Annual Report 2010 1 Contents Key figures ................................................. 2 Corporate governance ............................. 20 Ready to grow ............................................ 3 Management’s report .............................. 22 Insulation – the obvious way Independent auditors’ report................... 23 to reduce energy bills ................................ 4 Five-year summary .................................. 24 Committed to society ................................. 7 Income statement .................................... 25 The Rockwool Foundation. Income Balance sheet – Assets ............................ 26 spent on research and interventions ......... 8 Balance sheet – Equity and liabilities ...... 27 People to drive global innovation ............ 10 Cash flow statement ................................ 28 Sales, markets and performance ............ 11 Statement of equity .................................. 29 Highlights .........................................................11 Segmented accounts ............................... 30 Regional market developments .......................12 Notes ........................................................ 31 Business areas .................................................14 Definition of ratios ................................... 53 Financial performance .....................................16 List of Group companies .......................... 54 Board of Directors .................................... 18 The Rockwool Group ................................ 55 Group Management ................................. 19 Colophon Rockwool®, Roxul®, Rockfon®, Rockpanel®, Grodan®, Lapinus Fibres®, BuildDesk®, RockDelta®, Aerorock® and Rockshell® are registered trademarks of the Rockwool Group. Photos: (cover + 2) Shanghai / Aly Song, Scanpix Denmark; (3) CEO Eelco van Heel / Magnus Klitten; (5) Denmark’s first PassivePlus house / Steen Brogaard; (6) Electricity plant / Mark Gibson, Getty Images; (7) Rockwool employee / Niclas Jessen; (8) Schoolchildren being meassured as part of the Rockwool Foundation’s HealthySchoolNetwork / Stig Stasig; (9) Malawi women participating in the project ‘village banks’ / Ole Dahl Rasmussen, DanChurchAid; (10) Rockwool employee / Niclas Jessen; (11) Rockwool employee; (12) CEO Eelco van Heel meets President of the Russian Federation Dmitry Medvedev 29 April 2010 / Confederation of Danish Industry; Moscow / Hubertus Blume, AGE, Scanpix Denmark; (13) Shanghai fire 15 November 2010 in a 30-storey residential building / Scanpix Denmark; (14) Rockfon ceiling solution at the Technical and Environmental Administration, Copenhagen / Anders Sune Berg; (15) Enexis head office / atelier Pro architecten bv, the Hague, Netherlands; (18) Board of Directors / Ivan Otis; (19) Group Management / Magnus Klitten; (21) Rockwool employees / Niclas Jessen. 1 Layout and production: Bysted A/S ISSN nummer: 1904-8661 (online) Key figures Net sales (DKK million) Profit for the year after minority interests (DKK million) 15,000 2,000 12,000 1,500 9,000 1,000 6,000 500 3,000 0 0 06 07 08 09 10 06 07 08 09 10 Investments and acquisitions (DKK million) Employees by region 3,000 10,000 2,500 8,000 2,000 6,000 Western Europe (15 countries) 1,500 Eastern Europe 4,000 and Russia (15 countries) 1,000 North America, 2,000 (3 countries) 500 Asia and Middle East, (11 countries) 0 0 06 07 08 09 10 06 07 08 09 10 The world’s fastest growing construction markets are in Asia. In 2010 the Rockwool Group acquired the Asian insulation activities of the Australian conglomerate CSR Ltd., significantly boosting our presence in the region. 2 Annual Report 2010 I ROCKWOOL INTERNATIONAL A/S “The global trend towards energy efficient buildings has only just started“ Ready to grow Spring is slowly returning to the frozen landscapes of the We firmly believe that we can develop the business based on construction world. The financial crisis which paralysed the superior materials and technologies, plus a clear US and Europe, and put a brake on new building projects, is understanding of our customers’ needs. We have now receding and project activity is gradually being resumed. Our accelerated our innovative efforts and are already introducing focus on the enduring needs of society in terms of energy products and systems which address the sustainability needs efficient buildings has helped us during the crisis. The focus of the building sector. Aerorock – the world’s first insulation on energy renovation of existing buildings in countries like product based on a combination of stone wool and aerogel Germany and France meant that our products, systems and – sets a new standard for the lasting energy performance of services, were in reasonable demand and our volume building materials, and is perfectly suited for the growing increased compared to the year before. number of energy renovation projects. Within the new build sector, our pioneering Rockshell system offers a novel In the Rockwool Group, we have used the last few years as a shortcut to zero-energy houses. time to trim both our organisation and our strategic ambitions. So now we are well prepared to reap the fruits of an upswing The move towards low-energy buildings will revolutionise the in construction activities. The global trend towards energy global construction industry over the next decade. Together efficient buildings has only just started. We are tapping into with our partners in the building industry, we look forward to this megatrend by establishing new positions outside our playing an active part in this exciting and challenging global European home base. In North America we have recently marketplace. doubled our production capacity and our sales are growing fast, despite a weak housing market. Meanwhile in Asia, the Eelco van Heel fastest growing market region for construction in the world, CEO of the Rockwool Group we have secured a foundation for further expansion by acquiring the Asian insulation operations of CSR Ltd., and by establishing a sales platform in India, supported by a new factory in the Gujarat region. 3 Insulation - the obvious way to reduce energy bills Better insulation of buildings and industrial processes is one Using only 15 kWh/m2 annually for heating, these houses are of the most obvious choices for energy security, reducing more than twice as energy efficient as the most stringent energy expenditure while also mitigating emissions of CO2 and national energy efficiency requirements for new buildings. other air pollutants. This can be done in a highly cost-effective manner, creating green jobs and improving the indoor climate Energy use in emerging countries: a growing challenge and quality of life for millions of people around the world. Worldwide, most new buildings are being constructed in emerging economies. The Rockwool Group has therefore Our buildings account for some 40% of energy consumption in recently established production in China, Thailand and India, Europe and North America. Even in an emerging economy like and is expanding sales activities in countries like Brazil. We China, the energy consumption for buildings will soon reach also offer our expertise to regulators and decision-makers 35% as millions of people urbanise, requiring new homes, throughout the world. Better energy efficiency will improve workplaces and leisure facilities. Often these buildings are indoor comfort at an affordable price for millions of people erected without adequate insulation – if any – instead they – and help to prevent further CO2-induced environmental may make excessive use of heating and air conditioning which harm. requires a lot of energy. Existing buildings: the real challenge Europe champions zero-energy buildings By far the greatest challenge in the Rockwool Group’s large By the end of 2018, all new public buildings in the EU must be mature markets of Europe and North America is the old stock constructed as nearly zero-energy buildings, and by the close – millions of buildings remain poorly insulated. of 2020, private homes follow suit. A passive house combined with renewable energy resources will fulfil this requirement. According to the Energy Efficiency Action Plan Taskforce of the Construction Sector, the renovation rate – in Europe currently 1.2%-1.4% per year – would need to be increased by a factor of two to three times in the decades up to 2050 in order to reach the short and long term EU targets of reducing CO2 emissions by 80%-95% by 2050 as compared to 1990 levels. Positive net carbon footprint Germany, for instance, has successfully boosted energy modernisation projects through its public funding scheme; Our new carbon footprint analysis this allocates higher subsidies and/or low interest loans the reveals that, during the lifetime of more the energy efficiency of a building is improved. all the Rockwool insulation being Russia – aiming to improve energy efficiency by 40% before sold in one year, more than 4,000 2020 – is now insulating thousands of buildings. This will improve living conditions for many Russians and enable million tonnes of CO2 emissions exports of energy that would otherwise be wasted due to lack will be saved from buildings and of insulation. industrial processes worldwide. Insulation of industrial processes and Industrial insulation: the potential is huge technical installations contributes to The Rockwool Group also holds the important key to another neglected area: the potential for energy and CO efficiency significantly higher savings than what