GN Store Nord A/S (GN) Earnings Call Transcript & Summary

Good morning, and welcome to GN Store Nord Annual General Meeting 2024. My name is Jukka Pertola, and I am the Chair of GN's Board. So welcome all shareholders here in GN's head office and also a warm welcome to everybody who is attending via online. Welcome also to the Board of Directors and GN's executive management and leadership, and welcome to our auditors. A few practicalities. I will speak English, as you can hear, and so will our CEO, Peter Karlstromer, our Chair of the Meeting, Klaus Sogaard, will speak Danish, and the slides behind me will also be in Danish. If any shareholders have questions or comments, it's perfectly fine to do it in Danish. If you need translation to either Danish or English, you can borrow a headset. They are down there. The meeting will be streamed online in English and Danish. And as stipulated in our Articles of Association, the Board appoints us here to conduct a meeting and we have our partner with Gorrissen Federspiel, Klaus Sogaard to preside the meeting. With this, I will give the floor to Klaus Sogaard, who will guide us through the meeting.

[Interpreted] Thank you very much. I will be speaking in Danish. And as it was said, if you need translation, there will be headsets available at the back of the room so that you can listen in on in English. First of all, I need to find out whether the meeting has been legally and lawfully convened and whether we acquire it. I will not bore you with too many formalities. I've checked all this in advance and my conclusion will be available forth with. Just a couple of conditions that need to be met. It appears in the Articles of Association that we must have the meeting in the region of Copenhagen, the capital region, and it must be held in March or April. The convening notice must be issued a 3- to 5-week notice. It was done on the 19th of February. There will be a convening notice on the website and also by mail -- e-mail to those who have so requested. In the articles and in Danish legislation, there are requirements concerning the content of the convening notice and the documents made available on the website and also what is to appear in the agenda. I can also point out to you that shareholders wishing to have something discussed at the meeting must submit such proposals, minimum 6 weeks in advance. We have not received any such proposals not before 6 weeks, not after 6 weeks. With regard to representation, a total of 137 admission cards have been issued, 99 to shareholders, 39 have given proxy to the Board and 572 have sent in their votes in advance. If you use this kind of proxy you could do so all the way up until yesterday but an ordinary proxy that can also be withdrawn need to be received the week before. At the start of the meeting, a total of 49 shareholders were present. About half of those who had asked for entry cards. This is usual for AGMs in Copenhagen. The representative capital is about 57% of the total share capital. This is quite well done. And out of this, 94% have already voted by sending in this special form with indications of their votes. And also we have received support to the proposals from the Board by much more than 2/3 majority. So there will be no doubt at all before we even begin as to the outcome of the votes. But that shouldn't prevent us from having a good discussion. But I think it means that we don't have to have actual votes because of what we have received in advance. The -- well, the tension has already been taken out of this. Let's look at the agenda. As per usual, the first 4 items will be dealt with in one go by the CEO and the Chairman of the Board, is report by the Board of Directors, is submission of the audited annual report for approval, it is a resolution of discharge to the Board of Directors, and decision on application of profit or covering of losses. I will now hand over to Jukka Pertola. You have the floor, sir.

Thank you, Klaus. 2023 was a busy year for GN. Not only did the markets present us with a mix of tailwinds and headwinds, we also had to handle a challenging capital situation as well as fundamentally transforming the company organization. I will take you through the highlights of the year and our CEO, Peter Karlstromer will give you more insight into the business operations and how we view the markets and our opportunities going forward. The very short version of the story is that we feel it is going very well. And we have, as a company, indeed, turned a sharp corner looking towards a much brighter future than we saw at last year's Annual General Meeting. Let us first take a look at the numbers. I'm happy to say that we have delivered on our commitments, thanks to strong execution across our business activities and functions. In GN Hearing, we gained market share leading to 13% organic growth, driven by the successful ReSound OMNIA portfolio. In GN Audio, we executed well in stabilizing but quite negative markets. We have maintained our market-leading position in Enterprise and throughout the year gained market share with SteelSeries. On a group level, we ended with flattish growth and revenues of DKK 18.1 billion. We reached a 10% adjusted EBITA margin and delivered a strong cash flow of DKK 1.1 billion. In total, we have been able to reduce our debt by DKK 4 billion. This significant reduction of debt was possible because of a successful execution of the new capital plan that we announced in May last year. We raised DKK 2.6 billion in new equity. We refinanced debt on attractive terms with a new DKK 6 billion term loan facility. We sold nonstrategic assets of -- for a total of DKK 1 billion. And very positively, we saw that a serious operational measures paid off generating DKK 1.1 billion in free cash flow, excluding M&A. The execution of this capital plan extended the maturity of remaining material debt to the third quarter of 2026. And we reduced our debt leverage to 4.5x and continue to move forward towards our goal of maximum 2x debt leverage. This allows the Board and daily management now fully focused on the business and the execution of our strategy. We are confident that these actions place the company in the best position to continue and further develop our innovation strategy built on 155 years of technology-driven enhancement of vital human senses with the company's overarching purpose of bringing people closer. A central piece of this strategy is transforming GN into one fully integrated innovation powerhouse with a much simple governance and organization. At last year's Annual General Meeting, we described our strategy to increase the sharing of technologies between our different R&D organizations and to drive synergies between our go-to-market models to realize the benefits of an integrated GN Group. As a natural continuation in September 2023, we announced the next step in transforming GN's businesses into a one company setup and simplifying the group's governance structure. Today, the fundamental design of our new organization is largely concluded, and we have now moved into an execution of new ways of working, aiming to deliver both financial benefits and multiple advantages to our customers, partners, employees and shareholders. Capturing the full potential of working as one fully integrated company will over time include accelerating our innovation output, harvesting scale benefits, becoming a best place to work company and delivering attractive value creation. Our business activities are now organized in 3 focused divisions with accountability for customer and business benefits via success, Hearing, Enterprise, and Gaming & Consumer. These divisions are supported by strong functions of -- to drive scale across the company, R&D, operations, finance, people and culture, IT and strategy and transformation. The leaders of these divisions and functions of scale together with the CEO and the CFO constitute GN's new executive leadership team. In early September of last year, we announced Peter Karlstromer as the new Group CEO. Together with Group CFO, Soren Jelert, he forms our executive management. Peter and Soren very experienced executives who both joined GN in 2023. And I'm happy that the 8 leaders of our divisions and functions in our new executive leadership team are all recruited from within. All seasoned and very capable GN leaders. In combination, this leadership team provides GN with much executive and functional experience and competencies as well as new inspiration. This more streamlined and customer-focused organizational setup will enable GN to further expand our competitive position in attractive markets, returning to growth and increasing margins, and we are already seeing this team beginning to deliver great results. Now let me turn to our performance in some of the nonfinancial areas, environmental, social and governance topics. In 2023, we made significant progress towards our sustainability goals. Our current sustainability agenda is centered around 3 pillars: Health, climate and products and packaging. In the health pillar, we met our target to help 10 million people with hearing loss ahead of our 2025 target. This is a great result of our employees who take pride in helping people with hearing loss through innovative technology. In the climate pillar, we made significant progress towards our decarbonization goals. We have reduced carbon emissions by 34% compared to 22% in Scopes 1 and 2. That is the part of our supply chain that is fully in our own control. And we have reduced carbon emissions by 24% in Scope 3, which is partner emissions, which are only in our indirect control and thus, way more difficult to impact. With the plans and activities we have initiated, we expect a major decarbonization effects in Scope 3 to take place in 2025 to 2030. Finally, we have reduced our carbon footprint of business travel per employee by 17%. by 2030, we will reduce absolute CO2 emissions from our own operations by 80% and from our value chain by 25% from a 2021 baseline. These targets were validated by the science based targets initiative in 2022. We are committed to reaching net 0 by 2015 at latest. In the products and packaging pillar, we have significantly increased the use of recycled plastics in our products and are on track to meet our 2025 target, while the vast majority of our packaging already now meets the sustainability requirement set for 2025. As is described in further detail in our annual report, we have also taken several initiatives to ensure that we maximize the value we extract from every resource we use from design, source of materials, recycling, reparability and much more. GN is subject to the European Union Corporate Sustainability Reporting Directive, and in accordance to this, our annual report 2024, will comply with this -- with its reporting standards. And then something about our organization. GN fundamentally believes that the diverse leadership and organization are key to success as an innovation leader and thus, we embrace differences. To stay relevant as business, we need access to all employees' competencies, creativity, engagement and loyalty. We need the best talents, and we need diverse talents. Diversity, equity and inclusion are strategic priorities for GN. Therefore, we want to accelerate our progress in this area, and we are taking a number of initiatives across the company. We focus on diversity in general but also gender diversity when hiring our graduate program, which forms a pipeline of future leaders. Over 50% of participants in our talent development program are women. Over 50% of the participants in our mentoring program are women. And finally, in 2024, GN's executive leadership have bonus targets driving gender diversity across the company. We look forward to seeing these and many other initiatives bear fruit. At the board level, 2 new members are today proposed to election, and I will present them a little bit later. This means that we will have 4 men and 2 women elected by the shareholders, which brings us to 33% of the underrepresented gender. In the future, the Board will still have its ambition to have at least 40% of the underrepresented gender. And then I will come to the tax payments made by the company. The tax GN pays is an important part of our wider economic and social impact, and a key mechanism by which GN contributes to the development of the countries where we operate. GN is committed to paying tax responsibly, complying with tax regulations and acknowledges its responsibility to stakeholders to meet expectations of good tax practices. The GN tax policy is reviewed annually and approved by the Board of Directors. We monitor and support the international initiatives, building trust in tax management and payments of multinational companies. In acting responsibly, we disclosed our main taxes paid on a regional level and for Denmark separately. For the financial year 2023, our estimated corporate tax payment amounts DKK 175 million and our effective tax rate was DKK 22.4 million. And then about the dividends and share buyback programs. As mentioned earlier, GN's new capital plan and the company's performance in 2023 has taken us a long way in reducing our debt. However, we still have more debt than we would like to. So our focus continues to be to reduce this. We will prioritize to get our net interest-bearing debt down to 2x to EBITDA. In accordance with our dividend and share buyback policy, we will, therefore, not pay out dividend in respect of the financial year 2023 and share buyback programs have been paused for the time being. Then I come to the remuneration principles of Executive Management. The various components of remuneration offered at GN are set to balance the sustainable management of GN strategy and long-term ambitions with the achievement of short-term results. The remuneration structure ensures that the company's executive management is rewarded according to market practice and with a clear link between performance, the value generated for shareholders and pay. GN's remuneration policy is covered by the Board's Remuneration Committee and is approved by the Board in the Annual General Meeting. We have the notice to convene proposed specific updates to the remuneration policy. The purpose of the proposed updates is to ensure that GN's remuneration policy is in line with market practices and effectively enables the company to continuously attract, retain and motivate the right talent for its executive management. At last year's Annual General Meeting, the remuneration report for 2022 was presented for an advisory vote where it did not carry a majority. Subsequently, we have consulted with several key investors and listened to their feedback. As reflected in the 2023 remuneration report, the following steps have been taken to further enhance transparency and address investor feedback. Number one, no in-flight have been made to the targets or adjustments to the performance relative to the targets in the short-term incentive plan. Number two, no discretionary adjustment of bonus achievements has been made. Number three, we are disclosing the CEO pay ratio for 2023. Number four, we are disclosing the share ownership guidelines for executive management. And number five, we are disclosing the peer group for the long-term share option-based incentive plan. We hope and trust that these measures satisfy our shareholders. And then remuneration of the executive management. In line with the principles in the remuneration policy and based on the company performance, executive management received a remuneration that you can see here. It should be noted that the short-term incentives for Peter Karlstromer and long-term incentives for Soren Jelert includes sign-on bonus to compensate for lost equity with their previous employer. For a full and detailed account, I will refer to our remuneration report, which is available at the company's website. Board remuneration in 2023 totaled just over DKK 9 million. Based on the principles in the remuneration policy and fee amounts approved by the Annual General Meeting last year, which are shown on the slide and also detailed in the remuneration report. As I mentioned, 2023 was a busy year, and this was also reflected in the board's meeting activity in GN Store Nord Board alone, we had 22 Board meetings during the year. For this year and going forward, the Board proposes some changes to the fee structure. The intention is that the changes will not cause any substantial change in the total amount of remuneration paid for each board member. But as a consequence of the transition to a simplified one company setup, Board members elected by this Annual General Meeting will only serve as Board members of GN Store Nord and not as previously also for GN Hearing and GN Audio. The workload, however, for each shareholder elected Board member will remain the same as they will oversee the whole GN Group. Fees previously paid to members of the 2 subsidiary boards are consolidated into one board fee. The proposed fee structure and amounts can be seen here and was also detailed in the notice to convene. But as mentioned, the total remuneration for the financial year 2024 remains substantially at the same level than in 2023. So this is just part of the ongoing simplification of our governance structure into a one company setup. The Board yearly conducts an evaluation of its work to which the Board can track performance, strengths and development areas. In 2023, the Board performed a more comprehensive board evaluation with the assistance of an external adviser. The evaluation and personal interviews tailored online questionnaires, a mapping of the board composition and competencies, board composition, benchmarking and analysis of the time spent during Board meetings. Additionally, various documents were reviewed, including agendas, board material and committee charters. Individual board members received constructive feedback on their performance and contributions as part of the evaluation. The result of the board evaluation, including practical recommendations was discussed at the Board meeting in December 2023. The general conclusions were that the Board members are empowered to express their thoughts and opinions, they meet well prepared and they are highly committed. However, the Board in many ways, hit the perfect storm in 2023. On the back of the pandemic supply chain challenges and the acquisition of SteelSeries, GN experienced inflation, increased interest rates, high debt and a negative share price development. Moreover, GN simultaneously onboarded a new chair, a new CFO, a new CEO, and introduced a new governance structure. Based on this and the board evaluation, it was proposed that the Board should focus on maintaining board discussions at the strategic level while continuing to build an encouraging and valuable relationship with executive management. The Board and executive management feel that this has been a valuable process, which has helped us to move forward in a constructive way. Our current Board consists of 4 members elected by the Annual General Meeting and 3 members elected by the employees in accordance with the Danish Companies Act. Since last year's Annual General Meeting, 2 members, Montserrat Pascual and Ronica Wang decided to step down from the board. I would like to take this opportunity to thank them both for their services and dedicated commitment to GN, Montserrat since 2020 and Ronica since 2015. Pursuant to the company's Articles of Association. GN is managed by a Board of Directors of 5 to 9 Board members elected in the General Meeting. Evidently, we have dropped the light below 5 members. After conferring with our legal advisers, we decided that it would suffice to wait for today's Annual General Meeting to supplement the Board with 2 new members, which is what we propose today. The Board proposes that 6 members of the Board of Directors are elected by this Annual General Meeting. The Board proposes the reelection of Helene Barnekow, Anette Weber, Deputy Chair; Klaus Holse, and myself for a term until the company's next Annual General Meeting. As the 2 new members, the Board proposes election of Kim Vejlby Hansen and Jorgen Bundgaard Hansen. When recruiting Board members to fill the empty Board seats, we have with external assistance search for candidates globally with the experience of one or more of the areas that were deemed relevant for the Board based on the Board evaluation that I mentioned before. We have, in particular, looked for candidates that have CEO experience, relevant industrial experience, board experience, technical innovation experience as well as global leadership experience, not least in relation to our very large U.S. market. We believe that we have found 2 very strong candidates who will add important competencies and significant experience to the Board. Kim Vejlby Hansen is CEO at the globally operating company, FOSS. Kim has deep expertise within executive management, business development, M&A, product development and therein software, hardware, digital signal processing, actually, including also hearing aids. He has also has experience in quality, service and sales support, production, procurement and logistics. Kim, could I ask you to stand up so that the shareholders can see you? Thank you, Kim. Jorgen Bundgaard Hansen is CEO and Chairman of Gravitas Medical and based in the U.S. Jorgen is an experienced international leader having lived and worked in Europe, U.S.A. and Asia, where he has led large organizations with a global agenda of growth and major transformation, especially within health care. Jorgen brings a wealth of expertise within strategy, M&A, sales, marketing, medtech, R&D and supply chain, which will benefit our work in the Board. Jorgen, unfortunately, was unable to be with us today because a long planned prior engagements in the U.S. where he lives. All candidates proposed for reelection and election are considered independent as defined in the Danish recommendations on corporate governance. So with this, I would like to ask our CEO, Peter Karlstromer, to provide the shareholders with some more insight into our business and how we look at our opportunities going forward.

Thank you, Jukka. And let me also say a warm welcome on behalf of myself and the executive leadership team to all of you here present in the room but also present online with us. It's great to see you all. As Jukka explained here, 2023 has been a year with a very good progress for our company. I think we have strengthened our business across the board. We have maintained high market share or been growing market shares across our businesses. And we also successfully addressed the balance sheet, which were in a strained situation a year ago. So in essence, I will say, today, we are a much stronger company than we were a year ago. So if we can move to the next slide, let me just share a few thoughts and facts on our businesses. And here, you can see how we performed 2023 and how we're planning to execute our business for 2024. And the 2024 numbers is also the guidance we have given to the capital market. So in 2023, our revenue growth was negative 1%. Some businesses grew much faster and some had some difficulties in this market. But I would say, overall, a solid execution. What's very positive is that we finished '23 with a very good momentum across our businesses. And as such, we're also planning for '24 with a very healthy growth. We've given a range of that between 2% and 8%, and the range is largely due to external factors on the economies and the market developments. In every situation, we believe, will continue to perform very well on the parameters we can control. Then margin is, of course, also very important for us. In '23, we delivered an EBITA margin of 10%, and for '24, we are planning to increase this between 12% and 14%. And I think the range also largely depends on how the top line develops. A more healthy growth of the company also provide support for a stronger margin. Then when it comes to the free cash flow, in 2023, we delivered a free cash flow of DKK 1.1 billion, which helped to deleverage the company. A significant part of these were planned inventory reductions that successfully were executed. As we're now moving into '24, we have guided the market to say that we will deliver in excess of DKK 700 million free cash flow. This number is not -- I mean, assuming a major inventory reductions, this is a pure cash generation from our operational activities. I will come back here a little bit later to touch up on the different businesses we have. And as you noted, we changed our corporate structure, we're also changing the way we report. So going forward, we will talk about our Enterprise business, our Gaming & Consumer business and our Hearing business, and that's also how I will comment on our businesses. If we can move to the next slide, before going into each business, let me just a bit further touch upon how we are organized. And Jukka also mentioned some of this here earlier in his speech. We have 3 divisions now in the company. It's Enterprise, Gaming & Consumer, and Hearing. These are led by very seasoned business leaders that wake up every morning to just make sure we're doing the best to drive success for our customers and deliver a very healthy business in each of these markets. But then they are supported by our functions and the functions that are now supporting the whole company, and that is what is new. Before we have 2 separate companies working very much individually. Now we're bringing this together into one company. And here, we will gain a lot of scale and a lot of benefits. In R&D, we believe that working closer together across the business will really help us innovate better to deliver more exciting innovation to the market and as such, also drive further success in each of our businesses. Then in operations. As a company, we have a significant amount of production of products across our businesses. We're now uniting this into one organization, really make sure we have an optimized supply chain and operations set up across the company. This will yield a lot of benefit for each of our businesses and also benefits financially and to our shareholders. We already before shared functions in IT, in finance and HR, and we are keeping those in place but I would say, taken a further step in terms of further investing and professionalizing those. So all in all, I think we're moving towards a setup that is easy to understand, easy for our employees to navigate. We're taking away quite some barriers for interactions. And I think this also will serve our shareholders very well over time and also create a very healthy transparency into our business. If we can take the next slide. This is our executive leadership team. We have Soren here on the first bench as our CFO and myself, constituting our executive management team. And then we have the 8 experienced leaders leading the divisions and functions I just went through. We're already operating today as a very tightly knit team. We are meeting very frequently to discuss how we can bring GN forward with the benefit for our customers, our employees and our shareholders. We believe a lot in the growth, innovation and long-term benefits of what we're doing here. But it's also actually resulting in some short-term cost synergies. We have announced those to be DKK 600 million and DKK 400 million out of those, we have committed to deliver already this year, and I would say it's well on track. So all in all, we believe we're now setting ourselves up to have a simpler, more transparent and more powerful way of running the company, and very much believe in terms of this structure as we move forward. If we can take the next page here. So let me now go through each of our 3 divisions and the businesses, both a few comments on what happened 23 but also how we see the year ahead of us. Let me start with the Hearing business. Here, I will say we had a fantastic year in 2023, and we're very proud of what we accomplished. It was a healthy hearing aid market, supported by the structural trend of growth with the demographics and also the need for more hearing aids but we actually grew significantly faster than the market. And the way we did that was by introducing great hearing aid platforms. We first had our OMNIA platform really delivered well. And later in the year, we launched the successor, the Nexia platform. And this platform really help our users to hear better. I think it's as simple as that. It helps to hear better in noise environment, it helps to hear better in a broader sense of situations. But they are also better platforms in terms of working with for the audiologist and making a much easier interaction with our patients. So the wider value proposition of a Hearing is, we believe we have really strengthened those. And with next year, we actually are the first company in the world that is launching Bluetooth Low Energy and Auracast, which is a new level of connectivity, which makes it much easier for people with hearing losses to listen in public spaces like this on a theater, some cinemas or wherever you go where there's a lot of people. So we're very proud of this innovation really to create benefits for our users. And then Nexia, also, it's a very small hearing aid. We believe it's still the smallest one in the industry. And that is very important for all the users to have something that provides comfort and many of our users also would like to have a hearing aid that is not visible, so apparent. So all in all, we believe we're doing really, really well. In '23, we grew with 13%, which is significantly faster than the market. And in 2024, we are planning for continued growth in addition to the market growth, gaining further market shares. The range of growth we have planned for is between 8% and 12%, and the market we estimate to be around 4% to 6% of growth. So all in all, a great momentum and great progress on our Hearing business. Let's move to the next slide. So let's move to the Enterprise division, which is another significant part of our company. Here, we are doing, in particular, headset for professional use and video systems. And in 2023, we defended our market-leading position, in particular in headsets, where we have around 50% global value market shares. The market itself were challenged and it kind of adjusted after the COVID growth but we've really executed well and maintained the strong position we have in these markets. We also launched new products. We launched the Jabra Speak 2. Many of you might have seen the small speaker phone, the round ones and the new ones are launched in a very nice sleek design with even more performance and functionality. And we also launched new headset in the Jabra 2 Evolve range and those really are excellent equipment for hybrid work. And then on the video side, we launched the PanaCast 50 room systems that really strengthening the portfolio and our innovation around video systems for video meetings. And so all in all, I think we did very well. The market itself started to stabilize during the year. It was very difficult in the beginning of the year. But over the year, we saw more stable volumes in the market and towards the end, even more stability. And we're also picking up some -- the same kind of messages from our largest customers and partners in the markets. So we believe that this year, in our main planning, we will see a return to growth for our Enterprise business. And the way we have planned for this is to be a growth somewhere between negative 3% to plus 5%. And depending on when the market turned back into growth, that determine also the outcome here. So all in all, it's been a bit of a challenging year for the Enterprise market but we actually performed very well in everything we can control. So we're well positioned for market recovery and continue to do well in the Enterprise business. Let's move to the next one. So let me go to the third division, which is Gaming & Consumer. Here, we had an outstanding year for gaming equipment business under the SteelSeries brand. They grew with 16% in a market that didn't show any real growth. The market started quite in a tough position at the beginning of the year, stabilized over the year. But our teams really did very well, launching new products and executed very well out in our channels. And in essence, the SteelSeries offering is very much appreciated by gamers all across the world. We are strong in the headset space, growing strength in the keyboards and mice, and also launching new products like the SteelSeries Alias screaming microphone. So all in all, a great year for SteelSeries and Gaming business, and the teams are really performing well and are gradually strengthening their market-leading position. Then on the Consumer products outside of gaming, we also made significant progress. We launched our Jabra Elite 8 Active and Jabra Elite 10, which are the most advanced true wireless earbuds we have launched until today. They were launched towards the end of the year, been very well received in the market and is helping us to further move into premium brand also in the wider consumer side. So all in all, a year of great progress in the Gaming & Consumer division. And as we're planning for '24, we believe we'll be able to grow this business somewhere between 2% and 10%. So if I sum it up, we feel good about the progress during '23. We are finishing '23 with a good momentum across our businesses, and we're planning for '24 where we would like to grow faster than the market with improved margin and a healthy cash flow. So with that, I'd like to hand it back to our Chairman, Klaus Sagaard.

[Interpreted] Thank you very much. This was a report from the Board of Directors. And also, we will now be addressing all items from 1 to 4 on the agenda. Please come up here when you take the floor because we need everyone to be able to hear you. First, we will be hearing from ATP, the Danish supplementary labor market pension scheme.

[Interpreted] Thank you. So as you heard, I'm Claus Berner Moller, and I represent ATP. I'd like to start by thanking you for the report and the review of the financial statements. '23 was a year with tailwinds and headwinds for GN. '23 started tumultuously because the Board had to withdraw a proposal at the Annual General Meeting. This was the authority to add another DKK 7 billion. And that gave the Board a difficult task handling the debt. And it's been a focal point ever since. GN has reduced its net interest-bearing debt in 2023 from DKK 14.6 billion to DKK 10.6 billion. This has been done through a capital extension of DKK 2.6 billion positive cash flow, leaseback of the head office and divestments. The DKK 10.6 billion is still a high level of debt compared with earnings. But if you expected earnings development in '24 is delivered, then the debt will be of a more manageable size at the end of '24. '23 was a good end for the first part of the integration of Hearing and Audio. GN is now one company with one CEO and one CFO. This simpler structure, which ATP has been talking for in recent years. This will give synergies of up to DKK 600 million. GN expects to deliver 2/3 of that in 2024. In '23, you delivered 13% top line growth. In Enterprise, it went down by 16% due to the difficult market conditions. Gaming & Consumer part had high growth in Gaming but a big decline in Consumer. So anyway, '23 was a year with tailwinds and headwinds. I would like to know more about the opportunities at GN seeing from the new company structure. And here about the most important risks and challenges now that you have changed your structure. GN, in recent years, has made a lot of progress in ESG. On behalf of ATP and our ESG team, I'd like to say that we have had a good dialogue with GN on biodiversity. And we are convinced that the company is looking at the most important element of its supply chain. Next year, GN will be reporting under the new CSRD, the new sustainability reporting scheme of the European Union. This is quite extensive. There are about 1,200 different data points within 10 themes. I'd like to ask you how GN is working to ensure its focus on the most significant items here in this sustainability reporting. Over reporting gives unnecessary complexity, I would say, increases costs and the reader of the report will thought it would be lost. Thank you. I'd like to thank everyone for GN for the results in '23. I wish the management and employees. Good luck with the challenges in the coming year. Thank you.

[Interpreted] Thank you to Claus Berner Moller. I give the floor to the Chairman of the Board to comment on the specific questions.

[Interpreted] Thank you for good cooperation for many years and your support that we've had for many years from ATP for GN. Thank you very much for that. And thank you for your relevant questions. As we told you, we have done quite a lot, made quite a big change in the organization. We have simplified the company, I would say. We also think that we have made it more competitive, and we will see quick effects from that, I believe. There's a big change. You also asked what are the most important risks and challenges and opportunities when GN introduce such a change? First of all, the opportunities, has already been mentioned but we do believe that when we add everything up. We can create more economies of scale in our research and development. All of our development work, we can also have advantages with go-to-market models. We address the consumer market and the enterprise market and the hearing market. We do believe there's more and more of an overlap. Among the 3 markets with the new organization, we can better address these synergies. And not least, we see synergies in our production and supply sector. So this will also be a matter of more of economies of scale. In a big transformation, we have now a strong executive leadership team where we have a new style of leadership, and we've also had external systems so that we can keep focus on the transformation. We have an integration office that has experienced internal and external resources. So we hope that all the risks that exist that they are manageable and we have them under control. But it's a big change for the company, that's for sure and both for management and for all the employees. But we do believe we're doing quite well. Your second question is also very relevant. The CSRD reporting and ESG reporting much more extensive. We have good resources also to have that in hand to manage that. And as Klaus says, we have to be careful not to drown in all this reporting. We must have time to focus on our business. And I do believe we've done that quite well. We have a double significance assessment where we found that only about 50% of the ESG data points are covered by the CSRD, only 50% of it is relevant for us. So that reduces the burden, that's for sure. And we do believe that it's on a par with corresponding companies. It's important for us to report but not just to report but also to live by these new ESG challenges. It's not just good for the surrounding world but it's also good for business if we do it right. We will have better management of our resources, energy consumption and it will help us to ensure we can remain profitable. So we focus on ESG and I do believe at a suitable level. Thank you.

[Interpreted] It's comforting that we don't need to go over 1,200 reporting items next year. Anyone else with Mr. [ Bayer, ] you have the floor. If there are any other requests? Yes, there is someone at the back, right, your next.

[Interpreted] Thank you. I see that some companies this year have started conducting their AGMs digitally only. That is not democracy because you need to meet people and look them in the eye, and you can do that at a physical AGM. So I hope that you don't have any plans of making this into a wholly virtual AGM. I don't think legislators in Denmark don't know what the people really want. They focus on something entirely different. And this is not a good situation. I think you should be very careful and wary of these people that are trying to take away power from us. If we don't have cash any longer, we have in a very vulnerable situation if someone else prevents us from really being in control of our investments. Now EBITA, you said that in '23, it was 10%, and you expect growth to 12% to 14% in '24. But in the account, in the 5-year overview, it's 6.8%. So I don't really get what's -- there's something here I don't understand apparently. There are two different levels indicated. Also, concerning the share programs that you operate, how about share programs for employees, share price is low right now also because of the low figures. But if you have a low sort of performance, you don't have money to buy shares to give to your employees. So I just want to attract your attention to the good idea in buying treasury shares and make -- but you should also be wary of the situation where you all of a sudden make it extremely attractive to employees to get these shares that have been purchased at a very low price, and then they can sell them at a high price. It's not thanks to them that the share price has risen, it's due to the market forces. And you didn't talk a lot about this year's annual result but maybe you don't want to get into that sort of the final result, DKK 286 million last year. What do you expect with regard to the bottom line for next year? You talked about 10% to 12% to 14%. Surely, that should be reflected in a higher bottom line.

[Interpreted] Thank you. Mr. [indiscernible], four questions. We'll come back to them. First of all, you gave praise to the Board for still having a physical AGM. Number two, you wanted a key figure that we can now hear in a while from people seated up here. Then you talked about the shares and the share programs and then the expected annual results for the year forecast for 2024. But while you think about how to reply, we will hear the next speaker on the list, and I'd like to hear if there are anyone else. Well, for the time being, this is it. But let's hear the next speaker.

[Interpreted] Thank you. I'm [ Fleming Alex. ] I attended another AGM in the Demant company, and they said that they were going to divest their gaming service that's big with you. I've not attended your AGMs before, but I understand that this is very important. If they are planning to divest their gaming service, would that sort of involve new competition for you?

[Interpreted] Well, that was short and sweet. Before I hand over to the representatives up here for a reply, I take it that we have now exhausted the number of questions in the audience. Let's hear from Jukka first.

[Interpreted] Thank you for your question. First, to [ Kent Bayer ]. We are not planning to use a digital AGM. We are not going to do that. We'll continue the way we're doing it today, so that you can turn up. You can follow it online but you can also turn up here in the room. The result, there's been a bit of a confusion there that different lines in our financial statements. We have the adjusted EBITA. That's what we're talking about. This is what we report. And -- so adjusted has different one-off items that I included there. So the LTI program, we agree that the share price is quite low right now. So obviously, it can be good for our employees to buy shares right now, as you mentioned. We have a long-term incentive program, LTI program for our management and many employees. That's the purpose of pursuing our goal, which is also the goal of the shareholders. There was one more thing wasn't there? I forget what said the speaker. Yes, the result for '24, I think it's better that our management will comment on that.

Again to build on what you said, Jukka, I mean in the end, it's a bottom line that in many ways are the most important. But every year, there are different kind of one-off kind of costs that are taken. And therefore, we also talk about the adjusted EBITA to give an easier comparison between years. GN has been going through quite some change programs, in particular in the IT area. And as such, have been -- having quite some adjustments between the true bottom line and the adjusted EBITA. We've also part of one GN and said that we -- going forward, we will do utmost a few adjustments. So you should expect to see a closer alignment between the very bottom line and adjusted EBITA. And if we look for '24, at this point in time, we do not have any one-off items that we are planning for and I communicated. So as such, the guidance we have given should be seen all the way to the bottom line. So hopefully, that clarifies. Let me just also build up on what, Jukka, just said, on the LTI programs. I think it's also worthwhile to highlight for you as shareholders that we are doing a program every year and all employees on the senior level participate every year. Some years become a bit more favorable and some less favorable. We have two programs that just ended up in zero payouts. So I actually think, over time, we believe this is a fair and robust way to make sure that our senior employees and leaders are aligned with the shareholders to create value for our shareholders.

[Interpreted] Yes, [ Fleming Alex ] did not get a reply to my question concerning Demant.

Oh, yes, I forgot. I'm not in a position to comment on Demant's divestiture, as I'm sure you appreciate. But I think it's fair to say that the gaming industry as well as the enterprise communication where earbuds have been in both, I mean, our industries with many players. We are fortunate to have significant positions in both our SteelSeries Gaming business as well as the Enterprise headsets and video. So I mean our businesses are very well performing, and we see ourselves as market leaders in these segments, and we have healthy financials today and also see a strong future for these businesses. So we very much believe in those, and we believe they are good also for our shareholders.

[Interpreted] Any other comments, questions? No. I take it that we have now exhausted discussion in relation to the first four items but let me sum up. First, we have the report from the Board. This is not something that we'll be voting about. We will be discussing it and debating it. And once the debate is over, we proceed to item 2. Item 2 is presentation of the audited annual report for approval. Again, we have had questions and comments. So I take it that this is an expression of approval. Then we have discharge to members of Board and Management. This is kind of an old-fashioned expression but it means that you will not take management to court with regard to problems in relation to the accounts. And with regard to -- but if something later turns up, then the situation is different. I don't think it's going to rise to other comments. Then we had a decision concerning the distribution of profit or the coverage of loss. The proposal is that no dividend will be paid out this year. The general meeting cannot decide that the dividend to be higher than what has been proposed by the Board. So this means that it has actually been approved. Then we have other items on the agenda, many of them are sort of always-on agendas. This has to do with presentation and advisory vote concerning, the approval of the remuneration report. Last year, the report was not approved, which means that this year, you have to relate to what the problem was last year. And as the Chairman has said, there has been a dialogue with some of the major shareholders, and there has now been more transparency in the communication this year. So the Board now proposes that the remuneration for this year be approved. And as I said in my introduction, a large majority has acknowledged in advance that they support it. So we don't need an actual vote. About 19 million votes are represented in the room. But in advance, about 320 or 330 million votes have been cast. And the large majority are in favor. So I take it that this has been approved. Otherwise, you need to speak out very loudly. Then we have approval of remuneration to the Board for the current fiscal year, which is 2024. We heard in the report about this and there's also a very thorough description in the convening notice. It is proposed that the remuneration be unchanged from '23 to '24, although it comes from different boxes. Previously, it was divided into 3 amounts concerning the 3 different businesses. But now we have one company, so everything will come from one account, so to speak. Some of the remuneration amounts will be increased, some will be reduced. But generally, there will be no change in the grand total. Any questions? I take it as approved. The next item on the agenda is election of members to the Board. And you have now heard in the report that the Board came below the minimum number of Board members in the course of the year. This is not a problem from a legal point of view, but it just means that you wait until the next AGM, and then you fill up. We need between 5 and 9 members. And here, we have, first, a proposal to the effect that we have in future, 6 members. On the basis of the figures I've seen, I take it that this has been approved. I see no objections. Let's then find out who these 6 people are going to be. As already said, we have the proposal for the reelection of the Chair and the Vice Chair, and the 2 ordinary Board members also and new election of Kim Vejlby Hansen and Jorgen Bundgaard Hansen. Are there any other candidates or proposals? It is certainly going to be very difficult to be a candidate in view of the votes already cast. But there you go. Congratulations to both the 4 existing members and the 2 new members. Then we reach Item 8, election of a state-authorized public accountant. And here, we have a novelty because the Danish Parliament and the Danish authorities have decided to introduce a bill of legislation in the middle of this AGM period. It has not been adopted yet. But once adopted, it means that you also need to appoint a sustainability auditor. It's okay for that person to be the same as the financial auditor but we expect the law to be passed in 1 or 2 months. But after that, there will be an item on all agendas of AGMs to the effect that you need to appoint a sustainability auditor. We have representatives in the room. So we can, of course, ask them what it is they actually do. But PricewaterhouseCoopers will be elected to be financial auditors and also to be sustainability auditors. Any other candidates? It's very rare to see other candidates in an AGM. Right, congratulations, you have been elected, and congratulations with the new title. Then we have proposals from the Board. These are mainly standard items, adjustments to things that are quite common in companies. The first one is a proposal for renew the standard authorization to increase share capital with preemptive rights. There are no specific plans to do that. This is a standard authorization that a company wishes to have up to 50%. This is the limit that proxy advisers operate with. They're asking for it for a 5-year period, which is the one you can ask for in accordance with the Companies Act. Any questions? This regards to the first majority, which it will be. So this authorization has been granted and there will be an adjustment to the articles. Next one is in fact the same standard authorization to increase share capital without preemptive rights. This is what was done last year, asking a smaller authorization, 10% of the existing share capital also for a 5-year period. Any questions, comments? Going, going, gone. Adopted. The next one is a proposal from the Board of Directors to authorize the Board of Directors to acquire treasury shares. The company has 3.5% of the shares, and they're asking for what all listed companies ask for, an authorization to acquire own shares but you can never have more than 10%. You never have more than 10%. So this is an authorization to supplement by 6.5% as in all of the companies. There is a limitation in regard to the price. It cannot deviate more than 10% from the price on the stock exchange. Any questions or comments? No. Adopted. This brings us to item D, which is the proposal to approve the updated remuneration policy. There are some adjustments. The document has been available on the website. It has been approved by the Board but must be formally approved by the AGM and the convening notice that has been described that there are items here that could be focused on. You're going from share options to so-called performance share units. You're changing the LTI performance goals and there are guidelines concerning shareholdings. And if under the next item, we adjust the rule on indemnification. This will be adjusted also. Thank you. Any questions or comments? No. Duly adopted. We're doing quite well, aren't we? Next proposal is e-indemnification of the Board of Directors and executive management. You previously said that you have a provision on indemnification. So the things that are not grossly exigence like [indiscernible] or deliberate you can indemnify Board and management. We have that in many listed companies over the last 3 or 4 years. And it was fine as decided last year. Meanwhile, there has been a statement from the Danish Business Authority that requires certain changes to the wording. It's right quite limited these adjustments. It's an attempt to accommodate the adjustments that are required due to the statement from the Danish Business Authority. One of the most important point is that this is now a full year thing. So it will be a percentage for renewed approval at least in 4 years' time, the same as with the remuneration policy. There will be a good way to handle it to adjust them together. There's a separate proposal to put it in the articles that you have this decision to be made so that shareholders can find it. And so that shareholders can find the detailed content. That should be also in the remuneration policy, should be part of that so that you can see that. So these are 3 decisions: One is the actual indemnification; second, the statement in the article that described; and then the decision should be part of the remuneration policy. These are minor adjustments. Any questions? Not the case. So all 3 items have been duly adopted. That brings us to proposals from shareholders. I said that first that if a shareholder is to have an item on the agenda, is that proposals have been submitted to the Board no later than 6 weeks before the AGM, no such proposals have been received and none have been received after the expiry of the deadline. So that's easily done with. Then any other business, you cannot have anything decided, but you can have the floor if you want. Does anyone wish to speak under any other business? If not, I will discontinue my job and give the floor back to the Chairman. Over to you, Jukka.

Thank you, Klaus. Thank you for guiding us through the meeting as efficiently -- as effective as always. And thank you also, Peter, for sharing the insights into the business. And thank you for all of you who have come here to all our shareholders for your support. I acknowledge that we have been through some turbulent times and I hope that you can now see at GN's future like we do in the Board and Management with more confidence and optimism than a year ago. I hope to see you again next year when we can share more progress and value creation for GN. And with that, I will say once more thank you for coming, and I wish you all a good day. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]