Theon International Plc ($THEON)

Good morning, and welcome to Theon International Fiscal Year 2025 Earnings Call. I am Frans, and I'll be the operator assisting you today. [Operator Instructions] I would now like to turn the call over to Nikos Malesiotis, Head of Investor Relations. Please go ahead.

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

Thank you, Nikos. Good afternoon, everyone, and thank you for joining this call. We are once again happy to present a great set of results following a transformative year for Theon. We've continued, as you know, already to deliver even over deliver on our promises, building a strong track record and earning the trust of market participants. Let me begin by acknowledging the commitment and hard work of my colleagues, at production, R&D, business development and administration without who none of this would be possible. I will now provide an overview of Theon's results in 2025 as well as the strategic milestones achieved last year before handing you over to Philippe. Let's begin. 2025 has been a transformative year for Fin, significantly strengthening our strategic platform across our financial, operational and corporate dimensions. Starting with the financial highlights. Order intake reached a record high of $1.3 billion, supported by the largest ever order for NVGs. Our solid commercial performance allowed us to exceed our targets. I recall promising exactly a year ago that our book-to-bill ratio would be above 2x and we surpassed market expectations. I will return to our projections for the future at the end of this presentation. Looking at revenue, we delivered growth of 26%, increasing from EUR 352.4 million in 2024 and to $443.4 million in 2025, reflecting both strong demand across our markets and our ability to execute effectively at scale. This 26% growth follows 61% growth last year and an almost 50% annual growth since 2019, showing just how much we've expanded our platform over the past few years. This top line expansion was delivered without suppressing our profitability. On the contrary, adjusted EBIT rose by 28% from EUR 90.8 million to EUR 116.1 million, with our adjusted EBIT margin expanding by 40 basis points to 26.2%, demonstrating cost management alongside profitable growth. From an operational and strategic perspective, 2025 was marked by a sequence of strategic investments, acquisitions and partnerships that further enhanced our long-term positioning and many of which we expect to contribute meaningfully to our 2026 performance. I will revert to this point at the end of this presentation. In addition to that, we also extended our long-term commercial agreement with Exosens, reinforcing a key strategic relationship within our supply chain and technology ecosystem. On the corporate side, we successfully completed a EUR 150 million rights issue. Support from investors through this process was overwhelmingly positive and highlighted the continued support in the market for Theon. Lastly, we are very aware that while we've delivered so much in our short time as a listed company, investing in our people, capabilities and the expansion of our global footprint will continue to drive us forward, and we have continued to do so across 2025. Overall, 2025 reflects not only strong financial delivery but also transformative strategic progress as we build a larger, more resilient and globally competitive platform. 2026 will be an equally transformative year as I will explain later on. I will now pass you into Philippe.

Thanks, Christian, and good afternoon to everyone. I'll provide you a brief market and business update before providing an update on our platforms business and the progress on our THEON NEXT initiative. Turning to the broad defense market environment. Ongoing global turbulences continue to drive increases in defense spending worldwide. In Europe, decades of underinvestment are now reversing. The Russia-Ukraine continues to reshape defense policy and rearmament cycles continue to accelerate mainly in Northern and Eastern Europe. But we also expect Southern European countries to follow and step up spending in line with their financial capabilities. At the same time, the EU's broader ambition to strengthen its role in the global defense landscape is becoming more visible. Uncertainty surrounding the future of U.S. commitments to NATO adds another layer of strategic pressure across Europe for Alliance members, further encouraging nations in Europe as a whole to strengthen independent defense capabilities also through major support programs such as the SAFE initiative. A similar trend is evident in other regions like the Middle East and the Asia Pacific area, where ongoing regional tensions as well as uncertainties on U.S. commitments are driving procurement decisions and increases in budgets and investments. Countries like Japan, South Korea, Taiwan and Australia are redefining their security posters and increasing investment in advanced soldier level equipment. While recent ceasefire developments in current regional conflicts may provide temporary relief, underlying geopolitical risks remain significant. And the security environment continues to require strong defense preparedness across regions. Overall, these geopolitical dynamics continue to support a strong structural growth environment for the defense sector. On our platforms business, this slide highlights an important growth potential for this segment over the coming financial years. Starting with today. Our recently announced cooperation with Rheinmetall marks a significant strategic milestone with our Flex stabilized multisensor system being integrated into Rheinmetall's compact lightweight turret solutions. The trust received by one of Europe's largest defense contractors to develop and deliver the system is proof of our technical and industrial capabilities in platform electronics. This is the first of what we expect to be many steps towards establishing Theon as a competitive player in this much larger market segment, while also providing, as I said before, overall conviction in our technical and industrial capabilities. Looking ahead, we are focusing on the design of new products by combining capabilities with shock years with developments expected later this year, while at the same time, we are working on opportunities for our [indiscernible] and TRITON product series particularly in retrofit programs for all the vehicles where demand remains significant. By the end of this year, we also expect top line synergies through Kappa Optronics to begin contributing meaningfully to our growth. In parallel, progress on the construction of our new facility in Crop Athens will bring an increase in both production capability and capacity, helping us to meet expected increase in demand effectively. Overall, with these first orders, we are on track and actually ahead in our growth path for [indiscernible] Optronics with revenue contributions from these products expected to significantly increase in 2027 when serial deliveries will commence. -- underlining the strategic importance of this business line in Theon's future growth. Now on to THEON NEXT. This initiative represents our road map for the next generation of soldier systems. We have already begun to integrate technology blocks gained through our recent strategic partnerships with Allerion and Varco. Moreover, our joint efforts with Kopin, another one of our recent investments already producing fruits and has enabled us to present the dark eye concept, which is an innovative way to achieve image fusion and color display of augmented to read the information in a modular way to the social -- the dark eye demonstrated was recently presented to selected customers and we will continue to demonstrate it over the coming months to end users, mainly in Europe, but also in other regions of the world with a drive to develop this system further towards product readiness. Work on the overall ad next product family has also made progress, and we expect to show additional system demonstrators during the summer this year gathering feedback from our valued customers with the target to have concrete prototypes ready towards the end of the year. In support of this initiative, we are also engaged in ongoing discussions with major European primes, to join efforts into a much larger approach of our ARM next initiative as the future soldier vision system. These partnerships could play a key role in accelerating development strengthening market adoption and expanding long-term commercial opportunities. Overall, THEON NEXT reflects our commitment to leading future soldier modernization through innovation, collaboration and next-generation product development. In 2025, we delivered EUR 443 million of revenue, with the mix still heavily weighted towards night vision at around 93%, and non-night vision or digital, as we call it at around 7% due to the continuous strong demand for our night vision equipment. Over the medium term, our target is to exceed EUR 1 billion in revenues with a materially more diversified mix, effectively a targeted 50-50 split by scaling our digital and platform-based contributions alongside continued growth in traditional night vision. We expect platform revenue to start contributing in financial year '26 and more in '27 and to scale towards 20% of group revenue over time and digital mail portable supported by new capabilities infused imaging and smart targeting to grow towards 30% contribution. Importantly, this is not a replaced story. It's an add-on story. We remain committed to being the global leader in night vision with continued growth, while digitalization helps us further diversify and expand. And finally, we see bolt-on acquisitions as an accelerator to our organic diversification, allowing us to move faster where it makes strategic sense, be it verticalization or new technologies and revenue sources. This deliberate shift to a more balanced portfolio is designed to improve resilience and expand our addressable market with platforms and digital acting as the next growth catalyst for our group. With that update, I'll pass you on to Dimitris.

Thank you, Philippe. 2025 has been another transformative year for firm, delivering a meaningful step change in both scale and earnings quality. We achieved a record high order intake of EUR 1.3 billion, an increase of 182% driven by strong market demand and the landmark contract in it vision man portable equipment. Our forward visibility has strengthened significantly, supported by a soft backlog that extends well beyond the traditional 18-month provision. Revenue increased to EUR 443 million, up 25.8%, while adjusted EBIT reached EUR 160 million, maintaining industry-leading margins at 26.3%. This performance not only exceeded expectations, but also reinforces our ability to scale growth while preserving profitability. Importantly, this progress goes beyond top line expansion. The quality of our earnings has materially improved, supported by stronger operational discipline and a healthier financial structure. Working capital dynamics have also improved, marking a substantial step towards normalization set to reach at around 35% within the medium term. Our balance sheet remains strong, supported by good cash flow generation, share capital increase and a EUR 300 million revolving credit facility that was secured in the second half of the year. Overall, we closed this transformative year with an enhanced performance, greater revenue visibility and improved financial quality, thus positioning Fund for sustained long-term growth. Moving on now with order intake reaching a record of EUR 1.3 billion and revenue totaling EUR 443 million, we achieved a book-to-bill ratio of 3x. This highlights sustained customer demand while providing strong visibility for future growth. Europe continues to represent our largest market at approximately 75%. However, through diversification, this has come down from 82% of revenue last year. This segment is complemented by growing contributions from the Americas and the rest of the world with diversification strengthening both resilience and market opportunity across regions. Importantly, our success is not only measured by winning contracts. It is equally reflected in our ability to deliver on time, at scale and with operational reliability. This is obviously essential in defense market where execution is as critical as innovation. The above supplemented with our customization abilities and growing footprint for local fulfillment, secure Theon's current and future positioning. One of the most important developments in 2025 was the significant expansion of our soft backlog, materially strengthening forward revenue visibility. Our soft backlog, which is the aggregate of signed and secured orders stands at EUR 1.4 billion. On top of this, we hold options worth EUR 856 million, bringing total soft backlog and options to approximately EUR 2.3 billion. It is important to highlight once again that Theon has never missed an option in the past. The backlog profile is long-dated in nature, only 26% is expected to convert in 2026, while the remaining 74% expense across 2027 and beyond. We anticipate new orders that will close the gap between backlog and 2026 revenue targets, a process already showing results. This provides Theon with long-term planning visibility providing greater support for sustainable, predictable growth over the coming years. Theon's profitability continued to strengthen in 2025. A -- adjusted EBITDA increased by 29% to EUR 120 million, while adjusted EBIT grew 28% to EUR 116 million. This high conversion is driven by Theon's asset-led business model. Margin performance remained strong and increased by 60 and 40 basis points, respectively, compared with 2024. This was driven by disciplined cost management, operational level as from higher production volumes and a stronger-than-expected contribution from Harder Digital. At the bottom line, net income grew to EUR 81.2 million, representing a 20% increase versus 2024 and another year of record profits for the group. This highlights that Theon is not only delivering growth but also demonstrating scalability, operational efficiency and sustainable profitability. Our capital investments in 2025 were strategically directed toward areas that support long-term growth and competitive advantage. Capital expenditure increased to EUR 18.7 million, primarily allocated to designing new products, expanding capacity at Harder Digital and establishing new facilities across key geographies, including Denmark, South Korea and Belgium. These investments strengthen both production capabilities and global operational reach. Research and development remained another major priority focused on innovative new products that diversify our portfolio and reinforce our technological leadership. This effort has been supported by highly skilled recruitment as well as selective outsourcing to specialized R&D partners. Overall, with CapEx and R&D investment growing film is actively investing in both capacity expansion and next-generation product development to stay ahead of future market demand. As we have communicated previously, one of our goals is to reduce net working capital -- and in 2025, we made significant progress on this, reducing net working capital absorption to 41%, closer to our 35% medium-term target. At the same time, we maintained strong cash conversion at 84.5% and delivered a substantial increase in operating cash flow from negative in 2024 to EUR 45.5 million in 2025, reflecting tighter control over working capital across the business. This improved efficiency demonstrates stronger operational discipline, supported by enhanced inventory management and better balance across receivables, payables and stock levels. As a result, 2025 marks a meaningful step change in cash generation, strengthening both our capacity to fund future growth and the resilience of our balance sheet. We closed 2025 with a strong and flexible balance sheet, providing the financial capacity to support our next phase of growth. Operating cash flow of EUR 45.5 million, together with net rights issue proceeds of EUR 147.7 million enabled us to fund strategic investments, dividend payments and selective M&A activity, including Exosens and Kappa Optronics. The Exosens and Kappa outflows or [indiscernible] post period end, bringing our pro forma leverage ratio to 1.8x EBITDA, remaining well within our targeted range. Overall, 2025 has been a truly transformative year, delivering a materially stronger strategic platform for future growth. The strengthening of our capital structure has enhanced our ability to scale operations, [indiscernible] strategic opportunities and expand our global footprint. I'll now pass back over to Christian, who will finish with some closing remarks before we move to Q&A.

Thank you, Dimitris. I hope it's clear the progress we have made this year. That is in 2025. Internally, we are extremely proud, but I know the work doesn't stop here. As I told you, we expect 2026 to be a transformative year as well for Theon as I will touch upon a little bit later. I can once again reiterate confidence in Theon's strong growth trajectory with our overall aim of achieving EUR 1 billion in revenue by 2029 instead of 2030 initially announced remaining strong. Our guidance remains unchanged from previously announced and in line with our conservative guidance always, with revenue expected to be within the range of EUR 570 million to EUR 600 million next year, that is this year in 2026, while maintaining our leading margins and increasing capital expenditure to EUR 30 million. We today proposed full year dividend of EUR 0.31 per share. While that is a small decrease per share from last year because of the higher number of shares, it is at the upper end of our guided 20% to 30% payout range and an increase on the total amount distributed. We believe this is a balanced dividend payout approach that continues to reward shareholders while preserving flexibility for strategic investments. Overall, this guidance reflects confidence in both our operational momentum for 2026 and our medium-term ambition to continue building Theon into a larger, more diversified global defense technology leader. So to summarize and add some comments about our future. We entered 2026 with strong momentum, supported by structural growth trends. And historically, high backlog and an expanded product portfolio. Our ambition is clear: to grow from being a leader in night vision to becoming a leader across the defense optoelectronic sector over the medium term. We plan to achieve this through continued diversification of our product portfolio, expansion to new markets, maintaining a book-to-bill ratio above 1x, to strengthen backlog visibility and pursuing promising M&A opportunities. All of these initiatives are designed with 1 clear objective in mind, driving sustainable growth while increasing total shareholder returns. Overall, Theon exits the transformative 2025 from a position of strength with enhanced capabilities, greater visibility and a clear strategic path forward, and we are excited for what we're going to deliver in 2026 and beyond. Here, I need to address several quite legitimate and very reasonable skepticism from many investors during IPO and post-IPO in the period 2024 to 2025. This skepticism in some fronts we have all addressed last year and more to come as we speak, in some cases. First of all, low liquidity float which was 20% initially and has increased to 30%. Profitability, a lot of investors have asked whether we can sustain this profitability, this high profitability. And instead, we managed to even increase it. Then there was a skepticism about our experience in M&A. What we can tell you today, we have a superb M&A team in place working in several transactions at the same time. As you recall, back in August of 2025 in line with the timetable of 18 months, we have announced a lot of transactions, investments and acquisitions altogether. Here, I would like to reassure the market that whenever you do not hear news from Theon, it's because we prefer to announce holistically. Therefore, we expect the market can expect that Theon will announce the next set of his initiatives shortly. Let me also speak about Kappa and Harder, are all coming in Theon's family and grow faster than anticipated growth for 2026. And here, I must state that regarding Harder Digital, -- it is expanding very quickly from its very low scale when we took over, and we have positioned the company to easily double and triple its capacity within 18 months, if, of course, necessary. The other skepticism we have received is about our ability to integrate all those businesses. I would like to state the following: our model at Theon and it seems to work very, very well. It's a decentralized management process that works. Integration cannot kill entrepreneurship and agility. Same applies on new M&A that we're looking at. First, we see the domain and whether it's of interest to us and whether they are accretive, but the second step is very important also. There, we see the management and we proceed or not proceed if we feel comfortable with the current management in such a manner that there is no need, if possible, to replace even 1 person. This we have already achieved with Kappa and Harder providing very strong incentives to management to continue their growth within an agile environment. I will also now have to state about our investment in Exosens. We have received a lot of criticism and again, in many cases, legitimate. The first criticism was initially about the capital loss that we experienced given that we pay the premium. This premium today is at discount, and we have more than EUR 50 million of capital gains in a liquid investment that we can take advantage any time if necessary. I would like also to add here that as per studies by one of the top investment banks in the world. This asset of ours that is the almost 10% of Exosens shares is not reflected yet in our share price. The other skepticism we have received is that about the fact that we did not obtain a board seat. I've already explained that during Capital Markets Day that we couldn't do this because it will require regulatory approval. I also stated during Capital Markets Day that we are applying for a board seat. Today, I can confirm to you that this process has started. And we're also applying for the ability to buy more if and when necessary. We wish to stress here that we remain the top strategic investor of Exosens while now the top investor is at around 17%, reducing their equity gap between them and us as the second top investor where we are to close to 10%. Last but not least, another topic, again, within the frame of legitimate and reasonable skepticism and questions by the investors about the future and the digital future. I would like to stress here that Theon is not a video game company that presents prototypes that are only for demonstration purposes. I can tell you, we will be able to present an IVA solution with substance that a soldier can practically use while risking their lives. This solution will be presented the very latest in the first quarter of 2027, but very likely earlier. Furthermore, this year, our focus is not only to bring more orders in-house but also to continue and bring our conversion of options to hard backlog much earlier than we anticipated. We have not yet missed 1 option as Dimitris Parthenis, our CFO, stated. With all this, I would like to thank you for paying attention to this presentation. And I would like to assure you that 2026 once again will be another transformative year for Theon. Thank you very much.

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

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

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

Yes, of course. I mean, obviously, I cannot go into too many details here, but starting with platform optronics besides the flex that we presented that was announced recently, we're working on some other systems, again, with big partners for this [indiscernible] electronics when we come in to Kappa, which is well platform tronics. We have some very interesting leads and I think very soon, we're going to have some nice news to announce. I see as well that as part of this question, there was a question concerning the tanker aircraft of Kappa cameras, just that you understand every Airbus tanker aircraft is automatically equipped with Kappa camera because it said it's qualified on the aircraft. If we now go over to fire control systems, we're expecting as well. We are chasing some very specific leads there. The traditional product range, of course, night vision googles [indiscernible] as well 9 division sites, there are some concrete leads that we are chasing. On the armed ecosystem, besides obviously options that we are following on the existing contracts that we have we are expecting as well as some additional orders. And we are at the moment in the process to expand the components of the ecosystem with additional accessories or components or whatever you may call it, that that supports really the augmented reality capability functionality of the armed ecosystem.

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

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

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

I mean we see this well above one, as explained in the presentation. So well above [indiscernible].

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

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

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

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

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

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

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

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

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

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

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

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

Well, Exosens does not compete with us in the U.S. as Harder digital really. Sometimes, we use Harder digital, depending on the availability for some commercial business in the States. But we don't expect -- we don't look at it like that. Regarding the U.S., as it turns out, we never really participated at the U.S. Army, which as we found out, because the U.S. Army never got to see or review our own U.S. Army sample the developmental, but only the U.S. Marines product, which we knew was just a light option. So we are -- our U.S. Army developmental but it was ready earlier than anybody else. For some reason, it was not presented to the customer. Don't forget that we are not working directly with the customer there due to our agreements. But we are very happy about Exosens participating in this. I need to state also that all 3 contracts in the States are they are not 350 or something each. They are ranging from EUR 100,000 to EUR 350 million, which means they have to pass to rigorous tests, we are also looking to participate in this despite the first round. And again, it's a very rigorous testing process and we don't know how much each of the participants will get. The minimum commitment is $100,000 from the end user.

Thank you, both. The next one coming from Samadarik. Did you explicitly state so that we are now going to buy more sales in Exosens available and are going for a [indiscernible] Exosens recently sold a large chunk of shares. Was it not of tenders to you?

Yes. The answer is very simple. The -- we are not allowed to buy more than 10% for regulatory approvals. -- first, and that's why we started already the process a few weeks ago to ask for a board seat as well as the ability to buy more if and when necessary. We have our own views about the value of this. As we said very clearly in the Capital Markets Day, it was an offensive defensive move. We have an asset in our balance sheet, which is Exosens already. It's valued at EUR 350 million. As I stated earlier, this according to our investment bankers, which are 1 of the top 3 in the world. They consider that this is not reflected in our balance sheet because the focus is on whether we have a board seat or whether it contributes to dividends or what have you. Nevertheless, it is an asset we have a liquid assets that is in our balance sheet of EUR 340 million, EUR 345 million right now as we speak. It's a very powerful asset that because it's liquid. Regarding the future, as I said, we plan to review the situation depending on the price and whether it's necessary that we do it. We are great partners with Exosens as we are, and we will continue to work constructively with them. I would like with this occasion also to state that the asset that is also totally understated and is not reflected in our share price, it's Harder Digital. We know very well and allow me to digress because this would consider this important. We all know that the tube manufacturers are measured not so much in backlog due to the demand, but they are more measured on capacity. Here, we have an asset, which is Harder Digital, which is ramping up to do 30,000 to 40,000 tubes and the ability to double this and even triple this, if necessary, we don't plan to do that because we are happy with what we get, and we're fulfilling our demand. But when you do the math at 30,000 to 40,000 tubes per year eventually when we get there, which is not far away. We're talking about EUR 100 million of revenues with a minimum 20% of EBIT, which is understated -- we're talking about a company that is worth EUR 2 million to EUR 300 million. Again, that's our math. Everybody can do their own math and their own analysis. We're not going to interfere in that obviously. But I think both Harder Digital as an asset and ongoing and under our control assets is not reflected in our price. And secondly, -- as I said, the Exosens shares are also not reflected in our share price. And I also need to stress here that given the -- it's not only about the capacity of Harder Digital, I need to stress that -- and again, I'm responding -- I'm only responding to investors very legitimate thoughts and queries. Harder Digital with the investments we have made have improved very much drastically their quality. They can sell to Europe. They can sell anywhere within. Our focus is, at this stage, as I said, to cover our needs. And we have very -- we have under our control Harder, and we have an excellent relationship with Exosens. So we are fully covered. And this was also the reason why we moved to acquire the 10% in the first place.

We have another related question to Exocen,so maybe you can't close this parents -- how would governance issues be addressed with the Board set a significant confidence of interest as customer [indiscernible].

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

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

Okay. Let me answer that. First of all, on the Platform business, it's 3x the size of the night vision business, the man portable night vision. The most difficult thing in this business is obviously, to enter the business. And we had already some sales of towers of our other platform-based products, but the credibility and the legitimacy we received from our first relatively larger order of more than EUR 40 million is a key milestone. Therefore -- and it was done according to our profitability. Of course, as I mentioned in Capital Markets Day, if necessary in some areas in order to enter, we will sacrifice some margins on platform, if necessary. But again, it's 3x the size of [indiscernible] portable. So in the end, the effect of this more higher potential revenues will more than offset if there's any decrease in the margin. And also on that account, I need to stress the fact, and this also explains part of our increasing profitability. The ARM products, the digital products are coming in full swing into the bottom line of Theon. We have higher profitability there. And this compensates any possible reduction in the platform business in order to enter in certain key markets. And also in this regard, I would like also again to digress a little bit because it's important. I would like to stress something that I touched upon earlier about the IVAS. And again, when I say that we're not a video games company, I'm very serious about that because, as I explained, but I will repeat this, as I explained, there will be no digital evolution. There will be a gradual transition. The gradual transition cannot happen just 1 day we wake up and there is an unbelievable revaluation. For instance, on night vision, what we have seen on digital space is nothing different from what we have seen in the last 3, 5 years. Now the day vision is a different story, the interoperability and so on. So that is what our ARM products is doing by adding digital things on our analog business, that is -- you add on the analog doubles, you add digital, and that's how you transition to the digital space. But again, these transitions cannot happen by overwhelming the soldier. What Theon does, and we believe we are on the right path we gradually introduced digital add-ons to the soldiers. We don't overwhelm them. We take their experience. We adjust -- so when somebody tries those new products that are with all due respect, right, it's overwhelming, and it's really like sometimes like a video game. That's not the point here. And to do achieve this, you must have an end user experience. If you have an end user experience, then you can gradually introduce the digital, and we are very well placed with the Theon [indiscernible] that we have done. And as I said, we will have also our IVAS very soon. And it will be, again, adapted to the real needs of the soldier based on our very extensive end-user experience. Thank you very much.

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

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

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

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

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

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

First of all, I did not say that we changed our minds. I said that we will review. First of all, no, we're not afraid of any U.S. chief manufacturers making a bid because -- this has been tried before, not exactly from tube manufacturer and it didn't work out. Europe is on a path to consolidate within Europe. And -- and in the case of Exosens, let me also see the exact question. So I can -- yes, -- so we have not changed our views on excuses, but it's -- what is very important for us, and that's what we're trying to achieve. We're trying to achieve more coordination, cooperation on Exosens with Exosens operationally because it's very important that the operational coordination comes in line with any equity -- with any equity further purchases. And again, it has to do, we have to protect our shareholders. We have to buy if we buy at the right price. Now I also see another question about M&A focus in first [indiscernible] as I told you, as I told you, we plan to announce soon next few weeks or few months, the beginning of an holistic approach. I can tell you today that it relates to the most promising platform electrotics business. I don't want to define that at this stage. -- for obvious reasons. But the most promising part of the electronic platforms, you know what it is. I'm not going to state it again here or say it. But we will have some -- we expect to have soon quite a few announcements on that front. Again, Theon, that's the way we work we take a holistic approach. We don't want to, in a domain to announce just a small acquisition or a bolt-on or what have you, but we want to present to our shareholders and to the market our holistic approach that covers as much as possible globally with the domain. So you should expect a focus on platform business electrofic in the next few months.

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

I mean, first of all, this first significant contract we got from Rheinmetall. This is something we're very proud of, and it really shows that a big prime contractor like Rheinmetall, they trust us, it means that we know what we do. But as always with our partners, we stand by our partners. Yes, we are talking to other OEMs in Europe, but as well outside of Europe. But we're not doing anything that will lead to any competition with Rheinmetall. We consider them as our strategic partner, and we want to work with them on many, many more. projects. Obviously, we are very competitive in all aspects when it comes to the development of such systems when it comes to the production of subsystems, through our supply chain, through our competitors. Advantage that we have here being based in reason, obviously, we can, and we want to use this to get to further sales.

Yes. If I may add here, Philippe, we will -- if it's not already launched, we are releasing a video of our new facilities, which, again, we we are building a third factor of Theon and expanding warehouse because we -- the signs we have, not just from this initial platform contract that had to do with a product in our own design. We have been approached by many OEMs who would like to use as subcontractors even for design that is not ours. And of course, we plan to accommodate this. We can respond to the initial -- any initial demand even in '26 on platform for production -- and next year, we'll have a dedicated factory for platform electrooptics. Plus, as I said, it doesn't have to be all in Greece on the contrary, we will -- the announcement we plan to do on again, on the same on the platform business, they will be coming shortly, next few months.

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

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

Thank you, Dimitris. With regards to the last question we have, I can assure you that we have many job openings globally, not in Holland currently. Unless there are any other questions, we can conclude the meeting. So thank you very much for your time today. We can now conclude the meeting.

Thank you. Thank you. Bye. Bye.

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