StrongPoint ASA (STRO) Earnings Call Transcript & Summary

Good morning, and welcome to StrongPoint's AGM. I hope a lot of you also have had the opportunity to follow our Q1 presentation this morning, with a lot of good news coming out from our management team. My name is Morthen Johannessen, I'm the Chairman of the Board, and I've also been asked to chair this meeting. When the meeting is done, Hilde Gilen, our CFO, will cosign the protocol from the meeting. We have a pretty straightforward agenda for today's AGM, so I suggest that we just dive into it. First, formalities. We have received 9.5 million votes in advance, that's just about -- just above 20% of our total issued shares. And the -- both the notice and the agenda itself has then been approved. Then next point, approval of the annual accounts and the annual report for 2021. I would like to suggest to all of you that you spend some time on our annual report. It's a lot of very useful information there. It's not just historical numbers. But if you really want to get a good understanding of StrongPoint's business and our way forward, I would strongly recommend to spend some time there. Skip a couple of evenings on Netflix and dive into our annual report. I think that's a good advice. We had top line last year of NOK 981 million, and we had an EBITDA of NOK 53.6 million. The EBITDA, I would like to just comment a little bit on. Those of you following us closely know that we had a turnaround in Spain, which came with some cost. It's very good to report, like we did this morning, that Spain is definitely back on track with no -- almost breakeven bottom line and an impressive more than 50% top line growth. EBITDA is also impacted by the fact that we are heavily investing in our future growth. And we expense that. It's nothing kind of hidden on the balance sheet. We expense it and we are very determined in terms of investing in the right way to be able to grow our business for the coming years in order to achieve our 2025 ambition and targets to get to a top line of NOK 2.5 billion. Even 2021 was impacted in general terms by the pandemic around the world. And in that context, I would like to thank our entire organization for hard work and very solid results given those circumstances. That goes for the senior management team and it goes for the entire StrongPoint organization. Well done to all of you. No amendments have been received, so we see the annual accounts and the annual report, that I urge you to read, also as being approved by this AGM. Our auditor, EY, doing a great job for us, together with us. Coming with a cost, of course. Last year, NOK 500,000, also been then approved by this AGM. This might be our favorite slide at the AGM. I think we -- as you can see, we have now 10 years anniversary of paying dividend. And we have been proposing from the Board side, a dividend for last year of NOK 0.8. And we do that same time as we invest in growth. So we're trying to strike that balance, heavily invest in future growth. Same time, having a healthy balance sheet in order to continue to pay, hopefully, a growing dividend also for the years to come. We have not had anyone coming up with other suggestions there. So we can also view the dividend of NOK 0.8 as approved and it will be paid out within the next few weeks. Then it's more information, then it's not subject to voting, on corporate governance. I think the best thing to do here because it's pretty -- it's a lot of information and it's pretty complex, but you will find all of it on our website and in our annual report. I can assure you that on top of our list, both for the Board and for management in StrongPoint, we put integrity on the very top of everything we do. And we are trying to follow best practices in every aspect of our business. This year, I would also like to underline that our ESG report is having much more details and information than the last couple of years. So also that's a section I would definitely recommend you to take a look at. Find all the details, as I said, in the annual report, and I think we can just move on. Election of the Board. We have a Nomination Committee that have been having meetings with our major shareholders. They have had meetings with management. They have been having meeting with the Board members. And they have come up with a recommendation and a proposal for the Board for the year to come, with myself as Chairman; Klaus de Vibe, Board member; Peter Wirén, Board member; and Ingeborg Molden Hegstad, Board member. All of us then continue for another year. And then we have one newcomer on the Board that I would very much like to welcome, Cathrine Laksfoss. Cathrine is heading up Schibsted's e-com and distribution business, a very sizable business. And as some of you know, Schibsted is probably the leading technology company in Norway and maybe in the Nordics right now. So we are very happy to get Cathrine on Board as a new Board member. Same time, we are saying farewell to Camilla, Camilla Tepfers, after 9 years service on the Board of Directors. So thanks a lot also to Camilla. 100% support for the Board. Thanks a lot. Then it's the Nomination Committee's proposal for compensation to the Board, where they have suggested a slight increase. On year-on-year compensation for the Chairman, NOK 560,000 to NOK 580,000; for the directors, from NOK 280,000 to NOK 290,000. And then we implemented a few years back a system where 20% of the gross remuneration have to be used for share purchases. It's a very good system. And it's being then, over time, building up some shareholding among all the Board members, which I think is a good thing. We have 2 committees right now, Audit Committee and a Comp and Ben Committee, and the remuneration being then suggested, proposed by the Nomination Committee. Also here, also have a slight increase. No amendments and with pretty accurate numbers, 99.995%, we have got support -- or the Nomination Committee have got support for the proposal. So that's also been approved. The Nomination Committee is also up for election. Svein Jacobsen is heading that committee, he's continuing. Inger Johanne Solhaug is continuing as a member. And then we can welcome our second biggest shareholder, Sole Active, with Audun Nordtveit, as a new member of our Nomination Committee. Full support to that one, 100%, so they have been elected. The remuneration to the members of the Nomination Committee follows 100% the other internal committees, also with a slight increase then being suggested there. 100% of the prevotes in favor, so that's also then been approved. Remuneration report is also very much in detail described in our annual report. And we have a pretty basic system in place, where our employees having -- and particularly management, having then a base salary, they have a short-term performance bonus in there and they have a long-term incentive program. All the details being disclosed in the annual report. So again, please take a look. No amendments, so that's also then being approved by this AGM. Then we move on to the long-term incentive program, and I will ask Peter Wirén, my Board colleague, that's heading up the Comp and Ben Committee, to take us through that element of the compensation. Peter?

Thank you. So good morning. My name is Peter Wirén, as Morthen said, I'm the Chairman of the Compensation Committee at StrongPoint. I would like to start with a short recap. At the Extraordinary General Meeting in October 2020, it was decided to adopt a long-term incentive program as part of the total remuneration for executive management and key personnel. And the option program is designed to align and incentivize management performance with shareholder value creation and to attract and retain high-caliber executive management and key personnel. The option plan is a performance-based remuneration scheme reflecting the underlying long-term value creation of the company. And the Board considers this to be an important element in the efforts to reach the communicated 2025 strategic milestones and ambitions. The Board will take into consideration the company's goals and strategies as well as targeted performance for executive management when granting the options. The limits for the allocation of share options to the participants is determined by the Board, within the Board mandates approved by the Annual General Meeting. The option scheme will be granted with a strike price equal to the market price at grant. And the strike price is calculated as the average market price per share over the last 5 days. The options will vest over the 3 -- over 3 years, with 25% vesting after 1 year, 25% after 2 years and the remaining 50% after 3 years. And the split investing underpins the retention ambition of the program. Any non-exercised options expire 5 years after grant. The number of options granted under the LTIP 2022 will not exceed 3% of the total current outstanding shares of the company. And the total number of options shall never exceed 10% of outstanding shares. The Annual General Meeting is requested to authorize the Board to settle the options either by issuing new shares or by acquiring own shares in the market. And in short, that is the proposal. And Morthen, over to you.

Thanks a lot, Peter, for taking us through our long-term incentive program. I think we have a good program in place, and the key objective there is, of course, to align key personnel's then long-term objectives with shareholder objectives. We have got close to 98% support for the Board's proposal, so that has then been approved by this AGM also for the coming year. So thanks a lot. The 2 final items on the agenda today, more on the formalities. It's 2 authorizations that we normally ask for 1 year at a time. One is to have the opportunity to increase the share capital if we, as a Board, find that, that is something that would benefit all the shareholders. It could be used for then share issues or probably more relevant when we do anything on the M&A side. So we are asking for basically the same number as we have been doing the last few years, up to 9 million shares. I can guarantee you that will only be used in a very, very disciplined way the day it -- if or when it's going to be used. Been supported by just above 80%, so it's also then been approved by this AGM. Final, final one is also an authorization for the Board to acquire own shares. As some of you know, we have done that over the last year or so in order both to have some shares available for internal programs and also to optimize our capital structure, which is also a key element in terms of how we are managing our business. 100% support for that agenda item, with the authorization that we will then have. So thanks a lot. That, in fact, concludes this AGM this morning. And I would like to thank you all for listening in. And if you do have any questions, don't hesitate then to take -- contact with Hilde, our CFO and also in charge of our Investor Relations. So thanks a lot and looking forward to report, hopefully, on another good year when we meet up again in 12 months' time. Thanks a lot, and have a very good onwards day.