this incredible change and transformation within the group, and this digital transformation is more and more important and concerns practically all the business lines in the group. Beyond the strategy, we also focus on risks. The Audit and Risk Committee is in the front line concerning this risk monitoring and mapping. It's a very useful instrument which is updated on a regular basis, and it invites us to ask all the necessary questions concerning those risks and their intensity and their seriousness. Of course, some of those risks are also faced up by other companies, but cybersecurity is a specific risk as far as we are concerned.
You will remember the experiment or the experience that we had two years ago, and I can tell you that since this event two years ago, the teams have been mobilized in order to protect our group against new cyber attacks. Of course, in this area, we can't give a 100% guarantee. We're working on the regulatory environment. We follow up the main disputes and litigation cases, and of course, we see to it that the group is in compliance with all the basic regulations and rules. Beyond that, we are also very watchful about the CSR. During this strategic yearly seminar, we discuss in detail all the action plans concerning the CO2 mitigation plans and energy saving plans. Mr. de Chalendar has mentioned that. This is part and parcel of the group DNA, and we try that to be a priority in our strategy.
Our objectives, they are ambitious but realistic, but they require a permanent effort from the teams. We are working within the board intensively on those topics, typically during our ordinary meetings. We also had ad hoc extraordinary meetings in order for the directors to update their knowledge thanks to outside experts' reports, very high-level experts, which makes it possible for the directors to have the right assessment of the group's work in this area. We also work a lot on the circular economy. It's the core of our business, of course, at Saint-Gobain. We're very serious about security issues, diversity, biodiversity, and all those items which are part and parcel of a corporate CSR. I must say that the group's directors have a lot of information. They are well informed, but also they have the opportunity to learn about all the innovations in that area.
We also have transformed the boards. We have studied the way the board works and operates, the way the committees work and operate. Anne-Marie Idrac told you about that, and we also assessed each director's contribution. If I had to make a summary of our work, I would say that our assessment is a positive one. I told you so last year, and good news, I can tell you so this year. All the members of the board think that the way the board works is very positive. The membership of the board is very well balanced with diverse skills and complementary skills. Of course, we're always thinking about potential future nominations in this board. In the future, we should renew the membership with younger directors, maybe more informed about the digital environment.
Of course, it is, and with a lot of experience with distribution, of course, this can be taken for granted in this group. Beyond all that, the board members recommend to continue with value creation according to the trend in the share price, of course, and to continue with the speed of activity and portfolio turnover, and we need to make this group sustainable, of course. Let's focus on more specific topics. I was talking about the separation between the Chairman and the CEO position. You know that those positions are brought together in the group, and on a regular basis, we wonder whether it's relevant or not, and the answer is yes. It is still relevant, just as I told you last year. To have one single person to hold the two positions is quite relevant.
The Chairman and CEO is considered by the board members as very open, transparent, making it possible to have a very high-level dialogue in the board. You need to know, ladies and gentlemen, that we have incredibly lively meetings. Everybody is free to say what he or she wants, and the consensus is always guaranteed. Typically, if we had to wonder whether we had to separate these duties, and I told you we think it's not useful, but there is a sort of balance of power which is guaranteed, the very high number of independent directors on the board. We have a COO now, which is a specificity in this organization, strengthening governance. We also have meetings outside of the management. If necessary, I will chair meetings of the board where we will very freely discuss about the governance trends and more general items. The directors also may represent employees.
We have employee representatives as directors, and I would like to welcome them because they are very useful. They are free to say whatever they want, and they bring a very specific light to our meetings, and they remind us, if need be, that employees are very important in our group. There are other activities. For instance, we discuss conflicts of interest, but there are none. Of course, we do not have to manage them because there are no conflicts of interest. We examine the independent status of the directors and potential directors. We also discuss succession plans, particularly for the Chairman and Chief Executive Officer in the event of an anticipated vacancy.
I have mentioned those meetings which are held without the presence of the managers, of the CEO, and sometimes, with the agreement of the CEO, I have the pleasure to meet a certain number of shareholders, of investors in the group, to talk about governance of the group with them. Ladies and gentlemen, as a lead director, I can tell you I'm very happy. My life is made easier by the good atmosphere and those board meetings. It's a pleasure for me to attend those meetings. I know that everybody can talk to me if they want, and I can't say that I've been faced with internal conflicts this year. Normally, a lead manager should be able to resolve those conflicts, but there have been none. Thank you very much to everybody, and thank you, ladies and gentlemen, for your attention.
Merci, Jean-Dominique. J'invite maintenant Madame.
Thank you, Jean-Dominique. I would like to give the word to Monsieur Cécile Saint-Martin to present the auditor's report.
Thank you, ladies and gentlemen. Good afternoon. I have the pleasure, on behalf of KPMG Audit and PricewaterhouseCoopers Audit, to report the various missions that have been carried out according to the law and in order to present for the financial exercise closed on the 31st of December 2018, all the results. Those results have been—those accounts are presented to you. There are five reports, auditor's reports, and with the agreement of the chairman, I propose not to read out all those auditor's reports. I just want to sum up the main highlights of those reports. Commençons par nos rapports sur les comptes. Vous trouverez nos deux rapports de certification.
You'll find two certification reports on page 273 to 278 concerning the consolidated accounts of the group and 309 to 312 concerning the annual account. Let me remind you of the fact that the aim of our activity is to give a true and fair view of our accounts and ensure that there are no significant anomalies. In order to do that, we have carried out due diligence for our audits in the scope of consolidation of the Saint-Gobain group in France and worldwide. This scope includes more than 1,000 companies distributed over 67 countries. Our approach has been adapted to the business of the group and its international organization and covers the current activities and exceptional transactions and events during the financial year. Our work is regularly summed up to the management and to the risk and audit committee of your group.
In conclusion, we would like to certify in an unqualified way that the annual accounts and consolidated accounts are fair and true. Moreover, without challenging this opinion, we would like to point out to you in the consolidated account report the impact of the change in accounting standards after the implementation of IFRS 15, accountability of income from customers' contract, and IFRS 9 concerning the recognition of financial accounts. You will find that in attachment number three of your consolidated accounts. According to the regulation, we give all the details about our audits and the key points and the main due diligence activities. The key points or the highlights have been assessed as being the most sensitive on the basis of the management assessment. The highlights that are mentioned in our report on consolidated accounts concern the following items: the valuation of goodwill and intangible assets.
Now, then the assessment of provisions for asbestos-related litigation, then the acquisition of Sika securities, and finally, the assessment of suppliers' rebates and discounts in the building business line. We have given our answers, and you can see that on the slide. Concerning the annual accounts, we have mentioned in our report one highlight concerning the valuation of financial investment, fixed investment. We have examined the terms of valuation and the key assessments used in the FOIMACO those tests. This concerns our two reports concerning the annual accounts and the consolidated accounts of Saint-Gobain for the 2018 financial year, and you will be asked to approve those accounts in the first and second resolution. I'm going now to present the other reports according to the law. Specific report concerning the agreements, and this is in page 171- 179 of your file.
We communicate on the main terms of the agreements that have been given to us. There were three commitments which were authorized during this financial year, and your board has approved the three agreements, and you have to approve them today, or you're requested to approve them in the 11th, 12th, and 13th resolution. Those agreements concern Mr. Benoit Bazin, who has been appointed COO, and this has been presented by Madame Idrac, and this corresponds to the compensation benefits in case of cessation of duties, and also it concerns the supplementary pension plan and the health benefits during the duration of his term of office. You also have to be reminded of four regulated agreements which already have been approved by your general assembly during the previous financial years. One only has been implemented during the financial year, and those impacts are mentioned in our special report.
We also have issued the report of one of the auditors as an independent third-party body concerning the CSR policy. This is called the CSR information. It's on page 331 and 332 of your registration document, but you don't have to approve that. Finally, concerning the share capital transactions, your board would like to make a proposition to you in the extraordinary part of your 15th- 22nd resolution. It's a delegation of power in order to issue shares and securities, giving access to the shareholders' equity of your group, with or without the preferential right of subscription, and concerning the 22nd resolution for the benefit of certain beneficiaries only. Your board would also like to propose in the 23rd and 24th resolution to authorize it to carry out existing action subscription and share subscription and share purchases.
Finally, your board in the 25th resolution proposes to delegate all powers in order to cancel shares up to a limit of 10%. We have, concerning those transactions, carried out due diligence, due diligence which makes it possible for us to guarantee that the terms that are proposed are part and parcel of the legislation and comply with the legislation. We do not have any other suggestions to make, but we will issue complimentary reports when your board applies those propositions. The other propositions that are made by your board have not given rise to any specific comment. I would like to thank you for your attention.
Merci beaucoup. Je donne maintenant la parole à.
Thank you. I would like to give the floor to Antoine Vignial, our Secretary General, and he will present, in summary, all the resolutions that he should approve or not.
I would like to introduce the resolutions that you have to vote on. We have 14 ordinary resolutions and 12 extraordinary resolutions, and as Pierre-André told you, I'm not going to dwell on the resolutions that already have been presented by previous speakers, and I'm going to focus on the financial authorizations that you are requested to renew this year. The whole text of the resolution draft is in the notice of the meeting, and it is also in electronic form either on the Access platform or on the Saint-Gobain website. Ordinary general meeting resolutions, there are 14 of them. First resolution to third resolution, approval of the company's non-consolidated financial statement. The third resolution, appropriation of income and determination of the dividend, as Mr. Sreedhar has told you in his presentation. Fourth to 13th resolution, all concern compensation items, but Mrs.
Idrac has told you about that during her presentation. Program of share buyback, 14th resolution, authorization given to the board of directors to trade in the company shares. It's perfectly similar to the previous year's resolution, and it makes it possible for Saint-Gobain to buy back shares on the market. Most of them are canceled, which is the purpose of the 25th resolution. Extraordinary meeting resolution, there are 12 of them. We'll focus on the financial authorization. Now, what is it all about? Those authorizations will make it possible to the board to increase the share capital without having to summon a general assembly so to be more responsive and, if need be, to take market opportunities if there occur. It's all about increase in the share capital, but there are several types of increases. Those authorizations will last over a period of 26 months, except for one case.
This is not at all exceptional. The resolutions that are submitted to your approval are quite ordinary and similar to the other companies' practices and the market practices. Can they be used in order to avoid a takeover bid? No, because in case of a takeover bid, those authorizations will be canceled, except for the authorization concerning increase in share capital for the employees, but it can't become a defense weapon against a takeover bid. Now, concerning this table, there is a lot of information. In the second column, the number of resolutions. In the third column, period of duration for those authorizations, 26 months. None of those resolutions can be used in a period of takeover bid. What about the cap?
The cap is a limitation given to the ability of the board to increase the share capital beyond a certain percentage, and it's a sort of Russian doll organization. You have an overall limitation or cap of 20% concerning the cancellation of preferential subscription right, and you have another sub-cap with cancellation of GPS and a specific cap, which is 5% cap, in order to capitalize the premiums. The maximum amount, the maximum cap, is 20% of the share capital, except for the PEG, that is to say the employment saving plan capital, and this is 2.5%. Now, what's the preferential subscription right? It's a right given to all shareholders to subscribe in a preferential way. Sometimes this right is canceled, but even in case of a cancellation, according to resolution number 16, the board has the possibility to give a priority contractual right.
It's a subscription right for the shareholders, but only for five days. On this slide, you can see that there is an item called private investment, which is a share capital increase for a certain limited number of shareholders. All the shareholders are not invited to subscribe because there is a cancellation of the preferential subscription right, and this transaction is reserved to a certain category of investors. Over allotment, green shoe, which is called green shoe, if the transaction operates properly, the number of securities to be issued is increased, but the overall cap has to be complied with and the price of the transaction as well. Now, let me talk about other types of issuances where you do not increase the share capital against cash.
It's an increase in share capital in order to compensate for contribution in kind, resolution number 19, and capitalization of premiums, resolution number 20, and increase in capital for the employees through the employee savings plan. This is resolution number 22. The employees, thanks to this savings plan, are the first shareholders of Saint-Gobain, and each year, capital increases are proposed by the board for the past 22 years. Resolution number 24, you authorize your board to distribute free shares. We also have a cap, overall cap of 1.5%. It represents only 0.5% per year and a sub-cap, 1.2% sub-cap on a yearly basis for performance shares. The resolution period is three years, and of course, some specific terms have been scheduled for the allocation of those instruments of long-term compensation. There is a service condition, attendance condition.
You need to be an employee of the group during the exercise of the option. Also, a performance condition has been set, and the board has specified that in the future, performance conditions would be based on three criteria. First of all, internal performance, then relative criteria, which is stock exchange performance, and then CSR performance in order to guarantee that the beneficiary's interests are in line with the shareholders' interests. All this is available in chapter five of the registration document and in your notice of meeting. If you go and look at those documents, you will see that the performance conditions have always been determined in a very stringent way. Let's look at the last three years for those performance conditions.
For the options, the percentage of achievement has been 0% for the 2014 plan, 59% for 2013, 16.5% for 2012, and for the performance shares, 89% and 65%. This resolution is quite clear. I hope that this presentation has been useful to you, and I would like to thank you for your attention.
Voilà, je déclare après.
Thank you. I now declare that the question and answer session is open. We only have one single written question from Mr. Bernard Delpech, who is an individual shareholder, and which has to do with the calculation of a return on capital employed. Now, the reply to that question, which confirms that the ROCE is calculated before tax, that was his question, was it before or after tax, that answer is available on Saint-Gobain's internet site. I would now like to give the floor to the auditorium. Number four, please.
I'll start on the left. Yves Richard, individual shareholder. Chairman, sir, I would like to have a clarification as to your policy concerning the group's portfolio of activities. I regret that in your speech, you have not at all talked about one very sensitive subject, which is that of Pont-à-Mousson. As with everybody, I have read information in the newspapers on that topic, and I'd like to know whether you confirm or not that you have begun to seek partners or even perhaps to dispose of this activity. If so, what is the situation today, and do you think that you will come up with any solution before the end of the year? Thank you. Now, it's true that I didn't specifically talk about Pont-à-Mousson because, as of today, Pont-à-Mousson is not for sale.
As Sreedhar said in his report, the selling off of our pipes activity was, or our pipes activity was very difficult last year, and today it is in the process of being restructured. It just so happens that that restructuring plan that has been set up by Benoit Bazin, who was CEO of Pont-à-Mousson from 2016 to 2019. I think maybe that Benoit would be able to better answer this question than myself. There is a lot of skill and know-how in Pont-à-Mousson. That notwithstanding, over the last 20 years, there have been a lot of changes for it. First of all, changes in market, market sovereignty crises in Europe. Europe has been cut in half. The markets have become much more competitive. That was the first change, the change in markets. The second big change was that in competitors, 20 years ago, they were Japanese and American.
Today, they are primarily Indian, Chinese, and often three or four times or even six times bigger than Pont-à-Mousson. It is in that context of a worsened profitability that we announced a project for the future to try to work on the profitability of this activity in Europe. It meant that we had to make a lot of effort for cutting costs in investment and productivity in the French plants and also to handle the excess capacity that we had, such as we had in a German plant at the end of last year. That is a project that is going well, and that is improving productivity within Europe for Pont-à-Mousson. As I said, Pont-à-Mousson has become a very small player, an average-sized player internationally.
With that in mind, to flesh out Pont-à-Mousson's industrial project in the future, we have decided to think about possible partnerships, partnerships for capital, for sales. We have started to talk with our trade unions about the possibility of this. We will be looking at some of the possible projects in the future so that we can help Pont-à-Mousson. There is no deadline for this. We hope that we're going to be able to go as rapidly as quickly, hopefully before the end of the year. As I said, there is no official deadline to all of this. What is important is the quality of these new programs and the fact that they will strengthen Pont-à-Mousson so that we can take advantage of the considerable know-how and skills that are already there. A lot of discussion, but nothing more than that. Question number three, please.
Yes, Gérard Delpech, thank you for having partially answered my written question. You talked very briefly about the EUR 2 billion in asset impairment this year. What I'm surprised about is that they appeared all of a sudden and that over time, your asset impairment did not happen more progressively rather than having this sudden, huge impairment to do. It makes me a little worried about the future because in five years' time, when you tell us that there are a certain number of billions in assets, that will be changing the group's performance. First of all, this asset depreciation, this breakdown, if you like, is an accounting thing, nothing more. It doesn't reflect the operations of the group. Sreedhar, can you tell us exactly how we do that? Yes. As you know, every year, we do impairment tests.
All of this is under the watchful eye of the statutory auditors and of the audit committee. In Transform & Grow, we take the current situation and the outlook, which is not quite as good, and that is what has led us to this impairment in 2018. A lot of this comes from Great Britain, as I explained. Great Britain, over the last two years, has been struggling because of Brexit. We had to write off EUR 750,000 of goodwill. The second case that I also talked about was La Paire, which is also in difficulty. We had to write off EUR 370 million. Of course, the pipe sector that Pierre-Henri has just talked about. There too, we have restructured a lot of things because it was quite clearly necessary. We have shut down a plant in China, another one in Germany.
It was difficult to justify the asset value of pipes in our books. It's not something that has been sudden. It's just a somewhat singular situation in 2018. Question number two. The microphone is not working. My first question. Mr. Trump has just declared war against Mexico. We also have the vision of a hard Brexit. How is Saint-Gobain going to defend itself in this world? I also want to know, are you using some diamond flat glass in the cockpits in your iron nautical industry? If so, is that not dangerous if the portholes should explode or the windows in cars? My third question concerns the Swiss company Sika. You also sold off a German plant. Can you tell us why? Also, tell us something about your adventure in Vietnam for the children of Vietnam, for which I thank you very much.
Thank you very much. That is rather a long list of questions. I understood the last one. It's not a question. You were actually thanking us for what we did in Vietnam. First of all, Mexico. As with many others, I am one of those who has great difficulty in following the thought process of the American president when it comes to sales. He seems to be tweeting every which way every day. I don't know whether we can actually talk about a sales war against Mexico today. Not long ago, he was very proud to have signed an agreement with Mexico. I don't think that there is a commercial war with Mexico for the moment.
If there is an increase in customs duties between Mexico and the States, yes, it's true that we've got activities in Mexico that partially export to the States, but a lot of what we produce in Mexico, we also sell to Mexico. For car glass, they are equipping cars that are often exported to Mexico, but the manufacturers have told us that they could be exported elsewhere should there ever be a change in the American policy. What would we do if that were the case? I think that the pesos would drop compared to the dollar, and we normally sell in dollars in Mexico. The impact on our accounts wouldn't necessarily be dramatic. I think also, given the fact that the United States and Mexico are inherently joined at the hip, I don't see that type of policy lasting for very long.
No, I don't think you can talk about a commercial war. The American administration basically wants to make a difference concerning immigration policies. For Brexit, I think I always mentioned that last year. The impact of Brexit on Saint-Gobain has already occurred for the most part. In the week following the referendum, we have about 10% of Saint-Gobain's activities in England, and on each of our balance sheets, we had 10% less. I don't think we will ever get that back. If there were a hard Brexit, I think we will lose even more. For the rest, we have very few activities that are based on exchanges between both sides of the channel.
The last impact of Brexit for us is to know whether it's going to have negative consequences on our activities in Great Britain because our activities in Great Britain produce or manufacture in Great Britain and sell in Great Britain. There are a lot of uncertainties, but I see a situation that is far from being clear. For plasterboard, things are going well, but I think, unfortunately, that in the case of a hard Brexit, in the short term, it will be extremely negative for the British economy, and we will see economic activities that will falter. In the London region, it's particularly difficult, particularly for building. It's a little bit easier outside of London. In fact, it's done slightly better than what we thought, largely because prices were good, but volumes have started to drop.
There is not much that I can do about it, but I do not think that we are too closely involved in Great Britain. The things that will have a true impact on Saint-Gobain is the overall British economy. You have asked us about our glass products in the aeronautical industry. We do glass for the cockpit, not for the windows. The first time our diamond glass was used, it was used in the Pyramid of the Louvre. We are very proud about that. It is used for the amount of light that it transmits. We have several layers of glass in the cockpit, and there is always the danger of a cockpit glass shattering, but it does not necessarily mean that this diamond glass is harder. It is just more transparent. There have been a lot of tests done, so rest assured you can continue to fly in planes.
Now, on Sika, you were wondering exactly what our intentions were concerning their participation. Strategically, we did not manage to do what we wanted, but to exit a very difficult legal situation in Switzerland, we signed an agreement that has materialized in a very fine financial operation. As Sreedhar mentioned earlier, the operation has got better and better. It was a very complicated agreement. I talked to you about that last year, but we have a period of two years in which we cannot do anything with that stakeholding. In a year's time, we will decide exactly what we will do. We are cooperating with Sika, although it is not an easy cooperation. Why did we sell off our German distribution?
We did that because we had a market share that was, quite frankly, insufficient, and it was very difficult for us to actually acquire anything in that country, and it has been for the last 20 years. Secondly, because the business model in distribution in Germany is different from the business model in other countries. A lot of the products that we distribute do not go through agents. They go through what we call direct sales, and the margins in Germany are extremely low. We wanted progressively to transform that business model so that it would resemble ours, such as is the case in the Nordic countries or in England. The structure of the German market made that very difficult. It meant that we had an activity that was with very low margins.
In distribution, the thing that is most important is the local market share, the proximity to your client, which is enhanced when you work via agents, as you saw with the Portier, which is a company that is entirely different. That is why we sold off our distribution activity in Germany, which will have a mechanical impact on the group's profit margin. I think it'll improve our profit by 0.3%. I think that was it. I'll move on now to question number one. Thank you. Ladies and gentlemen, my name is Gilles Marmont, and I am an individual registered shareholder. My question is the following. Saint-Gobain designs reliable and innovative solutions for building and for flat glass.
Following on from the Notre-Dame de Paris fire, which is a church that was classified as in natural heritage and which is visited by millions of tourists every year, many companies have offered their aid in the restoring of Notre-Dame. What has Saint-Gobain done faced with this catastrophe? Were you touched by it? Have you done anything about it? Have there been any in-house meetings? Could you imagine some of your products that might be able to be used in the restoring of that cathedral? Thank you very much in advance. Thank you for that question. Yes, Saint-Gobain immediately reacted.
The very next day following that appalling tragedy, we sent out a press release that we thought that we would be more useful actually offering a form of patronage when the time is right on subjects where we might be able to help based on what is finally decided, and particularly for their stained glass. We manufacture. We have a stained glass factory in Saint-Just, which is one of the last ones in Europe. You know that, unfortunately, a certain number of Notre-Dame's stained glass windows were very badly damaged in this catastrophe. We informed the state that we would be available to help. We do not quite know how, but that is what we would like to help with in the future. Thank you very much. Question number two. Chairman, ladies and gentlemen, you are talking about transforming Saint-Gobain.
What about the selling off of POINT. P Public Works? Will we be able to keep those shares through the employee savings plan, all of those employees that are going to have to leave? For POINT. PTP, which is our public works activity, which is one of the companies of Saint-Gobain Distribution in France, it is true that we are planning on selling off that activity given the very poor synergies with the other distribution channels of Saint-Gobain in France. Yes, we are planning disposing of that. Discussions are ongoing, and I cannot actually tell you anything more about that for the moment. As concerns the employee shares, on the employee savings plan, obviously, if you leave the group, you do not have to sell off your shares.
However, for any of the operations that are done when the group is offering new share issues to employees, that will not be available in the future for companies that have left the group. Question three. Yes, good afternoon. Marjane Pasquet. I founded the shareholder minority shareholder.com, and I became a Saint-Gobain shareholder because I opened your convening notice. In your first sentence, you said, "2018 has been a positive year for Saint-Gobain." As I was hearing nothing but somewhat negative information about your company, saying that other companies saying that they had a bad 2018, I started to look at Saint-Gobain. I was very surprised. I am just wondering whether you are not being somewhat misleading when you say that 2018 was a good year. You began the year with a stock price at EUR 45.50, and you ended up at EUR 29.
That is a drop of 35% when the CAC 40 only dropped by 11%. I do not think that you have much to crow about. You also talked about that impairment of EUR 2 billion, which probably explains these bad results. You said that the stock market dropped because it was the sector that is not doing very well. You passed off an impairment of EUR 2 billion, but you said it is just impairment. It is not operational. Excuse me, but I am a little lost. If you buy an apartment at the beginning of the year for EUR 1 million, and at the end of the year, it is only worth EUR 800,000, you have lost EUR 200,000. I think that you are not entirely honest when you say that. Thirdly, your financial structure. You say that it is solid. You say that it is solid. It is true.
You're BBB , so it is getting worse because when I look at the figures, and you've got them in your convening notice, in 1995, you had a debt that represented 25% of your equity. At the end of 2017, 32%, and 45% at the end of 2018. There is a little drop in equity. Your debt has changed, but it seems to me that that is a slippery slope. We've seen the same thing with Casino, with other companies as well. That slippery slope goes very quickly. All you need are two bad years, and all of a sudden, things are very difficult. Last year, you signed an agreement with Sika. Again, is that a very positive one? You've got 10.75% of Sika, which is about EUR 2 billion cash flow that is sterilized in your stakeholding, and you don't do very much as a partner.
You have made capital gains, yes, but next year, when you sell off, if you sell off, if you have not signed any agreement, selling off is again going to undermine your share price or the share price. I see things in a somewhat blacker way than you do. You are also going to be paying out a dividend. I am very sorry for the shareholders who are here, but I do not think that this dividend is the best thing that could happen. You are also going to be asking them to vote on share buybacks at EUR 80, whereas it is only worth EUR 30 for 10% of the capital. You said that, "Yes, but we are not going to use it." If you do not use it, there is no point getting your shareholders to vote on it. I am sorry.
I know that this assembly is a very friendly one, and I even nodded off a little bit during what was said. It's a very beautiful company with very good products. There are still things that I need to point out. Monsieur de Chalendar, particularly, I wanted to talk about your succession. You are 61 years old, and you could, if you wanted to, retire. Sorry, but you can only retire at 67. You started quite late. You did Lénard, and so you're going to be able to leave with a sumptuous redundancy plan only in four or five years. What are you envisaging? Are you going to stay at the head of the group? Are you perhaps going to accept to just become a president and then maybe give the CEO job to somebody else? My last question, coming back to asbestos.
Last year, somebody asked a question about asbestos, and you just said to that person, "Go back and read the document." You have a provision of EUR 1.3 billion for asbestos litigation. I have seen recently this year that there was a case in France before the Prud'homme that you have just lost. 130 of your employees, just a few weeks ago, asked you for EUR 20,000 for a claim of anxiety, which is not very much, but I wonder whether you're going to dare appeal that. Thank you very much.
Alors, il y a beaucoup de choses exactes dans ce que vous avez dit. Il y a un certain nombre d'erreurs. Et puis, il y a des.
There are some things that are true in what you said, some that are wrong, and some that have nothing to do with us. The share price in 2018, you're quite right.
I said that that was disappointing in 2018. However, the link between that and the impairment is wrong because impairment was done in February, and since the beginning of the year, the share price has increased by about 15%. There is no link at all between the 2018 shares and share price value and the depreciation. Thirdly, you talk about our financial structure. You say that it is worsening, but actually, it has slightly improved. If I judge by the way we assess it, we've got our rating, which is BBB. It's one that we've had for a long time. Within the solvency ratio range that the rating agencies use, BBB. is actually Standard & Poor's. Moody's has a slightly different assessment, but our ratio improved in 2018, and this quite significantly. Our financial situation has improved rather than anything else.
We do not have any covenants because our debt is mainly in long-term bonds. Now, for Sika, we do not have EUR 2 billion in sterile cash flow. What was it? EUR 930 million that we invested there. We gave you the market value there, and I have already answered the question concerning our intentions. I cannot tell you about the intentions today because in the agreement that we signed, we have a waiting period of two years, and we will see afterwards. Afterwards, the dividends and the share buyback, you gave the answer in your question. The board has no intention of buying back shares at EUR 80. We have bought 6 million shares over the first months of the year, and that corresponds to the new issuances of the group savings plan, and we have done roundabout 32, and this at EUR 32 per share.
If you talk now about my term of office, it is indispensable that I be in the board, and the fact as to whether I could retire with full rights, that is none of your business. That is my business. I can tell you that if the board were to decide, that is not something that will be taken into account at all. The asbestos provisions, it is about EUR 540 million, I think. EUR 540 million. For the ruling, yes, of course, we are going to appeal. Antoine, you might want to add something there. I have not been able to read that sentence that was handed down by the court, but it does not comply with the Court of cassation's latest case, the jurisprudence, which says that you have to prove individual exposure of each employee.
This dates back to over 20 years, and the decision was simply applied collectively to all of the employees, but it was not necessarily proven that there was exposure or not.
Bonjour, Daniel Prémont.
Daniel Prémont, I'm a shareholder. Good afternoon. First of all, congratulations to the board of directors, to the management, to the researchers, to the engineers, to all the people who have been involved in the greenhouse gas reductions. It's very exciting what you can read in the report, very innovative. However, there is a reference to a 2% increase in COP21. If I remember right, it's 1.5% in COP21, but the future objective is 3%. My question is the following.
Have you done some research in materials that could be or are at present marketed by Saint-Gobain in order to reduce heat exposure in the apartment, which is at risk to become higher and higher in the next few years? Could we use this heat in order to heat the apartments? Thank you very much. You know that in the COP21 topics, it's either 2% or 1.5% if possible. I don't know exactly what is written in the annual report. Unfortunately, in view of what all the countries are doing, most countries are doing right now, it's not going to be easy to achieve this 1.5% objective. Concerning exposure to heat. Yes, indeed. It's one of the functions of our insulating glasses.
Those glasses, flat glasses, aim at preventing heat from coming into the apartment in the summertime or in the wintertime to prevent heat in the apartment from getting out of those apartments. The first layer is a solar control layer, and the second layer is called a low-emission layer. Yes, of course. We propose to our customers solutions in order to mitigate the exposure to heat. Of course, we sell a large number of solar prevention flat glasses to countries where the sun shines all throughout the year. The opposite is true of cold countries. We do not sell a lot of these flat glasses, but we sell to those cold countries glasses or flat glasses which are able to retain the heat. We do not install the same glasses where the exposure is on the north side or the south side.
Can we keep or capture this heat coming through the flat glasses? It is a very interesting topic. We have what we call passive housing. The whole set of thermal solutions proposed by Saint-Gobain aims at having houses which are called passive. They do not consume more energy than they produce. Recovering or the recovery of heat coming through the flat glasses is a very interesting idea. In the past, we had a glass-based solar panels activity. It was our photovoltaic activity. I am going to ask that question to our researchers. I am going to ask them to look into the topic. There was a Canadian solution for piping in order to recover heat and recycle the air through that heat. The applications are limited for the individual housing. Your question is very interesting.
Unfortunately, at present, we have not only to fight against climate change, but also we have to think about adaptation to this climate change. Thank you very much for this question. We're going to work on that. Number three. Number three. Good afternoon, Monsieur de Chalendar. Good afternoon, Madam. I'm very glad that you finally found a name for this glass, the Louvre glass. I'm very happy that you finally found a name for that. I may have an idea for you. Maybe we should use the LVMH skills, and you should sell your glass at the price of a Vuitton bag. Yes, they're very, very skilled at that. Your former chairman could give you the details about how this escaped to the Germans. The Germans couldn't get their hands on that worksite, which was delayed because of that.
Concerning your technical skills in glass, I would like to talk about your advertisement. You use a welder welding at the pyramid bars in order to illustrate the qualities of the Saint-Gobain glass. Maybe you should change that advertisement. I know how the Louvre pyramid has been built, and I know all about the details. I'd like to come back to a more serious topic. The CFO has been replaced, and the Managing Director has been replaced. It's not very pleasant to see that Saint-Gobain has spent EUR 532 million in order to buy back shares and incurring a high level of debt doing so. I had mentioned that topic, and I understood that the share has been bought back at EUR 42. Maybe it was to increase the share price for vendor.
I don't know whether this was the purpose, to increase the share price and in order to make people exchange their shares for bonds. Anyway, it's a serious matter. To get into debt in order to buy back shares is not a good idea. What is the average price for this EUR 532 million? At the time, it was EUR 42. I think you are asking a question about buyback of shares. Otherwise, you make some other comments, but it was not a question. Buyback is a really complicated subject. Some shareholders would like us to buy back shares, and some other shareholders do not like share buybacks. It is complicated. As you know, we have issued a lot of new shares in a challenging period for the group, 2009.
We had made a commitment, which was to stabilize this number of shares and to decrease progressively this number of shares, knowing that each year we issue a certain number of shares for the employee saving plan of the group. I do not think it is very sound to increase the number of shares. As of the first quarter of 2019, and the share price is EUR 32 or EUR 33, we have bought back the number of shares equivalent to the share capital increase. Last year, we had 13 million shares, and we had bought a little more. I do not remember the share price. We have what we could call an opportunistic policy or approach. The group has indeed increased its debt last year. However, we have acquired the Sika securities.
Now, you're telling us that it's because of our buyback program, whether we have also issued shares for the Saint-Gobain employee saving plan. I don't know whether you can really say that it's jeopardizing the financial balance of the group. Anyway, we are discussing that topic on a regular basis at the board meetings. I think it's not a good idea to increase the number of shares. We will continue to have such an opportunistic approach. We want to progressively decrease our number of shares, but our approach is going to be moderate. I have taken note of your concern, and other shareholders have the same concern. Number two. Good afternoon. Louis Motte. I am an individual shareholder. I've been for the past 30 years with the registered shares. The share price is not very high. You've just sold your distribution platform in Germany.
Do you think this is going to be harmful for the sale of the products that you manufacture? For instance, the product we have been presented. If the answer is no, don't you think that in the future you should ask questions about your building distribution business line? The craft people really appreciate that business line. If you close down that business line, it could add to the value of your group, which is a high-technology group. Your group is harmed by the sale of those accessories for craft people. Sika has made great performances. It's a high-technology group like you are, but Sika has no building distribution sector. If you gave up this building distribution sector, I think that the Saint-Gobain share price would skyrocket. Now, it's an interesting question. We've discussed our portfolio of activities. I don't have any taboos about that.
I'm open about that. The distribution business line exists in the group, but it has to be assessed according to our strengths in each country. I have given you an answer in Germany, but on the opposite, our distribution business line in France is a great asset for our group. First of all, the profitability is in line with the group's profitability, and it will increase this year, I believe. Margins are lower, but the assets are different. You say those are not high-tech products, but Sika products can be found at POINT.P just as the Saint-Gobain products. Distribution business line or sector is a key asset in France in the value chain for building materials. It is more an asset at its advantage for the group than a liability for the group, but not in all the countries. You're right.
It's very important to assess that on a case-by-case basis. The opposition between distribution and industry is obsolete. There is a complementarity between both sectors in the framework of the value chain induced by the digital business. We are thinking about that topic, and we're very open about that. Number one. Good afternoon. I am a shareholder with Bera Shares. I would like to ask a question to Mrs. Idrac. I do understand that fixed compensation is more important for the CEO than for the COO. I do understand the need to have a cap for fixed compensation. It is reflected by a percentage. Why is there such a percentage difference between the CEO and the COO? 170% versus 110%. We are talking about fixed compensation. I do not understand the difference between the percentages. I would like to understand the rationale. I'm not going to ask Mrs.
Idrac to answer that question, but I think she already answered the question in her presentation. She said that analysis had been made, including or taking into account all the benchmarks. This is why the board has made this decision. The COO is very happy with his compensation. Maybe he will take that into account in his demands for the future. I haven't dealt personally with that topic. I don't deal with Benoit Bazin's compensation. It's up to the Compensation or Remuneration Committee to do that. Yes, indeed, I confirm what you're saying. We took into account the benchmarking that has been done for the COO operating or having duties in the various French groups at the level of the CAC 40. This is why the committee made that proposition, which has been presented to you. No more questions. One question, number one.
One last question, and then we'll move over to the vote. My name is Lucie. I'm an individual shareholder. I would like to know whether you lobby for the energy saving rehabilitation in order to have a consistent and sustainable system and to inform people about the importance of that topic. Also, welcome to Monsieur Bazin. I think you could sing Françoise Hardy's song, which is called "Étonnez-moi Benoît, surprise me Benoît." It's a well-known song in France. Now, the answer to your first question is yes. Sometimes I was successful, and sometimes I was less successful as far as energy rehabilitation is concerned. It's a very fine national cause. It creates local jobs. It contributes to the fight against climate change. It means savings on the energy bill for France. Everything is in line here.
There are topics on which we make a lot of progress, and some topics we make slower progress. I'm rather happy about the overall development, but it's very complicated. Distribution brands play a very important role to train people, to train customers, and inform them and make them understand that they can get some subsidies, but it's very complicated. I think it would be better if the situation was more stable. I have the feeling that the result of the European election is rather positive as far as this topic is concerned. Now, let's move over to the vote of the resolutions after confirmation of the final quorum, Antoine. I can give you the final figure of the shares which are present or represented at this assembly. 60.07%, quite enough to vote on the resolutions.
Concerning the practical conditions of this, first of all, we are going to look at a short film in order to understand how you are going to vote.
Bonheur. Le boîtier qui vous a été remis à l'issue de l'émargement est strictement personnel. Le nombre de.
You have received an electronic device which is strictly personal. The number of votes that you have is downloaded in your personal device, and you only will use the yellow, red, and green keys. The green key is yes. The yellow key is abstention, and the red key corresponds to a no vote. After having read each resolution, the vote is going to be organized right afterwards. The vote is open. You will see on your screen a rectangle indicating the countdown, the number of seconds that you will have to cast your vote.
When the countdown is over, you will see the vote is closed, and you will not be entitled to vote any longer. The display of results is going to be on your screen a few seconds after the vote is closed. Thank you for switching off your mobile phones or doing out the vote, and please give the electronic device back to the hostess when you get out of the room. The vote is going to be organized for each resolution. I'm going to read out a summing up of the resolution, and it will appear on the screen. First resolution: Approval of the company's non-consolidated financial statement for 2018. The vote is open.
Le vote est clos.
Vote is closed.
La résolution est adoptée.
The resolution is adopted. 99.89%. Second resolution: Approval of the company's consolidated financial statements for 2018. The vote is open.
Le vote est clos.
Vote is closed. Resolution is approved. 99.82%. Third resolution. Affectation du. Appropriation of income and determination of the dividend. EUR 1.33 per action. Vote is open.
Le vote est clos.
Vote is closed. The resolution has been approved. 99.55%. Number four: Renewal of Mrs. Anne-Marie Idrac's term of office as director. The vote is open.
Le vote est clos.
The vote is closed.
La résolution est adoptée à 97.17%. Cinquième résolution.
Fifth resolution: Renewal of Mrs. Dominique Leroy's term of office as director. The vote is open. The vote is closed. The resolution has been approved. 88.79%. Sixth resolution, and I would like to congratulate Mrs. Leroy for the renewal of her term of office. Renewal of Mrs. Dominique Leroy's term of office as a director. The vote is open.
Le vote est clos.
The vote is closed. Resolution has been approved. 93.40%.
Congratulations to Monsieur Renc. Seventh resolution: Renewal of Mr. Jacques Pestre's term of office as director representing employee shareholders. The vote is open. The vote is closed. The resolution has been approved. 99.42%. Congratulations to Mr. Pestre. Eighth resolution: Approval of the components of compensation paid or granted to the Chairman and Chief Executive Officer, Mr. Pierre-André de Chalendar, in respect of 2018. The vote is open. The vote is closed. The resolution has been approved. 93.94%. Ninth resolution: Approval of the components of the compensation policy of the Chairman and Chief Executive Officer for 2019. The vote is open. The vote is closed. Resolution approved. 86.75%. Tenth resolution: Approval of the components of the compensation policy of the Chief Operating Officer for 2019. The vote is open. The vote is closed. Approved. 96.79%.
Eleventh resolution: Approval of the commitment to pay compensation for loss of office and other benefits to Mr. Benoit Bazin in the event that his term of office as Chief Operating Officer is terminated under certain circumstances. The vote is open. The vote is closed. The resolution is approved. 93.57%. Twelfth resolution: Approval of the post-employment benefit obligations towards Mr. Benoit Bazin. The vote is open. The vote is closed. Resolution has been approved. 98.87%. Thirteenth resolution: Approval of the decision to allow Mr. Benoit Bazin to continue to be covered by the death, disability, and health insurance plans for employees of Saint-Gobain in his capacity as an executive director. The vote is open. The vote is closed. The resolution has been approved. 99.90%. Fourteenth resolution: Authorization given to the Board of Directors to trade in the company's shares. The vote is open. The vote is closed. Approved.
99.78%. Fifteenth resolution.
À l'effet de procéder avec maintien du.
Delegation of authority granted to the Board of Directors to increase the share capital through the issue of preferential subscription rights for existing shareholders representing approximately 20% of share capital. Votes are open.
Le vote est clos.
Voting is closed. Adopted. 99.28%. Resolution 16: Delegation of authority granted to the Board of Directors to issue without preferential subscription rights for existing shareholders but with the possibility of granting a priority period for such shareholders by public offering with a limit of 10% of share capital. Voting is open.
Le vote est clos.
Voting is closed. Adopted. 95.63%. Seventeenth resolution: Delegation of authority granted to continue without preferential subscription rights for existing shareholders through private placement in the limit of 10% of equity. Voting is open.
Le vote est clos.
Voting is closed. Adopted. 92.07%.
Eighteenth resolution: Delegation of authority granted to the Board to increase the number of securities to be issued in the event that the issuer shares with or without preferential subscription rights or securities giving access to the share capital is oversubscribed in the fifteenth, sixteenth, seventeenth, or twenty-second resolution.
Le vote est clos.
Voting is closed. Resolution adopted. 92.32%. Resolution 19: Authorization to increase share capital without preferential subscription rights excluding any applicable adjustment with a limit of 10% of social capital.
Le vote est clos.
Voting is closed. Resolution adopted. 96.05%. Twentieth resolution: Delegation of authority to increase the share capital through the capitalization of share premiums, reserves, profits, or other amounts up to a maximum nominal amount of 5% of the share capital. Voting is open. Voting is closed. Passed. 99.89%.
Twenty-first resolution: Authority granted to set in accordance with the terms determined by the shareholders meeting the issue price by the company of shares or securities giving access to the share capital without preferential subscription rights in the limit of 10% of social capital for a period of 12 months. Voting is open.
Le vote est clos.
Voting is closed. Adopted. 96.25%. Resolution 22: Delegation of authority granted to the Board of Directors to carry out equity or equity-linked securities issues without preferential subscription rights reserved for the members of the employee savings plan up to a maximum nominal amount representing 2.2% of share capital. Voting is open. Voting is closed. Adopted. 98.12%.
Twenty-third resolution: Authorization given to the Board of Directors to grant stock options exercisable for existing or new shares without preferential subscription rights representing up to a maximum of 1.5% of the share capital with a maximum of 10% of this limit for executive directors of the company with this limit of 1.5 and some amount of 10%. Voting is open.
Le vote est clos.
Voting is closed. Passed. 96.46%. Twenty-fourth resolution: Authorization given to the Board of Directors to grant free existing shares representing up to a maximum of 1.2% of the share capital with a maximum of 10% of this limit for executive directors of the company with a sublimit of 10% for the directors of the company. Voting is open. Voting is closed. Resolution passed. 95.47%.
Resolution 25: Authorization given to the Board of Directors to reduce the share capital by cancelling company shares representing up to 10% of the capital of the company per twenty-four month period. Voting is open. Voting is closed. Resolution adopted. 99.63%. Twenty-sixth resolution: Last resolution powers to carry out formalities. Voting is open. Voting is closed. Adopted. 99.94%. The agenda: We have come to the end of our agenda. It is eight minutes past six. This meeting is adjourned, and I would like to invite you to our next shareholders meeting, which will be held on the fourth of June 2020 in a new place, La Salle Pleyel Could you please use the Vote Access Internet platform, which allows you to use all of the participation, all of the tools to participate in the next assembly, consulting documents, and so forth?
I suggest now that we end this day with a cocktail together. Could you please not forget to give back your voting devices to the hostesses who are at the back of the room? Thank you very much, and good evening.