TKH Group N.V. (TWEKA.AS) Earnings Call Transcript & Summary

Good afternoon here in the [indiscernible] here in the Amsterdam. And also the audience in the webcast, a very warm welcome. We believe we have prepared some very interesting presentations. Most of you will have seen the press release already this morning, where we announced to be active focusing on automation. Before I move into the presentation, I'd like to point out to the cautionary note regarding forward-looking statements and hope that you can read this very quickly and take it also seriously. Yes, we are proud with what we have developed at TKH Group had next-generation technologies that make the world more efficient and more sustainable. And that has not been an easy job to create that. And I hope we can make that more clear during the presentation that we have. We will have presenters from the business responsibility in the group, so that you also get to know more people than just the Executive Board. We also have a few videos. In these videos, you will also see some people coming from the operations to explain and clarify activities what we are doing. And I believe they can do it even much better than that we can do that as Executive Board. And what you can see is they really do that by heart. This is the agenda that we have on the screen. It was already in the pre-announcement. I will take the first part, then Harm, Jeroen and Mark will take over for the second part. We have a short break, and then we move into the electrification. And last but not least, Elling will conclude with the Execute and 2028 and disciplined capital allocation. And I believe, especially that is also really, really important in the next phase for the TKH Group. Yes, the key messages I already pointed out, TKH future is in automation. And I believe that was somewhat unexpected. On the other side, we already have been working on this for quite a while to prepare this to prepare that we can split up that we have very strong potentially stand-alone activities that can build further on the potentials that they have. And that is, of course, the electrification and for the future, the automation business. Capitalize on automation and electrification. Very important that after all the investments that we did in the past, I would say, a few years and not a decade, but especially the past few years, in R&D, in Smart Vision, in smart manufacturing, in R&D also within electrification, in market positioning to be able to grow our market, to create an additional addressable market, which is really, yes, a nice opportunity within the TKH Group, how we can go beyond, I believe, especially in the presentation of Mark Radford. You will see a few slides pointing out to what we are doing and have done with the additional addressable market in the past few years. And it's also really organizing the return on investment on all the investments that we did, R&D, but also especially the capital investments in the additional production capacity within electrification. Disciplined capital allocation, really, really key and should turn and have focus on cash conversion and as much cash generation that we can achieve and not by disturbing our business, but again, also be flexible with the capital investments that you need to do that if a certain market is coming down that you immediately also reduce your capital investments. And I believe that is not what we did in the past. Elling has a really key role in that. But I believe the commitment from all the MDs in the group is at a very high pace and level to support this. All the noses are in the right direction to make this happen. And then last but not least, we have the continuation of the noncore divestments. In the press release, you can see that it's accounting for about EUR 250 million. The majority of that is the digitalization business. And -- but we have added a few other activities to create further focus as that is the real key for the future of TKH that we need to be and have to be focused to get, yes, better returns than that we had -- that we even had in the past. I go to the next slide. We have had 2 programs in the past 7 years. The first program was the Simplify program, and I will come back in the next slide. I believe, a very good program to get more focused already. And yes, on the other side, you could say you have been quite slow because you are still in this transformation. But I can tell you, it is also intense to find the right owner structure, at the same time, have the right pace in all the investments in the future, where you want to invest. And that has led to the second phase, the accelerate phase that we started in the end of 2021. There's a very high focus on creating the right building stones as I already mentioned, larger addressable market, the right R&D technology propositions, the investment, the CapEx investments in electrification to get there, to a next level to go beyond their in a much larger market that we can address after the investment in all these activities. To point out here is, I believe, also important to the return on sales target. We have not been able to realize that. The potential of realizing the target is still there. In that respect, we have really, really sound business in the electrification and especially in the automation business, where we see also that the margins are at the highest level and especially the gross margin, the added value is way higher in that segment, and I will come back in the next slide with the -- related to the development of the added value in the past 4 years which is, I believe, quite amazing. And it's also giving you already the flavor that if you translate the added value in the right way, with the right cost conversion, that the potential for a much higher return on sales is there. Of course, we are disappointed that we have not reached that, but we are going to do our best in the next phase to show substantial increases in the return on sales. Here, again, a quick overview of everything that happened with the transitioning into smart technologies. And I'd like to point out here again, also to the Smart part. This morning, we were in the Mondriaan Tower. And there, we have a great department with many AI -- intelligent AI people, and we are very proud of them. It is not the only department where we have AI people, we have more AI people in the group, but it's really key to make the difference when we want to go further and develop in the right way within automation. And especially Harm will come back there with also the great opportunity that we have for autonomous production. And there, you will also see coming back, the synergy, the big synergy that we have between the vision technology and the automation -- automated production under which we also see VMI. But we are also going beyond in that respect with the production of systems to automate the world. The next slide, we see that we still had a quite nice organic growth. And we have -- we are not satisfied with that. We have had really a lot of headwinds, destocking the fiber optic business, supply chain shortages after a nice peak in demand in 2021, big supply chain shortages in '22. Yes, we had to win a race. And some of you might know, I'm a racing driver, and love many cylinders. But even if you are driving a 12-cylinder and 1 cylinder is missing, you cannot be in the top 3. And that is a big driver for us also to see that we get TKH running on really all the 12 cylinders and preferably less cylinders, but still at the maximum of the number of cylinders. Here, we also point out to the added value coming up from 47% to 51%. That's really substantial, 4% points in such a short period. It also is happening because of the movement into more automation. And you can see that in the graphs here also on the slide that the automation part is today around 60% compared to '21, where it was around 50%. Yes, the next phase is Capitalize & Execute, not too nice stories, not too much optimism, you see that we can really get the returns out of what we have. And that is not for the coming 5 years. It is for a relatively short period of 3 years to have that focus and to deliver in that respect, the returns that I believe and unlock value that our shareholders also are greatly looking forward to. Again, here, on the left side, you can see in the graphs, the development from the automation business that it has become now the majority in our activities. And we are moving into a new segmentation. I will not deep dive in that. Elling will do that. We transformed the Smart connectivity into electrification and we show in this electrification, the digitalization, which is on the divestment list. And then, of course, the electrification not too long from now, consist of only pure electrification activities which should make it also a very valuable activity, for which a lot of interest can be generated in respect of interest and also potential valuation. And then, yes, a very important slide, where we have the segmentation already in the new segments, as I just discussed, that is the middle chart. And we have changed the smart manufacturing into automated machinery. I believe that is the right pronunciation, clarification of what we are doing. And yes, we are strong entire building. But we can really go beyond in the automated machinery. What we see already is in Smart Vision that we are moving up the chain from components to systems, to solutions. And we believe, and Mark Radford will come back more in detail there, how important it is and what we already have achieved to move in the solution direction. And with the solution direction, we also increased the opportunity of delivering a wider scope. And a wider scope means also more turnover and more profitability that we can generate from the same customer. And then there's an explanation, I'm not going to walk through that in detail. But we know that the automation business is an asset-light business. We want to keep it also that way, and that also means from a value creation perspective, by focusing that and also reinvesting the money that we generate from the divestments in this activity into a buy-and-build strategy gives the highest potential I believe, in valuation, but also in performance towards our customers and I would even say a supplier and to go beyond and to meet the targets that we have set. So we have decided for an alternative future ownership for the electrification and we have not mentioned directly already what the route to go is. We see more options, and we want to evaluate in the coming 1 or 2 quarters, what the best option is. What is very good is that the electrification activities are already moving into the right direction with respect to profitability meeting being close to the target that we set in Q4, and that makes also the gap towards 2026, much smaller than if you look at the first half of this year. So it's not that we need to wait a very long time. We, of course, you can optimize and see that you get the maximum result in 3 years or in 5 years, but we have decided that we will already make such a big step in '26 that we should not wait until '28. And you also know, you never know what will happen. And I believe it is also important that we generate the cash as quick as possible to stimulate everyone in the automation group, who are really ready for the next phase and are excited to get access to the funds. Although Elling is protecting that in a very strong way, we see capital allocation, share buybacks, dividends and perhaps we have not put share buybacks as the highest priority because it's the #4 on the list. But again, Elling will explain that, and that is also, especially with the current valuation, a very good potential investment for TKH. Yes. Then the last few slides, and then I will close my presentation. That is, of course, the automation, what have we built in the automation activities and again, it is about superior developed technology and that makes life a lot easier. If you have really differentiating power from your technology point of view, and I believe we can guide you much more in what we have in our hands during the afternoon. But that makes life so easy to be able to gain market share and not only be depending on just the market growth, although we have in the automation segment, very good drivers, which we see here on the left side that stimulate higher productivity and higher investments in automation. In electrification, it is, yes, very good. And Walter here will come back to that. The big success that we have with the offshore wind generating more than 80% market share at the moment. That is not a guarantee that it will stay at that level. In the presentation of Walter, we will see that the sales funnel has increased from mid-August, the half year presentation from 11,500 to now even above 14,000 kilometer, and Walter will also inform you where that is coming from. So although there is a lot of negative news about the offshore wind, today, we see some shift, and that will also be in that presentation of Walter of investments to a later stage in this decade to more to the end of this decade. But that does not mean that there is no demand starting from the coming year up to 2028. And to utilize that is very important that from that, we get our cost ratio in line with what it should be. So we don't have to add any cost anymore in the electrification business. We are going to utilize the capacity that we have. We have a full order book in the onshore medium voltage, low voltage business that's going up to the end of 2026. And we still have capacity now for high voltage, which is mainly in our Lochem plant. But the destocking that is very good, that we already could announce that at the half year result that has disappeared, and that -- yes, the investment level is at a much higher pace than it was even before the destocking period. And so our focus is to generate as quick as possible, a substantial value for this activity. And to be able to support the buy-and-build strategy within automation. Here, we have the targets and execution. I already mentioned most of the parts in this sheet. So I'm not going in detail here. Elling will address this slide and I move to the next slide of the disciplined capital allocation and no major CapEx programs, very important. We don't need them. We can build on what we have for at least 2, 3 years. And that means a huge change in, of course, the cash generation. Buy-and-build strategy in automation and not very large acquisitions. First of all, we don't have the excess cash at this moment, but we also believe that bolt-on acquisitions can be a very good strategy. You can increase the number of bolt-ons and reduce the risk by having a very big acquisition. So a big acquisition is not today on our list. And then the payout ratio to our shareholders will continue to be at 40% to 70%, but we have put a kind of mix there related to the dividend yield. And so if the dividend yield and that means if the dividend yield is very high, you could say your share price is very low. It's not always the case, but I believe in the majority of cases, that will be the case. So we have put a limit of the dividend yield at 3% and excess will then go -- will not be distributed in dividends, but will go then into share buyback. And of course, we don't want to do share buybacks if our leverage is close to 3. Then we go to the targets. Yes, 2 targets for the 2 activities, specific targets, Elling will come back also more in detail. You have noticed it already in the press release, organic growth in the automation perhaps looks low. We have incorporated there that within the manufacturing area that the order intake is not running at a very high pace. We still see that the Tier 1 customers in the tire building industry are hardly investing and that is already going on for more than 2 years, and we have not put a very optimistic return of the Tier 1 in the coming 3 years. And that depresses somewhat the organic growth that we see in Smart Vision which will be at a higher level, and we also will disclose that in that way, that it will be higher than 5% to 7%. And in the manufacturing business, it will be lower than the 5% to 7%. But again, if the Tier 1 comes back, it could look much more positive. Then I'm not pointing to the return on capital employed, but of course, that is really key. Organic growth is important to achieve that and be organized for that and again, had a focus on the return on capital employed, and we will have a slide where we show what developed -- how the return on capital employed developed in the past 7 years. And yes, the outlook is, I believe, much better starting from today what we can achieve in the coming 1, 2, 3 years. Organic growth within electrification is quite good. And even at a high level at automation, again, mainly related to very good order book that we have there already and the capacity that we have available. And then I come back to my first slide. I'm not going to repeat everything here. It is clear that this is our focus. We will not be, let's say, distracted from this. We keep really close track on, I would say, even a daily basis, a weekly basis, and show the right execution and capitalization on what we today have in our building stones. Thank you for your attention, for my part of the presentation. And I'd like to hand over to Harm, who will move further, deep dive further in the automation business. Thank you very much.

Okay. A very good morning also from my side. Thank you, Alexander. And we will now shed some more light on our exciting view on automation, and we would like to start with a short video. [Presentation]

In our view, automation will remain extremely important in the industry and in the world around us. If you look at the key drivers for automation, I think a lot of you are familiar with that. You see that on the right side. Some numbers. Clearly, it has to do with scarcity of skilled personnel. And that will certainly become even worse in the -- if you look further ahead at the demographic figures. And that means that with scarcity, obviously, your costs go up, but also the scalability of your production is at risk. But there are more drivers for automation. One is mentioned here on the left side that has to do with the materials change. There's a lot of pressure on raw materials, scarce materials that will be more and more replaced with more sustainable materials. And the scarcity and this change means that it will be very helpful if your production becomes more precise, more predicted and that waste levels go down and that all can be achieved with a higher level of automation. So this leads to a -- what we have seen already. You see here, for instance, the number of installed robots in the industry already for quite some automation. But in our view, it doesn't stop at automation. We have seen manual labor from the past moving into what we now see as automation. You have operators working with highly automated equipment. But the real next step is autonomous production, the dream of the dark factory, where machines can work, can do the actual work where the machines can also take decisions and act and make this whole production facility not dependent anymore on -- no influence anymore on quality and output of people. And if you achieve that, then you see that on the right side, you can get a higher quality at higher speeds at lower cost. And as the system can also learn from the past, it will become better and better over time, and it is scalable. So if you're very successful, it's easier to scale this than with more people. But what is needed for real autonomous production in the end. In fact, 3 key elements, you see them mentioned here. One is replacing the eyes-off the operator with vision. The second is the hands-off. Of course, you need machinery, you need robots, you need systems to do the actual work and you need the brains, the smart software that can analyze the images, can come to conclusions, take decisions and steer machines to act. And as you all know, all these 3 elements are already quite successful in TKH. And that is where we really would like to bring these together and now what is called automation. We are already quite successful. Alexander mentioned, for instance, the highly automated systems in the rubber and tire industry. But we are also quite successful now in moving up with our vision systems in bringing solutions to the market, to customers to help them based on, obviously, our strong global network of sales, but definitely because we understand, have a deep in-depth knowledge of the applications in the market. Now if we combine this with what you see on the right side, with our smart software and AI capabilities, and the engineering skills that have been proven in machinery, highly automated machinery, you can really bring the next level of automation to the market and support customers getting to this autonomous level of production. Now to dive a little bit further into AI because a lot of companies are talking about artificial intelligence and bringing that to the market. I'm really convinced that in TKH, we have organized this in a very special and different way than other companies have. What we have set up is a group of software specialists. In total, we're talking about 130-plus engineers based here in Amsterdam and in Poland, who are deeply embedded as a team in -- you see that on the left side of the picture, deeply embedded in the universities and the academic world where work students and professors are doing either in the hub or with their research teams on the -- at the university, working on real-life applications and ideas. And at the same time, this team is also deeply embedded in the outside world of the software community where open source, for instance, is created at lightning speed, and that makes that with combining this, they can do real fast development of AI-powered software and machine learning principles. And on the other hand, this team is also deeply embedded in the R&D departments of the TKH companies who have the in-depth knowledge and the direct market access to apply this? And in this way, we can bring at very high speeds, real help and support for customers in the market. Now to underline this statement, I would like to introduce you to Aleide Hoeijmakers, who is leading our applied AI team here in Amsterdam and they will start a short video. [Presentation]

Our AI hub serves us to bring with our operating companies functioning as the nervous system. Together, for a responsive network that detects opportunities, process information and execute coordinated actions across our entire organization. Rather than each company developing their own AI solutions we built centralized expertise that benefits our entire organization. We developed proprietary algorithms once, then adept and deployed in a close diverse application. We take that research all the way through to practical implementations, ensuring our innovation create measurable value in real manufacturing. A perfect example is our proprietary machine vision algorithm, versatile across different applications, enforce quality inspection in one division by enabling intelligent predictive maintenance in another.

And she mentioned also another great example that we -- the algorithms that are developed for one can be easily then connected also to other applications. And that really helps in creating this very fast-to-market approach of smart software. Here, you see the overview of what we now see as automation in TKH, revenue of a little bit over EUR 1 billion when you look at the last 12 months up to now. On the left side, you see the division over the various activities. But I'm sure that Elling will dive a little bit deeper in the exact configurations, et cetera. You see that for the coming 2, 3 years, we predict an overall annual growth of, say, 5% to 7% as a bandwidth, where in the past, we have grown much faster. And that has to do with, like Alexander already explained, there's something going on in the industry right now with some reluctance. But nevertheless, we predict growth. already in the coming 2, 3 years. But after that, we are sure that we are very well positioned for future growth. More detail on addressable markets, et cetera, will come from the next 2 presentations. And I will now introduce first Jeroen Slobbe, who is the COO of VMI who is in the -- previous known as Smart Manufacturing Group. Jeroen?

Thanks, Harm. My name is Jeroen Slobbe, COO, responsible in Tire Building for R&D, engineering and operations. I would like to start with the portion tire building represents in the smart manufacturing system because a lot of things has happened over the last 4, 5 years. You see a, I would say, spectacular growth in our year-on-year organic turnover growth of over 10%. And also, we were able, in this segment to recover on the return of sales levels up to the 19%, which we are anticipating in this pillar. On the right-hand upper side, you see, of course, that the tire building is more or less dominating this smart manufacturing system pillar. And that's also the reason why I was invited to share a little bit our outlook and view on the tire building part. And with that, I think it's good to start with a small video. [Presentation]

So what are you actually looking at if you think about tire building. And I think the best representation you can see here on this slide, you look at the enormous passion our company has to create state-of-the-art technologies and constantly focus on creating value for our customers. You're looking at decades long of growth with multiple figures, and multiple digit figures. But what is also clear is that VMI or tire building in TKH found itself in a sweet spot where technology can really lift, let's say, a market. Initially started in 2009, introducing the MAXX technology picked up by the Tier 2s, later introduced the Hands Off Eyes Off philosophy around the MAXX automation, also picked up by the Tier 1s, supported and little bit affected, of course, by COVID outbreak in 2019. But clearly, we see a very strong bounce back after this period of COVID. And yes, one of the reasons we would like to share our, let's say, growth perspective is that we believe that we can still maintain outperforming our markets. The focus of the customer, the focus on outperforming the market starts, of course, with a better understanding of the global tire industry, and I simply took some examples of how this current market looks like. On the left side, you see the global tire sales. And I took a period of 20 years, and then you see a gradual shift to a dominant or less dominant position for our Tier 1s. And the Tier 2 picked up, Tier 1s were overwhelmed by the quality of tires able to produce by Tier 2, and of course, that -- created a loss of market share for the Tier 1s. You can also see that in the middle piece, it's a geographical distribution, multiple factors like transport cost, COVID, geopolitical pressure basically forced the Tier 1s to focus on local for local, a better spread of their geographical production capacity. Terms like near-shoring, factory closures is all related to what happened over the last couple of years to them. On the other hand, the Tier 2s still focusing on growth, still focusing on capacity increases. I will come back on that later a bit in more detail, but the Tier 2s are definitely still a strong part of our growth perspective now, but also in the future. It is recognized in our order intake already referred by Harm and Alexander. You can see it. 2021, domination by Tier 1s. 2024, you see now a dominant figure for the Tier 2 due to the slow order intake. On the right side, there's something important for the whole presentation about TBM. If you look at the outsourced TBM market, we basically talk about the capital, people are willing to expand -- to spend every year on tire building machines. And on the right side, we basically try to recognize that the Tier 3s and the majority of the Tier 2s allocate all their outsourced TBM capacity already to VMI. On the Tier 1s, 50% of the CapEx is used for their in-house production and 50% is used for outsourcing TBM to predominantly VMI. Having said, if you look at the current market, including the lower order intake of the Tier 1s, we recognize a potential outsourced TBM market for EUR 600 million to EUR 800 million at this moment. We expect that in the next 5 years, this will grow with another EUR 200 million to EUR 300 million. So the biggest opportunity for VMI is that within this growing outsourced market, we will also grow our relative market growth. And that's what I tried to explain in the remaining part of this presentation. This results in extra TBM sales. This is basically how you should see it. And then I will try to explain some of those drivers. It all starts with the market itself. If you look at the passenger tire market specifically, there's a 1.6 billion tires produced every year and, of course, driven by more tire sales due to either vehicle sales increasing or replacement market. This is not a very big growth, but it is at least a very resilient market. It comes back year-on-year. And it comes with extra capacity. But what is happening in that market is important for VMI because many companies are focusing more and more of their production to ultra-high-performance tires. And an ultra-high-performance tire can develop in all kind of directions. It could be the size of the tire, the composition of the tire, et cetera, et cetera. This ultra-high-performance tire result in the need for higher technology, higher capacity. So this whole product mix dynamic in our market is extremely important for VMI to be the preferred partner for outsourced capacity. The second driver in this growing and developing market is what we consider what is happening to the Tier 1s right now. I just introduced that the geographical spread has improved fair, but at the same time, they still have to update their existing factory footprints. And for us, that outsourced potential, we expect them to invest in the future is, of course, our biggest challenge to further grow our position with them. The second part is, and you might follow this a little bit, but there are still many capacity increases announced by Tier 2 customers. Plans introduced in India in Morocco, Algeria, Middle of America and South of America. So we still -- on the backbone of these investments, we still believe that there is a growing potential for VMI to also grab that portion of the growing market. So there's quite a solid midterm growth perspective for VMI, especially and then also the Tier 1s pickup. On the right side, probably important for you also to note that 1 out of the 3, 4 tires is made on TKH equipment. So there is some space still to go. On the other hand, another important driver is of this installed capacity, which is not linked to TKH, the age is more than 20 years. So 40% of the installed non-TKH capacity is aged -- is longer already or older than already 20 years or so. So massive potential for us to further grow. Another driver in this aim for and this ambition to outperform the market is driven by the growing tire complexity. And just to give you an example on the left side, multiple factors. It's electronic -- of the electric vehicles, of course, drives the new product characteristics, use of sustainable materials. The rim size has already shared and on the other hand, people are also -- customers are also developing all kind of tire specifications to be able to deal with all weathers or all kind of winter circumstances. What is happening is that, if you look at how our customers need to deal with this changing and increasing product mix is that basically the amount of passenger tire articles is constantly increasing. And I took this number for one of the Tier 1s and they basically presented that they now have to deal with 12,000 individual passenger tire articles, and they still believe it will grow. Now the impact it has on supply chains. The impact it has on change over time. The impact it has on flexibility. This is for us an extremely important driver that helps us to convince our customers that with an advanced technology position, we might be able to grab that outsourced portion as well and the technology gap between what they are capable to do in-house and what VMI tire and TKH tire is capable to do is basically going to become wider and wider and therefore, more beneficial for TKH Tire. And finally, our breed, the passion and the capabilities we have evolved over time is also changed into how can we create value for our customers? And how can we also create this value in higher revenue per tire building machine. And I took some examples of what happened in 2009 when we introduced the first MAXX technology, we were able to sell it on an average price of EUR 2 million. It grew gradually by introducing the hands of the technology of MAXX. Today, we sell these machines between EUR 2 or EUR 3 or EUR 4 million, depending on the amount of features we add, so we are basically able to convert our technology advanced position also in higher pricing. And we believe that this autonomous drive and alternative need for more autonomous machine is going to help us to put, let's say, these added features also in price increases to our customers. To give you some examples on what we think autonomous production can be. I put some examples here. FOD is one for an object detection. How can we prevent of using raw materials in the tire in an early phase. Self-adjusted breaker service means basically without operator intervention, control the machine, helping to do autonomous production. And we believe that, that operator independency will help to understand, let's say, the complexity and deal with it in the future, also beneficial for VMI. So all in all, knowing that the market, the outsourced addressable market will grow in the next coming years. We believe that we are ideally positioned to grab that outsourced portion in a bigger percentage for TKH tire, driven by well positioned to anticipate these business drivers, knowing that the truck tire market currently is quite weak, but it will come back anyway. And we also believe that if the Tier 1s step up again, we are ideally positioned to help them to overcome this technology gap they might have with their own in-house production. Another basket for future and further growth is what we call recurrent service business with an installed and growing installed base of our own TKH equipment, there is also a constant need to activate and keep, let's say, our existing installed base rejuvenated. And we have developed a complete portfolio of offering in that part, but we also invested already in our global footprint with service centers in, for instance, Mexico in preparation, Japan in preparation. And currently, we grow also our service center in a fast-growing market in India. So this combination of portfolio organization structure, but also our 24/7 call out services towards our customers is basically something we believe that we can further grow quite significantly year-on-year from a recurrent service business. Then on UNIXX often explained also in updates to you. Where are we currently with UNIXX. Basically, the UNIXX technology merged to production stages in the tire building process. It's the component prep combined with tire building. It combines strip winding technology with the capability to build a tire. It is, in our opinion, the answer for the mega trend when it comes to reducing batch sizes, increase flexibility, but also keep control of the quality of the tire from the beginning up to the end. Where are we now with UNIXX as such? We are offering it, of course, as a sell, but we also are quite successful nowadays with what we call the derived technologies coming from this unique platform. And I wanted to share 2 examples of where we currently are. We introduced the UNIXX Belt maker some years ago, which is currently quite successful in the market. And just to give you some impression is that it is -- it has shown how to optimize the manufacturing process. We see repeat orders coming from those customers who currently have installed the UNIXX belt maker. But one of the biggest advantages what we already claimed to our customers and is now also proven in the field, that it significantly reduced the amount of use of materials. Now that immediately fits nicely, let's say, this whole dynamic and development of technology advance and product mix development, et cetera. So UNIXX belt maker is what we consider the answer of all these trends in sustainability, high-performance tires, things, et cetera. I'm also happy to announce in this call that we use the UNIXX technology to enter a new market for VMI. We, together with a launching customer, we will soon in the next years to come, introduce a UNIXX Moto alternative based on strip winding technology with tire building and completely enter into a fast-growing ultra-high-performance tire market for the motor cycle industry. And with this launching customer, we also believe that we have the nice entrance to this market potential. And with that, we believe the UNIXX platform is partly potentially here and there eating some of the MAXX TBM existing market but on top of that, we really believe that this merging of stages component and tire building is going to offer us in unique new entrants into a new addressable market. And finally, but not the last one is that in order to maintain that nice return on sales level, we have a quite aggressive and ambitious operations excellence program. It's basically spreading our capabilities among the globe with finding sometimes best cost alternatives. Sometimes simply trying to find the best way to allocate and source our materials. So all in all, we also believe that there is a strong focus in our operations to excel and make our customers happy by always constantly deliver the best performance and the best quality and at the same time, of course, also give them access to the latest and best technologies. Having said, introduced already with the low order intake of the current market in the Tier 1, the very mild and a soft market in truck tire, we do believe that there is still possibilities to grow driven by this outsourced market, driven by this relative position, we still have to grow. We do believe that the updated product mix we have, the drivers behind, let's say, this -- in this market, will help us to give a growth with milder than expected, but we are definitely ready for future growth into the 2030 to come back to the traditional double figure CAGR we were used to over a very long period. So with that, I would like to conclude. Thank you for your attention. And I would like to hand over to Mark Radford. Thank you.

All right. Hello, everyone. Good afternoon. I'm excited to talk to you a little bit about Smart Vision systems. So within Smart Vision systems, there's really sort of, again, focused on vision technologies. So Vision Technologies overall from the turnover accounts for about 90% of the segment. And of that 90%, there's roughly an equal split between machine vision as well as security vision technologies. Over the past 4 or so years, we've seen most of the acquisitions within the group fall within this space as we really look to focus on key technologies that we believe our enablers. We've definitely had some pressure in the overall market conditions that have come from semiconductor spikes and then declines. But overall, we've achieved overall organic turnover growth of 3.2% despite those challenging market conditions. I do also want to highlight that the business is really a global one. About 50% of the turnover within the Vision segment comes from Europe. And the other 50% is roughly equally split between North America and the rest of the world. So I'm from the machine vision side. I'm going to spend most of today talking about machine vision, but I do want to just briefly update what's happening within the Security Vision space. So Security Vision. This is really a combination of pieces for mission-critical monitoring, mission-critical communication as well as parking guidance and intelligent traffic systems. TKH is really positioned at the high end of the segment with sort of high-value offerings, but is well positioned to grow, particularly when we look forward, there's a lot of geographic opportunity for the expansion of this group. In addition, the current environment is one where there's really a lot of opportunities being driven by rising security awareness but also the need to combine automation with the vision technologies. And this is really where this intersection between the market needs for greater awareness, combined with the technology enablement through software, AI and other technologies are now creating increased automation possibilities within this space. So we're seeing automatic enforcement and monitoring, particularly in places like traffic monitoring, tolling, things like that, but also from a security perspective. Really having systems that are observing what's happening, making decisions and automatically making the next thing happen. So overall, when we look forward to the next 4 or 5 years, we're expecting a total addressable market to grow at just over 9%. Now switching to machine vision. Again, I'm going to spend most of my time focused on machine vision today. I want to sort of highlight where this group is at in terms of the overall presence. So once again, really a global presence with a combination of manufacturing R&D sites across Europe and North America, but more importantly, a very strong direct presence in terms of sales in all of the major markets. A big aspect of the strength of this group is to be in the ability to connect with customers, those key customers have sort of a customer intimate relation with them and drive business from that perspective. So as we look across the world, you can see we're well positioned in all of those major markets. In terms of our go-to-market strategy, we have a good mix of customer types. In particular, I want to highlight the OEMs and system integrators together accounting for about 50% of the business within Machine Vision. And what's really important to recognize is with these 2 customer types, their business is directly tied to our business. As they grow their business, our business grows. As opposed to end user business where you can go through a lot of cycles depending on the investment, user companies that are very focused on making sure that they're continuing to sell systems and finding new markets, so we will get great growth from that perspective. In addition, we have a great distribution channel of partners accounting for about 39% of the business. And this is really there to serve either a combination of the smaller geographic markets or simply smaller customers or wouldn't be efficient for TKH to go direct to these customer profiles. So they fit that section of the overall engagement. And finally, looking at the verticals in which we serve. There's a good mix of activities but really with a strong focus on manufacturing and production systems. So from a categorization, general factory automation is by far the largest share, but you can see we've also got very strong presences in specific with markets such as automotive and battery, consumer electronics, wood processing, solar, et cetera. So some of you might not be very familiar with exactly what Machine Vision is. So I'm going to try and talk a little bit about that just to introduce sort of my view on how to categorize the different ways in which Machine Vision is used. So first up, probably most traditionally, Machine Vision is often being associated with inspection in the factory. Look at an object, make a pass fail or a quality control decision, but also used for grading or sorting or other simple applications like that. More and more, we move into the automation bucket, the second column. Harm has talked a lot about this, but why is vision important in this section. Well, really Vision is there to help manage the complexity that can come when parts vary or conditions vary, replacements vary. And there needs to be some sort of closed-loop control in terms of the overall system. So Vision creates those eyes for the machines to do their jobs. In reality, that's expanding from simple machines now into robots, collaborative robots, vehicles, all types of sort of automated systems that exist in this environment. The next category is in the area of optimization. We sort of think of this in terms of transformative manufacturing, taking one good and turning into another, taking a raw material, producing some sort of value for it. And here, Machine Vision is a key portion of that optimization process, really allowing the producer to make the best decisions automatically to optimize what value you can get out of an object. I'm from LMI, we started 40-something years ago in the lumber industry. How do you take a tree? And how do you cut it up into the most valuable lumbar? Because at the end of the day, that's what a sawmill cares about. But that applies to all different types of industries and particularly as we start getting into more of a focus on sustainability, monitoring yields, monitoring material usage and wastage. And these are key areas where, again, optimization can play a key role. And then the final area is really digitalization and augmentation. And this is a bit of a catch all. But essentially, you can think of it in 2 ways. The one portion of it is digitizing the real word -- world, capturing data. So going out there and observing what's happening and creating records of it. But also creating tools that sort of augment humans abilities to perceive things. So how can we enhance human vision with machine vision. So this can be creating systems that look at things that would be far too small to see with the naked eye or shifting the spectrum, right, using hyperspectral imaging or infrared technologies, to see through fog or to see through the skin of a fruit to other things and allow humans to make decisions utilizing machine vision tools. So now that we know what Machine Vision is, what's sort of driving the growth in this market overall? I think Harm has talked a lot about the automation sections. I'm not going to repeat that. But to briefly recap, a lot of the challenges with wage growth with labor shortages with deglobalization they're creating a very, very strong business case for automation. In some cases, this is just simply adding vision to optimize the machinery or a piece of equipment that's already there. And in some cases, it's driving new equipment purchases. We're also seeing a big shift in terms of how complex production is. Jeroen just talked about how many different types of tires vendors have to manage. But the same thing is happening in every industry, right? There's more variations in the colors of cars, the shapes of cars, the types of parts that have to be produced. And this is creating complexity for those factories to manage. They have to understand what's happening on the line, how to manage all the different parts, how to manage their supply chain, and they want to be able to do that automatically. So vision is an enabler there. The second sort of category of growth comes from the governance perspective. Some of this is based on regulations or safety initiatives, where there's needs for traceability or other aspects. You can think about this sort of through the context of like lithium-ion batteries and making sure that it's understood what happens with batteries and how do you control them due to the potential risks associated with them. At the same time, there's a big focus on sustainability now, right? How do you gain, get higher value production out of the raw materials? How do you manage waste? How do you ensure that you've made or got close control on some of these systems. And then really, the final category is on the technology side. Here, you sort of see new developments that are creating a combination of conditions that allow for possibilities that weren't previously possible when it comes to machine vision and automation. Some of these come from Machine Vision itself, new developments and sensor technologies or cameras someone more of the software algorithmic AI side, where now those systems have greater capabilities, but they also come from adjacent technologies. Collaborative robots make automation possible environments where it would have been size or cost prohibitive in the past. Wireless communication makes it easier to integrate these systems. Edge in cloud computing creates very scalable processing networks because they can scale up and down based on the needs of the system. So as you combine what's happening in vision with what's happening adjacent to vision, again, there's a possibility for basically new addressable markets that are being continually created. So when we take this all together, we're coming out of a bit of a soft period or even a downturn in machine vision. Overall, the market this year is still -- we've seen the sort of the first signs of rebound in growth. I think we reported on that in half year results. But we haven't necessarily seen that, that full turnaround that we expect to pick up. So overall, we're projecting about a 5.6% CAGR over the next few years here. So we've talked about the market and how it's growing. Now I want to talk a little bit about what the building blocks are for TKH to tech to capitalize basically on that growth. So TKH has built up a very nice portfolio of machine vision technologies. Again I highlighted a number of the acquisitions from a revenue perspective, but I also want to sort of highlight them from a technology perspective, where we've been finding companies that have complementary technologies to strengthen and build out the overall portfolio. When we look at our characterization of the overall Machine Vision market, we estimated it's valued at about EUR 4.8 billion. And when we go through the different segments, right now, we're addressing about EUR 3.4 billion of that. But in particular, we have really strong market share in a couple of key sections: area scan or 2D cameras, 3D cameras, line scan cameras, vision software and frame grabbers, these are all areas where we're very active. And so when you put that all together, overall, we are a top 5 global player in the Machine Vision space. So really, this has created a strong base in technology that allows us to go out and expand into these new addressable segments. So now I want to talk a little bit about what we've been working on internally and maybe isn't so visible outside, but creates again, another aspect of the growth. So there's been a big effort overall for about the past 3 years now on focusing on organizational consolidation. There's different aspects to this that I want to briefly touch on. The first of which is simply commercial, right? Bringing our teams together to cooperate and have a clear strategy on how we can reach the market in a more well-controlled way, right? So how do we increase cross-selling? How do we increase cross promotion but ultimately, how do we gain more from the sales organization and the partner networks that we have. The next is really from an operations perspective. There's been a lot of combination of production sites and supply chains. This is really just important in terms of creating not just cost efficiencies, but also creating scalable efficiencies, creating more resilience in terms of the supply chain and ultimately having something that our customers can be confident in. And then finally, and probably again, this ties to the capital portion of it. There's been a big focus on R&D and how do we centrally coordinate our activities such that we can develop all of our products off common components or a centralized platform. So this has been now centrally planned and starting to be implemented now in the latest set of products that are coming out. So on that note, I think a perfect example about this is talking about our software ecosystem. So at the core of this is a product we call GoPxL. And GoPxL is essentially the machine vision execution software for the industrial space. So starting at the bottom, we have all of the different hardware that exists in the TKH Group. We've now unified this connection interface such that all of this hardware can plug into the same platform. This platform manages the synchronization, the communication, external control, et cetera, with this. And it provides an engine basically for your software to run it. This is where the AI algorithms would come from our team at TKH AI and TKH technology plug into, right? It gives them a home for those algorithms to actually make decisions based on the data. But then once you've made that decision, you have to do something with it. You have to communicate it out into the factory. You have to control a robot, talk to a PLC, archive data as well as provide interfaces to the operators so they can see what's been happening on the machine, how things are trending over time, if adjustments need to be made. So that all exists within one unified platform now. And this really, again, sort of sets us up for future growth. Okay. So we've got our building blocks. Now let's talk a little bit about the addressable markets and where we're going. So the first thing I want to talk about in order to sort of set the stage for why the software ecosystem is so important is talking about the machine vision value chain as I see it. So starting on the left, we have components sort of the lowest level of what we would consider machine vision. And these components by themselves aren't necessarily useful. They must be combined with other components in order to get something that actually gets an image or creates your basic system. But there's a large portion of the overall Machine Vision market. When you take those components and you plug them together, you kind of reach the middle category. Now we have what we call vision systems. They're highly configurable systems based on a combination of lenses, cameras, lighting, software, that can be used by users and configured to solve a huge variety of applications. And then finally, when you take that and you start making it more specific, when you add unique mechanics, but also specifically unique software, unique algorithms to the point where you get a turnkey vision system, this is sort of the highest layer in terms of the overall solution. So right now, TKH plays at all of these levels. And we have a unique advantage here where we can leverage the technology that gets to the layer beneath it to ultimately increase our value add, but also develop these solutions much faster and more efficiently. So with that, we're now taking our new software ecosystem, adding some new hardware and starting to go after the rest of those product segments. So coming back to the previous addressable product segments I talked about, we're now taking GoPxL. We have some new hardware coming out, and we're launching into the smart camera market. This, combined with the ability for GoPxL to essentially run on any device, whether it's an edge device, an accelerator or PC, allows us to create configurable vision systems. So when we go back to the EUR 1.4 billion of the overall machine vision market that we weren't addressing before, we're now able to start getting into that market. It's a very big market. I'm not going to say we've got one product recovering the whole market, but we're making that step and we're going to keep refining and building into that overall. So we're coming in at the very top end with basically the highest performance smart camera that exists on the market right now. It will be able to run the most advanced AI networks and it's able to train those networks on the edge with the camera itself. There's no need to install software. There's no need for cloud computing. This is basically a very high-performance self-contained device. So again, I think this combined with the fact for GoPxL to easily scale between those different processing architectures is really an industry first. A different perspective on how we can take this technology platform and leverage it into solutions and new markets is what we're doing right now in the growth in security sections. So a little bit different than the pure security vision but more from the -- what the component companies have been selling, they're now able to start transitioning and move into basically selling systems and solutions to partners in this space. And in these areas, there's some pretty strict requirements that these companies to have. Whether it's from simply the fact that they're looking for an entirely Western supply chain to the fact that they want a large amount of edge processing to happen on devices, they want ruggedization to happen. They want customization of these devices. So with our platform of components and software, we can now start building these customized solutions for partners in that space at a time when this industry is seeing great growth. All right. Now for the last section here, I really want to tie it back into essentially the whole message around autonomous -- or sorry, autonomous production. So Harm talked about the yesterday, today, tomorrow message in terms of the transition from sort of the semi-automated systems into these fully automated systems. So from my perspective, where TKH is going from a vision perspective is as we move forward, we're going to focus our efforts essentially on the systems and the solution aspects to help create Machine Vision solutions that enable these fully autonomous solutions to happen. So a couple of examples of this. TKH is right now active in selling 3D vision-guided robotics. So these are systems that are basically using 3D data to provide real-time feedback and control of robots, to handle variations in part size, part shape, part configuration and is addressing different applications in certain markets. Right now, most of the business is in the automotive space, but we're starting to expand out into other cases, automated palletization and depalletization for mixed case pallets. It was a great example of common technology but in a different industry or a different application. So overall, when we look at what we're doing in this space, this is really representing growth opportunities from a number of dimensions. We're growing in terms of the value chain. We're moving up to the solution level. We're growing into new markets, warehousing, logistics, distribution, where we haven't done it. But we also have huge opportunities to grow from a geographic perspective. Right now, the majority of our business in the space is in North America, and we're now starting to leverage the broader TKH Vision commercial network to expand solutions onto the other continents. The next sort of industry I want to highlight is automated welding. And you might say automated welding is not new. And that's true. There's a lot of robots that weld parts right now, but those systems essentially require for the parts to be essentially the same all the time and positioned in exactly the same spot. So that works in a number of industries. But in the rest of the spaces, there's simply no solution for this. Parts are still welded by hand or even if they are welded by a machine, they have to be manually inspected by an operator and then manually reworked when there are defects. So in a short term, what we're going to see is we're going to see a big push towards more configurable, more flexible systems to handle higher variation in the parts that weld. We have all of the key vision blocks basically to enable this from a pre-weld perspective, as well as investing in other developments to start handling weld monitoring. And then, of course, we're already doing inspection from a post-weld aspect. But also to think about this from a future growth perspective. This is also where inspection starts to meet automation. What happens when you inspect the weld and you find a defect? Ideally, you want to be able to take the same system automatically program or rework path and then have the robot perform that rework, so at the end of the day, a good part comes off the line rather than a tagged defective part. That's really the future for where we see machine vision going. So wrapping it all up, looking at our Smart Vision outlook, we again sort of see these 3 different dimensions to our growth moving forward. On the one hand, we're going to see the market grow. So a combination of automation, technology developments. Again, this is just where there's going to be this sort of underlying growth. From our consolidated positioning, we see more opportunities to develop both new products, but also just a better more combined sales approach. And then finally, from the addressable markets, as we push more and more into solutions, this will sort of provide the last portion of our growth as solutions become a more and more important part of our business. So when we put this all together, essentially for the next 3 years, we're projecting that we're going to be above the 5% to 7% bandwidth, essentially offsetting the slightly lower projection from the smart manufacturing side of things. Thank you very much for your time. We're at the break portion of the program. So please get up and I think we have some refreshments outside. Thank you, everyone. [Break]

Good afternoon, all of you. Very nice welcome from my side as well. You can see on my screen, my job within the TKH organization, Managing Director for the Offshore wind industry since 6 years already. And before that, I do have a history as CFO for 17 years. After, you have energized a little bit during lunch, let's talk about electrification which is a very, let's say, main part of the smart connectivity within the TKH Group. There's a very simple, let's say, slide on what is smart connectivity as we speak. So the turnover over the last 12 months in this situation, July '24 until June '25, compared to 2021, you see an average organic annual growth just about 3%. And what is important in this is the bottom right figure where you see that also as today, the electrification portfolio of TKH is, let's say, responsible for 69% of the overall smart connectivity. And after that, you will see that this is a huge increase compared to 2021 when you look at the market share. So the global trend in electrification is clearly visualized in this figure as well. 69% of the overall pie. And top, you see, which is, I think, familiar to you that the core market still is Europe, of course, including the Netherlands, which accounts for almost 90% of the overall business. Electrification is part of smart connectivity. The return on sales, of course, we have to push that 9.3% 2021 and 2.1% over the last 12 months for smart connectivity altogether. 69% as part of the pie, let's say, as I just mentioned, which was 46% and in 2021. So if you do a deep dive into electrification as part of the portfolio, you see that the annual average organic growth of the electrification portfolio was just about 10%, driven by, let's say, the macro trend of electrification itself. We need to be sustainable for the society and take care of the next generation, 10.2% growth over the last 4 years annually. Let's go to the video for electrification to warm up you a little bit. And after that, we dive into offshore and onshore. [Presentation]

The energy transition goes on. And so does the electrification, of course. This afternoon, we're going to touch upon, let's say, the 2 areas where TKH is active when it comes to energy transition. It is the offshore wind industry. So let's say, the power generation, mainly linked, of course, to our capabilities in Eemshaven. And we also touched briefly upon, let's say, the developments when it comes to the high-voltage market, say the transmission market, think about TSOs like TenneT. And we'll also give a little bit of a glance on the medium voltage developments, where TKH, we can say that already has a very well-established situation already over decades being by far the market leader in the Netherlands. If we talk about, let's say, the global drivers or at least the European drivers, I must say, towards the cable industry, what is the biggest growth potential electrification full stop. There may be a little bit of concern in the market over the last couple of months. But still, if you talk about top left, Europe clearly committed to 42.5% renewable energy by 2030 already. And by far, the biggest part of that comes out of offshore wind industry, it's way more than 50%. This has been confirmed in 2024 and 2025. So it's not only that these targets have been, let's say, diminished, they are still in place. This is driven by the fact that we need to electrify the organization and the society, so to say. And this means that by 2050 -- by 2050, the electricity demand will be twice as much as we have it today. And this means electrifying the industry, electrifying, let's say, the power consumption of households as well. And of course, a big driver, the net zero that we need to achieve to take care of this, let's say, global altogether. And then it's, I would say, huge amounts, if you talk about, let's say, the increasing investment that is needed, the CapEx until 2050, EUR 100 billion annually, EUR 100 billion annually to match, let's say, the challenges we have and to get that overall power grid on the -- let's say, the right level to achieve those targets. Europe only. How did TKH already prepare itself to play a major role in this electrification. A CapEx of EUR 150 million was executed over the last few years. And of course, it goes without saying that a big trunk of that is linked to the new facility in Eemshaven, which is linked to the offshore wind industry for the biggest part. But do not forget that also the factory in Lochem was completely transformed into a specialized factory capable to meet the high voltage challenges as well up to 200 KV, it's maybe a technical thing, but we are prepared for the high-voltage markets with having transformed the factory in Lochem as well. And also, in Haaksbergen, we had, let's say, quite some facilities which were linked to the telecom market. Those facilities have been transformed into production capabilities and capacity to meet the challenges in the energy world. So all 3 factories play a major role in this CapEx program. Before we start, let's say, on the offshore wind industry, I would like to share a video on, let's say, the latest developments in Eemshaven. Alexander touched upon it already. I'm also responsible for business development, but I don't have a technical background. But I can assure you there are operations directors who are in this video, our technical director who are daily taking care of improving that process day by day by day by day, and the progress is huge over the last couple of weeks, months. Can we start the video? [Presentation]

Well, they are not here in the audience, but thank you to Will Ho and Ijmo, I would say, the technical heart of the factory in Eemshaven. And every time I'm there, so Jeroen touching his heart when he was talking about VMI. This is really touching my heart, working on sustainability with such a marvelous factory. And I've seen a lot of factories all of Europe, but not such as this one. When we come to talk about offshore energy, so let's say, the first block. We are active, what you see in the graph over here at the left side. So the cable we are producing is connecting all the individual world, let's say, turbines and in the end, transporting the energy to the offshore substation. And then you go into the export part, which is the red truck in this picture, that is not our cup of tea. That's the business of Prysmian, NKT and Nexans, a very competitive market, whereas the array cable market is really, really a niche market, also looking at the volume it takes from an overall investment in an offshore wind farm, come to that a little bit later on. So we are active in the yellow part on the left side. And being active means not only cable, by the way, a lot of accessories and promoting ourselves more and more as a solution provider also responsible for termination and testing of this cable on the turbines itself. Now looking at, let's say, offshore wind. I'm not going to mention all the individual bullets. You see, of course, in your handout. But what is clear, which is a bit contrary to maybe what is the sentiment in the market, but the demand in array cable because that is how we calculated this 2030, I do have the graph hindsight, 2030 compared to 2040 -- 2024, sorry, will double 6x. So by 2030, the demand in the offshore wind industry is 6 months -- 6x as big as it was 6 years ago, visualized by clear tenders, which are known in the market already, and if you then make an analyze on what is, let's say, the target per individual country, you also have the European uplift, which we will see in a picture later on. What are the biggest customer challenges? The biggest customer challenge is that the demand and the supply, the supply capacity does not meet, let's say, the overall demand that is necessary. You see it in the graph as well. And that comes along with the fact that some players have decided to go into, let's say, huge export, let's say, transitions. So the overall capacity, which is available for the array cable market is becoming lighter and lighter, yes? So that's a challenge of, let's say, the industry and very, very harsh targets on sustainability, which we meet with our design. If you talk about the market position from TKH in the offshore wind industry, it's clear that we do have already a very fast market share. This is the 30%, which was applicable over the last 4 years. But if you look at our hit rate over the last year, it was 80%, talking about Europe, to be clear. So all the tenders we participated in, we had a very, very high hit rate in Europe. What is distinguishing us talking about the market position, let's say, from our competitors? And now we really come to talk about the unique, let's say, point from TKH that is the design of our cable, which meets the sustainability challenges, but which also meets, let's say, the challenges which there are from a mechanical and electrical point of view. There is no such design in the market available like ours. And that brings us, let's say, also to the clear remark that some of you may think that winning such a framework from Vattenfall, a very reliable partner from us in Europe that we win those tenders only based on price or on whatever, no. The framework agreement with Vattenfall was granted mostly because of the sustainability performance of our cable and the enormous technical, let's say, capabilities as well. This is what is key in this market. It's just like Jeroen mentioned on VMI, it's really a technology-driven market as well. And this is this typical unique design. I'm not going to touch upon all of it, but this one, this is the cable that we do produce. Ijmo mentioned it briefly in his presentation. This is a completely dry design. So we have no water ingress at all in the cable. And looking at the construction of the cable, it is absolutely compact and robust which meets the harsh challenges under which conditions this cable needs to be installed in the seabed. If you talk about legislation, in the current project offshore wind in Europe, you need to give, let's say, a design lifetime declaration of 35 years at least, which is, of course, good for the net present value of such a wind farm and good for the investors as well. This is what we can approve, whereas other, let's say cable designs from competitors. Currently, really, really do have hard challenges to meet those 35 years design lifetime, well, let's say, wishes from our employees and the investors. Talking about, I just touched upon it already briefly, the market demand versus the supply which is available. This is a graph which was presented also last year. These are all known projects excluding China, worldwide, this one is worldwide, where you can see the volume of array cable which is needed to get the offshore wind farms being planned to be produced in those years, there is a mismatch. You see the dotted line. The dotted line is expressing the current and the expected capability and capacity of array cable production. And looking at, let's say, especially the graphs from '27 up till 2030, yes, you see that this does not fit. And that means that could not lead to a delay in our turnover, but lead to a delay in reaching the targets of 42.5% renewable power in Europe by 2030. The dark blue one is the Europe uplift. So those are projects which are not yet really developed and also not known into databases like 4C Offshore, but these are linked to the challenges per country in Europe, and that is how you can, let's say, make this calculation. I want to touch upon, let's say, the first bullet right. The rest you can read, of course, we need the industry. We need to take off of the energy of the industry because we can produce a lot of energy, but if the takeoff is not there, we don't have a feasible business case. But we also need the politicians. And you see there that contracts for differences being implemented in all over Europe. It started in the U.K. contracts for differences and it's now on the table of the politicians in Sweden, Denmark, Germany and the Netherlands as well, which you recently have heard from, let's say, the still current Minister of Energy and Green growth. This means that there is, let's say, a lot of comfort for the investors and the employers because contract for difference means that you will never reach a level of energy prices, which goes below a certain extent. So you can really calculate the business case on a secured price for the energy, but it also means that the uplift is, let's say, fenced off as well. But you can imagine that not being, let's say, dependent on the variable prices in the energy world, and all of you have read maybe that sometimes energy prices are even negative, that's out. So if we reach and if the politicians help us to get this in, I'm sure this will leave a lot of confidence for investors and employees to support the business. Now what you see over here, this is Europe. By the way, just to mention, including the U.K. So this is Europe. This is also the picture which was presented last year, but now we extended it a little bit. You see the lime green in this one, that is the current number and volume of wind farms known already with, let's say, employees like Vattenfall like RWE, Total, you can mention Iberdrola want to invest over the next few years. It's a lime green one. You see the gray one, that's the same figure last year. And I'm not going to mention them all, let's say, 6. But you see clearly there is a shift, and that is, let's say, known by you, I guess, some projects have been shifted to the right. So they were originally planned for '26, but now they have been planned for 2027. And even just to only mention one, we have that framework agreement Vattenfall, the [indiscernible] project, 2 gigawatt huge. 1 gigawatt will be invested next year, so that's going to be produced by us, and the other 1 gigawatt will be transformed to 2030. No problem for us looking at, let's say, the rest of the order book that we have. But the second, let's say, trunk of the 1 gigawatt is now in 2030. So what I expect is if you look at, let's say, those graphs from '27, '28, it could be that maybe something shifts from '27 to '28, '28 to '29. So it will be leveraged more. But still, the demand will increase up to volumes. You see that at the top left here -- top right, sorry, 19,000 kilometers already now known in the tenders in Europe excluding further potential, the EU uplift, which I mentioned in my previous graph of almost 6,000 kilometers that's not implemented in this one to be a little bit conservative. So far, let's say, talking about the offshore wind industry and mainly the array cable markets where we are in, but TKH has a long established position in the onshore energy as well as all of you know. And today, we will touch upon, let's say, the high-voltage cables and the medium voltage cables. And just to give a little bit of glance already in the medium-voltage cables, I mentioned it already. There is a very long established position in the market in the Netherlands since decades. But the high-voltage markets, we will see that later on if we are really keen there and look at the niche markets. So not at the big volumes, but there's a lot of price competition. But really at the niche markets, this could be a nice growth potential for the electrification portfolio of TKH as well. Talking about medium voltage, just to cut it short, if you see the first bullet talking about market growth, this all has to do with the fact, and you read the newspapers as well, there is a huge congestion in the Dutch, let's say energy, let's say, infrastructure. We cannot get, let's say, the industry connected to the grid. I have a slide on that as well. So only in the Netherlands, if we want to meet those challenges, a CapEx of EUR 195 million is needed to give our industry the opportunity to really electrify and get rid of fossil fuel, EUR 195 billion. Now what are the challenges of, let's say, the customers? It is that we need to speed up the installation capacity as well for those who are responsible for digging that cable installing that cable. That is one of the biggest, let's say, challenges we have. And we have the ongoing discussion, of course, on nitrogen and all the licenses, which, therefore, cannot be granted to get, let's say, yes, such a project started and digged. Talking about the market position, I already mentioned that you see it also in the header very, let's say, strong proven fundament in this business area already for decades. And we want to, let's say, pay off that in the next, let's say, 10 years. Looking at the huge amount of CapEx to be invested. If you go to the next slide, I touched upon it briefly. You see on the bottom of the sheet currently, as we speak, more than 10,000 Dutch businesses are waiting to get connected to the grid or to get more capacity from the grid. That means they are being limited in their investment programs, in their growth programs. But it's also, let's say, a fact that due to this the electrification is under pressure. So the pressure on, let's say, companies like Alliander and Enexis is huge to get this done. And there is one thing I would like to mention on the left part, which is talking about the Netherlands, Alexander mentioned it already, there is a huge demand. Over the last, let's say, 1, 2, maybe 3 years, we have seen that all those companies, the DSO, so to say, increase their stock levels. So there was a huge demand, but it was already backed up by huge stock levels of these companies, that's done. So the demand they have right now, talking about EUR 195 million to be invested will bring us to the fact that, let's say, we really need to start producing to, let's say, catch up with those demands. Stocking and unstocking, that's done. Now what you see at the right is, in the past, let's say, the medium voltage market was mainly linked to the Netherlands. You can say almost completely linked to the Netherlands. But abroad, you can see it here in the U.K., in Germany, Scandinavia, partly they have the same challenge. They have exactly the same challenge, and there is net congestion as well. And having Vattenfall on board is one of our esteemed customers on the offshore wind industry. Vattenfall was also responsible for the high-voltage network in Sweden for 40% and has a huge demand in medium voltage as well. And it goes without saying that we are talking to those as well. We have been invited to see whether we can help them as well. So slightly medium voltage, we will try to get, let's say, a position very, very niche and not, let's say, all over Europe, that's not a possibility, but to get it being to an international market as well. When we come to talk about high voltage, think about TenneT, the figures even become more dazzling, I would say. If you look at the high-voltage market, and the expected, let's say, CapEx to be invested until 2030 in Europe, it sums up to EUR 500 billion. That is not the overall addressable market of TKH, of course, but it again underlines the huge amount of money which is the need -- yes, is addressed to this market. Looking at the customer challenges, more or less the same as we have in the medium voltage, lack of installation capacity as we speak. So that's -- and also here the political, let's say, stability is necessary. But you must say that also here, challenges are there, but the market itself will keep on, let's say, increasing to those kind of levels. A little bit different from our position in the medium voltage, where we have Dutch -- a clear Dutch footprint. We here will aim for a much more European footprint. And what you see over here that the big players in the high-voltage markets, competitors of ours are focusing on the huge projects, the longer distances and really high-voltage cables, the extra high voltage mentioned in this presentation. But there is a secondary market, which is not that big, but where there is much less, let's say, pricing pressure and there is a need for a total solution up to 200, 222 kV and that is being developed by TKH over the last couple of years. I mentioned this one already. There's a clear position, let's say, in the Netherlands. We will remain that position, reinforce it even. But we want to focus, let's say, a bit more on the international market as well for the medium voltage but also for the high-voltage markets. That gives us a geographical spread as well. And I would say this is really a big fundamental to, well, accelerate the turnover in the electrification portfolio. My last slide, if you look at, let's say, innovations, it is a technology-driven market. You see 5 blocks, not touch upon all, but this is covering as well the higher voltage developments. It is covering the medium voltage and you say, well, medium voltage well, it's a well-established market, traditional product. But here, we are aiming for smart installation processes as well, pre-connectorized so we can do a much more efficient installation in that respect as well. On the right side, the 132 kV and the floating wind, those are completely linked to the offshore world. Currently, we are in the world of 66 kV that will increase to 132 kV because of the bigger turbines. And the next stage, still a lot of challenges to overcome will be floating wind. So not a bottom fixed, let's say, turbine industry, but really a floating rigged moored by systems onto the seabed. But there it is, well, a matter of harbor capacity, mooring systems, floating systems to be developed and a sustainable part in the middle that's, of course, applicable for the full picture when it comes to electrification, not to be underestimated. If you then look at, let's say, where we were in the last 12 months in terms of turnover in the electrification portfolio, and you look at, let's say, the expectations in the market when it comes to offshore wind high voltage, medium voltage, an annual average organic growth of 7% to 9% can be expected. This was the last slide of my presentation. Thank you very much.

Thank you, Walter. Good afternoon, everyone. I see already some smiling faces, looking forward to this section and some of the analysts at least. I have to apologize from the beginning because I don't have any film. I don't know that's maybe a disclaimer to this, but I don't think it changes the message. If you look at, and let me just go to the first sheet. If you look at our last Capital Markets Day and some of the targets which we highlighted at those days towards '25, basically, when I look at the revenue level, you can see here how the growth of revenue was forecasted to be with a basket of EUR 100 million to EUR 150 million revenue to be acquired, a basket for divestments, EUR 150 million to EUR 250 million. And then, of course, a big chunk of organic growth. We didn't succeed in the entire match of these 3 baskets. The divestments, yes, we basically got well into the middle of the basket. [ David Trone ] is not yet in here, but that has already been communicated. So that has been executed well. Some of the acquisitions which we plan to do, we have not done. We have shifted some of the required funds into the strategic investment program, which we have been running for the last few years. But we didn't see the full benefit coming through when we talk about the organic growth, not from this strategic investment program, at least not in the time, which we estimated it to be but also not fully from the innovations which we have carried in the last few years, and I'll come back to that a little later. What went very well, I think, is the further traction on the, what we call the added value, the gross margin. On the back of the change of the portfolio, we have been able to increase our added value to over 50% for the entire group. Of course, there is a split between the added value in automation and the added value you can see in electrification, also that I'll come back with. The next chapter going forward now is, of course, capitalized and execute. The foremost and first, I would like to address the ESG agenda and sustainability, a key topic within the organization, not just because this is a kind of markets issue, but also we want to take our role in the society and getting a right portfolio into the marketplace. We find it very important that at least 70% of our revenue streams are coming from portfolio, which hits the strategic development goals of the United Nations. And for the last couple of years, we have been reaching this target. Obviously, with all our efforts in the renewable energy markets, clearly, this has a clear fit to this particular target. In the meantime, we have also upgraded some of the KPIs on which we report, and I refer basically to our annual report. There's a huge section about sustainability with all kinds of KPIs and targets and our actions related to this. But also here, there are some items mentioned specifically, like we now have also committed ourselves to a net zero carbon by 2050. It's a new element and some other KPIs have improved as well. Essential for us and a lot of innovations and developments, technological improvements are linked to the topic of sustainability. But then diving further into the 2 segments, automation. I think by now, you have becoming familiar with this terminology. When we talk about the capitalize part, the element of how we go from here, on the automation part, you have seen already quite a few sheets referring with the growth opportunities, which are ahead of us. But if you look at this chart, your first impression might be that the best is behind us because the growth rate going forward is lower than what we have. That's not the case. It's probably more the time of 2028, where we look at which gets us to this particular parameter. If you look at the automation part, basically 2 segments: Vision and the automated machinery, mostly the tire building machines, of course, 2 different CAGRs, 2 different growth rates as you have been explained by the speakers earlier this afternoon. Vision above the bandwidth and the automated machinery below. But that's especially the second part is a temporary issue. We have seen and we have been discussing already the activities for 2025. We have seen already a delta, a negative delta compared to a peak year '24 for the tire building activities. And that effect is also to be seen into the next couple of quarters. So if you look at the 3-year horizon towards '28, we definitely have in the initial period of that, still some headwind in our CAGR rate. But of course, towards the second part of this 3-year period, it's going to improve, and it will be back to the prior levels. I think what we have seen in the last 25 years with a CAGR of just over 10% going forward. I don't think the industry has changed. The dynamics which have been explained confirm our position with a further growth in the addressable market up to EUR 1 billion for outsourced opportunities. So from that point of view, towards the 2030 horizon, I think we are back to a substantially higher CAGR for that particular segment. On the other side, vision is already at the level, as Mark explained, above the CAGR mentioned here. So from that point of view, I think we -- when we talk about midterm or a little bit longer term, there's quite some difference if you look at the opportunities here. And we have the portfolio for that, that might also be obvious. With the innovations of the last couple of years, we have a perfect fit to the market trends which we see and which have been explained so far. This leads also then to a return on sales, so the EBITA on revenue, which looks to be a little bit shy if you compare with the last couple of years. We are in the basket of 17% to 19%, but that's on the back of the development, as I just said, with the split between the 2 different segments. We see, in general, a higher gross margin within the vision systems, than within the tire business. But still, with all the dynamics attached to the top line growth, we see a kind of stability on the return on sales for the next to 3 years. There is, of course, and you can see that on the right side, but I'm trying to repeat some of the prior speakers, quite a lot of elements in here, which have positive effects on further improvement. And again, here, I think if you look longer term, definitely, the upside is here to be above the [ 20% ] level, but that's beyond the time zone as we communicated here. On the electrification part, and here, we are talking -- and you can see from the revenue figures about -- and I'll get to that in more detail when we talk about electrification, the segment that we have excluded from this chart, they all ready to be divested elements like the digitalization part. So we're talking here more what we in the past and it's not exactly one-on-one, but more the energy-related market. And then, of course, the growth rate is still substantial. Also in the last couple of years, the growth rate has been fairly high with a 10% growth on average. Also on the back of the investments which we have done, which, of course, have generated further growth, but not to the extent that we are fully capable to do and that is then for the further period. But it's more than 7% CAGR on top line, I think is here important to mention as well. This chart looks maybe a little strange. But of course, we had quite a lot of discussions with quite a few of you. If you look at the return on sales for this scope, it has been quite reasonable double digits for quite a number of years. But of course, as I mentioned earlier, the strategic investment program has kicked in. We had to deal with on one side, start-up and ramp-up effects. And at the same time, we see that there is -- as you have been shown in the video. Good progress in getting back on its feet. And from that point of view, the delta going forward is substantial. So we predict here that this return on sales level for this segment is in the range of the 12% to 15%. Essential here is the capacity utilization. You might recall that in the first half of this year, we meet the specification of our clients, which we can produce. So the technical capabilities are all there, but it had quite some effect on the resources we had to use in order to get that executed. And that, of course, put pressure on the return on sales despite the fact that the segment has been growing quite nicely. Other elements on the execution side, more general for TKH. You have a few baskets here. Of course, the first one, Alexander addressed already the separation of electrification. I'll concentrate a little bit more on the second, third and the fourth one. If you look at our divestments, we have done in the last about 5 to close 6 years, roughly EUR 450 million of revenue, which has been divested. And you can see that here, there is on the top part of the sheet. And most of the activities were in the previous connectivity segment. More commoditized portfolio, commodity where -- portfolio where we didn't have a lot of competitive advantage in terms of technology, and also the growth opportunities, creating value going forward, we're simply not there. And in the more recent period, as you can see in the last 2 years, also some entities within the manufacturing segment have been added in the divestments. The acquisitions on the other side, relatively small and mostly, basically all of them in the Vision segment. And we plan, of course, the divestments to go further up to the level of about EUR 250 million. I will explain you a little bit later where they are located. The next element is, of course, the focus on cash generation, essential. Alexander also highlighted this, if I focus on cash, free cash flow, et cetera. What you can see here on this chart is, first of all, we have completed the strategic investment program. And we are not planning and initiating any further programs of this magnitude. So from that point of view, the CapEx levels are going to be normalized. And I would rather say one step further, CapEx is going to be reduced. So what you see here is 2 baskets on one side. On the left, we have the CapEx related to R&D. Roughly 90% of R&D CapEx is within automation. And on the right side, you see the books related to the plant property and equipment CapEx. And there, roughly 90% is in electrification. So you see 2 complete different CapEx, let's say, groups here, each having their own dynamics. And if you look at our target here on the R&D side, we roughly spent annually in the last 2, 3 years, close to EUR 80 million in expense on R&D. Roughly half of that is capitalized. And if you look at our ratio of the capitalized R&D compared with the amortization, which of R&D, which you find back in our P&L, we want to close the gap. So in other words, put it simple. The line here, which says 1.4 has to go to 1, and it roughly works out that in the next 3 years, the CapEx on R&D through the efficiency programs and all the other things are going to be reduced by close to 30%. That is not meaning that our innovative power is reduced. I think we are on the back of some of the initiatives presented by Mark and the vision group, we can be much more efficient with our R&D. And at the same time, looking back at the prior periods, in some cases, we have had too many investments in R&D or innovations at the same time, and they did not always materialize to the effects which we intended. So the hurdle rate for CapEx spending is going to go up in order to have a better, let's say, benefit coming out of the expense we have. So when you talk about allocation issues, one is we're in the baskets. There are some change, but also at the basket as a whole. And the same applies a little bit on the right side with the plant property and equipment. There also, we want to bring the overall CapEx in line with depreciation level. And that also means that there the 1.2 ratio has to go down to about 1. So overall CapEx, when you talk about towards the '28 range is going to be below 100%, that's for sure. And if you want to talk about the split where CapEx is deployed, roughly, I would say, 60% is within automation, driven by the IP R&D related elements and the remainder is within the electrification part. Then if you look at the other elements in relation to cash flow is, of course, the working capital. Working capital for the entire group is too high. We have always had a target of 12% to 15%, and we are not changing the target. The target is realistic, I think, for the entire group. But here also, we need to look at the 2 different segments. On the left, when you look at the working capital for automation, in '24, we used as a reference point here. We were at the range of about 12%. That is a good level, I think. If you look at the way how this works and why we are able to get to the 12%, despite the fact that in the 2 prior years, we had a substantially higher working capital in this particular segment. It had a lot to do with the supply chain issues, electronic components were hardly available. So our vision systems were greatly affected by not having availability in the supply chain that led to further stocking. And as a result, we carried quite some inventory into '23 and then in the beginning of '24. That is gradually disappearing. And on the other part, within this segment, of course, we have the business model of our tire building machines, where we have progress payments, advanced payments and all these kind of things, and that helps the working capital structure. The model on the electrification. Also there, of course, with especially the subsea projects also works with advanced payments and progress payments and all these kind of things. But there, we have not come to the full functioning of the model that you can see here as well, but also not to be neglected here is, of course, the impact of digitalization especially the fiber optic business. We have had quite some issues in the market there, a structural overcapacity. We have been trying to deal with it with reducing our cost of the footprint which we had, which, in the end, led to establishing a new factory in Poland a few years ago, bringing capacity out of China to that facility. And also in the first half of this year, closing the activities from the Netherlands and bringing everything to that location as well. Of course, if you are transitioning equipment, et cetera, to new locations, you need to build up stock in order to have a service rate to your customers. And that's all part of here. So the stock levels, working capital and digitalization has pushed up in the last 2, 3 years, also the working capital in electrification. These things should be normalized, of course, when the divestments of the noncore assets is going to take place. The last element of this whole cash flow element is related, of course, to the capital allocation. Also here, we highlighted already the 4 buckets, if I want to call it and the kind of order which we try to bring in here. First of all, we want to make sure that our CapEx is something we have available in order to deploy. But within the conditions I just highlighted. So at a lower level than that we had in the past, no major substantial material programs. So from that point of view, this basket is already reduced compared to the last couple of years. The build and buy, of course, we want to strengthen our position in automation organically, but also inorganically, bolt-on acquisitions, nothing in the sense of huge transformational M&A, but definitely also here, we want to use the opportunity in the market and our technologies, which we have by strengthening them to the bolt-on acquisitions. Already mentioned by Alexander, the dividend policy payout, which we have currently of 40% to 70% assisted by a kind of ambition, if you want to call it, it's mentioned here as an aim, to be at a 3% yield. And then, of course, remaining is then in the end, of course, the share buyback with a foot note there and an important one that we want to keep our leverage below 2. But by the fact that if you look at our divestment program as well as the separation of electrification, we will run through these baskets. And as I mentioned, CapEx programs are going to be lower in size. The acquisitions are going to be more of the bolt-on character. And then, of course, with the definition on how the dividend will be distributed, you can assume that some important part will also end up in the last bucket. I'm not going to give more detail at this point in time. There's still a lot of work ahead of us to get to these proceeds, but this is the kind of mechanism we would like to apply. Then the last target, which we also have been guiding on already for many years is the return on capital employed. You also see here the 2 different dynamics. And of course, ultimately, when the remaining part is the automation segment, then here, the return on capital employed is between the 25% and 30%. The capital employed, which is in the chart, has been gradually increased, and that's on the back of also some smaller acquisitions, but also a little bit on the capitalization of some of the R&D. But also there, I repeat myself, we are much more strict going forward. On the electrification part, the capital employed, of course, has to do with the strategic investment program, where much more capital has been deployed. There, on the back of a still difficult performance in the last 12 months, you can see that the return on capital employed is not looking good at all. But also if you match the outlook which we have, the return on sales coming back in the time frame highlighted, also here, the return on capital employed can go towards the 20% range, more or less. I'll try to help you a little bit with getting your models organized on how everything now fits in one basket to the other. In this chart, on the left side, what we call the old system, you see the 3 segments, Smart Vision, Smart Manufacturing and Smart Connectivity. That has been our reporting so far. And mind you, by the way, in 2018, '19, we had 7 vertical markets. We went to 3. We're going to 2 with ultimately 1 remaining. So when you talk about simplification, I think this is a clear path on which we are. But I understand that it's difficult to follow this. But here, we want to make sure that you get this right. So from the old segmentation to the new one, basically, Smart Vision and Smart Manufacturing end up in automation. And there, we have 3 segments: vision, automated machinery. Basically, it's the tire machines as the largest part of it. And then we have the category Other. The ball with the percentage is the share of total revenue in TKH based on the revenue of the first half '25. And the last column on the right, what we call future, says basically what will happen with the respective segments. So within automation, ultimately, vision and automated machinery will be the remaining entity as being what we call automation. The segment Other is categorized as noncore, and that is part of the divestment program. Same applies for -- within electrification, digitalization already at the beginning of the year, earmarked as to be divested being noncore. And we have some additional noncore within that segment, which also falls in this basket. So the noncore titles amount to the EUR 250 million, which we earmarked earlier as to be divested. And then, of course, the electrification part is the one which will be within the separation agenda. I see a lot of people writing now, but also, and just to show it, not to go into detail with this, we will keep you, of course, informed about the underlying dynamics so that you can follow in your models what comes from where and you can keep abreast of the various subsegments on how they are doing in terms of their revenue and the organic growth related to that. This is more for background information, but we'll make sure that you have the right information to make your analysis. And this is just as a kind of overview on how this would look like if you look at '24 and the first half of this year. My last sheet has to do with the summarized targets. And I think we have been repeating them now a few times. So I think you know them by heart, at least I hope. With automation, of course, having then the 5% to 7% organic growth target up to -- as a CAGR for '28, the EBITDA margin of 17% to 19% and the return on capital employed of 25% to 30%. On the electrification, 7% CAGR on top line, 12% to 15% EBITA and the return on capital employed 19% to -- by 18% to 23%. What we have not included here for your model is the, what we call unallocated or the overhead/head office cost. I've seen that some of you have been allocating them fully to one of the baskets. We have not yet given specific guidance on what the -- that basket will be. But of course, that should be lower than what we currently have. That's what all I can say at this point in time. So if you summarize all this, I think looking back '21 to '25, quite some steps have been taken there. Of course, not everything what has happened in the last 3 years, especially in the outside world, we were able to predict, but there are also elements from our own side, where we have to learn in the sense that we are changing some of our policies, especially on the innovation part, being a little bit more strict and getting the time to market better so that we have a quicker and better return on the investments which we did. But at the same time, I think we are at a major milestone right now where we have made a clear choice on what is the dot on the horizon for TKH and we will embark on this path, especially on the separation in the next 12 to 18 months. Of course, we keep you communicated and up-to-date on what the different progress elements are from that point of view. That concludes my part. We take a 5-minute break, and then we'll be back for Q&A. Thank you very much. [Break]

Okay. Yes, I hope you enjoyed the presentations and learned a lot because, therefore, we spent a lot of time in preparing everything. And I hope also you got a good impression of my colleagues in the MD positions in the group that they are quite strong and have their shoulders under the business and know what they are talking about and also know how to develop the business in an entrepreneurial spirit.

It's now time for Q&A, not only Qs, but also As. Who can I give the first question?

I'll wait until it's operating. Yes. Martijn den Drijver, ABN AMRO, ODDO indeed. Three questions, if I may, and I'll take them one by one. You mentioned, Alexander, that there were options for electrification. What type of options are you considering an IPO, a full sale, partial sale? Can you elaborate?

I already mentioned them.

Which one has your preference at this point in time?

I had an interview with the local newspaper in the eastern of the Netherlands, and I said I cannot express a preferred option because every option besides my preferred option is then, let's say, not regarded as a serious option. And I believe we really need to look at the best options for all stakeholders. But my colleagues can perhaps disclose their preferred option.

When we talk about capital allocation framework, will that also apply in that order, I mean, for the proceeds of electrification down the line? So first, organic growth, organic CapEx and then...

I mentioned that already that basically that follows the same kind of pattern. But of course, as I mentioned earlier, some of the buckets are smaller in size than what we have had so far.

Okay. Because I do remember that from previous discussions, you were also thinking about reinvesting in production automation, a slightly larger acquisition, that seems to be more on the back burner now, as you said yourself, no large acquisitions. Okay. Just wanted to confirm that. And then on the -- a question for Mark. On the integration within Vision and all the brands coming back to 2. Can you elaborate a little bit on the time frame of when that consolidation and efficiency will be realized? And if possible, perhaps also something about the savings that you're hoping to extract. So a bit of guidance on that part?

Sure. Yes. So it's not nothing and then it all happens. It's already underway. So over the past couple of years, we've already seen a lot of consolidation happening within many of the companies that you've seen there. So Nerian has been merged into LMI. We've seen that Allied Vision, SVS-Vistek have come together. We've recently also changed NET over to be -- to join that group. And now we're moving on to the next stage where we're starting to address Euresys and the others. Time frame is roughly the next 12 months to sort of complete those actions. But it's in the process of being worked through one step at a time. So yes, we're -- I'd say we're over halfway through roughly in terms of the actions being taken, and we're planning out the remaining actions. So that was the first part of your question, sorry, the second was?

Perhaps an indication as to the efficiency gains, but particularly the cost savings or the tailwind for EBITA margin from that action.

You probably know that better than I do.

I think it has a few effects. One is, of course, some direct OpEx saving. But more important, I would say, is the further efficiency, which is being generated by having, for example, some of the R&D further integrated. So road map alignment and all these kind of things. So the output with less input, that's where the benefit is. And I think also on the commercial side, by having a global footprint better coordinated in terms of sales offices and commercial staff, the benefit will much more come from the top line than through the cost savings.

And just a follow-up on that statement that capitalization will match amortization. You said it won't interfere with our innovation capacity. Mark, again, for you. If most of those capitalized development costs, which will come down a little bit, are dedicated for -- to your business, what more can we expect? What are you working on in terms of new products? Because you've explained already that you have a key new product out, you have the platform. What's the next phase for you?

Yes, it's really putting the pieces together to create those solutions now. So I mean, as a technology company, you need to be continually investing and moving your products forward. That's going to create a base of just simply ongoing developments. But again, I think this is really where we've been very inefficient in the past. So when we look at what we've done in the way that we used to develop products, we're now able to do that much more efficiently. Even from the perspective of looking at, for example, Allied Vision and LMI. We used to have entirely different product divisions. We would build -- LMI would build their own camera boards, Allied Vision would build their own camera boards. The latest generation LMI sensors are using Allied vision cameras inside of them. So we can remove that portion of the portfolio and basically not duplicate unnecessary efforts even across the 2D, 3D boundary that we've previously sort of established in terms of the management of the business. So it really now allows us to go after those solutions for the different markets to work with customers, to customize and again, really focus on adding value at the system and solution levels.

Okay. Got it. And then my final question, it's perhaps not even a question, but a suggestion, if I may. You actually outlined the new structure. Unfortunately, some of the elements that will remain within the reporting lines because not everything will be excluded from the guidance. And your guidance already excludes certain elements, the other/noncore parts. But while you're reporting those will remain in within the reported results. So my suggestion would be automation, no split between the 2 because it's now one business. Other noncore holding consolidated. Otherwise, if you keep those other noncore businesses within automation, we have no way of tracking the performance of electrification and automation. That would be my question/suggestion.

David Kerstens from Jefferies. I was wondering, can you elaborate maybe about the decision to divest electrification, the rationale for it? I understand it's only 40% of your turnover, lower return on invested capital, more asset intense, lower valuation multiples in the market. But having said that, it has the highest growth profile and the strongest potential for margin recovery. And I think you also mentioned that you don't have to wait until 2028. You mentioned maybe 2026, 6 to 18 months. How quick will you get to those targeted levels already by 2026?

Quite quick. So we will see already a big step forward in Q4 so that the gap held between the quarters in '26 is already much smaller than it is compared to the first half few quarters. So that has also led to the fact that we should not postpone it too long. And you might get a higher multiple in '26 or '27 and a lower multiple in '28 because the profitability is higher. So I believe we have very good visibility that I believe we can come to a transaction in the coming 12 to 18 months already and get a very reasonable valuation and accelerate then also the investment, the reinvestment into the core business of automation. If you have to postpone that by another 2 or 3 years, you might also miss opportunities. And yes, the heart is really in automation. You could perhaps not believe I look more at the cable guys since the last few years. But I created the automation business. And I believe it deserves really this priority. And I believe we are not putting a discount on the value in the end for electrification. And yes, it has also a very good stand-alone perspective. So there are more options. The option of an IPO is really there. We have consulted already 12 months ago with an investment banker, and they said, yes, that is a good option also. And so we have not a preference, and I'm not going to disclose now a preference. But yes, that has to do with the timing. And anyhow, it does not bring synergy to have these activities together. And we all know that. We knew that longer ago. It was a big opportunity to do this strategic investment. If we get -- look at the valuation we think we have, it is a fantastic multiple we get on the investment. And yes, at that point of time, when we did this investment, we didn't dare to go into the acquisition mode of the automation business because the multiples were so high and then EUR 150 million investing, yes, was not a smart idea, we believed. And then if you look at what happened at TKH, yes, and we can turn back the situation, it might have looked different, but we can't turn it back and we take the best out of it now in respect of this multiple that we can achieve on the investment that we created. And then the return is far above 25% per year.

So Ruben from Kepler Cheuvreux. I just had one on electrification to start with. Just thinking about the fact that you -- I was thinking about how do you -- how are you willing to look forward with this asset, right? Because you've obviously had CapEx fully completed. It doesn't sound like you're going to be adding more capacity at this point. Also on the OpEx side, it doesn't sound like you will be having more incremental costs. So from a customer point of view, you obviously had very high commercial successes, 80% tender wins, 30% market share. Is there sort of a risk that the order intake might dry up at this point? If you look at future customers, they maybe see an owner that is in transit. So yes, just curious around your commercial strategy at this point for electrification.

Yes. We believe that we can handle this in the right way. And the desire to work with us is extreme because of the unique position that we have. So I believe the risk of, let's say, kind of pause with customers is relatively low because of the unique position that we have. And I believe also such a process should not take too long because then the uncertainty might get bigger and bigger. So that's why we pointed to 12 to 18 months, and that will be the focus.

Okay. Okay. And I think just to have some figures right. So I think in the past, you talked about 1,200 kilometers of total capacity. I think the -- one of the operational directors in the video talked about 60 kilometers a month, so annualized 720. Was that -- like the full scope was referenced?

No, it is referenced against the order book that we have created and will create further. So for '26, we are looking at around 600 kilometer to be able to utilize. And yes, that will move up then gradually to even, I believe that the -- when we look to '28, '29, we are getting close to 1,000, 1,200 kilometer even. But we always said the business case is based on 600 kilometer. We have a sound margin at 600 kilometer. And that is the first priority, and that is what you see back in the guidance of the return on sales and return on capital employed. If we can go beyond, then of course, these figures look much better than that they are presented at this moment.

Okay. And then I just had one for Mark actually on Vision. I think you provided lots of detail here and particularly the Slide 7, I think, with the addressable markets was very interesting. Obviously, you play in all of these or at least 5 to 10 and so on. Also in terms of the verticals, it sounds like you're all over the place in the sense that the other bucket is still 40%. So I was thinking like what could be sort of the merits thinking at it like, okay, would it be possible to hyper specialize going to one specific vertical that is very high growth. For instance, Security Vision, you have 9% CAGR, which is higher than the machine vision one. Like how do you think about, yes, maybe more specializing in certain areas of the machine vision market? And also, how do you think about actual software development in terms of doing it internally or acquiring it?

Yes. I think the first portion to recognize with machine vision is that a lot of the products are very horizontal in nature. We can build one product, and we can sell it into food scanning, into lumber production, into automotive. And the same applies across these technologies. So when we provide that segmentation, we're not developing necessarily a product for a segment, but rather a product that serves multiple segments. The last challenge, of course, with this is with the distribution channel. Sometimes we don't have good visibility on actually where the end users are. So a large portion of that other probably does allocate back to some of the other verticals. We just don't necessarily have good visibility on the reporting for that. So from a focus perspective, this is what we're trying to do in terms of as we approach that -- really that solution layer, this is where we're looking at high-growth applications where we see a substantial demand, and we really want to focus our resources on productizing specific solutions for those markets. And as much as possible, we try to leverage the previous technology that we've got in the portfolio to make that as simple. And maybe a good example of that is when we look at something like pre-weld where you're analyzing parts and trying to work out how much material to add in the volumes and the path, we actually can leverage a lot of the work that we've done in consumer electronics for adaptive glue dispense, where you're analyzing glues between parts and then you're programming robots to move down paths, dispense liquid adhesives. They're very similar applications when it comes to the technology stack, but they're in totally separate markets with different approaches and wouldn't be immediately obvious to the outside world, the technology overlap that exists with them. So we're -- it's complex, right? It's a combination of horizontal-based products, taking your building blocks, looking at the key opportunities and then prioritizing your resources towards them.

All right. And you see lots of capabilities internally to be developing.

Oh, absolutely.

Yes. Because I think in the last 2 years, I think you showed this chart as well, like the last additions you did within software, vision software.

Correct. So that was in the vision-guided robotics, right? So we're bolting on key technologies where we need them or to give us a boost into certain markets and certain applications. But we've really reached a point where we have a very, very strong technology base across all of the different product segments that we can leverage now to really try to dominate the market.

Maarten Verbeek of The Idea. I'd like to get back to the capital allocation. If you now look what's going to happen in a couple of months or years, you have completed your strategic investment program that has harmed your free cash flow lately, but that will turn around. You mentioned yourself your capital expenditure will go even below what was normal. You expect a recovery of the profitability. Even working capital doesn't require any cash proceeds because it's too high, even money will flow from that part to your bank account. On top of that, you will have several divestments, which will bring also tens, not even if not hundreds of millions, excluding electrification. Why don't you simply allocate those proceeds, particularly from those investments for share buybacks instead of this new dividend policy of allocating 3% as cash dividend and on top of that, share buyback since that is fairly meaning -- not really meaningful.

I'm not sure if it's not meaningful. It's -- if you would take the last dividend payment, for example, you would apply the 3%, probably you are close to a dividend of about EUR 1 instead of the EUR 1.50. So further EUR 0.50 would fall down in the share buyback bucket, which is EUR 20 million, which is on this amount small. When you talk about the future proceeds, I mean, as I said, probably a larger chunk ends up at the lowest bucket. So from that point of view, I think this is actually helping a little bit your statement that more ends up in the share buyback. But it's a different statement than saying that proceeds will be used, let's say, completely or whatever statement you want to make for share buyback. We still want to do the things which we have to do. And I think in the end, you might be right that it goes exactly as you say. But let's do the things first.

Assuming that the whole of smart connectivity systems, so including energy, including electrification will be sold to a third party and that would raise your asset base, how much cash is allocated to your assets. You talk about EUR 900 million. How will you handle that?

I think it's a little bit premature to get that specifically highlighted. But obviously, I go back to what we have mentioned on how we deal with these things.

So that even could include capital buyback of EUR 500 million, EUR 600 million?

Again, I mean, speculative now. We will deal with that, and we'll come back to you with the proper, let's say, statements at that point in time.

And then one question regarding Smart Vision. You mentioned you are moving from components to systems to solutions. Can you give a breakdown what contribution those 3 have within your portfolio?

Estimating, we're probably sitting at about 50% components right now, probably in the 30 -- 35 systems and then the balance in solutions.

Any other questions? Chase, sorry.

Chase Coughlan from Kempen. Just a few questions, maybe starting with Mark as well on the vision systems. I think it was touched on earlier that you expect the security vision market to grow almost at double the pace of the machine vision market. Could you provide a little bit of a breakdown in terms of the margin profile between those 2 businesses? Qualitative is okay, but how should we think about that progressing going forward just given the differential in the market growth? Or is it more product specific?

So I'm not that familiar with the security vision side of things. So...

I mean -- if you look at the -- what we call the security vision part, margin-wise, slightly below what we see, of course, within the machine vision part. but healthy for sure.

Yes. Okay. And then maybe moving to the cables business. I think I saw on the slide show that you mentioned 132 kV cables as potentially an innovation going forward. I know, obviously, some peers are also offering this at the moment. How do you plan on innovating and still being competitive in that space if it's still a newer product for you? Do you have, maybe the sustainability angle again? Or is there a sort of a playbook there already?

If you look at the current portfolio, the sales funnel I was talking about, it's about 90% -- it's 66 kV.

30 kV here we are. We are the only one today that can manufacture and deliver that type of cable because it needs to be a dry design. And no one in the industry has this dry design for interray cable. So there is a dry design, but that's with lead. And the market does not want to have that. It's too expensive, and it's, of course, environmental not good. And we have the big advantage that with the current dry design, we can easily move. There's no development at all. Only we need to get this, what is it, certification. But all the components that we need in manufacturing are exactly the same and also the materials that we use are for 95% the same.

Okay. Yes, that's helpful. And then my final question, just regarding the fiber optic divestments. Could you provide any more color on either a time line behind that? Or will there be, let's say, a number of smaller divestments within that or one large chunk of divestment? Just so I can get an idea of maybe when we should see some proceeds also with regard to leverage and such?

On the digitalization, we are working hard on 2 parts. One is, of course, the ultimate divestment. But secondly, we also have to make sure that we have the right condition. What I mean with that? We have, as I mentioned earlier, in the first half this year, transferred quite a lot of capacity and closed down actually our operations in the Netherlands and moved that into the facility in Poland. And we want to make sure that the proof points of this strategic shift are also there and getting back in some kind of valuation. So the horizon for that is not years, definitely a lot, it's quarters, but we need to have that first part. And sure, if there will be, let's say, a kind of one, let's say, chunk for digitalization or some split, that's not our biggest concern at the moment. We want to make sure that the performance is right in taking the right steps towards the ultimate divestment. Michael?

Michael Roeg, Degroof Petercam. I would like to challenge Mr. Slobbe on the growth profile of tire equipment. Because you explained that growth will be a bit more muted given the slow order intake from the Tier 1 -- but typically, I would say your growth profile is market growth. There's the potential for more outsourcing by the Tier 1s. Is that everything you've fitted into your long-term growth profile? Or is there also the third element that historically, you only sold the assembly tools and now you're broadening the base by also selling component tools, which basically doubles your addressable market. How much of that is in your projections? Or is that something for beyond '28 to quickly ramp?

To get it recognized in revenue, I would say, beyond '28 significantly. Right now, we are -- yes, in the field of what you call the UNIXX platform called the additional addressable market, I would say that it will become more substantial in the growth figures post '28.

From previous sessions, we know that there's a launching customer, but therefore UNIXX as a complete integrated system, but you're also selling them as individual modules. Could you tell us a bit more, is that especially being adopted by the Tier 1s or the Tier 2s? Or is it broad-based?

It's broad-based, I would say. with repeating orders from those who have their first UNIXX belt makers installed, for instance.

Okay. And there, you're basically gaining market share from the incumbents and then -- but it's still modest compared to where you are with the assembly.

Thanks, Michael. Any other questions? Then I will move to my closing remarks. A big thank you for attending this meeting also in the audience in the webcast. I believe the key message is clear, focus on the automation and capitalize and execute, and I keep it that short. So we can discuss afterwards if there are any further questions or remarks. But I believe that is, I believe, a good move forward. We are excited about that. We are completely passionate and focused to be driven to make it happen and what we disclose in targets and hope to see you in our next meeting, probably that is next year with the annual results, where we will host, of course, in another webcast and also a physical meeting for the analysts. And in the meantime, we will announce our quarterly results, I believe, on the 10th of November. And of course, we will also then be in calls with many of you. And again, thank you for your attendance, and I wish you also a lot of success in your business and making the right choices and advice -- give the right advices where to invest. And I hope that TKH has a special place. Thank you.