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Dear, ladies and gentlemen, welcome to the conference call of CompuGroup. At our customer's request, this conference will be recorded. [Operator Instructions] May I now hand you over to Christian Teig, who will lead you through this conference. Please go ahead, sir.
Thank you very much. Also from my side a warm welcome to today's conference call where I will be reporting on the third quarter this year for CompuGroup. My name is Christian Teig, and we will follow very much the normal format, which means a prepared slide presentation which can be either downloaded. And I will try to refer to the slide numbers as I step through it, or you can just follow our online webcast. In any case, we will now step into the pack, which will take about I guess 20 minutes, and then we have the normal question-and-answer session at the end. First slide, Slide #2, we see the key figures. There should be no surprises either way. We said already after Q2 that Q3 would be comparable to Q1. I guess as much as Q2 was very strong, this is more on the okay side. No more, no less. And year to date, we are certainly well-positioned for the last quarter of the year. If we look below EBIT, this year we have a normal financial result and also a normal tax rate that were really special effects last year. Most all of this is non-cash, so the 4x improvement in EPS doesn't really mean that much. The true way of assessing results is on profitability is to look at EBITDA or EBIT, whichever you like. We will now step through a little bit more details on the financial side. We turn to Slide #3. We see here revenue and profitability over the last years, quarter by quarter. As you see on this slide, historically, Q3 is normally our weakest margin quarter and Q4 is normally the strongest. This year, because of the high volume of product sales and installation revenue, the seasonality becomes quite pronounced, as you will see here in the delta between Q2 and Q3. Other than that, again, if you take the first 9 months, we are where we should be positioned for the finish of the year. Slide #4, we see our cost of goods and gross margin. Q3 is in some ways the least spectacular year because of the summer period in our main markets in Europe. That means just less product sales, less installation. That also means less cost of goods and higher gross margin, which again is then above 80%. All in all, I guess this slide shows that we have a very stable business model with about a 20% third party component aggregated all together in our complete revenue stream. If we move to Slide #5, here we see again the same historical perspective and current quarter on personnel expenses. Following our growth, we are adding to our organization -- you see this on the slide -- but it is in a gradual and controlled way. We are then onto Slide #6. We see the other expenses and how that relates to our personnel expenses, again, in the same historical backdrop. Other expenses this quarter and also in the preceding quarter is at a relatively high level. We do use extensive contractors to manage the current peak. This is both related to the TI rollout and also in the R&D area. And of course TI drives more external sales and marketing expenses, which is what lies behind this change from last year. The quarter, as such, is nothing special. We are then to Slide #7, our CapEx. This is a fairly normal quarter. We have 2 small acquisitions, about EUR 4 million. And again, the mentioned CapEx part of our increased R&D, especially on the HIS side. Then we are onto Slide #8, operating cash flow. So cash flow is strong, meaning it follows our profits. Distinctively stronger compared to last year, and Q3 is no different. We are all in all well ahead of last year in terms of our operating cash flow. Last slide on the more housekeeping side. This is Slide #9. We see the balance sheet. This is about as unchanged as you can develop over 3 months. The internal mechanics is basically that our operating cash flow has covered CapEx, including acquisition and the EUR 17 million that we spent on purchasing own shares in the quarter. And the end result is a virtually unchanged balance sheet. So those were the more financial corner points of the quarter and where we stand. We now turn into our operating segment. We flip through the Slide #10, which is the placeholder, and move into the Slide 11, where we see our AIS, doctor software development, for the third quarter. 37% organic growth. Strong development, as expected. We have this year the main growth driver, the rollout of the TI in Germany, not quite as pronounced as in Q2 for the mentioned reason of the summer period where we basically do have fewer weeks to sell and deliver compared to the rest of the year. Outside this special growth driver, we have normal development in our other markets, under the assumption that a flat revenue development, which is where we are in the U.S., is normal. We then get a little bit into details of the TI rollout. This is Slide #12. We did cover this at great detail and great length at our Capital Markets Day a few weeks ago. So anyone who feel that this presentation is a little bit short in this domain, please revisit the presentation which is available on our website. There's also a playback for the commentary which was given during that presentation. I think it's more than 1 hour, so this certainly will give you a lot of depth and detail as to what's going on. The short summary is here on this Slide #12. The number of orders you see here, it basically means that over the last 3 months, we added 7,000 new orders and also enfold 7,000 new deliveries in this period. The overall dynamics in markets hasn't changed that much. There is now a competitor who is live in the market and have also started to shipping towards the end of the quarter, early September. They are focusing, say, on their more captive audience as we are doing it, and it hasn't changed the market dynamics in any material way. It's by now fairly clear -- I will get back to that on a separate slide -- that the deadline which is related to sanctions will be shifted 6 months. Again, we also don't see that to greatly change the dynamics in the market. So in a positive sense, we are in a stable, progressive market situation, which is very beneficial to our business. Slide 13, yes, we don't change the layout, we do not change the content. We do change the heading. This is the true name of our German offering. It is the Now or Never Angebot, meaning offer in German. As you will see, we do follow and tweak our prices to be in line with the reimbursed amounts. This is also the case now for Q4, which means that without VAT and without extra card readers, we are selling our installation bundle for the amount here, about EUR 2,400. I mentioned the deadlines and the sanctioned deadlines. This is Slide 14. This will be finally decided tomorrow where it stands on the agenda in the Parliament. It has been injected into another legal process, the strengthening of nursing personnel law, which is the big thing that will be presumably approved by the Parliament tomorrow. And because they have changed so many of the corner points of the sanctioned deadlines related to the eHealth law, they have to go through the Parliament, and they just technically did it as part of this new act. Again, the vote will be tomorrow. And then, yes, formally speaking, it has to also be approved by the Federal Council, which will then happen towards the end of the year. That's more of a formality, hopefully with no disrespect to the Federal Council. As we said on the Capital Markets Day, the rollout will be in 2018 and 2019. All in all, somewhat of a gradual process, probably somewhat independent from now on how the law and sanctions are adjusted. We don't see big reactions either way on public debate or media coverage or even the upcoming vote tomorrow. I think the main point and message from the political side is that we are serious, and we expect and it needs to get to the point where every relevant healthcare provider connects to the network and uses the core services there. Exactly then the mechanics of sanctions and legal work behind may not be all that important. The important thing is that there is an exceptionally strong political will to see now this project and infrastructure through so that already next year, the beneficial use of the TI can start to flow in a much more meaningful way so that all of the envisioned improvements and benefits for German healthcare can begin to be realized. But again, we are one day ahead of the German Parliament, so the exact mechanics of the law can then be studied in great detail when it has been approved tomorrow. Slide 15. Just to inform you what n-design is. This is a subcontractor that we have used for an important part of the software development for our connector that is a key component for our TI connection package. This has now become a group company. The financial details of the transaction you can find in the notes of the quarterly report. It doesn't really change much financially at all over this transaction. The costs are more or less the same, the people are the same. They move from contractors to own internal costs. There is no relevant external revenue here. I guess total costs marginally go down as the inter-company margin then goes away when it becomes a consolidated group company. Those were the prepared comments on the AIS business and the TI rollout. We now move to the second segment, software for pharmacies, quickly flipping over the graphical placeholder, moving to Slide #17. Very strong start we had to the year, Q1, Q2. 9% organic growth. We never saw that as the full year results. I guess now in Q3, we came more down to earth with a flat revenue development. If you look at Q3 last year a little bit more in detail, it was the hardest comp that we had. All in all, year to date, we are still ahead of our full year outlook, and we are happy with how this business develops. Software for hospitals, next segment, we are then quickly over to Slide #19. On this slide, I think the bullet more or less says it all. Quite an uneventful and neutral quarter, exactly in line with how we have guided for the year. Also considering some of the changes to contract structures. Again, we have some news, or at least some substance behind our longer term goals and ambitions of this segment, and also our new board member, Hannes Reichl, who's responsible now for this globally in CGM. Those effects from all good initiatives driven under Hannes will start to show up from next year and on. This year, we have an unchanged outlook, which is again financially at least somewhat of an unspectacular year. Slide 20. This is another small bolt-on acquisition. This is an add-on product that we provide to our social care institutions, customer group of ours in Germany. Been a public partner for many years. We think there is inherently going to be more growth in the overall, say, ambulatory care. Ambulatory meaning home care and care associated with a stationary institutions, but still performed closer to the point of care and residence of especially elderly and other receivers of care services. And Factis, yes, has I think quite an innovative and intuitive mobile application, which is something that we could spend more now resources to distribute to a broader audience in the coming period. Again, the financial details of the transaction are quite elaborated in the notes of the quarterly report, so you can read that. It's a fairly small acquisition. HCS last quarter, that moves us to Slide 22. Really no change. Exactly the same development as we have seen over the first 6 months. There is on top of the somewhat challenging market with pharma companies this year also a material negative FX from our claims processing business and insurance business in Turkey. All in all, it's now down to the last quarter, which always has some special opportunities. We will then see how we land for the full year. But again, so far, if we are a little bit ahead on the pharmacy software business, we are here a little bit behind on the HCS business. This brings us then after 18 minutes to the Slide #23, the guidance, which is unchanged since the beginning of the year. Unchanged means also in terms of range that we still see the middle of the 2 ranges given as the most likely and neutral expectation for the full year. Still, the whole range is open. It is now very much down to the year-end deal making and finishing, especially of course on the telematics infrastructure side. This very much has to do now with how we manage the deal making with our resellers and also how we manage our installation backlog. I think especially the topic of the resellers is going to be a fairly big swing factor as we are then selling in bulk, basically then -- potentially thousands of installation packages per deal, and then the time and process to install that resides with the resellers. So there are many, many discussions pending and ongoing now, and there will certainly be an intense and exciting finish to the year. And this area, which means that even now, as we said, we have to consider still the whole range, and we will do our best to make a strong finish to the year. So that, at exactly 20 minutes, concludes the prepared part of the presentation. We are now open for questions. You have -- okay I was a little bit ahead of myself. We still have to step through Slide 24, which is the financial calendar. I will just quickly say that this is the last scheduled conference call for this year. The final result for 2018 in a preliminary way will be given to you on February the 4th next year, which is the next regular conference call scheduled. This, then, brings us to the Q&A session. The instructions are on Slide 25. If you would like to raise questions, you can press 01 on the telephone and you will be queued in and taken into conference. So please, questions.
The first question is from Knut Woller of Baader Bank.
Couple of questions, Christian. The first one is just looking at the momentum of the healthcare, we have seen a slightly slowing momentum, as you suggested. And when we look at the mix, we can see that the installed base momentum particularly was slightly down. In terms of orders, 3,000 compared to 4,000 from outside off your installed base. Can you give us some insights here regarding the bookings momentum currently that you have seen in October? And then getting back on the guidance, you said that where you end up depends mainly on the resellers. If everything now would end up with a pushed out end date until mid-2019, if I understood your comments correctly, resellers still could make you achieve the high end of the guidance. So that means in contrast to your own installations where you could likely recognize revenues only if you have done the installation at the customer side. If you sell it to a reseller, you can recognize the revenues at the moment the reseller takes the whole bunch of solutions that he is trying to resell. Is that the right way to look at things? And how is momentum here adding up in the reselling channel? That would be it from my side.
Okay. So for the first question, we've tried to stay disciplined and give our sales and installations figures on a quarterly basis. We gave a little bit of an early disclosure at our Capital Markets Day. But we will not give any, say, current momentum or figures where we are right now. I guess you could infer from what I said related to the ongoing changes to deadlines that there isn't great swings either way. Great swings means everything within what we saw in Q1, Q2 and Q3 that's not linked to Q3 specifically. But it's not as if the remaining 100,000-plus have already placed to 80% their orders with us or someone else. I think then I actually would have told you. Next week starts medical, which is important. This is, as we know, a very good period to do year-end business both with resellers, dealers and to some extent with end customers. We have our incentives and campaigns related to that, so that's going to be a good chance to bring us upwards also in this quarter. But as I said, those were the colors that I could give. And then I think we will have to see now what we can do from now on until the end of the year, and then on the 4th of February, the results will come out. To the second question, the mechanics of the resellers, yes, you are absolutely correct. As soon as they have an order, and we have delivered to them and they have assumed, say, the risk and remaining process for installation, that will be realized as a bulk sale.
And just to follow up, Christian, the resellers, they will do the services, right? So this will have a slightly negative impact then on ASPs, but it will be a positive in terms of volumes. And then I understand that you don't want to give more insight into the order momentum, but can you give us some color then, was that the 1,000 -- I mean delta between outside of your installed base and the lower momentum in the installed base, have there been any reasons behind that? Is that just quarterly volatility, or how would you see that, what we have seen in the third quarter with regards to the orders?
So for the follow up on the resellers, yes. But this is yes we have a lower, say, revenue per unit when we go through the resellers, but also then lower costs as they do all the service. So the contribution margin is more or less unchanged. But this, again, this is then more of a mix question, and there's already in the prior quarters the mix between reseller units and direct sales installed from our side units. In terms of the mix between, say, CGM customers and non-CGM customers, this is not a quarterly thing. This is just a factor that we have now, within our own customer base, sold more than 50% of it. So we are quite far advanced in penetrating our own customer base, whereas the rest of the market has more or less not even started. We have just done a small, small fraction of this. So as the quarters now roll on, you will see hopefully that this mix will change even more as we are gradually coming to the full penetration of our own customer base and hopefully can remain competitive and participate, say, in the rest of the market, which is unchanged, by far the largest part of the market.
And just to clarify the structure with the resellers, Christian. I mean, for them it must be difficult really to assess the opportunity. I mean, they do not know how successful T-Systems will be. So how would it be -- is it fully at the risk of a reseller the number of units he buys from you? So I would assume they don't take the maximum due to the fact that they -- if they cannot sell it, they probably -- they still have the costs. How does that work if they are not able to sell everything? That's fully at the risk of the reseller?
Yes, this is 100% market standard contract conditions and negotiations, very similar to how we have it with card readers. Every month you give a 12-month forecast. You are 100% committed to the first month. You are to X% committed to the next 2 months. So you have certainty and you have take or pay for that volume. Thereafter, you can adjust. Of course, whatever we can realize is 100% then transferred as a take or pay commitment, payable regardless of what they do. They can make a bonfire of all the connectors; we don't care. They have to pay us and make it up. And of course, this is then the question about prices, rebates, commitments, volume. Very normal B2B negotiations and contract structures.
The question is from Victoria Kruchevska from Commerzbank.
Couple of questions from my side, if I may. The first one regarding the guidance, but not the let's say the sales guidance, but if I recall it correctly, the beginning of the year you told that you expect your original outlook in terms of TI installations between 50,000 to 60,000. So if I calculate it correctly, you need to achieve to get 60,000 installations in the fourth quarter, so to speak, to get to your lowest guidance, which means 45,000, if I will just -- [ 50 ] minus what we have in 2017 the fourth quarter of around 5,000. Is this sort of like a -- is this the correct way of thinking, or do you think it's plausible it's realistic in the fourth quarter to get to that 60,000, taking into account you have in currently in backlog I guess 4,000? Another question regarding the maintenance. Now that we are already in the fourth quarter, so you have in total 34,000 installations have been done. So can you maybe remind us regarding the maintenance revenue, how would you actually bill your customers on a monthly basis or like a 1-year in advance, and how much, just to have the feeling you got year to date of that maintenance revenue? And maybe regarding the hospitals, that you mentioned the hospitals. I mean, it's rather long term, but you still have an idea. I remember in your Capital Markets Day, you talked about assessing the implications of the financing agreement that has been published at that time, or was in talks at that time. Can you provide maybe a little bit shed some light on where you're standing right now in terms of what does it actually mean for CompuGroup? That will be it from my side.
So the first question in terms of units and guidance, yes, we did give some hints to the underlying assumptions. 50,000 to 60,000 units installed minus the 5,000 already running end of last year. I think -- the 60,000 is probably unlikely, but keep in mind that the financing agreement was changed during the year, and we have been able to keep prices up throughout the year. So probably towards the end of the year we will have a lower number of units, but with a higher unit price, which means, again, they cancel out and all together financially it keeps us in the guidance. In terms of maintenance, the multiplier is roughly -- it is 69.47, so that's a very exact number. If you do that times 34,000, that's about 2.4 million per month. This is billed most all of it through a direct debit mechanism every month, so there is no prepayment. It gets charged like a, say, telecom subscription on a monthly basis and almost all of it direct debit. I guess on the hospitals, maybe you could repeat the question. I wasn't quite sure what the question was.
Yes, sure. At that time, I remember that you or some of your colleagues, they were actually talking or saying that you are currently in the process of assessing the implications of the financing agreement for hospitals, so now we are kind of a 1 month…
Okay. So TI and TIM opportunities. Yes. We gave -- so this is a 100% for next year, so I guess we still have a little bit of time to assess it. The details and the breakdown of the roughly EUR 400 million, which has been allocated to support hospitals in Germany to connect to the TI. Where you see that most of that money is related to changes to the HIS and for professional services. There is, of course, card readers and connectors where we will do our best to get a sizeable volume. As I said, that is the lesser part of the EUR 400 million. What we will of course we'll try to do is to not just serve our own hospitals, but also assist and help through professional services, other HIS vendors in the field. But this is mostly then because of the requirement for additional applications for the second half of next year. So there's still time, and this is still very early days for that process. But I would probably go back to the Capital Markets Day presentation and look into the breakdown of the examples given, kind of substitute percentage wise to a total financing of EUR 400 million, then you see the total opportunity. And as I said, most of that will unfortunately reside with the larger HIS vendors that would be Agfa and Cerner. But again, certainly it represents a good opportunity also for us that we will capitalize as much as we can on next year how we will -- we will guide for this early February next year, and as of right now, there is not that much progress since Capital Markets Day.
Okay. Maybe a follow-up question regarding you have mentioned that the number of units will be lower but at the higher price. And now returning maybe to the reselling part of the business. The market share expansion now, you have already 8,000 non-CGM customers in the sense? How should I think about that? If you say that for your own CGM customers, the number of units will be lower but at a higher price, and on the other side, you're having the resellers where you charge sort of like only half of the price of what you charge your customers, but they will see higher unit cost. How should I kind of think about those 2 variables, let's say?
I think I would -- I would think about them based on what we now have presented and discussed in a more or less unchanged way. We have never, and we've tried to make it clear that at some point -- the fundamental mechanics of prices and units will not be disclosed and this is unchanged. So I would more or less use the model that you already have and tweak units down and prices up, but with an unchanged mix. And more help, say, on that level, we will not provide to you or anyone else. And those are only, say, for to protect our competitive position and make sure that we do not adversely affect our maneuverability in the markets.
The next question is from Charlotte Friedrichs of Berenberg.
Actually most of my questions have been answered, so maybe just a few follow ups. So firstly, do you have any insight as to how many orders or installations T-Systems has already completed? And secondly, what is your opinion on the KBV now also pushing for the requirement that you order before December for that one to be delayed? What is your thought on that?
The short answer on question one is, no, we don't know. But it cannot be a massive amount. So massive mean if you -- it must be, say, significantly less than 10,000 would be our assessment. But again, the exact number would also be of our interest, but we don't know. Yes, the request from KBV is known through media. I guess we will see tomorrow what the Parliament find -- tomorrow is D Day, decision day. They will decide tomorrow. Either -- and I think that is still up in the air whether they will -- how exactly they will phrase the ordering requirement, how strongly it will be linked, say, to an existing certified supplier. And number 2, whether the date will stay as was originally indicated end of the year, or if it will follow the request from the KBV. This is now the open question, but it will only remain open for another 24 hours.
Okay, good. Maybe one last question. Can you maybe give a little bit more color on growth for non-TI revenues in the AIS segment? You said I think normal growth in most European countries and flat in U.S. Is there any more detail that you can give us here? Is this normal growth like 3%, or what sort of level would you think about?
I try as good as I can not to answer that question. But since you asked it, I had it prepared. So it's -- so in Germany, outside TI, revenue is roughly, roughly EUR 30 million per quarter. This is historical kind of levels. U.S. is roughly EUR 10 million per quarter. This is -- so if you go back to last year when it was 78, and you kind of assumed that there was no TI then, which is a fairly safe assumption, you could say everything else is roughly 38, kind of 40 thereabouts. And then the EUR 10 million in the U.S. we give quarter by quarter, and you see that's not growing now. And Germany, outside TI, is also flattish. This is normal because all our resources in sales and delivery is geared to the TI. If you do a little bit of Excel magic, you will find out that actually growth in this quarter was around 5% for everything else, and that's all organic. So that's very much business as usual normal.
The next question is from Knut Woller of Baader Bank.
Just 2 follow ups, Christian, we have discussed now. Very long regarding TI, and so I'm trying to focus on other elements of the business. The U.S. business, can you give us some ideas regarding the profitability levels? And I think in former conference calls, if I heard you correctly in mind, you indicated that it was the ambition, of course, to turn it around to growth. We have seen that it's now flattish again. What are the plans regarding the U.S. business? If I remember correctly in the past, you said that you don't want to put more money in the U.S. business, meaning I interpret this as M&A money. So what do you think about this business, and will you try to build it organically? Do you think about maybe getting out of this part of the business? And then with regards to the PCS business, Spain is now the third presentation listed as an area where you have more interest in. Can you give us an update here also with regards to your plans in an inorganic perspective and where the timing -- it always takes two to tango, so it's probably also a question of timing when you could announce something on the inorganic side with regards to PCS in Spain. Is that the right way to look at things?
So our current perspective on the U.S. is unchanged. We are not considering a sell or exit now, and we'll not consider that this year. We've also not expected in our plans to grow revenue this year as we are working on exchanging the inner parts and also the future of our product portfolio. So this year is very much of a cleaning up the internals and streamlining that to prepare for a better structure beginning next year. Profitability is a black zero. It depends a little bit on how you, say, account for the current product investments, black zero would be expensing all of that. But as I said, it remains a core ambition for us. But also as you said, we have no plans to do further M&A before we have a more proven track record and also proven effects from the current initiatives. I think if you look into the quarter now reported from our U.S. peers, you can see that there's absolutely no big uplift in the market. All of the gold-plated market leaders have probably had weakish quarters. And in this respect, we're actually quite happy with how the business is performing, which is for us an indication that maybe there is a small sign that our competitiveness is beginning to show signs of improvement. But it's still early days, but it remains an ambition for us to fix that business and keep it as a core element of the group. On the PCS side, this will be as close to a no comment answer as you will get. Yes, that we took a few small positions buying some very small players in the PCS market in Spain. This is no longer new. You are correct; that's 3 quarters ago now since we did the second one. That was never the long-term goal. The goal would certainly be to have more of an impact, and impact means M&A. But where we are or not are in such discussions, there is really nothing to say. For us, sooner is much better than later. But as you say, it takes two to tango, and there's really nothing to say on such transactions before they actually materialize.
The next question is from Uwe Schupp of Deutsche Bank.
Two questions, please. So it seems that RISE also received the admission of their connector today, earlier today. Any indication on your end how is that seen internally? Is it still a bit earlier than expected? And what indications do we have regarding their selling and henceforth potential success of their product now that they are coming in rather late? And then secondly, just on the share buyback, any thoughts, related thoughts in terms of launching another buyback now that the first one is done?
Maybe this is an indication that we are fairly relaxed on when a third connector will enter the market, so I actually didn't know that. But that they would be not far away has been known for a long time. We know when they enter into their certification, processes and procedures. So I will take your word for it, and you will be the first one to tell me that they are now certified. We don't see this as no more of an impact on the market dynamics than the entry of T-Systems. Maybe even less so as they still have the work ahead to bundle it in a complete offering, a secured delivery chain, card readers, the warehousing and all steps of the delivery chain, plus of course the VPN service. This -- yes. So exactly when they will start to market and sell, we don't know, but at least it hasn't raised -- it's not a big surprise, and it hasn't raised any big discussions internally. And I guess -- yes. Just about now is when it could be expected. Share buybacks, we always consider that as we did when we launched the last one. Yes, I guess the way it is, we will consider it to the point when we actually launch it, and then we will publish it. It's become a very regulated and strict information process related to share buybacks, both ahead and during the process. We just follow that process. Generally speaking, we've done this in my 10 years of CGM from time to time, and we will continue to do that from time to time. Exactly when and in which volume, yes, we decide on a -- or we consider and decide on a continuous basis. Exactly when, as I said, will only be known when we announce it.
The next question is from Andreas Wolf of Warburg Research.
It's Andreas. A couple of questions also from my side. The first one is regarding the pharmacy-related connectors. When should we expect sales here? I guess it will be your 4,000 pharmacies that will buy the connectors first. Maybe you could give us some flavor or your view on how we should expect this customer group to behave in the future. And do you already have indications/orders for December for the installation of connectors? I think while it's -- while the focus is now more on the orders as such for the financial year, we are probably also interested with regard to the revenue that you might bill also in 2018. And the last question is regarding the Polish hospital market. I know it was a very strong market in the past due to its changing government. Obviously this had some negative impact. And maybe you could give us some insights how this region is developing apart from the significant order entries that you obviously have got over the last couple of quarters [ give you good profitability ] going forward.
In terms of pharmacies and TI roll out, this in terms of timing is a topic for next year. There will not be done VSDM, so the checking of insurance cards in pharmacies. So they are waiting for the first emergency data set and medication plan applications, which for us is scheduled for August next year. So we will probably start to sell some early bird offers ahead of that, but a revenue recognition shipment will only be second half of next year. And as always, we have our own 4,000 pharmacies as targets, plus the rest of the market in a very similar approach to the doctors and dentists. There is no financing agreement in place yet. It's also not urgent for pharmacies. We've said that we expect that to be similar to doctors and dentists, but again, that also needs to be in place before we can start. The second question I think I will not comment much on as it relates to the current year-end finish and the December. Yes, so I think I will just leave that as unanswered. The third question, which is the Polish hospital market, yes, that was very strong, and then we had all the backlash, especially -- not so much with the hospitals, but with this large government project. This year is actually a very good year in Poland. And since you asked the question, we are over-performing in Poland. And we have some negative FX effects from Sweden, which doesn't touch the business at all. But actually year to date, if you look at group level, we've lost EUR 5 million of revenue just from foreign exchange, and half of that comes from the Swedish krona. But luckily, we are performing well again in Poland, no longer with any government projects, but now directly with the core hospital market. So that's come back nicely and is in a positive development state.
Okay. And just a quick follow up, if I may. We analysts, as you probably know, are keen on modeling and numbers, et cetera. So would it be fair to assume connector sales similar to the Q1/Q3 level, or should we expect some improvement as doctors might still have the old headline on their minds in purchase connectors?
Yes. Okay. So I think I more or less answered that question, and now it was a little bit more specific. So I said I think anything in the range from Q2 to Q3 would be -- but then again, it greatly depends on these bulk sales through the resellers. So it really is quite open, I have to say. I don't know, if Apple can get away with no longer disclosing number of iPhones sold, I think we can get away with trying to keep the intricate details, despite I know the pleasure of modeling things correctly. But as I said, hopefully what I've said gives you at least some feeling for how you can play with the numbers to make the model.
There are no further questions. I hand back to the speaker.
Very good, then. We have finished in time. Thank you so much for your interest in CompuGroup. And we welcome you back to our next checkpoint, which will be early February next year. Have a good day and good evening.
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