ASML Holding N.V. (ASML) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, may I welcome you to this Annual General Meeting of Shareholders of ASML Holdings. Due to the COVID-19 pandemic, for the second year in a row, we do not have the opportunity to welcome you in person. It goes without saying that for ASML, the health of its employees, shareholders and other stakeholders is top priority. This meeting will be held fully virtually in conformity with the Dutch emergency legislation. Shareholders have the opportunity to attend this meeting virtually and to virtually vote and ask questions before as well as during the meeting. A special welcome to all shareholders. Now due to COVID-19, the number of members of the Management Board and the Supervisory Board present in person is limited. Let me introduce ASML's President and CEO, Mr. Wennink; Mr. van den Brink, President and CTO; as well as Mr. Dassen, EVP and CFO, who are sitting here next to me. The other members of the Board of Management and the Supervisory Board attend this meeting via video connection just like you. So I would like to welcome the other members of the Board of Management, Messrs. van Hout, Schneider-Maunoury and Fouquet, as well as the other members of the Supervisory Board, Mrs. Aris, Mrs. Smits-Nusteling and Mrs. Kelly as well as Messrs. Grose, Stork, Schwalb, East and Durcan. I would also like to extend a special welcome to Mrs. Conix, whose appointment as a member of the Supervisory Board is on the agenda today. Furthermore, I would like to introduce Mr. van Delden. He is present on behalf of KPMG accountants, ASML's external auditors. He will only be able to answer questions regarding the auditor's report on 2020's financial statements. I also welcome Mrs. [ Grunlout ] who is virtually present on behalf of KPMG. Mrs [ Grunlout ] has taken over from Mr. van Delden after completion of the 2020 audit in connection with audit partner rotation requirements. Finally, I would like to introduce Mr. Reinier Kleipool, civil law notary at De Brauw Blackstone Westbroek, who will act as Secretary of the Meeting. This meeting will be held in Dutch. For those who don't speak Dutch an English translation of the meeting is also available. As usual, a recording will be made of the meeting for the preparation of the minutes. I would now like to give the floor to Mr. Kleipool. He will explain the procedures for asking questions and voting during the meeting.

Thank you, Chair. First of all, I would like to explain the procedure for asking questions. As announced on the ASML website, we offer shareholders 3 options to submit questions. Before the meeting, shareholders have been granted the option of submitting questions in writing. These questions will be answered under the relevant agenda items. Furthermore, those who virtually participate can ask questions during the meeting via the chat function of the online platform. And finally, those who participate virtually and gave notice of the fact that they wish to ask live questions during the meeting can do so via a live video connection. They've received a designated link. If you wish to ask a question, you will have to raise your hand and use the button to do so during the relevant agenda item. As soon as your name is mentioned, you can ask your question, please be as brief and concise as possible. At every agenda item, we'll discuss the written question submitted before first. Then the questions submitted in the chat function as well as those via the video connection will be answered. Questions submitted during the meeting will be discussed during the relevant agenda item as far as possible. If you have any question regarding agenda item that has already been discussed, you can ask your question during agenda Item 14, any other business. If several questions regarding the same topic are received, we will combine these questions where possible. In this way, we can ensure an optimal dialogue on the current special circumstances. We would ask you to submit your questions timely during the meeting or indicate in a timely manner that you wish to ask a question verbally. This will benefit the progress of the meeting. For a good meeting order, the Chairman can limit the speaking time and/or the number of questions. Let me now explain the voting process. During this virtual meeting, a real-time voting can be done via the online platform. This is extensively explained in the manual on the AGM website. With respect to this voting, our terms and conditions regarding virtual general meetings apply. The terms and conditions are on the website as well. Registration details for this meeting are currently being processed. Once all data has been processed, we will announce how many people are present as shareholders or proxy holders and what percentage of the issued capital is represented at this meeting, will also be announced how many votes can be cast, then the voting will be opened. From that moment on, you'll be able to vote on all voting items on the agenda, up to the agenda item, any other businesses, #14. It is therefore not necessary to wait for the agenda to come up. You can change your vote by selecting another choice. You have the opportunity to do so until the vote is closed prior to agenda Item 14, any other business.

I am back. Thank you. We'll now continue with agenda Item 2. Mr. Wennink and Dassen will provide an overview of recent events and the state of affairs at ASML. I'm pleased to give the floor to Mr. Dassen for an explanation of the financial results.

Chairman, thank you very much. Ladies and gentlemen, 2020, it was not a boring year, not in any way. When we started this year, we said that our expectation was EUR 13.1 billion in terms of sales, which would be low double digit. It was EUR 11.8 billion in 2019. So that was an interesting growth, and we haven't even voiced this expectation or we were hit hard by COVID crisis and all of us were faced with a certain degree of uncertainty. Looking back, we see that in that period of time, we were not only able to achieve the EUR 13.1 billion, but even more than that, EUR 14 million in growth is what we realized. I think that we can be very grateful to our people who have made such an effort. And despite the uncertainty, they have enabled us to show such a performance, and grateful also to all our partners in the ecosystem because they've done their best to realize this. Market developments, we'll be talking about that in a moment. Market developments that were so favorable and also because of working from home and also enhancing digital infrastructure. That was one of the driving forces behind the substantial growth that we experienced. Sales growth, we'll see that in a moment, across the business lines of ASML, new systems and also the line that you see here, installed base management 2019, EUR 2.8 billion. So you see a substantial growth of EUR 900 million to EUR 3.7 billion in installed base management, which is a combination of maintenance to the machines and also maintenance and performance improvements of the machinery, the equipment that we have. So that's quite an important growth. Excellent gross margin, 4 percentage points higher than in 2019. So this is what we see once again, the complexity of 2020. And despite that, we've been able to make headway. Net profit of EUR 3.6 billion -- net income of EUR 3.6 billion, up from 2019 and EUR 11.3 billion in net bookings. Excellent year in which we've been able to really break through and make headway with respect to further developments in 2021. I'll be discussing the details in a couple of moments. All the technologies have contributed to that. All product lines have contributed to this growth, and it's evident that EUV lithography technology is increasingly becoming part of the gross margin and the revenue, the sales of ASML. We see an increase in EUV system sales growth of 60%, EUR 4.5 billion. And in 2020, we also made major headway with high NA, as you know, is the next step in the EUV program. And we expect that this technology will proceed to high-volume manufacturing in 2025, 2026. But in 2020, we saw this, and you'll see this in 2021, also that the deep UV technology, which has been very -- has been growing at ASML for some time, that we have continued to progress in the developments here. We have really increased our efforts, and we've been able to introduce 2 new platforms, the latest immersion technology, the latest immersion product of ASML with a wafer power of 295 and 1.1 nanometer overlay, which is really a step forward as compared to the 2000, which is the predecessor. And also the first dry product of ASML in the NXT platform, the 1470 which particularly with respect to throughput, is a step forward as compared to existing products. Deep UV, we see here has really become quite clear in its development. And you also see further developments in 2021 of Deep UV. You see that we have a record number of bookings or record magnitude of bookings of Deep UV in 2021 -- 2020, EUR 7.3 billion. And we see this also reflected this year. And then in conclusion, applications are very important here. The first multi-beam systems, we talked about this last year, very important development. The first multi-beam systems, 3 of them have been delivered to customers. And now they're fully in the process to bring the technology into qualification, which ultimately will lead to revenues for ASML 2020. Once again, despite the COVID complexity, we were able to introduce this technology to our clients. And also with respect to YieldStar, you see that we've introduced a new product and also booked a record year with respect to the number of YieldStar shipments systems. And then it's important to establish that the acquisition of Berliner Glas, which is an important acquisition in our supply chain, also for deep UV and EUV, and we were able to close that transaction in 2020. What you see here is the overview of the several submarkets. We already commented on the installed base management and the major growth that we realized in 2020 as compared to previous years. You see that for a number of years, there's a reasonable steady growth of 2.7%, 2.8% and a breakthrough in 2020, 2 important driving forces here. On the 1 hand, you see that the share of EUV services increases substantially and further growth of installed base of EUV will -- you'll see development here as well. And also the upgrade business that has developed very favorably in 2020. You see that the Logic business, despite the fact that we had a very strong year 2019, nonetheless you see that in the Logic business, we've been able to grow even further. And this has got everything to do with what I just talked about, digital infrastructure, everything that has to do with 5G, artificial intelligence, high-performance computers. And also, you'll have read about this in the newspapers, the more mature nodes and you see that there's quite a demand for that. And also in the context of Internet of Things, a lot of automotive, et cetera. So those are the driving forces behind the further growth of Logic. And as we predicted early 2020, we saw that the memory market that stabilize in 2019 but in the second half of 2020 started to recover. And this recovery is -- continues in 2021, and I'll show you the numbers in a couple of moments. If we now zoom in on the development of sales, I'd like to show you a number of pictures here. The top left-hand side, you see that EUV of all product lines, all technologies, is now leading, responsible for 43% of the system sales. First year in which EUV overtook the immersion technique, RFI, in terms of percentages of the overall value of the total system sales. So this is an important milestone, I think, for the breakthrough of EUV. If I then look at the regional breakdown, Taiwan and South Korea are balanced out this past year, but you also see further growth of our business in China in terms of systems, very important market for us, as you can see. And now if we look at our financials, and let's start with the cash flow. In this case, you see that we have had quite a positive cash flow. This is the first year in this 5-year period in which free cash flow is higher than net profit, which means that we have a cash conversion of in excess of 100% with a lot of attention from ASML for working capital for management. And this is one of the important drivers behind this. And now the balance sheet. We see a robust balance sheet. And also as a consequence of the measures in working capital management, you see a robust balance sheet. And you also see that there's an increase of noncurrent liabilities. There are 2 bonds behind this that ASML has been able to close under favorable conditions. It's an important step because given the uncertainty of the COVID situation, we wanted to be sure that we had robust funding and also a good cash reserve. And I think that, that further reinforced our balance sheet and also improved the efficiency of our balance sheet. If we then look at our profit and loss account, which has disappeared. Well, here, P&L. I think we more or less looked into that already. If we look at an overview of 5 years of our P&L, what you see is that in 5 years' time, we've doubled the top line. So the sales side, the revenues side. R&D in 5 years' time has doubled. And also by means of an more efficient use of SG&A and focusing on higher margin, you see that earnings per share has more than doubled over this period of 5 years. This cash flow development that I just referred to and a strengthening of cash flow. Good working capital has also allowed us to return considerable sums of money to shareholders. As you know, we do this in 2 ways. We do this by means of an annually increasing dividend. And this year, we have proposed or we are proposing to your AGM, a total dividend payout of EUR 2.75 over and above the EUR 1.2 interim dividend that we paid out in November 2020. And that would lead to a final payment of EUR 1.55 per ordinary share after this meeting. And all in all, the EUR 2.75 is a 15% increase as compared to the dividend in 2019. You see that we've also been able, once again, despite the COVID-19 crisis, after a certain interruption of this program to purchase quite a number of shares. We have a 3-year program for a total amount of EUR 6 billion, EUR 1.2 billion thereof was purchased in 2020 up to last week because we continued purchasing our own shares in 2021 until last week, it amounted to EUR 3.3 billion. So we're well on our way to realize this program, EUR 6 billion at a very rapid pace. Last comment on my side is the development of results in the first quarter and the guidance that we have for the full year 2021. I think that the figures that we've shown are quite good, are better -- much better than we expected at the beginning of the year, EUR 4.4 billion in sales -- net sales with an excellent gross margin of 53.9%. There are 2 important drivers here behind it. One of the important drivers, and we already commented on that. In fact, is that you see that all the elements of the market, the Logic market and the Memory market, there's quite a high demand for chiplet. You can read about it in all the newspapers. And as a consequence, there's quite a bit of demand for new systems, and you see this reflected in high-revenue new system. Installed Base management is quite high here, EUR 1.2 billion for the first quarter, which is substantially higher than what we had thought at the time. And this got to do with the fact that precisely under these market conditions, our customers are very much focusing on enhancing and boosting their productivity with the equipment that they have to produce as many wafers as possible. And that means that we are getting all these questions from all sides, what can you do to make sure that the productivity of our tools can be further boosted. And that would mainly be software solutions that don't require machine downtime, so that our clients don't have to decommission their equipment. And so that was quite a substantial demand, very high demand, higher than we'll probably see the rest of the year. And so this was something that we particularly saw in the first quarter, excellent gross margin. I referred to that earlier on. Wonderful net income as the first quarter and a strong influx of net bookings in our order book. So extrapolating for our outlook for the rest of the year and the presentation of the first quarterly figures, you know we said that we expect that sales for this year will probably increase to EUR 18 billion. So that's a 30% growth as compared to 2020, gross margin between 51% and 52%. So here, also a substantial growth as compared to the 48.6% that you saw earlier on for 2020 and also an annualized effective tax rate between 14% and 15%. Ladies and gentlemen, all in all, 2020 was a good year. The first quarter 2021 was a very strong quarter. And I think that, that leads us to believe that the rest of the year 2021 will be a marvelous year. So with that, back to the Chairman.

Thank you. Now I'd like to give the floor to Mr. Wennink.

Thank you, Chairman. I would just like to focus on a couple of things. First of all, the state of play in our industry. And you will undoubtedly have read the newspapers. So you'll undoubtedly know that there's a lot of attention for our industry and the shortage of chips. And also, I would like to focus on our people, our organization and the extraordinary year 2020 in terms of COVID-19 and actually, it's still affecting us in 2021 and the impact on our society. So allow me to start with a few words on the industry as such. I mean you can't really talk about the industry without commenting on the COVID-19 crisis. If you look at digitization across the world, you see that there's an enormous increase in digitization, and that has had quite an impact. I think the first wave was quite clear in 2020. Obviously, there was a great deal of uncertainty, particularly the first 6 months or the first 9 months in terms of what the impact would be of the COVID-19 crisis on the world. And it's not surprising. And of course, very gloomy scenarios were being painted at the time. It's not that surprising that companies -- almost all companies were very careful in terms of investments. And if you look at expectations for profit in 2020, you saw that up to September -- or including September, the profit expectations were being adjusted somewhere around the third quarter line increased, and because it became clear to a number of industries that the downturn was not going to be as severe as they had thought initially. And that means that the capital investments, which you see as the CapEx on the right-hand side of this slide, you see that the CapEx needed to be adjusted all of a sudden and very quickly. And that led to the following situation. And if you give it some thoughts, the kind of investments our customers do with us, so their throughput times of 6 to 9 months. So that means that the planning of the CapEx, if that planning is to be adjusted, it will take 6 to 9 months before you can really start shipping your products and your clients get their products. So it's not that surprising. 2021, if the economy recovers, there will be a deficit in capacity. So that's what we see in terms of trends. But there's also a second trend, and this may be one of the most important ones because this is a long-term trend, a structural trend. We see that investments that are being carried out because of digitization, investments in Internet or in the cloud or possibility for people to interact with machines, machines with machines, connectivity, driven by AI, leads to distributed computing, so to speak. So what you see is you see distributed computing at the margins of this digital infrastructure system. So I mean this would be a self-driving car or advanced driver-assisted systems. These are distributed systems. So it's not only in cars, could also be in medical equipment, our own equipment, they're distributed systems that are out there now, and I'll say a few words about that later on. And you can see it in your phone, your PC, the tablet. So that's increasing rapidly, plus 5G, which is the big motorway, this big pipe, so to speak, means that data can be absorbed behind enormous amount of sensors, whether it be light radar, movement sensors, all that can be processed and processed not only by the super fast chips that we make with EUV. But since they are part and parcel of the distributed system, there are also chips that are sometimes 5 years old, 10 years old, 20 years old even in terms of technology. So across the range, you see the shortages because the intelligence edge, the sides, the margins where you see distributed computing is demanding everything, not only the 7-nanometer chip, but also technology that is sometimes 5 or 10 or 15 years old. And this is a development that -- and it started recently, 5G. And if we look at -- I mean, the expectation is that the worldwide CapEx for 5G infrastructure, 65% takes place in Asia, 20% in America and the rest Africa and Europe, which is quite a sad conclusion that Europe is lagging behind so much. That is one conclusion. But it also means that the rollout of this investment infrastructure has yet to take place to a certain extent. So that means that what we see today with respect to demand for all sorts of chips over the next few years will continue. So that's the second trend. And the more long-term trends, and I'll comment on that later on. But let me just give you some examples of what it is that I'm referring to. So this is an overview. This bar graph actually shows the content of semiconductor chips in what we call high-end smartphones. So these are the most sophisticated smartphones of Samsung and Apple and you see that the height of the bar indicates what the content is in terms of value of semiconductors, to the light blue bit of the bar are the advanced semiconductors made with EUV, for instance, but the dark blue is mature technology, and you see that growing substantially. And the green bit is memory technology. Integrated systems are increasingly needing more chips, of all sorts of chips, and that becomes clear when we take a closer look at automotive. This is the silicon value, the semiconductor value, the chip value in the car. In 3 years' time, that value has doubled from 30 billion, almost 50% growth to $45 billion. And we see this in electric cars, but we also see it in advanced driver-assisted systems, ADAS systems. And your interaction here with your clever board computer is increasing. And all this is driven by 7 conductors. And now let's proceed to the third trend. You have the first trend, which is a short-term trend. And the second one is a long-term trend. And the third trend is really the consequence of geopolitical tensions with respect to technology. Every continent, every country looks towards the future and tries to determine how value can be created in order to be able to fund a responsible society. Now if we look at the previous slides, you see the chips and semiconductor technology is going to play a very important role in this value creation. And because the ecosystem, this electronics ecosystem over the past 30, 40 years, has expanded to become a sort of seamless system across borders. You see that there are dependencies. And if tension increases, governments will think twice. Whether it is sensible to go ahead with this. You see this in the U.S., in China, you see it in Europe as well. And this trend, and we call it a push for technological sovereignty. Technological sovereignty, can we do things ourselves. And that means that governments are taking all sorts of initiatives to boost the chip technology or electronics or digitization rather. And you see this happening in Europe, in China and the U.S. Several initiatives have been introduced. And if you add it up it's somewhere between EUR 250 billion and EUR 300 billion that are set aside by governments in order to be able to support this trend for digitization. So these are enormous amounts. And a lot of that money ends up in the semiconductor industry. And you can't just build additional capacity just like that. Building a semiconductor plant will take you about 3 years, which means that if you announce this in 2021, in 2024, 2025, you'll have a plant, and that's where the machines will go. And that will be added to this long-term structural trends. So this expansion will undoubtedly lead to, I think, more capital inefficiency. And this very efficient worldwide ecosystem is sort of broken down to a certain extent, you could say, which would lead to more capital intensity or less capital efficiency. And obviously, at the end of the day, we do need equipment, we need machines. And as a unique supplier of top technology, that will end up with ASML as well. So that's the third trend. And now the question arises, obviously, If everybody is so passionate about this, so excited about this, can we actually foot the bill. There's a lot on this slide, but each and every little block represents a company that operates within the ecosystem. It starts with the top line, which are the manufacturers of equipment. You see ASML and Lam Research, Applied Materials. We supply to our customers that make the chips, Intel, TSMC, Samsung, and they supply to the companies that make the equipment. Apple, Samsung, you see here. And they then supply to the companies that make hardware for the infrastructure, and they then supply to those companies that provide the services. And I'm talking about platform companies, big tech. And this entire ecosystem last year, and I'm talking about 2020, had an earning potential of EUR 500 billion in earnings. So this is before deduction of costs. And it is expected that this will grow by 20% to 25%. So there's more than enough space for investment to give this chip technology a boost within the ecosystem to build the plants, to buy the machinery that is required in order to be able to supply all these chips. And obviously, that will also end up with ASML. And yes, what does this mean? It means growth, growth for ASML, not only the top line but also in headcount. Last year, in 2020, we grew from up to 28,000 FTEs coming from 24,900 in 2019. And we see this happening in Asia, U.S. and in Europe. Everywhere the headcount is growing. We have about 120 nationalities, 100 of them are working in Veldhoven here in the Netherlands, quite striking. A couple of years ago, not that long ago, 4, 5 years ago, number of female workers was about 12%, it's 17% now. So every year, we add 1% or 2%. And that obviously also has to do with the fact that 90% of our employees have a STEM background. Science, technology, engineering and mathematics. So these are very technical backgrounds. And unfortunately, it has to be said that the number of women graduating from technical universities lags behind the number of male graduates. But perhaps we can comment on that later on. I'm quite sure that you have questions about this. Later on, we'll be giving you more information on that. In any case, so this is a trend that has started and it is a positive trend. If we then look at this product road map. I'm not going to dwell on it for too much time. Roger also referred to it. But I would like to point out that it's not only in the product side that we've done some extraordinary things this past year, but it's also at the customer service side, the installment times and throughput times in the plant, despite the COVID crisis, was shortened and that's very important if we want to increase our output, our sales. You want to shorten your throughput time so that you could do more in the same square meters. And also in the field, I'll give you some examples. We made some important headway in terms of self-sufficiency of our customer service organization because we couldn't just board a plane and fly across the world. We couldn't do that in 2020. We still can't do that. So if we now look at what COVID-19 actually has meant, in fact, there are different dimensions of the new normal, so to speak, actually. Obviously, given current conditions, safety remains our #1 priority. People that come to ASML to do their work, we test our employees. We check their temperature, we've got masks, and we've organized the traffic, let's say, in our company to keep people safe and at a distance. And that means also with the information that we've received from our government, we have complied and more than 80% of our employees are working at home -- or from home. And this is something that is going to have some consequences for the future. Working from home will also determine how we deal with each other, how we work with each other. At ASML, what we do is we create an environment in which working at the office or working with each other and cooperating with each other is being encouraged. It is incredibly important in an innovative and creative environment that people can look each other in the eye and that they can join and meet each other in this creative process. In this creative process, you need to find solutions. So we want to encourage that. And we do expect that if we make it attractive to come to the office, and we're working on this very intensely, we do expect that people will not work from home more than 1 or 2 days a week, and in general, will be working with their colleagues cross functionally in order to come up with all these solutions. And then, of course, and I just talked about this, there was less traveling. Why? Because the solutions that have to be realized in the field, repairing machinery, is increasingly done remotely. We have very innovative concepts with Google glasses for instance, we can look -- we can show 3 dimensional images, holograms, people who are sitting next to the machine and they can be installed by engineers at a distance of 8,000 kilometers. So certain things in the past, these things were done by engineers that had to be flown in. And also for the supply chain, this also applies. And perhaps my last slide now, what did we do in 2020 in supporting communities. Obviously, wherever possible -- and of course, we don't make medical equipment, but we have provided medical support. We purchase medical equipment, medical -- we supported medical supplies, and that was important also in community engagement. We're particularly focused on underprivileged residents. And wherever necessary, we helped education. We started a program in which ASML engineers would help children that needed it, give them extra training. The engineers teaching children and elderly people that needed to communicate with their relatives remotely. Well, we help them to understand the digital world. ASML Foundation mainly focuses on people in underprivileged situations, people with an autistic spectrum, children with autism. Not only underprivileged people, people that have to live with certain disorders. That is what we focus on in the ASML Foundation, and particularly science, technology, engineering and maths, we want to support that. And there is obviously a lot of focus on educating girls because what we need is female engineers. So that concludes my contribution. Thank you.

Let's continue with respect to the questions. The following have been submitted by the VB before the meeting. Now in the past months, ASML's main customers have announced substantial increases of investments. To what extent is ASML able to scale up its production to meet the high demand for EUV systems? Peter, you have the floor.

I think that this is a very relevant question in the circumstances. I've just indicated that the demand for chips whether advanced or not that advanced is practically unsatisfiable. That is why we're looking into our capacities. In the first quarter, I've just indicated in my graph, that the number of EUV machines that we are planning to ship 40 and then scaling up to 55 in the next year. And based on that, if we look at the demand that is very necessary, that's 1 thing. I also said that the market for the more mature chips is growing. And this is not anything that will change very soon. It's part and parcel of the distributed computing on the side of the digital infrastructure. That's where those chips are necessary. It's absolutely our intent and idea to have more capacity there. We can do that in various manners. As I already mentioned, throughput reduction. The square meters in the factory have to be utilized to the max. This efficiency is the first step. Secondly, see to it that you have more machines. This is not necessarily our issue, but our suppliers' issue. They will have to be able to scale up their productivity as well, more machines on the same square meters. So you'll have to also build factories as a next step. I think that ASML we can manage, but it's important for the supply change. This is a very first upscaling of capacity, which you can make happen within the next 12 months. Then you'll have to make and install machines which will take another 12 to 24 months and building new factories costs you 2 to 3 years. These are investment levels, I would just like to sketch. We haven't really finalized discussions with our suppliers. We don't know yet whether they can follow our lead in all of this and where they are situated in step 1, 2 or 3. I think and I believe that they can take the first step. So our capacity for the nonadvanced chips can be extended in this year and very possibly in the next as well. We're working hard on all of this. It is often a question of including the supply chain and putting our shoulders towards ASML, I believe we can accomplish it. We still recruit more and more people to do so.

Onwards to the next question. The most optimistic forecast for 2025 outlined by ASML seems outdated already. Now within what period does ASML plan to provide shareholders with an update regarding the mid-long-term forecast? Roger, a question for you.

A very understandable question. Let's go back to 2018 when we indeed increased that bandwidth and said 2025 between EUR 15 billion and EUR 24 billion. That's where we'll be. But I've already indicated that with respect to our expectations for that year, we've almost achieved it. In this year, we're quite close. Aren't we? So it is realistic to assume that we're going to increase the bandwidth moving closer to 2025. It's going to be a bit narrow. We're not -- and we're going to recalibrate and boost it a bit. At 29 September this year, we have our Capital Markets Day, and that's when we will be able to announce the most current forecast expectation with respect to profits in 2025.

Next question. Over the last few years, chip manufacturers have made high CapEx investments in production capacity. Now an increasing part has ended up with lithography equipment makers, in particular, with ASML. Now how much does ASML think this share will increase by a further shift of customers to the more expensive EUV technology? Peter?

With respect to the more advanced ones, it will probably be that the larger part goes to the more advanced lithography equipment. But this is one part. The demand for those chips that aren't that advanced is actually increasing hugely as well. So those machines have a lower sales price per invested euro. This is technology that is between 5 to 10 years old. Plans are being made to build new factories and those plants are going to need lithography machines. They're not going to be EUV ones, but you can just call them less advanced machines. So all in all, I would say that the percentage of lithography machines as part of the full investment in machinery and in CapEx is going to increase, but not exclusively because of the EUV machines. The less advanced machines are still, and increasingly so, important.

Question on the average sales price of ASML's machines. This has indeed been increased because of the development of the EUV machines. Now in which rate will the price for EUV increase in the next years?

Now that is an interesting question. This is a trend that we followed in the past decades because the price of the next machine is determined by the increase in value for the customer. And you can express that in a higher productivity. For example, increasing 20%. Mostly, we say we divide that added value 50-50, so 10% higher value in the system. If we look at EUV machines, then we see the 3600D version. The success of the C1 has a 15% to 20% higher productivity yield, and that means sales price will increase by 10% to 15%. Now that is a reflection of the added value for the customer, not only productivity, also, print quality and positioning exactness because the various layers of the chip of the various wafers, thicknesses, et cetera. All of that is relevant in the actual yield of the chips, and that will be expressed in the added value. And with that added value, the price of the machine will increase as well.

Now the next question refers to China. ASML might benefit from China's ambition to manufacture its own chips. Now to what extent will this development enabled by companies like SMIC speed up the demand for EUV machines, if export to China were to be permitted? Peter?

Very good question again. I think in general, the demand for lithography machines is determined by the worldwide demand for chips in the end. Now if the developments that I discussed in my presentation continue, and if that structural growth trend continues, those chips will have to be there. Now where they're being made is just not relevant. The Chinese can indeed purchase those chips already, but there are restrictions to make them themselves. The market is out there. The question is where do those machines go to. And having said that, I already talked about the technological sovereignty. That is where capital inefficiency will occur. Now if China wants to build its own industry and America wishes to build its own industry and Europe and other parts of the world, too, then there will be more demand for machines, i.e., for EUV machines. That's a third trend, and that will lead to more capital inefficiently.

Another question about China and the relationship to the U.S. The U.S. government considers expanding the EUV-related export control restrictions in respect of China to other ASML systems. Now which financial interests are at stake if the export of DUV systems would also become subject to a similar export ban?

It's actually the same answer that I gave earlier on. Now as soon as the deep UV machines, they are necessary to produce those less advanced chips, if they don't go to China, they'll go somewhere else because the chips can be sold to China to be built into your next mobile phone. Now that's then probably produce somewhere else. And in general, this is a political discussion, a political decision. And we will -- if this enters rules and regulations, we are going to, of course, comply by them. The question is, in the case of China, is this actually a good idea? Talking about deep UV, the most advanced one, immersion with water between the lens and the wafer is used, that this is actually 13 to 14 years old. There are hundreds of systems already installed and productive in China. Now how can we get those lines even finer on those chips by using those immersion machines, and they then use several production steps on one layer. This is production technology that the American companies supply. And you can make those lines finer and finer. This deep UV technology is already out there. Now does it really make sense to place that under export controls? We wonder. We'll have to wait and see. Technology is already out there, as I said. And for the whole worldwide demand for chips, it doesn't really matter where those machines are located.

Well, thank you. Question about the competition. ASML generates the largest part of its revenue and profit from the sale of non-EUV machines. Does ASML expect any developments in the market for these machines, which will have a negative impact on the market share of ASML against Canon and Nikon, for example, the lower Japanese yen?

Well, this has been a relevant aspect for as long as we're in competition. This is relevant for the market in less advanced equipment. That's where the Japanese yen didn't really play a major role. It was the productivity difference that actually cut it. Our productivity was higher than the competitors. Now having said that, is this a difference for the older technology, 15 to 20 years old? Not really. It's not that huge, and that's where the competition is really fierce. I think the largest negative impact we could experience in the market share of the non-advanced systems has to do with the capacity that we were talking about earlier. If we can't deliver, then our Japanese competitors are going to do their best to deliver. Now having said that, it doesn't mean that our Japanese competitors have endless production capacity. At this point in time, we are very well able to maintain our market share. But as again, competition has been strong, always will remain strong, specifically in the non-advanced equipment.

Now I see some live questions, a follow-up question by the Shareholders Association. Now ASML has a couple of KrF high-line and other non-EUV systems. Can you tell us more about the gross margins on those deep UV systems. Peter?

That is certainly possible, but I won't make that public. And I hear that other shareholders associations are asking about competition positions and where we compete. We're not going to discuss our gross margins. That's not really sensible to my mind and certainly not our intention.

Then I see a question by Mrs. [ Cook ]. She's asking whether we predict that the Moore's Law will be maintained in the next years? Peter?

Well, Moore's Law says that there is an economic rule that sees to it that more functions are placed on a chip and that the chips cost less in the end. Lithography is a so-called scaling engine, but it's not the only one. There are various scaling engines have to do with architecture and material choices, system integration, 3-dimensional system integration. We call all of these drivers for scaling, and they all add value -- add value to the chip, to the number of functions on that chip. With respect to the 2-dimensional scaling, what we do with our lithography equipment, we're sure that this will continue in the coming 10 to 15 years, as far as we can see. Very importantly, EUV is now technology that we use in high volumes. And the wavelength, the wavelength technology of EUV and DUV as well, that wavelength technology has a life cycle of 5 to 15 years. We've only just started, so we will gladly continue.

Now let me hand over to our meeting secretary to see whether there are any live questions that we still have to answer.

I see one shareholder wishes to ask a question via the video connection, Mr. Janssen, on behalf of the sustainable shareholders association.

Hello, and good afternoon. My name is Edwin Janssen of the Dutch Association of Shareholders for Sustainable Development. We've been asking questions with stock listed companies for the past 20 years. We've read your annual report. We would like to congratulate you on your financial results. And I would like to ask questions about 4 topics, and I'll just give a brief introduction to understand the background, and we're going to take your answers into consideration and advice to our members. Now the first question pertains to recent events such as the extreme cold in Texas, the fire at Renesas in Japan, the COVID outbreak or the Suez channel blockage. All of these events show the vulnerability of the global logistics network. It also reemphasized the increasing risk that climate disruption or other sustainability-related disasters pose to global industries in their supply chains. Now VBDO would like to compliment ASML on publishing its first task force on climate-related financial disclosures in 2020. It reports on the risks of the physical effects of climate change. Now in this report, ASML states that climate change will not severely impact ASML nor its first tier suppliers. However, further down, that is possible. For example, in sourcing key materials such as tin, there are risks in the supply chain there. The question therefore is, does ASML have a roadmap to expand its risk assessment beyond Tier 1 suppliers with respect to climate, for example?

Very good question and also a complicated one. Our Tier 1 direct suppliers, about 5,000. And their location is practically exclusively because you're referring to climate risks in areas, but these 5,000 Tier 1 suppliers are in climate-safer locations. And we apply climate change risk analysis, which is audited. And we've actually invested quite a lot into this in the past years. It's quite difficult. If you look at Tier 1 minus 2 and 3 if you already have 5,000 Tier 1, then you can actually multiply that, and you will then have 10,000 in the second and third tiers. So it's actually impossible for us to apply the same rigor and focus in our risk analysis to those 2 layers. Now with our Tier 1 suppliers, they should follow our code of conduct. And they accept that we apply this rigor and [ focus ] on them, and they should apply that again on their Tier 1 suppliers. So this actually cascades down through the chain. We just do not have the resources nor the possibility to go even further down in our supply chain. So we're concentrating on the 5,000 Tier 1 suppliers. If that is done well, then we -- that means they will duplicate our efforts and we can indeed enforce that via audits. We make it also a precondition for retaining that Tier 1 supplier-ship at ASML. So we believe that this is the right way forward.

It seems like the connection to Mr. Janssen has been cut off.

Can you hear me?

Yes, wonderful. You're back online.

With respect to our second topic. ASML identifies and monitors material problems related to their workforce and the workforce of their first tier suppliers. We greatly value ASML's current efforts, but ASML does not monitor human rights risks and labor conditions at deeper tiers of the supply chain, comparable to the previous question. It's known that the -- well known that these issues are more seriously further down in the deeper levels of the supply chain. The EU regulations with respect to these issues are expected to tighten soon. Due diligence, human rights and ecological issues are going to be tackled there. Even though this costs a major effort, we would like to ask whether ASML has a clear road map to continuously improve understanding of its supply chain with respect to human rights. And what can VBDO expect in the next 2 years?

You've already indicated that your question is an extension of the first question. And my answer is an extension as well. So actually, the 5,000 suppliers, which actually cover 80% of our purchasing force, 60 to 80 companies in the EU mainly, that is where these EU regulations are so severe so that we don't really have major concerns about the first tier suppliers with respect to the injustices that you've indicated. I think it is extremely important, and I would like to repeat myself that in deliberating and weighing risks, not only with respect to labor conditions and fair pay, that we indeed look at our first tier and that we oblige them too in the way we they cooperate with us in their contracts to apply the same code of conduct that we apply as well and audit that. Again, a multiplier of our 5,000 first tier suppliers down to Tier 2 or 3 or even deeper is practically impossible. So the direct partners, that is our approach, are the ones that we address with respect to responsible behavior. And that's how the supply order will have to be implemented. And if that works and if that is enforced, and our suppliers to that as well because we require it from them and oblige them to do so, then you get this ripple effect in the chain. And that's how we wish to go forward. Now to be very honest, a harsh enforcement for 5,000 suppliers is already quite a challenge. And of course, we focus on the top 100 because then you have at least 50% of your purchasing power in order. Now if we do that well, then we can achieve and more because our suppliers have direct contacts to their suppliers and can judge the situation, assess it much better than we can. That's our focus.

Mr. Janssen?

Well, thank you very much. This is also a challenge for supermart chains, et cetera. They have even more suppliers. Do you expect that the EU regulation that is in preparation with a stricter requirements, do you expect that the approach you've just described will be sufficient?

Peter?

I think you'll have to look into this per sector, per industry. We don't sell bananas. Sales and purchasing, in our case, pertains to high-value technology. And our suppliers purchase in those areas where high-tech products are being made. You can actually see that our first and second-tier suppliers are mainly located in Europe. The effective risk analysis has to be the basis for any action in this respect. And that's what we've done. And this has been directed to the first tier, with the requirement or actually the obligation for them to apply the same code of conduct in their supply chain as we do in ours. This is a risk analysis based approach. We have to look at the type of industry.

Janssen?

Thank you. That's clear. With respect to the third topic. Looking back at 2020's AGM, ASML outlined, it was in the process of developing a diversity and inclusion policy. This was expected to be completed by end 2020, early '21. However, ASML stated in its annual report that this new policy has not yet been completed. VBDO is very curious about the progress and content of the new policy. And specifically, when can stakeholders see a publication of this D&I policy? And how will ASML continue to implement this policy?

Peter?

I can only promise that this will indeed come forward very soon. The pressure on the Supervisory Board to finalize this is huge. The COVID year didn't really help, but our concept is ready. And I can indeed promise that you'll find that next year in our annual report. You'll see very clear KPIs because diversity and inclusion is high on our agenda, not only in the Netherlands, also in the U.S.A., it's an issue there. We have a diversity and inclusion council already in the U.S. We're going to extend that to a worldwide council. This is already underway. Furthermore, diversity has various aspects, understandably so. If you look at a company like ASML, you're not only talking about what we can subsume under the term gender, but we also talk about people with a disability, with a certain orientation, with a nationality. We've just talked about the technology war between a number of great powers, which leads to certain nationalities not being seen as inclusive. And you'll have to take all of that into account. It's very complex. The concept is ready. The Supervisory Board is indeed pressing us to come forward with a definitive version very soon.

From VBDO, I'd like to talk about the very last topic. We appreciate the continued efforts on the side of ASML to conform to the 5-step OECD framework for responsible sourcing of conflict minerals. This has been expanded on in the 2019 conflict minerals report by ASML. VBDO concludes that ASML is already complying with the first step of that framework, but the other 4 are still out of reach. Furthermore, ASML currently is not following each of the 5 steps. That was not mentioned in the report. So the question is, can ASML report on conflict material minerals due diligence in accordance with the framework? And can it also commit to a roadmap for aligning with the OECD guidelines completely?

Peter?

Now our opinion, our due diligence is consistent with the guidelines of the OECD. Wherever that is not the case, I think it would be a good idea to exchange ideas in detail so that we can follow up on that. Wherever we can improve, we will. But we do observe the guidelines of the OECD. We would like to talk to you about this in greater detail.

We would like to thank you, Mr. Janssen, for your questions. We see one more follow-up question from the association of private shareholders with respect to the SMART Photronics company, which further role, because ASML has a small participation there. The photronics market, what is ASML going to do about that?

Well, this is an interesting area that we're quite enthusiastic about because it's one of the drivers for more chip technology. It's not and/or. It's a further extension of the whole digital transition, which we indeed support because it drives our own business. We're a small shareholder, and that means that those photronic chips are made on the basis of a certain technology that is a couple of generations older. We delivered the machine. And we said, well, actually, you can use the machine. We do the maintenance. This is an in-kind contribution of the photonics industry in the Brainport, it wasn't really an investment in cash.

Well, thank you very much. I look to the secretary and see that there are no further questions. So I would like to now hand over to Mr. Kleipool.

Thank you, Chair. With respect to the voting procedure, this shareholders' meeting has been convocated according to the rules and regulations. The total amount of ordinary shares are 419,498,292 with a nominal value of EUR 0.09. 6,134,571 of these shares are held by the company as treasury shares. As a result, the number of outstanding ordinary shares with a nominal value of EUR 0.09 amounted to 413,363,721 shares. Given the fact that one ASML ordinary share with a nominal value of EUR 0.09 gives entitlement to 9 votes, the foregoing number of shares give entitlement to cast 3,720,273,489 votes. Now we now know that the presence of the shareholders here at the meeting is a representation of EUR 29,340,909.72, which gives 2,904,390,000 votes, which means that 87.02% of the capital is represented. So all voting items on the agenda with the exception of agenda Item 6 and 7 can be adopted with a simple majority of the votes cast, as more than 50% of the outstanding share capital is represented. For agenda Item 6 and 7, proposals for adopting certain changes in the remuneration policies for the Board of Management and Supervisory Board, a majority of 75% based on the votes cast is required by law. I hand back to the Chair.

Well, thank you very much. The voting for the various voting items on the agenda has been open from now. As Mr. Kleipool said, you can now exercise your voting rights for any agenda item. You can change your choice by selecting another choice. You have the opportunity to do so until the vote is closed prior to agenda Item 14. I request the voting operator to switch on the voting system. And I would now like to conclude this item and move to agenda Item 3A. This item concerns the remuneration report of the Board of Management and Supervisory Board as drafted for the financial year 2020. The remuneration report has been prepared in accordance with the requirements of the revised EU shareholders directive that was implemented in Dutch legislation on the 1st of December 2019. Pursuant to this new legislation, the general meeting has an advisory vote on the remuneration report. This agenda item, therefore, is a voting item as stated in the agenda and the explanatory notes there, too. The general meeting is asked to vote on the fact that the remuneration report is clear and understandable. Now I'd like to give the floor to Mr. Rolf-Dieter Schwalb, Chairman of the Remuneration Committee. He will give a short explanation of this topic.

Thank you. Can we have the first slide, please? Okay. Thank you. The changes which we had last year in the Annual General Meeting of Shareholders, which took effect as of January 1, 2020, were mainly textual changes, as you may remember, to ensure the compliance with the EU shareholder rights directive. There is no basically no substance change. Now let me talk about the report for 2020. The first point was the base salaries, which we decided last year to increase of 2% for all Board of Management members. Next slide, please. Then we come to the results of the STI and LTI payout. And before I go into detail, let me first say that in the last -- say some 2 months, I had discussions, and session is also virtual, of course, with [ a median ] and with ISS and also with 2 individual shareholders because they had asked questions before making up their minds. And the questions were basically, for all 4 of them, they were the same 3 questions, number one being more transparency on target setting and achievements. Number two was about the adjustment to the return on acquisition invested capital result. And number three was about the sustainability targets and began about transparency. Now we discussed that with all 4 quite intensively, and interesting, there was 2 things basically. One was basically, they understood why we do not publish and also will not publish certain targets and achievements, and I will come back to that when I go through last year's achievements. And secondly, interesting was also that in the discussions with them, we together came up with a few more ideas on how to further improve the transparency in the report without touching these critical topics. And that, of course, will be noted, and we will look at it when we have next year's report. By the way, this year, we also have a deeper look in the remuneration commentary on the whole system of our remuneration policy and which targets in the last year's were good targets which were more difficult, and whether we continue as is or whether we look for an improved policy. Always, we will choose targets and systems which are relevant for management and relevant for the company to support the strategy and which are the most important things to do, basically, no matter whether we can actually, at the end, publish targets or not. Now let me discuss the STI targets. The overall payout has been 139.2% of target, which is 80% of base salary and, therefore, 111% of base salary. In the nonfinancial performance criteria, this is technology leadership index and market position, both achieved between target and maximum performance level. And to be a bit more precise, I can tell you that they're both around the midpoint of target and maximum, so around 125%. Now why don't we publish more on those two? Technology leadership index is, of course, at the heart of the company. How does it work? It is an internal target. It is defined or proposed to the technology committee of the Supervisory Board at the full Board by the CTO organization of Martin van den Brink. And basically, it's a list of individual projects on which the R&D organization will work in this year also, and also in the LTI, it comes back in the next 3 years. So it's really precise projects that we want to improve something in energy or want to improve something in availability or very specific technical projects. I think it -- and that is also the view of ISS and [ median ] and the other small shareholders we had talked with. Basically, these targets we should never publish in the -- basically your interest, the shareholders' interest that you talk about technology. They are rated at the end of the year, not only at the end of the year, basically, the technology committee also looks at them in every quarter on a 1 to 10 scale. And at the end of the year, some may end up at 5, which is not good. Others may end up 10 because that's perfect. That's exactly what was set up as target achievement. And then there is an averaging of the whole thing. And the outcome is then, as I said, this year, it was around 125% of maximum. So a round number, around 8 or so of the 10. In the market position also achieved around the midpoint between target and maximum. We have 2 sets of targets. One is based on the VLSI research data, where we basically look at how do we position in the semiconductor industry as a supplier to our customers? How do they look at us? Are we #1, the best one, #2, #3 and so on? And then we set targets around the position we want to achieve. In this one, basically, we discussed that in my view also, there's potentially no reason why we shouldn't publish there more. On the other half of the market position targets, we have very precise targets in the various business lines, on apps, applications and [ DOB ] about market shares of certain parts of those business lines where we have competition and where our market share is too low today. And on the EUV, obviously, with 100% market share, we don't do that. But there, we have a target on, for example, on availability to our customers. I mean basically, with these expensive machines, they have to run day in, day out without stops. Now that we don't achieve. And -- but there are certain targets which are good, which the customers actually want to have a very good performance of the machines and a good result for their internal targets. Now we are not yet there with EUV. We have made a lot of progress in the last year. So we set targets for availability for new machines to our customers. That, of course, if we come to a higher -- highest possible availability, I mean we'll never achieve 100%, I have presumed, but then, of course, that helps the economics for our customers and potentially also other more customers can be interested. Now those 3 targets, the market shares and the availability for EUV, we will also not publish in the future because, again, it is in your, the shareholders', interest that we keep that in the company and not make it available to our competitors and customers. So much to those two. On the financial performance I think it's no one after what Mr. Dassen said, a record year that we achieved basically the max, and EBIT margin very close to max, EUR 149.5 million of EUR 150 million potential. So this is no wonder. Here, we will also think about more what we put to more to publish. You see on EBIT. Actually, we basically give you the chance to calculate back the original target and also the achievement because you can see the actual EBIT margin in the P&L. So it's just a little bit of math. In the other 2, you cannot do that with a simple statement. We are above target. But I think it's very consistent with the overall performance of the company in 2020 that we have these financial results at a very high level. I mean we don't, of course, set the target at the beginning of the year for a record year. That you cannot do. And this is just an outstanding performance, especially in the COVID circumstances, but that all has been explained. Now next slide, please. On the long-term incentive, we came out with 146.5% of target, that is 73% of max. Obviously, with the share price performance, we made full max in the TSR versus the Philadelphia semiconductor sector index. In the ROAIC, that was the second question we had from ISS on our median and also their 2 shareholders. We settled also with the discretion of the Supervisory Board at 88.4% of target, which is still not very high. I mean normally, the company's management's objective is to clearly go beyond target. So even with the correction, it's only 88.4% of target. What did we do? Basically, when the targets were set in 2018, that was when High-NA was already on the map somehow. But later, our key big customers, which, of course, is TSMC and Samsung are the 2 biggest, they were pushing for getting High-NA to support their roadmaps faster. Now we were reluctant initially. But because this is a huge investment, you may remember that we talk about EUV almost like since 20 years, and only now will make it to high-volume manufacturing and results, positive results. But we decided to go for it. And the Supervisory Board supported that, that we invest considerably more money to try to speed up the plan. We now expect potentially that we will high volume -- have the high-volume manufacturing on High-NA at around 24%, 25%, but it's still a challenge. Now as you can see here, also on EUV looking back, these kinds of investments, we'll find the results much longer than the 3-year LTI period. So that is the difficulty actually with the ROAIC in our company. And in the overall look at these remuneration policy, we will also have a look whether this should continue like that or find a better alternative. But we found it totally prudent and right that we basically hold the Board of Management and all the other people who are linked to these results are free of these additional investments to support High-NA as was supported by the Supervisory Board. And basically, I would say also ISS [ and their median ] and the 2 shareholders I talked to were in full support of that. Now the last one is the 10% of LTI is sustainability. Between target and max, how do we measure it, because that was also a question. Basically today and for a number of years already, we measured the published Dow Jones Sustainability Index for us versus the leader in the semiconductor industry. And some years ago, we were like 20% in our ranking in the points we get from Dow Jones Sustainability Index. In the points we were at some 20%, 15% to 20% below the leader. And we have pushed that up, and our target simply says, do you want to get so close to the leader? So now that gets smaller and smaller and smaller. Last year, basically, the target was that -- the max. The best target was so the full payment would have been if you were as close as not more than 8% away from the leader. Now we achieved 9%, so it's between target and actually. Also there, I think if you continue with sustainability, which I doubt in this way with Dow Jones Index, because we are so close now to the leader that it hardly makes sense to -- how do you define a target when you are only 8%, 9% away? Is the next target then 5% or 6%? So we are at the end of the, I think, of lifetime of this kind of target setting and will during the year look for on all challenges. But in principle, I think we have already, like every year in the last years, increased transparency in our remuneration report. And with the discussions we had recently, we will also, I think, again, improve. But I hope that I made clear that certain targets like the TLI, whether it's 1 year or 3 years, or the market targets, except for VLSI, we will never publish. And I think it's in your best interest that we don't do that. Thank you very much.

Thank you very much, Rolf-Dieter. And we will now go into a couple of questions that have been submitted before this meeting by the VEB. Sorry. [Foreign Language]

I'm sorry. It's a Dutch meeting. So the following questions were submitted by the VEB prior to the meeting. SRD2 guidance. But despite that, ASML doesn't give any disclosure with respect to targets, thresholds, the short-term variable remuneration in the annual report. Would ASML, as from next year, provide more disclosure in this respect? I think, Rolf-Dieter, that you more or less answered all this in detail in your explanation to the slide. So I don't really think that we need to discuss this. The second question is, the Supervisory Board decided to adjust the ROAIC performance metric in a discretionary manner, given the CapEx that was conducted in R&D. Why did the Supervisory Board not include this adjustment in the proposal to update the remuneration policy for the Board of Management as submitted to the AGM in 2020? Rolf-Dieter, do you have any additional remarks that you would like to make?

Yes. Basically, I think this is not a policy topic because you will always have situations in case where you have to think what makes real sense. And this was such a case. So I don't think that these kinds of special cases should be put in policy. I think year after year, you might have this, hopefully, not too often. But to every year make a policy update for something you foresee for the current year, which in April, you may not even know because there might come up things after April. I don't think that it really makes sense. I think we have that discretion, and we try to apply it in a reasonable way, which simply is fair also to management and the people below the Board who are also linked to all these targets.

[Interpreted] Thank you, Rolf-Dieter. And then a third question from the VEB concerning the calculation. ASML explains that the return on average invested capital is calculated by deducting operational -- net operating profit after tax from the operational profit and dividing the result by the average invested capital. It's unclear how these subsections are calculated. Is ASML willing to share the underlying calculation? And can ASML confirm that it will disclose this calculation in next annual results or annual reports? Rolf-Dieter, you must have thought about this question.

As included in the question, it's not totally correct. The right is calculated by dividing the NOPAT by the average invested capital. But the question, of course, is then the same. Can we define that in more detail? What exactly is NOPAT -- what exactly is the average invested capital? And how is the real formula so that everybody can calculate the ROIC out of P&L and balance sheet themselves. I think we have to think about it. Spontaneously, I would say that should not be an issue, but let's think about it for the next 1 or 2 years still. Because, as I said, in the overall look at the policy, we might want to look at an alternative to ROIC. But it would still apply for the next few years. So let's think about it. But spontaneously, I would not see an issue there.

[Interpreted] Thank you, Rolf-Dieter. And the VEB also issued a voting statement that will be read out now by the Secretary, Mr. Kleipool.

[Interpreted] Thank you, Mr. Chairman. The voting statement of VEB is the following. VEB is of the opinion that the remuneration report of ASML provide shareholders with insufficient insight. For example, cannot be deduced how the final score on the applicable performance targets relates to the predetermined target. It's also unclear what for example would be this threshold and maximum per individual performance criterion. Because these are high-level targets, such as EBIT margin, gross margin on EUV systems and free cash flow, it's difficult to say that these targets are commercially or strategically sensitive. The VEB makes an appeal to ASML to provide additional information on the implementation the remuneration policy from the 2021 remuneration report onwards in order to better align with the shareholders' directive and the associated guidelines. The VEB is also critical with respect to the Supervisory Board's discretionary intervention in the remuneration policy. Such an intervention can only be justified in exceptional, extraordinary unforeseeable circumstances. And in a way, that does justice to the one-off nature that underlies this adjustment. This is not the case here. All the more so because ASML submitted the remuneration policy to shareholders for approval last year. It would have been reasonable to incorporate the said adjustment in the remuneration policy at the time. The VEB will, therefore, abstain from voting. I'm giving you the floor back, Mr. Chairman.

[Interpreted] Thank you. Okay. We will now check and see whether there are any live questions. Secretary? No. So we can wrap up this item on the agenda. Up to any other business, you can continue to vote, and we shall continue with agenda Item 3B. 3B concerns the discussion of the report and the financial statements of the company for the financial year 2020. As you will have seen, ASML published an annual report containing financial as well as nonfinancial information. This year, ASML, again, prepared 2 financial statements, one based on the accounting principles generally accepted in the United States of America, the so-called U.S. GAAP rules, and one based on International Financial Reporting Standards, IFRS and Dutch law. The 2020 financial statements based on IFRS and Dutch law are now submitted to you for adoption. The annual report with the annual accounts have been available for your inspection at the offices of the company and also have been published on ASML's corporate website. Mr. Van Delden, our external auditor, KPMG, is attending this meeting and shall provide some insight into KPMG's audit activities performed by -- for ASML in 2020 and can answer any questions concerning the audit performed. I shall now give the floor to Mr. Van Delden.

[Interpreted] Thank you, Chairman. Indeed, 2 financial statements for ASML, and we're issuing a number of opinions in the consolidated financial statements according to IFRS and also the simple financial statements and also the U.S. ones, we are issuing opinions, and we're also issuing an opinion with respect to the efficiency of the internal audits and the workings thereof. And finally, we also issued an opinion with respect to nonfinancial information that has been included in the rest of the annual report. And with these 5 opinions, on the 10th of February, we've issued an unqualified opinion. If you're interested in how we perform the audit, I'd like to refer to Page 218 of the annual accounts that you have in front of you. I shall highlight a number of elements. First of all, ASML is very centrally organized in Veldhoven, which means for us that almost the entire audit of ASML can be conducted from the Netherlands from Veldhoven without having to involve other auditors with the exception of the participating share in Zeiss, we use a German auditor for that. And since matters have been organized so centrally, we are able to achieve a high coverage with respect to the balance sheet. 91% of the revenue is part of our audit and 87% of the assets, and we order them with a materiality of EUR 160 million. Nowadays, in our extensive audit opinion, we also include key audit matters. That gives the auditor the opportunity to highlight what exactly were the important elements of the audit, what was difficult and what took a lot of time. And for us, this concerns the revenue of ASML, large contracts, several-year contracts in which several matters need to be supplied. Now the trick is to attribute the sales -- the revenue to those contracts. And so that really is the gist of our audit, and we pay a lot of attention to that. That doesn't mean that we don't consider that the other matters, such as stock, goodwill, tax position. Obviously, we also pay a lot of attention to that. A year ago, when we laid down our audit plan for 2020, it was very uncertain what would happen with COVID-19, and what the impact would be for ASML? And our auditor, Mr. [ Van Delden ] already outlined what the developments were throughout the year. Initially, ASML operations could not be -- were not affected by COVID and also a long-term prognosis or forecast did not decline. And that was important for our audit to see how the forecast at the end of the day panned out for the valuation of a number of items. But the industry in which ASML operates in any case was not affected. What was different this year was the way in which we conducted our audit. And if you would have said a year ago that we would carry out the audit without even having visited ASML or hardly having visited ASML, I wouldn't have believed you or hardly have believed you, but it went well. And it went well for a number of reasons. First and foremost, because for years, we've been working with an electronic file. So everybody can log on to the system from home and also the information exchange with ASML was -- the major part was digital. So our operation was hardly hampered by it. ASML also invested in digitization. So the sales files that were digitized this year and could be accessed remotely, and we could conduct our audit. And what also helped us was that because ASML also has a statement -- files a statement in the U.S. that the audits are well documented and also we have access to that. So all in all, our audit was hardly affected by all of this, and we've also established that most audits could be carried out remotely. Except for one example, and that is inventory stocktaking. We did that with a camera remotely, and we were present at a number of stocktakings, except for the one in the 1st of December in [ Eindhoven ]. We consider that to be business critical. So we were present ourselves here. So all in all, we were able to carry out the audit well. And so I was fully confident when I signed the financial statements. And the Chairman already pointed out that the independence rules prescribe that after 5 years, the lead partner needs to rotate. And this is my fifth year, my fifth AGM. So unfortunately, I will have to step down. Unfortunately, because I've always enjoyed working for ASML, it's an extremely interesting industry. And we've experienced enormous growth over the past few years, and it was going to be part of that, and we worked here with an excellent team. I enjoyed working for ASML. And so my heart bleeds to say goodbye, but I'm handing over to Peter Wennink, and I'd like to thank management and you, as a shareholder, for your trust in us. And I'd like to wish Peter all the best.

[Interpreted] Thank you very much for this explanation, and thank you for 5 years, excellent cooperation with ASML in a very constructive and critical way. There were no questions before the meeting. I see no online questions either. So I shall continue with Agenda Item 3C, which is a discussion item, explanation to the company's reserves and dividend policy. The company aims to pay an annual dividend that will be growing over time and will be paid out semiannually. Further explanations are in the explanatory notes to the agenda. We will now move to the questions. No written questions though have been submitted prior to the meeting. And at this point in time, I see no live questions either. So I would like to conclude this item of the agenda and go on to the next one. This is agenda Item 3D, the proposal of the Board of Management to declare a dividend for the 2020 financial year. On 13 November 2020, ASML paid an interim dividend of EUR 1.20 per ordinary share. The Board of Management now proposes to the general meeting to declare a final dividend of EUR 1.55 per ordinary share. This brings the total dividend for the 2020 financial year to EUR 2.75 per ordinary share, an increase of 15% compared to last year. For the sake of completeness, I inform you that the Supervisory Board has approved this proposal. This topic has already been discussed under agenda Items 2 and 3C. I refer, therefore, to the explanations given earlier. We will now move to the questions. There were no written questions submitted prior to the meeting. I'll check if there are any live questions. None at the moment. So I will also conclude this agenda item. Until the point 14 on the agenda, you can cast your vote. We will now proceed to agenda Item 4, the proposal to discharge the members of the Board of Management from liability for their responsibilities in the financial year 2020. We'll now move to the questions. No written questions submitted prior to the meeting and no live questions at this point in time. I shall conclude and continue with 4B, the proposal to discharge the members of the Supervisory Board from liability for their responsibilities in the financial year 2020. No questions submitted beforehand and no live questions. Again, I shall conclude this agenda item and move on to 5. The approval of the maximum amount of ordinary shares being 200,000 shares made available for the remuneration of the Board of Management. The ultimate grant of shares, which will be made by the Supervisory Board based on the applicable remuneration policy by applying the calculation method as described in that policy. Further, in this agenda item, it is proposed to the general meeting to designate the Board of Management as the body authorized to issue the aforementioned shares, subject to the approval of the Supervisory Board. And this designation is requested for the period from this meeting until the Annual General Meeting to be held in 2022. ASML has previously committed to inform the general meeting each year about the exact number of shares granted conditionally. Now in 2021, 29,946 shares were granted conditionally to the Board of Management for the financial year 2021. The volume-weighted average share price during the last quarter of the financial year 2020 amounted to EUR 348.93. In 2020, the general meeting will also be informed about the number of shares granted conditionally to the Board of Management for the financial year 2022. Again, no written questions were submitted prior to the meeting. No live questions have been entered. I will conclude this agenda Item 16 (sic) [ 5 ]. I would like to mention again that you can cast your votes until any other questions, agenda Item 14. We now move forward to agenda Item 6, proposal to adopt some judgments to the remuneration policy for the Board of Management. The current remuneration policy was adopted by the shareholders meeting during the AGM 2020. Then the Remuneration Committee performed the recurring biannual review for the labor market reference group and the remuneration benchmark. Now based on the result of that benchmark and review, the Supervisory Board upon recommendation of the Remuneration Committee, proposes to make certain adjustments to the current remuneration policy. If adopted, these adjustments will be effective as per of January 1, 2021. The reasons for the proposed adjustments to the remuneration policy are explained in the rationale for the remuneration policy for the Board of Management. The Works Council has been timely given the opportunity to determine its position and give advice on the remuneration policy adjustments. The Works Council follows the Supervisory Board in its rationale. Furthermore, the Works Council informed the Supervisory Board that it will not use its right to explain its position during the meeting. For the full text of the remuneration policy for the Board of Management with the proposed adjustments, including rationality, references made to the remuneration policy of the Board of Management Version 2021 as published on ASML's website. Mr. Schwalb, Chair of the Remuneration Committee, will now provide a short explanation of this topic. Please?

As we did in the last couple of years, actually 2 years, basically, we do it always in 2 steps. We first look at the reference group, whether that is still fitting ASML. But every time we did it in the last couple of years, we had to change the group because ASML is growing so fast that we were basically leaving a lot of companies behind the -- became too small, and we had to look for bigger companies to get in the reference group. So that first step we did mid-last year, and we basically removed 2 companies because of AMA, that is Shire and Linde, and we moved 1 company, Smith & Nephew because it became too small. To have rather stable number of companies in the reference group, we included NXP and Ericsson to ensure that ASML continues to position around the middle in terms of size, which is measured by enterprise value revenue and number of employees. At the end, with this change, ASML positions at the 55th percentile, but we compare to the medians of 50. So we are a bit more conservative than what the outcome is. This review in 2020 with the new group was done based, obviously, on 2019 data. So we are also always 1 year behind. The outcome of the review, next page, please. The outcome of the review basically showed a too low total remuneration and especially in the LTI possibility. So the proposal to, at the end, more or less match the median is to increase the LTI target percentage to 120% of base salary for all members of the Board. That was 110% for the Presidents, so increased to 120% and it was 100% for other Board members, now to 120%. This change will bring it, as I said, to median, and it will be applied after approval today, applied as of the beginning of the year. As the Chairman already said, the Works Council already was in favor -- or is in favor. Thank you.

[Interpreted] No further questions. Thank you very much, Rolf-Dieter. And no questions have been entered in the live system. We'd like to conclude and continue with agenda Item 7, which is a proposal to adopt certain adjustments to the remuneration policy for the Supervisory. The current policy was adopted by the shareholders during the AGM 2020. The Supervisory Board upon recommendation of the Remuneration Committee proposes to make certain adjustments to the current policy. If adopted, everything will be effective as per April 1, 2021. The reasons for these adjustments are explained in the rationale for the remuneration policy for the Supervisory Board. We would like to refer for the full text to ASML's website with adoptions and rationale. Just as with the changes to the remuneration policy for the Board, the Works Council has been given the opportunity to determine its position and give advice. Again, they follow the Supervisory Board with respect to the rationale for the proposed adjustments and do not use their right to explain their position during this meeting. Mr. Schwalb, again, your turn to explain.

Okay. Next slide, okay. The -- what we do is, again, here like in the Board of Management Remuneration, we look at it every 2 years and follow the same procedure as we did in the past. So we compare the benchmark of our remuneration for the Supervisory Board with the Tier 2 AEX companies. So we stay in the Dutch environment, but only Tier 2 because Tier 1 usually has different earn ratio levels. In doing so, we also realized that in the last 2 years, again, because of the growth of ASML, we became -- basically, we came to the 75th percentile versus the AEX Tier 2 companies. And also, we benchmarked again the 75th percentile. And the outcome without any adjustments is today's proposal, as you can see here on the slide, which is a proposal for increases in all relevant positions. Next slide. So this is basically what I already said. And therefore, I cannot really add more.

[Interpreted] Okay. Thank you very much, Rolf-Dieter. No questions have been submitted nor entered. I will conclude. And I would like to state that we're halfway through the agenda today. I encourage you to timely submit your vote on all agenda items. As you know, you can vote until agenda Item 14. Let's continue with agenda Item 8, composition of the Board of Management. On 20 January '21, we announced that Frits van Hout will retire as member of the Board of Management of ASML after the completion of his appointment term, which ends per today's AGM. You read in the explanatory notes to the agenda that ASML will not appoint a successor to Mr. Van Hout. As a result, the Board will consist of 5 members again per today's general meeting. As you know, with the appointment of Mr. Fouquet in 2018, the total number of members on the board was increased from 5 to 6 in order to create extra management capacity during the critical phase of ramping up EUV production and organizing the high-NA program. Now the responsibilities of Mr. Van Hout will be taken over by the other members of the Board. In that way, the continuity of the execution of ASML strategy is insured. Dear Frits, you worked at ASML from 1984 until 1992 and again, you joined in 2001 and continued since then. In 2009, you became a member of the Board as Chief Marketing Officer; in 2013, you became Chief Program Officer. In that capacity, you supervised the developments in our EUV business. Under your supervision, EUV was accepted as the next lithography platform in the semiconductor industry. Since 2018, you've been Chief Strategy Officer. You're mainly focused on strategy and strategic supplies relationships, which grew significantly during the emergence of EUV and high-NA EUV. We would like to thank you for your valuable contributions to the growth and development of ASML in the past years. We wish you all the best for the future. I now give the floor to Mr. Frits van Hout.

[Interpreted] Thank you, Gerard. When I started as a Board member in 2009, I addressed the AGM in a few words, and I would like to, now that I'm stepping down, address you again. In May 1984, I joined ASM Lithography. I was the first employee who didn't move over from any joint venture partner, Philips or ASML International. So during the course of the next 8 years -- of the next years, I worked mainly at ASML throughout my career. I had a wonderful time. I'm very thankful for all the opportunities I received for the various and diverse functions that I took upon and was allowed to take upon me. I worked with top colleagues each and every day. I received a lot of support from all of them, not only from my colleagues at ASML, but the colleagues at our suppliers, at schools, at universities and local communities, in various government areas, also from you, as investors and shareholders. I would like to also mention that I met my wife, Monique, at ASML, who's always been my support. And without her support and the support of my parents, I couldn't have done this job at all. Thank you all for a wonderful time. I wish you all the best and a future good course for ASML. Thank you.

[Interpreted] Well, thank you, Frits. All the best to you. No questions were submitted nor entered in the live forum. I would like to conclude this agenda item and continue with the next one, #9, composition of the Supervisory Board. Announced last year already, Mrs. Smits-Nusteling and Mr. Grose will retire by rotation at this AGM. Mr. Smits-Nusteling and Mr. Grose are not available for reappointment and will, therefore, step down as members of the Supervisory Board. Dear, Carla, thank you for your strong commitment to the Supervisory Board, not only as member of the Supervisory Board during the last 8 years, but also as Chair of the Audit Committee. Your valuable contribution to the Supervisory Board will be missed. Thank you very much for all your service and support in the past years. Dear, Doug. Thank you for your contribution to the Supervisory Board, not only as Vice Chair of the Supervisory Board, but also as a member of the Selection and Nomination Committee and Chair of the Technology Committee. The Supervisory Board has greatly benefited from your knowledge and experience during the 8 years of service. Thank you very much, Doug, and we look forward to see you again in the future. On the another under agenda Item 9A, we will nominate Mrs. Birgit Conix for appointment as a member of the Supervisory Board. After retirement by rotation of Mrs. Smits-Nusteling and Mr. Grose and if the AGM solidifies to appoint Mrs. Conix as a member of the Supervisory Board, the Supervisory Board of ASML will consist of 8 members again. This is in line with the explanation regarding the temporary increase of the number of Supervisory Board members that was provided during the AGM in 2020. I explained then that the number of Supervisory Board members was increased to 9, but that this would be temporary. I now proceed to agenda Item 9A, proposal to appoint Mrs. Conix as member of the Supervisory Board. A motivation is in the explanatory notes to the agenda as well as the details of Ms. Conix. Her appointment shall be for a period of 4 years from the date of this AGM. As Supervisory Board, we are convinced that ASML and the Supervisory Board especially will benefit from the knowledge, experience and management skills of Ms. Conix, in particular, given her financial experience in various sectors and countries. The Works Council was given the timely opportunity to determine its position regarding the proposed appointment of Ms. Conix. They've indicated to the Supervisory Board that it is in their -- that they are in favor of it. Again, no written questions were submitted. No live questions either. I conclude this agenda item and continue with 9B. This is a discussion item. The Supervisory Board gives notice of the vacancies that will arise in the Supervisory Board in 2020. Then Mrs. Kelly and Mr. Stork will retire by rotation. The General Meeting and the Works Council have the right to recommend candidates for the vacancies that arise for the vacancy arising due to the retirement by rotation of Ms. Kelly. The Works Council has an enhanced right of recommendation. Again, no questions were submitted prior to the meeting. There are no live questions at this point in time. So I conclude the agenda item and continue with agenda point 10. This is the proposal to appoint KPMG Accountants N.V. as external auditor for the reporting year 2022. As explained in the explanatory notes to the agenda, the Audit Committee performed an independent assessment of the performance of KPMG as ASML's external auditor over the past year. In the survey, among others, the quality, scope and planning of the audit as well as the independence and reporting of the external auditor was addressed. Pursuant to the outcome of the survey, as conducted, it is proposed by the Audit Committee to again appoint KPMG as external auditor. The Supervisory Board, therefore, based on the recommendation of the Audit Committee now proposes to appoint KPMG as the company's external auditor. Furthermore, I would like to announce that due to requirements regarding audit partner rotation, Mrs. Petra Groenland has taken over the responsibilities from Mr. Van Delden, as lead auditor, responsible for the external audit after finishing the external audit for the reporting 2020. I would like to thank Mr. Van Delden for the professional collaboration during the past 5 years, and I welcome Mrs. Groenland as new lead audit partner. I would now like to hand over to Ms. Groenland.

[Interpreted] Well, thank you very much, and good afternoon, ladies and gentlemen. My name is Petra Groenland. I'm partner at KPMG Accountants N.V. And since 2021, I have taken over the audit from Han van Delden. In preparing this role, I put time and effort into getting to know the company and getting to know their annual reports and the audit executed by KPMG. I've gone through an induction program. I've talked to a number of people at ASML. I've also followed meetings by the Supervisory Board and the Board of Management as well as the Audit Committee. I look forward to being your auditor, and I hope to be able to be present at your AGM again next year, physically or virtually.

[Interpreted] Well, thank you very much, Petra, and welcome to ASML. Again, no questions were submitted. I will continue with the next agenda Item #11, with 4 voting items A, B, C and D. It's an annually recurring agenda item. In ASML's interest, it is that of shareholders to be able to react timely and quickly if particular circumstances arise for which an issue of shares is required. The Board would like to have the authorization to issue shares when such circumstances arise and to exclude the preemption right situations, which is necessary to act quickly. In the past, this agenda item was, for example, used in relation to mergers and acquisitions. The authorizations to be granted will be valid for a period of 18 months until and including October 29, 2022. If you approve the proposal of this agenda item, the existing authorizations will cease to apply. For all proposals of this agenda item, prior approval from the Supervisory Board is required in case the Board wishes to use the authorizations granted. Agenda Item 11A concerns the authorization of the Board to issue ordinary shares or grant rights to subscribe for ordinary shares of the company's share capital, limited to 5% of the issued share capital for general purposes at the time of authorization. Agenda Item 11B concerns the authorization of the Board to restrict or exclude the preemption rights accrued to shareholders in connection with Agenda Item 11A. Agenda Item 11C concerns the authorization of the Board to issue shares or grant rights to subscribe for shares for an additional 5% of the current share capital of the company. This additional 5% can only be used in connection with or on the occasion of mergers, acquisitions and/or strategic alliances. Lastly, agenda Item 11D concerns the authorization of the Board -- for the Board of Management to restrict or exclude the preemption rights accrued to shareholders in connection with the issue of shares or rights to subscribe for shares as described under 11C. There were no questions submitted prior to the meeting. There are no live questions. I conclude this agenda item and continue with agenda items 12 and 13. 12 and 13, again, recurring topics on our agenda. They contain proposals to execute share repurchases and share cancellations. The current share buyback program starts January 23, 2020, was explained during this AGM under another agenda item. ASML aims to have flexibility in the execution of a return of capital to its shareholders. To enable such flexibility, ASML requests the general meeting to mandate further share repurchases and to approve further cancellation of shares to be able to implement further share repurchase programs should the company decide to do so. These 2 authorizations, as proposed in agenda Item 12, allow ASML in combination with the proposals under agenda Item 13 to: a, acquire a maximum of 10% of the issued share capital; 2, cancel these shares; 3, acquire once again a maximum of 10% of the issued share capital; and subsequently, 4, cancel these shares. As you will understand, the implementation of further share repurchase programs is dependent on many factors, and shareholders are advised that there is no certainty as to further return of capital nor as to the timing of another potential execution of a return of capital to shareholders nor as to the method of achieving such return. I will now deal with the Items 12 and 13 separately. Agenda Item 12 consists of 2 voting items, A and B. 12A concerns the proposal to authorize the Board to acquire a maximum of 10% of the current outstanding share capital. Shares can be acquired on the conditions as set out in the explanatory notes to this agenda item. Agenda Item 12B is the proposal to grant the Board the authorization to acquire additional shares up to a maximum of 10% of the current outstanding share capital. Shares can be acquired on the same conditions as set out under agenda item 12A and subject to additional conditions as set out in the explanatory notes. The reason for requesting this additional authorization is to have further flexibility in the execution of a return of capital to the shareholders. These authorizations are requested for a period of 18 months commencing today and ending on October 29, 2022. If the general meeting approves these 2 proposals, the existing authorizations will cease to apply. There are no questions submitted. So we will continue with the next agenda item. This is the proposal to cancel ordinary shares repurchased by the company. It is proposed to the general meeting to cancel any or all ordinary shares in the share capital of the company held or repurchased by the company under the authorization referred to under agenda Item 12 to extent that such ordinary shares are not used to cover obligations under employee share and stock option plans. This cancellation may be executed in one or more tranches. The number of or near shares that will be canceled will be determined by the Board may not exceed 20% of the issued share capital at 29 April 2021. No submitted questions. So we will now continue with agenda Item 14. I would like to hand over to Mr. Kleipool to check if there are any questions for any other business. Or if there are any agenda items that weren't tackled.

[Interpreted] There's one follow-up question with respect to gross margin on non-EUV systems, Peter, I believe that.

[Interpreted] Okay says the Chair. As already said, the voting is going to be closed before any other business. The voting is now closed. So we can now answer the question by the Association of Shareholders.

[Interpreted] During shareholders meeting, ASML indicated that the KrF systems with the competition by Canon is lot lower. This is true for other non-EUV systems. I already indicated that the KrF systems which is an early deep UV system with a technology of about 20 years old. In those days, competition was even stronger, and that means that this technology was offered by our competitors. Still a very strongly used technologies, specifically in the Internet of Things application area. Certainly, a very interesting market where we would not like you losing market share. So we have to do something about it. Obviously, we are going to compete on the basis of the qualities of these machines with our competition. I've already indicated that productivity differences between competitors, machines and ours weren't really large in the past. They did increase in the course of year, specifically in new systems. That was the case when we introduced the NXT system, which was a more superior version in terms of productivity at higher costs. Now we started an R&D program. One of the reasons why R&D expenses have increased, this program aims to make the KrF system ready for the NXT system introduction with a higher productivity. And that is where we want to enter competition with Canon or the other competitor, Nikon. And that is where the productivity advantages of the NXT system can be fully used for the KrF system as well. And in this way, the market pressure and the productivity or value differences between the systems of ourselves -- our own and the competitors become smaller, and we are able to resist competition. We are able to potentially expand our market share. So yes, in old technology, there is a certain competition -- certainly a competition with price and margin pressure, but specifically on the older systems and all of non-EUV systems, for example, immersion systems, where we have a strong position based on the productivity advantage, that is where we do not see the margin pressure. In KrF, we're going to compensate that by investing in the development of that system to bring it on to the NXT platform. Thank you. Let's have a look at the voting results. Mr. Kleipool?

[Interpreted] Thank you. The voting results are on the screen. Agenda Item 3A with the advisory vote on the remuneration report: 85% in favor of, 14.9% against. 3B, then the approval of the annual accounts: 99.93% in favor of, 0.07% against. 3D, the dividend for 2020: 99.84% in favor of, 0.16% against. The next slide, please. Agenda Item 4A, discharge of the Board: 98.68% in favor of and 1.32% against. Agenda Item 4B, discharge of the members of the Supervisory Board for the year 2020: 98.68% in favor of and 1.32% against. Agenda Item 5, proposal to approve the number of shares for the Board: 96.19% in favor of and 3.81% against. Next slide, please. Agenda Item 6, proposal to adopt certain adjustments to the remuneration policy of the Board: 93.86% in favor of, 6.14% against. Agenda 7, proposal to adopt certain adjustments in the remuneration policy for the Supervisory Board: 98.9% in favor of, 1.10% against. Agenda Item 9A, the appointment of Mrs. Conix as member of the Supervisory Board: 99.64% in favor of and 0.36% against. Agenda Item 10, proposal to appoint KPMG Accountants N.V. as external accountant for 2022: 99.93% in favor of and 0.07% against. Agenda Item 11A, authorization to issue ordinary shares or grant rights to subscribe for ordinary shares up to 5% for general purposes: 99.67% in favor of and 0.24% against. 11B, authorization to restrict or exclude preemption rights in connection with agenda Item 11A: 98.88% in favor of, 1.12% against. Agenda Item 11C, again, authorization to issue ordinary shares or grant rights to subscribe for ordinary shares up to 5% in connection with [ o ron ] the occasion of mergers, acquisitions and/or strategic alliances: 99.67% in favor of and 0.33% against. Agenda Item 11D, authorization of the Board to restrict or exclude preemption rights: 98.35% in favor of, 1.65% against. 12A now, authorization to repurchase ordinary shares up to 10% of the issued share capital: 98.81% in favor of and 1.19% against. 12B authorization to repurchase additional ordinary shares up to 10% of the issued share capital: 96.9% for and 3.41% against. Last agenda item, proposal to cancel ordinary shares: 99.17% for and 0.83% against. So for each agenda item, the required majority was achieved.

Ladies and gentlemen, then I find that all of the proposals were adopted. Birgit, congratulations on your appointment. I would like to close the meeting. Thank you all for joining this virtual AGM. We hope to welcome you all again in person, hopefully, at the AGM in 2022. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]