ASML Holding N.V. (ASML) Earnings Call Transcript

So ladies and gentlemen, welcome to this Annual General Meeting of ASML Holding N.V. We are happy to welcome you here in our TWINSCAN Auditorium in Veldhoven. And today's general meeting is a hybrid meeting. This means that shareholders are also attending the meeting virtually, and they're voting and asking questions on our online platform. So a warm welcome also to everybody attending this meeting virtually. I'd also like to welcome the members of ASML's Board of Management, Mr. Christophe Fouquet; Mr. Roger Dassen, Mr. Frederic Schneider-Maunoury, Mr. Wayne Allan and Mr. Jim Koonmen. And of course, also welcome to the members of the ASML Supervisory Board, Annet Aris, Ms. Terri Kelly, Ms. Birgit Conix, Ms. An Steegen, Mr. Mark Durcan, Mr. Warren East, Mr. Alexander Everke, and Mr. Jack de Kreij. Furthermore, I want to extend a special welcome to Ms. Karien van Gennip who is hopefully being elected on to the Board today. Welcome to you. Great to have you here. We also have Petra Groenland who is our auditor. She represents KPMG's accountants, our external audit company and representatives of PwC, our new external auditor are also here to take note of the proceedings of this AGM. Finally, I would like to introduce Mr. Reinier Kleipool, Civil Law Notary at De Brauw. Mr. Kleipool will act as Secretary of the meeting. Given the international nature of ASML and because ASML's corporate language is English, we'll conduct this meeting in English. We provide a Dutch translation of the meeting and all questions that are asked in Dutch will be translated into English as well. As usual, the recording will be made of the meeting to help us prepare the minutes. And I now give the floor to Mr. Kleipool. He will explain the process for asking questions and voting during the meeting. Mr. Kleipool, over to you.

Thank you, Mr. Chairman. Before we begin, I will explain the process for asking questions. During the meeting, shareholders will have 2 options to submit questions [Operator Instructions] For those here in person, microphones are available to ask questions. Please remain seated and raise your hand, should you have a question. Please wait until a microphone is brought to you. When asking questions, please state your name clearly and formulate your questions as short as concise as possible. If you're a proxy holder, please state the name of the shareholder you are representing. For proper conduct of business at the meeting, the Chairman may limit the speaking time and/or the number of questions. The Chairman will also determine who is best positioned to answer your question. I will now give a brief explanation on the voting procedures. Shareholders who are here in person can vote using the app on their mobile device or the voting device that you have received at the registration desk. As this is a hybrid meeting, shareholders attending virtually can vote via the online platform. Registration details for the meeting are currently being processed. And once all information is available, I will announce how many shareholders are present or represented, the percentage of the issued capital that they represent and how many votes can be cast. After this announcement, the voting will be opened. Once the voting is open, you have the opportunity to vote on all voting items on the agenda that will be up until we discuss agenda item 13, any other business. In other words, you do not have to wait for an agenda item to be discussed to submit your vote. You can change your vote by selecting another choice as long as the voting is open. You can make any changes until the voting closes, so at any time before we discuss agenda item 13. I'll hand it back to you, Mr. Chairman.

Thank you, Reinier. And we will now move on to agenda item 2. which is a discussion item. And on agenda item 2, Mr. Fouquet and Mr. Dassen will provide an overview of the company's performance and current state of affairs. And I will now give the word over to Christophe Fouquet.

Thank you, Nils. Good morning. [Foreign Language] those new applications. In order to do that, our industry will require major innovations to address power consumption, which is a real challenge for AI, but also cost. And this means that a lot of the product mix is going to shift towards advanced logic and advanced memory, which is, of course, an opportunity for ASML. Our customer remains at the core of our strategy, and we strongly believe that ASML will remain at the core of their choices, their technology choices in order to be able to execute on their road map. We expect that the shift towards more advanced technology will continue to increase the demand for lithography, and I will come back to that in my presentation. We also expect that the work we are going to do in our technology, scaling EUV for lower cost, extending holistic lithography to support 3D front-end integration and continuing to improve Deep UV to remain very competitive in the market will basically continue to address the need of our customer. Based on these dynamics, we expect the 2030 revenue opportunity between EUR 44 billion and EUR 60 million with gross margin expected between 56% and 60% just as we have explained our Capital Market Day back in November. Now of course, you will have noticed that geopolitics, recent tariff implementation, negotiations continue to create global economical uncertainty both on the short term and on the long term. So let me talk a bit about AI. We used to talk about chip everywhere. And nowadays, we start to talk about AI everywhere. And the reason for that is, yes, chips are going to be the foundation for any advanced application moving forward, I could name a few: Energy transition, electrification of cars, health care, we have the list here on the slide. But more and more, this will be complemented basically by AI, and we see our customer investing heavily into AI infrastructure in order to be able to develop those applications. So I picked a few examples that were presented in Las Vegas earlier this year of such application. And what you will see is that they are basically covering everything. This is an example of an industrial application with an autonomous tractor, this is robots. Robotic is mostly going to be one of the field that we will expand significantly in the next few years. This is basically the personal AI computer that was presented by NVIDIA, trying to bring AI basically to the consumers, [indiscernible] consumer application in the house. This is AI-powered plant box coming from Korea. And of course, health care, as you have seen already, is going to be also a very important application. So AI will be everywhere. And I think what we expect in the next few years is that will also drive demand for more chips and therefore, demand for more product from ASML. This is what you see here. We still look at a market opportunity of about $1 trillion at the horizon of 2030. We are still looking at further opportunity with AI. But as you know, the market is still developing. We still have to see exactly how it's going to play out, and therefore, we will continue to observe very carefully how this is going. When it comes to AI, people think usually about very advanced application, high-power computing. But AI also require the generation of many, many data. You cannot use AI without data. And this is good because it means basically that AI will drive both advanced technology, as I talked about, but also what we call mainstream technology, all the semiconductor chips basically that are going to drive the data generation. And when it comes to our product, it means basically that we are going to have demand on both advanced technology, EUV, but also the rest, Deep UV, for all the mainstream semiconductor, this is a trend we have seen for quite a few years, and we continue to see that. This is why we continue to basically focus on extending our overall product portfolio. Now let me talk a bit about technology. So I talked about uncertainty in the market. I think you have all experienced that in the last few months, technology is a bit our rock. It's our lighthouse. We know that if we develop the right product, if we stay strongly engaged with our customer, we will remain in a very strong position in the market. Therefore, our continuous to focus on all the key product of ASML. This is EUV low-NA. We just released basically our latest generation, the NXE:3800E, which provide record overlay accuracy performance, record productivity. This is very important because as we have explained in our Capital Market Day, as we continue to reduce the cost of EUV, we create more opportunity for our customer to use EUV more and therefore, to sell more product. So what this is -- this is what you see here comparing the pink curve, which is the cost of EUV with the blue curve, which is the cost of multi-patterning in different applications. And you see all the time that EUV become cheaper, which allow us basically to convert more business from non-litho to litho. So this has been a strategy ASML has been driving for the last 40 years, driving our customer to use single-expose lithography to increase our litho intensity to increase our business, and this is something we continue to do moving forward. Another good example of that is, of course, high-NA. High-NA, as you have heard in the last few months is now at our customers. We have shipped a few tools already. The first few tools already. They are being used by our customers. They're exposing many, many wafer. And here again, the idea is that high-NA, as our customers continue to evolve their technology, high-NA will help them to simplify patterning. So you can see it on this very simple example. On the left, you have low-NA where basically to create a certain pattern, a certain metallization, there will be the need to use 3D front mask, which is expensive, time consuming and create potential yield issue. Using high-NA customer will be able to do that in one shot. So again, moving from multi-patterning on the left to senior exports on the right. And this comes at a benefit of about 30% less cost, which, of course, is extremely valuable for our customers. So high-NA continues basically this strategy of ASML in lithography. Now of course, we talk a lot about EUV because EUV is being used by our customers to expose the most critical layers. This is also why this is a tool that allows our customer to go to the next node. But Deep UV, as you see here, is also used on most of the layer. In fact, we expose a lot more wafers with Deep UV than we do with EUV. And therefore, it's also important for us to remain very competitive in this market. And as a result of that, we have also continued to develop, to invest in our Deep UV technology to remain competitive and to continue to differentiate. We have released a new KrF product this last year, so in 2024, which boost productivity to more than 400 wafer per hour. We have developed the latest advanced immersion tool, which basically will complement EUV on the most advanced layers. And this year, we are about to ship our latest I-Line system that will also allow us to compete in advanced packaging, which is also a bigger opportunity moving forward. Finally, on technology, multibeam. So this is also a product where we have made huge progress last year. What you see here is very simple. We are just having basically more and more beam, simple on the slide, very complicated in real life to execute. But this gives us a chance basically to provide a tool that will be a lot faster, a lot more cost effective to our customer which is very important as this tool more and more will support basically yield analysis after very advanced lithography. This is for technology. A couple of more things I'd like to share with you, we are continuing to invest in our footprint. Yes, we see some uncertainty in the short term, but we still truly believe that on the long term, the market is strong, and therefore, we need to be ready to have the right capacity for EUV, for Deep UV. We are expanding pretty much anywhere we have a presence, in the U.S. in Europe, of course, and in Asia. And Asia is, of course, because we have a large amount of customers there. So this has not stopped because we continue to believe that we have to be ready basically for the future. Finally, I'd like to say a few words about our engagement with communities. So I think this has been also something we have developed quite strongly in the last couple of years. We are, of course, becoming a bigger player in BrainPort in the Netherlands in Europe, but I would say, in fact, in the entire ecosystem. And therefore, we believe that we have to make sure that our community benefit from that, and in some way, we can develop the community to support our growth. So a lot of activity around basically education, around ESG innovation. A lot of our employees are spending more and more time basically doing volunteer works. They like it, and we are very proud of them when they do that. And we have, of course, other activities such as investing in housing, investing in cultural, I would say, activities so that ASML also is a positive force in any of the communities we are going to be. This is the end of my presentation. With that, I'd like to give the floor to Roger.

Thank you, Christophe, and good morning, everyone. As Christophe said, easy on the slides, difficult to execute. I think that probably also pertains to the numbers that we have for this year. When we started the year, we actually said we think 2024 is sort of going to be in the same ballpark as 2023. We said from the revenue perspective, we believe '24 is going to be in line with '23 and we said probably the gross margin for '24 is going to be a bit lower than this for '23 and the end result is more or less in line with that. We were able to grow a little bit. So we had about 3% growth this year, 2024 in comparison to 2023. And in fact, we were able to sustain the gross margin at the 51.3% level. So I think kudos to everyone at ASML for making that possible for controlling costs the way that everyone has been doing and also being able to continue to deliver value to our customers and for us to be rewarded by the customers for the value that we were providing because that's the way we ultimately drive our gross margin. Net bookings a little bit below what you might have seen in previous years, but still we ended the year with a very, very strong bookings number and backlog number in 2024. So all in all, '24, very much in line with '23 in terms of top line. However, if you deep -- if you take a deep dive into it, you will see that there were quite some moving parts. And you see them on the right-hand side. So EUV is actually a little bit lower. 2023 was extremely strong from an EUV perspective, '24 was a little lower than that, 9% lower, still at EUR 8.3 billion. And Christophe just showed it, I think highlight of the year definitely was the fact that we were able to bring our 3800 and 5000 systems up and running and get them to the customer and get them actually accepted by the customer. And as a result of that, we could recognize revenue on multiple 5000 and 3800 systems. So I think that is a very good foundation for the future. When it comes to Deep UV, Deep UV was strong, increased 4% to EUR 12.8 billion as you see here. And again there, 2 very important new product introductions, the 2150, which is the latest and greatest immersion tool that we have at ASML. And also quite revolutionary, I would say, the 870B, which is our NXT-based dry tool, both introduced last year and shipped and recognized in terms of revenue to customers. The application business grew quite strongly, 20%. Two main drivers. First, the YieldStar, the overlay tool that we have, but also -- and this is really good news. I think the multibeam tool. So the fact that we were able to get multibeam not just ship to the customer, but actually recognized in revenue, accepted by the customer, I think, was a big, big, a big breakthrough. As many of you know, multibeam really came from the HMI transaction quite a few years ago. I think it's fair to say that getting multibeam really at the level of productivity that Christophe was showing that is necessary for it to really break through with our customers in terms of giving them the productivity they need to deploy it as an HVM has been a long journey. And therefore, to have the system recognized by and accepted by customers, I think, was a big breakthrough. But definitely not at the end of the development journey there. There is still a huge potential we believe when it comes to that. A big step up there. And finally, installed base business. So providing value to our customers on the tools that are already deployed there, both in terms of service and in terms of upgrades I think, has been a really strong business, and you see that it grew 16% to EUR 6.5 billion in 2024. So all in all, I would say a year as we sort of anticipated at the beginning, maybe a little bit stronger than we anticipated when we started 2024. If you look at to the details, I'll be very quick here on the technology front. As I mentioned before, EUV was very strong in 2023, it was a little less strong in 2024. We really could see our customers digesting the many EUV tools that they have been -- that they had bought in the year before. But the emerging business, what's called here rFI is -- was very strong in 2024. In terms of end use, it's interesting to recognize how strong the memory business is and this is very much driven again by AI because AI requires, as you know, a high bandwidth memory, very sophisticated memory and there was high demand for that in 2024. So therefore, the memory business in '24, very, very strong. If you look at the regional split, I think the one thing that will catch your eye, I think, is the China business, China business is very strong, and this is on the back of 2 things. First off, the memory business in China was also strong in 2024, just as it was strong on a global basis. But also as many of you know, China is really investing to become a significant player in what we call mainstream logic so the logic that you don't have at the cutting edge, not for AI, maybe not for the latest generation of smartphones but the kind of stuff that you need for electrification of vehicles, for instance. And that's a key application. I think we all know that China is pretty strong in that regard and that drives their demand for mainstream logic. So I think that's what you see there. What the China business really picked up in last year. Here, you again see how the memory business really picked up as you see the logic business, a bit of digestion of the very significant addition of capacity that happened there in '22 and '23, it's still holding up quite nicely. And as I mentioned before, the installed base business grew significantly. In terms of cash returned to shareholders, in total, in '24, we paid a dividend of EUR 2.5 billion. So both the final dividend for '23 and the number of interim dividends that we paid. And we purchased EUR 0.5 billion of shares. As you probably saw, we have been purchasing shares significantly at the beginning of this year, getting the total number that we purchased in shares all the way up until mid-April to approximately EUR 5.2 billion under the program that we currently have. In terms of our intention for dividend for the year, as you see here, if you follow the proposal that we have to the AGM, we would have a total dividend for 2024 of 6.4% (sic) [ EUR 6.40 ], which is approximately a 5%, 4.9% as we see here, increase over last year. The quarter, we just had that. As you know, we just had our release of the Q1 results last quarter. I have to say a strong start of the year with a total net sales of EUR 7.7 billion, so at the midpoint of our guidance that we provided for the quarter. Very strong gross margin as a result of the mix of tools that we were able to ship this quarter. But again, here, recognition also in the installed base by our customers. So customers really valuing the service that we provide, the upgrades that we provide and that resulted in a very strong gross margin on the installed base business, leading to a gross margin quite ahead of what we guided at 54%. Net bookings at EUR 3.9 billion, quite a bit less than we had in the quarter before. In Q4, we had EUR 7.1 billion, but we always say it is lumpy. We say it is lumpy, when it is high, we say it is lumpy when it is low because that's the way it works because typically how our customers order, these are significant amounts of money. When customers place an order with ASML typically, this could be in the billions. And that requires quite some Board work and Board approval by our customers to get that together done. You don't go through that hassle every single quarter. So if you place a big order in one quarter, it's not very likely you will get a big order in the quarter thereafter. So that's why there is this lumpiness in the order intake. That's also the reason as some of you know, that we said we actually stopped providing that number on a go-forward basis because it is not reflective, we think, of the business momentum that we have within ASML. So we will continue to provide a number throughout this year. And then what we will do is every year, we will provide the backlog number, so the total backlog number. And stick to that. In terms of the composition of our sales in the Q1, as you see here compared to the Q4 '24 quarter. Again, here you see the EUV business picking up. So that was 14 tools that we were able to recognize in revenue in the first quarter. So a strong quarter there. Memory business, again, quite resilient even though we expected to level off a bit for the remainder of the year. We expect the year to be approximately 1/3 memory, 2/3 logic. And you see China growing to what we think is a more normalized percentage for the China business in our numbers. So we said on the call that we believe the China business will be a little bit above 25% of our total sales. And I think this is more or less in line with that guidance for the year. Outlook for the second quarter, outlook for the full year. Second quarter, a little bit lower in terms of total revenue. This is not business momentum by any stretch of the imagination. It's just the way that shipments are scheduled throughout the year. So this is what we also expected at the beginning of the year. And as we also said, we believe the second half of the year is -- probably is going to be bigger than the first half in terms of sales. Gross margin, we expect between 50% and 53%. That's quite a wide window because typically, we have only 1 or 2 percentage points in that window. The reason we did that is the uncertainty that Christophe talked about, right? So the fact that there is uncertainty around tariffs, what are the tariffs, how are tariffs going to be passed on, particularly in the short term. I'm sure we'll come to talk about that a bit. But that's the reason why I said in the short term, there is some uncertainty there. So that's why we take a slightly wider window for the gross margin. And you see the rest of the numbers as indicated here. When it comes to the full year, of course, there is the macro caveat that Christophe also talked about. But given the conversations that we're currently having with customers, we believe that the window that we provided at the beginning of the year and actually started to provide last year between EUR 30 billion and EUR 35 billion and the gross margin between 51% and 53% is probably the right way to characterize our expectations for 2025. Christophe showed you the hardware. He showed you the buildings that we're constructing but of course, no buildings without the software, which is the talent that would grow within ASML to continue to lead the company to its future. And just some data points on the talent front. What we do in order to continue to make ASML attractive for talent. We have quite some interns and work students. As you see here, nearly 1,400 interims and work-study students that we had the benefit of in 2024, quite an increase in comparison to 2023. We have 31% female talent in the ASML student programs that really is one of the things that we're putting a lot of emphasis on to grow that within ASML. So I think that was a good data point there as well. And we have more than 100 universities in our global ecosystem that we're collaborating with either on research projects or, in fact, on the talent agenda. I love that phone because at the end of the day, it is made on an ASML device. So just got to bear with us for that. The progress on the talent agenda, just a few data points here in terms of our head count. As you see here, approximately 20% of our head count in the United States, little over that in Asia and a little over 50% of our head count in the Netherlands and obviously, with that also in EMEA. You see quite some diversity in terms of nationalities. You see in the Netherlands of the -- with the 23,000 people that we have there, they represent 124 nationalities. That's the level of diversity that you have when you work here on the campus. For ASML in total, so on a global basis, it's actually 148 nationalities that we employ. 21% of our global head count is female and an attrition rate of 3.8%, which I think is low by any standards. And it's something that we're very proud of because it means that we are able to offer our talent development opportunity that makes them stay with ASML. A couple of things. My final slide on ESG and on the sustainability agenda. A big year for us, 2024 in that regard, not just because of the progress that we made, but also because it's our first report on 2024 based on the ESRS requirements. So that's why it's a big year, a lot of hard work. I'm looking at the people that have been working extremely hard here on the front row to get it done. And actually, I'm very proud with what the team has achieved in terms of transparency on this front. But it's not just the transparency, we actually made quite some progress there. If you look at environment, you see that we were able to reduce our Scope 1 and 2 emissions from 60 to 33 kilotons since 2019. So I think that is a key achievement there. And you could see how we've been doing that by trying to reduce energy consumption, going into renewables. So those were key steps in that regard. Actually reducing the energy consumption of our EUV tool per wafer pass by 54%. Our ambition by '25 is to get it to 60%. So there's still some work to be done this year, but at least nicely on track to achieve that objective. We actually had our first Deep UV and YieldStar systems transported by ocean freight. If you had told me 5 years ago that we would do -- I would have said no way, our systems are way too complex or way too sophisticated to be put on ocean freight, we were able to do it. And this is a major step also in -- on the environmental protection, obviously, because by ocean freight the -- is considerably lower than by air freight. And finally, achieved an 88% reuse rate of parts returned from field and factory, which I think is a good achievement there. On the social front, we had an employee engagement score of 78.9%, which I think is a strong data point over a 3-year rolling average that, that is. We were able to actually support the building of affordable houses in the region, in the BrainPort region, and we were actually able to financially sponsor 1,286 affordable houses to be built in the region. And all in all, per employee, we invested nearly EUR 1,100. Our ambition is to continue to grow that number in the next couple of years. And finally, as I mentioned on the governance front, the highlights there, obviously, the ESRS requirement and we'll report based on that. But also the fact that the rating agencies gave us some good score. Sustainalytics giving us the #1 position in the industry. MSCI giving us a AAA rating. And also on CDP Climate, we made some good progress in the past couple of years, getting us to an A- score there. So all-in-all pretty proud of the achievements there. Dear shareholders, that is it, as far as I'm concerned in terms of the progress that we made in 2024. And with that, I would like to hand the meeting back over to our Chairman.

Thank you, Roger, and thank you, Christophe, of course, as well. And we're now ready to take questions. So are there anybody, any shareholder who would like to ask a question. Already on? Please state your name.

Thank you, Mr. Chairman. Also thank you, Mr. Fouquet, Mr. Dassen, for the welcome introduction today. My name is [indiscernible] I represent the Royal Dutch Shareholder Association, also known as the VEB. I have a few questions on the financials, in particular, but also looking at it from a competition angle and from a U.S. angle. On the 2nd of April, U.S. announced the 20% tariffs on all EU products, which seem to include semiconductor equipment of ASML as well. Despite a temporary delay, the 3-months delay in the exclusion and a possible exemption of semiconductor equipment, ASML last week announced that it's doing everything possible to limit the direct impact from tariffs and expect the impact to be limited. But I also noted that the indirect impact might be significant and more impactful. And we understand that if the whole world and all economies would suffer from an overall lower economic growth worldwide, of course, the sale revenues of ASML will suffer as well. My questions, what would need to happen specifically to hit the low end of the guided range? We just saw EUR 30 billion of net sales, would such a critical scenario require pushouts for DUV systems from non-Chinese customers as well other than TSMC. So what is necessary to, yes, hit through the lower guided range? More in general, do you believe that ASML could theoretically fully pass on tariffs, the so-called direct impact on to end customers, whereby the impact of the tariffs on the financials is minimized. Do you have market power in other words? And can you give some color on the degree to which the U.S. content of ASML machines, such as the light source, San Diego, Cymer operations, whether they reduce the impact of tariffs given meaningful production well and R&D will then happen and stay in the U.S. Then a question on TSMC, very important client, of course. As a result of financial and technological issues faced by foundry customers like Intel and Samsung, there are some worries about increased reliance on TSMC. Should investors fear less units being sold as TSMC might become more efficient and have more scale, also lower pricing due to the fact that TSMC would have more bargaining power? Also on TSMC, they keep ramping up the production in its 2-nanometer process node. At, for example, the Taiwanese Hsinchu and Kaohsiung locations, which will obviously require more semiconductor tooling, both DUV and EUV. Do you expect more orders from TSMC and consequently, a higher result in the next quarters? Then on competition pressure and there have been some rumors mainly pushed by the Chinese media, for instance, the South China Morning Post, about China developing an ASML alternative. For example, Chinese Huawei and SMIC is supposed to have developed an EUV scanner using a different light source technology. Some people are even hinting at a DeepSeek moment in lipography being close. Of course, as shareholders, we don't want it to happen, but what is the current view of ASML on the risk of an EUV alternative being developed that could disrupt ASML? And specifically, can discharge-produced plasma EUV disrupt ASML or is that technologically not an option for high-volume chip manufacturing? Then a follow-up question on your presentation and an issue also raised last year. You're probably aware that there continues to be questions around the high-NA EUV road map, especially with TSMC looking into the EUV multiple patterning. You just referred to that. And SK Hynix stating publicly that multi-patterning EUV is cheaper than high-NA EUV single patterning. Mr. Fouquet, you just referred to this in your presentation. What is ASML's view on this and the adoption of high-NA EUV? Will single patterning high-NA EUV outweighing -- continue to outweigh the benefits of multi-patterning of regular techniques? Penultimate question if you allow me, Mr. Chairman. ASML holds about 90% market share in immersion DUV and Nikon is looking to gain market share and wants to deliver a prototype immersion DUV tool be a, as they refer to, major semiconductor maker by 2027, so in 2 years. The new tool should be able to compete with ASML systems, while Nikon prices tend to be significantly lower. So what's your view on this? And Mr. Dassen, you ended with ESG and the most important topic in society. Let me echo that ASML's EUV systems today use about 50%, 5-0%, less energy per wafer pass than in 2018. So from 12.8 to 5.9 per wafer pass. And this is and that's very important, a great achievement, both in terms of declining the cost of ownership for customers, and, of course, the environment. And ASML is looking to get this below the 5.1 per wafer pass in 2027. Yet EUV tools still consume at least 10x more energy than DUV immersion tools, 0.55. Can you, in layman's terms explain if and how much of this gap is possible to bridge in the years to come? Those were my questions.

Thank you very much. Quite an elaborate bit of homework for us. But thank you, and I think I will almost suggest that we answer them a little bit from the back. So we start with the market position. So from where the increased reliance on TSMC and take the following questions from then. Maybe, Christophe, you could do that. And then afterwards, Roger could talk about the tariffs and the risk of hitting the lower end of our guidance.

Very good. Thank you, Nils. So I'll try to go back through your whole list and if I forget anything, please let us know, but I'll do my very best. So I think we have got indeed a lot of question about the potential reliance on TSMC. Maybe 2 elements here. So if you look first at the market share split for foundries in the last 5 years, at least, I think that one customer took a very large part of the market share. So I think this is not something that is really new if you look at the split. And it means that in the course of the last few years, we have developed relationship with the different customers, including the one you mentioned, to take this into account. The question comes a lot, this is not something we fear to be honest, because the type of relationship we have with our customer is on the value we provide to them, on the engagement we have on the long term. And we work in such a way that I will say we are not too sensitive to the different split of the market share. So that's the first point. So I will say, take a look at what's happened in the last 5 years, maybe this will address some of your concerns. The second point is that foundries, of course, is a field that is still extremely competitive. And yes, one customer today is doing extremely well and taking most of the market, but you also see that the other 2 are not giving up. And in many ways, this has almost become a matter of national security for a few countries. So we still expect also that the competition there will remain. And I think time will say how much the split may or may not change. But I'd like also to stress the fact that, well, we are not in a situation where the other 2 players have given up, I think they give, in fact, all the other sign, as you read in the press figure. So that's for the split. Now on the order themselves, I think Roger could put more color on that. But yes, if you look, of course, in the next couple of years, I would extend that to also '26 -- '25, '26. There is a major ramp happening on 2-nanometer. That major ramp will happen first with one customer, and therefore, if we look at the next couple of years, this will be an important part of our business. Now looking at the question you have basically on the competitive pressure, I think coming out of China on the alternative basically being potentially created for lithography. So the first thing I'd like to say is that when you are going to restrict a country to have access to a certain technology, they will do everything they can in order to develop that technology. And I say that's an argument we have tried to make government, who make those decisions, very sensitive to. A good reason to do that is if we look at our peers, if we look at other products that are being used for patterning, such as etch, deposition, we have seen, in fact, China making major progress in those products. And in many cases, right, being able to also have system that they can use today to produce some of their chips. So if you are going to stop people from doing -- to have access to a product, they will do everything they can to have their own basically. So that's a dynamic we have to take into account. Now when it comes to lithography, the good news there for us is this is a bit more complicated. And there are a few reasons for that. The first one is if you look at lithography, historically, Europe and Japan have been the only 2 places where lithography came from. And that's because, of course, of the supplier of lithography system, including ASML, but also because of the ecosystem around it. The whole supply chain, which I think you understand is also very, very important. We always talk about [ ZEISS ] at ASML and it's because what they do is also, of course, very critical to lithography. So that entire ecosystem is extremely difficult to reproduce. And China has been trying for many, many years. I think the moment the semiconductor industry went to China more than 30 years ago, we started to see some potential competition on lithography in China. The progress has been limited. I think today, our market share in China is still extremely high on all products. We have, of course, a lot of news, I'll come to EUV in a minute, about China making progress in lithography. But I would say this is not yet seen in our customers' factory. Our customer in China as long as they can, they would like to work basically with ASML tools. Now if I look at EUV more specifically because yes, there were also some news around EUV. I think you will see over time, most probably more of those news. And the reason for that is that it becomes clear for everyone that EUV is absolutely critical to produce any advanced logic chips below 5-nanometer. That's also something we have explained to many people in the last few years. And I think everyone come to the realization, also China, that without EUV, you may be able to do a few chips in research, but you won't be able to manufacture in high volume. Therefore, the same statement as before, China would like to have EUV, and they would like to show progress on EUV. What we have seen so far is very limited. I always remind people that when it comes to EUV source, when it comes to some EUV uptake, we had that 30, 40 years ago. We could image some wafer with EUV more than 30 years ago with very low energy source and maybe 1 or 2 [indiscernible] you will see a lot of that, but it doesn't, in any case is, I would say, the sign that there is a product ready to run high-volume manufacturing. So to make it sure, I think there's still a long way to go. At the same time, since the restrictions are there, I think that we will see, of course, China trying to increase its effort to make as much progress as possible. So this is for the competitive pressure. On the high-NA road map, I think indeed just talked about it. Yes, there's a lot of discussion about the cost of single-expose high-NA versus the cost of multi-patterning low-NA. But let me be clear here. As I explained before, no one will use a new technology if it's more expensive than the previous one, right? So we know even as we started to design high-NA almost 10 years ago that the cost of high-NA single-expose had to be lower than the cost of multi-patterning low-NA EUV so that the tool is being used. Now what's going to happen with high-NA is what is happening with low-NA. You have seen my graph on low-NA. Today, we still have multi-patterning Deep UV as we speak. So low-NA has not replaced all of Deep UV multi-patterning because initially, the cost of low-NA was too high. And this is why with our road map, we continue to drive down the cost of low-NA EUV, so that we continue to convert more and more multi-patterning Deep UV layer to low-NA. And that's a good news because it means that the litho intensity and therefore, the share of our business in patterning continues to increase. The same will happen with high-NA. High-NA will be adopted first on layers where there's a huge cost benefit. I showed one of them, some layers for DRAM logic, we see 30% cost improvement, which, of course, means customers will want to do that. And over time, as we mature the platform, as we work on the road map, we will also, I will say, work with our customer to make sure that single-expose is chosen as much as possible because single-expose is always better for our customer. It's simpler, it's shorter cycle time, it's better yield and that should be lower cost. So that dynamic, I think, will also take place over the next few years. And realize when we do something like high-NA, we think about high-NA for the next 10, 15, 20 years, not for the next 2, 3 years, where I think the transition will happen. So this is for high-NA and single expose, I think I have 2 more questions. On Deep UV, so yes, strong market share. I think I also explained that Deep UV is still a very, very important tool for our customers. And this is why also we continue to invest. I think that if you look at our R&D in Deep UV today, it's at an all-time high. And yes, we spent quite some money in EUV, but I will say we spend about half of this money also on Deep UV to continue basically to remain competitive. And yes, the market is great, so everyone wants a piece of it. And as you have seen, some competitors have announced new tool. I think again, I would invite you to look back at the last 10 years. This is something they have done for many, many years. And we still believe that some of the very fundamental technology we have on Deep UV, one of them being the TWINSCAN, we don't show this anymore because this is almost 20 years old now. But the TWINSCAN, the ability to have 2 stages, ones that allow us to measure the wafer while the other one is exposing it, still provide a very, very strong advantage when it comes to productivity, accuracy and the combination of the two. And we will continue to drive, I will say, those products, hard. We are going to work also on cost quite a bit to make sure that we remain competitive. So yes, the threat is here. I think there's always been -- we will fight it. And we will also, as I explained, even on products like I-Line, we will even develop new product to, in fact, also get some more market share. So it's not like we're also not trying to get more market share in places where maybe it's a bit lower for us. Finally, I think on the EUV power reduction. So first, thank you for your -- for acknowledging the fact that this is an important thing. It's a lot of work, we have been from day one on the mission to really reduce the power consumption of EUV because we knew that this was first one of the biggest impact we had on the environment. We also knew, as you said, that this was a major cost impact for our customer. So we have gone down 54%. We plan to go down more than 80% by the end of 2040. We continue to make progress on the source. So we are increasing the conversion efficiency of the source, which means that for the same watt at the power plug, you get more EUV energy on the wafer. We continue to improve the optic with ZEISS, the transmission of the optics, which means that the optics are going to capture less light. So you get again more on the wafer. Therefore, we continue basically to be very, very aggressive in getting less energy consumed per wafer exposed. This is good for the environment. This is good for cost. This is also helping our customer, by the way, to achieve their own environment targets. So there we have a lot of ideas to continue to do that very aggressively. Roger talked about ESG. I think this -- well, I think from day one, we wanted to do that because we felt this is also the right things to do on EUV, and the progress is very good. Now I give it back to Roger, who is going to answer the rest of the number.

So maybe one additional comment on the -- on ESG because you draw a comparison -- you drew a comparison between Deep UV immersion and EUV. Of course, you cannot do that just for our tool, right? So you have to look at the entire manufacturing process. And there, the same applies as what Christophe was talking about in terms of cost. When you compare single-expose EUV with multi-patterning in Deep UV. Of course, that also applies to the environmental footprint, i.e., when you look at multi-patterning, you shouldn't just look at the litho component of it, but then you also see the huge environment footprint of all the other stuff that needs to happen in terms of deposition, etch, et cetera, et cetera. And if you look at some of the reports that have been done on that front, that tried to draw the comparison between multi-patterning Deep UV versus single-expose EUV in that regard. I think he will quickly come to the conclusion that also there, there is a strong case to be made for EUV. And that ultimately, the total integral footprint of EUV is not as ugly as you might look at when you just draw comparison between the carbon footprint of Deep UV tool versus an EUV tool. In total, it really works also on the environmental side. Your financial question on the bandwidth for the revenue. When we started the year, we said if you look at the midpoint of our guidance, so the EUR 32.5 billion, what could lead to the upper end of the bandwidth, what could lead to lower end. And I think Christophe made it very clear that what is really driving the growth this year is AI. AI is really driving the growth for ASML. And that also means that if you look at the upside and the downside, you have to look at how AI plays a role here. On the downside, as we said before, there are a few customers that are currently not really benefiting from the AI expansion, A North American company and a South Korean come to mind in that regard. They do not have their share in the AI boost that is currently going on. At the midpoint of our guidance, those 2 customers are not completely derisked. So if for whatever reason, those customers are -- really struggle to gain traction that could lead to the lower end of the bandwidth. I wouldn't say because you specifically asked about TSMC in this regard. I think you're right in your conclusion. If you look at the TSMC and if you simply look at the comments that were made by their CEO on the call last week -- on the earnings call last week, it clearly confirmed that M2 is a big node for TSMC. And that the buildup of that node in terms of the ramp profile that is actually similar 2 N3, i.e., you said it's a big node. We have more tape-outs than we have 4 and 3, but the ramp profile really mimics the ramp profile that we have for N3. And if you follow that logic, than, indeed, this year, but also next year should be big years in terms of capacity addition in the 2 plants that you mentioned in the [indiscernible]. So I think that's the -- the downside to us really at that point would be related to the customers that are not really benefiting from the AI revolution, if you like, them not able to gain traction. Additional additional considerations, of course, as we always say, export controls is beyond the control, right? So this is something that could take you if you specifically look at the downside scenario. And then finally, but you already made reference to that. I think no one is currently in a position to gauge what the indirect implications of the whole tariff discussion are going to be. So we don't even attempt to do that. On the tariff side, to be specific to a number of the questions that you had, it might be good just to look out where could tariffs actually hit ASML. And I think the one thing that is obvious for everyone to see is you import a tool into the United States and you get tariffs imposed on that currently not the case, but it could come to the point that you made, right? So if tariffs are being imposed on the export of systems from the Netherlands into the United States, of course, that would be the first category. I think we said last week, we do believe that, that burden should be passed on to the next element in the value chain. I think in good English, I think that's called the customer, right? So I think that is what we think is fair and right to do. So that's the first category. But then you also made reference to the fact that we have U.S. operations. We have U.S. manufacturing operations. And interestingly, that was actually a negative at this stage because the fact that we have manufacturing operations in the United States means that we're actually shipping parts from Europe, from Canada or whatever, into the United States. They get assembled into a module. That module is being sent back from the United States to the Netherlands. It's being integrated into the full system and then the full system is being exported to Taiwan, Korea or the United States. So before you know it, you get a stacking of tariffs, right? Because even before you know the part that you sent from the EU to the United States could be taxed with tariffs and get, as I mentioned, ingrate into the modules, gets them back to the Netherlands. And then again, you get a tariff hit when you ship the tool to the United States. So clearly, a, that shouldn't be the goal of tariffs, right, because the goal of the tariffs at the end of the day would be to onshore manufacturing capability in the United States, not to make it even more complex and expensive. So I think there -- I'm sure the U.S. administration is thinking this through that this is a actually negative for manufacturing in the United States. And secondly, we have to look from our vantage points, how can we have all of our streams conducted in such a way that we can actually minimize that risk of stacking of tariffs. And one of the things we're currently looking into is, can we establish a free trade zone between our manufacturing capability here and the manufacturing capability in the U.S. in order to make sure that you don't get this burden of double stacking of tariffs. And the final component that I could call out in this regard is tariffs on parts that we sent to the field. So the parts that we need in the United States for the service to our customers. There, the passing on of the tariffs is a little bit more tricky because there, obviously, we have existing contracts and service contracts with the customers that we have to honor. So there might be a bit of a window before really able to pass on in full the impact that, that would have on our cost. So a pretty comprehensive answer, but those are all the moving parts that we have on tariffs. The way we look at it, the impact it could have on us and what our intentions are in terms of passing it on.

I hope that was answers to some of your questions, at least. Anybody else who would like to ask a question?

Thank you. My name is Lux, I'm private investor and also a member of VEB. Our measures considered notwithstanding developments here in this region. To mitigate the impact of tariffs from America, for instance, by relocating production capacity more than now. That's my question.

So as I mentioned, we are definitely looking at measures how to mitigate the impacts. If you think about relocating the total system integration and the total assembly of our tools and move that from here to the United States. I think everyone that looks at what has been built here not just at our campus, but also what has been built here as -- in the ecosystem. If we take many, many, many years before we would be able to do that. So I don't think that's a solution to the problem that we have at hand here. I think that the solution to the problem that we have at hand here is to a, work with all the alternatives that we have to mitigate the impact; and b, make sure that in the analysis that the U.S. administration is currently doing to understand what is the right tariff structure for the semiconductor ecosystem and what should we do or not do to make sure that the U.S. government has all the data points to come up with a sensible solution there because making semiconductor manufacturing more expensive in the United States by putting tariffs on parts and putting tariffs on new systems. We believe at the end of the day, is not conducive to getting onshoring of semiconductor manufacturing. So I think those are the 2 things that we currently -- that we're currently looking into. Moving assembly to the U.S. would be an extremely long-term solution. It would not be the way we look at it because we would like to build where we have the capability. We have the capability here in this region to do what we do.

Thank you, Roger. Anybody else? Question over there from this side. No, please to use the microphone because we have digital or online attendance as well.

My name is [indiscernible]. I'm a private investor, just from the area in the local. I'm happy with the forecasted growth for this year, the EUR 30 billion to EUR 35 billion. We're happy with that. Also, at the same time, living here in the area, living between people working at ASML or at one of the companies supplying to ASML that there's a -- the supply chain is still experiencing a big dip in orders already for the last quarters. Is that an inventory effect? Or can you elaborate a little bit on the expectations for that part?

Thank you, Christophe, will you take that one? .

Yes, I can take the question. So I think that why you have seen the forecast for this year. I think we also mentioned to the market, mostly we see 2026 to be also a growth year, again, based on the discussion we have with our customers. Now if you look at the last few years, I think if you go back to 2022, '23, we have grown extremely rapidly, right? This was a time where we couldn't generate enough machines for our customer. And I think that period of time has stopped basically last year where we have seen a bit of a rationalization of the market. also the transition to AI, as Roger explained before, has created a bit of shift. So we have seen some customers being a bit left behind. And some of those customers basically had a pretty strong forecast in the past. So there was a bit of, I would say, correction last year. This is also what we communicated in Q3. On top of that, this very, very strong growth. I think we feel today we have to rationalize. And this is true for our supplier, but that's also true for ASML. So if you look at our growth, Roger showed the number indirectly, this has also come down quite a bit in 2024. It's going to be very muted in '25, and we still have to mostly see what's happened next year, but we don't expect, in any case, to grow in the way we did in the last few years. So it's a bit maybe disappointing for some of our suppliers because it's nice to always get the number going. But we also think this is a good time to really work together with them to rationalize a bit the growth we have seen in the last few years because, to be honest, this was also not very sustainable. We grew very fast. We saw that -- we didn't always do a good job onboarding people. We went down in efficiency, so did our supplier. We didn't use the footprint to the full extent. So I think now the discussion we are having with them is how do we rationalize the very strong growth we had, I would say, in some way, take benefit of the current maybe change in the market and the AI insertion to make sure that we become more efficient together, and we can make a much better use of the footprint. So I think the main discussion now is if you want, how do we do maybe more with less because we have a bit of time to work on that.

While gearing up for significant growth, right, because you have seen a 2030 material, and you saw Christophe there, where we are talking about quite significant growth between EUR 44 billion and EUR 60 billion. So I think that's it. Shorter term, navigating that situation while gearing up for growth that is clearly coming towards the end of the decade. I think that's the main exercise now.

Thank you. Any other questions? Dear members of the board, dear members of the Supervisory Board as well.

Could you speak of a little bit?

Yes. It should be better. My name is Edwin Janssen, and I represent the Dutch Association of Investors for Sustainable Development or [VP]. Our members leverage a total of upward from trillion euros. Your answers will be included in the advice to our members. Once again, we read your report with full attention. Congratulations with another year of great results and achievements. We'd like to ask questions on 3 topics. I will introduce each topic shortly, starting with biodiversity before asking the corresponding questions. Regarding biodiversity, ASML does not consider biodiversity a material topic in its 2024 DMA. Despite upstream dependencies on mining activities, which are known to impact through deforestation then degradation as well as pollution. While ASML supports local green initiatives, the company does not address biodiversity through policy targets or in the supply chain. So the question, first one, Does ASML recognize the increasing importance of biodiversity and healthy ecosystems. And could the company elaborate how this might affect the company's materiality assessment moving forward. And the second question on this topic. In the meantime, how will you address by the first D considering the company's reliance on mind, raw materials and the potential biodiversity risks across its upstream supply chain.

Okay. Do you want this first or address that first? So I think you know that we conduct our double maturity assessment in line with the CSR recommendation. That's the way we do it in ASML. And out of this, we have identified 50 materials around our ESG topics across our value chain, and we report on 6 of the 10 ESRS topical standard. I think you're also aware that the level of insight of our impacts from our own operation is a lot stronger, is a lot, I would say, precise a lot more precise than what we know from basically our supply chain. Now this being said, we continue to improve the supply chain transparency to better understand any impact and risk. And we do so by taking a risk-based approach. For example, we identify which of the materials we source in which region we source them and which one of those could present a higher risk for the environmental impact. So this is the way we do it. This has been quite, and we're seeing intense activity, but this is something that, again, takes a lot more time and a lot more work than just assessing our own basically impact. So we will continue to do that. And whatever finding we have, we will take it into account in our next double maturity assessment. On top of that, in the meantime, we'll continue with our local initiatives everywhere. For instance, one of the programs of the community partnership program relates to green communities, which aims to preserve or develop green spaces, not only here in the Netherlands, but in all the different places where we operate.

All right. And your first question. So regarding the second topic. Sorry, the second question. Although ASML stated relatively low water use compared to peers. It operates in sources from and supplies to regions experiencing water stress. This includes California, Texas, Taiwan. Water is not identified as material and no concrete targets or KPIs have been set. However, will ASML introduce concrete targets and KPIs in the next annual report for water use, recycling and risk management, both in its own operations as well as throughout the supply chain particularly in water-stressed regions.

So here again, so today, in line with the CSR recommendation, we have not seen water as materiality. Now our DMA assessment is showing that this is increasing, right? So I would say we most really expect in the future that this could become a topic of materiality. When this happened, as we do with any other topic, we will have KPI, we will have a plan basically to also address that and report on it in our future annual report. So not the case today, but I think this is a matter of time when water becomes also material.

And then with regards to living wages, VBDO commends ASML for defining living wage in its annual report. ASML now also confirms that it pays wages above the minimum and living wage benchmarks in all countries where it operates in. However, VBDO is curious to hear how ASML is addressing this team in its supply chain, where, obviously, the risks are also the highest. For the question, will ASML introduce policies, KPIs and supplier due diligence to ensure that workers in the supply chain, especially in high-risk countries also receive a living wage.

So here, again, we ask all our suppliers to basically adhere to the Responsible Business Alliance, the RBA code of conduct. Today, the current RBA COC includes a reference to minimum wage. The RBA is still in the process of aligning its own COC with the corporate sustainability due diligence directive, the CS DDD, including requirements regarding living Edge. This is not done yet. We also believe that, in this case, the industry collaboration is key to effective human rights due diligence, including action on living wages. Company share supply chains, they share suppliers. So we believe that if we are aligning on living wage standards, approaches, tools, we would be able to create leverage and together, most will be able to go more quickly to the end results of that. And therefore, we continue to support the living wage initiative of the RBA to basically bring this view to as many suppliers as possible. We also identified living wage as a silent issue, so it's an inherent risk in some of our supply chains. We have established a due diligence program, which is called responsible supply chain to further strengthen our due diligence, including alignment with international framework, sorry, and upcoming legislation. We plan to publish our updated human rights policy later this year as well.

And then specifically with regards to the CSRD and ESRS in general. The VBDO commends ASML for the elaborate and insightful overview of the impacts, risks and opportunities that were identified based on the material at DMA. ASML highlights the role of stakeholder inputs in its double materiality process, but it also states it does not engage directly with affected stakeholders, such as workers, communities in this value chain. The question, how does ASML ensure that affected stakeholders such as value chain workers and local communities are meaningfully represented in the materiality assessment and broader due diligence processes.

So first, I think the stakeholder input is extremely important for DMA assessment every year. We do that every year. And another important input to the DMA is our human rights [indiscernible] assesment, a difficult word for me to products. And as part of this assessment that we did last year, we conducted stakeholder engagement with credible proxies of the stakeholder groups. We have, for example, engaged with NGOs and human rights organization who are specifically knowledgeable about the issue and about their workers. And we take this into account basically in our assessment. That's also a way to give us some information about the supply chain. So the saliency assessment is the very first step we have taken to identify potential impact. The next step will be to engage with the effective stakeholder more deeply, and we will do that whenever possible.

Very well. Any further questions? It's a little long arms are needed to get into the middle of the row.

Thank you. I'm [indiscernible], and I'm a private investor in as well as well. So I'm quite interested to hear about your opinion. What your expectation of the chip market -- the global chipmarket will be once China decides to invade Taiwan. Are they going to bomb all the TSMC plans? And how will the chip market look like once that happens.

That's quite a layered question. It's not the first time we hear it. So Christophe may be short, but of course, we can't give you a very good answer to this one.

I was hoping it's a question for you, Mr. Chairman.

I'll take it anyway. No. I think that's -- there are so many speculation nowadays. It's, of course, making the way we look at our industry more difficult. So there's no sign of anything you describe. And therefore, we are not acting on this, but I think we have, of course, to take into account more and more complex geopolitics scenarios. This is what we do with the Board of Management. We do that for geopolitics. We do that. Roger explained at length tariff. I think the world we live in has become a lot more complex. And therefore, we need to create, I would say, the readiness, the flexibility to deal basically with a lot of potential changes on the industry. I will leave it to that because the rest is highly speculative, but I can guarantee you that the Board of Management, together with the Supervisory Board spent quite some time to make sure that ASML can adjust. I think if you look at the last 12 months, there's been a huge amount of things we didn't expect. And every time we have made our very best to address to the situation, and we'll continue to do that.

But I think maybe adding 1 thing and people say, if Taiwan is bombed or the chips cannot access the global market, you would assume that you would have a need for machines elsewhere. But of course, it's also at a time where friction in the world will be significant then, and it's very hard to predict what happens. But it's hard to imagine that you, let's say, take Taiwan out of the equation without capacity being built out elsewhere. I'm sure you meet [indiscernible] from the hague, a lot of politicians would tell you that they have sleepless nights because they are worried about chip supplies. So the answer to that is you should probably build up some capacity closer to home. It's just a sales pitch right.

Okay. Any further questions? There's 1 again from you. Thank you.

Another speculative question that there has been an elaborate report in the magazine, the economist, how China is seeping into an infiltrating Taiwan and other important installations in the world. They do not go in by force, but by being smart. Now there is a rumor that it's supposed to be a kind of kill switch in the power of ASML that should China start to get really naughty, they can just take their toys away, right, pushing the kill switch is that so. I expect you will say, well, that is only speculation.

That's probably a good answer. I think it's been a while since we got the question about the killswitch. We were hoping this is -- I think what we explained in the past is that our EUV machine are extremely complex. And if we were to be in a situation where ASML cannot service those tools, well, there is a high probability that those 2 will not function anymore because they require a lot of care every day. As you know, we have many, many service engineering at our customer to keep the system up and running. So this is a bit, I would say, what will happen. This being said, our tools belongs to our customer once we sold them. And therefore, the only people who can decide to put them on and off our customer. And I think that the first part of my explanation was maybe the reason why people thought we had this magic power, which we neither have neither want. Well, by lack of care.

Any further questions? Doesn't seem to be the case. And then we have good news for you, and that is that the data on the registrations for the meeting has been processed. And we'll make some formal statements. And I'll give the floor to Mr. Reinier.

Thank you, Chairman. The total number of issued ordinary shares for the record date for this general meeting amounts to 393,830,692 ordinary shares of which 4,034,993 shares are held by the company as treasury shares and as each ordinary share carries one vote. The number of voting rights for the record date amounted to 389,795,699. The count for this meeting showed that at the start of the meeting, 280,714,147 ordinary shares were present or represented at the meeting giving the right to an equal number of folks. These shares represent 72.02% of the issued and outstanding ordinary shares per the record date. As a result, all voting items on the agenda, except for agenda Item 6 can be adopted by a simple majority of votes cast as more than 50% of the outstanding share capital is represented at this meeting. For agenda Item 6, the proposal to amend the remuneration policy for the Board of Management, a majority of 75% of votes cast is required by law. Back to you, Mr. Chairman.

Thank you, Reinier. And with these instructions, I will now open for the voting. And just to repeat what Roger said at the opening or earlier in the meeting, you can vote on any item at any time, and you can also change your opinion as the meeting go on, provided if you hear good arguments for changing your mind or just do it at any time, and you can do it until the meeting close. We now move on to agenda item 3, an agenda Item 3a concerns the remuneration report for the Board of Management and the Supervisory Board for the financial year 2024 is prepared in accordance with the Dutch law. The general meeting has an advisory vote on the remuneration report, and I'll now give the word over to Terri Kelly, the Chairman of the Remuneration Committee to add some words to this.

Yes. Thank you, Mr. Chair. I have a couple of short slides to share. So as Nils mentioned this complies with the law as well as the EU Shareholder Rights Directive. Remember that this report is aligned with policy changes we've made for the Board of Management in 2022. And and that of the Supervisory Board in 2023. I'll just spend a minute just on some of the work streams of the committee and certainly in my capacity as chair, I'd say a major 1 was outreach to our external stakeholders and certainly our internal stakeholders, certainly with the works council, which you'll hear more about later. And again, this has been very helpful for formulation of both the report as well as input on any policy changes. So I appreciate that engagement. And so the 2 main items we focus on this year as a committee, certainly an important one is an updated policy for the Board of Management that would be adopted this year and then some changes in the supervisory fee structure that we'd like to propose as well. And just looking at the report, hopefully, you all read it over, many times. But a couple of key points we saw for the border management just modest base salary increases of 4%. We did utilize the flexibility, which we're reaching the end of that flexibility under the current Board of management policy. As I mentioned, this is the key reason why we're looking to update the policy this year. And obviously, another important aspect of the report is the performance to the short-term and long-term incentives, which I'd like to just go into a bit more detail on the next slide. So on the short-term incentives, again, I think we have very good alignment with the output of the key measures, but also how the company has performed. And I will say it's been a very collaborative effort with the Board of Management to figure out what are the most important measures, both financial and nonfinancial that really drives strategic priorities, both in the short term and the long term. So you see for this year, we achieved 136.1% of targets, so good performance, but again, very -- also very aligned with the performance of the company. Just a couple of things to note. So the financials continue to be 50% weighting EBIT margin. And then on the nonfinancial, we have a nice focus on some of the most important priorities for our customer, representation from each of our major business units as well as a customer trust survey that we implemented over a year ago that another great way for us to get input. And lastly, our technology leadership index, which really gives you an indication of kind of our technology road map, which we think is a very important indicator of our success. So again, that's on the short term, and then I'll move to the long-term incentives. And again, the structure, this is over the '22 to '24 time frame. We continue to use relative TSR as a primary financial measure. In this period, we have the average cash conversion rate, which actually performed quite well. And again, we look at the Technology Leadership Index, which is on a longer time horizon and saw a very good performance. And then we have a number of ESG measures, some of which we touched on in the earlier presentation, which again align around some of the most important business priorities and impact that the company can have on our footprint. And so all told, that resulted in 132.3% performance to target. Again, we feel as a committee, this is very much aligned with that incentive payout with the performance of the company. So with that, I'll conclude my report on this. Mr. Chair.