Barco N.V.

Carl Vanden Bussche - Vice President Investor Relations Eric Van Zele - President and Chief Executive Officer Carl Peeters - Chief Financial Officer

Bart Jooris - Bank Degroof Guy Sips - KBC Securities David Vagman - Exane BNP Paribas Emmanuel Carlier - ING Stefaan Genoe - Petercam Marc Hesselink - ABN AMRO Bank

Good morning, ladies and gentlemen. Welcome to this conference call on the results of the full-year 2014.

I’m Carl Vanden Bussche, responsible for Investor Relation and Financial Communication for Barco. So I have with me here, as usual, our CEO, Mr.

Eric Van Zele and our CFO, Mr. Carl Peeters.

In a minute, Mr. Van Zele is going and together with Mr.

Peeters is going into the details of the results. And we will use the presentation that has been made available on our website since earlier this morning.

And we assure you, you’ve download the presentation and you found it over there. Maybe one other service announcement before we start, so, as you know, we have closed the divestiture on Defense and Aerospace end of January.

And so in the presentation of our results, we also made a distinction between reported operations and continuing operations. So in the press release part 1 and part 2 is on the reported business, part 3 is on the continuing business, so continuing, excluding the Defense and Aerospace activities, and then the part 4 in the press release is about divisional results.

In the presentation, we also made it clear whether we talk about reported or continuing business, but let’s say the default and especially in the first part of the presentation, we talk about the reported business. I will now give the floor to Eric.

Eric, please.

Yes, thank you, Carl. Good morning, everybody.

We struggled a little bit in coming up with the right title for this session and for the press release. Eventually, we elected to focus on the recovery of the second-half results and the momentum that Barco was demonstrating after a disappointing first-half, where has actually all of our businesses showed relatively alarming declines and most of which we have been able to come to and correct in the second-half of the year.

Maybe just very briefly all of the shortfall year-on-year between 2013 and 2014 happened in the first six months of the year in the second-half, the second semester was essentially leveled with 2015. So going to the slideshow on Page number 4, you can see the result of the second-half bills at €553 million is actually just a total below last year, margins at 32.9% pretty stable, I would say, the EBITDA at 13.3%.

And to the right of the slide bottom right, you can see that most of the divisions have actually staged a pretty good performance in the second-half of the year with noteworthy industrial and government going from a net negative position on EBITDA in the first-half of the year to a more reassuring still to get better EBITDA contribution of 7.1% in the second-half of the year. Also noteworthy, I think is that the Defense and Avionics the business that we did eventually sell and close at the end of January only.

We originally have targeted to close this transaction at the - on or before to December 31, but then we got some delays and - transactional delays and eventually closed the transaction on the - at the end of January. Nevertheless, as you can see Defense and Avionics staged a very good result in the second-half of the year, we thank them very much for their contributions.

This is the best they’ve ever done, and we wish them very good sailing under the new flags of Esterline. And then our ventures we will talk about that in a little bit more detail.

The results that we show there on the ventures are a mixed bag between the impacts of the sale of a - an activity called Orthogon, which we sold earlier in the year, I think in July - end of July, and then the decline and I would say an alarming decline that we suffered from - in our LiveDots venture, LED venture, but more on that later. I’m also going to ask Carl to talk about the significant gap that we have between EBITDA and EBIT.

There is some very good reasons for that, that requires some explanation and Carl will take that on him. When we then move into the results for the year, again, shipments at or sales at €1.51 billion 2014, gross profits at pretty much historical levels, EBITDA at 12.2% despite, as you can see to the right bottom negative contributions from the ventures and that is particularly LiveDots venture and e-venture [ph].

And then, again, this gap between EBITDA and EBIT, which will be commented upon in more detail just in a couple of minutes. The net cash position - net financial position of the company, at the end of the year was €63.4 million positive.

That excludes the proceeds from the transaction, which we have announced with Esterline which is valued at €150 million and an approximate gain in the books to be again commented upon a little bit more later on approximately $60 million. When you look at Barco now in a historic perspective on Slide #6, you can see that, we have culminated over 2012 and 2013, with record shipments in Digital Cinema and the decline of Digital Cinema as all of you predicted and we also realized, was anticipated.

And simplistically, therefore, you could look at this summary slide and say that the difference between 2014 and 2013 is roughly €100 million of sales in Digital Cinema, but that would be a very simplistic way of looking at these results, because there is a lot of stuff that happened beyond Digital Cinema. In fact, as we will see a little bit later, most of the decline in Digital Cinema, we were able to compensate for - through the contributions of projectiondesign and acquisition that we made in Norway to cover the needs of projectors in the 5,000 to 10,000 lumen range, and then also the, I would say, exponential growth very robust results reducing ClickShare with the acquisition of AWIND.

So our idea going into 2014 was that, we were able to compensate for potential declines in Digital Cinema with positive growth momentum and contributions from projectiondesign and AWIND, and to a large extent that has happened. So, yes, if we nevertheless show a decline than it is more because of the losses that we suffered on volume in our Control Rooms business in the first-half of the year and also in the LED business.

And I have to admit that that was largely unanticipated or happened a lot faster and was a lot more dramatic than we anticipated and required some firm reaction, which we did roll out into second-half of the year and we’re able to begin to have positive momentum again. So very bad news in the first-half, encouraging news for the second-half.

It’s also, perhaps, noteworthy to focus your attention on the top middle part of the slide, where we look at five years of Barco, and we still see despite a decline in 2014, a compounded growth momentum of 10 - double-digit 10.5%, and on EBITDA even grows to compounded 40%. Okay, going into the editorial comments for the year, the first thing we wanted to point out on Slide #7 is that, when we see an incoming quarters that appear to be lower than the year before that required some editorials, and you can see three lines there, the order book as was reported, first-half, second-half 2014 versus first-half and second-half 2013.

Then the order book for the business is going forward, so excluding Defense and Avionics. And then finally, the corrections that we took in the backlog in the order book related to the sale of Orthogon.

So the orders that have to do with the order book that have to do with Orthogon venture and then additional clean-up debookings that we - affected primarily in China and somewhat related to some problems that we’re having with channels of particularly Control Rooms, perhaps more than that a little bit later. So this, when you look then at the order book restated, which is the real order book going forward, the encouraging thing to note, I think is that, it is essentially at the same level as it was in 2013, which was a record year certainly also in terms of order in-take.

So the momentum going into 2015 looks actually pretty robust. It’s not just a shipment story in the second-half of this year 2014, but also order books supported, supporting some optimism going into 2015.

So the bottom half of that slide shows you the results of the various divisions looking at 2013 - second-half 2013 versus second-half 2014. And you can see that where 2013, in fact, was any record year for us, we have in most divisions outperformed on the top line of the results of 2013, except into ventures, the fourth one where we dropped from €35.8 million sales in second-half of 2013 to only €15.4 million sales in the second-half of 2014.

And that is entirely due to the decline in our validity [ph] venture in LiveDots. So the other business is robust, LiveDots a bit low still in the second-half of 2014.

Talking about on the next Slide #8 of the geographic breakdown, I think, as we have reported also at the end of the first-half - with the first-half results, we have seen sluggish performance of our business in China that have some to do with the laser projects new government, new allocation of resources. But also have to do with some of the news that came in the press also related to certain investigations by the customs authorities into import practices of some of our channels.

I would like to emphasize that Barco is not directly involved in this, but on the indirectly, as a supplier to these channels, we did not import product ourselves and also not accused of any wrong doing in any way, at least, not at this stage. But it affects the abilities of the channels to move products and to - and has horned this quite a bit in, particularly in the first-half of 2014.

Other editorial comments on the ability, margins, stable helped a little bit by the very good results that we have with ClickShare, but the margins are higher than normal somewhat to the negative compensated by margin pressure in our Control Rooms business. Because, as we know in our Control Rooms business, we were taken by - surprised by the speed of conversion from rear-projection cubes into LCD solutions, we have converted it ourselves and introduced new LCD solutions during the second-half of the year, the results of which are already visible in our results.

But we have to sell almost two LCD panels, or LCD square meters, let’s say, for the price of one rear-projection cube. And so much more competitive environment and even though we sold more channels, more video channels, more square meters than we haven’t done before, we nevertheless saw a significant drop in volume on the top line.

It is, however, growing market, and we think that, we will see continued positive momentum in Control Rooms going forward. Indirect costs have declined by €20.6 million, and I’m going to invite you to walk with me to Slide #13 [Audio Gap] continued business.

So, because also it is important for your modeling, I think going forward, essentially I think what I said on the P&L is also mentioned here. So from 2013 to 2014, we see increased amortization, the additional impairments for a continued business was €7.2 million, and we saw some lower amortization of acquired intangibles and depreciation, so leading to a €76 million gap between EBIT and EBITDA and 8.4% as opposed to 6.2%.

I think it remains the same couple of explanation on the impairments, because this is, I think important to tell, it’s a number of €7.2 million we have been doing every, like every years and stressed us on our capitalized R&D positions, and found that we have too much R&D capitalized for some activities. LiveDots is one of them.

Eric already alluded to that, I think, he will come back when he talks about the divisions that LiveDots disappointed in our sales this year. So, obviously I mean when we have lower demands and lower revenues planned for this year and the future also we are more cautious on the capitalized R&D.

Networking, we have invested a lot in the past years, but every project is successful. We have many projects that are really good and bring in nice revenues, but not all of them, so we have also enough close look to these projects.

And finally, in the division healthcare, we have the IPC, Interactive Patient Care about which we will talk also somewhat later, that have disappointing results leading also to the impairments. A small word about going forward to 2015, I can tell you that we expect lower amortizations in R&D obviously, because we have also capitalized this, so that logically, but they will be offset by somewhat higher depreciations due to CapEx investments, notably our systems and browsers roll out on platform, as well as or campus replacement.

Next slide is basically telling the same as the guidance. And the final note, of course, is obvious that we mentioned that we will book gains in 2015, but that’s, of course, with this fiscal year.

Slide 13, we saw already the waterfall, so I can over that, and my story wasn’t deep related to that rightsize and capitalized R&D. And let me now finish with, let’s say, the balance sheet discussion before going back to Eric.

On cash flow we realized $1 million cash flow - free cash flow in 2014. First-half was disappointing with a minus 8 in cash flow, but we have, let’s say, a much better performance in second-half.

Nevertheless, I think, this is not what we expect from a good cash flow, obviously. So we need to do better this, the driving factors are in the first place, roughly in profit, but also in working capital, we did not spend good enough, we will see that in a minute.

And gross operating cash flow was a result of - went from €141 million through last year to €119 this year or 2014. I mentioned working capital, it’s showing an increase.

And for those that are going back to the - comparison of last year, thee we had a decrease, which was helping certainly our cash flow. But in this year in 2014 we’re only clear of €26 million, leading still to a - for net working capital position on the balance sheet of below 9%, last year was even below 5%.

As you might remember in previous calls and in discussions with you, I’ve been guiding you that we can expect us between 5% and 10% net working capital, you can say, okay, with 9% or below 9% we are in that expectation. With this personally, I’m not happy with some of the evolutions in networking - in the working capital categories going towards with you.

Receivables, for example, is now posting a DSO of 60 days, up from 52 last year. I have to say or as a sideline comment here, it’s important to mention also that we have been going after some important transactions and deals in Digital Cinema in Latin America and have extended, for example, for large contracts for the tune of more than €15 million extended payment terms, which of course has an influence here.

That contract on itself which brings as a matter of fact were coming in, in the third quarter, actually the first month of this year had already an impact of five days on a total. But even then if you deduct that, it’s still €58 million, so that’s not good enough, we should do better in that.

Inventory turns also, we have turns of 2.7 last year, we are above 3. Our company should go over 3, so this is also a firm attention point for this year to get our inventories back on track, it’s a bit across all divisions.

But of course, we have to remember that we have introduced quite some new products, notably also in, for example in entertainment an corporates. In the corporate division we have a series of new meeting room and corporate projectors come to the market.

There is, of course, have an impact in the inventory. So on trade payables €122 million.

So we didn’t do much better in these - on the country. We went down in these working capital categories and to come to the net working capital position of 8.8%, as I mentioned, we are offsetting prepayments of customers.

So to wrap up, we are ending the year with $63 million cash position, of course, both acquisitions were prior to the proceed that we will receive for the Defense and Aerospace business and our return on capital employees, growth share is at 6%, down from 15% last year. Pension, of course, on the one hand of lower results, higher capital employed, I mentioned the working capital, and also tax rates, which goes from 12% last year, or 13% to 18% 2014, which is not a figure which was anticipated also on the tax rate.

Back to you, Eric.

Yes. So closing off with some additional comments about the divisions.

First of all, when we look at Slide 16, on Entertainment & Corporate, as we have indicated, it is our intention to separate the corporate business look at it as a different separate business from entertainment. Here in 2014, they are still reported as one grouping.

And the reason for that was primarily the integration of the projectiondesign acquisition, which was projected centric and therefore whether managed through the entertainment people than through the corporate channels. Anyway, when you look at results for Entertainment & Corporate, you can see that the drop happened completely in the first-half of the year from €306 million to €252 million in sales, more than €50 million just in Entertainment & Corporate.

And in second-half of the year pretty much back with even slightly uptick on €269 million shift in the second-half of 2014. I have to admit that ClickShare is a very big contributor to the growth in the second-half of the year.

Our ClickShare venture or our ClickShare collaborative solutions are meeting with very strong acceptance in the markets and are looking very robust growing also into the years to come. Noteworthy also is that we did - begin to introduce new generation of projectors, laser projectors at the high-end and what we call the cinema, Digital Cinema projectors for the smaller screens at the low-end.

It is also worth mentioning that Barco is clearly the reference player in Digital Cinema, we have captured rates on a global basis now between 55% and 60% on digital DLP chips. So Texas Instruments as a supplier, and we are clearly winning even in a declining opportunity space, and we have clearly one that all.

In Healthcare, we see a market within under second-half of the year from €88 million to €98 million and EBITDA contributions going up to - from 9.7% to 13.5% or 13.7%. Soft in the beginning of the year, I think we indicated at the end of the first-half that is - was in our opinion, a temporary phenomenon was companies like Philips, Alpha, Siemens, big customers slowing down their demand in the first-half, but recovering nicely in the second-half.

We have also reinforced our position in the market with a launch of a 12 million pixel color capable Uniti display, which really again positions Barco as the reference technology leader in that space. And also the introduction of a 4K Digital operating room network solution called NEXXIS.

That introduction was slow in the first-half of the year, because the big players are reluctant to adopt new technology without extensive testing and being careful going forward, but that business is picking up. If there is one area of concern, I would say in Healthcare going forward than it would have been our Interactive Patient Care segment, where we would now manage to produce contributions yet in 2014, we have right choice in that unit, given that more of a start-up nature again giving in some more autonomy, but also some more accountability.

And we are shifting the focus much more dramatically onto software solutions rather than to try, so hardware solutions for the patient in the hospital. Finally, last but not least, we are targeting to establish ourselves much more friendly in China.

China historically has been the story of Digital Cinema and Control Rooms, some events with largely Control Rooms and Digital Cinema, and we are moving a quite aggressively into China now, including manufacturing capabilities to come up with all conversions, much more competitive from a cost point of view, or price point of view initially for the Chinese market, but longer-term Horizon, partially also for lower price point export markets, such as maybe for example, India. Industrial & Government, very strong recovery in the second-half, we really have difficulty in the first-half, as you know, our rear-projection cube solutions are no longer competitive.

And we introduced rapidly and still a little bit too late in my case, but nevertheless where we act as quickly and we’re able to return to more healthy levels of profitability and volume on the top line, despite the fact that the price point on these LCD solutions is much lower than for rear-projection cubes. I think, we can move onto Defense & Aerospace, and then the Ventures.

Okay, Defense & Aerospace, what whether can I say good news, they’re doing well. We right-sized that business a couple of years ago, gave it much more of a focus on the, particularly in the Defense part of the business.

We were always strong under the commercial avionics side, but we had to do some, I would say all divisions bring in some new technology also on the Defense side, and we think that under a U.S. parent, U.S.

owner Esterline, they will continue to do well. Finally, Ventures, the [Audio Gap] lost business, sorry EBITDA must have lost operating profits in the LiveDots venture and that is indeed the case.

We’re in the middle of outsourcing our LED panels to alternative suppliers from China. And we’re actually moderately optimistic about recovering ground there in 2015.

For those of you that have gone to Amsterdam’s ISE Show, you will see that the LED display from Barco steals the show. Unfortunately, we don’t make enough money on it.

Our costs are not competitive. We are somewhat helped now by a weaker euro, but then in any case, our intention is to outsource this business to suppliers, particularly from China restore profitability and competitiveness that way and defend our position in the marketplace, but not good news in the second-half.

Okay, so what will be our focus in 2015, on Page #23. We wanted to improve on our working capital efficiencies and I have Carl to the lead a team internally to focus on the issues like obsolesces, write-offs, inventory turns issues that occasionally are with us.

I think in 2014 largely driven by the amount of change that we inflicted. If you look at each of our businesses, we have introduced a lot of new products and therefore have created for ourselves also some end-of-life issues particularly on the obsolescence side with some of the older product lines.

So we’ve worked our way through that at the end of 2014 we ended up, but we must be a little bit more careful going and get that stuff and the better management until 2015. We want to strengthen the geographic leadership when we look at the situations in China then we recognize that we must have strong local leaders that can exert local leadership and the local cultures with a better understanding of the local ways of doing business.

I think that is something where Barco had a tendency in the past to run too much of its businesses remote control with joysticks from fotoic [ph] that will change in 2015. We must rebuild channels in China, those channels that are under investigation or find it difficult to operate.

Under the current situations, we are establishing new channels to take care of that and have taken some debookings from the old channels, that doesn’t mean that projects have gone away, but it’s the only things that the relationship with one channel has shifted to another one. Let’s see, for the rest I think, the big challenge next year is to continue on our growth path in connectivity, collaboration, and networking, the investments that we made and the new technologies shifting the company even more from a hardware centric to a hardware plus software centric enterprise.

Also from a device centric or product centric philosophy to more of a solution systems integrated solutions philosophy all that is going on. And the second-half results are showing that we are actually making good progress on becoming less dependent on just the historic engine of Digital Cinema to make some for us.

I’m going to close in saying that because of our strong financial position and because of our confidence that we will restore profitability levels in line with historic performance in 2015. Our Board has decided to pay a dividend of €1.6 per share, up from €1.5 last year.

At the same time, however, because the company went through a substantial change in the shareholder structure, we believe that we will taper off and eventually slowdown our share buyback program but it went out, it has served its purpose, and we will - we intend to use the considerable cash resources that we do have to deploy organic and inorganic or internal and external growth initiatives. So those will come on top of whatever is already on the horizon for 2015, and beyond.

So, hopefully, that covers the tutorials, and we can open it up for questions, Carl?

Yes. Thank you, Carl and Eric, for a detailed explanation.

They’re ready to take some Q&A. We have about 30, 35 minutes left.

So may I just urge the people that are queuing to ask some questions? Do not fire four, five questions in the one row, make it maybe one-by-one and then leave it for the next attendance, as we have a large attendance in the room and already a number of people queuing up with the questions, yes.

Yes, good morning. I will focus my questions on two concepts.

First of all, the outlook, what do you think as a Forex sensitivity there, because given the decline of the euro this year already, we come from 1.38 on average on the dollar last year and we’re on 1.13. It seems like in your outlook you are saying the business, excluding Forex will be declining if you’re going for flat sales, could you elaborate on that?

And then second, is there any progress on your M&A targets and your growth projects, could you give us some insight in that? Thank you.

Okay, thank you, Bart. Eric will take your call.

Yes, let me try and stay at a high level maybe Carl wants to go a little more in detail. But obviously currency has helped us to restore profitability and to be more competitive in the second-half, and we expect that to continue if, of course, the dollar, euro relationship doesn’t worsen.

That clearly has made Barco more competitive going into 2015. And particularly in markets where products are outsourced from Belgium or from Europe like it was the case in Control Rooms to a large extent historically or so clearly in Healthcare and in Digital Cinema and barring what we do in China, but all the rest of the world is obviously benefiting from a stronger dollar.

So it makes us more competitive and it makes us be more optimistic and more bullish about going into 2015.

Okay, but why only go for flats to single-digit growth and sales then?

Because we are cautious. And maybe on the next question from Bart, on M&A?

I think your question was about, is there anymore outlook for M&A, the target obviously, I think we - you cannot expect us to talk about the details on that. Eric?

Yes, let me maybe chime in. We - I forgot the second part of your question, Bart.

So what we have done last year as you know is embarked on an elaborate exercise of identifying growth opportunities for the company, strategically first as markets opportunities, where we can bring value to customers, and we have identified three large spaces of opportunity for us. The entertainment world at large, the enterprise world at large, and then finally, of course, continuing the healthcare business.

And we will make or we will use - we decided that in those three markets, we could be global leaders. We are already in healthcare for the digitalization part, digital visualization part, and image processing and visualization, and we included the art and entertainment on the projection part in cinema.

But the entertainment world is larger events even retail and advertising as a potential market of - we see that as part of that larger space. So we see a world of opportunity.

We are not only the projector, but other technologies collaborative networking systems, more than just devices will make the difference. And it’s true in all of our three businesses, four businesses.

So we decided to divest from Defense and Avionics and deploy those resources very targetly to those three core businesses. We do have specific projects in mind, we are working those both internally and externally, organic, inorganic.

And as soon as we can, we will give you updates about that. We plan to share some of our strategic planning views in the upcoming Analyst Meeting later in the year - in may, in the month of May.

So we’ll give you a look at the Barco future. But yes, the answer to your question is, yes.

We know what we are doing. We are targeting certain companies, but we want to go over buying stuff or deploying new initiatives is easy spending the money as easy, integrating them well and producing - making them accretive from the very beginning.

Remember, we said we’re going from market share, not for technology. So we have to be cautious and make sure that we buy value rather than just volume.

[indiscernible].

Yes. Good morning.

We’ll concentrate on Digital Cinema. Can you give us a clue on the installed base?

How is it at the end of fiscal year 2014? And can you give us color on the services that are generated in 2014, as well as the split between new and replacement units?

And can you give us the average selling price of the lamp as well as the laser projectors. And what do you see in the trend of the prices of the laser projectors in ASP going forward for 2015/2016?

Thank you.

Oh, many questions at one, but let me try. Digital Cinema in general will continue to be an important strategic business for us.

We will continue to enjoy very substantial revenues from that marketplace, and it’s a combination of many things. First of all, being the market leader, we think that because of the high adoption rates that we have now, capture rates that we have now in the new markets of Latin America, Southeast Asia, our installed base for Digital Cinema projectors is nearing 50% give or take, those are not mathematical numbers.

But we think that half of the business out there installed base, remember we started from a lost position and we were not a player in this market, some other names were. But we really have captured - we are the well niche player in that market.

And every indication is that the business will continue to be win for us in 2015, be it at a lower level than the record years of 2012 in the [ph] local commodity. However, Digital, sorry, laser projection will be a very small portion of total volume.

We have some strategy of some noise. So laser projectors are sold still at roughly three times the price of a conventional projector.

But it is for the premium couple of hundred targets, very big screens, where a lot of light is needed, and again, we are leading in that segment. But we don’t think that it will have a dramatic impact on 2015 from a volume point of view, because it is a very small niche market, and it will take some time before it becomes more cost competitive.

However, it does reinforce our leaders emerging in that space and helps the traditional business, where I see more opportunity is in the smaller screens, where we are, as we speak actually introducing a new product line that is Hollywood compliant, DCI compliant at a lower price point, lower lumens, and where we were actually. As the market is shifting and smaller screens are converting into digital that’s where the opportunity lies, and I think we will see good results there in 2015.

What else can I tell you? On the service part, yes, that is an opportunity.

In North America, we were already doing that with servicing thousands of projectors remotely, we’re installing that capability also in China. Our new Chairman and I had an opportunity to take a look at that last week and we’re impressed.

So, yes, there is an aftermarket. Yes, there is a replacement market.

But the biggest opportunity for us is in that middle segment of smaller screens, where countries like China, India, but also many countries in Southeast Asia are deploying new theatres, where customers want to have the same movie going experience as they have on the BIG IMAX and other screens in North America and then Western Europe. And that’s where we are not seeing most of the case in 2015.

Maybe, Guy an addition on what Eric is commenting. So you have seen from the presentation how the volume in Digital Cinema has evolved in 2014.

Now, in the comparison between the pure sale projectors be it for new builds, be it for convergence, be it for replacements on lasers, so that was good for about 85% of the total volume in cinema, and then the remaining 15% was mainly services and adjacent business. And that’s indeed growing.

Okay. Thank you.

Okay.

Yes. Good morning, gentlemen.

Another question, I’m sorry about the USD and basically, let’s say about your choice, let’s say in term of the way, how do you see 2015, would you prefer, let’s say to get you to use the USD windfall to capture your market share or to rebuild your competitivity or rather to rebuild, let’s say, profitability? And then the second question on entertainment, if you could explain the relative weakness of the profitability margin in H2?

The last question on the traction of new products, in particular corporate projector only type mid-signal projector and digital operating income? Thank you.

Yes. Probably, let me start the first part of your question or your first question, David, on the USD impact.

As you know, we have, let’s say, a natural leverage of or hedging story from about 65%. So yes, we don’t see dollars, the denominated sales improving, but also we have cost improving, nevertheless the next result is positive.

So to your point about, do we anticipate improved margins or that we have improved profitability. Yes, I refer also to our Annual Report, where we actually gives us, pretty precisely we guide you towards the effect of 1% change in U.S.

dollar versus euro, reflects €1.5 billion impact on our bottom line. That’s the guidance that we can give.

However, in our guidance that also Eric expressed, we took already into account that state has improved our strengthening dollars rates going forward. To your point on the competitive positioning, obviously, I think also Eric, answer to that in that sense a minute ago to previous question on the U.S.

dollar, yes, we have now better positions on the market and we actually were having difficult seasons on very competitive segments. We feel more confident to withstand competition and to, let say, increase our market position in notably, of course, not America, but also other markets where U.S.

competitors are fighting with us. Eric?

Yes. I would say that we will continue to push for more integrated manufacturing in strategic markets, such as India and China.

So because the markets are also becoming more competitive, particularly as we move into volume segments like the - on Digital Cinema, where we are fighting in that 10,000 to 15,000 lumen or 8,000 to 15,000 lumen segment rather than 35,000 lumen segment, it’s a different gain. Volume is important.

Cost controls are important and currency helps. But as Carl indicated, our supply chain for many of our products is already to some extent or depending on where we make stuff to a large extent dollar base.

So the effect is muted, but it is significant and it will help us.

David, do you have one more question?

Yes, about entertainment in H2, basically the - if we compare on the H2 margin to towards the H1 margin on entertainment, you could explain what has been driving margin lower and then on the traction of new products?

David, which slide are you making reference now?

Viable [ph] entertainment.

So indeed EBITDA margin in the second-half is going to come from 15% in the first-half to 14.5% in the second-half.

I think it’s worth noting that we have included the X2O Venture into the numbers of Entertainment & Corporate. So and that was a negative effect on EBITDA, because we acquired the company, I think, we closed at the end of March.

And it’s an extremely promising platform I have never seen any platform being acquired by Barco meeting with so much enthusiasm in the sales force, because it allows us to offer customers features and benefits that go much beyond divisional experience. It’s all about connectivity and about having the detail on any device interactively anywhere you are.

So X2O is very strategic and looking very good, but was a negative contributor to EBITDA in Entertainment & Corporate to the tune of low between €2 million and €3 million negative contribution in the second-half.

Okay. That’s clear.

Yes, and about the traction for new projector of the new line that you introduced last year. How satisfied are you with, let’s say, to reception from client corporate in particular?

David, as I indicated, I was in China last week, and the market there is for thousands of smaller communities converting their theaters to digital. And our position there to our joint venture with China Film Group is very strong and the product is absolutely - the only product on the market that is DCI compliant it has just been released.

It will be assembled and manufactured also in China. So it’s localized, which helps, of course, the cost competitiveness and the local character of the product.

So we are quite optimistic about its future, particularly in those countries, where the average size of a theatre is a couple of hundred people rather than the kinapolises [ph] of Antwerp or the IMAXs of North America.

David?

Yes.

You add it.

No, no, and my question was also related to the corporate clients, the reception of the corporate client for mid-sized projectors?

That’s a good question. I think we have indicated that there is a section of the corporate market that is projection centric, but our strategy for corporate is much more networking connectivity and collaboration, AWIND, ClickShare, centric and projector centric.

We are using the projectiondesign capabilities which are high-end capabilities to offer also superior visible solutions to that market to the extent that they want to light up with the - with projectors. So that’s for relatively bigger screens.

But there is, as you know, a lot of - there are a lot of meeting rooms, where an 80-inch or 64-inch display with LCD technology is just as good as the projections. So projection is a critical element of corporate, but it’s not the dominant contributor to our corporate strategy.

It will be collaboration, ClickShare driven, and also networking capabilities driven.

Okay. Thank you.

David, I will also refer to our report for your question about the margins on the entertainment. There is a note 1.3 on the X2O and there is much details that Eric was referring to that will give you confident about the margin on the entertainment also in the second-half.

And so annual report will be released in the course of next week?

Next week, okay.

Okay.

Okay, next question.

Okay. Thanks very much.

Yes. Hi, good morning.

Two questions, one on the guidance. So your guide for improved profitability in 2014, could you be maybe a little bit more specific, do you guide actually that in 2014 that EBITDA margin will be more or less similar versus the one you have seen in the second-half of the year.

Could you also explain a little bit the drivers that you see, door [ph] is clearly positive, you expect some additional positive impacts on cost cutting of the elements. So that’s the first one.

And then the second one is on Digital Cinema. Two questions, one, do you see cost pressure in the segment, given the conversion rate is already very high.

Secondly, you mentioned that the receivables were higher in 2014. Is - that’s driven by the Digital Cinema segment?

Thank you.

On the guidance and I’m looking at Carl here to kick me on this. On guidance, we currently do not give guidance or forward-looking statements.

We want our core businesses to move and develop plans and actions - material actions towards the 15% EBITDA margin and some are close or at some. For example, Industrial & Government are not yet, so we will continue to push them up, and so your question about profitability, yes, we will drive continue to put emphasis on bringing cost in line with contributions and the dollar will help us.

I don’t know if you can give any further color?

No, I cannot, let’s say, tell everything, of course, Emmanuel, I think you will understand. If you look to the second-half last year, were 30.3%.

Take into account also that we have articulated that we do want to invest the proceeds that we will get from our VAT [ph] divestment into new initiatives. And that of course also, let’s say, takes away some profitability on that.

But I think we will - we are confident that we cannot say perform and that we will indeed looking to the second-half of the year, strive for, let’s say, similar, let’s say, margins. But come back on that on a later occasion when, for example, we see each other on the Analyst Day.

But during the Capital Markets, I think you mentioned leap of 15%. And then you added that you continue to investment.

And these investments could lower the EBITDA by, I think, it was 300 basis points if I remember, but since then we have seen a stronger door? So, yes.

No, I don’t remember saying…

No, not 300 basis points.

…not 300 basis points. The 15% is a strategic target for the core businesses.

And rightly so, next is also core businesses, we will launch different growth initiatives. We have heralded that to the markets, but we will do it very cautiously, because we are all aware of the fact that, if we take initiatives that are not EBITDA contributors that - yes, reaction of the financial markets would be negative.

So we are well aware of that. We have a Board that watches that with careful eyes, and we will be very selective in the investments going forward.

But we certainly have no intention of depressing our EBITDA margin with 300 basis points. That maybe a short version of my carrier then.

Okay, maybe just to close on the question, so the guidance that we articulated in press release and in the presentation is based on the continuing business, so like-for-like into 2015. Good, I think we are ready for the next question.

Sorry, sorry, Emmanuel, I had a second question, yes.

Yes. On DC I would like to say, that our view is that we are not only the survivor, but the consolidator in that market.

We are the leader. More opportunities, new opportunities are shaping up and we are taking more market share.

So we are bullish about DC, even though it is a declining universe. But as somebody already indicated earlier there are new opportunities for new technologies, integrated servers, laser technology, laser phosphor technology coming into the picture, lower level or let’s say lower lumen capabilities.

So it is certainly as we indicated a year ago, when we were together on the Analyst Day, We said that DC would stabilize at a level that was higher than what the doomsayers in the industry were suggesting and certainly has happened for us. And we do not expect that this picture will change in 2015.

If anything, we are relatively bullish about the outlook in DC going forward. Because of the many new segments opening up and because of the incredibly strong position we have in all of the strategic markets including North America, Western Europe and China.

So I can be only cautiously positive about digital cinema.

Emmanuel, I think to comment also to Eric’s what he called a consolidation, I mean, it’s indeed, the sponsor kit [ph] about the installed base. Barco is very strong in that, within, how many, 40,000 cinemas worldwide with conversion moving let’s say around 90%.

With our current capture rate, by the end of the conversion there will be about 60,000 cinemas with Barco projectors, we’re up that. I mean let’s not underestimate that, that’s a very interesting and very compelling kind of position to start from, because going forward that’s our market, that’s our captive market, which we really exploit with replacement, to start with, services secondly, but also let’s say additional gear service, additional installation service, so just to put that number on the table that you might, yeah.

Okay. Let’s move to the next question.

And sorry, on the key notes, could you maybe also answer that question. It’s related to digital cinema that you see that more cinema change or that it’s longer for them to pay?

Yes. I mentioned that, Emmanuel, when I was talking about DSOs, that one deal that we were discussing about it longer time, turns as on itself already five days impact on the total DSO on group level.

Going forward, we will be cautiously looking to these kinds of opportunities if this is coming to us. I mean also like in this Brazilian case we have been pushing forward to get the deal to us.

But having said that, I think when structurally we will go more for that, even the financing solutions, I see also solutions being offered based on leasing, which will not be ours, let’s say, wouldn’t coming on our balance sheet, but on other companies. So that will be remaining a mix and I don’t expect immediately a very big impact on the DSOs of this division.

Okay. Thanks a lot.

Yes.

Yes. Good morning.

Thank you for taking my questions. First, perhaps slight follow-up on the dollar, you just mentioned the - or you showed the EBITDA waterfall on one of the slides, €1 million for the full-year positive, but I assume this is for the - if we take H2 this is what €5 million to €6 million positive in H2.

Is this amount €5 million to €6 million something that is - something that you took into account for your budget 2015. And then a second question in Entertainment & Corporate, you mentioned that Venues & Hospitality and Corporates represents, I think you took that 45% in 2014.

I assume the other is digital cinema. So digital cinema represented about €286 million sales in 2014, is that correct?

And from those €286 million you’re quite bullish on the above alternative segments in digital cinema services, laser projectors et cetera. What kind of level you expect in 2015, should we see this going down to some €200 million or do you expect it to be more resilient than that?

Thank you.

Stefaan, most of your calculations are pretty good.

Okay.

Yes. Okay, good.

Okay. Can we leave it at this, or you’re going to ask me some…

No. I think, that’s if you agree on those points, then it helps me.

Okay, thank you.

All right. I didn’t say I agree.

I said, you are pretty good.

Okay.

But, I mean, I’ll your other questions to Eric, but on the dollar exposure I think, directionally you’re right indeed. The second-half did compensate for the negative FX effects in the first-half if you will remember our earnings call in July.

So yes, Genoe, your financial is correct on that upside, Stefaan. Yes, on the market…

Sorry, just that the number that Stefaan mentioned is obviously a number that is higher than what people would have predicted a year ago. It goes to the truth and it surprised us possibly as well.

Yes. And then I mentioned the last number, do you believe in this year, we should rather look for a level of around 200, or do you expect some more resiliencies other than that?

We have no indications today that the business would dramatically weaken going forward.

…will decline.

We have reason to believe that we are trying very hard to maintain our lead position going forward. Will it be lower than this year?

Probably. But will it be higher than the number you mentioned?

Also probably. It’s very hard to speculate.

I think the truth, but I am not a prophet, but the truth will be somewhere in the middle.

Okay. That’s fine.

Thank you.

Hi, thanks. I just want to get back to currency.

You mentioned earlier in the call the impact of €1.5 million positive for every 1% of change. I think we’re now - if we get the exchange rate somewhere around 13% better for you, that would be some €20 million positive.

It seems that’s more than what was - I just having the second question before, so I was wondering so what’s the - if you would say in the line exchange and EBITDA excluding exchange rate, what level would you be there?

I don’t know about the last one, so let me answer to that Marc, that the €1.5 million is indeed our average calculation. But we also to get into account when we give let’s say our guidance for single digit growth on the top line and improve profitability.

So I mean, it’s not that this is something coming on top of me. We make this guidance, we look to the let’s say forth coming year taking to account this evolution.

Because we knew already of course what the dollar was end of last year.

And, so - but that does not implies that your underlying EBITDA trends excluding currency is actually quite negative?

No, we’ve been saying that we are between flat and single-digit growth top line and I think that reflects also in the bottom line. So now it’s more cautious that’s true.

And I mean, that - and the word cautious probably also that we used before. I think it was answer to one of the similar questions before and that’s the reality.

We don’t talk about profitability. We say we expect single-digit growth in sales.

But we talk about improved profitability is…

Yeah.

Improved profitability, but hopefully leveraged by not just growth in sales but also by currency. So if we do not manage to bring more profits to the bottom line and the growth in sales, I think my board is not going to be happy with me.

Okay. And then, I just want - second question is, you’re actually speaking about the, so flat to mid-single digit growth.

Maybe say a little bit more like, how it’s going to share over the division. Is that on all divisions or one of them particularly strong - a division has to be particularly stronger than any other, can you give some idea on that?

Sorry, Marc. Can you repeat your question?

Difficult communication line...

Well, we have some stop, Marc, can you repeat, please, or..?

Yes, sure, sure. No, no, actually the question is, you’re - obviously you’re guiding on a group level.

But I’m just wondering underlying per division, are there big changes. Do you expect this more growth to come from all divisions or one of them, particularly strong and the other more weaker, any big change to that?

In the second half, as you could see all of the three core businesses, but particularly corporate have some good growth. And from the comments I made on incoming quarters that is also reflected in the order book.

So that gives you some guidance, at least, for the early part of next year, some comfort that that growth momentum is indeed present. We want to grow and we aspire to grow in all of the three core businesses.

We will not be a global leader if we do not grow both geographically as well as market share wise. And that’s why we focus the company on those three verticals and decided to divest from Defense and Avionics, because in that market segment, even though we were having and enjoying a very good position as you could see from the numbers, we cannot be global leaders.

We are relatively small potatoes in the Defense and Avionics business. So, yes, we aspired strong growth in all of the three core businesses, robust growth, I would say.

Okay. Those were all my questions.

Thanks.

Thank you very much. And if there are no further questions in queue, I would now like to hand over the line to speakers to conclude the conference.

Yes. Thank you.

Well, let me first thank you all for participating in this call. As mentioned before, we will revise our full-year annual report by the end of next week.

We are working very hard to meet that deadline. And as you know, we have a good tradition to defenders to be one of the first to release the full report.

Next to that, it’s the last day of ISE in Amsterdam, and so it is definitely a good idea. If you would have some spare time related today to pay visit to the Barco booth where amongst others we are releasing the quietest laser phosphor projectors on the planet for amongst others also the corporate market.

Just be modest, Carl, and we see on the show.

Thank you, Eric. So, again, let me thank you for participating.

If you would have more questions for us you know where to find us, and thank you, and have a nice day.