EVS Broadcast Equipment S.A.

Thank you. Good morning, good afternoon, good evening to all of you attending this session here today.

Before I start talking about the agenda and our results, I'll leave the floor to Veerle who can talk about our forward-looking statements.

Yes. Good day, everyone.

So welcome to the EVS 2022 Full Year Results Conference Call. As mentioned, we'll first go through a presentation followed by Q&A, but we start this presentation by mentioning that next to the performance of 2022, this presentation also contains some forward-looking statements.

These statements are based on our current expectations and management's assessment of the environment we operate in, but we do declare that these statements are subject to a number of risks and uncertainties that could lead to material different statements in the future. We will elaborate on some of those risks during this presentation, but there are also other risks that could affect our statements that we don't explicitly comment on.

These risks contain potentially technology changes, market requirements, price pressure from competition or any other macroeconomic elements.

Thank you, Veerle. So let's go to the agenda of today.

So we'll have first a business update. Afterwards, Veerle will give us the financial update.

We'll talk about our outlook, and then we'll have our conclusions, and we will end, of course, with questions and answers. So let me start here with our business update.

So all in all, we are quite happy with the results that we have been achieving in '22 and which show the progress that we are realizing with our PLAYForward strategy. Remember that's a strategy that we have put on paper at the end of 2019, beginning of 2020, just before the [indiscernible].

So looking at markets and customers, we see definitely a growth of revenues and order intake. That's clearly showing that we have a positive momentum and that our growth objectives are being achieved.

A major achievement in 2022 was, of course, the signature of the big tech contract '22. Remember that the contract for more than 10 years with the U.S.

customer. We have delivered several major big events, sport events in '22.

We have also implemented several price increases to be in line with inflation as we've seen that around the world. And last but not least, we've seen or we have received quite some awards from different 4 different business dimensions in '22.

On the technology side, we've been pushing further our artificial intelligence solutions and different environments. We've been introducing as for leadership, our balanced computing approach, which is an answer to the question, what about the plant.

And last but not least, we've continued investing in technologies for enabling our future growth.

On the corporate side, we have also been working quite hard on several topics. One of them was the implementation of our EVA project, which has now enabled us to activate the new ERP system.

Since '22, we've also been further focusing on ESG with, for instance, also our first sustainability report. We have, of course, also seen quite some cost increase due to inflation on the remuneration side but also on the component side.

And we've seen that our spending patterns are back to pre-COVID levels and that this is, again, the new normal as we speak. We also see in '22 the first important results coming from our channel strategy that we've set -- we've been setting up over the last years.

With the acquisition of Axon in May 2020, we see in '22 that is really starting to deliver the expected results. So that's a very good thing to see, of course.

We've been further working on the members of the leadership team. So we'll come back on that later on to demonstrate who is in the leadership team and why we've done that.

And we've been further working on preparing the future growth by further increasing the team size around the world. And last but not least, on the shareholder side, we see that we have the growth of revenues and order intake.

We see that we have been recovering the dividend promises of 2020 by increasing the dividend over the last years. We are happy to say that we demonstrated that we are able to execute M&A transactions in a quite successful way.

And last but not least, with the results of '22, we see also that we've been delivering a strong earnings per share.

On the next slide, Veerle will give us a short update on the main financial highlights.

Yes. So this is very really a short update on the highlights.

We'll get into more details later on. But just as mentioned -- as Serge was mentioning, so we finished an order intake of EUR 218.8 million in year 2022.

That's a growth of 46.5%. Even excluding the big tech contract, the growth is still around 13.5%.

So that remains a very strong, strong number. As mentioned, revenue was also really strong, beating definitely 2021 with 7.7% increase to a total of EUR 148.2 million.

And also our net profit is something that we want to call out. It's a net profit of EUR 31.3 million, so a 21% net profit margin.

It is a decline compared to 2021, but it is definitely in line with what we expected out of the year 2022.

And finally, as Serge already mentioned, we have been growing our team members in 2022 to ensure that we have enough of the right resources in place for our future growth. And so we ended the year with a total FTE number of 613, which is an FTE increase compared to the end of '21 with 62 FTE.

Thank you, Veerle. So going forward in our presentation here, a reference to our PLAYForward strategy that we developed at the end of 2019, which is fully based, in fact, on a customer intimacy strategy with a [indiscernible] goal of becoming the #1 solution provider and online video industry.

And we see that something as a long-term target that we want to achieve. And that is indeed meaning that we want to create realized growth year after year, of course.

So when we look on the next slide in the progress that we are making to an objective and that play forward the strategy on the different access, we see the progress that we are making. So going from a single company in 2015 to a group of companies and 25, we see that we did quite a good progress with Axon.

But on the other side, we are still seeing quite some opportunities to for further doing acquisitions. And while we did not do an additional acquisition in '21 and '22, we're now feeling quite confident that with the successful integration of Axon, we should be able to do more of those in the future.

The second access about going from product to solutions, there we feel that we are going in the right direction. More and more customers appreciate the solutions that we bring to the market and to demonstrate that, so we have been winning quite some additional references in our industry.

Talking about the premium market and also being present in different marketers, while premium market remains really our stronghold, and we've seen that with the introduction of solutions like XT-GO and further, we're leveraging our channel partners. So we're doing a good job and also better covering those other markets.

Then looking to the next axis, which is selling in CapEx mode only to selling an OpEx and CapEx together, we've seen quite some good progress. We definitely see that our SLA, our service level agreement sales is going up.

We also see that with the big tech '22 contractor, we definitely demonstrated that we can do that over a long-term of 10 years in this case. And for on-demand services, so we have also now a system available with EVS credit.

So we are doing a good job in advancing on the X.

When we talk about technology going from SDI to an IP total cost of ownership optimized media solution, there we really feel that we are making a substantial progress, and that is also being demonstrated with some large deals like with Fox, but also an important agreement with RTBF, which is showing in detail that the new production methods of the future are being developed as we speak. When we look at the next dimension going from EVS hardware only to software on commercial of the shops in the cloud and a combination of [indiscernible], we feel that we're making really good progress, of course, with XtraMotion that has been launched in the cloud.

But also with the introduction of our balanced computing approach in '22, that is definitely a good progress. And we have also integrated those cloud solutions and some major events.

So that demonstrates that we are on the right path also on this dimension.

Going from on-premise life production to life anywhere operation there, we feel we are nearly there. All our customers are able to select if they do on-prem production or remote operations.

So there are definitely a lot of work has been done over the last years, of course, accelerated by COVID. And in that respect, we feel that this dimension is needed fully accomplished.

And last but not least, some being mainly in sports and also going more into news and entertainment. And there, we also see that we are working more and more modernization contracts, which are transfers in different environments.

We have major contracts and different news environments as well. And we see, for instance, that the RTBF, with the flexible control room project that this is a going example that we are further extending also and domains next export.

Going to Slide #9, when we see the different problems that our customers are facing. And this is an overview of the major trends as measured by Devoncroft.

We see that we are really working on all of them. And you can see in the [indiscernible], how we contribute or how hard we work on that.

And we feel very confident that we'll be working on the right topics. So you see on the top of growth the migration to IP, networking and content delivery, that's definitely one of the most important trends that we see.

And that is one that we fully embrace and fully support and help our customers to move forward. So in that respect, we feel that they'll be very well intent with the major challenges that our customers are facing.

Going to Slide #10, there what we see differently is that our business is more linked to the volume of premium life productions than to the broadcast revenues, of course. So in that respect, we see that with the global value of media rights further increasing year-after-year and with the number of production of C1 productions happening and that is definitely something that is playing into our cards, and that was also demonstrated in 2022 by that tech contract term that we have signed in August of this year.

Slide 11, indeed, there's an overview of that big tech contract 2'2. Remember we'll be talking about the contract for many years as it is a quiet contract for more than $50 million.

So it has a big impact, of course, on our order book for the future. And it is indeed a contract that we have signed with one of our major U.S.-based live service provider customers, and that follows a major contract that is signed to have one of the big tech players of our industry.

So we're quite happy that our customer was able to sign that contractor as automatically. They signed the contract with us to upgrade and network their installed base and that for the future years, they know that they will be able to further rely upon our technologies and our service.

It's also an important step as for the first time in that LSP environment, we signed a quite large deal for service level agreements and that is indeed covering the next 10 years. So we feel that this is definitely confirming our position as a trusted technology partner and that it provides confidence in the capabilities to deliver the right solutions over the next decade.

And it definitely helps us to further increase our profitability for the next 10 years.

Going to Slide #12. I'm happy to leave the floor to Benoit Quirynen.

Thank you, Serge. Good day, everyone.

So on this Slide 12, you can see a few of the iconic contracts that were signed during 2022. And in fact, that confirms that the position of press partner is not reserved just for one contract with the big tech contract, but it's also distributed in different regions of the world and as well for different solutions and for the different market pillars.

You can see here that we have also gained some reference in the live audience business market pillar. And some of these contracts that you see referenced here and that are more detailed on our website, in fact, will not necessarily be achieved in 1 year.

They are spread over several years with, let's say, revenue recognition that is spread all along the different subsequent years depending on the contract. So a lot of trust from our customers because we have actually also progressed a lot with our solution.

In terms of life section, we have this big contract, but also we have for all our customers more and more LSM-VIA which are deployed. And this [indiscernible] also enable our customers to activate other features as XtraMotion, which is now being active on more and more events.

And of course, [indiscernible] has been at the core of the 2022 major events with new workflows that we introduced, not only XtraMotion but also [indiscernible] reviews and other set of features that are enabled by the LSM-VIA.

In the media section solution, we have introduced, and this is also referenced on our website, [indiscernible] as a major milestone. And [indiscernible] is a live editing solution, so where, in fact, the editors can really update the content just a few minutes or even seconds in some cases before going live.

We have seen as well the deployment of a new generation of solutions in the MediaCeption domain. In Western Europe, in the previous year, it was mainly in NALA and based on the references that we got in NALA, we are now also spreading in Western Europe.

So we observe globally a large market traction for this modernization contracts. And we also embed in our solutions more and more partners so that we can be more relevant and we can further help our customers to have the right solution.

So we also deployed MediaHub, not only in the big events, but also in the medium-size events that help the host broadcasters to distribute the content to the right orders so that they can benefit from different content structure in different channels and then provide the right content for the audience to highlight what is happening in all these events. In the media infrastructure domain, which is, let's say, architecture around the previous Accent product.

In fact, we have seen that Strada routing system is certainly the evolutive solution. We did win very large contracts in NALA.

We also deployed the contract that we won in the past. Cerebrum now is everywhere.

It's really swapping a lot of competitors and is at the core of flexible control room solution codesigned with RTBF.

If we move on the next slide, then it's about the cloud and the balance computing. So in 2022, we launched the concept of balanced computing, which is really a hybrid way of operating between on-premise data center and cloud.

So that means that EVS is certainly active in the cloud, but just for doing the right things. And in fact, that also creates an opportunity to increase slightly the SaaS and OpEx business because it's always perceived that with cloud, we can also help our customers to adopt a new business model.

We also observed in 2022, a trend for some of our customers who really engaged a lot during Covid into the cloud. We see them taking a step back because, in fact, in the cloud, you have also some constraints in terms of connectivity, but also in terms of costs.

And so this concept of balance computing, when you have some part of the workflow operated on-premise and some part in the cloud, like XtraMotion, for example, is really appealing and considered as the right shows by the customers. So all these good things for our customers in terms of the progress of our solution in terms of third leadership have been recognized as well by several awards.

In fact, we received an award at Status, which is a trade show in France in 2022, which is named the predefine distribution. We also won 2 awards linked to security and reliability, the shield at IBC '22 and also Neuron Protect at NAB '22.

So definitely, security, reliability are at the core of EVS value. Not only the products have been recognized, but as well as the company, in fact, we got 2 awards, this BlueStar because we received 2 awards of innovation and people choice at the [indiscernible] India business awards or regional awards.

We also got award really for all our work that we are doing in terms of ESG and one of these awards is the IABM Sustainability Award. We were very proud to receive this from IABM.

And last but not least, in Belgium, which is important for us because we want to keep the people that we recruited in 2022. We also got the award of top employer 2023.

So which recognized the fact that EVS is actually a very nice place to work. So 2022 also confirmed that Axon was a good acquisition, successfully integrated.

And the 2 aspects are important. And it was confirmed and materialized with higher revenues than when Axon was alone, higher contribution to EBIT, multimillion contracts, Axon was definitely not used to have so many multimillion contracts in a year and certainly not in U.S.

And Axon was not active in the big events. And this year, we have proven that thanks to the EVS brand support, vision, and quality of products, EVS can be a trusted partner to deploy also new categories of products and solutions within these big events.

So these successes would not happen if we would not have the new kinds of relationship with channel partners. And we created in the last years, this new channel partner program where we want to move our channel partners from opportunistic to sustainable partners.

And this kind of evolution in terms of partnership is really bearing fruit, especially in U.S. and especially in with media infrastructure, we have now more and more partners, which are certified typically to work with Cerebrum and that means that our partners can help our customers to engage into their transformation based on the technology provided by EVS.

So based on this, in fact, we have we had a lot of successes.

And now I will hand over again the floor to Serge.

Thank you, Benoit. So looking on the next slide, and we continue, of course, powering the world's biggest live sporting events.

And remember with the event rental business every 2 years when there are such big events, we have additional revenue coming from a rental of equipment and service provisioning. And that was, of course, also the case in '22 with Beijing with the World Cup, but also with [indiscernible] and also the European Championship in Munich.

So all quite successful events.

And again, next to those events, we also empower any other major events, but that is being done through our customers like, for instance, recently the Super Bowl as well, of course. But those are differently moments where we can demonstrate and show to the rest of our customers worldwide, our latest technologies.

And again, we've been very successful for doing that. So that will definitely also help us to further sustain our growth in the future.

When we look to what happened in '22, that was also an important year post-covid where we started to go back to major trade shows. So you know that 2 of our major trade shows are in April in [indiscernible] and also in September in Amsterdam at IBC.

And here we've been showing a few pictures from IBC and the feedback that we got. So we got a very positive feedback from our clients to come back to our booth, definitely also generating quite some enthusiastic feedback.

In this case, it was mainly, of course, attended by EMEA plan clients and channel partners, so less by U.S. customers.

We really see that after COVID there was some regionalization of those events. We see that the industry is quite positive, but there are lots of projects being discussed, and we see that our pipeline is growing nicely.

We see also that the media infrastructure, the plant regarding the capabilities and media solution that we presented here in the start of the group. Don't forget, this is, in fact, the first time that after the acquisition of Media Infrastructure in May 2020 that we really showed our integrated solutions and the trade show in Europe.

And last but not least, we presented our balanced computing concept, the one that Benoit just explained, and definitely a concept that a lot of clients appreciate very much. When we look to the main risks that we are still facing that scarcity of electronic components and that salary inflation and component cost inflation, it's still there.

In '22, we've been fighting hard against those 2 issues. Also we've on regular occasions pointed out that we might have problems with delivery of equipment to our customers.

Fortunately, by the good work of a lot of colleagues, we've been able to keep on delivering our equipment, but we did extend our delivery period to 20 weeks. But for the whole year, we've been able to ship within those 20 weeks, so we were quite happy to be able to do that.

And on the inflation side, of course, we saw inflation on the cost and on the remuneration, of course. But we have tried to compensate that by additional price increases.

And we continue to monitor the situation to make sure that our prices also reflect the increased cost of components and the increased cost of remuneration. Going to Slide #21, that shows our leadership team, and you see 7 phases here on this slide and with blue around them.

So Veerle, who joined us in November 21, Xavier, who was promoted to EVP Operations project in January; and Alex Redfern, who was promoted to our CTO also in January '22. So you see here we're quite a strong team, I think, with quite some external but also internal experience and which, in my opinion, is fully geared to enable us to future growth that we envision.

So in that respect, I'm quite happy with the team spirit and the complementarity of all the colleagues here and the leadership team.

Going to Slide #22, I'm talking about the engagement survey. We are a technology company with a customer intimacy strategy.

So the main assets of our company are, of course, our colleagues, our team members, and the way that they are working towards our customers and the way they are developing new technologies. So for us, it is indeed critical that the engagement is further increasing.

And here, you can see the results of our engagement survey that we do on a yearly basis, and we measure several elements like the generic question about EVS a great place to work, what you can see on the left. And you can see that since 2019 up to 2022, we've always increased that achievement of that result.

And then '22, we ended at 91%, which is also higher than the comparison of other companies between 500 and 1,000 employees. So we see on all those different dimensions enhance increase, and that shows us that tell us that we are doing the right thing and that our colleagues feel quite confident and quite engaged.

Talking about the team in '22, we have also further increased our team size quite rapidly, and we've been able to take benefit from a very strong brand reputation. So we're quite happy with the progress that we've been doing there.

For '23, we definitely expect that we will now stay at that team size and that will further work on optimizing our results that we get out of the team, of course. So we feel that the team is there, that we need to further align the magnets as we call it to increase efficiency that we ensure the right business priorities and that we create value, of course.

That's what our objective is for 2023 and for the years to come up.

On ESG, on the next slide, definitely, this becomes more and more important for us. And we also see very good progress being done on that side.

We have recently been able to do our first biocarbon. So we have now a good visibility on the results of what that means.

And that will allow us in '23 to also set the objectives for the years to come. We are definitely also making sure in our R&D environment in terms that we use more efficient technologies and software languages in that respect.

We make sure that we responsibly source our components, our products and services, we make sure, of course, that the well-being of our team members are at the center of our decisions, and we make sure that we implement the right optimal governance.

'22 was also the year that remain our first sustainability report for the year '21. And all those projects or all those efforts have been clearly recognized by different organizations, and we received the silver medal of EcoVadis and also by IBM, we received an environmental sustainability award.

So that definitely shows that also on this aspect, we are leading in our industry. So we're quite proud and happy of those results.

Going on Slide #25. There, you can see that we really focus on that and we practice and demonstrate that commitment to our team members, to our communities and to the environment every day through practical and engaging initiatives and the 3 that truly make an impact.

So that is definitely something that we live more and more every day. And we also -- we are also supporting external athletes like Marin Simons, who is our ESV ambassador and who is a free diver, which is a Belgian free diver.

So that brings me to the next chapter, important chapter of our presentation here this afternoon.

That's our financial update, and I'll give back the floor to Veerle.

Yes. Thank you, Herck.

So in terms of financial update, we'll first pause at our top line performance, line performance that, in our opinion, is a very strong performance for the year 2022 and one that makes us very proud. First of all, obviously, we have the order intake, as I mentioned it already.

So a total number of EUR 218.8 million in contracts were signed actually in 2022. So it's an increase of 46.5%.

But as I mentioned, even excluding the big tech contract that is still a growth of 13.1%. And which is comforting as well is that we actually see a strong order intake in all the regions.

So it's not predominantly in 1 or 2 regions. It's really across the world that we see the strong order in Zig.

When we look at the revenue, so as I mentioned, the revenue number of EUR 148.2 million, so a growth of 7.7%. But you have to remember, this is a growth despite a reduced Big Events Rental revenue and despite higher delivery terms.

So we increased our delivery turns hinting to a slowdown of revenue. And obviously, with our Big Events Rental being down, you know that the organic growth that we created is definitely there.

That growth is primarily driven by North America. It's also primarily driven by MI, so the former Axon acquisition, and is also driven by the price increases that we implemented in the year 2022.

We calculated a normalized growth. Would we exclude actually the impact of [indiscernible] and which we exclude also the dollar impact, which obviously helped us in 2022 as well.

That growth is still up 6.3%. Again, for us, a demonstration that our top line performance and our revenue performance is definitely demonstrating growth numbers and is demonstrating that we are actually growing from an organic point of view.

And most of all, I think that revenue performance is exactly in line with market expectations. So this one is really well managed.

We still have our order book in our top line performance, which is also a performance where we're very proud of. You see in the graph the grade -- the dark gray bar is the short-term order book and the light gray bar is the long-term order book.

And so you see actually that for both short term and long term, we have a very significant growth. So for instance, for 2023, the secured sales, we moved up from EUR 61 million at the start of 2022 to now EUR 85.9 million at the start of 2023.

So that's a growth of 68.4%. And also our visibility on the future years.

So the long-term secured sales is growing importantly and is beyond actually, it's EUR 55.9 million, obviously influenced as well by the big head contract, but even excluding the big cat contracts, that long-term visibility is growing with 30%. So for us, these are very nice figures, demonstrating the strength of our top line.

If we look at Slide 28, you see actually the evolution of the revenue by pillar and the geographical split. So you see actually that in 2022, there was an acceleration of our revenue in the LSP also the life service performance server performance.

It grew from 38% to 45%, following upgrade cycle that we have seen in that area. If we look at the LAP market, in percentage, we go down in absolute value is more or less flat.

But as [indiscernible] already mentioning, this is an area where our revenue is much more project related and therefore, much more spread over time. We are confident that long term, we will also demonstrate growth here, and we're confident to say as well that we will start the year 2023 with a total secured sales of EUR 42.3 million already in that LAB market.

If we look at the geographical split, the portion of EMEA has been exactly the same as last year. So EMEA is growing along the same lines as EVS in total, keeping a 46% of our total revenue in EMEA.

Obviously, you see the acceleration of our revenue in NALA, so growing from 27% in 2021 to 35% in 2022. We see that APAC is dropping a little, obviously, in relative performance.

So going from 17% to 13%, primarily because of a slowdown in China, which is obviously still linked to the COVID situation in 2022 in that region. But as mentioned already, APAC also had a very nice order intake in 2022.

So we're pretty confident that this situation will restore shortly as a region anyhow. And then in the end, you see the big event trends.

So the relative performance dropped from 10% in '21 to 7% in '22. So a slight drop there on the full year number in [indiscernible], which is obviously linked to the underlying rentals that we do.

So that was it on top line performance.

We have a second slide on profitability, exactly the same concept. So you see the evolution over the past 4 years.

First of all, we look at our gross margin. Our gross margin for 2022 ends at 66.7%, dropping actually 2.9 points compared to 2021.

There are a couple of elements that influence that gross margin. First of all, we made investments into resources or team members in our support and operations team.

This is to make sure that we fuel our growth, especially in regions like North America and make sure that we continue to deliver the support that our customers deserve. So it's explaining 1.4 points of the entire gap.

Then there's a mix of solutions. Media Infra is a bigger portion overall in solutions, driving actually a reduction on the average gross profit margin that is realized.

It is explaining 1.1 points.

And then there is a one-off impact that is actually a consequence of the implementation of the ERP system that we did in October of this year. That ERP system forced us to implement actually a much more granular follow-up of our inventory flow.

And out of that more granular follow-up, it was despite that we wanted to write off a part of an impact in our P&L, which is also explaining 0.4 points. So all these elements together, we have a positive element or negative elements, but we have a positive element then as well, which is obviously the profit improvement that we try to drive within our solutions.

It only generated 0.1 points, and it's something that we will continuously focus on in the future because ideally, that number is a little bit higher, but I think this is the way how we try to balance off. Yes, the price increases with the cost increases that we see like inflation, like components increases, et cetera.

So our gross margin is ending below market expectations. It is ending below market expectations with 2.2% and in [indiscernible] is primarily linked to, obviously, the one-off impact in inventory processes and probably an underestimation of the mix of solutions.

If we look at the operating expenses, those operating expenses include other revenue and in other expenses and also Esoc bookings. They have been growing.

They have been growing up to the level of EUR 67.1 million in 2022, a total growth of 14.3% and which is in line with the guidance that we provided. It seems like an impressive increase, but it's mostly linked.

First of all, to post spending patterns. So we are back to a new normal on expenses like travel expenses, expenses linked to our marketing spend, et cetera, et cetera.

We engaged again at a very high level with our customers, both on site and both during events. It is an important element for us -- so a lot of those elements are explained by those postcode spending patterns.

Obviously, there's also a part linked to the investment in additional team members that we did in 2022 to fuel our growth, and there's a part linked to inflation, not only inflation of labor costs, but for instance, also inflation of our energy prices. So we find it back in our fuel cost for our company cars, but we find it back as well in our utility costs for maintaining the facilities.

Again, that operating expense is fully in line with the market expectation.

Going on to the EBIT. We realized an EBIT of EUR 31.7 million.

It is a drop of 14.5%, and obviously, the EBIT is a result of the gross margin performance and the OpEx expenses together with the revenue and an EBIT margin of 21.4%, and this is where we ended below the market expectations by 5.3%. So I think this is definitely something where we -- the market had expected us a little bit higher.

Looking now at the financial structure. So I think it is important to mention that in earnings per share, we actually beat the market expectations.

We realized an earnings per share of EUR 2.29 per share. It is a decline compared to 2021.

So 2021, we still realized EUR 2.57 per share, a decline of 10.8%. But again, it's in line with the market expectations and even above market expectations.

And that is thanks to an important net profit that we were able to generate. So even if our EBIT performance was perhaps a little bit deception, we were able to recover that in net profit.

And basically, it's thanks to 2 things. First of all, proactive cash management and exchange rate management, we were able to generate EUR 600,000 additional financial income compared to 2021, just by ensuring that we proactively take care of our cash and our exchange rate.

And we also had a one-off benefit in taxes following extents that we paid in 2021 that were worth EUR 0.9 million. So this has led to a nice net profit performance and a nice earnings per share performance as well.

We do point out an evolution on our net working capital. You might see that our net working capital increased quite a lot comparing the balance sheet at the end of 2021 with the balance sheet at the end of '22.

So we move up from EUR 54 million to EUR 81.2 million. So it seems impressive.

It's a total increase of EUR 26.9 million, but it is easily explained by 2 events.

First, the investment that we do in a proactive management of our inventories and to make sure that we respect our delivery terms towards our clients, that is a EUR 2.8 million increase. And then the rest of the increase is linked actually to increase trade receivables.

And why is that so? It is actually because our trading receivables, we increased them with more than EUR 15 million in December 2023, and this is an expected impact after the implementation of our ERP system.

So with the implementation of our European system in October of this year, we had a block on invoicing for about 6 weeks, and this in a quarter where we have the highest volume. So obviously, it generated a lot of invoices during the month of December that obviously are not due yet by our clients by the end of December.

So it's definitely a temporary impact. We expect to recover on this in first quarter of 2023, but we thought it was important to point out anyhow.

You also still see in the graph that overall the receivables do evolve in line with our overall build volumes. So also there, we're quite happy with the progress on receivables despite the fact that the ERP has forced us to delay some elements in the fourth quarter.

We sought to give also an update on the intangible assets, so intangible assets that are capitalized under IAS 38. So we launched in 2022 for the first time, an internal development of 2 important projects.

They are quite stand-alone projects and our plan to considerably contribute to the growth of the company as of 2024. You won't see that for those 2 projects, we spent in 2022, EUR 7.5 million, exactly in line with our expectations.

And you will see that for next year, we expect to spend on those 2 projects still EUR 6.2 million. Those developments there followed up internally on a very regular basis as to ensure progress and outcome are in line with the business plans that were designed -- the costs are currently capitalized on the balance sheet.

You see them under the intangible assets. And in this area, you may expect a launch of a solution announcement somewhere in second half of 2023.

It might be at the IBC, we are still looking at that planning, but this is what you may expect in this area.

When we go to the outlook, I think this is still a very important section as well. So first of all, the outlook and the guidance for 2023.

As you might have realized already from our top line performance, yes, we start the year 2023 with the highest order book in history of EVS. It's a total order book of EUR 141.8 million.

And out of that EUR 141.8 million, EUR 85.9 million is to be recognized in revenue in 2023. So that volume is going up with 68% year-over-year.

If you know that we have EUR 85.9 million somehow already secured for 2023, you might understand actually that reduced -- that revenue guidance for 2023 that is demonstrating a growth compared to 2022 and a growth without any Big Events Rental income in 2023. Again, we're confident that we can demonstrate organic growth there.

And so our revenue guidance for this year is going to be in the range of EUR 145 million to EUR 155 million.

In terms of costs, 2023 will be the year where we stabilized our growth. So we have no further growth plans in [indiscernible] nor is there an expected increase of our capital expenditure envelope.

It is our ambition to demonstrate profitable growth, meaning that both revenue and cost control will be very important in 2023, especially also given the volatile macroeconomic environment. In terms of dividend proposal, EVS will propose to the Ordinary General Meeting of shareholders a dividend proposal at EUR 1.6 per share for the year 2022.

This proposal is in line with the dividend policy that we issued earlier in 2022, and it is consisting of a base gross dividend of EUR 1.1 per share and an exceptional gross dividend of EUR 0.50 per share as to recover the year 2020, the Cowage here, obviously. In November 2022, we already distributed an interim dividend of EUR 0.50 which makes that there's a remaining dividend to be paid subject to mark conditions and subject to the approval of the Ordinary General Meeting of EUR 1.1 per share in May of this year.

That's it for the financial update.

Thank you, Veerle. So let me conclude here indeed with our conclusions.

So key learnings for the year. That is what I would like to talk about here.

First is, we see the industry further consolidating, and we definitely have an ambition also to participate further in the consolidation of course. We see that the big tech providers are on the place.

They are both a partner -- a technology partner and a customer. So we see that we have quite some opportunities that are being generated by those big tech providers in the live production environment.

So that is also something we are happy to see.

We see that infrastructure is the cornerstone of big changes, and we definitely see quite some opportunities to further grow our revenue and our profits in the future, thanks to media infrastructure business. We see as a fourth topic that the business models are shifting from CapEx to OpEx or a combination of both, and we feel that we are well positioned to take benefit of that.

We know that cloud is just one of the enablers and that with our balanced computing approach, we have the right solution and the right message that we bring to our customers. And overall, we feel that definitely we are on good track, and you can see that with the various indicators like the order intake and the order book for this year.

So we are quite positive about that.

When we go to Slide #37 and we look at the focus points of our '23, we see foreign topics. We will continue to deliver on those large [indiscernible] modernization projects that we have been winning over the last years.

We'll continue helping our customers who are still using our previous versions of XT services to transition to our XT-VIA service before the end of support that will happen at the end of this year. We'll continue to leverage our new solutions to win more deals in '23.

We'll continue to expand our solutions offering both organically and through acquisitions and strategic partnerships. We'll confirm contracts that are linked to future major events, and that's also opened in this year.

And last but not least, we also focus on an improved cost control for the company. And that brings me to my last slide, Slide #38, with the conclusion.

We feel that our PLAYForward strategy is definitely starting to generate the expected results, and we see that in our revenue growth and in the growth of our order intake, of course. As we said, we plan no further investments in our cost structure, and we definitely want to make sure that in '23, we have a good cost control and that we further benefit from the investments that we made over the last years.

You've heard VMs that our revenue guidance for '23 is between EUR 145 million and EUR 155 million, which is quite a nice challenge on knowing that we are in an even year without big event rental revenue.

And last but not least, that we target a dividend of EUR 1.6 for the year 2022, which is subject to the approval of the Ordinary General Meeting of shareholders, of course. So all in all, we are quite happy with the progress that we have made in '22.

We know we still have some challenges in front of us, but we feel that we are on the right way to achieve our ambition over the next year to further grow our market share and eventually become that #1 in our industry.

So I think that we are done here and that we can take some questions from the audience.

Are you hearing me?

Yes, we can.

Okay. Okay.

Yes, first question is on the order book. So is it based on the order book and the information that you gave during the presentation to estimate that -- this will be one of the first years where LSP and LAB will be quite similar in size?

That's the first question. And do you expect this growth to be front-loaded or rather back end to it in the year?

Okay. Thank you for those questions.

So in general, we expect that our growth will come from the LAB market. So the LSP market will continue to stay the stronghold of ours.

So we'll definitely keep affecting this market, but we know that the future growth will mainly be fueled by our LAB business. Then to come back to your other question about front loaded or back load, I would say we expect an even distribution of that -- of our revenues and our order intake.

So we see no specific reason to think it would be more the one or the other.

And then an additional question on the cost side. So of lot of your costs are out of your hand; salary costs, Veerle also referred, so how sure are that you are able to keep your costs under control while most of these costs are out of your hands?

And given that, yes, I think the market is lagging a little guidance, you are very good in giving the market some top line guidance, but could it be helpful to give us some guidance on EBIT.

I think I'll answer the question. So we're not mentioning that there will not be an increase in our cost side.

So you have a reality in terms of inflation. We have a reality as well in terms of flow-through of team members that we hired in 2022 and 2023.

Typically, we don't give cost guidance or an EBIT guidance yet in first quarter. We tend to do that after the results of Q1, but I think the important indication that we can already provide there's no further investment spend.

So that's the best indication that we can give at this point in time.

Just a comment as well as per the guidance, I think historically, we've given a guidance on revenue and on OpEx. We tend to change that.

So in second -- well, after the first quarter results, we tend to give guidance on EBIT. We believe that that measure leads less to confusions, and so you may expect that from us after the results of Q1.

But at this point in time, it's just some indications of how this is evolving, and we will refine that guidance in second quarter.

Congratulations on the nice results for the whole team. I was just wondering if you say no more CapEx than this year, does it then mean also that we're going back to the normal of 0 capitalization of intangibles?

Or do we take the new EUR 8 million a year as a somewhat a new normal? And then the second question related to that would be also if that related project is launched in 2024, I think it was never disclosed what it was exactly.

But what would the depreciation rate be on those additional capitalizations? I'll start with those questions, and maybe have some follow-ups.

Yes. So Alexander, happy to answer those.

So in terms of intangibles, I think I mentioned in the slide on intangible assets. So we don't expect any new projects to be added.

So we will stick to the 2 projects. We expect a slight reduction of the spend on those 2 intangible assets in 2023.

So we moved from EUR 7.5 million to about EUR 6.2 million. So it will slightly decrease.

But no new elements will be added. So no new projects are to be added.

When it comes to depreciation rates, so we expect that depreciation will start as of 2024 and over a period of 5 years.

And as from 2024, we cannot -- we can expect the capitalization to go back to 0?

Yes, Correct.

Unless we have older major...

I would come. But I think you're right, we would expect that to go back to a much lower level.

Okay. And then I know you said you could not give any guidance on the cost side, but just wondering maybe how much of the -- basically assuming that there is no big event in 2023 or at least less.

So it's all going to come from LSP and LAB, just wondering what -- if you could give us some margin difference between the 2 elements because obviously, LAB is now going to grow faster than LSP. So I was just wondering what the margins are?

Or how do we look at that? And how much also on the top line is inflation of your price increases and maybe when you see the timing of those price increases?

And then on the bottom line, how much cost inflation do we need to pencil in? I guess you already have a bit of a good view on that.

All right. That's it from my side.

Okay. Well, regarding inflation and price increases, are to do the same thing as in '22 that is implemented 2 moments of price increases.

So we'll be looking at what is the real inflation of remuneration and cost components, of course, and we will try to be as close as possible to those numbers. And we know that when we do a price increase, it takes a few months before it really gets into the market, and it really influences the orders that we get from our customers, but our aims to continue adapting our pricing to reflect the increases in inflation that we are going through.

I think in terms of cost inflation, so yes, we are a company operating on the armies commit to par 2009, and that foresees an annual correction for inflation in July of every year. We have expectations that, that correction in July for the Belgium employees will be around 7.5%.

This is obviously still the guidance that we follow. We'll have to see how that evolves in the next few months.

But that is what we take into account.

Okay. Just because the price increases are lagging a bit the cost inflations, obviously.

I'm just wondering, do we then -- because that would imply that the gross margin and also the EBIT margin would decline a bit. Is that the correct assumption then to make?

Our objective is it to compensate -- so to make sure that we compensate cost of components and inflation in our prices. So we should improve from a gross margin point of view, the margin by solution.

Now, will there be an effect of change in mix? Yes, we still expect an effect of change in terms of gross profit because we still expect the infra to take a bigger portion of the page.

So with pure mechanical, I would say, rather than losing price power or losing gross margin model.

Okay. So correct that we can expect a bit the gross margin to come down a bit.

That's correct assumption?

Marginally, yes.

The first is on 2023 and in the top line outlook. If I do a bit of math and maybe this is fair or answers a question to say that the growth that you expect, excluding EBIT is more on price increase than on volume?

And then a second question, but related also to top line, how do you view the mix evolving? So looking at your order book for 2023 between LAB and LSP median France and how this could impact the gross margin as you've alluded to that.

So these are my, let's say, 2 first question. And then, yes, last point on the, let's say, also on the order book, or not state of the tailwind is the migration of the install base of XP server to move into ichthyosis.

So -- and where do you expect, let's say, at the end of 2023, the migration to be? Thank you.

Thank you, David, for those questions. So to answer your question about the top line growth, is that mostly linked to a price increase of volume driven.

We think for the moment, that will be a combination of both. So there is expectation for this year.

And indeed, this is an even year. So no big even trend on revenue, but the top line growth, as you can see it for the moment is a mix of price increase and volume.

But definitely, price increase has an important impact in that. Then when we talk about our installed base, we see for the moment that we have launched our current generation of XT-VIA in 2018.

So that's quite some years ago. We see some an acceleration last year.

And for the moment, we are seeing that we are somewhere between 30% to 40% of our installed base that has been upgraded. So that still gives us some room for doing further upgrades over the next years.

We have -- at the end of this year, the end of support for our previous version of the XT server. So that should normally also convince certain customers to take a decision and to move to the new version.

So we would expect to see that upgrade sank to continue also this year.

Can you hear me?

Yes. Go ahead.

Okay. Firstly, so you expect a bit similar revenue in 2020-2022, but our order book for this year is already 68% higher even without Big Events Rental.

There is quite a big discrepancy compared to last year's outlook in connection with the order book, where is that different exactly? And does it maybe mean that you can look at the current guidance with a high confidence?

Well, let's not forget that in '23, we will not have the big event rental. So if you compare the numbers that we gave the guidance of EUR 145 million to EUR 155 million.

You should compare that to a number of EUR 139 million in '23 , the EUR 139 million is a figure without the big events. So you see definitely there is an increase in those in revenues.

So it's not at the same level, but definitely, we expect an increase. And do we feel confident about the guidance that we give.

Yes, we feel confident about that guidance, and there is always a level of unsecurity in our business, of course. And therefore, we still hope, of course, that we could do more potentially, but that will only be seen during the year, of course.

We are still cautious about those projections, especially in the beginning of the year.

Don't forget that this is also mainly a project-based business. So the visibility of the certitude that we have to get that business in needs to build through on the year.

But I can only say that we feel indeed quite confident about the revenue guidance that we give at this moment.

Okay. The other question is, is it possible to share with us what percentage total payroll costs are as part of the total operating expenses?

I think you'll probably get more information in the annual report at that point in time. So I think I would refer to the annual report that will be published shortly.

Okay. And I think someone else asked a question that I had a bit of problems with the line.

You will share with us the difference in margin between LAB and LSP.

So that's indeed a TPI that we don't disclose. That is not what we plan to do.

I don't really follow it from that point of view either. We both -- we put all our solutions in LSP and in LABS.

So for us, that is something that is not really triggered separately.

Okay. And last question, what is your tax rate guidance for the current year?

Yes. I think we will probably be in a range of max 10%, I think.

With the current investments that we do in resource and development and innovation, I think if we correct our tax rate for 2022, which the one-off correction and with still some tax latency from the past, we are rather around the 10%.

Yes, sorry, I have one additional question on the timing of price increases. I think in 2022, we saw price increases in February and September, is that -- they are also the case in 2023?

And do you see some buying in anticipation of potentials or already ordering because we expect price increases, what's the case of the reaction of your clients in that scope?

Thank you for those questions. So the idea is indeed to apply the same timing as regarding those price increases that is indeed our objective.

Some customers, indeed, when they see that the price increases are coming are launching orders, orders that they may be delivering in 6 months, for instance, so they just take advantage of the labor plant put orders that they might otherwise put later into the year. So that is what we see sometimes happening.

Just a small follow-up on the Axon and the cerebrum because I found it quite interesting how you deployed it in North America. I was just wondering how is the competition there reacting to you taking the market share?

And what were the alternatives there?

Yes. Thank you, Alexander, for that.

So definitely, we come with innovative solutions when I was referring to Infra Strada, which is a routing solution that is a quite innovative solution and approach and quite different to what some of our competitors are providing and which is quite appealing to our customers. Our approach with Infra Strada is that we take our technology like Neuron and Cerebrum.

We package that together with switches or routers from, for instance, Arista or Cisco, and that brings a quite innovative solution to the market. When we compare that with the incumbents in our industry and how they do that is they have been building their own switches or own routers.

So they have a quite bit different approach than what we have here. And we bring in, I would say, the best of breed from the IT environment and our own technology, and that brings quite some advantages compared to competition.

So that definitely is a major differentiator that helps us to build upon the capacity of some big players like Arista and like Cisco and bring that into the live video world. So that is really definitely a major differentiation and you've seen quite some big American customers switching to this and indeed abandoning some of their previous suppliers that they -- as far as we understand, are we happy to leave behind them.

One more question on the capitalization of SLD, the spending on this project. How much costs that's allocated to the project should actually moving into 2024, should be moving back let's say, with internet basically staff affected to the project and will be moving back to the P&L.

So is it really that from a cash point of view, you know that we do see a step down in expense -- cash expense be the CapEx or expense meaning we do EUR 6 million, EUR 7 million to EUR 1 million, or actually, you've got some flow back to the P&L, if you see.

Yes. So I think we expect to flow back as of January 2024.

Can that time line still move a little? Yes, it can still move a little, but in principle, we foresee it over 5 years as from January 2024.

So yes, it means 1/5 of the spend to be depreciated in 4 then. From a cash point of view, we definitely at that point in time, given the fact that we're not talking about additional projects at this point in time, there will be no additional cash flow into these investment activities, so yes, absolutely.

All cash that liberates yourself.

Yes. And let me add to that, that some of those resources that we use on those CapEx plans this year and last year will be reduced because some of that is also with external partners, which will indeed once those projects are finalized, will not be continued to apply that.

So definitely, there will be a capacity reduction in our, say of our R&D department external capacity will be reduced at that moment in time when those projects are ending.

I know. So there is a small part like of internal staff is yes staff, let's say, which was working on this project.

And so from a P&L point of view, so you will have the D&A, the depreciation on the capitalization and as well as some, I don't know, engineers being allocated to projects at Vision staining, it's not much, let's say, the internal stuff being affected reallocated to -- sorry, to projects which are expensed a development, which is expensed?

Yes. Well, that's something that we will further investigate you throughout the year because also for other R&D activities, we also have some external support.

So -- but you're right that by the end of the year, we'll have to decide or we'll have to have a plan clearly set out to see how do those internal engineers of EVS, how will they be allocated. And that is an impact for the year '24, of course.

Yes. Apologies.

Actually, I think my hand should be not have been up, but now that I have you on the line, just on the -- to follow up on the David question. If I recall from the last September call, it was 50% internal staffing and 50% external staffing, just to confirm that.

Yes, that is correct.

Yes, I think we still have one question from Michael Roeg from Banque Degroof Petercam the whole he could not put it in the waiting line.

Most of my questions were already asked by my colleagues. But I have 2 smaller ones left.

Will you be generating net interest income now that interest rates have gone up? And if so, how much will that be per year?

Yes. So definitely, we will continue what we implement in 2022.

So it is a proactive cash management and where we can generate interest, we will generate interest. So we look -- so we constantly monitor our position and in interest rates and in dollar exposure.

So yes, that will continue. So we expect similar results in 2022, I think, definitely so.

Will it even be better with the current evolution of the interest rates? Possibly, but honestly, I don't have really a forecast on that at this point in time.

Okay. And I do still have a question on some of the things that were asked earlier.

Of course, cost control is something that can be challenging with indexation of 7.5%. With respect to the workforce, it was 613 at year-end.

And according to my calculations, if you keep that flat this year, where you will have growth of 4% versus the average of last year. Is that a correct calculation?

I think more or less, yes, that should be more or less right.

Okay. So whatever the indexation, you have 4% more average employees and then the indexation for the Belgium part of the workforce.

Correct.

Okay. Well, then I'll thank you for your participation.

As you can see, we think that we are well underway to deliver upon our promise of getting the company back into a growth mode. We demonstrate now that, that is definitely going in the right direction, especially on our top line.

We know that our next challenge is also make sure that our bottom line is also showing that the trend line. So getting also back into growth mode on our bottom line is something that we will be focusing on more and more.

But overall, we're quite happy with the progress, and we're quite positive about the future. We think that all the indicators look positive.

Feedback from our customers is quite positive. We feel that we're also gaining market share compared to certain important competitors.

And so all in all, we feel quite positive about our chances for supporting that further growth into the next year. And having said that, I'm thanking you for attending this session today.