Hello and welcome to the Agfa full year results 2021 call. My name is Judy, and I'll be your coordinator for today's event. Please note this call is being recorded. For the duration of the call, your lines will be listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad at any time. If you require technical assistance at any point, please press star zero and you'll be connected to an operator. I would now like to hand you over to your host, Pascal Juéry, the CEO, to begin today's conference. Thank you. [audio distortion] yearly results call. I'm sitting in the room here with my colleagues from the executive committee that will help and assist during the presentation and the Q&A, of course. It's great to have you here. Without any transition, 2021 was a kind of a complex year, but I would say, in this complex year, we could deliver what I would call a resilient performance, in a context of a very, very strong inflation headwinds that has hit most of our businesses. At the same time, it's a year where we continue to advance the transformation of the group on different fronts. First on the top line, 3% above 2020, although it's a rather contrasted division performance, and I will walk you through that. As I said, resilient gross margin performance. We have been busy along the year to take pricing actions to address inflation pressures. We have continued to manage our fixed cost with a lot of rigor. Therefore, we could deliver overall for the year a rather resilient gross margin picture. This being said, it's noticeable to see that the inflation impact has been building up through the year and will continue in 2022. Overall an adjusted EBITDA 5% above 2020, with a very strong performance of HealthCare IT, and we'll come back to that in more details. Radiology Solutions is the only business that is below 2020 for specific reasons I will explain. We're happy with the growth activities of Digital Print & Chemicals who have shown and validated really our strategic roadmap. However, we did not translate fully this growth into EBITDA, and again, we will come back to that. Offset Solutions has a significant rebound in a context of extremely strong inflation. Offset was the number one business in terms of inflation impact for Agfa this year. At the same time, we have ended our pension derisking measures, and we will present to you in more details where we stand at the end of the year. In a complex supply chain environment, we still managed to decrease our working capital needs by one point from 27%-26% of sales. We have reached some significant milestone in our transformation program. We have announced the simplification of our go-to-market organization at the beginning of the year. We have announced the reorganization of our IT activities, internal IT activities through the partnership with Atos. We still have a lot more initiatives in the making to continue transforming the group. If I talk about Q4, as I said, the inflation pressure has been building up through the year, and Q4 was by far the quarter with the largest impact on the P&L of this inflation. As you know, this is an inflation that comes from raw materials, packaging, freight, and now we are also seeing the return of salary inflation, by the way. Very strong quarter for HealthCare IT after a more subdued third quarter. Here, immediately, I would like to repeat what I've been saying. You shouldn't be looking at the performance of HealthCare IT on a quarter basis. Look at it on a year basis. The reason why is 50% of our revenue is project-based, and 50% is recurring. Very strong quarter for HealthCare IT indeed. Strong top line growth for Digital Print & Chemicals in the fourth quarter, 18%, which is quite a good growth. However, did not translate into EBITDA. We were impacted by actually manufacturing inefficiencies and some of inflation pressure also coming up to parts of the business. Offset Solutions has been impacted by cost inflation. Remember, it's a bit of a race between the inflation and us raising prices. Most of our pricing actions are in place in Q1 2022. They were not fully yet in place in the fourth quarter and therefore we've seen a more complex quarter for Offset. Now, if I turn to the P&L, well, let's look first maybe at the year, 3% top line growth. As I said, resilient gross margin, actually a bit ahead of last year on 28.3%. We lost half a point. However, if you look immediately at the Q4 gross margin, you see that the inflation is impacting us more, and therefore, our gross margin is 2 points below the average of the year. This is due to this kind of a delay of putting prices up versus inflation hitting the P&L. It's a time impact, in fact. SG&A and R&D are fully under control in terms of cost management, and therefore an EBITDA 5% up for the year and an EBIT 17% up. If we go down the P&L, we still have significant transformation costs, which you see in restructuring and non-recurring. Less than last year. Last year, we had the cost of shutting down two plants in Offset in the U.K. and France, as well as the reorganization of some radiology activities in Germany. Still a significant restructuring and non-recurring charge to continue the transformation of the group, meaning we end up still today in negative net profit due to this transformation cost. I am now going to turn immediately to Dirk, our CFO, who will walk us through some of the cash component of these results. Right. Thank you, Pascal. Overall for the year, Agfa shows a positive free cash flow before the extra pension funding, supported by a growth of the EBITDA. As you can see, there is a limited impact on net working capital. As you may recall, in 2020, we had a massive drive to reduce our working capital, so the impact is a bit less, and I will come back to that later in the working capital slide. CapEx was at a lower level versus the past, and this is also partially due to the fact that we had the closures of the two plants in Europe, so that should also help to have a sustainably lower CapEx in the future. Overall, that means that we have an adjusted free cash flow pretty close to the adjusted EBITDA. That was sufficient to both do the pension servicing that we normally need to do and to pay for the restructuring and the non-recurring items. On top of this, we concluded our pension de-risking program in the first half of the year, so that's EUR 130 million that we invested, leading to a free cash flow of EUR -122 million. If we look at the net cash position, so as you can see, it's still strong, close to EUR 400 million. Now another factor aside from the EUR 130 million that we invested in the pensions, obviously, there is also the share buyback that impacts the cash position. Over the year 2021, we had a share buyback amount, cash-wise, of about EUR 29 million. Overall, still, close to EUR 400 million net cash on the balance sheet. Coming back to the working capital, as you can see, and as we told you, Q4 is usually the quarter where there is a big drive to reduce the inventory levels. EUR 47 million was reduced just in that one quarter. Year-on-year, though, inventories increased, not just in total absolute amount, but also in inventory days. That was largely also driven not only by increased activity, but also the reflection of the high inflation on raw materials that had to be absorbed into the inventories. Trade receivables, let's say in terms of DSO, flat versus last year, but we did make quite a bit of progress in reducing overdue, so we keep on focusing a lot on that, and that keeps on benefiting the overall position. The key improvement you can see in the working capital is the normalization of the trade payables. You could see that already over the past quarters. There is a 13-day improvement quarter-on-quarter versus last year. That reflects the normalization of the activity versus the 2020 year, where obviously we were trying to put the brakes on the inventory buildup and reduce the working capital. Overall, as Pascal mentioned, we managed to decrease another percentage point year-on-year the working capital. Overall, a pretty good results. Indeed, we did it in a context where supply chain is not easy on us and transit times for shipment and is increasing tremendously. Overall, I would say it's under control. We will continue to drive this working capital improvement over the next years. Let me turn to HealthCare IT. HealthCare IT very good results for the quarter. If you remember, we did mention during at the end of Q3 that we had a number of projects which were a bit delayed in implementation. They all came in Q4. Again, I would insist, don't look at this business only quarter-over-quarter. Look at the last 12 months trend, the year trend, and you will see that we are walking the talk, and we are delivering what we said we were going to do in this business. The year is at almost 14% EBITDA. Two years ago, we were way below 10, and we confirm our guidance to reach high teens EBITDA in this business. Overall, very positive. What I want to say also is that our order book remains at a very healthy level. Actually, it's probably even a bit bigger than what we would like, reflecting the difficulty we have today to implement. You know that especially in North America, there has been a significant churn in terms of what is called the Great Resignation. We had a number of people that left, and we have replaced these people, but that has delayed somehow some of the implementation of our project, and this is for us a key priority to get back on track. We have very healthy order book. Now, the name of the game is to execute it and to implement it in the next months. Overall, we are very happy where we are with the business. I will comment on the outlook 2022 at the end of the presentation. Radiology. Well, different story for Radiology. I think Radiology is still, of course, today a very strong strongly contributing division to the group. We had a bit of a setback in 2021 across the businesses. First, in film, we were impacted by the change in China procurement process that impacted especially the first quarter. I would say we have built back our volumes and market share over the year in China, but we were impacted at some point. We've seen a nice volume recovery outside China in terms of film volumes as well. We also start being impacted by some of the cost inflation that we've seen in the business. Overall, I would say film is below last year, but overall quite resilient. What was not expecting for us is DR operated in a more complex market environment than what we forecasted. Actually, when you look at the market, I think we had three quarters that were showing negative growth for the DR market. It's a bit the aftermath of the pandemic where we've seen a boom in demand. Today, hospitals and caregivers are reviewing a bit how they operate. We believe it's gonna come back. We have no issue midterm about the market prospects for DR and X-ray in general, absolutely not. It was not a good demand year for us in 2021. Overall, Radiology is the one business that has deteriorated versus last year. Let me turn now to DPC, to Digital Print & Chemicals. If we look at the year, you will see that we are firmly in growth territory, 14% top line. This did not translate so much in EBITDA, where we improved our business marginally. This is the one business of Agfa where sales are way above pre-pandemic level. That's the only one. We are pleased about the top-line growth of the business. Why? Because all the growth-oriented activity has performed very well. The digital printing activity has performed very well and has improved profitability tremendously. All our, I would say our, chemical niches like ORGACON, have improved very well as well. ZIRFON membrane, we are gonna discuss it later, but of course, is on the rise, but still at a non-material level, I would say, but growing considerably. However, we were impacted by the cost inflation and, some manufacturing issues, on our film business. We still have a film, non-medical film business that sits on DPC, and that dragged us a bit in, terms, of profitability. Some of the issues are one-offs, that we've seen in Q4, and therefore are going to be solved. The inflation is being tackled also through price, so we are expecting, of course, an improvement. That was a bit a disappointment for us in an overall very favorable environment for DPC. Which is also the moment for me to introduce the subject of hydrogen. As you know, we have not only announced our results today, but we have issued a press release explaining that actually, we have made an agreement with thyssenkrupp, and thyssenkrupp nucera will use our membrane in their large-scale hydrogen projects. Very favorable announcement, and I would say, we are now making concrete what was yesterday a potential. As you know, thyssenkrupp nucera is one of the main players in the market and the one with the most advanced projects for large-scale hydrogen production. This is the opportunity for us to explain to you a bit more what it means for Agfar. I will turn the presentation to Vincent Wille who is the President of Digital Print & Chemicals, and he will explain in three, four slides what it means in terms of potential for the group. Vincent? All right. Thank you, Pascal, and welcome everyone. Very happy today to indeed tell you a bit more about green hydrogen. Only a very small part of our division, Digital Print & Chemicals today, but we indeed have quite high hopes. We're not gonna go into the technical details, of course, of everything. You know that there's a whole rainbow of colors when it comes to hydrogen. Today, there is already a hydrogen market, and I think today it's especially in the spotlight given the energy crisis. Most of the hydrogen produced today globally is gray hydrogen, which is hydrogen that is producing also a lot of CO2 as you produce the hydrogen. More than 90% of that market is actually gray. In the next decade, that market is gonna grow five to six times overall in hydrogen. Sorry, if you can go back just one slide. The majority of that growth, all the growth is actually gonna come, and even some substitution of gray from blue and green hydrogen, and that's where we want to play. We will be playing, and we are playing in the green hydrogen side, and more specifically in the alkaline electrolysis, but we'll come back to that in a second. Green hydrogen, and this is not numbers coming from Agfa, of course, and there's many sources out there that forecast a large growth. Here you can see some of the numbers on that graph on the left. By 2030 we expect... Today there's less than 1 GW if you translate it into electrical capacity installed, less than 1 GW available today. To reach our net zero targets, we will need at least 200 GW-250 GW of installed green hydrogen capacity. Announced projects today is 93 GW, and every week, every month, there's new projects being added to that, especially large ones. By 2050, you see also there's very, you know, diverse opinions on how that market is gonna evolve. I would say most people think that it's gonna be at least 3,500 GW installed capacity by then. You can see an explosive growth. It also explains why, you know, today this is still very small as a market also for us, but the growth is really gonna come in the next decades, and we are absolutely ready to take a part of that. If we translate between now and 2030 that market potential for Agfa, and we believe with our membrane, which we will explain to you in a second, but we really have a technological advantage. There should be a market potential for us over the next 10 years of roughly EUR 1 billion, and that is probably still a prudent assumption on that. You can go to the next slide. On green hydrogen, there is different methodologies, different technologies to make it. Again, without being too technical, they're the two most advanced, and today commercially available ones are PEM, proton exchange membrane, and alkaline electrolysis. We, as Agfa, are positioning ourselves on the alkaline electrolysis. Both technologies clearly have a place and a role to play. It is clear that for the large industrial installations, alkaline has an advantage. The main advantage is both CapEx, lower CapEx, and also the use of simple electrodes, simple metals in there versus in PEM, where you need actually PGM, platinum group metals, and those are both expensive but also scarce. There is simply a bottleneck, let's say, in how fast PEM will be able to grow because of the availability of materials, we believe. You see at the very bottom there the expectation of average project size by 2030. You see PEM. Actually, probably half of the projects will be PEM, but they will be much smaller. Probably three-quarters of the installed capacity will be on alkaline electrolysis based. That's the industry consensus. Maybe going to the last slide. We've actually been working very hard on this for the last 10 years. We have been commercially active in this market for more than 10 years. As you can see, today we're still not very visible because it's such a small market, but our membranes have been used for more than 10 years, and there's more than 350 MW of installed capacity actually with our membranes. We have a very good track record when it comes to reliability and performance. Performance was especially stressed last year, and when we did a study with Fraunhofer with our new membranes, and we continue to invest in innovation and in higher performance of these membranes. We now have membranes that have a similar performance compared to PEM membranes. We can really take it to the next level and when it comes to green hydrogen, it is gonna be a cost play, of course. About two-thirds of the cost of making hydrogen is electricity, so the higher the performance, the more hydrogen you can make for the same amount of electricity, of course, the better product you have. We do absolutely have that with our ZIRFON membranes. I would say we're happy to be in this market. We are ready also to take on the next challenge, and we will be investing in this in terms of growing with this market also with production capacity. Thank you very much, Vincent. Yes, the announcement by thyssenkrupp of the thyssenkrupp relationship is again a concrete action, but we work with all players in this alkaline market. Indeed we have here quite a unique technology in a very promising market segment. Continuing the presentation to go to Offset. Offset, if you look at the year first, we are back in positive EBITDA territory in spite of the inflation wave, and Offset has been the most affected business in terms of cost inflation. We have been busy increasing the prices during 2021. Actually, we did three price increases during 2021. As explained, due to the contractual situation, we couldn't impact the totality of our customer base. Over the quarters, we have seen the impact of inflation getting larger, and Q4 is an excellent example of that because basically, and unfortunately, we are close to zero EBITDA. The price increases are in place. They have been implemented already in January and February 2022, and therefore, we are gonna close that gap very very quickly. As you know as well, and we'll discuss it as well, the inflation continues in 2022, and especially aluminum. We will continue to increase price accordingly, and by the way, we are not expecting any issue doing so. Overall, I would say even if it's an improvement year on year, the inflation has hit us pretty hard and again, we have a bit of a delay in translating that into our contracts, but we are able to do that in a very effective way. Now, if we move to the outlook. We believe the group will improve its activity in 2022 in a context where inflation remains extremely strong and stronger actually than 2021. The price actions are in place. We have price actions in all businesses, not only Offset, but we have price actions in DPC, we have price actions in Radiology, we have price actions in HealthCare IT as well. Service contracts today with the salary inflation, we are increasing prices as well, so across businesses. A specific word on HealthCare IT. We have been very successful in the past two years to rapidly increase the profitability of the business and to refocus it. We are entering right now a new phase, and for me, 2022 will be more a consolidation year. Don't expect a spectacular improvement on profitability. What we will do is we will reinvest in resources in order to prepare the growth phase. We will reinvest in service capacity. We will reinvest also in R&D. Our objective for 2022 in for HealthCare IT will be now to turn to positive top-line growth for the year. Okay. I repeat what I said, don't look too much quarter by quarter, you need to look over a 12-month period. I already know that the first quarter for HealthCare IT, in terms of visibility of revenue recognition, will be rather subdued, and that the Q2 quarter will be higher. We have that kind of visibility depending on where you are on your project. We will continue also in 2022 transformation programs. We have a number of projects in the making with always the same goal, agility, simplification, cost reduction. 2022 will be a year where we will start executing projects. We won't see any benefits. The benefits will start 2023 onwards of these projects, but 2022 will be a transformation year. Last but not least, of course, we are not immune to what happens in the world and the Ukraine situation and the war in Ukraine and the situation with Russia indeed create new uncertainties for us. For the business, we have a small exposure. Russia is less than 2.5% of the group sales. Less than 2.5%, so it's not really material. However, we are reviewing what can be done. Our products are not on the sanction list, of course, and especially healthcare is never on such a list, and it's the majority of what we do today in Russia. But there is, of course, uncertainty about the ability to continue our business in this country. What creates the uncertainty is more the indirect impact. The impact on the global economy and the impact on the input cost for energy and key raw materials for us. Since the start of the events, aluminum has shot up by 25%. It's close today to $4,000. You know that indeed, aluminum is a significant input cost for us in Offset, but I repeat. We will pass everything to the market. Everything is in place. We have changed the nature of our contracts, and we are already preparing, as I speak, price increase number five, that should be implemented probably in May. We are not gonna have the same kind of delay we had before. We have learned our lesson. We have adjusted our contracts with our customers, and we have the ability right now to reflect, I would say, very fast, anything that we see on the aluminum market, among other things, but in pricing in general. I want to stress on that. That's for the business. We wanted also to walk you through, where we are in pension- Yeah. -after everything that we did and, therefore giving Dirk. Yes. Thank you, Pascal. A quick update on the pensions. Again, this slide reflects the material countries, so the four material countries. As you can see, overall, our funded status improved quite significantly over the year, EUR 230 million. Obviously, we did the pension de-risking program. In the material countries, that was about EUR 114 million invested in the de-risking. But also, obviously, we have had some benefits around discount rates. After years going in the wrong direction, now they're actually going a bit in the right direction. Our average discount rate in 2020 was around 1.05%. In 2021, it was 1.42%. That was, like, an increase that benefited also, obviously, the obligations. We will be publishing in our annual report soon the sensitivity that we'd like to share with you as well. If we have an increase of 100 basis points in the discount rates, the obligations would go down with around EUR 250 million, just short of EUR 250 million. On top of the material countries, it's important to note that we also had de-risking activity in the non-materials. You may recall that we eliminated the Swedish defined benefit plan. In total, and it's not on the slide, but in total, the overall funded status improved with EUR 259 million. If we look a bit at P&L and cash flow, and especially important, looking forward to next year, you can see that we expect the pension cost in EBIT to go down with EUR 5 million, although we do think that the net interest cost will slightly increase. Those are in the financing costs. Overall, total pension costs should reduce from EUR 32 million to EUR 28 million. The pension cash outflow, as you can see, 2020 and 2021 were marked by the de-risking program. But if you exclude that, the normal cash flow out in 2020 was EUR 75 million, in 2021 was EUR 64 million, and will become EUR 55 million in 2022. Over the two years, that's like a EUR 20 million reduction in the normal cash outflow that we expect for the pensions. I think that's it from my side. Thank you. Thank you very much. Just to finish up, sustainability. We have embarked in a sustainable journey. We have set ourselves a series of objectives that we'll be in a position to share publicly, I hope pretty soon. First, safety. We have set ourselves a reduction of accident program, so increase awareness on safety. In 2021, we have delivered -20% in terms of number of accidents with one day stop work. Which is a significant achievement, but we still have a lot of things to improve, and we are working on that. We are also working on the path for a diverse and inclusive approach at Agfa. We have set ourselves for gender diversity specific objectives in number of women we want to hire as a percentage of the total hires of the group, as well as their fair representation at executive level. That's a second objective that we have put ourselves. In terms of sustainable innovation, we have now put in place a methodology in order to ensure sustainability of all Agfa innovation going forward. We are working on specific sustainable development roadmaps for some of our activities, especially in the chemical field. Number four, we have, for the first time, received a rating from an external agency, EcoVadis, which is widely used in Europe. Just to know where we were, without doing any specific work on this, we are today on the top 45% of companies, which gives us a kind of a bronze level of achievement for EcoVadis. We will continue to work on improving our sustainability practices by selecting carefully our battlefields, and I expect to make further progress in this area. Last but not least, in terms of climate change, we have started to buy green electricity today in Belgium. We are putting in place new practices, not only for the workplace, but also for the mobility policy. Here you have an example also of circular economy where we are investing and receiving, by the way, some support to invest in reducing waste and CO2 at our plant here in Mortsel. Sustainability is totally embedded in the way we want to conduct our business. We internally have developed sustainability goals that are reflected also in the remuneration of the top leaders of the group as I speak. We're not forgetting at all this aspect. Overall, I would say for 2021, in spite of all the challenges that we had, we continued to develop our roadmap to profitable growth. We continued the group transformation. We were able to address most of the inflation impact. For 2022, we will, we believe that we can bring further progress in all these fronts. With this, thank you very much for your attention, and I would like to open the floor for questions of the analysts and the press. Operator, if you... We'll start maybe with the room, Operator, and if you, maybe would you be kind enough to, if there is anyone, 'cause we don't have all the analysts in the room, so if there is, on the phone questions, we'll take it from the analyst and the press. No calls on the phone. Okay, perfect. Thank you. Good morning, Maxime Stranart from ING. Three questions on my side, if it's okay for you. First of all, looking at Radiology and the profitability we have seen over this year and given the changes in China and so on, is this level of profitability the new normal, or do you see some room to continue improving on that regard? Secondly, on green hydrogen, it's pretty clear that you have, like, a leading product, but where the competition is currently standing at, and also what would be the CapEx required over the medium term to serve that market? Finally, on the pension side, you mentioned that the expenses in the P&L are expected to decrease, but if we exclude the EUR 130 million extra funding of last year, actually the outflow is expected to increase, so if you could shed some light on this as well. All right. If that's okay, Dirk, you're okay to start with the pension question? Yeah. Actually, I'm not sure if I understand, so, if I understand the question. Yeah. Basically, if you look at 2021, we have an outflow of EUR 178 million. If we exclude the EUR 130 million of extra funding. No, it's actually these are the material countries. That's why I mentioned it. Oh, okay. It's a misunderstanding. The material countries, the cash in that we put was EUR 114 million. The Swedish plan, which is not on the slide, and that's why the normal cash out was EUR 64 million, and next year it's going to be EUR 55 million. Okay. Perfect. Very clear enough. Okay. That's clear. No, thank you for the clarification. Not sure my... It works? Okay. Radiology. So Radiology in a nutshell, I wouldn't say it's a new normal. I would believe that in 2022, we can improve the performance of Radiology. To make a long story short. We still have uncertainty regarding what's gonna. The procurement process in China has been suspended so far, which means, by the way, that the results obtained were not necessarily the one that the Chinese authorities were looking at. And bear that, we don't have yet visibility on this. We expect Radiology to improve. On H2, what about competition versus... Of course, we are not alone in this market, but we do have a specific competitive advantage, but indeed we are not alone. What's your take on it? I would say today there's indeed two types of competition. There is the other electrolysis technologies which we described a bit there, and there is indeed quite some players on the PEM side. There's also players working on other less mature technologies, which consensus is that it will take five or 10 more years to bring to market to be commercially viable. Even at that time, the expectation is that they would not be lower cost versus alkaline electrolysis. On the alkaline electrolysis side, there is I would say cheaper Chinese membranes, but which really have a much lower both reliability and performance in terms of how much electricity you need to actually produce the hydrogen. I would say today, and the competition on alkaline electrolysis, if you have to compare to the performance of our membrane, and this is also recognized by our most important customers, we are far above actually what you can find in the market. Let me add as well that hydrogen membranes, separator membranes are critical to performance- Yeah. -but not relevant in the overall cost. Okay? One. Second, we have a 10-year track record. Nobody else has it in the market. If you want to build a hydrogen plant that is worth billions, what will you choose? Yeah. We have a proven lifetime also of our membranes that is at least eight years, I believe. Yeah. A proven track record. So it means indeed we have a few arguments, you know, that makes us confident that this is a market where we are gonna have a significant share. Yeah. Today, our share of the market is probably outsized, you know, and we know that some competitors will come. We believe as the inventor of the technology, we'll still have a leading share on this market. Perfect. Very clear. Thank you for that. Perhaps, Guy Sips, KBC Securities, perhaps first a follow-up question on that. For a project of 2 GW, what would be the share of Agfa? What would be the investment in the alkaline, and what is the lifetime of the membrane? If you use a replacement cycle of seven years, is that reasonable? I think what would be reasonable as a replacement cycle would indeed be seven to 10 years even. We probably could go a bit longer than seven, but that would be the order of magnitude. Your first question, are you referring to what the cost would be in a 2 GW plant? Okay. That would really depend on. There's a wide variety, let's say, in terms of the technologies the alkaline stack producers out there right now. It's a factor of two to three to four difference in between you want to make the same amount of hydrogen, not depending on the membrane, but depending on the performance of the overall stack, your cost might be two to three to four times higher versus the best technology out there today. It's a rather wide range, but you're looking at, let's say, for a gigawatt, you're probably looking at between EUR 10 million and EUR 40 million in terms of cost of the hydrogen membranes in there, depending on the performance of the stacks. To date, thyssenkrupp has announced two major contracts already, one in, it's- In Saudi. Saudi Arabia. Yeah. One in Rotterdam recently. Is Agfa involved in both projects? We cannot comment on specific projects. That is an agreement we have with our customer and most of our customers actually. Unfortunately, we cannot be specific on a specific project, but all I can tell you is that we have a very good collaboration with them, also to work on continuing to build the performance of those membranes. Every year, we continue to innovate and actually make them even more performing, and that obviously for the larger projects, they will continue to work with us as- You mentioned the two largest project of thyssenkrupp nucera. What we are announcing today, they select our membrane for the large-scale project. Okay. Yeah. Follow-up question on that. You see thyssenkrupp spinning out their nucera business. We will see IPOs in Italy as well on green hydrogen. What is Agfa's position on this? The development of the ZIRFON technology corresponds to one of the core competencies of the group. It's a substrate with a very sophisticated coating in it. It's not film, but it's produced with similar technologies in a way. For the time being, we believe that the right way to develop the ZIRFON membrane is to do it here with all the technology and capabilities we have. We have no plan today to spin off a hydrogen business for the time being. Remember, what we have to do is we still have to do the industrial scale-up of the business. That still has to be done. We are producing membranes for customers today, but as you've seen from the slides, the scale at which the industry is today is totally different to where it needs to be in three to five years. Which, by the way, it was, I think, one of the questions as well. We are also preparing an industrial investment in terms of capacity in order to be ready to fulfill the needs that we see in the pipeline. The order of magnitude of the CapEx is not three figures. I mean, it will be well below EUR 50 million. ZIRFON will stay under the umbrella of Digital Print & Chemicals, or will it be separately? For the time being, it will stay in DPC, but internally, we are structuring it as a full-fledged business unit. In our valuation, is that in the tens of millions of euros, or should we already see this as a three-digit million euro plus potential business? You look at the ramp up, I mean, look at the ramp up. I mean, we told you with the current announced project, it's EUR 1 billion potential in sales, okay? Over 10 years. That's just a picture of today. Actually, it might be not EUR 1 billion, it might be EUR 3 billion if the project portfolio increases to 250 GW, you're talking about EUR 3 billion here. Now, the next question is what is our market share on this? Okay? We have an idea, we have ambition, but you can figure out also what could be the level of market share and the level of margins, we can define. I will leave it to you to make your own estimate at this stage. We are not, we won't give full granularity for the time being. Okay. Two other questions on the remaining business of Agfa. First on the aluminum. We are used to work in our models with sensitivity of EUR 10 million impact EBIT for every $100 aluminum goes up with a time lag of nine to 12 months. There was some guidance on that previously. Is that changed? And also because you said that, yeah, we are becoming more proactive on in that field. Is the impact shorter or how is it working now? Is the impact correct, Dirk? $100 of aluminum, $10 million on cost, for you. I think it's a bit high, right? First of all, it's a bit high. I've seen that this morning also in the comments there. There is today the impact. Our position is very clear. Whatever happens with aluminum and other inflation, we put it through in the price. The impact will be a lot less. The impact will- We compensate. Will remain on the cost. Yeah, we compensate. We repeat our full confidence to be able to fully reflect it in the market and in a much more efficient way than we've been able to do in 2021. Last question on the pension liabilities. We saw discount rates going in favor of Agfa since end of last year. End of 2021. Do you have a rough estimate how much the net liability would decline if you market the pension to current discount rates? No, we have not done that exercise, I think. But the- At the sensitivity I communicated. The sensitivity of 100 basis points is around EUR 250 million decrease in pension liabilities. Am I correct that looking at the current discount rates, could the net liability have declined nearly EUR 100 million since? You mean the component that is currently in the numbers? Let's say there is a 0.37%, so 37 basis points improvement in the discount rate, which is translating roughly into EUR 77 million of reduction in liabilities. That's the effect of in 2021. I'm talking now 2022. Well, I'm not doing any predictions on 2022, yeah. No, no. For us, the subject of pension, of course, there is the calculation of the liability, but the subject of pension is purely becoming a cash out to our unfunded obligation in Germany. This is what it is. You've seen this cash out steadily going down. That's for me, what matters most. Indeed, interest rates will make it so that it will decrease our overall liability on the balance sheet, you know. The cash we're gonna have to pay every year will be the same. Post the EBIT, right? Yeah. I mean, it depends. I think the key factor long term of discount rates will be also around our ability to completely de-risk Agfa from certain funded plans. Obviously not for Germany, where we see this as a long-term liability with a steady decrease in cash outflow, roughly, which I explained also in the Q2 results. For the other plans, and basically in U.S. and the U.K., we can imagine at one point in time that the discount rates would be at a level where it's cheaper for us to eliminate them altogether. I think that will be the key effect of discount rates going forward. The market premium versus the IFRS valuation might actually close and therefore make it possible for us, without putting extra cash in the plans, to both eliminate U.K. and U.S. This is not for tomorrow. I think this is a multi-year view that we need to take on that. Alexander. Hey, good morning. Just the first question, on the working capital, you said it was 26% on total sales. I was wondering, can we use this figure going forward? Also could you give some granularity on how this is differentiated between several segments? I can, for example, imagine that in Offset it's quite higher than in HealthCare IT. If you could just give some granularity in that. Then also on the new contracts in HealthCare IT and Radiology in the U.K. How do we have to imagine this being rolled out over how much time span and how much does a contract like that represent in percentage of sales? Just to give a bit of a good idea on how we need to see this contract. Just on the CapEx side, how much of it is maintenance related, and how much expansion related? Do you see, I mean, how much CapEx do we need to foresee in the future? Mm-hmm. You take the working capital, part, okay? Yeah. On the working capital, we don't publish the details by division. Obviously it's true that there is a difference between the divisions. Like our HealthCare business has a very low usage of working capital, the HealthCare IT. Let's say in the equipment businesses and the film businesses, we usually have a much higher level. I think the percentage is okay to use going forward. I think our objective would be to continue to decrease because a lot of the efforts are around the film supply chain, around the component supply chains. Like, we're working hard on reducing in Radiology also the sensors and trying to be more efficient at delivering our customers with lower levels of inventory. We do expect and will go for reducing that percentage over time. It may be driven a bit by mix, but it's primarily gonna be driven by activity and actions that we want to take. Indeed, on a division level, working capital is very small in HealthCare IT, you know, almost inexistent. Then Offset, actually, you have Offset and you have Radiology and DPC who have higher working capital than Offset. The reason being, these are global supply chains that we're having in all of our business, actually. On CapEx, EUR 26 million, I should say it's really maintenance today. I'm not sure we can sustain that level of CapEx every year. We will have probably to spend a few more CapEx in order to maintain our plans. The other thing we do in CapEx is we invest for productivity. We have, for instance, a CapEx that we are currently doing here in Mortsel to increase the productivity of our polyester line and extrusion for SYNAPS. It's maintenance and productivity. Expansion CapEx that we can foresee will be in two areas. First, inks, if we need capacity for inks, but that's relatively cheap, non-capital intensive industrial activity. You're talking really about simple installations. The other one is ZIRFON going forward. Probably that's not a subject for 2022, but that will be a subject for 2023, you know, to build up the capacity for ZIRFON. On the Radiology contract, we have announced a Radiology contract indeed with Spire in the U.K. We announced it because it's a large deal, multi hospitals, multi-year. However, in the Radiology and especially the direct radiographic contract, the first customer is probably not even 5% of the total sales. It's a pretty spread out, but it shows the ability that we have to work on multi hospitals, multi-year deal with one of the main care provider in the U.K. It's just a good illustration of that. Okay. Thank you. I see another question in the room from Maxime. Just to come back on the exposure of Russia, you mentioned that it's below 2.5% in terms of sales. Yes. Could you shed some light on the profitability of that 2.2%-2.5% as well? That's if you take as a proxy the gross margin of the group. It's not different, so to speak. Perfect. Very clear. That's all for me. Any other question? Yes. Maybe just one more, because with the hydrogen, we're looking to the future and expanding a bit. I was just wondering, today you have about 30%-35% of your workforce isn't stationed in Belgium. If we look of course in Belgium we have a bit of the indexation, which makes sure that our wages increase faster than neighboring countries. How does this influence your competitive position at the moment? And do you already have tough discussions with clients on passing on the wages? All right. Yes, indeed. Belgium is one of the few countries in the world, it's not the only one, I think, where we have indexation of salaries. Indeed, but to be fair, salary inflation is a global phenomenon, and what you've seen in the U.S. and what we've seen everywhere else is overall, I would say, I wouldn't call, it's not. There are probably less people willing to work today, it might be a way to phrase it, but we are seeing the same phenomenon a bit everywhere. On top of that, it depends on the activity we have. If you're talking about an industrial activity, I would say that labor is not the defining factor of competitiveness. Input cost, overall, the non-labor input cost is far higher in terms of competitiveness factor. This being said, I think you're right, I mean, some of the activities become expensive to do in Belgium, but we are looking at it, and part of our transformation program is also addressing this point. Okay, thank you. All right. If there are no further question, Operator, I'm not sure there is a question on the phone, or maybe there is. There is one question coming through on the line. The question is coming from the line of Kris Kippers- Okay. -from Degroof Peterc am. Kris, you're unmuted, and now go ahead. Yes. Good afternoon, everybody. Thank you for taking my question. Still one or two remaining. Firstly, just on Offset, we saw indeed a return to growth in top line. We also see indeed, mitigating actions for pricing. If you look at the cost measures that have been done, you've closed some factories. What should be envisaged for this division going forward, firstly, on the margin side, and secondly, what could this imply for the carve-out of this activity and its future strategy? Thank you. All right. On Offset, I think indeed we have restructured our manufacturing. We have shut down Ipagsa, which was a tier two business that we managed from a Spanish subsidiary. We have reviewed our go-to-market. We have decreased the spend in R&D, and the spend in R&D today in Offset is mainly related actually to software development. We have done a number of actions to restore profitability. Right now we will continue to do so. We have ideas on to work on productivity of manufacturing, and we have still a project portfolio that is very active. The first factor to restore profitability of Offset is indeed pricing, and that's the number one action and the number one priority across the board for the Offset teams. The good news, as I said, is it took us a bit of time to be able to reflect in our contracts the new conditions of input costs. This is done, and now we are entering more into a routine mode whereby we are able to adjust the pricing as need be on a quarterly basis. This is really the main thrust. This is really the main priority for the Offset team. Regarding the strategy? Sorry? Regarding the strategy going forward to carve out and- The strategy, we have carved out the business almost, not totally, yeah, but I would say the majority of the work is done. Yes, I'm still open, we are still open to look at strategic options. Again, the priority is to restore profitability of the business. Even if we are ready to look at strategic options on the business. Okay. Thank you. Just second question on these pricing actions. How does this compare with your peers? Are you competitive? Or as a market leader, of course, you often take the first shot, but are they being swiftly followed by others? Yes or no? Frankly speaking, Offset is a good example. I think we were the first. You know, we are market leaders. Even if we are not market leaders by market share, we are market leaders by mindset. Okay? We were the first indeed to announce. I've seen the competition following more or less in various shapes or forms. Frankly speaking, sorry to say, but I don't care. My job is to do what's right at Agfa, and I noticed that we were able to increase prices. We have not lost volumes. Our plants in Offset are fully utilized, and we will continue to do so. We will continue to lead the market in price increase and profitability improvement. Now, we are not the leader in all our activities, but I would tend to say that this is the same for other activities. We tend to lead the price increase, indeed, but we are seeing also an overall environment where, you know, our competitors are not confronted to the same input cost. There is no magic in the price of aluminum, the price of silver or the price of polyester. There is no magic here. Okay. Thank you. There are no further questions in the queue. I don't think there are... Might be. Thanks, Operator. I think we can wrap up the call here. Once again, thanks very much for participating to the call. Again, 2022 is an exciting year with a lot of challenges, but a lot also of good opportunities for the group. Thanks. Thank you. Thank you, everyone, for joining us on today's call. You may now disconnect your handsets.