Novozymes A/S (NSISB) Earnings Call Transcript & Summary

Dear shareholders, welcome to this brief Extraordinary Shareholders' Meeting following the completed combination between Novozymes and Chr. Hansen. Now we're joined as one company, Novonesis, the name you see on today's agenda. The Board of Directors has been looking forward to hosting you here at the newly opened innovation campus in Hørsholm, north of Copenhagen. The campus has been built as a future-oriented center for innovation, knowledge sharing and customer support, especially in food and health, and it truly reflects what we can achieve with this combination. Thank you to everyone here in person and those of you watching the webcast. In December 2022, 2 strong companies agreed to combine with the ambition of creating a world-leading biosolutions partner. Our shareholders approved the proposed combination at Extraordinary Shareholder Meetings in March 2023. And on the 29th of January this year, the combination was registered by the Danish Business Authority. So yes, the combination is now a reality. But even more importantly, an excellent fit between 2 complementary companies is a reality. Novonesis is built on more than 100 years of innovation and dedication to changing the world for the better. Now we have an even stronger position to deliver the biosolutions that the world so urgently needs. Our combined technologies and capabilities will meet the evolving needs of our customers and society at large, while creating value for our shareholders. Novonesis brings something unique. We solve unmet needs with our biotech toolbox and our library of microbial strains and enzymes. We have a global footprint and a local reach, and we can produce and deliver biosolutions virtually anywhere at scale. And not least of all, our 10,000 employees have the talent, experience and commitment to unlock the potential of biosolutions. In numbers, the combined group has approximately EUR 3.7 billion in annual revenue, and we expect to deliver strong long-term organic revenue growth with attractive earnings and cash flow and a continued and relentless focus on sustainability. We look forward to showing the world what we can accomplish together with our customers and partners, supported by you, our shareholders. The Board of Directors has appointed Niels Kornerup, Attorney at Law, to chair this Extraordinary Shareholders' Meeting pursuant to Article 8.1 of the company's Articles of Association. Thank you once again for joining us today, and I will now hand over to Niels.

[Interpreted] Thank you for appointing me. To direct this meeting, I expect an orderly meeting, and I look forward to a good debate. Now first of all, I have had to check whether the general meeting was duly convened and had a quorum. And before the meeting began, I ascertain that the meeting was indeed convened in due time and in every way fulfills the requirements in the Articles of Association and the Company's Act. So I can ascertain that this Extraordinary General Meeting of Novozymes has been convened and is being held in accordance with the Articles of Association and has a quorum for the items on the agenda. And I'd like to know if the general meeting agrees with me, nobody has any objections apparently. So that goes into the minutes, and thank you very much for that. Now I should inform you that this entire general meeting is being transmitted by webcast over Novozymes' homepage on investors.novozymes.com. And so it'll be possible to follow the general meeting in real time or to watch it later by using the site. Now right before the meeting began, it was ascertain that 86.62% of the shares have been represented here today and 73% of the share capital is represented and the Board has received proxies and mail verts corresponding to about 97% of the represented votes and 98% of the share capital represented. And the final figures will be available in the minutes, but these are the figures I received just before the meeting began. Adoption of proposals, Item 1 of the agenda requires shareholders representing at least 2/3 of the votes represented in the company to be represented here at the Extraordinary General Meeting. And as I have just said, that is the case, furthermore, in order to adopt the proposal, 2/3 of the votes cast and 2/3 of the capital represented at the general meeting must vote in favor. Now if you want to check that what I'm saying is true, you can look at the Articles of Association, Article 92. The other items, numbers 2, 3 and 4, as require simple majority. And on the basis of the votes cast by mail and the proxies given to the Board, I can ascertain that the proposal by the Board have a majority and a large majority even. As mentioned in previous general meetings, according to the Company's Act Article 101, Section 5, there's requirement of a complete statement after voting for every decision in the general meeting, even though the result immediately apparent. Now I propose that we follow the same procedure as in previous years, and that is we abstain from the complete statement of the voting. And can you support me in that? Yes, you can. Thank you very much. So now I ask the shareholders who wish to speak to make themselves known to me because we speak from the rostrum and the easiest way to make it of known is to show me your admission card, either in a printed form and paper on your smartphone or tablet. We have reserved 2 chairs in front so that those who wish to speak can sit down up here in good time before taking the floor that will make for a rapid and smooth procedure. The agenda is what you can see here behind me. It has been sent out to you. It includes 4 items: one, the adoption of Novonesis A/S as secondary name and amendment of the Articles of Association in accordance herewith; Item 2, election of Vice Chair; Item 3, election of other Board members; and 4, authorization to Plesner Advokatpartnerselskab to register the adopted proposals. So with that, we embark on our agenda. And so Item 1, the first proposal is the adoption of Novonesis A/S as secondary name and amendment of the Articles of Association in accordance herewith. Now I will refer you to the invitation to the general meeting, which has been available since February 9. And here, you've also found a proposal for the new article associated. Now I'd like to give the floor again to Cees de Jong, who will describe the background for this proposal. Please go ahead.

Novonesis is here to better our world with biology. That is our purpose, and it is strongly rooted in our heritage and what we have done for more than a century. But more importantly, it is what we're here to accomplish today, tomorrow and in the years to come. Our name and brand reflect our reputation and thereby who we are and what we're known for. They are an important symbol, signal and the representation of our company towards customers and stakeholders globally. Our name and brands demonstrate our position as a world-leading biosolutions partner. It has been key to find a name that can be home to all our 10,000 employees. What is more a name that represents the future potential of biosolutions. We believe we found that name in Novonesis. Novonesis means new beginning, reflecting the beginning of a new company and more than that, the beginning of an era of biosolutions, because the world needs new answers to the challenges we are facing, and we will reduce food waste by increasing shelf life. We will provide alternative proteins for an increasing population. We will help recycle old plastic and give a new life. We will help capture carbon and turn some of it into food, and we're just getting started. Novonesis is a name that reflects our commitment to making biosolutions play an even bigger role in our planet's future. Let's take a closer look at the named 2 components. The word Genesis comes from ancient Greek and means origin or beginning. Choosing a word with its roots in Greek honors our ancient Greek thinkers from Pythagoras to Aristotle played a key role in the development of science as we know it today. Novo means new. The Novo name is globally associated with strong science capabilities, a purpose-driven mindset, a Nordic heritage as well as a great societal contribution. These are all assets and values that are shared by the combined company. And with these 2 components, we have Novonesis and a new beginning. It's been important to develop the name in close collaboration and dialogue between the 2 legacy companies. As part of the name, we've introduced a new logo and brand identity, and the brand identity is inspired by what is at the heart of Novonesis, the world of microbiology. I hope the name Novonesis resonates with you as it does with the Board of Directors, management and our employees. That is why we ask you, the shareholders, to support the proposed adoption of Novonesis A/S as a new name. Thank you, and back to you, Niels.

[Interpreted] Thank you very much for this presentation. Now formally speaking, the proposal is to adopt the name Novonesis as a secondary name and to introduce that into Article 1, 2 of the Articles of Association so it will be a secondary name, just like Novozymes A/S and Chr. Hansen Holding A/S, and Chr. Hansen Holding A/S was adopted as a new secondary name in the context of the adoption of the merger that happened quite automatically. And now having said this, I can open up the floor to a debate who would like to speak beyond Hansen would like to take the floor. Please step up here, Mr. Hansen.

[Interpreted] Right. Thank you very much for giving me the floor. My name is Bjørn Hansen. I have spoken to some of the shareholders whom I represent, and the name -- well, nemesis is very close to the new name. I don't know who invented this horrible name, somebody within the company itself, they are holding or the foundation, individual people. We need to look at mask they do. I mean they do very well. They say mask and then they add [indiscernible] something. And you could do something like that. You could say Novozymes-Chr. H. Now on the Board, we saw 9,900 patents. I think that can create a great deal of problems. I've had a few patents once and there was some misunderstandings, so I ended up in a court in New York and I partly won the case, but so did my lawyer. It was very expensive. But I really, I can't see why this name couldn't use more of the old names which are now well known all over the world. And congratulations on that.

[Interpreted] Thank you very much, Bjørn Hansen and the Chairman, briefly.

Thank you, Mr. Bjørn Hansen. I can tell you the name was selected by unanimous Integration Steering Committee, and we're delighted that we now have a proposed name that is widely supported by key representatives of both companies and that represents a new area of biosolutions. In addition thereto, Novonesis stands for a new beginning based on biology and both Novozymes and Chr. Hansen were involved in the process of getting to the name, and we think it works really well in our dialogues with customers and also internally. And then we have reviewed and tested more than 4,000 names across 27 countries regarding pronunciation and connotations, and it has been key to find a name that works well across the world. So the purpose of the name is to describe the start of something new with the area of biosolutions. And we would like employees from both companies, Novozymes and Chr. Hansen, to feel welcome with something new. So the name symbolizes the start of that new joint company. Let me hand over to Niels.

[Interpreted] Thank you very much. Would anybody else like to take the floor concerning the secondary name? That does not seem to be the case. So may I take this as an expression of the approval of the adoption of the secondary name. Yes, that seems to be the case, right. So we note that. That was Item 1, and we move on to item 2, election of Vice Chair of the Board. As informed at Novozymes Extraordinary Shareholders' Meeting on March 30, it has been agreed by a Novozymes and Chr. Hansen that the Board of Directors of Novonesis should consist of 9 shareholder-elected Board members, to ensure the strong integration of the 2 companies. Also, as informed, Chr. Hansen puts forward 3 shareholder-elected Board members. And on that basis, the Board proposes to elect Jesper Brandgaard as Vice President of the Board. Jesper has been the Vice Chairman of Chr. Hansen until the merger and is proposed that the present Chairman, Kim Stratton be elected as ordinary member according to Item 3 and Jesper Brandgaard, management positions and competencies are listed in the invitation to the general meeting as required by the Companies Act and also for the sake of information. And now on that background, are there any other candidates? That does not seem to be the case. So according to the rules, Jesper Brandgaard has been elected until the next ordinary general meeting. That's quite a short period of time, but congratulations anyway. And with that, we have arrived at Item #3, election of other Board members. As mentioned, it was proposed and decided that Chr. Hansen proposed 3 members of the Board and so it proposed Lise Kaae, Kevin Lane and Kim Stratton, as mentioned, be elected to the Board. The first two, Lise Kaae and Kevin Lane, were members of the Board of Chr. Hansen until the merger. Lise Kaae, Kevin Lane and Kim Stratton, management positions and competencies are listed in the invitation to the general meeting. Are there any proposals, any other candidates for these positions? No, that is not the case. And so Lise Kaae, Kevin Lane and Kim Stratton have been elected for the period beginning now and ending at the next ordinary general meeting, and congratulations to you and good luck to all of you. And so the Board of Novonesis now is now composed of the following members: Cees de Jong, President; Jesper Brandgaard, Vice Chairman; Heine Dalsgaard; Sharon James; Kasim Kutay; Lise Kaae; Kevin Lane; Morten Otto Alexander Sommer; Kim Stratton, all elected ordinary members elected by the general meeting. Furthermore, the Board also has members elected by the employees, Anne Breum, Anders Hentze Knudsen, Preben Nielsen and Jens Øbro. The entire Board can be seen on the screen behind me. Furthermore, Chr. Hansen has appointed the following 2 persons who have been members of the Chr. Hansen Board elected by the employees. They've been appointed as observers for the Board until the next ordinary general meeting in Novonesis in 2025 and the 2 people are Karen Louise Lauesen and Kim Ib Sørensen. And with that, we have the complete team. That was the end of Items 2 and 3, which were to do with the elections, and this leads us to the last item, Item 4, the authorization to Plesner Advokatpartnerselskab to register the proposals adopted and that is a proposal which requires an ordinary majority. I would like to take the floor. And now this is about the authorization to Plesner. That's what we are allowed to speak about under this item.

[Interpreted] Well, I came in late here because I went to number 10 and 12. So I missed the first 10 minutes of the general meeting. So I'd like the Chairman to repeat what was said if something important was said at the beginning because I think it's really, really a poor show that you put up a sign with the wrong indication and you have something was said about the future. I'd like to hear something about that as well. And if you want to know more about me, you can check hilpat.dk.

[Interpreted] Right. That was a little bit of a commercial. Thank you for that. Now we were at Article 4, which was to do with the authorization to Plesner Advokatpartnerselskab and now for the sake of order, I'd like us to finish that item before doing anything else. And then we can have a more general comment later and Cornelis, the Chairman will also get back to your concern. Now to pick up where we left off, Item 4, any other speakers for that item? No, that does not seem to be the case. Now I can then ascertain that this authorization has been approved by the general meeting. Thank you very much. With that, we have extinguished the ordinary agenda. Would anybody else like to take the floor? [indiscernible] has already spoken, but I'm sure that the Chairman will comment on that. But would anybody else like to take the floor? Mr. Bjørn Hansen would like to take -- now you need to make up your mind, Bjørn. Do you want to speak, you don't have to. All right.

[Interpreted] So congratulations with the new name, the new company, -- this will mean a lot on the Danish market, and I hope also that large market shares will be gained in Europe and in the United States. We are part of the Western world, and we approve of whatever is to do with the West, at least the people I represent. Now the new Vice Chairman, I think it's excellent, excellent that we have him with us now and will be part of running this company. On the financial side, he has really showed what he can do. So we are very, very happy. And we recommend that people buy the new shares. We don't know when they will be available. Now an hour ago, they were still called Novozymes with Danske Bank and the new name appeared with Saxo Bank 2 days ago and known it, had the old name. So I don't quite know when the new name will be introduced, but I expect it to be one of the ordinary day so that we'll have a platform on which to trade. Now I made a comparison. I mean this is a really, really big international share, at least seen from [indiscernible] perspective and some of the American companies have a number of shares, which I can't really believe, but the number of shares should be increased over the months between now and the first ordinary general meeting so that it can match the large corporation because the Americans are ahead of us. I must admit that in anything that has to do with the trading stock, it's a big market, yes. But in -- Novo, we have a little company called Novo Nordisk, which is not that small. And they made a split, which has increased the trade in their shares all over the world. We see that Novo shares are traded according to Saxo Bank through the tune of 5 million to 8 million to 10 million to 12 million individual transactions a day in the United States. So I understand that people follow that share in United States, but I hope that, that will also drop off on you so that you too will consider a split of the share. But congratulations with the new company, and I wish you the very best in the future. And we now expect to stick to a growth of 10%, 11%. We don't need 15% to 536% on former share, as we were seeing it in America. We prefer stability. That's what we like. 15% is okay.

[Interpreted] Thank you to Bjørn Hansen for their various questions and comments. And I now give the floor back to our Chairman. Please go ahead.

Thank you [indiscernible] for your questions. I suggest that you and I talk so that I don't need to repeat for the whole audience because they have heard me, but I'm happy to explain what I did in the first 10 minutes to you. And then Mr. Bjørn Hansen, thank you so much for your questions and your encouragement to management to deliver strong organic sales growth. I'm not sure that 10% is going to be the number. But when Ester knows how much he can deliver, I'm sure she will tell us. Now more seriously, to your question as to whether Novonesis or Novozymes should do a share split or bring more shares. I would say Novonesis is listed on the Danish Stock Exchange and will continue to be listed there. And as of Thursday, you will see that name more widely. We don't plan to do a listing in the U.S. like an ADR, an American Depository Receipts, and we also believe that the liquidity of the Novonesis' share on the Danish Stock Exchange is solid. Some 800,000 shares are traded every day over the last month, as an example, and that makes us one of the most traded stocks in Denmark. We're in the top 10. So we do not have plans to split the shares, has been done before 2011. And you may remember that at a 1:5 ratio, but that was the right time to do. It's not now. And then finally, I think your recommendation of the Vice Chair is much appreciated. Having worked with him, I'm really pleased to have him as my wingman. Thank you.

[Interpreted] Thank you very much. Now would anybody else like to take the floor? It's the item, any other business, anything goes except making proposals, well except, of course, within the bounds of the law. Would anybody like to take a fly, last chance? No, that does not seem to be the case. So with that, we have now finished the agenda, and I hereby end my job and give back the floor to the Chairman. Please, once again, go ahead.

Thank you, Niels. On behalf of the Board of Directors, I want to thank our shareholders and all our customers and business partners for the trust and faith you have demonstrated on this journey. We look forward to continuously working with you, investing in research and partnerships to create and develop biosolutions that make a difference and create value for the planet, for healthier lives, for our bottom line and for our shareholders. Thank you for joining this brief but important Extraordinary Shareholders' Meeting. It enables the Board to start the work ahead of us as Novonesis. The combination is completed and we're now ready to work and show what Novonesis can deliver. Thank you again, and I hope to see you at our Annual Shareholders Meeting in April. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]