TKH Group N.V. (TWEKA) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome at this TKH Capital Markets Day 2021. Happy to see you in either virtual participation or a few people here at the location itself. We have an interesting program today, I think, for you, interesting presentations to give you more in-depth knowledge about the performance of TKH and also, of course, the strategy and the ambitions we have in mind, especially towards 2025. But before I get into more detail, I would like to start off with the message of our CEO and Chairman, Alexander Van Der Lof. It's a pre-recorded message.

Good afternoon. Very warm welcome to the Capital Markets Day that we organized today. We are very happy to present this to you today, exciting news that we have to bring. After good results, Q3 results, that we presented yesterday, we now will further present new challenges, new opportunities for TKH with our Accelerate 2025 program. We will set new targets. And of course, we will present today our new segmentation and a very interesting deep dive into main business activities of TKH. Unfortunately, I cannot be present myself. I have COVID, and I have to be in quarantine. And I'm not allowed to be in the Okura Hotel today. But I've agreed with my colleagues that they will do the job today. And yes, I believe you can be all very excited about what will be presented. We will start with a short corporate video of TKH. Also, that will give you a very good overview of the exciting TKH Group with all the nice developments in our group. We are proud of what we have developed in the past decades, and we are really looking forward for the coming decade but, at least, be focusing on our Accelerate 2025 program. Thank you for your attention. I wish you a fantastic day today. And I hope to meet you all in the short time, in a physical way again, and that I get out of this quarantine as quick as possible. Thank you very much, and enjoy your time. [Presentation]

I would like now to proceed to the more formal part of the presentation. We will have some more videos during the presentation as well this afternoon. If we look at the agenda, the topics we would like to cover are basically split into 2 parts. First, strategy and targets. As you heard in the video, unfortunately, Alexander is not able to participate today. So I will take that part as part of the presentations, including the segment reporting, which will both take place in the first part. We have a short Q&A. And then at 4:00, we have the second part today where smart technologies are the center of the agenda, what are the smart technologies. And then we take a deep dive into 2 most dominant segments, our Vision segment and Tire Building, as the 2 drivers within the new segmentation for vision and manufacturing systems. And of course, also that follows with the Q&A. Let's go to a couple of key takeaways, a couple of key messages we want to get across. First of all, at our last Capital Markets Day about 2.5 years ago, in the summer of '19, we presented you a Simplify & Accelerate program, which highlighted the road map, getting towards higher returns on sales in our activities and a higher organic growth. I think that has been progressing quite well despite the fact that, in the last 2.5 years, we had to deal for quite a bit of this time with the pandemic getting in between. But still, I mean, if you look at the last couple of quarters, our performance is definitely kicking in also on the back of the effects of the Simplify & Accelerate program. So the 15% return on sales target, which we communicated at that time, is getting into site. The recovery out of the COVID period and the question out of the COVID period is really between brackets because we are probably, in some areas at least, in the middle still or who knows which part we are. But so far, I mean, out of the last couple of quarters, we see that we have a well-positioned portfolio, that our strategy has been working and that we have a quick rebound coming out of 2020. We will focus also on the simplification part of the Simplify & Accelerate program, a different kind of segmentation, which will help, I think, many of you to better understand where the value creation potential is for TKH and how we try to unlock that. We'll get back to that, of course, in the presentation later. An important element as well is that the ESG as a topic has always been a part of our structure and our strategy. But you can see the dynamics in many areas, many stakeholders are very much involved in ESG-related topics. It's stronger on the agenda with our customers, with our suppliers and also on our side. And therefore, also, we feel the need and we really want to prioritize ESG within our corporate structure as well in the strategy and the targets which we are aiming for. So also that will be coming back in today's session. And then, of course, the steps we have taken so far. Not all of them are completely finalized as we have, between brackets, only 2.5 years since the last time we communicated in the Capital Markets our targets with regards to the midterm. Of course, 2.5 years is not exactly the same as midterm. So there's still some work to do. But we want to give you a clear view on where we think we can stand in 2025. So a set of new targets will be communicated under the umbrella of what we call the Accelerate 2025 program. Where do we currently stand? We have yesterday a trading update on the third quarter. Basically, all the solutions are performing well. They contributed to the fairly high growth, I would say, in the third quarter. Of course, the like-for-like with 2020 is maybe with some nuances to be discussed. But important is, I think, that the recovery took place in all the 3 solutions segments, which we currently have. 27% plus growth, basically all organic, that's important. And I think encouraging is the increase of our EBITDA result, which was close to 70% compared to prior year. The return on sales have been improving nicely this year at least. First half, we came to 11.6%; second quarter, 13.4%; and we have mentioned yesterday that our third quarter return on sales ended up at 13.7%. So from that point of view, we are well on track, I think, with regards to the statement I made that the 15% is in sight and that we are moving in that direction. Obviously, the market is not completely, let's say, ideal. We read a lot. We see a lot about supply chain issues, all kinds of hiccups in logistic elements, et cetera. At the first half year result communication, we already highlighted that we expect this second half of the year EUR 20 million to EUR 30 million of revenue not being able to realize due to these effects. We are now a couple of months later than the middle of August when we disclosed this, we have not seen material differences on that statement as we speak. Issues are not resolved, but the impact is still within the bandwidth as communicated earlier. And that helps, of course, as well to keep our overall outlook for this year, where we aim for an adjusted net profit of between EUR 106 million and EUR 112 million. We are well on track as we have completed and disclosed the third quarter for this. So as I said, things are running pretty well, in some areas, a little bit quicker than others. And obviously, as I mentioned earlier, the like-for-like in some areas is easy to make, especially when we talk, for example, about the Tire Building activities we have seen last year in the summer. It was very tough in terms of order intake, market performance, et cetera. And already since the end of last year, we have seen a strong rebound, and that is basically continuing as we have seen in the last few quarters. I refer to the Simplify & Accelerate program as one of the areas where we get our attraction from. You might recall this is a chart which we presented in the Capital Markets Day 2019, a few building blocks on how we would get from the returns in 2018 towards the targeted 15% midterm. And again, midterm is not exactly this year, but at least we are making traction towards that. A couple of elements, divestments was going to bring us a further increase on return on sales. We highlighted at that time EUR 300 million to EUR 350 million in revenue to be divested. Divestments take place in areas where value creation potential is low, so lower margin activities within TKH Group, low organic growth opportunities. And we swiftly -- actually, within 9 months after disclosing this target, we already divested EUR 255 million, a substantial part. There's still EUR 50 million to EUR 100 million left. As we have discussed in the previous occasions, we are working since earlier this year on this remaining part. We had some communication at half year that we are making some traction there. So this is definitely a part where we still have to deliver the remaining balance. And you will see that also coming back a little bit later in the presentation when we talk about divestments towards 2025. Integration, an area where we look for mostly savings in terms of OpEx and getting basically also a stronger market approach as a result. We integrated quite some activities within the TKH Group. We consolidated footprint on the manufacturing side, in the Netherlands, for example, in one location. And all this, of course, has had already a competitive edge in the sense that we are leaner, meaner, lower OpEx, helping our return on sales target. And also here, we performed basically within the bandwidth as we guided for on this particular line item in 2019. Innovations and growth market focus, EUR 200 million to EUR 250 million of revenue we were targeting for and are targeting for to be obtained. The innovations, we have highlighted them in basically all the occasions that we meet where we communicate on the topics which are part of the innovation box. And when we talk about Subsea, Airfield Ground Lighting, the UNIXX within Vision, our new portfolios. And of course, again, if you look at the last 2.5 years, the COVID period is not the most ideal period if you want to launch your portfolio to choose that particular period and basically scale up your revenue base with the newly introduced products. We did, but we are not having this completed. So we obtained roughly EUR 100 million out of this basket of EUR 200 million to EUR 250 million so far. But still there's a balance to go, and that's also where we still have our return on sales improvement to come from in the coming years. We have, of course, that you have maybe seen already, clear expectations about the contribution coming out of innovations and the growth markets also in the next couple of years. Because we are an innovative company, we will have more innovations coming to market, driving our overall performance, driving our gross margin and, therefore, also pushing up the return on sales. But still, some part of the portfolio, which we have invested for in the last couple of years, have not come to the full, let's say, level where they can operate and should operate. And that delta is still to be seen back in our P&L. On the acquisition side, EUR 100 million to EUR 150 million. We have not been very aggressive. We have been focusing very much on organic growth. As I said, we have invested ourselves quite a bit in the past that portfolio has to go to market. And of course, we look at acquisitions but not in a very aggressive way. Acquisitions is mostly targeted around specific technologies and, in some cases, market access. These elements, these 4 pillars will come back also in our plan, Accelerate 2025. The simplified part is no longer there in the future plan as we hope to clarify to you in this presentation why that is because I think with the new segmentation, we have become a little bit more simple. If I take back a little bit of a longer view, actually, it's maybe a very long view, the last 20 years, but you see a few big steps. And I have that here for you. If you look at 2001, that was the first time basically when we started to discuss about solutions, integrated solutions, concepts. At that time, TKH had a market cap of less than EUR 100 million. 10 years later, 2011, 2012, the different solution portfolio elements gave us the possibility to target specific markets and enter into what we call the vertical markets, growth markets where we see potential to derive at high organic growth rates and get good market shares. That was the phase where also, let's say, our technology engine started to work. We had acquired, we developed and we continued to do that. Technological components, which we integrated into final concepts. And that is mostly seen here on this chart, if you look at the period of 2011 towards the current date, the gross margin, the black line, is substantially up. We were around 40% 10 years ago. Today, it's close to 50%. And that is a kind of indicator of the level of technology which we carry on our propositions. It's more smart. It's more intelligent. It's less only hardware, it's a combination of intelligence with hardware. And that's the stage where we currently are. We want to take the next stage going forward where the center is very much driven around technologies, smart technologies. And you will see this word coming back on quite a few occasions in this afternoon's presentation. I mentioned already the simplification part because it's, for many of you, sometimes not easy to understand TKH well in the sense of what it is that we do, who we are and what we aim for. Of course, we try to see ourselves as a technology company, an innovative leading technology company, where we create superior smart technologies and basically try to serve attractive growth markets. And the way we try to organize this is, of course, with a key set of values in the sense that we want to be very much focused on, let's say, being a good citizen, a corporate citizen, a global citizen, sustainability has become more important, working with our staff, our talented staff in order to make sure that we can create above-average value by unlocking the potential which our technologies give towards our customers. And in this way, we believe that our business model can function. So keywords, which you always see back in our communication and our activities and basically our DNA, have a lot to do with innovation, efficiency and more and more sustainability. That's more the newer part in our approach. Sustainability on our side in the sense that we have to take care about all kinds of effects by improving our sustainable performance as a company but also with the technologies which we carry towards the market where a lot of demand exists for improved, sustainable solutions. And this leads basically to, as we call it here, an introduction to the new segmentation, more and more focus on technology. We want to be a technology company, a leading technology company, an innovative technology company. And that means that we are shifting a little bit our segmentation. And therefore, our reporting from a market focused, call it, the vertical markets as we have been carrying so far towards a technology company as our strategy better aligns to this. And of course, you will see this coming back throughout the presentation. I've used the word technology already many times. I will use it more. But it's really a kind of a concept where, in the last couple of years, we have been growing into. In the past, we talked about core technologies, but we definitely are seeing the possibility. And also in the markets, we see that more and more activities are initiated or originating from the technology side. In the past, as I said, with the vertical markets, we have been focusing on specific end markets and tried to serve this end market best. That, in itself, is not going to change, but we see that we need to do more on the technology side and use our overall group capabilities and possibilities and competencies in order to organize ourselves with smart technologies to better serve the end markets, which we still see as attractive as high growth potential. But a lot of the competitive edge comes from the technology and not just from choosing the market. And that part, that alignment in the strategy is what we put more at the center of our activities. And that's why we are more and more driven towards a structure around our technologies, our smart technologies. And of course, we do that with a mind of improving our targets, the return on sales and some of the other targets as we have been highlighting in the past and also will do going forward. Just for your reference, the current segmentation -- and for some of you, it's already like bread and butter. But for others, it's still a challenge to fully understand the structures in the sense that we have 3 solutions segments. We have vertical markets. For us, it worked very well, and it's working. But we can fully understand that it's difficult sometimes for the external stakeholders to really understand where actually, let's say, the value is being created and where the technologies really make a difference. So going forward, what we are aiming for in our strategic model is basically to go to a structure, as you see with the pictures here in the middle of the chart where we talk about 3 segments: the Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems. Smart everywhere, that's the first thing. It's not just hardware, it's a lot about intelligence/software, which is added to the propositions we'll be carrying. So this combination of hardware and software is more and more an important factor here. And that all, in order to get our ourselves further positioned as technology leader, which we want to be. And of course, we have identified clear mega trends, which support the key drivers of our concept. Technology, you'll find in many different areas, and we'll get a little bit more explanation on the mega trends which we see and which we really try to follow. A company where we have a high level of entrepreneurship, some of you know us in that way that we are really slightly differently organized than some others, at least people say in the sense that we are a little bit decentralized, try to be close to our customer base, et cetera. And as I repeat again, sustainability is part of our home more than it had been in the past, and specific targets are communicated for this as well. Staying with this element of innovation and leading technologies. I mean TKH always had, and is going to have, this concept of innovations in the sense that we aim for at least 15% of revenue to come from innovations. In innovations, I mean, you can get a PhD on the definition, but we have specified this as being revenue coming out of portfolio introduced in the last 2 years. So 15% of revenue from newer portfolio. And we do this with our, let's say, efforts in terms of developing new portfolios. We have 750 FTE in R&D and software development. And of course, the software development part has been growing quite rapidly in the last couple of years and, as we speak, a strong point on our agenda. And on the back of it, more than 3,500 patents. So we have quite some power in-house in order to make sure that we make the right choices where we want to continue with our R&D agenda. And of course, we are not doing this just by ourselves. We try to look clearly at market developments and try to align this with what we see in the market; which we define as mega trends. There are many mega trends, of course, but we have highlighted 3 which are of relevance for us. The first one is automation and digitalization. Everything is being connected. Technology everywhere. Data transmission everywhere. So it requires connectivity, networking. But also we see that due to lack of resources, things get automated in manufacturing processes, tolerances on inspections become at such a level that no human eye can do this anymore. So you need more and more technology in order to get, let's say, certain processes optimized or started even. Technology also becomes more and more complex. If you look at the customer, they often have many different technologies which they need to integrate in order to let something work. They don't want to have all the cost on their payroll in order to make everything adaptable. So they also need partners there who can provide this technology and the knowledge at least on the integration level now. These are areas, sweet spots, where we maneuver and where we see a lot of potential for our proposition. Sustainability, again, you see a lot of organizations, public and private, all kinds of stakeholders coming up with all kinds of new targets, ambitions, et cetera. We, of course, are also trying to meet all these targets and requirements, that's one. But we also see that that's a big opportunity because many of these targets are not yet, let's say, can be completely realized based on current technology. There's new technological developments necessary in order to get to achieve these targets. This is an area where companies like us where TKH, I think, can help and must even help in order to close the gap towards the targets which are communicated. And this is also a good business opportunity. It's a market which is going to develop more and more and where we need to be focused on and where we can get an, I believe, interesting share going forward within our group as well. Last part, what we have identified here, safety and security. And we talked about data already. We had a discussion a little bit prior to this meeting about, let's say, all the security, cyber attacks, which we see, et cetera. I mean these are, let's say, new kinds of security applications. But in many areas, we see that, let's say, safety and security elements become more and more important, also in the concept of monitoring. If you look at smart cities, smart infrastructure, there's a lot of technology required in order to get new applications done. So this all very well supports what it is that we do. And the way how we work, as I mentioned earlier, we carry quite some entrepreneurship within our organization. Responsibility is deep in the organization, close to the customer levels. A lot of customer intimacy is what we strive for, a place where you are part of a big group, bigger group like TKH, but you still have always a fairly close relation with the different stakeholders with which TKH works. So it's an inspiring environment for many people who want to, in their professional careers, join companies like us in the structure as we have organized ourselves. And of course, we facilitate with all kinds of programs, also from a corporate perspective, to make sure that the size of the group is well represented in the capabilities and the potential of each of our employees. So the model also helps going forward with the smart technologies. And as I mentioned earlier, Smart -- Harm will give a more detailed presentation this afternoon on the definition of Smart, but it's basically bringing intelligence/software into a kind of hardware environment. And that leads to, in the end, potential decision-making on the technologies which we provide in the sense that a higher level of automation comes in. And it's not just a particular on and off application but actually, decision-making or pre-decision making is being done by the technology itself. Of course, we want to make sure that the 3 segments as they are presented here. The Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems are not 3 isolated boxes, and we will see that also in the presentation later this afternoon. If you look at especially the software development, that is where we take a corporate role. Corporate leadership is the one who drives the competence centers on the software development. Currently, we already have this. We have software centers where we have a particular group of people who serve all the 3 segments as they are mentioned here. And of course, with machine learning, artificial intelligence, et cetera, we want to make sure that we are staying ahead of competition and, let's say, are at least performing to the utmost within our structure. Therefore, we need to have a certain centralized structure in order to get this done. Otherwise, individual operating entities will not be able to have the same level of performance because either it's not a skill base that they have or they don't have the size in order to get that organized. So this is a group level activity using the competent centers around the world, which we have. And that's where we step up. And that's also, let's say, the cement between the different segments as well as the corporate strategy which we carry. And of course, within TKH, one of the other good benefits, I think, which we can bring to many of our operations is that, from a smaller innovation, a small initiative, we are very well capable with all the experiences which we have to scale that up and bring it to a certain business size, which then comes back in some of the presentations as we have seen here. We have developed a lot of these things in the past. Some are really, let's say, main contributors or are at a smaller scale. And of course, also, we have failures. But in general, I think the model of how we work this fits well in TKH. And that means for the activities within these 3 segments, the entire group structure, experience, management, et cetera, is available to scale up. And that's why we have seen a lot of benefit in the past. And that's also what is, of course, available in this particular structure. To summarize this part at least, when we talk about the value creation principles which we have, of course, the continuous focus on the increased added value, what I started off earlier, through the smarter element of the technologies. Currently, the 50% added value, with more smart, we should be able to grow that. We are well positioned in the international growth markets on the back of the mega trends, which we have identified. And we see, of course, that we are able to create market share growth with the disruptiveness of some of our technologies. The innovation basket, I referred to a couple of slides earlier, a business portfolio which is really disruptive. We don't see any other players, in some of the areas at least, having similar technologies. And this breakthrough technologies that we create markets, we create market share growth. All of this, of course, as a base, as a fundament for further return on sales and return on capital employed improvement. And of course, this all makes also, I think, the company an interesting working place for many people. Talented people in our structures are basically the fundament which drives all the things I mentioned earlier because that's where it happens. The more we grow smart, the more brain power and the less equipment is involved. And that's an area where I think a lot of capabilities and possibilities exist for people within our group and also the ones who want to join us. ESG, a separate topic mentioned here. Obviously, ESG is around in any media these days, in many occasions. That also [ sounds ] for us. We have to take our responsibility. We take our responsibility in this particular area, being a good corporate citizen. And of course, on the different items, we want to make sure that we do whatever is possible in order to get to the aims which we have. And if you look at the areas where we're currently active, you see already that a lot of our technologies in each of these 3 technology segments benefit the further, call it, sustainability of the society. Obviously, you think immediately about the offshore wind parks and our connectivity systems going in there. That's a clear thing. The whole energy transition, the infrastructure buildup, which is necessary, we facilitate with our portfolio a lot of programs in that particular area, with our fiber optic rollout to improve communication, to improve online education. All these elements are in our portfolio. If you look at our Machine Vision portfolio, creating efficiency in many different manufacturing processes, having less input for the same output, yield improvement, quality improvement, this is all reducing material consumption, less waste of resources. This kind of technological concept, which we bring, have substantial impact. In the past, we probably have not highlighted this so much as we will do now and in the next couple of years. Our technologies really make a difference, especially, I think the technologies for the next couple of years as there is more focus on our side on this particular segment. And of course, you might recall that if you look at our annual report, we have always been reporting quite a lot of detail on what it is that we do. But that will become, let's say, more in line with the segments as we currently have highlighted. 70%, as we disclosed in our annual report of 2020, already touched the SDGs of the United Nations. So there's already a lot of relationship there. And of course, we see that the markets look for standardization on all kinds of KPIs, et cetera. That will be very helpful. It's also a challenge sometimes to meet all the different KPIs and requirements. But still, we need to do our utmost from our side as well. And we have identified here a couple of key nonfinancial targets. On the environment, social and governance aspects, 100% carbon neutrality on our own operations in 2030; 80% recycling on the main raw materials, so copper, aluminum and PVC; and less than 5% wastage rate. If we look at -- and we have more KPIs, but I just highlight a few here. You might have seen in our annual report a longer list, but this is the ones I just want to bring across. And on the social heading, we aim for at least 25% of our executive and senior management structures is female by 2030. Of course, it doesn't happen just like that. I mean there's a lot of programs needed for this. We have started with one of our operating companies, a specific program where female technical graduates are being hired and recruited together with an external company to get into a specific program to tie these graduates to the company and grow them during a longer period of time so that there is really an action being taken in order to get the people in and try to stay them and bring them to management positions. So we do a lot of different things more than we did in the past. It's stronger on our agenda. And that's necessary. Otherwise, these targets will also not be achieved. And I don't want to list all of them. We said them here in our annual report upcoming on 2021. You will see clear descriptions of all of them, including some of the action programs. We have already started with assurance on some of these KPIs for this year. We believe that's also an important element in the overall equation here. But specific actions, that's basically how we try to carry where we currently are towards the target communicated here. All of this is basically groundwork on what it is that where we came from, where we see our strategy and how our strategy is shaped, resulting in the next couple of sheets on more of the specific targets coming out of this. And we have branded the next phase of strategic priorities as Accelerate 2025. Of course, the organic growth part is still the core driver. I mentioned acquisitions so far have been low. Also going forward, yes, we will do acquisitions. But the main focus remains on the organic side. Cost efficiency is also an important one. You have been hearing us talking some time ago about the conversion ratio. What we aim for is that at least 35% of our added value is converted in operating results. I mean you have seen our targets, where we aim for. It also leaves that our gross margin should improve a little bit. But that's, of course, on the back of the smart technologies. But it's really one way of getting more efficiency in our organization and having a contribution through that line as well on our return on sales. Of course, we keep the innovations high on the agenda, therefore, we invest also in R&D. And apart from acquisitions, we also continue with the portfolio management. This leads to a new set of targets for 2025. And we aim for a revenue. And it's not a bandwidth as you might have guessed because we have been using that in the past. We really have made a specific statement in terms of what kind of revenue base we aim for. That's at least EUR 2 billion in 2025 with a return on sales and EBITDA margin of 17% or more. Return on capital employed, 22% to 25%; and our debt leverage, below 2. That's what we aim for. And the way how we want to go there is in the similar format presented as we did 2.5 years ago in the sense that we believe that on the organic growth side, so more, let's say, growth in our existing portfolio. Of course, there's margins attached to this but also scale effects. We will see that the scale of the organizations, the incremental coming out of it, is going to be pretty good on that part. More than EUR 300 million should come from that particular basket in terms of revenue, and that should bring the return on sales up 2.5%. Innovations, EUR 200 million. This is all basically going forward as of now. And so we had, as I mentioned earlier, targets already on innovations communicated in 2019. I also highlighted that we were not able to fully execute all the revenue coming out of innovations due to, one, the time, 2.5 years, as well as the pandemic in between. So from now on, we still expect towards 2025 EUR 200 million to come out of innovations. And again, a lot of these innovations are in the market. Some of them have to come to market, most of them are, but they need to scale up. And as I said, 2020, it's not an ideal kind of time frame. If you would choose when to go to market, you would never choose 2020 as the most ideal period of time. But we are in the market. We need to scale up. And that's what the effect is what we believe coming -- what's coming out of this element is a 2% return on sales improvement. Of course, the innovations are focusing on high-margin business. And we would not invest in, let's say, innovative product portfolio if it would be a kind of average contributor. So we definitely look for a higher end here. And again, you have to think about elements like, within Vision, where we have new portfolio but also to scale up further on airport, ground lighting. Within Tire Building, and we'll see that also in the presentation this afternoon, there are some elements in there. So quite a few elements where we have a clear agenda, clear portfolio, almost completed, let's say, technological base already. And again, it's about scaling up the revenue attached to these portfolio elements. Then the acquisitions. Again, we expect from now on towards '25 EUR 100 million to EUR 150 million in revenue to be acquired. There's no delta presented here on the return on sales because we expect that they will be at a similar level when we talk about the return on sales through the acquisitions. The last part in this chart is the portfolio management part. You might recall, as I mentioned earlier, that we still had EUR 50 million to EUR 100 million left out of the previous divestment portfolio. That is still in here because this, again, is from today going forward. And so you see that we have added a new basket of divestments on top of what we communicated in 2019. So the EUR 50 million to EUR 100 million out of the EUR 150 million to EUR 200 million is basically coming out of the 2019 Capital Markets Day, the rest is new. So we continue with portfolio management as a way to further improve our overall performance. And of course, it's important to understand where this comes from. So a little bit more on the financial side, how does this, let's say, current segmentation lead to the new segmentation. And we have earmarked here, the, let's say, growth scenarios for the vertical markets. I think quite a few of you are well familiar with this. which were the growth scenarios presented in the past, which led to a revenue for the overall group of between EUR 1.8 billion to EUR 2.2 billion with a time frame, and what we have been communicating, 3 to 7 years. What we have now done, of course, made it very specific, that in 2025, we expected EUR 2 billion revenue to be realized. And in the new segmentation, you see that it's probably better presented here in the sense that some of the vertical markets carry the different technologies. And that was always a little bit of a struggle. Where does now the revenue come from? Now if you look at this kind of bridge between, on one side, the vertical markets and how the revenue in the vertical market ends up in the technology segments as we will use from now on, this chart hopefully can help you in that conversion. If I dive a little bit further into the individual segments, I'll start off with Smart Vision. And the Smart Vision -- we not only have Machine Vision, just to make that clear. We have many vision activities within the group. Machine Vision has always been a vertical and was clearly reported on. Machine Vision is, of course, the largest part, I would say, within this activity in the sense that if you look at 2D and 3D Machine Vision, very well identified and presented activities in the past. But of course, we also have vision, for example, within parking. Our parking is a vision-driven system. We have security vision systems. We have vision systems for infrastructure. I talked about smart cities and smart infra, and it is all vision-driven. So what you'll see in this segment is basically all our vision activities combined. This chart, on the right side here, looks a little bit strange in the sense that we turn over the green bars. Of course, also here in 2020, we had the impact of COVID, but it doesn't really show in this chart. But it's more like a reduced growth percentage compared to some of the other segments I will show you. But the return on sales has been developing nicely. We have also forecasted here, and it's a little bit more guidance than what we usually do to make it a little bit easier for you, on the [ '21 ] level where you already see that there is a further increase in the revenue line but, more importantly, I mean, our return on sales you see already going towards the 17% for the segment of vision. And you see a little bit of wave in the previous years, had to do with some of the underlying business. But in general, we see that this year, we are already getting for this activity towards a 17% return on sales. And that shows the strength, I would say, of our portfolio and the way we put this portfolio at work in the different markets. The pure vision item within this segment, what we call vision technology, is about 86%. What does that mean? There is a little bit of other portfolio in this basket of Vision Systems, which is more kind of elements related to security, but this is not 100% vision-based. But we will give you constant kind of reference to what the core vision development -- how that drives the overall development of the segment Vision Systems. I hope I'm clear with that. Obviously, within the presentation of Mark Radford this afternoon, there is a further deep dive in vision itself. What is in 2D? What is in 3D? How is Machine Vision performing in the sense of market capabilities, market competencies we have? How do we view the potential in the market, in which particular areas? So you will get more detail in this afternoon's presentation on where we see that the upside of the potential is and how we get to those markets with what kind of technologies to drive further growth in terms of top line and return on sales. But obviously, I mean if you look at vision and we have, again, many times repeated that there's higher levels of automation in the market. We see hands off, eyes off construction everywhere. So Machine Vision is a core growth driver in many different industries. Many applications are just popping up because it's a relatively new technology. I mean if you look 15 or 20 years ago, the applications were fairly limited. But today, with the capabilities which we have, many different opportunities exist in many different industries. It's also for us to make sure that we choose the right industries to have a certain focus and in-depth knowledge of these end markets. And there are a few logical ones where we have this knowledge, and we see a lot of potential for further expanding this. But the fundaments of these kind of technologies are very strong. And again, it goes back to the mega trends but also the, let's say, positions we currently have already in the marketplace to further scale up our performance. If you look at Manufacturing Systems, of course, within Manufacturing Systems, the largest segment close to 70% is Tire Building. So Tire Building is the main driver within Manufacturing Systems. And that's also why this afternoon, again in the presentations in the second session, a focus on the Tire Building as the key driver within the Manufacturing Systems. Now if you look at the chart here, obviously, 2020 was not a good year. No surprise, I would say. We have been through this. The Tire Building activities, they were hit hard. The CapEx reductions on the customer side for VMI mostly were down. So from that point of view, we were hit quite a bit due to, call it, COVID effects last year in this particular area. So top line went down, but you saw also that the return on sales for the Manufacturing Systems went down to about 12%. But what we see now, and that's not yet -- and also here is the forecast for the full year, but it still carries a weak Q1. In Q1, we were still having a lot of COVID effects and not yet the full effect of the higher order intake coming through in our operations. But we see that already, let's say, the benefit of scaling up, growing in top line helps the return on sales. And there is no reason -- actually, it's quite obvious, I think when we are back to the top line we have seen in the last couple of years, there's no reason that the return on sales will deviate from the previous levels as well. So also here, you will see that there is a substantial, relatively quick, I believe, upswing towards the return on sales levels for this segment as we have seen prior to COVID, as we see market traction for our proposition, higher order intake in the last couple of quarters, a good order book but also definitely a very strong appetite for our portfolio. The more dynamics there are in the tire market in the sense of roll resistance, new compounds, energy saving, e-mobility, all these elements drive dynamics in the manufacturing plants. And that leads to the discussion, do we use existing equipment? Is it efficient to use existing equipment? Technically, can it be done? Because a lot of equipment is fairly old. And that all brings a market which is in constant movement. And this kind of movement is basically essential to our business in this particular segment. And of course, also here, we have seen -- and that's on the back of the core competence with the entire building. And again, this is a good example of the synergy effects within TKH. A different market had been approached, the care market, where we talk about, let's say, the Indivion, medicine packaging and dispensing machine. This is also part of this manufacturing systems segment. Also there, we see a lot of potential going forward. But again, this overall manufacturing systems segment carries about close to 70% of their revenue base coming from Tire Building. And again, also in the future communications, when we talk about half year performance, et cetera, how we are doing, we will make reference to these segments on how they are doing. So how much impact it has in terms of how it moves manufacturing systems by giving you an explanation on how the Tire Building segment is working. Last segment is connectivity. In connectivity, we have also some of the innovations in there, of course, with the subsea connectivity. Also within the fiber optic networks, we see a new portfolio, a smart portfolio going to market as well. And this is an area where we have a little bit more fragmentation because clearly, vision was very obvious. Manufacturing, Tire Building is very obvious. And here, we have, especially, let's say, the 2 main segments being the energy markets and what we call digitalization. And that's everything related, let's say, to fiber optics. If you look at the activities here, and also here is the forecast presented for '21. Then you see that there is an important upswing on the return on sales. This is one area where, for example, the scale effects are coming through. As I mentioned earlier in the sheet, some of the growth of the existing portfolio will deliver a scale benefit, and that is, as a matter of fact, just in addition to our return on sales. And that's going on, for example, in this segment. And also here, we see that there has been a nice top line growth, 2020, obviously. Also here, not an ideal period of time. But if you look at the prior years, then we create growth. And the underlying, let's say, end markets where we are active, especially on the energy market and the digitalization segment, are very strong. We talked about offshore, let's say, energy projects, wind farms, et cetera. But also, I would not forget the onshore part. The whole energy transition, talk with the energy providers, the infrastructure owners, it's a whole hassle in order to get infrastructure, the distribution network executed, shortages. There are all kinds of issues. And there's, for the next couple of years, a very important growth and demand coming to us, coming to the market. To handle all this, I would say, this whole basket of energy transition, where, of course, we have a lot of portfolio matching that particular market growth. On the digitalization part, obviously, fiber optic portfolio is essential there. We talked about everything has to communicate. Data flow is essential, requires high bandwidth. The fact that probably most people today are watching this online as well. Obviously, this requires strong networks, high capacity. And in some areas of the world, there's definitely a big lag in terms of where they should be with their networks, and that creates a lot of opportunity. And some of these regions are where we are very active and gives us a lot of growth potential as well. So here also, we see a lot of interesting propositions for our technologies, the integrated technologies, which we bring to these particular markets and will drive our growth. We have segmented the 3 areas in terms of the geographical spread in terms of revenue. The light green part is what we call Europe. So that's Europe excluding the Netherlands. And you see that basically everywhere, except for smart manufacturing, there is -- Asia is a little bit bigger. But European-based activities is the core for basically all, I would say, of the 3 segments. Obviously, with smart manufacturing, there's a little bit more of a global footprint than in the other areas. Connectivity is very much a European-driven operation. And that's, of course, important also from a business model point of view but also from the underlying GDP growth potential which we see in some of the regions. Then making it even more specific. And we have split here the P&L, the short version of the P&L in the new segmentation for 2020 as well as the first half of '21 and provide you with the return on sales as well as the return on capital employed for the individual segments. So also here, we go a little bit further than what we did in the past. And of course, you need to digest some of the figures here because there are quite a few. But I think the important part came already true in the previous sheets in terms of where we see that our return on sales currently is. And it's not that when we talk about a target of 17% that we're going to have, let's say, a complete out-of-balance segmentation that 1 or 2 will lead everything and the other one is dragging behind. That's not the idea. I mean we see growth opportunity and potential in each one of them. And as I highlighted, we have strong fundamentals to grow in each of the 3 segments and bring the results towards the targets which we aim for. And some, of course, are already close to this or already at the level, as we have shown you today. And some require the market to recover a little bit further. They're all not -- they are not all, let's say, growing at the same speed. But the fundamental, I think, is strong. And it's definitely not that in one area, it's going to be the driver for everything. Of course, we have our divestment portfolio still in here that we'll give some tweaking as well going forward towards 2025. But I think in general, we have good ambition, good potential and good capabilities in order to execute that all of the 3 realize their actual growth potential. A long list. Looked like a checklist, but it's actually how we want to -- when we talk about simplifying and transparency, what kind of information we would like to give you. Especially on the transparency part, I think we go a little bit further than what we did in the past. There's a long list here of items you're going to get from us on a regular basis. I think important is that you will also have access to the gross margin for each of the segments to see the developments there. And as I mentioned earlier, the return on capital employed at segment level is important. So we really want to, let's say, get you a little bit more on the inside so that you can follow how we believe that our value creation could take shape. And of course, this is maybe on the side, if there are specific questions on -- in terms of the bridge between current reporting and the new one, et cetera, of course, we are always available. And there will also be some material for that. Slowly getting to the end of my part. There's been sufficient time for Q&A. When we talk about capital allocation, obviously, we have a few elements in the basket here. Of course, when we look at our investments and you see in the chart here, where we have included on the bar chart -- sorry, the black element in the bar chart are the acquisitions, which we have done in the last few years. The green relates to the intangible investments, mostly our R&D. And the gray on the tangibles, which we have invested in. If you look at the intangibles, clearly, R&D is part of our business. That's not going to change. Roughly, the expense will not be so much different from what we have seen so far in the sense that we work around 4 to -- a couple of years ago, it was 4.5% of revenue. In that range going forward, it will be. It's developing a little bit like that because with the divestments, you'll see that some of the revenue disappears, which carry hardly any R&D components. And of course, with the growth being more in the smarter concept, you'll see that some elements of R&D will be added to that particular revenue. On the CapEx for tangibles, we believe that EUR 30 million to EUR 40 million is something to work with, not very much different from the last couple of years, except for major strategic investments, which we'll communicate separately, if that's the case. And then, of course, the equation when we talk about dividend and share buyback, we keep our policy in terms of payout, 40% to 70%, and in combination with the net debt/EBITDA being below 2 as a leverage level. We also have communicated already a couple of quarters ago, and we repeat that, that what we call structural excess cash that either share buybacks or dividend is an option for us without being too specific at this point in time. And some of it probably will be driven by the divestments which we foresee. So to repeat the key message, as I said, from 2019 -- summer 2019, where we were at that point in time with the programs we put in place, I think quite a lot has been in progress, not yet finalized or completed. But we're getting to a point that the 15% return on sales is in sight. And that also gave us the base now to get to a new, more specific outlook towards 2025 in the combination with becoming a little bit more transparent and less complex to follow. And I think these objectives have been met. One is the target itself, and second, getting a little bit more simple in terms of reporting and understanding, hopefully. That has to prove itself. And I think also important is, as I have been saying now a few times, that ESG is really also driving us in terms of internal activities but also towards market opportunities. And that's an element where we, let's say, have more, let's say, ESG components or elements integrated in our strategy and actions. And that's something we want to use at this point in time as well to communicate it more clear. And of course, going forward, using the Accelerate 2025 program, which specifies roughly the road map on where we believe or how we believe we can get to these targets is there. Obviously, some of the questions of you will be related to how do we then actually do that in the individual businesses. Some parts, as I said, we'll come back for tire manufacturing and the vision segment in the afternoon's presentation to give you more insight on what we see as market potential and how we can take benefit of this. But this basically summarizes the first part of this afternoon, where we talked about the strategy of TKH, the simplification in reporting and the new targets for 2025. I think I have a couple of extra minutes given to you on the Q&A. We have 2 options because maybe for the people who are watching this through the webcast, of course, you can submit your questions. And I see that some of them are already there. And we have -- and that's -- something I just want to explain. In a very careful setting here with a minimal group of people, only the analysts which cover TKH are invited in the physical location here. And for them, there's also an opportunity, of course, to ask a question. But you have to follow the instructions and go into the microphone. Nobody can give you the microphone, but please go ahead if there is a question from your side. Maybe you report your name and then also the [ firm for you ].

Peter Olofsen of Kepler Cheuvreux. I have a few questions on the targets and on the new segment reporting. Maybe on the margin target, you indicated that you see upside for all 3 segments, and that is not just one segment that will drive the improvement. But could you give maybe a range for the 3 segments where you think the margins may end up by 2025? And then a clarification question on the reporting. So should we assume that you will no longer update us on the revenue development in the 7 growth verticals? So we won't be able to track how they are progressing against the growth targets that you had set for these segments. And then actually, what made you decide to set a specific year for the targets? In the past, you always talked about medium-term targets. Innovations will be very important to get there. But when you bring new disruptive technologies to the market, yes -- exactly predict the adoption rate is not always easy. So what make you make this decision to put a target year on that? And then lastly, you mentioned quite a few times the importance of software. I think historically, software revenues have not been very material, I think, as a separate kind of revenue stream. Is that going to change? Or will it still mainly be as part of a larger integrated solution where you mainly make the revenues from selling a product?

Thank you, Peter. The first question with regards to margin disclosure or target setting on the segments towards 2025, that's something we don't want to do at this point in time. I think the overall group margin is definitely there with the statement that each 3 of the segments have the growth potential and will realize their growth. But I would like to shy away from making it a very detailed puzzle to give you an individual range for each of the segments itself. Your point about the vertical markets, how can we track and follow that. What we try to do is for the most, let's say, material markets. You have seen them coming back in my presentation. When we talk about, for example, Tire Building, or for example, when we talk about fiber optics, for example, as an area, these are areas which we will keep on highlighting in the sense of how, for example, manufacturing systems is developing. And we will then give you a reference point how much Tire Building revenue share is within that particular segment. So like the 69% right now. We will give you the similar kind of percentage going forward, and that gives you a good base to track how the revenue is developing in a particular segment. We don't want to do that again for all the 7 because then we're back to where we were. That's not the idea. So we keep the most material ones. And that's, let's say, communicated in a way similar to what we have shown today. So I think on the main ones, you're able to follow if we keep the part of performance and growth as we originally estimated and guided for because, obviously, changing the reporting structure does not change, let's say, the actual outlook in that particular market. But we want to make sure that we give you the right comfort that you can follow what is actually happening, and I think we can with the system. Your point about why specific figure -- revenue figure in 2025 rather than a range. And you highlighted that innovations normally have difficulty to pinpoint exactly when they start to contribute, but I think that's one of the reasons. I mean it's not that the innovations are all to be developed and have to be all, let's say, brought to market. A lot of the innovations which are contributing towards this basket identified are already there. We have -- and some of them already had, if I put it blunt, the hassle of getting traction in the market and getting, let's say, customer feedback and knowing exactly how we should position ourselves. It's not all new. I mean we have passed some of the learning curves, and that's why we have more comfort on how we believe this can develop and how we can create this traction, and that gives more comfort on making a statement in terms of an absolute figure rather than a range. On the software part in the end, clearly, we are not kind of Microsoft where you can just download our products only. That's not the idea. It's a combination of hardware, software. The shift from hardware to more software elements in there, that's basically what we are talking about. So the software content is getting higher, and that's basically where the smart concept comes from. So yes, there are occasions where software is sold as a product, but that's less. That's minor. It's more the combination of hardware, software. And for example, if you look at the tire equipment in VMI, the processing power of raw materials going into the final product, you see a big machine with a lot of steel, a large footprint. But actually, the processing software drives the performance for the customer. And that's the combination we're looking for, and that's basically the combination when we talk about software with hardware.

Martijn den Drijver from ABN AMRO-ODDO. The first question that I had is on the guidance of EUR 2 billion, including M&A. That kind of implies a CAGR of organic -- on an organic basis above 8%. Can you tell us a little bit about how that will be phased throughout the years? Is that back-end loaded, front-end loaded? Probably the former. And what inflation expectation is baked in given what we will probably see in 2022? The second question that I have is with regards to the divestments. Can you shed a bit of light on where we should expect those divestments to come? Is it only smart connectivity? If I look at the EBITA impact, it could also be from other divisions. But a bit more information on what your thoughts are there. And what I'm missing in the overall presentation is the integration, restructuring part that played a significant role in the former strategy. It does not currently. However, in your own presentation, you show that all the vision companies have presented themselves under the TKH division brands in Stuttgart. Does that imply that they will be integrating legal IT admin? Or is that not the case? And what other measures do you have in mind? Maybe more minor. And then the final one is you're expecting quite a bit of growth. So maybe you can update us on your CapEx guidance for the coming years. And then just a minor question. On Slide 4, you show what you're going to report per segment, but it doesn't show organic growth. Will you be reporting organic growth per segment or not?

The EUR 2 billion, the CAGR of 8% plus basically, of course, as I said, I mean, some of the innovations which carry a substantial part of the result improvement, they're, let's say, not immediately, let's say, having their full contribution as we speak. That takes a little bit of more time. Of course, we have been -- as I mentioned also in the previous question, we have been working on that, but it's not that immediately that will shoot up in terms of revenue within 1 quarter. So that's a more gradual approach. So there, it's a little bit more towards the front end -- the latter part when we talk about 2020 -- '25. The second part is that, of course, there are some, let's say, hiccups in, as I mentioned earlier, the supply chain and all these kind of things. Within the limits -- as we have expected, within the limits as how we have communicated, 2022 is, of course, an area where there's still some uncertainty. I don't believe that everything will be solved as of the 1st of January. So from that point of view, I don't think that, let's say, when you look at the growth pattern, that immediately, also '22 will be a high growth contribution. There will be a little bit of scale-up effect, a little bit lower in, let's say, '22 and then '23. And then I think you'll see the latter part coming in because of, one, innovation is kicking in to the full extent; and second, the supply chain issues hopefully disappearing at an earlier pace than that. I just want to highlight as well that it's not going to be that we have, let's say, a huge delta between the years, but it's a more gradual kind of lineup towards the 8% on average. The inflation for '22, again, related to this topic as well, when we talk about all kinds of shortages in many different areas in labor and material and all these kind of elements, I think we're talking there about at least 2.5%, 3%, what we will see in 2022. Again, that is how we look at it right now. That might change again in a couple of months. The divestments, are they only in smart connectivity? No, that's not the case. We have not highlighted where they are. The conclusion might be that if you look at the current returns on sales, that's the area where with the lower margins that will take place for us. That's not necessarily the case. It's about value creation potential. Do we have potential to turn things around? Do we have potential to grow? Can we reposition the company? What else we can do in order to generate growth and improve profitability? If these resources are not there or if these possibilities are not there or it doesn't fit anymore within the strategy, then these are cases where divestments come in. But it's not at this point in time, I believe, reasonable without having also internally communicated where this might take place. So I'll shy away from giving a specific answer. Then on the integral -- integration and restructuring. It's correct that we have not highlighted it as a new bullet. I would say it's on the success of the fact that we did quite a bit on this already in the last 2.5 years. As I mentioned, we consolidated footprint in some of the activities, et cetera. So quite a bit has been done. But it's never over. But it's not, let's say, making us to perform a specific program about it. There's logical things you will always do. That's basically what we carry. So it does not require us to take it a step up in terms of having a specific restructuring program at this point in time at least. Of course, when you talk about companies with further integration capabilities and possibilities, you mentioned the vision group. I think it's a good example where at the vision show in Stuttgart like 1.5 months ago, the entire TKH Group and Mark Radford will, in his presentation a little bit later today, also highlight a particular picture on that. I think it's a good step of teaming up with the entire portfolio. And sure, there can be more steps can be made. But they are all, let's say, along a part of, let's say, a gradual approach in the sense that it does not require major restructuring programs as such. But we do the right steps as we see them bringing the benefit. It's not a goal in itself, but it must support the overall performance. Then CapEx, more guidance. I think I mentioned already in the chart of the capital allocation what kind of levels we see there. The tangibles, the EUR 30 million to EUR 40 million on an annual basis, not so much different from what we had in the past. And on the intangibles, basically in line with the current percentage of revenue, which we see at this point. Very major, big strategic investments that has to be dealt with separately. And we'll communicate it separately when necessary. Next one? Or we have an online question maybe? Question here is for reaching EUR 2 billion in revenue, what kind of macro backdrop have you assumed in getting there? Well, that's a good question first, if there is a macro backdrop. Of course, we made different scenarios in order to get to a reasonable forecast, scenarios which can show headwinds in different regions, directions, competitive moves, et cetera. So it's a more complicated back than just a statement of which macro backdrop fits in here. Of course, if you look back -- and you might say should you plan this now from now onwards, if you look at COVID-19 and its impact, a scenario like that COVID 2025 or something, which is not something which is in our model to that extent. But we see, let's say, based on what current market conditions are. Of course, we deal with issues which lead to higher inflation, shortages and that kind of things. But I think that's pretty well encompassed in the 2025 targets, as we have highlighted, without giving a specific scenario of it, whether it's so many percent GDP drop in EU or whatever. But I think this is the best, what we believe is achievable in the, let's say, scenarios we have seen and the risk elements we have taken into account.

Tijs Hollestelle, ING. Yes, compliments on the reporting structure because I was quite nervous about that, but I think that this gives a lot of insight. And I do also appreciate your comments that you will keep us up to date on, let's say, the concentration risk within those areas because some areas do, of course, have very specific end markets which can impact the results. So that was the first thing. And then what I think is also important is that on Slide 10, on the previous set of targets, if you're skeptical, you could save on -- well, you didn't reach basically everything. But if you look at the performance of TKH Group, this is quite solid as everybody knows that when the tire business comes back, you're at the targets. So if I correctly understand -- corrected well, then the bounce back to previous historic levels of the tire business but also, I think, the delay a little bit in subsea cables, which is now building up, and you do have those orders, already gives you a big jump in the margin on the short term. And then only maybe on Machine Vision and on the building growth organic, that was helping the margin a little bit. But all these other elements are now coming right at you in the coming periods.

Your point is, it's an easy, right?

No. My point is I believe you mentioned on the new set of targets that it is from today of another additional margin benefit. So that probably can also be delayed then. But if everything happens together, you could reach your target early, I would say.

We do whatever is possible to get it achieved as early as possible. But obviously, I mean -- and that's also what we tried to show in some of the charts when we saw the revenue for each of the new smart technology segments that, sure, we are -- let's say, if you look at pre-COVID, there's already good substance in terms of return on sales and revenue base. And you highlight specifically tire manufacturing. Obviously, when that comes back to levels as we have seen prior COVID, there's no reason that return on sales should be different. And so from that point of view, there is definitely a good scenario, which we see in front of us. And it's also the case, of course, that with some of the newer activities that takes time, as we discussed earlier, but we have taken some time on them, and they should really scale up. It's always the case that when you scale up, of course, there's always a little bit of cost effect. You need to increase headcount. You need to invest a little bit in the organization in order to get that done. So yes, the opportunities might drive -- and the revenue might come, let's say -- I don't want to say quick but at least within a certain timeframe, but it does not immediately give you the right operational leverage at that point in time. But then after that, then the effect should kick in. And that's also where we play a little bit. You might be a little bit optimistic in terms of short term, but it gives a little bit of a delay in terms of then the optimal return on sales as you need to scale up, and that requires a little bit of cost in some areas. But I think we're well positioned. If you look at the case before, COVID, take the steps we have executed so far in the Simplify & Accelerate program and what we still put on the agenda, including some acquisitions, including some additional divestments, including a further focus on the innovations, I think that the road map on how we think we can go towards the target for 2025 is definitely fairly solid. Thanks for your first point as well.

Martijn den Drijver. Firstly, when you were -- based off your EBITDA margin target improvement and your conversion ratio, this model suggests that your gross margin will increase by more than 500 basis points or somewhere above 55%. Is that a right conclusion to make?

Obviously, if we talk about a conversion rate of 35% at least and the 70% return on sales, somewhere I get to that right kind of calculation. The road map going there -- and that's why I showed you also a little bit of the historic perspective. In the last 10 years, our gross margin increased -- actually, it increased 25% from 40 to 50. So 10 points, in that area. And that's on the back of getting more, let's say, smart than where we were 10 years ago. And that stage is not completed actually. I think compared to in the past, we get to a higher, let's say, smarter component in our revenue than in the past due also to the investment -- divestments. And that is also going to help, of course, the gross margin.

Okay. You mentioned your CapEx in tangibles. Intangibles do not deviate much from the past. I presume your working capital ratio or target between 12% and 15% will more or less remain the same as well. On basis of your guidance, your EBITDA will increase from roughly EUR 200 million to EUR 350 million. But still -- and you have a certain number of targets. But you have left your ROCE target unchanged, which is a bit odd according to me, unless you're going to spend an awful lot of money on acquisitions. But I don't believe that since you only will add some EUR 100 million to EUR 150 million. So why did you not change your ROCE target? Because if I see the difference in capital employed, that is massive. So how should I explain that difference?

Well, I think you cannot exclude, let's say, an uptick due to the acquisitions. But that's, let's say, a little bit of a gray area in the sense that, of course, we have some ideas on what kind of acquisitions could come in mind. But between now, and let's say, the target of the EUR 150 million or 2025, we don't know exactly when we talk about valuations and this kind of thing, how this will develop. But that's part of the equation why there is a kind of, let's say, bandwidth similarity to what we had in the previous target.

It still suggests fairly expensive acquisitions, which is not TKH.

That's true. But if you look at how some of our, let's say, activities and technologies are valued, you might say that they also should carry this similar kind of valuation. But that's an area where we have not finalized, let's say, the actual impact of the acquisitions in terms of what valuation attached to that can be.

You mentioned excess cash. Could you more or less give a bit more color how you define excess cash?

I could have done that in the sheet, but we didn't. And we have not a specific definition there in the sense that we want to disclose that. Of course, we take into account, let's say, the total strategic road map which we have in place. That includes acquisitions. That includes different components, the CapEx part, et cetera. And we will, of course, look from a more case-by-case point of view where we stand and what is on the agenda going forward, whether that results in a situation, whether we are an excess cash position at that particular point in time. And obviously, these situations come up even stronger at those points when, for example, divestments have taken place. And that's what we have been communicating so far as well, that once divestments come, and we communicated the one which is, let's say, where we are working on as we speak, that could trigger a share buyback, for example. But it's not something where we want to fix a definition right now for the next couple of years.

Because again, looking at your improvement in profitability, your working capital ratio more or less remain the same. Your CapEx, not much changing. You will rapidly turn into a net cash company. Again, it's not taking into account the acquisitions. But...

Acquisition -- but I also mentioned that we have, of course, apart from the, call it, the running rate of CapEx that we have not included in the EUR 30 million to EUR 40 million strategic investments, which require specific CapEx programs of a certain size. I'm not talking about EUR 1 million or EUR 2 million, but more substance. That also comes into the equation when we, in the end, define what kind of investment is best, share buyback, dividends, our own CapEx or things like that.

And last, are you willing to give a definition to excess cash in the future at one moment in time?

Probably at some point in time. [ We can't give you the date now ]. You'll be the first one to hear.

Emmanuel Carlier, Kempen. A few questions from me. First of all, on M&A. It's always tough to time when a deal will fall, but do you have concrete plans on divestments and on acquisitions? So could it be front-end loaded? Or is it really a program over the next 4 years -- 4, 5 years?

With regards to divestments, obviously, the last communications we have been reporting that we are working on the divestment agenda, that we are quite active in that. So that would be, let's say, short term, but that's ongoing as we speak. Of course, it's not for the full program, as highlighted in today's new target because we have upgraded the target with an additional amount in there. But it's also not something where, let's say, we plan specifically to wait 4 or 5 years to see if things can be different. But it's more a gradual approach. M&A, that's more difficult, I would say, almost to time that. We have seen in the past that it took years before we finally could do a transaction where we really try to do whatever was possible. But it simply was not available at that point in time. So we are working always, and we always can on individual companies, which we believe are interesting. But I think it's -- it will be more spread than that there will be a specific lump in the sense of this year or next year or in 2025. I think every year, you should probably see some of that coming through. But difficult because it takes 2 to tango on...

And given the size that M&A needs to add to sales, is it fair to assume that the bulk part of that needs to come rather from distribution and not really from tech? Because otherwise, you would have to pay a lot of money.

That goes back to the former question. That will be probably a combination. I mentioned earlier that, of course, we want to strengthen the technology within the group and in some areas when we talk about market access that could be -- I don't want to say distribution, but market access, which can fast track, for example, the entrance of some of our innovations in a particular key market. So there will be a little bit of a combination, but I think predominantly, it will be on the technology side. And within technology, of course, the more smart elements and more software-related components will be in there.

Yes. And this will not only be focused on the vision part, if I understood you well, which is maybe a little bit surprising, I would say, given that it's most likely the highest-growing segment. And also, if you look at the financial performance of your vision segment and you compare it with Cognex, Keyence, Basler, I think the conclusion is that on profitability, you're a bit in the range. But on organic sales growth, it looks like these other companies are growing faster. So does that not make more sense to try to get the right technologies in there so you could also try to accelerate the organic sales growth?

I think it's not only about -- let's say, the only way towards growth is not through an acquisition. I mean that's one way. I mentioned also earlier, we have invested quite a bit in our own portfolio and our own organization, et cetera, but we need to scale up. We need to further, let's say, get market access and basically grow the portfolio which we currently have. And of course, when you look at, let's say, the future in terms of technologies, et cetera, there are decisions to be made. Do we do that ourselves? The next step in technology, should we acquire a company, which gives us some time saving? There are different elements in there. And of course, our vision is not a one-on-one comparable with the Cognexes and the Baslers of this world. There are some other elements in there as well when we talk about, for example, the intelligent traffic systems, infrastructure, smart cities, all vision-driven concept. But your original part of the question, is it only for vision? It's not. I mean we look, of course, where it makes more sense in terms of targets, needs and capabilities internal to get the road maps executed. But it's not that vision has exclusive right to acquisitions in TKH, no.

Yes. Okay. Related question to vision. So even if you would make your vision segment comparable with Basler and Cognex, et cetera, you would still see, I think, that the organic sales growth is good but lagging peers. What is the main reason for that, you believe?

Again, I think it's very difficult to put one company next to the other. I think it has to do also with the portfolio and the timing of which portfolio is in the market. I think we have developed portfolio. It's also further to scale up that, let's say, growth opportunity which we have in front of us based on the portfolio which we have. I think that's the part which will, let's say, give us also the growth scenario where you referred to. And I think as well that, let's say, with the element of, let's say, the vision group cooperating more and more, and again, Mark will highlight a little bit more as a vision group, that also gives more reach into different end markets. The North American market is maybe a little bit easier to approach for market data, networks, et cetera, from our LMI operations there compared from our German operations, for example. So this kind of cross-benefit is also going to help in, you say, closing the gap but I think putting us to a certain extent ahead of.

Okay. And then on the 15% EBITDA margin target. You're at 13.7% in Q3. It's probably fair to assume further organic sales growth next year. Do you believe you could get already to the 15% without M&A changes next year?

That's a good question, a smart question. I like the word smart by the way. But we, of course -- yesterday, we disclosed our outlook for the full 2021 year with a specific bandwidth. We highlighted indeed the return on sales in the third quarter was at a good level, slightly up compared to Q2. So the running rate is pretty good, but I want to not use this afternoon to give you a specific guidance on 2022.

Okay. And then a final question is on the intangibles. I think you mentioned that as a percentage of sales, that number will not change. But then I think you mentioned 4.5% of sales. I think it was rather 3 in the past.

There are 2 parts when I talk about R&D expense. That has been, let's say -- of course, COVID has some influence on the percentage, but between 4% and 4.5%. And not all of the expenses, of course, are capitalized. Roughly half. And if you look at the growth going forward, then the, let's say, structure of the growth will be more towards the, call it, smart portfolio, which carries in general a higher, let's say, R&D component than for example, with the revenue, which is currently in the total revenue, which is related to what we would call the divestments where hardly -- any hardly R&D is attached to. So that change in itself makes the R&D component to increase a little. Okay. I think you're the last one if I look at timing, but good timing.

I'll make it long. Michael, Degroof Petercam. Being the last means most of the questions have already been answered. So I'll start with 2 questions on semantics. First one, in the press release, it was mentioned we have a large number of new contracts signed, but you don't have a subscription business. So basically, everything you sell is based on a new contract. What did you want to say by this?

I'm not sure exactly what you referred to, to be honest. But...

In the press release, it says, "We have a large number of new contracts signed." That was shortly after recovering nicely this year. Do you want to say that your recovery is improving further and looking into next year already? Or did you want to say that you signed a large number of new contracts for all the innovations that are ramping up?

Not specifically the innovation. Across the board, we have seen that, let's say, our order book is developing well. And also if you look compared to last quarter, we have seen an increase in the order book. So from that point of view, we basically refer that we have added new contracts into the operations of TKH, which, of course, a higher order book gives you more, let's say, outlook and guidance and more benefit as you go forward. And so from that point of view, there is a little bit of spillover towards next year, but it's not that we want to say that 2022 is really, let's say, closed or in the pocket.

Okay. So I should not look too deep into that. Then also on semantics. On Slide 20, you have the 3 divisions or segments. And each one has a different word. Machine systems is superior, vision systems is state of the art and connectivity system is advanced. Now if I think of superior, that's the best, and it's also for the activity in which you have the highest market share. So should we think that these 3 segments are ranked by these words in market position, pricing power and thus operating margins?

It's a very smart question and a good observation, but I would not fully agree with you like that. And I think internally, there are also some different opinions if I confirm with you. So I would like to shy away from that. But I think that's probably where you try to balance too many things in one word. We -- of course, every segment will claim that they have superior systems, obviously. If you refer to superior as being an absolute market leader, obviously, in the manufacturing systems with VMI and the Tire Build, we have a global market leadership. So I think, definitely, when we use the word superior, it definitely could apply there. But I could say the same to our 3D vision, where we are a top 3 world player in 3D and machine vision. That could also carry the stamp superior. So from that...

I just heard that you were lagging a bit over there.

That's a different story. This is a different portfolio. I'm talking about 3D.

Okay. Good. Well, then I'd like to follow up on Tijs' comments about that information that you provided. Most companies that change segmentation never give you anything. And you give us 4 years of history and also an outlook, including margins. So thank you for that. Well done. And then I just looked at that vision chart, which was growing rapidly. Is that the one where that EUR 20 million to EUR 30 million in sales is missing this year because of the shortages?

Not only, but we have said that the supply chain issues have most impact in the vision part, but they are not exclusive dealing with these issues. We have other companies who struggle the same. But the most material impact out of the EUR 20 million, EUR 30 million is there, correct.

And you're already nearly at 17% there in spite of that. Yes. Okay. Good. Final question on ESG to be original. In the presentation, I saw that you're going to check your supply chain to see whether they use materials that are, well, probably stamped with a certificate or a seal of approval. Are your customers also checking you? And how often does that happen? How much does it cost you on an annual basis to open the books, open the doors and whatever?

I would say the net effect is -- it doesn't cost anything because if you look at what it is that we do in terms of getting all these plans about energy saving and all kinds of other KPIs in order in our house, it creates opportunities for us. We see that quite a lot of tenders were customers require, let's say, companies to get organized in the whole range from -- of ESG, let me call it like that, that once you do a good job there, you have a better scoring in the tender process. And of course, this will be confirmed by audits, et cetera. So by having customers coming to us, certifying our ESG performance, checking it, auditing it, et cetera, it gives us a possibility to be commercially more attractive. We can differentiate there with the competition. And it gives us, in some cases, even in terms of price advantage and especially in the areas where we've been talking about energy transition, et cetera. These are key elements, and I think there, we score well. So it's not necessarily a cost. Of course, we have to spend time. And you can say we could do something else. Definitely the case. But in the end, I think by having a good system in place, it helps us rather than that it creates issues for us. So customers are, from that point of view, not a burden at all, no.

Okay. Well, that's reassuring considering all those consultants and their hefty wages and all those stamps and...

Not on that side. I think as I mentioned in my presentation as well, there's, of course, all kinds of institutes, organizations, et cetera, who require all kinds of reporting. That is, of course, an area where, let's say, a lot of work goes in, where a lot of disclosure takes place. But there is not a direct, let's say, interaction or benefit in that stakeholder element. That's more troublesome, especially as long as standardization is not yet completely firmed. And then we have to deal with each individual stakeholder having its own requirements, and that makes it very time-consuming and costly. And that's definitely an area where I agree with you. Standardization will help. But on the customer side, in a business chain, where we are able to explain what it is that we do and what we do well, that creates a yet more benefit than a burden, and we're happy to do so. Thank you very much. I think we have to close this Q&A session.

There's also the second Q&A session.

Indeed, after the next part, which will be chaired by Harm, there's also the Q&A. We take a 15-minute break right now, and we'll be back to you soon. Thank you very much for your attention so far. [Break]

Hi. Welcome, everyone. Back to the Capital Markets Day, Session 2, where we will dive deeper into our smart technologies to underline the growth perspective in the coming years. We have constantly and constantly increased our added value, mainly based on the fact that we combine our smart technology with software propositions. In that way, we have created disruptive technologies that allowed us to grow faster than the market. And in those markets, I believe we are well positioned to benefit from the mega trends as Elling already presented, digitalization, automation, safety security and sustainability. And yes, we are ambitious, but I also believe that we are realistic knowing that we have an excellent track record in bringing new technology to market and with our talented and driven people, I'm confident that we can make it. And we have a long list, a long bucket, a wide portfolio of potentials. And here, you see on this slide, a couple of them, the superior technology for tire production, new smart manufacturing used for packaging of medication, the subsea cables, unique technology used in the wind energy farms up --on offshore, CEDD technology that helps support airports with high uptimes, the unique quality of our fiber optic solutions and connectivity systems that brings fiber to the home. The in-house developed ASIC for the Alvium, a unique modular concept for 2D vision cameras. And last but not least, the excellent technology in 3D that brings us to the world market leader in 3D. Today, we started the Accelerate 2025 program. And in this program, we underline our ambition for growth in the coming years. You see here the 3 technology segments along which we organize ourselves, Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems. And we expect turnover growth and ROS improvement over all these segments. And these are not just wishes or ideas or dreams. We know that this is really backed by detailed action plans. And you noticed the word smart. And as already mentioned earlier today, Smart means that we combine things with intelligence, with software. And you could say that if you look at the coming years that the growth that we expect is really founded and built on the foundation of our software proposition. We move from a technology developer more into a smart solution, a smart technology provider. And the intelligence on the software side helps us to really unlock the potential of the technology. Sometimes this software is located in hardware, as you can see on the left side of the picture. Sometimes it's added as a module to a solution that we provide. And sometimes it's really integrated into our smart manufacturing concepts, helping our customers to make full use of the technology that we provide. And yes, software is becoming more and more important. We see it all around us every day. Also in our markets, our customers, the industry that we serve, software is more and more important. And why is that? Well, there are a number of reasons for that. One is the fact that if you look at the sustainability targets that we have all set, are all working on a global scale, you see also in our industries that getting there means that we need smarter and more intelligent solutions than we have today. And I think that, that is part of the task that we see in front of us. Not only developing technology, but also helping it to make it smarter using our software propositions. Over the last decades, a lot of automation has already been achieved. And to get even further into automation, it becomes more and more a challenge from a technology perspective. And also there, software will help to raise the game and bring it to the next level of automation. And as we, as TKH, get more deeper into the processes of our customers, think, for instance, in the building of ultra high-performance tires; think of inspecting welds on batteries. Very detailed and difficult processes that also require smarter and smarter solutions. And we as TKH, I think, are really uniquely positioned to make sure that we can help and bring that further. We are developing technology in our operating companies, in R&D centers close to the market, and we combine that with a -- from a TKH scale an organization that helps the smart software side to be developed. And the combination of this larger-scale TKH software proposition, combined with the in-depth knowledge that as they are close to market, makes it a winning combination. So how do we do that exactly? That is -- you see on the left side is how we do the technology development. We develop our new systems and our new products in the R&D centers very close to the market and in the operating companies. And that is very, very helpful because they are best to understand what the market needs, when they need it, what the customer needs are. And they also make sure that the right focus is there and get the time to market as short as possible. And at the same time, that is backed up by the corporate structure where we have a larger group and where we can bring everyone together. We have created a knowledge platform where we maximize the synergy effects because people can exchange their lessons learned and their knowledge. If you look at how we have organized that exactly, then you can see that here in this graph, you see in the various technology segments, the operating companies where R&D takes place close to the customers. Within these segments, like for instance, the Vision group, Obviously, you can benefit from each other and work together in certain developments. But over this whole group, you see this position there of the smart software and artificial intelligence group. We have a dedicated director of smart software and AI at TKH, at a top level, reporting directly to the Executive Board to make sure that it has the right priority. And he will overview the activities, support where needed and also organize the resources that we have in -- within our group. And we have a lot of resources. Here, you see over 750 FTE in R&D and software development shown on a globally spread scale. And this global spread also helps to be a little bit more independent from lack of resources that you have here and there in the region. And it also helps us to really get access to top talent, wherever it is in this world. The IP coming from this group is very well protected. Already shown, more than 3,500 patents. Of course, a lot of the software is behind encryption. And this all makes sure that we protect our IP as well as possible. I would like to give you a short example of a very successful integration of software, smart manufacturing and smart Vision. And what you will see in the upcoming video is a part of the tire building machine that makes ultrahigh-performance tires, where cameras are moved in position based on their task, what they have to carry out and the images are analyzed by software. And the software steers then the application of the materials in the right way. Maybe we can start off the video. And as you can see, the green light, that is laser light. You see the cameras moving in and out and steering the application. Now it's moved aside. The application is completed. And the results and the accuracies achieved are shown completely on this software digital platform. And I think this is a very nice example of where software helps to create really groundbreaking, new accuracies and speeds in manufacturing. Going forward, in the coming years, you will see that a lot of the activities that we have in our group will benefit from growth. But the 2 main drivers in the coming years will be the vision technology in the Smart Vision systems and the tire-building technology in the Smart Manufacturing systems. So we've chosen these 2 to be highlighted today and to dive deeper into that and to give you a better understanding of market potential and of the potential for further growth in the coming years, up to 2025. So there's more than this, but these are the 2 main drivers. I would now like to give the floor to Mark Radford to do the deep dive on Vision technology. Mark, the floor is yours.

Thank you, Harm. Yes. All right. Good afternoon. Is my mic on? Good afternoon, everyone. So I'm going to take you a little bit deeper and talk about the technology behind the Smart Vision systems here at TKH. So first off, I wanted to cover sort of the key messages that I'm going to cover through this section. The first is really reinforcing how TKH is a market leader in the 3D space. We have that top position, that superior positioning, as was talked about in the Q&A. But we also have a very strong position in 2D. We have a broad portfolio of products that are well positioned to continue to grow with the market. I'm going to cover the strong value positioning of the products, particularly on that integration of systems, taking hardware, taking software and leveraging a lot of unique knowledge from those applications, those vertical markets. to create really competitive and compelling solutions that create high added value. I'm going to talk about, again, innovation. It's been a key theme of today's talk, but really how innovation plays a role within the Vision segment. And then finally, the goal behind the one-stop shop, the TKH Vision name and the ability to really bring all of the different portfolios together in a way that serves customers in a compelling way. So within the technology -- or within the Vision segment, we sort of have 3 subsegments of technology. We have 2D security vision. This is a combination of surveillance, parking guidance, intercoms. We have the 2D machine vision market. And then the 3D machine vision market. Looking at their turnover overall, 2D security in Vision is the largest, about 39%, but they're roughly split almost 1/3 each overall. And when we look at the projections on the CAGRs for these different subsections, you can really see the high growth rates that are projected here over the next 5 years. It came up in the Q&A sort of about an 8% CAGR. You can see how most of these segments are growing at either just below 8% or even above 8%. And really, with our position, with our innovation, we expect to outperform these growth rates in the market overall. I also want to highlight the strong return on sales of the Vision segment. So in the first half of 2021, the Vision segment achieved 17.8% return on sales. And really, there's a forecast to increase that by basically 5 points. And so what's driving that? Well, first off, parking. Parking was one of the industries that was hit really hard by COVID. There was a total lack of projects. Revenue was way down. And with that, the profitability dropped into the negatives. So essentially now what we're seeing with COVID behind us, there's a big push, a big investment in parking. I'll talk a little bit about some of those driving factors later. But with that return to a 15% return on sales within the parking segment, you see the overall return on sales of the Vision segment come up 1.5 percentage points. Then we continue to have innovation in the pipeline. There's a big focus on innovation overall. And as we keep adding new products, more products, more compelling products, we're not only able to just increase the added value of those solutions but also grow and outgrow the market, which ultimately results in a higher return on sales. Next, there's a big emphasis on software within the group, creating bundled solutions that pair hardware with software. That added component of software drives up the gross margin of the products, which will also add another 1 percentage point. And then finally, as discussed in the greater context of TKH, the scale factor. As revenues continue to climb, we're going to see that the cost efficiencies have a role and will further boost the return on sales by 1.5%. So across these different subsegments, there is one consistent strategy that applies to all 3. First off, the focus on innovation. So within the segment, we see about 13% of turnover reinvested back into R&D activities. So much higher than the overall growth rate or the overall rate within TKH, but that also drives a very, very high level of turnover associated with those innovations. Right now, we're sitting at 25% of turnover; relates to innovation from the last 2 years. And again, within the overall group, a large portion of the R&D and software expertise, about 450 staff, sits within the Vision segment. The second key component is this combination of software and hardware to create a compelling high-value solution. So within the hardware side, obviously, we're focusing a lot on embedded solutions. This is allowing -- or the technology advances in this space is creating very high-performance edge systems that run at low power, which can then leverage algorithms such as AI-based algorithms to create a really compelling solution that's highly disruptive. We're basically taking entire PC-based vision systems and replacing them with a single smart camera or sensor. And then finally, really, our approach to market to be customer -- to be end market focused. So in this space, we're really looking for these high-growth rate segments or customers -- and who are the Tier 1 players in that space? Who are the big accounts that we can win? And by driving a strong connection to those players, we can basically outperform the market. And so we do this through a combination of factors. We've been in this space for a long time. We have a lot of expertise. We can take that. We can pair it with our global presence or sort of excellent support and service that we offer and really go after winning those customers. So on that note, within the TKH Vision segment, we're very well represented globally. We have offices directly in 21 countries, covering all of the major territories, Europe, North America, Asia. But in addition, we also have a very strong distributor channel. And this really serves 2 roles. The first is to get access to smaller markets, to emerging markets where maybe there's not a desire to put a presence yet, but it allows us to have a presence in South America and Eastern Europe and even other portions of Southeast Asia. But the other aspect that it plays is it adds a second dimension to the access of customers. As we go after the big large Tier 1 players, our distribution channels in the same regions can focus on serving the smaller customers in that space, and it works out for everyone basically. Looking at the geographic distribution of turnover within the 3 subsegments, within the security vision segment, we see a big focus on Europe. This is really where the presence of that is, but it's strategic and it's also one of the fastest-growing regions for security and surveillance. We do see some revenue in Asia and North America, and that's largely linked to the parking business. Within 2D machine vision, again, it's heavily focused within North America -- sorry, within Europe, about half of the business overall within Europe and the Netherlands, but also strong presence in North America and in Asia. And then in the 3D machine vision space, it's primarily focused in Asia. This is really where a lot of high-volume manufacturing activities happen, particularly in the consumer electronics, battery spaces, automotive, et cetera. Now breaking down the end market turnovers of all of the groups. I'm not going to go into each one in a lot of detail, but here you see building security and ITS from the surveillance sections. And then basically, the machine vision activities are spread out over a large number of markets. But we have penetration in all of these different markets that are growing at different rates. Right now, we see a lot of growth potential within the agricultural space. I'll talk a little bit about how software is influencing that. We talk about big investments in semiconductor right now as there's a global supply shortage for that. as well as just general automation, particularly in spaces like logistics, where there's a goal to replace people with automated systems, and those systems require vision solutions. So now I'm going to sort of shift gears a little bit, talk a bit more deeply about the portfolios within the different subsegments. So starting with 2D Security and Vision. Overall, again, this is a very big global market, largely dominated by video surveillance, but also has a significant proportion, particularly on the video intercom, we're going to call this the commercial or industrial segment. We're not talking about residential doorbell cameras, but rather a commercial-level intercoms as well as the parking solutions. But overall, in this market, we see strong trends towards increasing the number of surveillance systems. And this is driven by a number of factors. On the one hand, you have technology benefits. The use of AI software is allowing the systems to do a lot more intelligent analytics by themselves. It's requiring less people, which then extract higher value out of the systems. And in return, that allows more systems to be deployed because they see better returns from them. And so when combined with concerns over things like security, combined with the need to improve and modernize cities to have smart cities with automated response to incidences; to improve traffic flow and guidance; to implement tolling, speed enforcement in an automated way, You're seeing a lot of these systems come into play with a big demand and push, and that's driving the really high CAGR of 11.6%. On the parking side, we're also seeing a return to investment in parking. For -- at the beginning of the pandemic, everyone was staying home, people weren't going to work, people weren't going out into public, they weren't using parking much. As we get towards the end of it, there's been a strong reluctance to use public transit just for safety. Everyone feels more comfortable in their own vehicles. And so now the demand for parking has skyrocketed again. And we're seeing that now in terms of the demand for automated systems to improve those facilities. And then finally, I talked on the technology trends a little bit about AI, but I also want to talk about some other key components. Cloud has been a big word for the last little while. But in the context of video surveillance, what it's really done is it's decoupled the need for large storage systems to be on site. This means that it's much simpler to build scalable surveillance systems essentially. And so with that, there's more potential to continually upgrade and implement improved systems. Then on the acquisition hardware side, the actual cameras themselves, there have been big technology improvements. We're seeing higher resolution 4K cameras. This is allowing you to extract more detail and cover larger areas with fewer cameras. But again, it comes back to that value proposition of the solution. A video surveillance system that generates video that isn't very useful, doesn't have a strong value proposition. Higher resolution cameras, better low light performance, again, ultimately makes the system more useful and therefore, our customers are more willing to invest. Looking just quickly at a snapshot of the portfolio and how broad it is. On the video surveillance side, we have basically everything covered, everything to deploy a system. So it starts with the actual cameras itself, all of the networking hardware and finally, the video management software that brings it all together. So essentially, within the TKH Security Group, we're able to deploy entire systems using all of the technology within the space. On the intercom and PA side of things, again, we have highly integrated systems combining software with multifunction hardware. And then within the parking guidance space, again, hardware with a combination of site level management software. So going into a little bit more detail here. Really, again, within the security space, within surveillance, bringing together all of the different companies within the TKH Group has allowed us to build a full solution here. I'm going to start by talking a little bit about VDG Sense. This is basically a video management platform. It brings in all of the feeds. It provides user interface, it provides alerts, and it provides interfaces to all of the other systems within the building or facility. And really, the key value add here moving forward is on the video content analytics. This is the use of AI to start actually extracting events or data from the video feeds that are happening. This is, of course, paired with a wide variety of hardware. So on the camera side, there's cameras available for indoor or outdoor, harsh environments, explosion-proof along with all of the networking. So again, a full suite of solutions. So here's a quick example of some of the different sort of modules available within the suite for content analytics. So these are all basically segments or plug-in modules that use AI. They can detect objects, they can classify what type of object it is, detect their color, work out if something's changed in the scene, identify and match people's faces or even recognize car license plates. So these modules all again add a lot of value, and that's really where the added value of the system comes in. Within the parking segment, again, there's a focus on fully fleshed out systems that provide the whole solution to the customers. So in this system here, starting up here, this is what you would see in the lobby of a building or in the entrance to a parking garage. It's a multifunction display that allows users to come in, put in their license plate, work out where their car is parked, how to get to it. We provide guidance within the parking garage on where the available stalls are, how to get to them, which is the closest one. And this is all basically starting with the acquisition hardware of the multifunction head. So these heads basically serve a number of functions. They have cameras. They look at the parking stalls and they have a built-in guidance light. And combined with the software position here, these heads are able to work out, is there a car in the spot? If there is, is it parked correctly? Are there incidents? Has someone hit a different car? Is someone breaking into a car? All of these things can be detected through software, which ties into the overall site management platform that is sold as part of these solutions. Then finally, within the group, I'm going to highlight here the Commend Symphony multifunction intercom. So here, we have, again, integrated hardware within a single platform. It's covering a video link of who's at the door, providing, in some cases, 2-way video, providing an interactive display that can be worked with as well as voice. It's all in a very rugged platform that can be deployed indoors, outdoors in harsh environments over a huge temperature range. And comes with the management software and ties into all of the other systems. So we have a quick video here to show it in action. [Presentation]

So it's taking that ring home doorbell experience basically to users in commercial environments and being able to create highly connected systems. All right. Now to look at the second portion, we're going to cover the 2D and 3D machine vision side of the business. So looking at this market, it's much -- at least in the way we segment it here -- it's much smaller, but a little bit more focused in terms of the overall market size, about EUR 3.3 billion currently, growing at 7.6% overall. When we look at the opportunities that are happening and the trends within the market space, COVID has really sort of changed things in some ways. One of the key trends we're noticing in the discussions with our customers is the desire to restart production, right? As COVID hit, as certain countries shut down, as supply chains were disrupted, there were suddenly strong national interests in securing certain parts or managing those supply chains. And it caused a lot of disruption, right? People weren't able to get medical masks at the beginning of the pandemic or [ where were ] vaccines being mandated. And suddenly, the whole globalization that's happened over the past several decades was a problem. And many companies are now reacting by trying to bring production of critical components back closer to them, to the same country or to the same region. And this is creating a huge opportunity for automated production systems. Those systems, in order to be competitive with what the product costs were in the past, are turning to automation as a solution. And those automated systems require machine vision for a lot of the activities. In addition, also coming out of the pandemic, we've seen a large challenge with labor shortages around the world. There's not enough people to perform certain jobs. Crops are going on unpicked, packages are sitting in warehouses or just simply companies can't hire staff. And that's changing the return on investment in some cases for different operations. Whereas in the past, let's say, the investment in an automated machine would largely be a payback of, if I replace -- if I buy this machine, I replace one person and therefore, it takes me 2.5 years to get a return on it. It's now come back to the fact that we can't hire a person to run this machine so the machine is sitting idle. Therefore, we must automate it in order to keep our company moving. And so again, these are 2 factors that are really driving up at least in the short term, the levels of spend and automation that we're seeing. The other big shift that's happening within the automotive market is the move to electrification. And obviously, this drives certain needs, the need for batteries, the need for huge volumes of batteries, like the world has never seen before. But it's also driving a whole redesign of how cars are manufactured, what pieces are in them, how they're put together, how they're assembled, which again leads to a large investment in terms of the equipment for it. As engineers are reimagining what a car is, they're also reimagining how to build them. And so rather than continually just simply updating production lines that are in the past, whole new production lines are being built, not just for the cars themselves, but also for the infrastructure that goes into them, such as the battery modules. And then finally, sort of a last point I have here on automation and agriculture, really also ties into the trend in AI. We've seen a lot of machine vision over the last decade go into factory environments, places where it's very easy to control the conditions. The parts always look the same. They're in consistent conditions. The lighting doesn't change. And that's been a key to making the systems work effectively. But what AI has added is the ability to detect and to measure features in widely ranging environments with different backgrounds, different lighting, essentially different conditions and to do it very accurately. And now that's opening up the possibility to take vision systems and to move them out into the field, into farms, into places like that. And so it's largely an area that hasn't been tapped in terms of automation. And now we're starting to see a huge investment happening there in that space. So it's going to be one of the more rapidly growing subsegments. Yes. Building on AI. I mean, really, what's great about AI is how different it is from traditional rule-based learning. Machine learning allows you to teach systems based on just looking at data. And that data is now readily available. So it's opening up the possibility to put machine vision systems into applications that just simply were too difficult to solve in the past. In addition, on the technology side, SWIR, or short range short-wave IR has also seen a lot of improvements. The systems have really decreased in complexity. They're decreasing in cost. And now that technology can be used for solving a lot of applications where essentially it was deemed too complicated or too expensive in the past, and so we're seeing a lot of growth there. And fortunately, we're a leader in that space in terms of the production of SWIR cameras. We're also seeing a large trend for more and more open interfaces, maximum interoperability, right? This has been a trend that sort of started in the open source software area. But it's working in our favor: As the complexity of these systems increase, there's a little bit more standardization happening and there's a lot more opportunities to get involved in new business that wasn't available in the past. And then finally, we're just seeing an absolutely incredible growth in the power of embedded computing. I mean, everyone's witnessed this with the cell phone in their pocket in the past 10 years in terms of what it's now capable. But the same thing is happening on the industrial side. We're now seeing processing power in smart cameras that is much, much greater than 10 years ago, what you'd see in an entire PC-based vision system. So again, we're seeing a lot of abilities here to leverage that to produce much higher added value to our customers. Looking now at the portfolio within the Vision Group. On the 2D side, we have a broad range of products covered by the different companies, covering everything from 2D area-based cameras to fully integrated ITS systems, line scan cameras, board-level cameras, 2D smart cameras as well as the SWIR cameras. On the 3D side, again, a very large portfolio of products, covering single-point displacement sensors, line profiling sensors, structured light snapshot sensors, line confocal products, embedded computing modules and then very, very powerful AI-based software. So all of these products have now come together under the TKH Vision umbrella brand. This joint brand was really highlighting how many different solutions there are within the group and allowing the group to be a little bit more effective in terms of connecting to the market. So for the first time, all of the groups displayed together at the Vision show at the beginning of October, in Stuttgart. It was an integrated booth, not just highlighting all of the different capabilities of TKH to our end customers, but also showing how our different technology works together. The image on the right shows a combined demo, bringing the different technology pieces to play in a common environment. So now doing a little bit more of a deep dive into some specific components. First one I'll start with, the Alvium camera module from Allied Vision. This is really a one-of-a-kind product because it's the only industrial machine vision camera in the market that's built around a purpose-built ASIC. And really what this ASIC provides is it provides the highest performance in the smallest package with the least amount of power. And that might not sound that important, but in this space, it is really important, just simply due to the form factor and the demands of customers. This is producing cameras that can go into different scenarios or different applications where other cameras were just simply too bulky or were too expensive to do so. Also at a time when semiconductors are in very short supply, the use of an ASIC greatly simplifies the camera board. It removes the need for an FPGA in many applications, removes the need for the PHY layer on the network. And so these are critical components that are hard to find in the market and they've been replaced by this ASIC. Finally, it's a very modular platform, right? It can support different image sensors in different lens formats with different output interfaces, including USB, CSI-2 and 5GigE. And it's highly customizable. And beyond all of this, it's been put together in a way through automated production at Allied Vision, that creates a very, very compelling product in the market. I've now got a little video that sort of introduced this and has some of the team members at Allied Vision talking about how this camera really represents the future of Allied Vision and what it's going to do for them in the market. Video, please? [Presentation]

So while there's numerous applications something like the Alvium can go into, one recent example of a growing market segment is the use of these cameras and embedded modules that are going into autonomous vehicles in the logistics space. And again, it's really that notion of being able to take a standard product that's highly configurable, customizable, work with key customers in the space and deliver a product that exactly meets their needs, create added value through additional alignment features or just through the higher initial quality of the product, really opened up the possibility to work in that space. But there's a lot of other benefits in those products that really apply to the whole 2D machine vision space. So really now, we have a leading-edge technology platform that can be used to really accelerate the growth within that market space. Next step, I want to talk about the VEGA system from Tattile. This is an integrated platform of vision systems and processing hardware with AI software that essentially creates -- I want to call them -- smart cameras for the ITS segment. So these are configurable modules that can be used in a variety of applications. And again, really targeting ITS. So this is free flow tolling, traffic monitoring, security, speed enforcement, traffic light enforcement and even vehicle identification and picking up. And so these cameras can be configured with different AI algorithms to essentially create an entire vision system in a small box. Here's one example. This is the actual accounting system that's being developed as part of Tattile. So again, using that platform there, essentially this module is mounted on the side of the road. And as vehicles pass by it up to 250 kilometers an hour, you can accurately identify how many axles are in it, regardless of what type of vehicle it is. So now you're replacing entire toll booths with a single camera system that's much more reliable and doesn't interrupt the flow of traffic. So again, very highly disruptive technology here. Next up, I want to talk a little bit about the 3D smart sensors. So the LMI Gocator platform is built around this notion of taking acquisition hardware, essentially the 3D sensor, whether it's laser or structured light based, and adding an embedded processing module as well as software to create an entire vision solution in one box. So a big portion of this is the Gocator software that runs inside it. This is essentially embedded in every Gocator sensor that's built and it serves multiple functions. Users connect to it through a web browser. There's no software to install. They can configure the device. They can add measurement tools. They can configure the output and then they can -- that sensor itself can actually be set up to run an entire manufacturing operation, communicating directly to robots or PLCs. So in terms of showing it, I think this is a great example just to sort of talk about the benefits of 3D. In many cases, vision systems are there to measure the real environment, to digitize it. And any time that you're looking for at the shape of an object, which is critical in all aspects of manufacturing, jumping directly to measuring in 3D solves a lot of challenges with 2D. So I've got a very brief video clip here that's going to show basically the scanning of a tire, what that data looks like within the system. And again, you -- everyone is familiar with what a tire tread looks like. But think about looking at it with a camera and what that tread would look like and then compare it to what you get from a 3D scan in terms of the definition of it. Then you'll see basically a section be applied to that, where we're cutting through that data. And now we're going to look at one of the tread grooves, and we're going to be able to measure its width and depth using the onboard tools within the Gocator. So video, please? So here, we see the raw data from the scan, highlighting the profile. Now we're adding a tool. It's detecting where the groove is, and it's measuring basically its dimensions. And then it's outputting its width and depth over on the right side of the screen there. But again, a good example of how you can take an everyday object that everyone's familiar with, you can digitize it and then apply measurement tools, all within one sensor, no additional hardware or software required. Next up, LMI has been doing a lot of work within the consumer electronics applications, and one of them is in the area of glue dispensing. As screws have been phased out and adhesives have been moved in as there's a need to create entirely sealed waterproof devices, the use of adhesives is critical. And with the complexity of these parts with a high degree of tolerances -- essentially, blind automation is not enough: vision systems are used. So these systems are typically used in 2 ways. One is pre dispense, where the part is scanned to work out how much adhesive needs to be applied, where it needs to be applied, basically what angle the needle needs to come in, what the flow rate of the adhesive needs to be and then post dispense to basically ensure that the adhesive was applied correctly and there's no gaps. So again, we've got a very, very brief clip here, sorry, showing the glue bead. And here, you can see a defect in terms of the flow. That gap should be closed, and it wasn't. And it's a pretty obvious defect, but really what you see in the scan here, looking at all of the different segments is the ability to measure how much adhesive is at various points and whether it's in the correct position. Also within the consumer electronics space, again, due to the complexity of the devices being produced, the low tolerances in terms of how tight everything has to fit together and the miniaturization that's happened, essentially, every component is inspected either for past fail in terms of projection or just simply binning the parts in order to make them fit together correctly. And so again, here, we're looking at a section, a section of a mobile phone housing, and we're looking essentially using the Gocator environments to collect the data, to detect a feature and to measure that within tolerance and then basically be able to communicate that result back out to the system. Finally, I want to talk a little bit about the snapshot technology. What's great about the snapshot technology is it allows a single sensor to develop a full 3D point cloud of data without any motion of the system. Laser line profilers require the object to move through the scan plane in order to generate the data, whereas this just takes a snapshot just like a traditional camera would. And really the fastest-growing area of application where we see snapshot technology being used is at the end of robot arms. And what this allows to be created is essentially a very, very flexible inspection cell. This robot can basically position this sensor at any angle and any position around a certain object and provide inspection on that. So it's commonly used in something like the automotive industry. As cars are being assembled, they're constantly being checked for features, for presence or absence of certain components or as the body panels and doors start going on, are they correctly aligned, are the gap and flush corrections there. And so in a typical configuration, there'll be, say, 4 sensors on 4 robots positioned around the vehicle. And as it's moving down the production line, the robots will move with the vehicle to different points and inspect multiple features on every car. And of course, what this flexible cell gives you is the ability to inspect basically any type of car, any color car, any configuration, which allows multiple vehicles to be built on the same production line without any change in tooling, just reprogram the system on the fly. The final product I want to highlight within the group is the Line Confocal Imaging from FocalSpec. This is patented, highly unique technology where there's nothing like it in the world. And really what's so great about Line Confocal technology is it achieves submicron resolution on basically any type of surface, transparent or not, at high speed, full production volume speeds. So this is highly useful, again, in areas like consumer electronics and semiconductor manufacturing, where you're looking for very, very tight tolerances, but you have incredibly high production throughputs. The sensor, again, produces very low-noise data on very difficult to scan surfaces. Most other technologies just simply can't measure the curvature of glass or glass and plastic and painted surfaces and metal all in one go, and this sensor is able to do that, making it highly flexible. Here's an example of some scans of different lens assemblies on mobile phones. And what's actually really unique about this technology as well is its ability to measure multiple surfaces at once. So with a single scan of the sensor, you're able to detect both the top and bottom surface of all of the optical elements stacked up within a device. There's no other technology in the world that can do this right now. So again, quickly recapping our segment here. TKH Smart Vision. We are the leaders in 3D right now in the world, and we continue to push that with new innovations. We have amazing 2D technology. It's positioned in a way that it's going to rapidly grow with the market. We really have a strong focus on combining hardware and software together into unique systems that are driven by a high degree of innovation within the group that will lead us to not just maintaining our strong position, but actually continuing to outgrow the market. And then finally, by combining the resources of the group together, we have a very compelling complete portfolio, creating that one-stop shop experience for customers. So thank you very much for your time. I'd like to now pass things over to Jeroen Slobbe, the COO of VMI.

Thanks, Mark. So I would like to move on with another part of TKH, part of the smart manufacturing system. Clearly, VMI is known, but today, I would like to focus on our capabilities to further grow our business to a EUR 500 million target. Clearly, I'm going to say something about our position in the world. Of course, something about the strong recovery we did after the COVID crisis, back to ROS levels. And I would like to, of course, share also a little bit how we believe that we can outperform the organic market growth. If you look at our offering, we build technology to produce tires, clearly. One of the main aims of our customers is to give you mobility, safe drive, comfortable drive and, of course, more and more important, save also on fuel or energy. Now one of our driving forces in our industry, of course, is that we are making technology available, production technology available to meet these demands. After this, let's say, start of post-COVID back to normal ROS level, we also believe that we are now in a position to really unleash the full potential of our current product portfolio, the disruptive technologies we work with and of course, our service capabilities. That's where we invested, and this is what we would like to share with you. If you look at our current position, if you know that as a TKH tire-building supplier, we are capable to meet over 70% of the market share. So every sale we do in the specific market refers to approximately 70% of the total new installed capacity. We do that globally. Luckily, since Q4 last year, we recovered. Sales intake grew dramatically, and we're also showing good operating results at the moment. Again, we saw first strong sales in Asia, but surprisingly, also the EU and the U.S. picked up much faster than expected originally. What we also noticed is that the Tier 1 and the Tier 2 customers are back in the game, investing and modernizing in plant modernizations and replacement capacity. What we also noticed, and of course, part of the discussions today in presentations is that we see our customers investing in smart solutions and the need for smart solutions. And clearly, also, the global intentions of our industry moves more attention for global sustainability ambitions, which we believe will have a positive effect on technology development. I want to start with an overall global market situation, how we observe it for the passenger tire. Currently, approximately the market size of the tire business for passenger is approximately 1.6 billion tires. There was a strong recovery in passenger tire last year, this year, and we also expect next year. But on average, we assume that a 2% growth will be the organic market growth. What we also noticed is a very different perspective per region. In the pre-COVID, we saw huge investments in Asia. But since the global and geopolitical pressure is increasing, import taxes and higher transport cost, we also see that regions like U.S. is growing fast. Another typical and of course, good to understand situations that 70% to 80% of the market exists of replacement. So it's not only the new tires, but it's also replacing tires. But we also see still is that our Tier 1 customers have and did develop a lot of their own engineered solutions and still the case but changing. Current tire production plants are mainly set up for high volume, so not smaller batches, but higher volumes. And we do see a lot of initiatives now to start modernizing plants, getting higher efficiencies, better performances, trying to reduce waste and of course, the energy to produce tires is also, yes, pretty well under attack right now. So one of our key challenges, I would say, and that refers to passenger tire as well as truck tire is how can we outperform the organic market growth since the market growth is only 2%. What do we do to grow even faster? And I think one of the most determinating factors here is that we are able to partly create our own markets. Our new technology offers our customers capabilities and possibilities to make processes more efficient, more reliable with higher performances. So if labor cost increases, our technology gives our customers the possibility to reduce the costs. If tire technology becomes more complex since we try to become -- and deliver products, which are more fuel economy, we are capable to deliver then technology to produce more sophisticated tires. So with this replacement and modernization intentions, we are capable to offer them the new technologies to meet this demand. We also see, of course, the positive effect of reshoring forced by the Asian markets, the import taxes in the U.S., but also investments in EU are even growing fast. The need for digitalization end-to-end traceability is very much linked to, if you want to control cradle-to-grave operations, you feed a lot of materials in the process. You end up with a tire. End-to-end track and traceability is one of those examples where smart solutions are more integrated in our production area. If you look at tires, we see an even stronger recovery of the last year and also the next coming years. We believe that, on average, we will see a growth of approximately 3%. Again, very different perspective, transport costs, also labor cost intensifies the investments in the U.S. and EU. And also here, we see that the impact of environmental-friendly regulation forces tire companies to produce different type of tires, and we'll come back on that later. And here again, we see also plant modernization is in place. Now how are we performing? Again, we are capable to outperform the organic market. First, of course, because the level of automation we provide is reducing the reliance on labor cost, manual labor. And there's quite some manual labor still involved in producing a truck tire. The other thing is that quality of tires becomes more important. Our customers are looking for ways to use the tire for a much longer period, more mileage or more kilometers. That makes also that the tire quality as such becomes a much more important thing, and I will come back on that a little later as well. And apart from that, we also see different varieties of transportation systems, not only electrification but also last-mile concepts where smaller vehicles, bigger vehicles are supporting any kinds of changes in logistics. Also here, we see reshoring positively impact the potential growth of our company and of course, our offering. Now if you look at where we are and also why we believe there is potential to grow is that our existing product portfolio is still very well positioned. We have still the most advanced technology over actually our complete product mix. And with all the investments we do, we do also believe that there is a strong pipeline of new disruptive innovations. We saw actually that since last year then, in our opinion and also the way we can show the figures, the tire building is back on track. The growth is there to really embrace a sustainable growth up to the EUR 500 million. And what I would like to share with you is our 3 building blocks, how we believe that this EUR 500 million target can be reached. If you look at the way how we currently have our turnover divided, in the 2019 figures, we spread a little bit -- we made approximately EUR 330 million. And the distribution was very much driven by an equal distribution of Tier 1, 2 and 3 customers. We do believe that the growth in 2025 or towards 2025 will very much rely on further growth for Tier 1 customers. It will also be possible to maintain our strong position with Tier 2. We might sacrifice quite a bit in a Tier 3, more or less known for price buying, and we also see a substantial potential in service business. If you look at our product mix, currently, we very much rely on our passenger tire offering in -- with the MAXX and [ Axiom ] and other related passenger tire products. But we do see that in the next coming years, the position of truck is going to become more and more important. But of course, also UNIXX and UNIXX-derived technologies will become more and more recognized in our product mix and turnover. So knowing that we are, let's say, recovering from this post -- from the COVID period, we are back to what we believe are very good loss levels. Our main focus will be the future revenue growth. We created these 3 building blocks simply by -- because we believe that the growth is in these 3 areas. It's in the existing product mix. And I would like to give you a little bit of more feedback or more in-depth understanding of what's happening in these 3 building blocks and why we still believe that we can grow. First building block: strengthen our position with our existing product portfolio in the addressable markets. In the passenger tire building solutions, we have a very strong products and presence, and we do believe that there is potential for further growth with our Tier 1 customers. We do believe that our technology is so advanced that it will become more and more difficult for our Tier 1 customers to produce and develop this technology themselves. We are in contact with them. And I'll also share you later that we have these long-term agreements already with them in place, and we believe that there is good potential future growth with them. All our machines are designed in such a way that we are capable to produce the lowest cost per tire, which is incredibly important since that is one of the ways we can win also from our competition and is one of the main aims, of course, of our customers to produce at the best possible and lowest cost. What we also see is that there is an incredible need for more production flexibility and further automation. So one of the things we are working on is to make our machine so automated that we can offer solutions for automatic material changes for instance. Further, we integrate machine controls, proprietary vision and smart solutions. Mark already explained a bit. We are using TKH vision solutions. We integrate them and Harm gave already a nice presentation of how these -- all 3 comes together. As important is the way we can improve quality of the product and control the processes. In order to get a good performance out of your system and a good, of course, high-quality product, we are also capable to add more vision systems, more control, more machine learning solutions and which is also very good for our current product mix. Now as I said, we already did something with long-term agreements, and we are extending these. Very important for our Tier 1 customers is that we are also open for cooperation and co-development. And the last one and last but not least is that our customers are aiming and facing more carbon-neutral initiatives. They want to reduce the waste, and of course, the material spillage in the production of tires. I would like to give you one of the examples that the MAXX technology, which also is a single-stage tire production cell. We added a lot of new benefits and technologies to this same system. So this 1 system is now capable to, first, add a wide range of diameters, so we can produce tires from 12 inch to 24 inch. It also is possible now to make a different spec like run flat, for instance. And one of the most, we believe, groundbreaking technology capabilities is what we call the Crown and Synchro Crown drum. But this drum offers that in the same platform, we are able now to produce light truck tires. We are able to make a more complex separate side wall construction. And this also opens the door to replace 2-stage tire production cells, and some of these solutions are very much linked to some of our Tier 1 customers. And while having this option now onboard in MAXX, we can compete with our own alternatives, and that's where we believe that some future growth with Tier 1 customers is possible. I would like to show you a little bit of the complexity of the MAXX. You see a lot of movement, a lot of things happening, but at least it gives a little bit of a feeling of what the tire production means, please. So you see the processes where drums are rotating, a lot of movements, a lot of synchronized movements through the technology, vision technology, software, of course, controlling the whole process, automation, a lot of detection. Here, you see the way we build up the tire. Many components are coming at the same. We don't have enough cameras actually to actually show what's happening all at the same time. In parallel, it is extremely important that all these layers of rubber and compounds are put nicely and in full control during every process cycle. Stitching up to the finishing of the green tire. This highly automated solution is up till now, and we also believe for the next coming years, an absolutely winner in the industry. There is no better technology available to produce a tire than this. With all the varieties we offered, we believe that we can continue also partly the growth in the existing business. Another example is the MILEXX. It was an instant hit when we introduced it. Over the last couple of years, we have invested even more in the capabilities of the MILEXX. The MILEXX gives distinct tire quality. We believe that there is no high automation solution available in the market capable to produce such high-quality tire. And why is this important? Some of our customers are looking for ways to, produce a tire, which is capable to stand for more than [ 1 million ] kilometers. But therefore, need -- the carcass needs to be extremely good in order to be retreaded later on. So this carcass can only be made on highly automated and very sophisticated machine technology. And this is where we believe that the MILEXX can offer us this stepping stone into Tier 1 customers where we can combine their aim for long activity, and we support them with technology to produce these bases. And again, here, also, you see an enormous need for automation. Truck tire is heavy and heavy tire, a lot of manual operations so far. We replaced it with sophisticated automation solution. Another example of a machine we introduced this year. We used the COVID time to invest and focus on one of these examples. The Revolute is producing a bead apex, it is called. And the bead is a component to produce a tire. The bead is where you put the tire around the rim of your car. And this component has always been seen as a kind of add-on. It filled some of the gaps in the body ply and side wall, but it was not seen and considered as a very sophisticated part. But since the need for fuel economy is increasing or to find ways at least to spare either fuel or energy, we see that the cycles need to become thinner and the complexity of this, yes, old-fashioned component is -- becomes much, much more advanced. This technology offers the customer to do 2 things. We can produce the compound online. In this compound, we are capable to support all kinds of additives to make this bead apex more complex. And we have a fully automated solution then to stack it, to handle the metal ring, the process of stitching the rubber on the ring. And we believe that this is a groundbreaking initiative for future bead apex produced production. Please start the video. I'll give you a small example. On the left side, you see the compounding process. And on the right side, we have a fully automatic eyes-off, hands-off production cell capable to do deal with the product. You see the product on the left side, touched on the right circle, taken away, turned around, positions to a robot system. Here, you see the rubber coming in or the compound attached now to the bead, fully automatic. And it's not only for one size. We made it in such a way that the robot system is capable to change the tooling to produce a variety of diameters so that you can also add a lot of production flexibility to that. Here, you see the way we stacked the product and so the plastic [ green ] contains one bead. They are all stacked together. And then we see this to the MAXX machine where it can be automatically feed to the tire building process. Let's move on to the second building block. The second building block basically represents our disruptive technology where we believe that the key is vertical integration in the production environment. So in a traditional tire factory, you produce compounds in a different area with high -- with big process installations. But everything linked to our disruptive technology aims to combine the compound making with the tire making or part of it. So what I would like to share with you is, of course, first, the UNIXX system itself. We believe that the UNIXX is this revolutionary new single-cell production platform. It basically combined the compounding preparation and the complete tire building process. It anticipated market trends where we believe that, due to this reshoring the more regional production of tires, we allow our customers to invest in one system rather than all the kind of all the different systems you need to produce, first, the compound and later on the tire itself. We are capable now to support smaller batch sizes. With the UNIXX, you have also the compound preparation in such a way being controlled that you can do that almost online -- sorry, you can -- you do it online, but you can link it to your supply chain where you don't have to produce massive amounts of intermediate stock and warehousing. You can do that all in the same system. Another big benefit of the UNIXX is that it will reduce the energy consumption massively. And your factory footprint can also be smaller. Further to that, we also built a complete digital world around it. Everything we linked to operating the line, getting data for track and tracing, changing the recipes, it's all controlled in one complete environment. And of course, at the end of the day, we also have a very limited operator involvement. But next to the UNIXX, as important is that components of this UNIXX technology to build everyone in a single cell is what we call derived models or derived technologies coming from the UNIXX. By having this compounding and tire building combined, we have also -- you can also take elements and modules out of this UNIXX platform. And that's what we did. So we built next to the UNIXX also specific machine solutions to support existing factories in optimizing the compounding area and the preparation of the materials for the tire production itself. So the FLEXX eliminates the upstream equipment in a tire factory. It produces breaker material. These are some of the components of a tire, body ply. And in the future, we are also capable to mix -- to prepare this for the truck tire industry. So you basically produce the base material on a reel, and the reel then is fed to the tire building process. Now by combining FLEXX and MAXX technology, we believe that this supports the further automation of a tire production plant, and it also helps to further reduce energy consumption of your -- effect of your production process. It's not all, next to the capability to link it, we also changed the technology in such a way that you are capable to produce thinner materials. And thinner materials brings an immediately saving on material costs. It provides a lighter tire, which, of course, has a benefit for the use in cars, but it also helps us to make it more sophisticated. Currently, FLEXX is installed. It's already producing product to release for the market. And we believe that this is the deep product where we can also bridge the gap into selling the UNIXX systems at the end. I will show you a small video of the process. I will show you the example where we make breaker material, the breaker contains steel cords. Steel cords are fed to the system on the right side. They are positioned and heat up, rolled. Then we combine and then merge them with the extrusion processors. The extrusion put a small thin layer of compounds around the steel cords, which you see here. There's a thickness control, so we know for sure that all the materials have the same thickness. Then we take it fully automatic after the cutting stage and put it in line, as you see on the belt. We can change the angle of the cut and therefore, also the width of the component needed, completely done automatically. So the robot system changed the tooling. And if you want to produce a different size, that everything is completely automatically controlled. You can do that with some menu recipe changes and then you continue the process. That offers a huge flexibility. So here, we combine automation, flexibility and also improve product quality coming out of the machine, helping to support the development of new tire specs. Now then the final building block is if you look at our current installed base, we have approximately 1,400 tire systems actively producing tires. With the next years coming, we believe that this installed base will grow significantly, but we also believe that this existing equipment already will require further retro-kits, upgrades. With all the technology developments currently going on, we also believe that the current installed base has a constant need for upgrades. So what we did is that we invested over the last 2 years substantially in our staff and engineers. We did a full implementation of an IT solution to manage the assets we have installed at the customer side. We extended our retro- and upgrade kits portfolio, and we increased the number of hubs and our service support locally in the regions. With that, we believe that, over the next coming years, we can gradually grow 60% to 70% of our sales business, which is a nice cornerstone and fundament under the recurrent business of the volume growth in VMI. So all in all, for us, these 3 building blocks forms the base for our growth into the EUR 500 million: the existing portfolio and strengthen our position, the disruptive technology entering introduction of all kind of intermediate solutions other than the -- next to the UNIXX, and the third one is the increase of the customer service business of our installed capacity. With that, I would like to end and hand it over to Harm.

Thank you, Jeroen. Thanks, Mark. I think we saw in the 2 deep dives some very nice opportunities for TKH to grow the business in the coming years. We're now open for Q&A. A microphone will be brought in. Just a second. Very sure you can step up.

Peter Olofsen, Kepler Cheuvreux. I have a few questions on the UNIXX. I recall from earlier analyst presentations that the product could be commercially launched next year and that we then could see a contribution to the revenues going into 2023. Is that still the kind of time line that you're looking for? And then on the selling prices of the UNIXX and the FLEXX systems, I recall from a number of years ago that the expectation was that the UNIXX would sell around 3x the price of a MAXX system. Is that still the kind of magnitude that we should think of? And what is the price of the FLEXX as a percentage of the UNIXX selling price? And lastly, on the margin development in tire building. If I look at other large equipment vendors, like for instance, ASML, we have seen that when they introduced new technology that initially, they had to go through some learning curve and they had to build up some scale so that initially, there was a relatively low margin, and it took some time to get to the margins of the, let's say, existing business. How do you see that with the launch of the UNIXX, will it initially be a drag on the margin in tire building? Or could it be -- already have a good margin from the start?

Thank you. I think some of the questions, I can answer immediately. The next year launch of the UNIXX, that's still, I would say, within reach. But to be honest, the COVID situation in Europe has really caused a delay in the development of -- in the final industrialization phase, you should say. The machine is installed at a customer site, and the inability to travel and lockdowns have really impacted the progress. That being said, we're still confident that on a relatively short notice, we can finalize this. Whether that will still be within the time lines that we had set before is questionable, you could say. But if you look at the FLEXX, for instance, which is derived from part of the UNIXX technology, that is now really successfully producing components that are commercially accepted already in ultra-high performance tires by the way. So the -- I would say, we're confident, but there was a delay, you could say, due to the COVID situation. Whether that's next year or the year after, I think working hard to make that as short as possible, I would say. Talking about price, indeed, I think the range of, say, roughly 3x, to the 3x of a MAXX tire building machine is, I think, still okay. And the FLEXX comparing to the MAXX is not -- well, you could say that's not feasible because the FLEXX is making a component of a tire and in a very flexible way. But the component they make are then transported to the MAXX tire building machine and then fed into that machine. So it replaces other equipment, component prep machines where TKH does not have a very large market share. So I think this is a great growth opportunity so to say. And the low margins when introducing new technology into the market, well, we have seen that in the past also when you really come with a groundbreaking new technology. We saw that also with the FLEXX introduction, MILEXX with the introduction of the [ added ] various models that, in the beginning, you have to go through a learning curve, especially with real groundbreaking high tech. And obviously, that brings additional cost, but I think we can absorb that. We have absorbed that in the past pretty well and did not impact our bottom line figures so much. For UNIXX, I think the fact that we -- we have not been able to travel there, did not stop us from final -- of really helping the software side of the machine further with a digital twin that we have in our headquarters in our R&D center. We have been able to work further on finalizing the software to a much higher level than we previously had. I think we're really good out there. Other questions?

Yes. Martijn den Drijver of ODDO. On the -- you used the words Tier 1, Tier 2. Could you remind us what your definition is of Tier 1, Tier 2? You showed the Revolute, if I pronounced it correctly, when did you introduce that? And could you give us a bit of a range for the price of the Revolute and basically the same for the FLEXX? Because, Harm, you gave an indication, but it was kind of complex. Is it just possible to tell us it cost EUR 1.5 million to EUR 2 million? A bit of clarity there. And I'm sorry for asking but is it my understanding that if you have one of your updated MAXXs and you add the FLEXX that you have a very sophisticated system than in place? Wouldn't that hinder the acceptance or penetration of UNIXX? Those were my questions on the tire manufacturing. And then on vision, I recall the Capital Markets Day in 2017 where the 2D activities were displaying what they're doing. And at that time, it was mentioned that they were doing really well in the high end, doing really well in the low end but that there was a gap in the middle. I was wondering if you could tell us what you did to solve that issue because you were aiming to do so and tell us where you stand today. And then a final question is I saw TKH Security [indiscernible] Dutch. I saw command. I see 2D, 3D. Are they all -- and I know you said that it's a decentralized organization. But do they all have independent organizations, independent management teams? And will that stay that way?

Now let me start with the definition of Tier 1, Tier 2. It's not always clear, but to give at least some guidance there, Tier 1 Michelin, Goodyear, Bridgestone, but clearly having a path into product development, which always is linked then also to some technology development to produce. Tier 2 are most of them are followers, not necessarily having such a deep investment program in product development but still require a substantial high technology to produce a good quality tire. You could think of, I think, Hankook, Nokian as examples of Tier 2 customers.

And the price of Revolute, would be?

I won't give it away, no.

I think the Revolute would be roughly between EUR 1.5 million and EUR 2 million if I'm correct. And the FLEXX would be around 3 million, I guess -- EUR 2.5 million to EUR 3 million. And interesting suggestion of FLEXX combined with MAXX tire building. Would that hinder or help the UNIXX sale?

I think it goes nicely together to be honest. If you look at the installed base in MAXXs and also upgraded MAXXs, then it might be a smaller step to add FLEXX rather than exchanging that already installed capacity. I have not seen business cases where MAXX with FLEXX is nicely compared with the UNIXX benefits actually. You might probably know.

Yes. And to answer that, because I think you're absolutely correct, UNIXX is a complete system. So that would be ideal for small new setups or small extra added capacity in existing factories but if you have existing capacity that is fulfilling the production capacity that you need. But you're getting to the end of your potential because of the flexibility issues. You have to shut down machines for a long time and do all the changes and then start it up again. In those cases, if you would exchange, for instance, some large equipment in the component prep side and put in a FLEXX, you don't even have to take them out. You just add, for instance, a FLEXX belt maker. And then you immediately increase the flexibility in your production. And that helps to get the full productivity of the MAXX tire building machines to use. So I think this fits perfectly in existing, so brownfields, where you would like to add flexibility or even increase quality. And once that technology is really being quickly absorbed in the coming years, that will definitely fuel the belief in that you can do this completely on all the components, and then you have the UNIXX system. So we believe it helps and it also fits into a part that UNIXX itself will not be competing with. And then on the Vision side, the -- looking back at 2017, Mark?

Yes. I think the big shift there is the acquisition of Lakesight and then the corresponding reorganization within the portfolio. So when we look at, let's say, the 2D machine vision space, particularly on the camera side, Harm, in his presentation, talked about cooperation within the R&D groups. And of course, what we want to ensure is that the individual operating companies are not competing with each other and going after the same segments. So essentially now you have SVS-Vistek as producing the high-end portion of the camera portfolio, the very high-speed interfaces the large-format imagers, the high resolution parts. And then you have Allied Vision taking in the lower and mid-portions of that segment. And specifically addressing the mid-performance level. That really is the Alvium 5GigE product. What's important to about the 5GigE interface is it uses copper still. It uses sort of standard Cat 6 cabling. It doesn't require the very expensive network infrastructure of 10GigE but at a much higher performance level than single GigE essentially. And so that's opening up a lot of opportunities in the market at, what I'll call, the mid-level segment there is covered by the Alvium.

And then there was a question on the organization. Well, you already said something about the cooperation, et cetera.

Yes. I mean you can speak to the whole thing. But yes, essentially, every organization does have its own management team and there is independence. And a portion of that is by design to keep the organization's agile to have them really focused on certain segments. But obviously, strategically, again, there's the goal to organize the companies in a way where they can cooperate and assist each other rather than, of course, compete with each other. So every company within the group has a certain sort of niche or aspect to their portfolio that they're focused on, while at the same time, looking at how we can share development resources, technology, building blocks, supply chains, manufacturing facilities and ultimately a commercial organization to make the group as a whole more efficient.

Yes. Next question please.

Michael Roeg, Degroof Petercam. I have a question on tire equipment. You mentioned some of the growth drivers are new products, FLEXX, UNIXX, but also services. But I think a huge opportunity is if your customers were to upgrade or replace that existing installed base, 17 years old. So my first question is, you can do retrofitting and upgrading, but can you do that for a 15-year-old equipment or only for recent MAXX units. And the second question is, if you look at all the equipment you've sold in the past 5 years, do you know whether that was expansion at your customers or also partly replacing that installed base. What's the mix? And finally, what would push your customers to really shut down 15- to 20-year-old equipment and order new stuff from you?

One question. I will take, Jeroen, the percentage expansion replacement. The -- I would roughly guess that we're now at 50-50. So all machines that are leaving the factory, half of them are expansion, expanding capacity for our customers. And the other half is replacing their existing equipment. And the -- it's a very simple calculation actually whether -- if you have equipment running there, which is still producing high-quality tires, otherwise, you would have another need to replace it, but if it's still able to do it. But if you look at output, number of operators, energy consumption, waste levels, et cetera, and you do a calculation, if I take it out and replace it with a highly automated machine, that is this investment and then calculate within 3 years a payback, then, yes, you just, I would say, need the funding to do it. And the -- and that is not in all situations easy because replacing is not only taking machines out and easily because you can imagine that some of these factories are quite large, producing 20,000, 30,000, 40,000, 50,000 tires a day. So that's a massive amount of equipment there. And if you start replacing the equipment from the outside, that might be easy. But once you're getting more into the factory and then getting all these machines out, you have to shut down quite a part of the factory. And that is then, you could say, part of the limiting factors here. The -- so yes, that's up to the practical situation sometimes. So that -- and then, yes, how long can you...

How can you upgrade it? Yes, we do believe that such old equipment makes no sense to upgrade actually. Then the initial costs are much too high. We do believe that the perfect fit is tailor made. But to that extent, that, of course, it need to be able to be supported by scarce resources in engineering. And at the end of the -- of course, also lead to substantial sales. And with such an old equipment, we believe that we should focus on much younger equipment.

But I also believe that the development is going so rapidly that we developed now already something for the maximum of 3 years ago.

3, 4 years ago, yes.

And that helps customers so, yes.

We'll leave that judge also to our customers to determine when the -- it becomes more beneficial to invest in new equipment versus upgrading of existing. But clearly, we believe that there's substantial growth in this installed base.

Further questions?

Emman Carlier, Kempen. Three questions. First of all, on tire building, so you guide that the service sales will go up a lot, I think, something like 65%. Could you explain a little bit better why you believe there will be so much growth? Then secondly, a lot of the growth in tire building needs to come from gaining Tier 1 customers. Would be helpful to better understand why you have higher conviction today versus a couple of years ago that you can really gain share there? Because if I'm skeptical, and I look at 2017, 2020, it looks like it was not that much growth in that segment. And then a question on both segments, Tire Building and Machine Vision. You didn't really say a lot about the competitive intensity. So I would like to understand a little bit better how competition has evolved over the last couple of years. If you believe your market position has improved or not, if there are a lot of new players. So yes, just a bit of broader overview on that.

Okay. Let me take the Tier 1 question. You have seen that, over the last decade, we really grew in that area up to a level of over 30%. But in the last 2 years, mainly, you could say for a number of reasons, the automotive sector was declining a bit end of '19; and in '20, COVID hit this industry very hard. And that is the reason why a lot of the investment programs of last year have been delayed. I think we're -- you could say, well, why now? As Jeroen showed, we have further empowered the MAXX platform with a lot of new features that also make it a very versatile machine where you can build tire constructions that were previously not -- impossible to build on and on a highly automated single-stage machine and had to be done in several stages. And that makes this machine also easy to be accepted by companies who produce a very wide range of tires like the Tier 1 and the incredible speed at which vision technology in the group has been developed, the software side have created and so intelligent platform right now that we believe we can outperform almost anyone. And that being said, it gives us more confidence that the -- that this growth will further materialize. But there has been certainly already growth, so I'm not completely in line with your statement. But I think that the market situation, particularly COVID really did not help in this respect. Yes, then about the service side?

Service, actually very simple, basically, a bit in line vision systems, a lot of late-hours automation, all kind of processes to support customers with automation solutions. And drum technology offers many more options for customers to produce different tire specs, some of the, let's say, yes, roughly 3 domains where we believe the significant growth can be realized on our installed equipment. But there are others. These are there some of the examples where this growth can be recognized.

Mark, can you say a little bit about competition?

It's a very difficult topic to cover briefly, but I will do my best. I think there have been a lot of changes in the competitive landscape but not necessarily in a way that puts the group overall at any sort of disadvantage. I think that we've gained in certain areas, and we've lost in others. But overall, there's been so much shifting in the marketplace. I think when looking at the machine vision space, which I'm best equipped to speak to, I think the trends on the competition, we've seen a lot of acquisitions and mergers, particularly by bigger companies to form larger vision organizations. And then as part of that, we're seeing diversification of companies going into segments where they haven't traditionally played. So we're seeing 2D companies start producing 3D products. We're seeing companies from logistics space starting to get into machine vision and 2D products. But -- and then I think finally, the last component will be the emergence of vision technologies leaving China now being sold in the global market as well. So I think those are probably the 3 big trends in the market. But overall, I would say that we're well positioned in each of the product segments. And again, really with the focus on an integrated smart solution, adding software and leading in that space puts us in a very strong competitive position across the different categories.

And competition for the tire building side is also difficult to cover in a very short period of time. You could divide it over 2 sectors. One is the open market. And there, for the MAXX, [ Axiom ] platforms, so the tire assembly side, competition is mainly coming from Asia, Korea, Taiwan, China. And for the component preparation machines, it's mainly European, I would say, North America somewhat. And if -- but at the same time, when you talk about the really high-end Tier 1 companies, then the competition is obviously, there, in-house capabilities of engineering and producing their own solutions. And the competitive landscape is different for the one and the other. But I think we're in a strong position to cover both more or less. Any other questions? One last question? Okay. Then thank you very much for this section, and I will give the floor to Elling to wrap up our Capital Markets Day. Thank you very much.

It's almost 4 hours after that we started. A couple of hours with a lot of information, I believe, interesting information, exciting information. We took you a little bit back even 20 years ago when we had a level of operation around the first start of solutions with a market cap of below EUR 100 million. Currently, we are discussing a different portfolio, a different range, a different TKH. The transition from a -- if I put it blunt, a cable manufacturer in the past to a leading innovative technology company as well on its way. We try to give you, today, basically our next step in that transition. We are further strengthening the smart technology concept. We believe that we have invested quite a bit in the last couple of years with new portfolio. Portfolio, which is ready for the market, is partly in the market but has not gained its full power partly driven due to the COVID situation in the last 1.5 years. But that's still the opportunity, which lays ahead of us. That opportunity is there to grasp. We have seen that also in this year, the last couple of quarters with strong rebound after 2020, partly driven by the portfolio, partly driven by the program, Simplify & Accelerate, which we introduced in 2019, which brought up the performance to the levels, which are getting towards -- we are not yet there but towards the 15%. And therefore, we also have taken the step-up to take a new look at the company, the performance, which we expect we can achieve in 2025, leading to some extent in the strategy, so more corporate leadership on the smart component of technology, so the software development, the cement between the 3 different technologies where we organize and facilitate and strengthen the resources related to software development and the smart concept as I mentioned. And also the ESG agenda, stronger in our portfolio, more predominant, followed with actions and that is not only a burden but definitely a large opportunity for us as well. As technology is going to be an area where a lot of expectation for many stakeholders is formed around and we are part of that solution, I think, for many stakeholders to achieve certain performance targets and certain social targets. And technology is a motivator, driver in this respect, and we are well positioned to take advantage of this. As I mentioned, Simplify & Accelerate, topic of the last Capital Markets Day. We skipped in the new program, the Simplify part. I think the new reporting structure, as we communicated today, gives a better picture of where TKH can create value and how it's going to create value. At least that's the ambition we have. I understand this is the first day that we communicated this, so there's some awareness to be created, how things work, how it was in the past and how it's going to going forward. We are, of course, always available to help you with this. Any questions, any topics you want to discuss, we are there for you. But at least, I think the transparency in terms of where we believe our technologies can bring us, hopefully, this has been the message you were able to get today with the deep dives in the afternoon in tire and in vision. You see the components which we have in-house, the markets which are available for us and the positions which we have. I think there's a lot of potential. We took these 2, not to give you another 2 hours here, in connectivity. Smart connectivity, of course, we have similar concepts, and there's the same kind of potential available there, but we don't want to go back to a full range of explanation on all the topics we have. We kept it very concentrated on the 2 main dominant areas. That's why we have the deep dive in these 2 segments. So all in all, I think a lot of information shared today. I hope that we are able to get you more familiar with our propositions and the route towards the targets for 2025. It's a long session. Thank you very much for you here, the few of you here; and all the others who are watching through the webcast, thank you very much for staying with us and getting excited, hopefully, about TKH. And again, any questions you might have after this webcast, you can reach us, e-mail, phone, whatever, you will find us. Thank you very much for your attention. Thank you.