Coloplast A/S (COLO-B.CO) Earnings Call Transcript & Summary

It's my pleasure to welcome you to this year's AGM. There is direct translation via the company's website. So welcome to you all, whether you are here or outside. First of all, let me introduce members of Board and management. Together with me up here, we have the Vice Chair of the Board, Niels Peter Louis-Hansen; and the company's CEO, Lars Rasmussen. The other members of the Board elected by the AGM are Annette Brüls, Carsten Hellmann, Lars Rasmussen and Marianne Wiinholt. And the 3 Board members that were elected by the employees are Thomas Barfod, Roland Vendelbo Pedersen and Nikolaj Kyhe Gundersen. The other members of the executive leadership team are Anders Lonning-Skovgaard, Dorthe Ronnau, Allan Rasmussen, Caroline Vagner Rosenstand, Rasmus Just, [indiscernible] Thomas Johns Jr. According to our Articles of Association, it is the Board of Directors that appoints a Chairman for the AGM. And as last year, we have decided to point to law firm Bech-Bruun. Man up here, Mr. Kornerup. You have the floor, sir.

Thank you for appointing me Chairman of this AGM in Coloplast A/S. This has taken place in accordance with Article 10 of the Articles of Association, I hope for a good AGM and a good debate. I encourage you to make sure that your mobile phones are turned off, and I can inform you that the press can access the AGM and that they can record sound but no videos. My first task as Chairman of the AGM is to conclude whether the AGM has been lawfully and legally convened and is competent to transact the business on the agenda. I can see that the notice has been sent out in time and that the requirements in the Articles of Association and in the Danish Companies Act have been fulfilled. Therefore, I can conclude that this AGM has been lawfully convened, and I hope that the shareholders can support me in this conclusion. It seems so. Thank you very much. That will appear in the minutes. And that means we have all the formalities in place. Before we started, I can tell you that the access inspection concluded that 122 people are present in the room, of which 90 are shareholders. That means we have 32 advisers, guests, et cetera. Votes represented are 87.14% and 77.9% of the share capital is represented. We have -- in the Board, we received a number of proxies and postal votes, representing 87.10% and 77.84% of the capital. Based on the proxies and postal votes already received, I can tell you that all of the proposals from the Board have a broad support. We also need to touch upon Article 101, subsection 5 in the Danish Companies Act, which calls for a complete account of the voting. That means that we have to account for the number of votes in favor, against, et cetera, even though the results are quite clear. However, the requirement for a complete account can be waived if the shareholders agree. And just like in previous years, I assume that I have the support of the shareholders to deviate from this complete account. That seems to be the case. Thank you very much. Finally, and in more practical terms, I must ask shareholders who wish to take the floor to speak from the rostrum. And to be fair, I ask for you to make sure that you approach the podium with your voting cards and that you come up here and sit down in the front row when it is your time to speak, particularly if you're seated in the back. And so with all of that in place, we can have a look at the agenda for today. You can see it on the screen behind me. And Item 1 on our agenda is the report by the Board of Directors on the activities of the company during the past year. Item 2 is the presentation of the audited annual report. Item 3 is the resolution of the distribution of profit in accordance with the approved annual report. Item 4 is the presentation of the remuneration report. Item 5 is the approval of the remuneration for the current financial year. And then we have Item 6, which is the proposals from the Board of Directors or shareholders. And here, we have Item 6.1, which is an update of the remuneration point. Then we have [ 6.2, ] election items; 7, election of members of the Board; and 8 election of auditors. Item 9 is an authorization to the Chairman of the AGM and then Item 10 is any other business. That leads me to the agenda itself. And as per the tradition here in Coloplast, we will take Item 1 to 4 on block, and we will take a debate on these 4 items as one. That means that I will now give the floor to the Chair of the Board, Jette Nygaard-Andersen, who will present the annual report for 2024 to '25, give a report of the activities of the year, and she will also present the remuneration of -- the remuneration report and the proposal for distribution of profit. The floor is yours.

Thank you very much. I've been looking forward to presenting this year's report. For almost 70 years, Coloplast has had a clear purpose to make life easier for people with intimate health care needs. This year, Coloplast has helped more than 2 million people worldwide. We produced more than 1.6 billion products. And that means that people with very intimate and private conditions have gained access to our products and solutions with a wish to live life on their own terms. And in this way, '24-'25 became yet another year in which Coloplast lived up to its purpose and that matters. But it was also a year where not everything went as we wanted. The year was marked by a downgrade and also a couple of operational challenges. These are circumstances that we would certainly have preferred to be without, but which we have learned from and we've used them to sharpen our focus in future. In '24/'25, Coloplast delivered 7% in organic growth and a profit margin of 28% before special items. And the result was within the updated financial guidance, but lower than the goals that were set at the opening of the year. Our Chronic business delivered a solid year if we exclude China. On the other hand, we experienced certain challenges in Interventional Urology and in our Advanced Wound Care business, partly due to the product recalls. We also saw volatility in the Biologics market, where the postponement of a U.S. health care reform temporarily affected growth in Kerecis in the second half. Although there were some challenges in '24/'25, it was also a year of important decisions that will shape Coloplast's future. The company now stands at the beginning of a new chapter with new leadership and a new corporate strategy called Impact4, a strategy that builds upon what we stand for, but also takes us a step further and strengthens Coloplast's position in coming years. With Impact4, we carry Coloplast's mission forward. We see a considerable potential in helping even more people worldwide, raise standards of care and support health care systems with solutions that make everyday life easier, both for patients and health care professionals. This is the development we will now be embarking on and which I look forward to telling you more about today. But before I look ahead, I'd like to look back at the strategy period that concluded this year, Strive25. Strive25 was an important period in our history. When it was launched 5 years ago, the strategy marked a shift from focusing solely on organic growth to also investing in a new growth platform by means of acquisitions. At the same time, the company strengthened its focus on innovation and new product launches, increased capacity and efficiency in production and sustainability. During the period, we made solid progress. We launched new products and innovative products such as our catheter platform, Luja, which set new standards in the market and received fantastic feedback from users and health care professionals. We strengthened our global production setup with new production plants in Costa Rica and from next year in Portugal, and we invested significantly in automation. We completed major strategic acquisitions of Atos Medical and Kerecis to support our long-term growth and value creation, and we took important steps to operate the company more sustainably. Among other things, we succeeded in reducing emissions from our own operations. This is what we refer to as Scope 1 and 2 by 41% since 2018, '19. These strong advances during the Strive25 period have made Coloplast stronger and better equipped for the future. That said, the period also involved headwind. This was due not least to the COVID-19 pandemic, rising inflation, geopolitical tensions and new market conditions in China. And as a result, we didn't meet all our targets for growth and earnings, and we acknowledge that. We've taken several important learnings with us that have been turned into concrete actions. Among other things, we have adjusted our activities in China, strengthened profitability in our Advanced Wound Care business and streamlined costs in Interventional Urology. The end of the Strive25 period also marked a change in leadership. In May, Kristian Villumsen stepped down as CEO after 7 years in the role and 17 years in total with Coloplast. On behalf of the Board, I'd like to thank Kristian for his many years of service and fantastic contribution to the company. He took us safely through the COVID-19 pandemic, spearheaded Strive25 and played a central role in the acquisitions that will support our growth for many years to come. To ensure continuity, Lars Rasmussen stepped in as interim CEO while the search for the right successor is ongoing. Together with the rest of the leadership team, he has worked to finalize the new strategy. As part of that process, Coloplast presented a new organizational structure and a new executive leadership team in August to unlock the potential of Impact4. And now I'll elaborate on our new structure and leadership team. Going forward, Coloplast will be organized into 2 business units: Chronic Care and Acute Care. The new structure reflects differences in markets, customer needs and business models and is designed to make us more focused and better able to deliver on our 2030 strategy. In Chronic Care, we bring together our core business, Ostomy Care and Continence Care with Atos Medical, which we also refer to as Voice and Respiratory Care. These 3 business areas all hold strong positions in attractive markets with structural growth, an estimated combined market value upwards of DKK 50 billion and a rising demand for innovative solutions. The commercial part of Chronic Care is led by Caroline Vagner Rosenstand, who has many years of experience with Coloplast, most recently as Head of Atos Medical. To strengthen our focus on innovation, we have created a dedicated R&D function for Chronic Care headed by Rasmus Just. Rasmus has returned to Coloplast after several years with Novo Nordisk, and he joins the executive leadership team. In this way, innovation will get an even more central role in the company and focus will be on developing new differentiated products based on customer needs and an ambition to bring them to market faster. As part of the changes, the Board and Nicolai Buhl mutually agreed that Nicolai would step down from his position. I'd like also here to say thank you to Nicolai for many years of service, and I wish him all the best going forward. In Acute Care, we are combining our Advanced Wound Dressings business and Kerecis into a new organization called Wound & Tissue Repair. The goal is to build a stronger global business with greater innovation power and better growth opportunities. The new organization is headed by Fertram Sigurjonsson, who has built Kerecis into a fantastic company with a unique technology. The second business unit in Acute Care is our Interventional Urology business, which will continue to be headed by Tommy Johns. So altogether, Acute Care operates in the market worth more than DKK 70 billion. Within Acute Care, the Wound & Tissue Repair market represents around DKK 50 billion, while Urology represents around DKK 22 billion. And the market grows steadily, driven by the aging population and a rising demand for more advanced and evidence-based solutions. Besides the new organization of Chronic Care and Acute Care, the remaining executive leadership team is unchanged. The search for our next CEO is progressing as planned. And we will, of course, come with an update as soon as the right candidate has been found. And this brings me to the Board of Directors, where changes are also underway. On the 9th of October, Lars Rasmussen announced that he will not seek reelection to the Board after nearly 4 decades with Coloplast. He has played a decisive role in developing Coloplast into the global leading medtech company that we know today, both in the capacity of CEO and Chairman of the Board. I'd like to thank Lars for his many years of service, his strong commitment and his unwavering focus on the people that Coloplast exists to serve. And I'm pleased that we will continue to work together until the new CEO is in place because Lars will continue as interim CEO. With this decision, the Board is focused on ensuring continuity and a smooth leadership transition as well as securing the long-term leadership of Coloplast. And therefore, the Board proposes the election of Niels B. Christiansen as a new member. Niels comes with strong international experience and insight into customer-oriented companies and is the right profile to support the execution of our Impact4 Strategy where the customer is at the center. It is expected that he will be appointed Chairman at next year's AGM at the latest. The Board evaluates its work on an annual basis to ensure that collaboration and competencies are aligned with the company's needs. The annual evaluation shows that we have a strong and trusting collaboration with management and high satisfaction with the Board's competencies. The Board also wants to strengthen its focus on company culture and on talent and leadership development with particular attention to building a strong pipeline of future leaders. In connection with the work of finding a new CEO for Coloplast, we will also discuss which competencies will be needed to supplement the Board going forward. I look forward to continuing our close collaboration with the management team in the coming year, a year where we will truly begin a new chapter for the company with a clear direction towards 2030. And now I'd like to introduce to you our new strategy, Impact4. Impact4 marks the beginning of a new chapter for Coloplast. We call the strategy Impact4 for 3 reasons. First, it is built on 4 strategic priorities that span the entire company and are essential for our future results and value creation. Secondly, we enter Impact4 after a period of significant investments in organic growth and acquisitions. Now it's about unlocking more value from those investments and realizing their full potential. And thirdly, Impact4 includes a new long-term ambition to help 4 million people with our products and services. That is twice as many as we help today, and that is ambitious. Impact4 is, therefore, a plan for our priorities now as well as a long-term ambition for the future. To get there, we must challenge ourselves, strengthen our focus on innovation and collaboration and constantly evolve in step with the changing needs of our customers and users. The first priority is, therefore, about putting the customer at the center of everything we do. Our ambition is to be the preferred partner for users, health care professionals and payers worldwide. In our Chronic business, we have the strongest product pipeline ever. Now we will enhance the customer experience and get even closer to those we help. We want to understand their needs, follow them through treatment pathways and offer integrated solutions that make their everyday lives easier. At the same time, we will continue to set the standards for innovation, supported by strong clinical evidence and strengthen our guidance so both patients and health care professionals can achieve better outcomes. In Acute Care, we also have a strong foundation and a significant potential for the coming years. By combining Coloplast's Advanced Wound Dressings business with Kerecis, we create a unit that strengthens innovation and expands our position within biological wound care. Our goal is to set a new clinical standard through new products, technologies and digital solutions that using AI and smartphone-based applications will make it easier for doctors and health care professionals to use and connect our products and services in their daily work. In urology, the expected launch of INTIBIA in the fiscal year 2026 to '27 for the treatment of overactive bladder will be a major growth driver, especially for women. This is an area with a large untapped potential, where Coloplast can make a meaningful difference. In short, across the business, we will elevate the customer experience at all levels through products, services and partnerships so that Coloplast will remain the preferred choice. Our second priority is about efficiency. We must use our strengths better and create more value with the resources we already have. During the Impact4 period, we will launch initiatives that strengthen both our gross margin and the robustness of our supply chain. We will also increase scaling in our business support center in Poland, where artificial intelligence will play an even bigger role. And to support growth, particularly in North America, we have opened a new business support center in Costa Rica. Finally, there will be synergies from the integration of Kerecis and Atos Medical, which are expected to be completed during 2025 to '26. The goal of all of these initiatives is to make Coloplast even more efficient and scalable and to position us even better for future growth. The third priority is about technology and how we can use it to create better customer experiences as well as more efficient processes. We're launching a 5-year technology program with additional investments of several hundred million Danish kroner to fully leverage the potential in areas such as artificial intelligence. New technology will strengthen our contact with users and health care professionals, enabling us to react faster and more precisely while making our internal processes simpler and more efficient. This will free up resources that we can devote to innovation and growth. Technology shouldn't be a goal in itself. Technology will give new tools to our employees in their daily work. And most importantly, technology is a means to create better solutions for the people who use our products. Priority #4 is about people, culture and sustainability. Coloplast is an attractive workplace. Year after year, we achieved a high score in our employee surveys. This year, it was 8.2 out of 10, which shows that our employees thrive and are engaged in the company's purpose. At the same time, Coloplast today is a more diverse company than before. We have moved from one unified culture to several cultures across the company as a result of acquisitions, all tied together by our shared values and our mission to make life easier for people with intimate health care needs. With Impact4, we will strengthen Coloplast's culture and make the company even more customer-centric with a focus on leadership, development and collaboration that ensures that we deliver on our ambitions. At the same time, Coloplast will continue to work towards a more balanced gender distribution. In 2024 to '25, women made up 26% of senior leadership, and our ambition is a 40-60 distribution by 2030. Sustainability also continues to play an important role. Towards 2030, we will reduce our CO2 emissions within our own operations, that is Scope 1 and 2 by 90%. For Scope 3 emissions in the value chain, the goal is to reduce CO2 by 10% per product instead of the previous 50% per product. The new goal is more realistic and builds on the learnings from Strive25 in working with our suppliers. At the same time, Coloplast has set a goal of becoming climate neutral by 2045, a long-term and ambitious target that reflects our responsibility to the world we're a part of. Impact4 also comes with a new financial ambition towards 2030, an ambition that reflects the reality we are facing with a changed China, geopolitical tensions and greater global uncertainty. All of these place new demands on the company and on our financial goals. We, therefore, enter the Impact4 period with strong ambitions but also with a realistic view of the world around us. From the base year of 2025 to '26, Coloplast's long-term financial expectations are the following: we will deliver organic revenue growth of 7% to 8% with a 5-year CAGR up to 2029-'30. We will drive EBIT growth in constant currencies at or above revenue growth. And we aim for a return on invested capital of more than 20% in the fiscal year 2029 to '30 with an expected linear improvement throughout the period. With Impact4, we will increase value creation for our shareholders by generating organic growth above market levels. We will deliver strong EBIT growth, improve return on invested capital and maintain a solid cash flow. That concludes the review of Coloplast's new Impact4 Strategy and our financial ambitions towards 2030. We enter Impact4 with the strongest innovation pipeline to date and with 2 new companies, Kerecis and Atos Medical as part of Coloplast. And we're investing in new technology and artificial intelligence to strengthen customer experience and enhance value creation. Coloplast is, therefore, in a strong position with new leadership, a strong strategy and many opportunities ahead. And now I will present the key figures for 2024 to '25. Organic revenue growth was 7%. And in Danish kroner, revenue increased by 3% to DKK 27.9 billion. Operating profit before special items increased 5% to DKK 7.7 billion, corresponding to a profit margin of 28% before special items. Gross profit increased by 4% to DKK 18.9 billion, corresponding to a gross margin of 68%. Return on invested capital after tax and before special items was 15%, in line with last year. This year's profit before special items was DKK 4 billion. Total assets amounted to DKK 48.4 billion and equity was DKK 16.1 billion. Free cash flow was DKK 5.4 billion. And at year-end, net interest-bearing debt amounted to DKK 21.7 billion. The Board of Directors proposes at today's Annual General Meeting a further dividend of DKK 18 per share in addition to the DKK 5 per share paid at the half year point. For the full year, dividends will, therefore, total DKK 23 per share compared to DKK 22 last year. This corresponds to a total payout of about DKK 5.2 billion and a payout ratio of 143% after special items. Coloplast's tax rate is extraordinarily high in 2024 to '25 due to the transfer of IP rights relating to the Kerecis acquisition. At a normalized tax rate, the payout ratio is 108% after special items. On the last trading day of the previous financial year, the Coloplast share was priced at DKK 875 on NASDAQ Copenhagen. On the last day of the financial year, I'm reporting on today, this share closed at DKK 543. The return on the Coloplast share from the 1st of October 2024 to the 30th of September 2025 was a negative return of 35%, including dividends paid out in that period. The day before the Annual General Meeting, the share closed at DKK 579. And now let's have a look at the financial outlook for 2025 to '26. In the financial year 2025 to '26, Coloplast expects organic growth of around 7% and around 7% EBIT growth in constant currencies. Return on invested capital is expected to be around 16%. The growth expectations reflect continued solid progress in Coloplast's chronic business, excluding China, and an easier basis for comparison in urology due to product recalls in 2024 to '25. The expectations also include our challenges within Wound Care in China, where we have had to withdraw a product due to local regulations. Coloplast expects reported revenue growth of 4% to 5% with a 2 to 3 percentage point negative impact from currencies. These expectations reflect increased costs related to establishing Coloplast's new factory in Portugal and investments in Impact4. These include investments in new technology, which I mentioned earlier, a commercial opportunity within bowel incontinence in the U.S. and investments related to INTIBIA expected to launch in 2026 to '27. Coloplast's financial expectations assume that the company's products will continue to be accepted from tariffs in the United States and that there will be no significant impact from health care reforms. CapEx expectations are around 5% of revenue and the effective tax rate is expected to be about 22%. That concludes [indiscernible] '24 to '25. With Impact4, we have opened a new chapter for Coloplast, a chapter with new leadership, a strong strategy and many opportunities ahead. This gives us a solid foundation for the results we aim to deliver in the coming years. But before I close, I would like to say thank you. Thank you to our customers and partners for your trust and close collaboration. Thank you to our 17,000 employees worldwide for your dedication, professionalism and the difference you make for our users every single day. Thank you to our shareholders for your support to the company and the direction we have taken with Impact4. And most importantly, thank you to the people who use our products and solutions. You give meaning to our work and your needs drive this company forward. Finally, I would also like to extend a special thanks to you, Lars, whom we are fortunate to keep with us a little longer to ensure a smooth leadership transition. After almost 4 decades at Coloplast, you have made a lasting impact on the company. You have moved Coloplast forward, developed it into a global leading medtech company and led with attention to both results and the people we exist to help. I know that Coloplast holds a special place in your heart. And over the past 10 years as colleagues, I have seen your dedication and passion for the company firsthand. That is why I find it fitting to end with a film that highlights what has always mattered most to you and to Coloplast. The people whose lives we strive to make a little easier every day. Here is the film. Thank you very much. [Presentation]

Thank you, for the report by the Board concerning the financial year 2024-'25, presentation of the annual report and the remuneration report for the same year and the introduction of the distribution of profit. Before I open up for the debate, I can point out that the annual report has been signed by the members of Board and executive team and has also been given an unqualified endorsement by the company's auditor. I can also refer you to Page 158 in the annual report, if you wish to test the correctness of my statement. Also, I would point out that the proposal from the Board has proposed the payment of a dividend of DKK 18 for fiscal '24/'25. And this is for each share of DKK 1. This is in addition to the extraordinary dividend that was paid out earlier this year in connection with the interim result where a dividend was paid of DKK 5 per share. So the total payment of dividend amounts to 143% of the consolidated financial result this year or DKK 5.18 billion.

I will now open up for the debate. We have 3 speakers on my list. First, ATP, Claus Wiinblad. You're the first person to speak representing pension fund ATP.

Thank you. I am Claus Wiinblad, and I represent ATP. First of all, thank you to the Chair of the Board for the presentation of the annual result and the new strategy. Over the past 2 years, some of the largest listed companies in Denmark have unfortunately seen a lot of turbulence in the upper management layers. And this turbulence has caused uncertainty among shareholders and this is reflected in the share price. And that's why we, as shareholders, are punished. The same has been seen in Coloplast. There may be many good reasons why you may need to make drastic decisions. But the way it is done is certainly very important. I will not make any comments concerning the process itself. But I would like to talk about where we are today. We now have a new strategy, a new financial goals, considerable change in the structure of the company and also the upper management level. This is a very unusual situation for a company that so much change takes place just before a new CEO joins the company and a new Chairman. It's usually the other way around. However, I'd like to seize this opportunity to welcome Niels B. Christiansen to the Board. And this in the capacity potentially as new Chair. There is a large job waiting for you. You have to find a new CEO and also work with the strategy in the long term. We now have heard about the new 5-year strategy Impact4 from the Board. And one of the most important initiatives in this strategy is the split into 2 divisions: Chronic Care and Acute Care. As I see it, it gives Coloplast a better opportunity to diversify its strategy to -- and enable them to focus on the 2 different customer segments and markets. It makes good sense, and it will probably help you generate fine growth in the future. Later today, we will also decide on a new remuneration policy, and I also have a comment to make in this respect. The new level for the variable pay with the short-term bonus part is raised. Well, this is not unusual if you look at the peers in the market. But it's important for the new high level also to be reflected in the KPIs that need to be met so that you really get a strengthening of the performance. And this is not just another way of giving people a higher salary. There's also the possibility of an extraordinary bonus up to 300% of the total pay package in connection with new people joining the management level. So this is a very high level. Generally, I'd like to say that the use of extraordinary bonuses is something that we don't really welcome. We understand that businesses need some degree of flexibility. This also includes the possibility of being able to get a newly employed person out of the company where he or she is already working, but it should only be used this with high bonuses on very rare occasions. In connection with the future presentation of remuneration report, we will assess whether we feel that it has been applied in a reasonable manner by a Danish company such as Coloplast. Then to round off, despite the turbulence, I'd like to say thank you to you, Lars, for the huge job you have done in Coloplast, we have had good collaboration and dialogue over the years. We have always appreciated the good and open discussions we've had with you. Thank you very much.

Thank you very much, Mr. Wiinblad from ATP. And let us hear the Chair of the Board.

Well, terminology can be a difficult thing. Thank you, Claus Wiinblad, for your comments and your contribution. First of all, what you said about the changes that we've had at management level and at Board level. It's true. It's been a turbulent year with lots of changes, but we feel that it was necessary to do it. We now have a new organizational structure and a strong team, very strong management team and also an ambitious strategy and a good balance, I think. The introduction of new people at the top level also gives a different kind of dynamism at the level they join us in. So it's good to get new competencies. You also mentioned the new -- the situation with the new CEO and the new Chair of the Board. It's very important that we have been able to focus both on continuity and stability and also to have a good transition, not least from here to the future so that we know that in the long term, we have the right management for Coloplast. So we think that we have provided a good basis, a good transition from the present CEO to the new, good transition from the person taking my chair after me and the fact that we can set up cooperation between the new Chair and the new CEO at a very early stage. And we have -- you know that both Lars and myself have been members of the Board for many years. So there will be new winds blowing. We have many years of experience in Coloplast. I think that the employees elected to the Board together have 84 years of work in Coloplast. And that's quite a lot, but it was important for us to make sure that there was continuity and stability and a good transition to the future. You said that it may not be a very good timing to introduce the new strategy before the new CEO joins us. Well, Strive25, the old strategy expired, and we knew straightaway that we needed -- also to find the new CEO outside our company. And it does take time before you find one and the new person sort of gets acquainted with the business. So it was important for us to make sure that we didn't lose momentum in the process. So this is one of the reasons why we decided to go ahead with that process, and we were pleased to announce our results. But having said that, I also find that we now have made room for a new CEO, and he or she will, of course, have some elbow room when he or she joins us. Also, thank you for your comments concerning the new remuneration policy and the remuneration report. You said that you would check that we operate on the basis of the right goals, and we agree with you entirely. It's very important that you work with the correct goals. It has almost become rocket science these days. But it is important because it is what will underpin our execution of the strategy. We hope that we have reached the right level and that it fully reflects the expectations we have. And all this is what we announced in our guidance, as you know. So I think this was all I had by way of comments and replies to your presentation.

Thank you very much to the Chair of the Board for those comments for ATP. We have one more speaker on the list, and that is Bjarne Kongsted on behalf of the Danish Association of Shareholders.

Right. Good afternoon. I would also like to start by thanking the Chair of the Board for a good and comprehensive review of the fiscal year 2024 to '25. My name is Bjarne Kongsted, and I represent the Danish Association of Shareholders. And I would like to immediately recognize the strong position that Coloplast holds, but I would also like to underline a few areas in which I believe the company could be more clear, more transparent and more ambitious in its communication to its shareholders. I have 3 remarks just briefly. The first area is what I call strategy and investment plans. Coloplast makes significant investments in capacity, in product development and in market expansion. But the long-term continuity between these investments and the expected improvements in margins and competitiveness are still not clearly communicated. Shareholders need more insights into concrete milestones and effects of these investments. Secondly, market pressures and cost management. The market challenges in recent years are one of the most pressing concerns for shareholders. We would like to see a more detailed description of the challenges and the initiatives you are going to launch in order to make sure that margins are going in the right direction. Thirdly, what I call ESG transparency and risk management. In a global medtech company, quality control and compliance are crucial. We would like to see more specific reporting on geopolitical risks, supply chains and environmental impacts. Coloplast has a strong financial position in 2024 to '25 with high earnings, stable growth and good cash flows. But the challenge is the pressure on the market, high costs for transformation and increasing global complexity. Coloplast continues to deliver strong growth and return on investment, and that is a good indicator of long-term financial health. All the while you have the right position to strengthen your portfolio through acquisitions in adjacent medical facilities. By way of conclusion, I have 3 questions to the Board. Firstly, can the Board make it more concrete what sort of milestones and specific effects you expect as a consequence of the significant investments that you have made in capacity over the next few years? And how are you going to measure whether the investments deliver the expected value creation? Question two, what specific initiatives will be launched by the Board to counteract the continued margin pressure? And how can shareholders expect to see margins going in a positive direction? My third and last question, can the Board tell us what concrete risks in the value chains you see as the most critical at present and how you handle these risks, particularly in light of the geopolitical tensions and regulatory changes we're seeing globally? In the Danish Association of Shareholders, we continue to believe that Coloplast will continue its success in the Danish as well as the global market. But this success demands clear goals, strong governance and full transparency towards your shareholders. We encourage the Board to strengthen communication and make it more clear what goals you have set in areas where uncertainty is too high today. Thank you very much for the floor.

Thank you to the Danish Association of Shareholders. There were 3 concrete questions that will be answered by Lars Rasmussen.

Thank you very much, Bjarne Kongsted, for those remarks and questions. I really do understand that you would like us to dive more into these matters. I have been here for almost 4 decades, as we just heard. And it is my privilege to run this company as the CEO right now and since the month of May. And in that period, the changes that we have seen in the company have particularly taken place in China and the U.S. And there are several large changes and more changes than I have seen in the past 15 years put together. So you put together a strategy and each morning when you get up, you have to look at whether the strategy still holds, and it does. But when it comes to specific milestones, we now have a strategy that in a market growing 4% to 5% and where we have large market shares, we expect 7% to 8% growth. And that means we need to win market shares every day. We have lost EBIT margin in the past year during Strive25, partly due to COVID and what that did to commodity prices, but also due to acquisitions and interest costs that have entered our accounts. And we are very happy about the acquisitions, but we can still see this as an effect on the numbers. And therefore, the guidance for the EBIT margin is that we expect to grow at or above our top line growth. And that means that we expect to improve the margin in the current year. We also have a new target now that many of our investors are happy about. It's a very investor-friendly goal, which is return on invested capital. And of course, it has decreased as a consequence of our acquisitions. We have only had organic growth in all these years. And now, of course, our return on invested capital is at 16%, and we expect it to surpass 20% in future. That's a very concrete target that we measure on each quarter. I think that was the easy part of your questions. So now let's move to the difficult part. What do we do in order to counteract the ongoing pressure on margins. It's quite true. We primarily operate in markets where the payer is some sort of public sector institution. And of course, that does entail a certain pressure. At the beginning of this new strategy period, we have a new type of technology. We've all heard of AI, and that's, of course, an opportunity for us to serve our customers better. That's what is most important to us because scaling our business makes it easier to withstand pressure on margins. And the other thing is we have quite a lot of administrative processes as a company selling things, but we also need to invoice insurance companies, whether they are public or private. And this entails quite a lot of work that can be automated, and we expect to be doing that in the coming period. And then we have the ongoing work to get more out of what we already have, and we are already a big company. So we have plenty of activities that we do for the sole reason of improving our margins. So you can't just cut back and become a fantastic company that way. But on the other hand, you cannot become a fantastic company without CapEx and efficiencies. For many years, we have invested in order to achieve a strong position in China, and we have more than 60% market shares in Ostomy in a community in China. But in a market where we used to grow 20% a year, now we are around 0% growth on a good day. And that's because we are seeing a whole different kind of competition in that market. And we can see that reflected in our numbers. So we can see we have -- we are seeing health care reforms in the U.S. and other sorts of reforms. And our task is to make sure that we can again achieve growth of around 7% to 8%. So we definitely feel the pressure, but we are quite sure that we can grow more than the market and that we can improve margins. The final thing were the most crucial challenges in our value chain, which became apparent during COVID. We diversify our supply chain even more at present. We already had production in the United States, in China, in Costa Rica, in Hungary and a bit in Denmark. And now we will also open production in Portugal, a very large factory that we've invested in and that we will take into use by the end of this fiscal year. And that means that we will not have to invest in more factory capacity, perhaps more equipment, but not in any new properties. And that will be beneficial to us. But that is absolutely a risk that we have mapped out. And we feel that we are quite well equipped to face that risk. Another very important matter when we're talking about risk is, of course, cybersecurity and the need to be covered in that department. And here, we are even certified as much possibly as we possibly can. So with what we know today, we are quite well covered. But of course, the risk landscape here is changing all the time, and we do our best to be ahead of the game. And so far, so good. But of course, we cannot rest on our [indiscernible]. Thank you very much again for those questions.

Thank you to Lars Rasmussen. And the last speaker on the list is Bjørn Hansen. Are there any other requests for the floor, then please approach me. And now Mr. Bjørn Hansen, you have the floor, sir.

I am Bjørn Hansen, and I represent a group of small shareholders and large. And I'm also a consultant to people from Norway and Sweden. I have also had contacts in Germany, but unfortunately, for other reasons, they have withdrawn. But first of all, I'd like to say thank you to the Chair of the Board for the presentation of the report. It was a good report. I really think so. And I also wish to thank our current CEO, although he is an interim CEO, it would be fine if there was the possibility of you sort of staying on for about 12 months. But I think it would be good for Coloplast and good for the shareholders if you remain perhaps as a consultant for a year or so. And then a piece of good news. It's wonderful to hear that Coloplast -- and Mr. LEGO, where are you? Is he here? Or is he not? Niels Christiansen will now join the Board and get to know the business and perhaps become Chair of the Board. He is very good at this, and he knows the business from his work with the C25 businesses and from LEGO. It's -- I know this is a different universe, but he certainly knows a lot of things. So that is certainly a game for Coloplast. And many shareholders are likely, I think, to start buying shares in Coloplast again. According to Danske Bank, I don't know whether this is correct, but for the past 52 weeks, it has declined 42%. That is a crying shame. But if we look in the -- to things in the long term, then the 3 best shares that we have invested in. And here, Coloplast is one of them. And in some years, they made a good contribution. And you certainly did well as a company, both employees and management. Then the debt level. We have started looking into the indebtedness of Danish businesses. And it turns out that some of the figures that have been stated by some banks will refuse simply to give the figures. I won't -- Danske Bank [indiscernible] and there were a number of silences while I talk to them on the phone, but they said they would come back to me. A number of years ago, a shipping business talked about -- well, they found out that the figure for their indebtedness had not been corrected, and it was, in fact, DKK 2 billion higher. The indebtedness here is good, and I think it also has to do with the share price. The number of shares I was informed about an hour ago is reflected correctly in the articles and also the level corresponds with my own calculations. And it also means that there is basis for an increase in the share price. Surely, it could go to around DKK 800. Let's not be too optimistic here. But give us 2 years, and I think you will have attained it, in particular, with the plans you have. And the new strategy, I think, has the possibility of a very good impact power. I don't know what I feel about China, but the new production plant in Portugal will start up next year. And I hope that the products from that production plant, well, there will be more than one product because we have a lot of people in the EU. What's going on here? Something is happening. I think the rostrum is going up. Oh, I see I pressed -- well, fine. Thank you. The thing is the number of shares that you have, has there been a change in the holding company? I believe there has. And about 2 or 3 years ago, you became a holding company. That was the right move by management to organize that. I think it's especially a good move when there is to be a change of generation. I hope that this is not for the next 20 to 30 years, but still women now live to the 105 and men folded in the street when they're 80. So that's the way it goes. We should also talk a bit about production plant in Central America. A lot of good products are produced there. It's not only one as far as I have found out. And I'd like to know about whether there are exports to the Unites States from that particular plant. And I have been informed an hour ago that for the time being, no extra customs duties have been placed upon those products. That's fine. And apparently, Mr. Trump has decided not to penalize this particular kind of products. There have been some problems with workers pay there. On the AI, I hit on Google, it says that you have several production plants. And I tried to look into it and it said, 2 production plants plus others. I thought that there was one production plant in Central America. I don't know if it's 1, 2 or 5, but I'm not sure about these AI hits. Is it Elon Musk that is actually behind all this? And is he capable of making share prices go up and down? Sometimes you get the impression AI is fine, but it should also be checked. And who checks it, who keeps control of it? This is all very difficult. Unfortunately, this year, there was not a set of accounts in Danish. And this is what I also want. There are many people, many shareholders who would like this in Danish. In Sweden, when you attend a general meeting, it takes place in the Swedish language. And if there are problems, there will be answers given in Finnish or English. That was [indiscernible]. And in Germany, they speak German and sometimes they answer in English. We get answers in English American, but not in Danish. You were one of the last to hold an AGM in Danish, and that is very courageous of you. You bought a company in Iceland that uses fish skin. I don't know whether this is cod or any type of fish or any species will do, but this is good for the treatment of fire wounds or other types of wounds. There is going to be a meeting about this in Nuremberg. I think this stands a good chance in relation to all the victims of the warfare in Ukraine, and it would be fine to start exporting to these people. So do that as soon as you can. And Merry Christmas, everyone, also to the Chairman of the meeting.

Thank you to Bjørn Hansen for these remarks. There were a few concrete questions, and we will hear an answer from the Chair of the Board.

I will just lower the rostrum a bit again. Thank you very much, Mr. Bjorn Hansen, for your remarks and your words of praise. I understand your remarks on AI. As you ask, thus you will be answered as they say, but I'm glad that you appreciate us having our AGM with physical presence. And I can also confirm that neither Lars Rasmussen nor I are chatbots or any sort of robot. We are both physically present here. And your comment about Niels B. Christiansen, that as I said in my report, we are very happy to welcome Niels B. Christiansen. Unfortunately, he couldn't be here today because LEGO has its own AGM today. So he wasn't able to make it today, but we very much look forward to welcoming him on the Board. Then you asked a few questions about our debt. And as you can see from the annual report, our net interest-bearing debt was 21.6% at the level of last year. And it's true that our debt has increased due to the fact that we have acquired 2 new great companies, but we also have a plan to reduce our debt in the coming strategy period. So that is a focus area of ours. Then you asked about the shares. And I think it would be going too far to start reading out the numbers of shares, but the best sources that you can look at are our Articles of Association. They include the ballot numbers. What you hear from Danske Bank or other sources, I can't really comment on that, but you can count on our Articles of Association. And regarding the other numbers you've seen, again, I will refer you to our own website. That is the best source of information that I can give you. What's that? No. Well, I can definitely confirm that what we write on our website is true. So if you refer to that, then you're quite safe. Then you'd asked about our production plants, and I think I will let Lars answer that question.

Thank you for the questions, Bjørn Hansen. Well, the largest production plant is in Hungary and then we have also built production plants in Costa Rica and in China. And now we have a new one coming up in Portugal. Those are the volume production plants. And then we have smaller plants in other places. And perhaps I should also talk about the fish skins, it's cod, and it works. There's plenty of cod in the sea around Iceland. Thank you.

This was the reply to Bjørn Hansen from CEO, Lars Rasmussen. Any other requests for the floor concerning Items 1 to 4 on the agenda? That doesn't seem to be the case. We have now closed the debate, and I find with your endorsement, of course, that we have now taken notice of the report, and we approve the appropriation of profit suggested by the Board, and we also approved the remuneration report. So I will enter this into the minutes. And this brings us to Item 5, which is approval of the remuneration to the Board for the current fiscal year. This is a regular recurring item on the agenda, and it has the proposal from the Board, which says that the level of remuneration to the Board for '25, '26 will remain unchanged from this year. There will be a basic fee of DKK 500,000 for ordinary Board members. There will be a fee of DKK 875,000, which is 1.75x the basic fee to the Vice Chair. And the Chair will get 3x the basic fee, which is DKK 1.5 million. The proposal is also to pay DKK 300,000 in fee to members of the Audit Committee, but the Chair will get DKK 500,000. With regard to members of the Remuneration and Nomination Committee, the proposal is to pay DKK 200,000 to ordinary members and DKK 300,000 to the Chair of the 2 committees. And then it is possible to obtain compensation for a number of different costs incurred as a Board member. This is a proposal that only requires simple majority. Are there any contributions from the shareholders? That doesn't seem to be the case. I take it then that we have approved the proposal for remuneration to the Board for the present fiscal year. This was Item 5 on the agenda. This brings us to Item 6. And this is also a recurring item concerning proposals from Board and shareholders. There is one single proposal this year from the Board. It has to do with an update of the company's remuneration policy. The proposal is for an update to be made to the company's remuneration policy. The update involves a number of amendments to the policy as described in the convening notice and the draft for the update, which both have been available on the company's website since the 11th of November 2025. The purpose of the amendment is to allow the company to remain competitive with regard to attracting and retaining talent and the main features of the amendments are as follows: the ceiling for variable pay under the short-term incentive program will be increased in order for members of the management in future to receive cash bonuses of up to 150% of the fixed pay. The long-term incentive program for the company will be updated in order for the possibility of allocating both performance share units in future and stock options and the time to maturity for stock options will be changed to 8 years and the ceiling for extraordinary allocations in future will enable the company to pay up to 100% of the individual management members total pay package, but that it is possible to give extraordinary allocations of up to 300% of the individual management member's total pay package if the purpose with this allocation is to compensate for a loss of incentive pay from a former employer. This is what we call a sign-on allocation. And this was also what was referred to by the ATP speaker. And then there is a section about deviations from the remuneration policy. And for the sake of good order, I would also point out that material concerning this proposal and the amendments to the policy have been available on the company's website before the meeting, and we only require a simple majority if we wish to adopt this one. And then Mr. Bjørn Hansen has asked for the floor.

Right. I have a brief question about your new CEO. How far are you in this process? Are we talking 2 years or 2 days? And do you have a Vice Chair, I mean the new CEO? Thank you.

Thank you to Bjørn Hansen. That was a specific question, not concerning the remuneration policy, but about the Chair of the Board. The Chair of the Board will give an answer.

Right. Bjørn Hansen, as I mentioned in my report, we have an ongoing global process, and it is running quite on schedule. And as soon as we have something more to tell you, we will not hesitate to share that with you. But we are in the middle of a global process. So we knew from the outset that it would take some time, but we will tell you as soon as we have any news.

Thank you very much to the Chair of the Board. Does anyone else wish to take the floor under Item 6? That does not seem to be the case. Can I then conclude that, that proposal has also been adopted? I will. Thank you very much. That will appear in the minutes. That leads me to the next item, which is Item 7, the election of members to the Board of Directors. And as the Chair of the Board and several others have said, Lars Rasmussen has decided not to stand for reelection at this year's AGM. Therefore, the Board of Directors proposes reelection of the other Board members who are all running for reelection and they are: Jette Nygaard-Andersen, Niels Peter Louis-Hansen, Annette Brüls, Carsten Hellmann and Marianne Wiinholt. As you can see from the company announcement from the 9th of October and as mentioned here at the rostrum, the Board proposes the election of Niels B. Christiansen as a new member of the Board of Directors. Mr. Christiansen has considerable executive management and Board experience. And since 2017, he's been the CEO of LEGO. As the Chair of the Board mentioned, LEGO has their own AGM today, and therefore, Niels B. Christiansen could not be with us today. Niels B. Christiansen also has extensive Board experience. Among other things, he is the Chairman of the Board. He has been the Chairman of the Board at Demant. And Niels B. Christiansen will not run for reelection at Demant at their AGM next spring. I can also inform you that the other managerial positions of the proposed candidates can be seen from Annex 1 to the convening notice and on the company's website. Are there any other candidates? That does not seem to be the case. And that means that all of the proposed candidates have been reelected or elected for a 1-year period. Congratulations to all of you. That leads me to the next election item, which is Item 8, the election of auditor. Here, the Board of Directors proposes the reelection of EY Godkendt Revisionspartnerselskab. And this applies to statutory financial reporting as well as assurance engagement relating to sustainability reporting. Here, I refer to the audit regulation, and I can inform you that this is as recommended by the Audit Committee, which has not been influenced by any third party or been subject to any agreement under which the election of certain auditors or audited firms or audit firms would be restricted. Are there any other candidates for company auditor? That is not the case. That means that we have reelected EY Godkendt Revisionspartnerselskab. That leads me to Item 9, which is the authorization to the Chairman of the AGM. Here, it is proposed that the general meeting authorizes the Chairman of the AGM, that is me, with full right of substitution to apply for registration of the resolutions passed and to make any such amendments thereto that the Danish Business Authority or other authorities may require as well as to make and apply for registration of linguistic and other non-substantive adjustments to the company's Articles of Association. Does anyone want to take the floor under this very exciting item? That does not seem to be the case. I will, therefore, conclude that the general meeting has adopted this proposal. Thank you. And that leads me to the final item on the agenda, which is any other business. Does anyone wish to take the floor under this item? Anything can happen. You can say anything as regards to the company, of course. And Mr. Bjørn Hansen wants to take the floor. Is it to do with the company?

Wound healing. How many pieces of cod skin does it take to heal the wounds of one patient? There are quotas for cod fishing and there's a hell of a fight also in the area of Greenland -- in Greenland waters for getting the cod that you may actually pull out of the water. So how much can these people actually produce?

Thank you and very specific questions regarding cod and catches that is possible to obtain. Lars, do you know anything about this?

Well, as I said this primarily for deep wounds, wounds that will not heal in the same way as superficial wounds. And what you do is that you take away the live tissue from the fish skin and put it on the wound. And it works as kind of a scaffolding process because it allows the cells from the wound to attach to the skin. And a second layer is added subsequently. I think this is about the size, 5 times 10 centimeters and then you add new layers. Sometimes you use up to 10 skins, but it takes a lot to exhaust the numbers of cods, I think. These people would otherwise have to have their limbs with the wounds amputated. And so this is a very important product. And I don't think that for the time being, there's any prospects of an extinction of the presence of cod in the waters in the north.

This was a reply from the CEO. Anyone else for a comment on the any other business? That doesn't seem to be the case. We have now exhausted the agenda, not only any other business, but also the entire agenda. Thank you for good order and discipline at the meeting, and this leaves me with signing off as Chair of the meeting, and I will now give the floor to the Chair of the Board for a final conclusion.

Thank you very much. I would like to thank you too for a job well done as Chairman of the meeting, and thank you to all the shareholders that have taken the time to turn up today in the flesh. Meeting is closed, and I wish everyone a Happy Christmas.