Theon International Aktie

Hello, everyone. Thank you for joining us, and welcome to Theon International Plc First Half 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Evangelia Karatzia with Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to Theon's Half Year 2026 Results Conference Call. Thank you for joining us today. I'm Evangelia Karatzia, part of the Investor Relations team at Theon. We are pleased to present you today with an overview of the first half of 2026.

We will start with the period highlights by Christian Hadjiminas, our Founder and CEO. Next, Philippe Mennicken, our Business Development Director and Deputy CEO, will present market sector and business insights that guide our strategy. Following that, Dimitris Parthenis, our CFO, will present the financial performance. We will close the presentation returning to Christian to address our guidance and future outlook. The last part of today's session will be dedicated to your questions.

At this point, I would like to invite Christian to take the floor.

Thank you, Evangelia. Good afternoon, everyone, and thank you for joining us today. We are once again pleased to present another strong set of results that reflect our growing momentum and in our view, demonstrate both the sector's promising prospects and especially the now expanded EUR 8 billion addressable market for Theon and the potential for our business model and strategy that lies ahead. I will begin with the first half 2026 highlights as well as the strategic and business milestones achieved across the group in that period before handing it over to Philippe. Let's begin.

The first half of the year has seen momentum build up for Theon, delivering strong financial performance while materially enhancing our strategic platform and positioning the business for continued growth. Starting with our financial performance, we generated record first half revenues of EUR 248.7 million, representing growth of 35.4% compared to H1 2025. This growth was delivered alongside a 40 basis point expansion in our margin, maintaining our industry-leading profitability with an EBIT margin of 26.2% despite ongoing portfolio expansion and acquisition integration. Order intake reached EUR 232.5 million, demonstrating continued demand across our product portfolio and supporting a book-to-bill ratio of approximately 1.0x. As usual, order activity is weighted towards the second half of the year with stronger intake anticipated in Q4 due to the industry's normal seasonality, while further acceleration is expected from early '27 onwards.

Our backlog remains a key strength. Soft backlog stood at EUR 1.46 billion, complemented by EUR 902 million of contractual option, which, of course, we believe they will mostly all of them exercise shortly, providing strong revenue visibility and underpinning a coverage ratio of 2.4x based on the upper end of our financial year 2026 revenue guidance. At the same time, we continue to diversify our product mix and broaden our platforms. Revenues from non-night vision products now account for approximately 15% and are expected to reach around 19% to 20% by year-end, reflecting the successful execution of our strategy to expand into high-growth optoelectronic markets.

Overall, the first half of 2026 combined strong financial and commercial delivery with significant strategic progress. We have expanded our addressable market, strengthened our backlog and maintain industry-leading profitability, providing a strong platform for the remainder of 2026 and beyond. And again, I have to stress, it's very important for Theon to retain its credibility and whatever we have promised so far throughout the last 3 years since we are in the public markets, we have delivered -- more than delivered, I should say.

Now to provide some further detail on our key strategic milestones. First half of 2026 was an important period in the continued evolution of Theon as we continue to expand our platform. The transaction and partnerships announced in first half have led our addressable market almost doubling to about EUR 8 billion and marked our entrance into some of the fastest-growing areas of defense technology. The activities in this acquisition and integration domain for a company of our size can be simply assessed as unprecedented without exaggeration.

In May, we announced the acquisition of an 80% stake in Merio, marking an important step in our strategy to accelerate our entry into unmanned vehicle systems and establish a stronger presence in France. Preliminary engagement between Theon's and Merio's business development and R&D teams have identified a range of identified potential commercial opportunities and technology synergies, which we expect to support future growth and innovation initiatives. Subject to the necessary approvals, state approvals, we expect the transaction to close in Q4 of this year.

Furthermore, we also made a EUR 3 million minority investment in Twin Prime, an AI venture in the U.S., alongside the agreement to establish a joint venture to develop, commercialize and deploy bespoke AI solutions. This helps to expand our footprint in the U.S. and provides Theon with direct exposure to the rapidly developing defense AI market. In June, we signed a memorandum of understanding with Safran to establish a joint venture focused on the design and production of gimbals for UAVs. Theon will control 51% of the venture with part of the production expected to take place in Greece. The goal of this JV with Safran is to establish itself as nothing less than the global leading gimbals company by the end of 2027. We believe with all the work we have done, this is an achievable target by the end of 2027.

Last but not least, this joint venture is another evidence, and I would like to stress the importance of that of one of our strategic premises whereby Theon becomes a prime catalyst for European defense industry integration and especially for French and German and Greek defense industry integration.

Finally, we announced our largest investment to date, the acquisition of HGH for an enterprise value of approximately EUR 300 million. This is a significant strategic step for Theon, accelerating our entry into the counter-UAV market and further broadening our technology portfolio. HGH has unique innovation capabilities and has developed proprietary software solution augmented with artificial intelligence. By leveraging HGH technological differentiation, Theon will further strengthen its product portfolio and create additional value. Importantly, we expect the transaction to be margin accretive within the first year following closing, which we expect to be early Q1 of 2027.

Together, these initiatives, which were broadly unexpected by the market, that is the speed and its size as well, significantly broaden Theon's capabilities beyond our traditional markets, marking accelerated entrance into UAVs, counter-UAV, AI and additional ISR technologies while creating a substantially larger ecosystem for future growth through a significantly expanded addressable market. Following the strategic investments just outlined, our strategic focus is now firmly on successful integration and realizing synergies across our expanded platform while continuing to deliver strong organic commercial growth.

Again, here, the speed of operational integration is unprecedented as it has started earlier even than Theon's obtaining approval as in many cases, a, integration has commenced while seeking final approvals; and b, in other cases like Kappa and Harder Digital, the results have been swift and visible as it will be further explained in this presentation.

Looking at organic growth and one of our biggest opportunities is in the United States. In order to speed up the industrial entry of Theon into the United States, the company has commenced its investment in organic growth across distinct units in the East for man portable products in Virginia and West Coast for electro optical platforms in Oregon, respectively, with an initial projected investment of about USD 30 million to be deployed over the next 2 to 3 years, including hiring new executives in product development and BD, which we have already commenced as well as building our production capacity.

Now I would like to briefly address our investment in Exosens. This was a strategic investment, and Theon has concluded that the stake it currently holds represents a sufficient, and I will stress the word sufficient move given Exosens' position as a key supplier to Theon. We, therefore, feel that this investment has run its intended course and now our focus turns to the partnership itself. As a result, Theon has paused the application process to pursue a Board seat and Theon's potential ownership stake increase. Above all, we now eagerly look forward to working even more closely together with Exosens to capture new opportunities ahead. Let me remind you that Exosens is an excellent detector company and Theon, alongside to Exosens is an excellent end product company, always in the electro-optical fields.

Following a very active M&A period, our priority is now firmly on integration execution. We are progressing with the expected closing of Merio and the finalization of the Safran joint venture before year-end, subject to the remaining regulatory approvals. But in the meantime, we're not sitting idle as management teams across the group remain fully focused on driving business growth and supporting customers. Our integration process is phased and disciplined with an initial focus on capturing business development and R&D synergies, both aspects that, of course, take some time to produce results, though we have seen much faster results so far in the acquired companies than us had anticipated.

While formal integration activities remain limited until closing, our teams have already identified several attractive commercial and technology opportunities that we will pursue once the transactions are approved and completed. At the same time, we're working to optimize efficiency across the group by improving working capital management, adopting a common treasury management system across our entities and streamlining key processes.

We're also reinforcing our group reporting capabilities to support a larger, more integrated organization, always with a priority to retain the entrepreneurial spirit, the same spirit that brought Theon at its current position. Overall, having significantly expanded Theon's platform and capabilities, our focus is now on successfully integrating these businesses, realizing synergies immediately and converting the strategic value of our acquisitions into commercial growth and operational efficiencies.

Moving on to Slide 8, before I hand over to Philippe, I want to touch on our integration track record and more specifically, our proven ability to deliver improved capacity and capability, drive commercial growth and leverage technologies to co-develop with our partners.

Starting with capacity and capability. We can evidence our ability here through the delivery of 3x production capacity increase at Harder Digital, exactly as we have been announcing in the last 2 years since acquisition. Alongside, and this is very important, image intensification tubes' quality improving from 1,800 FOM to 2,000 FOM. This is a very important quality improvement.

Highlighting our commercial growth ability at Kappa, revenue and profitability performance already ahead of our initial expectations, and the group has secured a new contract of approximately EUR 30 million with support from Theon, taking the business above its initial financial year 2026 revenue target. Here, I would like also to add that we are very, very pleased, aside from the German operation of Kappa, we are very, very pleased with the capabilities of the Spanish-owned entity by Kappa with the superior quality of its staff members and the results they produce, which allows us also to expand into Spain as well.

Lastly, our co-development and ability to leverage technologies can be highlighted by our partnership with ShockEOS, which is already translating into meaningful commercial opportunities. The co-development of the PHYLAX stabilized multi-sensor system to be supplied to Rheinmetall is just one of a great example of this with an initial committed value in excess of EUR 40 million. Furthermore, I'm very pleased to tell you that there is strong demand for ShockEOS products and services, especially in the Middle East. On the back of it, as we have already announced, Theon is proceeding to acquiring -- exercising its option acquiring the majority of ShockEOS.

Overall, the progress across these businesses demonstrates our strong track record on post-merger integration. We're not simply adding new capabilities to the wider Theon Group, we're scaling them, improving performance and leveraging technologies of the wider group while generating new commercial opportunities. Here, I must add that those invested companies, including Merio, HGH are full of young entrepreneurial talent that Theon is already tapping in to take full advantage of.

I'll now hand you over to Philippe, who will provide an update on the business and the wider defense market.

Thank you, Christian, and good afternoon, everyone. As briefly mentioned earlier, today, we will touch upon our recent activity as well as the overall market and sector drivers directing our steps. As I hope you have gleaned from our recent activity, we are at the forefront of a new wider market being created, and we have a clear outline of how we aim to lead in this battlefield evolution. We listen to our customers' operational requirements, design products to provide armies with agile, smart tech capabilities and deliver cost-effective solutions they need to provide them with a technical edge and enhanced awareness in the battlefield.

While we maintain our focus on soldier systems, 2026 has been a year where we, as expected, have seen a rising interest by end users on drones and other related ISR products across land, sea and air. Leveraging our newly acquired companies, you can now see that we have built an ecosystem of portfolio companies, which have strengthened technological capabilities and provide us access to more domains and accelerated commercial traction in the wider market, creating the foundational layer in order to achieve our vision of becoming a global defense optoelectronics champion.

We will take a closer look at Merio today since the transaction is now closer to closing. And as Christian mentioned earlier, some business and synergy opportunities have already been identified. Merio's role in our ecosystem is to expedite our growth into the evolving air domain. Based in France, Merio operates a similar asset-light business model to Theon and has built a strong reputation across the EU, delivering proven products deployed by major UAV programs. As usual, the incumbent management team will remain in place to continue Merio's growth path, which they have delivered successfully over the past several years.

As a quick reminder, we entered into binding terms in May of this year to acquire 80% of Merio with 3 main strategic points driving the deal. Strengthening Theon's product suite, increasing our footprint in Europe and specifically France and marking our entrance into the drone market, combining capabilities with other group companies. With Merio's competencies added to our arsenal, we strengthen Theon's air domain capabilities and enhance features across our wider ISR product range.

We expect this investment to deliver several synergies for the group, including cross-selling opportunities and, of course, helping accelerate the joint venture with Safran. Touching on these synergies in more detail, we expect the investment to drive cost synergies for the entire group, while also helping drive growth for Merio through access to our global network and R&D capabilities. Our operational base will also facilitate the scalability of Merio's operations.

Before our investment, Merio already had a proven track record and a strong market position, which we expect to strengthen further as integration progresses, making its capabilities market-leading. For illustration purposes, we have put 3 peer companies on this slide, which are amongst the market leaders today in this field. What convinced us to invest was that Merio had all the technical and engineering capabilities to rival its leading peers, but lacked the scale of operations, global reach, supply chain and the financial and human capital that Theon can now provide. As part of our group, we are confident Merio's capabilities will be amplified, giving us a springboard to capture meaningful market share and become more competitive in this fast-evolving field.

Moving now to the market. We continue to see defense procurement in an expansion cycle with a significant growth opportunity for Theon. Global defense spending reached USD 2.9 trillion last year and is growing quickly with decades of underinvestment in defense continued to be rectified and budgets and investments increasing globally. In our home market in Europe, we are seeing the fastest growth driven by NATO readiness and commitment to defense program spending from NATO members.

Outside of Europe, Army modernization programs are in progress across all regions with significant opportunities across APAC, the Middle East and the largest market globally in the U.S., where we have significant penetration headroom. This expansion cycle has supported sector fundamentals improve and helped drive sustained growth with average industrial revenue growth of over 20% over the last 12 months. Margins are growing faster than revenue, highlighting sustainable growth and the shift to long-term contracts is expanding backlog visibility and points to long-term demand. Theon continues to operate at the intersection of this growth and having continuously expanded our addressable market, we expect to benefit from structural growth across the board.

Whilst we have expanded our addressable market through recent investments, we'd like to emphasize that this structural growth is being seen across the market. Major budget allocations are being set, as you know, for UAS and counter UAS systems, which we are targeting with our new ISR capabilities. But importantly, demand for soldier and man-portable equipment remains strong, especially in Europe. We see our largest opportunity in Europe, where continuous procurement and an increasing number of countries joining OCCAR are driving long-term structural growth in the region. At the same time, we do see countries that have already advanced on night vision goggle procurements moving into procurement cycles for night vision and thermal sights.

Outside Europe, some procurement decisions in the Middle East and Far East have been somewhat delayed due to short-term budget pressures. Specifically for Middle East, there is a temporary shift in spending priorities towards drones, counter-drone solutions and air defense systems. Importantly, we view this as a timing-related effect rather than changes in the underlying demand, while we are also able now to address these drone and counter-drone demands with our new ISR capabilities. The underlying requirements remain intact, and we expect these programs to progress and procurement activity to normalize towards the year-end and into the first quarter of 2027.

This reinforces our confidence in the order outlook and supports the 1x book-to-bill target we set from the outset of the year, reflecting both the resilience of demand in our core markets and our expectation that delayed programs will resume. Overall, we believe Theon is well positioned to capture the significant opportunities ahead, both within our traditional soldier solutions business and across our expanding ISR portfolio. I hope that gives you a clear overview of the opportunities that lay ahead for Theon.

I'll now pass you on to Dimitris, who will dive into our financial performance in more details.

Thank you, Philippe. Let me start by turning to the financial performance for the first half of 2026. As you can see, we have maintained strong momentum through the first half, delivering continued growth alongside our best-in-class profitability. Revenue reached EUR 248.7 million, up 35% year-on-year, reflecting the continued strength on the business and our ability to execute against the significant demand we are seeing across the markets. Importantly, we delivered this growth while preserving our industry-leading profitability.

Adjusted EBIT increased by 38% to EUR 65.1 million, with the adjusted EBIT margin improving by 40 basis points to 26.2% compared with 25.8% in the prior year period. This performance remains firmly in line with our medium-term guidance, demonstrates the operating leverage embedded in our business model and reinforces Theon's ability to combine high growth with sustained best-in-class margins. Operationally, we continue to strengthen the group's performance in the first half. Harder Digital delivered further improvements in both quality and output, while we moved quickly to build new capabilities in drones and artificial intelligence. Strategically, we also remained active on the corporate front.

As discussed earlier, we made targeted investments to broaden our technology base and accelerate our expansion across ISR, drones, counter-drone and AI capabilities, consistent with the strategic direction we have previously outlined. Taken together, H1 2026 was another period of strong execution. We delivered significant revenue and earnings growth, maintained market-leading margins and continued investing in the platform required to support our long-term growth ambitions.

Moving on to the next slide. Our strong momentum continued through the first half with order intake increasing 38% to EUR 232.5 million and revenue growing 35% to EUR 248.7 million, of which 24.7% reflects organic growth. This represents a sustained book-to-bill ratio of approximately 1x, providing a solid foundation as we move into the second half. Importantly, alongside this growth, we are beginning to see the product mix evolve in line with our medium-term ambitions.

Night vision remains the core of our business, but now represents approximately 85% of H1 revenue, while non-night vision products have now grown to around 15%. This is an important development for Theon as we have consistently said, our objective is not to move away from our leadership position in night vision. Rather, it is to build additional revenue streams alongside it, particularly across ISR and a broader digital and platform-based offering. That diversification is now beginning to come through in our H1 revenue mix, and we expect it to continue over time.

From a geographic perspective, Europe remains our largest market, representing approximately 80% of revenue. The Americas contributed around 6%, while the rest of the world accounted for approximately 14%. This mix reflects particularly strong demand in Europe, while also highlighting the opportunity to continue pursuing growth across our broader global footprint. Overall, we are delivering strong top line growth while progressively shifting the revenue mix towards the more diversified business we are building for the medium term.

Turning to our backlog. We continue to benefit from very strong revenue visibility, which is increasingly expanding beyond our traditional 18-month horizon. At the end of June, soft backlog stood at approximately EUR 1.46 billion, comprising around EUR 1.22 billion of backlog and EUR 234 million of secured orders. In addition, we held approximately EUR 902 million of options, bringing soft backlog plus options to approximately EUR 2.36 billion. This represents revenue coverage of around 2.4x and provides significant visibility over our longer-term growth trajectory, including approximately EUR 0.5 billion of soft backlog scheduled for delivery in financial year 2027. It also reflects the increasing weight of longer-term framework agreements and program-related orders within our order book.

Moving to profitability. The first half again demonstrated the strength and scalability of our asset-light business model with earnings growing ahead of revenue. Adjusted EBITDA increased by 42% to EUR 70 million, with the margin expanding by 130 basis points to 21.1%. Adjusted EBIT increased by 38% to EUR 65.1 million, with the margin reaching 26.2%, maintaining our best-in-class profitability. This performance was supported by gross margin expansion, disciplined cost management, operating leverage and an improving product mix.

Importantly, profitability remained resilient despite the step-up in acquisition activity and the consolidation of new businesses. Finally, net income more than doubled to EUR 74.3 million. For clarity, this increase reflects both underlying profitability growth and a fair value gain on financial assets.

Turning now to Slide 21. I will touch on the investments we are making to support future growth. We are deliberately increasing expenditure to support the next phase of growth, both through additional capacity and the development of new products. CapEx increased to EUR 11.8 million in H1, equivalent to 4.7% of revenue, primarily reflecting organic expansion in Belgium and the accelerated capacity ramp-up at Harder Digital during this period.

At the same time, expensed R&D increased to EUR 5.6 million or 2.3% of revenue as we accelerated the introduction of new products to capture growing demand across adjacent categories. This also includes work to qualify new materials and further reduce reliance on critical minerals. These increases in CapEx and R&D remain in line with our guidance and reflect the investment required to support Theon's growth trajectory while expanding both our capacity and future product pipeline.

Turning to cash generation. Underlying performance remained strong in the first half despite the expected seasonal investment in working capital ahead of second half deliveries. Net working capital absorption improved to 40% adjusted to reflect prepayments related to recently announced investments. While this ratio remains above our medium-term target of approximately 35%, we expect this working capital investment to unwind as deliveries progress through the following quarters.

Cash conversion remained robust at 83.2% with a modest year-on-year reduction largely reflecting the CapEx acceleration discussed on the previous slide. Importantly, operating cash flow increased to EUR 30.7 million despite near-term working capital headwinds supported by strong underlying profitability. Overall, the business continues to demonstrate strong underlying cash generation while investing in the working capital and capacity required to support our growth trajectory.

Moving to the next slide. Theon remains well funded with substantial financial flexibility to support the group's growth ambitions. Our financing structure comprises of a EUR 400 million revolving credit facility issued in October 2025 with a 5-year tenor alongside a new EUR 325 million 5-year term loan signed in September 2026. Both facilities were secured on highly competitive pricing terms. As a matter of fact, the new term loan was agreed on even stronger terms than the RCF, underscoring the continued support of our global banking partners. Together, these facilities provide a strong and flexible funding position with no near-term need to raise additional capital to support our strategic growth plans.

Building on that funding position, I would like to briefly address how we expect leverage to evolve over the coming years. Following completion of the HGH and Merio transactions, pro forma leverage is expected to rise temporarily to approximately 3x. While this is above our target of below 2.5x EBITDA, these investments are supported by a clear strategic rationale.

We also have a clear deleveraging path supported by continued revenue growth, successful integration of the recently acquired businesses, operating leverage and stronger cash generation. On this basis, we expect leverage to return below 2.5x our EBITDA during 2027 and fall below 2x in 2028. In addition, we retain further flexibility through our liquid financial assets. If monetized, these assets would reduce pro forma leverage to below 1x in 2027 and below 0.5x in 2028.

This can also be achieved without necessarily relinquishing our ownership on these assets. Let us also not forget that all these minority investments are now generating capital gains. Taken together with the funding structure outlined on the previous slide, this gives us confidence in our balance sheet position and our ability to fund growth while maintaining appropriate leverage.

I will now hand back to Christian, who will present our revised guidance and wrap up today's call before we move to Q&A.

I hope it's clear the progress we have made this year. A lot more than announced has been going on in Theon internally in preparation of integration, looking at the future, which cannot be reflected in announcements. That's why I know internally, we're extremely proud, but know the work doesn't stop here. On that basis and under the frame that Theon always will remain conservative in its estimates and prefers to surprise the markets on the positive side rather than the negative side, we would like to say that, first, we maintain our guidance with confidence towards the EUR 600 million target of revenues for this year.

We are providing, though an update to our margin guidance. With increased confidence in our operational efficiencies and expected synergies to come through more recent investment, we can be clear that we expect our adjusted EBIT margin to be at least 26%, not just this year, but over the medium term. I believe this is important also in the context with very legitimate skepticism all these years, whether we can maintain our profit margins given the increase in revenues. Well, it seems that we have again managed to overcome this skepticism and deliver results like this one where the margins are increasing while revenues are also increasing.

Overall, this reflects confidence in both our operational momentum for financial year 2026 and our medium-term ambition to continue building Theon into a larger, more diversified global defense technology leader in the electro-optical segment of the market, which is about EUR 8 billion, I repeat. I hope we have not only provided you evidence and confidence in that we do what we say we will, but have clearly also outlined the growth opportunities ahead of the over the coming years. With that, now it is time for your questions.

[Operator Instructions]

I will now hand the call back to management to begin. Please go ahead.

Thank you, Tracy, and thank you, Christian. We have received a few questions already. The first one, does your medium-term organic growth target of 15% include HGH and Merio?

No. As we have already guided, we expect a 15% annual growth, which is going to be complemented by acquisitions such as the one of HGH and Merio. So no, the answer is no, this is not included.

Okay. The next question, by early 2027, Theon will have completed a series of acquisitions and over the last 2 years, including Harder Digital, Kappa, Merio and HGH and minority investment in several other companies. For these companies where you have majority control, do you have any plans to introduce a centralized ERP system to optimize group level working capital needs and inventory levels?

Sure. As a matter of fact, the plan is to centralize a lot of our functions. Finance is one of them. ERP is another one. This is going to help us move on more efficiently in integrating the companies that we have acquired.

Moving to the next question. As your sales mix evolves with rising revenue contribution of thermal, ISR and platform optronics businesses, where do you see your net working capital sales trend evolving? Is client advance ratios in platform optronics ISR contracts higher?

Well, we typically anticipate that as we move on to orders from areas such as ISRs from platforms, which relate to more long-term contracts from primes such as Rheinmetall, for instance, which is our customer. We expect that advance payments are going to be paid. We don't know, however, how soon this will impact our net working capital.

Okay. Great. Conversion of backlog to revenues and potential supply bottlenecks remain a key investor concern for defense companies. Within your optronics ISR segment, what has been your experience so far in terms of potential risk to your component supply, while extending supply contract for IITs with Exosens cover your components demand in a night vision goggle. How confident do you feel about supply resilience for your platform optronics, thermal and ISR businesses?

Okay. There are several questions here. This is Christian. I'll try to answer as many as I can. First of all, let's -- the backlog to revenues. We don't see any bottlenecks. We are also in the platform business, we don't see any bottlenecks on supply. Of course, this is easy to say because we are -- at this stage, we are at low levels of sales because we just started with Kappa and other products we have. So we don't see any major or any sign of threat down the road. The major threat was in the past on tubes. We have addressed that by the expansion of capacity by Exosens, which -- and also in Harder Digital, which went in line with the demand. Again, we have to calibrate and not expand capacities before the demand is there. What else? Yes. That's basically it. And maybe, Dimitris, you want to answer. No, no, it's okay.

If I may add here, any potential supply issues on the ISR business, obviously, we're looking already into this. We do not see any at the moment. But obviously, we're always proactive to make sure that we have similar agreements like we have with Exosens for other critical components on the platform side so that if and when the demand goes up, that we are still covered, of course.

Thank you, Philippe. Moving on to the next question. With regard to Exosens. Exosens are planning to 3x increase thermal camera production in 2026. How much of a competitive threat does this pose?

First of all, the thermal camera production, we are very happy for Exosens because what we are advancing now is an end product. It's the gimbals and the thermal camera is just a component. So we will be very happy, and we are talking to Exosens as we talk to other suppliers to get a proper support like we get from Exosens on the tube side.

Can you give us -- can you provide us with an update on your efforts in getting a BOD seat at Exosens?

Yes. I think that was covered. We paused the process because we realized that there's no need for that, no need to increase and no interest to increase our stake in Exosens. And at the same time, we realized there were so many applications to be done in various jurisdictions that it would draw down on management time, and it was a moot point by now since we don't plan to increase our equity stake in Exosens.

And also regarding the Board of Directors, given what happened in the last 6, 12 months, where we have strengthened our relationship with Exosens, this may have caused problems for conflicts of interest. Although that could have been addressed as well, but there was no need for all this complication. Our relationship with Exosens is better than ever. I repeat Exosens is a very good detector company, and we are a very good end product company. And that's -- these are the highways where we work together parallelly.

Thank you, Christian. The next question is focusing on orders and margins. As you have mentioned, you typically see an acceleration in both orders and deliveries in H2. Any comments on what the mix of both orders and deliveries may look like in the second half? And how does this support your new margin target this year?

Yes. Well, first of all, the -- I've already mentioned that we expect at the end of the year to have 19% of the total revenues to be non-night vision. And as you can imagine, the more non-night vision products we have, although we have good profitability on night vision, but the more non-night vision products we have, these have higher -- carry higher profit margins. So -- that's why we're also very confident about the achieving above 26%.

Once again, I will repeat, I know I'm repetitive here, but as I've always did, the policy of our company is to be very conservative. And that's why from the beginning of the year, when we give guidance, whether it's book-to-bill ratios and everything is conservative. And when the first 3, 4 months, 5 months of the year, we start seeing the first results for the year, then we would tend to revise upward our guidance. But as I said, our approach is to surprise positively the markets, not negatively.

So I know a lot of investors would have liked us to say what we believe we can achieve, but we have to -- it has to be backed by solid facts and solid feedback from the market. So far, everything is going up, and we expect this in terms of guidance numbers and everything, they're all going up. But again, as they go up, we will -- and as we increase our confidence that we can definitely deliver, then we will be revising those guidance. Thank you.

Great. Moving to the next question with regards to the investment in U.S. that Christian mentioned earlier. Regarding the approximately $30 million investment plan for the company's U.S. expansion over the next 2 to 3 years. Could you please clarify whether this is a newly announced investment or part of an investment plan that Theon has already disclosed previously?

Yes, we had a good question. We have already announced that we will be expanding in the U.S. So part of it was reflected in our CapEx future needs. But now that is -- and again, it's spread over 2 to 3 years. So it's a $15 million to $10 million a year. Now we have more concrete data where we know exactly what we should be doing, especially in the West Coast, which is for the -- our base that we're building a base for the platform business in the States. We are more able to give specific numbers.

Great. Thank you. Moving to the next question. Alpha Bank announced a successful completion of EUR 325 million syndicated financing for Theon International. Where will the funds be allocated?

Yes. So this will mostly fund the acquisition of HGH, which is going to be concluded in the first quarter of 2027.

One more question on margin guidance. In the past, you mentioned the OCCAR night vision goggle contract to be less margin. But despite this, you see EBIT margin more than 26%. Why is that? Is that because of the margins of HGH?

No. HGH is not -- yes, if it is guidance for the future, definitely, HGH is an important factor for that. HGH has about EUR 40 million in revenues this year, maybe more. And we really -- our ambitious target is to double their sales. And here, let me say something which is very important. And of course, this, to answer your question, this affects -- gives us higher confidence to increase the margin, which, by the way, on the traditional products, it gets improved because we are building much bigger volume and that absorbs a lot of the fixed costs and increases the profit margin. So it's a normal process, which more than compensates for potential more competitive situation in the market for night vision.

But on the other hand, and I have to spend some time here, and we are not conservative on our BD targets. Let's take HGH for which we still don't have an approval, but -- we already have started the process of supporting their sales. I will only say that maybe people have not realized the importance of HGH within the portfolio of Theon. HGH has products that are passive detectors of drones. Passive detector for drones means that they cannot be detected from the enemy. When you combine those things and initially, there's a drone detection by an HGH passive, you pass it on to the electro-optics, which is of Theon products like Talos and then Talos passes the coordinate to the countermeasures. These are passive systems.

As far as drone detection, this is -- HGH has the only that we know of modern updated with AI system. And therefore, we feel very confident. And for instance, let me give 2 examples very quickly because I want to be specific. In the Middle East, of course, there is big demand for that. And this is very helpful also for infrastructure facilities. Therefore, in the Middle East, we see demand. And now all of a sudden, the last few weeks because of what happened in the attack in a German airport, we see interest coming up and it's already manifested in Europe about protection of airports. And of course -- and this is the beauty of HGH and Theon 2 entrepreneurial organization working together. And of course, we are rushing and we're already making the first presentation in this account. Again, we have to wait for the formal approval for the acquisition of HGH.

But as I said, we're not sitting idle. BD and R&D integration has started across the board because it needs to be like that. And last but not least, I will stress again because at the end of the day, we're talking about human capital. We are really surprised despite the due diligence we have done before we invest in those companies, we are truly, truly surprised by the quality of the staff in HGH, in Merio, in Kappa. As I mentioned, Kappa has a subsidiary that is full of young people, very energetic and I was pleasantly surprised about that. The same thing with HGH and all these companies acting as entrepreneurial companies, they have in various key markets like, for instance, in the U.S. or Middle East, they already have a presence. And now we are integrating their presence with our presence. And in the States, we have Kappa and HGH having offices and all this, we're in the process of integrating under one umbrella.

So we are very, very optimistic about HGH, about Merio and about what we have done. Again, in our case, because we need to bring results quickly, BD and R&D integration are the top priorities before and once we get the approvals, we go to ERPs and internal management processes.

Great. We see some questions on HGH and Merio. I think you covered most of them. Moving to the next one with regards to the joint venture with Safran that we announced during summer. The question is, can you remind us what are the objectives and timing and what to expect from this joint venture?

I'm -- this is an area where I would consider this as an accomplishment of this year. That is the JV with Safran because Safran is a tremendously strong company, and we are very honored that they have trusted us with this initiative. We, of course, we're working hand-in-hand. And it's not only the fact that only with this combination, we can become very quickly the #1 gimbal company in the world by the end of 2027. But it's also, as I said, it's very important to show signs that are productive collaborations between European companies. So I consider this as an accomplishment of Theon this year, and we are very grateful for the trust that Safran has provided us with.

Thank you, Christian. Moving to the next question, I think that's for you, Philippe. Night vision, what about the tenders in Taiwan, Philippines, Japan, et cetera, details about the timing, the amount? And if you can give a summary of the situation in Asia in general on the night vision market.

Yes. A good question. In Asia, as you know, the energy prices have increased quite a lot with the conflict in the Middle East. So there are some pressures on the budget, which means, and I think you mentioned it as well during the presentation that certain projects have gone a little bit back. So there are some delays in certain projects. They are not dead. They are still there. We can see them. We're working on them, but there's been some delays. Same as we see as well in the Middle East because of priorities for air defense and counter-drone equipment. But we expect these projects to pick up again towards the end of the year or at the latest at the beginning of next year.

Thank you, Philippe. Moving now to the last question about the French market with Merio, HGH and now tie-up with Safran. Why are you focusing heavily on the French market? What's the strategy behind that? And if you can explain briefly the differences between the 3, the joint venture and the acquisitions?

Okay. First of all, the -- as we have stated, we consider the French market as an export-oriented market. In other words, what we are aiming is not to so much to sell to France, although those companies they sell in France. We're aiming more to take advantage because both of those companies belonged and still belong in -- by young people with AI technologies, very entrepreneurial oriented. So it's not that we're focusing on the French market as a destination, but we are focusing on the French market as an export possibility.

Also, I need to tell you that we're going to be establishing an AI center in -- as part of HGH far beyond what the HGH products, which they already have AI. We found and we see that there's a lot of talents around Paris and the universities, and we really want to take advantage of that. Now there's no -- the difference is that Merio and JV with Safran is exactly the same thing. Merio will be working under the JV of with Safran. And then, yes, it's HGH, as I explained, a total different company.

Thank you. And the last question for Philippe. Can you please talk about what you're seeing in the supply chain? Is there a disruption in chips and critical minerals?

Not really critical minerals, yes, I mean, obviously, as most of you may know, there's germanium used in thermal lenses, but we have taken steps to basically transfer lenses to germanium-free material, not to be dependent on this mineral. In terms of chips and all other electronic components, yes, there is -- I wouldn't say disruption, but yes, the demand is there, but we are still covered at the moment. And as I said earlier on, we have taken all the steps basically to make sure that there's no disruption in the supply chain.

Great. Thank you, Philippe, and thank you, everyone. I will now conclude the meeting. Thank you very much for your time.

Thank you very much.

Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, and welcome to Theon International Plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the management team. Philippe, good morning, sir.

Well, Lily, this is Dimitris. I'm the Group CFO. So I would like to make this introduction. So good morning, and thank you all for joining us. We are delighted to host our second IMC session following Philippe Mennicken, which is our Deputy CEO and Business Development Director, who is with me today. Hosting our first session in early March. We are very pleased with the feedback and viewing numbers from that session, particularly given that we are listed on Euronext Amsterdam and maybe less familiar to some of our U.K. audience. Theon has been highly active since our IPO in February 2024, transforming and scaling the business and a great deal has happened since our first IMC session. We have rapidly evolved to a much expanded and cutting-edge product offering.

Theon has a global footprint and important local fulfillment capabilities, including in the United Kingdom, where we have now a manufacturing facility in Scotland through our partnership with Kopin. Additionally, and before we get into it, I'd like to highlight that Theon is now available on Hargreaves Lansdown with U.K. investors able to trade our shares through this platform. In March, Philippe provided a detailed overview of Theon, a deep dive on our products and the dynamics of the market in which we operate in. That session remains available on the IMC platform for viewing on demand. Today, we will focus more on recent developments and go through our guidance and targets that are supported by a solid investment case.

The essential point about Theon is that we are ambitious and high growth. In 2022, our revenue was around EUR 140 million. In 2025, it was EUR 440 million, and this year, it's expected to exceed EUR 570 million. We fully envisage to achieve our stated ambition of EUR 1 billion revenue by 2029, supported by much diversified revenue streams and expansion into new areas of the market, all while maintaining best-in-class margins. We look forward to the Q&A session at the end of this presentation.

Before we begin, I will just remind attendees that we are currently in a close period ahead of a scheduled Q2 trading update on the 27th of July. So therefore, we cannot comment on Q2 first half numbers and current financial performance. However, I can say that we remain very confident in both our full year 2026 and longer-term guidance, which I will reiterate in detail towards the end of this presentation.

I will now hand over to Philippe for a quick catch-up on the recent developments, and we'll be back with you for the financials. Philippe?

Thank you, Dimitris, and good morning or good afternoon, depending on where you are in the world. Yes, welcome from me to this webcast. So turning to Slide 3. Let me briefly recap who we are. And to begin with, as a short introduction to myself, I'm Philippe Mennicken, the Deputy CEO and Business Development Director. I've been with Theon for more than 15 years. And yes, and of course, we have Dimitris, our Group CFO, who has been with the company, if I'm not mistaken, for more than 8 years, but obviously, he has previous extensive experience at private and listed companies. Moving to Theon. So Theon, we design, develop and manufacture high-tech military electro-optical systems for both man-portable and platform-based use.

Just to explain for those who are not really familiar with us and our products. Man-portable is anything that the soldier carries during the operations, goggles, sights, and platform-based optronics or as we call it nowadays, ISR is anything that is mounted onto a platform. Man-portable still represents the lion's share of our revenues, while platform-based equipment is a small part of our revenue, but obviously with a lot of potential to grow. As I said, in platform-based optronics, we're now shifting basically to the correct term, internationally used term of ISR, which stands for intelligence surveillance and recognition optronics. So you will hear this term ISR more and more instead of the platform-based optronics as well during this presentation.

With over 20 years in the market as a pure-play defense supplier, we have established ourselves as a global leader in man-portable night vision equipment, where we have around 60% -- 50% to 60% of the global market for night vision goggles. And in the past few years, we have dynamically entered the ISR product segment on one hand, but we entered as well the digital age and our man-portable equipment with the Armed product portfolio. More about especially the ISR product segment a little bit later in this presentation. We are a disruptor in the sense also that we are more agile and faster than our larger competitors. So we have fast and efficient execution, the ability to capitalize on opportunities and a quick product to market time due to our extensive in-house R&D capabilities and now also in cooperation with the R&D teams of our newly acquired companies. All of this, of course, we do it in very close cooperation with our customers.

This combination of our R&D team, a global user network and close customer collaboration delivers customized specifications and customized products at speed. And this also contributed to our Star of Innovation Award last November at the European Small and Mid-Cap Awards, which were held as part of the European Commission's SME Assembly. And this award acknowledges organizations that bring pioneering technologies to market, transform operations through advanced methods and demonstrate sustained potential for growth and competitiveness. Now we have delivered more than 280,000 systems across 72 countries, including 26 NATO member states. Historically, over 90% of our revenues have come from night vision equipment, in which, as I said, we are the world leader, and we have sustained high growth alongside market-leading profitability. Now as we will go into more details later, our revenues are set to materially diversify while growing, of course, as we enter new market segments.

Underneath all this is our strong financial foundation with long-term growth visibility and an asset-light model. Having achieved over 50% revenue annual growth over the past 6 years and maintained our market-leading mid-20s margins, we are targeting now minimum 15% annual organic revenue growth over the medium term and a 20% to 30% dividend payout. With our cash generation and asset-light model, we are able to support both investments in the business as well as dividend payouts. If we move to the next slide, a few words about the business model. We apply a proven business model where we control the full process. That is to say design, development, testing, production and assembly. For this, we draw on a pool of high-caliber engineers here in Greece and now globally as well. All of this at a highly competitive cost. So when I mean globally, I mean that we leverage the existence of strong and experienced engineering teams of our acquired companies and investments because we've done as well some minority technology-driven investments in certain companies.

And this allows us to have the complete oversight of engineering and production, producing those high quality, but at the same time, cost-efficient solutions. We are differentiated by customization for every customer as long as there's a desire, of course, and as long as it's possible by the laws of physics, so to speak. We have short delivery times, leading technology and the capacity to support growth with high operational leverage. We are also recognized for our on-time delivery, which in the current environment has become a critical differentiator. And here, I like to refer to what top officials at OCCAR and the German government always say that we are, if not the only one, one of the very, very few companies that do what we say and deliver always on time. And especially European Armed forces now place significant emphasis on suppliers' ability to deliver on schedule because there's no time to waste.

And this makes program execution a key driver of customer trust and building of long-term relationships. And this is reflected at Theon in a consistent conversion of order options into firm contracts where we have never really missed out on any option and the high level of repeat business that we get from our existing customers. We currently have sufficient capacity to meet demand, and we are investing further to accommodate further growth. And this business model is only possible because we are more agile, as I said before, than our larger peers. And this is something that despite our rapid growth, we are very, very determined to keep. Now when talking about global presence, it is really a global platform which we have successfully assembled across 4 dimensions.

So geographic, operational, technological and commercial, and all this in a way to be ready to quickly scale up. As you probably know, our headquarters and main facilities are in Athens, where we employ around 300 people across around 8,000 square meters, and we are currently building our third factory in Athens, actually just behind me outside the workers are raising the third factory up. And we expect this new facility, actually, to come online in the second quarter of 2027, which further obviously increases our production capacity. As I put in our previous session, just as the ancient Greeks established trading outposts outside of Greece, we also establish local presences worldwide wherever it makes sense and especially industrial presences where we want to give something back to our customers, to the economy and to the country that places orders with us. And this can be seen across the map.

In Germany, which is a very important, if not the most important and trusted customer right now for us, we operate a production site as a joint venture with HENSOLDT along the 2 companies of our group, Harder Digital and Kappa Optronics. In Denmark, another example, we operate a repair and maintenance hub, which also do now -- does now assembly work. In Belgium, we have Theon Belgium, which was inaugurated a few months ago in the presence of the Belgian Defense Minister and which focuses on thermal products. In the Middle East, we have co-production capabilities in certain Gulf countries, and we have also a production line deployed in South Korea, extending our industrial footprint across Asia Pacific. And not to forget also ShockEOS in South Africa, which is more on the design side, of course.

Across the group, we now employ close to 1,000 people and is expected to grow with increasing presence and investments, especially in France and in Eastern Europe. In the U.K., we have manufacturing facilities in Scotland through our partnership with Kopin. And we see all these hubs as important for the group and ensure we can leverage local fulfillment as a competitive advantage. Just touching briefly as well on the United States. We need and we are in the process to strengthen our presence in the U.S. as it is and remains an important growth market for us. The U.S. is, and is most likely going to remain the world's largest defense spender, and we want to grow it from a currently moderate revenue stream. You may be aware that the current administration in the U.S. is prioritizing domestically designed and manufacturing products.

Nonetheless, we have in place a contract with the U.S. Marines since 2023, extending at least to 2027. And we are now focusing on strengthening our presence and relevance in the U.S. through a combination of organic and inorganic growth initiatives, also using our new and extended product portfolio. Moving to the next slide. Basically, this slide shows the market opportunities that exists for Theon as a summary. So decades of underinvestment in defense is beginning to be rectified, especially in Europe. With budgets and investments increasing pretty much everywhere. The world, as sad as it may be, is becoming a more dangerous place where all alliances may not be valid anymore in the future. So everybody has to make sure that the country is secured and can be defended. In man-portable optronics, where we are the global leader, driven by our share in the market of night vision goggles, the market is around EUR 1.7 billion, growing at around 10% annually to 2030.

And in the ISR segment -- and I'm sorry, there's a mistake on the slide. It's not inspection surveillance reconnaissance; it's intelligence surveillance and reconnaissance. The market is much, much larger, much larger, approximately at EUR 6 billion and growing at around 7%. Now, obviously, these figures are, as you can see at the bottom of the slide from September 2025, and these have changed in the meantime, most likely going up, especially in light of the recent and ongoing events actually in the Middle East. Our excellence in operations and business development has made us a leader in the man-portable section. Building on that, we intend to replicate this success now from a position of strength also in the ISR segment. We entered this business with an initial focus on land-related applications, armored vehicles, so to speak. But we very quickly identified the rising opportunities in the sea and especially in the air domain.

And we acted accordingly, where with the recent acquisitions and investments as well as certain internal initiatives, we are effectively expanding our total addressable market via our entrance into drones and airborne products. Move to the next slide. I want to give you a brief summary of what has happened since the last IMC update. So while only 4 months have passed since we last spoke to you, there has been significant activities. So -- and looking above the line, we haven't slowed down. We have expanded our footprint. We closed previously announced deals, and we received new orders. For some that might be enough, just do what you have to do, but that's not the case for Theon. Outside of the typical business, we announced 4 strategic investments over the period -- over the 4-month period.

In May, we entered into binding terms to acquire 80% of Merio at an accretive EBIT multiple. It is expected to generate around EUR 15 million in revenues in 2026 with projected EBIT above EUR 3.5 million, and it strengthens Theon's platform product suite, increase our footprint in France and it marks our entrance into the drone market. Also in May, we invested EUR 3 million in Twin Prime, a U.S.-based frontier AI lab with a plan to form a Greek-based joint venture to integrate artificial intelligence across our product portfolio and expand our footprint in the U.S. If we're moving to the next slides, going now to touch on our 2 most recent developments. The first of which was an agreement to establish a joint venture with Safran Electronics & Defense to address the growing demand for ISR products with a focus on airborne applications, so as I say, gimbals, where we want to foster the strength of both companies, that is to say, in short, muscle and agility.

This JV will be based in Germany with Theon holding 51% stake and Safran 49%. The management responsibilities will be shared equally between the 2 partners. And Merio, our recent acquisition, will be integrated into the setup and serve as an accelerator with its existing product portfolio. We are very, very proud of this decision to establish the joint venture with Safran as this partnership represents yet another endorsement by a leading global defense prime of Theon's technological capabilities and our overall strategic and business development approach.

Now the second and so far, our largest investment was the agreement to acquire 100% of HGH for an enterprise value of around EUR 300 million. A few words about HGH. They operate in essence under the same asset-light business model as Theon, so they design, develop, assemble and market their systems. They have actually 3 business lines. They have an industrial product line, which is similar to Kappa, who have as well a small industrial product line. They have as well test equipment for man-portable, for night vision goggles and other such system, which is complementary to our business of man-portable products. And then they have the counter-drones solutions, which is really their key expertise in the key market. Their counter-drone solutions in a few words, is based on a passive optical infrared camera, which basically rotates and constantly scans the sky. The importance here is that it is passive. It's not an active systems like a radar. And as it is passive, it's undetectable basically by the enemy.

This is a key feature of this specific technology. But what makes HGH even more unique is their software expertise and the proprietary data they have accumulated to develop an artificial intelligence model that really allows to detect and categorize flying objects at a very far distance, which if you look at the image with your bare eyes, for example, you don't see anything. But the software, which has been fed with more than 15 years of data is able to detect, recognize and then as well classify what is this, what is coming there, what kind of drone basically is approaching. Now with appropriate adaptations and these models, the AI model and software can be deployed across both our ISR product portfolio, but as well our man-portable product family, and we're working on this. And this is a significant milestone in our strategy to rapidly establish ourselves as a leader in ISR electro-optics, and it complements our growing ISR product portfolio.

This agreement with HGH also reinforces our strategic commitment to France, further expanding our industrial base and strengthening our connection to the French supplier and customer communities. We expect France actually to become an important export hub for Theon as well as an artificial intelligence R&D center, which we're going to build at HGH and where obviously, we're going to build on the existing AI capabilities that HGH possess. From a funding perspective, the acquisition will be initially financed through a bridge facility provided by BNP Paribas, which is intended to be fully refinanced with debt. No equity capital increase is expected. And this will take our leverage position to around 3x at completion, and we expect leverage to come down to around 2.5x by the end of next year. We will continue to update the market, of course, on the progress of this acquisition as we approach expected completion by the end of the year.

Now just a small parenthesis, our M&A playbook because you see that we have been quite active on the acquisition side lately. And our M&A playbook is very clear. We increase and enhance our product offering and access to key technologies. With this, we increase, obviously, the total addressable market, and we expand our global footprint. I may be repeating myself explaining this M&A playbook, but this is crucial and very, very important for you to understand, and that's basically why I like to repeat this. Moving into the next slide, yes. As I hope that you have seen from the previous slides, we are at the forefront of the new wider market being created. Warfare is changing, as we have been saying for some time now. And we, as Theon, we are changing too, and we have to change, and we're adapting ourselves to this new reality. We listen to our customers, and we provide the new products and solutions with cost efficiency and speed so that our customers, which basically are the end users out there, are able to meet their individual new and changed operational requirements.

Our strategy is actually simple. We target investments and partnerships that provide synergies or access to adjacent growth areas, only invest where incumbent management teams are performing and keep them in place and combine capabilities to pursue global business development together. We do not seek to run the business we invest in. We don't have time, but we enable their management to grow alongside us, realizing synergies over time. This, and this is important to understand and to keep in mind, leads to a low integration risk due to our collaborative approach and incumbent teams becoming part of the group. As I said, we do not have time to run the business of our newly acquired companies, but we are combining capabilities and working together on global business development, making us stronger together. This approach, and I'd like to give you a couple of examples, allowed us to capture new opportunities quickly.

We demonstrated this before with Kappa. Only a few months after joining the group, we secured the first order for the products through our business development efforts. The order value that we got for Kappa's products was close to the total 2026 revenue amount we had initially expected to consolidate. And we saw the same pattern with ShockEOS, our South African development -- design development house in which we invested. Within a month of this investment, we accelerated the commercialization of our new PHYLAX stabilized gimbals, ultimately leading to Rheinmetall awarding an initial contract of around EUR 40 million for this product. And this is exactly what we expect to achieve now through our new partnerships with Merio, HGH and of course, Safran. We are working on this as we speak at high speed. And where we target to have a similar success as we've shown in the past with our other partner and acquired companies in the coming months. Needless to say, we are not leaving our core business behind. That is to say, man-portable business, which, as you know, represents the vast majority of our revenues. There is still a very high demand for night vision.

And definitely, the initial focus we had for land ISR opportunities especially the land vehicles besides the drone area in which we are moving into now still stands as well. We will not abandon this for sure. With this, I hope I was able to give you a brief update on what we have been doing recently. As you can see, we've been quite busy.

And with this, I'd like to pass over to Dimitris for a quick catch-up on the financials before we then jump into the question-and-answer sessions a little bit later. Dimitris, the floor is yours.

Thank you, Philippe. So yes, now if we move to the financial slides. So 2025 was a transformative year for Theon, another record year, both financially and commercially leading to a materially enhanced platform. Revenue reached EUR 443 million, growing 26% year-on-year, while maintaining a market-leading margin with our adjusted EBIT of 26.2% continuing to expand. Importantly, our net profit increased significantly, enabling us to continue distributing dividends. While the dividend per share may appear lower due to the increased number of shares following our capital increase back in November, the total dividend distribution was, in fact, increased, rising from EUR 23.8 million to EUR 24.4 million. We achieved a record order intake of EUR 1.3 billion, up 182%, supported by the largest single order ever placed for night vision man-portable equipment. This is the OCCAR project coming from Germany. Our soft backlog stood at EUR 1.4 billion at the year-end, providing revenue visibility for the first time beyond the typical 18-month horizon, and we saw net working capital absorption decline to 41%, a substantial step towards our medium-term target of 35%.

In December, we raised EUR 150 million through our -- through a share capital increase, refinanced our borrowings at improved terms and signed a EUR 300 million revolving credit facility in October, maintaining the flexibility to fund future organic growth and inorganic growth. One thing to note is that we are fully utilizing our strong balance sheet and listing to pursue our ambitions and the considerable growth opportunity opening to us. You will see our leverage temporarily increase as we do certain M&A, but we have clear deleveraging plan supported by our cash flow generation and operational gearing. Our normalized leverage target is in the area of 2 to 2.5x EBITDA.

Moving to the next slide. So in 2026, we continue to maintain strong momentum with robust Q1 results and resilient margins, confirming our consistent execution of our growth strategy. Revenues reached EUR 120.1 million, representing 32% growth year-on-year, while we continue to deliver industry-leading profitability with an EBIT margin of 25% -- this margin performance remains resilient despite ongoing investments to scale capacity and strengthen innovation with investments such as Kappa. At the same time, we have transitioned into a net debt position, standing at approximately 1.8x LTM EBITDA in the -- at the end of Q1, thus reflecting our strategic investments while maintaining a balanced capital structure.

If we move to the next slide, please. Yes. So as stated during the introductory remarks, we are confident in our growth trajectory and continue to expect to achieve EUR 1 billion in revenue by 2029. We are focused on operational gearing and strong profitability, benefiting from an asset-light business model, allowing us to both invest in our business while also providing shareholders with dividends. For 2026, we expect revenue of EUR 570 million to EUR 600 million, an increase of approximately 30% on 2025, continued market-leading mid-20s EBIT margins, capital expenditure of EUR 30 million, around 4% of our revenue. This is to support our continued growth, obviously, and a dividend in the range of 20% to 30% of our net income.

For the midterm, we expect sustainable double-digit organic growth to continue higher than the market growth rate, supported by our new product pipeline into an expansion into higher growth segments and increased total addressable market of around EUR 8 billion, which is 2x larger than a year ago. Our order book and backlog is increasingly characterized by longer-term framework agreements and program-related orders, significantly increasing revenue visibility and quality and repeatable demand. Our diversification strategy remains the same, continue being a global leader in night vision with continuously growing revenue, but equally, platform revenue begins contributing substantially in 2026 with the aim to reach around 20% of the total mix.

Bolt-on acquisitions will accelerate this diversification. In parallel, revenue from digital man-portable capabilities is targeted to grow to around 30%. So non-night vision products are targeted to account for approximately 50% of revenue in the midterm. In 2026, specifically, the combined contribution from new digital products and platform electronics is expected to more than double to between 20% and 25% of our revenue. Overall, our financial trajectory continues to evolve as expected. We remain firmly positioned for growth and look to the future with confidence.

And with that, I'll hand back to you, Philippe.

Thank you, Dimitris. So yes, before we head to question and answers, let me just summarize where we are heading. We have a very strong momentum through compelling combination of much expanded product portfolio and thus total addressable market, strong global market dynamics and penetration opportunities and a high backlog and revenue visibility. We have successfully assembled a global platform geographically, operationally, technologally -- technologically and commercially, which is ready to scale. Commercial traction is building across all newer product areas with multiple commercial and financial proof points to come through from the near term. We expect sustainable double-digit organic revenue growth to continue, supplemented by further strategic M&A, and we are highly confident in our guidance. We are firmly focused on rapidly growing from being the leader in night vision equipment to becoming the leader in defense optoelectronics, including reaching EUR 1 billion revenues by 2029, as already said by Dimitris. And we expect or you can expect basically multiple commercial and financial proof points to come through over the near term, sorry.

With this, I think we can open the floor to questions as they are.

[Operator Instructions] As you can see, we have received a number of questions throughout today's presentation. And if I may just start off with the first question here, which reads as follows. Can you elaborate on the current tender pipeline and business development opportunities for H2? Do you expect any deceleration due to budget constraints or shifts in spending priorities towards other product categories?

Yes. I mean as you know, and historically, obviously, H2 is always an acceleration in terms of defense budget spending and order work and contracting. So yes, there are a number of opportunities and as well as some large opportunities that we are working on and that we expect to close during H2. There is obviously a lot of attention being drawn to drone and anti-drone equipment, and that's one of the reasons why we are moving into this area as well. But it's not like drones will be only the future warfare.

It's soldiers are still here to stay and traditional equipment is still here to stay. And thus, our man-portable and platform-based equipment is still here to stay because to defend the position or to take a position, despite what anybody says, you still need soldiers. So this is not to go, and we can see attention to other equipment, but the budgets and the needs and the demand for our traditional business is there, and there is more to come.

Perfect. Just turning to the next question. Was the acquisition of HGH a competitive process? Are you comfortable with what you are paying?

Yes, it was a competitive process that I can confirm. And yes, we are comfortable with what we paid. Don't forget that we believe that HGH have a unique product, unique technology, have a unique software, the artificial intelligence enhanced software that I mentioned earlier on. And all of this obviously comes at a price. And we are clearly focused on increasing HGH business over the next year or 2 and bringing -- then justifying even more the investment that we made.

That's great. The next question we have here reads, what should we expect on the M&A from the next 6 to 12 months considering your recent activity and the new leverage position? Are there any priorities now in terms of products, technologies or geographies?

I mean, obviously, I cannot go into details or tell you anything specific. But yes, we are constantly looking at opportunities, and we are pursuing and we are analyzing these different technologies, different geographical areas. The U.S., and I mentioned it, is one area that we're looking into. But when -- what and how big any further M&A activities will come, I cannot say anything more about this.

Yes. If I may add here, we need to pause for a few months because, obviously, we need to start giving emphasis on the integration of the companies that we have acquired or that we are about to acquire Obviously, we are looking into many opportunities around the world, mostly in the U.S., which is an area where we want to penetrate even further. We don't have any plans for the time being, let's say, for the next 6 to 12 months for any acquisitions. And even if we do so, then it will be something that is going to be -- it should be very meaningful for us for our business, for R&D and for penetration to new territories. But at least for the time being, we don't have anything on our menu.

Just a couple of questions here. What is the total volume of the market you now produce systems for? What is your market share on visual systems you now produce? And what volume will be the market for which you then produce systems? And what part of it do you project to be Theon's?

Okay. I'm not really sure I fully understand the question, but I will try to answer as good as I can. So if we're talking about the traditional vision system, night vision systems that we have, we are the global market leader. We have around 50% to 60% of the global market. When it comes to platform-based optronics, visual systems there, obviously, we are much, much smaller in terms of market share, but the market share is growing. This is a business. It's a little bit more longer term or longer delivery times or lead times than on the man-portable business, which has shorter cycles.

But as I said before, we're not going to abandon any of this traditional business, even though we're moving now into the -- especially into the drone segment, which as a total addressable market appears to be a very, very large too. And for sure, it's going to grow at high growth rates, but we're not going to abandon the traditional market where we want to at least maintain in the night vision segment our market and global market-leading position, if not increase this. And obviously, we want to increase our presence on anything that's land related besides the naval and the air applications.

That's great. The next question we have here reads: Many NATO countries are creating dedicated drone commands and expanding UAV fleets. Belgium, for example, recently appointed a dedicated drone commander as it restructures around unmanned systems. How much of the demand pipeline that you see for Merio and HGH coming from such opportunities?

As I said, there are very, very big opportunities in this field. Merio and Safran is all about drone optronics. And what we really intend to do here is to become the European champion for airborne gimbals, airborne optronics from very, very small gimbals to the larger type of gimbals. Europe, as you know, has a clear focus on procuring European equipment. And at the moment, we identify that there is a gap. There is a place to establish such a champion, and we believe that we have the right ingredients to take this place and to grab a big share of this market in Europe, but obviously, not only in Europe, we're looking as well at worldwide opportunities.

And then HGH, it's all about counter-drones -- when you're talking about drones, you're talking about counter-drones. It's the cat and mouse game. And HGH, as I said, has a unique technology. It is passive. It cannot be detected by the enemy. It provides obviously this specific advantage, and it has this AI-supported software that we believe gives us a big advantage compared to similar systems that exist in the market, which, as I said, don't have the performance, are not as much developed and especially don't have the software that the HGH system comes with.

That's great. Just turning to the next question. Koropi plant to be operational in Q2 '27, what will the impact on Theon's production capacity as a percent increase in this facility going to produce only ISR products?

Dimitris?

Well, we cannot -- let's say, we are going to anticipate that the Koropi expansion will bring us to a level to accommodate our ambitions to reach EUR 1 billion by 2029 as we have already guided. Now as far as it is planned, this facility is indeed being manufactured to serve the production of ISR products, but also it's going to accommodate other functions of the company.

That's great. Just moving on here. With the continued fast M&A and JV speed, how can you ensure or manage the key strengths you claim across all different products, countries and entities? The original culture weakness or cultures will continue to diverge.

Yes, that's a good question. As I said, we are determined to keep what we call Theon DNA, which is all about, number one, business development. It's about speed, it's about agility. And what we try to do is to infuse this DNA into the management teams and our new coworkers and our new companies that we acquire. Obviously, we're dealing with different nations, different cultures, German nationalities, French, South Africans and so on. And every nation has their own culture and their own differences and philosophies of approaching things and working.

But I can tell you that so far, our experience with Kappa, with Harder, with ShockEOS, but only recently with Merio and with HGH to a certain extent is that they all welcome this fresh air, this fresh wind coming from Theon with our approach, not setting up complicated structures, complicated decision-making processes, being efficient, being fast, go for it and focus on getting the business, focus on business development, using the advantage that we have. And we can see that there is -- this is welcomed. Obviously, we have to find the right mix. We have to get our new employees convinced that this is the right approach. It's not going to happen overnight, but we are determined, as I said, to keep it that way. And from what I see so far, I'm very, very confident that we will be able to do so.

That's great. Just turning to the next question. Any recent progress on your application in France to get a BoD seats at Exosens? When do you expect this process to be finalized? And please, can you confirm that once you have a Board of Directors seat, Exosens stake will no more be treated as a financial investment, but will be consolidated as per equity pickup methodology?

If I may, what I can say is that we have already started the process for the -- all the respective applications to various authorities around the world. This is a process that will take some time. It's hard to say when it's going to be finalized. We were hoping that it would finalize by the end of the year. To be more realistic, I would say, Q1 next year. Now to your question, if the -- if we can confirm that the treatment -- the IFRS treatment is going to change, I can confirm that this is our intention. However, this is also going to depend on the auditor's approval. So there's going to be an extensive discussion around it with them.

Perfect. Just moving on. Can you help us separate recent NVG demand into 3 buckets: direct procurement by Ukraine, European governments buying equipment to donate to Ukraine and countries buying for their own forces as part of higher self-use penetration and readiness?

In terms of percentages, it's difficult to answer, but definitely, countries buying for their own forces is the biggest part, especially in Europe. European Armed Forces have done a lot in over the past few years, not all countries, but obviously, the countries that are, let's say, the closest to the threat have been the most active and in particular, Germany, basically realizing the underinvestment for decades basically. Germany, for example, they -- we signed this contract for 100,000 night vision goggles in December. And I think the total number on the contract through the OCCAR vehicle is around 160,000 to 170,000 goggles. But if you look at the growth of the German Armed Forces, the predicted growth over the coming years and the announcement by German defense officials that every soldier needs to be fully equipped.

And in theory, what remains to be seen as well the reserves, you're looking at a lot more to come. And this is just as an example. It's a similar picture in many European countries. And therefore, this is definitely the biggest share. The Ukraine is buying night vision equipment directly, but I would say it's rather small quantities. And European countries or other countries donating night vision equipment, it's definitely bigger than what Ukraine is procuring directly themselves. But in the bigger picture compared to what countries are buying for their own defense needs in Europe, especially, but not only Europe, Middle East, Asia and the U.S., this is definitely the largest part.

That's great. And just perhaps the last question we've got here reads, as NVGs order sizes increase, how should we think about the balance between customer volume discounts and Theon's own scale benefits? In large framework contracts, do customers get benefits from lower unit pricing? And can Theon offset that through better IIT procurement terms, non-IIT supplier discounts, assembly efficiencies and fixed cost absorption?

Yes. I mean, obviously, the larger contract is -- we are able to grant better pricing because of the economies of scales, and this applies to everything that's been mentioned, just on the supply chain, all other components on the image intensifier tubes as well, but as well that we are able to introduce more efficient assembly procedures basically due to the sheer volume that goes through the factory. But one important thing to remember here is as well that the demand, especially on our traditional best-selling business, the night vision is still very, very big, and there is still a shortage of image intensifier tubes. So it's -- to a certain extent, prices are determined by what is available and what can be delivered.

As you know, we have signed a long-term supply agreement with our good partner, Exosens, through which we have secured a very, very large amount of tubes. We have our own tube manufacturer, Harder Digital, which -- it's smaller than obviously in production capacity than Exosens or the U.S. tube manufacturers, but it's still there as a strategic reserves, if you may call it that way. But still, the demand is very, very big. And in many cases, if a customer wants equipment with fast deliveries, we have to juggle our production capacity and slots and so on to serve this. And obviously, this comes at a premium. So -- and this applies even for larger contracts because it's not like there's a shortage in the next few months. It's a shortage for the next 2, 3 years, maybe even further depending on how the markets will go.

That's great. Thank you for answering all those questions you can, from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which you know is particularly important to the company, Philippe, could I please just ask you for a few closing comments?

Yes. First of all, thank you to all of you joining today's webcast. I hope it has been interesting for the newcomers, but as well for those who know us and follow us for quite some time. As you could see, we have been quite busy over the past few months since the last webcast, especially on the M&A front. Following our vision really to become the leader in defense optoelectronics from being today's leader in night vision equipment. As I like to say it, today, you really see a new Theon. It's not the Theon that you used to know, but it's a Theon with a much, much broader product portfolio where we go into new areas, we don't abandon our traditional business, the man-portable night vision.

We focus as well, and this is something that we haven't spoken much about it today, but this is still an important pillar for us, the Armed ecosystem, which is the digital new era of man-portable equipment. We're still focused on the land segment in platform optronics, ISR. And now we are strongly moving into drone and counter-drone business. Doing all this, as I said before, we will -- we are determined not to drop our speed, our agility and our BD approach, trying to infuse this approach to the newly acquired companies and to our new colleagues. And whatever we do, trust us, we have a master plan in our heads. So stay tuned over the coming months for more news to come. Especially on the order intake as things pick up towards the end of the year. Thank you very much.

That's great. Thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Good morning, and welcome to Theon International Fiscal Year 2025 Earnings Call. I am Frans, and I'll be the operator assisting you today. [Operator Instructions]

I would now like to turn the call over to Nikos Malesiotis, Head of Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to Theon's Full Year 2025 Results Conference Call. Thank you for joining us today. I'm Nikos Malesiotis, Head of Investor Relations at Theon. Today, we will review the highlights of 2025 with Christian Hadjiminas, our Founder and CEO; followed by Philippe Mennicken, our Business Development Director and Deputy CEO, who will provide an update on the defense market and an overall business update. Following that, Dimitris Parthenis, our CFO, will present the financial performance. Christian will subsequently return to address our guidance and future outlook. Following the presentation, we'll open the floor to your questions.

At this point, I would like to invite Christian to take the floor.

Thank you, Nikos. Good afternoon, everyone, and thank you for joining this call. We are once again happy to present a great set of results following a transformative year for Theon. We've continued, as you know, already to deliver even over deliver on our promises, building a strong track record and earning the trust of market participants. Let me begin by acknowledging the commitment and hard work of my colleagues, at production, R&D, business development and administration without who none of this would be possible. I will now provide an overview of Theon's results in 2025 as well as the strategic milestones achieved last year before handing you over to Philippe.

Let's begin. 2025 has been a transformative year for Theon, significantly strengthening our strategic platform across our financial, operational and corporate dimensions. Starting with the financial highlights. Order intake reached a record high of EUR 1.3 billion, supported by the largest ever order for NVGs. Our solid commercial performance allowed us to exceed our targets. I recall promising exactly a year ago that our book-to-bill ratio would be above 2x and we surpassed market expectations. I will return to our projections for the future at the end of this presentation.

Looking at revenue, we delivered growth of 26%, increasing from EUR 352.4 million in 2024 and to EUR 443.4 million in 2025, reflecting both strong demand across our markets and our ability to execute effectively at scale. This 26% growth follows 61% growth last year and an almost 50% annual growth since 2019, showing just how much we've expanded our platform over the past few years. This top line expansion was delivered without suppressing our profitability. On the contrary, adjusted EBIT rose by 28% from EUR 90.8 million to EUR 116.1 million, with our adjusted EBIT margin expanding by 40 basis points to 26.2%, demonstrating cost management alongside profitable growth.

From an operational and strategic perspective, 2025 was marked by a sequence of strategic investments, acquisitions and partnerships that further enhanced our long-term positioning and many of which we expect to contribute meaningfully to our 2026 performance. I will revert to this point at the end of this presentation. In addition to that, we also extended our long-term commercial agreement with EXOSENS, reinforcing a key strategic relationship within our supply chain and technology ecosystem. On the corporate side, we successfully completed a EUR 150 million rights issue. Support from investors through this process was overwhelmingly positive and highlighted the continued support in the market for Theon.

Lastly, we are very aware that while we've delivered so much in our short time as a listed company, investing in our people, capabilities and the expansion of our global footprint will continue to drive us forward, and we have continued to do so across 2025. Overall, 2025 reflects not only strong financial delivery but also transformative strategic progress as we build a larger, more resilient and globally competitive platform. 2026 will be an equally transformative year as I will explain later on.

I will now pass you to Philippe.

Thanks, Christian, and good afternoon to everyone. I'll provide you a brief market and business update before providing an update on our platforms business and the progress on our THEON Next initiative.

Turning to the broad defense market environment. Ongoing global turbulences continue to drive increases in defense spending worldwide. In Europe, decades of underinvestment are now reversing. The Russia-Ukraine conflict continues to reshape defense policy and rearmament cycles continue to accelerate mainly in Northern and Eastern Europe. But we also expect Southern European countries to follow and step up spending in line with their financial capabilities.

At the same time, the EU's broader ambition to strengthen its role in the global defense landscape is becoming more visible. Uncertainty surrounding the future of U.S. commitments to NATO adds another layer of strategic pressure across Europe for Alliance members, further encouraging nations in Europe as a whole to strengthen independent defense capabilities also through major support programs such as the SAFE initiative. A similar trend is evident in other regions like the Middle East and the Asia Pacific area, where ongoing regional tensions as well as uncertainties on U.S. commitments are driving procurement decisions and increases in budgets and investments. Countries like Japan, South Korea, Taiwan and Australia are redefining their security postures and increasing investment in advanced soldier level equipment.

While recent ceasefire developments in current regional conflicts may provide temporary relief, underlying geopolitical risks remain significant. And the security environment continues to require strong defense preparedness across regions. Overall, these geopolitical dynamics continue to support a strong structural growth environment for the defense sector. On our platforms business, this slide highlights an important growth potential for this segment over the coming financial years.

Starting with today. Our recently announced cooperation with Rheinmetall marks a significant strategic milestone with our PHYLAX stabilized multi-sensor system being integrated into Rheinmetall's compact lightweight turret solutions. The trust received by one of Europe's largest defense contractors to develop and deliver the system is proof of our technical and industrial capabilities in platform of optronics. This is the first of what we expect to be many steps towards establishing Theon as a competitive player in this much larger market segment, while also providing, as I said before, overall conviction in our technical and industrial capabilities.

Looking ahead, we are focusing on the design of new products by combining capabilities with ShockEOS with developments expected later this year, while at the same time, we are working on opportunities for our TALOS and TRITON product series particularly in retrofit programs for all the vehicles where demand remains significant. By the end of this year, we also expect top line synergies through Kappa Optronics to begin contributing meaningfully to our growth.

In parallel, progress on the construction of our new facility in Koropi, Athens will bring an increase in both production capability and capacity, helping us to meet expected increase in demand effectively. Overall, with these first orders, we are on track and actually ahead in our growth path for platform of Optronics with revenue contributions from these products expected to significantly increase in 2027 when serial deliveries will commence, underlining the strategic importance of this business line in Theon's future growth.

Now on to Theon Next. This initiative represents our road map for the next generation of soldier systems. We have already begun to integrate technology blocks gained through our recent strategic partnerships with ALEREON and Varjo. Moreover, our joint efforts with Kopin, another one of our recent investments already producing fruits and has enabled us to present the dark eye concept, which is an innovative way to achieve image fusion and color display augmented to read the information in a modular way to the soldier. The dark eye demonstrated was recently presented to selected customers and we will continue to demonstrate it over the coming months to end users, mainly in Europe, but also in other regions of the world with a drive to develop this system further towards product readiness.

Work on the overall ARMED NEXT product family has also made progress, and we expect to show additional system demonstrators during the summer this year gathering feedback from our valued customers with the target to have concrete prototypes ready towards the end of the year. In support of this initiative, we are also engaged in ongoing discussions with major European primes, to join efforts into a much larger approach of our ARMED NEXT initiative as the future soldier vision system. These partnerships could play a key role in accelerating development, strengthening market adoption and expanding long-term commercial opportunities. Overall, THEON Next reflects our commitment to leading future soldier modernization through innovation, collaboration and next-generation product development.

In 2025, we delivered EUR 443 million of revenue, with the mix still heavily weighted towards night vision at around 93%, and non-night vision or digital, as we call it at around 7% due to the continuous strong demand for our night vision equipment. Over the medium term, our target is to exceed EUR 1 billion in revenues with a materially more diversified mix, effectively a targeted 50-50 split by scaling our digital and platform-based contributions alongside continued growth in traditional night vision. We expect platform revenue to start contributing in financial year '26 and more in '27 and to scale towards 20% of group revenue over time and digital man-portable supported by new capabilities infused imaging and smart targeting to grow towards 30% contribution.

Importantly, this is not a replaced story. It's an add-on story. We remain committed to being the global leader in night vision with continued growth, while digitalization helps us further diversify and expand. And finally, we see bolt-on acquisitions as an accelerator to our organic diversification, allowing us to move faster where it makes strategic sense, be it verticalization or new technologies and revenue sources. This deliberate shift to a more balanced portfolio is designed to improve resilience and expand our addressable market with platforms and digital acting as the next growth catalyst for our group.

With that update, I'll pass you on to Dimitris.

Thank you, Philippe. 2025 has been another transformative year for Theon, delivering a meaningful step change in both scale and earnings quality. We achieved a record high order intake of EUR 1.3 billion, an increase of 182% driven by strong market demand and the landmark contract in night-vision man-portable equipment. Our forward visibility has strengthened significantly, supported by a soft backlog that extends well beyond the traditional 18-month horizon. Revenue increased to EUR 443 million, up 25.8%, while adjusted EBIT reached EUR 116 million, maintaining industry-leading margins at 26.2%. This performance not only exceeded expectations, but also reinforces our ability to scale growth while preserving profitability.

Importantly, this progress goes beyond top line expansion. The quality of our earnings has materially improved, supported by stronger operational discipline and a healthier financial structure. Working capital dynamics have also improved, marking a substantial step towards normalization set to reach at around 35% within the medium term. Our balance sheet remains strong, supported by good cash flow generation, share capital increase and a EUR 300 million revolving credit facility that was secured in the second half of the year. Overall, we closed this transformative year with an enhanced performance, greater revenue visibility and improved financial quality, thus positioning Theon for sustained long-term growth.

Moving on now with order intake reaching a record of EUR 1.3 billion and revenue totaling EUR 443 million, we achieved a book-to-bill ratio of 3x. This highlights sustained customer demand while providing strong visibility for future growth. Europe continues to represent our largest market at approximately 75%. However, through diversification, this has come down from 82% of revenue last year. This segment is complemented by growing contributions from the Americas and the rest of the world with diversification strengthening both resilience and market opportunity across regions.

Importantly, our success is not only measured by winning contracts. It is equally reflected in our ability to deliver on time, at scale and with operational reliability. This is obviously essential in defense market where execution is as critical as innovation. The above supplemented with our customization abilities and growing footprint for local fulfillment, secure Theon's current and future positioning.

One of the most important developments in 2025 was the significant expansion of our soft backlog, materially strengthening forward revenue visibility. Our soft backlog, which is the aggregate of signed and secured orders stands at EUR 1.4 billion. On top of this, we hold options worth EUR 856 million, bringing total soft backlog and options to approximately EUR 2.3 billion. It is important to highlight once again that Theon has never missed an option in the past. The backlog profile is long-dated in nature, only 26% is expected to convert in 2026, while the remaining 74% expense across 2027 and beyond. We anticipate new orders that will close the gap between backlog and 2026 revenue targets, a process already showing results. This provides Theon with long-term planning visibility providing greater support for sustainable, predictable growth over the coming years.

Theon's profitability continued to strengthen in 2025. Adjusted EBITDA increased by 29% to EUR 120 million, while adjusted EBIT grew 28% to EUR 116 million. This high conversion is driven by Theon's asset-light business model. Margin performance remained strong and increased by 60 and 40 basis points, respectively, compared with 2024. This was driven by disciplined cost management, operational level up's from higher production volumes and a stronger-than-expected contribution from Harder Digital. At the bottom line, net income grew to EUR 81.2 million, representing a 20% increase versus 2024 and another year of record profits for the group. This highlights that Theon is not only delivering growth but also demonstrating scalability, operational efficiency and sustainable profitability.

Our capital investments in 2025 were strategically directed toward areas that support long-term growth and competitive advantage. Capital expenditure increased to EUR 18.7 million, primarily allocated to designing new products, expanding capacity at Harder Digital and establishing new facilities across key geographies, including Denmark, South Korea and Belgium. These investments strengthen both production capabilities and global operational reach. Research and development remained another major priority focused on innovative new products that diversify our portfolio and reinforce our technological leadership. This effort has been supported by highly skilled recruitment as well as selective outsourcing to specialized R&D partners.

Overall, with CapEx and R&D investment growing Theon is actively investing in both capacity expansion and next-generation product development to stay ahead of future market demand. As we have communicated previously, one of our goals is to reduce net working capital, and in 2025, we made significant progress on this, reducing net working capital absorption to 41%, closer to our 35% medium-term target. At the same time, we maintained strong cash conversion at 84.5% and delivered a substantial increase in operating cash flow from negative in 2024 to EUR 45.5 million in 2025, reflecting tighter control over working capital across the business.

This improved efficiency demonstrates stronger operational discipline, supported by enhanced inventory management and better balance across receivables, payables and stock levels. As a result, 2025 marks a meaningful step change in cash generation, strengthening both our capacity to fund future growth and the resilience of our balance sheet. We closed 2025 with a strong and flexible balance sheet, providing the financial capacity to support our next phase of growth. Operating cash flow of EUR 45.5 million, together with net rights issue proceeds of EUR 147.7 million enabled us to fund strategic investments, dividend payments and selective M&A activity, including Exosens and Kappa Optronics. The Exosens and Kappa outflows occurred post period-end, bringing our pro forma leverage ratio to 1.8x EBITDA, remaining well within our targeted range.

Overall, 2025 has been a truly transformative year, delivering a materially stronger strategic platform for future growth. The strengthening of our capital structure has enhanced our ability to scale operations, pursue strategic opportunities and expand our global footprint.

I'll now pass back over to Christian, who will finish with some closing remarks before we move to Q&A.

Thank you, Dimitris. I hope it's clear the progress we have made this year, that is in 2025. Internally, we are extremely proud, but I know the work doesn't stop here. As I told you, we expect 2026 to be a transformative year as well for Theon as I will touch upon a little bit later. I can once again reiterate confidence in Theon's strong growth trajectory with our overall aim of achieving EUR 1 billion in revenue by 2029 instead of 2030 initially announced remaining strong. Our guidance remains unchanged from previously announced and in line with our conservative guidance always, with revenue expected to be within the range of EUR 570 million to EUR 600 million next year, that is this year in 2026, while maintaining our leading margins and increasing capital expenditure to EUR 30 million.

We today proposed full year dividend of EUR 0.31 per share. While that is a small decrease per share from last year because of the higher number of shares, it is at the upper end of our guided 20% to 30% payout range and an increase on the total amount distributed. We believe this is a balanced dividend payout approach that continues to reward shareholders while preserving flexibility for strategic investments. Overall, this guidance reflects confidence in both our operational momentum for 2026 and our medium-term ambition to continue building Theon into a larger, more diversified global defense technology leader.

So to summarize and add some comments about our future. We entered 2026 with strong momentum, supported by structural growth trends, historically high backlog and an expanded product portfolio. Our ambition is clear: to grow from being a leader in night vision to becoming a leader across the defense optoelectronic sector over the medium term. We plan to achieve this through continued diversification of our product portfolio, expansion to new markets, maintaining a book-to-bill ratio above 1x, to strengthen backlog visibility and pursuing promising M&A opportunities. All of these initiatives are designed with one clear objective in mind, driving sustainable growth while increasing total shareholder returns.

Overall, Theon exits the transformative 2025 from a position of strength with enhanced capabilities, greater visibility and a clear strategic path forward, and we are excited for what we're going to deliver in 2026 and beyond. Here, I need to address several quite legitimate and very reasonable skepticism from many investors during at IPO and post-IPO in the period 2024 to 2025. This skepticism in some fronts we have all addressed last year and more to come as we speak, in some cases. First of all, low liquidity float which was 20% initially and has increased to 30%.

Profitability, a lot of investors have asked whether we can sustain this profitability, this high profitability. And instead, we managed to even increase it. Then there was a skepticism about our experience in M&A. What we can tell you today, we have a superb M&A team in place working in several transactions at the same time. As you recall, back in August of 2025 in line with the timetable of 18 months, we have announced a lot of transactions, investments and acquisitions altogether. Here, I would like to reassure the market that whenever you do not hear news from Theon, it's because we prefer to announce holistically. Therefore, we expect the market can expect that Theon will announce the next set of his initiatives shortly. Let me also speak about Kappa and Harder, are all coming in Theon's family and grow faster than anticipated growth for 2026. And here, I must state that regarding Harder Digital, it is expanding very quickly from its very low scale when we took over, and we have positioned the company to easily double and triple its capacity within 18 months, if, of course, necessary.

The other skepticism we have received is about our ability to integrate all those businesses. I would like to state the following: our model at Theon and it seems to work very, very well. It's a decentralized management process that works. Integration cannot kill entrepreneurship and agility. Same applies on new M&A that we're looking at. First, we see the domain and whether it's of interest to us and whether they are accretive, but the second step is very important also. There, we see the management and we proceed or not proceed if we feel comfortable with the current management in such a manner that there is no need, if possible, to replace even one person. This we have already achieved with Kappa and Harder providing very strong incentives to management to continue their growth within an agile environment.

I will also now have to state about our investment in Exosens. We have received a lot of criticism and again, in many cases, legitimate. The first criticism was initially about the capital loss that we experienced given that we pay the premium. This premium today is at discount, and we have more than EUR 50 million of capital gains in a liquid investment that we can take advantage any time if necessary. I would like also to add here that as per studies by one of the top investment banks in the world, this asset of ours that is the almost 10% of Exosens shares is not reflected yet in our share price.

The other skepticism we have received is that about the fact that we did not obtain a board seat. I've already explained that during Capital Markets Day that we couldn't do this because it will require regulatory approval. I also stated during Capital Markets Day that we are applying for a board seat. Today, I can confirm to you that this process has started. And we're also applying for the ability to buy more if and when necessary. We wish to stress here that we remain the top strategic investor of Exosens while now the top investor is at around 17%, reducing their equity gap between them and us as the second top investor where we are to close to 10%.

Last but not least, another topic, again, within the frame of legitimate and reasonable skepticism and questions by the investors about the future and the digital future. I would like to stress here that Theon is not a video game company that presents prototypes that are only for demonstration purposes. I can tell you, we will be able to present an IVA solution with substance that a soldier can practically use while risking their lives. This solution will be presented the very latest in the first quarter of 2027, but very likely earlier. Furthermore, this year, our focus is not only to bring more orders in-house but also to continue and bring our conversion of options to hard backlog much earlier than we anticipated. We have not yet missed 1 option as Dimitris Parthenis, our CFO, stated.

With all this, I would like to thank you for paying attention to this presentation. And I would like to assure you that 2026 once again will be another transformative year for Theon. Thank you very much.

Thank you, Christian. We have received a series of questions. So we can start with this one probably for Philippe. Does Theon have any plans to diversify sales and produce sensors and products for not only the defense sector but also for the retail and corporates outside the defense sectors?

At the moment, we do not have any such plans. We focus on the defense sector. But of course, if there is any opportunity to do so, we obviously would look at this. But at the moment, there is no such intention.

Thank you. And a series of questions from Atinc Ozkan. Can you elaborate further on near-term deal pipeline for each segment, starting with new platform optronics and the same applies for night vision Googles and portable digital thermal ARMED family segment.

Yes, of course. I mean, obviously, I cannot go into too many details here, but starting with platform optronics besides the PHYLAX that we presented, that was announced recently, we're working on some other systems, again, with big partners this platform optronics. When we come in to Kappa, which is well platform optronics. We have some very interesting leads and I think very soon, we're going to have some nice news to announce. I see as well that as part of this question, there was a question concerning the tanker aircraft of Kappa cameras, just that you understand every Airbus tanker aircraft is automatically equipped with Kappa camera because it said it's qualified on the aircraft.

If we now go over to fire control systems, we're expecting as well. We are chasing some very specific leads there. The traditional product range, of course, night vision googles backed as well night division sites, there are some concrete leads that we are chasing. On the ARMED ecosystem, besides obviously options that we are following on the existing contracts that we have we are expecting as well as some additional orders. And we are at the moment in the process to expand the components of the ecosystem with additional accessories or components or whatever you may call it, that supports really the augmented reality, capability, functionality of the ARMED ecosystem.

Thank you, Philippe. The next one is about deliveries in [ Bundeswehr ] with regards to the IdZ program. When should we expect them to begin on orders in 2026 in this program?

I mean deliveries have actually started or about to start, I think, this month or next month. And then with the additional options, yes, of course. This is public knowledge that last week, the German Parliament approved the next tranche of IdZ, which very soon will be then converted into a contract with Rheinmetall, and I can confirm that we are part of this extension of the IdZ contract.

I think the next one has been already answered. I mean, where do you see Theon's book-to-bill ratio in 2026 and beyond?

I mean we see this well above 1, as explained in the presentation. So well above 1.

Okay? And with regards to order intake expectations for 2026, do you anticipate more countries to enter long-term supply agreements for night vision equipment? Which regions do you see providing the most potential?

Yes, of course, there are several countries that we expect to enter long-term agreements this year. Also using the mechanism of SAFE, which is the support mechanism by the European Union for joint procurement. And for example, the OCCAR contract is a perfect vehicle for this because it is in the end of the day, a joint procurement. So long-term agreement, yes, mainly in Europe, but not only as well in other parts of the world, whether it's the Middle East or even the Asian Pacific area.

Yes. I would like to add here, this is Christian. I would like to add that the SAFE mechanism does not include only European Union, but it includes some top, top countries like Canada and the U.K., which are gradually moving in, I would say, Norway as well. And this -- the mechanism of SAFE as well as OCCAR is in place and we expect quite a few orders through this mechanism this year. But as I said, one of the most important things in our assets is credibility. So therefore, we tend -- it's very tempting to increase our guidance, very tempting, and we would still feel comfortable, but we want to be conservative and always surprise well positively the market.

The next one also coming from Lasse Stueben from Berenberg. Do you expect night vision revenues to exceed EUR 0.5 billion in the years prior to 2030. Given your targeted 50-50 split between core night vision and digital platform products within the Euro with a EUR 1 billion target or should we see EUR 0.5 billion as the cap given the capacity constraints into production?

Let me answer this one as well. No, we -- yes, we expect it to exceed because there are many big countries, especially in the Far East, which are entering the market. We don't see any problem with the capacity because we have made provisions. First of all, as you know, Exosens has increased their capacity. And in line with that, we have also increased the capacity in Harder Digital. And as we have stated earlier, even this increased capacity, and we can talk about that later, this increased capacity can even double as far as Harder Digital is concerned. If need be, we don't see the need because we are well covered by Exosens, but we are stand by if need be more than cover this equivalent more than EUR 500 million of night vision in 2029.

Dimitris, how do you intend to manage working capital to 35% given your expected growth profile?

So the fact that we have received contracts with much, much higher value than in the past, such as the OCCAR contract, not only provide us better visibility for the future, but also help us improve our working capital through better inventory management. Also, we have in mind a series of tools, let's say, especially in the management of payables that we intend to deploy in the next few quarters. So this would also be helpful. Plus given that platforms are going to enter our product mix from now on, we expect that such contracts will also bring some advanced payments which in turn will also help us in working capital margin.

Can you explain the significant increase in the Asian regional sales also ambitions regarding Japan and South Korea. And again, with regards to the new fire control system products, when we have plans for beta testing or Harder orders expected?

I'm not sure I fully understand this question, increased last year in significant sales...

Yes, in '25, we had a significant increase from Asia.

I mean, yes, these are the first signs of what we've been telling for a long time that there is an additional wave or another wave coming for defense procurement in Asia, and these were the first signs. Obviously, defense business is binary. So you get a contract or you don't get a contract. But for the next few years, we expect that we've been saying this since the IPO that the Asian Pacific area, the business coming from there will grow. They are, if not day by day, but there are constant new events. I just read today that Japan, they are now allowed to actually export defense business, which shows that the attitude and the mentality is changing. It's more to defending their own countries. So yes, we do expect an increase -- significant increase in business from the Asian countries in the coming years.

I think this answers a lot of questions at the same time. And with regards to the U.S. market, will it be harder to gain some business in the U.S.. Exosens is now clearly competing against you there. So how will you gain market share in the U.S.

Well, Exosens does not compete with us in the U.S. as Harder Digital really. Sometimes, we use Harder Digital, depending on the availability for some commercial business in the States. But we don't expect -- we don't look at it like that. Regarding the U.S., as it turns out, we never really participated at the U.S. Army, which as we found out, because the U.S. Army never got to see or review our own U.S. Army sample the developmental, but only the U.S. Marines product, which we knew was just a light option. So we are -- our U.S. Army developmental, but it was ready earlier than anybody else. For some reason, it was not presented to the customer. Don't forget that we are not working directly with the customer there due to our agreements.

But we are very happy about Exosens participating in this. I need to state also that all 3 contracts in the States are they are not [ EUR 350 million ] or something each. They are ranging from [ EUR 100,000 to EUR 350 million ], which means they have to pass to rigorous tests. We are also looking to participate in this despite the first round. And again, it's a very rigorous testing process and we don't know how much each of the participants will get. The minimum commitment is [ $100,000 ] from the end user.

Thank you, both. The next one coming from Usama Tariq. Did you explicitly state that we are now going to buy more shares in Exosens if available and are going for a Board seat. Exosens investor recently sold a large chunk of shares. Was it not of interest to you?

Yes. The answer is very simple. We are not allowed to buy more than 10% for regulatory approvals. First, and that's why we started already the process a few weeks ago to ask for a board seat as well as the ability to buy more if and when necessary. We have our own views about the value of this. As we said very clearly in the Capital Markets Day, it was an offensive/defensive move. We have an asset in our balance sheet, which is Exosens already. It's valued at [ EUR 350 million ]. As I stated earlier, this according to our investment bankers, which are 1 of the top 3 in the world, they consider that this is not reflected in our balance sheet because the focus is on whether we have a board seat or whether it contributes to dividends or what have you. Nevertheless, it is an asset we have a liquid assets that is in our balance sheet of [ EUR 340 million, EUR 345 million ] right now as we speak. It's a very powerful asset that because it's liquid.

Regarding the future, as I said, we plan to review the situation depending on the price and whether it's necessary that we do it. We are great partners with Exosens as we are, and we will continue to work constructively with them. I would like with this occasion also to state that the asset that is also totally understated and is not reflected in our share price, it's Harder Digital. We know very well and allow me to digress because this would consider this important. We all know that the tube manufacturers are measured not so much in backlog due to the demand, but they are more measured on capacity. Here, we have an asset, which is Harder Digital, which is ramping up to do 30,000 to 40,000 tubes and the ability to double this and even triple this, if necessary, we don't plan to do that because we are happy with what we get, and we're fulfilling our demand.

But when you do the math at 30,000 to 40,000 tubes per year eventually when we get there, which is not far away. We're talking about EUR 100 million of revenues with a minimum 20% of EBIT, which is understated. We're talking about a company that is worth EUR 2 million to EUR 300 million. Again, that's our math. Everybody can do their own math and their own analysis. We're not going to interfere in that obviously. But I think both Harder Digital as an asset and ongoing and under our control assets is not reflected in our price.

And secondly, as I said, the Exosens shares are also not reflected in our share price. And I also need to stress here that given the -- it's not only about the capacity of Harder Digital, I need to stress that -- and again, I'm responding -- I'm only responding to investors very legitimate thoughts and queries. Harder Digital with the investments we have made have improved very much drastically their quality. They can sell to Europe. They can sell anywhere within. Our focus is, at this stage, as I said, to cover our needs. And we have very -- we have under our control Harder, and we have an excellent relationship with Exosens. So we are fully covered. And this was also the reason why we moved to acquire the 10% in the first place.

We have another related question to Exosens, so maybe you can close this parenthesis. How would governance issues be addressed with the Board seat a significant conflicts of interest as customer of Exosens?

Yes. Again, very legitimate. We -- what we plan to do is we plan not to participate in any discussion that relate to Theon. This has been done before many times. So there's absolutely no conflict of interest because we will not participate and definitely with a 10% for sure, we don't have any influence on that anyway. But we don't intend to participate in any board meetings or the part of the Board meeting that will involve anything that to do with Theon. We have made it very clear to Exosens' management and shareholders.

Then a couple of questions around margins. First of all, should we expect margins to decrease as we launch the new platform-based revenue line? And secondly, will Harder Digital have a positive impact on margins as we source IIT internally?

Okay. Let me answer that. First of all, on the Platform business, it's 3x the size of the night vision business, okay. The man-portable night vision. The most difficult thing in this business is obviously, to enter the business. And we had already some sales of TALOS, of our other platform-based products, but the credibility and the legitimacy we received from our first relatively larger order of more than EUR 40 million is a key milestone. Therefore -- and it was done according to our profitability.

Of course, as I mentioned in Capital Markets Day, if necessary in some areas in order to enter, we will sacrifice some margins on platform, if necessary. But again, it's 3x the size of man-portable. So in the end, the effect of this more higher potential revenues will more than offset if there's any decrease in their margin. And also on that account, I need to stress the fact, and this also explains part of our increasing profitability. The ARMED products, the digital products are coming in full swing into the bottom line of Theon. We have higher profitability there. And this compensates any possible reduction in the platform business in order to enter in certain key markets.

And also in this regard, I would like also again to digress a little bit because it's important. I would like to stress something that I've touched upon earlier about the IVAS. And again, when I say that we're not a video games company, I'm very serious about that because, as I explained, but I will repeat this, as I explained, there will be no digital evolution. There will be a gradual transition. The gradual transition cannot happen just 1 day we wake up and there is an unbelievable revaluation. For instance, on night vision, what we have seen on digital space is nothing different from what we have seen in the last 3, 5 years. Now the day vision is a different story, the interoperability and so on. So that is what our ARMED products is doing by adding digital things on our analog business, that is -- you add on the analog goggles, you add digital, and that's how you transition to the digital space.

But again, these transitions cannot happen by overwhelming the soldier. What Theon does, and we believe we are on the right path, we gradually introduced digital add-ons to the soldiers. We don't overwhelm them. We take their experience. We adjust. So when somebody tries those new products that are with all due respect, right, it's overwhelming, and it's really like sometimes like a video game. That's not the point here. And to do achieve this, you must have an end user experience. If you have an end user experience, then you can gradually introduce the digital, and we are very well placed with the THEON NEXT that we have done. And as I said, we will have also our IVAS very soon. And it will be, again, adapted to the real needs of the soldier based on our very extensive end-user experience. Thank you very much.

Just to answer [indiscernible] second leg about how the digital and the margins. So as Harder Digital grows, we expect that a lot of operational efficiencies and operational leverage will come. So this will obviously have an impact on our margins as well. However, Harder Digital only accommodates a very small part of our needs, around, let's say, 10%. It might. It will grow in the future, but it's not going to exceed, let's say, more than 50%. So in that sense, the impact is not going to be very high.

Okay. Thank you. Then out of the EUR 787 million of SAFE program for Greece, what percent does Theon plan to get?

I cannot obviously disclose this, but we will be involved. I can assure you on that. It is part of SAFE, as I said, is part of joint procurement. It's not about tendering and cumbersome tendering procedures, it's about common procurement. And as I said, several countries, including Greece, have -- are already included in the -- both in the safe mechanism and also in the OCCAR. So yes, we expect some to be involved. I cannot say more at this stage.

Thank you. The next one is around European budget constraints and conflicts with the current Iran situation. Do you see other delays in Europe or inflation worries already? Is it something that you monitor?

Of course, we monitor this, but we do not see any delays at least in Europe, because of the European countries were not really involved in the conflict in the Middle East. And it's rather the opposite that the world is becoming more dangerous, the risk of the U.S. getting away from NATO, for example, it becomes more real. So there is no other choice than keeping investing into defense, especially in Europe, but not only in Europe. The world is becoming more dangerous. You see in the Middle East, you see in Asia-Pacific. So we do not expect even with increasing inflation that defense spending will be reduced.

Okay. Then with regards to Exosens again, could you kindly explain us to what market or combine specific issue or development made you change the view on buying new Exosens shares. Do you see any risk of American players making a bid for Exosens? Or was it just the order book swelling that made you look at the supply chain in another way?

First of all, I did not say that we changed our minds. I said that we will review. First of all, no, we're not afraid of any U.S. tube manufacturers making a bid because this has been tried before, not exactly from tube manufacturer and it didn't work out. Europe is on a path to consolidate within Europe. And in the case of Exosens, let me also see the exact question, so I can -- yes, -- so we have not changed our views on Exosens, but it's -- what is very important for us, and that's what we're trying to achieve. We're trying to achieve more coordination, cooperation on Exosens with Exosens operationally because it's very important that the operational coordination comes in line with any equity -- with any equity further purchases. And again, it has to do, we have to protect our shareholders. We have to buy if we buy at the right price.

Now I also see another question about M&A focus in first half of '26. As I told you, as I told you, we plan to announce soon next few weeks or few months, the beginning of an holistic approach. I can tell you today that it relates to the most promising platform electro-optics business. I don't want to define that at this stage for obvious reasons. But the most promising part of the electro-optical platforms, you know what it is. I'm not going to state it again here or say it. But we will have some -- we expect to have soon quite a few announcements on that front.

Again, Theon, that's the way we work. We take a holistic approach. We don't want to, in a domain to announce just a small acquisition or a bolt-on or what have you, but we want to present to our shareholders and to the market our holistic approach that covers as much as possible globally with the domain. So you should expect a focus on platform business electro-optics in the next few months.

There is another question about platform business. If we have any other plans to cooperate with more OEMs, including Rheinmetall. And then how much of platform revenues will be in 2026. I guess, this is already answered through Kappa. We are going to cover almost 10% of our sales coming from Platform business. Philippe?

I mean, first of all, this first significant contract we got from Rheinmetall. This is something we're very proud of, and it really shows that a big prime contractor like Rheinmetall, they trust us, it means that we know what we do. But as always with our partners, we stand by our partners. Yes, we are talking to other OEMs in Europe, but as well outside of Europe. But we're not doing anything that will lead to any competition with Rheinmetall. We consider them as our strategic partner, and we want to work with them on many, many more projects.

Obviously, we are very competitive in all aspects when it comes to the development of such systems when it comes to the production of subsystems, through our supply chain, through our competitive advantage that we have here being based in Greece, and obviously, we can, and we want to use this to get to further sales.

Yes. If I may add here, Philippe, we will -- if it's not already launched, we are releasing a video of our new facilities, which, again, we are building a third factory of Theon and expanding warehouse because we -- the signs we have, not just from this initial platform contract that had to do with a product in our own design. We have been approached by many OEMs who would like to use as subcontractors even for design that is not ours. And of course, we plan to accommodate this.

We can respond to the initial -- any initial demand even in '26, on platform for production, and next year, we'll have a dedicated factory for platform electro-optics. Plus, as I said, it doesn't have to be all in Greece on the contrary, we will -- the announcement we plan to do on again, on the same on the platform business, they will be coming shortly, next few months.

Dimitris, would like to reiterate something about margins per product.

Yes. Obviously, digital products, thermal products are going to have much -- they already have much better margin than the rest of our product range. The beauty around digital products, among others, is the fact that we do -- as a key component, we don't use the night vision tubes. So this means that we have components that are less expensive, so they take a smaller part of the total COGS in the product. And then we have, let's say, I wouldn't say an abundant, but much, much bigger number of suppliers that we can use in order to use for components around digital. The same also applies for platforms, which, obviously, in the beginning, margins are going to be much lower, especially given the fact that this is an industry that we want to penetrate. But over time, we believe that platforms are going to reach same profitability levels as night vision.

Thank you, Dimitris. With regards to the last question we have, I can reassure you that we have many job openings globally, not in Holland currently. Unless there are any other questions, we can conclude the meeting.

So thank you very much for your time today. We can now conclude the meeting.

Thank you. Thank you. Bye-bye.

Ladies and gentlemen, that concludes today's conference call. Thank you all for joining.

Good morning, and welcome to Theon International plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I would now like to hand over to Philippe Mennicken, Executive Director, Deputy CEO, and Business Development Director. Good morning, sir.

Thank you, Paul. Good morning, everybody, and thank you for joining us today. I am Philippe Mennicken. I'm the Deputy CEO of Theon International and the Business Development Director. Today, I'll be taking you through an overview of Theon, the business model, our operations, recent financial results, and an outlook ahead.

As I understand, we have here quite a few people that may hear first time about us. So for those who know us, you may hear things that you already know, but it's never bad to hear things again and maybe that improves the understanding as well of what we do. As a short introduction to myself, I'm a Belgian national, but I've been living in Greece for many, many years, and I have been with Theon for more than 15 years. When I arrived at Theon, it was a small company with around 30, 40 people and maybe EUR 8 million or EUR 10 million revenues. And since then, I have witnessed an incredible growth journey that we have been on, which is the result of very hard work, and I'd say, a unique business development DNA that we have within the company.

Actually, we had to work twice as hard, and I like always to say this as anybody else in the industry because we had to overcome many prejudices in the market, being a Greek company and not a U.S., German, French, or British company. And we had to gain the trust of our customers, which we did. And today, we are indeed a brand and a reference worldwide. So for those who are unfamiliar with Theon, we design, develop, and manufacture high-tech military optronics for both man-portable and platform-based use. What does that mean? Man-portable and platform-based is simple as the words say, man-portable is anything that the operator, the soldier wears on his or her body, goggles, sights, anything like that. And platform-based is any optronics that go onto a platform, can be an armored vehicle, a drone, a naval vessel, whatever it may be.

With over 20 years in the market as a pure-play defense supplier, we establish ourselves as a global leader in our field. And definitely, we are the global leader today when it comes to night vision -- man-portable night vision equipment. What differentiates us is besides the unique business development DNA that we have within the company from the business development department down to production and engineering departments, it is really our ability to deliver fully customized solutions, which is something that we have been doing from the very beginning of the existence of the company, where we design and adapt our products to operational needs. We listen to the customers as simple as it may sound, not everybody does this. And we implement what the operator who knows best what he needs tells us to do as long, of course, it's within the laws of physics.

So as I said, this approach has enabled us to build long-term relationships with our customers who trust us. And this is really crucial, and a crucial element of our business success. Because when we have these long-term relationships with the customers, they trust us and they give us business, especially in these times where product availability and fast deliveries are crucial. Over all these years, we have introduced a focused portfolio of man-portable and as I said, also now platform-based optronics with relatively low CapEx and R&D investment, an element that contributed as well to our Star of Innovation Award last November. We have delivered more than 250,000 systems across 72 countries, including 26 NATO member states. Historically, over 90% of our revenues have come from night vision equipment, which is our bread and butter business in which we are the world leader.

And as you can see, we have a high growth, which was even present before the beginning of the Ukraine war, and we have a market-leading and a very strong profitability. Just like the ancient Greeks established trade outposts outside of Greece, we also establish local presences worldwide, wherever it makes sense and especially in industrial presences, where we also want to give something back to our customers, to the economy, to the country. So here, you can see our expanding global presence. Obviously, our main facility and the headquarters of the company are in Athens, where I'm sitting now, where we have around 300 employees. The facility is around 8,000 square meters, and we plan to increase. Actually behind me, they are digging at the moment the ground to build our new third factory here in Athens, which is going to increase the available production capability or capacity even further expected in Q2 2027.

If we look at the global map, we have a strong focus on Germany, which is a very, very important and trusted customer of ours. We have a production site in Wetzlar as a joint venture together with HENSOLDT. We invested into Harder Digital and Kappa as well as Andres Industries. I will talk a little bit more about this just in a while. We have a presence in Denmark, where we have a repair and maintenance hub. Now in Belgium, we have a factory in Belgium that focuses on thermal equipment. The U.S., obviously, an important market to us. We have co-production with EOTech. We have as well a subcontracting and equipment supply to Elbit Systems of America that then produces and delivers our equipment to the U.S. Marine Corps. We have cooperation and investments in U.S. companies, eMagin, Alereon, Kopin Corporation, and more about these companies later. SHOCK EOS in South Africa. In the Middle East, we have co-production sites in the UAE as well as in Saudi Arabia. And last but not least, in South Korea. We have Theon Saudi through which we increase as well our industrial presence in the Asian Pacific area. As a Theon Group total, we are now close to 1,000 employees.

Now considering the business model very, very briefly. We control the full process. So it's our design, it's our development. We test the equipment and we produce and assemble this equipment. So we tap in Greece here in a pool of high-caliber engineers and have also access to skilled workers, all of this at a pretty competitive cost, if I may say so. We are renowned for our on-time delivery. And as trivial as this may sound, again, this leads to trust and additional business. And I always like to mention that especially in Germany, when we talk to the head of the procurement of the German Army or as well the OCCAR Director and another personnel, they all typically praise us for our on-time delivery, which I said is not a given in the business, but we are proud that we stick to this.

We do have sufficient production capacity at the moment to serve our customers in Athens, in our various production sites around the world. And as I said, we expand this capacity just behind me to serve our customers as well in the future. If we come and have a quick look at our trading performance since the IPO in 2024, I'd have to say that our share performance has been exceptional. We are listed in Amsterdam, as part of the Euronext, which is establishing itself as a hub for defense listing. We IPO-ed with a valuation of around EUR 700 million at the time and a 20% free float, where we raised close to EUR 100 million in funds to fund our initial M&A strategy, which enabled us in an initial move, the acquisition of a majority stake in Harder Digital, which is one of the four image-intensifier tube manufacturers in the world, and which is important, and I will tell you a little bit more -- a little bit later because image-intensifier tubes are the main components of night vision system are the detectors. And the global supply of these detectors of the tubes is short. And hence, the investment into Harder Digital in the first step, which we did right after the IPO to strengthen the supply chain for the tubes.

Following the strong investor demand, we then executed two secondary placements of existing shares to improve liquidity and later completed as well a share capital increase in December. Our main shareholder, he is the Founder and CEO of Theon International, Christian Hadjiminas, participated in the raise, which reinforced confidence in the business plan. And the proceeds of this raise basically supported the acquisition of a 9.8% stake in Exosens, which is another image intensifier tube manufacturer. It's the second tube manufacturer in Europe and one of four global tube manufacturers and actually the only producer of 60-millimeter tubes. So this was a strategic investment basically to secure the supply chain, amongst other reasons, of course. And last but not least, our market cap today stands at approximately EUR 2.5 billion.

So let's have a move on to the overview of our products and the markets we operate and provide you some color on the recent acquisitions and the strategic partnerships that we have worldwide, starting with the products. First of all, we divide them into two main categories. It's the man-portable equipment and platform-based equipment. So here, we're talking about on this slide, man-portable category. There are two main types of equipment, night vision and thermals. The night vision is what we call analog equipment and the thermal is the digital equipment. So night vision, the major part and the major part of our revenues are night vision goggles, which is the first thing that any soldier needs to have in order to operate during the night. You need to be able to see in order to operate. And then you have a variety of weapon sights, which is the second thing with which you would equip a soldier for night fighting capability in order to target and to aim during night combat operations.

On the thermal or the digital side, we have a variety of weapon sights. We have fire control systems. What are fire control systems? These are systems have not to do with fire, it's with shooting basically. They increase the accuracy of the targeting so that basically the first shot basically goes onto the target. And in times of ammunition scarcity, this is a big advantage to have, and it protects the soldier as well because if you hit the target as a first shot, the risk to be hit back is obviously much, much lower. And of course, we have as well some customized solutions on the thermal and fire control systems, so the digital side.

Last but not least, we have as well a new category, let's put it that way, of products, which is called A.R.M.E.D. A.R.M.E.D. is short for Augmented Reality Modular Ecosystem of Devices. And the A.R.M.E.D. ecosystem basically combines both technologies, night vision and thermal. So what it is about these A.R.M.E.D. products? Basically, the future warfare requires the soldier to have a better awareness of what's going on in the battlefield. And to have this awareness, the soldier needs to have access to data. This basically means that the soldier needs to be connected. It needs to be -- soldier needs to be connected to a battle management system, to command and control center that can then provide the soldier with crucial information of the battlefield. But at the same time, the soldier can feedback information to the command and control center. And the soldier needs to be equipped with a better vision of the battlefield. And here comes fused vision into play, where you fuse night vision and thermal technology onto one screen.

So in this field, we have developed a variety of products. First of all, the THEA, it's a heads-up display. It's the only product that we have for daytime operations. It's a see-through display that provides this augmented reality data to the soldier. We have the IRIS-C, which is a small thermal clip-on that mounts onto our night vision goggles or on any night vision goggle really and provides the soldier with fused imagery, but as well the augmented reality capability during nighttime operations. And here, especially for this product, we -- there's a huge potential. We got a recent contract with OCCAR to supply this equipment to the Belgian and German armed forces, a total of around 25,000 systems, including the options. We have as well some other customers, existing customers in NATO countries, and there's a strong interest because this is the future. You have night vision equipment, which is here to stay for many, many years to come. But with this equipment, you provide the soldier with extra capabilities, fused vision and augmented reality capabilities.

Then we have the ORION. It's the principle of an integrated fused goggle, again, with augmented reality capabilities. And then we have the Smart Battery Pack. We have different variants of the Smart Battery Pack. It's the hub basically. It's a battery pack that sits at the back of the helmet and it's like the central computing unit that connects the goggle, whatever goggle it is, the ORION, the IRIS-C or even the THEA during a day to the Battle Management System. And the Smart Battery Pack together with the THEA, for example, is already introduced in Germany with the [ Infanterist der Zukunft ], the German Future Soldier Program.

If we move over to the platform-based optronics, we have a growing range of this type of equipment. Now I have to be honest with you, the amount of revenues generated today from this type of equipment is very, very small. We are a new kid on the block. But what we intend to achieve and we will achieve this is to repeat the success that we've had in the man-portable segment. Platform-based optronics, as I said, go on any kind of platforms. We have an initial focus on armored vehicles. But as I said, this equipment can be used as well on unmanned, for example, sea vessels, on unmanned ground vehicles, on unmanned aerial vehicle, drones. So this is an area we really focus on at the moment, and we have had some original successes last year, which we announced, and there's more to come. And there are some announcements to come very, very soon.

So as I said, we want to replicate the success that we've had in the man-portable segment in this platform optronics-based segment, and we can do this. I mean, we have the business development channels. We are still as hungry and as aggressive as we've been in the old days where we were nobody basically. We can provide the same reliable quality, the same competitive products to our customers. And today, we are a brand. We have a reputation. The customers know us. They respect us for our on-time deliveries, high-quality products, and outstanding customer support.

Let's have a look at the geopolitical landscape. We see emerging multipolarity. What doesn't mean there's not any more East against West. There are different poles around the world. And this basically leads to investments everywhere basically in the defense. In Europe, in particular, we have seen decades of underinvestment, and now this is being addressed. This started obviously with the invasion of Ukraine by Russia. And we see Germany leading Europe basically with almost unlimited defense spending, but it's not only Germany, it's Scandinavia, the Baltics, Eastern Europe. And we also expect Southern Europe that have obviously budget issues to be forced to step up and increase the spending there as well.

In Europe, overall, we see an ambition of Europe to play a stronger role in the global defense landscape, which benefits as well European defense companies. We can see a similar trend as well in other regions in the Middle East and the Asian Pacific area with ongoing tensions and now with the recent news in the Middle East, of course, leading to rapid procurement decisions and increased defense budget. We see this in the Asian area with Japan, Taiwan, Korea, all substantially increasing their defense budgets because everybody is aware that you cannot necessarily rely on the old allies and you have to make sure that you can defend your country in terms of a conflict.

Last but not least, the U.S. it's not prominently facing on this slide, but the U.S. remains the world's largest defense spender. And while the current administration prioritizes domestically designed and manufactured systems, which, in essence, a similar thing is happening in Europe. We at Theon, we are driving a parallel, how can I say, investments and business development activities. So we're focusing on Europe. But in a separate stream, so to speak, we're focusing on the U.S., where we move forward with our A.R.M.E.D. equipment, where we have invested in technology companies to bring the A.R.M.E.D. ecosystem to the next level. And we are focusing as well on all the units in the U.S. to strengthen our presence in this country.

Of course, the U.S. today, in terms of revenues, it doesn't have a major part of our global revenues. Why? Because in the U.S., typically, we ship our equipment as kits without the tubes, for example, the U.S. Marine Corps, which uses our night vision goggle. We ship the equipment to the U.S. It's assembled there with U.S. tubes and then shipped to the U.S. Marine Corps by Elbit Systems of America. So as a revenue stream, it is relatively low. But obviously, it is a very large and prestigious market.

This is, I think, a very important slide, especially for those who are maybe new to this field. We like to talk about penetration rates. So what does it mean? As I said before, in order to enable a soldier for nighttime operations, the first thing you need to do is to equip them with a night vision goggle. And here, there is a trend which has started in the U.S. many, many years ago to equip every soldier with a night vision goggle. And we try to estimate, obviously, these numbers are not accurate, but we pretty much know what's going on with our customers worldwide, this penetration rate. If we start from the left, the U.S. or North America has more or less 100% penetration rate. The U.S., as I said before, they realized this many, many years ago. Their motto was always Own the Night, and they have pretty much one soldier -- one goggle per soldier. But here, the U.S. is moving into a replacement cycle where they have many, many tens and -- hundreds of thousands of very old night vision equipment, which needs to be replaced. So even in the U.S. there is a big potential for night vision goggles even though the penetration rate is 100%.

Interestingly or more interesting though is Europe, which is our focus at the moment. In Europe, we estimate around a penetration rate of 30%, maybe 40%. In APAC, which, as I said before, is investing -- is expected to invest a lot in defense equipment and in our equipment, the penetration is even lower. We're just talking about probably 10% of soldiers having night vision equipment. The Middle East and Africa, 20%. And then Latin America, also 20%. So if you look at these numbers, if you look at the numbers of soldiers in all these areas, you can do your math. And you can see the potential is there for our man-portable equipment. And as I said, traditional night vision equipment is here to stay for many, many years to come. Whatever you may see new technologies, whatever you may hear, yes, there are developments on new technologies, and we are moving into this area as well with our A.R.M.E.D. ecosystem and future developments, but traditional night vision equipment is here to stay for 10, 15, 20 years for sure.

So if we have a look at defense spending at the global market, and we have a look at the segment breakdown. If we look at the man-portable segment, where we hold the leading global market position, particularly in night vision goggles, the market is expected to grow at around 11% annually, whereas we foresee a higher growth than the actual market is expected to grow. On the platform-based segment, as I said, we are -- I wouldn't say nobody, but we are a new kid on the block in this segment. But if you look at the total volume, the total potential, it's much, much bigger than the man-portable business, and it's growing at a similar rate. And here, our growth in this segment, we predict this to be very, very high, coming in with our new developed products, including as well the products of our newly acquired company, Kappa in Germany.

Talking about which newly acquired companies. Let's have a look at the acquisitions and the strategic initiatives and the M&A basically that we have carried out over the past two years. So we have executed a series of targeted investments to support our growth plan, but not only, but as well to secure our supply chain and to expand our technological capabilities. All these three elements are very, very important in our overall strategy. So our first priority was the night vision supply chain. As I said before, in 2024, we acquired a 60% stake in Harder Digital. So -- and this was a cash injection basically to replace old production equipment to increase the capacity basically of Harder Digital and to have direct access to image intensifier tube technology, which before was something like a black box for us.

In 2025, we then broadened our footprint -- sorry, we invested into Andres Industries, which is a small company based in Berlin, Germany. So we acquired a 10% stake with an option to reach roughly 25%. With Andres, we hold an existing contract for our IRIS-C thermal clip-on for the Belgian and German armed forces. And with this investment and this cooperation, we strengthened as well our presence in Germany, obviously. Then further in August 2025, we invested into platforms optronics with the full acquisition of Kappa, which shall accelerate our entry into airborne, but also vehicle-based optronics, where Kappa has a series of cameras, for example, on tanker airplanes, the cameras come from Kappa. And on the armored vehicle side, they have 360 cameras that are mounted on armored vehicles that allow basically the driver, the commander, and the crew of the vehicle basically to see what's going on around the vehicle. And we see a need for this equipment everywhere basically because it increases the situational awareness and it protects the soldier that the soldier doesn't get out of the vehicle without knowing what is going out there.

The management team of Kappa, and this is important to mention, remains fully engaged. And this is what we typically do. We don't want to run the companies we invest in. We want the management to run the company and then through the synergies to grow the business together with us. So Kappa is expected to contribute around 6% to 8% of our 2026 revenues, and there's a very, very strong growth potential, of course.

Now moving on to Kopin and Varjo. These are two technology investments, I would describe them. That's -- Kopin is a company active in the field of displays, a very specific displays, a lot of technology there and Varjo, a Finnish company in virtual and augmented reality systems. So these elements are needed for our future development, what we call the THEON NEXT initiative, which brings our existing A.R.M.E.D. equipment portfolio into the next level. And we -- these technology investments basically to have access to these technologies and in order to work with these and develop over the coming years, the products of the next generation.

Then in October, we invested and acquired a 9.8% stake in Exosens, further reinforcing our supply chain of image intensifier tubes. Just for your understanding, there are four image intensifier tubes in the world, two in the U.S., two in Europe. We have relationships with all of them. One of the two European companies is Harder. It's -- we own a 60% stake. And the other one is Exosens, which is the leading company in terms of production size and capability in terms of image intensifier tubes. The stake we acquired, we acquired this at a price of EUR 54, which at the time was a premium to the share price when we acquired them. But today, we actually see that they're trading well over EUR 60. But this wasn't an investment to make money. It was an investment on a strategic decision, and it was as well, if I may say, some sort of a defensive move. At the time, there was a stake available for sale. We saw a chance to move in to secure this and basically to strengthen the relationship with our main supplier of image intensifier tubes and to strengthen the access to this very, very critical component.

At the same time, we signed or even before we signed a long-term supply agreement, which was at the same time, extended basically with Exosens that secures us tens of thousands of tubes over the coming years so that we are able to satisfy the surging demand of this type of equipment that we see coming. Now finally, then in November, we expanded our collaboration with a company in South Africa, SHOCK EOS. They are a design house, really experts in terms of platform optronics. We partnered with them since 2024 on stabilized gimbal development. And then in November, we acquired 30% and agreed on an option to reach the majority holding of the company.

Looking ahead, now we intend to continue our M&A activity through smaller bolt-on acquisitions, focusing on areas that can accelerate our efforts in fire control systems, platform-based products, and of course, the A.R.M.E.D. ecosystem. And the THEON NEXT initiative, which brings the A.R.M.E.D. ecosystem to the next level, to the next generation of fully integrated digital man-portable solutions. At the same time, we plan to keep expanding our global footprint, particularly in the U.S., but also in the Asian Pacific regions. So as part of the strategy, we're actively evaluating potential acquisition targets in these areas and technology fields that complement our long-term growth plan. Importantly to say here, any acquisitions, at least in the near -- medium-term future, are expected to be funded without the issuance of new shares.

Now let's have a look at financial performance, starting with the financial year 2025 highlights. 2025 was indeed an exceptional and another record year for Theon, both financially and commercially. The revenues exceeded the initial guidance of EUR 410 million to EUR 430 million, reaching EUR 443.5 million and represented a year-on-year growth of over 25%. The profitability outperformed this growth with an increased market-leading adjusted EBIT of 26.2%, fully delivering on our mid-20s guidance. We also achieved a record high order intake of EUR 1.3 billion, of which I will provide some more details on the next slide.

As said, in 2025, we completed a sequence of strategic investments, acquisitions, and partnerships in support of our THEON NEXT vision strategy as presented at the Capital Markets Day held in November. In January now, we completed the acquisition of the Exosens stake and the acquisition of Kappa, further cementing our position in night vision and accelerating our introduction into platform-based electrooptronics. In December, last but not least, we successfully raised EUR 150 million through a share capital increase and refinanced our borrowing at much better terms, which maintains as well financial flexibility to fuel future organic and inorganic growth.

Now looking at the visibility going ahead. As I just said, in 2025, we achieved a record high order intake of EUR 1.3 billion. This was supported by the largest single order ever placed for night vision goggles through the OCCAR organization for Germany, which placed an order for 100,000 goggles on -- with us to secure the equipment of the troops for the coming years. And here, a small parenthesis why did Germany do this and why are other European countries or why have they moved to framework agreements securing the long-term supply simply because the demand of this equipment is expected to be much, much higher than what can be delivered, what can be delivered in terms of image intensifier tube. So the supply/demand is just in a balance, but it is expected that the demand is going to be higher than the supply. And more and more countries are moving into securing their equipment for the coming years. So not to be left out, not to be -- not to have to stand at the end of the queue because all the equipment is gone. And that's what Germany did and that's what many other countries do. And this is -- brings us in a very good position, especially in the context of all these long-term relationships that we have with many European customers that, as I said, are placing these long-term framework agreements with us.

Plus we have secured our supply chain. We have our own image intensifier tubes. We have the supply agreement with Exosens. We have as well access to U.S. tubes, even though they have some limitations in terms of exportability. We, as Theon, are able, as it stands today to support and to supply our customers. But of course, there's only so much available supply even from our end. So customers are urged and they do this basically to come and secure their supply.

If we have a look at the backlog that we experienced at the end of last year, you see there it's almost EUR 2.3 billion, and that includes options. And when it comes to options, I think we have never missed any options. So any contract that we had with options, these options have always been exercised. So the soft backlog, including the options, is well over the double of the level of 2024.

So a quick outlook in terms of guidance. Our guidance for this year represents an expected revenue increase of around 30% compared to last year, so around EUR 570 million to EUR 600 million. And we continue to expect to have market-leading mid-20s EBIT margins. with an increase in CapEx to EUR 30 million to support the ongoing strong growth of the company. Dividends are expected to be in the range of 20% to 30%.

So with this, I come to the last slide, just a brief summary and an outlook. So we have entered 2026 with a very strong momentum starting from the very high backlog that we have, the expanding product portfolio, continued tailwinds in the global market. Revenue contribution from new digital products. So that's the A.R.M.E.D. ecosystem that as well the platform optronics, including Kappa are expected to more than double this year from last year and reach 20% to 25% of our revenues. Our supply chain is secured. And the acceleration of the production capacity increase at Harder Digital, which we announced in January 2026, is expected to further boost our capacity and our ability basically to serve our customers worldwide. We expect to see further bolt-on M&As. And this -- we all do this with the aim to grow and to not only to be a leader as we are today in night vision equipment, but to become the leader as well in defense optoelectronics over the medium-term horizon.

So with this, I like to give back the microphone to Paul, and then we can address any questions that may be raised by. Thank you very much.

Philippe, fantastic. Thank you for such an in-depth presentation. [Operator Instructions] Philippe, as you can see, we've had a number of questions from investors today, and thank you to all those who've submitted. So perhaps let's start off with the first one and no surprise, I guess, with this comment and question really. Can you comment on the current Iran conflict?

Yes, even though we don't comment on specific events or political events. But yes, obviously, when there is a conflict, there is always a need for armament and for our type of equipment, both in the short term, but as well in the long term. And we see this already now to take place.

Okay. Just moving on to the next question we have got here is what are your revenue ambitions? And how quickly can you reach them? I know you touched on some of those financials in the outlook, but just back to you, please.

Our revenue ambition is to achieve revenues of EUR 1 billion. The original ambition was to achieve this with organic and inorganic growth, obviously. The original ambition was to achieve this by 2030. But we believe that -- and we are on track to achieve this ahead of this original projection.

That's great. Thank you, Philippe. A little bit of an expansion on Exosens. Can you comment on Exosens' new contract in the U.S.? Did you participate in the tender?

Yes, an expected question, I guess. Yes, we participated, but we knew and we expected that we will not be part of this directly. But then for Exosens, we are the second largest investor in Exosens. And obviously, we are very pleased for them and for us as a large investor in this company with this new contract. As we have said on our end, when it comes to the U.S., we intend to further grow in the U.S. independently of this contract in the U.S. for the U.S. Army. We will continue strengthening our local presence, our strategic relationships there. And of course, we expect to be in a position to -- and we are already in a position to address all other major pillars of the defense market in the U.S. It's not only the U.S. Army. We have an ongoing contract with the U.S. Marine Corps. We are active in the commercial market, and there are as well some other very large units in the U.S., which we are addressing. So there's more to come in the U.S. from Theon and for Theon.

Just a question here, sorry, on share price. Can you comment on the share price volatility?

Yes. I mean, first of all, if you look at the past few days, the whole sector sees high volatility, which is due to the war in the Middle East at the moment. If this question refers to previous volatility at the end of last year, in particular, then it was related to our preannounced rights issue that was -- that was subsequently successfully completed in December. And just to be clear here as well, there are no current plans to issue any more new shares or for any new or near-term sell-downs by the majority shareholders.

Next one reads here. I'd like to ask if the platform's optronics production will start before the third manufacturing plant is completed or if it's necessary the third plant to be completed in order to begin the process.

Yes. Now we do have available production capacity here to start the production of this equipment. There's no need to have the new facility in place in order to commence this. But obviously, with this type of equipment, there's going to be a ramp-up. There's going to be more business, and this will then be covered by the new facility.

Question here. Data link is an important aspect of network-centric warfare. How does your equipment fare in terms of data link connectivity? How is the situation in case you pursue non-NATO customers considering they don't use standard NATO data link?

Yes. To answer this question, just to explain a little bit more about what we do. In terms of connected equipment, as I said, we have the various goggles, heads-up displays and so on. They are connected to our Smart Battery Pack, which is the computing hub. And this is then connected typically to a radio, for example, or to a tablet. And in the end of the day, connected to a Battle Management System. How this is linked, how the data is transmitted to and from the soldier, this is not part of our business. Part of our business is that our equipment and in particular, the Smart Battery Pack is compatible with any battle management systems. And we do have already today, we cover the majority of Battle Management System that our system can connect to. And to connect to new Battle Management System is just a matter of writing the software basically to have the correct plug-in. So there are no restrictions basically for our A.R.M.E.D. equipment to work with any battle management systems around the world.

A three-part question just on the U.S. Some of these parts, I think you have covered off in just some of your previous answers, but I'll read them all out. Are you part of the BiNOD program, which -- I can't even say it today. Exosens one, will you supply kits to Elbit in the BiNOD program? And do you plan to invest CapEx into the U.S.?

As I said before in the previous question concerning the Exosens contract in the U.S., yes, it's related to the BiNOD program. No, we were not selected. But yes, we are happy for Exosens. And one comment here as well. I said it before, the revenue stream from the U.S. in terms of revenues is fairly small. It's a small part of our overall revenues. And our guidance and our revenue ambitions, this EUR 1 billion is -- there's no BiNOD program included in these numbers. So it does not have an impact on our guidance. To answer the second part of the question, no, we do not supply kits to Elbit for the BiNOD program. We supply kits, and we continue to supply kits on the U.S. Marine Corps Program. And then whether we plan to invest CapEx in the U.S., I don't want to comment on this. We have a forecast for the CapEx, which I mentioned before. And as I said before, we're focusing on the U.S., both on traditional night vision equipment, the various pillars, the various customers we have there, the A.R.M.E.D. equipment, but as well platform optronics. So the U.S. is and remains an important market for us. And we believe that we -- through strengthening our presence in the U.S., we will definitely increase our revenues coming from the U.S. despite the fact that we were not selected on the BiNOD program.

How important will augmented reality products become? And will all products be sold be able to link to this?

As I said before, augmented reality is becoming more and more important for the soldiers in order to have better awareness of what's going on in the battlefield. But first of all, traditional night vision equipment is here to stay. It's analog equipment. It's, I wouldn't call it cheap equipment, but it's fairly priced equipment. It works, and it provides the soldier with the ability to see in the night. In parallel, we will see more and more development of augmented reality products. And as I mentioned in my presentation, we are already in this area, and we have an immediate solution for the soldier, which is our thermal clip-on, which mounts onto our night vision goggle and immediately enables the goggle to be augmented reality ready. And yes, as long as the product has a digital output, it can be connected. It can have an augmented reality capability.

What are the price points of the main products?

I'm not sure if I understand the question correctly because obviously, I cannot provide prices here. But typically, night vision binoculars are several thousands of euros depending on whether it's a monocular or a binocular, then we're talking about A.R.M.E.D. equipment. This equipment can be more expensive. The smart an equipment is, the more technology there is an equipment, the more engineering work that goes into this, obviously, the higher the price of such an equipment. And then if we're talking about platform-based optronics, there, we're talking about tens of thousands of euros and can go even in the hundreds of thousands of euros if we're talking about really, really big multi-sensor stabilized gimbals.

Just a question following on from the first one. Are there any consequences from the U.S.-Iranian war for your sales for 2026?

I'm not sure if I can really comment on this. But as I said before, when there is a conflict, what we typically see, there's a demand for armament, including our equipment. And there's a conflict in the Middle East. So just do the math and put one to one together.

And just to step on from that. Can you elaborate on the exact arguments for the 1:1 ratio? Are all soldiers obliged to carry/use night vision equipment?

It'd be great for us if they were obliged and that would make things easier basically. No, they are not obliged. But the -- especially the Ukrainian war has shown the importance of night vision equipment. You may remember at the initial days of the Russian invasion when there was this very long convoy towards Kyiv and what did the Ukrainians do? Basically, they attacked this convoy during a night equipped with night vision equipment because the Russians didn't have such equipment. This is public knowledge. It's not me making up this story basically. And they attacked and made this convoy to break down and to retreat. And not only because of this event, but in general, it made everybody aware that if your soldiers cannot see during a night, they cannot operate during the night. And obviously, when you operate during the night, you have a huge tactical advantage because it's dark. So if you can see, but the enemy cannot see or the enemy cannot see as well as you can, you have a huge advantage. And that's why we see this drive to equip every soldier at least with a night vision goggle and then in the second wave to provide them as well with targeting capabilities during the night.

Do the thermal and FCS products need the same critical image intensifier tubes?

Yes, very, very good question. And I didn't really go into this during my presentation. No, they don't. Image intensifier tubes are used in night vision goggles. And what is an image intensifier tube is basically a detector that collects light, whatever light is available from the moon, from the stars, from street lights and amplifies them the light and then projects the image onto typically a green or a black and white screen like you see in the movies. It's an analog device, but it works very, very well at an affordable cost, affordable power consumption, and it does not have any lag. It's an analog device. The image is at speed of light basically, and there's no lag when you look around.

Thermal and fire control systems or any digital equipment doesn't use image intensifier tubes. It typically uses bolometers, which are detectors basically that detect difference in temperatures. So my body has a higher temperature than the environment. So this detector detects the difference in temperature and displays the image typically in various gray shades or sometimes as well in color or red to provide an image to the user. The disadvantage of thermal technology is that you cannot really have an exact image of what you're looking at. So sometimes not easy to identify what am I looking at? Is it a soldier? Is it a civilian? You cannot look through glass, for example, because glass has a uniform temperature. So you will see just black basically and has some other disadvantage. But the big advantage of thermal is basically it's perfect for detection because when the soldier is hidden in a forest, for example, with camouflage, with a night vision goggle I will not see him. But if I have a thermal clip-on and a thermal equipment, then I will see the heat signature of the soldier and it will be very, very strong and I immediately detect the soldier. And then with the night vision capability, I can then go closer or identify it is actually a soldier or what am I actually looking at? That's why fusion of these two technologies is basically the best of both worlds.

Just a penultimate question, just we're coming up to the hour mark. Do you have some more color on your plans regarding the new FCS segment and any recent development steps, product launch, R&D partnerships in this segment? What's the anticipated revenue contribution from FCS?

Yes. I mean in the FCS, we already moved into this segment. We've been working with Aimpoint for quite some time with their fire control systems where we basically have a thermal clip-on that goes with their FCS. We have as well other customized equipment that upgraded to FCS. We now have our first own fire control system using thermal technology. And we are actively talking to partners, to users to continue the development of this type of equipment. As I said, it's crucial equipment because it increases the accuracy of the targeting and ensures that ideally, the target is hit with the first shot, which reduces the use of ammunition and as well increases the security and the safety of the user.

Just final one, Philippe. Given increasing tight supply for tube, should we expect margin expansion, pricing power in NVG or margin expansion be derived from new product categories?

Not sure what is meant by margin expansion. I mean we have given our guidance in terms of margin, mid-20s. Just very briefly -- I mean, of course, there are -- there's business that had a -- that has lower margins, for example, even when there is a tight competition for interesting contracts. Then yes, margins may have to suffer or for example, in the platform segment, if we want to really get a certain business and really get our foot into the market, then to a certain extent, margins may have to be sacrificed in the short term just to get in. But on the other hand side, products, as I said before, that are smarter, that have more advanced technology, whether it's man-portable equipment or platform-based equipment can command higher margins. So in essence, basically, we stick to our midterm guidance for a mid-20s EBIT margins.

Thank you for answering all those questions you have from investors. And thank you to all the investors for submitting your questions. I know there's a number that haven't been responded to, but the company will be able to address those. And we publish responses where appropriate to do so on the Investor Meet Company platform. Just before redirecting investors to provide you their feedback, and it's particularly important to you and the team, Philippe, can I just ask you for a few closing comments, please.

I mean, first of all, thanks for this opportunity. I hope that I was able to give you an interesting brief on our company and what we do, in particular, for the newcomers that may be listening for the first time about Theon. In short, these are definitely exciting times. There are a lot of things to come. We will cement basically our global leading position in night vision equipment, and we continue to cement this. That's why with this various investments into the image intensifier tube, we secured our supply chain. We have the capacity here. We have the long-term agreement, and we want and we will remain the leader in this field.

We move aggressively into the next generation in the augmented reality and fused enabled products through our A.R.M.E.D. ecosystem, which exists and which is continuously being improved and developed further also in the context of the THEON NEXT initiative. And last but not least, we enter the platform optronics segment, which in absolute terms is much, much bigger and which is a segment that we already entered last year with our initial contracts for small quantities, but very important contracts. And this happened much, much earlier than we expected. And you shall hear more about this very, very soon. So thanks again for the attention. And any further questions, I guess you can always address yourselves to our Investor Relations team, who'll be able to help you further. Thanks, Paul. Back to you.

Philippe, thank you so much for updating investors today. Can I please ask investors not to close this section as you'll be automatically redirected to provide your feedback in order the management team better understand your views and expectations. This will only take a few moments to complete, and it's greatly valued by the company. On behalf of Philippe and the team at Theon International plc, I would like to thank you for attending today's presentation. That concludes today's session, and good morning to you all.

Hello, everyone. I'm Nikos Malesiotis, Head of Investor Relations at Theon, and it's my great pleasure to welcome you all today here to our very first Capital Markets Day, both those being here in person and also those attending virtually because we have more than 200 people in total. We are truly delighted by the level of attention this event has attracted. It's a testament to the growing excitement around Theon, and we will work hard to prepare a day that's insightful and hopefully will keep the attention high from start to finish.

Let me briefly walk you through the agenda. Today's program is structured into 3 sessions, each separated by short coffee breaks to recharge and connect. After the final session, we'll open the floor to your questions, giving you the opportunity to engage directly with the leadership team. And for those attending in person, we'll wrap up the day with a dinner where conversations can continue in a more relaxed setting.

So now if you look to the next slide, you'll see why this moment is so important for us. We IPO-ed in February 2024 and nearly 2 years after the placement, we are very, very proud to say we've addressed and we have delivered consistently on the promises we've made. Christianos Hadjiminas, Theon's Founder and CEO, will soon take the stage to explain how and take you through all these various exciting developments on the past 19 months, from growth and profitability to the expansion of our capabilities. But that is just the beginning. Joined by key executives from across Theon, we'll also share what's next, the evolution of our strategy and the opportunities ahead.

In addition to Christianos, you'll also hear from Philippe Mennicken, Deputy CEO and Business Development Director; Dimitris Parthenis, our Group CFO; George Papageorgiou, our newly appointed CEO of Theon Sensors, our Greek subsidiary, who is also leading the post-merger integration efforts; Dimitris Parthenis, CTO and Head of Optical Engineering; Nikos Vasiliadis, Director of Electronics Department. And last but not least, we're especially honored to have with us Michael Murry, President and CEO of KOPIN, who will share our common vision for the future; and Sebastian Vreeman presenting virtually, KAPPA Optronics, a company we believe will play a pivotal role in our future growth.

So I won't keep you any longer. I would like to invite Christian to the stage, who will take us into the heart of today's event. Christian?

Good afternoon, everyone. How are we doing? Good, good. Usually, the token American is before the bar, but this time they put me just before the bar, so I appreciate that. But firstly, thank you, Christian. Thank you to the team at Theon. I'm truly grateful and quite frankly, humbled to present here at your inaugural event in this beautiful country and the nation's capital.

Since joining KOPIN 3 years ago, we've been on a transformation plan that has been very aggressive, maybe not as aggressive as the transformation plan that Theon is on. But essentially, we've retrenched and refocused the company to focus on defense applications. At our heart, we're a semiconductor company that focuses on defense markets that really truly need vision beyond imagination. So when you think about Theon, every single microdisplay that goes into a night vision goggle or thermal weapon sight is critical technology to this company. And that's something that we've been building for over 30 years.

Some of the other markets that we focus in on are visual acuity systems like the IVAS program as an example. We also have a franchise building F-35 helmets, microdisplays that go into those helmets that we've been doing for many years, also automotive weapon sights. One of the interesting things about KOPIN, we also build the training and simulation modules for these technologies in America.

Now before I explain a little bit more about KOPIN, I want to tell you a little story about how we got here and importantly, why I think it will matter to all of you. Over a year ago, I met Christian, I think, at AUSA, and we discussed the trajectory of the market and the need for more strategic partnerships and technology collaborations that truly matter to both companies. Moreover, the need for domestic and sovereign supply chains and technology developments is critical for both countries and both nations.

As I listen to Christian's vision for the future, I quickly realized this relationship will be a synergistic one. From there, a significant transformational relationship was formed centered around the advancement of microdisplay technologies and optical solutions that Theon will empower vision beyond imagination in the most critical times. The new KOPIN fits within the strategy very well actually, as we are now the only North American company that designs and builds 4 different types of microdisplays in the United States and in Europe. These technologies are the right display for the application versus our competitors that only choose to develop one technology and then force their customers to adapt to that technology.

We're also the only company in North America that is currently building a monochrome micro LED, and I'm going to come back to that technology and why that is so important, not only to Theon's future, but KOPIN's future in the United States and NATO. Moreover, we've actually invented a fifth type of microdisplay. It's actually called neural display. This technology is the world's first bidirectional human-in-the-loop AI-enabled microdisplay that looks directly back at your eye. The reason why this is so critical, it allows people, while in the battle of war, still looking at the field to control a drone and operate a drone just with your eye. And the sensor within the microdisplay looks back at your eye and you're able to control that drone. We demonstrated this for the first time in AUSA this year.

This technology was affirmed and our road map was affirmed recently by the United States Army and the Secretary of Defense through what's called an International based Analysis and Sustainment Award under the Secretary of Defense. So the IBAS award that we just received was $15.4 million to develop a sovereign color microLED for the U.S. Army by the U.S. Army. So this is critical for a number of different reasons. Not only will we be developing the technology in the U.S., but we'll also be funded to actually build this technology in the United States for the first time ever. That will cost tens of millions of dollars, which the U.S. government will be investing into KOPIN Corporation directly to build that technology.

This investment will take place most likely at the end of 2026 into 2027. And this is critical technology not only for the United States, but also NATO and our allies, and I'll get to why in a moment.

So the why behind the color microLED is critically important to understand. Most investors that I talk to in the United States don't quite understand why this technology is so important. The reason why color microLED is disruptive in the vanguard of technology is threefold. One, human beings do not do well under stress, trying to remember symbology. Is a square good, a triangle bad and a diamond unsure. When you're getting shot at, those are very difficult things to remember. But the human brain can actually remember green is good, red is bad and yellow, I don't know. So color is critically important. Unfortunately, friendly fire is a common place in the battlefield as well as the training field. And in high-stress environments, mistakes happen with the best veterans in the world that are trained to be the best.

Second, this technology offers a more robust physical device with 50x more brightness in contrast than any given OLED in service today. That brightness is critically important for day and nighttime strategies. As you can see here, this is actually a daytime strategy, and you can barely take note of the note of the words that are put here. This is critical technology for daytime as well as nighttime applications.

Finally, the combination of ultra-low power color microLED displays are important because batteries replace bullets. You don't want your war fighter having big batteries to haul around in the ruck stack. This is great technology that is critical for our war fighters and our allies, but more critically and more importantly, China already has it. They have instrumented their allies with this technology. And for the first time ever, the asymmetric battlefield is favoring them, not us. Therefore, that is why the U.S. government has put their seal of approval on KOPIN Corporation to develop this technology with the Army, for the Army for applications that are like the next generation of thermal weapon sights, certainly the next generation of night vision goggles and Soldier Borne Mission Command applications. This one technology opens up a $1 billion serviceable available market to KOPIN just in the United States.

With the support of and partnership with Theon, we'll deliver similar technologies here in Europe for European, Southeast Asian and NATO countries alike. Customers will receive tariff-free sovereign manufactured Theon equipment using our technology through our Delghetti Bay, Scotland location. Theon will have early access to this technology, creating a significant advantage for Theon, not only in the market, but also from a price perspective. We'll deliver this technology to Theon through the global market, selling either devices, application-specific solutions or suboptimal. We'll take a look at other specific solutions that we can deliver to the market like our DVA and Dark Wave strategy, which you see here.

Again, I'm thrilled to be part of the next phase of Theon's evolution and together, we'll deliver solutions that enable this vision beyond imagination for the most critical of times, which will allow our troops and allies to see their adversaries before they're seen, which will provide better mission outcomes and most importantly, ultimately, save more lives. So we're very appreciative to be here today, and we want to thank Christian and the team and congratulate on the new award and certainly congratulate Jannis and the team for all the great work that they've done. So thanks very much for having us today.

Welcome, everybody, here and online. My name is Dimitris Parthenis, and I serve as Theon's CTO, Chief Technology Officer and Head of Optical Engineering. I'm pleased to introduce the first part of Theon Sensors technical presentation, after which Dr. Vasiliadis, the Director of Electronics, will present the second part.

Theon is at its core, an R&D-driven company with strong organically developed expertise and capabilities built over time. We have achieved the competencies needed for product development by consistently investing over the years in the key disciplines, optics, mechanics, electronics and software engineering. Theon fully utilize the manufacturing capability space by designing systems using the latest and most advanced manufacturing techniques while relying on suppliers for the production of the subcomponents. We get security of supply by having at least suppliers for each part, of course. All incoming components are thoroughly inspected by a quality control department before reaching our production floor. Final assembly takes place at Theon facilities where lenses, mechanical parts and electronics are all integrated into the finished products. Each product then undergoes rigorous testing and adjustments, ensuring the high standards of quality that Theon is known for.

Let's start with a brief history of Theon sensors product portfolio, followed by some of our upcoming products in Theon Next, our vision for 2030. Theon founded in 2009 -- sorry, 1998, and its first product addressed legacy armored vehicles, where a family of image intensified night vision periscopes was designed with its first export to the Australian defense forces in 2004. Multiple variants of this product family have been designed and sold to a variety of customers with minor sales even to this day. The night vision periscopes, familiarized Theon with the technology and use of night vision image intensifiers, which was capitalized by the design of a family of night vision weapon sites in 2008. This product family was expanded in 2012 when Daymon MR and LR were designed, while Theon recently designed Daymond MAC 2. The most important decision in Theon's history -- sorry, came in 2011 when Theon designed its first night vision monocular with its revolutionary helmet mount. It caught Europe by surprise, and Argus became the preferred option for monoculars selling to Sweden, the Netherlands, Denmark, UAE, et cetera. A few years later, Theon designed dedicated binoculars, Micron -- Micron and NIC, followed -- which followed and became the best sellers as they superseded in technical specifications, the dominant U.S. globggle at the time, selling to Germany, the U.S. Marine Corps, et cetera.

In 2012, Theon ventured into the digital products world with its first product, Urania, a camera solution designed for the CV90 vehicle of BAE systems in Sweden. The digital portfolio was expanded in 2014 when Theon launched a new line of products by developing its first thermal weapon site followed by a full family of stand-alone and sites. Theon listened to its customers and the shift in preference by the advanced armies to thermal against intensified vision as thermal vision easily detects and human-related activities. This was followed by the second-generation ThermisMark2 family of We have seen a lot of success in the past years with sales to U.K., Belgium, et cetera. They also evolved into a few tailor-made products that were co-developed with prime defense contractors such as Apoint to serve the anti-tank weapon market as the night vision accessory to their popular fire control system.

Accelerated by the IPO 2 years ago, Theon launched a new product line named ARM, augmented reality modular ecosystem of devices, to cater the needs of the future or modern soldier. This line addresses the modern soldier requirements for inter connectivity, situational awareness, multispectral imaging, et cetera. It features daytime and nighttime augmented reality products that integrate data from the battle management system. Central to this product line is a soldier-borne mini computer that processes and augments the data, projecting it to the user's unobscured eye. -- is the head of display for daytime use, while for nighttime use, you can either choose Orion or IrisC. Both of those products -- sorry, the FIA and the mini computer will be supplied to Rheinmetall Electronics next year for the future soldier program of the German Army. Theon again turned their attention to vehicles by developing a thermal for legacy vehicles called Thermon. And at the same time, expanding the R&D team to develop Talus, a family of ISR systems. These systems integrate off-the-shelf multispecle cameras, laser range finders and optionally stabilized pan and tilts, which have already been sold to a couple of customers already. This concludes the overview of the past products that we developed until the beginning of 2005, while on the next slide, we'll show the current developments and the future.

It is with great excitement that I share with you Theon's current and future developments as well as Theon Next, our vision for the unification of all manportable equipment. All upcoming products combine organic expansion of the portfolio based on Theon's 28 years of experience in electro-optics with technologies that are inorganically added through our strategic investments. On this and the following slides, we will demonstrate how our investments seamlessly integrate into what we call Theon Next Vision.

Firstly, our oldest product line of vehicle and ISR products, which was until recently relied on commercially off-the-shelf components is now radically expanding. We are deepening our ISR design capabilities by integrating the expertise of SOC EOS, as we already described. Together, we are currently developing 2 stabilized pan and pills, multispectral systems to meet the growing demand of vehicle manufacturers for stabilized and AI-enabled observation and targeting optronics. This will feature bespoke thermal and day cameras on a new pan and pill stage. Simultaneously, Theon Sensors is also developing a multispectral electronics box for a remote weapon application that employs a unique architecture, which significantly reduces cost. Theon's acquisition of Kappa completes our offerings in the modern armored vehicle department, adding 360-degree peripheral camera systems and video distribution systems. New R&D synergies with Kappa will certainly follow with our new partners.

Theon will continue to expand our most popular product lines. This includes our night vision monoculars, binoculars and sites as well as our thermal weapon sites. We plan on introducing new products such as multispectal sites and cooled sniper sites, among others. But let's now talk about Theon Next, which comes -- which brings together organic growth and new partnerships. During this year, Theon Sensors introduced a new product family based on a new technology block, the ballistic calculator. The first product in this line is an upgrade of the THERMIS Mk2, thermal weapon side, combining the ballistic calculator that was organically developed with environmental sensors to deliver a true dislocated reticle to the operator, making into a fire control system. As discussed, we expect fire control systems to get increasingly adopted in the manportable business and Theon is ready to engage.

Theon Next focuses on the needs of the modern soldier, targeting the IVZ, the German Army's Future soldier program and other customers. We aim to expand our product portfolio by incorporating cutting-edge technologies such as waveguide optics, low light CMOS images, ultra-wideband and mixed reality components. And we are currently working on several exciting new products, including the dark eye for rear projection on an night vision goggle, via second-generation and a visual augmentation system, or VAS. Copings, microLED displays and various mixed reality expertise will play a pivotal role into bringing these products to life. And of course, the FCS and AI technologies will merge with ISR, adding new capabilities.

Now let's dig into Theon's main product families to give a little bit more information on how the products are developed and how strong is the in-house development expertise. The products are now being presented on their core technologies. Firstly, let's see the image intensified or analog products. They are comprised of 25 variants for Theon for various night vision monoculars, binoculars, night vision weapon sites, having different field of use, sizes, mounts, battery packs, et cetera. In this category, Theon have always performed 100% of the optical design, mechanical and electronics design while integrating any commercially available image intensified tube, the component that amplifies the light. This has traditionally given Theon full control of customization of the developed goggles, while optimization of the various design parameters and cost led to their worldwide success.

Most of Theon goggles are what we call cube agnostic. They can accept tubes from any of the 4 tube manufacturers of the Western world. To secure the supply of the image intensified tubes, as we already discussed, Theon has commercial agreements with Elbit Systems of America and L3Harris, the 2 U.S. suppliers, while recently invested in the 2 European suppliers and now Theon owns 60% of Hardware Digital, and we are in an agreement to purchase 9.8% of Exosens.

The THERMIS and THERMIS Mk2 families of thermal weapon sites have undergone development for over the past decade. These products represent Theon's response to the evolving requirements of advanced military forces, which favor thermal vision systems due to the clear advantages in night operation, effective Camo+ penetration and reliable performance integraded environments. Theon possesses 100% in-house capabilities for designing the optics, the mechanics and the electronics.

Regarding the electronics, Theon maintains full organic capability, designing all sensor readout electronics, image processing units and input-output interfaces within the organization. This ensures complete control over product design and enables Theon to provide fully customized solutions tailored to the customer requirements.

Moving forward, let me present Theon's ISR solutions. Theon entered this market 4 years ago, as we discussed, when we created a dedicated R&D team. We developed Talos ISR and optionally stabilized pan and field electro-optical solution based on mostly commercial off-the-shelf components. Talos has already started making sales while it's greatly contributed to organic increase in knowledge and testing infrastructure at Theon. As discussed earlier, Theon decided to accelerate the path to a wider range of ISR products once that we have fully in-house developed components by investing in SOC EOS.

Since last year, Theon -- the combined R&D of Theon and SOC EOS have been developing 2 new product solutions that address the armored vehicle market. They are 100% designed in the group for the optics, mechanics and software with AI-enabled capabilities. It's too early to disclose more information on this, but we expect prototypes in 2026 that will be evaluated by the first customer. We expect this market to grow, as we discussed, as there is a vast increase in the armored vehicles requirement in Europe and elsewhere, and we are fully engaging with this technology segment.

This year, Theon entered the Fire Control Systems segment as well. The demand for increased efficiency among modern soldiers continue to grow, and FCS solutions address this need by allowing fewer personnel equipped with advanced fire control technology to produce a greater impact in the field, thereby reducing both material and human resources required. And FCS differs from traditional marking methods where soldiers rely on ballistic reticles and must estimate their own target distance without any accuracy. That results in decreased marking precision at longer distances. The fire control system utilizes a laser range finder to determine the target distance while also measure the environmental conditions that affect the projector trajectory. Thus, they automatically calculate the correct ballistic solution and provide to the operator a simplified reticle, which significantly reduces their cognitive load and improves success rates over extended distances.

At Theon, we have integrated a state-of-the-art laser range finder with an in-house developed ballistic calculator and the sensor suite to form our own fire control system module. This advancement was first implemented through the upgrade of the THERMIS Mk2 into an FCS-enabled product. Currently, the prototype phase -- currently, it is in the prototype phase and the ballistic calculator has demonstrated excellent field performance with comprehensive customer evaluation scheduled within this year. As we discussed already, we expect also this segment to have the greatest increase in demand and fee and plan to address it with multiple products that are coming up in the next few years.

Thank you for your attention, and I will now pass the torch to Dr. Vasiliadis.

Thank you, Dimitris. Good afternoon, everyone. I hope that you are not already tired, but I will try to make it quick. My name is Nikos Vasiliadis. I'm the Director of Electronics, responsible in leading the research and development of electronics, hardware and software, including the integration of sensors and computer vision at the edge. And I would like to thank you from my side for attending Theon's Capital Markets Day.

Today, I would like to give you Theon's approach to capture the digital dismounted soldier space. I will first walk you on current state of the ARMED ecosystem to address the space, to address the digital soldier requirement. And then I will go through our new initiative, the ARM -- next to even expand further the capabilities of the soldier for 2030 and beyond.

But what is ARMED? Arm stands for augmented reality, modular ecosystem of devices. It's not just a product as it has been already presented, but it is a concept, a complete ecosystem that it is being designed to advance the capabilities of soldiers operating in complex environments. Modern digital soldier, modern war fighters are facing 3 main challenges. First, they need to operate -- to have the visibility to operate in low visibility in adverse condition environment. Then they need to be connected to the -- up and down to their command and control and management chain and of course, being constantly aware of what is going on around them, so they have a situational awareness of their environment. ARMED addresses all 3.

How it does that? ARMED is built on Theon's proven electro-optical systems. So for example, here that we demonstrate that we depict ARM on one side, we have all the existing electro-optical systems, the digital, but also the night vision systems that have been already presented. The Orion fused by Nota, the IC and the Micron device and of course, all our line -- the complete line of THERMIS weapon sites. This list is constantly evolving, and we have already introduced systems like the FIA daytime see-through AR display. And within these ecosystems, they are all interoperable between them.

The electro-optic devices are now augmented by computing devices that have the capabilities to run applications, collect the digital imagery from the sensors, from the systems, fuse them not only together, I mean, the imaging sensors, but also fuse them with critical information that represents the environment and then send it to be projected to the user at real time. This approach results into an ecosystem modular and interoperable. Customers can come now to Theon and select based on the tactical requirements and the organization of their forces, select and cherry pick the right equipment for their application, while at the same time, they can -- the war fighter can seamlessly change from nighttime to daytime configuration back and forth in the field.

Beyond the core features, ARM supports new applications developed by Theon, third parties or even the customer itself. These apps enable advanced functionalities like AI-based object classification, gesture recognition and video stripping up and down the up and down the C2 of the system for a complete situational awareness of all the battle management system. This flexibility ensures that ARM can involve with mission needs and technology trends. But ARM is not just a concept. It's already operational. Among others, a lot of demonstrations and a lot of users that have acquired instances of the ARMED systems. Two notable examples are the recently announced OCA and contracts.

So in the context of the OCA tender contract, for example, the German and Belgian forces are equipped, they opted -- they decided that for their operational capabilities, they would like to equip with the Micron with the -- the IEC thermal clilipon attachment together with the localization and computing smart battery pack module. This system now is connected with the battle management system that each of these forces are using. This is taken care completely by film supporting the user. Now these 2 users do not only have night vision fused with thermal imagery, but they have augmented reality. So we are collecting all the information from the battle management system, pick only those that are very critical for their current tactical requirements and then we represent them as partially aligned information with the environment.

So now the user has not only enhanced vision, but absolutely knowledge of what is going on, where are the friendly forces, where are the enemy forces, where are their points of interest. And this information is active, is connected to the -- up and down to the battle management system. So it's always live and providing value to the user. In the context of the IDZ now, the user has selected to get the see-through augmented reality display together with our even more advanced Smart Gateway, which now has more computational capabilities. And through that, through custom applications that we developed for the Smart Gateway, the system get connected with the IDZ infrastructure. So now whatever is happening to the IDZ system, we can create live video views that they are being projected to the user via the see-through display.

But not only this, although the IDZ for now got these 2 components, since all these systems, as I already told you, are interoperable between them, they are enabled for the future to select at any point, any other electro-optical instrument to augment their capabilities. So to sum it up, ARM delivers modularity, adaptability and operational value. It's a future-ready ecosystem designed to keep soldiers connected, informed and effective in the most demanding environments.

So again, Theon is committed to advance the ARMED ecosystem with new equipment and capabilities and our road map that has been already presented by Dimitris reflects that commitment. However, I'm excited to share our next big step and Vision for 2030 and beyond, what we are calling ARM Next. So this initiative is not just an upgrade. It's a response to evolving technology, market dynamics and direct feedback from users, customers and future so the program where we are already in and getting information from this. The continuous advancements in sensors, AI and augmented reality, combined with this operational feedback that we got, highlights the need for a more holistic, modular, like we already were modular, but keep this modularity and future-proof solution. ARMED next builds on the foundation of ARM, but pushes the boundaries to deliver enhanced capabilities for modern systems.

So the capabilities that ARM Next brings to the table are -- can be summarized. One, we need increased lethality by seeing first and acting first for the user. To achieve this, digital day, night and thermal imagery is fused into a single unified display for faster decision-making. Second, enhanced situational awareness by overlaying critical mission data, but this time also AI identified threats in real time. Third, we -- the user needs increased servurvability using sensors, not only to detect what it is on the user's field of view, but also to detect rear and flank activity, giving soldiers a full spatial awareness.

Command and control on autonomous devices. Soldiers can view live streams from drones or robotic units directly on the visor, enabling their remote control. And finally, we need to integrate the headborn system, the ARM Next with more and more headborne devices like audio headsets for a holistic headborne solution. So to achieve this vision, we are pursuing both organic and inorganic growth and as has been already presented again and again. Organically, Theon's R&D is expanding its power and expertise in key areas like multispectral sensors, advanced optics, now AI and AR, VR, NXR applications and software and hardware platforms.

Organically, Theon is forming strategic alliances, supplier agreements and targeted acquisitions to accelerate innovation. We already spoke about that. Innovation, which pursues to develop the ARM Next modules as they are being depicted in the slide. Excuse me that the slide is AI generated, but this is a very new concept. We are constantly working on that and unfortunately, I cannot disclose more real-world images.

Now about the modules, if we could quickly run through them and how we are approaching their design and development. First of all, the ballistic helmet, which efficiently mounts all different modules and efficiently routes the cabling, which is becoming more and more. Here, we are collaborating with Tier 1 suppliers from the field to address that. Then the vision enhancement suite where day low light and thermal imagery is produced to enhance users' visions and rear cameras are used for threat detection. This module is based on Theon's long-term technology and know-how.

Now the headborn computer on the back of the head, which is also the power module, provides advanced computing capabilities like AI, modular batteries and secure wireless interfaces. This module is also based on Theon's technology and know-how. However, we have expanded by integrating ultra-wideband technology, a military-grade wireless interface that enables us to transfer wirelessly imagery from connected weapon sites directly to the computing system and from there to the projector. So this way, the user now can see around the corner without being exposed or can even engage target without need to raise the weapon at the soldier height.

It was to be mentioned that the ultra-wideband module through the alliance we had with Alerion is already manufactured and delivered out of Greece to sustain -- to keep the secure the supply chain. So ARM Next offers an immersive AR experience through our collaboration with Varjo, we have already mentioned that, we enable synthetic environments for training, collaboration of different users in the field and mission simulation. The digital audio headset is also integrated as a key module on the system. This way, audio is available to the BMS up and down the command chain while also it can be used and is being used for AI-based human machine natural communication.

Finally, the Varjo, our next-generation see-through AR glasses provide large field of view, high resolution and night to-day visibility to enhance the capabilities and situational awareness of the user while being thin and lightweight to reduce user fatigue. Theon is carrying over the design and development of the AR glasses, while the collaboration and placement in coping dissipates the availability of high brightness microLED display to increase the daylight capabilities of the system.

To sum it up, the ARM Next is designed to deliver unmatched situational awareness, salability and connectivity. It's a modular future-ready system that empowers soldiers to operate smarter and safer. This is Theon's commitment to innovation and operational excellence. Thank you.

Thank you. I suggest we have a 15-minute break. The last session will be much shorter. I promise, 10-minute break, okay? And we'll return for the financial part and also questions, okay? Thank you.

[Break]

So welcome back, everyone. I'm thrilled to see today so many familiar faces. I will try not to take too much of your time. I guess there are plenty of questions to follow this session. So let's continue today's presentation with an overview of Theon's financial performance.

Our results reflect a disciplined approach to growth underpinned by a robust balance sheet and prudent capital allocation. We have consistently delivered profitable growth, maintain a strong backlog and ensure that every investment, minority or majority, supports long-term value creation. Our lean cost structure and efficient use of capital have enabled us to deliver on our commitment to shareholders.

Before proceeding to our financial metrics, it is important to highlight here that due to the upcoming share capital increase, the one that we have already announced will support the acquisition of 9.8% in Exosens. So this share capital increase will be done through a rights issue, and there are several associated regulatory constraints. And because of this, we have prudently decided not to provide any profit or margin guidance at this stage. Guidance for 2025 and 2026 will be provided to the market once the share capital increase is concluded.

Moving on to our backlog. As of today, we report a soft backlog of EUR 700 million, reflecting the addition of a recently announced order from a European NATO country. As a reminder, soft backlog includes both confirmed orders and secured projects, which are waiting from some final ratification or signing. This backlog is distributed across various regions with particular emphasis, of course, on Europe. The composition of orders indicate ongoing demand for night vision, while there is an observed shift toward Thermal and ARM products. Of this total backlog, 19% is scheduled for delivery in 2025, 46% in 2026 and 35% in 2027 and beyond. Additionally, there are options amounting to EUR 720 million that our customers may exercise at their discretion. I remind you here that historically, all such options have been fully exercised. And not only that, but we have seen in many cases that existing customers are tapping into existing into previously, let's say, finalized contracts and adding more and more quantities. So we have a very good confidence that these options are going to be exercised in the near future.

The evolution of our key financials demonstrates our ability to scale profitably. Revenue has grown from EUR 143 million in 2022 to EUR 352 million in 2024. We have revised our guidance for 2025 from EUR 410 million to EUR 430 million range to EUR 435 million to EUR 445 million range, while our target for 2026 is set to a range between EUR 570 million and EUR 590 million. Our top line midterm target is to grow by at least 15% per year organically.

EBIT and EBITDA have followed a similar upward trend, underscoring our operational discipline and focus on value creation. Midterm target is to achieve a mid-20s operational profitability as per historical numbers.

Our investment strategy is both ambitious and disciplined. With a demonstrated history of efficiently allocated capital, we prioritize capacity expansion and the acceleration of R&D activities, all contributing to substantial organic growth. Capital expenditures increased from 2.6% of revenue in 2022 to just under 5% projected for 2025.

R&D expenditure remains in the area of 1.2% to 1.4%, enough though to efficiently support our new product development objectives. Our immediate focus is on further increasing -- Digital's production capacity, advancing technological innovation with a special emphasis in AI through internal efforts and strategic alliances and investing in our new platform facility in Athens. All CapEx and R&D initiatives are closely integrated with our key growth strategy to ensure optimal returns on every euro invested.

I want to emphasize the strength of our balance sheet, which is a cornerstone of our financial strategy. Historically, Firm maintained a net cash position fueled by our strong cash generation. To facilitate upcoming M&A activities in addition to utilizing our IPO funds, the company has entered into a 5-year EUR 300 million senior facility agreement. Through this facility, we have already refinanced our shorter-term working capital facilities and will partly finance the investments in both Kappa and Exosens.

I remind you here for those who haven't seen the respective announcements that there is also an accordion option attached to this facility for an extra EUR 100 million. So this means that we have enough firepower to fund all our future M&A plans with no additional equity raising apart from the one that has already been announced around Exosens.

Although our pro forma leverage ratio will peak at 2.9x, we target to bring this down to healthy levels, well below 2.5x and maintain a prudent midterm approach. Our capital allocation strategy is designed to balance disciplined growth with strong financial stewardship, ensuring we create long-term value for our shareholders. Our top priority remains the pursuit of bolt-on acquisitions that strengthen our core operations and deliver synergies. We will also seek strategic minority investments that offer a clear and executable path to majority ownership, enabling us to build a relationship with high potential businesses and give access to key technologies. Again, emphasis on bolt-on. So we're talking about acquisitions in the range of EUR 30 million to EUR 40 million each.

Our second priority is the allocation of capital towards production capacity expansion and research and development. These investments will support increased demand, enhance efficiency and drive innovation across our product and technology portfolio. By reinforcing our operational capabilities and sustaining our pipeline of new offerings, we aim to secure long-term growth and resilience in an evolving market environment. We will maintain a prudent capital structure, ensuring ample liquidity and financial flexibility to support these priorities while continuing to deliver stable returns to shareholders through a consistent dividend policy.

In 2025, as promised in the IPO, we distributed 40% of our net income. In 2025, 35% -- sorry, in 2024, it was 40%; in 2025, 35%, and we expect dividends to keep growing in absolute numbers. Each capital decision will remain guided by a disciplined focus on total shareholder return, integration excellence and strategic fit.

Now looking ahead, our guidance and target remains strong, yet adjusted to the new realities of our business. For 2026, we are targeting revenue of EUR 570 million to EUR 590 million. And this, of course, will be fueled by our existing backlog, but also the exercise of the options that we expect to happen in the next months and also, of course, orders that are going to be received for now until the year-end.

CapEx is going to be in the area of $30 million and a dividend payout ratio between 20% and 30% of our net income. We appreciate that this is a bit lower than what was guided right after the IPO, but the company is targeting total shareholder return for its investors. For the midterm, we guide for a more than 15% organic growth and a mid-20s profitability. We revised upwards our CapEx guidance to around 4% of our revenue to support our growth even faster. Payout ratio will remain between 20% and 30% of our net income. Lastly, our effective tax rate going forward is estimated at 23% to 24%.

With this, I will give the floor back to Nikos to coordinate the following Q&A session. Thank you.

Thank you, Dimitris. So I suggest before giving the microphone to those attending here in person to address a series of questions we have received from those virtually. So this group of questions is around our upcoming Greece to finance part of the Exosens deal and it's about also the upcoming M&A opportunities we have, size, sector and things like that. Yes. Okay. Correct.

Okay. Let me try to -- although Dimitris covered a lot of those points that were raised, which I'm aware of, let me clarify the following. First of all, we don't plan to have another capital increase than the one we have decided to do. We have enough ammunition to do those smaller-sized acquisitions that I talked to you about and Dimitris has talked to you about. I also want to say that, again, because we participate in this capital increase that has already been announced as being an anchor investor, okay, as a sizable size, we are not -- we are constrained. We cannot disclose more specific guidance for midterm, correct, Dimitris?

So we are concerned on that, but our targets remain the same as they have been from what I described to you in the IPO. Also, I want to clarify something that we do not plan to have any other -- for the next year or so, we don't plan to have any other acquisition of shares of Exosens because also a lot of people ask us about that. What I was referring to earlier is basically, we are after the approval of the acquisition of 10% by -- for Exosens on the beginning of January, we will make all the necessary steps to strengthen our relationship, and we have a lot of good ideas in mind. But we -- for us, it is -- we believe it's an amazing opportunity. And the move that we did with Exosens was really cemented our relationship. We see a lot of potential, and it's a different way to have a commercial relationship and a different relationship to have a commercial relationship and to be the only strategic partner. So we don't plan to increase the stake right now. We don't plan to have any other capital increases. I don't know what other points?

I think it's enough for now. If there are any follow-up questions, we're happy to address them. Yes. Or are we online? I mean, also with regards to the type of issuing, I don't know if you want to cover it, the way of raising money or we need to ask Antonios.

Antonios, please. Antonios Gkiokas, our Chief Legal Officer, and he will explain also the constraints that we have.

Good evening to everyone, and thank you for joining us here. The process that we will follow for the upcoming capital markets issuance will be through a rights offering.

Why is that? Because given that we have a majority shareholder having an anchor position in the process, we have the regulatory and corporate requirements under Cyprus law, which have driven this decision to go through a rights offering instead of a similar process. So we're actually moving for a share capital increase, which be at the -- around the previous ranges between EUR 130 million to EUR 150 million, I would say, million, not more than that. And a sizable portion will be underwritten and covered by our majority shareholder. Therefore, it's a totally driven decision on regulatory and corporate requirements under Cyprus law, which take us through a rights offering.

Also with regards to timing -- and this also gives us the space and timing that we can implement this transaction as per the legal and regulatory requirements. And happy...

I want to stress -- I don't know if I want to stress that we want to do this capital increase as soon as possible. We do understand that it has an effect on us. But as I said, we have to follow regulations, and we have already said about in January, but we make every effort to do it much earlier than that. If we didn't have the regulatory, we would have already done it. So that's it.

Any more questions? Yes.

Usama from ABN AMRO, ODDO BHF. I just have one small question with regards to the Theon Next. So I do understand that the market is trying to digest the current M&A strategy and the way of financing it. In the medium term, market has a view on it, maybe negative, but you say in the long run, it is going to work fine. I want you to war game slightly on the -- on what has happened in the last 2, 3 weeks with release of the EagleEye platform. I do understand that you're the market leader in night vision and you can sell it immediately to already clients. Do you see a strong chance of disruption from Andurl's product, especially in the U.S. market? Or do you still see it as an opportunity? I know maybe it's a little bit out...

I don't like to comment on specific companies, but I think maybe Dimitris or Nikos, you would like to address that?

Is it -- Okay. Well, yes, all those recent developments were a pleasant surprise, not a pleasant surprise, but it was exciting news for us to see where the technology is going. However, those are developmental products, and they will take time. Remember, about 7 years ago, the first IBAS program was also a big developmental program. And 7 years later, it actually sat down and was retendered to those 2 companies. So we believe that traditional image intensified night vision goggles will not be out of the picture for a long time. And there are multiple technical reasons for that. The reason is that they consume very, very little power. With just a single battery that you put in a toy, they last for 20 or so hours. A battery in those modern system will take you, I don't know, 10 minutes of run time. So power is just the most important parameter. And of course, resolution and low light performance, which is intensified. So we are not, let's say, worried that much that gobbles will be substituted. However, we do see a new segment -- product segment opening up those vast systems. And that's why we will be following -- we are actually following already, but we don't see this as competition to the golobbles. We see it as a parallel market for a virtual mixed reality system.

CEO Avarelas from Pantelakis Securities. You very kindly showed us the breakdown of the opportunity of EUR 6 billion by region. I would like to clarify what is the time frame for this EUR 6 billion opportunity, please?

Yes. Thank you for the question. It depends on the region. For instance, in the Far East, it's -- we don't expect any major movements that is an actual issue of tender. We know the exact requirement. We know the exact more or less tender that will come out, okay? For instance, in Asia, which is the most far away. And we believe it's going to be like 5 to 7 years delivery or maybe earlier in the Far East, but we don't expect anything to come out before 2027. I mean there will -- there could be -- when we're talking about the big countries like Japan, Korea, Taiwan is a different story. They have a different path that will come earlier. But on the other ones that we've discussed, like Europe, it's immediate, imminent. I cannot use another more short-term word. The U.S.A. is also the more programs like KOPIN is involved. We are also involved. By the way, you need to understand that in the States, we have a shutdown, which prohibits people from announcing things and which means that we have also, for instance, aside from what Kopin is working, we also have another program that we are being awarded to another U.S. partner. And we cannot say anything because it's a shutdown. So there's no -- you need to get permissions and things like that. So regarding also the buyout in the states, I'm talking region by region to answer your question. Regarding the buyout, again, they have been too down selected, but we are in one of them, one option. We are ahead of the others in terms of having an actual product. But as Philippe said, the mood right now in Washington is very U.S.-made, U.S. produced, U.S. design, U.S. everything, okay? And we are obviously addressing this as we speak. But we have other imminent decisions in the states like the National Guards where, as Philippe said, there are 4 major clients in the U.S. I cannot say more, but we are already covering 3 of them, okay? Now about the other, as I said, Europe is yesterday, and I'm sure Q4, you will see a lot of European orders, let's put it this way, very imminent. And MENA is a little bit more slow process, but we're going to have a more smooth release of tenders of opportunities. Now remember, in the Middle East, in some countries, we are now like one-way street supplier, okay, in some of the major countries we stated earlier. So this is a continuous and predictable cycle in the Middle East for us, okay?

Can I just...

Yes, please, please, please.

Can you just help us understand, is this just night vision or platforms also on?

For instance, in Middle East, platforms are -- as we speak right now, there are specific opportunities that we're pursuing as an example. The same thing happened in Europe, and that's why we had the announcement yesterday, which for us -- for us, at least, it's a breakthrough. The in the countries now this is a very good question actually because in all of the regions that I mentioned earlier, I was referring more to the traditional business, we have the night vision business. Now for the other, because there's something new like the thermal Iris and now everybody knows that we are the main supplier in Europe. For the other products, the ARM products, the demand is much faster. That's why we think we're going to exceed -- not we think -- we know we're going to exceed 20% of this mix of products into our portfolio. I think you were second, and then I will take.

Lasse from Berenberg. Can you give a view on -- you mentioned the 30% penetration in Europe. What is your view on how long that takes until we get to full penetration? I guess what's the runway you still have to keep growing at the pace that you're growing?

I will let Philippe answer that.

Question to me.

Yes, it's...

Difficult to answer with an exact time line. We estimate we're at around 30% today. It's never going to be 100% or it may be, who knows. But we would be rather conservative to see that it's going to end up at 70%, 80% at some point. Now if you look at the math and the numbers that need to be delivered, we're talking about a huge quantity. I think we will soon see that certain countries will really move towards the goal of, if not 100%, but really go up to 60%, 70%, 80%, 90%. And then I would guess that other countries will soon follow because you always need a leader basically to make the first step to really go for it. And then other countries will follow not only because it's the right decision to do the equipment sold with this capability, but also because they will realize if they don't move now, they will be -- they have to go to the end of the queue because at some point, there's only a limited capacity and a limited supply of tubes. So to answer your question, how long it's going to take, I don't know. But I think we will see probably in the near future that things will move faster towards this direction, at least in certain countries, and my personal belief is that other countries will follow.

I would like to add about Europe because we're talking about Europe right now. We said something earlier, and I will stress it again, maybe it was not fully understood. I mean, Philippe said that the SAFE mechanism, for instance. The SAFE mechanism, what is it? It provides financing. It's financing, it's not subsidies, right? Very, very low interest financing, right, which allows countries that have joint procurements to tap into that. The effect of that, and that's why Philippe was saying earlier, the effect for that for us is amazing. And then I will answer your question also to complement what Philippe said.

It's amazing because a lot of countries are rushing to the same institutions that we have been dealing with to get the same product and take advantage because you cannot use a SAFE mechanism if it's not a joint procurement, okay? And this -- whatever we have done in some of the institutions in Europe, it's considered to be a joint procurement. Now -- so -- and that's why a lot of this demand that Philippe is saying also has moved. We've seen that with specific countries, especially in the South that they are rushing to take advantage of this financing and we want to place the orders now. The problem is -- and again, that justifies fully. That's why we are so excited about the Exosens. That in itself, it's -- what it means, it means because given our projections already those countries will not be able to get their goggles in '26 and '27. But given those, as an example, SAFE mechanisms, they will place the orders now for '28, '29, they will get some in '27, '28, '29. But those mechanisms have made people to rush to buy now, but we have the problem with the capacity.

And if you have heard about Exosens' recent increase, which is not as big as it was because it was already announced a part of that. It's in response to also, if I'm allowed to say, what we are encouraging them to do given what we see in the market. So the answer to your question through a long way, is very simple that contracts will be placed now, but the deliveries will be spread out to the future, that is '27, '28 as Exosens as well as Harder Digital ramp up their capacity on that.

And maybe how do you balance pushing Exosens to increase capacity versus, I guess, to some extent, it's in your interest that the market remains tight in terms of supply. So how do you kind of balance that?

We are -- how can I say, we are like a mirror of our end user, okay? And this is why our relationship with Exosens is good. If the end user tells us, please, you need to speed up and everything and given a specific opportunity we have in front of us because end users are serious, right? And the countries we are dealing here in Europe, they're all very serious. So if the end user asks you, we have this specific requirement, right? And you see that there's not enough capacity to cover that, what you're going to go. You're going to go to your supplier like Exosens or Hardware Digital, although there are different type of tubes, and you're going to ask them to increase the capacity. So it's the capacity -- what I'm trying to tell you, the capacity increase that we are pushing, sometimes our suppliers is directly related to specific opportunities that can fill that cannot be fulfilled given the availability that we know today.

And capacity increase is as well an expensive sport, and it takes time. So you don't want to invest millions and millions in creating a huge capacity. And then after 5, 7 or 10 years, you have overcapacity. So yes, it is in line with what we see in the markets and what we suggest or what we discussed with Exosens as well our own capacity increase on Harder Digital, but it has to be done in the proper way. And don't panic and invest investment doesn't create something huge, which in the end of the day is not -- doesn't bring any return on investment.

Yes. And let me remind again everybody that Exosens, that's why it's an amazing opportunity for us. It's the only producer of 16-millimeter tubes. Neither Harder Digital nor the Americans produce 16 millimeters. And right now, our biggest clients in Germany, for instance, and Saudi Arabia, they're all using 16 millimeters. And that's why it's very important for us to have this strategic stake because we -- it gives us the -- if you want, the leverage like any other shareholder, but the only strategic shareholder to push the company in the right direction or to encourage it, I should say.

Apologies One question related to this one, to this point is whether we have any plans to add -- to create new type of tubes in Harder Digital on top of the 3G 18-millimeter tubes?

No. The answer is no. Right now, we don't plan to do that. I think Exosens is doing a very good job now that we have long-term agreements. And again, we've stressed that we have a long-term supply agreement with Exosens that is almost -- not almost it's automatically renewable, okay? And we will exercise that shortly, okay? We will exercise that shortly. And once we are approved in January, we will work with Exosens and its ownership to forge even closer ties between us.

Maybe just one more -- can I ask one more? Yes. I know you can't give formal margin targets for next year because of the, I guess, the rights issue. But I mean, is there any reason to believe that margin should be materially different to this year just based on product mix or something you're doing with Cap optronics or anything like that? Because I know some people in the market might interpret it as not giving guidance means there's something happening, but...

No, no, no. It's -- I wish we could give you -- it would be only good news for us to give you guidance for that. But regulatory, we cannot do that. We just cannot do that.

As we said before, this year, we have 90% analog of traditional night vision and 10% digital. And next year, we see that's going to be 80-20. And what we said before on the digital, we see even higher margins. So just think about it. that shouldn't.

And plus, we don't see right now any pressure on our prices for the 90%. We don't because there is more demand than supply. No more questions for you. You have to use your colleague to...

You covered some of my questions. So thanks.

So I have, unfortunately, also several questions, but I'll limit it to three. So let's continue with margins. So we know that in portable night vision and VGs, you are dominant. In digital thermal, margins are higher, and hopefully, that's going to be increasing contributor to the revenues. But we -- what we don't know, but -- and you are the new entrant in this is platform optronics, which is more crowded, more sophisticated. As far as I know, for gimball using drones, you need also stabilization technology. And although there isn't a perfect peer, we know where haensolds optronics or platform optronics margins are. We have some idea about Elbit in their iStar segment, and this is not...

They are low. They are low -- So again, I don't want to comment on other companies. I mean -- but your comments, yes. You say that they are low.

Yes. So what's your view on the medium term? Let's not talk about 2025, 2026, with your ambitions to penetrate platform optronics and as this becomes a revenue contributor, isn't it going to be margin dilutive for you? That's my first question. The second one is shorter. You touched upon the big opportunity in Asia Pacific. As far as I know, Japan, not South Korea, will become the third largest spender? Japan.

Japan, yes, absolutely.

So my question is, why buying a small player in South Korea rather than doing in Japan? I'm pretty sure that there is lots of answers behind that. So that's the second one. And the third one, sorry, to take your time is regarding the IDZ there was a project in Germany. As far as I know, what was awarded as a firm order is just the beginning, just to equip, I guess, 13,000 trucks. So where do you see this contract going in the medium to long term? Can we assume it as tip of Tysberg? And are you going to stay as the largest subcontractor of Rhein metal in that very specific project?

I will let Philippe answer the last one, but it also -- your question answers a little bit your question in the sense, how long will that last? Well, it's going to last, but then the soldiers we won aside from the traditional that we are supplying right now, they will also want the future soldier stuff. And it's like it's being built on a modular basis, but Philippe will say more about that.

Let me answer you the previous questions. Japan. First of all, in Japan, they were -- they have only been buying very small quantities, small tenders. We have won most of them, okay? Now as soon as we see, and I don't want to disclose more, as soon as we -- before we do -- first of all, South Korea is a very big consumer of night vision. That's number one. So it's fully justified. Plus also, we had them for -- to have an additional plan to do exports out of them, not just relying on our European operations. But Japan, we want to get clarity on what they really want to do, how they want to do it, who they want to involve. We already have an industrial partner in Japan. I can say that it's And we are in discussions like I presume other suppliers do with the Japanese government to define their strategy as far as how much and how they want to have these big night vision procurements. When we finish this discussion, we will take our decisions. That's about Japan.

Now platform. Let me go a little bit back to the history. The way Theon start growing a lot is, yes, sometimes when we enter the monocular and the binocular, we had to drop the prices, okay? And to get notice, so to speak, I'm talking about 15, 20 years ago now, yes, 15, I would say, 20. So we did this, but we had a good read in the market that we can reduce our prices because the tube manufacturers were in excess capacity back then, yes. So we would get contracts. We were aggressive with in theory with a small margin. And in the end, we would end up having a much bigger margin, right? But also it had to do with our fact that the more we're learning with a specific supply chain, the more we were increasing our profit margin. So on platforms, so far, I would also have expected to have smaller profit margins, okay? I cannot be -- nobody knows those things until you actually interact with the end user. But the interaction we have so far is given our cost structure, okay? And this is, again, Theon's advantage, they don't seem in theory, dilutive the platforms. Having said that, in some cases, to answer your question and to be very frank with you, yes, if need be, we will have a lower profit margin so that we can quickly grab our market share and build on that just like we did with monopolers and binoculus, okay?

But as I said, as you have -- think about it like that. Let me try to keep it very simple. 50%, our targets have to still remain 50% on the traditional business, nitrogen. We don't see any pressure right now on our profit margins because we're very efficient. We are the biggest buyer of tubes. Our supply chain is -- so -- and there's excess demand than supply. So we don't see any threat there. Then when you come to the mix, ARM, as you also said, and the digital, they have higher profit margins. And this higher profit margin as you -- and this will be more than 20% next year. I don't know exactly how much the platforms will be next year. okay? But I do know that we have enough cash in there on the digital to more than make up for any shortfall in the platform business if we decide in a specific case, we have to be aggressive. But frankly speaking, again, I'm also surprised the first feedback we have is that we seem to be cost efficient on that. And we have not even started really working the supply chain on platforms I'm talking about.

Can we assume majority or most of the production will be happening in -- in Greece?

No. Well, the major, yes, it will be, but we have -- that's why Theon has a very nice industrial global footprint like in places like in Germany, right, now in Denmark, we will -- it's a give and take, okay? Fair enough. It's a given -- we will try to give work more and more to the countries that give us contracts. For instance, I will tell you in Saudi Arabia, I'm very proud because others talk about that. But in practice, we are the only one that really does localization, okay, in this specific case. Localization means to do more and more there. And to our surprise, in some cases, they can be with our assistance, I'm talking about the more the parts, they can be competitive. Again, when you get a contract from a country and the country asks you or has this like a soft requirement to do something, we will do that. But the main production, more than 50% for sure, will be right now in Athens until we calibrate it. And then just like we did with HENSOLDT, we started doing our own binoclars here. And now we have a very successful cooperation with HENSOLDT in Wetzler, where we produce, we will assembly at least half of the products.

And just to answer your question as well on the IDZ, the number you just mentioned is more or less correct. And the deliveries for this quantity is going to run over the next 3 to 4 years, probably '28, '29. And then in 2030, indeed, there's a next tranche expected to come. This is what we hear from the official ministry and then the And here, don't forget that the German armed forces that they're going to grow. They're going to grow up to, if I'm not mistaken, 460,000 soldiers, including the reserves. So there's a big growth of the number of people that you have there, and they all need to be equipped. Of course, not every soldier is going to get the IDZ equipped, at least not for the beginning. It's going to be the regular forces that get our equipment as we have. There may be a possibility that at some point, the reserves that need to be equipped, that they get the equipment from the regular Army and the regular Army gets more and more IDZ equipment in the context of new technologies being introduced into the market as well as the Next initiative that we're working on, making the soldier intelligent. But yes, from 2030 onwards, in light of the growth of the German Army, yes, IDZ, there's much, much more to be expected.

Do we have any more questions in the room?

[indiscernible] I'm relatively new to the case, but I had a question about the income from participations in your profit and loss account next year with the impact from your stake in Exosens and the HENSOLDT. That line item is expected to increase significantly if these companies also continue to perform well. So I've got quite a broad question. What is, let's say, the cash conversion for Theon, so dividend streams from that income, your best estimate. Is it included in the leverage ratio? And also, do you take that into account when you're going to say something about your new EBIT margin targets?

Dimitris, do you want to take it?

Sorry, what was your last question, EBIT margin?

Yes. So when you -- after the rights issue provide, let's say, overall margin guidance, the impact from the -- yes, if you add it to EBIT without revenue, it's kind of easy EBIT.

So as you probably have already noticed, we considered some of our acquisitions like the HENSOLDT, a strategic minority. So we treat it as such. This means that this affects the operating margin. As far as the exercise is concerned, this is something that we're going to be in discussion with our auditors. I mean, the extent in which we are going to be able to include this in our operating margin. But this, of course, will come after we get some board seat so that we can indeed justify that we have some influence in the company. So this is something that is going to be an ongoing discussion in 2026.

Now to answer your question, if this has already been included in the debt -- net debt-to-EBITDA ratio? No, it is not, at least for the time being.

Okay. And is there, let's say, a dividend stream into Theon from these participations combined?

Yes, it's -- of course, we haven't learned otherwise.

And how much is that -- rate?

So I guess it's going to be in the area of EUR 3 million to EUR 4 million from Exosens, if my calculations are correct.

The other minority investments do not have any initial contribution to our profitability? And with regards to KAPPA, we expect them to be in 2026. As we mentioned before, KAPPA has EBITDA margins in the mid-20s area without any synergies.

Just a quick question on the business development end markets. I think this one could be answered by Philippe. So you talked a lot about those markets that you could gain shares in. But what about the market you know you won't be able to access? So for example, for night vision, we know that France, Poland, Spain are hard to access because they are local markets. So can you expand on that for night vision and as well for ARM products and platform? Do you have specific markets in Europe, for example, that you know you won't be able to access?

Yes. I would say there is no market that we won't be able to access. We will never give up. But yes, you're right. France is a good example, where France, Thales is the household supplier of night vision equipment, to the French armed forces, at least when it comes to traditional night vision. When we're talking about armed equipment, there, possibly, there may be an opening, and we're always open for cooperations, whether it is could be with Thales or with Safran or anybody else. So we would never give up and say that the market is not accessible at all, talking about France as an example. There are other examples in Europe. There are countries such as Poland or Finland, for example, that have as well local producers that have been getting direct contracts. But in these countries as well, we're taking actions. And it's not that we want to attack the local industry because that would be wrong, but we're rather looking at, okay, how can we cooperate and provide our strength to the local players so that it benefits in the end of the day, the armed forces in these countries.

And if I may add to that, it's a good question. France is a big market, and this is another side benefit we get from investing in Exosens, okay? Because it's very important and the French government will appreciate that what we are doing with them already. They've been briefed about our collaboration even before the acquisition. Now we have another reason to stake our claim. But there's -- usually, the resistance comes mostly from Southern European countries because of the local industry, and we can sympathize with that. But a, you have the effect of the SAFE and some of those southern countries, that's why I mentioned they will go through the SAFE mechanism, which means, in essence, that there may be some incentive for the local defense industry, but mainly they have to go to a product has been decided like in our case, mostly by the bigger countries.

Also, I want to say to complement Philippe mentioned 2 countries, very, very, very efficient countries industrially, Poland and Finland. We feel the potential is much bigger, and we're taking action and the action is definitely, we believe with the local players, we're complementary. That's what we believe. It takes time, but in Europe, I think we have turned a big corner against the fragmentation of the defense industry. Each one -- each country is good at doing something. It so happens in our case, Greece is a night vision leader. And I think the trend right now in Europe is, okay, let's have 1 or 2, like the states have by tradition 2. Let's have 1 or 2 suppliers, but not 10 smaller companies that don't make sense. So all those things work in our favor. But again, you're right, France is -- now we have more how can I say, more excuses to ask our fair share in the French market. I'm talking about the night vision.

We have another question from a virtual attendant, which is the following, which are considered the main competitors we have per segment and why?

Okay. No, go ahead, and I will complement.

Main competitors are the usual suspects are still main competitors. The big companies in the U.S. 3, Elbit in the U.S., Elbit Israel, Thales. But when we talk about Europe, and you can see this at the numbers, at least in the night vision area, we are dominant. They are very, very small. In other parts of the world, obviously, in the U.S., we compete with U.S. -- we cooperate with U.S. companies. In Asia Pacific, we compete as well with a bit of everyone. And then there are these cases that we just mentioned before as well in Finland and Poland, where there are some pockets, I wouldn't call it the pockets of resistance, but there are some pockets where you have local companies that are protected and where we've been trying to compete with and get into the market and which has been difficult in certain countries. And these are competitors that we don't want to defeat. We don't want to destroy them, but we want to, as Christian said and as I said before, we want to work with them because the demand is very, very large. We can provide something. We can provide capacity, we can provide supply of equipment. We can provide technologies, and they can provide as well their local added value. So we want to get away from seeing them as competitors and seeing them seeing us as competitors, but go towards a model of cooperation.

And also, I want to add something here because of this question about the U.S. once the Army program is deployed, and it will be very small quantities next year, and it will start being more bigger one in 2027. Believe me, and that's why if you see our sales from the U.S. is only 8% because we only supply kits. We only supply kits to the states because they have their own tubes. So they get the kits from us and then they deliver to the customer. But according to our calculation, because the demand in the states for the new programs, including the Marines is for very high foam. Very high foam means you're going to have to have a very good yield, which constrains you from increasing the capacity. What that means in a simple layman's terms is that in 2027, when you start having the Army procurement along with the national guards, I doubt that the U.S. manufacturers will have any capacity because the constraint is not the kit, like which is, for instance, we make the kits. We have vast capacity to make kits, but tubes is a different story. And in the U.S., the U.S. manufacturer, even if we were not to be selected, and it's still an ongoing process, I don't think we will see too much of U.S. competition in the world because it will be -- all the capacity will be absorbed, the tubes I'm talking about. But without the tubes, you cannot sell the products even if you have excess capacity on kits.

So that's why we are very optimistic about the future based -- and I need to repeat, I think I think and we think in our team, maybe we're wrong. But I think we are the only ones that are doing proper global demand supply altogether and then region by region. We do a lot of analysis. And what I just told you, we know exactly what is the possibility of of ramping up capacity of tubes. And again, that was also one of the reasons why we're excited about what we did with Exosens, okay?

Because we know exactly the shortages where they will appear for sure, on 16 millimeters. And overall, there will be a shortage of tubes. And this will make the U.S. manufacturers because, again, you cannot increase your capacity as a tube manufacturer in the States, right? And at the same time, fulfill the very high foam requirements because the high foam requirements means that you are constrained to -- even if you increase the capacity, you will still have a yield that is not enough for you to have available tubes to export. It's as simple as that. So that's why we are very bullish on hardware digital. We're very bullish on Exosens, and that's why we did the move.

Are there any other questions in the room? Yes, somebody...

This is Sriram from Deutsche Bank. Quite a few questions, but I will stick to 2, 3 of them at this stage. The simple one to begin with, when you say medium term, what is your definition of medium term? Is it 2027, '28, 2030? What exactly is that? That's a simple one.

On average, midterm means 3 to 4 years. So 3 to 4 years.

Okay. Okay. And I think in one of your slides, I saw that the revenue target is close to $1 billion in the medium term.

Yes, you're talking about, yes. 2030. 2029 and 2030. sorry. This is our aspiration through organic and inorganic growth.

Okay. So that's exactly my question. So what proportion or how much of it is coming from organic? And how much are you planning from any nonorganic level within that $1 billion, which is by 2029, 2030?

A hybrid situation. I mean, do you consider platforms organic or inorganic? We have our own business. Now we have also acquired Cap Optronics. We have invested in So we are working together. So after next year, this will be considered organic, right?

So this is within your perimeter?

Without additional -- without significant additional mergers or acquisitions.

I would say in a very quick calculation, but again, don't hold me to that, a very quick calculation I just did, if that's the target, I would say at least 15% to 20% of that will be inorganic.

Okay. So which is on top of the current perimeter. That's what you mean? Okay.

And again, don't forget the breakup, right, our target. We're talking about targets now, right? It's not guidance, the target. The target is to have 50% of our organic, right, on platforms and ARM products. And if you look at that number, you make the math, right, what we're saying is it's not -- it's totally realistic to achieve that. Just take the 50% of the 80% -- and we are already here, 90% of 430, you see what I mean, just to give you a flavor.

Okay. And the final question, can you give us more details about the order and the deal which you announced yesterday?

I'm sorry, can you repeat that?

The order, the major order which you're expecting, the news which you released yesterday. Can you give us more details around that Shock U.S.?

There are 2 things. We got indeed an order yesterday for a small number of stabilized gimbals, platformronics. These systems were ordered by a European -- a large European defense prime. And these systems are going to be used by the prime to qualify our gimbal on a turret. And that's going to take a certain amount of time. And after which, once the system is qualified, then we expect a large order to follow. So that's one thing of the announcement. The other thing of the announcement was the investment into Shock EOS, right? And the investment into Shock EOS comes as a result of the cooperation that we're having with them for the last 12 months, working on the development of this multi-sensor stabilized Kimble.

But he asked you about the value of the contract. I cannot disclose that, but it's sizable. And obviously, we don't expect any -- because we never had any problems in -- when we were working with a customer because we've already passed a very rigorous preliminary testing, and we don't have any issues. So we don't expect any hiccups on that. But we cannot disclose -- we're not allowed to disclose this number. Sorry, by the prime.

You've made the shortage of tubes very clear here. So if I Exosens were, I'd be taking up price quite a bit. And you talked about transitioning to longer-term framework agreements in the years ahead. How do you align that with your contract with Exosens? Or if tubes are in shortage and Exosens raising the price, how do you manage the risk that you're committing to long-term contracts at set prices?

Which price is Exosens raising?

I'm just saying if there's a shortage of tubes, Exosens seem to have a lot of pricing power. So if they take up price, how do you manage the risk of entering in long-term contracts with your customers at set prices? Or how do you align your contract with Exosens?

That's the beauty of our cooperation with Exosens. We are doing them back to back, okay? And which also it gives predictability for Exosens and us covers our risk. The big ones are back to back. And in our long-term agreements, we have enough room to operate on our own, having fixed the prices already. And again, this is the benefit of being the largest buyer of tubes, the larger customer. But as I said, with Exosens, we have a wonderful cooperation. We work -- we open markets together. And that will continue.

Do we have another question? I suppose we can conclude this event. Thank you all for attending in person and virtually. And please join us for a dinner.

Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to H1 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Nikos Malesiotis, Head of Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to THEON's Half Year 2025 Results Conference Call. Thank you for joining us today. I'm Nikos Malesiotis, Head of Investor Relations at THEON. Today, I'm joined by our Founder and CEO, Christianos Hadjiminas; our Deputy CEO and Business Development Director, Philippe Mennicken; and our CFO, Dimitris Parthenis. In this order, they will take you through the most important developments and the financial results for the first half of 2025. After the presentation, there will be an opportunity for questions.

With that, I hand you over to Christian.

Thank you, Nikos. Good afternoon, everyone, and thank you for joining this call. Before providing an overview of the first half of the year, I would like to note once again the work and efforts contributed by our team towards achieving our organizational goals. Without our team, we will not be in the position we are today.

First half of 2025 performance was characterized by robust order intake, achievement of financial targets and solid progress in THEON's growth strategy. Since June, we have announced several new strategic acquisitions, investments and partnerships, which support our THEON Next Vision & Strategy, which we announced a few weeks ago. This encapsulates THEON's ambition of becoming a trusted market leader in the next generation of optronics and a global player in the modern warfare era.

At our announced Capital Markets Day to be held in Athens shortly, we will showcase the key growth drivers on the THEON Next at what promises to be an exciting event. And I would like to add here that these acquisitions also underline the fact that whatever we promise we deliver. When we did our IPO where we raised, as you very well known, EUR 100 million, we said we will complete our acquisitions within 18 months, exactly within this frame, working of course very cautiously to find the right cost efficient but also accretive to the extent possible acquisitions, we delivered them exactly at the end of the 18th month. This, for us, underlines THEON's credibility and whatever we say we do.

I will now provide an overview of THEON's exceptional results in first half of the year as well as a strategic milestone achieved so far in 2025 before handing you over to Philippe Mennicken, who will highlight why we are in a prime position to drive continued growth by capturing the momentum of rising global demand.

First half of the year performance this year has been underpinned by robust top line growth and sustained industry-leading profitability reflecting the strength of our business model and disciplined execution. As a business, we continue to benefit from a healthy order book, particularly in first half of the year, when we saw a strong pipeline of contracts, providing clear revenue visibility. As you already know very well, Q4 is always the best for booking new business in our business. So in the 4 months until the year-end, we expect accelerated order intake that is expected to be over 2x the revenues of the year.

During the period, the business successfully executed on its strategic priorities, advancing growth through disciplined M&A, driving product and innovation initiatives and accelerating geographic expansion to strengthen its competitive position through an impressive, I would add, industrial global footprint. In first half of the year, we made clear progress on all fronts. Our order intake saw an impressive 118% uptick on the previous years, highlighting the growth we have experienced, supported by new contract wins and deployments of existing contracts, resulting in a soft backlog of EUR 622.2 million, despite, of course, the deliveries already, after taking account the deliveries in the first half of the year.

We are fortunate to have strong relationship with long-standing customers which delivers a high volume of repeat purchase into our business, adding to the strength of our order book. We generated revenue of EUR 184 million in the period, which is up 20% versus the prior year. We delivered $47 million of adjusted EBIT in the first half, growing our EBIT margin to 25.8% from 25% at first half of 2024. We have strengthened our balance sheet, holding a net cash position of EUR 34.7 million at the end of first half of '25. This has enabled us to pay dividend of EUR 0.34 per share in June, in line with our guidance.

Now I will let Mr. Mennicken, our Deputy CEO, to take you through more detail on our recent acquisition of Kappa optronics, while I will explain our other strategic initiatives. Philippe?

Thank you, Christian. I would also like to extend a warm welcome to everyone. Kappa was founded in 1978 and is headquartered in Göttingen, Germany, home to both its design and assembly functions as well as management and administrative teams. Kappa operates an R&D-driven asset-light model focused on design, assembly and quality assurance, closely aligns with what we do at THEON.

With a team of 60 highly skilled engineers and a strong technological edge in platform products, the company is well positioned to contribute to THEON's innovative pipeline. Together with its subsidiaries in the United States and Spain, Kappa employs approximately 200 people and operates out of approximately 3,000 square meters of operational space.

Now Kappa brings not only cutting-edge technology, but also a culture of innovation that aligns with our vision at THEON. We expect meaningful top line synergies, accelerated product co-development and valuable knowledge exchange across the companies alongside an AI-ready integration potential. This acquisition instantly expands our electrooptics product offering, particularly for land and aerial platforms, which are key focus areas for THEON's strategy. In addition, acquiring Kappa provides immediate accretiveness with strong potential to scale sales rapidly through THEON's business development capabilities, complementing our Athens based team of around 80 engineers ultimately highlighting the revenue and supply chain synergies, which lie ahead.

Kappa is on track to exceed EUR 37 million in revenues in the financial year 2025, with an EBITDA of approximately EUR 8 million, primarily driven by defense mobility and autonomous machines. In August 2025, the group through Theon International Plc acquired 100% of the shares and voting rights of Kappa optronics GmbH for an enterprise value of EUR 75 million and consideration value of EUR 69 million through a mix of cash and debt contribution. This transaction is subject to regulatory approvals and is expected to be completed in the fourth quarter of 2025.

Now back to Christian to tell you more on our other strategic investments in the context of THEON Next initiative.

Thank you, Philippe. Until today, we gained 5 new strategic investments across the group. And as I said, exactly within the 18-month deadline that we have put ourselves and we have announced during the IPO. In July 2025, we acquired a 10% strategic equity stake in Andres Industries AG based in Berlin, Germany, through a EUR 1.1 million share capital increase with options to increase its stake up to 24.99% within 2 years for a total consideration of EUR 4.5 million in order to expand further our presence in Germany.

I need to stress here that Andres is a partner of THEON in several business opportunities that we expect to soon announce, particularly regarding our new thermal clip-on IRIS. So this investment is related to our day-to-day business.

In August 2025, we launched our THEON Next initiative, a platform designed to drive the development of next-generation soldier systems through targeted investments, collaborations and co-development projects. The following investments in strategic operation form part of the THEON Next initiative. At the end of July 2025, we invested EUR 5 million in Varjo Technologies, a Finnish virtual reality, mixed reality specialists, through a convertible loan with an option for an additional EUR 5 million. I have to say here that this has opened the door for us in Finland, a very promising defense market. And it's not going to be the only initiative of THEON in Finland, where there is a very rich ecosystem of technologies that can drive the growth of THEON in the future.

In August 2025, we entered into a strategic partnership with Kopin Corporation, a U.S.-based defense microdisplay and subsystem specialists through a total investment of $15 million. The investment will serve as the basis for a new European joint venture focused on augmented reality-enabled systems and microLED display production. This transaction is subject to regulatory approvals and is expected to be completed in the fourth quarter of 2025. At the same point in time, we signed a renewable 2-year supply agreement with eMagin Corporation, a U.S. also based manufacturer of OLED microdisplays securing the supply of high-resolution displays used in its products, including IRIS, our new thermal clip-on, for which we stated several times, we see a lot of business prospects and a lot of new contracts being generated.

Again, at the same time, we entered into a strategic partnership with Alereon, a U.S.-based leader in ultrawideband technology to integrate UWB into its A.R.M.E.D. product line with production increase and exclusive promotion rights in Europe and the Middle East. More details will be provided at our Capital Markets Day taking place later on this year.

Regarding the last 2 points I mentioned and investments, it's key to understand that this time, THEON has done a very cost-efficient vertical integration at the same time for its future and current A.R.M.E.D. product line. In other words, we have secured our supply chain through those partnerships by also being able in a position to produce in Greece some very, very critical component. So we don't experience any future supply issues.

Last but not least, I would like to stress that all those initiatives with a total cost of less than EUR 25 million complement the almost EUR 70 million acquisition targets -- acquisition price of Kappa and the EUR 35 million acquiring Harder Digital. So that's about EUR 125 million roughly in total investment, which is in line with what we have raised in the IPO. Also, I need to stress that -- and I'm very proud of this and our team that we have managed regarding the THEON Next initiative with a total consideration of less than EUR 25 million to -- being able as THEON to have access to key elements of the future at a very low investment level. While at the same time, being in a position to recover even this investment through the equity appreciation of companies like Varjo and Kopin.

Thank you very much. With that, I will now hand you over to Philippe.

Thank you, Christian. And moving on to brief market and business overview, starting by giving an overview of the markets by regions. The world continues to face new situations globally. The world has changed and previous values and alliances are not necessarily guaranteed anymore. This has an impact on all regions in the world, and for sure, on Europe, Asia and the U.S. and provides further opportunities for THEON.

As you know, THEON operates in growing markets, which are driven by several supportive tailwinds. Firstly, the geopolitical global landscape means that there is a continuous and increasing demand for defense products. Governments are now placing much more focus on their defense capabilities, which is driving an increase in defense spending globally.

Starting with the U.S., defense expenses have been and are still, to a certain extent, being reviewed, but this is temporary. Global challenges require instead increased, if not more efficient spending and for sure, we don't anticipate any decreased spending in the U.S. in the coming years. The U.S. is continuing to position itself as the one and only military superpower, marking a significant investment in developing next-generation military systems.

Europe sees defense spending increases in almost all countries, in light of the continuous Russian threat and the realization that it must be able to defend itself independently. This especially applies to Northern and Eastern European countries, while countries in the Southern and Southeastern Europe must contend with both Russian and border threat emanating from the area.

The situation in the Middle East is still fragile and dynamic with possible continuous local strikes remaining still below the threshold of declaring war. In the absence of efforts to improve relations, countries in the Middle East with ongoing disputes are likely to invest in systems that provide early warning and increased domestic stockpiles.

Countries in the Asian Pacific region are continuously concerned by potential short-term conflict with China over disputed territory and in essential waterways. The Chinese-Taiwanese conflict could draw in regional players with battles fought by large Navies, Air Force, but also land and marine infantry troops.

I'm now going to focus a little more on Europe specifically and its defense budget outlook. NATO states have agreed to raise the target for core defense requirements from 2% to 5% by 2035, with 3.5% to be spent on defense expenditure that includes procurement, sustainment and personnel costs. Countries already meeting or nearly meeting NATO's 2% target in '23 to '24 are set to experience more limited growth in hitting the new 5% goal, while others are expected to strongly boost spending at much higher speed to ensure earlier readiness than 2035, like, for example, Germany.

Europe is expected to remain our main customer based for the foreseeable future, and we continue to strengthen our presence in our core focus area. At the same time, we remain alert to new markets and opportunities to capture rising demand.

Turning now to our total addressable market by region and product. Our total addressable market is expected to grow by 13% annual growth over the next 5 years. Europe is obviously the largest accessible market with countries investing in the recapitalization of capabilities, upgrading legacy systems in the short term and procuring modern systems in the mid- to long term.

The North American market growth is mostly driven by the U.S. and continued investment in armed forces, though due to political reasons and make in U.S. initiatives, procurement shall focus on United States designed and manufactured products. Yet this will tie up capacity of U.S. defense companies and specifically in our business, for critical components like image intensifier tubes. As a result, this will strengthen the position of European companies outside the U.S., such as THEON, Harder Digital and Exosens, which remains our largest supplier of image intensifier tubes.

APAC and MENA customers are rapidly increasing investments as regional security worsens, but begin from a smaller baseline than the European market. The optics market for vehicles, both stand-alone and for weapon-mounted fire control systems, will grow as a larger pool of countries adopt advanced systems that require a greater range of sensors. Overall, there has been dismounted market growth driven by an increase in frontline military personnel and growing investment in sensors for specialist units to increase lethality.

Now providing a breakdown on the dismounted product category, helmet-mounted devices account for the majority of the total addressable market value. Whilst fire control systems drive growth, complemented by targeting systems. Within the vehicle mounted product category, armored fighting vehicles dominate forecast while investments into main battle tanks and infantry fighting vehicles, recouping platforms donated to Ukraine and reorientating toward land warfare. Patrol and reconnaissance vehicles and sensor package increasing focus within fleet investment as users seek to maximize situational awareness.

I look forward to speaking with all again of you at our Capital Markets Day later this year, where we will provide more information on our THEON Next initiatives as well as further details on the business outlook.

Thank you for your time, and I will now hand you over to Dimitris.

Thank you, Philippe, and good afternoon, everyone. On to our summary of financial highlights now. THEON's order intake reached EUR 168 million, marking a notable increase from the prior year comparative period. We anticipate an acceleration in our order intake as we go into second half, which is in line with traditional waiting and pending demand in the market.

Revenue grew by more than 20%, landing at EUR 183 million. This growth is driven by both new contracts and the deployment of existing ones. As at the end of the half, around 42% of our full year guidance is already delivered in line to what we had recorded at the same time last year. As a result of our strong performance and continued high levels of new contract wins, we stand well positioned to address any year-end ad hoc demand that might appear as it typically occurs.

Moving to our backlog where we have achieved significant growth of 45%. This translates to a soft backlog of EUR 622 million at the end of H1 2025, which provides solid visibility for the year ahead with an additional EUR 378 million of contractual options providing further headroom for growth. We are already experiencing strong traction in Q3 with additional orders expected to be announced. This will more than replace orders invoiced in H1 as well as those expected to be invoiced in H2 2025. Of our current soft backlog, we expect to deliver approximately 40% in 2025 and the remainder in 2026 and beyond.

H1 this year marks another period of strong profitability with adjusted EBITDA of EUR 49 million, up 25.7% compared to the previous year. Our adjusted EBIT levels grew 24.4% to EUR 47.4 million. This adjusted EBIT translates into a margin of 25.8%, in line with our guidance. Please also note that from H1 2025, share of profits from core equity accounted in the space are recorded within adjusted EBIT. Our net cash position as of the end of June 2025 was at EUR 34.7 million, marking a slight decrease primarily as a result of an earlier dividend payment of EUR 23.8 million in June, while last year dividend was paid out in the beginning of H2.

We continue to invest in company's growth in accordance with our strategy. In H1, CapEx increased to EUR 6.7 million, in line with the guidance of EUR 20 million for full year 2025 to support the acceleration of the growth strategy. This amount includes investment in capacity expansion of Harder Digital and development of new man portable and platform-based products. Given financial strength seen in the first half of the year, THEON has a strong cash conversion rate of 85%, in line with H1 2024.

Turning to the next slide, where I will take you through our guidance. Here, we reiterate and confirm our 2025 targets alongside with our medium-term ones. For 2025, we have strong confidence in reaching revenue of EUR 430 million, at the top end of the originally presented guidance of EUR 410 million to EUR 430 million. We remain focused on maintaining an EBIT margin in the mid-20s, and we expect to spend EUR 20 million CapEx this year, the highest ever, supporting our strong organic growth plan investing across the globe. In June 2025, the company paid out dividend totaling EUR 23.8 million, in line with our dividend distribution policy articulated at the time of our IPO.

In the midterm, we expect to continue growing in line with our addressable market and to maintain an EBIT margin in the mid-20s. CapEx is expected to reach a maximum of 3.5% of revenue, and we aim to maintain a 30% to 40% dividend payout ratio.

Thank you for your time today, and we are now ready to take your questions.

[Operator Instructions] I will now pass it to the team for questions.

Thank you all for attending today's call once again. We just have received -- receiving a series of questions. The first one is the following. What's the current status of your negotiations to extend the supply agreement with your main tube producer, Exosens.

Yes. Thank you. This is Christian Hadjiminas. Thank you for the question. Mr. Ozkan. We -- our supply agreement with Exosens is a renewable contract. So as soon as we approach the end of the year, then we extend this for 1 more year or 2 more years depending on the situation. So we don't expect any change on that at all.

The second one is the following: Did the post ABB 90-day lock-up period of your controlling shareholders, Venetus or CHRE Investment expired? Is there any indication by Venetus, CHRE about further potential sell-downs in THEON in the near future?

Hello. This is Dimitris. I believe it's expiring in a few days. if I'm not mistaken. And at the moment, we don't have any indication by Venetus or CHRE about any further potential sell-down in the near future.

And given our share repurchase program has been activated recently, have we already started share buybacks, Dimitris?

We have, but very small amounts. Of course, we are going to announce the amount of shares that have been purchased based on the regulatory framework.

The next question is the following. Given your recent Kappa and Harder Digital acquisitions, are you planning further M&A transactions in the second half of 2025 or in 2026? Or you will mainly focus on integrating and expanding recently acquired assets?

No, we have not finished the acquisitions. It's a good opportunity for me to state the following: as I mentioned earlier, when we started the IPO where we raised -- just to remind everybody, we raised EUR 100 million to do acquisitions in vertical integration, in expanding our range of products and in fire control systems, and above it all, of course, on platforms, on electrooptics products, where we want to become a leader position in a leading position, just like we have become on man portable.

At the time of IPO, we said exactly 18 months. And I'm very proud because we really -- what we say we do. And on the 18th month exactly, which was in the -- in August frame from the February starting point of our IPO. During the summer, and this may have come at a cost to us because during the summer, as you know, there's -- the people are less focused on reading news from companies. However, since we have given a promise to the market for 18 months -- within 18 months, we will complete the acquisitions, we announced them, and with a total expenditure of a total of about EUR 125 million in total, Harder Digital, Kappa and the THEON Next initiative. So we are spot on, near the levels with minimum increase in our leverage ratios. We were -- we delivered exactly what we said exactly at the time within the time frame we set.

Having said that, the company still has a lot of -- has ability to raise debt quite a bit because we have not really used these facilities. We do look into a couple of acquisitions, especially which are coming slowly, slowly, but they will mature definitely before the end of the year. We're always -- these are smaller, as we have promised the IPO, smaller further acquisitions, but we do not exclude any major acquisition as well. We are -- again, we are driven by the needs of our company, the needs of what we have right now and how we can cement it like with vertical integration or how we can strengthen our products.

And that's why the THEON Next initiative, if I may say so, although I'm sure maybe some will ask us, that's why the THEON Next initiative although it is for a midterm, we expect results in terms of finished products, these technologies are already being implemented and being incorporated in our existing A.R.M.E.D. products. For instance, the Alereon, the UWB, which is a way to transmit data within short range approved by the National Security Agency of the United States, and it is a U.S. company. It's already being incorporated as we speak in our THEA product, which involves our heads-up display and eventually a fused goggle.

So all these technologies that we have acquired, are all technologies that will be used right away being incorporated in our products, while at the same time, talking about midterm, while at the same time, we are preparing the versions of the future, the future, which may come much faster than the market believes. Thank you.

The next one is Kappa specific and is the following: does Kappa need any capacity or R&D investments in the near term? And do you see any cost synergies to be unleashed in the future, such as moving some of the production to Greece?

First of all, I need to tell you that -- and again, this is an accomplishment. We have, as you know, investment plan with HENSOLDT, which is a leading, as you know, German defense manufacturer. And we have a joint venture where we have, of course, 49% in Wetzlar. And this facility, we have managed to make it as competitive as our Greek facility is. This gives us maximum flexibility depending on the orders to produce in -- either in this joint venture or in Greece.

Kappa, I have to tell you, is really a spot on acquisition in terms of what we were looking to expand on the platform-based electrooptics, is a very reputable company. And the interesting thing is, even with the existing portfolio, THEON's global industrial foot and commercial foot very soon results of our supporting business development-wise, Kappa. And then at the same time, the process of integrating our R&D teams is -- has already commenced. I have to tell you that the synergies are already apparent with a different expertise.

Kappa has 200 people, of which 67 are R&D engineers. As a comparison, THEON is about to reach the number of 80 people. So you can imagine how important it is to add another 67 people with a different type of electrooptical experience and the ability to launch those products in a very demanding environment. Just like, for instance, the -- which is one of the main business of Kappa with air refueling for Airbus. And so these are really very valuable human resources, R&D capabilities that's being added to THEON.

Thank you, Christian. The next question is the following. Will the supply of tubes be a bottleneck for growth?

Let me answer that again. The demand for tubes is increasing. And sometimes, even when we have independent like RAC that has posted, where we are posting here their new estimates of the electrooptical market, both helmet mount, the man portable and the platform. In actuality, we see larger demand for tubes. There is no doubt that there are 2 things at play here. It's the global demand and supply of tubes. The global demand keeps increasing, and we have not really seen the way that we expect to see from the Far East and the Middle East because the focus has been on Europe.

And the other thing is that with the programs in the States, there will be less U.S. tubes around. However, as we said, we expect there will be no bottleneck because there has been adjustments on capacity from European and U.S. manufacturers despite the increased demand. But again, THEON is placing -- we have this growth from the tube-related night vision secured. And mind you, THEON is increasing its market share, and it's increasing it, not by taking away necessarily from other competing companies where we have more than 50%, but it's increasing it because the growth of this market is primarily driven by customers that we have already delivered that is mostly in Northern Europe.

And as a result, this additional add-on demand goes to -- comes from countries that THEON is very well placed. So we expect our market share to increase from 50% higher, however, and we have to stress this. THEON is putting a lot of emphasis for its future growth on A.R.M.E.D. products. We have -- we may end up this year about 10% from digital products or products that are not related to night vision company. However, next year, we know as a fact this percentage, we've already announced, it's going to be more than 20% from existing business, but also tenders that we hope to soon announce. And our target is to increase this in -- to keep increasing it through the man-portable A.R.M.E.D. products in '27. But in '27, we expect a major impact of the electrooptical platforms.

So our trajectory, so we will have 2 elements, and I will try to make it as simple as possible. One, the night vision, which will keep growing. But the one that will be growing even more will be the A.R.M.E.D. products. And just to remind some people, A.R.M.E.D. products, we talk about thermal and digital products like the one we want for the German Future Soldier. This will increase much faster. And on top of that, we will be adding sales of our own electro-optical platforms that we've already developed and launched already as of late last year, this year, plus, of course, the sales that will come from electro-optical platform companies such as, for instance, Kappa. And as I said, it's not going to be in that domain, the electro-optical platform is not going to be our only investment. We hope by the end of the year, we'll have at least 2 more acquisitions, again, within -- with a very cost-efficient manner.

Thank you, Christian. The next one, I think, is for Philippe and is the following: which key tenders announcements should we expect in the second half of the year? And were any major tenders lost in the first half?

Yes. Hello, everybody. Philippe speaking here. First of all, we haven't lost any major tenders in the first half year. Any tenders that we won, obviously, have been announced. And when it comes to ongoing tenders and announcement during the second half of the year, obviously, there are various large tenders ongoing. We cannot -- or I cannot comment at the moment in too many details on these tenders, but we should be able to announce some good news, hopefully, towards the end of the year, Q3 -- end of Q3, beginning of or end of Q4, depending on the opportunities that we are working on. But good news should come soon.

Okay. Thank you, Philippe. Moving on. 40% of the soft backlog is to be delivered in 2025 and would imply reaching your current guidance. Do some short-term [Technical Difficulty] orders in Q4 provide potential upside to this? And what is the near-term outlook for larger orders and from which countries are you dealing with?

First of all, we will -- we are retaining our 430 million guidance as before. We're not going to change this. But as of September, where we started until the December, we expect to announce some award tenders because we are in very advanced discussions and finalizations. So we do expect this, but we will not change our guidance for 2025 because of that.

Now we have some more focused on questions on the potential order in the U.S., the NVD-Next. And they ask if we have any visibility on other larger potential orders, including any from Asia and especially Japan.

Yes. In the U.S., we have a lot of challenges, like a lot of non-U.S. companies because, as you know, the emphasis now, okay, one thing is tariffs, but tariffs do not affect us or other defense manufacturers because as far as we know and so far, it's a reclaimable amount when it comes to an end user like the U.S. Army or the U.S. Marines. So there's no effect from the tariffs. But where there are challenges for any non-U.S. company is that the emphasis is clearly on U.S. design products.

Regarding the U.S., we do not know yet what is the final outcome. Of course, the policy and especially in this specific tender is the U.S. Army, and I can say that because that's public information, the U.S. Army had already funded the last 2 years development products from 2 major U.S. companies. They have already funded those products so that the products can be developed according to U.S. Army specification. Again, we do not know the final outcome because we are not a prime on that. Nevertheless, I can proudly tell you that in DSEI in London, but also in AUSA, THEON will present a product that meets fully the U.S. Army specifications. We cannot know where the other 2 competitors are, but we believe that we may be ahead of everybody else in having the U.S. Army specifications ready-made and tested product. Nevertheless, as I said, there is a bias right now for U.S. design products in the U.S., and this is a big challenge.

The next one is also related to the U.S. It is the following. Anduril has taken over the IVAS platform. What risk does that represent?

I would rather think of it as an opportunity because, obviously, Anduril will move and develop the IVAS platform further, which so far has not been the greatest success. Outside of the U.S., as you will probably know, we are very much ahead of many other companies in the field when it comes to augmented reality-enabled systems, fused systems, connected systems as part of our A.R.M.E.D. ecosystem. And whatever the U.S. developed and successfully developed is typically a good sign that there is a need in the market.

And we are ready not only to follow, but to lead to our THEON Next initiative to develop our own IVAS type equipment to come out into the market over the next few years and provide the soldier with the capabilities of the IVAS system. Important to understand though as well that the IVAS goggle that has, of course, certain sensors, certain cameras that were providing imagery during night or other difficult conditions, but it is not per se a night equipment. Nevertheless, we are working on the similar equipment, similar technologies to be able to provide such equipment with a focus, of course, of our European customers in the future.

Thank you, Philippe. This is Christian again. I think these are very, very, very nice questions. And let me add to this. I've already alluded in my opening remarks. This IVAS, for instance, Anduril and Microsoft, they had a lot of their efforts focused on Finland, for instance. And a lot of people who have left the companies there, and they have joined. And that's why, as I said, Finland has a very interesting ecosystem of people because it has companies that have arisen from people that used to work on those programs, including ex-Anduril employees.

This is really -- it comes to justify from another angle, our THEON Next initiatives. That's why I said in my opening remarks that our investment in value is just the beginning because in Finland, we feel that there is more talent, and again, we are not a CapEx-driven company. We are an R&D and business development, of course, company. That's what we are. Therefore, in our quest to be able to do the following things: being able to be ahead when and if there is a breakthrough in technology that would make, for instance, digital products even at night, less expensive than the analog tubes based.

We want to be there. We have all the elements of the technology. Every single investment we did under THEON Next, which, by the way, again, will be thoroughly explained with graphs and presentation by -- likely, I would say, by technical people so that it's understood by everybody. And you will understand, the market will understand the THEON Next initiative. And again, whether it's IVAS -- go back to the main question, whether it's IVAS or it's an A.R.M.E.D. product, which is about night vision or digital or thermal vision, in both cases, the technologies that we have invested in, they have -- one element is the technology parameters.

So we think with Kopin, Varjo, Alereon and eMagin, we have covered the basics, right? But at the same time, I will stress it again, we already started using this technology. In our business, the way the history works in the past, but also in today's world, there is no real breakthrough that one day we wake up and analog products are dead and then something else comes through. All those things, even if something -- there's a breakthrough, it will take several years for this to materialize.

However, the evolution, and this is how THEON managed to become the market leader, having more than 50% of night vision goggles is because every year, we were adding a lot of you that have participated in our presentation, the IPO and our road show. Every year, THEON -- THEON did not become a leader in 1 year. It became over several years by getting more and more contracts and by adding more and more features.

Like now where we are is that those technologies that we have access to, it is the technologies that will allow us to continue this thing with a direction even on the analog products, that is the standard night vision goggles to add features like intercommunication and other technologies like Alereon. We are in a position with those technologies to continue this process that we have been doing in the last 10, 15 years, where every year, we become better because our goggles, the standard goggles has a new feature, whether this is to measure how much life cycle is still in the tube inside, how many hours has been used and other features.

Now those new technologies of THEON Next will be gradually being added to even to the analog products. Of course, the emphasis will remain on A.R.M.E.D. products, which is the present and the future. Thank you.

Before we moving on with financial questions, when should we expect a decision on NVD-Next, on the U.S. tender?

The decision will be made shortly. But as I said, we're going to present in DSEI and AUSA. We will present our full U.S. army specs. I cannot speak about the other companies, but we will have something ready, okay? But the decision is shortly. We are not a part of the information flow on final decisions.

Okay. Thank you, Christian. The next one for Dimitris is the following. Your admin costs stepped up quite material in Q4 -- in Q2, sorry. What are the key drivers for this?

Indeed, we have a step-up of admin costs in Q2, and this will continue in Q3 and probably Q4 as well. These are associated with new hirings in finance and legal departments, but all these are supporting our M&A and of course, the size of the company that is expanding, as you can imagine. And of course, with third-party costs again, associated with M&A, with the acquisitions, with the respective due diligence and so on. Now moving to next year, I think that this is going to decelerate as a percentage of the turnover.

The last question for now is the following. Can we discuss the acquisition of Harder Digital positive and negative surprises so far?

I don't believe we had any surprises, positive or negative, because we have been close to the company for many, many months. The plan is going as we have initially thought. Already the first machine for tube manufacturing, the new machine is already in place, and it's already fully operational. We expect to have another one operational within 2026. So the plan to produce around 20,000 tubes per year is on track. And at the same time, of course, some -- we have some developments in the investment of some funds in Latvia, where we plan to have, first of all, a facility that will manufacture NCPs, which is a key component for tubes. And at a later stage after a few years, a full-fledged tube production.

Thank you, Dimitris. I would like to invite you once more to type your questions in that chat, if you have any more questions.

I would like to add a little bit more, if I may. So just to complete the analysis because there were 2 or 3 issues about the U.S. I have to say the following: THEON, when we've done the THEON Next initiatives, it had -- is trying to attack a couple of interesting aspects at the same time. One was technology, which I think I've exhausted an answer on that, pending also the Capital Markets.

The other one is a geographical location. If you think about it, THEON all of a sudden, and I hope the market has realized that. Not only we've opened -- we put our first step in Finland, which has the largest army, and we will continue stepping up our presence there. We have also, with the Kopin production in Scotland, where it will produce all of Kopin's production outside the U.S. It will be done in Scotland. We found it very interesting that it is in the United Kingdom. The United Kingdom is a country also we wanted to get in, and we sold in the past, and we sold some complicated thermal products.

But U.K. is part of the European defense structure as well, as you know, and has been added along with Norway. As a result, this is another platform we have set up in Scotland, which geographically is very important. But the most important geographical setup was what we have agreed with Kopin. For those of you who do not know, Kopin is working and is a company that is working on several very advanced U.S. Armed Forces program. The fact that we have selected because we had 2 co-production facilities in the States, but they were not ours, one at EOTECH and one at Elbit Systems of America, which they continue very successfully.

The fact that we have in Reston, which is in Virginia, we are setting up an industrial production that is going to be fully owned by THEON, but at the same time, working with the R&D departments of Kopin, which is ahead, is about the present and future, and we expect them to get some more contracts. And therefore, THEON, even if the U.S. decides otherwise, and they only want as they show already U.S. design products as well, we will expand our presence in the U.S. Kopin is -- and our cooperation with Kopin is just an initial THEON-owned plant, let's put it this way.

We will invest a lot in the U.S. That's why we expect the next 2 or 3 acquisitions, small or larger ones, to be in exactly those countries that strengthen our geographical and market penetration, like, for instance, Finland and the U.S. Already in Germany, we have done -- who has become a very important customer, and we are very grateful for that. And we returned to the country by doing 4 already investments in Germany. We have more or less completed our investments in Germany, and now we're expanding these capacities and everything. But U.S. and Finland and another European country that I cannot disclose right now has increased our global footprint, and this will be our direction.

And oh, by the way, I need to say a last thing so that people understand, the Baltics and the Nordics have become very important countries because they are basically the frontiers of NATO. Our new -- and this is another thing we have done in record time. Our new investment in Latvia via Harder Digital is something that we plan to expand as well as seek opportunities in that area as well. We expect those countries to be not only -- because they have a very rich ecosystem like Finland, we expect those countries to increase which they've already done, by the way, their defense spending. But we also expect them to be hosts of larger European Army as it has already started in Lithuania.

So what I'm trying to say, unfortunately, with as little words as possible, I can, is that everything that we do is technology and geographically, that is to be close to our large customers or potential customers. Thank you very much.

Thank you, Christian. Since we don't have any other questions, and we are almost on time, we're about to conclude this meeting. Thank you again, everybody, for attending today's call.