I'm Carl Vanden Bussche, Investor Relations Officer for Barco and I'm most happy to welcome you to the conference call on the first half results of 2015. We assume you have all found the press release and the presentation from our Investors portal on our website. And maybe I'd like to draw your attention and also following some questions I received this morning on some footnotes which are available on the first page and linked to the financial highlights in our press release, in which we refer also to EBIT and EBITDA, let me call it old school. I will come back to that later on during the call. And if you would have issues finding the deliverables, don't hesitate to contact Ann Bouckaert at ann.bouckaert@barco.com. So in this meeting room and most probably for the last earnings call in our old headquarter here with me I have Mr. Eric Van Zele, CEO; and also our CFO, Mr. Carl Peeters. Mr. Van Zele will kick off the presentation in a moment and he will do so using the presentation we have been referring to. We will also ensure that there is sufficient time and room for Q&A after the presentation. I am now most happy to give the floor to Eric. Eric, please go ahead.

Thank you, Carl, and welcome all of you to this update on the results of the first half of calendar '15 for Barco. And I'm pleased to, with all of your hope, to say that we have a very good first half probably in terms of sales and incoming orders, one of the very best in our history, particularly if you then make mental adjustments for the fact that our Defense and Avionics sector activities have been sold to Esterline early - late in January. And also a small divestment we made on the activities of Orthogon, a former avionics - part of the avionics activities of Barco. So when you make adjustments for all of that on the core Barco businesses this was a very, very good and very encouraging first half. In our executive summary on page five of the presentation, we have tried to capture some of the key messages that we will comment on in more detail later on. First of all, the operational performance of the company with incoming orders up 15.9% year-on-year, first half to first half, sales up 16.6%, adjusted EBITDA at 8%, adjusted EBITDA from now on going forward we will call that EBITDA as everybody else does. But as you know, we used to capitalize R&D expenses and have decided no longer to do that. Carl will comment on the reasons for that in a minute. So despite this change in methodology, let's call it our normalized EBITDA is at 8%, which is pretty good. And cash flow after also all the expenses related to some of the investments we made was at 14.5 million. So good operational performance, a strong cash position, primarily as the result of the substantial gain that we made at the end of January through the sale of our Defense and Avionics activities. And as you know, we did it so that we could focus more and invest in the future of our three reported verticals. So, hopefully it will open up new horizons for growth initiatives for us in the quarters and reporting periods to come, years to come. And then finally, as I already referenced the important change and capitalization of R&D expenses methodology which Carl will address in a minute. So when we move to page number six, orders at 522.5 million that was actually even a little bit better than we have originally planned for and anticipated. It is a touch lower - order book is at touch lower than it was a year ago. However, the reason for that is primarily some de-bookings that happened in the first half compared to prior year. So order book is essentially at the same level comparable apples-to-apples, with the order book of Barco last year. Incoming orders, however, for the first half at 522 and shipments at 506, which was of course substantially better than what we did in the first half of last year. Currency, as you know has played an important role in this. Currency not only results in - the currency translations not only results in better figures for us, because 75% of our business are thereabout is dollar denominated. So if the dollar strengthens the numbers look better, but it also makes our company much more competitive. When you look at the swing in currency overall, basket of currencies, and we will see that when we take a look at the geographic slide. You can tell that growth in APAC and in North America, Asia-Pacific and North America has been helped quite a bit by the fact that currency has taken such a big swing year-on-year. It's probably also worth mentioning already early in the presentation that as we go through the year, the second - the currency comparisons in the second half will be less dramatic than in the first half. Some of you will remember, I'm sure most of you will remember that the very strong euro was essentially phenomenon that affected us negatively in the first half of last year, fiscal'14, and then even doubt in the second half. It explains also why, when we talk about outlook and looking forward, the currency advantages or positive momentum that we had in the first half. We think we'll still be there, but not in such a pronounced way as it was - in the second half as it was in the first half. Gross profits at 35.4%, up 2.1 percentage points, that's very good for us. That means that we managed to sell our products at good prices and good margins and that internal efficiencies help us to drive profitability, so that's good, adjusted EBITDA new methodology at 8%. In the old methodology, and that's a little tricky to make that statement, because we didn't capitalize R&D expenses any longer, it would have been closer to 12.8%, just shy of 13%, which for us is a very good historic number, up 2.9 percentage points year-on-year. EBIT at 7.5 million or 1.5% that has a number of factors you know because we continue to amortize even though we didn't capitalize. So we have still an impact on EBIT, I'm sure Carl will explain that in more detail in a minute, leading us to the 7.5 million reported. Net income of 51.7 million, obviously dramatically helped and realized through the exceptional gain we made on the sale of the Defense and Avionics activities leading to an earnings per share comparison of 3.86 versus 0.69 at the same point last year. So, a very substantial gain there and free cash flow at 14.5 million. It's probably worth looking at the right side of the slide very briefly that the Entertainment division overall continues to be the strong holder in the company, not only in terms of top line but also in terms of profit contributions. Healthcare is back and doing well, stable and strong. The Enterprise division is a mixed-bag, where we have very strong momentum in the corporate segment, thanks to our ClickShare product and some substantial weaknesses continuing weaknesses in the control room segment. We will address those or our intention is to address those in the months to come, but stable I would say in the Control Rooms on the top line, but depressed or below our expectations in terms of profitability. Moving onto the new capitalization methodology on page seven, I'll switch to Mr. Carl Peeters.

Yeah. Thank you, Eric. It's an important I think relevant point to clarify to you, so let me explain that here and of course we will come back also when we talk about the P&L shape later on in the presentations. Obviously, I think it's the objective of the management and also the Board to have an as good transparency on the reporting as possible, not only to the external rules but also, let's say, as an internal tool to guide and to steer our cash allocation to developments as more cash oriented, when we, let's say, do not capitalize any more. And also we have been avoiding or we want to avoid, let's say, disruptions of impairments. And of course that all is related to the predictability of developments, essentially also one of the reasons IFRS technically has spoken that we have changed our methodology today. So for you, we will have, let's say, a reporting which has a much narrower gap between EBIT and EBITDA. Obviously, because we don't park any more of our expenses of development on the balance sheet. And as a result of course no related amortizations anymore. We will execute as follows, that - and we are reporting that as we speak also in the documents that are in front of you, that we stopped capitalizing product development expense as of the 1st of January this year, from this semester. Of course, we do have an outstanding development expenses on our balance sheets, end of December last year, this was EUR71.4 million. We will amortize that over the remaining periods as was foreseen in the amortization schedule and plan originally. That of course will give a temporary effects on our P&L, because next to the amortization we don't have any capitalization anymore. This semester we already amortized 23 million, so that's of course an immediate effect on your EBITDA line. But going forward, we will of course consume, if I can call it like that, the EUR71.4 million through the P&L. This reporting period also the next semester and a part remaining in 2016. But from there - from that moment onwards, that effect is gone and we will have, let's say, development costs going directly into the P&L as cash benefits. And as a result, you can expect that the gap between EBIT and EBITDA will evolve to 3 percentage points. So that's also the reason, already Eric mentioned that that we, let's say, recommend that you look to our performance based on the adjusted EBITDA, in other words EBITDA minus capitalized developments, which is giving a perfect comparison between, let's say, the performance of this semester compared to last semester. Eric, turning back to you.

Yeah. So we are at page eight, I believe. With some editorial comments on orders and shipments, as I mentioned it's pretty good performance in the first half, even slightly better than our internal expectations. Order book at 333 level at last year. If you make abstraction of some order de-bookings that were reported in the first quarter. Substantial growth in order intake and sales in the Americas and APAC region, you can see that on the slide, a couple of slides down the deck we will get to that. I would say, the Entertainment division continues to bring us positive surprises in the cinema activity with primarily driven now by successes, continuing successes in China. And if you remember my comments from last time, we predicted that in the emerging economies of the world there would be growing opportunity for Barco to capture market share and e-cinema, let's say, the not so large screens of the more modest cinema theatres, thousands of them in many of these up and coming countries as opposed to the very large screen successes that we historically had in Western Europe and primarily in North America. That - the introduction of new products specifically aimed at that segment has proven to be a powerful and the combination of that plus the early successes in leisure make us clearly the market leader in cinema and with continuing success. So as we have said so many times, the falloff in Digital Cinema that was heralded so many times simply isn't happening. The other segment in that business that appears to be doing well is the venues and hospitality business. Other segments are okay, not great but okay. So overall results in entertainment, good. Probably worth pointing out that our LED activities, the former venture called LiveDots have been fully integrated into the Entertainment division and are part of these reported numbers. In Enterprise, exponential growth in corporate. What we mean to say there is that, our collaborative technologies around ClickShare and therefore the ability to increase the value of our solutions to the Enterprise customers, not so much in terms of image quality but in terms of the usefulness of what you can do with the visual solution, with the screen, with the displays of Barco, that has driven tremendous growth and again ClickShare continues to surprise us in the positive sense is doing very, very well and is now clearly the standard in that industry where people meet and want to share visual information on the central displays, it is the ClickShare solution that is on their mind. On the other hand, as I did already mentioned, we have serious challenges in Control Rooms, not so much on the market penetration side, the opportunity continues to be there but as we commented upon several times already and in the past the conversion to - from rear-projection cube technologies to liquid crystal technologies, LCD screens, that conversion is taking us faster than anticipated, but also at much lower price points. So we are lagging a little bit on our ability to be really truly competitive and that depresses our margins and has an impact on the profitability of the Control Rooms business. We will - we're currently evaluating a number of options both in terms of the resources deployed in that division as well as the future solutions and technologies that will shape the future of the Control Rooms business, the big video walls and we will drive for increased profitability in the second half of the year and the years to come. And then Healthcare, up 18.4%. Again, the investments we made in prior years in the surgical arena with digital solutions for the operating room are beginning to pay off and are helping us again to reinforce this leadership position branding of Barco and that world is substantially reinforced by the success in surgical. We did acquire a relatively small company on the West Coast of the United States that and better results company called ADVAN, one of the key suppliers, home-grown suppliers, to potentially important customer of ours called Stryker. And better results of ADVAN have not been included as yet in these results. So that bodes well for inclusion in the second half of the year. And moving on to slide number nine, where you can see the dramatic effect of currency on growth. In North America, it is largely currency, I would say more than 10% is the translation of the dollar, kind of the 16% change, more than that is driven by the strengthening of the dollar. In Europe, what we see is a mixed situation, obviously, business is done in Europe in euro, so no currency effects, but strong growth in ClickShare or collaboration, but not so good results in Control Rooms for and then a pretty much stable business slightly up in Entertainment and also in Healthcare. In Asia-Pacific, because of the importance of the cinema successes in China, combination of both currency effects and strong growth. So, on to slide number 10 on profitability. It's probably better that I let Carl to talk about the income statement on page 11. Carl?

Yeah, sure. Income statement I think - of course the main topics have been mentioned. You see the nice growth in sales. Also, we are encouraging the stronger gross profit realizations, 35.4%, compared to 33% last year. But of course the specifics that we already highlighted in the first slide, that Eric presented, are also clear here. So if you look in we have a small arrow to the left here. So the net capitalization/amortization effects on the first half is 23 million minus of course, because that's amortization only kicking in, whereas for example last year we have about the same capitalization/amortization for the year. Obviously that is a major impact currently on the current EBIT. As I said before, this will fade out over the next reporting periods, a big part of this year and the remaining part in 2016. Of course, this gives an impact on EBITs, EBIT coming in at 1.5%. For your information, I think Eric hinted on that, in old school it would have been 6.2%, to be honest I'd like to turn that page and now concentrate on, let's say, going forward how we will report and therefore also mainly ask you to look to our EBITDA minus capitalized development which is on the bottom line, an improvement from 5.1% last year to 8% this year or going from 22 million to 40 million EBITDA margin in this definition. One other point on this P&L that I want to draw your attention is of course the gain that we booked on the divestment of our Defense and Aerospace activities to Esterline, which you see on the other small red arrow that we show there, the 46.3 million net income from discontinued operations, obviously giving a very big impact on the net income for this reporting period. I think if you have any other questions on that P&L statement or in the P&L shape, feel free to ask that later in the Q&A session.

So on page 12 you can see the same factors but then at the EBITDA level, EBITDA minus capitalized development. And as you can see, last year reported EBITDA was 22.3 plus 24.5 to 24.5, that didn't happen this year. So like-for-like, it's the blue comparison, the uptick from 22.3 to the right 40.5 million EBITDA generation in the first semester with currency helping 20.5 million to that effect, then more sales and better margins another 8 million, for volume and for profitability 4.1, slight effect of R&D cash expenses because of the end part capitalization methodology. Then sales and marketing expenses up. I have to say that bonus accruals are part of that largest currency, so the two effects there. And then G&A and other expenses in the noise level. Okay. Moving on to cash and balance sheet, do you want to talk about that Carl?

Yeah. Of course we will enter or we did enter the semester with a very strong cash position, close to EUR188 million, up considerably of course on the toe end of our cash inflow from the Esterline transaction. The gross operating cash flow goes from 46.8 last year to 38, obviously this is the effect of the capitalization methodology, I will come back on that in the next slide, which is a bit more clearer. To explain that, although it's pretty obvious, we have 10 million increase in working capital. Of course, also here FX effects are playing, but let's look to the relative numbers and then we see that AR and the trade receivables is coming in at 65 days, whereas, end of last year, we had 63 but first half last year at 54. So I think here we have still some improvements to realize. Although below these numbers you could see for example that from overdues we are improving, so we have been sharpening up our process in the first semester, making sure that we have less overdues and of course after the result also less risks on those ARs, but we are working with regional management to work also on the payment terms. Inventory turns coming in at 3.1. You see the comparison with first semester and full year last year. On the other hand also, if you allow me to compare with the first quarter of this year, then we have still higher turn, so we have a very good second quarter, improving the inventory turns to 3.1, actually decreased drastically over inventories in the last three months, also on the back of dedicated actions with our supply chain teams. Trade payables at 111, pretty stable compared to the end of last year. Free cash flow realized, that's pretty large swing compared to the last year, because last year we were at minus 14.5 and now it's plus 14.5, so the 29 million swing, you'll also see that in the next slide from the figures. Return on capital employed is 5%. Allow me to give a side note on that is that, of course also here we have an impact of a methodology in a sense that the return figure, the EBIT number of course is impacted a one-time with the capitalization methodology. Going forward of course this will go away, and even more also the capital employed will also decrease obviously because we don't have those - the balance sheet position anymore. But for a temporary effect, we will have these effects, but I'm sure that the overdues on the firm, we'll look through that in the long run. Capitalized developments on the balance sheet is now at 49.2 million, of course down from 71.4 end of last year. So you'll see that, if I call it like that melting away over the next semester and also still a bit also next year, which as I said will give us a lower capital employed position. Capital expenditure at 18.1 million, typically a bit higher for us because we see now the major impact from the building happening this semester and also the next semester. I think Carl hinted to that, that probably next call will happen from the new building, let's say developing as we speak, actually next door here, but that's an impact on the CapEx investment. Next slide, number 14, gives you the free cash flow statement. As I said the turnaround of 29 million year-on-year, and there I'm drawing your attention, we tried to do that a little bit with arrows on the right side that the gross operating cash flow, I mentioned that in the previous slide, this is down 8.6 million. We have to look that in combination with the third - or fourth last line, the expenditure on product developments where we, of course, a plus 24 million. So the inswing or in the - let's say total effect, that's close to EUR16 million impact. Other working capital, flat. As we noticed in the first half of last year, the main impact was from, let's say, other change in net working capital, that was mainly to decrease in down payments or pre-payments from customers, but that being kept flat, let's say, in this semester, in the first half of 2015. Incidentally, I can also tell you that if you look to the balance sheet, our net working capital position compared to sales remains around 5%, which I think, if you recall our guidance on that space at the good side of, let's say, that balance sheet position compared to sales. I think for the rest, I think, I mentioned basically the most essential points. Just for information for those that are calculating it through the third last line, purchase of fixed assets is 6.1. You might say that we saw in the previous slide 18.1, but we do not report the campus within, let's say, the free cash flow statement. You will see that as a matter of fact in the next slide, page 15, where you see that reported and we took that here because the numbers are pretty important. So the net cash 63 million, end of last year. We have a free cash flow reported 14 million, then of course the proceeds from divestments. But we paid in the last semester also for ADVAN, the acquisition that Eric already mentioned before. We had also CapEx investments for the campus, by the way financed on the one hand with divestments of facility of buildings here in Belgium but also with the long-term loan. And then of course we had the dividends paid of 19.4 million, giving us a net cash of 188 million. I think that is, let's say, the clarifications on P&L and cash position, and I will turn back to Eric.

Yeah. Thank you. So in closing, we're going to take a quick look at each of the three pillars of the company. We think that because of the new structure with the Entertainment division really being the central profit contributor doing well and continue to do well. And you can see at the bottom of page 18, why that is. And as I already hinted that we are leading the conversion to laser solutions and that gives us again that reinforced hi-tech faster than everybody else, more agile kind of reputation, very much appreciated by the industry on a global basis. Barco in cinema is really the reference player. In addition to the introduction of low cost, lower cost I should say, E-series or e-cinema projectors in the first half, which is beginning to allow us to lead also in that very important segment of mid-size and smaller screens. With PCI compliance or Hollywood compliant projectors, that's a first in the industry. And then QImage processing solutions, particularly in venues and hospitality giving us again an edge there on the technology side. So Entertainment very good. And yeah, what can I say? The strong holder of the company. The Enterprise division, where we on page 20, show the numbers of the two segments and we've already indicated that the positive momentum and very, very strong positive momentum within our opinion also still very promising new territory ahead of us, because ClickShare is just one product line of the many potential capabilities that we might deploy in collaborative solutions. But the good news here, I think underlying all of this is that Barco is successfully transitioning from being a hardware-centric company to being both hard and software with software being the ultimate additional value creation tool for this company that otherwise would be at risk of becoming commoditized and obsolete. It's the software initiatives around networking and around collaboration and around making or offering our customers systems and solutions beyond just better pictures, better quality of images that explains the success, not just in Entertainment but also in Enterprise, certainly on the ClickShare corporate side. And I have already spent quite a few comments on Control Rooms. We believe that large video walls is a business we need to be in and we need to lead. We believe that the world of energy, the world of blue light, security, government that world will continue to buy advanced visual solutions for a number of applications and that the transition we are implementing here is twofold. On the one hand, we are updating our ability to come up with cost effective, advanced hardware solutions. So the conversion to LCD and probably with a somewhat longer-term horizon even LED solutions rather than the conventional, should I say, historic rear-projection cube solutions. So that transition is taking place and that's the one that depresses the margins, because we have been late I think in some - to some extent making the switch to LCD but also not so much on the technology side, but mainly on our ability to offer these solutions at cost competitive price points. We are fixing that and more to come on that as we move into the remainder of the year and into coming years. We want to lead in Control Rooms and we will take appropriate measures to do so with the eye on important strategic global markets for Barco. The other transition in Control Rooms is the transition towards software integrated systems. The operator in the control room, his interaction, not just with the screen but also with the crises, points over the public network or IP networks, the ability to share all that information in not just within the confines of the control room but the crisis center and beyond, also mobile applications with the people in the field, security officers and other. All these things are hitting the market and Barco is very well positioned to lead in that segment. So ultimately, people will buy our solutions because of the combined effect of cost effective advanced hardware solutions with software enabled applications that create much more value to the customer than just simply watching the screen. So double picture our Control Rooms results in the first half were below our expectations and even though we continue to see it as a very strategic market, we were certainly not satisfied with the profit contributions of the vision. And then finally in Healthcare, we are enjoying, I think again the leadership position that we have enjoyed for so many years on the hardware side. We have gone a step further in our radiology capabilities with the introduction of a product called UNITI, which is really an impressive display for radiologists, 12 million pixels, color enhanced with advanced software to make the diagnostics more meaningful and more effective. Product that meets with the tremendous positive reactions in the field. And probably unlike other markets where the display technologies are commoditizing, in Healthcare the fact that the product is still better in terms of visual performance that continues to be an important value creation for the company, because diagnostics by doctors are helped tremendously by this high-end product. So here, I would say old Barco, hardware Barco continues to do well and enjoy good prices and tremendous reputation, very high market shares also. But even here, the introduction of digital solutions for pathology applications and for digital operating room make us move beyond hardware into integrated systems and software strategy that we articulated over a couple of years ago as what is next for Barco. Again, we may be only halfway there, we need to continue to strive for excellence in that transition, but we're doing well and the results are supporting that. So what does that say about the remainder of the year on page 24. Well, obviously, we are pleased with the results of the first half. So we think we can look forward to a good year, but we want to be cautious. And in the statements that we are making here, first of all, we must point out that our assumption is that, foreign exchange rates will remain roughly at current levels, otherwise with the big swings that we have seen in the past, we have been confronted with some surprise effects in the past, hopefully that will not be the case. And also as I pointed out in the beginning of my intervention that the dollar-euro relationship in the second half of last year, fiscal '14, the dollar strengthened and euro started to weaken. Therefore, the comparison with the second half of last year, second semester of last year, will be a little bit more challenging. Nevertheless, we continued or we are saying that we expect to produce adjusted EBITDA, so let's call it EBITDAs including some growth initiatives that will require funding and which I have hinted at in my previous comments. Including all of that, we still think that we will improve both sales and profitability year-on-year. So that is the outlook statement and I think Carl I'm going to give it back to you.

Thank you, Eric. And I believe indeed we can now move to the Q&A session. I would like to ask maybe even urge you to limit your questions to maximum two questions at a time. This will help us to respond appropriately to your questions, but also allow the other participants to ask their question. If you have more questions feel free to queue again. The operator will now explain you how this works.

Ladies and gentlemen, we will now being the Q&A session [Operator Instructions] And our first question is from Guy Sips with KBC Securities. Please go ahead. Your line is open.

Yes. I've two questions. First is on the EBITDA and the new methodology. Do you - can you give us some guidance and some of your internal targets on a division-by-division basis for EBITDA and EBIT for the three divisions going forward? And second question is on the CapEx, the impact of the new building and the new SAP system, can you give us - do you have already more information on that after the Capital Markets Day? What will be the impact for full year '15? Thank you.

Okay. So we have the question on EBITDA, new EBITDA on group level and on the divisional level and then one on the investment. So, Eric you will figure out...

I'll take the first one. So very briefly we want the Enterprise group to be at par with the others. I would say, Entertainment and Healthcare are in the neighborhood of where we want them to be, Enterprise is below our expectations, because of the effect of the control rooms business. And therefore, we have hinted in our comments that we will take appropriate measures to drive the control rooms performance towards the others, the level of the others. The trade-off that we are making here maybe as an editorial to your question is the following. We do have substantial cash resources as you know and we really want to have the opportunity to invest those in growth initiatives going forward. So putting too much emphasis on increased EBITDA would probably hamper our ability to invest the considerable resources we have available in future growth. So it's a trade-off between profitability and growth, Enterprise division is below our expectations on that trade-off. So there we need to take corrective measures. Both Healthcare and Entertainment are pretty much in the neighborhood of where we want them to be. And so, bitterness there will create more room for growth investments rather than for squeezing more profits out of them.

Okay. Your point Guy on the CapEx, SAP to start with that, investment size, let's say, for a semester is about 3 million investments, full year same, so full year will be again about 6 million. This will, let's say, pave way with the next year, because of course, in this period also we launched SAP here in Belgium successfully I may say on 1st of July. So I can tell you it was a pretty busy period in this building here in the past couple of weeks, but it went pretty smoothly. As an effect of an investments and I think you could probably also ask that in detail on the Capital Markets Day like when will we see benefits, let's be careful. I mean we just rolled out and I think benefits will only, let's say, start to kick in as from the next year onwards. So I think it's a bit early to tell that, but that's give you some idea on the investments. On the investment of the building, as I mentioned the first semester had a 11.4 million. I think it's another secret to tell that the total investment of the building is around 50 million, 50. So knowing that we had already some full year of investments last year around 12 million, so the remainder of the year we will see another 16 million, 18 million depending a bit on the completion. As Carl was saying, we have a big part completed already this year because we are moving in end of the year, but some further, let's say, completion will happen early next year, that's an order of, let's say, magnitude that we can expect.

Okay. Thank you.

Thank you very much. And next in line is Emmanuel Carlier with ING. Please go ahead. Your line is open.

Yes, hi. Good morning. Two questions from my side. The first one is on the guidance for 2015. I'm a little bit surprised with the statement that you expect adjusted EBITDA to grow only modestly year-on-year. So could you maybe quantify a little bit or give a little bit more explanation on the impact from the growth initiatives in the second half of the year, because if I would look at it that would imply a negative EBITDA year-over-year in the second half of 2015? And then the second question is on the guidance you used to provide on EBITDA margins. So at the Capital Markets Day you mentioned the 13% to 16%, if I'm right. Now you seem to target more around 10%, is that correct? And what is the impact on your ambitions on the top line, because I understand that you target to do more on new growth initiatives? Thank you.

Okay. So, first you have a question on the guidance on EBITDA and what that would bring in the second half. And then, as your second question was EBITDA margins. But allow me to say, Emmanuel here, let's not confuse the old format EBITDA with the new methodology or the new format EBITDA. Eric, would you take the first question, please?

Yeah. I don't really know, I don't want to get into the arithmetic extrapolations of the second half. What I would venture to say is that we expect our core businesses to do well and to continue to do well. We are confronted with corrective measures going forward in control rooms, and we are looking at those and we will take steps accordingly from a cost efficiency point of view, profit generation point of view. So on the core, I don't think you should expect to see any dramatic changes to the negative. It would be more of the methodology of reporting than a fundamental change in the business performance. However, what we did hint at is that, we will or we want to have the freedom and obviously that are subject to approval by our Board to make selective investments in each of these businesses. We have a view on where we need to go and what the breakout strategies are that will allow us to transform this company called Barco from the hardware-centric, image-centric company at the risk of commoditizing a couple years ago into a leading software enabled, yeah, solutions systems provider and that will require certain investments and technology, it will require - it may require certain acquisitions that we will do in the periphery of our recurrent activities. And to question against those mix has been a little bit cautious on our predictions. Carl, do you want to answer that?

Yeah, I think. No, I think you said rightfully. I think it's a mix of, let's say, cautiousness in general on the back of, let's say, also our expectations on currencies going forward. But secondly also and I think many of you were at the Capital Markets Day a couple of weeks or months ago, I think recently. You did see a lot of, let's say, ideas that we bring to the table banking on our strong market position. Let's not forget, I mean, we are market leader in cinema. I think our management of that division has explained to you about many new ideas that where we want to monetize our market position, but the same is happening with ClickShare, Eric was mentioning that. I remember that we gave you, let's say, an example of what we call incubator, let's say new idea on education. I think many of you will remember that. Well, that of course doesn't come for free. I mean we have to invest and we will invest into that, because we are convinced that these ideas will also be fueling the future growth of Barco. So yeah, I think that's the combination on the guidance going forward.

Well, the second question was on guidance on the EBITDA margin, which you've got discussed during the Capital Market Day being between a couple of percentage points and then the new EBITDA margin, but I think you addressed it already.

Yeah, I think we addressed that. I think if you look today - I think Eric and I also mentioned that we are performing well with 8% EBITDA now, new definition, in the past that would have been close to 13. Of course, I mean the arithmetic does show to you with amortization. So if you count Barco in the past shooting for 13 and going from 13 higher towards the 14%, while deduct from there the amortization that we typically have and then it come indeed to, let's say, a new arithmetic or a new kind of, let's say, goal that we have in front of us, which is an 8 and beyond, I mean that's the kind of goals we are setting ourselves. But for the full year, I refer to my previous comment on the gross.

Can I maybe add to that. We believe that the current valuation of the company is already very strong or was already based on EBITDA minus capitalized R&D. When you look at the multiples, they clearly are indicative of an investor world that looks through this capitalization versus amortization methodology. I think cleaning it up, this was a good time to do it also because our product development cycles become so much shorter and we just want to have a clean balance sheet, we want to have management that is responsible for the expenses that they - or the investments that they make in R&D and make in - make they didn't pay for that right away to avoid any short-term deviations. So I think overall it makes us a better company and I think the 8% EBITDA number that Carl made reference to is a good number. Can we do better? Yes. Can we do better and at the same time invest in the kind of growth that our shareholders expect from us? That remains to be seen. It depends whether some of these acquisitions are fully accretive right away or not, whether - usually it takes a couple of months if not years before these things really pan out. So that's why I made reference to our Board and our shareholders. We obviously want to create profitable growth and that's why we decided to divest from Defense and Avionics and invest wisely in our core. So if we didn't believe that we could create shareholder value through this move, it would have been the wrong thing to do. Now we've done it and I think we've done it successfully, we have this big amount of cash available to invest it wisely. And that's why we are a little bit cautious on raising expectations on EBITDA which would limit our ability to invest in growth.

Thank you.

Thank you very much. And our next question is from David Vagman with Exane. Please go ahead. Your line is open.

Thank you. So, two question. First, if you could comment on the most recent trends in China both for digital cinema and medical imaging? And then second question is on M&A, on the let's say your most recent linking, also looking at investment opportunities on M&A? Thank you.

Okay. Eric probably a question for you.

The China situation on the cinema side is absolutely excellent. We have enjoyed very high levels of market share as you know, but we are winning now also with the introduction of laser, introduction of media blocks that are integrated in the projector. And we are introducing the E-series projectors or projectors positioned for the smaller theatre. So for us the future in China on the cinema side is looking good and there continues to be a great opportunity for us there, because the potential market, the accessible market in China, when you move into the e-cinema business is quite substantial. So having said that, in Healthcare, we have changed our approach a little bit in the sense that we are targeting through new set of reps and distributors for the high-end market where the local players don't compete with us on cost. And even in countries, up and coming countries, the days that China was an under-developed or a developing country or long behind us, so there are hospitals and medical centers that require the best-in technology, and our short-term focus is on conquering those and selling out, call it the Western solutions to these high-end centers. But at the same time and this is a new focus, we are preparing and taking steps to be able to position a second good enough, I would say, a series-B products for the Chinese market. And China - for China it's a big theme in this company, because we don't believe that the old approach of an export to that model has any chance of succeeding. We need to be in those large domestic markets such as China, holds to some extent also for places like India, Indonesia. We need to be there with local products that are supported by local staff and that are tailored to the specific needs of the local customers. And I think we didn't do that right in the past in Healthcare and we're talking corrective action. We've looked at possible acquisition opportunities there and maybe that we will come into new ones in future months or years to come, but for the time being we are not final yet on the kind of partnership that might get us to our goals. So whether we will do it under our own flag or whether we will do it with the partner in this B segment remains to be seen. And then my last comment on China would has to do with control rooms. 40% of the world's market for large video wall solutions is in China. Even our competitors, not appropriate for me to mention the names but even our local competitors in China are not doing well. So there is a government in place that is somewhat late or reluctant to release big investments in public infrastructure, be it railway, be it traffic, be it nuclear or be it whatever centers. Over the past six months, first half, the public sector has been slow and controlled. So that explains in part the weakness that we have seen, because in the most lucrative market for us the demand was very weak and not just for Barco but for everybody. Now we think that to really lead in China in this control rooms business we may also have to partner up with strong local players like we did in the China Film Group for example. So again, we are looking at those, we're evaluating several options, we think that the longer term future of our business in China is extremely strategic and extremely promising. But in control rooms, we're coming out of the period where the government did not invest very much, where we were not sufficiently competitive in part because we were trying to sell and import products rather than localized product and not necessarily tailored to the specific needs of our customers. So combination of factors that make us be not so proud in terms of our progress in China on control rooms. But we know where we need to go and we are determined to go there.

Second question was on M&A and so the criteria we applied there to select the targets.

I don't know if I can say very much about that. We do have articulated strategies for each of these three verticals. You have had access to these strategies. So we've shown you on the Investors' Capital Markets Day that unfortunately I have to miss where we want to go directionally, whether we go there through acquisitions or organically remains to be seen. We believe and with us our new Board and our new Chairman in particular, we believe that we must sufficiently invest in developing our own technological capabilities, not just always go around and buy companies to close the gap. So it will be a combination of external or organic and inorganic growth initiatives. When we go external, so when we acquire companies, the emphasis will be more as I indicated in the past on being accretive at EBITDA level. In the past we have primarily spent money, small amounts of money, on technology acquisitions. Going forward and not excluding technology acquisitions, we're really looking more for market share and for go-to-market channels, because we think we have the building blocks and this company now needs to capture the opportunities that lie in front of us into different markets the three segments that we have carved out. To capture those will require strong presence, local presence in the three strategic theaters of the world and if that requires that we take over a company that has sales and marketing presence, for example, in the corporate segment, then we will look at that and with our Board we'll decide to go for it. But I cannot say that we have or that I can share with you a particular list of acquisition targets, everything will come at its own pace. And we certainly will not be adventurous. We will be cautious and walk into the future with our eyes open.

Thanks very much.

Thank you very much. And moving on to Bart Jooris with Bank Degroof. Please go ahead. Your line is open.

Yes. Good morning, everybody. Lot of my questions have already been answered, few left. First of all, you talk about making adaptations in control rooms, should we see some restructuring charges there? And could you give us an idea on the amount of that? And then also a follow-up question on the acquisitions. As I understood from the Capital Markets Day, you're not in a hurry and it could take some time to do these. But as I understand now from all the explanations that were given around the guidance we should expect already some moves in the second half of this year, is that correct?

Okay. So, two questions. So the first one on the profitability improvements under consideration and control rooms. Eric?

There will be change and whether change means that we have to let go people or redeploy them, that is what we are looking at. Because at the same time we have growth segments where some of these resources could be redeployed. But we definitely are considering to lower the breakeven point in control rooms, those of you adopt in arithmetic have probably already figured out that there is no positive EBITDA contributions in control rooms and when - in the first semester. So we need to address that. But whether it will lead to restructuring charges, a little bit too early to tell. We first need to be clear about what it is we want to do and then look at the possibility of redeploying these resources before we can answer that question.

Eric, can I make a small comment on that. Have you already taken some cautiousness regarding that in your EBITDA guidance?

That I would probably suggest that the answer is yes. And then the second question?

Second question was on acquisitions as well. And how we reflect that in our guidance for the second half…

But we're saying that on the Capital Markets Day - we said, look, there is no hurry. I mean we will take our time, that's also boding well, Eric, with your statement on the capability that with eyes wide open and cautious, but it kind of concludes from your explanation that of this, now things happening in the second semester. Yes or no?

Again, I'm not a prophet, Bart, so I cannot be decisive in either way negative or positive. But are we looking at project in our M&A department and are some of these rather concrete? The answer is, yes. Whether they will happen in the second half of the year? I really cannot tell and I shouldn't speculate.

Okay. Thank you very much.

Thank you very much. And our next question is from Stefaan Genoe with Petercam. Please go ahead. Your line is open.

Yes. Good morning. This is Stefaan Genoe, Petercam. I would say first thank you for the much clearer accounts we will get going forward. And then my two questions. First, I'm afraid I will come back also on the control rooms. If you want to go to the Group average, you need some 20 million EBITDA recovery from the profitability level that we've seen in H1. How do you tend to realize that because we set some restructurings in the recent years, we set some relocation of production and assembly, now the selling prices with the LCD screens are reducing, of course it's not possible to continue reduce headcount, could you give us some more color on how you will get this significant improvement in profitability from this unit? That's one. And then the second question, on your natural dollar hedge or ForEx hedge, I would say, given the strong digital cinema sales and then in H1 I suppose, that is part of - a big part of the positive ForEx impact we see on EBITDA in the first half. And could you update us, please, on the percentage of natural, ForEx hedge in your accounts currently? Thank you.

Yeah. I'm going to take Control Rooms one more time and then Carl will deal with the outlook statement on EBITDA. Look, when you look at the Control Rooms business over the last two years, we have lost more than 50 million on the top line. That, at the margins that we used to enjoy explains much more than the 20 million EBITDA defined that you made reference to. What we are saying now is that we are not banking on the 50 million top line to come back, not because the volume isn't there because we have sold even in the first half of this year. We've sold more video channels than we ever did before. So the market is still there, but the price point that is now being set through LCD solutions as opposed to former rear-projection cubes solutions, that price point has dramatically come down to, I would say, roughly half of what it used to be. And so the measures, the first set of measures that we are taking is to make our offering in LCD more competitive. And that may require that we partner with certain players in the East, in China, for example, to be able to restore profitability through cost reduction as opposed to headcount reduction. Now, as I indicated to Bart earlier on, I don't want to exclude headcount reduction and I don't want to give you any definitive answer, but the real challenge here is in the product and in the cost thing of it. Because - and then I go to my next point, we also think that we have some unique solutions, both hardware as well as software that we can - in this transition to LCD opens up new technological horizons for us also, not just in terms of image quality but in terms of what you can do with the system interactivity, ClickShare, expanded ClickShare, let's say, type of applications for the control room. And so, when we aim for growth which we believe inevitably will come because the addressable market in control room just big. But the measures we're taking are measures that go or start from the point that we will level off at this point, not a double-digit growth extrapolations with the current product kinds of cost reduction and potentially redeployment of resources. But at the same time, we have a second set of measures that have to do with bringing new innovative technically advanced solutions to the control room, but based on LCD not based on rear-projection cubes, potentially also laser solution solid-state. So I think we can do it, I don't think the 20 million gap on EBITDA is all that difficult once we have a positive momentum in the market. Now we're in a defensive mode, because we need to supply products that are as good as or even - but more expensive. So we don't have a differentiating capability, but that will change and that will change, I can promise you in the second half of the year already. We are already introducing new capabilities to the market that give us an edge and then obviously combined with potential partnerships to bring the cost down, should give us that positive momentum again. But that will take some time, it may some investments and but we are bullish that we can fix the problem.

The second question on - Yes, Stefaan, let me first say as I appreciate that you see the benefit of having a more transparent and easier kind of reporting and I trust your colleagues think likewise. Your question on the impact of our Chinese business, you're right. I mean the weight of China specifically in DC, in digital cinema, increases. So obviously also the currency effect of China kicks in. And indeed, in fact right, we typically talk about the dollar dependency and the dollar rate impact will, of course, by the same token also especially with the volume increasing China becomes important. However, to your point on natural hedging, it doesn't change that much. I think we, in percentage-wise, you know that we are guiding always around 65-ish percent on natural hedging. And why? Because also we more sourced from China as well and we have already and also growing, let's say, presence in China. Growing in the sense of, let's say, development and also operational activity. I think Eric mentioned that we are bringing to the market, how did you call it again, a series-B kind of projectors for the local market. Of course, that's obviously also done with our local team. So that's confirming also our hedging percentage in general.

Okay. Thank you. That's very helpful.

Thank you very much. And moving on to Marc Hesselink, ABN AMRO. Please go ahead. Your line is open.

Yeah. Thank you. Actually I've two questions, both on the Entertainment division. Could you tell bit more about, for first one, on Digital Cinema like you have the separate segment, so service and maintenance, some conversion still, the new builds probably in China, but also new initiatives like the Escape and the laser projector. Comparing those areas, where do you see right now the strongest uptake? And is there still some conversion left to do, just a little bit more details on these separate areas, please? And then secondly, the other large player in Entertainment, the venues and hospitality, it seems that - I mean this was also I think in Capital Markets Day, it seems pretty strong segment at the moment. Could you also see what you're seeing right there, your market share, your growth and profitability, please?

Okay. So both questions on Entertainment, so first cinema, Eric?

Yeah, not necessarily easy. I think that our approach to cinema has proven to be successful for a number of reasons. First of all, we continue to make the best conventional projector. Second, we have introduced the new generation laser capabilities for high lumen applications, very big screens. We were the first ones to do that and the picture quality of these laser solutions is stunning. The number of laser projectors that we have sold is not necessarily astronomical. It's a slow process, the introduction process; these things are also expensive. But it gives us that reputation of being the technology leader in terms of projection solutions for cinema. In addition to that, we have entered the market of e-cinema, as you know, not just in China but many, many other countries, Vietnam, Indonesia, all these countries will find it more and more necessary to convert to DCI-compliant digital solutions, because the studios stop making analog copies or 35-millimeter copies or even conventional technology from our competitors, not non-DCI compliant, those projectors cannot process Hollywood content. So we have an edge there and I'm a strong believer that will continue to be a success story for us. Then we - at the same time that we continue to lead in the conventional projection segment, we also have expanded our capability to include solutions for the lobby as you probably have seen at the Capital Markets Days and also Escape. Now Escape meets with tremendous enthusiasm from the studios. They see new capabilities and whereas some of our competitors are focusing on image quality or new sound solutions, integrated 3D sound solutions. Our tact to go in the direction of more 180-degree viewing experience seems to catch a lot of attention. And as you know that results in three projectors instead of one for one particular room. Now again, I think that Escape will be limited to the high-end segment. It will be where new releases are shown in the first couple of weeks and where the ticket prices are also higher. But nevertheless, it makes - it binds the contact with the customer between Barco as a total solution provider and the cinema people in general makes that bond stronger. And last but not least, we have not introduced this but we are looking at it, we see a growing opportunity for service related activities where we even look at potential models whereby the exportation of our equipment is done in collaboration with theater owner or with parties that can offer these capabilities on an OpEx basis, rather than on a CapEx basis. So all this makes us continue to lead and lead confidently in the cinema space and much of the same arguments hold for venues and hospitality with one additional remark and that is that we, as a company, we are leading also in the field of controlling the devices, the lights and the projectors on an event. It used to be that the control panels for lighting and the control panels for video and the control panels for sounds and all of these things were separate and there were resilient cables running around and different systems to manage though. Barco is leading the transition of bringing all these control capabilities into an integrated solution and through our capabilities from Austin, Texas, former high-end systems. We have introduced some very powerful solutions for control any events which again helps our ability to lead in that segment. So I remain bullish on both.

Okay. So if I hear it correctly, then the - is it the growth that you've seen in the past half year, but also the growth in the order book, is it really going from both the areas, both are growing considerably at the moment?

Yes. And you can see on page 18 what those numbers are. Orders, incoming orders up 26%, I mean even for the digital cinema guys that's pretty solid growth.

Yeah. It's very clear. Thanks.

Thank you very much. And we have a question from Guy Sips again, KBC Securities. Please go ahead. Your line is open.

Yes. Thank you. On digital cinema, we can expect some 140 million cinemas - 140,000 cinemas worldwide. But can you give us a clue how many e-cinemas there are, and what is their conversion rates currently? And on the laser projector, how many units are we talking? Are we talking of tens of units that are sold in the first half of this year? And can you also give us an indication of the average selling price? And also on the ClickShare project, do you have - can you give us some guidance, how the average selling price is evolving, do you see some declines over there? Thank you.

Okay, Guy. I think I'm going to have to disappoint you. I cannot answer all these questions specifically. The number of laser projectors is in the - somewhere in the neighborhood of between 100 and 200 this year, not in the tens but also not in the thousands. However, this is year one. The price of these projectors is more than five times a conventional projector. So that gives you an idea of the price range. What else was asked for...

ClickShare. ClickShare average sales price or ASP.

I think we're still on the same page as what was announced during the Capital Markets Day. So where the ASP of ClickShare and then the, let's say, the cheapest model is around EUR1,700 so the more expensive model is closer to EUR4,000, but so one out of four is then the more expensive model, so you can calculate for yourself. ASP is around 2,000.

Say for your question, Guy, on the e-cinema volume and market potential. I think there also we discussed on the Capital Markets Day, it's probably too far now to try to re-calculate. Okay?

Okay. Thank you.

Yep.

Thank you very much. And as there are no further questions, I would like to return the conference call back to the speakers.

Okay. And we will conclude here with the Q&A session. Let me thank you all for participating in the call. And should you have any more questions, you know that we remain available and we remain available still for a couple of days, still somewhere next week.

Thank you all for calling in. Thank you all for the questions. Thank you, Eric and Carl. And please enjoy a nice day. Bye.

Ladies and gentlemen, this concludes today's conference call. Thank you all for attending. You may now disconnect your lines.