Sebastian Frericks - Director of Investor Relations Ludwin Monz - Chief Executive Officer Christian Mueller - Chief Financial Officer

Scott Bardo - Berenberg Bank Falko Friedrichs - Deutsche Bank Daniel Wendorff - Commerzbank Oliver Reinberg - Kepler Cheuvreux

Good morning, ladies and gentlemen, and thanks for joining us today. Welcome to our six months 2016/2017 analyst conference call.

My name is Sebastian Frericks, I am Director of Investor Relations of Carl Zeiss Meditec. And as usual I am here with our President and CEO, Dr.

Ludwin Monz; and our CFO Dr. Christian Mueller.

I would like to hand over to Ludwin Monz to give you some prepared statements. And afterwards, we are open to take your questions.

Yeah. Good morning, ladies and gentlemen.

Welcome to Carl Zeiss Meditec's six months reports 2016/2017 analyst conference also from my end. We would like to share with you today our six month numbers, as well as some exciting product news.

Please turn to Slide 3, which outlines today's agenda. I will start with a short overview of our six month results.

And then as usual Christian Mueller will give you more detail on the financials in the next section of our presentation. Then I will talk about the status of the launch of the refractive laser procedure SMILE in the U.S.

and also about a major new product launch in microsurgery. And finally, we will give you an outlook for the second half of the fiscal year.

Please turn to Slide 4. Carl Zeiss Meditec was able to grow substantially both in terms of sales and profitability in the first half of all fiscal year 2016/2017 compared to the same period in prior year.

Revenues reached EUR588 million, which is almost 9% above last year. Top line growth was - it would have been a 7% at constant currency.

Christian will talk in detail about the growth contributors in just a minute. Let me mention however that the region APAC once again achieved the highest growth and profit company across most.

EBIT increased by 26% to EUR95 million, which corresponds to an EBIT margin of 16.2%. As explained in our Q1 call, however this EBIT number includes EUR8 million one-off gain from the disposal of non-core assets.

As we reported, these assets were related to the manufacturing of hydrophilic IOLs in Ontario, California. When we adjust the EBIT by the asset sales and PPA effects, our adjusted EBIT margin is 15.2%.

This is still a high margin which we are happy with. Last year, the comparable adjusted EBIT margin was 14.3% at this point in time.

The improvement of the EBIT is roughly 1 percentage point supported by a favorable product mix. Our net income reached EUR64 million which corresponds to earnings per share of EUR0.76 and prior year was EUR0.59.

Please note that the number of issued shares changed over the reporting period, we used weighted average of the share number for our calculation. Okay, so overall we are quite satisfied.

As I said before, my colleague Christian will provide with more details on the financials now. Christian?

Good morning, and also welcome from my side. As Ludwin mentioned, we had a strong second quarter and overall by that also a positive six months results.

And as usual I am now going to give you more detailed overview about our financial starting with the largest strategic business units that covers around about three quarter of other revenue which is the business unit Ophthalmic Devices. So Ophthalmic Devices brought portfolio of technology of devices for both diagnosing and treating patients with high deceases.

And I just came together with Ludwin back over the weekend from the largest congress for cataract and refractive surgery in the U.S. with more than 6,000 attendees, so lot of events and enormous excitement also for our offering data that we've seen.

Financially, revenue came in for Ophthalmic Devices with EUR433 million in the first six months. So compared to prior year, this is a reported growth of 10.6%.

And you should take a look here at the currency, corrected number 9.2%. You see we benefited from currency tailwind here of 1.4%.

Within Ophthalmic Devices, our refractive laser business continued its strong performance from the past. Here especially our SMILE technology continuous to develop very nicely and of course this was highlight also at the ASCRS at this congress and we also already see a small contribution from U.S.

launch there in this numbers. We see continued high demand as well for our surgical offering, so again also strong IOL growth with market share gains there but also ophthalmic surgical workplaces and our surgical microscopes did very well.

The more challenging area has been and remains to be the diagnostic franchise, due to the competitive landscape in this field. But also here we've seen some positive signs on the one hand increased demand especially for innovations that had been launched recently but also positive effects from the ongoing cost measures that we've initiated.

Profitability-wise, Ophthalmic Devices reported EBIT margin of 13%, roughly 13%. This includes the one-off gain from the sale of non-core assets at the Ontario site.

If you remember, we've reported that on Q1. But also on an adjusted EBIT margin, so eliminating this extraordinary effect, we achieved an improvement of around about 1 percent point.

So 11.9% on an adjusted basis compared to 10.7% the prior year. Now moving on, Slide 7 to strategic business unit Microsurgery.

And in Microsurgery, the secret about innovation is now lifted. We've announced in March and in April again at large congresses in the U.S.

and in Germany the new product launches in neuro and in dental surgery, so the KINEVO 900 and the EXTARO 300. Both launches were highlights of both shows and generated high interest and look when we tell you more about these very exciting new product launches.

Microsurgery delivered in the first six months a very stable performance with revenues of EUR154 million, so an increase of EUR5 million compared to the previous year, a growth rate of 3.5%. Also here some support from the currency.

So on the like-for-like basis, microsurgery grows by 1.8%. Profitability-wise, again a very solid performance.

The EBIT margin in microsurgery with around about 24% continues to be very let's say solid, remains on a high level. Moving on to the regional split of our sales on Slide 8.

You'll see the three main regions, well balanced of course those three regions with similar more or less similar shares. Although I have to say APAC with its very consistent and high growth rates is gaining share quarter-by-quarter and of course has already become our largest region.

But let me start here now with Americas first, EUR185 million revenue generated in the first six months, which represents an increase of 4.8%, so constant currency-wise 2.7. Here in the U.S.

that catch up, we've seen a growth of 6% in the U.S. also some currency tailwind there, but continuously let's say improvements that we see here.

Quite competitive landscape in the U.S. especially in the diagnostic fields, very intense, but nevertheless, we see some positive signs overall there.

Latin America all-in-all flat and here, different performances in the different countries, economically and politically, some countries somehow more challenging than others. So an overall we benefited in this region from the currency as well.

So as you have seen 2% points currency tailwind in America, mainly related to the strength of the U.S. dollar against the euro.

EMEA, overall a slight decrease of 1.3%, so constant currency-wise 0.6%. Here we had a significant gap in the first quarter.

During the second quarter, the situation in Europe has improved smartly versus the relative few weeks start. So - and here in EMEA also to consider a comparison effect.

So here Aaren dealer business in the prior year is included, which mainly relates to the development in Germany, but has on a six month basis overall in the region up such a significant effect anymore. So - but overall it had a picture in EMEA, Central Europe for example Germany, growth and most other countries are doing well, more challenged situation currently we are seeing in the U.K.

And again Middle East and some countries in southern Europe, here the situation is not let's say not that dynamic, so that we see declines in these regions. Strongest growth and our main growth engine here again as already mentioned by Ludwin, the APAC region, an increase of 21.7%, so constant currency-wise 18% grown compared to the six months of the prior year, so remains to be the region with the highest dynamics.

And again we've seen strong growth here in China, but also in Southeast Asia and India, regions countries where there is really a strong growth dynamic ongoing and not only in one quarter, so very continuously. The other large country here in Asia, Japan, here at the end of the fiscal year, end of March, so the typical seasonal effect also for Japan have reported an increase in sales.

But the overall dynamic of course is different than in the rapidly developing economies there. Then Slide 9, sharp look at the profit and loss line items.

The gross margin with 54.8%, so increase and reported increase of roughly 2% points. Sounds very favorable is related to some mix effects and of course cost measures, but also and that's why I said looks favorable also here the reclassification that we already mentioned in Q1 for some costs, sustaining costs plays the role here so that we have to shift from OpEx or from yeah from OpEx not from COGS into OpEx.

So that means the gross margin is somehow more favorable shown here and OpEx, the increase that you see here is somehow inflated by that effect, which is in total amounts to round about EUR8 million this reclassification amount. The OpEx, in terms of absolute numbers, as I said before to this reclassification effect on the one hand, but we've also invested especially in safe hand marketing so in the U.S.

for example for refractive laser business, but also felt let's say and hired people and strengthened our sales and service infrastructure there. The increase in R&D expenses, here if you look at the single line items, here the reclassification also plays a role.

So overall OpEx still on a very stable level. If we exclude the Aaren effect which has a positive effect here this EUR7.7 million income, it's - we are on a level of 40% on an adjusted basis here, so very stable, leads to an EBIT of EUR 95 million, so significantly above prior year and EBIT margin of the 16.2%.

But let's immediately come to the next Slide to Slide number 10, where we see the adjusted number because the disposal of the non-core assets at the Ontario site of costs have here the highest impact. The adjusted EBIT margin reached 15.2% compared to 14.3% of the previous year.

So an increase of around about 1% and here, as I said before the one-off gain from the Ontario asset sale as reported in Q1 is the one major effect, the other effect is really is related to the purchase price allocations and the depreciations on that one. Finally, have a short look at the cash flow statements on Slide 11, and some comments on some key ratios.

So the operating cash flow with EUR16 million lower than previous year. We've invested on the one side inventory, which is related to the product launches, mainly to the product launches, but on the other side we've also seen an increase in trade receivables.

So let's say a very backend loaded distribution of our revenues that we've seen especially in March, which leads to higher revenue trade receivables, but we now need to collect in the upcoming weeks and months. Regarding the cash flow from investing and financing activities here is reflected the shift that is related to a EUR110 million fixed term deposits, which expired in the first quarter of 2015/2016, and have not been extended.

Other than that the cash flow from financing activities doesn't show any let's say are the main effect here. The balance sheet and the financial ratios again remain very strong.

Equity ratio which had been on a very high level already has not even been further lifted up now at 77% and net cash position amount to EUR638 million. This is mainly related of course to the capital increase end of March.

As you will remember, we got - we achieved gross proceeds in the amount of EUR317 million. So all-in-all again, a strong performance also reflected here in the key ratios again.

Last Slide and just for completion reasons, I guess you all or most of you had attended the call that we had invited for after the capital increase. So this is most probably all familiar to you that we've collected or raised capital and managed to increase our let's say our liquidity by EUR317 million.

Here this is only now 4, 5 weeks ago there is I think nothing else to add here at this stage so no news on this one. Having said that handing back now again the Ludwin.

Yeah. Thank you, Christian.

I now would like to share some highlights as always as Christian was already explaining. We have just completed two major meetings and related trade shows, one was of the American Association of Neurological Surgeons, AANS, and the other one is a meeting of the American Society of Cataract and Refractive Surgeons ASCRS both actually took place in Los Angeles and we just returned two days ago.

So please go to Page 14, where you will find an update on the introduction of our minimally invasive laser surgery technology SMILE in the U.S. This was certainly one of the hottest discussion topics at the meeting of the ASCRS.

As we disclosed, we got the FDA approved for SMILE in September of 2016. We have used the meantime to prepare for the market launch by building up sales, service and support infrastructure .And I'm really happy to report that we let SMILE is now available in the U.S.

market. The first commercial patient procedures were performed in March, 2017.

And furthermore, I can report that the Fort Belvoir Community Hospital in Virginia which is the first U.S. Department of Defense medical facility performed its first SMILE procedure.

The Department of Defense has expensive refractive surgery program with over 20 dedicated centers around the world which performed over 40,000 refractive surgery procedures in last year. And we certainly hope that SMILE will be able to establish itself further in this program.

Globally, we have reached a total of more than 750,000 SMILE procedures since its introduction in 2011. There are more than 1,000 surgeons regularly performing the procedures around the globe.

However, we are looking forward to seeing a revenue contribution also from our U.S. SMILE business in the low double digit millions in the second half of our business year.

As Christian said before, there's already a small effect in the current result. Okay.

Now let's go to Page 15. We are very proud to announce a major innovation from our Microsurgery SBU.

We have just introduced a new robotic visualization system called KINEVO 900 to the market. So KINEVO is a system that most developed and very close collaboration with our customers.

We collected input from a large scale market survey. And furthermore, we worked with 50 neurosurgeons from 14 countries in 10 customer groups on the design of the new product.

We believe that the device has the potential to really change visualization in neurosurgery fundamentally. A traditional surgical microscope is purely optical and surgeon looks through the eyepiece at all times during surgery and he sees the magnifying surgical field through the microscope.

KINEVO introduces a new concept. The microscope image is recorded with a camera and displayed with high resolution 4K video system.

The images displayed on a high resolution 4K and 3D video screen. And this allows the surgeon to freely move around and he's not tied to the eyepiece of a microscope anymore.

However, it is possible to turn the system into a traditional surgical microscope with no effort at all. And this is why we call it a hybrid system.

This feature that you can turn it between the digital mode and the microscope. This feature is that what customers found truly appealing.

The other differentiating feature is the fully robotic movement of the system, so it's a really you could call it a robotic arm. This is a major innovation as well as it allows the surgeon to perform easy hands free movement which has always been a requirement in neurosurgery.

Days much more to report about the new product it has actually more than 100 new features. As we do not have time to go more into detail, unfortunately I just would like to mention that KINEVO 900 is a new platform.

And we will use this platform in the upcoming years to further advance neurosurgery and at new functionality. We expect a contribution to our business grown from year as 2017/2018 onward next fiscal year.

Please note that a very near term performance might be slightly affected by the transition as we ramp down the old model and ramp up the new model. Therefore, we would caution a bit to be overly optimistic with volume estimations for this product line over the next several months.

However, it goes without saying that the launch of this product is really very good news for our microsurgery business and we have substantial expectations for the years ahead for this product line. You know so much about our product news as Christian mentioned before there was also another product introduction and maybe we talk about that in one of the upcoming calls more in detail.

This brings me to our last agenda item of today's presentation, which is the outlook. Please turn the Slide 17.

The growth driver for the medical market in general and for microsurgery and ophthalmology markets in particular are fully intact. Furthermore, we believe that we have a well-balanced global setup, a strong innovation pipeline and a strong brand.

Carl Zeiss Meditec will continue to follow the strategy which was very successful over the last years. The elements of this strategy are first of all to further drive recurring revenue generation beside the cataract business the rollout of SMILE in the U.S.

and also further global rollout of SMILE that all will allow us to achieve this recurring revenue goal. Secondly, we will extend our technology leadership.

This is trough for all our businesses but in particular for the surgical ophthalmology business and the diagnostics business, as well as a microsurgery as we just explained. Thirdly, we would like to mention that we focus on further improving customer service.

As we discussed before, we will complement this organic growth strategy with our M&A efforts. For fiscal year 2016/2017, we expect consolidated revenues between EUR1.5 billion and EUR1.20 billion.

We anticipate an EBIT margin in the range of 13% to 15%. We expect to be within this range also without the one-off gain of EUR8 million, which means on an adjusted basis.

As the current business trends and the half year performance is favorable and we might trend towards the high end of our outlook range and for the fiscal year. Our midterm goals are unchanged for the time being.

Yeah. Ladies and gentlemen, this is basically our report of the first half.

And it concludes our presentations. We're happy to take your questions.

Now I hand back to the moderator.

Yeah. Thank you very much for taking my questions.

I have few questions, please. So the first question just relates to use of proceeds from the recent capital raise, obviously no update today, but could you through some light on that progressive with your corporate development activities, would you say that things are getting in a more advanced stage then perhaps 6 weeks ago when you raised the capital or just some sort of background here to how you're progressing in this regard, please?

And the second question, just relates to the new microsurgery platform and KINEVO 900, obviously very pleasing to see a strong platform launch over the recent weeks. Can you give us some sense of when you expect FDA approval for the system please?

And also could you give us some sort of perspective as to the contribution from this platform. Is this in your opinion a similar market expander and to KINEVO 900 which show you in a double digit growth range for this division for several years or should we expect less significant incremental growth contribution from KINEVO?

So that's first and I have a follow-up. Thank you.

Yeah. Scott, thank you for your questions.

Regarding the capital raise, as you were already guessing this nothing new to report. We have a –there is a continues effort right regarding M&A, so we are working constantly here through our pipeline.

Again please understand that I cannot give further information here about specific targets and a status of discussions. Regarding the microsurgery platform, yeah I really believe that this can make a significant impact and you are right.

The effect which we had with the PENTERO as that when we introduced the system or when we introduced new features then the market group right, because it's - the market size is relatively small, we have a significant market share and if there's something new customers stop buy and the market grows. And I believe that something like that could also happen here with the KINEVO.

It's - what's really new here is that as I said and try to explain is a kind of difficult to do it just with words. It's so much easier to show it on the system.

So if have a chance if you are - some of your interested let us call. The new CS really that is digital right.

So you're looking at the screen and that makes a big difference to many of our customers and they are really interested in that. And with the other feature which really has a lot of potential is the robotic movement, right.

And you're right, it's a platform, so we will build on that and then at upgrades, at functionality step by step and that hopefully will grow the market. It's before you ask I make a comment, it's difficult to quantify that right.

But what I can tell is that, it will take a while until funds of our customers are available because they are that typically six months cycles I would say that it takes to really get the money to invest into a new system. This is why we expect an impact here on that new product only in next fiscal year.

You asked about the FDA approval. That's always difficult to predict.

The good news is this is a 510-K approval. So we just saw equivalence to other devices and that typically doesn't take that long.

So I would expect that this will be available the next couple of months. But I don't have a specific point in time because FDA does not give you an exact dated now.

Thank you. And obviously this is a more sophisticated and technologically advanced device, when we think about profitability mix in this solution going forward, should we expect it to be favorable profitability mix to the current microsurgery margin which is already quite healthy or do you expected if you like to be at a slightly depressed margin versus where you are today?

We're certainly at aiming at maintaining the profitability level here. We can't tell for sure yes because the price level first needs to be established in the market.

But my assumption and you could use that same assumption would be that it's in a similar range of what we have today.

Thank you. And last question on operations, obviously things in business seem to be going well from a growth in margin perspective.

And you've reiterated the margin guidance this year will be partnered in that the upper end is looking increasingly achievable. And the question is that if when compares historically precise the second half margin has already - always being typically stronger than the first given that you already exceeding your upper end of your margin target and in the first half.

I just wondered if you can confirm is there any particular additional cost offerings we should be aware of which breaks the historic trend of stronger to profitability. Thank you.

First, I take this question Scott. There's not - there are no specific let's say cost effects.

The second half we have more clearance I would say in the third and especial in the fourth quarter. We've seen some tailwind as well from the currency side in the first six months, so this also always plays a role how the current develops, then the special effect of cause is if you look here at microsurgery the new product introductions exciting products we need to see say how the market accepts these products on the one side.

Ludwin mentioned the time delay in getting patches for that and so on. So here you typically see then that the existing portfolio is less attractive to customers.

So we expect to rather let's say it will be more challenging to maintain sales with our existing let's say portfolio until. So this is some kind of a special situation that we are also faced in the second half of this year, which will - we cannot let's say compare with normal second halves.

So that's why we are a little bit I would say cautious here as Ludwin said, we have trending towards same or the higher end, if everything is okay and - but too early let's say give more clearance on this one.

Thank you. I'll jump in the queue.

Thank you very much.

Hi. Thank you for taking my questions.

The first one would be in the EMEA region. Could you maybe provide a bit more color on the countries that are not performing up your expectations and how this could develop in the second half of the year?

And then secondly, could you provide an update on how much you would like to add to your microsurgery product portfolio in addition to the KINEVO launch over the next quarter? And then thirdly, maybe higher level question, since you have merged your two ophthalmology units into one unit about three quarters ago, have you started to see meaningful synergies here from the combination of business activities?

Okay, maybe Christian, you start on the countries.

The countries, I already mentioned let's say the major effect here country-wise so, where we are that's a not growing currently that's in the U.K. where we've seen a decline and that's some major effects here in the Central European or in the larger countries and let's say smaller countries in Southern Europe.

Spain has stabilized now again more let's say the Southeast Asia is a market and Middle East where we've do not generate, let's say a significant portion of our sales. But if you see there a drop off of 4 million, 5 million something like that, this of course play the role and in the overall numbers, growth numbers of that region.

And so it's a mix really of different ups and downs and the major effect I mentioned already. So good performance as I said for example in Germany, in the Benelux area and also some other countries.

France is somehow mixed more flat currently, but - so the expectation here depends a little bit on how the of course the economic situation develops and now overtime how let's say the Middle East region for example, difficult to predict in how far here. Additional dynamics comes up.

And U.K. you know there is of course also some political topics around that.

Nobody exactly knows today how the BREXIT will be realized, what the impacts in detail will be, but therefore I'm struggling a little bit in giving a detailed outlook on this one.

Yeah. Your second question was on the product portfolio in microsurgery.

As you might know in microsurgery, we basically have two product lines, the one is on microsurgery with also other applications like ENT surgery, plastic and reconstructive surgery and others. Here we have the KINEVO platform, we have a mid-range it's called - mid-range product line.

We will again the majority of our business here comes from the high-end the new KINEVO platform which will largely replace the PENTERO platform. So - and this strategy in that segment is to as I explained before to now build on the new platform which these are products upgrades if you like that our customers then can adds to the base system.

And that strategy worked very well in the past right and we were - and if you look at the growth of the microsurgery business over the last years, this was mainly based on really additions to our product portfolio. So we added new products, customer started buying in the market group and that pattern is what we would like to continue.

The other segment in microsurgery is dental and we call it the office business. It's mainly dental microscopes and as we mentioned before, we've introduced a new product EXTARO 300.

That I believe is an excellent basis also for the next year. So we have a brand new products portfolio there.

First introduced that will definitely carry us the way through the next couple of years. There's no reason not to add further and we will continue to innovates, no doubt.

But I believe the position is really strong now. Your first question was on meaningful synergies in OPT which we might see and yes we do.

This was meant to realize synergies and marketing, right. So these were not some organizational financial synergies.

Now this is about marketing. This is about presenting our company as a solution provider as we call it in ophthalmology.

And that's just really about a consistent messaging to the market. And if you look at our presentation for example as they just completed meeting of the ASCRS, it's much more consistent now and also just look at our marketing materials, you will find that this really has improved and that's the synergy we're looking for until we clearly see some progress.

Okay, great, Thank you.

Thanks for taking my questions. Two from me.

One question is related to the SMILE procedure and if you go back six months and then you look at what you expected from the U.S. launch at that point in time and you see what's happening now, can you potentially talk about the differences in what you are expecting and what is actually going to happen now because your volume sounds now quiet optimistic I would say with regards to the U.S.

launch? And the second question is on the margin in microsurgery in the second quarter, which was held up nicely also on year-on-year basis.

Can you talk about effects which contribute to that because your prior launches cannot really have played a major role here and if I get it right? Thank you very much.

Maybe I take the first one and Christian talks about the margins in MCS. I would say the market launch of SMILE in the U.S.

really goes well as expected. So as I said this is about building up first of all infrastructure.

We need to have infrastructure. This is a delicate procedure which we need to support.

So we need to train the surgeons, we need to be there when they perform their first procedures and that really requires infrastructure. We need to service infrastructure to set up the systems to service the systems.

This is really high tech equipment. And that's why took a while to get that going.

That has gone well I have to say also the buildup of let's say our marketing has gone well. The excitement in the market is really there and that I believe it's also a good news.

That market - the U.S. market has been waiting for innovation in refractive surgery for quite some years has not been much new to the U.S.

because of the ejaculatory hurdles. And that is why and now there - there is quite some focus on that and we had lots of product demos here at the meeting at ASCRS.

And so it's going well, yeah. And I would expect that it goes on.

This was of course what we were hoping for. So I would say quantitatively that's in the range of what we hope for and what we expected.

Regarding first one additional note regarding how we satisfied with the SMILE more on a personal note. I am not wearing glasses any more.

So I am - I underwent SMILE surgery five weeks ago so I'm very satisfied with the procedure, the one of the 750,000 procedures is related to it and I did not regret undergoing it and I guess many other patients are in the same lead.

So but…

What Christian is saying if you are interested while we can certainly find a good surgeon for you.

But seriously second question was on margins microsurgery, and here the margins were very stable. In microsurgery, we see a stronger shift between let's say this reclassification that I mentioned before sustaining costs which are reallocated from COGS into R&D.

This plays a role here. But from the product mix, nothing special in microsurgery, so your office did very well there so same mix, nothing special to report.

The new product of course has no impact here. There are no revenues generated so far with the new products.

This will start only now in Q3 and then will ramp overtime and hopefully then hopefully.

Thank you very much also for new product experience with SMILE. Thanks.

I'm Oliver from Kepler Cheuvreux and thanks for taking my last quarter. And firstly on KINEVO, and when discussed this in my last quarter more detail, you were actually set off one in providing us with some kind of details on the installed base.

That will fantastic if you can actually share the number, what the installed base of that PENTERO currently is and also what into total installed base of the addressable market is? And also when it comes to the KINEVO platform, the way in our position that is there any kind of change in terms of what's in total recurring revenue potential the system holds or is that rather comparable with the old platform.

Second on region, can you - it appears that you are happy so far with the ramp up in terms of sales and service capacity. So is it fair to say that the current sales and service infrastructure you have in place is not a bottleneck so that you're capable of serving all the interest that's out there?

And can you also talk a bit about the price point how the system is not being positioned by VisuMax in the U.S. market?

And third and last question, as I think about the next two to three years, is there any kind of special project that we should be aware of that would extend your operational cost base in a more meaningful way or see nothing really on the agenda? Thank you.

Yeah. You're kind of difficult to understand, I don't know the time is not the best, but I try to answer what I got.

So first on the KINEVO and please understand that we cannot provide numbers here for competitive reasons on the installed base of the PENTERO, because it is really sensitive number, our competitors are definitely interested in. Regarding recurring revenue, yes, there is a new component which the, you might know that in neurosurgery the surgical microscope is trapped which means that's a sterile plastic which is a consumable.

And in the KINEVO that actually is now tied to Zeiss through a special design, so it cannot be purchased from third parties anymore. However, that's a relatively small component.

So the recurring revenue in microsurgery will go up a little bit, but again the number of procedures in neurosurgery by fall than what we see in ophthalmology, so that's not comparable and it will remain to be a relatively small number although a little bit bigger than in the past. And on the VisuMax, I didn't understand the full question.

What I got was you were interested in service infrastructure and what I can confirm as that now we do have the service infrastructure in U.S. in place, which we need to install and also service the systems which are - there was the second part of the question which I didn't get.

It's bottleneck today, so whether we are limited by our resources that's was the question.

No. We are not limited by our resources right now.

That was the case initially right when we started because we were a little bit surprised by the early approval. We expected it a little bit later.

So we had to quickly buildup these resources. But that challenge has been overcome and everything's in place now.

Special project special costs which we expect, no, there is nothing, nothing to report.

Great. Then one question that's probably was not getting to.

Can you talk about the price point how your clients are currently positioning this SMILE procedure in the U.S. compared to the standard procedure?

It's positioned as the latest generation. It's - there are several - there have been several steps.

So the first one was the Microkeratome, LASIK or PRK actually was the first, Microkeratome, the LASIK, then came the Temptu LASIK which was the combination between a simple Temptu flat cutter and eczema laser. And now the SMILE procedures positioned as the latest generation which is a slept less one laser procedure.

So that's how it's positioned. It depends a little bit on the refractive laser clinics.

I mean they do the marketing to their patients. Some certainly will position it as the high end procedure and will differentiate by prices, but they're also doctors who basically decide on the medical case and say they always offer the procedure which is best suited for the patient and so the doctor would make the decision which procedure to take.

That depends a little bit on the marketing approach and also the medical approach I should say of the refractive surgeons.

Okay. And would you mind reminding me in which kind of cases actually this SMILE procedure not superior?

It's really - I'm not a doctor, right. So it certainly depends on the indication range, of the indication range is smaller in the SMILE then it is with eczema.

So if a patient has an extreme Myopia there we do not have approval for SMILE. A cylinder is not approved yet in the U.S.

We are working on the approval, so that will probably follow. We do not have not even outside the U.S.

Hyperopia, we are in clinical trials on Hyperopia and globally outside the U.S. that will take several years to get that through in the U.S.

So they are cases where the patients is simply not suited for that. There are other procedures like - there are other procedures where, other cases I should medical cases where SMILE wouldn't work.

However, if you look at the percentage of procedures which doctors perform on SMILE and on LASIK in the same clinics right. So if they really have a choice, the number of SMILE procedures is growing rapidly.

And I believe is that 60% right now compared to what is done without a SMILE on the traditional LASIK. So, yeah, that's growing strongly.

Great, thanks a lot indeed.

Yeah. Thanks very much for taking my follow-ups.

The first question please, this relates to the Ophtalmic Devices business, I think you highlighted significant growth in there, so some of the other cataract profiling, can you afford a little bit more detail here please, I mean how strongly where you growing in intraocular lenses on an underlying basis? And also can you get a bit more clarity is to which categories within the rest of the cataracts suite displayed in the most dynamic growth prospects in the first - or much growth in the first half?

So that's the question one please. And a very quick question two.

Can you talk a little bit about whether there's any upcoming clinic data to hammer on destroy our advantage of SMILE, I know I think some clinical data but are we expecting that data said to be strengthened going forwards? So those two questions and one last one after those, please.

Christian, maybe you can start here with the first one.

So, in surgical ophthalmology so let's say the product portfolio grows across the whole product portfolio. And here what Ludwin mentioned before, our temped to combine our products in more consistently from a marketing perspective and also well in sales is also now showing let's say results here in surgical ophthalmology.

So we've grown in the microscopes. We've grown in the cataracts suite.

We've grown in biometric in all segments quite consistently. The growth in IOLs was again double digits compared let's say on a like-for-like basis.

Like-for-like basis, because last year we had this Aaren dealer business included. So if you eliminate that we are let's say on a highest single digit growth rate but eliminating that clearly on a double digit rate.

Your second question was on dry eye data. There are a couple of people actually working on that as I know.

The challenge with the solid clinical data on dry eye is that dry eye is subjective. So this is very difficult to measure.

And do you have to ask the patient how he feels and if he has some problems with dry eye but it's extremely difficult to quantify. And because of that there's very little solid data, right.

So you can - it's almost always based on asking a patient how do you feel, do you have any problems with dry eye and that's the challenge here. So there's very little out there of course, you know the more procedures we perform, the more doctors are involved and the more data we will get.

But again I don't expect here a big study or big results on that yet because it's so difficult to get it.

Okay. Thank you so much.

And so last one, obviously things are relatively encouraging at the moment also from the margin side, and it sounds from your comments that the base here is something to progress from given the continued long view of your new products. So can you just remind me of the deprive, is a board planning, when one might expect or if one might expect any revisions your current 13% to 16% margin guidance, is it something we may expect as a capital markets updates at any point in the future or is it unlikely.

Could you please say on that?

Again from today's perspective given the business development and in our guidance is 13% to 15%, we will closely look at the development. We will see whether the level we had in their first half of the year is sustainable.

And of course always assess whether our guidance still reflects the actual business situation. When we come to a different opinion we will change it.

But for the time being that's just where we are.

Okay. Thanks very much indeed.

Okay, ladies and gentlemen, so thank you very much for your interest in Carl Zeiss Meditec. Thank you very much for your questions and hopefully we could answer all of them.

We are looking forward to talking to you after the third quarter. Have a good time, until then bye, bye.