00:01 Hello and welcome to the Agfa Full-Year Results 2021 Call. My name is Judy and I’ll be you coordinator for today’s event. Please note, this call is being recorded and for the duration of the call, your lines will be in listen-only. [Operator Instructions] 0:34 I would now like to hand you over to our host, Pascal Juery, the CEO, to begin today’s conference. Thank you.

00:45 [Technical Difficulty] Results Call. I'm sitting here in the room here with my colleagues from the executive committee that will help and assist during the presentation and the Q&A of course. So, it’s great to have you here. 01:01 So, without any condition 2021 was kind of a complex year, but I would say in this complex year, we could deliver what I would call a resilient performance in a context a very strong inflation headwinds that has hit most of our businesses. At the same time, it's a year where we continue to advance the transformation of the group on different fronts. 01:37 So, first on the top line, 3% above 2020, although it's rather a contrasted division performance, and I will walk you over that. As I said, resilient gross margin performance, we have been busy along the year to take pricing actions to address inflation pressures. We have continued to manage our fixed costs with lot of rigor. And therefore, we could deliver overall for the year a rather resilient gross margin picture. 02:16 This being said, it's noticeable to see that the inflation impact has been building up through the year and will continue in 2022. So, overall and adjusted EBITDA 5% above 2020 with a very strong performance of HealthCare IT. I will come back to that in more details. Radiology Solutions is the only business that is below 2020 for specific reasons, I will explain. 02:50 We're happy with the growth activities of Digital Print & Chemicals who have shown and validated really our strategic roadmap. However, we didn't translate fully this growth into EBITDA and again we will come back to that. And then Offset Solutions, as a significant rebound in a context of extremely strong inflation Offset was the number one business in terms of inflation impact for Agfa this year. 03:23 At the same time, we have ended our pension de-risking measures and we will present to you in more details where we stand at the end of the year. In a complex supply chain environment, we still managed to decrease our working capital needs by one point from 27% to 26% of sales and we have reached some significant milestone in our transformation program. 03:51 We have announced the simplification of our go to market organization at the beginning of the year. We have announced the reorganization of our IT activities, internal IT activities, as well to partnership with Atos, and we still have a lot more initiatives in the making to continue transforming the group. 04:16 If I talk about Q4, as I said, the inflation pressure has been building up through the year and Q4 was by far the quarter with the largest impact on the P&L of this inflation. And as you know, this is an inflation that comes from raw materials, packaging, freight, and now we are also seeing the return of salary inflation by the way. 04:46 Very strong quarter for HealthCare IT. After a more subdued third quarter here immediately, you would like to repeat what I’ve been saying, you shouldn’t be looking at the performance of HealthCare IT on a quarter basis, look at it on a year basis. The reason why is 50% of our revenue is project based and 50% is recurring. But very strong quarter for HealthCare IT indeed. 05:18 Strong top line growth for Digital Print & Chemicals in the fourth quarter, 18%, which is quite a good growth. However, did not translate into EBITDA. We were impacted by actually manufacturing inefficiencies and some of inflation pressure also coming up to parts of the business. And Offset Solutions has been impacted by cost inflation. Remember, it's a bit of race between the inflation and us raising prices. 05:51 Most of our pricing actions are in place in Q1 2022. They were not fully yet in place in the fourth quarter. And therefore, we've seen a more complex quarter for Offset. 06:08 Now, if I turn to the P&L. Well, let's look first maybe at the year, 3% top line growth. As I said, resilient gross margin, actually a bit ahead of last around 28.3%. We lost 0.5 point. However, if you look immediately at the Q4 gross margin, you see that the inflation is impacting us more and therefore, our gross margin is 2 points below the average of the year. This is due to this, kind of a delay of putting prices versus inflation hitting the P&L. So, it's a time impact in fact. 06:49 SG&A and R&D fully under control in terms of cost management and therefore an EBITDA is 5% up for the year, and then EBIT 17% up. If we go down the P&L, we still have significant transformation costs, which you see in restructuring and non-recurring, less than last year. Last year, we had the cost of shutting down two plants in for Offset in the UK and France, as well as the reorganization of some [hydrogen activities] [ph] in Germany, but still a significant restructuring and non-recurring charge to continue the transformation of the group. Meaning, we end up still today in negative net profit due to this transformation cost. 07:48 I am now going to turn immediately to Dirk, our CFO, who will walk us through some of the cash component of these results.

08:01 Right. So, thank you, Pascal. So overall for the year, Agfa shows a positive free cash flow before the extra pension funding. So, supported by a growth of the EBITDA. As you can see, there is a limited impact on networking capital. As you may recall in 2020, we had a massive drive to reduce our working capital. So, the impact is a bit less, and I will come back to that later in the working capital slide. 08:31 CapEx was at a lower level versus the past, and this is also partially due to the fact that we had the closures of the two plants in Europe. So that should also help to have a sustainably lower CapEx in the future. And overall, that means that we have an adjusted free cash flow pretty close to the adjusted EBITDA, and that was sufficient to both do the pension servicing that we normally need to do, and to pay for the restructuring and the nonrecurring items. 09:02 On top obviously, we concluded our pension de-risking program in the first half of the year. So that's 130 million that we invested leading to a free cash flow of minus 122. If we look at the net cash position, so as you can see, it’s still strong, close to 400 million. Now, another factor aside from the 130 million that we invested in the pensions, obviously, there is also the share buyback that impacts the cash position. So, over the year, 2021, we had a share buyback amount, cash wise of about 29 million. So, but overall, still close to 400 million net cash on the balance sheet. 09:47 And coming back to the working capital. So, as you can see, and as we told you, Q4 is usually the quarter where there is a big drive to reduce the inventory levels. So, 47 million was reduced just in that one quarter. Year-on-year though inventories increased, not just in total absolute amount, but also in inventory days and that was largely also driven not about – not only about increased activity, but also the reflection of the high inflation on raw materials that had to be absorbed into the inventories. 10:28 Trade receivables, let's say in terms of DSO flat versus last year, but we did make quite a bit of progress in reducing overdue. So, we keep on focusing a lot on that and that keeps on benefiting the overall position. But the key improvement you can see in the working capital is the normalization of the trade payables. You could see that already over the past quarters. 10:54 So, there is a 13-day improvement quarter-on-quarter versus last year. And that reflects the – say the normalization of the activity versus the 2020 year, where obviously, we were trying to put the brakes on the inventory build-up and reduce the working capital. So, overall, as Pascal mentioned, we managed to decrease another percentage point year-on-year, the working capital. So, overall, a pretty good results.

11:25 Indeed, and we did it in a context where supply chain is not easy on us and from the times of shipment and is increasing tremendously. So overall, I would say it's under control. We will continue to drive this working capital improvement over the next year also. 11:47 Let me turn to HealthCare IT. So, HealthCare IT had very good results for the quarter. If you remember, we did mention during – at the end of Q3 that we had a number of projects, which were a bit delayed in implementation. They all came in Q4. And again, I would insist don't look at this business on quarter-on-quarter or look at the last 12 months trend, the year trend, and you will see that we are working the talk and we are delivering what we said we were going to do in this business. 12:25 So, the year is at almost 14% EBITDA, two years ago, we were well below 10 and we confirm our guidance to reach high teens EBITDA in this business. So, overall, very positive. What I want to say also is that our order book remains at a very healthy level. Actually, it's probably even a bit bigger than what we would like, reflecting the difficulty we have today to implement. 13:02 You know that, especially in North America there has been a significant churn in terms of what is called the great resignation. We had a number of people that left and we have replaced these people, but that has delayed somehow some of the implementation of our project and this is for us a key priority to get back on track. So, we have very healthy order book. 13:24 Now, the name of the game is to execute it and to implement it in the next months, but overall, we are very happy where we are with the business. I will comment on the outlook 2022 at the end of the presentation. 13:44 Radiology, well different story for Radiology. I think Radiology is still of course today a very strong – strongly contributing division to the group, but we had a bit of a setback in 2021. Across, by the way, the business is first in film. We were impacted by the change in China procurement process, so that impacted especially the first quarter. 14:19 I would say we have built back our volumes and market share over the year in China, but we were impacted at some point. We've seen a nice volume recovery outside China in terms of film volumes as well, but we also start being impacted by some of the cost inflation that we've seen in the business. But overall, I would say film is below last year, but overall, quite resilient. 14:53 What was not expecting for us is DR operated in a more complex market environment that which we forecasted. Actually, when you look at the market, I think we had three quarters that we are showing negative growth for the DR market after – it's a bit the aftermath of the pandemic where we've seen a boom in demand and today hospitals and caregivers are reviewing a bit how they operate. 15:25 So, we believe it's going come back. We have no issue mid-term about the market prospects for DR and X-ray in general, absolutely not, but it was not a good demand for us in 2021. So overall, Radiology is the one business that has deteriorated versus last year. 15:54 Let me turn now to DPC, to Digital Print & Chemicals. If we look at the year, you will see that we are firmly in growth territory of 14% top-line, but this did not translate so much in EBITDA where we improved our business marginally. You see the one business of Agfa where sales are well above pre-pandemic level. That's the only one. 16:31 The reason why – so, we are pleased about the top line growth of the business. Why? Because all the gross oriented activity has performed very well. The digital printing activity has performed very well and has improved profitability tremendously. 16:54 All our, I would say our chemical niches like [indiscernible] have improved very well as well. Zirfon, we are going to discuss it later, but of course is on the rise, but still at non-material level, I would say, but growing considerably. 17:16 However, we were impacted by the cost inflation and some manufacturing issues on our film business. We still have a film non-medical film business that sits on DPC and that dragged us a bit in terms of profitability. 17:35 Some of the issues are one-offs that we’ve seen in Q4 and therefore are going to be solved. The inflation is being tackled also through price. So, we are expecting, of course, an improvement, but that was a bit – that was a bit disappointment for us in an overall very favorable environment for DPC, which is also the moment for me to introduce the subject of hydrogen. 18:10 As you know, we have not only announced our results today, but we have issued a press release explaining that actually, we have made an agreement with thyssenkrupp and thyssenkrupp nucera will use our membrane in the large scale hydrogen projects. So, very favorable announcement, and I would say, we are now making concrete what was yesterday a potential. And as you notice thyssenkrupp nucera is one of the main players in the market and the one with the most advanced projects for large scale hydrogen production. 18:55 So, this is the opportunity for us to explain to you a bit more what it means for Agfa. And I will turn the presentation to Vincent Wille who is the President of Digital Print & Chemicals and he will explain in a few – in three, four slides, what it means in terms of potential for the group. Vincent?

19:20 All right. Thank you, Pascal, and welcome, everyone. So, very happy today to indeed to tell you a bit more about green hydrogen, only very small parts of our division, Digital Print & Chemicals today, but we indeed have quite high hopes. And we're not going to go into the technical details of course, of everything. You know that there's a whole rainbow of colors when it comes to hydrogen. 19:43 Today, there is already a hydrogen market, and I think today it's especially in the spotlight giving the energy crisis, but most of the hydrogen produced today, globally is Grey hydrogen, which is hydrogen that is producing also a lot of CO2 as you produced hydrogen, and more than 90% of that market is actually Grey. 20:04 In the next decades, that market is going to grow 5x to 6x overall in hydrogen. Sorry, if you can go back just one slide. But the majority of that growth, all the growth is actually going to come and even some substitution of grey from blue and green hydrogen, and that's where we want to play. We will be playing and we are playing in the green hydrogen side and more specifically in the alkaline electrolysis, but we'll come back to that in a second. 20:30 Green hydrogen, and this is not numbers coming from Agfa of course, and there's many sources out there that forecast a large growth, and here you can see some of the numbers on that graph on the left. So, by 2030, we expect today there's less than 1 gigawatt if you translated into electrical capacity installed. Less than 1 gigawatt available today to reach our net zero targets we will need at least 200 gigawatts to 250 gigawatts of installed green hydrogen capacity. 21:00 Today announced projects is 93 and every week, every month, there's new projects being added to that, especially large ones. And by 2050 you see also there there's very diverse opinions on how that market is going evolve, but I would say most people think that it's going to be at least 3,500 gigawatts installed capacity by then. So, you can see an explosive growth. It also explains why today, this is still very small, as a market also for us, but the growth is really going to come in the next decades and we are absolutely ready to take part of that. 21:34 If we translate between now and 2030 that market potentials for Agfa, and we believe with our membrane, which we will explain to you in a second, but we really have a technological advantage, there should be a market potential for us over the next 10 years of roughly a billion euro. And that is probably still a prudent assumption on that. 21:55 Can go to the next slide. On green hydrogen, there is different methodologies, different technologies to make it, again without being too technical there, the two most advanced and to today commercially available ones are PEM, Proton Exchange Membrane and alkaline electrolysis. 22:12 We as Agfa are positioning ourselves on the alkaline electrolysis, both technologies clearly have a place and a role to play, but it is clear that for the large industrial installations, alkaline has an advantage, and the main advantage is both CapEx, lower CapEx, and also the use of simple electrodes, simple metals in there versus in PEM where you need actually platinum group, PGM, Platinum Group of Metals and those are both expensive, but also scarce. 22:42 So there is simply a bottleneck, let's say in how fast PEM will be able to grow because of the availability of materials we believe. And you see at the very bottom there, the expectation of average project size by 2030. So, you see PEM, there will be a lot of actually probably half of the projects will be PEM, but they will be much smaller. So, probably three quarters of that's the industry consensus, three quarters of the installed capacity will be on alkaline electrolysis based. 23:12 And then maybe going to the last slides. We've actually been working very hard on this for the last 10 years. We have been commercially active in this market for more than 10 years as you can see. Well, today was not still very visible because it's such a small market, but our membranes have been used for more than 10 years and there's more than 350 megawatts of installed capacity, actually with our membranes. 23:33 So, we have a very good track record when it comes to reliability and performance and performance was especially stressed last year. I mean, we did a study with Fraunhofer to – also with our new membranes and we continue to invest in innovation and in higher performance of these membranes. We now have membranes that have a similar performance compared to PEM membranes. 23:57 So, we can really take it to the next level and when it comes to green hydrogen it is going to be a cost play, of course, about two-thirds of the cost of making hydrogen is electricity. So, the higher the performance, the more hydrogen you can make for the same amount of electricity, of course, the better product you have, and we do absolutely have that with our Zirfon membranes. 24:20 So, I would say we're happy to be in this markets. We are ready also to take on the next challenge, and we will be investing in this in terms of growing with this markets also with production capacity.

24:32 Thank you very much, Vincent. And yes, the announcement by the thyssenkrupp relationship is again a concrete action, but we work with all players in this alkaline market and indeed we have here quite a unique technology in a very promising market segment. 24:55 Continuing the presentation to go to offset. So, offset, if you look at the year first, we are back in positive EBITDA territory in spite of the inflation way and offset has been the most affected business in terms of cost inflation. 25:20 We have been busy increasing the prices during 2021. Actually, we did three price increases during 2021. As explained due to the contractual situation, we couldn't impact the totality of our customer base. And overall the quarter, as we have seen the impact of inflation getting larger on Q4 is an excellent example of that, because basically and unfortunately, we are close to zero EBITDA, but the price increases are in place. So, they have been implemented already in January and February 2022. And therefore, we are going to close that gap very, very quickly. 26:12 As you know, as well, and we’ll discuss it as well. The inflation continues in 2022 and especially aluminum. We will continue to increase price accordingly and by the way, we are not expecting any issue doing so. 26:29 So, overall, I would say even if it's an improvement year-on-year, the inflation has hit us pretty hard, and again, we have a bit of a delay in translating that into our contacts, but we are able to do that in a very effective way. 26:52 Now, if we move to the outlook. We believe the group will improve its activity in 2022. In context, where inflation remains extremely strong and stronger actually than 2021. The price actions are in place. We have price actions in all businesses , not only offset, but we have price actions in DPC, we have price actions in Radiology, we are price actions in HealthCare IT as well. Service contracts, so today with the [indiscernible] inflation, we are increasing prices as well. So, across business. 27:37 Specific word on HealthCare IT. We have been very successful in the past two years to rapidly increase the profitability of the business and to refocus it. We are entering right now a new phase and for me 2022 will be more consolidated year. I not expect a spectacular improvement on profitability. 27:57 What we will do is, we will reinvest in resources in order to prepare the growth phase. We will reinvest in service capacity. We will reinvest also in R&D. So, our objective for 2022 for HealthCare IT will be now to turn to positive top line growth for the year. Okay? But I repeat what I said, don't look too much quarter-by-quarter. You need to look over 12-months period. 28:33 And I already know that the first quarter of HealthCare IT in terms of visibility of revenue recognition will be rather subdued and that the Q2 quarter will be higher. We had that kind of visibility depending on when you are on your project. 28:52 We will continue also in 2022 transformation programs. We have a number of projects in the making with always the same goal, agility, simplification, cost reduction. So, 2022 will be a year where we will start executing projects, we won't see any benefits. 29:15 The benefits will start 2023 onwards of this project, but 2022 will be a transformation year. Last but not least, of course we are not immune to what happens in the world and the Ukraine situation and the war in Ukraine and the situation with Russia indeed create new uncertainties for us. 29:39 For the business, well almost – we had a small exposure. Russia is less than 2.5% of the group sales. Less than 2.5%. So, it’s not really material. However, we are reviewing what can be done. Our products are not on the sanction list. Of course, and especially healthcare, is never on such list. It's the majority of what we do today in Russia, that there is, of course, uncertainty about the ability to continue our business in this country. 30:18 What creates the uncertainty is more the indirect impact. So, the impact on the global economy and the impact on the input cost for energy and key raw materials for us. Since the start of the events, aluminum as shut-up by 25%, and it is close today to $5,000. 30:45 You know that indeed aluminum is a significant input cost for us in offset, but I repeat, we will pass everything to the market. Everything is in place. We have changed the nature of our contracts and we are already preparing as I speak, price increase number five that should be implemented probably in May. 31:13 So, we not going to have the same kind of delay we had before. We have learned our lesson. We have adjusted our contracts with our customers and we have the ability right now to reflect, I would say very fast anything that we see on the aluminum market among other things, but in pricing in general. So, I want to stress on that. 31:41 So, that for the business. We wanted also to walk you through where we are in pension, after everything that we did and therefore, giving Dirk.

31:58 Yes. So thank you, Pascal. So a quick update on the pensions. Again, this slide reflects the material countries, so the four material countries. As you can see, overall, our [funded] [ph] status improved quite significantly over the year. So, 230 million, obviously we did [pension] [ph] [ph] de-risking program. 32:23 In the material countries, that was about 114 million invested in the de-risking. But also, obviously, we have had some benefits around discount rates. And after years going in the wrong direction now they're actually going a bit in the right direction. So, our average discount rate in 2020 was around 1.05; in 2021, it was 1.42. So that was like an increase that benefited also obviously the obligations. 33:00 We will be publishing in our annual reports soon the sensitivity that we'd like to share with you as well. So, if we have an increase of 100 basis points in the discount rates, the obligations would go down with around 250, just short of 250 million. 33:19 On top of the material countries, it's important to note that we also had de-risking activity in the non-materials. So, you may recall that we eliminated the Swedish defined benefit plan. So, in total and it's not on the slide, but in total, the overall funded status improved with 259 million. 33:41 If we look a bit at P&L and cash flow, and especially important looking forward to next year, you can see that we expect the pension costs in EBIT to go down with 5 million. Although we do think that the net interest cost will slightly increase. So, those are in the financing costs, but overall total pension costs should reduce from 32 to 28. The pension cash outflow, as you can see 2020 and 2021 were marked by the de-risking program, but if you exclude that, the normal cash flow out in 2020 was 75, in 2021 was 64, and will become 55 in 2022. 34:26 So, over the two years, that's like a 20 million reduction in the normal cash outflow that we expect for the pensions. And I think that's it from my side.

34:38 Thank you. Thank you very much. Just to finish up sustainability. We have embarked in a sustainable journey. We have set ourselves a series of objectives that will be in a position to share publicly, I hope pretty soon. 35:03 For safety, we have set ourselves a reduction of accident programs, so increase awareness and safety. In 2021, we have delivered minus 20% in terms of number of accidents with [indiscernible] work, which is a significant achievement, but we still have a lot of things to improve and we're working on that. 35:26 We’re also working on the path for diverse and inclusive approach at Agfa. We have set ourselves for gender diversity, specific objectives in number of women we want to hire as a percentage of the total hires of the group, as well as their fair representation at executive level. So that's a second objective that we have put ourselves. 35:57 Then in terms of sustainable innovation, we have now put in place a methodology in order ensure sustainability of all Agfa innovation going forward. And we are working on specific sustainable development roadmaps for some of our activities, especially in the chemical field. 36:24 Number four, we have for the first time received a rating from an external agency [indiscernible] which is widely used in Europe. And just to know where we were without doing any specific work on this, we are today on the top 45% of companies, which gives us a kind of a bronze level of achievement for [alkalische] [ph] and we will continue to work on improving our sustainability practices by selecting carefully our battle fields and I expect to make further progress in this area. 37:09 Last, but not least, in terms of climate change, we have started to buy green electricity today in Belgium. We are putting in place new practices, not only for the workplace, but also for the mobility policy and here you have an example also of secular economy where we are investing and receiving by the way some support to invest in reducing waste and CO2 at our plant here in Mortsel. 37:49 So, sustainability is totally embedded in the way we would want to conduct our business. We internally have developed sustainability goals that are reflected also in the remuneration of the top leader of the group, as I speak. So, we're not forgetting at all this aspect. 38:15 So, overall, I would say for 2021, in spite of all the challenges that we had, we continue to develop our roadmap to profitable growth. We continue the group transformation. We were able to address most of the inflation impact and for 2022, we believe that we can bring further progress in all these fronts. 38:49 With this, thank you very much for your attention. And I would like to open the floor for questions of the analysts and the press. 39:05 So operator, we will start maybe with the room operator and if you maybe, would you be kind enough to – if there is anyone, because we don't have all the analyst in the room, so if there is on the phone questions, we'll take it from the analyst and the press.

39:24 No problem at all.

39:28 Okay, perfect. Thank you. Good morning. Maxime Stranart from ING. Three questions on my side, if it's okay for you? First of all, looking at Radiography and profitability we have seen over this year and given the changes in China and so on, is this level of profitability the new normal or do you see some room to continue improving on that regard? Secondly, on green hydrogen, it's pretty clear that you have like a leading product it’s where the competition is currently standing at, and also what could be the CapEx required over the medium-term to serve that market? And finally, on the pension side, you mentioned that the expenses in the P&L are expected to decrease, but if we exclude the 130 million extra funding of last year, actually outflow is expected to increase. So, if you could shed some light on this as well?

40:24 All right. Maybe let's, if that's okay, Dirk, you are okay to start with the pension question, first?

40:30 Yeah, actually I'm not sure if I understand. So, see if I understand the question.

40:34 Yes. So, basically, if you look get to 2021, we have another [178 million] [ph], so if you exclude the 130 million of extra funding….

40:42 No, it’s actually these are the material countries, that's why I’m [missing it] [ph]. So, it's a misunderstanding. So, the material countries that cash in that we put was 114 and the Swedish plan, which is not on the slide. And that's why the normal cash out was 64 and next year it’s going to be 55.

41:00 Okay. That's clear.

41:03 Thank you for the clarification. [Hope it] [ph] works? Okay. Radiology. So, Radiology in a nutshell, I wouldn't say it's a new normal. I would believe that in 2022, we can improve the performance of Radiology to make a long story short. We still have uncertainty regarding what's going – the procurement process in China has been suspended. So far, which means by the way that the results obtained where not necessarily the one that the Chinese authorities we are looking at. And they are that, and we don't have yet the visibility on this. We expect Radiology to improve. 41:57 On H2, what about competition, was of course, we are not alone in this market, but we do have specific competitive advantage, but indeed we are not around – what's your taken on it.

42:09 So, I would say today, there's indeed two types of competition. There is the other electrolysis technologies, which we described a bit there and there is indeed quite some players on the side. There is also players working on other less mature technologies, which consensus is that it will take 5 or 10 more years to bring them to really to markets to commercially viable. And even at that time, they would – the expectation is that they would not be lower cost versus alkaline electrolysis. 42:39 On the alkaline electrolysis side, there is, I would say cheaper Chinese membranes, but which really have a much, much lower both reliability and performance in terms of how much electricity you need to actually produce the hydrogen. So, I would say today the competition on alkaline electrolysis, if you have to compare to the performance of our membrane, and this is also recognized by our most important customers, we are far above actually what you can find in the markets.

43:15 Let me add as well that hydrogen membranes, separator membranes are critical to performance, but not relevant in the overall cost. Okay. So, one. Second, we have a 10-year tactical. Nobody has did in the market. If you want to build an hydrogen plant that is worth billions, what will you choose? We have a poor lifetime also of our membranes that is at least [indiscernible] I believe. And a proven track record. 43:54 So, it means, indeed, we have a few arguments that makes us confident that this is a market where we are going to have a significant share. Today, our shareholder market is probably outsized. And we know that some competitors will come, but we believe as the inventor of the technology will still have a leading share in this market.

44:22 Perfect. Very clear. Thank you for that.

44:25 Guy Sips, KBC Securities, perhaps first a follow-up question on that. So, for a project of 2 gigawatt, what would be the share of Agfa, so what would be the investment in the alkaline and what is the lifetime of the membrane? Is it, if you use a replacement cycle of 7 years, is that reasonable?

44:54 I think what would be reasonable as a replacement cycle would indeed be 7 years to 10 years even, we probably could give a bit longer than 7, but that would be the order of magnitude. Your first question, are you referring to what the cost would be in the 2 gigawatt plant? Okay. 45:11 That would really depend on – there's a wide variety, let's say in terms of the technologies, the alkaline stack producers out there right now. So, it's a factor of 2 to 3 to 4 difference in between you want to make the same amount of hydrogen, not depending on the membrane, but depending on the performance of the overall stack, your cost might be 2 to 3 to 4 times higher versus the best technology out there today. 45:38 So, it's a rather wide range, but you're looking at for let's say for gigawatts, you're probably looking at between 10 and 40 million in terms of cost of the hydrogen membranes in there depending on the performance of the stacks.

45:56 And today, thyssenkrupp has announced two major contracts already. One in Saudi Arabia and one in Rotterdam recently, are you, is Agfa involved in both projects?

46:13 We cannot comment on specific projects. That is an agreement we have with our customer, and most of our customers actually. So, unfortunately, we cannot be specific on a specific project, but all I can tell you is that we have a very good collaboration with them, also to work on continuing to build the performance of those membranes. Every year, we continue to innovate and actually make them even more performing and that obviously for the larger projects they will continue to work with us.

46:40 But you mentioned the two largest project of thyssenkrupp nucera, and what we are announcing today, the selecteerde membrane for the large scale project. Okay.

46:53 A follow-up question on that, you see thyssenkrupp spinning out their nucera business, we will see IPOs in Italy as well on green hydrogen, what is Agfa’s position on this? Is it a possibility that Zirfon would be, yeah?

47:14 Well, the development of the Zirfon technology corresponds to one of the core competencies of the group. It's core competencies, it’s a sub-straight with very sophisticated coating in it. And it's produced, it's not [film] [ph], but it's produced with similar technologies in a way. So, for the time being, we believe that the right way to develop the Zirfon membrane is to do it here with all the technology and capabilities we have. 47:50 So, we have no plan today to spin-off an hydrogen business, for the time being. And remember what we have to do is, we still have to do the industrial scale up of the business. That still has to be done. We are producing membranes for customer today, but as you've seen from the slides, the scale at which industry is today is totally different where it needs to be 3 years to 5 years, which by the way, it was I think one of the questions as well. 48:25 We are also preparing an industrial investment in terms of capacity in order to be ready to fulfill the needs that we see in the pipeline. And the order of magnitude of the CapEx is not three figures. I mean it will be well below 50 million.

48:47 And Zirfon will stay under the umbrella of Digital Print & Chemicals or will it be separately?

48:54 For the timing being, it will stay in DPC, but internally, we are structuring it as a full-fledged business unit.

49:03 And in our [indiscernible] is that, yeah, in the tens or millions of euros or should we already see this as a three-digit million euro plus potential business?

49:18 You look at the ramp up. I mean, look at the ramp up, I mean we told you with the current announced project, it's a billion euro potential in sales. Okay, over 10 years. Now, the next and that's just the picture of today. Actually it might be, not billion, it might be 3 billion if the project portfolio increases to 250 gigawatt, you're talking about 3 billion here. 49:45 Now, the next question is, what is our market share on this, okay. Well, we have an idea, we have a mission, but you can figure out and say also, what could be the level of market share and the level of margins, we can define. So, I will leave it to you to make your own estimate at this stage. We won’t give full granularity for the timing being.

50:13 Okay. Two other questions on the remaining business of Agfa. First on the aluminum, we are used to work in our models with the sensitivity of €10 million impact [indiscernible] for every $100 aluminum goes up with a time lag of 9 months to 12 months, there was some guidance on that previously, is that changed? And also because you said, we are becoming more proactive in that field, so is the impact shorter or how is it working now?

50:51 Is impact correct? $100 of aluminum, 10 million on cost for you, I think it's a bit high, right?

51:01 First of all, it's a bit high. I've seen that said this morning also in the comments. But there is today the impact, our position is very, very clear. Whatever happens with aluminum, and other inflation, we put it through in the price. So, the impact will be a lot less.

51:24 But the impact will remain in the cost, but again, we repeat our full confidence to be able to fully reflect it in the market and in a much more efficient way than we've been able to do in 2021.

51:42 And last question on the pension liabilities as we saw discount rates, yeah, going in favor of Agfa since end of last year, end of 2021, do you have a rough estimate how much the net liability would decline if you market and put pension to current discount rates?

52:05 No, we haven’t done that exercise, I think. But the sensitivity I communicated. So, the sensitivity of 100 basis points is around 250 million decrease in pension liabilities.

52:22 Am I correct at looking at the current discount rates, could the net liability have declined nearly €100 million since?

52:33 You mean the components that is currently in the numbers? So, let's say there's a [0.37, so 37] [ph] basis points improvements in the discount rate, which is translating roughly into 77 million of reduction in liabilities, that's the effect of – in 2021.

52:54 But I'm talking now 2022 the …

52:57 Well, I'm not doing any predictions on 2022.

53:01 No, and for us, the subject of pension, of course, there is the calculation of the liability, where the subject of pension is purely becoming a cash out to our unfunded obligation in Germany, and this is what it is and you’ve seen this cash out steadily going down. And that's for me what matters most. Indeed, interest rates will make it so that it will decrease our overall, our overall liability and the balance sheet, but the cash we're going to have to pay every year will be the same. [Indiscernible]

53:43 Yeah, I mean, it depends, I think the key factor long-term of discount rates will be also around our ability to completely de-risk Agfa from certain funded plans. So, obviously, not for Germany where we see this as a long-term liability. With a steady decreasing cash outflow, roughly – which I explained also in the Q2 results, but for the other plans and basically in U.S. and the UK, we can imagine at one point in time that the discount rates would be at a level where it's cheaper for us to eliminate them altogether. 54:25 So, I think that will be the key effect of discount rates going forward. So, the market premium versus the IFRS valuation might actually close, and therefore make it possible for us without putting extra cash in the plans to both eliminate UK and U.S., but this is not for tomorrow. I think this is a multi-year view that we need to take on that.

54:52 Hey, good morning. So, just – first question, on the working capital, you said it was 26% on total sales, I was wondering can we use this figure going forward? And also, could you give some granularity on how this is a difference shared between several segments, again, for example, imagine than in offset it's quite higher than in HealthCare IT? So, if you could just give some granularity in that? And then also on the new contract in HealthCare IT and Radiology in the UK, how do you have to imagine being this rolled-out over how much time spent, and how much does contract like that represent a percentage of sales just to give a bit of a good idea on how we need to see this contract? And just on the CapEx side, how much of it is maintenance related and how much expansion related and do see how much CapEx do we need to foresee in the future?

56:01 You take the working capital [Multiple Speakers]

56:03 Yeah, on the working capital, we don't publish details by division, but obviously, it's true that there is a difference between the divisions. Like our HealthCare business has a very low usage of working capital, the HealthCare IT, and let's say in the equipment businesses and the film businesses we usually have a much higher level. 56:27 I think, the percentage is okay to use going forward. I think, our objective would be to continue to decrease because a lot of the efforts are around the film supply chain, around the component supply chains like we're working hard on reducing in radiology also the sensors and trying to be more efficient at delivering our customers with lower levels of inventory. 57:00 So, we do expect and will go for reducing that percentage over time. It may be driven a bit by mix, but it's primarily going to be driven by activity and actions that we want to take.

57:14 And indeed on a division level, working capital is very small in HealthCare IT, almost existent, and then offset actually, you are offset and you have Radiology and DPC with higher working capital than offset. The reason being these are global supply chains that we are having in all of our business actually. 57:42 On CapEx, 26 is not only, well 26 is, I should say, it's really maintenance today. And I'm not sure we can sustain that level of CapEx every year. We will have probably to spend a few more CapEx in order to maintain our plans. The other thing we do in CapEx is we invest for productivity. 58:11 We have four instance, CapEx that we are currently doing here in Mortsel to increase the productivity of our [indiscernible] and extrusion for Synaps. So, it's maintenance and productivity. 58:26 Expansion CapEx that we can foresee will be in two areas. First inks, if we need capacity for inks, but that's relatively cheap or non-capital intensive in the activity. You're talking really about simple installations. And the other one is, Zirfon going forward, and product that's not a subject for 2022, but that will be subject for 2023, you know to build up the capacity for Zirfon. 58:59 And on the Radiology contract, we have announced Radiology contract indeed with Spire in the UK. We announced it because it's a large deal, multi-hospitals, muti-year, however in the Radiology and especially the [indiscernible] the first customer is probably not even 5% of the total sales. 59:27 So, it's a pretty spread out, but it shows the ability that we have to work on multi-hospitals, multi-deal with one of the main calculator in the UK. It's just a good illustration of that.

59:51 Okay. Thank you.

59:58 I see another question in the room from Maxime.

60:01 Just to come back on the exposure of Russia, you mentioned that it's below 2.5% in terms of sales.

60:09 Yes.

60:10 Could you shed some light on the profitability of that to 2.5% as well?

60:13 That, if you take as a proxy, the gross margin of the group, it is different, so to speak.

60:20 Perfect. Very clear. That's all from me.

60:31 Any other question? Yes.

60:37 Maybe just one more, because with the hydrogen we're looking to the future and expanding a bit, but I was just wondering today, you have about 30% to 35% of your workforce is stationed in Belgium. If we look, of course, in Belgium, we have a bit of the indexation, which make sure that our wages increase faster than neighboring countries. How does this influence your competitive position at the moment? And do you already have the discussions with clients on passing on wages?

61:18 Alright. So yes, indeed. Belgium is one of the few countries in the world. It's not the only one, I think, where we had indexation of salaries. Indeed, but to be fair that our inflation is a global phenomenon and what you've seen in the U.S. and what we've seen everywhere else, is overall, I would say, I wouldn't call it's not – there are probably less people we need to [indiscernible] might be aware to fight it, but we are seeing the same phenomenon a bit everywhere. 61:54 And on top of that, it depends on the activity we have. If you are talking about an industrial activity, I would say that labor is not the defining factor of competitiveness. Input cost overall, the non-labor input cost is far higher in terms of competitivity factor. This being said, I think you're right. I mean some of the become expensive to do in Belgium, but we are looking at it and part of our transformation program is also addressing this point.

62:32 Okay. Thank you.

62:37 Alright. If there are no further question, operator, I'm not sure there is a question on the phone, or maybe there is.

62:45 There is one question coming from the line of Chris [indiscernible] go ahead.

62:55 Yes. Good afternoon. Thank you for taking my question. Still one or two remaining, firstly, just on offsets, we saw in the return to growth in top-line. We also see indeed mitigating actions for pricing. If you look at the cost measures that have been done, you've closed some factories, what should be envisaged for this division going forward, firstly on the margin side? And secondly, what could this implement for the carveout of this activity and its future strategy? Thank you.

63:31 Alright. On offset, I think indeed, we have restructured of our manufacturing. We have shutdown [indiscernible] which was a Tier 2 business that we managed from our Spanish subsidiary. We have reviewed our go to market. We have decreased the spend in R&D and the spend in R&D today in offset is mainly related actually to software development. 64:00 So, we have done a number of actions to restore profitability, but right now, the one, and we will continue to do so, we have ideas to work on productivity of manufacturing and we have still a project portfolio that is very active, but the first factor to restore profitability of offset is indeed pricing. 64:26 And that's the normal one action and the number one priority across the board for the offset teams. The good news, as I said is, it took us a bit of time to be able to reflect in our contact. So, the new conditions of input costs. This is done, and now we are entering more into a routine mode whereby we are able to adjust the pricing as need be on a quarterly basis. 65:00 So, this is really the main trust, and this is really the main priority for the offset team.

65:13 [Indiscernible]?

65:15 Sorry.

65:16 And regarding the strategy going forward to carve out [Multiple Speakers].

65:19 By the strategy, we have carved out the business or most not totally, but I would say the majority of the work is done. Yes, I’m still open, we are still open to look at strategic options, but again the priority is to restore profitability of the business. Even then if we look at – we are ready to look strategic options on the business.

65:48 Okay. Thank you. And then just second question. On these pricing actions, how does this compare with your peers? Are you competitive or as a market leader, of course, you often take the first shot, but are they being swiftly followed by others, yes or no?

66:04 Frankly speaking, we – offset is a good example. I think we are the first to – the first, you know, we are market leaders. Even if we are not market leaders by market share, we are market leaders by mindset. Okay. So, we were the first indeed to announce, I've have seen the competition following more or less in those shapes or forms, but frankly speaking, sorry to say, but I don't care. 66:35 My job is to do what’s right at Agfa, and I noticed that we were able to increase prices. We have not lost volumes, our plans in offset are fully utilized, and we will continue to do so. So, we will continue to lead the market in price increase and profitability improvements. 66:56 Now, we are not the leader in all our activities, but I would tend to say that this is the same for other activities and we tend to lead the price increase indeed, but we are seeing also an overall endowment where, you know our competitors are not are confronted to the same input cost. There is no magic in the price of aluminum, in the price of silver, or the price of [polyester] [ph], there’s no magic here.

67:31 Okay. Thank you.

67:36 There are no further questions in the queue.

67:39 I don't think there might be. Thanks, operator. I think we can end up the call here. So, once again, thanks very much for participating to the call. And again, 2022 is an exciting year with a lot of challenges, but lot also of good opportunities for the group. Thanks. Thank you.

68:01 Thank you everyone for joining us on today's call. You may now disconnect your handsets. Hosts, please stay connected.