SFC Energy Stock

Good morning, ladies and gentlemen. Thanks for taking the time and joining us here for our half year results, but also for naturally the discussion and presentation of our second quarter results here in 2026. We are obviously happy to present a good set of numbers. We are looking back at the best 6 months of our company since inception, and we are looking at an exceptionally strong Q2 here in terms of revenue, about 20% above our previous record quarter, but also naturally translating into a significant improvement and strong increase in profitability.

Some of the highlights here, yes, doubling EBITDA on an adjusted basis compared to last year, and also more than tripling the EBIT by itself is a positive fact. We also looked at an increase of revenue by about 12%, where we have to see that the second quarter was here having the key impact. Apart from naturally looking back, I think looking ahead, a significant increase in order intake to more than EUR 108 million compared to EUR 43.6 million last year. And also a solid backlog still now at the mid of the year are also the basis for us being able to narrow the guidance upward here within the previously increased ranges.

Before going now into all the financial details, I think let me put the results here in perspective. Very clear, the market entry into the Ukraine has and will have also within the year, a boosting effect. But overall, this is following naturally the strategic positioning here of ourselves in structurally growing energy markets. It also shows a scalability of the business model, as mentioned, with an acceleration in profitability.

If we look at the background here, especially on the Defense & Security part of the business, what we are witnessing is a different format of combat, a different format of warfare, strongly unmanned and most of it electrically powered, so all going electric, if we put it in more generic terms. And at the same time, in a very dynamic, agile and mobile way of implementation. All these requirements, all these changes are a very good fit for our fuel cell-based energy supply.

We are able to easy and fast deploy and move. We have a long-lasting and longer-lasting than conventional sources, energy source. And I think the element that we are not generating or we are virtually not generating; signature, neither temperature nor noise is the changing element. This means low to no detectability and therefore, increase -- a significant increase of safety of all the operators. So what we witnessed here, and I think the examples we are getting here, especially also from Ukraine, but also other parts of our business is we are moving from a nice-to-have to a must-have.

But beyond the fact that we are naturally happy with, let's say, a successful market entry here in the Ukraine and the deployment, it's happening as we speak, and I'll get back to the next steps here in Ukraine in terms of what does it now need to perpetuate this kind of entry success. Let us also look into some of the other markets.

If we look into our industrial fuel cell business, reliable, resilient, long-lasting and commercially viable off-grid and backup power for areas like civilian security, all our CCTV customers, critical infrastructure, backup power and also all our sensing and monitoring solutions here, looking into the European part of the business and also what we are witnessing, especially, for example, in Singapore, we are looking at the range of growth of 10% to 20%, some of it, 25% growth, solid momentum, solid demand there.

Oil and gas for both segments, the Clean Energy with the fuel cell power solutions and also the Clean Power Management with our frequency drive business there. Canadian oil and gas business based naturally also on the raw material and commodity pricing, having a solid performance. Yes, we have to also see some impact, and Daniel will relate back to this later with some negative currency effect, but solid development there. Still with all the good news, I think it's even more important to look at the areas where we feel we are not at target, not at plan.

Not happy with the power management business for the time being compared to the plan here in Europe, although we have to say we had a very strong first half year last year, and we are not quite at this level, but we're also seeing a softer demand from our largest customer, them facing some soft demand in their end markets. Factoring this in for the remaining part of the year, we are seeing already an uptick in their forecast here. So we are not expecting an immediate change here, but we are factoring this into our year-end forecast here.

The other area, if we look at the regional business here in the U.S., customer diversification is the most important strategic initiative there here. Branching out from, I'd say, initial customer here in the CCTV sector, we are now seeing, let's say, half a dozen to 10 leading CCTV mobile security players being already repeat customers, also a first time here entering into Amazon MSU division here with initial systems, I think, is an inspiring fact. But at the same time, we have to see volume-wise, we are lagging behind here, means there is room to improve, and we will focus here in the next 6 to 12 months to catch up and create the right momentum.

Looking at India, after spending a couple of days together with our Indian partners here in July, I think we are seeing the right signs of, call it, recovery. We are seeing a reinitiation of procurement here in our existing programs. We are seeing new programs coming up. The expectation here is higher order activity now in Q3, Q4 and especially also in Q1 of '27, all factored into our overall forecast.

Coming back to Ukraine. As said before, the sequence is clear. We are right now in the phase of deploy. We are in the phase of train, and we are building up training support and backup activities and structures locally. We are talking about the training elements here, including naturally standard activities like documentation videos, all in local language, but we're also talking about different local structures, redundant structures. We are setting up separate locations here. And well, eventually, in a case of emergency, they also have to be mobile to a certain extent. This is happening as we speak, and I think we are progressing well now in Q3.

And the next step is a localization step, looking at local supply chain as other companies do it there too, and expanding our activities of sales also to other parts of the armed forces. Our team was there again now in summertime, and we are planning to get back end of the month. So this is where we see the need here in terms of further allocation of resources from our side in order to be able to continue with repeat business also in this market.

Strategically, I think we have taken the time also to invest in our growth platform. We were on site in Singapore with our partner Oneberry, I think the investment is in good shape. We are seeing good activities. We are expecting 2026 on track. And there are some larger opportunities in the pipeline here on a local basis for AI-based unmanned security systems. The collaboration with General Dynamics, we published this together here at Eurosatory. The first platform where our EMILY fuel cell is built in is the so-called Pandur. We went to see the General Dynamics team last week in Vienna to talk about, let's say, marketing initiatives and the sales strategy here together with them.

Last but not least, we are also delivering on our M&A strategy. Just a couple of weeks ago on 2nd of July, we announced the acquisition of, assets of Siqens, company active, a specialist in fuel cell in reformed methanol fuel cell technology, a good complementary fit to us. So between 1 and 5-kilowatt solutions being positioned between our methanol -- direct methanol fuel cells and our hydrogen fuel cell solutions at the end, giving us good access to users who cannot -- who are not allowed or who are not willing to use hydrogen to higher power methanol systems.

Finally, also a consolidation activity here with an upcoming competitor. And besides the assets, we are particularly happy to have a team of experts here who joined us now in July and integration is on its way. Target here is to get cost neutral with first projects being executed in 2027. The product needs some touch-up and some finalization. I think that our experience from an industrial perspective is really helpful.

If we look at the order part of the business, as mentioned before, we had an active first half of the year with about EUR 108.6 million order intake, well, compared to last year, a factor of 2.5x. But even if we net out the Ukrainian large project here, we would look at a factor of 1.5x. So also here, one can see that we have the business growing also outside the Ukrainian project.

Obviously, Clean Energy from a segment perspective is the growing element in the first 6 months, as mentioned, with 22.7% of growth with a significant impact also from shipments to Ukraine, about EUR 22 million. So roughly half of the project was shipped by 30th of June. And the shortfall on the power management, I mentioned this already. I think 2 sides of this business, very solid and growing with the oil and gas market in Canada and the shortfall here in Europe. But also here, I think factoring into the outlook and seeing also an improvement of the forecast of our key customer here we see, let's say, the turning point happening as we speak.

For the Clean Power Management, there is also one additional element that is, I think, worthwhile to mention. We have our first OEM defense project in-house with a European OEM for high-energy laser systems also for the defense use. Usually, this is for drone defense, either platform-based or portable. So also there, we expect some impact, maybe not in the short run here in the next couple of weeks, but then also over the next quarters.

With this, I would like to hand over to Daniel to look into the earnings.

Thank you, Peter. Good morning, everybody. Thank you for joining our call. Let me run you quickly through our earnings, to the margins, a bit on the cash flow and give you some highlights and background on some cost positions.

I think Peter already mentioned it, the growth momentum in the second quarter as well as the first half year were exceptionally strong with regard to revenue, but also with regards to earnings and margins. And these are reflecting, on the one hand side, the strong growth and the performance, especially of the segment, Clean Energy as well as the attractive product mix that we had in the first half year and the second quarter with a high share of defense revenue coming from the Ukraine order.

The results for our key KPIs across the board were very strong, exceptionally strong, I would even say, revenue growth, Peter mentioned it, 12% half year on half year. We had a gross margin on the group level of 47.1%, which corresponds to a margin expansion of 4.6 percentage points compared to the first half year 2025. The EBITDA adjusted margins increased to 22%, which is a 10.8 percentage point margin expansion compared to the same period last year. We had an EBIT adjusted margin of 17%, which is also a 10.7 percentage point expansion compared to the same period of last year. We had a cash flow from operating activities, which were EUR 4.6 million, and we had a very strong order backlog of EUR 105 million.

Looking at the gross margin on group level, I mentioned before, very strong with 47.1%. This is also significantly above what we've seen for the full year last year. We consider this margin to be on a reasonably strong level with apparently, and Peter already touched on that, upside potential in the segment Clean Power Management, where especially the notable drop in revenues led to a higher unit cost due to relatively higher production and overhead per unit. So that really reflected in the gross margin per segment.

The gross margin in the segment Clean Energy well above 50% with 52.6%, also well above what we've seen in the last year, whereas we had to realize a slight drop in the gross margin on the segment, Clean Power Management was going to 28.3%. That drop is really due to the lower revenue in the Power Management solutions, our Dutch/Romanian business and that lower revenue always leads or tends to lead to a lower dilution of the manufacturing overhead.

If you look at the group operating expenses, below the gross margin, we see that the functional operating expenses decreased slightly year-on-year by 1.2%. The biggest positive influence on the cost factors were in the G&A expenses and mostly due to lower spending on IT and the ERP implementation in the first half year. Remember, in 2025 in the first half year, we really had a lot of spending on that one. We did streamline the cost where we made some advancement here. Of course, these costs will also occur in the second half of the year.

We had some negative effects on our operating expenses in spite of the fact that they decreased slightly. One of them was an impairment of capitalized R&D expenses. The impairment was EUR 500,000. It is shown in the R&D expenses. That's why you see R&D expense being slightly higher than what we expected and also what we've seen previously. And subsequently, also that impairment is shown in the depreciation. That's why you would also see a slightly higher depreciation in the second quarter.

And the other negative effect were consultancy expenses of approximately EUR 600,000 in context with closing the Ukraine deals. These are shown in sales and marketing expenses, a lot of advisory, a lot of legal expenses, big contract, a lot of consultancy expenses in context with closing that contract in the Ukraine.

If we look at the capitalization rate of our R&D expenses, so 13% of our R&D spend were capitalized. That is still on the lower level compared to 50%, what we had in the last year, which already was on the lower level. But for the time being, we assume that this will not change. We won't have a higher rate of capitalized R&D expenses in this year.

When we look at the exchange rate income and losses, and if we look at the net effect, so we had a balanced result, we had a net gain of EUR 67,000. So basically, the result is 0, and that compares to EUR 2.6 million of net losses last year. So there, you see that this will also contribute to the margin expansion on EBIT and EBITDA level.

Brings us to our adjusted EBITDA. I mentioned it, 22.4% of the margin corresponds to EUR 18.4 million. Solid, solid increase. The increase in summary over time, it's the very good performance of the segment, Clean Energy, driven by the product mix, by the revenue growth itself. The overall positive operating expense effect, operating leverage kicking in, especially in that segment. And that also -- which also counters the lower margin of the segment Clean Power Management, which went in the opposite direction.

Depreciation, total depreciation is EUR 4.4 million. Still the structure of the depreciation is the same as we see in the previous quarters. About 40% is IFRS 16, i.e., lease accounting related, slightly higher than what we've seen in the last year, simply because we are leasing or we have leased a new site in the Netherlands, which will bring these depreciation expenses slightly up. And on top, as I mentioned before, you see the impairment of an R&D project in those depreciation costs. That brings us to the EBIT, adjusted EBIT, solid with EUR 14 million and giving us a margin of 17%.

CapEx, if we exclude the investment in Oneberry, which happened earlier this year and the IFRS 16 related CapEx expenses, we had EUR 1.4 million in PP&E in equipment and machinery, which is really a normalized level, nothing extraordinary or special there.

Cash flow. The operating cash flow before change in net working capital were EUR 17.5 million, much stronger than what we've seen last year. If we look at the development of the working capital, the working capital ratio to last 12 months net sales increased to 42%. It's a little bit higher from what we've seen for the full last year, where we were at 37% with that ratio. And the largest impact on the net working capital had a strong increase in accounts receivables with a negative cash impact of EUR 9.8 million. It has to do with the very strong revenues, especially towards the end of the quarter. Our days of sales outstanding increased to 120 -- sorry, 139 days. We were looking at 122 in the last full year. That number will go down in the next quarters. As I said, it really has to do with the strong rollout of sales at the end of the first half year.

We had a very small impact from an increase of inventory, about EUR 300,000. So by and large, inventory stayed at the same level. The inventory will decrease in the third quarter. Key reasons why the inventory stayed on the same level is that we purchased a lot of components in the second quarter for delivering now the last part of the Ukraine order. So really, this is what has been driving raw material and components.

And on the other hand, we also purchased quite a bit of platinum in the second quarter, locking in on the relative lower platinum prices. That platinum stock that we now have will carry us towards the end of the year into the first quarter of 2027. So these are the key reasons why inventory has stayed more or less at the same level. Again, that will go down towards the end of this quarter and also towards the end of the year, and then we would see a release of cash.

After tax payments and the change of inventory, we are looking at an operating cash flow from -- operating cash flow of EUR 4.6 million, much better from what we've seen in last year. Cash flow from financing activities, mostly related for IFRS 16, again, to lease payments, was negative EUR 1.9 million, slightly higher than what we've seen in the last year. And then the change in cash, we had minus EUR 2.9 million, driven largely by the net working capital development and also the CapEx, especially investment in Oneberry.

So that brings us to our cash position. Cash freely available is EUR 44 million. The financial debt has decreased slightly, never a big on our balance sheet, as you know, and as you've seen. Our net debt, in this case, net cash position is at EUR 41.2 million at the end of the first half year. With a lot of payments coming in right now, we will see this position to increase. Still very solid. We are still very comfortable with this position.

And with this quick summary, I will give it back to Peter Podesser.

Thank you very much, Daniel. Well, now looking at the forecast, I think at the end, adding up the performance in the first half year, seeing what are the expected deliveries, the current and the expected -- or the current backlog and the expected orders based on the order or project activity we are having. We see ourselves in a good position to, let's say, narrow the forecast upwards on the basis of the raised guidance of May 12. So revenue, EUR 166 million to EUR 175 million. EBITDA in the upper half here of the previous guidance, EUR 31.5 million to EUR 34 million. And let's say, the -- both EBIT and EBITDA on adjusted basis, as usual, is now expected in a corridor between EUR 21.5 million to EUR 25.5 million.

Looking at all of this, you see us really confident with this framework here, but you see us also very focused and cautious and conscious about some of the areas to improve. I mentioned the power business. I mentioned also the acceleration here of the diversification and scaling in the U.S. We are expecting, I think, good order activity in Asia, mentioning India and Singapore here. And for the U.S., we should not forget that we are preparing for the reentry into the defense market. We will be present as of next week here talking to key parties there. So overall, I think a lot of activity.

Ukraine, again, it's about deploy, it's about train, support and localized and new customers. And all of this, I think, also leaves us in a situation where we still need to work on supply chain availability, especially towards the year-end because there's also one fact with, let's say, focus strongly on fast shipments here to the Ukraine in Q2, but also naturally partially in Q3. We were clearing out stock levels with a number of customers here apart from this business. And well, we did not leave any customer without products, but naturally, we brought down stock levels here in the chain to the customer, and we are also expecting some catch-up effects here.

And all this together naturally leaves us with an element of assessment in autumn time to see whether there is still a headroom to work on the forecast. We have noticed that some of you have seen parts of it, especially on the revenue side, as conservative. Again, we feel very confident with this framework right now and let us work and look at it again in autumn time.

Last one here, we have also sent out a save the date here for a Capital Markets Day planned on the 7th of October in our Swindon facility. We would welcome you all in best case, naturally, physically there to show our capabilities, the technological depth and breadth we have there here on the membrane development and manufacturing, but it naturally will be also a hybrid format here for those of you who cannot join us. An official invitation will follow. If you mark this in your calendars, we will be more than happy to welcome you there.

With this, as always, we close here and open up the floor for Q&A. Thank you very much.

[Operator Instructions] Our first question comes from Usama Tariq with ABN AMRO.

I have 2 small questions. Number one is mostly housekeeping. So for H2, the adjusted EBITDA, you still have EUR 20 million sales coming from the Ukrainian order, if I calculate correctly. But the guidance, the midpoint implies EUR 14.4 million. My question is, what is the reason for being slightly more conservative in my view, especially on the adjusted EBITDA for this year?

And my second question very quickly would be with regards to 2027. I know it's a little bit early, but we have a very big order in 2026, compared that to 2027, do you foresee any possibility that it would be repeated for other Ukrainian forces? Any color there would be really, really appreciated.

Maybe I can start with the second one, Usama. Thanks very much for joining us. Well, as mentioned before, naturally, there is a lot of focus here on, I'd say, making sure we are creating the short-term and long-term basis here for repeating and perpetuating the business also in the Ukraine, just making sure that users can make proper use of our products now in their day-to-day obligations. I think that's fully on its way.

At the same time, we are, let's say, present there consistently and also travel there on a regular basis also to, again, look into expanding the customer base within the armed forces, but then also look at repeat possibilities. Financing from a German and European perspective has been, let's say, delayed over the last couple of weeks with all the changes in the leadership there, but the decisions are there, the resources and the financial means will be there also in autumn time.

So here, overall, I think we need to work through the next couple of weeks and months to really assess what is the situation really for 2027. Overall, looking also at the demand outside of the Ukraine and our initiatives here on industry basis as well as on a geographical basis, naturally, we are looking at further growth there. So for the assessment of the situation then in Ukraine, bear with us a couple of weeks, I think September, October time frame, we should have a better picture here.

So with regards to the EBITDA guidance and the lower end or the more conservative version, as you said, well, the nature of the lower end is that it will reflect certain possible expenses and uncertainties that may or may not occur in the second half of the year. So if we take this a little bit apart, of course, lower end is always a function of also lower end of the revenues also to the lower end of the revenues comes segment Clean Power Management. As I mentioned before, the impact of production overhead on that segment is a little bit higher than what we see in the segment Clean Energy. So this is something we factor in when we look at the low end of the guidance.

Also, we are looking at potentially certain impairments on capitalized R&D expenses, which we will see or will not see in the next 2 quarters, something that we test every end of the quarter, potentially higher IT spending always in the third and the fourth quarter. I would most likely see a bit of higher IT spending, and that relates to the introduction of the ERP system towards the fourth quarter. And of course, Peter mentioned it's also building up support function, service functions in the Ukraine, which is an investment on the operating expenses.

So yes, could be conservative. But naturally, the sum of those extraordinary or whatever expenses is then reflected in that lower, more conservative and that's really what we're doing.

Our next question comes from Karsten Von Blumenthal with First Berlin Equity Research.

Congratulations to the excellent results. My first question is regarding Q4. Peter, you mentioned in the last call that you may face supply constraints. And in this call, you again said that you are working on the supply chain. So what is lacking in Q4? And what could be the revenue impact of supply constraints?

Good morning, Karsten. Thanks for being with us. I think at the end, working on it consistently also since last time we spoke. It's not about our own production capacity. It is really specific components for our products where we still are in, let's say, the order phase and some of the deliveries that I'd say, have to land here latest by end of September are not here yet.

But to clarify, with the current guidance, we feel very confident. And so there is, let's say, supply chain constraints on the lower end factored in. And whether we will see and have some headroom here, I think that's, let's say, the element of change. So what we see as a forecast here and the ranges that we published or have published this morning, we are safe on this one.

Next question is regarding the Ukraine contract. I was surprised to hear that you have already delivered EUR 22 million. It's more than half. And so can we expect that the rest will be delivered in Q3?

Well, I think the element of urgency here is the need on the customer side. And if you recall, we also did compromise on some capacity already in Q1, expecting an even earlier closure of this contract. And that's, I think, why we were able to ship approximately half of it. The expectation here would be that we can execute on, I would say, virtually most of it within end of September, give it some residual revenues also in Q4. This is not yet fully, let's say, judgable as some -- as we said, some of the material is still on its way in. And -- but we will see a significant part of it in Q3, which is already clear. So we are looking at, again, a very strong Q3.

And your capacity is sufficient to serve all your other clients?

That's exactly the point. And what I mentioned before and tried to explain, I think we are managing this to the best we can. We cannot, let's say, leave long-term growing customers here without the right level of attention and without the shipments of product, and that's why we are balancing this. But with this also, we are clearing stock positions here throughout the whole chain until the end user. And this will result in some catch-up effect also in Q4.

All right. Understood. You mentioned in your U.S. business that you were successful in a broader customer base but that volume-wise, you are lagging behind. Could you elaborate on that? What hinders customers from ordering larger volumes? Does it simply make more -- do you need more time to explain the product? Or is any difficulties in the market? What is going on in the U.S.?

No, I think if we look at the CCTV market, we are in the favorable position there that we have, let's say, all the top players in the CCTV market already integrating our EFOY product. But at the same time, there is competition out there, and they are at the end, fighting for the same project. So it's less, call it, regionally protected, fragmented as we observe it in Europe here, where you have clear market leaders in different geographies going for the business there, it's more a head-to-head competition.

And we are seeing, therefore, let's say, being -- people being less aggressive also then in their volume forecast. We had a head start here with our largest customer, LiveView Technologies, but others are catching up. And therefore, I think that's an element that's on an intermediate basis, I think, slowing us down, seeing our integration in all their value chains here with the different competitors. I think we have a significant growth potential here ahead of us. So it's not about, let's say, being replaced by other technologies. It's at the end of the day, a competition on our customers' level.

All right. That sounds rather promising. One last question regarding your defense business. You said that your product has become a must-have. So when do you expect further large orders, be it from Ukraine, be it from other armed forces, that would, of course, help to get visibility into 2027.

Well, I think we have a signaling effect out of what is being used in Ukraine, and this is not SFC specific. If I look who, let's say, is all going to there and get an understanding of this, let's say, new format of a combat situation, more agile, more mobile or, let's say, electric and not so much a monolithic warfare. We are seeing, let's say, all parts of armed forces from North America to Asia to the Middle East also being present in Ukraine, watching and trying to learn. And therefore, we expect naturally also an impact, let's say, on our business.

If we look at, let's say, what is in the pipeline, I think on the OEM part, we are expecting also for '27, the first programs to scale geographically in Europe. I mentioned already, we are, as we speak, invited in the U.S. to look at the development program here for a new generation of portable systems second element. And if we look at the activities now in Asia, I would say also most promising is the reinitiation and the refunding of our programs in place in India. So that will be, I think, the conservative view of looking at it. If we now see, let's say, what happens also in the Middle East and also our activities there, I think there's significant upside coming out of this region, too.

The next question comes from Michael Kuhn with Deutsche Bank.

A few ones. I'll start with, let's say, backlog and visibility. Is your H2 guidance entirely based on backlog? Or is there some elements in the business that have shorter order cycles? And if so, what is the amount? And what is the current backlog do you expect to carry into next year?

Good morning, Michael, it's Peter. Well, we -- especially on the power side of the business, we have also a part of the backlog naturally ranging significantly also into 2027. If we look at what you have here and if you see where we are at the midyear, you can say about EUR 25 million level of revenue is getting also into 2027. And therefore, you also see that there is a residual part still, let's say, needed for the midpoint of the guidance, but that is mostly the industrial part of our fuel cell business, especially also the civilian security, the CCTV part.

This is a business that, in most cases, is also intra-quarter. So within, let's say, 8 to 12 weeks time line, we are turning this around here with our CCTV customers. And that's why we have factored this also into our forecast. And that's actually also that part where we are working strongly also on, let's say, removing supply chain constraints also above, let's say, the midpoint of the guidance.

That's very clear. Then on Clean Power Management, you mentioned some softness of your key customer. Do you expect this to persist or that problem to dissolve over the next few months? And also in that segment, you mentioned new use cases like drone defense lasers. Maybe you could share some thoughts on time line and the size of the business opportunity here.

Absolutely. I think here on the power management side, we have an extremely reliable industrial partner with a precise forecasting, and we knew that it would be a soft year. I think, let's say, the fact that this was also now getting into, let's say, Q3 still was something that we had not factored in. At the end, we see their end markets at the beginning of the year, still one of their core end markets, semiconductors did apparently not deliver the pickup. This is now changing.

The mere analytical market from research institutes to universities impacted also by funding constraints, especially in the U.S., has an impact going further. And that's why I think having right now a conservative still outlook for this year is the right approach. Seeing the latest forecast, we see, let's say, also the first uptick here towards the end of the year. So under control. I think also good communication here. At the same time, our biggest semiconductor company in the semiconductor customer in this segment is accelerating programs. So we expect an uptick there.

And on the defense part, I think we will see first shipments here into programs by '27. I mentioned the first OEM partnership here. We have launched this program here on all the defense shows throughout the first half year. And we're also seeing, let's say, beyond this OEM program here, serious interest because it's not a new development. It's actually an industrially matured power supply platform that is adapted for the laser use and for the laser application in defense. So it is something that is ready to use with adaptions to the customer-specific requirements.

And therefore, yes, we expect shipments to start in 2027. As always, with OEM programs, we are, at the end, exposed to time lines that are out there with our OEM partners. But as everybody is growing in this segment and the supply chain is limited, I think it's a real good upside.

Understood. And one more on your acquisition, if I can. So I think you elaborated that you are basically closing a gap in the portfolio here, also where H2 fuel cells are not usable. Maybe also a few words here on use cases on, let's say, the impact of your -- on your overall product offering, whether there's any replacement changes and, let's say, by when you expect this new platform to be fully up and running within SFC and how much it could contribute?

Yes. With all, let's say, naturally, the limitations of just being in the process of finalizing the acquisition and starting the integration, I think, strategically very clear. There are customers who cannot or who are not willing for whatever reasons, logistics, security, who are not willing to take, let's say, hydrogen as a fuel. And there, reformed methanol, converting methanol into hydrogen on site and then using the hydrogen in the fuel cell and therefore, also reduce the bill of materials in proportion to the output number in terms of watts or kilowatts is a compelling solution.

We did a classical make or buy assessment here instead of, let's say, going there and do, let's say, all the R&D from scratch, it was a very good opportunity to, let's say, make use of naturally the difficulties Siqens faced here in terms of commercialization of the product, setting up and establishing an international sales organization, partnership structure, I think, was the major hurdle they had to face, combined naturally with some final improvements of the product stability, longevity, operations time.

And I think, in both areas we can help immediately. At the end, customer use cases range from defense to the CCTV area to the oil and gas area. We see the demand for this kind of power level. If you take CCTV, we are all looking at increased power needs because of AI-based camera systems and computing power already on site. And therefore, it's a logical reaction then to increase the power level also of the fuel cell as the backup power source here to battery and solar. So we see, I'd say, initial projects where in some of them few, but still some of them we were competing, where we would clearly favor now the new platform and offer this, and we want to have first systems out.

We're actually working with those customers already, and we might even ship some of those products still in Q4 of this year, depending on how fast we are in recovering here, let's say, the supply chain and do the touch-ups. But we definitely will be able to ship in 2027. But expect, let's say, a modest number here. We are not talking about EUR 10 million sales. We are talking about, let's say, the first 20 to 50 systems, and we are talking about, let's say, from EUR 1 million to a EUR 3 million to EUR 5 million impact here in this period of time.

And it is also naturally about testing the systems out there. But still, we are also consolidating the offering. We are the only one now having this consistent full stage offering here on a worldwide basis. And therefore, I think we are making ourselves more interesting for customers to go with us along the whole range of products.

Our next question comes from Malte Schaumann with Warburg Research.

First question is on the gross margin. I mean you had a pretty strong mix in the first half of the year. So what are your thoughts about the second half? I mean product mix might look almost the same with still a big chunk of the Ukraine order to come in the third quarter. So what are your thoughts about gross margin development in Q3 and Q4?

Malte, this is Daniel. So gross margin development for the second half of the year, apparently, as you just mentioned it, we are looking at strong orders or a strong delivery in Ukraine in the third quarter. So we would have a very strong gross margin again in the third quarter, probably around the level of what we've seen in the second quarter, plus/minus, of course, because we have defense in there.

And then the fourth quarter, it kind of depends. I would see still a very good gross margin, but there is a big dependency, remember, on what we deliver, what we can deliver, in which markets we can deliver mostly because of making sure that we have all parts available, less because of order backlog, more because of availability of parts. So to make it short, third quarter, very strong and good. Third quarter, there is a bit of a variety from good to strong.

Okay. Sounds good. Then on the Clean Power business, we are down almost 15% year-over-year in the first half of the year. I mean Q3 should not -- doesn't look like it will pick up immediately, maybe Q4, but Q4 last year was also strong. So is that minus 10%, minus 15% sales growth, sales development, the right view to look at this business for the full year in 2026 and then hopefully pickup will happen next year?

Well, I would say we expect an improvement in H2. As mentioned, there are some signs of recovery here in the European part, and especially also from oil and gas customers we see consistent investments. So I think a range of up to 10% is what we would see as our assessment today in our year-end forecast.

Okay. Then on platinum, did you implement some hedges earlier in the year or towards the end of last year? Is there a hedge position still in place?

No, there is no hedge position. We did not implement any hedges luckily because you've seen the platinum pricing decline. So the answer is no. We just bought quite an amount of platinum to -- which is physically stay with us to lock in on the lower prices.

Okay. That's good. Then you mentioned the adoption of the clean power supply platform for defense applications. Can you elaborate on the opportunity? What revenue contributions might come out of that in 1, 2, 3 years?

Yes. As I said, there are a number of OEMs out there who are really looking for, let's say, an acceleration of their supply chain, expansion of their supply chain. We have a classical dual-use product here of high-tech industries using it. And therefore, we are fast to market. And if we look at it and if you look, let's say, on a midterm basis, yes, this is a business where we would expect, let's say, a lower double-digit business coming out of this.

But we are also looking at procurement cycles that are, let's say, usually slow at the beginning and then start to scale. So that's why we start with a conservative approach here for '27, and then we see how fast scaling goes there. But yes, the market is there, and I think we have a proven platform that is, let's say, the clear advantage of our dual-use product strategy.

Then on the business in India, will that lead to gradually -- gradual order intake? Or is that -- do you expect kind of a bigger order at some point in time in the third or fourth quarter?

Well, I think we are looking at really a reinitiation of those programs. That is at least what we also learned from our partners when sitting together a couple of weeks ago. We also see, let's say, the activities on what we do on the support contracts where we see our products are fully in use. We are out there with all our service capabilities supporting them in the field. And therefore, still for the outlook, we are looking at more a higher backlog than revenue impact in 2026.

But as their fiscal year goes until our first quarter in 2027, I think this is where we will see, let's say, the biggest part of the impact, not going back to, let's say, the level immediately of where we were 2.5 years ago, but catching up and getting back to those levels, I would say, within a period of 24 to 36 months is absolutely realistic because we have the installed base out there. They need to refresh, they need to restaff. And as far as we see it right now, funding is back in place.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I would now like to hand over back to Mr. Podesser for any closing remarks.

Yes. Once again, you see ourselves here very confident for the remaining part of the year, addressing what needs to be addressed. And for the time being, if there are any further questions on a bilateral basis with Daniel, myself, also Susan, we are at your disposal. And we thank you very much for your time on this nice mid-August morning here. Thank you very much. Goodbye.

Goodbye. Thank you.

Good morning, ladies and gentlemen, and thank you for joining us on a, I would say, a truly special day and special call. After just stepping out of the night train here from Kyiv to Poland, I'm still in transit and hope that the connection is stable enough. If it's not, please remind us, and then I think Daniel and I can share the presentation or I can find a space where I have a better connection.

So as usual, we will lead you through the numbers, but naturally also now we give you our view on the contract and program we signed yesterday in -- as said, we just arrived here after, I would say, for me, a remarkable and impressive visit to Ukraine. And besides, yes, signing, I think, this contract, we are looking also at what is the impact of all of this to our business this year, but also beyond.

Starting -- well, I think we can only also express our gratitude here at SFC Energy to the Ukraine and Ukraine partners as well as our own German government for their trust in us. We also, I think, see this as an expression of, let's say, an important contribution here to this initiative here to enable the Ukraine to sustain their efforts in their war against Russia. And I think as a new defense-tech company, we are bringing different capabilities there now. And I think that's the main message here. At the end, what do they use it for? We see them use it for naturally our conventional critical communication applications. It's used as uninterruptible power in vehicles. But the key elements are it's resilient, it's decentralized and it's easy to deploy and easy to move in very short periods of time. And then it comes to the, let's say, 2 differentiators. It's now, again, combat-proven like we have systems for years also with other forces, including Israel, but Ukraine has, let's say, I think, a leading role right now and everybody looks at what they use and how they develop it. And it virtually has -- and that's a key element no signature, neither temperature nor noise and therefore, a different level of safety. It's a safe, reliable energy source for the ones who use it. And this was also what we got back yesterday as a reflection when talking to one of those commanders there at the end, he said, "Well, you're making the lives safer for my young men and women. It's not just that, let's say, our anti-drone laser operates now not just 7 days, but 28 days, so a factor of 4 longer. It simply gives them the opportunity to exchange fuel cartridges and not charge batteries by generators and therefore, expose themselves to a life-threatening risk. So I think that's about how is the user looking at it.

If we now look at the structure of the agreement itself. It starts at the end this quarter. We are supposed to ship a good almost half of the equipment until mid of the year. This is also the reason why we compromised on some capacity in Q1 here for production already to satisfy the needs here. And we are supposed to deliver everything within 2026. So the first step now is to really operate under this contract that is financed by the task force of the Ministry of Defense, 100% payment out of Germany and with, let's say, significant impact also on our cash flow, where Daniel can give you the mechanics and the details also in a second. The visit we had now, the last days here on site was about naturally getting to a final signature on this contract, but it's now also about the next 2 stages and also this week's visit of Mr. Pistorius in Kyiv was about, well, how to localize now activities. The next step now is support activities, training, service and repair capabilities on site. And beyond this, then also naturally to look into a local supply chain contribution here from Ukraine, which we see in a time frame of, let's say, '27, '28. And all those activities are still supported also by financing from Germany as well as the EU. And that's why we see, I'd say, also an impact beyond the year 2026.

If I now go back to, I'd say, what was the original naturally topic for the call. We are looking also at a first quarter with a significant increase in profitability. And on the revenue side, we -- as mentioned, we did compromise some capacity, and we are looking at, let's say, a shortfall of about 12% compared to last year's Q1 revenue. If we look into the details here, we also have to say that the first quarter, especially in 2 regions, in India and in the U.S. last year were the strongest quarters we had. In those 2 regions, we also had a currency impact. But overall, looking, I'd say, at the 3 million to 3.5 million capacity we took out of the first quarter and already used for production of components here for shipments to Ukraine in Q2.

I think we can look at a solid start on the profitability side. Daniel will lead you through, let's say, the reasons for an improved profitability in terms of EBITDA and EBIT ratio. If we look into the segments and also what we expect now going forward, yes, the bigger impact we had on the Clean Energy part of the business here by delivering EUR 24.7 million products out in the first quarter of 2026 compared to EUR 28.4 million. The lower sales, as said, in core businesses in the civilian part as well as in the defense part. But looking at where we are right now at the end of -- or at mid-May, we also see, let's say, activities up significantly in Europe, with Germany and the Netherlands being leading here.

On the defense side, we had the first shipments on a sizable project here above EUR 1 million to Austria here for portable fuel cell systems, which also had a good impact on the mix and on the profitability. No rebound in India in Q1 as expected because it was the last fiscal year of their year to be completed, we also see and expect a rebound in the Indian defense part.

If we look on to the power side, a slight increase here in terms of overall proportion of the Clean Power business, but also there, in terms of revenue, an expected lower revenue in Q1 because we had, as already also mentioned and reported before, a soft start with our biggest customer, Thermo Fisher. Looking at their forecast as of today and also looking at an up cycle in the semiconductor business and therefore, our second biggest customer, ASML, we are seeing a catch-up here in Q2.

On the power side, a really good start in Canada in the oil and gas business. The high oil price doesn't lead now to immediate new projects coming up. But what we see is a solid execution on budgets. And we also expect this to be and have a positive impact on, let's say, Q2 and Q3 here in terms of significant orders and projects out there for decision-making. So looking at the backlog, I think, if we look at the historical data back in at the end of first quarter, I think that's maybe from today's point of view, not that meaningful, adding up what we signed yesterday, we are looking right now at the backlog between EUR 112 million and EUR 115 million total and a solid pipeline. Therefore, I think we were catching up compared to 31st of March.

With this, I would like to hand over to Daniel to look into the earnings of Q1.

Good morning, everybody. Thank you for joining our call. So I want to keep it kind of short today. I'm assuming that the Q&A session will be a little bit longer. I'm just going to go through a few highlights or a few explanation with regards to financial. I think we quickly want to drop a word on the gross margin.

The gross margin on group level, you've seen has gone down to 42.7%. We are coming from 44.3% in the first quarter of 2025. So that is slightly below what we've seen in the first quarter '25, still above what we've seen on the full year level where the gross margin was 40.8% for the entire year. So we are kind of happy and okay with the gross margin.

When we look at the segment and Peter kind of indicated already, the gross margin on the segment Clean Energy with 48.8% is on the higher side. So that is okay and a little bit above our expectation, to be honest.

If we look at the gross margin on the segment Clean Power with 26.8%, that is definitely on the lower side and below our expectation a little bit. The reason is, Peter mentioned it, that we had lower revenues in SFC Netherlands, we have the power electronic components. And that margin decline is mainly due to the lower manufacturing overhead dilution, which is as a result of those revenues. Again, the overall gross margin, we are fine with that and it's on a decent and good level.

If you look quickly at the operating expenses and also there, let me just go through the 3, 4 highlights for the first quarter. We had a positive impact from an exchange rate net gain. That's a small gain of EUR 200,000. However, that compares to a loss that we had in the last year's first quarter of EUR 800,000. So we see that this has a positive impact on the EBITDA. Again, also here, the larger part of these net gains have not been realized as has a larger part of the net losses. We've seen that the expenses for IT and ERP are on a higher level, but it's not above what we've budgeted. We will expect those costs to remain a little bit on a higher level. We've also seen that the capitalization of R&D expenses is on a lower side. We're looking at 40% versus 23% in the first quarter of 2025, which has an implication on the R&D expenses on the P&L, but still overall, R&D expenses are slightly lower what we've seen in the last year.

If we look at the entire operating expenses, so operating expenses, meaning sales and marketing expenses, development expenses and admin expenses, we see that we are roughly EUR 1 million lower from what we've seen in the first quarter last year, which, of course, has a positive impact on our EBITDA. Main reasons are here and there a little bit less headcount, of course, some savings or lower expenses for advisory expenses. So overall, some of the, let's call it, cost discipline measures we introduced in the last year are still helping us and leveraging this cost.

Now we'll get to the adjusted EBITDA. It's about EUR 6.2 million, pretty much in the level what we've seen last year with the lower revenue that we realized in the first quarter that, of course, translates into a higher adjusted EBITDA margin with 18%, which is normalized on the higher side. Of course, it will change a little bit to the positive with the large order we just received yesterday.

If we then look into CapEx, CapEx in the first quarter, if you look at the cash flow, you'll see that it was above EUR 3 million, which, again, is on the higher side, but the largest part of that CapEx is really the investment in Oneberry, which we had. So this is carried under CapEx plus it's an participation. The CapEx in PP&E and intangible assets really without the investment in Oneberry was a much lower level of EUR 600,000. So that is the normalized run rate that we're having. That is, I think, something I just want to mention and go through.

Cash position, EUR 45.7 million. So again, at a very solid level. It's about EUR 1 million lower from what we've seen at the year-end. The financial debt has slightly decreased. So that brings us to a net cash position of EUR 42.3 million, healthy for our operations and to finance our group.

If we look quickly at the cash flow, operating cash flow before in the change of -- before -- sorry, the change in net working capital is about EUR 5.5 million, 22% lower from what we've seen in the last first quarter. This is mostly due to the lower revenue that we generated.

Net working capital, quickly, went down by -- sorry, went up by roughly EUR 800,000. The largest impact on the net working capital had the decrease in accounts payables in the first quarter with a negative cash impact of EUR 3.2 million. So if we then look at our days of payable outstanding, 12-month trailing, we at 63 days. which is 3 days below what we've seen at year-end. So not significantly, but apparently paying a lot of bills in the first quarter.

If we look at the inventory, the inventory decreased slightly, so not worth mentioning. Basically, it stayed at the same level what we've seen at year-end. Days of inventories have increased to 155 days from 151 days. And then apparently, as Peter just mentioned, with the order of Ukraine, we will expect our inventory to decrease significantly over the next 2 quarters.

And then -- and also when it comes to the working capital, we did collect quite a large amount of accounts receivables, EUR 2.2 million in the first quarter, which brings our days of collectibles outstanding to 103 days.

Overall, after tax payment, investment and financing cash flow, the change in cash is negative EUR 1 million, so at a very healthy level.

I will leave it at this in this call, and thank you very much. Giving it back to Peter.

Well, thank you, Daniel. And yes, let me summarize now the outlook. And also apart from what we signed yesterday, I think we see a healthy development in the business. And -- but based naturally on yesterday's decision, we have changed the guidance, and we have raised the guidance revenue-wise to EUR 163 million to EUR 175 million.

It's not just an add-on of, let's say, the total order of Ukraine to this because there are, I think, 3 elements to mention. We had part of it and I'd say, obviously, a small part of it in our planning. You can think about EUR 10 million. We add the differential to it. And then still there is, let's say, a differential remaining of another, whatever, EUR 15 million, where at the end, we see naturally headroom throughout the year to our business. There's still risk in some projects we had planned for. So we still expect this to close, but it's not closed yet. And the other element is also it's not about production capacity, but it's really now a significant task here on supply chain, we have specific components, dedicated components for our fuel cell products, be it civilian, be it defense, where we are now working on still increasing capacity here with our suppliers, especially for Q4. And that's why somebody might call it cautious here at this level, I would call it realistic. It's the range here that we are seeing as the realistic one.

If we improve on the supply chain part and if we can execute on all the projects we had in there originally, naturally, we would have to look at this range again. On the profitability, we see a significant impact also of the operational leverage and the mix impact here, especially of our defense business, bringing the EBITDA range up to -- from EUR 29 million to EUR 34 million is the bandwidth we are seeing compared to the EUR 20 million to EUR 24 million we had before. Well, and likewise, on the EBIT side, also a jump, raising it to a range from EUR 20.5 million to EUR 25.5 million from the previous EUR 11 million to EUR 11.5 million.

So overall, I think a solid outlook, and you see us confident to really deliver on this. The workload naturally now is on the operational side. But as mentioned before, we started to work on this already in Q1 as we had indications of an earlier signing of this contract, which now coincidentally was just the day before our publication of the Q1 results, which ended up naturally now in a sequence of news from yesterday night to today.

But overall, I think we are having -- the overall picture right now, and we are happy to now go into the Q&A session and give you more details, especially also on the structure of the deal and the program here for the enablement of Ukraine.

Handing back to Hilli to open the floor for Q&A.

[Operator Instructions]

The first question comes from Usama Tariq from ABN AMRO.

Congratulations on the great outlook. I just have maybe 2 general questions. Number one would be, so we have a very big order from Ukraine. With regards to sustainability of it going forward, so I do understand that it is now sort of a one-off order for this year, but do you see some implications of it coming back next year or the years after it?

And my second question, if I may, would be on India. So you've already had a very massive order from Ukraine, do you still see something positive from the Indian front, for example, in H2 going forward this year? Very grateful. That will be my 2 questions.

Thank you, Usama. Let me take those 2 on. Yes, I think it's about then how sustainable is it going forward? And I tried to allude on 2 elements already during the introduction.

So I think the key part is there is a supporting plan still in place here from Germany as well as the EU. We are talking about EUR 44 billion on the EU side, the German program should be comparable to this year's EUR 12 billion. And assuming a positive feedback as we had it already now before entering into this program, we would see, let's say, a continuation here and the discussions for next year's planning and budget, they are already on, and we are in the midst of it.

But therefore, I think it's also important to see this order didn't happen just now, let's say, last couple of weeks as a surprise to us. We started to work consistently here with the task force, but then also directly with the different forces in Ukraine over a period of, I'd say, more than a year, bringing our products just out there to the users, to the front line, have them, let's say, experience it and put it what is called at the end, their requirement list.

So we are part of the formal requirement that was set by the forces here also to the German task force here for this support and enablement package. And the other element is this is for one single part of the forces. So we are now in what is called the national guards. But then you still have, let's say, the conventional army, you still have, let's say, special forces. They all have tested our products already. We have positive references, and we expect a rollout there, too. So it is a program that has started in a very positive way now with this significant order. And the work and the expectation now is to translate it naturally into, let's say, a sustainable yearly business here. And therefore, also, the other element is to build up now the support and service and training structure on site and also going to a localization like we did it also in India.

So naturally here -- expectation here is work -- or what we work for is to have, let's say, a continuous business here with the different parts of the armed forces in the Ukraine on a, I think, solid basis we are creating now with them.

India, first quarter here, still last quarter in the fiscal year in India, there was no expectation there. So yes, a soft start in our first quarter, as mentioned. We had quite some exchange here with customers, with our partners, FCTec there. As mentioned before, we have a very cautious planning here on our end. So we only have in our previous guidance, we had about EUR 5 million of business with India in there. What we see right now is a rebound at least to this level. What we have is indications for some stronger demand and also the financing for it. But I think we would not change our expectations. And first orders coming in, in a June, July, August time frame. The ongoing support programs are running. And therefore, yes, we expect a distinctively better year in our Indian business than it was last year, where this was, let's say, if you want to call it like this, our biggest headache if we look into 2025. So rebound in India as of Q3.

Now we have a question from the line of Karsten Von Blumenthal from First Berlin Equity Research.

My first question is, I mean, now you are kind of Russian enemy, I think you are a small company, but is there any preparation from your side regarding possible attacks of Russian agents on SFC? Be it cyber, be it terrorist. Is there any personal danger for management? How do you see this?

Well, I think at the end, we have been well advised and well prepared also by the relevant people here from the MOD, from the Ministry of Defense. And we have been preparing for this on the cyber level with an enhanced and increased security. We are doing it as we speak on our premises and the same, let's say, for individuals potentially being exposed.

So there is -- I think there are examples out there, and I think we are following those examples.

All right. That sounds good. You mentioned that you don't have a problem regarding capacity, but that supply chain is a challenge. So my question is, do you have to postpone orders of other clients to get this order through on time? Or how do you manage that?

Well, at the end, we were doing 2 things. If we look at the capacity, yes, it's not about the production. Now as we all know here in this round, we did build up capacity in different parts of the world. So here with Romania and Munich on the fuel cell side, we do some of the assembly also in India for some of those products right now going to Ukraine. We are well equipped. The membrane part we have in our hands, we ramped this up significantly.

We are starting to commission our second robot there in Swindon in the next couple of weeks. So also there, I think we kick it off. It's really about dedicated components here for the normal effort, but also the JENNY and the EMILY line, where we are now working on really the supply, especially for the last couple of months of the year.

And in terms of, let's say, satisfying our existing customer base, we have not, let's say, taken out orders or, let's say, not satisfied urgent orders, but we have scaled it back across the board, which at the end of the day, then leaves us again with the situation that I think that the guidance range we have out there is a pretty solid one. And let's look at it again, whatever in September time frame, there might be some headroom.

All right. That sounds good. One last question from my side. Could you say something about the U.S. business, production side, demand there? Could you give us an update?

Absolutely. Well, we are already shipping the first units to -- that are, let's say, what we call so-called refurb units here to our biggest customer, LifeView. We are starting also to ship products to others. I think that's working and under control.

As we made, let's say, an experience of being too aggressive last year in our assessment of the U.S. growth rates and also, let's say, uncertainty and spending, let's say, concerns in the U.S., we have a much more cautious planning here. And therefore, I think we we progress, but in, let's say, a different speed than we originally had planned for.

Looking at North America in total, we do expect that Canada will, let's say, compensate for any, let's say, delays in rollouts in the U.S. with, let's say, especially the oil and gas part being really solid there with a couple of projects in decision-making also for shipment this year of significant size.

So we're more cautious in the U.S. compared to Canada. North America, definitely on track.

The next question comes from the line of Robert-Jan van der Horst from Berenberg.

Congratulations on -- from my side as well on the great order and the profitability in Q1. Most of the questions I had on the obviously kind of cautious guidance were already answered. But just to be sure here. So you mentioned that especially in Q4, supply chain risk might be to shift of revenue into the next year. I just want to make sure that there are no like penalties associated with possible delays of that contract so that this is scheduled for 2026. But if anything falls into 2027, everyone is kind of aware of the possible supply chain risks here.

Absolutely clear, Robert. Thanks for being with us and your question. There are no penalties associated to it, but we might have to calibrate some shipments here across then a time span from November to maybe February. But at the same time, we are really actively working also on a ramp-up of capacity here that could, let's say, at the end, minimize this impact. We didn't want now to go out with, let's say, an overly aggressive statement and then have to explain or talk about, let's say, some supply chain shortages in September time frame.

It just we'd rather do it the other way around.

And also, if -- I think one thought that is linked to it, we have pretty favorable payment terms here in this big contract. So actually, today, we will send out the first invoice for 50% prepayment and down payment. So -- and we naturally also use this to accelerate part of our supply chain by being also flexible then in our payment terms. And actually, with the last shipment of the product, we will also have 100% of the payments in with, I would say, 0 counterparty risk, this being the German government.

Okay. Perfect. So there should then be a significantly more positive cash flow in the second quarter, of course, if I understood that. 50% will be prepaid.

Absolutely.

[Operator Instructions] The next question comes from the line of Malte Schaumann from Warburg Research.

Congratulations also from my side. First question is on profitability. Could we expect more or less a similar structural profitability within the contract in comparison to other defense projects?

Well, if I can start here and then Daniel, maybe you can take over.

Yes, if we look at this contract here, this is not just strict defense products. We also are shipping, let's say, 2,000 EFOYs here at a at an industrial price level.

So overall, I think if you compare defense to defense, also this is naturally having the usual impact and therefore, is a driver.

But maybe, Daniel, you want to comment here on to this topic.

Yes, Malte. so basically, yes, of course, it's a defense business. Our defense products have attractive margins. That also applies to the current contract, so to speak. But we still have to look, it's a huge contract, right? It's rolling it out in a very short period of time, securing all the material and the logistical complexity may be a little bit higher.

So I think some of the margin on gross level will also be compromised by slightly higher operating cost. So -- but still, even if you take those higher expensive costs into account, it will still be a very attractive margin and on the higher side of what we see in our products.

Okay. Good. Then on your comments trying to make inroads in other branches of the Ukrainian Army. Is that something that could materialize still in this year? Or is that, in any case, something for 2027 as a follow-up?

No, we definitely expect first also shipments, not in this order of magnitude here, but first shipments to other branches. We have their positive references. We have our quotes out, and we expect initial orders definitely in the second half of this year.

Okay. Sounds good. And would you quantify -- I mean, within the scenario of maybe building a sustainable business going forward here, would you quantify this contract as maybe exceptionally high? Or would that be kind of the target level you would see as prospective sales across diverse areas of the Ukrainian Army going forward is potentially sustainable?

Well, I think as a target value, definitely desirable. Is there potential for more? -- significantly more? Yes. But if you ask me about, let's say, what I would put into the plan now when we do, let's say, our formal planning for '27, well, I'd say, see this as, let's say, slightly too high. So we would not put, let's say, the level of EUR 40-plus million in, maybe more between EUR 20 million and EUR 30 million as an ongoing and then project-based decision-making.

Okay.

And also there, if I may add this, sorry, I think we also have to now see how it trickles in with the other branches here of the armed forces. We should be in a better position to judge this, honestly, in a 3-month time period. Looking at, let's say, September, when we do our also budget planning for next year, we should have a better visibility and then naturally, we would assess this again. For the time being, I think a little too early. Let us get into our foot into the other doors and then we can assess this.

Okay. If the war would come to an end, would that trigger a change in your take of these prospects? Would the customer still make investments into these areas?

We are seeing this across the board now with investments in defense. I do not -- and it's not just me, I think the consensus here really out of specialists, but also of the government sources is that investment will be high. What we are introducing here, and it took us some time is a more reliable but also a safer energy supply here for all the different activities in terms of defense, not just the active combat situation. And the other part to it is I'm sorry. I'm not sure whether this is with me right now, but you can still hear me, right?

Yes.

Okay. And the other part is that half of this whole project is already on civilian products. So this is really already targeting at the restoration period also in Ukraine, having decentralized power here for communication for telecom, et cetera. So therefore, this also goes into, let's say, the rebuilding of the infrastructure where you have temporary needs and decentralized needs.

The biggest, I think, threat they have seen also to their infrastructure is this monolithic energy infrastructure they are having and the enemy is always targeting this. And that's why I'm particularly happy with this distribution between also civilian and strict military use cases.

Yes, makes sense.

That's really -- and that's also, I think, part of the idea of the financing here from the German side.

Okay. Again, on the guidance, sorry for that. But I mean, the difference seems to be quite large between order volume and the guidance increase. I understand your take on maybe potentially hiking a bit later. But then in combination with -- I mean, the order intake in the first quarter was not that strong. So are there areas where you see elevated risks that project won't materialize you had initially baked into your forecast?

Well, I think what we had in there, and that's why Q1 is also on the lower end was a slower start here on the power side, especially with Thermo Fisher. There, we expect decision-making for follow-on significant contracts to happen within the next 2, 3 months, which will, let's say, compensate for this part.

And as said before here to Karsten's questions, we are definitely more cautious than last year on the U.S. end. as, let's say, experience tells us, it takes also some time for the rollout here. Production is, let's say, prepared. We are on our way. We are doing the, I'd say, diversification of the customer base. We might even see some positive surprises there on the defense part of the business within the next couple of weeks. But from the current view, I think it is Yes. I know you see it as conservative. I think it's still a realistic framework.

And it's -- if you look at it, if we take the top end of the guidance, you take, let's say, the EUR 10 million we had in there as a potential value here for, let's say, this regional expansion of the business into Ukraine. If you then add, let's say, another EUR 15 million that is the top end of the guidance differential, and then the remaining part, if you split this half into, let's say, supply chain risk and some projects at the year-end with a certain risk still not being in, I think that's the math to it.

If we look at it again, I would say, right after summer or in summer, we might come to a less conservative conclusion here and then just make use of this headroom here. That's, I think, where we stand for the time being.

Okay. That's fair enough. So no major deviation from the initial...

No. It's honestly, if we look at where we are there, we talked about India. India was a real game changer last year. I think by being conservative in the planning and now seeing, let's say, a more positive outlook here from customers and FSTec, we will reflect this in a 3-month time period when we have the first orders in and similar here to the U.S. And on the U.S. end, we are still looking at potential M&A targets, which will not have a revenue contribution this year, but should then help us to accelerate market penetration the year after.

So this is not off the agenda. This is there yet. And defense U.S., I think we are progressing again. They're coming back to the technology. The decision has been taken, and we are there again still this month, sitting down to see whether we start a program together here with the U.S. Army on a next-generation portable power system.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Peter Podesser for any closing remarks.

Well, thank you all, as always, for your time and your interest and trust in us. I think we have a really good, let's say, outlook here ahead of us.

But at the end, it's now about to execute on what we pulled in and then naturally to branch out and bring it to a sustainable and repeatable business level, especially on the defense part of the business with the impact on the profitability.

If you have additional questions, please do not hesitate to reach out to all of us, Suzanne, Daniel and myself. And with this, wishing you a good remaining day and looking forward to catching up soon. Thank you very much.

Good morning, ladies and gentlemen, and thank you very much, Vicki, for the kind introduction. Well, and thank you all for taking the time to join our presentation here of the audited consolidated financial results 2025. In a good tradition, we will share the presentation here between Daniel and myself and then be happy to go into a Q&A session.

Well, looking back to 2025, when we did this more or less in the same format a good month ago, we have to say that 2025 was a year of particular challenges. Also some difficulties where we had to revise our original targets for the year. Daniel and I will elaborate on the main reasons once again today here later in the presentation. But I think we also took the time and the opportunity to consolidate, to reset in some areas and then also to put together a clear set of strategic priorities in 3 main areas to prepare ourselves for another growth phase, another growth stage in which we are already in now at the end of the first quarter.

What are those 3 pillars here of, again, growth here for SFC Energy? Well, expanding our international footprint. Two examples for it. In Scandinavia -- in Denmark, we turned the hydrogen assets we acquired from Ballard into a profitable core business of hydrogen fuel cells for critical infrastructure and telecom. Together with this, we streamlined our hydrogen activities group-wide. We made Denmark a competence center consolidating the knowledge for this part of the business, especially in terms also of applications and specific customer needs.

The second one, well, just finalized last week -- a week ago, but most of the work done back in 2025, 15% stake holding in our long-term partner, Oneberry Technologies in Singapore. At the end, creating a regional hub for the further expansion here in this populous region of the world, active region of the world, Southeast Asia. But at the same time after [ 15 ] years of partnership also stepping into a different business models, unmanned AI-based automated security solutions here in mostly a business model that is based on security-as-a-service, long-term lease and rental contracts here with governments.

And now it's up to us to simply assess in which parts of our business and regions can we make use of this kind of knowledge here of a different business model, particularly also to overcome -- yes, naturally existing also CapEx hurdles we have in our mainly CapEx-based business.

So really looking forward to this. I will also be happy to join the Board here of Oneberry as we speak. And yes, try to consistently grow the business. And not to forget, yes, we also linked the final close here with a significant order coming in of EUR 6.6 million size, also contributing naturally to this year's dynamic start of the business.

The second area really is systematically growing our business in the defense, but also public and civilian security business. So it's naturally the military-based part of the business, the government-based part of the business, but also our civilian security business, especially with our customers in the CCTV-based security service business, coming up to about [ 15% ] of the business of the group already. Well, and on the defense part, yes, we will look into this in a minute. We saw some delays in India having an impact naturally on the overall growth, but at the same time, expanding regionally with defense forces here NATO-wide, but also outside of NATO as well as OEM programs being kicked off here in the defense business.

The third element, our business is based on leading technological solutions, making sure we have dependable power that consume less energy here for our customers, power supply solutions that help to reduce the power consumptions for our customers in all our end markets. And I think looking at what we have successfully already commercialized in 2025 is worthwhile mentioning. The one is entering the defense business also with our power supply solutions for man portable and platform-mounted laser systems predominantly used as anti-drone capabilities. We have a long-term OEM partnership here that translated already into a business that is significantly above EUR 1 million in 2025. We are now expanding this as well as presenting this product to other OEMs where we see quite a positive feedback and expect further substantial scaling here.

The other part for the Canadian government and with the Canadian government, we have developed what we call an Arctic power solution, our new product called EFOY Pro Shelter dependable power for border security and surveillance solutions on the Northern Canadian border, sub minus 40 degree C environment, pretty hefty requirements also in terms of autonomy, 12 to 36 months of autonomy. We expect this program to scale in '26 and '27 significantly within the Canadian framework, but the project is also presented here on a NATO-wide basis at the first feedbacks we have here from Scandinavian and also Scandinavian potential customers as well as from the Baltics is pretty positive here. So we expect this to further scale. As said, both products are already out with customers. So they are commercialized.

Now looking into the development of sales, once again, we did most of it already, as I said a month ago. So let me stay at the, I'd say, consolidated level, yes, seeing a decline of the revenue by 1 percentage point to EUR 143.27 million, mostly influenced by a delay in programs follow-on programs for defense customers in India as the main impacting factor here for the top line. Just visiting India a couple of weeks ago, I think we are on good ground to expect a rebound of this business within, let's say, our fiscal year here 2026. The fiscal year in India is ending as we speak here at the end of our first quarter. So we expect, let's say, first activities starting in their first quarter, which is our second quarter.

The other part where we fell short of our own expectations was the organic growth of the business in the U.S. still including currency impacts growing by 19%, almost 20% is a solid organic growth, but naturally not reaching to the levels we had historically there, and we also expect it for 2025 being at around 40%. So we promised 40%, we delivered 20%, not meeting the target at that time. And the negative currency effects in the U.S., in Canada and in India had naturally a further impact also on the top line development.

Just completing the picture here on the power management side, we were particularly happy with the development in the European part of the business, but we saw one major project shifting in Canada here on the power side of the business. which we expect, by the way, to now being decided in 2026 and coming in, in 2026. But in 2025, this was the single reason why we had a decline of the power business in Canada. And so overall, consolidated sales coming in slightly below the forecast corridor of last year.

Nothing I'd say that we are particularly happy with, but I think the facts are clear. And with a sensible planning for 2026 and the growth outlook for 2026, I think we are reacting to this. And with this, I would hand over to Daniel to look into the financial results, starting with the earnings part.

Good morning, ladies and gentlemen. Thank you for joining the call also from my side. Let me provide you some more information and beat to the bone with regards to costs, to the gross margin and give you some more color on why it has developed the way it developed as well as what we see for the current year. When we look at the gross profit and the gross margin specifically, we see that almost symmetrically developed with the cost. We've seen a decline in the gross profit of 1.5%. If we look at the gross margin, we see that the gross margin on group level remained nearly at the same level as in the previous years, even though the gross margin of the segments developed differently.

Overall, we consider the group's gross margin to be on a level which we are not entirely satisfied in 2025. So good wheels. At the beginning of the year, we were anticipating a higher margin level. However, and we discussed that in the previous quarter calls, the economic turmoil, especially with trade politics were a challenge in -- remaining on the margin or increasing the margin level that we have. We set the targets higher. If you look at the outlook for the current year, we do expect to deliver stable gross margins. Whether we'll be able to expand the margins significantly highly depends on how the entire geopolitical landscape will develop with prices for components, with prices for energy especially with prices for the precious metals and platinum that we use in our products.

So far, the way we look at it, we can manage price increases well. But of course, it depends on how high the increase of this cost may be. We had an exceptional impact on our gross profit in 2025 as we had in 2024. So in 2025, we had an exceptional income of EUR 0.6 million comparing to a net expense exceptionally of EUR 1 million in the previous years. Those expenses and incomes relate to provisions that we make a warranty to revaluation of the precious metals that we hold our stock. When it comes to 2024 with the [indiscernible] from the Ballard acquisition that was reflected in the gross profit, and will be provided some more information in our annual report.

Looking at the gross margins of the segments. The gross margin of the segment Clean Energy declined to 45.4%, which is a decline of 1.2 basis points. One of the main reasons behind the slight contraction of the gross margin, main reason is the product mix, which was [ characterized ], Peter mentioned that before. By a lower share of defense revenue in 2025, we were looking at 10% of the segment's revenue being generated in the defense sector that compares to the 18% that we had in 2024 and the segment revenue that had in the segment in 2024, of course, heavily impacted by the defense revenues that we realized in India.

Second huge impact on the gross margin in the segment was the unfavorable movements in the exchange rated -- rates with regards to the U.S. dollar and with regards to the Can dollar. In average, the U.S. dollar depreciated 7.3% year-on-year. That would apply to roughly 18% of the segment revenue and the Canadian dollar depreciated about 5.5% year-on-year, and that would apply that to 26% of those segment revenues. So you see a rather strong impact on this exchange rate in the revenues and then consequently also the gross margin, which has an impact on the segment gross margin.

When it comes to the gross margin of the Clean Power Management segment, we have seen an increase. The gross margin increased to 30% in 2025 from 28.2% in 2024, which is a 1.8 percentage point increase. Those positive impacts result basically from a good pricing power for those products on the one hand side, but also from a higher share of value-added services and higher value-added products that we sold in that segment. That applies to the power management solution as well as the drive motor controls.

Going to the operating expenses, and I would start with the key cost drivers or exceptional cost drivers that we had in 2025. Those of you who have been listening to us in the quarterly reports are already aware that there were certain developments in the cost basis that had an impact -- an exceptional impact on our margins. I would start off saying it has a negative impact on the SFC results. However, we do not consider this to have an impact on the underlying earnings power of the group, given the extraordinary character of those costs.

I will start off with the extraordinary expense for the exchange rate net losses. So the net losses accounted in 2025 to EUR 3.4 million. That will translate in 2.4% impact on the EBITDA margin. I would like to stress one more time that out of those EUR 3.4 million, roughly EUR 1 million has been realized. The rest of these losses are not realized, and you can also see that reflected in the cash flow statement.

Second large driver on the cost basis were the expenses for IT as well as the implementation of our ERP system. Total cost for these 2 items were about EUR 5.1 million, which translates into 3.8% impact on the EBITDA margin. And last but not least, the decrease of the capitalized R&D expenses to total R&D expenses. It decreased from 29% in 2024 to 13% in combination also with a notably higher spending for R&D. The impact on the EBITDA margin is around 1.2%. The total impact on the EBITDA on those 3 specific effects amounted to approximately EUR 10 million in 2025, of which we consider roughly between EUR 6 million and EUR 7 million not to be recurring in the midterm.

Giving you some more color on those effects. So with regards to the exchange rate losses, we had income from exchange rate differences of EUR 2.6 million, which were entirely offset by the exchange rate losses of EUR 6 million in 2025. So that comes to the net effect of EUR 3.4 million and that is an effect on EBIT and EBITDA.

As I mentioned, out of the exchange rate losses of EUR 6 million, approximately 85% were unrealized losses and EUR 4 million of the EUR 6 million related to intercompany position, therefore, also unrealized losses. These intercompany positions are shareholder loans, financing for our subsidiaries all over the world as well as intercompany receivables from the supply to our subsidiaries. The biggest impact with regards to the losses we had from the Indian rupee, followed by the Canadian dollar.

Some color on the extraordinary costs for IT, which are reflected in the G&A expenses. So the cost relating to the SAP implementation amounted to approximately EUR 3.3 million in 2025. We would expect that this amount would also be invested and be expensed in the current year. However, we do not expect that cost to be recurring in the next year. The cost for improving of our IT system, which will also include licensing fees for new software, including the SAP software amounted to an additional EUR 1.7 million in 2025. And this portion of the cost would likely be recurring also in the next years as we will put a special focus further on IT security as well, as I mentioned before, licensing fee for our software.

Lower rate of capitalized R&D expenses. So the total R&D spending in 2025 and that spending is made up of the R&D cost that you'll see expense on the P&L plus the capitalized R&D costs plus subsidies that we received amounted to EUR 11.4 million. That compares to EUR 11 million in 2024. So you see a slight increase in R&D spend of 3%. From this R&D spend in the previous years, we capitalized 29%. In the current year, we capitalized only 30% of this cost. On a like-to-like basis, this would translate an additional EUR 1.7 million of cost that could have been expensed in the P&L. However, the capitalization is an audit function and accounting function.

In 2025, we focus much more on improving, making our serial products more stable, better also with more features. These development costs cannot be capitalized in the current year. We would see a higher rate of capitalization again as we are developing new products, new generation of products and these costs can be capitalized.

So these are the extraordinary effects, as I mentioned before, an impact of EUR 10 million on EBIT and EBITDA. That brings us to our adjusted EBIT and adjusted EBITDA. We had an adjusted EBITDA of EUR 16.7 million in 2025, slightly above the midrange of our guidance, respectively -- slightly above the high end of the revised guidance of specific guidance we published in September. That translates in adjusted EBITDA margin of 11.6% compared to the very good 15.2% in 2024. And yes, it's a decline of 3.6 percentage points.

Adjusted EBITDA excludes the nonrecurring expenses and income as we have in every year. These are -- I'm repeating myself related to the provision in addition to the capital reserves for the LTI programs, stock option programs that we have for management and senior management as well as the transaction-related expenses. The total negative impact on the EBITDA of those 2 cost items were EUR 4 million. So it compares to EUR 2.4 million in the previous year.

The net expense for the LTI programs, SARs, stock options and PSP amounted to EUR 2.5 million comparing to EUR 2 million in 2024, so decently higher. And if you look at the transaction-related expenses, they amounted to EUR 1.9 million. That compares to EUR 900,000 in 2024. So you see that we had a high activity level on our M&A strategy on further driving in growth. And of course, also in these costs is reflected the transaction expenses for taking the 50% stake in Oneberry, but not also Oneberry, there are also some other activities ongoing.

So as I mentioned, the adjusted EBITDA was EUR 16.6 million is 24% below 2024 EBITDA and the margin declined to 11.6%. That contraction is due mainly to those 3 effects that I mentioned before, which is the losses on exchange rate, which is the IT expense as well as the lower rate of R&D capitalized. So as I mentioned, we would not see all of this cost recurring this year. Some of them will recur this year, especially with regards to the IT expenses.

Depreciation and amortization, a quick word on that one. So total depreciation and amortization were EUR 7.7 million above the EUR 6.5 million, which we saw in 2024. Almost 40% of the depreciation is related to IFRS 16, so accounting for the leases, which is a cash expense and were about EUR 3 million in 2025, above 2024 level, it has to do with the fact that we have a full lease in for our U.K. subsidiary, for our Denmark subsidiary as well as for our U.S. subsidiary.

The depreciation without the IFRS 16 impact comes to EUR 5.5 million. And a larger part of this depreciation results to depreciating the capitalized R&D expenses. So out of this EUR 5.5 million, EUR 2.4 million is depreciation from capitalized R&D expenses, which also has no cash impact.

That brings us to the adjusted EBIT. The adjusted EBIT reached EUR 8.9 million compared to the EUR 15.5 million in 2024, and that results in a margin of 6.2% compared to 10.7% in 2024. So a notable 4.5 percentage points below what we've seen in 2024.

CapEx for the year were well below what we've seen in 2024. So total CapEx, excluding the CapEx for right of use IFRS 16 accounting was EUR 4 million at a much lower level than what we've seen in 2024, where the CapEx was EUR 9.2 million. What is the reason for the lower CapEx? Mostly, we had a lot of expansion CapEx in 2024. This expansion CapEx related to building out our Romanian site for the production of fuel cells. It relates to building out our site in the U.K. for the manufacturing for the membrane electrode assembly or the MEA.

And also EUR 9.2 million is reflected the acquisition of the Ballard assets in 2024. So it was a bit of an extraordinary year in 2024. We see that CapEx has come to, what we consider, be a more normalized level in 2025. The split of CapEx between intangible assets and PP&E is about 61% to 39%. And yes, cash and cash equivalents, net debt liquidity position of the group, we are rock solid when it comes to our liquidity position. Cash freely available at the year-end was at EUR 46.6 million EUR 30.9 million lower than what we've seen in 2024, where we ended the year with EUR 16.5 million.

I'll provide you with some details on that in a minute. The financial debt, it decreased to EUR 3.3 million. Financial debt has not changed in terms of what it is. It is mostly working capital lines, short-term debt for SFC Netherlands as well SFC Canada.

That brings us to a net debt or in this case, specifically a net cash position of EUR 43.3 million at the end of the year, below the EUR 56.4 million in 2024. Equity decreased by EUR 0.5 million. That is due to the negative net income or net loss in this case. The net profit was minus roughly EUR 1 million, but the equity ratio remained on the level of last year at 72% compared to 71.5% at the previous year.

So cash flow, why did the cash position decline? The operating cash flow in 2025 came to EUR 17.4 million comparing to EUR 21.8 million in 2024. So that is below what we generated in 2024. But given all the extraordinary costs that we've seen, still a decent level. And that also reflects, as I mentioned before, that large parts of the currency losses had no cash impact because they were not realized. So we still consider that cash to be at a solid level, even though there's room for improvement.

What we, however, see is that the net working capital increased significantly in 2025, totally by EUR 20 million, where we saw a much lower increase in 2024, which was EUR 5.3 million.

The working capital ratio to net sales increased to 37% in 2025. We had 25% in 2024. So what are the key drivers in the net working capital? The largest impact had an increase in accounts receivable, which were cash consuming of EUR 12.8 million. We have seen that the days of sales outstanding increased to 103 days compared to 80 days in 2024. Key reason is that really a lot of customers are using the payment terms to a maximum. We also see that especially larger customers are stretching the payment terms for a couple of days. We have not seen any defaults or any major defaults with any customers. So in spite of the fact that payment terms and days of sales outstanding have increased, any write-offs or the provisions for bad debt have not increased. And frankly speaking, we do not see this in the current year neither.

Nevertheless, we are pushing hard to bring those accounts receivables down and are in constant discussions with other customers to optimize that position. Second largest impact is from the increase in inventory. We see that the inventory increased with a cash impact of EUR 6.8 million. That increase was mostly driven by stocking for fuel cell components in anticipation of higher revenues at the beginning of the year. So the stocking has taken place mostly in Germany and to some extent also in the U.S. All of this material that we purchased will be used. So we don't see any -- use correction or write-off in this inventory. That was one reason.

The other reason for the increase in the inventory was initial stocking in our U.S. subsidiary also in light of the discussion of customs. We have shipped quite a lot of components, quite a lot of fuel cells to the U.S. to optimize customs impact that has an impact also on inventory levels. The days of inventories have increased to 152 from 131 in 2024. Those 2 impacts altogether, if you add them up, roughly EUR 20 million were not offset by the increase in accounts payable, which increased by EUR 1 million only, and that translates into days of payables outstanding to 69 from 66.

After tax payments of EUR 2.4 million, this then results in a negative cash flow from operating activities of EUR 4.9 million. The CapEx or cash flow from investing activities came to EUR 3.7 million, much lower from what we've seen in 2024. And then it goes -- then we have the cash flow from financing activities, which is mostly lease payments came to EUR 3.6 million. That altogether that results in the change of cash of EUR 12.2 million, but still with what we consider a very solid and a good cash position.

With these wonderful [indiscernible] details, I would return to Peter for an outlook and further details.

Well, thank you very much, Daniel. Two things here to close out from our side. First of all, some remarks really on the let's say, geopolitical and macro situation out there and the impact on SFC Energy. Daniel already mentioned, yes, we saw some precious metal cost increase, especially with platinum peaking out last year here and naturally exchange rate impacts. We did some price increases already implemented throughout the entire offering. As always, this takes some time to trickle down, but I think on a good way.

And then direct and potential impact of the war here, U.S., Israel versus Iran. I think we are fortunate that our business model is, let's say, also in terms of energy consumption, pretty light. So we see a direct impact here on methanol spiking up a good, let's say, 20% to 30% here on the substance. But the substance only being, let's say, 10% of our fuel cost as such as this is mostly, let's say, packaging safety and some logistics, we see, let's say, a single-digit percentage impact here and working on, let's say, our customer buy-in here.

The other area is transportation cost. And naturally, we are in talks with key customers to see how we can share the burden here. So from this side and also on the top line, yes, naturally, some projects regionally might see a delay here. But as this region is still for us a business development region in terms of the Middle East, also here, we do not see a significant impact also on our projections. And Israel has been a constant, let's say, customer there also, I'd say, we feel our outlook not impacted from today's point of view in terms of the top line.

So going to the forecast here and the outlook. We see despite the volatility in the macro environment or you see us in an optimistic mode here. We have returned back to growth in Q4 2025 already. We are predicting a range of EUR 150 million to EUR 160 million of revenue. We acknowledge also the feedback that this slide is seen as somewhat conservative by some of you. But at the same time, I think we have it as a sensible planning here. And I think a good starting scenario into the year.

Where is this growth coming from regionally? Well, Asia, I mentioned Singapore already, but also Europe, a good start off here in the first 3 months, and we are expecting a really strong first half year. The other part of the growth, and I mentioned this also initially, is definitely a significant growth in our defense and public security business up to a range of 15% to 20% of group's results. And still, the underlying growth here in our industrial business is also seen as, let's say, a positive contributor.

Oil and gas benefiting here from the current oil price levels. We see CapEx programs being, let's say, some of them accelerated in Canada already being there last week seeing our team, but also seeing some of our, let's say, users, yes, this has for this part of the business, obviously, a positive impact.

Looking at the profitability, we see EBITDA adjusted increasing to EUR 20 million to EUR 24 million range and the EBIT adjusted between EUR 11 million and EUR 15 million range. So both indicators, both core KPIs we have on the profitability side should see, I'd say, a significant increase. Main factors, top line growth, sales growth, higher-margin business in Defense & Security as well as a good mix on the industrial side, and some operational efficiencies.

We do not neglect some of the residual risks, naturally exchange rate, but also naturally the spending on ERP as well as cybersecurity. But at the same time, we feel that this is catered well from today's point of view. So again let's say, all this background, we see ourselves well placed for growth again and also increased profitability. Looking forward to your comments and questions, and thank you very much for your attention so far.

[Operator Instructions] The first question is from Karsten Von Blumenthal. First Berlin Equity Research.

My first question is regarding your Oneberry acquisition. You have acquired 15% and you have concluded this recently, and you still have a 50% option to increase to 50%. What are your plans there?

Peter, yes, I think we are still, I'd say, having been working together for 15 years, we are, I think, doing the right thing now stepping in with a limited risk also seeing the business developing well on their end. And I think both parties at the end of the day are operating in good faith here to assess also a majority option. While I think it is not a compulsory step here, we still can achieve our strategic targets here.

And finally, you know us well enough. We are always pretty cost and price sensitive here in M&A steps. It will definitely also depend on the development of the business and then the valuation is the key factor of decision-making. But knowing each other long enough, we can operate now for a foreseeable future in this format, and we'll take it from there.

Great. That helps me. My second question is regarding your CapEx budget in 2026. Daniel said that in 2025, it normalized. So could you roughly elaborate on your budget for CapEx for PP&E and intangibles in 2026?

Yes, Karsten. So the CapEx we would see for 2026, a little bit above what we've seen in 2025, but that is mostly related to the increased capitalization of R&D. So when it comes to PP&E, we do not see any huge investments above what we've seen in 2025.

Last question. I mean, we talked just a few weeks when you published your preliminary figures. If you recall this time between the call today and some weeks ago, is there any major change you have perceived? Or have things developed in the way you said it? I mean my impression is it is developing well, but perhaps I have missed anything. So perhaps you could elaborate on that.

I think we see ourselves well on track here in the -- from different perspectives. The one is we see, let's say, significantly higher dynamics in the defense part of the business. I mentioned this, we expect a rebound in India, but we also have signed initial, let's say, OEM program steps in the meantime, in Europe here and on the industrial side, a very, very good start here in the European part of the business and also a good start, especially driven also by oil and gas business in Canada.

So overall, I think well on track, but still, let's say, especially the expansion on the defense side of the business, I mentioned that is contained in the outlook, still is contingent to a couple of decision points regionally, but also on the OEM level of business. But also there, I think within also expectations in terms of time line.

Gentlemen, at the moment, there are no more questions. I would like to turn the conference back over to you for any closing remarks.

Well, thank you very much. Thank you all again for taking the time. As always, don't hesitate to reach out to us here Suan, Daniel, myself for direct interaction and follow-up questions. With this, happy to close the call right now and wish you all a perfect day. Thank you very much.

Good morning, ladies and gentlemen. Thank you very much to all of you for taking the time here for the first time in this calendar year to join us for our presentation for the preliminary numbers and at the same time, also the publication and the presentation of the guidance and outlook for 2026.

Together with my colleague, Daniel, we will present you the key elements of the preliminary unaudited numbers so far and naturally also look forward to our question-and-answer session after this. Let me start off with, let's say, a critical and quick look back. I think we are looking back at 2025 as a year definitely of challenges, but also a year of consolidation.

And at the same time also, I think we have made good use of this period here for a further strategic alignment and focusing ahead of starting era of growth again. Back to growth, I think, is also what we see here with our last quarter of the year 2025, the fourth quarter with about EUR 40 million of revenue, also recording the strongest quarter during this year, also with decent profitability.

At the end of the day, if we look at the growth drivers here in the closeout of the year, we are looking again at our industrial fuel cell business here with, let's say, the known end markets. And we are also looking at the European power management Besides, let's say, consolidation, I think it was a clear focus and we, let's say, allocated the right resources to further implement the long-term strategy during 2025, looking at 2 elements from today's point of view.

The one is really expanding our international footprint, further the international presence, the customer proximity. But then at the same time, I think, again, investing into our competitive advantage, our competitive strength through technological leadership through new attractive products introduced into the market.

Let me look into the international element first, expanding our footprint by establishing a more significant site in Orem Salt Lake City, establishing and preparing also for the local production in the U.S., again, driven by the need for customer proximity, the expectations of our U.S. customer base, but at the same time, actually also shielding us relatively well then against, I'd say, tariff and other trade hurdle implications over time with the local supply chain to be built up.

Looking at, let's say, the assets that we, some time ago, also purchased here in Denmark in the hydrogen fuel cell business, I think we have turned this into an operating and profitable hydrogen fuel cell business with a customer base in critical infrastructure from telecom to data network operators.

Well, and the third one, yes, the planned strategic investment here into our partner in Singapore, where we expect to close, let's say, in the near future, creating a regional hub for the further expansion in Asia, but also giving us and allowing us access to a fast-growing security as a service business here with government customers.

On the technology end, I think apart from, let's say, the existing product suite, I think especially in Defense and Security, we have 2 new offerings that are already contributing that already have contributed to the business here in the low single-digit million format. The one maybe new for some of you, a defense power supply platform developed together with a French OEM here out of our power management business in Denmark for laser application portable and land or vehicle-based lasers, one of the key applications drone defense.

We are showing this since yesterday as one of the news here also at the [ membrane ] tech in Nuremberg and have quite some positive feedback also from, let's say, not just the existing users, the existing customers, but also from potential new OEMs.

The second one in Canada, we have invested a good 2 years of collaboration here with a customer developing what we call the EFOY ProShelter, an Arctic power and energy solution shelter-based for extreme climate and temperature exposure below minus 40 degrees C with extremely long autonomy between 12 and 36 months of autonomy. The first systems are already deployed in the northern part of Canada, the northern border also of Canada.

Totally, we expect here from both product lines, a scaling effect already, let's say, in the running year with the existing customers, but definitely also new customers. And if we look into the Arctic energy supply, naturally, there are other regions in the world where we see already explicit demand. There is, with all of this, a structural shift in our business towards defense as well as the public and civilian security applications.

If we look at all of this in 2025, this all added up to almost 50% of the total group revenue. With existing products scaling, but also new products now contributing to further growth, we see significant momentum in this field of the business naturally also against the known geopolitical situation. As per today, we are, I'd say, unfortunately seeing the fourth year of war ongoing here in the Ukraine.

What do we expect here? Significant preparation for OEM programs in the defense sector, mostly auxiliary power systems either for vehicle or dismounted applications. But we are also looking at, let's say, the general hybrid energy solutions as a need for resilient and dependable power. So it's at the end, a combination of our fuel cells with batteries and wherever possible also with solar capabilities.

We also expect a regional growth in this sector. And I think important also for all of us who have -- for all of you who have witnessed with us also these delays in programs in India. In the last recent discussions over the last couple of weeks here in India, we see a, let's say, a resumption of some of those programs happening also near time at least during the course of the year.

The expectation here for this part of the business to increase to approximately 15% to 20% of the revenue seems realistic. But then also if we add the civilian security part, all the Security as a Service business, I think we also see 60% as a mark to be reached within this year of the total group's revenue as realistic sales, good products and solutions with attractive margins, and Daniel will go into this in a second.

Apart from this, we also expect our industrial business to contribute and deliver, I'd say, organic growth here across the fuel cell as well as the power management business. We also look at the order intake there, we also see a return to growth with the fourth quarter recording about EUR 40 million of order intake, which was the highest intake of all quarters of last year.

And we've seen also a dynamic development in the recent, I'd say, 2 months or also first part or the first part of 2026, we see several major projects out for decision within the foreseeable future. And based on all of this, we expect a very strong first half of 2026 in terms of overall visibility. If we now look into the sales and earnings of 2025 in a more concrete way, yes, we are seeing sales of EUR 143.3 million at almost the same level of 2024, 1% down.

This is slightly below the lower end of the target corridor we had published also by November. I think also a conscious decision from our side not to overstretch, let's say, revenues and push projects here in the last weeks of the year simply at the cost of impacted margins. We also see this in the profitability of the fourth quarter and that we also -- we see the overall factors leading to this EUR 143 million not reaching the original plan for last year.

If we look at the major deviations, I mentioned it already, we had to digest delays in defense projects in India impacting our Asian business. The overall uncertainty, also macroeconomic uncertainty, also delaying decision-making processes hurt us in the new business development in the U.S.

Finally, I think we delivered still an organic growth of around 20%, which per se is nothing bad, but still behind the historical growth numbers in the U.S., but also below, I'd say, our own expectations as well. And the third element, currencies, functional currencies going against the euro here had also an impact metric on our euro-based group's revenue.

With this, I think I would hand over to Daniel to lead you through the earnings part of the preliminary numbers.

Good morning everybody. Thank you for joining the call. So neither wanting to repeat the last quarter's discussions or preempting that we will have. I think the major drivers when it comes to earnings this year were characterized by high losses from exchange rate translation and high cost for the implementation of our ERP system at the group level as well as investment in IT security.

So I think this is the overall topic that we've discussed in the last quarters. And I think this is also the topic that we're looking at the fourth quarter with some slight changes and what seems to be a light at the end of the tunnel. You've seen our EBITDA, adjusted EBITDA, which is EUR 16.7 million, translating into a margin of 11.6% and our adjusted EBIT, which amounts to EUR 8.9 million, translating into a margin of 6.2%.

So both of these key financial indicators are slightly above the higher end of our latest forecast, which we published in November. One of the reasons for the better performance in the first quarter than we anticipated. I think one of the reasons is the product mix in the first quarter, which was quite favorable. The second one is a good price implementation that we have, especially in SFC Netherlands as well as SFC Canada, but also SFC Germany.

We had some, to a small extent, onetime effects, all of this leading to a higher -- slightly higher gross margin than we anticipated in the worst case in our last forecast in November. Also, what we saw in the first quarter is that for the first time in 2025, we had a balanced result from exchange rate losses, i.e., the losses were very, very low in the fourth quarter, which also helped.

So there was not a significant negative impact from other operating expenses. And all over, keeping costs at a decent level also helped in generating the slightly above EBITDA and EBIT. We see that the margins are that is not a big surprise, below what we have seen in 2024. We're looking, as I mentioned before, at an EBITDA margin of 11.6%, still a double-digit one, but apparently away from the 15.2% that we saw in 2024 and also slightly lower of what we anticipated for the given reasons that we have discussed in the first 9 months of the last year.

I think to make a summary and we'll discuss the results much more in detail once we publish our final numbers, it is a, I would say necessarily super happy result for 2024 -- 2025 apologies. we've seen in the fourth quarter some factors really driving our profits up again and most of it being apparently the gross margin, which goes straight into the EBITDA margin.

So very short and sweet from me this time, I'll pass it back to Peter.

So also from my side. Now looking into, I think, the guidance and the outlook for the year. We, I think, can give a confident outlook based on facts for 2026 after, I'd say, the challenges I think we have to address last year, as mentioned just before.

At the end, we see still a consistent increase of energy demand for dependable, resilient and sustainable energy, decentralized applications driving, let's say, our customers' needs -- at the same time, I mentioned this before, we have the structural shift in our business to the defense, public and civilian security business with the existing customers, existing products, but also new and scaling applications and some significant decisions still pending in this area.

And regionally, we expect larger impetus coming from the European and Asian, especially Southeast Asia, but also a rebound in India, bringing a significant growth impulse. We are not neglecting the risk. I think we are still operating under a challenging overall macroeconomic environment. Geopolitics strikes to a certain extent, actually our customers' needs.

We still see tariff risks and trade policy and trade hurdles being a factor to be, let's say, also assessed. But at the same time, we have, I think, also experienced a certain shielding in some of our core businesses and by localizing, especially in the U.S. and having already localized in India, we also see a shielding out of this. So overall, we expect a healthy growth. The corridor, we see, let's say, between EUR 150 million and EUR 160 million of revenue for 2026 with the Clean Energy segment growing slightly faster as also historically seen.

And at the same time, we also see an overproportional impact on margins and improvement of margins. Daniel has mentioned also the effects already in Q4. We are consistently also expecting a proper implementation here, but also an operational leverage for growth. At the same time, we are not neglecting the risk here of precious metal prices developments and also currency risk.

But the range we are seeing as a target range is an EBITDA adjusted between EUR 20 million and EUR 24 million for 2026. And on the EBIT adjusted level here on group's results, we expect the range between EUR 11 million and EUR 15 million as the realistic end rate from today's point of view. So after a year of consolidation, you see us here with, I would say, a sensible planning, a realistic view for risks and opportunities.

But at the same time, we see ourselves back at the growth trajectory needed and doable. And I think we are also, let's say, as mentioned, seeing a number of initiatives that are, let's say, that have been worked on for quite some time also during the last year coming to a decision-making stage.

So with this, I would like to conclude here and hand back to Moritz to open the floor for the Q&A session. Thank you very much.

[Operator Instructions] And the first question comes from Karsten Von Blumenthal from First Berlin Equity Research.

Happy to hear that especially regarding margins, EBITDA margins, EBIT margin, you are back on track. It's better than I expected in Q4, and Daniel mentioned the reasons for this. My first question is regarding the U.S. business.

Peter, you said that overall in 2025, you grew roughly 20%. As far as I remember, in the first 9 months, the U.S. growth was roughly 29%. So this is an indication that Q4 in the U.S. was relatively subdued. Is that right?

Karsten, Peter here. I think what we see here is some shifts between quarters. I think it is not something that we see a slowdown here. I think what we see in the what we saw in the third quarter was, let's say, the softest demand in the fourth quarter coming back again and also, let's say, a much broader customer base.

Well, getting in starting the year with a significant dependence from our largest customer. I think we now have started to, let's say, see the distribution of the customer base becoming broader and broader. So at the end, what you also see naturally, if we look at the 20% growth, and this might be also some differential here, we'll look into this offline. This is naturally after currency effects, we are seeing, let's say, 19% to 20% growth.

All right. That helps. And happy to hear that your customer base has broadened. Could you give us a bit more details regarding the state-of-the-art of your U.S. production site. So what has happened in the last few months? Where are you exactly? Could you shed some light on that?

Yes. We have, let's say, continued with the hiring, the training of people. We had them over here. We had them in Romania. The classical preparation work. All systems are in place. ERP system is up and running.

And pilot production can, let's say, start any day at this point in time, I think we feel well prepared here for delivering, and this will be a major shift products for the U.S. now out of our Orem facility as of this quarter.

Perfect. In this quarter, I'm happy to hear that. I remember that last time we talked about your relatively high working capital. That is nothing we have now discussed with the preliminaries, but have you perhaps a qualitative update on your working capital? Were you able to improve your position there?

Karsten, so we've not been able to improve our position significantly in the fourth quarter. So overall, I think from our call, which we had in November, working capital is still at a decent high level. Most of the components, if you look at the inventory, there's nothing in there. I mentioned already in November.

A lot of stuff that we have in anticipation of an increased business, which we've seen in the fourth quarter. But also with a strong quarter in the fourth quarter, you know that accounts receivables tend to increase as of the 31st of December.

So the message is the 2 drivers, inventory and accounts receivables are still expected to be at a rather relatively high level, but we expect that now as the business increases and goes up again that at least inventory will go back to these levels. Accounts receivable will remain what it is with the growing business.

That means we should rather look into, well, H1 figures to see you coming back to the levels you had, say, at the beginning of 2025?

I think H1 is the right period to look at. Remember, some of the components, especially platinum has increased in pricing significantly. So that also has an impact on the working capital, i.e., the inventory, not saying that it is driving the inventory. We are managing inventory, but we still want to make sure that we have sufficient components in -- on our stock.

And the second driver as a general driver of increased inventory is, of course, as we open up new manufacturing sites inventory will go up if we -- as we start ramping up certain sites, inventory will go up because in the beginning, and that's very similar to what we've seen in the last years with India and with the U.K. you have a higher level of -- or double level of inventory in the German as well as in the new manufacturing.

All right. Thanks for that update regarding working capital. Perhaps one question to your surprisingly for me, surprisingly high EBITDA guidance for 2026 and the margin.

So I assume better product mix and the costs, the one-off costs in 2025 will not -- will no longer burden you in 2026, say IT cost, ERP software, security, all this seems to be through. And yes, you go back to a decent margin level in 2026. Is that right?

In part, it is right. But if you look at the expenses in a different way, when it comes to the gross margin range, we will see a bit of a wider than normal range with the gross margin development, which could be gross margin remaining stable to gross margin improvement. I think what we're dealing with, and I mentioned that about when I discuss the inventories, of course, you've seen that platinum prices have increased significantly in the last 6 months.

So that has a result on our bill of material. We, of course, intend to pass on those costs to customers. Let's see how the platinum prices will develop that will have -- and let's see how we can pass on to our customers that will have an impact on the rate of the gross margin. You've seen the whole custom discussion having reopened just in the recent days also remains a factor that could have an impact on the gross margin one or the other way.

And still exchange rates tend to be volatile also impact on the gross margin. So when it comes to the cost basis and the margin, the EBITDA and EBIT margin, gross margin has a direct impact and the range of the gross margin is a little bit wider. When it comes to sales and marketing, I think we'll see a slight increase of those expenses, nothing significant, mostly driven by the regional expansion and new markets.

So where we would expect lower expenses in 2026 is the R&D expenses is R&D expenses expensed over the P&L, the R&D spending, which is the expenses plus what we capitalize will increase or we expect it to increase slightly. But what we also expect this year again is that the capitalization rate as we're doing new products and investing in new products will be higher than what we've seen in 2025, which will then lead to a lower portion of our R&D expenses hitting the P&L.

G&A, we will still see high investments in the IT and ERP. So I would not say that those costs will go significantly below what we've seen in 2025. The probably remain at a very similar level over the entire year. What we do not expect or it's very difficult to forecast. I think this is one of the drivers in the margin is, remember, we have losses from exchange rate conversion reaching almost EUR 4 million.

Of course, in our forecast, we do not consider losses at this high level, which has a huge impact on the EBITDA. Apparently, if the U.S. dollar and the Canadian dollar and the Indian rupee start depreciating at the same speed or the same amount as we've seen in 2025, that would have a negative impact on our EBITDA and our EBIT. For the time being and also based access to that we have. We don't see it in this amount. But again, that remains a risk. Does it help?

Then the next question comes from Usama Tariq from ODDO BHF.

Congratulations on the great results. I have a set of questions, 2 to be precise. Firstly, on the FX going forward. So there was a lot of expectations for negative FX impact this year. And of course, that has been realized. But going into 2025, could you -- you already indicated that the higher adjusted EBITDA guidance will somehow be affected from a relatively better FX. Are you going to actively get involved in hedging FX in 2026?

And my second question would be a little bit more general in nature. That will be -- I see a lot of fuel cell peers in the last 6 months have had a really good run, Bloom Energy and [ SLS ]. They are primarily focusing the data center market. I understand that the power generation for the units for SFC is not as strong as required for data center, but is that also a market you are looking at? Or is that just totally not something that you target?

Nice having you on the call. When it comes to FX, what I mentioned just to Karsten is that, of course, we are more conservative with our FX assumption for 2026, still based on what we see or what we saw as a consensus in the market from FX research. So a little bit difficult to really say we're going to end up within a year, but we would expect a slight stabilization.

We don't see any gains from FX development. When it comes to hedging, so of course, we're looking here and there into some hedging of FX may enter into some hedging. I cannot exactly tell you yet because hedging has become very expensive. And then if you look at it, it has 2 impacts, right? So of course, the hedging will if FX decreases or depreciated, improve your EBITDA, but it will decrease your cash flow.

Hedging those positions have become very expensive given the volatility of the exchange rate and also the exchange rate that we are dealing -- so you will see on the one hand side, and you know this much better than I do, a positive effect on the EBITDA and a negative effect on the cash flow. That's why if you look at the cash flow also in the 9-month cash flow, we don't see a huge impact from the FX expenses because most of them are noncash long-term intercompany financing.

So let me look at it really on a basis what the cost of hedging is and what the benefit of it means actually also in terms of what is the cash impact and the cash impact will not be low. Remember also, we're looking at IFRS 18 being introduced mandatory from 2027 so they're going into details from 2027 with the IFRS, you'll see the presentation of AX results differently from what we see it right now, but I'll comment on that a little bit later.

And then I come back to the data center question. Well, just recently, we had a very, very -- and I personally also was there with the team, a very interesting meeting with the largest data center provider in the UAE -- when the CEO there showed me the 32 diesel gensets here in the backyard as the backup power, it was obvious they are looking for a more sustainable solution there just replacing the conventional backup power.

We are looking at data center projects also in India as India wants to become a hub here also on a global scale. It's one of the initiatives. But I would be really negatively surprised if we could not secure our first project, although recognizing that there are power levels for the, let's say, largest sized data centers that are beyond also fuel cell capabilities even of other players. I think there is a good starting point here at midsized data centers, and we are working as we speak on...

Very grateful. So if I understand correctly, please correct me if I'm wrong, data center as a general opportunity is for you and you are actively working in that. And you wouldn't be surprised if you get some order in 2026 this year from the data center end market.

Well, we are making all efforts and focusing naturally on the higher power range on our hydrogen-based product range here on this as one of the upcoming markets. And I can confirm what you reiterated.

Then the next question comes from Robert-Jan van der Horst from Berenberg.

So I have 2 questions. The first one is, could you just give me maybe a quick update on what you -- or maybe just a little bit more color on what you expect from the Indian defense program. When I understood correctly, it was in part delayed and in part, funds were repurposed for drones. So do you expect it to come back significantly this year? Will it stretch out more?

Or will the volume overall decline? Just an idea where we are at now. The other question is regarding the one-offs for the IT and ERP projects. Could you give me a rough estimate how high the effect was in 2025? So that would be my 2 questions.

This is Peter. Talking about the Indian defense programs, as I said, we just recently returned from India having a yearly kickoff there and also the review of the forecast, we are expecting, let's say, some of those programs now again resuming and restarting. And I think we also got a good data point in the discussion with also a major defense player there in India in the defense vehicle business.

They had to suffer from the same fact that funds were repurposed and literally was said basically, well, for 9 months, we didn't get an order and now it starts again. So I think we were not the only one suffering from it, which for us also was a validating point to say to clearly state, yes, the business is intact. The business case is intact that the moment the programs resume, I think we will see a rebound here.

Also in conjunction with this, we did a very conservative planning, call it, a sensible planning in our Indian defense business. And I think we have all the reasons to believe that we will, I'd say, have a good chance to come in above the current planning.

So when it comes to European IT and one-offs in 2025, I'd say that we're probably looking at anything between EUR 2.6 million and EUR 3 million one-off -- that does not reflect the entire investment that we had in IT and ERP system.

So a certain portion of that will be recurring, especially stuff like licenses, like maintenance, which will be higher going forward on a recurring level. I think one-off really mostly in consulting, mostly in implementation of software components is, like I said, anything around 2.5 million to 3 million.

Then the next question comes from Michael Kuhn from Deutsche Bank.

I'll start with, let's say, the visibility. You mentioned good visibility, especially into the first half. Should we make out of that, that, let's say, the guidance as we look at it today is front-end loaded?

And also in that context on backlog conversion, I think backlog around 80% at year-end. How quickly will that translate into sales? And let's say, what major projects you're working on where you would foresee entering it into the backlog over, let's say, the next 6 months with the realization of the project in the same year?

Michael Well, I think if we look at the planning as we have it right now, I think we see as, again, repeating myself as sensible and I think realistic, also taking a learning also of the experience of last year.

And then if you look into the order intake over the last couple of quarters, yes, you see a consistent increase here over the last 4 quarters here, culminating in Q4 with over EUR 40 million, but still my, let's say, the backlog alone, I think, is not that decisive part. As you rightly said, it's about the conversion.

We have also significant parts of the business, especially on the clean energy fuel cell side, industrial fuel cell business where you usually have, let's say, an in-quarter conversion. And therefore, I think it's always a combination also as you rightly concluded, it's the backlog, but it's also the project pipeline. And as mentioned before, we are seeing some significant decisions here being worked on to be expected and painting really for the foreseeable future, talking about, in some cases, weeks, some cases, maybe, let's say, something in the next quarter.

On the defense side, it's about, let's say, OEM decisions, but also regional programs. the rebound also we discussed it in the Indian programs. their fiscal year starts on 1st of April. So that's something expected, let's say, for the second half of the year and the summer. But then also on the civilian part of the business, and as I said, it's a combination.

It's, again, a solid and robust growth in the civilian part of the business, but it's, let's say, a more dynamic view and a more dynamic situation in defense and public security. And if you give us a couple of weeks and we watch out for, let's say, we together watch out for what we can, let's say, execute here, I think we get, let's say, even more visibility beyond, let's say, the first half of the year.

Understood. Then on the U.S., with the production about to ramp and first product to be delivered soon, will that do you think influence the behavior of your U.S. customers by, let's say, removing tariff uncertainties and delivering a U.S.-built product. So should we expect a, let's say, more dynamic buying behavior in the U.S.?

Well, I think definitely, it is going -- it has an impact because it's one of the concerns voiced to us by customers at the end, having a key component coming, let's say, from Europe, be it from Germany or Romania as we have it right now is seen widely as a risk per se in the supply chain. We are removing this. And naturally, they can also, let's say, reduce, let's say, their cycle times, be it an advantage for us or not.

But at the end, for the customer, it's a good thing. We are able to, let's say, satisfy their demands also on shorter notice without, let's say, longer planning, including logistics times. So overall, definitely, does it eliminate all impact of uncertainty looking at the last couple of days, I do not think we can take this general conclusion here.

But long term, it's the right path. They want us to be there. They want it made in the U.S., and I think that's what we have to deliver apart from not ignoring, but apart from, let's say, the uncertainties out of the trade policy of this administration.

Yes. No, fair point. One more on business mix. You mentioned 15% to 20% defense. And then did I get that rightly, another 60% on top from security/surveillance?

No, this is, let's say, additive. So the 60% is including also the military part of the business.

Okay. Understood. And then last question on this product you mentioned being deployed in Canada with the very long working times and temperature resistance. Is that also something thinkable for, let's say, Eastern European or Scandinavian border protection, where there's a lot of talk going on, obviously. And could that be a, let's say, significant use case going forward?

That is definitely our expectation here. As I said, we have a clear path of scaling here with our existing customer. And that's, let's say, at the end of the day, a NATO force, and we have naturally made use also of the presence of many of our customers and decision-makers here during the Munich Security Conference to get this out and show it as a solution here for all the other NATO and non-NATO forces.

So it is -- what is the application? It is uninterrupted dependable power here with -- with low to no temperature and noise signature. And at the end, it's for sensing surveillance and data transmission and operating periods between 12 and 36 months in really remote locations. Right now, yes, along, let's say, a new marine let's say, logistics course in the northern part here of the Arctic based out of Canada, but naturally there are, let's say, all other locations also suitable and Scandinavia and, let's say, Northern European and Northeastern European locations, too. So scaling this year with the existing program, but deployment in other regions is exactly the plan.

Then the next question comes from Malte Schaumann from Warburg Research.

First question is a follow-up on the defense part. Could you remind me what the defense revenue share was in 2025?

Around 10% due to the drop also in India and expectation this year is there's a healthy chance to at least double this. But the part is at the 15%.

Okay. And what do you expect to be the main drivers beside the recovery expected to happen in India? So can you provide maybe some more color on what are the major building blocks for the increase?

Absolutely. Yes, we are expecting some, let's say, OEM decisions, but we are also expecting some, let's say, decisions out of regions where we have had, let's say, a lot of business development and a lot of project-based business, new projects are up for decision. So it's OEM and regional expansion.

And we have developed those 2 new products there. We talked about Canada a minute ago, but also on our power supply offering. We have this product out there in a fast scaling laser platform, portable land-based vehicle-based main application drone defense, and it is, let's say, the scaling with this OEM. By the way, we have approximately, let's say, 400 of those units already out there in the field.

And naturally also other OEM users here in terms of laser technology on the defense side. So it's a combination. It's not the one big project that makes it all. So we also think this is, let's say, taking risk out. And as I said, in India, I think as of April, we expect, let's say, to come back to, let's say, a growth curve.

Okay. Good. Defense alone, the growth you expect in defense alone is broadly covering the full revenue range you expect for 2026, which would then imply you expect basically no growth in all the other areas. So maybe you can add some more what do you think about that thought?

Do you see any opportunities in security applications, industrial applications, et cetera. So with a strong growth in defense, so then the guidance does not look very ambitious regarding all the other businesses.

I think naturally, there is also an element of learning in there out of last year's experience where at the end, let's say, an add up of multifactors led us to miss the original and I would say, justified ambitious plan. I think we have, let's say, taken as I think as a reaction to this, a more conservative, but still, let's say, ambitious growth plan, not neglecting that still, let's say, risks are out there.

We know how fast delays in defense projects occur. And half a year, let's say, goes by without the decision is not something unheard of. So at the end, I think the truth is somewhere in between. We see still, let's say, the organic growth in the industrial business, fuel cells and power supplies intact. We had an impact in Canada on the power business last year with a single project being, let's say, not decided.

But overall, also there, we saw, let's say, a very stable environment with, let's say, which is also the underlying assumption here. But yes, if everything adds up in a positive way, we will be all happy to look at this and think about, let's say, the guidance again.

Yes. Good. Then on the gross margin again, you mentioned several factors, Daniel. But if I got you right in the end, you expect flat to slightly -- potentially slightly increasing gross margin. Is that right?

Yes. Looking at from comparison to 2025, which is right now still the gross margin, but it's not bad. I would expect a flattish gross margin on the lower end, but I will still look on the upper end gross margin which increases.

As always, remember that the rough guidance we're giving is gross margin can go up on an annual basis, anything between 1 and 1.5 percentage points. So we will not see any jumps on the upper side, which is beyond that.

Then we have one follow-up question from Usama Tariq from ODDO BHF.

Just one follow-up question for 2026. How do you see the balance sheet going into 2026? Do you still expect it to be net cash? Do you think you will take some debt financing? Any pointers there would be really nice.

So when it comes to the balance sheet, yes, I would see still net cash. I would still see us to be cash generating. doesn't need super complicated math. If you look at the 9 months, if you see the results of the fourth quarter from a purely operating cash flow, we are positive on operating cash flow. The key liquidity driver of consumption is really working capital.

So that's where the cash is getting consumed. If you look at CapEx, we do not expect any huge CapEx programs in 2026, similar as we've seen it in 2025. So to get to the point is, yes, still net cash positive. when it comes to leverage and financing. Let us see, we do have certain credit lines in place and see how we can draw them down given the current liquidity that we have, we may not use that excessively. And then, of course, we still have the variable.

We are still looking and that is not a surprise at potential acquisition and/or investments into strategic partners. As always, those processes are something where you can say could happen, could not happen. There's a lot of variables out there. But of course, we're confident we would not go into the exercise we believe that there would be a positive result or outcome of such a transaction. And depending on where and how we do a transaction, we could look into leveraging the purchase price of such a transaction.

And if I may just add on it on the acquisition part, what geography would you be targeting? Would you still be looking towards an aggregator? Or is it still -- or something on the technology side? Is there something in the pipeline? Or do you really are just looking currently? Any pointers there would be great.

Well, it hasn't really changed the strategic focus of what we have done in the past and we've been looking for. First of all, yes, it's a regional expansion and getting deeper into certain region markets. Of course, North America remains on our radar screen. Let's see how the overall environment develops. Of course, Southeast Asia remains on our radar screen.

The same thing here, regional penetration getting quicker into the market and/or into certain sectors. We're also looking or maybe looking at some opportunities in Europe. And then from a technology point of view, also, yes, we are looking at potential higher power opportunities on the technology side where the technology complements our and PE portfolio. There are assets out there, which we would consider to be attractive.

So yes, we are looking, but we're looking purposefully. And when we're looking, we are also engaging into discussion being understood that we invest prudently and looking at opportunities very cautiously. But yes, the opportunities are out there, discussions and you see that if you look at our transaction expenses that -- which are good level of the transaction expenses is a good level indicator of the level of engagement.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Dr. Peter Podesser for any closing remarks.

Well, yes, again, thanks, everybody, for your time, your interest. As always, I'd say, Susan, Daniel, myself, we are available for any direct interaction and follow-up. Yes, you see us here, I'd say, confident for 2026, optimistic based on facts.

But at the same time, I think you also see us inspired and motivated with the dynamic environment, by the dynamic environment we are experiencing here in the first part of this year. And we will be happy to report on further milestones as soon as we have them. Thank you very much.

Good morning ladies and gentlemen, and thank you for joining us in this call presenting our Q3 and 9-month figures as well as an overview of the business right now. Together with Daniel, we will lead you through all the key figures, but also key facts relevant to the 9-month period right now, but also naturally onto the outlook. And thereafter, we will be happy to answer all your questions. No question.

We are looking back to a soft quarter. We're looking back also to a challenging period here in the business. We have to say, as also anticipated as this was one of the key reasons where we saw ourselves obliged to bring down the guidance back in Q3 at the end of July. But naturally, starting with this point, I think we want to give you, let's say, a solid and concrete analysis on this. If we look at the development here. In the first 9 months, we see a slower growth than originally planned. in all parts of the business. I think if we look into the main reasons of deviations, I think we have to start off with the biggest impact on the defense business.

In India, we saw a postponement of the follow-on programs here for our M&A and JENNY deployment, M&A and JENNY fuel cell deployments to the Indian one, based on a decision that was basically a repurposing of funds during this current fiscal year. We have spent quite some time in various meetings on site in India. And I think within the last 3 months, we see I think we see solid signs and we see, let's say, basis also for a rebound within, let's say, the next fiscal year here for the business in India. Maybe not back to immediately the levels of the 2024 on our business third, definitely higher levels than we see it in '25. Two additional elements here. We have signed service and repair contracts comprehensive maintenance contracts now for all the deployments with the Indian Army, which going forward as of Q4, and we have signed them last Friday. So going forward, this is basically also covering more or less lower cost and also yield proper capacity loading here for our operation. In India, and we have also started last week and local methanol filling here as we do it in other parts of the world, North America and Asia as well. So we are also able now to provide local methanol address also cost concerns from customers there and also see this as the basis also for the rebrand. So India, the first element here of deviation this year. Definitely, I'd say, volume-wise, the biggest impact.

If we look at our organic growth, we also see growing -- we still see a growing business in the U.S. Overall, in the first 9 months, we see about 28% growth, but we have to say, especially with new customers, we were expecting also based on historical growth rates, a significantly higher growth. The overall economic uncertainties have an impact on decision-making of our customers there. And therefore, we have missed that on the original plan to see growth above 40% as said, 28% organic in the first 9 months and a corridor that we also expect until the end of the year is, per se, a solid growth number, but definitely not what we have planned for and what we expected. The third element, and Daniel will go into this. Yes, we have seen 3 functional currencies, I'd say, devaluating significantly against the euro U.S. dollar, Canadian dollar as well as the Indian rupee with an impact on sales and earnings getting into this in a bit.

If we look now into, I'd say, the reaction on these developments, I think we are seeing first fruits out of, let's say, cost alignment and cost measures that we have implemented was immediately in third quarter, we are seeing, I'd say, a normalization, especially on IT and our key spending and I think also functional cost, you will hear from Daniel is, I think, an alignment on what we implemented. As also mentioned before, we are not talking about here now significant head count reduction at all. I think we are in a selective hiring mode here in those areas where we see growth, and we are reallocating also resources to those areas where we see growth. And we are taking capacity out in those areas where we don't growth.

If we now look into the third quarter, we have to -- we are seeing a significant increase especially on the order intake side, which also is the basis for us expecting a strong fourth quarter. We are over seeing an increase to a book-to-bill ratio of compared to about 0.76 in the first half of the year and combined with, I'd say, a product mix also impacted and positively impacted by a higher defense sales ratio in the fourth quarter, we see a positive impact also in the fourth quarter. If we now look also into, I'd say, the next steps of implementing our strategy I think the acquisition of a 15% sit in Oneberry Technologies in Singapore is a key element on the one hand, for the regional expansion of the business, we are seeing Singapore as the regional hub for the expansion in Southeast Asia. The closing process is in a final phase that besides the regional expansion, I think we have is a unique opportunity here to learn and to step into a business model that is highly attractive and profit turbo where Oneberry is operating under a security as a service business model for their AI-based unmanned security solutions from Voda protection to grow defense locations and predict infrastructure protection. Overall, we have an option also to take majority ownership, and we are working actively on this as also a platform for further growth in Asia as of 2026.

Furthermore, important to inform you about the U.S. operation. We are on track for the ability to do the local production to ramp up the local production in our facility in Salt Lake City, strengthening our local-for-local program here at the end, it helps us to reduce exposure to import tariffs. But over time naturally also makes us less vulnerable and depending on exchange rate and currency risk by establishing a local supply chain. Our team from the U.S. right now is here in Europe, for training. And therefore, we will be ready to have a first pilot series produced still this quarter. and ready for production early 2026. So overall, looking at the sales performance, we see a decline of 2.4%, as said, not happy with this performance, the reasons for the deviation, the reasons for the decline, the main reasons mentioned here.

If we look into, let's say, the order intake, I mentioned this seeing EUR 34.6 million in the third quarter, we see a significant increase to the previous quarters. So the book-to-bill ratio now is up at 1.2% in this quarter, and this also naturally gives us a solid basis now for the final -- for the final weeks of the yes. If we look at the overall backlog big around EUR 79 million that is definitely significantly lower than at the beginning of the year with EUR 104 million, reflecting the weak order intake we had, especially in the first 6 months of the year.

Yes, I would like to also draw your attention to the fact that we naturally have a part of the business being highly transactional, which means it's kind of a rolling order book that is turned around within the quarter, and we are looking here at a ratio between, let's say, slightly below 40%, up to 50% of the revenue also turned around within the quarter that we are looking at, let's say, this year, affording to EUR 15 million turnaround in the quarter. So having this in mind also, you put in perspective that order backlog.

If we look at the segments, the big impact here on the revenue and the significant impact was mainly on the Clean Energy segment, the biggest segment, clean energy still is accounting for about 69.7%, so almost stable to the year before. But still here, we see a drop in revenue of about, I'd say, 2.5%. I mentioned this, the U.S. and the Indian defense business being the biggest impacting factors. Looking at the end markets there, we still have to see that Industrial part of the fuel cell business is growing above 10%, 10.8% and the security part in this, that is basically CCTV application, civil security business is running about 15% growth. So there is an impact growth curve, I think, visible.

Looking at the clean power management, around 30% of the business a decline of 2% strictly leading back to a single project missed in the Canadian and gas business of, I'd say, a EUR 2.8 million business year for Power Products, VF with one customer in Canada that was basically in our forecast a loss to competition. Looking at the clean energy business in Canada, we see also this part on a solid growth curve.

With this, I will hand over to Daniel, leading you through the financial results here of Q3 as well as the first 9 months.

Good morning, everybody. Thank you for dialing in. Let me go into the margins a little bit as well as the cost basis I think as a summary, what we would say is that those negative impacts that we have seen in the first half year have continued. To some extent, they have lowered, but they will still negative impact. I believe from the cost basis, you've seen we are running rather stable in the underlying us or rather optimized. But let me go into that we quit and highlight certain enrollment.

So when it comes to the overall gross margin, in the first 9 months, we've seen the negative impacts that we also have seen in the first half year, especially with regards to the segment free energy, which is the less favorable product mix with the lower share of the case revenue. We mentioned that before. That really played an essential role in the unprovable gross margin since the beginning of the year. What we also have seen now is that the constant duty that happened introduced slowly negatively impact MRI gross margin. Like I said, we will be unlikely that we'll be -- that we'll be able to avoid the entire customer impact. So it is not that we will see a huge impact, obviously, a slight impact from those custom duties. And then what we also see in the segment Clean Energy is the less favorable exchange rates with regards to U.S. dollar and the hand dollar. So if you compare the average exchange rates of this major currency. The U.S. dollar in average depreciated by 1%, the $10 in average accretion by 4%, which has an impact on the gross margin. So the overall group's gross margin weak 40% in the first 9 months, which is slightly below what we've seen the 9 months of 2024, while we had a gross margin of 41.7%. And it's also moderately below the level of the previous full year margin, which was 41%. Nevertheless, we have considered the group's gross margin to be on a level with which we're not entirely satisfied for good reason.

At the beginning of the year, we have higher goals and higher targets. We may not anticipate entirely economic turmoil ahead of us the beginning of the year, we may not have seen entirely the development of the exchange fleet, but also the development in India, all of it has an impact on the gross margin, especially with regards to the segment. We have everything to heterogenous development that gross more we've seen that. We have a gross margin expansion in this segment in power management, where we see the gross margin going up to 29.7% from 26.9%. That's something that we are happy in content with that meaning of that, the decrease is basically in both main product line in that segment. So the commerce resolution we were able to implement a higher pricing also because we had in the first half year report call already also due to our product -- products that we've been operating, but we've also been able to implement higher prices in the drive motor control products.

So again, looking at the EBITDA margin and the key impacts on those operating expenses, R&D and G&A, I think there's -- again, there's 3 major topics that we've seen in the first half year, which is the extraordinary cost for exchange rate losses. That is the IT spending for the implementation of SAP as well as making our IT so overall and at more robust. We've seen those costs or those expenses having come down in the first quarter, but there was still an extraordinary expense in there. And what we also see in the third quarter is a lower rate of capitalization of R&D, which is something we've had in the first 6 months. And this is also something that will likely change because that is pure accounting, and that has also impacted EBITDA negatively compared to the first 9 months in the last year. So if you add up those 3 impacts and look -- look at the last year make a like-for-like comparison, those 3 effects together have impacted EBITDA negatively but approximately EUR 5.5 million. [indiscernible] shows that our cost basis is solid. The earning power is still there. We believe we take those 3 as a way. We know that they're there, but you'll see that we didn't do has. Let me make it is the exchange rate losses. First of all, so you've seen or we had an income from exit-rate gains of EUR 1.8 million in the first 9 months, which were entirely offset by the exchange rate losses of EUR 0.1 billion in the first 9 months. So that comes to a net impact of EUR 3.3 million, which negatively impacted the EBITDA or 3.2% of revenues. So out of these exchange we losses that we've seen by EUR 4.4 million or 85% is unutilized losses and out of which approximately EUR 4 million are related to the company positions, i.e., shareholder loans and intercompany receivables. I mentioned that already in the first half year. So that's why you would not see that in the cash flow statement. Yes, we'll forget but this unrealized losses for the exchange rate. [indiscernible] thus impact and EBITDA negatively with 3.3% [indiscernible].

The next position is the ancillary cost for IT in the G&A expenses. These are costs relating to the SAP implementation. So in the first 9 months, the total cost has been EUR 1.9 million. They come down notably in the spending has set down notably in the third quarter, but it still along the first 9 month trust takes into 1.8% negative impact of the revenues on the EBITDA. We also had costs for improving our IT system that amounted to approximately EUR 1.4 million in the first 9 months, which again would then make a 1.4% negative impact on the EBITDA. Together, if you see that amount that we will spend on IT, and yes, it's necessary, we need to make our system more robust, we need to make a step over in higher efficiency and automation in our system. So this is not something that we're just doing for doing it. It really means making the major staff in getting our systems safer, more secure, more robust increased efficiency, also increase the effectiveness of our operations. What is a huge investment that we've seen, and we'll see further investment in the fourth quarter. We also will see some of those investments still in the next year until that system is how we implement that.

And then the third impact is the lower rate of capitalized R&D expenses. So the total R&D spending amounted to EUR 8.7 million in the first 9 months of 2025 compared to EUR 7.5 million in the previous year's timeline. So you see a decent hike in our R&D spending. But what you will also see is that in the previous years, approximately 23% of these costs were capitalized. In the current year, we are just capitalizing 30% of the cost. So on a like-for-like basis, which will also request into a negative impact on the EBITDA on [ EUR 600,000 ] to go into this really briefly. So capitalizing R&D expenses is not a choice amount of option which we do -- it is, as I mentioned at the beginning of the call, as an accounting principle, so [indiscernible] projects can be capitalized, [indiscernible] projects cannot be capitalized and that's a little bit dependent on your R&D focus, but also what you have in the pipeline. Remember, any capitalization going forward needs also depreciation and additional cost. So it's not that you're optimizing the cost. You're just pushing those expenses into the future. In any event, it is what it is, but you'll see that our R&D spending as we go has increased, it has not a huge jump that you see in the mail and the early power out, that's why I said at the beginning is still at a decent level.

So what does it mean for the adjusted EBITDA and the adjusted EBITDA. It means that we reached EUR 10.81 million which, of course, is significantly with 56% below what we've seen in the previous year's 9 months. It is, of course, a factor of revenue growth of gross margin and those negative effects in the other operating cost side, just mentioned. We appreciate amortization, you don't see a big change in there, depreciation of EUR 5.8 million versus EUR 4.5 million, 40% of the negotiation IFRS 16 related. So you will not see a new change in that position going forward either. That brings us to the adjusted EBIT, which is -- came up to EUR 5 million. That represents an adjusted EBIT margin of 4.9%. That's significantly lower from what we've seen in the first 9 years in 2024. Again, we're not entirely happy with that, as you mentioned.

Let me finalize with a cash flow and our cash position, cash fully available at the -- so at the end of the first 9 months were EUR 40.8 million compared to EUR 60.5 million which we have at the end of 2024. So it's EUR 20 million lower from what we have seen. The financial debt, on the other side, also decreased by approximately EUR 1 million to EUR 3.1 million, which gives us a net debt -- sorry, net cash position of EUR 37.6 million pretty much EUR 20 million below what we've seen at last year end. Our equity decreased by EUR 1.5 million. This is due to the negative earnings but remain in the negative earnings also there's nonrecurring effects with regards to the IFRS 2 and the stock option programs are reflected.

Cash flow. The operating cash flow before the change in net working capital was EUR 10.5 million, that compares to EUR 18 million in the first 9 months of the previous years. So what we see is -- is significantly lower, but it's still at a good level with EUR 10.5 million. So it is 20% -- sorry and what we see there is the net working capital development. The net working capital increased by EUR 21.5 million. That compares to EUR 2.5 million in the last 9 months. So the working capital ratio road of last 12 months net sales went up to 40% as of September compared to 25%, what we see at the year-end. So we really find hard to manage that working capital. It is really the inventory that we need to look at, it's really looking at the accounts receivable. The largest impact of that is really the increase in the inventory, which has gone up by EUR 10.3 million. That has changed the days of inventory to 237 compared to 131 at the end of the year. That is an extreme high value. We are fully aware of that. That is something that we need to manage more actively and bring it out. We are fully aware of that. We have a lot of material sitting in the mostly fuel cell components and materials, which we intend to bring down in the next 6 months. So it's nothing that is going to go pad will become obsolete. It is really good hidden happening it has to be bought in the program.

You also see a large impact on the increase of the accounts receivables. They increased by EUR 8.1 million compared to year-end, that translates to a 12-month trailing base of sales outstanding of 114 compared to 90, which we had at the end of the last year. So we see increase in the sales outstanding. We don't see any VAT receivables out there, but this is something also that we are managing actively and intention that number doing in towards the 90 days. Then we also see is that the accounts payables have come down. They're going down EUR 2.8 million. That rate the payables outstanding down to 52 days from 66 days. So then with the tax payment of EUR 1.4 million, you'll see that the operating cash flow after the net working capital and tax is becoming very negative with [indiscernible] least minus EUR 12.4 million, all driven by the net working capital development.

Cash flow from investment activity is much, much lower from what we've seen in the last year. We are looking at EUR 2.6 million compared to EUR 6.4 million. I mean the last year, so all those large investments that we have made last year are done and completed. So EUR 2.6 million is at a decent level. It includes, of course, the analyzed R&D. Then we see the cash flow from financing activities of EUR 2.8 million. A loss portion of that is related to leases. And if you add those numbers up, you'll see a change in the cash position of EUR 70.9 million, and then we'll still have to have the exchange rate impact on our cash point currency.

So overall, cash as we view, like I said, in summary, mostly capital. We've seen the March decline. Still, I think we are at a good level, but not a level which we are happy or satisfied with and we were we need to be on working on [indiscernible] measures structures to optimize, especially our cash flow assumption.

With that, I'll we turn to Peter.

Thank you very much, Daniel. So summarizing where we are. I think on the basis of the performance to date. Also, we talked about the order backlog and also I'd say still some -- I'd say, challenging macro conditions here. We've done, I think, a concise assessment here on the year-end forward costs that we are expecting the revenue at the lower end of the target corridor that we had out there that we have out there as a revised guidance. we see EBITDA adjusted as well as EBIT adjusted in the lower half of the corridor that is out there for EBITDA, the corridor is EUR 13 million to EUR 19 million. And for the EBIT, respectively, it is the corridor of EUR 5 million to EUR 11 million. As said, we are expecting to end up in the lower half for both ratios.

So looking at this, I think after years of continued and a continuous and significant growth and increasing profitability, you see ourselves here clearly. And honestly, disappointed with those results here after 9 months. We also have to be self-critical here in terms of some maybe 2 aggressive and optimistic plannings in some areas, especially of the top line against the macroeconomic environment that we are operating under. But at the same time, I think we have done a thorough analysis of the situation. We also see the recent tensions and we have implemented clear and targeted measures. We've talked about the cost part.

I think on the inventory price, yes, the defense part of the business has downside with, let's say, longer procurement because but the good thing is those products are not turning anywhere that, as Daniel mentioned. So this is naturally the basis here for the improvement also on the cash flow side to get let's say, this out of the north as fast as possible. And that's why you've seen ourselves here, and I'd say this clearly, I'd say, I'm a realistic mode, but with all the dedication to get this back to growth curve. And again, I think for all of us here, we have a and organic growth in the business, be it, let's say, our civilian security business, be it the industrial business. We are talking here about double-digit growth here between 11% and 15%. And also our U.S. business, significantly above 20%. So the expectation there is to continue on this growth path to return to a growth path. In India, as I said, service contracts in place, local methanol filling all basis also for further, let's say, satisfying the customers' needs there.

And we've been intensively working on OEM programs on the defense part of the business in Germany as well as in those states. And naturally, we are expecting an impact of this in the year to come. We are doing, again, our regional expansion with the investment in Singapore, we expect growth impact out of this. And we are seeing our products performing properly, well also for new applications like done charging. And I also mentioned the drone defense activity here in Singapore. So all over, yes, the situation, especially in the last 2 quarters, a very, let's say, disappointing we've taken the measures now, and we are looking at a strong year-end and again, a return to growth and improved profitability here based on all the measures that we mentioned together.

With this, we close our presentation and would like to open the floor for questions. Thank you very much.

[Operator Instructions] The first question comes from Karsten Blumenthal from First Berlin Equity Research.

My first question is regarding Oneberry. You have now a 15% stake. And perhaps you could shed some light on your future activities. You have a 50% option. When and how will you try to get this option?

So we have that option to be exercised in the shorter term. short term in within this year potentially beginning of next year. That option apparently, as we said, is to increase are holding in Oneberry majority for fixed valuation. So this is something that we intend to do and when we put this option there in order to exercise it, of course, we'll have to redo certain things with the business. We'll have to complete a bit more on the due diligence side, everything that is set at a subject process, and then we will likely exercise likely exercise that option.

If I can add here, Karsten, just to take shed a little more light on, let's say, the business model at the end they are engaged in long-term multiyear contracts with the Singapore government, the pipeline they have and the backlog they have is more than 90% government business there. And this is something naturally we want to continue to grave, but then also replicate this model to other parts of the region and if possible in other parts of the world, a rental business so security unmanned security automated based on, let's say, significant also, I'd say, AI content to, let's say, recognition parameters here. At the end, with a higher profitability than we see it in our own business, and well, having been partners for quite some years, I think we also have a good trust base there to roll this out to other areas in the region as well as in other parts of the world.

So there's a high likelihood that you will be able to consolidate Oneberry next year when you exercise the option. Could you shed some light on sales and EBIT, Oneberry reached, for example, last year in 2024 that we can have an idea what will be the impact on your P&L next year?

I think we would, at this point, also after negotiations there, I think it's good to have a our figure here in terms of revenue, we're looking at about EUR 20 million of revenue. And as said, profitability, I'd say, above our own EBIT and EBITDA levels.

Consolidation, well, let's assume that we exercise that option last us to will get the control as defined for cost evasion. Then currently, let's assume that we were close to that transaction, then yes, we would consolidate Oneberry from next year on. Remember the numbers we are saying are not in IFRS to be also to make that sure rights talking about Singapore gap [indiscernible] a year.

All right. That was very helpful. Next question, you mentioned a postponement in India. And you said that you expect a rebound in 2026, but not as high as in 2024. Could you roughly tell us how high revenue was in India in 2024?

Well, the defense revenue in India was around EUR 12 million and being, let's say, now, I'd say, 60% below last year's revenue as said, is one of the major impact in fact that this year. The fiscal year there ends at 31st of March, and that's why we are, as we speak now in the assessment of, I think, the right level of or the right budgeting level together with our partner on site and will naturally be based on the experience a cautious assessment for next year, but still we expect a rebound and growth based on what we have learned over the last 3 months out there.

All right. One follow-up question regarding the U.S. You mentioned that you are on track for local production in your facility in Salt Lake City. Could you shed some light on the next milestones you want to reach. So when will production start how quick do you want to scale it up?

Highlights we have our team of the U.S. right now in Europe for training for, let's say, still the next weeks here, and then we do the first pilot trial still in December, so that everything is geared up for 2026 Series production. The plan here is to have, especially, let's say, our high runners, the 2,800 all produced locally next year. And that's why we are looking, let's say, at a shift here from production from Germany as well as Romania to the U.S., whereas the core elements as the specs still will be mounted here in onto -- so it's a pretty -- the same exercise we did here with India, and we did with Romania in the last, I'd say, 12, respectively, 24 months. So we are not reinventing the wheel here. So it's basically topping the process.

Yes, that was certainly facilitated. Could you roughly give us an idea about the value of the shift in terms of revenue for 2026?

You mean end customer revenue or simply the transacted systems?

Now what -- how much revenue will you generate with the U.S. -- plan to generate with the U.S. production next year roughly, very roughly?

Well, this will be somewhere above EUR 10 million because still part of the products will be shipped from here as we are not transferring the whole product line over there. We also do refurb of all is here in the market where we will not shift the entire production of this. And therefore, in the first, I would say, 2 years, we will still see a mix dominated by also the old version here that is in the market. And then step by step, I think we will face this one out and then the entire production for the U.S. consumption of eVoice is planned to be there. And in addition, naturally, we will also have to see how the defense part of the business evolves. I think that we were particularly pleased to be invited by the U.S. Army on the occasion of the this defense show here a couple of weeks ago to again reengage into a fuel cell development program, and we were particularly happy about the fact that we already have prepared local manufacturing capacity there, which I think is also a big argument for us that it be that a partner for them doing the local production also on defense over time on site in the country.

the next question comes from Michael Kuhn from Deutsche Bank.

Three essentially. First of all, you mentioned OEM programs in the defense space into 2026. Is there any possibility to roughly quantify that scope already? Or would that be too early? Second question would be on the contract loss you mentioned in North America, I think, where you lost versus a competitor? Was that a full competitor? Or was a customer there going for, let's say, different technical solution? And last question would be on working capital. I think you talked about a 6-month time frame to reduce that. So just to confirm that and maybe get a confirmation on, let's say, that working capital won't dramatically change over the course of the fourth quarter.

Michael. First, OEM programs in defense. I think with, let's say, all the experience we just are undergoing, yes. We are a little hesitant now to come out, let's say, with numbers on those programs that are still work in progress. What we see today is that, I'd say, with a very, let's say, favorable financing environment based on all the political decisions, we also see that still capacity the capacity on the administrative part of the purchasing or procurement part, but also the capacity in, let's say, some of the manufacturing capacity is a limiting factor and we, I'd say, therefore, expect all this to happen, I'd say, in 2026. Part of it, I would say, on the earlier part of '26, but I'd say the visibility at this point in time is not at the point where I would feel comfortable to, I'd say, put numbers out. We are looking at programs in Germany, but we are also looking, as you recall, we have, let's say, this also partnership here with Polaris on where, let's say, our products are under a NATO procurement contract. So we know that this program that [indiscernible] has been awarded tier to Polaris, but we have not been, let's say, informed both individual numbers here out of the different countries participating. And I think the same thing here now with our German program, we are working on it as soon as we have more clarity, even if this is still before Christmas, we would be, let's say, able to share this.

On the contract loss in Canada, we are talking here -- we are not talking about the fuel cell business. So it is, I'd say, on the power management side, where we are integrating where we are integrating equipment also from ABB, and this was a loss based on, I'd say, tough pricing within oil and gas OEM. At the same time, I think we also see, I'd say, that's a competitive market. So it's -- but it's the single reason for, let's say, seeing a deviation from the original plan here, otherwise in the, I'd say, Canadian oil and gas business also, especially on the eVoice side, we are still on our growth plan. And the third question, I would hand over to Daniel for answer.

So with regards to the working capital, we have our 2 positions that we're really working on. As you roughly said, the first one is the inventory bringing inventory down. That, of course, is a function currently of selling and manufacturing those fuel cells because the largest part of the inventory increase as I mentioned, is in the German entity and happening in Germany. So that is really our intention to get back to a normalized level. which we'll be looking at what we had at year-end. One impact that is one factor that is negatively impacting our inventory is the fab pricing. Remember that a large part of our membrane is platinum that has in the price has increased significantly in the last 9 months to an all-time -- all-time high. I think the highest thing I've seen for a couple of years. The amount of platinum that we have in our inventory is over EUR 1 million. So of course the -- and we tend to buy platinum when it's at a low price or relatively low prize. And then we intend to buy and the amount of platinum that covers us for at least 2 to 3 somebody in the fourth quarter. That is really maybe so that we can lock in the cost. That will have an impact on our inventory like I said, right now, we have in EUR 1 million.

On the house receivables, yes, we intend to bring them down significantly. We expect collections. We don't see any receive all or in all of rotate write-off there. So that is something that we expect to improved towards the end. I know you -- you need the math with regards to any -- so you know what we expect in terms of revenue for first quarter. Currently, the higher revenues at the end of the quarter, the higher the accounts receivable. And everything that we have to right now, we take 2 [indiscernible].

The next question comes from Malte Schaumann from Warburg Research.

First one is on the customer behavior. I mean, during the second quarter call, one of the reasons for the weak order intake in the first half of the year, you mentioned that especially new customers kind of hesitated to new technologies, place orders Peter, do you actually have in the recent weeks, we just had a change in the customer behavior or the mall is more of the same U.S. terror discussions, et cetera, and still led to existing uncertainties?

I think at the end, we see, I think, with new customers still, I'd say, hesitation out there. And I mentioned before that the U.S. pattern of the business still, yes, seeing, let's say, a growth of significantly above 50% organically is a solid growth, but it's not at what we are seeing here, I'd say, historically, over the last 3 years. And that's why I think we -- with the environment, let's say, not being more stable and continuing as it is in the macro part for the new customer business, we have also factored this in into our year-end planning.

Existing customers, I think, being we published a significant order a couple of weeks ago with one of our largest civilian fuel cell customers here in Europe. We see a consistent repeat this, as mentioned before, the overall CCTV part, civilian security part of the business is also above 15% growth. But the change of that decision making to, let's say, embarked on a new technology here and complementing their existing whatever battery and solar devices with fuel cells, definitely is are delayed with, let's say, the environment as it is. So therefore, I think we can differentiate this pretty clearly and see this also in, let's say, the customer behavior.

Okay. And then maybe kind of an early view next year or the level of confidence that order levels will what do you expect kind of subdued order levels going into early next year and then hope for recovery later next year. What's your visibility or your level of confidence then going into 2022, where do you see maybe increasing customer activity and rare uncertainty still prevailing kind of reducing the visibility. I mean you have alluded to some areas unsafe unfavored situation, little viability. But then on the other hand, you might have kind of gained some confidence in the meantime that, for instance, Indian -- India will return is a major customer and defense. So maybe you can shed some light on what your thoughts on maybe how 2026 can [indiscernible] launches?

As you can imagine, no, we are doing not a constant analysis on this and let's say, also assess, say, the original part of the different regions of the business and also the different end markets. And looking at where we are right now, I think we see, I'd say, this repeat part of the business on a constant, I would say, a growth curve that we also would, I'd say, assume as a basis, and we are also doing this in our planning right now because budgeting time, we are finalizing our planning runs right now. So we are expecting, let's say, an organic growth out of this. We are seeing, let's say, signs of, again, improvement again in India, where we have this aviation this year.

With this coming back to, let's say, a modest growth part, I think we are in a corridor here of near organic part that is somewhere around, let's say, low double-digit growth. And we also do, I'd say, this analysis here on our, I'd say, what we call this rolling part of the ODM book that is intra quarter business transaction, where we have a pretty good view on it. As I said, this is between let's say, 40% to 50% here that comes in and out within a quarter. So adding this all up, I think -- and then also looking at what we have, let's say, done on the cost side. We're also looking at our product pricing here based on raw materials platinum being a big factor here. We will have to adjust this and we are preparing for this.

And therefore, I think a growth corridor, just organically, as mentioned here, of a good 10% is, I think, a solid ratio across everything. This does not include a big impact also of when we look at, I'd say, a larger defense program. And at the same time, we have a good person to the impact of the potential majority acquisition of the Singapore business here adding up to, let's say, the planning then in 2026. Also with the caveat, we have not exercised this option yet. But naturally, we've done this to go through this process and hopefully get to positive and also here with our partner in Singapore.

Okay. Then on one. In the press release, I think you late scenario for potential significant growth in the years ahead. So maybe you can shed some more light on where do you see growth? I think you mentioned EUR 100 million potential revenue contribution. So maybe you can just some more light on that number and whether the growth primarily comes from and what should happen that this will materialize and maybe I don't know what the time frame is 5 years, so just plus. So what are [indiscernible] on that? .

Yes. Oneberry has been very focused and fully entrenched in the Singapore and security architecture also by, let's say, family roof the owner of Oneberry. And also, let's say, looking where, let's say, such a family business then stays also in terms of, let's say, further investment into regional expansion, the planning of the owner here, the family owners was not to expand this and roll this out, let's say, into the region. With us being on board, this is a key element really copying what we have what they have built up integrating also our products into those security services and roll this out.

And actually, it is a logical we have done some business development in Indonesia we have done in Malaysia and Thailand and in the Philippines. And this is, at the end, the overall business plan that we have already sketched out with them. But naturally, first of all, we need to take the next step and close the transaction and talk about, let's say, the option. And then it is initially a regional play but we are also seeing large customers in our civilian and security business looking for potential rental solutions and we might also have to and be able to, I'd say, copy this part or this business model here in other regions.

And if we look at, let's say, potential in, let's say, Asia, this is, let's say, what we have developed together as a scenario with the owner family of Oneberry that is also at the end, a reflection of what we see in terms of demand here in Asia, which, at the end, again, is the most populous region time frame, yes, as you said, we are talking definitely midterm, and we are talking about a 5-year scenario here.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Dr. Peter Podesser for any closing remarks.

Well, with this, we thank you all for your time and interest. As always, we are at the disposal also for bilateral discussions here with Daniel, myself and also Susan. We are heading through some rough waters here, stay with us. I think we have a solid plan ahead of us. And we have shown that we are able to, let's say, implement plans apart from naturally, not neglecting the fact that we have seen 2 very tough quarters behind us. Thank you very much.

Thank you very much, Alessia for the introduction. Good morning to all of you, ladies and gentlemen, and thanks again for joining us here today to the presentation of our half year results. As usual, my colleague, Daniel Saxena and myself will first again, assess some of the key reasons for the recent adjustments of our guidance end of July. I think we can give you a profound insight into the half year numbers as well as some measures implemented following the adjustment. And then also, we will focus on the outlook. And naturally your questions in the Q&A session.

If we look at the first half year of 2025, yes, although I think we achieved some visible and important milestones like the ramp-up of our MEA production into, let's say, a seamless to shift production in Swinden, U.K., we also integrated the hydrogen business that we acquired from Ballard end of last year here in, I would say, smooth way, and this business is going to contribute here on the revenue level as expected, but also at least be, let's say, breakeven as plan.

And still, some developments, and we published this a couple of weeks ago, end of July, some development in the macro environment as well as our business made us adjusting our full year forecast at the end of the year. Such a decision never is an easy nor a pleasant one, but we think nevertheless, it was necessary in order to set the right basis for realistic expectations and also the right course on the basis of a clear analysis.

Let me just summarize the key reasons for the adjustment here and staying, let's say, at let's say, the level of just going through it one by one, not taking all the details here at the beginning of the presentation, as Daniel and myself, we will look into the numbers later on. Yes. We are seeing a macro environment that is still characterized by uncertainty and has been so with an impact on -- and the negative impact from a euro perspective in terms of exchange rate, which had an impact for us in core markets like Canada, U.S. and India, uncertainty overall led to some hesitation in terms of decision-making here for new projects and investments.

We mentioned last time, our new business development in the U.S., although growing by still double digit, about 16%. It is not at the original expectations here of, let's say, 30% overall. In addition, we had to accept that our customer in India here, the defense part of the business in India with the Indian Army saw some delays as funds already allocated to energy programs were reallocated here to drone programs, which at the end of the day is a revenue element that in the short run, we were not able -- or we are not able to replace and compensate for in 2025.

Looking at the financial results here, just on a short note, and Daniel is elaborating on this later. Yes, some spiking in the spending on, we think long term, the right investments into structures, into systems, into cybersecurity infrastructure had a temporary and extraordinary burden here on our earnings from, let's say, IT and SAP spending here.

Overall, I think the analysis is done and measures in place, let's say, looking at the overall spending and, let's say, curbing down some of the spends in the mentioned areas. I think we're looking at EUR 1 million to EUR 2 million less of spending maybe in the second half of the year out of this Hiring. Yes, we are not talking about, let's say, reduction of workforce. We have been growing significantly over the last years also with the expansion of the organization internationally. We are around 500 people on the payroll right now.

Yes, we do not expect now to add another 50 as we had it in our plans, and we were already looking at. We are let's say, not freezing all hirings. We still do selective hirings, but we are looking at it closely, watching every single one. And I think this also will have the expected impact also on the cost structure. So overall, I think a big impact we expect here from further steps in our local-for-local strategy, especially now in the U.S. as we have done this before.

In India, we are preparing for the ramp-up of our production in Salt Lake City in the U.S. in Q4 as planned. With this, the original intent naturally is or the generic intent is customer proximity, but at the same time, naturally, we are reducing our exposure to existing and potential further import tariffs. We are reducing our currency risk and I think in our own interest, but also in the interest of our customers, we're bringing down supply chain risks locally.

And at the same time, naturally against the background of bringing down our guidance, we should not and we must not forget that we have core business growing solidly. If we look at our industrial applications in Europe as well as in North America, the industrial fuel cell business here with a core segment in the civil security and civil protection area is growing consistently above 20% in some areas, existing business like in the U.S., about 30% also in the first half year and seeing the active dynamics here also on the order intake side, we expect this to continue throughout the year.

If we look into our power business, the power business has been growing with approximately 9% here year-over-year with, let's say, significant impact, especially also regionally in the Netherlands, key customers, Thermo Fisher Scientific and ASML growing consistently. Also, this is the expectation for the remaining part of the year. If we look into the defense part of the business, yes, we have an impact here on the overall defense business with the delays in India that were planned for being the biggest part of our revenue contributors this year.

This also brings down the expectations here in Asia, and that's why we are not seeing growth in defense and public security and also not in Asia for the year 2025, apart from the other regions in the industrial and the power business. So if we calibrate the expectations, I think we are looking at a weaker or a weak Q3, but we're also looking at the robust and good Q4, looking at, let's say, the guidance revision we have out there. Why is the expectation here for the end of the year are positive.

Again, we see the defense and security pipeline filling up. We are looking at programs in Germany on the OEM side, in the Netherlands. Core projects are still out there also in the U.K. as well as in Austria, materializing in terms of revenue impact, we are looking here at 2026.

And besides all of this, naturally, we are continuing to open up new markets and just mentioning one key example here. We look at major infrastructure projects in Germany, where we see also quite some government efforts going in with the funding program over the years. We have recently completed successfully our first large-scale project on a motorway construction site where we have 60 EFOY systems, integrated systems operating for a couple of months together with a strong partner, Ramudden Global, one of the leaders in traffic security services.

And that's one construction site out of, let's say, many. If we look at the published numbers out of the 28 motorway -- 28,000 motorway bridges, in Germany, 8,000 of them are qualified as to be refurbished and around 4,000 of them are officially qualified, and one can read this also on the website of the relevant ministry to be out for urgent need to renovation.

So we are expecting here a new market to unfold. And at the end, our EFOY fuel cells simply reduce the total cost of ownership here for energy supply by longer run times compared to mere battery solutions. And again, this is not something out of the blue. We have been working on this for a couple of years, and I think it's now maturing. So adjustment of the forecast is done, but the strategic direction remains unchanged with, I would say, again, a renewed and reshaped focus also on the spending side.

If you look at the recent momentum in the business, I think I'm very happy also to report that we had -- despite being in summertime, we had a quite active order intake here around EUR 14 million in the first couple of weeks of the quarter here from the U.S., Canada and Europe.

I would say we are expecting EUR 10 million to EUR 15 million in the upcoming weeks. And if we add this all up, I think we are addressing the weak order backlog here by mid of the year in the right way. Looking into the segment part, I think we are looking at a horizontal or, let's say, just a growth of 1.8% in the Clean Energy segment. We have discussed the relevant impact there, and we are looking at a 9.2% growth in the Clean Power Management segment.

As mentioned before, we see regionally, therefore, a significant jump here in sales in the Netherlands of more than 75%. Yes, we will see a flattening out over the year, but it's, let's say, confirming the positive development of the power business here with Thermo Fisher and ASML, but also the continuous growth with our long-term partner, BauWatch] in the clean energy side.

Regionally, also in the U.S., despite not reaching our expectations of new business growth also being 30%. We are seeing an overall growth of 30% and Germany, above 21%. With this, I would like to hand over to Daniel for the analysis of the half year's numbers on the earnings and the profitability side as well as the balance sheet.

Good morning, everybody. Thank you for dialing in. Let me dig into, first of all, the gross margin of the group as well as the gross margin of the 2 segments. Overall, we've been able to maintain what we consider to be sustainable and healthy gross margin level on the group in spite of the macroeconomic environment and challenges that we had and the negative impact from the exchange rates. With the exchange rates having a severe impact on a certain cost position and on certain valuation position. I'll dig into this a little bit later also.

But giving you an overview, if we compare the average exchange rate at the end of '24 and the end of the first half year '25. We've seen that the U.S. dollar depreciated by 4.1%. We saw that the Canadian dollar depreciated by 3.1% and that the Indian rupee depreciated by 5%. These are 3 important exchange rates for us because in North America, we sell in U.S. dollars and in Canada dollars. And in India, a substantial part of our business is being done in Indian rupee.

If we then look at the exchange, not the average exchange rate, but the exchange rate at the cutoff date, 30 June 2024 and compare it to at the end of last year, the effect of the depreciation of the exchange rates are even bigger. The U.S. dollar plummeted by 11%, the Canada dollar by 7% and the INR by 12%. This is an impact on our other operating expenses if you have seen, but it also has an impact I believe on our gross margin.

Nevertheless, we were able to increase our gross margin by 4.8% and the gross margin reached 42.5%, which is moderately above what we've seen in the first half year of 2024 in spite of the less favorable exchange rates. It is also slightly above the gross margin on group level that you've seen in 2024 for the full year, which was at 41%. In spite of the fact that we consider the gross margin in both segments to be on a decent level given the overall macroeconomic environment, we have set ourselves higher targets in the beginning of the year for our gross margins.

If we look at the impact of the segments on the gross margin, we see that the segment Clean Energy was suffering much more from the less favorable exchange rates than the segment Clean Power Management. We see that with a stable North American revenue share of 37%. The gross margin, and there is also an impact of the exchange rate declined from 47.9% to 47%, not a huge decline, but again, not the targets we set ourselves at the beginning of the year that we were really aiming for an expansion of the gross margin.

We had a positive impact on the gross margin from the segment Clean Power Management, which set off to some extent, the decline in the Clean Energy segment. The gross margin in Clean Power Management increased to 31.8% from 25.9% in the last year, which is consequently of a stronger pricing with our Power Management solution as well as the drive motor controls business in Canada. If we look one more time deeper into the gross margin development and what are the impacts of the gross margin in Clean Energy.

I think one of the impacts that we compare with the first half year 2024 was that the revenue mix has shifted. We had a decline in the defense business, if you compare half year on half year by over 50%. The defense business tend to be the business with the highest gross margin. So that has an impact naturally from our product mix in spite of the fact that also the industrial business is very highly priced, but missing that attractive revenue from the defense business has an impact.

The second impact was a specific topic with one customer in Canada, where we provide solutions with that specific customer. We had somewhat of a weaker gross margin and weaker pricing than anticipated. That is not a trend. This is not across the business, but it was one big customer and had an impact, and you see it on the gross margin of Green Energy, even not huge, but any little percentage point will impact it. And then last, but not least, and I mentioned it, the third impact was really the much stronger euro against the U.S. dollar and the Canadian dollar, where we see if we translate it in euros, lower revenues. At the same time, and we mentioned already in our call when we lowered our guidance, and of course, some of the materials that we are purchasing, especially from EMEA are purchased in U.S. dollars.

So the material cost will also be more favorable, but there's is a time lag before you see it, frankly speaking, because we do not buy the material on the spot market, some of the stuff and most of the stuff has been bought already in the fourth quarter of 2024 or at the very beginning of the year, or you still have slightly higher U.S. dollar prices. So this is something you will not see immediately.

I mentioned the strong expansion of the Clean Power Management gross margin to 31.8% from 20.9%. We see that the margin in that segment is getting higher, is increasing really based on a more sophisticated product strategy as well as new platforms that we have rolled out with a stronger pricing. The first half year was impacted by some unexpected and some higher than planned expenses. When I come to the unexpected expenses, it was, as I mentioned before, really the exchange rate losses.

The income from exchange rate and the gains that we had in the first half year were EUR 1.3 million, but that was more than offset by the exchange of losses, which we had, which amounted to EUR 4 million. So that we had a net expense of EUR 2.7 million or if you look at it and put it in relation to revenues, 3.6% of the first half year revenues. It is important to understand that out of the EUR 4 million exchange rate losses, EUR 3.3 million were unrealized losses -- sorry, out of the EUR 3.3 million exchange -- sorry, out of the EUR 3.3 million exchange rate losses, they were unrealized. And out of those EUR 3.3 million, EUR 2.5 million are intercompany positions. So these are not third parties. This is really intercompany receivables. It is related to intercompany shareholder loans that are how we finance our subsidiaries in the U.S., in Canada, but also in India.

So the largest portion of it is really a long-term financing for our subsidiaries. And that is, like I said, unrealized losses, which also have no cash impact. What was a little bit higher than we planned for in the expense -- on the expense side, were the G&A expenses. And specifically, within the G&A expenses, the cost through the digitization, higher cybersecurity and especially also the ERP and SAP implementation in the group, which we intend to complete early next year.

The costs relating to the SAP implementation in the first half year amounted to approximately EUR 1.4 million. These are consulting expenses, these are license expenses that we are having for the software, even though we have not fully implemented it. These are advisory expenses for various fields and processes. So that's a huge cost that we have. And then in addition, the cost for improving our IT system, which is cybersecurity, making them more robust, making more stable and more efficient accounted to EUR 1.3 million.

So in total, the cost for IT that we have in the first half year were EUR 2.7 million. So we know and we already said that in the last year and announced at the beginning of the year, we want to invest heavily in our IT infrastructure, because this is required for operating efficiently and effectively also in view of the growth that we have ahead of us, which we still strongly believe will happen. But some of the costs that we anticipated to happen in the second half year of 2025, really incurred in the first half year.

Now you could argue that we are trying to speed up the whole process to make sure we got it implemented. You could argue that also those projects tend to be a bit more expensive than anticipated. In any event, the costs were higher, and that really has an impact again of something like 3.7% of revenues. So if you combine those 2 impacts, and that is really if you look at our operating costs, those 2 impacts are huge and one of the reasons why really also our EBITDA margin went down.

Getting to EBIT, EBITDA. The adjusted EBITDA amounted to EUR 8.5 million, which is down 32% of the EUR 12.5 million we saw in 2024. Adjustments in the EBITDA, the same thing as every quarter. It is related to provisions from LTI programs, IFRS 2 accounting and it is related to transaction-related expenses for potential M&A transactions. So these adjustments amounted to EUR 3.9 million in the first half year 2025 compared to EUR 1.9 million in the first half year of 2024.

Adjusted EBITDA, like I said, 32% below the level of H1 2024. Adjusted EBITDA margin declined to 11.6% from the very high 70.7%, which we had in the first half year 2024, but it's still below the full year EBITDA margin 50.2% in 2024. What are the reasons for the contractions of that margin? I already mentioned those 2 positions in G&A and in other operating expenses, i.e., net exchange rate losses. But also, what you have seen is that we had a contraction to relatively higher R&D expenses expense in the P&L in addition to the relatively higher G&A expenses.

Some of these increases are of one-off nature, I would say, for the current financial year, and we would not expect them to see then next year. So let us quickly look at the drivers behind the absolute EBITDA decrease and bring forward some of the functional cost discussion. We've discussed the gross margin. If you look at the adjusted sales and marketing expenses, we'll see that we are pretty much in line with the growth. So adjusted sales and marketing expenses in relation to revenues amounted to 11.6%, which is marginally higher above the last full year's revenue relation, which was 11.1%.

As Peter mentioned, we're looking at optimizing the cost also there to bring that ratio down again towards the end of the year. The main cost increase, however, in sales and marketing is really the additional headcount. We had an average 8 people more, but there was also higher marketing and travel expenses, which, of course, is in connection with our product development.

If we then look at the adjusted R&D expenses, you would see that the cost to revenue ratio increased significantly to 6.4% from 4.7%. But the main driver behind that was really a lower capitalization ratio of R&D expenses due to the R&D activities in the first half year 2025 being focused more on serial development, which cannot be capitalized, but also, to some extent, with increased personnel expenses.

If you look at the R&D spend and the R&D spend is the adjusted R&D expenses in the P&L, the EUR 4.7 million that you see plus the R&D capitalized, it was roughly EUR 1 million plus the subsidies we received with the EUR 3 million. So this adds up to an R&D spend of EUR 5.8 million, which compares to EUR 5.2 million R&D spend in the first half year 2024. So still 12.4% higher.

However, the capitalization was much lower for reason, as I just mentioned, which increases the P&L expenses in -- obviously, in the P&L, which also has an impact on the EBITDA in spite of the fact that you haven't really spent that much more money on R&D.

And then the adjusted G&A expenses. I already mentioned it. The key driver behind the increase of those costs, which were 50% of the revenue, which compared to 30.2% of revenues for the full year 2024 was really IT expenses. But in addition also, we had a slight increase in personnel expenses with an increase in average headcount by 4.

So this is basically if you isolate the drivers behind the EBITDA margin dilution. It's not the gross margin. It's really a R&D expenses, a higher portion being expensed. The large portion of IT costs. And then last but not least, the very large portion of exchange rate losses, out of which, as I mentioned, a large portion is not realized and not cash impacting. Nevertheless, it's expense and really depends on how the exchange rates will develop, whether this will turn into income into the near future.

If we then quickly look at the depreciation and amortization, total depreciation slightly up, EUR 3.9 million versus EUR 3 million in 2024 in the first half year. The depreciation, 40% of it is IFRS 16 related, so EUR 1.5 million. The depreciation without IFRS 16 impact is came up to EUR 2.4 million. Large portion of the increase is the depreciation of capital R&D, which is EUR 1.3 million out of that EUR 2.4 million total depreciation without IFRS 16. That brings us then to the EBIT adjusted, which went down to EUR 4.6 million from EUR 9.6 million and translates in an EBIT-adjusted margin of 6.3% compared to 13.4%.

Having a look at the balance sheet, key position there, first of all, fixed assets and intangible assets. You saw that the CapEx without IFRS impacts, IFRS 2 impacts came down to EUR 1.7 million from the EUR 5.8 million you saw in the first half year 2024. The total CapEx, like I said, being excluding -- that was excluding the IFRS 16 accounting impact.

If you split that EUR 1.7 million between intangible assets and PPE, you will see that intangible assets are about 55% of that CapEx with PPE equipment being 45%, much lower than what we've seen in the last year, given the fact that last year's CapEx was driven by the buildup of the [indiscernible] manufacturing site in the U.K. as well as the assembly site in Romania, too and some more investments in India. So we basically see a normalized CapEx pattern again, where our run rate of PPE is something between EUR 1 million and EUR 1.8 million for the full year.

You would also see that the investments in intangible assets are lower because a large portion of that is the capitalized R&D, which was EUR 1.9 million this year compared to EUR 1.5 million in the previous year, as I mentioned before, when we were discussing the R&D expenses. Looking at the cash and cash equivalents. Cash really available went down by EUR 10 million from EUR 60.5 million at the end of 2024 to EUR 50.6 million at the end of June. Key driver were really the investment in the networking capital.

I will explain and give some more information on that subsequently. Financial debt increased slightly to EUR 4.4 million coming from EUR 4.1 million at the end of the year. So you will not see a huge increase in that and still with a very, very low leverage. We see that the equity increased by EUR 321,000 to EUR 1.4 million, pretty much on the level at year-end.

Cash flow, operating cash flow before change in net working capital were about EUR 9 million. That is significantly lower than what we've seen in the first half year 2024, where we had EUR 12.6 million. Still, we believe this is solid given the investments and the higher operating expenses that we really had in the first half year. Now what we see is that the networking capital, however, increased by almost EUR 40 million. And that already an indication why the net cash position has decreased, whereas in the first half year 2024, we had a decrease in the working capital.

What -- the working capital ratio to last 12 months net sales has increased to 32% from 25%. So we see that our net working capital has gone up significantly and cash was consumed there. The largest impact from the net working capital change has the increase of the accounts receivable, which went up notably from year-end, resulting in a negative cash impact of EUR 7.1 million. So if you look at the days of sales outstanding, 12 months trailing at the 30th of June, they came to 103 days and were up from the 90 days that we saw at the end of last year.

Various reasons for that. We do not have any big creditor who's failing or is not paying the bills. We see here and there and especially in North America, but also Asia customers had to pay a little bit later. But again, there's not a significant change that we are seeing. There is not a significant change that we see in the credit risk that we're having and in the rating of our customers. It is just a development that we have a close look and want to make sure that we bring that number down significantly by year end.

The other position in net working capital that increased significantly with a cash impact of minus EUR 6.3 million is really stocking and that is stocking in SFC Germany in the AG, mostly of fuel cell components that accounts for the increase of the inventory of approximately 80%, 85%. So if you do that, the very simple math on days of inventory at the end of June, we are looking at 155 days last 12 months trailing comparing to 131 days at the end of 2024, which is a significant increase.

Also there, we will look to bring this down towards the end of the year to manage our inventory more effectively, efficiently. But still, we want to make sure that we have sufficient components on stock. By far offsetting these increases in inventories and accounts and receivables is an increase in accounts payable, cash impacting EUR 2.4 million. So does increase up a little bit. That leads to days of payables outstanding last 12 months trailing again coming up to 74 days from 66 days at the end of 2024.

After tax payments of EUR 1 million, that results then in a negative cash flow from operating activities of EUR 6.3 million. We had cash flows from investment activities, EUR 1.5 million, much less than the EUR 5.2 million that we saw in 2024. Then we have cash flow from financing activities, which is mostly related to lease payments of EUR 1.7 million, which then in some had a change in cash of EUR 9.5 million.

And then we had an exchange rate impact on cash also, which is about EUR 800,000. This was an overview about the balance sheet and the operating performance. I think in summary, yes, there's light and shadow. We don't see a structural topic in our operating expenses, but rather some impacts, as mentioned, that hit us and some what we would consider one-off expenses this year. We still see that our balance sheet and our cash position is rock solid, and we are still prepared for the growth going forward. With these words, I'll turn it back to Peter.

Thank you very much, Daniel. Complementing it with, let's say, number of employees here. We are now at -- we were at 30th of June at 409 permanent employees. And as mentioned before, we intend to keep this stable for the foreseeable time, depending also naturally on top line development. And then for the forecast, yes, we have announced a revised guidance, I'd say, top line now being between EUR 146.5 million to EUR 161 million. We see the adjusted EBITDA to reach a corridor between EUR 13 million and EUR 19 million and adjusted EBIT between EUR 5 million and EUR 11 million. All together, I think we now look at, let's say, 2 pillars to make sure we do continue our risk mitigation, which as a first point is, again, the local for local implementation in the U.S.

And as Daniel said, yes, it's cost sensitivity and also, let's say, dedicated and focused cash flow management here throughout the remaining part of the year. And still, we are not planning to stop some of those initiatives, including, let's say, cybersecurity as well as ERP. We might have been too ambitious at the beginning of the year to implement this as fast as we can. We still need this, and we'll still do it.

And we make sure we manage this better. And with this, I think we are looking now, as mentioned before, at Q3 being down, let's say, in the low EUR 30s million of revenue and the Q4, again, looking at the guidance, we are looking at EUR 40-plus million in Q4 with, let's say, again, a strong result. And this entails a buildup of pipeline in, let's say, the defense and public security part, a continuation of the industrial and power business performing as we see it right now and looking at the order activity, as mentioned in those weeks of summer right now, well, I think we are confident to deliver on this one and building up the right pipeline long term also for the year to come.

I think we see ourselves in an even improved technological position looking at, let's say, the market environment and peer group out there. And we also, I think, have an extremely solid financial position. Last but not least, we are not just looking at M&A opportunities. We are actively working on it, and we have been doing so, I'd say, over the year. First focus is market access, better market access in Asia.

In the U.S., we are looking at our existing verticals, be it oil and gas, defense or, I'd say, our civil security and protection business. And with this, we conclude our presentation here. We thank you very much, and we are looking forward to your questions. Handing over back to Alessia. Thank you very much.

[Operator Instructions] First question is from Karsten Von Blumenthal, First Berlin Equity Research.

We've lost connection with the gentlemen. Next question is from Michael Kuhn, Deutsche Bank.

One on current market dynamics. I mean, obviously, you elaborated on quite a lot of topics still. I mean, versus the call 4 weeks ago, have you seen, let's say, any change in customer behavior? You referred to, let's say, some hesitation in some areas? Is that slowly dissolving? Or is that still the same? And in that context, you mentioned orders collected so far in the quarter and what you see in the next few weeks. Maybe you could quickly repeat it. I understood EUR 14 million collected so far and other number in the teens over the next few weeks. So just to confirm that number.

And the second question would be on the M&A topic that you touched on at the very end of the call. It sounded like it could be in a kind of progressed state already. Is there a chance that you see any additional deal over the remainder of the year?

Michael, thank you very much. Yes, on market dynamics, I think we have 2 elements. We are seeing really the continuous activity and growth in our existing industrial fuel cell business as well as the power side. And if we look at the recent orders, yes, last couple of weeks, about EUR 14 million in, which again is exactly out of this, these 2 parts of the business. The overall hesitation, I think if we look into the U.S., again, I think our final implementation of setting up -- or ramping up the production going local for local, I think, will help us there, too.

And again, it is not that we do not see new business. As said, we were around the 16% growth rate or we are at the 16% growth rate even in new business there. But our expectations and our ambitions were higher than this. And orders, we see in, let's say, the immediate pipeline, I think a good EUR 10 million to EUR 15 million for the upcoming weeks is what we see right now.

And if we look at this, adding this all up to where we were at mid of the year, we also see ourselves well positioned also for the remaining part of the year. M&A., yes, we continue to really put our focus on it. And I think we have a good probability to at least land one of those projects and to, let's say, close it or at least sign it within the remainder of the year. And again, it's about, let's say, market access.

But there, you might want to give us a few more weeks here until end of September to see where we are, but heavily working on it. And again, looking at the pipeline once again, on the defense part of the business, the buildup of the pipeline is, I'd say, already now for 2026 revenue realization given just the time line of such projects, including the supply chain. And that's, I think, the summary on this end.

Next question is from Malte Schaumann, Warburg Research.

First one is on the inventories. You potentially just touched upon briefly. So the buildup -- just to confirm that the buildup we are seeing should not go away in the second half of the way and then the preparation for the growth you expect next year, right?

We should -- we expect to decrease the inventory towards the second -- in the second half year. So yes, it should go to a lower level again.

Okay. Okay. Good. Then on the Indian project in India, I mean that you received the announcement from your customer on pretty short notice, which triggered the announcement at the end of July, early August. So potentially, you have been attached with your customer. So -- and meanwhile, so did you get further indications, further confirmations about the project and what will happen in 2026? Or is that yet to come?

Well, I think, Malte, this is Peter. Yes, we naturally have been in intense conversations and exchange here over the last couple of weeks. For the time being, I think it's very realistic to assume that we are going into a realization of those programs now in 2026. We have this, I'd say, in our planning now maybe with a slightly, let's say, lower dollar or euro value, not just because of the currency, which is one impact where we are still, let's say, now more cautious also in planning as well where we do the same thing with the Canadian and the U.S. dollar going forward for, let's say, at least the remainder of the year and the beginning of next year.

But overall, we have no reason to believe that those projects are not going to be continued because the basic decision-making is taken. There was a short notice reallocation of already purpose funds, which, yes, was simply not expected. And let's say, both of us sitting here, we will be in India within the next couple of weeks separately and I think get more details here. But we have taken out those programs out of 2025. That's besides the, I'd say, currency impact, the biggest impact on the top line by far for 2025.

Yes, sure. Okay. And then maybe comment on the pipeline of projects of new customers, which have not done business with you in the past, how that developed over the past couple of quarters? Do you see a change in getting leads, et cetera? So maybe some color here would be good as well.

I think here, again, looking at just the different segments, if we look into, let's say, the civilian surveillance and protection business, we are expanding from core initial partners like BauWatch in Germany and the Netherlands or Europe or LiveView in the U.S. to, let's say, the whole landscape of players there for the mobile security market. a certain hesitation in the U.S. due to the mentioned factors puts us, let's say, at a lower growth speed here than originally anticipated, which I think is now factored in.

But overall, yes, we are seeing a market penetration of our fuel cells as simply a superior technology to batteries and solar combinations only and still naturally also total cost of ownership then superior to diesel. And looking at new business, I think what we look now at in the infrastructure part of the business, going out there here on construction sites and providing combined solutions here batteries and fuel cells, our EFOY packages here, 2 key players in the industry that are consolidating this business, we see as a significant upside here.

If you look at it, the first project being realized here, is just an initial pilot that confirms the viability here of our technology, just bringing down the cost. If you look at such a construction site here in Germany, going out there changing batteries at one of those sites is an expense between EUR 2,000 and EUR 4,000 because you need 4 trucks going there, 2 for safety, 2 for, let's say, the team as well as the equipment.

And if you can take out a few of those visits per year, it makes a pretty attractive calculation and teaming up with one of the key leaders in this industry in Europe as well as North America, I think, is a good starting point in the market. For us, same pattern as we do it for the surveillance part of the business.

Okay. Then on defense, maybe more related to the NATO -- potential NATO customers, major customers. What are you seeing there about momentum picking up going into 2026 or some projects taking a bit longer hence rather be we realized maybe late next year, early '27. So what's your take on the environment as you see there?

Well, I think what we see is, Malte, some almost contradictory picture. Although the funding constraints are eliminated at least from a political decision-making, until this again trickles down into a household, it again takes some time. And then you have the other limiting factor, which is the capacity of the industry. If we talk about vehicles with the OEM customers, some of them are really, let's say, at the limit of their existing capacity and are thinking of turning some automotive facilities into defense vehicle facilities.

So household, yes, in Germany, the parliament is coming back in 2 weeks from the summer break, and then we see, hopefully, to see a household in place end of September. And then it's more a couple of weeks than a couple of months that the household is open. So that's why I think we will see this contradiction in 2026, but this is really complaining at pretty high level because the overall funding limitations are removed, and that's the fundamental change to the years before.

And therefore, our focus is really on the OEM side to make sure we get those programs in place. We published this collaboration with the vehicle manufacturer, Polaris, just a couple of months ago. We are at the big defense show in the U.K. in 2 weeks. That means building up pipeline for the U.K., for the Netherlands, for Germany, some projects being in there also for smaller countries here for portable systems like Austria. Not everything is going to materialize as you mentioned, in '26. But with the rebound in India and 1 or 2 of those programs, we are looking again and expecting, again, returning to growth in Defense and Security in '26 and '27 onwards.

Next question is from Usama Tariq.

I just had a set of questions. Number one, being -- could you just elaborate this, the motorway construction where 60 E4 systems were used and you do identify a large opportunity there. So just a little bit of color there would be really nice. Is it bettering based? How long is the cycle? So there and secondly, FX, do you foresee going forward some hedging activities if FX has been that negative, do you see doing some FX hedging next years?

Well, thank you very much, Usama. This is Peter. Well, the motorway construction part of the business, yes, we started collaborating with dedicated security and traffic safety companies a couple of years back, just for the testing of the EFOYs. At the end, what we do is all those signs at such a construction site out there, be it, let's say, just light LED lighting, be it, let's say, speed control devices just overall, let's say, signs, they need off-grid power.

The conventional solution today now to a large extent is expand its battery and solar combinations with certain limitations on run time. And by adding an EFOY, it's our standard approach, hybridizing, we are prolonging the run times. And therefore, we are bringing down the maintenance cost. And it is, let's say, the business -- and the way to market, going to the customer is through those dedicated service providers there. And for the time being, looking at just now the German opportunity here.

I mentioned this before, we are looking at, let's say, 4,000 bridges that are, let's say, defined as urgent need for renovation or replacement and also seeing, let's say, the plans of the government here in terms of investment I think we see ourselves well positioned. I think we will also realistically now need some time in the next couple of months to really assess the opportunity. But the partner we are working with is not focused on Germany only.

It's one of the market leaders here in Europe as well as in North America. So I think having completed this first major project with success and also commercial success here for our partner. It's now up to us in the next couple of weeks and months also within our budgeting process to assess it. But just, again, 60, let's say, EFOY units on one of those bridges, and we are looking at the plan of the government here to do 400 bridges a year. We might not get to 100% of market share, but even 10% of the market share would be a tremendous success in adding to our industrial business.

It's Daniel. So with regards to doing hedge or how to derisk the exchange rate risk going forward. I think it's a bit of a more comprehensive answer, but let me try to summarize it a little bit. If we differentiate between 2 different exchange rates. The first one is what I told you, the average exchange rate for a certain period which is not fluctuating or has not fluctuating that much so far.

So I said, if you compare it fiscal year '24 to the first half year '25, we see that U.S. dollar came down 4.1% average exchange rate, we should apply to the revenue number. The Canada dollar came down 3.1% and the largest decrease has happened with the INR which is 5.4%. So we -- obviously, we do have an exchange rate colors, which we use or look at it, which clearly the movement has been higher than what we anticipated in this year on that average level.

So that is something we'll have to look in and maybe potentially going to be more conservative with that going forward. But then the other one is the exchange rate at the cutoff date when you value your balance sheet items, right, your assets. And that is done end of December and then now again, end of March and end of June. And if you look at that exchange rate, right? So that's the spot rate at that day. You'll see that the U.S. dollar went down by 11% compared to year end, the Canada dollar 7% and the INR 12%. And that is really where a large portion of that exchange rate loss comes from because you value your receivables and your assets on that specific day.

And you see that the depreciation is much, much higher than on an average. And when it comes to that position, right, yes, we will be looking into some of those currencies and talking specifically now about Asia, we may look into hedging certain positions being aware that payment cycles in those countries are much longer from what we see than in North America. And I think this is something we are looking at.

And we're looking at any position, asset position, and that would be accounts receivable mostly, where we have an exposure, which is significantly above 60 days. How we could either reduce that exposure by collecting earlier or what we can add/or negotiating exchange rate adjustment clauses with the specific counterparty and/or going into a hedging instrument there, which, of course, is also not for free. And as I mentioned in the quarter before and, comes with the cost.

So we will apply a sophisticated strategy, which will not reduce the eliminate the exchange rate risk, but we want to avoid having those fluctuations on a quarter, right? As I said, larges portion is unrealized on that. There's no need for us to realize it. Nevertheless, we are fully aware that it is not looking good on our P&L and then we need to act on that.

[Operator Instructions] Next question is from Karsten Von Blumenthal First Sterling Equity Research.

I was disconnected when I tried to ask my question first. So I hope you can hear me now.

Yes. Very well.

Perfect. So in your corporate news, you said that Defense & Security in H1 was roughly 48% of H1 sales. Could you roughly split this in public security and defense for us?

I think specifically, it is defense and public security, which is, let's say, the government part of the business being about 9% and the remaining part is the civilian part of our security business, which we have in the industrial part of the business. It was just to make sure one can see now how big, let's say, Civilian Security and civil protection business has grown, which is, I'd say, the fastest-growing segment, as mentioned before, and still under our industrial business. So it is the government part and the civilian part together, so not -- to make sure we are specific here.

Perfect. That helps to understand it. One further question regarding Salt Lake City. You mentioned ramp up in Q4. Does that mean that from Q1 on, you will have full capacity there?

Well, at the end, again, as we've done this before. In India, we've done it in Klush in Romania, we have to look at, let's say, the setup there. We are talking about an assembly line and the main equipment in there is naturally all the quality assurance and test benches. So yes, it will be there, and we will do this.

Okay. Do I understand this right that it just takes time to get such a production online, and it is an ongoing process. So we will also, in Q1, probably see further ramp-up activity. Do you have a target when you want to reach your full capacity there?

Well, I think at the end of the day, what is now happening is the setup there, we have, let's say, the hiring there ongoing. Training is a key element. Part of the training will take place here. Well, the moment everybody has a passport, they can also travel here to Germany.

And the part of the training will be here, part of the training will be there. And then it's really something that can be adjusted to, Let's say, the business volume there. So we are, I would say, not too excited or too. We are not at all afraid of doing this, and we are excited of implementing it. And we have done it and shown it here in Europe as well as in India.

All right. We're ramping up and having the production is one part. The other part is probably to say, localized cost. So how much of the total product cost can be sourced in the U.S. next year?

Well, I think we have been also clear here from the beginning. We are not anticipating to, let's say, move some of the core parts here to the U.S. as, let's say, the supply chain is highly depending on our own membrane facility here. We have not taken the decision whether it makes sense in the initial part to move, let's say, things like a stack assembly to the U.S.

But as Daniel mentioned before, if we look at the MEAs, core part of the materials that come to Swinden are coming also from a U.S. supply chain. So therefore, I think we have -- if we look at the stack, we have about, let's say, of the 2/3 of the cost being in U.S. dollar out of, let's say, U.S. based or U.S. originating supply chain. And actually, this gives us some flexibility.

We might not move, let's say, all the assembly right at the beginning. But that's, I think, that the potential apart from, let's say, the logical things from cabling to other, I'd say, standard parts. But that's, I think something that protects us already in an effective way, but we take this along the lines here.

Again, the move and the decision to do this in the U.S. originates from the request here from and the expectations from our customers to move the assembly there. It is seen as an objective or maybe from our perspective, maybe more a perceived risk, but they want us to be there. And now mitigation on tariffs and exchange rates, I think, are the additional effects that we are now, I'd say, having here in our risk mitigation plan also seeing the environment developing as it's developing.

Perfect. One last question from my side, Peter, you mentioned Polaris. And I think in the last call, you said there are some tenders out. Is there any recent positive development from Polaris regarding orders for you?

As mentioned before, we are working on the pipeline for 2026, and this unfortunately implies the fact that decision-making is not there yet. And this, again, has to do with the overall situation of political decisions being taken, but allocation of funds here in the various households is usually decoupled and delayed. But still, the overall environment, we must not complain here.

And we have to confirm here that we did not do anything when you were disconnected.

Ladies and gentlemen, that was the last question. I would now like to hand over the conference back to the management for any closing remarks.

Well, again, thank you very much for taking the time. As usual, we are here at your disposal for the individual discussions that might arise now from our call today, Daniel, Susan and myself. And in addition, we will be at the Hit Hamburger investor store target as of tomorrow presenting results and outlook and hopefully seeing some of you there. Thank you very much.