Agfa-Gevaert NV (AGFB) Earnings Call Transcript & Summary

Hello, welcome to the Agfa Full Year 2023 Results. My name is Caroline, and I'll be your coordinator for today's event. [Operator Instructions] Please note, this call is being recorded. I will now hand over the call to your host, Pascal Juery, the CEO, to begin today's conference. Thank you.

Thank you very much, operator, and good morning to everyone. I'm sitting here in Mortsel actually with my colleagues, Viviane Dictus, our investor relationship person and with my Executive Committee colleague, [ JanSan Wheeler ] and Jeroen Spruyt. Unfortunately, Dirk De Man, our CFO, cannot be with us today. He is suffering from a health issue that means he cannot be with us today. He will be back in a few weeks, okay? So Viviane and I, we will ensure, I would say, the presentation today. So time to come back and wrap up on the year '23, and we're going to walk you through the elements of the results of the group. So clearly, the headline is a very strong increase in EBITDA and 52% in the year. And I think the key message is this growth is really coming from the growth engines. And for me, it's the validation of the repositioning of the company portfolio and activity to future-oriented activities. That's really the main message. If we look at quick comments for each of the components, health care IT, just very simple, the highest results ever for health care IT. So fair to say that during the year, we had less visibility on how we were going to finish up the year. The truth is, we finished the year extremely well, probably a bit higher compared to our expectations. And we do that on the strength also of improved customer satisfaction and innovation that we brought to the market, rather at the end of the year. DPC, very strong evolution but very contrasted. Actually, what works very well in DPC, these are the growth engines. Their fund starts contributing to profitability. We are very happy in less than a year, we could most realize very successfully. But digital print as well on the strength of the Inca integration is very well oriented and deliver a very good performance. However, in the Digital film activities are suffering from indeed, the demand and pressure from macroeconomic conditions. So Radiology is the only division that is under pressure actually, again, it's contracted. The DR business, Direct Radiography business improved very much during the year, and the film and CR are under pressure. This being said, I want also to strike for this division that most of the profit decrease during the year is actually currency driven. Most of this profit decrease comes from the currency, mainly the renminbi exposure. So an adjusted EBITDA at EUR 76 million. And again, growing in the right categories, which for me validate our strategy. Also very significant improvement in working capital management from 32% of sales to 27% of sales in a year. And here, again, we ended up in a very good place in terms of working capital. Needless to say, as you see, we are a business with seasonality. This is the way it is. And we have a similar seasonality in HealthCare IT, in radiology in a way and even in part of DPC actually. This is the way the market works, meaning actually, we delivered 42% of the yearly EBITDA in one quarter in Q4. It's not my choice, but this is the way the market operates, especially in the health care and also in the equipment side of digital printing, which is always strong at the end of the year. We have delivered all that in a context that is not very supportive, in fact. When you look at the macroeconomic environment, which was not opportune for us, we had an adverse currency effect in all our businesses. And actually, we did that in a year where we had to cope with [indiscernible] coming from the divestment of [indiscernible], which represented 40% of the group activity. In spite of all these, we have delivered, as described. Now if I turn to numbers, plus 3.2% on the top line. Again, it's very contrasted as we are a company in full transformation. Actually, we have a very dynamic sales growth in our growth engine and a decline in some of our legacy and film segment, in fact. But the compounded rate is still positive top line growth when adjusted for currency. Significant EBITDA growth. And I think the message is very clear. It's all coming from growth engines. And actually, we are going to show you in the next slide, maybe a different way to look at the numbers compared to our published division to illustrate when I'm saying, look at this slide, when I look at what I call our future-oriented businesses, meaning to make a long story short, our digital solutions and thereon. In Digital Solutions, you've got HealthCare IT, of course, we've got digital printing as well as direct Radiography and therefore [indiscernible]. So if you look at the top line and here, we took 4 years, plus 24% from growth-oriented businesses and the message is the growth is accelerating between '22 and '23. As you know, the maturity of these growth engines is improving. And at the same time, we have, of course, a specific decline of what we call the film and legacy business. When we turn to profit and when we look at actually the underlying improvement of the growth engines within the group, you can see that it was EUR 32 million in just 1 year. So the message here is we are positioned in the right segment and the growth is accelerating actually -- the underlying growth is accelerating, which is, of course, validating the transformation of the company. If I turn to the P&L right now, what I want to stress here is, again, we are improving our gross profit, not only in absolute terms, but also in margin percent. Better mix and again, the impact of -- we are growing the right part of our business. And I want also to stress that we are doing that in a very good mastery of our operational expenses. This is due to the transformation program that we have launched already some years ago that are multiyear programs that continue to deliver, and it's a very good illustration. But even in an environment that is still inflationary we are able to master quite well these expenses. So overall, I think a very good project recovery during the year. If we turn to the lower part of the P&L, of course, we still have a significant loss for the year. But half of this loss is actually related to the asset divestments. So that's rather something that is now behind us, I would say. And the rest of the loss is still very much influenced by the cost of the transformation of the company. You see the restructuring nonrecurring charge at EUR 40 million. As we advance restructuring and nonrecurring will decrease already in '24, significantly. And of course, the offset impact is, I would say, final. And that explains this loss as we are still a company in full transformation. If we look at working capital, that's clearly 1 of the success of this year for me from 32% to 27% -- meaning we've been able to decrease working capital but more or less EUR 50 million when I remove the impact of pent up which is a difference of perimeter story, but EUR 50 million more significant, 5 points of working capital in the year is an excellent job by the operational teams in Agfa. And most of it is related actually to inventory. Most of the decrease is really coming from the inventory where we decreased the number of days of inventory by 20 days approximately. So a rather positive results as well. Positive free cash flow in Q4 stemming, of course, from the specific improvement of working capital. We are Also, I stress that we are a seasonal business and that working capital will always go up during the first 6 months of the year because we have more or less 6 months of production and then decrease during the second half of the year where we operate approximately 4 months. So this is a normal pattern. And here, we are seeing the Q4 positive impact of this. If I turn to the full year, we still are consuming cash during the year, part of it is also due to the cost of the offset transaction. And of course, the cost of the transformation, you see here with EUR 61 million of restructuring that corresponds more or less restructuring and recurring that corresponds more or less to the negative free cash flow of the year. What I want to stress here is we have all the liquidity we need -- we have a revolving credit facility with an access to EUR 230 million that we are hardly using today or we're using very, very small portion of it. And that is on until March '26. I want also to stress that actually, we have on our balance sheet an activity where we finance some of our customers, mainly in DPC and HealthCare IT, meaning we actually provide loans to our customers to finance their acquisitions. That's also an area that is a source of cash if need be as we can very well outsource this activity, which we are doing mostly by ourselves today. And third element in terms of cash, we are still expecting, as you know, the proceeds from the offset divestment it's not a question of -- if it's a question of when, it's a bit of a long process in order to come to the definitive conclusion, but we are still expecting to be in a position to receive this cash in Q2. So -- and all the group is really working towards optimizing the cash generation of the group. The culture, I think, is more and more prevalent in the company. If I turn now to the business, and I'm going to start with HealthCare IT. What are the highlights for me of HealthCare IT during the year? First, we have launched our cloud solutions and our web streaming solutions at RSNA. It's very important because basically, we are catching up with the best-in-class providers in the market, okay? We were a bit behind in these elements. We are not anymore today and actually, I would even argue that for web streaming, our technology is probably the best in the market today. So that's a significant milestone for us because we are at the eve also starting the transformation to go to a SaaS model. That's also the message. In this context, we will continue to innovate in this area. And if anything, we want to accelerate it. So we have decided that we are going to invest a bit more in R&D for the next couple of years to speed up this transition to cloud. We are offering cloud, but we need still to optimize this and make it more efficient. And this is an effort that we expect to be EUR 10 million in the 2 years, so 5 million per year, more or less, but it's not evenly totally valuing equalized. And for the first time, we will capitalize this effort. It's a specific project, which we do in a specific context. And therefore, it will be another step to really get to our position technology best-in-class in HealthCare IT. The other highlight is really the significant improvement in customer satisfaction. We are in a service business and customer satisfaction probably is a lead to actually success on being able to compete well in the market. And in '23, our customers have become promoter. We have seen a significant breakthrough in customer satisfaction, which is related to the quality of our enterprise imaging systems, which now is running extremely well. And this is further reinforced by the industry recognition. Everybody is looking at class in this market to look at how we position in terms of competition. And for the first time ever, we had a best-in-class award on our universal viewer. This is a viewer to see the medical imaging. And we are also -- we are progressing extremely well in all other rankings. So that's something that is for mere leading saying that we are doing the right things in the market and combined with the innovation, we are in a good place to compete in HealthCare IT. So if I turn to numbers, plus 5% in terms of top line when I exclude the currency effect. And again, here, same comment, you have a positive mix effect. Actually, we sold less hardware -- and we sold more on IT software, which is what we want to do. So top line, as such, is not the only indicator. What we are looking at is really the mix. Order intake, we had a strong increase between '22 and '21. We have a modest increase between '23 and '22, plus 2% in the 12 months rolling. So we -- that's where we are. We have order intake for the year at EUR 125 million. I just want to say that unless some of our competitors, we do not include the SMA revenue in this number. So it's only kind of a CapEx part but not the SMA that will be associated with it. I say it because it's important to define in terms of number. I also want to say that about 15% of this total order intake is already what I would call delayed revenue and margin model because it's a service model that is not exactly technically SaaS yet, but this is a similar model in which customers are paying according to what they consume and the service we deliver over a multiyear contract. On the EBITDA clearly, a very good second half. Again, I'm not responsible for the seasonality of the business, but 75% of the EBITDA of this business is actually during the second half more than 50% in Q4. I wish it was -- it were different. But unfortunately, these are the market practice. -- that's probably also the reason why it was a bit difficult for us to pilot exactly the lending in Q4 as we did probably, yes, it will be better than expected. We were more cautious during the first part of the year, but we took actions as well in the meantime and we delivered for Q4. So I'm pleased with the overall delivery of this business. And again, strongest numbers ever. And if you look at the numbers, you see that the gross margin is increasing, again, absolute terms, 10%, reflecting the credit period of the mix. And you see also that our expenses are under control. The reason being we are staying to the quality of our product, we are driving more efficiently. In fact, we are more efficient when implementing services and whatnot. So overall, I would say, a positive development. DPC, and I'm going to start with the 2 growth engines of DPC, double-digit growth in top line for DPC on the strength of the Inca acquisition. And the even better news is actually our consumables business is growing faster than the average growth of EPS. And as you know, consumables is really a profit driver for -- it means our ink swap program for Inca is working well. And it means as well we are in the right segments of the print business. So I can tell you that in the non-digital world, I mean, '23 was not a good volume year for ink and print in general. So very pleased with what we do. Strategic partnership Agfa and EFI, acceleration for us, a significant impact on top and bottom line. We are next week at FESPA, which is the yearly step for digital printing and we'll be presenting our new model that we are sourcing from EFI and EFI will do the same. I think we will have a joint PR. It's a good partnership for us. It accelerates the growth and it also means EFI who is larger than Agfa and the market leader actually does recognize the quality of our solutions. It's a very heavy year for us, '24 for digital printing. We launched the set back in December in Cambridge. We have our first contract signed already today. It's a customer in the U.K. It's what we call a beta customer, meaning it's still development customers, and we are going to have full access to the machine to make sure that we can really develop it further. So we are very pleased, and we are expecting probably another 1 very soon as well. So as planned, very heavy innovation agenda. We have -- we never had so many launches actually with DPS. We have a new generation of midrange products actually coming up. The 5-meter roll-to-roll machine that we are supplying from. So very, very dynamic and really very happy with the results here. ZIRFON, over 100, I think we are at 100 in 30. But it's not anymore over 100, it continues to evolve very well. The big news is we've been able to successfully industrialize ZIRFON production, which is never given when we go to industrial production, and we make progress almost every month on the way to make it. We have started the work to build the new unit. Well, it's still a way to go. We don't expect to be operational before October '25 but it's in full work. As you know, we have received EUR 11 million of subsidy from Europe, Again, in terms of cash, it's going to be only EUR 2 million this year and EUR 9 million in '25 when the unit will be built, actually, I want to make this precision -- and the capacity we are building, but it's going to be more productive and give us the capacity to access market demand. We have prolonged our cooperation with VITO -- ZIRFON comes from this collaboration from VITO. So we are very pleased to continue to work with the tool and for 24, it's a business in which we have a very good visibility because we have already more than 80% of the '24 volumes that are committed by our customers. So there is no -- there will be no surprise here. We are relatively modest in our volume growth for '24 today. So we feel very good overall about it. Now if you look at the numbers, how does it translate? You see 12% top line growth for overall DPC. Interesting to know that DPC is now our largest business. And all of this on the strength of the growth engines. If you look at Film and Foil, I mean it's a rather flattish business. The businesses that are increasing are really DPS and ZIRFON. So very -- overall, very happy with the profit recovery and the profit recovery that we have has a very different profile -- historically, the main profit of DPC was coming from the legacy business of film. Today, it's coming from growth engines actually more and more -- so very good evolution. If we look at the P&L, again, same comment on strong growth of the gross profit in percentage and in absolute terms. We also took price actions -- that's an area where we invest operational expenses are a bit higher due to the fact that we are expanding and doing [indiscernible], of course, we resource this part, but a good recovery that will be confirmed in '24 actually. If I turn now to Radiology Solutions, the highlights. Really, what I want to stress is in our DR business, we believe the innovation doesn't come so much on the hardware, but it comes from the software. And here, we have been very diligent in adding artificial intelligence powered solution to our X-ray modalities -- so meaning we are able to do at the same time to add value to these modalities by helping to detect the pathology in an automated basis to speak. And we are also considered as a thought leader in the X-ray market with various recognition from different markets. So this is really what we are positioned for really the differentiation for us like is truly through the software part and the solution part. Overall, for the business, as you know, very, very difficult year overall, minus 4.5% outside of currency, reflecting, in fact, the difficulties we still have in the film business and especially in China, but not only China. We are also impacted by other geopolitical issues. Russia, for instance, used to be a significant market for us. But DR has been performing quite well, especially on the bottom line. The top line was rather muted. We have seen -- we are seeing a good dynamism in emerging markets, but rather subdued environment in developed markets. So overall, this translated indeed with a profit decrease, I repeat, most of this profit decrease is actually coming from the currency impact now and mainly the exposure to China -- while we could -- we are making progress in India. So profit and loss very quickly. You see this is the only business where we have a profit actually decreased in terms of gross profit in spite of the very good control of the operational expenses, you see a significant decrease of these expenses, but we cannot make it all up given the complex market conditions we have in film in China. Now I'm going to turn to Julie [ Yan ] to have a word -- a few words about CONOPS.

Yes. So indeed, the fourth division and the smallest one, so the contractor operations and services. So that's actually the supply of film and chemicals that we do towards the new owner of our offset business, which is ECO3, also some other services. And you see, of course, sales-wise, it was stable, '22 versus '23. EBITDA, what you do see a nice improvement there. But of course, the way we report the cost should differ. In '22, actually, deposits were still all in the CONOPS division, the stranded costs in '23, they are allocated to the other divisions. So that's, of course, why we see a huge increase there. On the other hand, we also have costs same. So structurally, this division actually should run about with 0 EBIT going forward.

Thank you very much. That leaves -- that gets me to the outlook as the outlook '24 -- while the message is, clearly, we are going to see the continuation of -- the continuation of this trend, meaning we are expecting actually HealthCare IT to continue to progress -- during the year to continue its journey and we continue to invest as well, as I told you, to make sure we remain the solution of choice for our customers. DPC, significant top line and profitability growth is expected. Actually, for me, the first source of growth in '24 will be DPC and then HealthCare IT. So significant on the strength of all the initiatives we have and the ramp-up also of ZIRFON. And last but not least, on radiology we're still expecting a similar situation like '23. This -- the medical film will continue to be under pressure in China, although we are coming to a point where the market evolution will stabilize. And we will continue to make progress in [indiscernible] radiography in the meantime. So overall, growth engines will continue to improve the profitability of the company. I stress again that indeed, we are unfortunately, a seasonal business, I would say, and that we are going to see a similar pattern as what we've seen in '23, meaning a much weaker first half than the second half. This is the way it is. Again, we can discuss it a lot, but this is really the seasonality we have in our businesses. And on top of this seasonality given the fact that some specific elements like EFI partnerships will be more impacting the second half of the year because we are launching these products right now in March and also that we have a kind of a ramp-up for ZIRFON -- that also contributes to the fact that the second half of the year is significantly for the year than the first half. This is the way it is, and I want to stress it again. In terms of cash profile as well, what is different from '23. But first, what's going to be different. We cannot repeat what we did in terms of working capital improvement every year that is a given. So we'll continue to be very stringent in managing our working capital, but don't expect another big improvement. That's for sure. We have more -- we have less restructuring. We are a bit at the end of the restructuring program, and we are not launching any new initiatives now for some time. We are just pursuing and delivering the initiatives that we already launched, meaning you're going to expect a lot less cash out in terms of restructuring to nonrecurring, I would say, half of what happened in '23. The tax cash out will be below $10 million as well. However, we will face in '24 and '25, by the way, the peak CapEx for ZIRFON. And as I told you, we are not going to receive the subsidy before the end of '25. So we are facing the peak CapEx due to ZIRFON and also the increase in R&D in HealthCare IT. So that's also what I wanted to share with you in terms of outlook. I'm going to -- before leaving the floor for questions, I'm going to just discuss briefly also about sustainability. It's extremely important. But the story is we are making a lot of progress in CO2 reduction plan. We are now committing a 62% reduction according to the Fit for 55 objectives and we are making commitments. We have joined the science-based target initiative to further refine our reduction targets for the group in the next 2 years, including the Scope 3 reduction. On the people part, safety is an area where we need to make progress, and we are not exactly at the safety level that I would like us to be and we are taken a lot of action. So in this area, we have a very aggressive target of reducing the number of accidents. At the same time, we continue to increase the share of women in our workforce. So we are recruiting at about 50% more women that we currently have in the company. So it's in progress of -- and we have also DEI initiatives that are starting to build fruits. Last but not least, we started to have an external ranking with EcoVadis 2 years ago. And in 2 years, we are now a part of the first time in terms of performance of ecology. So it shows that we need -- we could very, very fast, very quickly come to the best-in-class part in terms of sustainability management. And I think it's important for us. Before we take the question, of course, a slide on pension. Of course, it was expected. So I will ask [ Bijan ] to take it please.

Yes, indeed. So once a year, we give, of course, an update on the pensions because then we have again an actuarial calculation. And then on this slide, actually, first, you can see that the funded status. So the net liability actually of the pension decreased, so moved in a positive way with EUR 54 million. Most of that is related to the sale of offset solution. When we dig deeper into the pension costs. So you see that costs moved from 28% to 32%. And then you have, of course, always 2 parts in those costs. You have the part which is included in EBIT and the part below the interest costs. You see that the first part in EBIT moved from 19% to 13%, which is following actually the movement of the discount rate when you see the movement of the discount rates of years before it shows here actually, and the interest cost, of course, below EBIT the financial cost moves in the opposite way -- so increasing from 99. If we look at estimates for '24, you see a decrease in interest costs as well and service costs decrease mainly related to sale -- so less active participants in Belgium. Pension cash out because, indeed, [indiscernible] also an important element to look at a stable '23 versus '22. We did normally expect a bit of decrease because of offset sale, but unfortunately, using inflation of the salaries to Belgium is stage 3. You see for the next year that we do forecast again?

Yes. So we had a blip due to the high inflation and indexation in Belgium in '22 that has impacted '23 in terms of pension in fact, that's what happened. One word on Germany and the fact that we have a new actuarial calculation, Vivian?

So maybe -- yes, you see the bit below EBIT also moving. And aside from indeed, the higher inflation in Belgium, we also did change the actuary. So it's a new part of doing that now for us, and they have a kind of more conservative approach to -- so that's why you see a bit of a change in cash count.

Yes, we will -- indeed, the actuarial calculation are a bit different and a bit surprising to say that is EUR [ 4 million ] in terms of -- but okay, this is what it is. So let's now turn to question and answers. I propose to take questions from the room, where we have analysts and press. And then to turn to the virtual room for press if any questions. Who wants to start?

Alexander from Kepler Cheuvreux, yes, in HealthCare IT, you have part of the legacy business in the old tax systems and you have some new systems, say, enterprise imaging, et cetera. Could you give a bit of a granularity on the sales go between the new systems and old systems? And then yes, the order book that is right now if I calculate probably a bit flat to slightly up versus last year. What are the moving parts there? Is that a growth decline in the old system and growth increase in the new systems? And then a second question also on HealthCare IT. You mentioned EUR 10 million in capitalized cost that is EUR 10 million on an annual basis or just EUR 10 million split over 2 years and then maybe it's over 2 years in a control -- and then yes, I just wanted to get a bit of understanding on the part of the decision. Is that a specific project there? Or is it really an investment in a new technology that you think will lead to an increased both with the clients. And then a question for -- a third question for Vincent. If I'm into the outlook, I mean, it's clearly that DPC will -- is where you expect probably the strongest profitability increase -- could you shed some light on this? And specifically, okay, you have [indiscernible] from last year to this year, which was last year a loss -- this year a small profit. Can we expect the same -- maybe from next year. And do you think it may be less...

Well, okay. Thanks very much, Alexander. On the second question, the capitalization, it's EUR 10 million over 2 years, not per year. And the nature of the benefit is not -- is actually lower to the cost of providing the solution and the benefits to customers. Okay, meaning actually, it's a self charging investment, so to speak, where we are going to improve our cost to deliver. So it -- guys a clear payback in other world. That's what I can say. On your question on HealthCare IT, I'm a bit perplexed because we don't look at our business in this way, actually, -- we -- everything that we now propose to the market is enterprise imaging. It's not the old solution of the past. That's really what we are -- so when you look at the order intake, I would say the vast majority is in order intake. Is this now in the order intake, you have different nature of order totally new system where we implement. It can be adding features. It can be different options. So there are a lot of different components, in fact. But to make a long story short, today, we are fully towards the enterprise imaging system and not anymore with back. It's not an area of focus. And if anything, what we are doing is migrating our old, I would say, older [indiscernible] customer to have an [ EI ] system. This is a way it works. For DPC, so what's your comment?

My comment on DPC would be that very clearly comparing to '22, we had to indeed restore profitability in '22 -- second half of '22, we were impacted by high cost inflation. And on top of that, electronics market being down in '23, electronics market is actually still quite a bit down, but we restored profitability, thanks to overall price increases, thanks to growth in ZIRFON as well and growth in ink volumes. And also some restructuring we did actually end of '22, beginning '23. So those important price increases and restructuring efforts we did will not necessarily be we doubled because that was really to restore profitability but we should see in '24, indeed, a similar from the growth businesses from DPS, from ZIRFON, from [indiscernible] Solutions. We should see a similar growth in top line and profitability. What is a bit more difficult to predict, maybe is on the specialty on the chemical side, the legacy businesses on that side. Of course, there, we have a lot of actions in place to also improve our profitability. But there the growth and there is some higher areas are growing. But overall, this is a mature and declining business. So in DPC, you have that mix, of course, of those.

But again, we say, yes, DPC will be the first contributor of the growth today. And mainly on the strength of ZIRFON and digital printing. Look, we are -- we have a ton of initiatives in DPS. We are already on a good ramp of growth. And ZIRFON, again, we started -- we ended up the year in productivity in a very different place when we started the year 2020 -- so today, I mean, we -- together with the volume growth and the productivity improvement, we will see ZIRFON evolve very favorably.

And how much ZIRFON and DPC right now?

Today it is still about in sales of less than EUR 25 million, okay? So -- but it is already profitable and very profitable.

I'm Sips, KBC Securities. Some questions on the SpeedSet. And then linked to the next-gen Anapurna, is it the same kind of numbers that you can expect in that kind of machines or for SpeedSet sales price in a range of EUR 5 million and EUR [ 1 million ] ink per year consumption roughly, is that a good guideline? And what is it for the Anapurna in [indiscernible] the same magnitude or how could we see that?

Okay, allow me to take this. So thank you, Sips, for the question. SpeedSet and Anapurna are actually at the very extremes of our portfolio. And so the Anapurna range is the low end of our machines. These are machines ranging between EUR 100,000 and EUR 250,000 in sales price. But of course, we sell a lot more than we will ever for a year and then we will ever sell SpeedSet. We will never sell 100 SpeedSets a year. I would not say no, but -- the market is not...

Why not?

No, no, this is totally different anomaly and you're really talking totally different ends of the spectrum. So our new Anapurna, by the way, will also relaunched a new name next week, you will see it. At FESPA, we will launch a rebranding of our WeChat portfolio. But all of our portfolio is actually moving up in terms of speed, in terms of performance. So the new next-gen Anapurna is actually the higher end has seen the features as well on for technical here, but it's popping up the speed. You're talking about 30%, 40% more speed and in consumption than the Anapurna we have today. And here, we're changing or we're bringing into the market the high runner, let's say, and the biggest of our Anapurna is one name, but it's actually several machines and several with this one. So the ideas in the next 2, 3 years that all of them will be renewed to this new -- the next generation.

To the new platform.

To the new platform. On the SpeedSet set. I think the order of magnitude you're giving there is indeed correct for 1 machine. The ideas we've seen yesterday our press release, we signed our first data customer now for the U.K. the idea is that this year, we're going to have 2 betas installed. That does not mean that they will necessarily be in revenue recognition because there will still be investing phase. And as you know, before they come actually into our revenues, the final sign off that the customer has to happen. So as of '25 as per plan, and I think as per what we've always communicated as per '25, you should see recurring sales on things and on equipment for SpeedSet in our numbers.

But they will still pay for the ink, all the beta customers.

The main question is actually, can we expect from the Anapurna new range kind of same effect on the sale of things as we can expect from the SpeedSets. So overall, added to, of course, you will sell much more Anapurnas, which will really surpass the ink....

It's a replacement market, okay? It's a replacement, okay? So are we going to -- are we expecting growth from our new initiative in [indiscernible]? The answer is yes, okay? But I wouldn't place it in the same category as we said, okay? Anapurna is a replacement of -- it's a replacement and an upgrading. I would say it's a kind of incremental growth, so to speak. SpeedSet is a breakthrough both for us now. So it's totally different model. Here, we are managing the portfolio with Anapurna, which is good because we are renewing and coming with the next-generation machine to maintain our market share and whatnot. SpeedSet is a weapon to win share, okay, so to speak. It's very, very different. .

Second question is on ZIRFON, you're doing quite a good job on hiding the success of silicon for the moment you were indicating a little bit less than EUR 25 million of sales, but the growth range here -- what is now keeping ZIRFON back from doubling, tripling again? Is that production capacity? .

No. It's not production capacity, it's implementation of projects, okay, in Europe, mainly which took -- will take slower than expected, okay? So that's it. So in a year, we have multiplied by 5 ZIRFON between '22 and '23. In '24, we have a much more modest assumption behind our outlook of about 20% to 30% growth, okay, which will be in any way to have significant leverage on the profitability -- but here, this is a rate at which the projects are being financed and decided. And during the past year or over the last 12 months, I would say, the rate of implementation of Hydrogen project was whether low in Europe. We believe it's picking up right now. And especially, we believe that North America, India are growing faster, okay? And we are also present in these opportunities. So it's more like this, okay. We are ready for our customers. By the way, our customers are giving us very precise -- we have all the orders almost in place for '24 already. We're already working today about '25 with our customers. But the ramp up is -- the ramp-up is defined by the velocity of projects in finance and build.

2 more questions. First, you are guiding for higher CapEx this year and next year and that will be the top of the CapEx -- can you be a little bit more precise and give some exact numbers?

Sure, EUR [ 50 million ] is a good number for CapEx for the next couple of years. That includes the EUR 10 million.

And then you're always prudent when you talk on the sale of offset solutions and the money that has the [ community ] you were indicating end of March before now it's second quarter, is it kicking the game down the road or what...

I'm not prudent. I'm prudent about the timing, not about what we are going to receive, okay? That's more about the timing because I -- basically, we are in the last phase of, I would say, third-party expertise and judgment on this matter. And I'm not the 1 controlling the clock, Actually, the adviser is controlling the clock actually. That's why I'm not prudent on the timing because I don't master fully the timing, okay? -- but not on the fact that we are going to receive.

The timing will be in Q2?

I believe it will be in Q2, yes. But again, it's not a question. So I feel extremely good about are we going to receive the money. I have no doubt, okay? But the when is defined by the process we are going through and that involves a third party for which I do not master exactly...

And just -- you had the Board meeting and I think some of these Board members will also look at the share price. What was the atmosphere around the table related to the share price? Was there -- were they agnostic to that or what was....

No, nobody is agnostic to share price, although we don't watch it every day. Nobody is agnostic to the share price. And last time we talked to the market was in November and between November and pretty much today. We've seen a significant decrease of the share price. So nobody is going into that. And especially, you know we are aware that how we bid in '23 for a few weeks now. And we cannot be -- we expect to answer to the market with our delivery. That's it. We are really focusing on that and knowing what's the right thing to do for the company. And here, the message is, again, I think the repositioning of the company works. We are exposed to good growth market in which we are performing -- it takes a bit of time because in the meantime, we still have pressure on the legacy business. But overall, I feel very good about the overall story. And in terms of cash, as I told you, we have enough liquidity to see us through this period without any particular stress, I would say.

So first question on HealthCare IT. How do you look at the order intake for 2024 and then could you also remind me how the service importing works they say 6 months...

The service okay...

And then also a question on the restructuring charges. You said it will be half this year? And how should we look at that then for 2025?

No. Okay. On the HealthCare IT, so today, as we said, the -- we are talking not about the order book, but the order intake. We say it's basically in line with last year. What I want to say in order intake, it becomes a bit more lumpy, okay? And again, we are doing last 12 months, but it's very dependent on -- we have more and more large deals that will influence a lot a given quarter. And that's what we should retain. And the reason why we are only at 2% is because we had a customer contract that slipped and was signed in the first week of January, okay? Just if we included this contract, the number would have been very different actually. So we need to take it with a pinch of salt in terms of lumpiness of this order intake. If all of a sudden, we have a contract for EUR 20 million, you see the order intake of the year is EUR 125 million. So it's a significant event. So today, that's our first priority, order intake. This is really, if you're asking the first priority of the business is really order intake to make sure that we can deliver the year. To your question regarding service, we typically in the north in the traditional business you pay for the project and the CapEx when you install and then typically has a 15% to 20% sales fee over a year, which is service and maintenance fee. This is a classical model. We are going to move more and more to a model for the time being, 15% of our order intake is on managed services, meaning it's a different model where we actually provide service as we go. So there is less invoicing at the start more during the next year. And then we will also -- we are moving to a SaaS model as well, where it's a similar pattern. We have less at home and more along the life of the contract with a different pricing mechanisms -- so in the first instance, by the way, when you move, when you have a transition from a CapEx model to a more managed services and SaaS model, it will have an impact on the profile of the business, that's for sure. We will recognize less upfront. Probably, we will modelize it and give probably more details later this year.

On the restructuring charge?

On the restructuring charge, well, I would expect the restructuring to continue to decrease but never go to 0 because we will still have in the next year, things to adjust. I remember that it's a company with 2 parts, the part that is declining. And we will have to take some steps regarding specific businesses that are a bit [indiscernible] life, but the general trend will be a decrease. Maxime?

Maxian from ING. Two questions on my end and one final one, it's a bit more philosophical I would say. You mentioned significantly a lot of time in this meeting. In my February an increase or decrease of 12% to 20% in the way you look at it as well...

For DPC, it should be even more than that.

And then the real question now. First of all, looking at February '23 and the volume and pricing dynamics. Obviously, you get some pricing figures in DPC. I understand in other divisions like [indiscernible], but more difficult to increment -- you shed some light on what the real pricing reporting at group level regulation and secondly, [indiscernible] itself. Could you shed some light on the way of the selling business on adjusting business -- better model of this...

Okay. So let's start with pricing. To make a long story short, we had pricing -- positive pricing everywhere except in film in China. And when I say film in China, it's medical and nonmedical. Except from China, pricing, we were okay in DR, in DPC. In HealthCare IT, we have indexing and so on and so on. And I told you, it's not perfect, but not a big issue -- I would say now. Your second question, just to make sure, can you please...

On radiology, obviously, you have 2 activities.

Yes. We have 2 -- we have actually 3 activities, the film, CR and DR.

Just to switch equipment and [indiscernible], if I may say, which was a big component of -- last quite maturely over the last year. Could you shed some light on what to wait now to...

We don't disclose this granularity within radiology. But let me tell you that film is still very profitable, even with the decrease in which we are going through today, it's still a profitable business for AXA. Also in China, although it's much reduced -- also in China.

One follow-up on that. So you mentioned price increase in HealthCare. If you look at the top line, I think, 2.4% increase in 2 years basically meaning volumes are flat the way to look at it?

No. Well, as I said, there is a significant mix effect as well, make. So we sold a lot less hardware. We sold more services on IT software. So we are selling hardware. We are selling on IT software. We are selling third-party software integrated in our system. We are selling implementation services. We are selling professional services and we are paying maintenance -- service and maintenance. So it's a rather complex mix overall and -- and as I told you, the different components of the mix has different evolutions. If they look at soft to add hardware, it's probably a double-digit decrease. If I look at only IT software, it's a double-digit increase. So -- and then it depends pretty much on our activity. So your question is not that easy to answer. But look at the margins of HealthCare. I mean the gross margin of HealthCare for the year have increased -- so I think that's a good response to your question. Peter, in the press, can you speak in the mic, please?

I have a question about this one. So now the revenue is about EUR 35 million. And for this year, 80% of the orders is already there, so that you can give me a guidance on year -- obviously I would think

Can we give a guidance? I said that we were expecting for the [indiscernible] 20% to 30% increase in volumes, okay?

Is there a price effect as well? .

There is a positive price effect in there for as well. But when I was talking -- I'm talking about the volume here. I may ask some follow-ups...

I had 1 other question. The real question was to get a full picture of the company [indiscernible] addition of the tanker. Where are your tanker now?

Well, we're trying to -- you know the story is to try to turn the tanker into a motor boat -- but we're not there yet. We're still in full transformation, but I think we have enough size today that this transformation is truly happening actually -- there are very tangible signs that this transformation is now in full swing, okay? And again, it's a transformation of the company and the portfolio and the operating model, also on people and culture. And the nomination of [indiscernible], by the way, is a good illustration of the renewal of the leadership also in the company. So it's a full-fledged transformation that we are going on. And that is not done in 2 years. Okay. That takes a bit of time. But indeed, the idea is to transform the tanker into a motorboat.

[indiscernible] a new President of Radiology. I'm just wondering what's your plan to turn around this business because, obviously, it's been suffering a lot from central procurement in China? Is it your plan to travel more to China to get that base? Or how do you want -- how do you convince these Chinese officials to buy your films to buy it at a higher price as well? And then also maybe if you could shed some light on the security? And then a second question, which was -- obviously should get longer than expected in the beginning. I guess there's some disputes around the table. Maybe if you could just shed some light on what the third party is looking? And why is the quarterly discussion -- and then the third question would be on HealthCare because you mentioned if you would -- included the order that you had in January this year, the order intake would be higher. How much higher would it be.

So what are we going to do, [ Yahun ], to fight the China situation. Yes, actually we have taken action already.

Yes. Yes. So with regards to China, I think the most important thing that we have been doing is basically strengthening what I would call a boost on the ground in China both from HQ point of view, but also from strengthening the team that is really locally on site in China and is running the activity in the mid market. And honestly, it's all about having a strong local presence and being present in early -- in the market at the moment that tenders the show off. And there we are stepping up compared to what we have done in the period where due to COVID presence, it was quite difficult for us to be really present in 1 site and for... So that is absolutely an action that has already taken place that is what I would call imply -- at the same time, when you look at the rest of the business, we are really in the more authority market, which is still clearly there and really okay. So then we have quite some actions with regards to streamlining the activity and streamlining the operations in all the lines -- also in line with 2 other businesses that we have been in [indiscernible] and just improving the overall efficiency of the machine.

Very good, very good. And to be clear, I'm going to be crystal clear. In fact, what happened was we basically are changing our China team. And we had a new GM in China that started actually a couple of weeks ago. And we have replaced, I would say, a number of people in our go-to-market organization. So we are rebuilding this go-to-market organization in China. So we are, let's say, idle as well. That's very, very true and it's done...

Because, I mean, obviously, you're losing out the Chinese pace?

Well, let's be careful here. We are not losing out market share. We are not losing out volumes, okay? What is under pressure for us is the margin, meaning the prices, okay? But we are not losing out on volumes not actually -- or in market share, okay? That's purely -- and we're not helped as I told you by the currency. We -- that makes it a bit more complex. Offset, well, obviously, if it takes time because the seller and the buyer has different opinions regarding a certain number of elements on the closing statement. That's what it's about, okay? -- we feel very good about it because we went through a first, I would say, first analysis. And basically, we feel good about it, but there is a recourse -- it is possible for the buyer. And the buyer will utilize at the fullest -- to the fullest extent this recourse and which is why today we are -- we are in the second, I would say, unsigned on arbitrage in the matter. So that's why I'm saying I feel very good about [indiscernible] I have been a little bit less [indiscernible] when I say when it cannot go for either a time, but I feel good about it. And in HealthCare IT, well, as I told you, if you have a EUR 10 million or EUR 20 million contract that moves from a quarter to another quarter, you know that our yearly order intake is EUR 125 million, you can do the math yourself -- I'm not saying it's a EUR 20 million contract, but I'm saying -- I say EUR 10 million or EUR 20 million and you have this order of magnitude. But again, it's not super important for me. What is -- what's important is the fact that we have improved -- 2 major points to our offer. First, we really have cloud solution and web trading technologies that are now outernational, and that's extremely important for us which we want to be efficient in answering customer needs, and our customer satisfaction is going up very, very much with our -- and recognize that also changes -- that changes, I mean, our position in the market -- we were in ideological lines in Vienna a few weeks back. And in the attendance at HealthCare IT stand was much higher than the year before. And especially we had a ton of new customers that came to -- so that's what I'm looking at, when I want to look at the leading indicator. And that's why I feel good. Now turning this customer satisfaction into order does not happen in a week, of course -- but it's a positive trend for the business. It's a very positive trend for the business. Any other question in the room? Then do we have a question, operator, by the press -- we are taking press question on me. So just checking. If none, okay? So just a few words. Indeed, I'm pleased with 2023 results, and I'm pleased by the nature of the results and where they come from and what they bear as a promise in terms of strategy development for the company. I'm also pleased, by the way, we are managing costs and working capital as well. And again, I feel confident that we made the right choices in terms of activities going forward. So that's for me, very good. Last but not least, we have all the liquidity we need to see us through what is going to be the next 2 years where we have a peak CapEx. Of course, we will continue to improve profitability year after year. And therefore, for me, it's the transformation is in full progress, and these are very clear factor signs that this is the case. But we are also a company where the seasonality of the business is don't ask us too much in the first half. Remember the delivery of the business by nature and by some specific elements will be more back-ended during the year. That's very, very clear to -- thanks a lot. Thank you, operator.

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