Agfa-Gevaert NV

Hello and welcome to the AFCA All Year 2024 Results Conference Call. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host, Mr. Pascal Jouet, CEO, to begin today's conference. Thank you.

Thank you very much, operator, and good morning and welcome to everyone attending the call. I'm sitting here in Motsul with our CFO, Fiona Lam, my colleagues from the Executive Committee, and Viviane Dictus in charge of Investment Relations. And we are going to walk you through, Fiona and I, our Q4 and year-end results before opening to questions, first in the room and then to the analysts and the press on the phone. So let me start by saying, well, to make a long story short, I think Q4 and also 24 is showing actually record results for the three growth engines of the group, healthcare IT, digital printing solutions, and Zerfen, all had record years and record Q4 quarter where we've seen an acceleration of the growth. And I would like to note that, indeed, we are a company with a strong seasonality because we are generating 43% of our EBITDA in Q4, actually. And that stems from the business seasonality, especially in healthcare IT, and also in the businesses where we have equipment cells involved, like DPS, digital printing, but also, in fact, DR in radiology. So Q4 is of critical importance, and I believe you've seen that we did a record Q4 for all the growth engines. At the same time, we're also addressing the challenge of the other part of the company. I was reading this morning in the data you know, a tale of two companies. And, well, we are one company, but with distinct, indeed, activities. And the film decline has accelerated in 24. We have put in place a transformation program to address this state of the market that is now ready for implementation, and I'm going to come back with more details on this. So, overall, overall, Healthcare IT had a record Q4 and a fantastic year where we launched our cloud solutions successfully and where customer satisfaction and order intake are the best, I would say, testimony to our growth, our successful, profitable growth strategy in the business. DPS also had a very good year, boosted by the growth engines of DPS and their partners. Radiology, of course, was strongly impacted by the decline, especially that we've seen in the medical field market. DR is still growing and growing very nicely, digital radiography, but cannot make up for the decrease in the field. So that's a bit the key messages I would like to convey for the year. Now, if I turn to numbers and look at the sales, well, Q4 a nice growth compared to last year, but again, a tale of contrast, where we've seen significant still decrease in radiology during the quarter, and an 8% growth in healthcare IT and 15% growth in DPC. If you look at the full year, it's pretty much the same trend, except that in fact Q4 has shown an acceleration of the growth, But the trend is still there, a significant decrease of our film activity, offset by a significant increase in VPC. The decrease for the full year of healthcare IT stands really from lower margin businesses, mainly hardware, and is testimony to the market moving partially to the cloud, in fact. So meaning our customers, some customers, stopped buying hardware in anticipation of their move to the cloud, and it has a short term But if I look at EBITDA, again, same as sales. For the full year, you've seen very nice growth of DPC and LCIP, and a steep decrease for radiology. If you look at Q4, the trend is even amplified, actually. In fact, most of the growth has been accelerating for our growth engine for the year. One comment, the radiology situation on the film is being addressed through our transformation program. However, getting in place such a program means that there was almost a very limited impact in 24. The impact will really start in 25. So we are bearing the weight of this decrease fully in 24. Thank you. Now, if I take a step back and look at the past five years, which is, I think, extremely important for a company like us in cool transformation, you see the direction of travel. You see the tale of, yeah, I mean, the film business, but here it's not only the film business, but our chemical business and our VR business has started this gray bar as well. You see a decrease, 3% decrease in CAGR average in the past five years, while our growth engines are growing 9% in the same period, and I would tend to tell you that actually the growth has only accelerated in the past two years. If you look at EBITDA, you see the same story of the transformation of the company. In 2020, most of the profitability of the group was related to the film. It has decreased significantly in the past five years, while we were growing actually the growth engines. And again, these five years are not equally creative, of course. We've seen an acceleration of this trend in the past couple of years as we have put in place all the elements of success for the growth engines in the earlier years of the plan. Now we can start seeing some of these benefits. I also want to jump immediately on the transformation program for the film. Let me tell you, it's not only a cost-cutting exercise that we are doing in this transformation program. We are also changing the way we work. We are setting up our operational excellence projects, and we are considerably changing the way we operate the plants. The good news is we have a social plan signed and agreed with, with our social partners, and I have to say it's also testimony of the ability we have to work in full partnership with all stakeholders. We did it without any conflict or any day of strike, which was not given, given the size of what we are undertaking in this program. We confirmed the 50 million plus recurring cost savings impact. It will start kicking in in a significant way in the certain parts of the year. The time to implement, we are just starting actually now to implement. I confirmed it's a cash-accretive program. Restructuring costs, we told you that we were estimating about 50 million. In fact, it is 32 in our PML. a little bit more in terms of cash, 37. As you see, the expected cash out is pretty well spread out for the next year, which is also one of the reasons we can use such activities for the program. So very pleased with the plan. We are now in implementation phase, and we'll give you regular updates of where we are. I'm going to turn to you, Shona, to comment the P&L.

In terms of the P&R, the numbers, sales and top line and bottom line, Pascal, of course, already highlighted quite a lot. You have heard them already now. Thanks to the growth engines step up in both top line and bottom line, you see largely compensating actually the fixed cost coverage losses we have in radiology. So you see our gross profit is relatively stable. So that's good to see that we have been able to keep our gross profit percentage at stable like the year before, even though we have lost quite some volumes on the top line on the total year level. And also, with the good cost control of our operating expenses, basically, with inflation, we were able to reduce it to $2 million, kept the full years also quite stable. So you see we post a decent, let's say, adjusted EBITDA level for 2024, the top line that we have lost, of course. cannot avoid that the volume impact still has certain bottom line EBIT impact as well. If you go from the adjusted EBIT to the operating result before tax, there we have quite a significant amount of adjustments on restructuring and one-off non-recurrent business. This is expected. Largely, the 65 million in Q4 We made it like Pascal said, 32 million to the restructuring which we were planning, expected. It's actually good news because it's lower than what we originally thought of. It's a cash-out item. We also know already in advance with the acceleration of radiology, we would have to re-evaluate the impairment of the fixed assets of radiology, which is not a cash-out item, but we know we need to do that for our balance sheet. So we have impaired radiology largely, all the dedicated assets, 24 million euros need to fall. Those are the biggest items of the postings of the $65 million EQ4. Plus, of course, we also still have some smaller ones like Germany. We managed to actually announce to close down the site in the radiology areas as well. So we also booked a $5 million closure of that site for Germany and some other, et cetera. The financing cost is quite stable. We have been quite stable compared to last year. There's no major accidents or expectations. We are not going up or going down. So it's quite a relative statement. That led to our net financial results still with a loss of 75 million. On the free cash flow, Q4, like Iveta, was the 43% of the year. Free cash flow for Q4 at AFA is also extremely good. You see we have 35 million positive free cash flow, largely driven by good positive EBITDA results, but also significant reduction of our networking capital in Q4. So that has led to a positive free cash flow of 35 million. Unfortunately, if you look at the full years, we are still at minus 46 million. We have a good reduction in Q4 on the working capital, but compared to 2023, we still are slightly higher than what we were in 2023. So we have a build-up working capital of 18 million. Some of them are also related, of course, in the Q4 higher sales that you led to a higher advance receivable. Good thing is that a big part of this consumption of the cash is the conscious planning on the CARPEX investment for the growth of the future. So you see... In the year, we still have planned $45 million investment. A large part of that, of course, is also the SIPOM investment on the site here in Vauxhall. And then we have, of course, continued to invest in the IT infrastructure, some of the energy sustainability investments as well on the energy side. So you see we have still quite a large capex investment which will invest for the future of the business. And we have also a positive contribution on the provision of 16 million, which is linked largely to our strategy going forward for our AXA finance strategy, which used to have in the past financed, let's say, low-wage customers. It's acting like a leasing company for our customers. this strategy do not fit our current strategy anymore. So we actually would amortize and try to phase out this strategy. So in the coming years, it would have positive impact actually in the coming years, every year in this magnitude of amount. If that's all the rest are stably like what we have expected, pension costs of 44 million, which is every year, roughly at this number, every year we're reducing these five to three million euros of spent on the cash out on the pension side, et cetera. And then we have the restructuring adjustment, the cash flow of 21 million on those. So that led to minus 46 million of 3 million. And that also means we have now a net financial debt end in position of 37 million. The leverage is still very, very healthy. It's 0.7 versus a maximum governance of 3. also on the interest of governments of certain countries versus the minimum of five. One good news also to mention is on the pension status. So you see we have here you see the material countries of the material five countries overall have reduced by 51 million. At the group level, total have been reduced by 53 million at the end of 2024, meaning we have actually a good reduction of 51 million on the SSI of our pension versus our liability, and therefore the net pension reduction is reduced by 51 million on the material countries.

Thank you.

It makes this the division. Yeah, and I take it back from here. So, healthcare, healthcare IT. So, have you seen, I've already touched on it, for the full year sales, slightly below due to the transition to the cloud, actually. But for me, the highlight of the results is really the order intake, plus 32% versus last year. Actually, at the end of Q3, you know, we gave it for plus 20, 25%. And we ended up at just 32. It's illustrative today of the real momentum we have in the market, and clearly due to the customer satisfaction and the image of AXA in the market, which has been totally turned around, I would say. One good news in this order intake, also the good news is it's cloud-related for about a little bit less than 30%. All of this increase is coming from net new customers. So, I mean, when we have net new customers, you know, representing all of this increase of 30%, it means we are getting share. We start getting share, which is totally new for us. It's a total turnaround of where we were a few years back. Also, a very good indicator is recurring sales are growing, actually, even if total sales are not growing. This is also a testimony to things behind it, testimony to the shift to more and more recurring revenue models, of course, but also due to the fact that we're not losing any customers anymore, so we have an SMA volume that is remaining constant. It's a combination of the two. The EBDA in spite of the top line decrease is actually improved due to the fact that indeed the cells we lost were rather lower margin cells and the progress we made is in higher value services. To make a long story short and as you can see also illustrated by the margin percentage which continues to increase. So a rather good year, and as far as leading indicators are concerned, really excellent momentum for the business. If you look at the P&L, that pretty much illustrates what I just said, we continue to be very conscious regarding our operational expenses. Gross profit is increasing. And, you know, yes, the transition to the cloud has an impact for us in terms of revenue recognition and margin recognition. It delays the revenue recognition and the margin recognition. I would like to remind you that if I sell 100 million in project sales, pretty much it's going to be in my sales the next year. If I sell 100 million of... subscription model, I will have 20 or 25 in my next year of sales. So it has this condition as an impact. But today, we have a growth momentum that probably means we won't see such a dip. It will just limit our growth in the next year. But all these mean excellent news for the business because turning project revenue into recurring revenue is very stable. So overall for the numbers. If I go to the next slide. So really, really pleased by the year. I mean, it's a record profit number. It's a record order intake. We never had so much order intake in the year. And records are made to be broken. I'm sure we'll do even better in 2025. I'm very confident it's going to be the case when I look at the dynamism of our commercial pipeline today. Cloud deal, 27%. Remember that 24 was the first year where we were offering cloud solutions, and it's already a very sizable part of our future business. Met new customers, as I told you, for the first time daily share, meaning now we have still customers. We have two-thirds project business and 34% recurring business in our order intake. What I'm probably the most proud of is really the customer satisfaction. The way we have improved in the class rankings, which is based on customer feedback, is unprecedented. Actually, unprecedented. And for the first time ever, we have three best-in-class awards in the U.S., The first two are elements of our enterprise imaging systems that are being recognized. And the third one is actually the transversal award for the full healthcare IT industry. So it's testimony to the progress we've made in our products with our customers. Must improve the software. The features that we've been implementing are working extremely well in the market and that's recognized. So, very happy with LCR IT. It's a stellar performance and I'm very confident going forward. DPC, also a very good year. 7% top-line growth, but of course DPC is like a small AXA. So not everything is growth-oriented in DPC. And if you look at the growth rates of our growth engines, 13% in digital printing and 27% in Zircon. Well, again, we deliver what we said we were going to deliver. And even in a rather subdued volume environment for Zircon, and we'll come back to that in a couple of slides, we still are able to increase ourselves significantly and also our bottom line, actually. And for BPS, double-digit growth, we are fully delivering on our strategy. The Inca acquisition works. We have made a number of launches that were successful in 24, and inks are increasing plus 15%. We are outgrowing the market in BPS, and we are basically doing what we told you we were going to do. When I look at the DBA, you see, therefore, a significant progression for DPC. Well, you know, DPC and SKIT are competing for the highest, absolutely the best number in Madrid, but I think we will continue to see 25 very strong roles of this nature for DPC, right? you have everything it takes to be successful. If I turn to the P&L, you see that the growth also has accelerated during the year. Meaning the growth of Q4, which is the most important quarter for us, is plus 14.7%, while the growth of the full year is 7%. So the growth has accelerated during the year, which is normal due to our product initiatives. In fact, and also the AFI partnership that... that took place more in the second part of the year. We keep our operational expenses under control, actually with the growth of the percentage on sales is decreasing steadily. The EBITDA number is not yet where we would like it to be, but we are making significant progress. So if I turn to the news on BPS, why are we successful in this market? We are very active with our innovation, and we are launching new printers that have received a very good welcome in the market. And every time we launch new printers, these are larger, more productive, more in-controlling printers. So there is also an improvement in the mix of what we do. So we have grown everywhere except for the onsets. The reason being, we are renewing the onset for next year, so it was a kind of a transition period before the relaunch that we are forecasting for 2025. EFI partnership works very well. We are very happy, and Inc. growth is exactly where we want it to be. Plus 15%, it means we are going to double our business every five years in Inc. We are also, as you know, made progress on speed set. I think the beta situation at our customer in the UK is working well, and we expect to finalize actually the sale of the beta in the next, at least in the first half, and of course, we are confident that we'll do for ourselves the speed set during 25th. We have announced actually a couple of days ago the signing of our formal agreement and partnership with VHS, by which we are going to supply print engines for their corrugated lines, a monochrome one, a black one, if you want, and a polychrome one. And we will also have the ink opportunity regarding this partnership. So that's also testimony to VHS. So I think the fact that we are recognized as one of the leading players in the digital world, these jetliners are actually, I would say, the fastest digital printers in the world. And we continue also to gain market share in water-based decor. Decor is not a market that is very favorable for the time being, Digital is taking really the technology place of the future, and we expect the growth to firm up in the next year. Green hydrogen, maybe here a few comments. You know, in any situation like that, we are living a bit the sobering moment, you know, from the hype of hydrogen two to three years ago to the reality of the market. So it's a normal process that would happen in any such innovation like green hydrogen. So globally, the number of new investments is decreasing, meaning the announcements for new projects are decreasing in terms of trend. But reversely, the number of FIDs, so final investment decisions, is increasing, so it's a contrasting trend. You know, the first one is really the announced project, and when you look at the sum of announced projects, it's an extremely high number, more than 1,000 gigawatts. But the FID is what we need to look at in order to make sure that we have a market reality on that. So actually, it's encouraging to see that investment decisions are increasing. Now, geographically, we see different dynamics. And it's clear to say that Middle East, Africa, Asia are moving faster than Europe. I think Europe has also a tendency to regulate and to until everything is absolutely clear in terms of regulation. it slows down a bit the development of hydrogen. But for us, it's not an issue. We have a global presence, and that's the point. We are coming also to a time where you have a number of electrolyzer producers, and markets in this environment will probably rationalize or consolidate on a fewer number of large players. Zircon will continue to be doing very well against this market backdrop of volume, I would say. Well, the volume decrease is probably not what our customers expected. So we are going 27% in 24. We are extending our customer base. We are selling now in Asia. We had another round I think it's from Norway, right? partner as well. And we have also set up now, a few months back, a lab to continue innovating with new versions of Zircon, and we have promising stuff in our pipeline. And of course, the construction of the plant is on track. Radiology, much more contrasted, of course. Here on the left-hand side, you see minus 10% overall for the division for full year 24. But in fact, it's minus 16 for the film and it's plus 8 for the VR business. So very contrasted also within radiology. And the impact on the film is quite tremendous in terms of volume. And remember, this is before we are implementing our transformation program. We don't have yet the necessary adjustments in the curve base showing in this number, and that's what we are working on. If you look at the PML, same...

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Hello? I think we're back online. I'm sorry for the interruption. We just don't know what happened. So sorry, I was about to comment the P&L of radiology solutions, and I would say... As you've seen, we've been very busy also adjusting our expenses to the reality of the market, but not yet with the transformation program for the plant. And therefore, we had a significant impact on the volume decrease for film for the time being, and that's really the object of the transformation program. If I look at our business, I think I already said the main element. We are also taking care of the CR, I would say, end-of-life technology. And we have also announced the shutdown of a German plant where we were making CR components at the same time. So we are addressing... the declining part of the business. Reversely, DR is still growing, and we are, I would say, outgrowing the market. And the way we do it is actually we provide more and more AI-based and software-based innovation to the market, and that proves to be quite successful. We already had strong imaging software with Musica, but today we are complementing this software with solutions that are embedded right at the point of care for our radiology solutions. And I think this is a way forward, and we are receiving a very good response from the market with this approach. So that's for radiology. I'm going to go now to the Outlook 25. And to make a long story short, we expect the strong performances of the gross engines to continue in 2025. Of course, I'm saying that this outlook is based on the current economic environment. I think everybody knows that the environment has become a little bit more volatile since the end of January, of course. And therefore, we have a little bit less view on some of these elements. But for us, we are staying the course. Per division, as I told you, the momentum in order intake is expected to continue in 2025. Probably our guidance when I say our performance is expected to be roughly in line with last year or might be a bit conservative. But I'm cautious. Uniquely as what I explained to you, meaning The impact on going from more project to cloud project, which is just delaying some revenue and margin confirmation. But I think we are still in an excellent position in this area. DPC will continue to grow as you've seen in 24, both in VPS and in green hydrogen solutions. If the growth of hydrogen solutions don't expect a spectacular volume improvement, that's not going to be the case, but we will continue to grow our business and to improve our bottom line. And hydrology solutions will be stable. We still believe that the decrease in the market will continue, but we'll be able to mitigate it through our transformation initiative. One thing where, unfortunately, we have not made any progress is we have been expecting the results of the expertise for Aurelius' discussion regarding the purchase price agreement. We have been now eight months in the process. Unfortunately, we have no leader on the experts, which is an independent expert, and we are still waiting for the results, in spite of our numerous actions towards follow-up from that, we still do not have it. And I already discussed extensively about the transformation program on the film. So overall, we are going to address the film decline in a very significant manner with our transformation program, and we expect the continuation of the growth of those engines. Just a word on sustainability. We have committed to science-based target initiatives in terms of CO2 reduction in line with Street 455 program. We remain committed to this program, of course. DEI is about inclusivity. We will continue to work on that. The idea is that even if we are meritocracy, we need to make sure we work on inclusiveness and sustainability. And for everyone to have a chance, the same opportunity in the company. So we continue to do that. Also working on the representation of gender in the company. And of course, safety programs. Safety programs, I have to say that this is the second year in a row where we are decreasing the number of accidents by about 15%. And we expect to continue making progress in the same way. way for the next year. Last but not least, we are actively working on the CSRB reporting for sustainability for this year, even if it's a significant commitment in terms of resources. I must say it's quite a complex set of measures for a company outside even the number of activities we have. But we are actively working on it. So I'm going to stop here for Q&A. And I will first take questions from the room. But again, we are really on track to succeed the access transformation. And the success we've seen in the growth engines is the best testimony of this. While at the same time, we are not shy to manage our declining businesses through cross-actions.

Turn it to Alexander.

Yes, hello. Alexander from Capitale Chevreux. Based on your order intake, it seems that the order book in healthcare IT is up with about 30% to 40% of QNs. You highlighted the excellent momentum in healthcare IT with higher sales and recurring revenue. which has already become a sizable part of the net unit base, so I'm a bit confused as to why you died for a stable performance in 2025. Could you clarify that out a bit, please?

Yes. But just because the nature of the order intake has changed. And again, if I was in a project base, you know, you could roughly say that whatever you take in order intake for the 0M will be revenue recognized in the year N plus one, okay? So what you take in 24, you will recognize in the year N plus one. But it's not anymore the case, and when you recognize the sale, you recognize the margin, and therefore the EBITDA. If you have now a recurring project, instead of putting this project, this order intake, you know, as sales, it will be spread out by six, seven, eight years, depending on the length of the contract. Meaning that mechanically, the way you recognize your profit is also delayed. So going from a project model to a subscription model has a mechanical impact to delay revenue and margin recognition. So if we were in an environment where we were not growing, actually, we would see cells decreasing significantly and EBDA decreasing significantly before during the transition year. It's not the case here due to the fact that we are growing. So we can make up this mechanical effect due to the fact that, indeed, all their intake growth is significant. But still, it means that all your growth, you will not get it in one go. You will get it credit over many years. And this is the reason why we are guiding. Typically, what you see in a business making a SaaS condition is a sell dip and a profit dip for two, three years. That's not what we're saying due to our growth. We say we believe it will be at least, you know, at the same level. And I say, maybe I'm a bit cautious or, you know, I have a cautious outlook. So already by doing that, it means that we are able to do that just because we have significant rules in the other instance.

Then how much growth do you actually expect in 2025 for Zircon? Because you mentioned the number of investments is up threefold, or the decisions at least. So I'm wondering whether we should take that as a guide.

No, no, no. You will not take it as a guide that we are going to multiply our business by three because there is a timing impact. Vincent, what's your growth of Zircon for 2020?

Yeah. So in 24, we grew by close to 30%. I think in 25, we should see something that will be in the same order of magnitude. It will not be massively more than what we believe. We do believe that the market will pick up more than that, but it will be in 26, 27. We see now bigger projects being announced. companies, again, starting to look at real projects, I'd say, not just, you know, high-level dreams. So, this will, indeed, come more for the entering years.

And then, a bit of a maintenance question, and then I'll leave the floor to my colleagues, because there seems to be a slight change in reporting as you didn't include tax of exchange rates this year. So, considering the dollar was rather strong at the end of the year, I could only imagine that the effects were spawned, but maybe you can clarify how the effects impacted.

Viviane, Fiona, I don't know who wants to... Actually, it was a very full year basis, a very minimal effect, and that's why we didn't explicitly mention it anymore. Yeah, it was minimal, not material in numbers.

Sips KBC Securities. I do not want to spoil the party, but can you give us, on the division by division, an impact of potential U.S. tariffs? And what's your U.S. exposure, division by division, and what could be impacted by tariffs?

Yeah, of course. Well, first, it's a bit difficult for me to comment because it seems to be changing quite rapidly and on a frequent basis. But what... The area where we are exposed is mainly because we have a Canadian plant for printers. So of course, this is one plant that supplies the world, and of course, North America. So we are exposed in this geography. But we also are working on contingency plans. We have also a plant in the UK. where we also assembled printers, and we could imagine to use the UK plant as a backup. This being said, there is no talk of tariffs for the UK for the time being, but that could come tomorrow. So we'll manage according to what we see, but this is really the one specific exposure that I can point out. Now, things are complex to understand also you know, we might have positive impact, for instance, for DR, because actually some of our competitors are doing DR equipment from China. If they want to go to the U.S., they have this. For the time being, we don't, from Europe or the countries where we operate. But I'm very cautious because it could change tomorrow. So it's a little bit difficult to say. I don't think at the end of the day this specific impact for me of duties is more about the impact it has on the market itself, meaning in such uncertainty, people are not making a capex equipment decision. They say, I'm going to wait a bit to understand what's going to happen in the market. So for me, what worries me, is, of course, the direct impact of the duties, but we have ways to mitigate it. But it's more about the impact on the market and the decision-making by customers. You know, as a head of, when you run a business, I mean, you need stability in order to make a capex decision. And for the time being, I'm not sure the situation is stable, so to speak. But this is really the one area that we need to look at.

You used the word China for the first time in this conference call. After 45 minutes, I have to look at the transcripts over the last 15 years. I think it's... first time that China is not mentioned that much? What's your situation in China in radiology solutions?

I think, yeah, I was about to say the situation in China. I mean, when we are talking about the decrease of medical film market, that's mainly China. So that comes mainly from China, which is normal because basically China is more than 50% of the world market for film. And the situation we are seeing in China is actually a market decrease due to some digitalization initiatives in China. So yes, I do mention the world China in the call.

And then last question from my side is on the printing division. So BHS, you mentioned into opportunity. Can you quantify that a little bit on a per device per year? What is the potential? And on the speed set that you mentioned that the beta will be sold probably in the first half of this year. What is the number of targets for this kind of machines on a full year basis?

How many machines do we plan selling? Okay. InBHS?

Sure. So on InBHS, maybe a comment there. These machines, these are big machines, they take a long time to install, and it's not like, let's say, our bigger sign-and-display printers, you're talking one to two weeks install. On these bigger sign-and-display printers, bigger, sorry, single-path printers, you're talking certainly for betas, several months. Over time, they should go down to maybe six weeks or so. So, clearly, in the first period, we will see equipment sales before we actually start seeing, let's say, substantial ink sales. We are indeed a preferred ink partner for BHS, but these will be open systems. So we will not be the only supplier, but for sure we're one of the certified and preferred suppliers. So I would say you will see in 25 mostly equipment effects. You will see as of 26 also the ink starting to ramp up.

But maybe talk about, let's talk about the potential. These machines are consuming a lot of ink.

Actually, the monochrome machine will be not using so much ink, but still, it's substantially more versus one of our own sign display printers. You're talking somewhere between 2,000 and 10,000 liters of ink, and it's actually quite a big spread because you can imagine if you do an Amazon box with just a little bit of black on it versus a lot more on your box, you'll get a lot more. On full color systems, you will typically use up to 100,000 liters of ink per machine. Those are typically boxes that you print at least 50, if not 100% of the box with full images. So there's quite a big gap between monochrome printer, imagine an Amazon box on which you do a small print versus a full color box.

And competition there is on the Fuji...

There is actually limited competition today. HP has a machine in the market that we consider as a competitor, but I would say that the VHS machine is actually a first of the kind.

For the inks. Not for inks, we were talking, I think.

On the VHS, as you're not... We are not the exclusive supplier, so the question of these, who are we competing against?

Today, we're not competing against, but... They just can, of course, choose to have certain other partners that they work with, but it's not... I'm not giving you all the names of the people they're working with.

These are smaller companies. And actually, you know, when all this was done, when it was Inca and not Agfa, of course, Inca didn't have ink, okay? So now we are coming to this game, and part of the partnership will give us also access to a significant portion of the ink consumption.

Thank you. Good morning. Maxime Stranach, ING. A couple of questions on my end as well. Firstly, if I look at radiology, obviously, even of one million, if I recall correctly, for the full year, you elaborate based on the trends in between medical films on the one hand and radiography on the other. I would presume that medical films are in negative territories. So a few on that. Firstly, then just for... My understanding, can you remind me, can you capitalize R&D in the U.S. in healthcare and what you're expecting here as well? And then finally, I'm going to do like this for the party a bit, looking at the officers and the diversions. We were talking about 28 million. I think that's been two years already that we're talking about this. Any view on timing, certainty, priority of success, anything you can share with us?

Thank you. Sure. Okay, capitalized R&D, you have the number of, we are capitalizing about six, seven million, six, seven million. It's part of the acceleration, but it's also showing in our ability, by the way, to have upgraded our product quite rapidly, and it will stay at the seven, no change. Regarding your question on radiology, well, we're not disclosing actually profitability for the various parts, but there are three components in radiology. CR, which is end of life. The film and DR. Actually, film, no, it's not money losing. It's not losing money. Even in the situation we are in today. And our news, we are still talking about the same amount. There is no change. It's just that we don't have yet the report by the experts. So nothing has changed. The work is just not being done today by the experts. Okay, but nothing has changed. So the changes have not changed. Our assessment has not changed at all. We are diligent in trying to make sure the expert is working on the file, but there is so much we can do. It's a joint, I would say, assignment with OILUS and AXA, and we have, I would say, unfortunately, no lever on the expert, as it should be, by the way, as an independent expert. So I still expect the situation to resolve during the year, but I'm extremely cautious because, frankly speaking, to have already an eight-month period for an expertise is way too long, in this case.

We have no deadline obligation by the experts.

It's up to the experts to define the time they need to come up with the results.

Thank you.

Ben. Yeah, hi. These guys already asked most of my questions, but I wanted to stand still at offset again, sorry. Just trying to get an inkling of, do you have an idea on what's taking so long? Is it workload at the expert's office, or are there other things at play? Do you have any idea?

I do not.

You do not? I do not. And they don't offer an explanation because it's getting quite strange for us as outsiders to see as well.

There is a restriction because of the dependency that we are also restricted not to approach her too much. So we have to wait for the status and basically not like a normal situation where we can discuss timeline and deadline. And so we are not allowed to approach also too much.

And does Aurelius share your annoyance at the timeline?

No, because it's a bit different. They have to pay us cash, so they are not in a hurry. It's a bit unbalanced in this story, because basically, of course, for our use, it's okay to wait and not to pay us what is due. So, of course, it's very unbalanced here.

And maybe one more very general question. You've discussed on the transformation not being a straight line. Do you have like an indication on when it does become a straight line? When like the fluctuations...

like kind of erode then life in real life you don't have straight lines okay i don't think it does exist but i think the direction of travel is there and then you have always variation you know according to various events but but i think you know when i look at the mega trans is green hydrogen going to be developing the answer is yes Is digital printing growing? This is the one growth technology in the printing market, and it will develop. And LKIT, I mean, our solutions are absolutely well in tune with market expectations and the ability to actually process more people in a more cost-effective way in a health system. And in each of these businesses, In Girton, we have the market reference for the membrane for Alcalá in France. In DPS, in where we play, we are a leading player and the growth that we have is testimony to that. And in LKIP, today, we have put back ourselves totally top of mind in this market. And therefore, we are enjoying not only the growth of the market today, but probably some share gain as identified by the other intake. Now, it's never a straight line, and you cannot say, okay, I'm going to grow every quarter by 8%. Okay, there will be always variation along the line, but the direction of travel is still... On SIRFON, is there any change in competition?

And can you give us already an indication on how the capacity constraints are evolving So the factory... Competition, competition.

I mean, it's clear that with the market that was honestly not there three years ago and it is now starting to develop, there is also competition on the horizon. That being said, like I was saying, we keep on being the reference supplier. We also are not sitting still. That's why we continue to invest in innovation and together with our key customers and partners, we continue to invest in developing the next-gen campaigns.

Except for, let's say, the Chinese players and the one Japanese player that we know, are there other important names popping up?

No, actually not. There is indeed competition popping up in China already for quite some time. Some absolutely not successful, some a bit more successful, but not to the level of innovation certainties that we have. And also operationally, I think we certainly have a head start. with our plant and the new plant we're building. In terms of your second question on bottlenecks, our plant is still due for being startup set up this year. So there will be, certainly with the market growth as it is today, there will be no capacity constraints.

On our side? On our side. That's for sure. Did we address your questions?

Yes, on this one, yes.

Maybe question on the phone?

I know Laura is... Indeed, indeed, we have a question coming from Laura Roba calling from the group Peterkam. Please go ahead.

Good morning. Thank you for taking my questions. I have two. First of all, coming back on healthcare IT, based on your order book, do you have any visibility today on when this higher order intake will translate into Higher sales, are we talking two years, five years? I don't know. And then how should we look at the CapEx evolution for this year?

The CapEx evolution, you said? Okay.

Yes, for this year.

Yeah, yeah. On, I believe, on healthcare IT, actually, we are planning for 25 to see already an increase in sales. Actually, relatively modest due to what I was explaining in terms of going from a project model to a subscription model, but we will already be growing the top line, we believe, in 25. And again, it's due to the fact that we have a high growth in order intake, even if we delay the revenue and margin recognition due to this subscription model. So, yeah, I mean, we're expecting we will probably, we will grow in 2025. And CapEx, CapEx this year was, you've seen it, 44 million. We expect about 10 million less for 2025.

Okay, thank you.

There are no further questions, so I will hand it back to the floor to conclude this conference. Thank you.

Thanks very much. Thanks for attending the conference. And again, I want to repeat our strategy is well in place, demonstrated by the successful run of our growth engines. I think we made the right choices and we are operating the businesses. We've been improving the way we've been operating these businesses and their performance. And again, we are absolutely committed to address the situation we see on the film market to preserve the profitability of this business for Acta in the years to come through our transformation program. And here, the execution is really starting after the successful agreement we have in place with our social partners. So thanks very much, everyone, and have a good day.

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