The Rockwool Group in Brief

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The Rockwool Group

ƒ

As a supplement to a variety of already existing

activities related to the construction industry, stone

wool production was started in 1937.

ƒ

From the early sixties the Rockwool Group was

started in its present form and the decision made to

focus on development, production and bringing to

market of stone wool products only.

ƒ

The Rockwool Group is today the worlds biggest

producer of stone wool products and systems and

number 2 in mineral wool in Europe.

(4)

The Rockwool Group

ƒ

This position has been obtained through

prioritisation of:

ƒ

Process technology, engineering and R & D.

ƒ

Market share increase.

(5)

The Rockwool Group

ƒ

The Rockwool Group was listed on the Copenhagen

Stock Exchange in 1996 and is presently member of

the Midcap+ section.

ƒ

Since the beginning of 2003 the value of its

B-shares has increased from approx. DKK 95 per DKK

10 share to 791 at the end of august 2006.

(6)

5 years Share Price Development

75 175 275 375 475 575 675 775

Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06

P ri ce i n D K K

(7)

The Rockwool Group

ƒ

The Rockwool Foundation holds 23% of the share

capital. The Foundation stimulates neutral research

into social, political and economical circumstances

in Denmark and abroad.

ƒ

There exists – as far as management is aware – no

shareholder agreement between shareholders.

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Net sales 1994-2006

682 715 767 839 902 970 1022 1065 1067 1104 1229 1344 603 711 0 200 400 600 800 1000 1200 1400 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

(10)

EBITDA 1994-2006

115 101 119 130 145 153 133 141 131 147 177 201 84 120 0 25 50 75 100 125 150 175 200 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

(11)

Changes in EBITDA

EBITDA 2004

177

EBITDA 2005

201

Increased sales prices

46

Increased volumes / changes in product mix

23

Increased prices on purchases

-51

Improved efficiency and other items

6

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EBIT 1994-2006

56 42 49 58 66 60 29 50 40 66 89 119 43 62 0 20 40 60 80 100 120 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

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Profit after Minority Interests 1994-2006

38 34 45 46 48 39 19 27 18 34 54 77 101 27 41 0 10 20 30 40 50 60 70 80 90 100 110 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 est 2005 Q2 2006 Q2

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Cash Flow from Operations 1994 - 2004

101 107 122 119 120 100 83 124 115 104 152 148 21 72 0 20 40 60 80 100 120 140 160 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

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Stocks, Debtors & Creditors 1994-2006

-50 -58 -61 -66 -66 -94 -111 -120 -123 -151 -159 -163 -226 -206 -250 -225 -200 -175 -150 -125 -100 -75 -50 -25 0 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

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Investments & Acquisitions 1994-2006

56 88 100 89 141 160 202 120 105 85 95 127 60 55 0 50 100 150 200 250 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

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Free Cash-Flow 1994-2006

49 20 25 31 -21 -59 -118 4 10 19 57 21 -39 16 -120 -100 -80 -60 -40 -20 0 20 40 60 mE U R 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 Q2 2006 Q2

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Financial goals

Target

Actual 2005

6% sales growth

9.6%

Profit ratio at 9%

8.8%

Return on invested capital at 14%

18.3%

Free cash flow at 2% of turnover

1.6%

(19)

Expectations for 2006

ƒ

Sales growth at 12%

ÆNet sales from EUR 1,344 million to approx. EUR 1,505 million.

ƒ

Net result after minority interests

ÆFrom EUR 77 million to approx. EUR 101 million.

ƒ

Investment and capital expenditure

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Key points

1. Market development

ƒ European building insulation market

ƒ Other markets

2. Main changes in the competitive landscape

3. The capacity situation

4. Legislative opportunities

ƒ EPBD

(22)

Expected growth in

European

construction

markets

in 2006

Sources: Euroconstruct June 2006 et al.

> 5 % 3-5 % 1-3 % 0-1 % < 0 %

(23)

European (EU) building insulation market

ƒ No lasting negative effect on the increasing building

industry activity from rising inflation (incl. energy

prices), interest rates and regional shortage of certain building materials

ƒ Increased focus on energy efficiency in buildings – in

particular from the legislator. The insulation market will outgrow the building market – 4 to 6% by 2009

compared to today

ƒ The residential market will remain stable at the rather

high levels of previous years

ƒ The non-residential market will grow in line with the

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European (EU) building insulation market

ƒ The refurbishment market is growing, fuelled by high

energy prices and new financial incentives:

ƒ In Germany EUR 1.4 bn/year for increased energy efficiency in existing dwellings. The interest has been overwhelming

ƒ Incentive programmes being introduced in many other countries e.g. France, Spain and the UK.

ƒ EU’s structural funds now to target building projects in the new member states :

ƒ EUR 6 bn (2% of total amount) for multi-family housing projects 2007-2013

(25)

Other markets

ƒ The building insulation markets in North America, Russia and the Ukraine remain buoyant – however – with a slow down in the US residential segment

ƒ The technical insulation market is growing fast due to a general under capacity in the petrochemical and power generation industries

ƒ The horticultural greenhouse industry continues to suffer from high energy prices. Despite this, our Grodan

(26)

European competitive landscape

ƒ Finnish stone wool and sandwich panel producer Paroc acquired by capital fund Arcapita

ƒ Knauf indicates further glass wool capacity increase in Eastern Europe

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Grand Forks Milton Melaka (Malaysia) Wern Tarw Roermond Caparroso Moss Doense Hedehusene Gladbeck Neuburg St. Eloy- Les-Mines Vamdrup Trondheim Iglesias Flechtingen Cigacice Malkinia Bohumin Gógánfa Tapolca Vyborg Moskva Istria (under construction)

Geographic expansion

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Capacity situation

ƒ The Rockwool Group is presently establishing new

capacity – both greenfield as well as at existing facilities – in order to match the expected market growth in the coming years

ƒ Management has at this point in time a number of additional capacity increase projects on the drawing board

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Legislative opportunities

ƒ The Energy Performance of Buildings Directive (EPBD) enforces:

ƒ Building regulations must be based on total energy performance calculations

ƒ Energy certification (incl. advise on energy efficiency

improvement measures) of buildings which are constructed, sold or rented

ƒ National building regulations to be revised (= tightened) concerning energy efficiency every 5 years

ƒ Buildings > 1,000 m2 must be upgraded to follow energy efficiency requirements when undergoing major renovation

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Legislative opportunities

ƒ No member states managed to fulfil all requirements

concerning implementation by the target date 4 January 2006 but Germany and Denmark were close

ƒ In a number of countries, energy requirements for new constructions are now strengthened as a consequence of the implementation

ƒ Such strengthened requirements will usually impact the market with a 12 months delay due to the building cycle ƒ Implementation of the EPBD is still ongoing:

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Changes in energy requirements of new

buildings

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Legislative opportunities

ƒ The Rockwool Group wishes to play a major role in the market for energy efficiency in buildings and has therefore established the BuildDesk Division

BuildDesk is unbiased and offers software tools, services and consultancy

ƒ BuildDesk is active in Germany, Holland, the UK and

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Legislative opportunities

Major BuildDesk achievements since March 2006

ƒ Launch of energy performance software for new

domestic buildings and supporting seminars in the UK

ƒ Energy certification and consultancy software and training launched in Denmark

ƒ Strategic “energy certificate” partnership established in Germany with DENA (Deutsche Energie Agentur), the Federal Ministry of transport, building and urban affairs, the energy company E.ON and EID (Energiepass

Initiative Deutschland)

ƒ BuildDesk Online established; initially with a U value calculator

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Legislative opportunities

Directive on energy end-use efficiency and energy services (ESD)

ƒ Adopted in December 2005

ƒ Enters into force in 2008

ƒ Goal: To improve end-use energy efficiency in each

member state with minimum 9% over a period of 9 years either through national initiatives and/or through

obligations on energy providers to help end users improve energy efficiency

ƒ We expect the ESD will have a market impact comparable to the EPBD

Figure

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References

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