Earnings Call: H1 2021

Aug 25, 2021

Hello, and welcome to the Agfa Half Year twenty twenty one Results Call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask Jeff. And you will be connected to an operator. I will now hand you over to your host, Pascal Jouary, CEO, to begin today's call. Thank you. Hello, everyone. Good morning, and welcome to the Exa Earnings conference for Q2 and the 1st semester of the year. I'm sitting here with Dirk Damain, our CFO and the rest of the executive committee is also in the room ready to take any questions if need be. So first, rather very good set of results for Q2. We've seen an improvement across the board in our activities, and that translated in a very significant Jeff. Increase in EBITDA, about 30% higher than last year, knowing that last year, of course, was the Q1 of the year that was impacted By the pandemic. Inflationary pressure, and I would like to Try and give more color to the comments here on the slide. What do we mean? We mean that We've seen some inflation already in the first half of the year. We have started, as you know, to Jeff. Increased pricing accordingly in various business areas. However, the P and L impact of inflation will be more significant Jeff. In the second half of the year than in the first half, simply because the inflation has been building up during the 1st semester. Price action are in place. Contracts permitting. We have various Jeff. Situation in terms of contractual arrangements with our customers. And every time we can, we increase price. However, We do expect an overall lag, a bit of a lag in the implementation of the price increase. And that will impact margins And especially for offset. 3rd, our confidence in our ability To make up for the inflation over time is high. It's mostly a timing issue. Jack. We are reporting back to you that we have concluded our pension derisking plan. And Dirk will walk you through On the details of this achievement, which I believe is a very positive news for Agfa. We continue to manage our working capital tightly. We have even in a Seasonal impact of increasing inventory, we have kept working capital under the same percentage of sales of the last quarters. It's an area of really focus for us. It the cash focus of the company, and we have been continuing our cost reduction programs in a number of areas. This resulted in a positive net profit for the group of €15,000,000 Now if we walk to the P and L. Sales, 13.5% higher when corrected from currency impact. So quite a significant rebound, I would say, in most of our businesses with health care IT being an exception. But As I repeated over time, we are not so much today after top line, but more about quality of the business in health care IT. Apart from that, overall, very nice rebound. We'll give you more color on each of the business or where we stand. Gross profit is pretty well oriented, so it means the top line did translate to the bottom line even with an increase of margin. SG and A is higher than in 2020 purely because we have cost back with the activity. However, If I compare this number with 2019, we are 15% below. That shows the very tight cost management we are implementing at Agfa. R and D a bit higher, but it's just a timing issue. It will be globally in line with last Geoff. So that results into an EBITDA of €40,000,000 or slightly over 9% on sales And an EBIT of €25,000,000 almost 6% of sales. If we go further down the P and L, The big difference, the big swing between the 2 years, of course, is restructuring nonrecurring, which turns positive in this year. The reason being we have a few asset sales as well as Our CR recovery plan does not cost as much as first anticipated. Last year, it was the impact of the Lied Spontamark Announcement. So overall, the only difference as well, of course, is in Q2 'twenty, we recorded Jeff. The sale of the Healthcare IT, which resulted, of course, in a huge profit from discontinued operation, but overall for this quarter, back to a positive net result. All divisions are improving, and that's really The key takeaway. Healthcare IT continues to make progress. Last year in the quarter, we'll come back to that, we did recognize a Very large contract. But overall, when I look at the overall situation in Elska IT, very healthy. We continue to make progress in order intake. Our order book is, I would say, high single digits higher, almost double digit higher than last year, Which is a good predictor for future activity. And we continue to improve We still have 2 activities that are below, the NDT part, which is linked to Oil and Gas and Aerospace, and we expect a recovery but later, Jeff. In line with the sector expectation. And in Jet, for which I would say the order intake has recovered, but not yet the sales. And there is a slight delay in, of course, turning the order book into sales in InJet. So we see a good trend, but not yet in the sales. Radiology Solutions, Significantly better performance than Q1. Q1 was indeed a quite weak quarter. Although we are still impacted in our film business by COVID because we sell in Countries that are still suffering from the pandemic, India, Latin America, Russia, South Africa being a few countries That's significant for us. Doctor continued to increase double digit. We have put price actions in place in the film. So overall, I would say it's a satisfactory result in Q2. And offset that improved significantly its performance also in Q2, we have seen Through the first wave of price actions, every time where we could, we did increase price the first time And we'll continue with price actions, but there will be a delay in some implementation due to contractual arrangements. So overall, for the quarter, gross margin improves and net profit of €15,000,000 I've already Jack. I'm going to turn to Dirk to comment the cash flow performance for the quarter on the semester. Yes. Thank you, Good morning, everyone. So free cash flow of the quarter, obviously, a strong EBITDA result. Working capital is the seasonal buildup That we usually see in Q2. CapEx, normal spending, nothing special in regards to provisions. This is also a bit of a seasonal effect in Q2 that we see Regarding employee benefits, income taxes were positive and that's mainly due to the fact that we received cash wise the R and D tax credits that is more a timing effect as well, leading to an adjusted free cash flow of EUR 5,000,000 Regular spending on pensions around €10,000,000 and restructuring nonrecurring €14,000,000 This is really the restructuring in Leeds and Punta Marque that is Coming to cash payouts and that is increasing the spending in restructuring and nonrecurring. Leading to a free cash flow before the extra funding of minus 19. And then we had in Q2 The buy in program in the UK for EUR113,000,000 and I'll explain a bit more all the steps that we took In the next slides when we talk about the pension. So leading to free cash flow of minus €132,000,000 On the next slide, you can see the year to date. So I don't have any many additional comments to make. So basically, you can see The EBITDA result, trade working capital net only €5,000,000 cash out. So again, we also had a good quarter, 1st quarter on the working capital. CapEx at normal levels. Provisions is still at positive 8. And then in total, I'll just jump to the extra funding of pensions, the EUR 129,000,000 That was spent year to date. So in Q1, as you remember, we did the Swedish plan. In Q2, we did the UK plan. And so in total, Jeff. There was €129,000,000 of extra spending. If you then look on the next slide, you can see the cash position of Agfa. Again, We still have a very strong cash position of €425,000,000 So we really have continued to have a good Jeff. Working capital, it's stable as a percent of sales despite the seasonal working capital buildup, Which we usually have in Q2. So that really says that we're continuing to do well on working capital management. So We are 2 percentage points of sales below 2020 Q2, so quite an improvement versus last year. We're even On an absolute basis, below Q4, which is traditionally the quarter where we try to manage inventories to a very low level. And for 3 quarters in a row, we maintained the 27%. So we're quite pleased with that result. The key point to make though is that inventories are suffering a bit from the global supply chain issues that we are seeing. So there's a couple of effects. There is the raw materials increasing, which Obviously, makes your inventory more expensive. There are also some transport delays. So due to the disruption in logistics globally, We are seeing a delay in delivery of, let's say, intercontinental transport, but also some delayed delivery of components. I mean, Jeff. It's primarily in the equipment business, but we are seeing some slowdown of the execution of our supply chain. We had a very good result in trade receivables, notably in the reduction of overdues. I think quarter on quarter, we reduced overdues by €10,000,000 So we're continuing to focus very hard on, let's say, the quality of the receivables and that had some very good results Jeff. Let me maybe switch to the pensions. And As you recall from the divestiture of the health of part of our Healthcare IT business, we decided to invest around €350,000,000 in Derisking and Funding Pensions, and we're happy to report that we completed that program in Q2. In total, we have focused on the funded plans and with the exception of Sweden, I'll get back to that later. In total, they are now 100% funded on average, but there is a bit of overfunding in the U. K, some underfunding in U. S. And Belgium. And as we said before, also the German unfunded plan will remain unfunded, but it's very predictable for us in terms of cash flows, And they will continue to reduce with about €1,000,000 a year. The other good news is that we said our target was to get Our net liability below €700,000,000 on the material countries, we actually already achieved That results, and I'll explain in one of the next slides also how we did that. The key reason is that not only Did we contribute to the pension plans, but also we were able to register a better discount rate on the liabilities. From that, and I'll share that with you later as well in a slide, is that we're expecting the cash Geoff. On the pensions, the regular cash outs to decrease from a €66,000,000 predicted for 2021, that's excluding the Extra contributions to €52,000,000 in 2026, and they will continue to reduce over time. And maybe the last key comment to make here is that when we look at the midterm in terms of what we plan to do, so again, we're not planning to do another program requiring cash, But we are going to explore, I would call, midterm, maybe 5, 7, 8 years from now Jeff. To see whether there is an option to create a buyout for U. K. And U. S. With minimal cash contributions. So But that's more midterm. That's not anything for the next few years. On the next slide, you can see what we did Do in the past 12 months, so this is quite an intensive program that we had. So here you can see the overview in Belgium. We basically focused on extra contributions, There was no de risking activity there. In the U. K, we did extra contribution in both years, And they were used for a buy in, which we completed this quarter. And on the left hand side of the slide, you can see The definition of a buy in. So basically, the buy in creates an asset on our balance sheet that Jeff. In the U. S, we did some extra contributions. We did an annuity purchase. We also did a lump sum project. And then finally, and that is not part of the material countries, but €16,000,000 is what we did in Q1 with a complete Annuity purchase of the Swedish pension plan in total amount of €16,000,000 So that was the program. On the next slide, you can see the impact on the funded status. So versus 2019, as I mentioned, it's almost EUR380,000,000 Reduction of the net liability versus year end 2020, it's a €211,000,000 reduction. And on the left hand side, you can see the €211,000,000 explained. So on the one hand, we did the €129,000,000 extra There was €35,000,000 of normal contributions that we did. And then we had An impact of remeasurement. So over the past few years, we each year had to come back with unfortunately lower discount rates, which continue to increase The overall net liability, we're happy to report that the trend is turning. And so the new discount was established at EUR142,000,000 versus EUR1.05,000,000 at the end of 2020, and that created another additional lift of around EUR80,000,000. So overall good news and maybe also to note the funded status of the nonmaterial countries evolved from 38 Jeff. So that's basically the elimination and the revaluation that we had on the nonmaterial Countries which included Sweden, which is now not anymore part. So there if you add the 2, you have the total amount. On the next slide, and again, just some a bit of numbers for transparency purposes. I think the key point Here is that we wanted to share with you where we are in the first half, but also where we're going to be estimated at the end of the year. And again, I'm not going to give much detail. I think this is just useful information for the financial community. But on the next slide, I think that's the more important one. This is the outlook, the projection that we have made for the next couple of years. And basically, obviously, we had to make assumptions. So the assumption, number 1, is that we maintain the discount rate, so there is no improvement of discount rate And also no experience gains or losses or demographic adjustments. So it's basically a Paribas' projection of the pension liabilities. And as you can see, we're projecting for 26, a reduction of €133,000,000 down to €440,000,000 more or less. Also the pension costs will go down to €28,000,000 And you can see that and we basically broke down the total cash Into the different components because that's useful for financial modeling. So the extra cash out This year was €113,000,000 The regular cash out €66,000,000 of which Jeff. A part is included in the EBITDA and some part is below EBITDA. So there you can see that the regular cash out is going to Come down from $66,000,000 estimated this year, and that's down from, I would say, dollars 75,000,000 to $85,000,000 over the last And continue to go down to around €52,000,000 in 2026. So overall, I think a very good achievement, very Good work done by our risk management and treasury departments. And I think overall, a very successful program delivering Jack. Exactly on the expectations that we were having for it. Thanks a lot Dirk for this very comprehensive Jeff. Explanation of the pension situation. Let's turn now back to the business and look into more details at the various divisions of the company. We're starting with HealthCare IT. Well, this is the exception to the top line. As I Told you it's not the first priority right now. And on top of that, we have a comparable in Q2 where we had a very Significant contract that was recognized in one go, which is not, by the way, typical of the way the business is done. So actually when you look quarter to quarter, you see a decrease of the activity. But If we take into account the overall more steady state, we are still happy with where we are in Healthcare 14% EBITDA. Costs are under control. The gross profit is at very good levels. So There is nothing broken with the business on the contrary. The division So performs well. We are looking at the order book, which is for us the way to describe where our business is going. And we are encouraged to see that Order intake is picking up. What's interesting, it's picking up also because we are gaining customers. Jeff. We have made new customer contracts in the past quarter, Especially in Italy. Or when we renew customers, we renew it with an expanded scope and a new generation of products. So That's also part of the progress we are making. So I told you the order book is roundabout close to 10% increase compared to last year, Which is very good, and we expect this trend to continue over the next quarters. We are more and more offering. We are becoming, I would say, 1 of the strong players in this market. We have concluded this quarter our first Full cloud based contract. We have started to sell actually artificial intelligence Jeff. Solutions to our customers, we are recognized by market organizations such as CLAS as Good players also for cybersecurity. So overall, I think the momentum that we see in this market is very positive. So, we are confirming of course our objective of high teen EBITDA percent In the midterm, actually, you see that we are getting close to this target almost, I would say, every quarter. So that's for Healthcare IT. Radiology Solutions, so clearly a rebound From a rather weak Q1, you see currency adjusted almost 10% growth over last year. Profit wise, not exactly in line in terms of EBITDA, but close to it. And if we look at the detail of the business, as I told you already, Doctor continued to grow double digit in a market That is rather subdued in terms of context and growth. Medical film volumes still impacted by COVID even with this We are not yet back to normal in terms of these geographies that are representing a significant part of our Shipment. We have put in place selective price increase policy as well to tackle Inflation pressure with, I would say, success. So overall, I would say it's back to normal Situation for Radiology and a satisfactory performance. If we turn to digital print and chemicals, well, here you see a 23% growth over last year in terms of revenue. We're not yet fully back to pre COVID level in the division as explained, but it's a very good progress. And that translates as well on the bottom line because we continue the ride of the Q1 with even some improvement With a good profitability for the business. If we look into more details, Everything so we have 3 businesses, I would say, to keep it simple in DPC. The first one is inkjet. So in Jet, all the consumables and the service are back or higher than pre COVID levels, Meaning that our customers are busy printing and digital printing has some momentum, I would say. The equipment business is not yet back in terms Sales and here the capital decisions Jeff. A bit slower than usual. However, when we look at the order intake and even Our sales, we are making tremendous progress. And our order intake, I would say, Jack. He's now back to a very satisfactory level. Now the name of the game is to translate it into sale and that's where you know what Dirk Jack. Talking about regarding supply chain challenges, transport, parts supply is basically slowing down a bit Jeff. Or extending, if you want, the time between order intake and recognition in sales. But frankly speaking, we are encouraged. On top of that, when we look at the mix of our order book for printing equipment, it's more on the high end, Meaning more in consuming and I would say more expensive machines, more productive machines. And so we're encouraged Jack. With what we see. We have introduced a few months ago the fastest J type tower printer. And actually, the success we had in the market exceeded our expectations. And right now, the name of the game for us is to Make sure we can fulfill the order. So that's an extremely good sign for us of the health of the business. And all our solutions in decor printing, laminate floorings, leather are ramping up. It's not yet significant in our numbers, but we are very confident going forward. At the same time, we are looking at new applications, Jeff. The Gtight Auto printer was a machine that could do also some packaging jobs. And this is an area for us that is very promising and that we are going to develop. Then the second business is What I would call the more legacy film business from Agfa, especially the largest one He's ended in on destructive testing, which is going to aerospace and oil and gas. And here, that's one of the area where we're not back Jeff. To normal volume in this area. Our Specialty Chemicals business is actually above pre COVID level. Jeff. The reason is quite simple. The positioning we have is very favorable. I discussed already our Zirfon membrane's potential. It's not yet material in our sales, But it's still it will still be multiplied between 23 for the year. And when we look going forward, the project pipeline at our customers, it's absolutely tremendous. I mean, the project pipeline has been multiplied by in the industry of Relaylogen by, I would say, More than 10 in the year. So very bullish going forward, not yet impacted fully. We have launched our latest The membrane UTP-two twenty. Basically, that's a membrane that gives higher yield in terms of Hi, Logan Production. So you can see that here we have extremely good momentum. Our conductive polymers that are used in hybrid and electric car technology are doing well as well So overall, apart from film and foil that are continuing to be a bit subdued, Jeff. Except for a small niche we have in printing, we have synthetic paper printing for which it's taking off. But NDT is really the one That does not yet improve back to pre COVID levels, but very positive on DPC. Offset here again, pretty positive sets of results for Q2, 20% improvement in sales. We are not back to COVID level, and we don't expect to be back to COVID level, Jeff. By the way, we made progress, as you see, on profitability of the business during the quarter. Jack. But also reviewing our revenue model and so on and so on. So overall, a satisfactory quarter. However, As I already mentioned, we are impacted the most in offset By the cost inflation for the group, not only for aluminum, but also I think like across market Biochemicals, Packaging and Shipment Cost as well. So Jack. It's a significant impact that we had to absorb already in Q2, but the impact is going to increase In Q3 and Q4, in terms of P and L, we are taking actions on pricing. We are taking the lead actually in pricing I would say in the offset world, we are this is already the 2nd round of price increase that we are offering. However, as explained, we do have contracts in place that are aluminum indexed, Jeff. But the index is kicking in at a later date. So it's not a question of if, but when. And then we have We have also some fixed contracts that we are busy renegotiating, but that implies a lag, Somehow a lag of implementation of the price increase across the board. So we are looking at indeed a more challenging S2 in offset, although we are taking all the steps to preserve profitability. One of the things also I would like to mention is we are continuing to review our business In terms of digital plates offset with a subsidiary in Spain, we have decided to wind down this activity Over the next 6 months and to reintegrate it back into AXA with a Tier 1 Approach. So that's another example of all the actions we are taking to Jeff. Sustained profitability of the business. We are making progress also in setting up the business in a standalone as So overall, if I look at what's in store for the rest of the year, we do expect Continued recovery on volume. That's pretty clear across the board. We are seeing positive momentum. The one event that I've been talking about is really the inflation impact On the P and L, that's going to be more significant. I'm not coming back to that. I think that's really Jeff. The main subject for us going forward. So quite and that's mainly for offset. The rest of the business is, I would say much less impacted. That's pretty much an offset specific subject. But overall, we will continue to take price action. We will continue To manage our costs very responsibly and continue to have cost reduction initiatives in a number of areas. And of course, we will continue to manage our working capital very tightly. And we expect this also to show during the 2nd part of the year. Jeff. So that's where I'm going to stop for the presentation and open up for questions. So we do have some people in the room, some analysts in the room. And maybe we'll start with the room, Lilian. Yes. We're going to start with the room. And then if you have a question over the phone for Mainly for the press, maybe, okay. But we are going to take the question from the home. Okay. Thank you. This works. Good morning. Chris Kipperzinger of Petercam. First question, logically, I think, on the Lagging price increases. I was just wondering if you look to industrial players, they are mentioning that price increases are being accepted today by clients mostly. So to what extent are you hindered by your fixed contracts? Could you give an idea of the percentage of the group level or at least some indication? And why is the impact so big in H2 And not yet in the Q2. I think that there is a might be on the contract side on the purchasing perhaps. And the second question, Linked to that a little bit on your working capital, to what extent actually do you need to pay your suppliers in advance to obtain raw material? Is there any shortage yet? Or is it not an issue today? Thank you. I'm going to start with the price Under contracts, I would say and Luc, you can step up if You believe it's not exact, but I would say you have 3 situations in because mainly it relates to offset. I would say the situation is a bit different in other areas. I would say in other areas, it's less material than in offset. But in offset, we have 3 We have customers for which we can increase price immediately and we already did so in Q2. You have customers who have some aluminum based contracts With index that are kicking in with some delay, that could be 3 to 6 months, I guess. And you have fixed contract. That's the 3 kinds of contracts that we have Jeff. For Offset. Now to quantify it, let me say that we have Jeff. Yes, sizable part of our business that are on contracts that will induce a delay either through an index or Through a fixed contract for the year. I'm not going to Put numbers on it, but there is a good so that's where we are. However, so far, every time we've been The first price increase that we pushed through was a success. And I can say we have not lost Material volume, you can always have something happening at the French, but that's it. Jeff. And again, it's mainly for offset on the situation. And why is it so significant in the second half? Because aluminum, Freight, chemicals, packaging, they have not increased on January 1. They have been continuing to increase. It's leveling off in packaging, in chemicals, but not yet in the freight and not yet in the aluminum. So which is why the impact is much more in S2 than it was in the first half of the year. Okay. And just a small follow-up. You as a price leader mostly, of course, you raised prices first. Competition is following Jeff. We have seen for the 1st wave of price increase, we have seen indeed Some of our competitors issuing price increase statements, I would say. We so basically that we have seen. Most recently, we've Jeff. The market leader in Japan do an announcement of price increase in Japan, which is typically a bit late by the way, but it's part of the Culture, I guess, business culture in Japan. They did it. So overall, I guess everybody is confronted to the Same challenges in the industry. And the price of aluminum is pretty global anyway these days. To your question on working capital, are we obliged to do advanced payment to suppliers to secure raw materials? I'm not aware of that at all. Jeff. And if you look at our working capital and the DPO in terms of number of days, it has Stayed and improved by the way at a good level. What is bothering us Jeff. In the Everyday Life, his lead time are getting longer and it's difficult to ship. As you know, we source some of our components in Asia, of course, as you would expect. Jeff. And therefore, we see we are seeing this difficulty, but not to the point where we have to pay in advance our suppliers. Yes. Good morning. Hesus, KBC Securities. I have two questions. First is on the pensions, and I thank you for the very good explanation and numbers you gave on this one. It's mainly on the Swedish pension fund. So the cash outflow was in the Q1. It was in the 2nd quarter that you booked A profit on that in the restructuring and non recurring items. So the real question is, can you break down a little bit this EUR 3,000,000 plus What is the impact of Sweden and what's the impact of the Spanish business that you closed? And then can you give us some guidance on these restructuring and non recurring items? I think previously you were hinting for EUR 40,000,000 on a full year basis. Is that still the case? So can we expect there Quite a large number in the second half of this year. And the second question is on Healthcare IT. So In Q2 2020, we saw this big contract, which is not recurring. But the question is actually This kind of bigger contracts, how many times can we expect this? Is that once every 2 years, once every year? Is that Or is it just once and it's not recurring? You want to start with the contract? Or Dirk, are you ready? Or anytime, okay. Geoff. So in the nonrecurring and restructuring, there were some special effects in there. The restructuring for EPAXA was around, Let's say EUR 3,500,000 and again these are all approximate numbers and not exact. The reversal on the Regarding South Germany, it was around €10,000,000 The overall guidance sorry, I did I So I covered the Swedish pension was around 4,500,000 gain. And the guidance, I think at this point in time, I would I'm not sure exactly what I said last time, but around €30,000,000 €31,000,000 is what we're predicting right now, but that depends On certain decisions to be made still in the second half of the year, but that would be more or less the guidance. Luukte is heading our HealthCare IT Business. Can you answer on the contract? So if you look at the business of Health IT, you first have About 55% of the business, which is, I would say, recurring. It's very stable. It grows gradually. It's based out of your support And then you have projects. And these projects are recognized based on milestones, as you know. And sometimes you reach such a milestone and sometimes you don't. It's The quarterly evolution of the project business will continue. That's something that you will see on a continuous basis. Particularly in Q2 That was reached for the entire customer and that's what is making is an exception. But what you typically need to do for the Healthcare team market is to look at Not quarter per quarter. You need to look typically at a yearly cycle and how the improvement takes place on a yearly cycle. That's Geoff. A general thing to keep in mind when you look at the business. Which is why the of course, we look at the delivery. Jeff. But for us today, the main area that we are looking to track the business is the level of order intake and the level of our order book. Jeff. That's really as well as, of course, the quality of the order intake, what do we sell and the quality, therefore, of the order book. Jeff. That's really what we are looking at in this business. And looking at this, we feel pretty confident. Now you can have a quarter where you have less project implementation and a quarter where you will have more. Jeff. But it's not so there is a bit of variation on the project side as explained by Luc. But overall, what you need to look at Jeff. This indeed on a yearly basis. Yearly So, Maxime Stranard, ING. So if it's okay for you, four questions on my side, one for each division actually. First of all, on LCR IT, you mentioned that the order book is the way you operate the performance of the business. Is it something that you plan to publish in the future? And could you already quantify it? On the Radiology Solutions side, Obviously, still a negative impact from hardcopy, which well decreased product mix performance. Could you quantify how do you see the hardcopy business evolving for the second half in 2022? Thirdly, digital print and chemical with the new UTP-two twenty and membranes, Again, can you quantify in terms of volume or in terms of amount what you're selling right now and how the pipeline is looking like? And finally, in offsets, could you quantify the impact of the wind down of the activities in Spain? That would be all for me. Thank you. All right. Are we going to publish our order book? Jeff. I listen to you. For the time being, we do not. Indeed, although we give you indication on the evolution I note what you say will I don't have we need to think about it. Jeff. I need to look at what can be done in this area, but I heard you. UTP 2020, I mean, let's face it, I'm not going to quantify right now. It's impossible to Jack. For the time being, it's not yet a material business. You understand if you look at things In the green hydrogen market for the time being you have a lot of projects being committed in the market. Of course, We sell membranes when the projects are being implemented. There is a lag in such implementation. So for the time It's not easy to quantify. UTP-two twenty is the latest addition of our range. This is a top of the range product. It's just being launched. But I would say for very large projects, that will probably be the membrane of choice For our customers, quantifying the potential of the membrane business that can be done, But you're talking 3 to 5 years. And you're talking 3 to 5 years, the business that with what we see currently, we start being material for the group, But not before this period of time. And giving numbers is premature. However, if you want to look at it, there is a good proxy. There is an inventory being done of the projects Announced in rehydrogen. That's about 80 gigawatt today, I guess, more or less. Jeff. And therefore, you need to look at the share of the alkaline technology in this In terms of gigawatt, and that's also information that can be found. And then What is necessary for you to understand is basically what it how does it translate for us in terms of sales, Okay. So that's what you need to understand. Jeff. In a project, our membranes are critical to performance. They are not the bulk of the cost of building a green hydrogen plant, But this is a way you can look at it. Look at the evolution of The portfolio project, and you will see you have a way to understand what is the potential for us. Now radiology quantification for IS2, That's a bit well, typically, the seasonal pattern for hardcopy is Q3 is a bit weaker and Q4 a bit more active. From what we are seeing today, it's difficult to as I said, this is an area that is still a bit COVID impacted Given the nature of the geographies we sell in, what I can tell you is And in China as well, we are seeing the VBP process being on pause. So for the time being, we also have a stable outlook Jeff. In China. That I can share. Yes. Question on offset. The wind down of Ipaxa and the impact, Moiv. Luc, you want to take this one? I don't Ipaxa, there will be no impact. Ipaxa, it would be rather even a positive impact next year. So it's not contributing to the EBITDA? There will be a positive impact on 3 fronts for me. As Luc said, it's not contributing, so it's going to Contribute to the profitability. We have the opportunity to take over part of the business, not a lot, but some. And third, We are going to wind down the working capital associated with the business. So three benefits. I say next year. We want to wind down orderly the business. Yes. We have a 6 months period now to wind down, which is why most of the impact will be next year. We'll improve Probably a bit already this year, but most of the impacts will be next year. Sorry for having forgotten the impact. That would be all for me. Thank you. If you have more, go ahead, Chris. Yes. Still one question remaining. Looking at the comments on the cost base that you made versus 2019 and view the restructurings, could you share with us a bit On where the cost base should normally land on a full year basis or for example, going forward with all the restructurings which are now taking place being done, To have an indication of if your sales level is again stabilizing and structurally up, where should be the inflection point? Okay. We're not guiding of SG and A. Of course, it's We will continue our efforts in SG and A. We will certainly continue our efforts going forward In a number of directions, but you'll have to wait for specific initiatives. So as I said, part of it has come back from 2020 in terms of cost, But we're still well below 2019, and we still are working on productivity plans for the group. It's linked also to Dirk's answer regarding restructuring, so you will see. Any other question from Maxim? Thank you. Here again, one recurring one for me. Do you have any midterm targets At group level or divisional level that you would be keen on sharing upon point in time? Well, at some point in time, yes, we will do it. Jeff. Yes, I would welcome the opportunity to do it. You'll have to be a little bit more patient, I would say, but yes, I mean, we will do it. We already I believe we are giving you this for Esco IT. We have made a commitment and we know where we want to be. We are actually working on our strategic plan for the rest of the group. And as soon as we believe we have something that is ready, we'll come back to you on this and I Note your point, indeed. And one last question on the pensions from my side. As you stated that your only plan in the midterm and you stated 5, 7, 8 years from now, Derisking intention, so does that mean that for now in the next quarters, it will be quite calm on that front? Yes. So Geoff. So basically, we committed to that program and we executed it and it's done. So we're not planning to Extraordinary contributions to the pensions in the foreseeable future. I know things can change in the future, but That's not the plan at this point in time. When I talk about de risking, it is really playing the combination of, Let's say, discount rates moving over time, the market premiums to do a buyout potentially coming down in the future And then getting to the right point in time to actually be able to take it off balance sheet and do a complete buyout. So that's really what I wanted to say. So we think if we let time act and Again, I'm not pretending to know what interest rates will do in the long term, but I do think that there is a turning point that we have seen that I hope we'll continue to evolve over time. We could get to the point where we could do a buyout without any additional contributions On some of those funded plans. That's really what I meant. And can you give us some guidance that every 25 Basis points interest rates rises has an impact on your pension fees. Yes, we will redo the assessment. So that's Published in our annual report and we will redo it, but I think we didn't do it for this half year. We will redo it And is it fair to assume that the underfunded status in the U. K. Is balanced out by the over Sorry, the overfunded state in the U. K. Is balanced out by the unfunded state in the U. S. Or is it Yes, it's U. S. And Belgium. Yes, that's balancing. So those three together, they're close to 100%. There's a bit of overfunding. And again, it's IFRS valuation. So The point is for a buyout, you need to look at the market conditions, which are not complying with IFRS necessarily. So yes, that's the way it is. Sorry, last from my side on this. Why only why stating that is it that your intention is to derisk in the mid Geoff. And not earlier, is there specific Yes. As I said, at this point in time, our intention is not to do any additional funding. So Obviously, if you want to do a buyout, if you put the cash in, you can do a buyout. It's a premium that you would pay. But we're not willing at this point in time to pay that premium. So we're really going to see how the market evolves Jeff. And try to get to that buyout point without needing to add cash. So we could do it earlier, but that would mean that we need to put more cash in and we decided that The program was going to be €350,000,000 and not more than €350,000,000 I think it's a good guidance. We are looking at any derisking action that will not cost us cash. If it happens in a year or so be it. But more realistically, we believe it's I think that's the point. We are not we did what we believe is necessary. We are not putting more cash. All right. Maybe time for 1 minute concluding comment. So overall, a good quarter across the business. Clearly, an inflation challenge that will impact more in S2, but it's more a question of timing than anything. Jeff. It's not a structural issue. It's more a timing issue. Very pleased with the development of HealthCare IT and DPC, you know, over the past quarters and this will continue. So very confident going forward in this area. We will continue also Our actions on cost management and working capital. So continue to run the company That's time to conclude the call. Thank you very much To all of you attending, and I look forward to talk to you soon. Thank you.