Carlsberg A/S (CARLB) Earnings Call Transcript & Summary

[Interpreted] Dear shareholders. Welcome to Carlsberg's Annual General Meeting, both those of you who are present here today, here in the wonderful room of the Glyptoteket and welcome to those of you who are following the meeting via webcast. Nothing is normal these days. We're all shocked by what has happened in the world since the 24th of February. So today, before we start with the formal part of AGM, I want to address the terrible war and humanitarian crisis unfolding in Ukraine. Both as an individual, as the Chairman of the Board of Directors of Carlsberg, on behalf of the employees of Carlsberg, we are shocked and deeply moved by the several events in Ukraine. It's difficult to find the right words for this huge tragedy that's going on. There should be no doubt that we stand with Ukraine and the rest of the world in strongly condemning the Russian invasion. At this terrible time, our first and foremost priority is the safety of our 1,300 Ukrainian employees. That's why on the 24th of February, we closed our 3 breweries in the Ukraine so that our employees could concentrate on the safety of themselves and their families, not worried about work. We do pay them salaries, and we advanced their bonus payments, too. In addition, we have taken a number of initiatives to help as much as we can. We have arranged for transport. We have set up safe places of refuge, including at the Lviv brewery. Our warehouse has been transformed into a reception center for refugee workers and their families. We started producing bottled water at our breweries, and we've donated the water to citizens in need. In addition, our stocks of barley, for instance, has been given so that people can bake bread from it. So -- and our staff in Ukraine and Poland are doing a fantastic job providing humanitarian aid. So in cooperation with the Carlsberg and Tuborg Foundations, Carlsberg donated DKK 75 million to support humanitarian work in Ukraine. Carlsberg has also, at the request of the employees, launched a fundraising campaign where employees can make donations to Red Cross and Carlsberg will match the amount raised. Over the past week, we've been asked a number of questions concerning our activities and presence in Russia. We strongly condemn the Russian actions in Ukraine, but we also feel a big moral obligation towards our Russian employees. We have been -- as all of you know, we've been owners of the Russian business, Baltika, since the year 2000. All these employees have worked with dedication for Carlsberg, sometimes under very difficult conditions. They are in no way responsible for the actions of the Russian government. On the contrary, they're grateful to work for Carlsberg, which is known for honesty, fairness and a culture based on strong values. But we are also very much aware that this is not business as usual. Shortly after the Russian invasion of Ukraine, we announced that we are stopping new investments and exports from other group companies into Russia. Since then, we have stopped all our efforts sizing activities in the country. We've also stopped all production and sale of the Carlsberg brand in Russia. We've decided to completely segregate the Russian business. So it's now an independent business unit with a clear objective of supporting our 8,400 local Russian employees. Any profits generated in Russia will be donated to independent humanitarian organizations. The situation in Ukraine and Russia means that Carlsberg is working intensively to analyze what the consequences should be, both for the local activities and for the Carlsberg Group as a whole. That was also the reason why Carlsberg had to suspend its earnings forecast for the year on Wednesday last week. Our Group CEO, Cees ´t Hart, will address this in his report. We're looking into a very uncertain future. Carlsberg management is assessing, on a daily basis, the changes that are taking place. And whether that means that we should take different actions in Russia, but we always have the safety of our employees in mind. The situation in Ukraine affects us all very much. So let us start now on the formal part of the agenda. According to Article 23 of the Articles of Association, the Annual General Meeting is presided over by our Chairman Elect by the Supervisory Board. And I began -- we have again this year asked [indiscernible], attorney at law, to chair the AGM. But I'd like to show you who is up here. Next to me is [indiscernible]; then the company's CEO, Cees ´t Hart; the CFO, Heine Dalsgaard; the Deputy Chair of the Supervisory Board, Henrik Poulsen. My name is Flemming Besenbacher. I'm the Chairman of the Supervisory Board. The other members of the Supervisory Board are Carl Bache, Magdi Batato, Lilian Fossum Biner, Richard Burrows, Lars Fruergaard-Jørgensen, Søren-Peter Fuchs Olesen, Majken Schultz and Lars Stemmerik. They are all elected by the AGM in 2021. In addition, the employees have elected 5 members; Hans Andersen, Eva Vilstrup Decker, Erik Lund, [indiscernible]. And with this introduction, I give the floor to our Chairman of the meeting, Mr. [indiscernible]. You have the floor.

[Interpreted] Thank you very much. My first job has to do with dealing with some household details and safety details. In case of fire, the fire alarm will be activated. There will be an alarm sound. At the same time, all the guards will be notified via the radio system of the museum. Of course, there are no fire drills planned for today. So if there is an alarm, it's not a drill. You need to leave the building through the escape routes or alternatively to follow the directions given to you by the guards. You will be asked to go outside to the place in front of Glyptoteket and wait for permission to enter the building. Again, there is also a defibrillator in the building and staff has received first aid training. That was safety. Then we have the more practical details. Toilets, also for disabled, are found at the lower floor near the cloakroom and ticket sale and at the entrance to the French painting section of the building. If you want to leave the room during the AGM, you must bring along your admission card, at least if you intend later to go back to the meeting. The meeting is live streamed on the company's website simultaneously with the AGM here in this room. The meeting is also recorded for the purpose [indiscernible] preparing the minutes. If you want to take the floor as a shareholder later when we have the possibility for Q&A, you are kindly invited to come to the first row on the right-hand side of the room, where there are special seats reserved for you. You have to show your admission card and your ballot slip to [ Sophie ]. [ Sophie ], would you please stand up, so people can see you? There you are. And shareholders doing this will be -- have their names entered on a list, and I will get this list, and then I will introduce you. And this will be done by me inviting you in the order in which your names appear on the list. If you don't wish to be filmed, because we do have the live streaming of the meeting, then please tell [ Sophie ] this when you approach her because in that way, we can give you a microphone and you can then remain in your seat in the first row. Members of the press may take photos and film after the AGM, but you cannot take photos, film, audio files during the meeting. If you see any photographer in the room violating this rule, then, well, it may be the official photographer of Carlsberg, who is actually doing what he has been asked to do. First of all, I have to verify that the meeting has been duly and lawfully convened and is quorate. The convening notice and the agenda including complete proposals were published on the company's website on the 11th of February 2022. It has also been sent to shareholders who have registered their e-mail address in the register of shareholders by mail. According to the Danish Companies Act and the Articles of Association, the Annual General Meeting has been convened with no less than 3 weeks' notice. And also on the January 12, 2022, that is with a minimum of 8 weeks' notice, it was announced when the meeting would take place and the final submission date for proposals. All of this in accordance with the Danish Company (sic) [ Companies ] Act. Also, the following documents have been available on the website of the company since the 11th of February, and this is in accordance with the Articles of Association and the Danish Companies Act, the convening notice including the information about total share capital and voting rights, documents to be presented to the general meeting, agenda and complete proposals, forms concerning proxies and postal voting. And also the annual report 2021 has been available on the company's website since the 4th of February this year. The agenda of today's AGM is in compliance with Article 24 of the Articles of Association, which allows me to verify that the general meeting has been duly and lawfully convened and has been convened in the correct manner. We have an agenda today, and there is nothing in the agenda that requires a specific part of the share capital to be represented in order for the meeting to constitute a quorum. So it is my opinion that we constitute a quorum and the meeting has been duly and lawfully convened. But if there are any objections to this, now is the time to raise your hand. That doesn't seem to be the case. There are no objections, so we will proceed. First, let's have a look at the agenda. The first item is report on the activities of the company in the past year. Number two, presentation of audited annual report for approval and resolution to discharge the Supervisory Board and the Executive Board from liabilities. Three, proposal for distribution of the profit for the year, including a declaration of dividends for presentation of an advisory vote on the remuneration report for 2021. 5A, approval of the Supervisory Board's remuneration level for 2022. 5B, proposal to reduce the company's share capital for the purpose of canceling treasury shares. 5C, proposal from the Supervisory Board regarding authorization to acquire treasury shares. And 5D, proposal from the Supervisory Board regarding authorization to distribute extraordinary dividends. Item 6, election of members to the Supervisory Board. Item 7, election of auditor. The agenda items may all be adopted by a simple majority of votes; however, 5D must be adopted by no less than 2/3 of the votes cast and of the share capital represented at the meeting. Right. Let's begin with Items 1 to 4, which we will deal with in one go as per usual. The first speaker is the Chairman of the Supervisory Board. You have the floor, sir.

[Interpreted ] Dear shareholders, this is my last report as Chair of the Board -- Supervisory Board of Carlsberg. I've chosen not to run again. As I said in my welcome, this is a sad background we have for this year's annual report, but I am pleased that we can meet here physically again in the wonderful room of the Glyptoteket after the corona pandemic. And you, Carlsberg shareholders, have turned up in numbers to be updated by our Carlsberg business and to be an active player in shareholder democracy. Over the last years, when I've talked about Carlsberg, I've talked about the 4 piece: profit, purpose, planet and people. And I'm proud to pass on Carlsberg because it has developed in all these 4 areas in my 10 years of Chairmanship. P for profit. Carlsberg over the last 10 years, especially since Cees ´t Hart took over as CEO in 2015 and Heine Dalsgaard took over as CFO in '16, Carlsberg has achieved very strong financial results despite the headwinds that Carlsberg has experienced the last couple of years because of the corona pandemic. Earnings per share adjusted for special items in the period from '12 to '21 has gone up by 34%. The return to shareholders has increased almost sevenfold. Dividend per share has quadrupled from '12 when the dividend was DKK 6, and this year, we are proposing DKK 24. In addition, Carlsberg had carried out share buyback programs since '12. Carlsberg returned $839 million to shareholders in the form of dividend. In '21, it was $6.8 billion in the form of dividend and share buyback. P for purpose, Carlsberg has a unique heritage and history with the Carlsberg Foundation as a long-term majority or main shareholder. Carlsberg's purpose is brewing for a better today and tomorrow. That's our purpose. And we have that throughout our activities. Our purpose means that we are working all the time for Carlsberg to develop and to create value for our shareholders, our employees and for society. We want to signal that Carlsberg is different from many other breweries, and we have very special reason for our existence. This is very much in line with the heritage from our 2 founders, J.C. and Carl Jacobsen and helps to commit our organization to something that's bigger. The strength has been seen very clearly in recent years -- recent weeks when the group's employees, at least locally in Ukraine and neighboring country, Poland, they've made a huge effort to help our 1,300 Ukrainian colleagues. The support initiatives taken are certainly in the spirit of our founders. It's also in their spirit that we're protecting our 8,400 employees in Russia. In addition to their strong responsibility, ethics and decency, Carlsberg's founders also put quality highest. And they were convinced that -- of the significance of science if you wanted to perfect the art of beer brewing. And J.C. Jacobsen, you can see it at Carlsberg, this is what he said. He said Carlsberg breweries' operation, the purpose must be without looking at the immediate benefit to look to develop production to the best possible level. So this brewery, their production always be a pattern and example showing that beer brewing is held, is maintained at a high and decent level. So this sculptor was an ambition for the brewery, create a better world. Another motto was semper ardens, always burning, always trying to reach the highest level of perfection and quality of our products. The linkage to science has always been there from the very outset, from 1875 when J.C. Jacobsen founded the Carlsberg Research Laboratory. When I took over as Chairman of the Board, one of my goals was to bring the laboratory back to its crucial role that it had when it was founded. But there's no doubt that the work and the [indiscernible] in the laboratory in recent years have been important contributions to the unique journey that Carlsberg has been on. Let me give you a few examples of that. Alcohol-free beer has made a long progress from where it was 8 or 10 years ago. Today, it's fantastic, it's a well-tasting product, and many people enjoy it every day. This development comes not least from the new yeast stems developed at Carlsberg laboratory and development of the new brewing technology where the lab has played a very important role. Another example is barley, where the unique competencies are the Carlsberg laboratory employees have contributed to new barley variants, including variants that extend the life of the beer and improve the taste for consumers, while at the same time, spending less energy in the brewing process. And the laboratory has also developed variants that are more productive, climate-resistant and environment-friendly. These are just a few cases, just a few cases [ in port ]. The Carlsberg Research Laboratory is also very active in genomics, breathing of barley, hops and yeasts and the development of new technology. So now we come to the P for planet. Since the launch of our ambitious sustainability strategy, Together Towards ZERO, 5 years ago, we have clearly reduced the group's CO2 emissions and water consumption. The starting point was in '15. We reduced our relative CO2 emissions by hectoliter being produced by 40% and water consumption by 21%. Looking at water, it's even more remarkable that the group's skillful employees have been able to reduce water consumption by as much as 35% in high risk breweries. Those are the -- in those areas where the water is a critical resource. At the brewery in Denmark in Fredericia, we only use 1.8 liters of water for 8 liters of beer. When our new water recovery system has been fully implemented, we'll get down to 1.4 liter by recycling 90% of our processed water. This will make the Fredericia brewery world leader when it comes to our water consumption. As an internal part of Carlsberg's new strategy SAIL'27, with our CEO, Cees ´t Hart will talk about in his report, Carlsberg will subsequently launch a new expanded sustainability program that will be called Together Towards ZERO and Beyond, it will be called. The new program will continue to focus on CO2, water safety and workplace and a responsible drinking culture. In addition, we will introduce 2 new focus areas, sustainable farming and packaging. We will set goals, and we'll report on the progress of these goals every year. And again, Carlsberg's Research Laboratory will play a crucial role. Carlsberg's work in sustainability is described in the ESG report that was published together with the annual report on the 4th of February. You also have seen the report on the Carlsberg Group website. It contains a detailed description of the group progress in recent years. ESG, that's environmental, social and governance, that's ESG. The ESG report also contains a listing of the financial contribution of the Carlsberg Group to the societies in which we operate, the taxes and duties generated by the group's companies and our employees. In '21, these taxes amounted to about DKK 40 billion. Carlsberg recognizes the legitimate interests of our shareholders and other stakeholders in openness in regard to the tax policy and tax payments of multinational companies. In 2020, we carried out a thorough review of our tax policy information about -- that we present for the general public. In '21, we carried out an examination of the possibility of publishing our tax reporting country-by-country. The conclusion of this examination was that until such a country-by-country-based tax reporting becomes a requirement from all companies in the industry, this will be a competitive disadvantage, considerable disadvantage for Carlsberg. But it's important for me to support -- to say that Carlsberg will also support openness in the field of taxes. So we've expanded the ESG report. We have reporting not country-by-country, but we have it by region. The last P for people. And this is also essential. I'm proud to report that Carlsberg has a very strong employee team at all levels from the top management, Cees and Heine, the remaining part of the Executive Committee, all the other leaders and the employees across the company's markets and central functions. One important priority in our strategy that we've pursued so far, SAIL'27 and the same thing in the new strategy of SAIL'27 is to ensure the Carlsberg has a winning culture, where managers and employees ambitiously with commission are committed every day to create value for customers, consumers, employees, local communities and Carlsberg shareholders. And now some general comments to Carlsberg's result for 2021 and, after that, something about good corporate governance and the remuneration policy for members of Supervisory Board and Executive Board. Our CEO, Cees ´t Hart, will in his report briefly describe the new strategy and go over the results for the year in 3 regions and for the group as a whole. On the February 4, 2022, we presented the annual accounts 2021. I'll briefly highlight some of the most important figures. Despite the continued challenge caused by corona, Carlsberg delivered results on many parameters in 2021 that were very good at a level with or even better than 2019, which was before the pandemic. As you can tell from the graphs behind me, this applies to revenue, profit on primary operations, net profit, cash flow from operations and return on invested capital. The return on invested capital measures the competency of a business to generate return on the capital and the assets used in operations. Here, Carlsberg delivered constant improvement in the period from '16 to '21 and this in spite of the major corona-related challenges appearing both in '20 and '21. In 2016, the return on invested capital came to 5.9%, but in 2021, it had risen to 10.3%. The impressive development of the group was driven not least by continued solid growth in Asia, including China. When I took over as Chairman of the Supervisory Board in '12, it was my ambition to increase our exposure in relation to Asia and, in particular, China that I knew very well from my scientific work. Asia has been and is still a considerable growth engine, and I'm proud to say that we have achieved a considerable increase in our business in Asia. Revenue of DKK 9.1 billion and a result on primary operations of DKK 1.7 million billion means that Asia contributed about 15% of our business in 2012. In 2021, revenue had more than doubled, DKK 19.5 billion. And even more impressive was profit on primary operations almost tripled to DKK 4.9 billion. As a result, Asia accounted for about 1/3 of consolidated revenue and about 40% of the primary profit on operations. These are fine results, and it means that the Board recommends to the general meeting that for the financial year 2021, a dividend of DKK 24 per share be paid corresponding to 49% of the adjusted net profit and thus in accordance with the company's dividend policy. Profit -- sorry, dividend per share for the year reflects an increase from the year before of 9%. Total payout is DKK 3.4 billion, which is taken from the company's reserves, which accounted for -- or amounted to DKK 32.2 billion as at the December 31, 2021. We made share buybacks in 2021, broken down on 4 programs, each of a 3-month duration. The first program was launched in February, the last one in late October, which meant that it ended in late January this year. Over the 12-month period, a total amount of DKK 4 billion was used for share buybacks. We also wish to do that in 2022 to return excess liquidity to shareholders. And in keeping with the process in 2021 and because of the continued high uncertainty related to both corona and the strong inflation and also the situation in Russia and Ukraine and prices of raw materials and consumer confidence in general, we have decided to use also 3-month programs this year. The first program was launched on the 4th of February, involving DKK 1 billion, and it will run until the 22nd of April. In Carlsberg, we work actively with good corporate governance, and we have published our statutory report on corporate governance and compliance with the recommendations from the committee for good corporate governance, which is accessible on the group's website. It appears that we meet the recommendations from the committee apart from 4 areas. First area is the announcement of quarterly reports. For the first and third quarter, we only published a so-called trading statement. The second area has to do with nomination and remuneration committees. Half of the members are defined as so-called independent members. The recommendation says 50% plus. The third area is the recommendation to the effect that a minimum of half of the Supervisory Board members of the -- elected by the AGM must be independent. The proportion was 40% in 2021. We now have some candidates we hope make us live up to this recommendation in 2022. The last thing has to do with recommendation of using external assistance in connection with an evaluation of the Board's work minimum once every 3 years. This did not happen in 2021. Every year, we do have evaluation of the Board's work and composition. All members reply to a number of questions about Board composition, cooperation with Executive Board, committees on the Board, improvement potential and so on. I have also, together with the Deputy Chair, had evaluation interviews with each individual member and also members of the Executive Board on the ExCom and then a total report is issued that follows up also on conclusions and proposals from last year's report. The conclusions in 2021 that there is high satisfaction with work on the Board with the work done by the Executive Board and the general condition of the company and the direction we are moving in. The Board has defined a number of targets for diversity on the Board with regard to international exposure and gender. With regard to international exposure, the target is for a minimum of half of the members elected at the general meeting to have considerable international management exposure, not least because about 95% of our business takes place outside Denmark. We live up to that. With regard to gender, the company's goal is for minimum 40% of the general -- of the members selected by the general meeting to come from the underrepresented gender. In 2021, we had 2 out of 10 members on the Board that had been elected by the AGM. Unfortunately, that meant that we failed to meet the 40% target. Today, we have 3 women and 6 men that are up for election. That represents a proportion of 33%. I know that there's still a keen focus on creating a better balance in terms of gender on the board, and I hope that this will be achieved in the near future. It's important for me to emphasize that we have a board with a very high level of diversity when it comes to competencies in relation to financing sustainability, supply chain, sales and marketing, new technology, research and development, management experience, regional and cultural awareness and knowledge of so-called fast-moving consumer goods companies. Today, we ask the general meeting to approve the specific remuneration paid to the Board for 2022. Carlsberg's Board members receive a fixed amount and are not involved in any kind of incentive schemes. The base fee for Board members have not been regulated since 2017. And upon recommendation from the Remuneration Committee, we have decided to recommend that the basic fee be increased by 7% to DKK 440,000. Apart from that, the remuneration calculation is unchanged. The composition of the remuneration appears in the convening notice. The basic amount paid to the Carlsberg CEO was unchanged in 2021 compared to the year before. However the total remuneration paid to the CEO was higher, thanks to the extremely fine results achieved in 2021. The composition of payments to the Executive Board in 2021 appear on Page 9 in the remuneration report. The general principles for remuneration to Executive Board members have not changed since -- well, in relation to the policy adopted at the AGMs in '13 and '20. We find that we have complied with the remuneration policy in 2021 and the report has, of course, been prepared in accordance with this policy. Payments to members of the Executive Board consists of 3 components, the fixed amount, an annual cash bonus program based on the fulfillment of a number of specific targets and a share-based remuneration amount that builds upon the fulfillment of 4 specific targets spanning a 3-year period. So 2 out of 3 components are variable, which means that they are closely linked to shareholders' interest and will only be paid out if Carlsberg can deliver the goals defined. Beginning in 2021, we decided to increase the weight of the so-called ESG measures in the short-term incentive schemes to 20% and the KPIs include all 4 focus areas in the sustainability program Together Towards ZERO. Because of the fine results that were much better than originally anticipated, there was a considerable increase in the short-term incentive program compared to 2020 when payment was halved due to the challenges from the corona situation. The value of the long-term incentive program for 2021 was on par with the last 2 years. Before I conclude my report, I'd like to have -- make a comment to the changes in the composition of the Board that we will decide later today. In my time as Chairman of the Board, I have developed to develop the Board and make it more contemporary in view of us being a company with activities in more than 30 countries. On that basis, the Carlsberg Foundation announced in 2020 that at the AGM in 2023, only 2 members from the Carlsberg Foundation's Board will be available as candidates for the Board of Carlsberg. This change in composition has to do with good corporate governance and has -- is taking account of the diversity, the industrial knowledge and the global experience that we need as an international business. We are already reducing the number of Board members representing the Carlsberg Foundation this year when we go from 5 to 3. I wish to emphasize that the Foundation will still be a committed main shareholder of Carlsberg, making sure that we always think and act in the long term, attract, develop and maintain a diverse mass of talent, make sure our products have a high quality and contribute to a better society in accordance with our purpose. There will also be a change in the sense that in future, the post of Chairman of the Supervisory Board will be given to one of the independent members. I will not be running again for the Carlsberg Supervisory Board. I will now hand over the baton to the Deputy Chair, Henrik Poulsen, who we expect will be appointed new Chairman after the AGM today. Henrik has been Deputy Chair for the past year and been very actively involved in Board work and the development of SAIL'27. And I am sure that he would be the right Chair. I've had a very good cooperation with him. And this means that Majken Schultz, who is the new Chair of the Carlsberg Foundation Board, will be the new Deputy Chair of Carlsberg. Lars Fruergaard-Jørgensen and Lars Stemmerik have also announced that they will not run for reelection, warm thanks to them both, a special thanks to Lars Fruergaard-Jørgensen, who was Deputy Chair in '19 and '20 and who made a huge commitment a major contribution to Board work in Carlsberg. The new -- the candidates for Board membership are Punita Lal and Mikael Aro. We have been looking for qualified candidates and we wanted to find candidates with in-depth knowledge of and insight into Asia, respectively, Eastern Europe. We have achieved this. Punita and Mikael both contribute with a very extensive management experience. Punita is from India and has more than 30 years of experience in -- with brands include, not least, knowledge from her management positions in Pepsi and Coca-Cola. Mikael Aro is from Finland, has a broad commercial background, has worked with Carlsberg from 2005 to 2007 when he was CEO of the Finnish brewery, Sinebrychoff. And from 2007 to 2009, when he was head of the then Northern European region. They are both extremely competent candidates, and I'm convinced that they will contribute with additional competencies to the Board. Dear shareholders, on behalf of the group, I'd like to say warm thanks to you as shareholders, also thanks to our customers, suppliers and other partners for good cooperation over the past 10 years and also in 2021. Also, on behalf of the Board, warm thanks to Cees and Heine who have steered the company through very difficult times and also, of course, thanks to all the -- just under 40,000 competent and highly committed employees for a job well done in 2021, where once again, we had a number of corona-related challenges. We wanted 2022 to be a year in which we could put corona behind us and look forward to more normal conditions. The horrible war in Ukraine put an abrupt end to that. And I wish to conclude my report by once again expressing my horror at the war in Ukraine and my deep-felt hope that it will soon come to an end. And with this, I will hand over to CEO, Cees ´t Hart who will add to my report and go over the main figures of 2021.

Good afternoon, and also welcome from me to this Annual General Meeting. As the Chairman already stated, we are shocked and deeply saddened by the war and the humanitarian crisis unfolding in Ukraine. Thousands of lives are being lost and millions of people are being impacted. We stand alongside the Ukrainian people and people around the world in condemning the Russian invasion in the strongest possible terms. No words can ever justify the violence inflicted on innocent Ukrainians. Our hearts and thoughts are with Ukraine and not least with our 1,300 local colleagues and their families. Our #1 priority is their safety and wellbeing. I want to assure that you, our shareholders of Carlsberg, that work is taking place around the clock to support our employees, their families and the people of Ukraine. I'm deeply moved by the engagement and also the selfless efforts shown by our colleagues across our business and not least in Ukraine and Poland. I'm also well aware and understand very well the emotions regarding our actions in Russia. Any decision we will make will have substantial consequences either way. The decisions we have taken regarding Russia are based on a careful analysis and evaluation with our minds and with our heart, with the safety and interest of our people as our guiding principle. This cannot be business as usual. The Chairman explains the actions we have taken in Russia. And I want to make clear that our Russian business will run independently from the Carlsberg Group. It will operate in Russia by our Russian colleagues, and any profits generated by this business will be donated to a relief organization and used for humanitarian causes. We are currently reviewing a full range of strategic options for our Russian business, recognizing the obligations we have to 8,400 people working for us there. We must remember that they are not responsible for the actions of the Russian government. The war is bringing business challenges that a few of us have ever experienced. But what touches me deeply is the huge impact of the war on so many innocent people's lives. It's truly heartbreaking. It's my greatest hope that this work comes to the fastest possible peaceful end. As difficult as it is, but let's now turn to 2021, which was a year when the world continued to be impacted by COVID-19. Our people business, customers, consumers and societies were, to different degrees and at different times, affected by the pandemic. During the year, our main focus remained the health and wellbeing of our people and, at the same time, ensuring the health of the Carlsberg Group. It was encouraging to see that many beer markets, particularly in Western Europe, recovered during the summer months, with consumers eager to socialize and return to bars, cafes and restaurants. This gives us confidence in the resilience of the beer market. Despite the ongoing challenges of the pandemic, the organizational, strategic and financial health of the Carlsberg Group was good in 2021. The good organizational health was evidenced by the 2021 employee survey despite the immense challenges for all employees. On a personal and professional level in both 2020 and 2021, the results were largely on par with the survey conducted in 2019. The results told us that our many initiatives to support and take care of our employees to empower them and to ensure good communication have resonated well. The strategic health of Carlsberg was also very strong. Since 2016, the SAIL'22 strategy has guided us on our journey to become the most successful, professional and attractive company in our markets. We are pleased with our achievements during the past 6 years. And there's no doubt that our clear strategic choices and priorities have been key for our ability to navigate through the rough seas of COVID-19. Let me give you a few examples to show you that we, also in 2021, delivered strongly against the SAIL'22 priorities. Our craft & speciality volumes were up by 15% despite continued lockdowns and restrictions. This growth was supported by very good results for 1664 Blanc and Somersby, which grew by 24% and 10%, respectively. Alcohol-free brews continued the strong momentum and grew by 17%, driven by very good growth for many of our local alcohol-free brands in both Western Europe and Central and Eastern Europe. We have strong market positions in alcohol-free brews. And in 2021, the category accounted 4% of group beer volumes. The pandemic has accelerated consumers' online buying habits, and e-commerce is growing fast. In 2021, total e-commerce revenue was up by more than 50%, although from a small base as online sales still only accounts for around 6% of total revenue. As its name suggests, SAIL'22 is now coming to an end. And therefore, during the second half of '21 and the beginning of this year, we went through the process of defining our new strategy, which we have named SAIL'27. SAIL'27 builds on the strengths and successes of SAIL'22 while setting a new and exciting long-term direction for Carlsberg with higher ambitions for top and bottom line growth. We developed SAIL'27 as a collaborative company-wide effort co-created by over 200 Carlsberg employees from more than 30 different markets. And in this way, we could ensure that our new strategy incorporates the learnings and experiences from SAIL'22. With SAIL'27, we keep and sharpen our existing strategic, organizational and financial focus. At the same time, we want to make sure that our direction setting is refreshed and that we incorporate expected global, regional and local trends. In other words, SAIL'27 incorporates the learnings from the past and assumptions on the future blended together. As you can see on the slide, we will focus on 5 strategic levers: portfolio, geographies, execution, culture and funding the journey. For each of these, we have made distinct choices to be clear on the focus of our efforts and allocation of resources. It's important to emphasize that just as with SAIL'22, our strategic levers and choices are an integrated set of activities, which together will drive shareholder value. By executing the SAIL'27 choices and priorities, we aim to remain an attractive company for investors, societies and employees. We believe that we can successfully capture long-term growth opportunities. And we are, therefore, increasing our financial and sustainability ambitions. Firstly, from 2023, we target average organic revenue growth of 3% to 5% per year. The key building blocks will be growth in premium beer, alcohol-free brews and beverages beyond beer. Geographically, Asia is expected to deliver disproportional growth led by China, India and Vietnam both in terms of value and volume. Western Europe and Central and Eastern Europe are expected to deliver value growth across all markets, with some markets also delivering volume growth. Secondly, organic operating profit is expected to grow faster than revenue. This will be driven by growth in premium products and alcohol-free brews, where profit per hectoliter is above average; country mix; and continued cost and efficiency improvements from funding the journey. Thirdly, we will continue our ROIC focus and disciplined capital allocation. This included keeping our dividend policy unchanged with a payout ratio of around 50% and the return of excess cash to shareholders through either share buybacks or extraordinary dividends. Fourthly, we will set ambitious sustainability targets. We will announce the new targets in April when we launch our new ESG program: Together Towards ZERO and Beyond. Let me now turn to the financial results of '21, and let me start by reporting on the regional performance. Western Europe had a volatile year, especially the first half of the year was impacted by COVID-19-related restrictions in most markets, whereas we benefited from fewer restrictions in the third quarter and easy comparables in the fourth quarter as restrictions were more severe in 2020. Total volumes in Western Europe grew organically by 4.2% and by 10.7% in reported terms. The higher reported volumes were due to the acquisition of Marston's brewing activities in the U.K. in 2020. Organic revenue growth was 6.4% and organic operating profit growth was 8.9%. The higher operating profit growth was supported by positive channel mix and tight cost control and savings during '20 and '21. The operating margin was 14.4%, impacted by acquisitions as Marston's brewing activities had a significantly lower operating margin than the rest of the region due to its high on-trade exposure. Turning to Asia, the development varied significantly between markets. Most markets were impacted by restrictions and lockdowns, although these varied in timing and severity. Total volumes grew by 12.1%, mainly driven by China and India. Volumes in most other markets also grew, albeit at a slower pace and helped by easy comparables. Organic revenue growth was strong at 15.6%, supported by positive brand mix and, in some markets, a positive channel mix. The organic operating profit growth was strong at 23.9% and the operating margin therefore increased to 24.9%. The relative size of the Eastern European markets, including Russia and Ukraine has reduced significantly in the past decade. In '21, Russia and Ukraine together accounted for around 13% of group revenue and around 9% of operating profit. The impact of COVID-19 differed significantly between the markets in Central and Eastern Europe, although the situation across the region became increasingly challenging towards the end of the year. For the year, the region delivered solid results. Total volumes were up by 6.1%, supported by a positive contribution from most markets. Revenue grew organically by 10.1%. This was driven by volume growth, price increases in some Eastern European markets, a positive product mix and an improved general mix in Southeastern Europe due to fewer restrictions. Organic operating profit grew by a modest 1% due to the higher cost of goods sold and logistics costs and a difficult competitive environment in Russia. And now the group's overall results. In '21, revenue was DKK 66.6 billion. The organic growth was 10%, while the reported growth was 13.8%, mainly due to the acquisition of Marston's brewing activities. Reported operating profit was DKK 10.9 billion with organic growth of 12.5%. There was a small positive impact from acquisitions, which was offset by currencies, and consequently, reported growth was 12%. Excluding acquisitions, the operating margin increased by 30%, while in reported terms, the operating margin declined by 30 basis points to 16.3% due to the margin dilutive impact from Marston's. Net special items amounted to minus DKK 253 million. Special items were impacted by several things, including reversal of provisions related to acquisitions in prior years, impairment, write-downs and one-off costs related to COVID-19. Net financial expenses amounted to DKK 381 million. Excluding currencies and fair value adjustments, net financial expenses amounted to DKK 319 million, positively impacted by the reversal of a previous write-down of a loan to our partner in Carlsberg South Asia. Tax totaled DKK 2.2 billion. The effective tax rate declined to 21.7%. If we exclude the net impact of certain special items, the effective tax rate would have been 23.5%, which was in line with our expectations. The Carlsberg Group's share of consolidated profit was DKK 6.8 billion. Adjusted for special items after tax, net profit was DKK 6.9 billion. Free cash flow amounted to DKK 8.9 billion and was composed of cash flow from operating activities of DKK 13.3 billion and cash flow from investing activities of minus DKK 4.4 billion. At the end of 2021, net interest-bearing debt amounted to DKK 19.2 billion. This was a decline of DKK 2.1 billion. The strong free cash flow more than offset the cash outflow from the share buyback program and dividends to shareholders and noncontrolling interest, in total amounting to DKK 7.3 billion. When we issued our annual results on the fourth of February, the world was very different. At that time, we believed that 2022 would be another challenging year but due to very different reasons. COVID-19 was expected to continue to impact our markets to various degrees. At the same time, we would also be impacted by substantial increases in input costs and general inflation, and that was anticipated to have an impact on consumer sentiment and subsequently on beer consumption, brand and channel mix. Our expectations on the fourth of February was that we would be able to deliver an organic operating profit growth between 0% and 7%. This guidance can be found on Page 23 in the annual report, which was published in -- on the fourth of February. However, everything has changed. The development in Ukraine and Russia will negatively impact the group's financial results for 2022. The group's assets in both markets may be subject to noncash impairments and write-down. The markets outside Russia and Ukraine are currently seeing only a limited business impact. However, the indirect impact from rising commodity prices, including energy, will have a negative but currently unquantifiable impact on goods on cost of goods sold and logistics costs for this year. Due to the very high uncertainty related to Ukraine and Russia and the possible impact on the rest of the group, we no longer consider it prudent to provide guidance for 2022, and therefore last Wednesday, March 9, we suspended the earnings guidance for the year. We are following the situation closely, and will provide updates to the market as our visibility on earnings increases. The suspension of the guidance for 2022 does not change the financial statement as per the 31st of December 2021 as presented in the '21 annual report. Before ending my report and on behalf of everyone in Carlsberg Group, I want to acknowledge and thank Flemming Besenbacher for his great contribution, commitment and immense dedication to Carlsberg during his 10-year chairmanship. It's under his chairmanship that Carlsberg has been brought to the level it is at today, with a strong financial foundation and a clear strategic direction and an integrated sustainability program. Moreover, Flemming has shown a fantastic ability to reinforce the unique legacy and purpose of Carlsberg, supporting the increasing value for the shareholders. and all other stakeholders. Before leaving the podium, I would like to acknowledge the collaboration and the continued support of the Supervisory Board. But more importantly, I want to thank all my colleagues in the Carlsberg Group for the remarkable effort and dedication. This was seen during the COVID-19 crisis, and also now with the Russian invasion in Ukraine. It makes me very proud to be part of this company. My hearts and thoughts are with the people in Ukraine. It's my profound hope that the peace is urgently restored. And with this, we recommend the 2021 annual report for approval by the Annual General Meeting. Thank you very much.

Before I open up for a debate, let me just inform you that the annual report I have seen has been signed by the Executive Board, the Supervisory Board and the auditors elected by the AGM. And I'd just like to read out the conclusion from the auditor's report, their opinion, and we have it on the screen in Danish. In our opinion, the consolidated financial statements and the parent company financial statement give a true and fair view of the group's and the parent company's financial position as at the 31st December '21 and of the results of the group's and the parent company's operations and cash flows for the financial year first of January to 31st of December 2021 in accordance with the International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. So it's an [ unqualified ] opinion by the auditors. So let's just open up for the debate. I have 5 people on my list of speakers already. As mentioned, if there are other people who want to have the floor, please come up here and talk to Sophie, who you saw a moment ago, and she will make sure to put you on the list of speakers. The first speaker on my list is [ Klaus ] [indiscernible] who represents ATP, the Danish Labor Market Supplementary Pension fund. Over to you.

Thank you. So I'm Klaus [indiscernible] and I represent ATP. I'd like to start by thanking the Chairman of the Supervisory Board and the CEO for a good report for 2021. As we heard from the Chairman, there is a war in Ukraine. We are in the middle of a time that has tragic consequences for millions of people, so that's why I'd like to start by addressing the war in Ukraine. For all companies with activities in Ukraine and Russia, I'd like to say that I very much respect the very difficult situation you're in. It leads to a number of dilemmas and difficult decisions that go far beyond financial and operational questions. In ATP, we really understand that this is very difficult to handle. First of all, I'm happy to hear that Carlsberg doing every -- doing whatever it can to support its -- protect its employees in Ukraine to take best possible care of their safety. The situation developed very quickly. What is the right decision today could well look different in a week's time or 2 weeks' time or at a later point in time. This is a very difficult analysis to do for all activities with -- all companies with activities in Russia and Ukraine. For us outside who do not have a full picture of the situation, it's even more difficult. And that's why ATP is reluctant when it comes to having a clear opinion about what's right to do for the individual company while the war is raging. That certainly also applies to Carlsberg. This is because there's a big difference for different companies with activities in Russia as -- a big difference between short-term and long-term consequences of a given decision. There's a big difference between the effect and consequence given the decision could have in Russia and for the employees locally, and there's a big difference in regard to what can happen subsequently with the assets that are involved. That being said, companies obviously need to comply with sanctions that are introduced. Furthermore, we have a clear expectation that the individual company understands its responsibility and is prepared to take even difficult decisions. I have no doubt that Carlsberg lives up to that. With the several pictures of the horrors in the Ukraine, other agendas might seem less important and less significant. But there is 1 topic that I'd like to address that is still eminent. Carlsberg has been at the forefront in regard to sustainability. I'd like to take the opportunity to take biodiversity and put that on the agenda. There's been a lot of focus on climate change. It is still important in the conscience of many companies. So if you look at experts, the species that might be lost and -- even a bigger problem. Biodiversity has been defined as one of the biggest risks that can influence the economy over the next 10 years. Carlsberg is very dependent on being able to use the Earth's resources and also certainly has an impact on biodiversity. I know that it is very difficult to define goals clearly in this field, but I'm happy to hear that Carlsberg, going forward, has put farming as part of their sustainability agenda. I am not going to comment a lot on the financial statements, but just pinpoint a few items. It's been very difficult to operate a brewery during the COVID pandemic, especially during the periods when bars and restaurants were closed. I think Carlsberg deserves a lot of praise for the ways they have navigated through the difficulties created by the pandemic. The second matter I'd like to underline is the impressive growth in China. There's no doubt that China has created an attractive growth engine, and the Chinese market can become the most important growth driver for many years going forward. In connection with the financial statements, you've also published a new strategy, SAIL'27. The last strategy, SAIL'22, has worked extremely well for Carlsberg. The execution of SAIL'22 has certainly brought Carlsberg into a better position over the last 5 years since it was launched. This applies to Carlsberg's commercial position and balance sheet, cash flow and dividend to shareholders, which has been strongly improved. So I'm not particularly surprised that the new strategy plan, SAIL'27, with a few adjustments, is to be seen as a natural continuation actually of the old strategy plan. At this AGM, Flemming Besenbacher is stepping down as Chair and Henrik Poulsen will take over. I'd like to say to Flemming Besenbacher, thank you very much for your efforts at Carlsberg. I'd like to stress 3 areas where you've been very important. One is the strategic change that has occurred at Carlsberg during the period when you've executed SAIL'22. This has really been proof that Carlsberg is now in a better position than it was before, both strategically and financially. I'd also like to praise you for the big courageous decision. It was to carry out the major change in Carlsberg's governance structure that you explained. It's really a big change in the history of Carlsberg. And the last point I'd like to emphasize is the focus that there has been that you have seen on putting sustainability on the agenda at Carlsberg. I want to thank you ever so much for that particular effort. I'd also like to thank you for a very open, constructive dialogue that we've had even if we have disagreed about pay policy in Carlsberg and we still have some disagreements there. But I'd like to welcome Henrik Poulsen as the new Chairman of the Supervisory Board. I look forward to continuing the constructive and open dialogue that we've always had with Carlsberg. So with these words, I'd like to wish the management and employees of Carlsberg good luck with your work in 2022. Thank you for your attention.

Thank you very much. The next speaker is Troels Børrild who represents the academics pension fund.

Thank you. Today, I speak on behalf of LD Pensions fund and AkademikerPension, and together, we have invested about DKK 500 million in Carlsberg. And we are living in times of great uncertainty as several people have said, and we also have to address the situation in Ukraine. It raises a lot of questions. We don't have any answers yet. It has to do the questions that we all have as people, as employees, shareholders. How will it end? What can we do? What should we do? But one thing is for certain, it has not become easier to operate a business. In AkademikerPension and LD Pensions, we understand that you are under great pressure in companies, and we support your announcement that you will stop selling your products in Russia and donate sales from other products in Russia to relief organizations. We also understand the change in the guidance that we have seen in connection with developments in the situation. It would have been good idea. Many people in Denmark think that you had discontinued sales at an earlier stage, but there you are. But you have to be very clear with your signals and your communications in regard to the situation in Ukraine. And sometimes, you are exposed to criticism that is not sufficiently nuanced and that is very tough. And we've seen this also in relation to Carlsberg recently. You shouldn't forget that Carlsberg's Russian business is important to Carlsberg, but it was established a long time ago when we all believed in trade with Russia and peaceful coexistence. The situation has changed. It must be dealt with in the best possible manner, and we all hope for a positive outcome. Although fiscal 2021 is already in the past and is secondary in review of the crisis, that's what we are here to discuss today. And in '21, Carlsberg achieved to navigate its business in an excellent manner. And despite the pandemic, you delivered your strategy. Several growth engines show that they were tenable and the foundation is in place. In the next 5 years, we'll focus on a lot of the same drivers that we have seen on the SAIL'22. 2021 was also the year when AkademikerPension and LD Pensions put forward a shareholder's proposal at the AGM for the first time in Carlsberg. It had to do with taxation. One of the big challenges here is to make sure that there is enough money because it is expensive to tackle considerable crises; defense, green transition, health, et cetera. And here, tax payments from companies are very important. The collection of tax and making sure that companies pay a fair amount in the countries where the money is earned is something that has triggered a considerable debate. We don't doubt that you pay the tax that you have to pay, and yet we ask the Board to check out the possibilities of being more transparent in relation to the group's tax payments on a country-by-country basis. We have made the same proposal to other Danish companies. It's not as if we are suspicious. But the thing is that we and many with us believe that transparency in relation to tax payments by companies will drive a positive development, and someone has to spearhead this development. We want both to look into this because it is difficult to do this through political challenges. So the initiatives should come from private businesses, frontrunners such as [ Ulster ], that today announces tax payments on a country-by-country basis. The Board has found that it is not a good idea for Carlsberg to do country-by-country reporting at the present stage, but we thank you for having looked into the matter. We need the discussion though. It is still there, and we believe that transparency will be standard in future. Remuneration to the Executive Board. Well, we always consider both the policy and reports. We look at the construction, the size and the transparency of our business. But we have -- we think that the size of the remuneration is too high, and there is a lopsidedness in the distribution between the fixed element and the variable elements. The percentage is simply too high. We know that the remuneration is there to ensure competitiveness, but there's also a balance that has to be struck. The transparency in the remuneration report is not sufficient, so we find it difficult to assess the connection between performance and remuneration. We would like to call upon the Board to reassess these aspects. We've done the same with other Danish-listed companies. We've decided to vote against your remuneration report this year, but we often do that actually more than -- at more than half the AGMs last year, we voted against the remuneration report. And also, we do find positive aspects. For instance, part of the pay is related to the fulfillment of sustainability goals. By way of conclusion, I'd like to thank the Board, the Executive Board and the many employees of Carlsberg for a job well done in times of uncertainty and change, but thankfully also solutions. We also wish to thank you for emphasizing the leadership shown by Mr. Besenbacher. When you were at the helm, Mr. Besenbacher, Carlsberg really took a major leap forward and did a lot in relation to sustainability and not least also corporate governance. It's been a major decision that you have made now. We respect it, but we find that -- it is also a good corporate governance to make sure now that the Chairman of the Board will be representing the independent members. We look forward to a continued good dialogue also with the new Chairman, and we will follow your developments closely. Thank you very much.

Thank you. The next speaker on my list is [ Michael Bach ]. He represents the Danish association of shareholders. You have the floor.

Thank you. The Danish association of shareholders and private investors would like to thank you for being able to meet again physically. We've been waiting for that in these wonderful rooms even if the background is very sad. But it's important we can meet. It's important we can have these discussions. We have shareholder democracy, which is a good thing. So we have many private investors. We have had many more in recent years. We see these weeks and months that the need of connection between companies and users and shareholders is really important. We'd like to contribute to that. I'd like to repeat what we have said and written about the crisis that's going on at the moment. That is important as we, as shareholders, show support with the Supervisory Board and Executive Board that have given us a lot of progress in recent years, and we can now have a dialogue about them. So let me start just like my -- the 2 other speakers just did. Thank you. I want to thank you for the good report and the dividend that you are paying. Shareholders appreciate that. Thank you to the Chairman of the Supervisory Board for finding and maintaining the members of the Executive Board that are up here, and I'd like to welcome the new Chairman of the Supervisory Board. And there are 2 topics I'd like to address. One is the increase in raw material prices that we saw last year is continuing this year. Can we see these prices being transferred directly to us as consumers? Or will they influence the results we see from the shares that we invest in? And then secondly, the unfortunate situation in Ukraine. Carlsberg, in the media, as it has been said in recent weeks. At the AGM in 2019, the last time we were together here, I asked the question not knowing anything about this. But I said, have you taken enough into account the political unrest that there was in Russia back then? Yes, you said. Yes. It was in relation to goodwill. But in the annual report for 2021, you also review the risks. And here, we can see partnerships, we can see financial instability. There's no risk assessment concerning Eastern Europe and the Russian business. I fully understand that nobody, nobody predicted what has actually happened. And this is why we must support Board and management. But still, I think we should ask Board and management, Supervisory Board and Executive Board. In light of the big business you have in Eastern Europe and Russia, could you, should you have addressed the risk analysis differently? And how can that influence other uncertain markets in the world where you'll be working going forward? That was it for me. I wish management and all the employees throughout the world all the best in a difficult but important year for Carlsberg. Thank you.

Thank you for these questions. I'm going to give a reply to the first bit, and Cees will reply to the second bit. Price increases of raw materials and how they are passed on to consumers. This is early days. It's still early days. It's too early for us to conclude. As you've seen, we see clear price increases across a number of different raw materials and a number of different energy sources. If this kind of becomes permanent, permanent price increases of raw materials, of energy, over time, yes, this will be sort of passed on to customers and it's going to be up to customers to do what they want to do. But it's quite clear there might be a staggering of -- in time of that.

With regards to the question on whether Eastern Europe and especially Russia was not a too big part of our portfolio and whether we should have assessed that better. Well, for those that follow Carlsberg longer than 6,7,8 years, you know that Russia in the past was 50% of our total portfolio. And today, when we talk about profit or EBIT, it's 5%. So indeed, already in 2015, when we made our assessment of the geographical portfolio of -- the geographical footprint of Carlsberg, we came to the conclusion that those days we were too dependent on Russia. And by growing the other bits or the other parts like China, like Vietnam, like India, but also improving our business in Norway and Switzerland and France, we have been able to become less dependent on Russia. It's also fair to say that over the last 2, 3 years, because of the competitive dynamics in Russia, we indeed reduced or had to reduce the expectations for the margins. All in all, it's 5% of our total portfolio, which is not too big, frankly, I think, especially if you're a shareholder. Normally you don't put more than 5% on 1 stock. It's 5% as part of our portfolio. It's still painful. When we were talking about 9%, we were talking about Ukraine, 3% and Belarus, 1%, and that makes them in total 9%. Thank you for the question.

Thank you very much. The next speaker is [ Frank Aaen ]. You have the floor, sir.

Thank you. I come from a group called critical shareholders. And like the others, I would like to begin with talking about the horrible war in Ukraine. I agree with what was said by the Chairman of the Supervisory Board and the words that you do whatever you can to make sure that this war is put to an end in the best possible way. This raises the question, of course, of sanctions. And as I see it, all the sanctions that can affect Putin and his team, gas, oil, will help. That will have an effect, and that is to the benefit of Ukraine. And I think that's very important when we talk about this. Is this to the benefit of people in Ukraine? And I don't really think that closing down breweries will help a lot because they will be taken over by Putin's people, and it will affect the employees. So I think that we should be very much aware in the discussion about this that we are not at war with the Russian population. They're not responsible for what Putin is doing. They are the backbone of a rebellion against Putin. So it's important that we make sure that they don't get angry with us but get angry with Putin. Those were my introductory remarks more of principal. And things may, of course, develop differently. I know, and then we will have to take account of the situation then. But back to today, thank you for the initiative that you have taken to make sure that the people in Ukraine have been sent home with full pay and the other measures that you outlined. It's all very important because this is very specific help to Ukraine in the current situation. Others have said that it is difficult to go from that awful situation to the more mundane things that are usually discussed at an AGM. There are nonetheless things that I'd like to highlight. Before the meeting today, my group, critical shareholders, put questions. One of them was about giving full pay to people or employees in Ukraine. And I understand that this is something that has already happened. Another question had to do with Item 4 on the agenda. The remuneration report. If you look at Page 10 of the remuneration report, you see that the CEO gets 175x the pay of group employees, the people that actually create the value, get every year. Annually, he gets 175x what they get. Or to put it differently, the third of January, he has made what amounts to the payment for a full year of an employee. That is way above other Danish companies. Some of them are at a high level, but this is head and shoulders above what we see in the companies on the C25 index. I don't think it's okay. It is an unreasonable difference in pay in a group, and it's bound to spread to other companies and will create more inequality in our society. On Page 11, you see that it's DKK 45.6 million in cool cash paid out to the CEO. And you should perhaps also say that this is at a lower tax rate than what people in Denmark pay because I didn't know that the CEO was a researcher or a scientist, but there is a specific taxation scheme for such people. They only pay 27% in tax plus the labor market contribution. I don't think it's fair that it's possible to pay such a low tax rate when you are a company CEO in Denmark. And just -- question. Cees ´t Hart has been with Carlsberg 7 years this year. No one has said this before, but that is the -- interesting aspect of this that the possibility of staying in this special tax scheme will run out this year. So what will happen after 2022 when you can no longer be covered by that special tax scheme. Well, Carlsberg have to pay [indiscernible] higher amount so that he can get the same after having paid tax as he gets today or will he accept this decline in his real wages. What is going to happen? Or is he going to leave the company? It's just a simple question, actually. And this is a global group. We've heard the speakers say that. And it has operations, as we've heard in Russia and Ukraine, but Myanmar, there's a large brewery out there with a considerable revenue and a considerable profit level. But the problem with a considerable profit level is that you have to pay tax. And you have to do that in the country where you operate. It is DKK 84 million that go directly into the pockets of the military regime in Myanmar. I know it's difficult to answer this perhaps off the cuff, but couldn't you reduce tax payments in Myanmar in order to reduce the amount that you pay into the pockets of these dictators, that would be a good thing to do. That was 1 question. The second question I have to the market has to do with China. We heard that the company has a high level of activity in China, also in the [ Xinjiang ] province. If you follow the news, you know that there are huge problems with human rights in that part of China. I know that the Carlsberg Group believes that they comply with human rights, but I'd like to hear from Carlsberg, what do you do to make sure that in production, distribution, in the group of sub-suppliers and otherwise in connection with the company's activities in Myanmar, how do you make sure that there are no violation of human rights in any of the links in the chain here? Those were my questions.

Let me give a reply to the first bit, and I'm sure Cees will answer the question concerning Myanmar. Let me say that as Chairman of the Supervisory Board, I'm very pleased that we have Cees ´t Hart as our CEO at Carlsberg. I think Cees has represented a wonderful turnaround at the Carlsberg business since he was taken over in '15 and Heine Dalsgaard came in '16, as I explained in my report. When it comes to the pay for the CEO, this is always a topic that's up for discussion. It is true that Cees' pay is [ 175x ] higher than the average pay in the Carlsberg Group, but that is based on all employees in Carlsberg. If you do a different calculation, only take the parent company, you get a slightly different amount, you get 65. These figures can -- are very high. They can be very difficult to relate to, but I really support the contract that I concluded with Cees in 2015 and the principles that were adopted in 2013. Cees' pay is based on the 3 components that I presented in my report. Fixed pay and the other 2 are based on the goals that we set up for a given year. And as I said in my report, in 2021, Cees' pay went up because the business was doing well, but [ Frank Gowen ] will remember that his pay went down in 2020 when we had challenges in the business. I am not going to speculate about when Cees is not the CEO anymore. Cees -- he has been a wonderfully leader for Carlsberg during the COVID pandemic. He took us through the crisis expertly. Now we are not in a hurricane. We're in -- we are not in a storm, we are in a hurricane. And I'm very, very pleased that Cees is there with his team of managers trying to take us through the terrible situation we're in here now. I can tell you that Cees lives in Denmark and in the Netherlands. And I can tell you that Cees pays taxes in both locations based on applicable rules. Other than that, I'm not going to make any statement concerning his private situation. I'm very pleased that Cees is the CEO now, I hope he'll continue and take us through the hurricane. I agree with [ Frank Gowen ] about his initial comments. It's a terribly difficult situation we're in, in Ukraine. What is important is not to say that this is -- this problem is the fault of our Russian employees. It is not their fault. So we try to treat our Ukrainian colleagues and our Russian colleagues as best we can. And I fully trust management in this extremely difficult situation. I'm sure they will try and take Carlsberg through it the best possible way. I think we all dream that the terrible war that's going on will stop as soon as possible. Cees?

Heine? Maybe.

[Interpreted]. I'll deal with the question concerning Myanmar. We have a brewery in Myanmar. That's correct. Unfortunately, we don't have a high profit there. So we have a negative profit before tax, which means that we do not pay income tax in Myanmar.

With regards to the human rights issue in Western China. Well, basically, we apply the international rules on human rights everywhere in the company. Where we operate, we want to obey and to concur these rules. And the question was very specifically, what have you done to prevent it? And indeed, in 2021, we have recruited a so-called inspector that will increase even the control of our sites of our contracts, but especially also in areas where it might be challenged to make sure that we are totally in line with what we promised.

[Interpreted]. The next speaker on my list is [ Bjorn Hansen ]. You have the floor, sir.

[Interpreted] It's true I am [ Bjorn Hansen ]. First of all, thank you to Mr. Besenbacher for his good and informative start to today and his review of the past year and also thank you to our Dutch CEO. I'm quite sure that he is getting even more fluent in Danish, and he also gave us a lot of good figures. What he said about China, I couldn't really follow. But apart from that, I think he gave us some good answers. And the thing about pay, if a company is doing well, I think people should be paid well. So things go hand in hand here. And I think that is what we're talking about in Carlsberg. In the past year, unfortunately, things have happened. This has already been mentioned, Ukraine, Russia. Let's not quibble about the price of soda pop and high prices, et cetera. We should be constructive to enable Carlsberg to move forward and make money. This is before your time, Mr. Besenbacher, just for your information. At one point, investments were too heavy in Russia on the part of Carlsberg. I know that the angle was different. Heineken was in the lead, and they were also fast in selling off. We were perhaps a bit too stubborn and in the long term that is difficult and dangerous when you have a person such as Putin at the helm. Apparently, he has ambitions of being a Hitler. And I have the following proposal to make. Carlsberg has now closed down 2 breweries. Now Mr. Besenbacher says 3 in Ukraine, at a cost of several million krone when they were purchased. I take it that we're talking about land, buildings, bottling plants, equipment, and bottles and cans, et cetera. How many millions did it cost to start up the individual breweries? And what about in Ukraine that were also purchases made for the year 2022? Are there any losses? And what plans have you got in Ukraine for continued operations? Or what about bottling lines and machines? Will they be used in China going forward? About China, well, I think that Putin hasn't yet closed the route to China. 15 years ago, I pointed out that China was an important market. And someone said from the [indiscernible], no, we are not interested in China. We will go into Russia because that's where the money is, but the tune has changed because now the Chinese drink beer and there's a middle class and they now, I think, are about the size of the French population and how they want beer. Anyway, apart from China, we have a country called India. And we need to go back to the second world war. At that time, Carlsberg was a recognized brand. You read that the British soldiers had -- they wanted to drink Carlsberg beer. And some of the best warriors in the world were those from Punjab and they were beer drinkers. So why not start up there. A major German brewery decided to do that? I know that things have started happening there. And one of your predecessors Mr. Besenbacher was very enthusiastic about India. But what's going on there? Isn't it better to make sure that the breweries make money instead of being idle in India or in China. I don't think Carlsberg will be given permission to send breweries to Houston, not in Texas. Also, in the Soviet Union Carlsberg had several breweries. Some of them are no longer active, and Putin has signed a decree to the effect that all foreign businesses may now be taken over by the Russian state at the cost of only few rubles, and that's the same thing as bankruptcy for these businesses. It's 5.3 now you have to pay for RUB 1. In 1989, someone told me that RUB 1 was worth $1, U.S. dollar that is. I got these awful Eastern Germany marks that Carlsberg's people through into a bucket, and they were used for, I don't know what afterwards. And then the situation with regard to currencies, Heine. I think this is for you. Western currency, Finland and Sweden, I think that's an opening and is still an opening or there may be a third location. How many millions of empty bottles and cans have you got stored in Carlsberg? And what about depreciation in 2022 for this only Russia and Ukraine? Next question isn't the best thing to do financially in order to minimize losses to simply disassemble all the plants in Russia and Ukraine? Since RUB 1 is now worth DKK 5 and perhaps DKK 2 now, we are below [ 0.01 ]. I think the dividend you pay out is good, and we don't get paid in cent, now in rubles, but in good Danish krone, we like that. During times such as these, it's a good thing. But there are some huge challenges waiting out there. And [ Henrik Poulsen ] certainly had -- has his job cut out for him. How about sales and exports in Europe, including EEA countries? And will this also support your philosophy in relation to market shares and growth of about 8%. I actually got some figures, when the CEO delivered his report. I'm grateful to hear that there is progress in Europe. Perhaps it's all of Europe and not only the EU. But I take it that Ukraine has been -- well, it's not been separated as I understand it. I would like a written answer and also an oral answer. And I also have a recommendation to all of you. I have actually made a collection, handed it over to the Red Cross. There are people who say, "Oh, don't send them close. They have much too much by way of close." But it's wonderful to hear about the money that is donated. But let's say, congratulations to Carlsberg, and if some of these breweries could be relocated, let's give Cees ´t Hart another couple of million kroner because then he's deserved it.

[Interpreted]. Thank you very much. I view through the history and geography, and I will try to answer your challenges. First of all, with regards to the Ukraine, I think we need and some of the first earlier speakers also said that we need to be very clear in our communication. Of course, we do our utmost to make it very clear, but also, we see that not everybody reads our press releases well enough. And hence, there's sometimes some confusion about whether we retreat from Russia or not, or closed our breweries in the Ukraine. So as shareholders, I would like to inform you on that. We closed our 3 breweries in the Ukraine just because of the war. But we hope to reopen them as soon as possible. At this moment of time, almost as we speak, we produced water in [ Lviv ] and the other 2 breweries are indeed empty just because of the fact that most of the employees have come to the rest and have now a shelter in our warehouse in [ Lviv ], so we hope -- because that will mean that there is peace or at least that Ukrainians can live again in their own country. We hope that these 3 breweries will reopen as soon as possible. With regard to our progress in India, we have been there pretty successful since I think 2012, '13. The strategy there is to start in a state. And at the moment that we are cash positive, then move to another state. I mean now in 9 states, we are continuously gaining market share. We are now selling 3.5 million hectoliters in 2021, which was a bit less than 2019 because of COVID, but we are making excellent progress. We make 16.5% operating margin there. At the moment, our breweries are, let's say, back to the volume of 2019. And that means that we continue to invest in India because we do believe over a longer period of time, it will be an important country. And to the earlier challenge also to prevent that we are too dependent on countries, like Russia, like China and so on. You were talking about nationalization. That's indeed a risk. And some of the newspapers have said that we were not fast enough to talk about our position in Russia. We have been very careful. We understand in that respect, a bit what's going on, we think, in Russia in these kind of times. And therefore, we have refrained from making quick decisions. As we said, we stay in Russia as long as we can. We take our responsibility for 8,400 people. But also at the moment that we would come to another conclusion, it means -- or the Russian come to now a conclusion, it means that we lose our assets there and our people would work for the Russian government and the assets would be in the hands of the Russian government. And that's one of the real risks at this moment of time. And you've heard in Denmark, the Russian ambassador or the ambassador for Russia in Denmark has made it very clear, this weekend, how they think about this. I'm not sure I fully understood your remarks on currency. We could take that maybe after the meeting together with Heine. When you talk about market share, that's a very important figure for us, of course, a good metric to follow and to monitor and it's good that in 2021, we had more than 90% of our turnover that was in line with or even better than the previous year market share, which basically saw holding share and increasing market share for more than 90% of our turnover, means we are strategically very healthy, and you were talking about the EU. And even in the U.K., not being member of the EU anymore, even in the U.K., we gained market share. So to your point, Europe is very important for us, and we are successful. And last but not least, our employees indeed are really answering our questions for any donation to Ukraine fund and the company will match that at the moment that we close the fund and then we're able to transfer these -- that money to the Red Cross. Thank you for your questions.

[Interpreted] [ Bjorn Hansen ] for a reply.

[Interpreted]. Thank you for some of your answers. But I ask you, I want to know which plan we have to move the breweries out. And I understand the Russian beer, what we have now that can keep their jobs, make Russian beer, make not Carlsberg anymore because you have the best brand. It's Carlsberg #2, it's maybe Tuborg, and #3, you have in the East Europe, [indiscernible] Russia, you have before you have [indiscernible] for the plant in Leningrad, what we call it now Saint Petersburg. He has connections to Mr. Putin. And every time there was about the tax should go up, he took the telephone, called Mr. Putin and nothing happens. So it was 1900 and I think [indiscernible] 1990 that comes from the European Commission. One of them, he don't want his name called today. But they have connections this company, and the Russian beer is good for the Russian, make that for the family and the market and get out of it, or what you can do -- and don't wait 3 years because we [indiscernible], no. There was another Danish company, they wait about 75 years, so they get money back from Boris Yeltsin, 75 years. Good night.

[Interpreted] Thank you. First of all, we indeed delisted Carlsberg brand. So we're not trading that in Russia anymore. We have a portfolio of some other brands, including the Baltika brand. And then you have 8 breweries in Russia, you are serious to stay there because you feel that, that is the obligation, the moral obligation that we have in Russia for our employees. We cannot just take the entire assortment from them. It's, of course, a very important decision that we took. And what I said earlier in my speech, it came with a lot of deliberations and we are still looking at different options for the future. I think it's also clear, and I hope that, that was also clearly represented in the Danish newspapers as it was also in the Dutch newspapers that at the moment that the company suspends the action, the suspends the operation in Russia that basically nationalization will take place. And that means that assets will be taken away from us. Hence, in a view of our people, in view of Carlsberg, in view of also the shareholders, we need to basically base our decisions on our heart, but also on our minds to really make sure that we do the best in the future and balance all the different considerations that we have to make in these very difficult times.

[Interpreted]. Nobody else has asked for the floor. That's one more speaker coming up. Please approach, [ Sofie ]. So welcome, could you introduce yourself?

[Interpreted]. My name is [ Marisa Bayer ]. I'll speak just for myself as a shareholder. I'd like to comment on the points of you presented by Olesen that the I think the speaker meant [indiscernible]. But anyway, so yes, talked about the fee and the remuneration of the CEO. And I'd just like to say I don't care how much the CEO makes as long as there's a profit for the rest of us.

[Interpreted] And I have no one else on the list of speakers. So we finalize the discussion concerning items 1 to 4 on the agenda. As regards to Item 1, the assembly has adopted the report, take a note of the report with the comments added by shareholders and management here today. As regards to Item 2, that's the annual report, submitted for approval and for discharge. I'd like to say that discharge means that the Supervisory Board and Executive Board granted discharge from any liabilities in relation to matters described in the annual report of 2021. So can I assume that the annual report for '21 has been adopted and that we have granted discharge? There are no objections. So that has been duly done. As regards Item 3 on the agenda, this is a matter of the distribution of the profit for the year and the size of the dividend. Can I take it that the proposal has been duly adopted, that the proposed dividend of DKK 24 per share has been adopted? It has been adopted. Brings us to Item 4 on the agenda. This was a presentation of an advisory vote on the remuneration report for 2021. I can inform you that this is only an advisory vote. It means that if shareholders do not approve the remuneration report Carlsberg and the remuneration report for 2022, we'll have to explain how that result has been taken into account. Can I take it that the advisory, that the remuneration report has been duly adopted? It has been duly adopted. So that brings us to Item 5a on our agenda. This is the approval of Supervisory Board remuneration for '22. Supervisory Board proposes in accordance with the remuneration policy, that the remuneration for the members of the Supervisory Board will be unchanged from '21 apart from an increase of the basic remuneration of 7%. So the ordinary members of the Supervisory Board will receive a basic fee of DKK 440,000. The Chair shall receive a fee 4.5x the basic fee and will not receive any further remuneration for any committee work. The Deputy Chair receives 1.5x the basic fee, that the Chair of the Remuneration Committee and the Nomination Committee receives 50% of the basic fee, that the Chairman of the Audit Committee receives a fee of 113% of the basic fee. And there are other members of Board Committee receive a fee of 38% per committee, 38% of the basic fee. Does anyone wish to speak on this proposal? That is not the case. So can I take it that the proposal has been duly adopted? It has been duly adopted. That brings us to Item 5b on our agenda, proposal to reduce the company's share capital for the purpose of canceling treasury shares. So what is being proposed here is to reduce the company's share capital by nominally DKK 68 million by cancellation of 3,400,000 of the company's holding of own [indiscernible]. And this in accordance with the rules on capital reduction so that money can be paid to shareholders. So the shares were bought back as part of the share buyback program. It was opened from the 5th of February 21 to the 6th of January 22, with a total amount of [ DKK 3,683,500,643 ] corresponding to an average repurchase price of DKK 1,073.84. So the capital reduction is carried out at a price of DKK 5,269.19. As a consequence of the capital reduction, the amount of the share capital will be updated in the Articles of Association. Does anybody wish to speak on that proposal? That is not the case. So can I take it that the proposal has been duly adopted? It has been duly adopted. Brings us to 5c. This is a proposal regarding authorization to acquire treasury shares until the 13th of March 2027. They can acquire treasury shares up to 10% of the share capital, such as may not exceed 10% of the share capital at any time. The price of the acquired treasury shares must not deviate more than 10% from the price on the stock exchange. NASDAQ Copenhagen AS must not deviate more than 10%. And the Supervisory Board suggested the current authorization to acquire treasury shares given on the 14th of March 2018, which expires on the 13th of March 2023, that will then be withdrawn. So a new authorization and the existing authorization is canceled. Does anybody wish to speak on that proposal from the Board? It's not the case. So can I assume that proposal has been duly adopted. It has been duly adopted. So that brings us to Item 5d, is a proposal regarding authorization to distribute extraordinary dividend on one or more occasions in accordance with the Articles of Association and the Danish Companies Act and the rules therein. Does anyone wish to comment on that proposal? Can I take it that the proportion has been duly adopted? Yes, has been duly adopted. Item 6 on the agenda. It's a question of election of members to the Supervisory Board. First, I need to inform you that according to the Articles of Association, Board members elected by the AGM are elected for 1 year at a time. The Supervisory Board proposes the reelection of Henrik Poulsen, Carl Bache, Magdi Batato, Lillian Fossum Biner, Richard Burrows, Soren-Peter Fuchs Olesen and Majken Schultz. And the election of Punita Lal and Mikael Aro. As you have heard, Flemming Besenbacher, Lars Fruergaard Jørgensen and [ Lars Stemmerik ] are not available for reelection. I should also point out that in accordance with Section 120, Subsection 3 of the Danish Companies Act, information about the candidate executive functions and other companies must be provided prior to the election of the Board candidates at the AGM. And there was a short presentation of each of the 9 candidates included in the convening notice of the AGM. And there was also a link to the company's website where information concerning their other executive function can be found. So I'd like to hear if there are other proposals or comments to the proposal? Are there any other candidates? That doesn't seem to be the case. I find then that Henrik Poulsen, Carl Bache, Magdi Batato, Lillian Fossum Biner, Richard Burrows, Soren-Peter Fuchs Olesen, Majken Schultz, Punita Lal and Mikael Aro have all been elected. Congratulations. And the next item has to do with election of an auditor. According to Article 33 of the company's Articles of Association, a state-authorized public accountant must be appointed to audit the 2022 accounts. In accordance with the recommendation from the Audit Committee, the Board proposes the reelection of PwC as auditor. So I'd like to ask if there are any other proposals? That doesn't seem to be the case. PricewaterhouseCoopers has been reelection -- reelected. Congratulations. So we have now exhausted the list of items on the agenda. Thank you for good order. And I'd now like to hand back to the Chairman of the Supervisory Board.

[Interpreted] Thank you, [ Anders ]. First, I'd like to thank you for taking us so excellently through the AGM here today. As I said before, this was my last general meeting as Chairman of Carlsberg Supervisory Board. It's been a great honor to be the Chairman of the Supervisory Board of Carlsberg. Carlsberg is an iconic company, started as a Danish company, now an international company. Only 5% of the volume that we sell is sold in Denmark, and we are in the 3 regions, as you also heard in the report, in Western Europe, Eastern Europe and Asia. I'd like to thank very much, Cees and Heine for excellent cooperation. I'd like to thank all the very many skillful employees that I've met in Denmark and outside during my time as Chairman. It's been a wonderful today to be able to meet her for a physical AGM. Shareholder democracy is extremely important. I'd like to thank form [indiscernible] HCP, Troels Borrild from the AkademikerPension, [ Mikael Bak ] from Danish Association of shareholders, Frank [indiscernible] from Critical Shareholders, Bjorn Hansen [indiscernible] for your comments. Well, I've been the Chairman. I have met some of the bigger shareholders, as [ Klaus ] mentioned, and thank you for constructive cooperation that we've enjoyed. And finally, let me finish by saying once again that it's a sad background we have for this AGM. A few years ago, I really had not hoped that I would be giving my last report while Europe is at war. But again, I'd like to praise Cees and Heine and the management of Carlsberg for handling the crisis so well. We had the COVID storm and now we are in a hurricane, but I'm very pleased that Cees and Heine and the top managers take try their best to steer Carlsberg through the hurricane. And I really hope that the terrible war in Ukraine will end soon. Thank you for your attention. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]