The total revenue, excluding exchange-rate effects, was at the same level as in 2003. Here again, this means that the decline of the last 3 years has now been halted.

 

The recovery in income from services and supplies is taking place later than expected.
The continuing decline in the value of the dollar has led to lower revenues and income in euro from our US activities, which generate a total of 36% of the Océ revenues.

 

All in all 2004 was therefore not an easy year, but the positive trend in sales gives us confidence in the future.

 

In addition, we also succeeded in achieving a number of other important objectives for 2004:

Now I'd like to go through the financial results and the operational activities with you.

 

Let's start with the financial results.

As explained, the exchange-rate effects depressed significantly the results.
The sale of a large proportion of the lease portfolio has had a positive affect.

 

That completes the explanation of the financial results.

 

Now I would like to look in more detail at the operational activities in the various market segments in which Océ operates.

Starting with the Strategic Business Unit Digital Document Systems, which serves the office and graphic arts markets.
Océ supplies these markets with printers and digital copiers offering speeds from 45 to 158 pages per minute.
In addition, Océ supplies continuous feed printers with speeds of between 100 and 1200 pages per minute.

 

Implementing these printers successfully for customers is carried out with the help of best-in-class output management software and professional IT services.

 

In the office market, printers are used for the production of office and transaction documents such as bank statements, insurance policies and bills for utility services.

 

In the graphic arts market, these printers are increasingly being used as an alternative for offset printing.

 

Revenues in DDS declined by 4% to 1 billion 835 million euro.
This decline was due entirely to exchange-rate effects.
If we eliminate these effects, revenues increased slightly compared with 2003.
During the year sales of machines and software increased by 9%.
This growth was due largely to the success of new products that were introduced in 2003 and 2004.
Recurring revenues from sales of maintenance, services and materials, together with interest revenues, declined by 3.6%. This decline was the result of lower interest revenues and lower sales of maintenance contracts.
The lower interest revenues are the result of the divestment of the lease portfolio.
The lower sales of maintenance contracts resulted from the accelerated withdrawal from the office market of 25,000 low-volume machines.
In addition, the installed base of analogue copiers in the market is declining strongly.

 

The revenues of Business Services increased by 6.8% in 2004. However this increase was insufficient to compensate for the declining trend in the total recurring revenues.

 

Because of the further increase in the sales of new machines, the trend in service revenues will show an upturn. This is expected in the course of 2005.

 

The lower costs were unable to compensate sufficiently for the lower revenues and margin.
This meant that the operating income of DDS declined by 21% to 55 million euro.

 

The Strategic Business Unit Wide Format Printing Systems supplies products and services for the management and printing of wide format documents in the technical and display graphics markets.
In these markets, Océ supplies printers, scanners and digital copiers with speeds ranging from 0.5 to 12 A0 sheets per minute.
Just to explain what that means in practice: 1 A0 sheet is approximately 1 square metre of paper.
Typical applications are technical drawings, CAD designs and advertising posters and billboards.

 

Also for wide format systems, optimal integration in the customer's total document flow is ensured by means of excellent output management software and supporting IT services.

 

The revenues in Wide Format Printing declined by 5% to 818 million euro.
This figure was of course also adversely affected by exchange rates. Without these effects, the decline in revenues would have been 1%.
In the wide format market we also sold more printers and software than in 2003. Especially because of the good results in the second half of the year, the sales of new systems increased by almost 4%.
This growth was achieved mainly by sales of colour printers for use in both drawing offices and the display graphics market.
Recurring revenues declined on an autonomous basis by 3.7% compared with 2003.
As well as by lower lease revenues, this decline was also caused by the lower revenues from the sales of materials.
Revenues from service contracts in Wide Format Printing increased by 1% on an autonomous basis in 2004.
The effects of the lower revenues and margins were to a large extent compensated by the lower costs.
The relative margin increased slightly compared with 2003.
The operating income of WFPS, at 55 million euro, remained the same as in 2003.

 

To summarise, the results of the two Strategic Business Units in 2004 were strongly affected by the lower dollar and the decline in the recurring revenues.
Despite the fact that there has been no improvement in the economic climate, we succeeded in achieving a significant increase in the sales of new printing systems, by a total of 7%.
And as I said earlier, we expect that a continuing growth in sales will lead during 2005 to an improving trend in the recurring revenues.
That completes what I would like to say about the operational activities in the Strategic Business Units.

 

Ladies and gentlemen, that brings me to the outsourcing of the lease activities.
As you know, Océ has decided to divest the lease portfolio. We made good progress in 2004 with the outsourcing of the lease activities.

 

Specialist leasing companies will take over the existing and new Océ lease contracts, and will handle the financing and administrative processes.

 

However Océ is and will remain the 'customer-facing brand' through the use of the Océ logo, the Océ sales force and the Océ service organisation.

 

The improvement of the financial offering increases the commercial opportunities for Océ, while the proceeds we receive for the transfer of the lease portfolio provides extra capacity for investment in our core activities.

 

In addition, the substantial shortening of our balance sheet will allow significant improvements to be made in return on total assets and on shareholders' equity.

 

Overall, contracts with a total value of 312 million euro were sold to our lease partners during the year. The book profit on these sales was 31 million euro.

 

The size of the lease receivables on the balance sheet was 403 million euro at the end of the year.
We expect to divest further lease contracts with a value of 175 million euro in 2005, which will leave a portfolio of approximately 225 million euro on our balance sheet.

 

Now that the majority of the lease portfolio has been sold, thereby significantly reducing the results of our financial operations, the profile of our company's activities has changed. The performance of Océ should from now on be assessed on the results of our commercial operations.

 

The commercial revenues declined by 3.3% to 2 billion 585 million euro.
The operating income increased by 10% to more than 62 million euro, including the book profit on the lease portfolio.
From 2005 onwards we will place the emphasis on, and we will ask your attention for, the results of the commercial activities of Océ, corrected for the profit on the sale of the lease portfolio.

 

A second outsourcing project, ladies and gentlemen, is the relocation of a part of the production of machines from Venlo to Central Europe and Asia.
This project has been completed entirely according to plan. In 2005, 20% of the original Venlo production will come from these countries.
The objectives in relation to cost price and quality have been achieved to a large extend.
The corresponding reduction in the number of personnel in Venlo has been largely achieved. A large proportion of the employees concerned have found new employment elsewhere.
Experiences to date strengthen the view that Océ must continue along its chosen route. Apart from the lower manufacturing costs that have now been achieved, an additional advantage is that products that are sourced in Asia are paid for in dollars, which reduce Océ's dollar-sensity.

 

That completes the presentation of the financial and operational situation at Océ in 2004.

 

Ladies and gentlemen,

 

Océ formulated some ambitious objectives a number of years ago:
In financial terms, Océ aims to achieve a Return on total Assets (RoA) of 12% and a Return on Equity (RoE) of 18%.
In 2004, the RoA was 4.8% and the RoE was 11.3%.

 

In commercial terms, Océ aims for a top 3 position in the selected strategic market segments. At present we hold these positions in the wide format market and in high volume transaction printing. In the other segments, we are among the top 5.

 

Last year we told you about our strategic agenda, through which we intend to achieve these objectives.
As you will see, we have hardly changed that agenda in 2005.
First of all because the defined actions have a longer horizon than a single year. However, good progress has been made so far.
Secondly, we can see that the strategy is starting to show results.
In other words: we are moving in the right direction. Now it's essential to continue our strategy with focus and determination.

The agenda for 2005 is as follows:

 

Ladies and gentlemen,

 

Océ has achieved a great deal in 2004 through intense efforts in the fields of commercial organisation and innovation.
We firmly believe that we are on the right track, and we have every confidence that we will succeed in achieving our long-term targets.

 

That brings me to the conclusion of my presentation, with the prospects for 2005.

 

Prospects
In 2005 Océ will make further investments in its distribution power.
Thanks to the new products, the sales of printing systems will show continued growth. This will lead to a turn around in the recurring revenues, which is expected to take place in the course of 2005.

 

The operating income from commercial activities, excluding book profit on the sale of the lease portfolio, is expected to be higher than in 2004, provided there is no further decline in the value of the dollar relative to the euro.
As a result of the lower revenues from leases, the net income in 2005 will be lower than in 2004.