Slide 1: Press Conference - Analyst Meeting
Agfa-Gevaert Press Conference - Analyst Meeting August 19, 2004
Slide 2: Divestiture of Consumer Imaging
Divestiture of Consumer Imaging l First step: decision to carve out and to run CI as a separate entity, for cash. l Second step: launch a review of all strategic options. l Objectives: l exit the consumer photo market to focus on core growth markets: Graphic Systems and HealthCare; l at least a cash
Slide 3: Divestiture of Consumer Imaging: process
Divestiture of Consumer Imaging: process l Advisor: Goldman Sachs l Contacted parties: l 5 financial investors l 5 industrial companies l management buy out/buy in l May/June 2004: l detailed non exclusive discussions with 2 different parties 2
Slide 4: Divestiture of Consumer Imaging: transaction scope
Divestiture of Consumer Imaging: transaction scope All of Consumer Imaging’s activities: l World-wide production, R&D, sales and marketing of: l film l photo-paper and chemicals l lab equipment In the first half of 2004, Consumer Imaging’s sales amounted to 363 million Euros, with an operating resul
Slide 5: Divestiture by a management buy-out/in
Divestiture by a management buy-out/in l All CI’s activities to be continued in a new company, called AgfaPhoto. l AgfaPhoto is willing to take over 2,870 employees: l all of Consumer Imaging’s directly allocated employees l all other employees dedicating more than 50% of their time to CI Procedures
Slide 6: Divestiture of Consumer Imaging: purchaser
Divestiture of Consumer Imaging: purchaser l Purchaser: AgfaPhoto, private company incorporated in Germany (GmbH). l Shareholders: l 55% NannO Beteiligungsgesellschaft l 25% CI management l 10% Abrams Capital l 10% Highfields Capital l Mezzanine financing: 20 mio € from Abrams Capital and Highfields
Slide 7: Divestiture of Consumer Imaging: scope
Divestiture of Consumer Imaging: scope l Purchase price: 175.5 million Euros. l Purchase price adaptations for changes in net working capital and net debt at closing. l Estimated net asset value of ± 560 million Euros at closing, representing: l fixed assets l other assets l inventories l trade paya
Slide 8: Divestiture of Consumer Imaging: financial parameters
Divestiture of Consumer Imaging: financial parameters l Agfa to issue a vendor loan note to purchaser at closing for a maximum amount of the adjusted purchase price. l Note secured with lease receivables transferred to purchaser. l Interest rate: 10% per annum. l Repayment over 4 year period, in lin
Slide 9: Divestiture of Consumer Imaging: financial impact
Divestiture of Consumer Imaging: financial impact l Non-cash book loss recorded of 430 million Euros, tax deductible. l Expected book loss already accounted for in the June ‘04 closing to assure maximum transparency l impairment of fixed assets: 107 million Euros l provision for the remaining expect
Slide 10: Balance sheet impact of CI divestiture
Balance sheet impact of CI divestiture June 2004 l fixed assets -107 million Euros l deferred assets +139 million Euros l total assets +32 million Euros l shareholders equity -291 million Euros l provision for expected loss 323 million Euros Ü Agfa’s balance sheet remains very solid, with low net fi
Slide 11: Divestiture of Consumer Imaging: a cash positive transaction for Agfa
Divestiture of Consumer Imaging: a cash positive transaction for Agfa Ü Transaction is cash neutral for Agfa in 2004. Ü Transaction is cash positive as from 2005. Ü Total positive cash effect of 260 million Euros, taking account of tax impact and repayment of vendor loan. Ü Fortis Bank has concluded
Slide 12: Divestiture of Consumer Imaging: two fully independent companies
Divestiture of Consumer Imaging: two fully independent companies AgfaPhoto l Graphic Systems l Consumer Imaging l HealthCare l Specialty Products Ü Starting from closing, two completely separate companies, active in different markets. 11
Slide 13: Divestiture of Consumer Imaging
Divestiture of Consumer Imaging Providing AgfaPhoto with the assets and resources required for long term viability: l Agfa already prepared the business to be run as a separate entity l Agfa accepts the book loss l AgfaPhoto is licensed to use the Agfa brand l for an unlimited period of time for con
Slide 14: Rationale for Consumer Imaging
Rationale for Consumer Imaging Ü Dedicated and reinforced management team, with in-depth knowledge of market and customer needs. Ü Business will be run as a medium sized company and will be better structured to adapt to rapidly changing environment. Ü Agfa gave AgfaPhoto a viable starting position.
Slide 15: Rationale for Agfa
Rationale for Agfa Ü Full focus on core markets of Graphic Systems and HealthCare. Ü Concentration on business-to-business imaging solutions. Ü Enhance Agfa’s growth and profitability profile. Ü Cash positive transaction. Ü Balance sheet remains very solid, even after the book loss. Ü Transaction gi
Slide 16: Half Year Results 2004
Half Year Results 2004 August 19, 2004
Slide 17: Trends in turnover (in mio Euros)
Trends in turnover (in mio Euros) Excluding currency effects -11.8% 2,124 (-5.4%)* 2,124 1,874 1,944 1,097 1,097 (-4.0%)* Q2 1,006 Q2 1,025 -8.3% Q1 1,027 Q1 919 1,027 868 -15.5% (-6.8%)* 1H'04 1H'03 1H'04 1H'03 * Variance excluding NDT divestiture After a weak start of the year, sales pick up in al
Slide 18: Sales trends per business group
Sales trends per business group (excl. currency effects) CI GS +0.5% HE 826 822 -3.6% 703 678 419 +3.5% 405 -15.6% 364 442 365 +0.3% 373 Q2 Q1 250 211 -15.6% 407 417 -2.4% 313 339 -7.7% 162 -15.6% 192 H1 '04 H1 '03 H1 '04 H1 '03 H1 '04 H1 '03 Year-on-year decline stabilises for CI, while HealthCare
Slide 19: Key figures Profit & Loss - Group (in mio Euros)
Key figures Profit & Loss - Group (in mio Euros) Q1 ‘04 Q2 ‘04 Q2 ‘03 H1 ‘04 H1 ‘03 Sales 868 1,006 1,097 1,874 2,124 -8.3% -11.8% Gross profit 368 414 461 782 912 -10.2% -14.3% Gross profit margin (42.4%) (41.2%) (42.0%) (41.7%) (42.9%) The gross margin remains above 41%, in spite of combined effec
Slide 20: Raw Materials
Jan -0 3 4 5 6 7 8 3.5 4.5 5.5 6.5 7.5 8.5 Fe 3 19 b-0 Ma 3 r-0 Ap 3 r- Ma 03 y-0 Jun 3 -03 Jul -03 Au g-0 Se 3 p-0 Oc 3 t-0 No 3 v-0 De 3 c-0 Jan 3 -0 Fe 4 b- Ma 04 r-0 Ap 4 r- Ma 04 y-0 SILVER (USD/troyounce) Raw Materials Jun 4 -04 Jul -0 Au 4 g-0 4 Jan -0 1,325.00 1,375.00 1,425.00 1,475.00 1,52
Slide 21: Key figures Profit & Loss - Group (in mio Euros)
Key figures Profit & Loss - Group (in mio Euros) Q1 ‘04 Q2 ‘04 Q2 ‘03 H1 ‘04 H1 ‘03 Gross profit 368 414 461 782 912 -10.2% -14.3% R&D -51 -49 -19.7% -61 -100 -119 -16.0% SG&A -242 -256 -272 -498 -545 -5.9% -8.6% Other operating items* -29 -475 -24 -504 -59 of which: - restructuring charges -8 -24 -
Slide 22: Key figures Profit & Loss - Group (in mio Euros)
Key figures Profit & Loss - Group (in mio Euros) Q1 ‘04 Q2 ‘04 Q2 ‘03 H1 ‘04 H1 ‘03 Operating result 46 -366 104 -320 189 Non-operating result -15 -11 -19 -26 -40 -42.1% -35.0% Profit before taxes 31 -377 85 -346 149 Taxes -11 +122 -25 +111 -50 Net result 20 -255 60 -235 99 Net result excl. effect o
Slide 23: Earnings per share (in Eurocents)
Earnings per share* (in Eurocents) Q1’04 Q2’04 H1’04 16 29 44 Earnings per share, excl. CI divestiture -203 -187 Earnings per share * Based on an average number of outstanding shares of 126 million 22
Slide 24: Key figures Balance sheet
Key figures Balance sheet TOTAL EQUITY AND NET FINANCIAL DEBT GEARING RATIO LIABILITIES (mio Euros) (mio Euros) (%) 3,839 77% 3,553 66% Liabilities 2,468 2,519 41% 31% 17% Equity 1,371 1,034 233 323 June Dec. Dec. Dec. June Dec. '03 June '04 Dec. '03 June '04 '01 '01 '02 '03 '04 Balance sheet remain
Slide 25: Working capital: key figures (in mio Euros/days)
Working capital: key figures (in mio Euros/days) INVENTORIES TRADE RECEIVABLES TRADE PAYABLES 1200 1200 Target: 100 days* 1200 Target: 70 days* Target: 55 days* 1000 973 1000 935 1000 863 842 859 813 826 814 800 800 800 600 600 600 138 133 132 124 400 400 400 290 304 313 312 200 200 200 77 74 79 73
Slide 26: Cash flow: Key figures (in mio Euros)
Cash flow: Key figures (in mio Euros) GROSS OPERATING NET OPERATING CASH FREE CASH FLOW CASH FLOW FLOW 150 96 61 54 50 27 11 16 -11 Q1 Q2 H1 Q1 Q2 H1 Q1 Q2 H1 Payment of taxes on capital gain of NDT divestiture had large impact on Q1’s cash flow. 25
Slide 27: Consumer Imaging: Key figures (in mio Euros)
Consumer Imaging: Key figures (in mio Euros) Q1 ‘04 Q2 ‘04 Q2 ‘03 H1 ‘04 H1 ‘03 Sales 155 208 250 363 442 -16.8% -17.9% Sales excl. currency effect 162 211 250 -15.6% 373 442 -15.6% Restructuring/non-recurring expenses +0.6 -11.4 -8.2 -10.8 -9.2 Operating result excl. of expected loss -19.0 -10.7 -3
Slide 28: Graphic Systems: Key figures (in mio Euros)
Graphic Systems: Key figures (in mio Euros) Q1 ‘04 Q2 ‘04 Q2 ‘03 H1 ‘04 H1 ‘03 Sales 386 413 405 799 822 +2.0% -2.8% Sales excl. currency effect 407 419 405 +3.5% 826 822 +0.5% Restructuring/non-recurring expenses -5.0 -9.3 -3.6 -14.3 -6.0 Operating result 20.9 19.8 27.1 40.7 61.0 -26.9% -33.3% Retu
Slide 29: Lastra profile
Lastra profile l Italian manufacturer of 2003 SALES 226 MIO EUROS printing plates, chemicals Italy and equipment North 16% America l Mainly analogue printing 30% plates, but recently started production of digital plates l 6 factories: Rest of 4 in Italy, 2 in US Europe l Number of employees: 30% ∼90
Slide 30: Lastra acquisition: rationale
Lastra acquisition: rationale l Market consolidation l Large cost and revenue synergies l Strengthen the position in the US with Lastra’s IP for a digital plate l Increased market coverage from low end to high end l Streamline combined sales and distribution network 29
Slide 31: Lastra acquisition: financial parameters
Lastra acquisition: financial parameters l Enterprise value 155 million Euros l 2003 sales 226 million Euros l net financial debt 88 million Euros l shareholders equity 53 million Euros l Closing end August 2004 l Cash transaction, accretive from first year 30
Slide 32: HealthCare: Key figures (in mio Euros)
HealthCare: Key figures (in mio Euros) Q1 ‘04 Q2 ‘04 Q2 ‘03 H1 ‘04 H1 ‘03 Sales 292 356 364 648 703 -2.2% -7.8% Sales excl. currency effect 313 365 364 678 703 +0.3% -3.6% Restructuring/non-recurring expenses -4.1 -3.0 -1.7 -7.1 -3.3 Operating result 36.4 53.7 71.4 90.1 138.1 -24.8% -34.8% Return on
Slide 33: Specialty Products: Key figures (in mio Euros)
Specialty Products: Key figures (in mio Euros) Q1 ‘04 Q2 ‘04 H1 ‘04 Sales 35 29 64 Operating result 8.2 0.8 9.0 Return on sales 23.4% 2.8% 14.1% Lower sales, mainly related to seasonal effects in cinefilm. Operating result in Q1 benefited from a one-off price adjustment on NDT divestiture. 32
Slide 34: The new Agfa
The new Agfa l An imaging company, active in 2 core markets: l Graphic Systems and HealthCare l Striking similarities in both markets: l extensive customer intimacy l active on a world-wide scale l world class technological know-how l broad portfolio of high quality products and solutions l Agfa is
Slide 35: Graphic Systems
Graphic Systems Prepress + Industrial inkjet printing Mature market of 8 bn Euros Emerging, high growth market Expected size 10 bn Euros in 2010 Ü cost, technology and market Ü offering press software, inkjet leadership media inks Ü make equipment business Ü leveraging on technological profitable le
Slide 36: HealthCare
HealthCare Radiology Solutions Departmental Solutions Enterprise Solutions l film l computed/direct l Clinical Information l print solutions radiology Systems l computed/direct l PACS l Electronic Patient radiography l connectivity systems Record l PACS/RIS l workflow management systems Consolidate
Slide 37: CIS / EPR covers eight main functionalities
CIS / EPR covers eight main functionalities Typical functionality Description l Financial mgmt. & general accounting l Patient billing Hospital admin l Planning/logistics (equipment, beds, personnel) systems l Human resources l Management information/data warehousing l External reporting l Retrieval
Slide 38: The new Agfa
The new Agfa l better focussed l less cyclical l less currency exposure l strong market positions l higher margins l higher growth 37
Slide 39: Questions & Answers
Questions & Answers Ey