MilDef Group AB (publ) (MILDEF) Earnings Call Transcript & Summary

Welcome, everyone, to MilDef's first ever Capital Markets Day. It's, in a sense, a historic day because you're all here. Thank you for that. My name is Olof Engvall. I'm the Head of Investor Relations, Corporate Com, and I'm also the Chairman of the Board of the MilDef Charity Foundation. We can talk more about that later. This is, for us, a bit of a historic event because this is the first time we meet so many friendly faces that have followed us for a long time. Some of you have been around the MilDef store ever since the IPO on the fourth of June 2021. So you know that we've disclosed 13 quarterly reports so far, 13 occasions to deepen and widen the MilDef story and explain to you what this company is all about. But as you know, those moments, those 30, 40, 50 minutes of meetings during the quarterly reporting are quite brief. So today, for the first time, which we're very happy about, we can show -- throw a show altogether, 4 hours if you spend the lunch with us to deepen and widen the story. And for those of you following us on video, thank you for taking part of the MilDef journey very much so. And that's why we do this in English, by the way. Welcome. Please find a seat. It's good to see it's full. And we have packed an agenda, which is quite ambitious. And maybe overloaded, we'll see, in 4 hours, you will give us the verdict, and I will send out an inquiry later on. So you can tell us how we can evolve during the Capital Markets Day. But we have listened to you. Thank you, ladies and gentlemen, for those of you who helped me understand what we want to present. And this is what you've told us. You want us to cover the MilDef journey, also going back a little bit. And you want us to explain how we capture the wins of the growth potential right now and how we do R&D, product innovation, to whom we sell and how and with what ethical standards, that's a special segment of today's show that is actually very exciting and maybe in a bit the first time you hear this. We will dive into the numbers that matters, of course, with our CFO, Viveca, and we will talk with Daniel about the path to the future growth, and we will have a smashing Q&A at the very end. This is the agenda. It's been printed out so you can see it. It's 1 hour 25 minutes before the coffee break with sandwiches and treats. And we packed the full suit case in the morning here, as you can see. We will listen to Daniel Ljunggren. We will listen to Fredrik Persson, our CTO and Deputy CEO; Fredrik Jacobsson will take us on a journey on where and how we sell the MilDef product and the offering. And then we'll do that special segment about the ethical sales with our CLCO, Karin Svalander in a talk actually. And you can ask questions, of course, yourselves. After the break, we'll have a little special segment from SOFF, the Swedish Defense & Security Industry Association with Robert Limmergård. And then Viveca will take on the show and Daniel and our CPO, Martina Karlsson, will talk about how we recruit for growth. We're in a very different atmospheric pressure right now compared to a few years ago, as you probably understand. It is today extremely relevant to what we do and the people that want to work with us are extremely motivated. Completely different situation. And then we'll do the Q&A. But like I said, before we get the show started. This is the first Capital Markets Day of MilDef, so it's in a bit historic event. And now I would like to also say that this is not only that. It's also the first time that we show you the full corporate management team of MilDef and now I will ask my dear colleagues to stand up and turn around and just face you all because you will meet this crew later on. This is the seven people crew, the corporate management team of MilDef, and they will all make presentations during this show. Now you can be sure that you understand who's on stage. And the tall guy is Daniel. Some of you have already visited MilDef, because we had a moment of doubt, Daniel and myself, when we planned this event. We were thinking, should we bring all our friends down to Helsingborg. Quite a few of you have visited the MilDef fortress, state-of-the-art facility where we manufacture, we do the R&D, we do the innovation, we do the selling, we do the testing. It's quite a fascinating facility in Helsingborg. We were thinking maybe we should bring you all down to Helsingborg, but then we realized it's a bit easy to have you walk over to [indiscernible] -- but so now, for those of you who did not yet visit the fortress in Helsingborg, we want to take you there on a super quick flyby. And this flyby is about 1 minute, 30-second long, and we traveled by helicopter, and we will meet a super excited host at the MilDef fortress in Helsingborg. [Presentation]

Thank you, Olof, for that handover from myself. Welcome to the MilDef here in Helsingborg. Behind me, the headquarters of MilDef and our main production facility. At MilDef, we collaborate to armor IT. Now let's have a look at how hardware comes to life. First of all, our R&D teams are being put to work to design and engineer what we are to build for our lovely customers. And you know it's very often tailor-made, step-by-step concepts are being made ready for production. And the production magic happens downstairs. This is the beating heart of the MilDef fortress, our assembly lines. This is really where the magic happens and products come to life by my many talented colleagues. Looks are important, but not enough for our armored IT. It needs to be super ruggedized and therefore, we tested for pretty much everything, water, vibration, dust and heat and cold. But that, ladies and gentlemen, it's not enough. This is maybe the most important room of the mall at the MilDef Fortress, the EMC chamber, testing for electromagnetic compatibility. Remember, our ruggedized hardware needs to be super silent and almost invisible. So this is the final station of the MilDef tour. This is the logistics department for batch after batch of MilDef's products are being sent out to the MilDef universe and to our many trusted customers and partners. So this, ladies and gentlemen, concludes the super quick tour of the MilDef Fortress. Now back to myself in Stockholm. Thank you, myself. That was the fortress. How many of you have already visited the fortress? A quite a few. How many did not? Okay, you're warmly welcome at any point in time. So please remember that. Okay. Now it's time for the first real handover of today's program. The first segment, for 13 years, he has been central, instrumental, together with his colleagues in building the MilDef journey. When he arrived at MilDef 13 years ago, MilDef turned over approximately SEK 50 million. Today, it's well over 20x that size. Please welcome Daniel Ljunggren, CEO and our President.

Thank you very much, Olof. That was quite of introduction, I felt like a rock star introduction or something like that. Welcome, everyone. As Olof said, a historic day for MilDef, our first capital market as a listed company. Me and my management team up here are very excited to meet all of you here today, some familiar faces and some new faces. That's a great mix for our Capital Market Day. You normally meet me. You meet CFO, Viveca Johnsson and Head of Investor Relations, Olof Engvall. And now you also get the chance to rest -- meet the rest of the trusted management team and trying to give them some tricky question at least. So. This first scene is about -- to just to set the scene for the rest of the day, so to say, we have 3 hours here together, we can go deeper and wider into MilDef and what we're doing and how we operate, let's say. So this is just the first 20 minutes to give you a brief overlook of MilDef, who we are and what we do, so to say. Yes, it's green. Behind is our customer promise. We armor IT or we armor IT, some kind of humor in it, of course, but what we do at MilDef has nothing to do with humor. This is serious things that we are doing. We are providing the IT backbone, the infrastructure, IT solutions to our peacekeeping defense forces. And that is a job that we take very seriously. That is why we build products that never can fail. When and where the stakes are the highest, our products needs to be up and running in functions, so to say. And I would say, to find adaptable solutions in tactical IT, together with putting the customers' need as top priority, that's the DNA of this company. That's MilDef's DNA. That is what we have built for doing, so to say. We're also very proud to be very relevant. And now it's -- if we just be serious once again for 30 seconds, I mean, we have war again in Europe. We have war again in our near geography. And of course, that is not the way you want to be most relevant in, of course. But that is the situation we have and the whole defense industry is now in the spotlight, so to say. And MilDef is very much into the spotlight, but again. So it's, even if we think we have a full room here today, we have a lot of interest coming from different ways, but MilDef and the defense industry is very relevant. And if we look at the MilDef from more of an investor perspective, so to say, and give you five bullets that we think we can later on go through this even more, well reputed supplier on a strong growth market, technology and solutions positioned for defense ramp up, experienced experts on digitalization on defense and security, high-level engineering skills and strong industry knowledge and also a proven strategy for accelerated growth and value creation. These are the five bullets that we will -- all the areas will cover it in some kind of ways, so to say. So we will come back to this, but this is how we see that we are very relevant from an investment perspective as well. Now we can go back to a little bit set the scene of MilDef, the MilDef story, and the MilDef universe, so to say. Founded in 1997. Founded by Tomas Odelid and Marianne Trolle. Tomas was the entrepreneurial guy, crazy ideas, all these kind of things, and Marianne was the administration, taking care of all of that. And I think that those two together created a very dynamic duo that was really great for the start of this company. And we also say that history matters. Found in 1997 means that we have more than 25 years as a company in this business. And for our customer that needs to rely upon the solutions we provide, that's very important. We have been around our products and solutions is field-proven, has been out there, and that's very important as well. We did an IPO, June 2021, short story, me and our co-founder and current board member, Marianne Trolle, the former CEO and now he's the current Chairman of the Board, set in Marianne's Kitchen and said, okay, I think it's time now to go for a listed company. And this was a couple of months into 2020. So we were a couple of months post the breakout of the global pandemic and we said, okay, this -- maybe the extraordinary is only going to be MilDef that we will be making an IPO in this kind of dynamic. We were wrong, as you all know, there were probably a plus 100 company doing an IPO in 2021. Today, we have more than 300 employees, and we have legal entities in nine countries. Our core markets is the Nordics and also selected EU and NATO countries. We can find our customers within defense government and critical infrastructure. What we offer the customer is the hardware, software and services. And I said history matter, and let me just give a quick overview of the history of the company. As we said, it was found in 1997, started off as a pure reseller of rugged IT. And that IT was produced in Taiwan by a company called MilDef Crete Inc. And MilDef Crete Inc. also cofounded the start of the company, so that is also the reason why you can find MilDef Crete Inc. quite high up on the cap table today. They have been around since 1997. The first 10 years, as I said, acting as a pure reseller on the Scandinavian market. In 2007, they launched the 19-inch two concepts that we now see is driving our growth. If you see this big server halls like Google and Amazon, et cetera, those IT racks are 19-inch and 19-inch half, of course, is our half of that and that is because space matters in our business, I'd say. If you can just build a bigger hall then you can just keep this 19-inch. But if you have battle tanks or combat boat 90 or something like that. The space is really small. They have the same size as they had 75 years ago, but now they want more power, more computer power, digitalization. And of course, that means that we're doing the small things, smaller and smarter things, let's say. The next phase in the company's history, I will call it, internationalization and growth phase, I would say. In 2011, we started to look outside Sweden, so to say, Norden. We realize that we will end up in a one customer issue if we don't do that strategic move, so to say. And we also changed name from Login to MilDef. Login was the previous name from the start. This 2010, 2011, where search engine optimizing is very in a hot spot, so to say. And you can try to have a company name that is called Login. I mean it will be 10,000-page something on Google. So it was -- name was changed to MilDef instead. We acquired our first acquisition outside Norden was a U.K. company Terralogic Ltd, which today is MilDef Limited. And also I mentioned in 2016, two important acquisitions, one in the U.S. We started our U.S. journey by acquiring Amrel's rugged computer division and also Bedriftssystemer, a Norwegian company, who is today our MilDef Norway company. The final phase in the phase we are in right now will say is a strategic expansion through acquisition and accelerated growth as a listed company. So this is the time where we have been acting as a listed company. And as you have seen in 2021, we did two acquisitions. Norway and here in Stockholm. The Stockholm acquisition is about the integration services that we can talk about later when we talk about the new facilities that we are building here. Also I can mention the subsidiaries in Finland and in Denmark. That is, of course, our ambition to cover the full Nordics and be the #1 choice for technical IT, at least in the Nordic market. And 2024, where we are right now, acquisition of AVT was a U.K. company. We bought assets from that, and that also paid off by a big order coming in here. New premises in Stockholm I mentioned, and then we also have Sweden joining the NATO that sets the scene as well going forward. What, to whom and how we sell, brief overlook. Hardware is our legacy, and it's still our biggest revenue stream is coming from the hardware. Our CTO, Fred Persson will deep dive into -- a little bit more into the products later on. But hardware is still our main revenue streams coming from. By acquisition, I said that we also added services revenue streams. 25% of the sales today on a rolling 12-month basis is coming from services. And then I think we have software as well. Today, we are standing for 5%, but I think this is something that is really interesting that we can hopefully continue to grow that percentage of the software. Customer segment, of course, defense, 80% is coming from the defense sector. And I think that the defense sector is where we put our main priorities, so to say, it's the defense sector that we think we should be in. If we have been now working with the defense sector 27 years, and we have just declining military spending, we don't see any reason to move away from defense now when we see rapidly increased defense spending. But we have also some 20% of sales going outside defense. It could be a field hospital, it could be firefighting. It could be [indiscernible], for example, it could be a Coast Guard and things like that, critical infrastructure for the society. If we break down the revenues the last 12 months and see how does the geographic split look like? You can still see that the Nordic is our home market, our home base, that is where we present more than 50% of the revenues, so to say. But we also have a quite strong footprint in Europe, 25% of the sales coming from there. And also in the by far, the biggest land when it comes to military spending, U.S., of course, we have presence there, and we hope that we can increase that number. But last 12 months, 17% of the sales coming from the U.S. We have had a busy Q3. Let me tell something about it at least. I mean we signed this new facility agreements up in here in Stockholm in [indiscernible] and that is around the integration service part, so to say. We -- our current facilities, we can bring in-house on-site one platform and a platform could be combat boat 90 or something like that. In the new premises that we hope will be ready autumn '25 something, we can have four platforms at the same times. And that will drive efficiency and synergies, how we can -- when we can work on four platforms instead of one at a time. So that is something that we're really looking forward to. And also, I'm very happy to announce that we signed a contract with Magnus Hagman, who will have the opportunity to present himself later on here, but that was also in Q3. Magnus will be responsible for business area Nordics, so he will be the Vice President of that. And a couple of weeks ago, our Board had a strategy meeting and they said that now it's time to challenge me and the management team a little bit more. Challenge accepted. So they raised the profitability targets. And instead of at least 10% EBITDA, it's now saying at least 15% EBITDA margin. And that is something that we now do everything we can to meet, of course. If we look at some -- if we take it down from the corporate news to the business news, we can see a plate of good orders coming in here in the third quarter, so to say. This one, European military vehicle program, SEK 135 million is connected to the AVT, the asset project we did in U.K. And that also very -- I'm very happy that we also added this display capabilities into our portfolio. We can use that selling that to other customers. So that is very interesting as well. Have you followed MilDef in 2024? You know that we signed a 10-year framework agreement with BAE Bofors Systems, and they ordered SEK 52 million in the first one, I think, and now additionally SEK 18 million to that. And that's the platform R2, you can see there. Also Norwegian order coming in, our biggest Norwegian order ever. They are doing a MilDef upgrade on their existing CV90 vehicles, battle tanks. SEK 72 million. And today, this morning, we also announced that we received an order from the Danish procurement agency, so it's Norway down market and Sweden and [indiscernible] of Nordic and also we have this U.K. over here. So very intensive start of Q3, I will say. I will give you some short recap of the financials. So you have that also during the day with you. If we look at the MilDef journey and we take out the project even going all the way back to 2014, we can see that it has been quite a journey, CAGR of 24% the last 10 years, but we can also see that we are ramping up the speed here. 36% in 2018 and then since '21, a CAGR of plus 57%. Of course, there is some acquisition-driven growth in this as well. But I think that the big pattern is there, so to say. And then we just take a deep dive into the isolated quarter, Q2 and see what's happened there. SEK 302 million in net sales, a slight increase. I know we have been up to some tough comparison figures and quarters. Q1, Q2 last -- in '23 was really strong numbers. But at least, we could establish this new level and increase a little bit of the growth. But most exciting, I think, with the Q2 was the order intake increased by 43%. And that is something that we have seen for a while. The market is being more and more active the all time. So it's -- I will come back to that later, but we're seeing -- that we seeing beginning of the beginning, let's say. From an EBITDA margin perspective, we increased the margin a little bit from SEK 16.5 million to SEK 17.8 million. And also, the gross margin was north of 50%, which is very important for us to keep that gross margin and continue to develop the gross margin in the right direction. Operating cash flow also super important for us. We -- now for the third quarter in a row presenting a stable positive operating cash flow, and that's very important. If we should be able to do this growth, we also need to find smart ways to work with the net working capital and cash flow. This headline is the beginning of the beginning, as I said, and this is just to set a scene and try to explain that MilDef is a late cycle in this defense ramp up, so to say. The defense ecosystem, they are hit by the new money, so to say, in different cycles. What we saw in February 2022 was, of course, that the end customer was running towards this one, operational focus fuels, ammunition, boots to the solars, et cetera, everything that's needed here and now, most important for them, of course. And yes, I mean, that's the natural, of course, to run to that. Then we saw in the second phase of this, that the platform providers have started to getting really strong orders and order backlog, for example, [indiscernible] here in Sweden, for example, all the ones that provide them the big platforms, they have felt this ramp-up of the defense spending, so to say. And we have said many times that we are here, MilDef is in the third wave. When all this platform needs to be equipped with some intelligence, they need our products. And the big question has always been, okay, when will this happen? And where are we right now? That's the $10,000 question, everyone asked them. And today, I would say, I think we are here somewhere between 2 and 3. I think 2.5, something like that. We are moving into a phase where we see more and more activities, more and more order intake coming to equip the platforms that has been ordered. I think we will see a full effect of the 20 -- of the -- what happened in February '22 for MilDef in '25, but we are starting absolutely to ramping up, and we are starting to see at the beginning of the beginning, as we say here in the headline. So it's interesting times for MilDef. I think I will stop there actually and see if there is any questions due to the first slide, first deck.

Yes. Excellent. Thank you, Daniel. We have about 3 minutes if you want to shoot some questions now, and I forgot -- please forgive me if I did not say that earlier. We do not want questions in the presentations, but right after. So if someone has a question for Daniel right now or you'll save it for the Q&A, you're welcome to do it right now if you want to. But I see no hands in the air. Yes, I see a hand in the air, Erik?

[indiscernible].

You mean on this slide? I think we see orders coming in right now that is relating to the new money that was added after February 2022. I showed you the growth journey before started already, before '22 but that was more of a decision based on 2015 something when they invaded -- when the war in Ukraine actually started. But in February 2022, those money, I think we're starting to see the effect of what they have done with that. So that's why I'm saying that we are now probably in 2.5 something. But we see -- for the first time, we're starting to see orders that are coming from February 2022 money, so to call.

Did you see any bottlenecks for this growth?

The question was if you've seen any bottlenecks. I think that we -- for example, we will talk about later on here. I mean, the staff, the MilDef employees, that could be -- absolutely be a bottleneck. I talked about the integration part of our business. Now we have addressed that question. And we have the new facilities where we're ramping up 4x, for example. But I don't see -- if the supply chain will keep up, and we will not go into like how we had it in the COVID time, I think that there is no major bottlenecks to produce even more, so to say.

We'll save the questions for the Q&A. Thank you. Daniel Ljunggren, CEO and President, MilDef Group. Yes, why not? As you've heard already, the MilDef tagline is "WE ARMOR IT" or we armor IT. We make everything we do stronger. Sometimes our many products and services and hardwares are described as a box of lego, a box of lego with components that you build together to create a competitive edge for the end user. So to help us dig into that big lego box of the MilDef offering, we now present the best we can muster for increased understanding of the MilDef offering, namely our CTO and Deputy CEO, Fredrik Persson. Take it away.

Thank you a lot. Yes, I have the challenge to try to summarize our portfolio of hundreds of products and our legacy in 27 years in 20 minutes. So that's challenge I have taken, but let's see what we can do here. I will, as Olof said, talk about how we armor IT with suitable for this session. And I will start with a big picture to try to dig into the customer value we create and into our portfolio later on. This is where we started 27 years ago when MilDef was founded, it was founded on three principles. Military is here and will stay here for a long time. And there, we will find our business. Number two is the digitalization of the military has just started, and we will support that by delivering rugged electronics. And number three, we will do it where requirements are the toughest like the tactical edge. That was 27 years ago, and we still do that and that's still defining our business, which I think is showing our focus on doing exactly this one. We have added software and services. It's not only rugged electronics today, but still, we deliver that for combat vehicles, soldier systems, and commandos, and we do it on land, air and navy. As Daniel mentioned in his presentation, he said your #1 choice of tactical IT that is our vision. Then I quite often get a big question. What do you mean with tactical IT? What you deliver to the customers? So let's dig into that. Tactical IT for MilDef, is what we -- is the backbone of our IT system, a military system. It's the IT infrastructure, and it is the operator environment that get a lot of subsystems to function as one system. So IT infrastructure is integration of hardware, software, and it ensures secure communication, data processing, data storage, seamless integration of all the different special functionalities and interoperability with other systems. And then you have the operator environment, which you also can provide, and that is where the soldier can consume the data and the resources made available of the IT infrastructure. So for example, it can be monitor and control system, it makes the soldier to be able to command and control operations. So in the end, with our offering, we provide tactical IT to have effective operations. And basically, the final line here. We want to be able to deliver the right information at the right time to ensure the right decision, and we want to do it every time and faster than the enemy. That's basically what it all ends up in here. If we go a little bit more in details and tell you what we do to the right here, we have a simple illustration. And if you're sharp eyes, maybe you can see it to CB90 in the background, that it could, yes, there's easily be a box of vehicle. It could be an operator center or could become a combat boat 90, because all of them are built up on the same principles. It's the system of systems. And with that, we mean all the boxes around are independent systems that are vital for functionality for a military system. You can have battle management system to have surveillance, you can navigation, military radius, weapon systems, et cetera. And that's just the small steps of all the systems are in vehicle. But they are really important to get the functionality you want, but if you don't communicate and get it to function as one, they don't get the effective operations that you want. So there, MilDef comes in the middle. Here you we see a rack of MilDef IT equipment. You see our displays, keyboards and one is our software. So we can provide services to product manage to put the requirements to design the systems because that services and experience and competence we have. And then we have the portfolio of hardware and software to put in there to get the full picture and guarantee what's needed to get them effective operations. But today, we usually don't deliver the full scope. We don't take the responsibility for the full system. We have delivered, for example, one computer in Norwegian CB90 or just the software. But we try to build this -- what we built up the last 5, 6 years with hardware, software services to one package and taking bigger and bigger responsibility of that. But still, we deliver separately hardware, software and services quite much. But to deliver that, one, we need a portfolio. This one you've seen quite many times before, I guess, if you have seen our presentations, our software and services, but we dig into it. Our hardware is based on these four segments. The small form factor is also called 19”/2, the standardized form factor, half IT rack. We have displays and pan LPCs since 5, 6 years back in time. And then we have the mobile computer, which was what we resold or from the beginning from 27 years ago. And then we have customer projects which is very specialized projects and products, for example, that we deliver to Clavister where we do projects together with the customers. But with a little bit more, then we have a small form factor with 19”/2, the standardized width and it's a modular IT component. They are small, high performance and rugged and very reliable. They have been deployed and used in battlefield for 15-plus years. And here, you have the lego building on a system level. But as you can select what functionality you need, if it's power distribution, it's router of the gateways for setting up the network, computer servers, switches. You can build up all the functionality needed as a backbone in the military systems. And we can customize this one. The tailor-made is very important this one because you need to do it exactly as to fit into a system. Displays. To this one. We have a complete range of rugged displays and panel PCs for technical scenarios. It's a perfect complement to the small form factor because if you have a computer and you have an IT system, you need to be able to consume it. You need a display to see the data. And then if we can deliver the computer and the display and the cable, we can take full responsibility. They are interoperable, they work and we can take a responsibility there. We can from now on in-house capability designer from [indiscernible]. We have all the capabilities needed. And since this summer, when we did the asset acquisition, AVT, we now have the last piece of expertise we will act. So now we can do video and image processing, we can do video distribution by our own software developers and FPGA solutions. So that means I see it as we have all the competence and expertise in-house to be industry leader within this segment as well. So that will be really interesting to see how it works out. But I mean, we have the products, we have the functionality, and we have technical specifications. That's important, but equally important to sell in this market is quality, of course, quality is on top. And as I said, they are battlefield-proven since 15 years back. But what else to sell in this industry is standardization. All of our customers, they want to stability. They want form fit and function units. Do you need to be able to do form fit and function replacement when, for example, military platform live for 20 years, we need to replace the computer every fifth -- every 10th year to have the security features, software updates and so on. Then so easy to just remove the computer and replace it with a form fit and function computer. You can reuse the mounting, can reuse all the cabling and we make sure that the software works and you don't need to recertify the whole system. Maybe most important for our unique selling is our ability to customize our products. And here, we build lego again because as you see in this picture, the insight is modularized. And here we get the economy of scale. We try to have a few parts as possible, so few PCBs as possible, but create as many products possible here for a customer. So if we can get up the volume, we create products for less bill of material cost, but we also use less R&D resources to deliver more products. So here, the strategy around that one. I think we've been very successful. But now we take the next step when we level up in number of units. So this is really the base of our ability to deliver quite small volumes and still make money. And that we do because we have the full ownership and the IP of the products, we have our own capabilities within product development, test verification, manufacturing and services port. We own the full life cycle of our products, and we can keep them on live for 10, 15, 20 years in front of us. And then at the end, always designed for defense from the start. We don't have any moving parts. We have fanless designs, long life cycles, 10 years old minimum, we have -- we can deliver for 15, 20 years as well. And that's really important when you have platform life cycles up to 50 years and we have -- it's proven as well. And then everything is designed to military standards, no matter if it's electromagnetic compatibility, environment or power, and we do it against NATO standards, U.K. standards and U.S. standards. So proven supplier of this kind of product. So you have the technology specification, but this is equally important to be able to be a successful provider in this industry. Then we go further into the portfolio, and we have the mobile computers where everything started. We have PDAs, tablets and laptops from Taiwanese, MilDef Crete, but here also, we add capabilities from the acquisition handled. So here, we can get Android devices because we think Android devices are -- digitalization of soldier will be a big thing here from now and into the future, and we need to have the capacity and capability to deliver those units and therefore, put it in there for. But that you see almost the same unique selling point is form factor regeneration because if you have a docking station to set your laptop in a vehicle, then easy to just remove it and put in a next generation of the computer, in that sense, make it easier for our customer, rugged design, life cycles, and we can deliver for all domains, land, navy and in the air and they are used for many years, and it's proven a good track record. That is the hardware. So if we go into software that we acquired if the OneCIS is called. We acquired Sysint company in Norway 2021, and we acquired them because we think this software is brilliant and a perfect complement to our hardware. Its deployment software, which means it takes care of rolling out the software, getting in place and get the system up and running in the military platform. Usually, air gap, which means it's not connected to cloud. So you need to do it from a hard drive or from USB memory. And that is proven and used by Norwegian defense, and we think it's -- there's a big interest outside Norway now as well. What we do here is that we -- with this software also can offer to deliver turnkey solutions, hardware and software. Because in this software, we take care of the integration of third-party products, services, and operating system. So basically, from our USB memory, we can set it in, can install everything. It's security hardened, it's penetration tested, and we can maintain the software package for a long time in the same way as you do for hardware. So then we can deliver the software and the hardware, and we can promise effective operations. And in the end, very important those days is NATO compatible and compliant with Federated Mission Network. It means that it out of the box can guarantee interoperability with other NATO countries. So that's something we've added and is very valuable for us when we are talking to new customers. And then into services. We have organically since 2019 and with the acquisition of [indiscernible] added services into our portfolio. And that is strategic then because we think that -- our customers all help we can give them to integrate our products and our software in the best way to get best effect of them is valuable and also these days, the capacity that our customers are on the limit, and I think we can help them to offload. So we can deliver full systems, full projects from start, defining requirements to designing systems to fiscal integration to training and maintenance and keeping live with them. So we have the full spectrum of that, and we've built up that capability during the last 5 years. So it's an interesting trouble. And one example of that is next month in October, there will be an exhibition in the U.S., AUSA. Then we will launch our dismounted soldier offering. And this is just an example of what we can do with all the capabilities and products we have in the portfolio. This is showing an ecosystem for a soldier or at least a small part of it. All the white circles or things that MilDef can provide. Here we have, for example, a tactical Android device that is via the capability of the handheld. Can get into the MilDef portfolio. Then we have a tactical Android device that are suitable for soldier to use on field. We can fix cabling, we can fix mounting, but with legacy R&D, we can also develop -- and there is actually a first process out there and use we have for soldier, which is the IT infrastructure on soldier, connecting all the devices. And then we have software OneCIS that make sure that we can do device management and deploy all the software as well in this ecosystem. But now we take next step here. Normally, we used -- we sell the hardware, we sell the software and the services here. But here, we also would like to take the responsibility to -- for a full system. So by our partners we have, we can get in tactical radios, we can get in batteries, we can get in software. And by that, we package it, we can take the full responsibility and we can keep it live for a long life cycle. So this is what we would like to. So it's not a coincidence that we have built up the portfolio we have, the services we have and the software we have. We think there is a position for us to get to a solution or a solution provider, a system house. So we would like to customize solutions for all kinds of platforms, objects and facilities. And we have the hardware, we have the services, we have the software. Now we would like to position us for solutions. It's not instead of what we have done in the last 27 years, it's extension of our offering. And we will do this for the whole life cycle. And back to this picture, why do we want to do that? I would think the defense industry, the timing right now is that everybody has a little bit too much to do. Everybody needs more capacity. And I think we can help them by make it easier for our customers. We can do more of their work and we can take bigger responsibility. We come closer to our customers, we will be strategic partners, we will have strategic collaboration. And that means that we have better insights in what they're doing. We will be able to be more proactively and work more proactively and prepare our portfolio to what's coming, the right products, right services, the right software. It will reduce complexity for our customers. They have one point of contact, one point of responsibility and accountability, and that will be us, and we will take care of the sub suppliers and take that. I think they will gain quite much of what MilDef, our DNA, we're agile and customer-centric approach. I think we can do much of this work quicker than the big procurement organizations or the big companies as well. So if you try new things, they will get things done quick. I think we are very suitable for that. And then, of course, the dream is that we can tailor-made systems that we use as much as possible of the existing products. And we have some smart -- where we can do that, that our customers are not aware of. So in that way, we can -- I hope we can streamline our hardware portfolio, but still keep the flexibility on the system level. Of course, in the end, we had this solution or getting to a system house is, of course, to enable to sell more hardware and software. It's a complement to what we already do. To summarize it, tie it back to where I started. I think military -- digitalization of the military and where requirements are toughest is more relevant than ever. Daniel has talked about it, the military, everybody knows about it of some reasons -- or what reasons and it's very relevant. Digitalization of the military is going faster than ever. So there's a big need of those products and those services and those -- the software. And the third one, the requirements are tougher than ever. It's everything from technology to security of supply, cybersecurity and it's just getting tougher and tougher to fulfill all of these needs. So with that said, I think we have the portfolio. We have our offering that already for the next challenge to be a system solution provider, but also to keep doing the business we already do.

Thank you, Fredrik, and if there is an urgent question right now or we can save until the break or the Q&A because we're going to move from one Fredrik to another Fredrik. But before we do that, Erik in the back, we run that Kongsberg video just to give you a glimpse of where our stuff ends up. So we'll travel to Norway and our Kongsberg friends and will display in the middle of this video, you'll see some of our displays and keyboards. So please take it away, Erik. [Presentation]

Yes. Ladies and gentlemen, this is the world we live in, and we work in. So just a brief reminder of where our technology ends up and protect what we cherish the most. Okay. So let's go on back to the slide deck, and I will now hand over to the next Fredrik. We have been traveling into what we sell and now we will travel into how and where we sell things. You all know that we are brought up in the Swedish context, we traveled out to the Nordics. We traveled into Europe. We traveled to Germany, U.K. and the U.S. But I think there are some holes maybe in your knowledge and understanding of how we sell and to whom and what channel strategies we have, add some reference cases at the very end of the next presentation, and we have a perfect setup for the next Fredrik, from one Fredrik to another Fredrik, who joined the MilDef journey in 2007, so you are really the long timer of the MilDef.

So yes, I've been around for 17 years, but every time it's the first. So this is my first capital day, and I'm looking forward to it. A bit nervous, of course, but that's how is. Up until this -- beginning of this year, I was the Chief Sales Officer. But starting from this year, we also did a change in how we operate in sales. And that also goes hand-in-hand with our client on the value chain, you could say. So before a couple of years ago, we had a lot of different MilDef sales companies around the world. But now we have added more like production, integration and other things. So that's also why we did this change into the two business areas. And I'm responsible for Europe and North America, and we have Magnus on board now, being responsible for the Nordics. And just to give you an idea of what we have in these two business areas, we have, of course, all of the sales operations in here, but we also have the handheld operation in my business area, all of the handheld operation goes there. We also have an international sales team that works out of Sweden, but sells to all the countries where we don't have our own company. So they sit in Sweden, but travel around the world to sell and promote our products. Like you've seen before, we have added production in U.K. So U.K. is not just the sales office anymore. It's also production and service, and we're starting to building up the technical -- local technical expertise in U.K. And we do mainly B2B sales. I will explain why a bit later on. But compared to the Nordics, which is our home market, we have been able to grow more quickly, I would say, on the value chain closer to the government. So in the Nordic countries, we do more government business directly, but of course, also a lot of B2B business to [indiscernible] and so on. In the Nordics, we have people employed in these four countries here. And of course, it's sales and service in all of these countries, but we also have the big site in [indiscernible] where we do all the integration and the software development is taking care in -- yes, we do that in Norway. And as you see here, also relating back to Daniel's slide, a lot of these additional comes from acquisitions. So the U.S., the U.K., handheld software in Norway and integration in Sweden all comes from integration -- sorry, from acquisition over the past couple of years. And it's a 50-50, roughly 50%-50% split here between the two areas, both in people and money. Okay. So how do we actually sell this then? Of course, we have salespeople that travel around the world and talk to all our customers. They go on exhibitions. We try to be active in seminars, working group. We engage ourselves in the local like SOFF we have here in Sweden. There's a lot of other similar organizations in other countries that we are involved in. So we engage in those. But the most important thing here is that we build strong relationships with customers. And with many of the customers, we have had those relationships over 15, 20 years. So we have set up the business to not gain short-term sales and wins and instead, build these very long relationships with our customers. And there's a lot of benefits with that, of course. By doing so, we have gained a good position in a lot of different platforms and have proven ourselves in these platforms, because we have delivered to these platforms over so many years. And that also gives rings on the water. It spreads itself. When people are looking what to have, they look at what's existing in other platforms and other systems and they find MilDef in this. I was asked how many public tenders we compete in every year. And it's not that many, actually. We do compete, of course, in public tenders directly to government agencies, but most of the business we do is business to business, as I said before. But our next slide will give you an overview of all the different layers we have when it comes to the customers. And we had several instances this one here, when the government customers ask for MilDef, maybe they have MilDef equipment in the platform, and they are expanding into new platforms into new areas, and they want, of course, to use the same -- so sometimes, we have government customers basically pointing at MilDef, we want MilDef in this next platform, and that's kind of the best, of course, best positioned to be in when that happens. Sorry -- so I will try to explain the different levels of customers we have. And if you look here at the top, we could call them end users. That's the actual soldier or operator that Fredrik talked about, that is actually using our equipment in a vehicle in a command for somewhere. We rarely do business directly with these entities, but they take care of, of course, the, let say, life support and spare partner things, but it's not up here that we do the business. So they can set requirements and they can have needs on the systems and products, but we don't do business directly with these. Instead, most countries are organized in a way that they have defense buying organizations. So in Sweden, we have F&B, Norwegian have the materiel agency and Denmark similar. So it's with these organizations that we do the business to government -- sorry, yes, business to government sales. And here, we also find the public tenders and you also find, of course, when they are acquiring a new combat vehicle, they compete. Yes, people compete for that. But as Fredrik said, we're not there yet. So we will never deliver complete CV90 but we can deliver the IT infrastructure into these government bodies. Worth to notice is that we also have existing framework agreements with a lot of these bodies. And with that, they can order from us the products that we have decided and they don't have to make a new public tender each and every time. And you can get those tenders, of course, by competing in an open tender for the first time we win it. But in some cases, they also direct the business to a company that they want to acquire products from -- products and services from. So we have several ongoing active framework agreements that these companies can buy from us. The next level is all the global defense companies. So if you take the top 100 global defense companies, you will find them in these layers here. And these are, of course, also our customers. And it can be different depending on if we sell to a platform provider or if we sell to a system provider or if we just sell a piece of hardware like we do sometimes. And you will also see that A lot of these companies compete with each other for some cases. And in other cases, they cooperate. And it's the same with MilDef. So when we are now climbing the value chain, we are sometimes competing a bit with these companies, but we often complement very well. So we can -- in other programs, we can deliver and be a very good supplier. But for some other bigger programs where we sell our system solution, we might compete in a way. Lastly, we also have local partners in some countries. And we have that on markets where we don't have our own company, but we still think it's a very attractive market to be on. And the examples here are from Germany, Czech Republic, Estonia and Japan. So here, we have the international sales team work with these local partners on the local market to then work on -- with the defense players and the government bodies in those countries. Okay, that's we show the reference cases. First one, is from U.K. And this has been press released and everything. And this is a program that we won a couple of years ago. So we were tasked to developed 4 products for this vehicle. And we won it basically on the product, the customization of the products, the price and that we could fulfill their made in U.K. requirement. So to be able to win this, we had to set up production in U.K., which we also did after the award. And this program is now running all the way up to 2030 with deliveries. But then, of course, you have a lot of extended -- how should I say, obligations, yes, because they will need spares, they will need other programs and things going forward. And of course, it's not just developed for this product -- this platform. All of these products could be put into any other military platform. And this is just a good example of when we are in a platform it spreads other people are looking at what they are doing in U.K. It can be spin-off effects to other RBSL platforms. And it's really good to be in these long-term relationships with the platform providers for that sake. Next one is SAAB Swedish company. And -- when I started MilDef, I worked as the key accounting manager for SAAB, I know quite a lot about this. And the first big sale we made to SAAB was a display into their radar surveillance aircraft, back in 2006. We met them at an exhibition. They wanted a display, and we quoted that me and the old -- the founder of the company. That's a fun story. But what happened after that, we managed to deliver that one. And since then, we have been involved in a lot of other SAAB programs. So we have, over the years, built this crossword the relationship with SAAB, which means that we are at the forefront. We always get information on next programs, what's happening next. We can develop the next generation products to fit their needs. And it has been a very good customer for us over many years. Last one, we have 1 outside if you want to have a look on this product. But it's a collaboration with Clavister, a Swedish cybersecurity software company. And BAE, which is the customer for us. So it's a combination here of MilDef hardware and Clavister software that is put into this nice product there and it basically protects the vehicles, all the IT infrastructure in the vehicle. So cameras, the vehicle itself from the cyber threats. And Again, it's a good example of when you're in a platform because BAE is now promoting this as a kind of a standard solution in the platform. So when BAE is selling and promoting the CV90 platform, we are embedded in that as a standard. It's not a guarantee that when they sell a CV90, we will sell this, but it's a good chance to be in there. Okay. That was my last slide.

We have a few moments for questions. If you want to shoot 1 now, you can do that for Fredrik Jacobsson or we will dig in even deeper. Yes, sir, please.

[indiscernible].

I would say it's a mix. It's not any big program like, for example, in U.K., where we have the MIV, that stands for a big portion of our sales in U.K. But in U.S., it's a lot -- it's more programs in less volume, I would say. So we don't have 1 big program that we're delivering to in U.S. It's a mix -- a good mix, yes.

Okay. Sorry. Let's do the microphone.

How is the competition in U.S.

It's very hard. It's very hard, and we are not as well known as we are here in the Nordics and Europe, of course. But we build on the on the things that Fredrik presented like the quality on the products, the Swedish heritage, the customization possibility. So we still have a good chance in U.S., but the competition is, of course, it's harder. We see a lot more of a lot of more companies to do similar things, but of course, we don't think it's as good as we do it, but yes, but it's harder. But our sales in U.S. is increasing, but I'll let Daniel and Viveca answer to numbers if you want. But I think the sales in U.S. is increasing.

It's not a secret that we want to reiterate what has been doing in the U.K. the project in the U.K., which actually in our world was a bit of a miracle, but we won that big European contract, little MilDef in U.K. So we traveled, so we wanted to do again what we did in the U.K., in the U.S.

But have you all production in the U.S.?

No, we don't. We don't not.

So it's not U.S. made.

No, but we could easily set it up because we have -- we've done it in U.K., and we are also moving new products to U.K. So we know how to do it. But so far, we have not competed and lost just because we have to make it in U.S. And if that was a requirement, we would offer it to make it in U.S. It's the assembly that is made in U.S. and also in, yes in U.K., we use a lot of U.K. sourcing and manufacturers in U.K. to milled aluminum and make the PCBs and things. So it doesn't only has to be assembled, it can be also local suppliers for making all the parts.

Okay. Yes, Erik. Let's give you Erik, the microphone. So we get it on tape.

On the B2B part there and the large Tier 1 defense contractors, a couple of obvious, maybe you didn't -- that was not a full list, but -- how do you -- when you enter a new one, any obvious ones missing that you would like based on their exposure? And how do you get in? And what were the lead times to do that?

Yes, there's a lot of companies missing here, of course. We -- as I said, if you -- if we look at like the top 100 defense companies, I think we are selling to most of them, but most of them are also huge companies with 20,000, 30,000, 50,000 employees. So it's -- yes, we have to work many different ways to get in those companies and it can take time. I didn't mention it, but our regular sales cycle is maybe somewhere between 6 to 24 months. I would say. So it takes a really long time to get into these platforms. And I mean, in the network we have, we can easily find who to call, but then they also need the budget. They need a funded program and so they need -- we can't just sell it, it needs to be a funded program from any -- from a government to even have an interest from those customers.

Yes, out of those 100, let's say, the top 100 then, how many have an internal competing business yours -- roughly?

I don't know, what can it be 15%. I'm looking at you here as well, 10%, 15%?

[indiscernible] there is no direct competing with that [indiscernible] generic product, we're going to get in.

Thank you so much. We'll close the Fredrik section segment right now.

I'm available in the break.

Yes, you will be available in the break. Thank you so much with an applaud -- thanks -- thank you, Fredrik. Now we have 15 minutes before the well-deserved break. So bear in mind, we will be refreshed in 15 minutes. However, we will now make a special contribution, a special segment, we will dive even deeper. No, we will not dive deeper now. Thank you, Karin. I was -- still we have 16 minutes. Now we will present our next Vice President of the Nordics. Please, welcome.

Good morning, everyone, and happy to be here. Really excited to see so many interested in MilDef. My name is Magnus Hagman. I have since yesterday, assumed the position as Vice President of Nordics. So we have long timer in the corporate management team with Fredrik and the new timer, that's me. I'm on the crash course learning about MilDef quick here. So for today, I would, of course, not be responsible for answering detailed questions, but I'm going to be around. But what do I bring to MilDef? What is my experience and my immediate contributions? Well, my origins in Work Life was fighter pilot in the Swedish Air Force. So between 1998 and 2012, I flew Gripen, worked as a qualified flight instructor working on the export programs, training some of the customers to Sweden on the fighter jet. There, from there, I transitioned over to SAAB, had a decade-long tenure with SAAB, working on international business development and sales for large system programs, half of that time in markets outside Europe. And this is what, I believe, also my immediate contribution is going to be to MilDef, it's this international business development, how to collaborate and cooperate with some of these big logos. I've seen inside of them. I know they're all different, but they work on that kind of metrics. So that's my immediate contribution, but also, of course, spearheading but continued growth for Nordics. That's my 2 minutes, isn't it.

Fantastic. We could listen to you for much longer -- thank you, Magnus Hagman. Sorry about that blooper. Naturally, I will make at least 5 bloopers during the course of the action. Thank you. Am I the moderated by the way. So now the next segment is very exciting. We will dive for the last 15 minutes even deeper into who do we sell and we will put an ethical layer on that discussion because that is important for you. And this is actually the first time we do this in a room with people like yourselves. So this is something special for this day. And before we head into why we do this with the interview with Karin Svalander, CLCO, and we do this without the PowerPoint slides. We just want to let you read for 30 seconds, the following message. Yes, so you see that MilDef aims to go above and beyond the norms set by legal regulations. Okay. Thank you, CLCO, Karin Svalander, that's the Chief Legal Compliance Officer.

Yes, that's correct.

That's a fancy title, good acronym.

The longest one.

We will make an interview about this because this is very important sustainability responsibility we take very seriously. And therefore, we do this work, and you lead this work. First, let's set the scene and understand here. Tell us about the rules that apply to the sales of the MilDef products.

Yes. As for any company, there are, of course, general rules that apply to all sales like rules to prevent corruption and to promote their competition and so on. And then since we also have some products that are classified as a dual use -- and that is a technical classification based on the characteristics of the products, which means that they can be used both for civil purposes, but also for military purposes. And some of our products have this classification far from all. But then we have to be aware of when we export products outside of the EU better products must sometimes have a specific license to be exported. And then a third layer of sales regulations are international embargoes and the ever increasing number of international sanctions, which can be directed at countries or organizations, companies or even individuals. And we are, of course, very, very keen to follow all of those regulatory rules and we work constantly with other regulatory compliance.

There are many rules to follow, but do we do more than follow the rules?

Yes, we do actually. We have set up our own ethical framework regarding our defense business. And this means that we sell our products primarily to selected EU and NATO countries. And this applies to all of our products. So not only the products that are classified as dual use, but also our civil product that we could sell anywhere and to anyone within, of course, the anti-bribery and other general rules.

So what you're saying is that we actually do more than the rules requires. Why does MilDef think it's not enough to follow the rules?

Yes. As you know, we sell our products primarily to the military defense sector. And we think that, that gives us a great responsibility to make sure that the products end up in the right place and that they are used for the right purposes. So we feel that, I mean, doing what the law says that sort of the absolute minimum. And sometimes we feel that it's required to do more, more than the bare minimum and especially when it comes to sustainability. And we have identified this area as a sector where we can contribute to a more sustainable future by taking care to whom we sell our products.

Okay. So if you relate to this group here today, potential investors, current investors, how should they relate to this all, Doesn't this ethical approach limit our ability to grow and sell more?

Yes, that's a very good question. And it is, of course, a limiting factor. That's sort of the thing about it. But we conduct this ethical approach not only because we think it's the right thing to do from a sustainability perspective but also because we are convinced that it creates business benefits, long-term business benefits. So we are really confident that we can grow this business in the way that we want and fulfill our long-term financial goals within this ethical framework.

So in a way, you say that not only can we sell as much with this ethical framework, we can even sell more due to it? Can you elaborate on that?

Yes. Well, it's pretty simple. When we reduce the number of customers and do not sell on certain markets, we reduce our risk, and we increase trust. So it's just a fact that when we stay away from some markets, the risk is less of, for example, accidentally contributing to corruption and at the same time, our stakeholders can feel secure that we are a reliable business partner and a reliable investment. So even if we have to then say no to certain business from time to time, we feel that it's very easy to stick to this agenda since we believe that it is the right thing also from a business perspective over time.

So how does this work in practice every day life Karin? I mean different people have different compasses ethically in a way, don't they? Or could be?

Yes, that's certainly true, and we have set up therefore a framework, as I mentioned, to help our sales organization. And as a basis for this, we have our internal Green List and the Green List, lists the countries where we prefer to do business. And that this list is, of course, very well aligned with our business plans and our business strategy. And the countries on the list are most of, but not all EU and NATO countries. And in addition to that, some other countries like if you remember the map that both the Daniel and Fredrik has shown before also Japan and Australia, New Zealand and Switzerland are included.

So the Green List is very important for us as a framework. Does this mean we do not sell outside the Green List?

Well, sales outside Green List are not entirely excluded, but they require a more thorough customer control and also approval from the Ethics Council. And we are -- I mean, we are very confident that our sales organizations are good at prioritizing and sticking to their core markets. But if there is a deal that a salesperson wants to pursue with that is outside the green list, then we think it's important to have a central function that sort of takes out the direction of the company's ethical compass. That shouldn't be for that salesperson to do, but to have the bigger picture.

So the ethics committee is very important in this work. So who populates the ethics committee. I would guess you're in it.

Yes, it's shared by me or by the Chief Legal and Compliance Officer, which for the time being would be me and other members are the CEO and the Chair of the MilDef Board of Directors and also our Director of Quality and our Director of Business Development. So 5 people in total. And we have deliberately kept our sales organization outside the council. But instead, the relevant salesperson that has a case outside the Green List is invited to the council to present the case and describe why this case is interesting, still being outside the list. And we have seen also, I mean, some of -- and some of our peers have started to be more interested in this approach also. But then sometimes still leave the decision with the salesperson. And we have chosen another path in that direction. And I think that we are 1 of the companies that go furthest, when it comes to this ethical approach on our sales and I'm very proud of that, of course.

So I was going to say some other defense and security companies have salespeople in their sort of committees. We do not. So salespeople don't get to decide. How does the council decide on what is okay or not?

Yes. Those decisions are they are not always easy, but that's also why the council is set to sort of make the hardest decisions and when we decide upon case, we do not care about the monetary value of that specific case. But instead, we look at the bigger picture. So we take into account the level of corruption and the level of respect for human rights and democracy in the relevant country. And when doing so, we use independent data from, for example, Transparency International.

So still isn't there a risk that all these decisions become very political.

Well, not really. We consider ourselves to be both have the privilege and the obligation really to be as apolitical as possible. And that's possible because ethics and politics aren't really the same thing. I mean, politicians can sometimes have to make decisions that aren't perhaps the most preferred ones from an ethical perspective, but maybe unnecessary due to a bigger political agenda or some bilateral negotiations or whatever. As we don't have to take those considerations that we can instead stick with our ethical Agenda.

Thank you, Karin. Some questions perhaps before the break. But my final question to you is what's the next step? How do you evolve this even further? Because this is not a new thing. It has been going for quite a while. How do you evolve it further?

Yes, we have had this ethical approach really since long before the big growing budgets, and we have always considered this more of a benefit than a limitation. So the next step is to continue to always educate our salespeople and to have workshops and discussions to evolve this work even more and the ethics counsel meets not only to decide on specific cases, but also to evaluate whether any country should be taken away or added to the Green List and so on. And we are also now trying to digitalize more our whole KYC process and also having the customer interact more directly with us in a digital way, and we evaluate the cases.

Questions before the break. Yes, sir, with the microphone coming up.

Yes, [indiscernible], you have been around now for more than 25 years. Have you had any sort of issues? Or have you been involved in transactions where these have become issues? And how did that resolve itself?

Well, I would say that we have been both lucky because there is sort of even if you do as much as you can, there is also always a bit like of luck, because it's hard to control everything until the final -- and -- but no, we haven't had any crisis or anything, but we have -- we have had situations, where our KYC has deducted things that could have been problems. So luckily enough, not any big crises so far.

Fredrik you can add if you have the microphone on. Fredrik Jacobsson.

No, but we have been quite good at seeing when -- if you have somebody that asked for something specific from a country that we don't want to sell to and then that -- the same thing pops up 3 months later from another country that is on the Green List. It's -- we have that kind of built into the organization that oh it's the same case. So it's kind of built in also that we try to when people try to, what you say, go around...

By proxy.

By proxy our rules, we can also pick that up because we are -- we have that built into the sales organization. So we have had a few cases like that where we see people might try something.

Ladies and gentlemen, we thank you, Fredrik, for that contribution. And thank you so much, CLCO, Karin Svalander, thank you for that presentation interview. We are running about 1.5 minutes late. Coffee break 20 minutes, be back, and then we'll listen to Robert Limmergård from SOFF, CFO, Viveca Johnsson, CPO, Martina Karlsson and CEO, Daniel. Enjoy the break. See you soon.

Ladies and gentlemen, welcome back. So sorry, what a party pooper to break up the wonderful stemming and mood. Thank you for doing that for us. bringing that atmosphere and energy into the room. Sorry, we have a full long hour of lunch where we can continue our talks. And I know that the management team will stay along a little further not -- maybe you did some other plans, Daniel. But I'll say you can continue after 1:00, if you want to have some one-on-ones with my lovely colleagues. Please go ahead and do that then. Okay. For some of you who are not so well versed in security and defense. We now make a special contribution to today's program by inviting the Swedish Defence and Security Industry Association SOFF, namely General Secretary, Robert Limmergård, please take it away.

Thank you, and thank you very much for having me. I'm not going to do a blinder here and start making presentations because we have seen some excellent presentations from the MilDef team here. So I decided that I will not use any slides. And I also will follow a little bit of a script here because this is sometimes a little bit sensitive and since we are live streaming, I'm going to stick on that and also to make me a little bit more comfortable between you all guys here. But I hope that we also will be able to take a few questions later on. But to start off and talking about the state of the market and the growth of the market, of course, this market doesn't really behave as other markets. And I'm going to talk a little bit about the characteristics of the defense market, but also what will happen going forward. And I mean, with defense market. It has different preconditions requirements and that makes it unique. And like all companies, of course, defense companies need customers, but all the defense customers, end customers are and must be government's. And with defense companies and its exports, are, therefore, of course, subject to different regulations by the different governments, but we are also a direct connection to politics. And that is that the government is when customer means that the defense market is by state intervention, a market which has quite high barriers to enter. Which each national defense market. So on most defense markets, you find a symbiotic relationship between the government and its national defense companies. And most countries take where defense series and therefore, consequently, we also take the defense industrial-based series. So it's not possible to really talk about 1 defense market. All markets are like different animals. And therefore, there is different ways of entering all the different markets. And I think that's very important to keep in mind. So what is the defense company? Well, most companies have defense as a business area. A very few companies really are specialists focusing on understanding the customer and taking a little bit of a position like an OEM, a system integration or as Fredrik pointed out before here, called it a system house because it's a lot to do to understand the context of the military requirements and how the warfighter the soldiers and the sailors and all really needs to work with the material. So those companies like MilDef that has found its niche and excels in understanding the military problem are interpreters of customer and therefore, has a very important role in ecosystem. There is not many startups that will directly enter this kind of market because the knowledge of the market is something that is a very high barrier. We have 250 member companies in South, most work on civil commercial markets as well. But what bring them together is more or less that we have the defense customer as something that we all work on. it's not really what we do. We offer products ranging from space capabilities to freeze-dried food, but we work on the same specific regulations that's following from doing business with this kind of national security. And it's not just the national regulations. It's also like the U.S. regulation, ITAR, CMMC there are some extraterritorial regulations as well that are affecting the supply chain even if you're not just doing business with the U.S. So the defense market is filled with those special conditions and that makes different approaches to different markets and the interface between government and suppliers looking very different in the different states. So that's something that we keep in mind. But also to add to the complexity, in some cases, the government has control of some part of the competencies of the companies of infrastructure, which is needed to do business. Looking a little bit broader in the Nordic area, you have [indiscernible], which is a state government-owned company. In Finland, you have [indiscernible] is the main -- but you also have it in the U.K. and in most of the European countries, state-owned companies that work on this area. But in Sweden, we have a tradition of actually having privately owned since we deregulated and privatized all the industry in 1998 to 2000. But having said that, how is the market doing? Well, the market situation finds itself in a time of great change -- we are at a critical point where we can see the outlines what are the challenges we face, but the rate of the change is very accelerating. And the level of uncertainty is actually still growing. So due to the security environment, we have seen increase in defense expenditures. And those are actually unmatched since the 30s, and it has just started. In 2023, the revenue of our member companies was up 25% from the previous year, breaking SEK 64 billion. But it started really already in 2014, when Russia attacked Ukraine. And since then, we have seen an investment in defense spending in all allied countries, steadily, but which is not often noted, more and more defense spending is being operationalized by the companies. What I mean is that on forces in the West in order to focus on their warfighting we have started like all other business areas or different kind of operations to outsource more and more of their operations to companies. So businesses are increasingly getting involved in training, MRO services and so on. So it's not just the defense spending that hasn't been growing is also the share of the cake that is open for business that is growing. At the same time, today's era of military competition is characterized by additional variables like speed and agility. And we are now seeing a great challenge in competing regarding how can actually 1 part out adverse the other partner fast and then rather to out-invent everyone else. And that is something that is changing. It's not just a matter of what armed forces are buying. Now more whenever it's also about how they buy things. They want to ensure that they buy the function of things, how quickly they can dive those things, whom they are buying from because trust is going more and more into the supply chain, how rapidly and creatively they can adopt those and use those new capabilities in different ways. And everything is down to actually staying ahead. I mean, the war in Ukraine show us just how important it is to innovate and adjust as Ukraine has done in strategic wise. The challenge for Ukraine and all in the West is actually quite clear. To stay ahead and to ensure this kind of deterrence from China, from Russia, from Iran and other adversaries we need to out invent, we need to out discover, we need to ensure that we can work on that on a daily basis. And to be able to do that, you need to tap into the synergies, both that we have partners with the private sector and the commercial sectors and adopt new technology but also by accessing different types of defense markets and to ensure cooperation above borders. And to continue to stay on this cut-edging technology, we need to be able to take more risk. In creative thinking in innovation to up our game in terms of the speed. But here comes the problem. When everything comes to funding in this time is more or less focused on time. I mean the budget increases are offset of course by price hikes and so on and we can see that there are constraints in the supply chain, but the real challenge is that everything takes time. We have built a system in the previous years to focus on economy to ensure that we are cost efficient -- and now when we need to up our speed, well, it takes time and different processes, and it will take time until those investments that we see from the political side actually are offset into orders. And even if your budget is increased, well, we are in a time where we have developed the whole procurement processes in and for a peacetime economy. Well, so it will take time to do business in defense. The upside is when you do it and you have all the green lights and you have crossed all the certificates and you have all the permits. And most importantly, you have earned the trust of delivering, well, it's a long-term business. So the defense business is like no other business, trust is important in all the businesses, but in defense, it is vital, reflecting current statement here earlier on being a reliable business partner and in reference to system house. The key is to understand the market, and that is also what makes it a good business. So I think I will stop there and see if you have any questions for MilDef.

I certainly do have one. Sometimes, these lovely ladies and gentlemen, ask us about us about catch-up effects. When will things really accelerate in procurement and ordering of material, is there an answer to that.

Well, usually, we said previously that it took about from political decision to deliver about 5 years. That's, I mean, the long-term perspective of different types of capabilities as an average, some even took longer. It's very hard to predict where the market is heading. It is a very peak situation. And there is not really any statistics about it. Where will we see our new, I mean, baseline when it comes to defense spending. One way to try to understand the group is actually to look at the export control permits because in order when you have some military equipment that is classified as military equipment, in order to do enough there, you need to go to ISP and put in a file permit request to make an offer. So it's the volume of offers taken that they actually have some statistics on and so it doesn't really show what kind of order intake you have, but at least it shows the idea of where we are heading. And for me, that I believe that most of it is unclassified, and most of it is a dual use. So I'm not talking about that height of equipment, but it is more export control of military equipment. And for 2022, it amounted to about SEK 50 billion and according to ISP in 2023, it has risen to SEK 100 billion. And now we are looking at probably SEK 200 billion for the year of 2024. So that's a little bit what shows that -- and I mean companies on the market as today, better run for all the different businesses. I mean, if you are working on sales in this business today, you need to prioritize your business really, really hard. You can't go for all the different opportunities out there. So having said that, when you see an increase from SEK 50 billion to SEK 200 billion in 2 years. Well, that shows a little bit about where we are heading. But it's low because that's -- I mean, yes -- and it takes time until it actually gets to the companies themselves.

It's a trust game. It takes a long time. And finally, with a few words only because we're at the end of your show, but you're staying during the lunch, which is fantastic. But how long is this trajectory? Are we talking 10, 20, 30 years? What kind of journey are we on in ramping up defense spendings and rebuilding what we have destroyed.

Most companies -- most countries work with defense plans for about 5 years. And what we see now is that the Swedish government is about to launch our new 5-year defense deal on the 15th of October, so it's pretty close. And I mean we are going up to about 2.6%, 2.7% of GDP. In Poland, we are getting close to 5%. In most allied countries, they are increasing quite steadily. I will say that in the short time up to 2028, 2030, we can actually see a little bit from both kind of defense bills where we are heading. And that's, I mean, that's going like 3x where we were like 2 years ago. But beyond 2030, it's very, very hard to actually understand. And because even if you have platforms like aircraft or naval vessels, it's not sure, but 1 vessel will be replaced by a new 1 because the new capabilities and the new technology raise means that everything is changing even in the war-fighting environment.

Thank you, Secretary General at SOFF Robert Limmergård, who will stay with us during the lunch. So thank you. The next speaker of the program has been with the company for a year now. So note to myself buy flowers, I guess -- together with Daniel and myself, Viveca Johnsson the person that you guys and girls meet the most when you tune into the MilDef story on the quarterly reporting, you have a hawk eye on the numbers that matters. Take it away, Viveca.

Thank you, Olof. I'm going to move these tables. So I have a better dancing space than Robert did. There here we go, I want to start with zooming out. Robert talked about the future. Let me talk about the history. You saw this picture when Daniel presented back to 2014. Why am I showing you this as the first slide? Well, I want to really bring to your mind what is the core of MilDef, we are a growth company. This is what we have at our core. To further emphasize this, of course, we need to talk about order intake. This is what it has looked like, since 2020. We did the IPO in 2021, rolling 12 months of 2024. It's on the same level as 2023. But given the highlights that Daniel presented to you, I'm sure your imagination can run wild about what will be in the next quarterly report. This, of course, has now brought us to an order backlog position, which is close to SEK 1.5 billion in Swedish, an all-time high and a security for a good growth going forward on the sales side as well. This is something that we talk a lot about when we talk about our financial targets, our long-term financial targets. And I will come back to those later on. So don't be afraid. This is not the only slide on those. Here, I've chosen to present organic and acquisition growth. And I often get the question, why don't you have a financial target in growth split on acquisitions and growth -- organic growth. And this is why because it fluctuates so greatly. You had here in 2021 negative organic growth, whereas in '23, we have an almost 50% organic growth, and there was a quite small acquisition growth. So that's why we have chosen to have -- our Board has chosen to have 1 growth target not 2. Growth, fantastic, but to be sustainable in growth, we need to be profitable. And this is my favorite KPI, the gross profit margin. I love how it has developed. And my absolute favorite about it is how it's been so stable since about 2022, that is now constantly moving towards 50% even quarter-by-quarter. Even if it can fluctuate, we have some customers, some contracts, some products with lower margins, somewhat higher, but you can see a very clear trajectory on this. getting closer to those 50% that we have talked about for a while. On the other side of the profitability cost, if you will, is the cost side. Or cost to serve, what does it cost us to bring our offer to the market to present to our customers what we have to offer. I've chosen to illustrate this as operating expenses in relation to sales, OpEx, if you will, expenses, Dear child has many names, cost costume, not the least. You see here in 2021, we IPO-ed in June, of course, cost goes up. And that's not only the direct NASDAQ fee that we need to pay. It's the whole costume that goes up. We need to be more professional. We need to have more qualities to be able to deliver on our promise also to you guys, the investors of ourselves. And it's also a part of growing up, isn't it? The larger the company gets, the more professional you need to be the more compliance we need to invest in, the more important that becomes the more IP we need to invest in and the more people we invest in to secure our future and our growth journey. You see here, we continue to build 2021, 2022. We are growing into our costume a little bit better now. Will it continue down -- we see this as a growth company. We need to continue to add resources, but we do not see adding resources in the same pace as we're adding growth. And with an increased gross margin as well, I think this could be a really nice case. Which our EBITDA is a good example of a scalable business model. Here, we see it in absolute numbers little bit softer start to 2024, bringing the rolling 12 number down, more or less fully dependent on the volumes being a bit softer at the start of 2024 on the sales side. And here, we see it as a margin. And now I'm sure that some of you at least are thinking, why is she still talking about EBITDA? Didn't you change the target to get rid of the D. Well, let's talk about the financial goals and let's go through them 1 by one, and I promise you, I will drop the D and just go for [ the A ] in a few slides. But let's take them 1 by one. Let's start with our growth target, 25% growth per year. I think I've made my case why we don't split it on organic and acquisitions. 56% growth in total in 2023. So I think it's safe to say that target accomplished in 2023. And I joke with Daniel all the time and say, "Can we do 0 in 2024 and everybody is still happy?" -- he doesn't think you guys will be happy with 0 in '24, so we try to exceed that, of course. This is the new target, which we have gotten from our Board and happily accepted. So we are moving from EBITDA of at least 10% to an EBITA of at least 15%. So let's start with the deal. Why did we get rid of the D. Again, it's part of growing up. We're at that point now that we need to be able to show you guys that we can carry our depreciations in our operating excellence, and we can do that. So it's time to drop the D and show you an EBITA to better represent our full operational performance. 15%, we had 12.2% in 2023. So there is, of course, a bit of leeway to reach the target by purpose, I think, from our Board. We need ambitious targets. We need something to stretch for. It would be unwise to set a target that we would achieve already the same year given that it's a long time target. We're quite confident in this that we will reach that within a few years. Let me come back to that in a couple of slides as well. To remind you, this is not new capital structure. We have a net debt in relation to EBITDA, not exceeding 2.5x unless on a temporary basis, 1.7% in 2023, so well within range also on that one. And finally, our dividend policy to distribute between 20% and 40% of our net profit as dividend payout, of course, having with that the consideration of the capital structure of the company, the market conditions and our growth journey that from time to time requires capital. So I promised you I would show you this without the deal. So let's keep that promise. But you can also see that the trend is very similar. We are keeping the A and not going for a clean EBIT because part of our growth journey is acquisitions and with that comes amortization of surplus value. Let's not mess up the operational performance with those choices that we make on how to allocate that. So we keep the A. We give you the trend on the percentage as well and with the same explanation that the volume has brought us a little bit down here on the rolling 12 compared to the full year of 2023. But as you can also see, we have been up there on the percentage with the different type of profile on the company, we should remember here. In 2021, we acquired Defcon Solutions, which is now fully integrated in MilDef Sweden, which has integration business. This is running with a different type of profitability profile than we had here in 2020, where we had more of a pure hardware sales profile of our portfolio. 2022, we have brought in handheld also a different kind of profitability profile but as you can see, we have worked in 2023 to bring us up to 12.2% in EBITA. Quite proud of that. And it's also a good evidence of our scalable business model. On the next slide, I want to bring you along on a thought experiment on an illustration, if you will. Don't take it as a promise but take it as a thought experiment here. If we are imagining that we 2024 hit our long-term targets, and we'll do that for a couple of years. We will, by 2026 through organic growth and acquisition beyond SEK 2.2 billion a true fast grow in global company in that case. But the most fantastic part is what's happening down here if we're doing all of that, and we're meeting 15% EBITDA. We are bringing SEK 337 million bottom line. What do we have to do? Fredrik, you talked about in your presentation, economy of scale, effective innovation, customer centric. You also mentioned that customer in focus is what we need to do. That is what we are doing. We can do more and we can be even better than we are. And then, of course, we have our acquisition synergies as well as strengthening our position in our current markets. Profitable growth because without being profitable, growth will be limited at some point. We will bump our head into a ceiling but we believe we can do both. For the sake of formality, I'll go through the other two financial targets as well. Net debt in relation to EBITDA -- sorry, now also lost the D somewhere. Here, I want it back. So here it comes in relation to EBITDA. Under 2.5 illustrated by the line here, only temporarily exceeding that but that was with our -- at the point largest acquisition of handheld that we temporarily went above. After that, we remain on a solid level below 2.5. Dividend. Well, to be honest, this is where we have deviated from our first part of our policy where we say '22, 40%. But we also said, remember, the capital structure, the long-term development of the company and the market conditions need to prevail and be present here. So for example, in 2022, the company chose not to pay dividend to secure our growth journey, which you saw quite well in 2023 numbers. That was our financial targets and I want to take you through another part of this, which is a dear topic for everybody who has followed us for some time. I see smiles in the audience now. So I'm trying to do this a little bit differently by showing you our working capital structure in days. So how many days it takes to turn the working capital into revenue basically? Starting from 2020, going up to rolling 12 in 2024. The dark green at the top is the net between our receivables and payables. So the smaller, the better preferably negative. But given that we have a margin of what we sell, it's not going to be negative. What you can see, however, is that it has shrunk, indicating that we are doing quite a lot on this to negotiate better terms with our customers, better terms with our suppliers, something to be proud of. The light green part is the inventory, always a dear friend to talk about. What happened here? I'm sure you all remember the pandemic and the component shortages that it brought along with it. It was a challenge for us and we started stocking up, both on almost finished goods that we couldn't deliver because we missed 1 or 2 or 3 components. And after that, we did, MilDef did, the industry did and most industries thought, wait a minute, these global supply chains are really fragile. We need a little bit more on stock to be able to deliver to our customers on our promise. And that's where we have been since a little bit more stocked in order to secure our customer promises. In 2022, we acquired handheld, also a different capital profile than the classic MilDef portfolio, if I call it like that. We have more off-the-shelf products there. So it brings with it. It's a larger inventory volume basically. We are working to bring it down. Fredrik, you mentioned a couple of modular projects that we have going on to limit the number of components available but still being able to customize. That sounds like one project but it's in reality, of course, many projects given the rest of the portfolio. That's a target area for us, clearly. And then we have this. I was going for beige, but slight pink version down here. It's a nice other, if you will, where we have all the taxes and all the VAT, but we also have something of a quite big important in that number and that is our work in progress on our projects, and that's especially our integration projects after the Defcon solution in '21. Here, we can do something. Here, we can negotiate better term milestone payments, the longer payment terms with suppliers in that. So that will be a focus area as well going forward. Given how successful we have been on our hardware sales and the net between receivables and payables. I have good confidence that we will also make good progress in our project business. Turning then to operating cash flow. Here, of course, I have two pictures in one. The left one is the rolling 12 months. And the right one is rolling 6 or year-to-date for 2024 as per June, if you will. Trying to bring you from our EBITDA to operating cash flow. Starting rolling 12, good profitability brought down quite severely by changes in working capital that was adversely. Of course, we paid some interest and taxes, CapEx, some material ones and some immaterial, which is primarily in our product development and a few other bits bring us to 21.5%. Talking about an operational cash conversion ratio in relation to an EBIT, it's about 0.3%. Nobody gets excited about 0.3%. On the right-hand side, what did we do rolling 6? What's the current trend? What are we working towards? Here, we have still a good profitability, although slightly lower due to the softer sales volumes in the start. We have working capital positions that is progressing in our favor. We paid interest and taxes a little bit more than we did last year. We don't have any carryforward losses anymore because we are profitable in more countries than previously, which is, of course, very positive unless when you pay tax, of course, then you pay more tax, which we are happy to do. CapEx, same profile. And now we land on an operating cash flow of SEK 37 million, north of SEK 37 million. And that brings us to a SEK 1.4 billion in an operating cash conversion rate. Well, that I get excited about at least. So why do I bring you back to this picture as the final picture in my presentation. Well, it is to remind you that even though we are profitable, we can be more profitable, we are cash positive generating and we can be even more so. We are at our core a growth company. Thank you.

And we have the time now. We are protecting the Q&A session because Eric told me to do so, so we don't miss out on that important moment, but we have a few minutes for questions to Viveca if somebody feels urged. Yes, Hugo Lisjo, Carnegie with a microphone.

Could you provide a more detail on the concrete example of the steps you are taking to improve cash flow?

We can take a couple of ones. Fredrik mentioned one, increased modularity in our products to reduce inventory position. And as I said, that sounds like one project but it's actually several or many. So that's absolutely one of the focus areas. Then you always have the ongoing discussions with suppliers and customers. But I think I've said this a lot of times for those who have listened like yourself that it's long lead times in this. You mentioned 6 to 24 months in the sales cycle. That's where we negotiated terms. Once we've landed that order, it takes maybe a year or in the case of the mechanized infantry vehicles up to 2030 until the delivery happens and we see it in the cash flow. So all the good activities over here takes a little while for it to be shown. But that's an ongoing job as well.

Anything else Hugo? Okay. Anyone else yes, Eric. Thank you. I was expecting you to.

Yes, so continuing on the working capital discussion, then just it is going down in relative terms. Where is it? I realize you're a fast-growing company and that's always going to be a strain on keeping it down. But assuming you hit your own growth ambitions, I mean, where is normalized working capital to sales for you? And then the second question is right on to that. On the gross margin, really nice trend as you say. What's the -- I mean, 50%, is that how you run the business roughly? Or is there more potential and how mix dependent is that figures to?

I think maybe those two hang a little bit together in terms -- of the terms we negotiate with customers and suppliers, of course, that can emphasize our margin but it can also help us on the working capital side. What is a normal working capital with the current profile that we have, the current mix of software solutions, integration services, this type of hardware. We have said and I'm sticking to that, even if I'm still repeating midterm length on the goal that we are coming down to -- these are days we're talking about percentages that we are coming down towards below 30%. I think this is absolutely possible. And we did the initiatives that we are taking midterm, still we have good ambitions for this. I have good trust in these projects that we are -- or projects that we are making in the inventory because we cannot just scale down on the volume in inventory per component, we need to take a different grip on it. We cannot go back to that. In terms of normalized gross margin, then is 50% in normality or can we go above? Well, we've said 50% at some sort of target. Are we seeing quarters with above 50%? Yes, we are. Does that mean that, that can be sustainable? Of course. Will it always be so? Well, that depends. It depends on what customers were taking? Are we starting to take these larger projects and maybe the margin will be smaller but the volume will be much higher. So it's difficult to say on a quite long-term basis. But with the current profile 50% is clearly doable above 50%. Well, I'm an optimist.

Okay. Can we -- one more. Yes, a quick answer.

It's a bit of commentary from sort of when handheld came in. It was typically a blip in most charts we see. How's Handheld performing today compared to the group?

Handheld has brought very good opportunities to our product portfolio. Fredrik showed one example in the dismounted soldier concept. We have announced in -- I think it was Q2 a very good order that the handheld products is involved in. So I would say that, that is indicating that the performance is on the sales side, increasing here on the product side and enhancing the middle portfolio and performance as a whole.

Get back to that later, then you might be able to comment on that as well. Thank you. Viveca Johnsson. Now we'll have to rush forward. Thank you. We are now at the final approach of the MilDef flights landing gear soon to be deployed. But before we open up for that Q&A that I keep talking about, Daniel will return to share a few glimpses into the strategies going forward. But also, we will tune into an important message from our CPO, Martina Karlsson, who in a few moments, will tell you all about how we will stay cool to attract the sharpest mind for our continued growth. But this is yours now, Daniel. Take it away.

Thank you very much, Olof. I hope that my mic is on here. Before I jump into the next topic, very important topic, I want to say thank you to my MilDef colleague for great working great presentation. And thank you, Olof, for project leading and being a moderator here today. He's the reason behind where we have this Capital Market every one here. And I hope that so far you think this is valuable time, so to say. Strategy is for growth. As Viveca said, this is a growing company and we have growth in our DNA, and we always want to be forward leaning, we always want to aim higher than we do. I think that we need to start with these fundamentals that is in the market right now for being able to understand the additional growth, so to say, how we can continue to grow this company. And this is no news for no one in this room but I think it's worth mentioning all over again. I mean, due to the war, we now have the largest increase in military spending in Europe in the past 30 years and this will continue for many years going forward most likely. And this is, of course, a fundamental platform for a defense company like MilDef that there is money in the systems. We have spent many, many years where we have seen the customer, then customer are having a lot of time, but no money. Now it has swift. Now they have not so much time but a lot of money. So that dynamic will absolutely play out in the favorite for a company like MilDef. But we heard Robert Limmergard talked about this 5 year for you, maybe. And we, from the beginning, thought that this is going to be much, much quicker before it hits MilDef. But now we have seen understand that it will take 3 to 5 years before it has a full impact on MilDef. We talked about that earlier in the different waves we presented. And the next bullet around this fundamental platform that we will build our growth is, of course, if they have more money, what will they spend the money on, of course, very important. And we Fredrik Persson, CTO, talked a lot of this increased need of digitalization of the end customers. We have a war going on in Ukraine. We need also to see how that could develop future defense capabilities, what is the end customer will ask for in the future. We don't really know here and now. But I'm sure that when they summarize the war, hopefully, sometimes, all the data they have around what is future defense capabilities. There will be some development and we need to understand which way that's going. But I think absolutely, that digitalization will be one big part of future defense capabilities. So that's very important. They will start spending the more money they have, they will start spending them on increased digitalization. We also Fredrik talked about this Dismounted Soldier concept, so to say. We think that we will see going from digitalized vehicles in numbers, maybe 100, maybe 1,000 to individual soldiers, then we're talking 10,000; 100,000. So that is also a volume game that can benefit MilDef in the long run. So I think it's very important to keep these fundamentals in mind when we talk in future growth, let's say, we also have a bonus. We don't really know exactly and I have listened to many others of speaking about this as well. No one can exactly say what this will take us. But I think even if MilDef is an international company, we have strong Swedish roots. So I think it's important for MilDef that Sweden now finally have joined the native membership and are aligned with the native countries. And I think that will be something in the long run where we can build trust as being a company from a native country. So this picture is setting the context and the market dynamics that we're operating in right now. So there will be a lot of opportunities to capture out there. I'm sure about that. It's just down to the MilDef team here to capture that opportunities that we see out in the market. Little bit around how we see that we can continue to grow this company and the route to accelerate the growth and how we can further expand MilDef. One, of course, if we're talking about the organic growth, one is, of course, I think we have a huge untapped potential in our product portfolio. We have been in this industry 27 years. We have built super good products. We have an IP bank of knowledge how we can build those kind of products, find solutions that the end customer is asking for. And I think that we have, can bring this out more widely geographically speaking, so to say. We have digged very hard in the Nordic countries. That is our home market, and that is where we're coming from. So as I showed before, revenues is 50% of the revenue is coming, the lion part is coming from the Nordic countries. I think we can do more. Geographically, if we spread out, we can talk about Central Europe, for example, very attractive market here. And now we can talk about the DACH region down in Central Europe. We can talk about a country like Germany, for example, that has due to the World War 2 under invested for many, many years in their defense capabilities. They have just rippen off the wet blanket they have had since World War 2 and now starting really to increasing their spending there, aiming for the 2% GDP. And since the German economy is quite big in absolute numbers. That will mean that there will be a lot of money and opportunities out there. And also adding to Germany that they have due to the -- probably the World War 2 have a lot of the big platform providers like [indiscernible] one example. So if we can increase the presence in Germany, for example, I think also we can be closer to the big global Tier 1s and platform providers and work hard with them and get our products also when they export further up. I also think we have talked about and there were some questions around U.S., for example. I said before that U.S. potential, our products is super good for U.S. market, I think, and if we can have this breakthrough order like we had in the U.K. with MI recontract, and that started to giving ripple effects. We're just seeking that breakthrough and we are competing, and we are quite close in many of these ones. And hopefully, we soon we'll get this breakthrough in U.S. because U.S. today, what we sell there is the mobile segment that Fredrik showed coming from Taiwan mainly, the laptops, the notebooks, PDAs, et cetera. If we can get in with our own products, the stickiness is very much higher. It's a higher threshold to get in, but when you're in, it's much more sweet to be in that context, so to say. Okay. So geographic expansion of the portfolio we already have in terms of building organic growth, but also, of course, like we did now in the U.K. with [ AVT ], where we purchased for a small amount of money, their capabilities of building displays as we then sold for plus GBP 10 million, I think it was we can take that further to the next customer as well. So finding those kind of do it in-house, new technologies, moving up in the value chain being this integrated, taking on more complex business, also acting more put third-party products, but we are acting as preventing the capabilities in the end that this turnkey solutions, as we talked about here today. That I think is a way to expand this business as well. And finally, we, of course, have something that is always on our radar, our M&A agenda, where we're always trying to find strategic acquisition that fits very well with MilDef. We are not saying, as we said a couple of years ago, we need to do 1 or 2 per year. We need to do the right acquisitions at the right time for the right price. And that is very important for us. And I think that since our M&A rate is always on, we have always some kind of discussions going on. It can be depending -- the crispness of it could be depending on exactly where we are in the phase but we're always looking. I think it's a very fragmented market in Europe, at least, where we can find great opportunities. We can find companies that are. The founder has a great technical interest and has taken the company to a certain level but maybe lacking the business development side of it, lacking the size of the cost of the company, et cetera could be a great opportunity for us to turn into acquisitions like that and growing the company. So we still will continue very hard to find the right objects. We have, for example, look for U.S. on the M&A activities. We normally walks away because I think that the multiples on the price for the companies in the U.S. are ridiculous high, always on private equity company coming in and bidding and we're trying to bid as much as we can, and we're not even coming to the final phase of it, but the acquisitions will be a part of our growth going forward, also a potential driver for higher volume, of course. I thought about this before, but this is a smaller and smarter thinking of a more computing power AI, for example, what that can brings to the table. But it's, as I said, going from low volumes in terms of vehicles, maybe so much, much higher volumes, smaller devices, but in volumes that will drives our growth going forward. But to be able to perform growth, of course, we need to take care of the most valuable assets we have within MilDef. I mean, it's always coming down to people in the end. It's the people that should drive this company forward. And I always say that that's our greatest asset at MilDef to people and the culture of MilDef so to say. And that's why I've invited our CPO, Chief People Officer Martina Karlsson to talk us through a little bit how we work, what kind of strategies we have to yes, get people on board and that they feel healthy and they feel that they are in a great place when they're working from MilDef. So please, Martina.

Thank you, Daniel. [indiscernible] Hello, everyone. Just like Daniel said, I got the opportunity to talk to you about our absolutely greatest assets to people of MilDef. And I'm happy to share my passion with you how it is to build a thriving workplace, what is the thriving workplace and why are MilDef a thriving workplace? So it is our internal capital, as we already said. But we are growing continuously and we keep up that growth. We have grown three times our size in the past 5 years. We have -- we're coming from less than 100 to more than 300 today. That's why I very often get this question, how do we attract and retain for growth. What is it that make MilDef unique? Just like many of my colleagues already mentioned today, first of all, we are in an industry more relevant than ever. We are delivering a reliable and advanced product that's a real world needs. And we do this at a time in a world where what we do, if needed. Workforce today very often looked for an employer with a higher purpose, and that is what we have. We have a vision of a secure world. And MilDef is a place where people want to stay. And where they also know that they can grow because since we grow and our expansions continue, great opportunities for internal movements, bigger responsibilities, new challenges comes to our people when you stay and wants to grow your competence portfolio continuously in MilDef. And it is true, people stay at MilDef. We stay for about 5.5 years. And that's a quite a high number for us and a good number because they need to say, we need the knowledge, we need the competence, we need the people because it's a high number because we are having a quite aggressive recruitment rate, as you all know. But the core why we would like to join MilDef, where we're curious to know more and why we decide to stay. It's because we are strong within. All businesses experienced external pressure, external difficulties that we really cannot control. External pressure that comes from the macro economy or what we have experienced for the latest year since the pandemic. What we can control and what we should focus on is our inner strength. And I'm proud to lead the people agenda at MilDef. Because we put focus and effort to be strong within. For us, that is about leadership, employee shift and our culture. The leadership will leave through others in MilDef. The leadership culture is the engine that enable us to move forward. We invest in leadership on all levels because we believe strong leadership is important to create employees that are inspired to follow. And our employees, they not just only stay with us. It also creates employeeship. An employeeship that stands for accountability, commitments and a proactive attitude to your job. We want to create some an employeeship that we feel that we are on this journey together. It's my job matters. What I do is important for the bigger picture. Together, I contribute to the strategy of MilDef in our long-term success. But finally and probably most important is actually put those two together. That's our culture. Because we know that culture is not just an internal matter. The culture is shown in our behavior, how you see us, how our customers and partners perceive us. What they think about us when they're interacting with us, how we do business, like Karin spoke about before, we're doing sustainable business. We are a trustworthy relationship with our partners and customers. That is culture. The culture is invisible for us that drives us in the same direction and help us to make decisions. The glue that keep us all together. It doesn't matter where we are located in the world or which department we are working in, we are all working across our strategy, and we do it in the same way, the MilDef way. I'm confident that our focus on being an attractive workplace, but also to keep the great talent we already have, together with our focus on and efforts to be strong within. We will ensure that we remain strong and successful. For me, that is a thriving workplace that's what MilDef is. Thank you.

Martina, thank you very much. So now Daniel will wrap it up, and then we'll...

Trying to speed this up because I agree with Eric. We need a dynamic Q&A session in the answer, say some time for that. But now it's down for the crystal ball future outlook. What do we see out there? So this is mainly what we see when we look into our crystal ball at least. We see a high demand landscape and we see it here to stay. I'm talking about some generals, and I talk to you, they say that this is going to be a 40- 50-year play. I can -- I think I will stick with a 5 to 10 years at least before we -- something changed around the demand in the landscape. And also, the bullet #2 here, I think it is very important that it will be the end users' needs to drive innovation and volumes, and there is a great need for digitalization, but also understanding the market and understanding the end users' needs, that's super important for us going forward. We will see what come out from the war in Ukraine, Russia and what kind of capabilities we will need to produce in the future. But the fact, I would say that there is a great need for digitalization. Everything that has happened in the commercial world has not been -- the defense has not been able to keep up with that. If we go back 20 to 30 years, something, it was the military that was driving the development forward, then Silicon Valley took over, for example, but I think we will see changes in that now and also there is money in the systems to be able to sit in the forefront again when it comes to the R&D, for example. That would be very important. And also continue, as I said, active M&A agenda. Adding strategic acquisitions and by that, also creating long-term shareholder value for every shareholder of the -- how many [indiscernible] 70,000?

14,000; 1,700 new shareholders last month.

So that is our future outlook. And if we should just summarize that in one sentence, so to say. So for the coming years, we expect an accelerated growth as we predict that increased defense spending will have a fully impact on MilDef from 2025 and onward, so to say. So that will be the final statement from MilDef here today before we move into the Q&A session. So that was all for me actually. Will you take it from here?

Absolutely. Well, you will certainly stay there because now it's time to rise to the occasion for the corporate management team of MilDef because I'm sure there are some holes to fill. So please you get up on stage, you have mics and then we just let lose the audience. I mean, Tom, Pareto, we're very happy that you're with us, for instance, tracking the MilDef journey. And Daniel from Danske Bank, you climbed around warships with myself haven't you? I mean, there are quite a few analysts out there that know a lot of things. So I anticipate good questions now, [ Anders ].

I have a question on the profitability target. You said that it came from the Board, the 15% EBITDA margin target. Was that really the case? And if so, on what basis do the Board find that level appropriate?

I would say that mainly that's coming from the Board of Directors, they are setting our financial targets. It's not a management question of how the financial target should look like, which we adopted that challenge. They increased it with more than 5% as units because we also took away the D. We think that we are in a position to be able to delivering up on the new target as well. I know that we have overperformed on the previous targets for a long time. I think that many in this room has also realized that the old target has been obsolete, so to say, for a long time. And I, at least, and I think management in total as well feels much better around the new target. Now we can talk to the shareholders and others in the right context, as otherwise, they have always asked why shouldn't the profitability be more than 10% of the EBITDA and the see the gross margin going up and you see the top line going up and I see that the OpEx is quite flatting out at least. So if you do that in a calculation, it doesn't match up in the end. And now I think that we can see that matching up better.

Okay. Could I also ask about your growth target, 25% per year means more or less, you double every 3 years. So by 2030, you will be 4x bigger than today. How confident are you about that target, i.e., what's the visibility? And finally, which targets are you most happy or confident about the growth or profitability target.

As we've shown here before if we went back to 2014, that 10 years back in time, when we say we have delivered annual growth of 24%, I think, was exactly. So of course, we have believed in the financial target of growing 25% per year. And of course, also it will be tougher and tougher when we're growing more because it's going to be adding more absolute numbers on the top. I think from here and now and coming years, I have a great belief in that we will be able to achieve this 25% longer out, of course, when the absolute numbers is going bigger and bigger, then I think the Board needs to sit down again and take a new decision, so to say. Which one is the most tough to meet. I think -- it's hard to say. I think that the growth target is probably maybe the hardest one to meet. I think the profitability will come when we have a scalable business as we have, adding 25% on the top where we are today, growing into the new customer, as Viveca showed before also that the OpEx in relation to sales is going down. I think that we can meet this 15%, at least.

I want to throw my SEK 0.50 on that as well. And of course, it's two things. I think we have a very wise Board who sets long term targets that aren't somewhere over in Infinity. It's something that is achievable within a few years. And I think it's the package of the financial targets that is the sweet spot for me that, yes, we should grow. That is challenging and we will do so, but we must remain profitable. We must have a capital structure that makes sense while doing it. And we must also, of course, have a nice dividend policy for those of you who are in the game for that part, so to say. So for me, it's really the package of those that it hangs together that creates sweet.

Tom from Pareto. Go ahead.

I was just wondering how important do you see delivery pace in contract negotiations. So you said there's a change of pace from the customer having a lot of time to having money in no time. So how important is that in winning contracts now.

Yes, I can start and someone I can fill in at. But of course, we see that the end customer is picking up when it comes to the deliveries time, so to say. They want things quicker yesterday, sometimes. But they also need to understand and realize what kind of where we're living in, what is the quick lead time, so to say. And I think we are quite much competitive when it comes to the lead times. We are talking a lot about the end user when we're talking about the government side, for example, how we can share risks how we can be able to shorten the lead time by having more critical components in the inventory and things like that. But in the end, I think MilDef is very great when it comes to lead times. So sometimes the customer wants it fast. But I think we have a reasonable time that MilDef can deliver it. So I think they're asking for it, but this is reasonable to do it. And then I think they need to come into play as well and share some risk with I say sometimes that I can put how much money on the inventory because they have 14,000 shareholders on my shareholders as well. So the government needs to understand that play as well and then they need to take risk on shorten the lead times.

Can I add yes. And also when we are included in these like 10-year contracts, it often come with a delivery plan. So they wanted quick deliveries from maybe prototypes and test vehicles. But after that, it's often a plan that rolls out over like 5, 7, 10 years. And then we know a few years ahead when we will have the big batch of delivery. So for the MIB, it stretches almost over 10 years and the big batch is somewhere in the middle. So it starts small ramps up and then it goes down at the end again. So the more bigger programs we are involved in, we have a much better crystal ball to see when we need to deliver the things.

And there is also the opportunities for this quick delivery. So that if you have short lead times, you can win them. Otherwise you are out. So it's important to have the possibility to be agile or have a process to deliver quick, but then you need to push something. But at least that you have a possibility to deliver quick for those opportunities when they're going to donate equipment or whatever we do. But in general, we have quite okay lead times compared to the lead time of a combat vehicle.

Yes, sir.

Yes. Thank you. I think earlier about order time, you mentioned about 6 to 24 months typically thereabout. And in this situation, then more and more countries are stepping up and need to order and increase the capacity faster and perhaps also relating to giving a way to Ukraine or likewise. Anyway, is this process changing? Is there -- are there more pockets of faster processes and perhaps go for a larger proportion of gravity in towards the 6 months.

I think we are in the landscape starting to Swift. As we said before, we haven't really been into the Phase 3 with the orders and the money starting to rippling down and hitting a small defense company like MilDef. But when we will move into that phase maybe in 2025, then I think absolutely that will be a matter of time. I mean, how can we shorten the lead time? How can we go from shorten the sale cycles, et cetera. I think for example, they are talking about moving on from find some standard products and just buy in the standard products. But I don't think that they really understand a dynamic here because there is no standard products. So then they need to identify, okay, this is a standard products. Could you buy all the components, put them in inventory, set up a product line so you can quickly turn this into finished products, so to say. But I don't think we are really at that moment for us.

Yes. And also, if it's a new customer, then the lead time is longer to get the contract, if you know as its trust business. So I think all the customers where we have agreements in place, we know each other, then can go quick. This is more the introduction of new customers that you need to do the whole -- that start to get on Board, let's say.

Perfect. And compared to 10 years ago, we talked in the break here. we did much more very specific customer. We still do that today because it's part of our DNA and our business model. But we always promote what's available, and we have customers asking, okay, what can we buy and get to live in now, and that will be the already existing products that we have delivered to other platforms. So we are going for that approach. But then in the end, they still want to change a connector or something that makes it fit 100% into that vehicle. So it's -- yes, they have to choose with what's existing today or a perfect fit. So we see customers moving towards looking at what existing.

Thank you, corporate management team. Do we have more questions? Yes. At the same time, okay, which one, here it goes first. Remember, you often ask three questions in the row, which really...

That's another one of those three questions. Firstly, on the Dismounted Soldier, which is really interesting, and you've been working on it for some time. But where are we in the development of this? I mean do you have any advanced discussions with clients? Or is this something that we might see somewhere in the future?

Yes, there are some discussions, absolutely, and we are discussing now about just how we introduce it because it's not really decided how they're going to use it, how they're going to digitalize the soldier and it's still a discussion about that. But we are talking about project-based, so the fund projects and the pretesting the systems and introducing that way. And we are talking about we need to invest. For example, there is Soldier hub outside there that we have invested in ourselves also in devices. So we need to do some productively investment that we haven't done that if we didn't have the discussions we had a number of clients. So I think but we will have two clients that test our prototypes or our first samples during next year absolutely.

And then the second question on M&A. If you could just explain a bit the general rationale for that? I mean, what's the value created when you look at acquisitions and do acquisitions. Is that part of your portfolio that you're missing, you think that you really need to have a complete offering? And what's the I think it's to M&A.

I think it's two type of M&A. We have looked deeper into. The first one is to get something with really etch on into our portfolio. And I think we did that when we did a small asset acquisition in U.K., we added this highly competitive displays. On the other hand, we're also looking for geographic expansion. We know that this business is quite much local sales. You need to have presence in the country, speaking the language, understanding the network and the sales channels, et cetera. And there, I think that we can find some suitable acquisitions going forward. So it's more of either due to geographic expansion by maybe buying sales and support company that has the right networks and framework agreements or something that could add really edge to the portfolio. I think that is the two main acquisition target that we're looking for and aiming to find.

Okay. And then the third question on OpEx and the pace of growth to support your targets. I think you're around 10% or they're below in the current expansion pace. Is that what we should expect going forward? Or will it be higher, lower? What are the variables?

I think the current pace is somewhat of an indication, absolutely. Then we might have periods where it's lower and periods where it's higher given the growth journey. We sometimes invest in a lot of people at one time, and sometimes it's a bit of a slower period. But as a general trend, where we are right now, I think this is an appropriate level.

I think the next question is from Gustaf.

Yes, Gustaf von Sivers from the Calgus Fund. We've been owners in the stock since you came to stock market and your next biggest cost after cost of goods sales is your sales costs. And I also all the time will it come down? Yes, it will come down, but it's still at 26%, was 26% from last 12 months, 26% in the first half year. So will they actually come down? Or is that sort of a static number that you will stay on going forward. For example, if you, in 2026, turn over to SEK 2 billion, what will that percentage do you have an ambition to take it down? I mean, of course, will you actually do that? Or shall we just go for 26% of sales cost on that is maybe the...

Yes, sure. I think as I just answered Eric's question around this pace of increase is somewhat of an indication over time. But there's two parameters in play here, both the sales cost as such, but also the sales number. We had had a weaker start to the sales number. It was a bit soft here in the first half of 2024. Once that is ramping up to, let's call it, normalized levels, you will see the percentage coming down due to that, so to say. Then we have the quarterly volatilities, which we have talked about so massively. It also shows a little bit in the sales. As Fredrik explained, sometimes we get this delivery that is quite long, and they hit sharply at the time when we deliver and then the sales goes up in that period, but it might mean that it's lower in others. So yes, it will come down, but it will vary between quarters. So the volatility remains.

Okay. Second question then for Martina here. When you hire people during the defense sector, we heard previously that you need to invent better and do better than, I mean, the enemy or whatever you say, the competitor. But when it comes to the enemy anyway, do you have any security classification of people you hire? And how do you do that? Or is that not done?

Yes, we do that on part of the organization in part of the roles we do a background check on all our employees, all that we are hiring. And then people working, especially in our organization here in [indiscernible], we do specialized security contract.

Thank you, Gustaf, for those questions. I think we are finally done. I'm happy. I was waiting. This might be the last question because we want -- then want to go for lunch.

Just on the gross margin. I mean now your supply chain is working, the input price has come down and you have supported your gross margins. But how scalable and what kind of scalability effect should we expect from higher volume going forward? And then the second question, the Q4 is still a very important quarter for you seasonality-wise, what should we expect that how fast will that even out? And what will be the main drivers of that?

Do you want me to go first with the gross margin and then you can elaborate in Q4? In terms of the gross margin, increased volumes will have an impact on the gross margin as such because when you can buy more from a certain supplier, you can have better negotiations. It could, of course, have the reverse effect when you have a customer with a really big volume, they limit the margin. I would say it's rather the incremental changes that impact our gross margin and where we really see the leverage on increased volumes is on EBITDA, on our operating profit. That's where we get the full exchange from bringing down our total cost to serve and our sales expenses in relation to sales. Now, Dan, you get to elaborate.

Yes. Thank you, Dan, for that question. I mean absolutely correct that the seasonality has been high in this company and that Q4 has been in delivery wise absolute biggest quarter. But I think also over time, that has been reduced a little bit. We are not so much Q4 heavy than we were before. And that, of course, depending on that when we have much sales to Sweden and Norway, they have their budget pattern, et cetera, they use or lose budget, so to say. I think that we will see less and less Q4 heavy. I think we will see more spread out over the year, so to say. When that's going to happen, I'm not really sure. We saw last year that Q4 was quite a significant quarter again. So we will probably have that dynamic for a couple of years going forward. But since we successful internationalization and growing the company and adding more customers to it. I think the seasonality will reduce heavily in the upcoming years.

Yes, I think that's it. That's the show. Don't you think so? Let's give them an aplaud. So thank you all, and thank you all for taking part of the first-ever MilDef Capital Markets Day. We hope after 3 hours that you've gained some new knowledge and deepened and widened your knowledge on MilDef. My name is Olof Engvall, reach out if you want to keep in touch and go visit the fortress. So make sure to do that. We're always open for new talks. Thank you for coming today. Have a wonderful lunch and stay longer because this team will stay longer if you want to evolve a little bit further after 1:00. So thanks for today. And thanks for the viewers on the video. Thank you.