Leonardo Spa Ord

Good afternoon to everybody and welcome to our...

Our 2025 preliminary results presentation. I'm Claudia Introvigne, as I think you already know me. I'm the responsible for investor relations here in Leonardo. And today I'm really pleased to have with me our CEO, Roberto Cingolani, and our CFO, Giuseppe Aurilio, who is at his first report here in Leonardo. We are pleased to present our preliminary results which will be focused on 2025. Please remember that you are all invited on the 12th of March to our industrial plan presentation. when we will also present to you our 2026 guidance so please bear it in mind in the q a session that will follow thank you and now i will hand over to our ceo roberto

Thank you. Thank you, Claudia. Hello, guys. Nice to see you again digitally. As usual, we make the pre-closing, the preliminary of the year, the Q4. And then in about three weeks, we will have a much longer session about the update of the new industrial plan. Somehow, this is the last Q4 we celebrate together. So it's a farewell. It's a farewell session. I hope to be back the day after the 12th, of course, March. Today, we want to share with you some of the data. And first of all, let me acknowledge the fantastic work that we did with the new team, with Claudia, that you already met a couple of weeks ago. I think in the last report, the Q3, and with Giuseppe Aurillo, who was integrated immediately in the team. The transition was extremely smooth. Giuseppe knew very well the company, was in the company for many, many years, and we were extremely effective. So maximum satisfaction from my side about the progress of the work and the reporting with the new team. So let's see the numbers. Numbers for the Q4, though preliminary, they're almost exact, I would say. They're very satisfactory. Let me start with the comparison year over year about orders. We were expecting something in the range of 22 to 22.7 billion. So that was the updated guidance. and we closed with 23.8% to be compared to 20.8% last year. So it's plus 14%. Concerning revenues, we closed with 19.5 billion, plus almost 11%. The guidance was... 18.6. Last year, it was 17.6. The EBITDA is also remarkably growing. We closed 175 billions, so plus 18%. Our updated guidance reported 1.66. Last year, it was 1.48 billions. The return of sales is increased by 0.6%. So we go from 8.4 to 9.4, this Q4. Cash generation is also here. I mean, for the first time, we... We break the psychological threshold of 1 billion. I think we finished 1 billion plus some little money extra. The updated guidance was 0.92 to 0.98. Last year, it was 0.84. And the net debt is reduced by 44% down to the level of 1 billion. Last year, it was 1.8%. So I think we got all the results we had in mind, slightly better than the updated guidance. Let me make the story, because this is the last Q4 in the mandate, and I think it's interesting to discuss with you the significant growth and the financial transformation that Leonardo underwent over the last less than three years. So orders have been growing by 38%. When we started our mandate, they were in the range of 17 billion. Today, we are in the range of almost 24. Revenues were growing by 33% over the three years from 14.7% to 19.5%. And I think this is encouraging, but I think this is even more encouraging to see that EBITDA and free operating cash flow were growing super linearly compared to the orders and revenues. As you see, the EBITDA was rising from 1.2% up to 1.75%, 44%. And the free operating cash flow grew by 88% from 0.5 to 1 billion. Now, I think this deserves some consideration. First of all, let me remind you my usual gesture. At the beginning, I said orders, revenues, EBITDA, and FOC, we're not happy because the orders were growing, but the FOC was not growing properly. And actually, the target was to have something like this. So the curve should have been kind of parallel. I think we are on the right track. For sure, orders and revenues are growing, but you see EBITDA and free operating cash flow are growing faster. That means our recovery in terms of performances, efficiency, cleaning the portfolio and so on and so forth are now giving the right results. the analysis of the other KPIs. Let's see, in the last three years, the net debt, as I told before, was going down from three billions to one billion. Actually, this 67% reduction comes from, first of all, the savings, the efficiency, and the rationalization of the portfolio we did so far. It comes from the sale of the under-marine activity, the UAS, and On top of that, it comes from the higher cash generation that really allowed us to go down to a debt level that is unprecedentedly low in the history of the company, recent history of the company. The dividend, this is very important for us. When we started, we had a rather modest dividend that was stationary for many, many years. We were in the range of 14 cents per share. This has been increased regularly every year. Today we are at 0.52 euro per share. So the CAGR was plus 275%. What is important for us is that the dividend yield now is aligned to the European average of the peers. We were below the lowest decade in 2022. And the CAGR of the growth of our dividend is much faster than the average one of the peers in Europe. So we grew up by 55%. And what I would like to anticipate, I mean, for me, this is very important. I would like Leonardo to be always attractive and satisfactory for our investors. This year, we're going to increase further. the dividend, of course, we are making the detailed calculation. This will depend on the net income. Very likely, we will improve kind of plus 20% because this will follow the expected increase of the net income. So anyway, this is very important for Leonardo because we have to be in the right range as a company with ambition. And of course, we want to reward our investors. Finally, the employees. When we started, we were about 50,000 people. Today, we are about 73,000 people. The growth is 22%. What is very important is not only the absolute number, but also the typology of people and the age and the gender. In the three years that we just finished now, we hired a net 17,000 people, one seven, 17,000 people. The important thing is that... About 70% of those people are STEM. So they own essentially a technology degree in science, engineering, mathematics, whatsoever. More than 30% are women. And what is more important is that 55% of those are below 30. below 30 years old. That means that in these three years, we also started an unprecedented transformation in the human capital, getting younger people much more technology-oriented, which followed the portfolio transformation of the company, because we need by far more STEM to be competitive in terms of new technology and new solutions for defense and security. so uh at the beginning of the three years um that was the picture uh we summarize on the left orders this this has been discussed already revenues ebitda 1.2 billions free operating cash flow 0.5 billions dividend per share 0.14 50 000 people roughly and the market cap was 4.6 billion our Our matrix portfolio was relatively complex. We had in the air domain all kinds of aircraft and helicopters, not yet the sixth generation fighter, a lot of electronics in all domain, land, air, maritime, space. And we had some starting cybersecurity projects. activity and very poor digitalization so at the very beginning three years ago there were businesses that were in silos in silos not interacting very well to each other so far from the modern multi-domain concept interoperability concept that are becoming essential mandatory for the future defense there were several unresolved issues in terms of performance and and efficiency and capacity. The product portfolio was fragmented. We had to clean it substantially, also cutting development lines that were absolutely off core business. There was a very limited digital capability. I'm sure you remember this was one of the first, the point when we started our enterprise. Innovation was quite slow and maybe the confidence of the investors was not so high. Now, over these three years, we were working quite hard. I'm not going to read again the numbers, just reminding the thank you to your trust. We could go up in the market cap to $34 billion. And I thank you for this investment, believing in Leonardo. But what is more important is that the matrix of products now is very complete. We cover the entire AIR domain with all platforms, manned and unmanned, which is very important. There was no unmanned whatsoever before. Electronics is becoming the glue of all the platforms. Digitalization is transversal to all our platforms from digital twin to digital toolkit for digital. for manufacturing ai more than 2 200 people that are using ai in production and more than 200 developers of ai capabilities we doubled our computational power and our storage with the new davinci to supercomputer. LAND, with the recent agreement with Rheinmetall, the acquisition of Iveco, other agreements with KNDS and other companies we're starting to discuss with. In LAND, we cover all the manned and unmanned platforms. infantry vehicle, main battle tanks, wheeled and with trucks. Maritime, we own absolutely the control of all the combat system of warship. Space, we started our constellation. We developed with a lot of effort a new division, and now we own the entire spectrum of satellite services applications. And as you know, we are discussing the constitution of big company at European level with our peers. Thales and Airbus, and cybersecurity underwent a strong impulse that you've seen from the numbers, but later Giuseppe will give you more details. So what happened in those three years? New product and portfolio rationalization that was essential to complete the matrix. Without this complete matrix, we cannot be in the multi-domain as a leader and not as followers. We made a number of strategic partnership and joint venture and selective M&A acquisition. This part is what we, you remember at the beginning, we presented as our inorganic growth plan. The strategic partnership are bringing in very good results. We now have all the platforms for drones. By the way, I anticipate that in April, we will launch our first drones from the Ronchi dei Legionari plant in collaboration with our friends in Baicar. GCAP, you know everything. This is the edge wing company that's been constituted. We are up and running. Actually, I think this is the last big consortium left in the international landscape, so we're in a very good position. Bromo for space, I already mentioned. Selective M&A moves, especially in the field of cybersecurity, were very convincing. We now own, in cooperation with our partners, partners' zero-trust capability, and we are developing very quickly the portfolio of cybersecurity. We accelerated the digitalization in a way that has never been done before, including doubling the power the global power computation and storage that we have in the company. We have launched the capacity boost program. I'm happy to say that the capacity boost program has now reached a maturity point. We have more than 300 manufacturing and production pilot programs, and there is a team of about 100 people distributed in the company that are working directly onto the production line. So this went from theory to production line in about six months. And then, of course, we are pursuing our disciplinary capital allocation program. This is fundamental. The numbers are good. The net income is good. Free cash generation is good. Debit is under control. This is the time to make a very ambitious but disciplined capital allocation to accelerate further the growth of Leonardo for the next years. So at the beginning, three years ago, we had a rather incomplete portfolio, little digitalization in that some cybersecurity was the only thing available. And of course, we knew at that time that it was very important to create the capability for a multi-domain platform. Now, actually, after three years with the effort we did, we are able to face the market with a very complete portfolio. There is everything from the Constellation to all the manned and unmanned flying systems, to all the land manned and unmanned flight systems. entire suite for global combat system in the ships. And the space has been substantially improved in terms of data analysis, constellation, ground stations and so on. On top, High-performance computing and cloud for AI generation has been improved substantially. Cybersecurity has been reinforced and it's growing fast. And as I said before, the Constellation is there to provide data and supervision. In the end of the day, we said three things three years ago. Bullets and bytes. At that time, it sounds like a very exotic statement, but I think now it's commonly accepted everywhere in the world. A large part of the effort in defense goes through digital technologies coupled to AI. bullets technologies, let's say metal mechanic or platforms. The second message was no one can make it on its own. So joint ventures, acquisition alliances are fundamental to accelerate the response towards the dramatic demand that we have on the market and also to facilitate the creation of a European space of defence, which is before being political, this has to be industrial. And finally, We are preparing ourselves to face the real challenge of the next decades and possibly more than one decade, which is passing from the bare defence, which means essentially weapons and weapon system, to a much more complicated global security approach, which should defend our countries by the hybrid wars. So no matter whether we will have conventional wars in the next decade or all the wars will finish and we will have another kind of war, which is a cyber war, safety, security of the infrastructures, energy security food security all those things will cause damages and economical losses that are incredibly high so we are preparing leonardo ready to face both challenges this will be the content of the new plan the updated plan that we will introduce to you guys on march 12. i don't say more I cannot spoil more. There will be numbers, there will be forecasts, but of course there will be strategies that will design, will pave the way to the future of Leonardo. I conclude, before giving the words to Giuseppe, with a bit of sustainability. I'm very proud to say that meanwhile, Leonardo was growing quite fast in terms of group revenues. So basically in a few years, we grew up by 40%. Well, of course, consider that this was the COVID time. So that was a very complicated period. Let's say that most of the growth was in the last three years, as I said before. We were able to work quite effectively on water withdrawal, waste production and reduction of emission by scope one and scope two. And you see how counteracting is the growth of the business compared to the improvement in terms of sustainability, scope one, scope two, waste produced and water withdrawal. Those are the numbers if you like to see them. And on top, the workforce, as I told you before, was increasing substantially, improving diversity and improving the global fraction of young people below 30 and also reinforcing the innovation because today we have reached approximately 20% increase year over year in innovation. So today Leonardo can safely state that we invest 15% of our revenues in R&D, which is actually the safest way to be very competitive in the future at the level of the best companies in the world. Now, what we did so far has given very good results in terms of ESG rating. In this radar plot, you see Leonardo nowadays. Those are the main ranking that I'm sure you're familiar to, so I'm not taking time to go through them, where we are always in a very good situation. And this curve is the radar curve averaged of the peers. So it seems that Leonardo has gained a very prominent advantage in terms of sustainability of the business compared to the peers. Of course, the core business is to make the best technology ever, but also being sustainable is very important. Now, before concluding and giving the stage to Giuseppe Aurelio, I want to anticipate two things that I'm sure you're going to ask me, because I promised you to give some important update about aerostructures and about IVECO. So I'm going to do this now. Happy to answer your question, of course, but I think it's good to anticipate the core. So concerning IVECO, The closing, we confirmed the closing by March this year, so we're very close to accomplish the acquisition, to finish the acquisition. We are very happy in terms of industry opportunities, wield and track the systems. The demand is very strong. We are delivering already to the Minister of Defence the early machines with dry metal and the capacity will increase thanks to the Iveco absorption. Concerning the trucks, our colleagues in Rheinmetall are now testing the situation with the antitrust, of course. So this is a mandatory step. So we will give them approximately six months of exclusivity in order to check how this can be developed. Anyway, we're going to close because the agreement is that we close. We are in a hurry. to increase our capacity. The truck business itself is a business that has a rather good margin, 12% to 13%. There is absolutely no warning, and there is quite an interesting backlog of orders. So we look forward to see what the antitrust analysis that our colleagues in Rheinmetall will do together with the Leonardo team, and then we will decide how to proceed, I think, by the mid-26th. There are also other potential challenges companies interested, but as we told you since the very beginning, we try to pursue the strategy with Rheinmetall, wait for the antitrust and then make a decision. There is no worry at all, whatever will be the outcome of those analysis in the next few months. Concerning aerostructures, I have news that are important. So I was personally visiting the top management of our counterpart, potential counterpart. They still ask some confidentiality for six months, but I can tell you where we are in a very detailed way. So our standalone plan was accepted and evaluated very well by the partner. We evaluated the standalone plan of the partner, which is very interesting. The idea is to create a joint venture, which is going to be something like 50-50 at the beginning. It's an international company. The brain at the beginning stays, of course, in Italy, but we... push substantially the production because our partner is both financial and industrial, and they have a strong demand of components for civil aviation, but also for military aviation, rotorcraft, and in the near future, potentially also space. So this is going to be a gate towards a new global company that's starting with their structures, going to open to big markets in the, generally speaking, their domain, air and space domain. Everything is ready. The due diligence lasted the... 14 months so far. There were approximately 70 items, 70 assessment lines. About seven should be finalized this month. The others are completed, green spots, so they're done. Our partners are waiting for the confirmation that some incentives will come. by their local ministers that will complete the financial plan. And the commitment, because the exclusivity is given up to June, is to sign before that date. I think, industrially speaking, we finished our work. Our customers, so the main builder, are aware of that. We, of course, confirmed at the very beginning we will keep absolutely the quality as usual in our plans while we transfer some of that technology, some of those technologies in the partner company, in the partner plants. So we expect a very smooth transition, quite an enhancement of the business, which is going to be because it's going to be a global player, not a limited division, let's say. And I expect to see a positive impact already in the 2026 balance sheet as soon as we complete. I can't say more details because confidentiality is a primary requirement for our partner, but I think I gave you a clear picture. You know where we go and you know that 95% of the job has been done. Thank you very much for your attention. I give the stage to Giuseppe for the financials and then we'll be happy to answer your questions. Thank you guys.

Thank you, Roberto, and good afternoon to everyone. I'm very pleased to be here presenting our full year results, our strong performance for the year, and looking forward to meet you, as many as possible of you, in Rome when presenting our updated industrial plan. Let me start with some initial consideration, as I'm now serving as CFO of Leonardo since three months. So, as Roberto was saying, My transition was very smooth. I found a very strong management team and a very strong team. So this is helping me a lot in understanding the complexity of our business. I found a company and a group which has a very clear strategy. I was impressed when reading back all the papers that we were presenting to the market, how linear is the connection between what we said at the beginning of the three-year mandate and what we have been doing during these three years. And I found also a group which has transformed a lot at a very quick pace. i see from a financial point of view the difference in terms of profitability and cash flow generation as you were seeing where roberto was presenting the results for the three years the increase in a bta and free ability cash flow is much bigger compared to the top line this means that we have been doing a great job in recovery efficiency and improving cash flow generation So very strong performance. I said we exceeded all the guidance in all the KPIs. So orders are around 24 billion this year, driven by successful export campaign. We will see when discussing about the divisions. that this increase is spread over all the divisions. Of course, there is a specific focus on aeronautics because it's where we got the Kuwait service order, following a very big order in Kuwait. Revenues were at 19.5 billion, so well above our guidance, and the same for EBITDA, 1.75. So the EBITDA increased significantly. both for the volume effect, but also because we recovered profitability with the return on sale up to 9% from 8.4%, so 60 basis points up. Free operating cash flow was above the 1 billion threshold, which was impressive to me. If I think back about my first period in Leonardo, I was also in the CFO department. We were struggling every day on cash flow generation to improve, but with a level of the target which was completely different. So being above 1 billion was a challenging target, and I'm very happy about these results. and this has led the debt net debt down to 1 billion of course we have here the positive impact of the cash flow generation for the year but also the proceeds from the disposal of the ues business early 2025 so i said we are growing we are continuing growing but increasing profitability and cash generation so let's focus on the orders For the year, orders were up 15% year-on-year, with total backlog at $47 billion. As you can see, the book-to-bill was above one in all the divisions, at 1.2% at group level. We have a very strong increase, as said, in aeronautics, where we have the effect of the extension of the support service contract for the IFA-Q8, but also very good momentum, so new orders on trainers, C27J, and of course we have strong opportunities also for the future. Defense electronics, we see there is an increase of 5%. 8% if we look at Europe, you know that inside the electronics defense, we have Europe, US, it is DRS, plus the contribution at least at EBITDA level of our JVs. So, Leonardo DRS was negative year on year, but just because of the exchange rate of the translation of the dollar, which was negative. Otherwise, it will be positive by 4% compared to 2024. Helicopters marked a growth of about 5% so here the growth was driven also by the customer service activities which is very important in our strategy as it is part of the roadmap we have to increase profitability in helicopters and we will see later on some results on that. finally so we are growing a lot in our three bigger pillars electronics helicopters and aeronautics but i am i'm happy to highlight that we are above 1 billion orders per year also in cyber and space which were very small when starting the execution of this industrial plan. You may remember that cybersecurity was about 0.4 in terms of revenue in 2022. Now we get 1 billion orders. Space was not a division. It was a part of other division. The activities in space were part of other division or were operated through the Space Alliance. So now it's a division with one billion orders and one billion revenues per year. So I think this is a very good sign of the proper industrial plan, which was set at the beginning of the year and the execution of that industrial plan. This increase in orders, of course, has pushed up also revenues, which were up 11% compared to 2024. So double-digit growth, double-digit growth also over all the divisions. So we are growth at group level, but also the same pace in all the division. So defense, electronics, and security, we have a strong growth in Europe, 11%. but also in leonardo drs again this eight percent that you read on the table of course is affected by the negative translation difference on the dollars otherwise it will be above 10 so very strong increase also in leonardo drs helicopters were up by 11 compared to last year so one year ahead of industrial plant targets where we were supposed to get the same level of revenues in 2026 and higher volumes driven both by the helicopter and the platforms, but I said also that the customer support. If we look at the deliveries of the helicopter division, this year we are slightly down in total compared to last year, 182 deliveries versus 191, but the mix is completely different. because in 2024, the weight of light and very light helicopters was much bigger. So for instance, we had 42 light helicopters against 14 this year for the US Navy. So you can understand that the number in total of deliveries is lower this year, but the mix is more favorable in terms of unit per delivery. And I want to underline also the increasing contribution of customer support where we have higher margins and this is an important part of our roadmap to improve profitability in helicopters. Aeronautics performed in a very solid manner. I think we are well progressing in all the main programs, IFA, proprietary platforms, GCAP, JCEF, so very solid performance. Aerostructure, were slightly negative but in line with the budget and we will come back on this point while discussing about the profitability because I think aerostructure was a key point. And of course cyber security and space are increasing following the success we have on the commercial side. So revenues at the end, 19.5 billion, with Italy accounting for about 23%. So the international dimension of the group is increasing every year as planned in our industrial plan. This increase in revenues has a positive impact on EBITDA, which is up 18% year-on-year. This is not only because of the volume effect. You see on the table that a portion of that increase is linked to the volume effect, but of course we have also a significant increase in profitability. We said that the return on sales has gone up by 60 basis points from 8.4% to 9%. And so this is a clear effect of the actions we are doing to improve our profitability and cash generation. Also here, we had a small negative impact for the translation of the dollar figures of DRS, but quite small. If we look at the EBITDA by segment, I think it's interesting to deep dive on each division, starting from Defence Electronics, which is this year above 1 billion in terms of EBITDA. with our return on sales close to 13%. Slightly better, apparently, compared to last year. But then, as I said earlier, we need to look at the composition of the value of the EBITDA for the division. As you know, we have four building blocks. We have Electronics Europe, And here our EBITDA was about 11% from 10.3% in 2024. So very good increase. We have Leonardo DRS, which has increased its profitability from 10% to 10.4%. And also we have the contribution of our JV and strategic partnership, MBDA and ENSULT, which in total gives a contribution of 180 million, which is about 20 million less than 2024. So if we look at the overall growth, We see a slight increase, only a slight increase, but because it is affected by the negative variation compared to last year of our JV. So a little bit surprising, this negative variation. I will explain better why. As you know, we put in our EBITDA the net result coming from the JV. So we put on our EBITDA also the impact, which is below 1%. the EBIT line of those JV. So mainly tax, which were this year higher in MBDA. MBDA is a group which is performing very well. This year is going to be close to 6 billion in terms of revenue with a backlog of 44 billions So double-digit profitability, so it's performing very well. But if you go to the last line of the profit and loss, we got a tax charge because of the tax reform in France, which has affected the net result. So profitability in electronic division growing slightly, but only because of this impact on the JV. Helicopters, we have increased our profitability from 8.8% to 9% ROS. So here we see the benefits from our actions, both on the efficiency on engineering and our supply chain management, but also the increased contribution from customer support. As I said, we have bigger margins on customer support, and this is part of our strategy. Aircraft, again, very solid performance in aircraft division, close to 13%, driven by the programs I was mentioning before. Aerostructure was negative by 130 million, around 130 million. so still negative but in line with our provision and this is true for all the kpis of our structure including cash flow so the plan we made is solid during the year we increased also the shipsets rates on b7a7 you know that it is our bigger program program in our in our structure and during the year we started from four shipsets per month so we arrived at seven at the end of the year so a very good progress we got an agreement also with boeing that makes our rate plan for also for the future much more robust and reliable and this gives confidence about the solidity of the plan we made on our structure an additional point about our structure if you look at q4 only you see that our structure is at a break even This is due to the impact, of course, of the increase of the rates on B787, but also on the closure of some smaller programs, which has allowed us to release some contingency. So it's a very good sign because it implies a progress and a benefit on the activities we do for Boeing, but it's also not an indicator of the trend going forward. We expect uh our structure to be in a lost position also in 2026 and we maintain the plan we we said in the past we will go in more details of course in march but i can anticipate you that of course if you see break even in q4 is not what you have to expect in 2026. I said very important milestone, the agreement with Boeing. It's around 50% of the business. Then we have other activities which are more or less fine. And these are reducing the issues on aerostructure on around 30% of our revenues. It has the activities we do with ATR and Airbus. But Boeing now has a more solid profile. Cyber security is up 63% compared to last year. Of course, this is mainly due to the different scale. We are increasing scale a lot in cyber security, so the fixed costs have been absorbed much better than in the past. SG&A as well were lower in contribution to the revenue. This has increased the margins. Also, I have to say that we have some very good new programs which are contributing to the EBITDA. finally space where again we have a very significant increase plus 90 percent this is part let's say organic it means the activities we do on the service segment where we have been doing very well this year very strong increase in revenues very strong increase in profitability but is also due to the lower loss of thales selenia space You know, we put here the 33% of the net result of TAS. Last year was negative by around 50 million. This year it's still in a lost position by 23 million, but of course the reduction is a benefit for the result of the division. TAS is progressing in its recovery plan, still negative, but it's progressing as expected on its plan. The results include also the benefit from our efficiency plan that we launched at the beginning of our industrial plan, when executing our industrial plan. We see that also this year, like in the past year, the benefit from the efficiency plan exceeded the budget. We were higher than the budget. So this gives us a strong confidence that we will be able to achieve also the scale that we have in the plan for the future years. So we are progressing very well also in the efficiency plan and this is sustaining our EBITDA. And the increase of our EBITDA, of course, is increasing our free operating cash flow, which is 21% up compared to last year, with the same conversion rate, which means that this year we have been able to translate all the improvements we have done on the operational side on the EBITDA in cash. Very important because this is a key factor for our future development. So operating cash flow was 2.3 billion. And it was able to pay back also additional investments. We are this year at around 1 billion, increasing compared to last year. And of course, this is a trend that we will see also in March when presenting the new industrial plan. Of course, we paid also interest and taxes for 03, leading to a free operating cash flow of 1 billion again. This is a best ever. It's a comment that is applicable to all the KPIs because it's a best ever for all the KPIs. But in free operating cash flow, as we were seeing when looking at three-year mandate of the current board of directors, is the most powerful indicator of the improvement of the group. Thanks to this cash flow generation, group net debt has gone down by 44% in a year, starting from 1.8% and closing at 1.0%. We have, of course, also the benefit coming from the proceeds of the sales of the UAS business, 0.4%. But also, as Roberto was mentioning at the beginning, we paid a much higher dividend this year, 0.3%. So net final position, 1 billion. I think it's important also to look inside this 1 billion to understand how it is built up, to understand also how flexible and solid is our balance sheet. We have a group net debt that is in total 1 billion, but excluding lease liabilities and net payables to joint venture is positive by 0.9%. Now, what is this line? This line borrowing loans to joint venture is the cash that our joint venture deposit to us, mainly MBDA, of course. So it's our share of cash in the joint venture. As I said, the trend in NBDA is such that, I mean, this is cash we usually have in our hands and it's owned to NBDA, to the JV, but of course it's our share of cash in the JV. So if we look at the subtotal before those two lines, we have a positive net financial position by 1 billion. Very important also to link with the commitments we have, the potential outflows we have in 2026. In March, when closing the EVACO deal, we will have cash outflows that before the cash in the company is around 1.7 billion, but we have the money available to pay that amount. So, very good results. very well positioned for the 2026 also based on a strong fourth quarter which is part by the way of the actions that we are doing on the cash flow generation and the profitability try not to be too much concentrated in the last part of the year so they're risking the free operating cash flow also trying to anticipate and be compliant with the milestones we have during the year in order not to be too stressed at the end of the year. Still some area of improvements because if you look at the trend of the free operating cash flow it's of course negative and probably it's Something related to the business, which cannot change, but it's strongly negative over the first three quarters, but much less compared to the past. So this is an effort that we are doing. We are trying to make revenues, profit, free operating cash flow more linear over the year. I think this year we have been quite successful in doing this. Of course, to do that, you have to focus mainly on the execution of the contract, on the achievement of milestones and then on revenues and debits to be sure that you are able to cash in the money before the year end. So again, this is our full year results. This makes us very confident about the future development of the group.

Thank you Giuseppe. So now I think that we are ready to take your questions. The first question is coming from Sam Burgess from Goldman Sachs. Please go ahead.

Good afternoon and thanks for the presentation. Given we're getting some guidance in a couple of weeks, I'll try and contain myself on any forward-looking financial questions, but I saw R&D had a very strong 20% year-on-year increase, running well ahead of sales growth. Can you just give us some color on the areas of investment here and whether this level of investment is likely to continue? And a follow-on from that, in your discussions with the Italian government customer, are there any capability areas that you are not currently delivering where they would like to see investment? That would be really helpful. And then a third, if I can ask a third, would be within your cybersecurity business, are you seeing any new market entrants anywhere you compete that might be kind of AI-focused startups? Thank you.

Yeah, thank you, Sam. A complex question. I'll try to simplify the answer. The pillar of the R&D excellent investment for sure are digital, particularly doubling the computational power and the storage capability. This is necessary. because we plan to have ground stations for the data analysis that are produced in the multi-domain, and we need a very fast machine for algorithms and decision-making in real time. Of course, Good investment is being done through the NATCO for the drones and the adjunct for the GCAP, for the swarm intelligence. That's very important because as you can imagine, the GCAP itself is a platform, but the NATCOs are developing kind of synergistically, but independent to each other, their drones and their, so the adjunct and their swarm intelligence capability. So that's very important. We are investing a lot in command and control because, of course, within the Michelangelo, as you might remember from the previous presentation, the idea that we have to develop a module that becomes a upper layer communication among different platforms. And the module itself is agnostic with respect to the platform or to the effector. So it could be adapted to let... An aircraft manufactured by a company and a tank manufactured by another company under the same command and control and under the NATO umbrella, that requires a specific investment in terms of new electronics and, of course, sensors. We are investing on the long-range radars because we have started the activity on the... 1,300, 1,400 kilometers range radars. That will be the last ring of the chain for sensors, radars that go from 30 kilometers to almost 2,000. Investment then is done in many other industries. areas, cybersecurity is presently undergoing a strong acceleration in that whatever we will do in the future, either cyber war, anti-threat, or multi-domain, Michelangelo dome, whatever, we will need a strong capability in cybersecurity. All signals will be wireless. So, you know, you really need to be strong in terms of cybersecurity. Those things are developed in parallel. Compared to the past, those are not silos or silos. Those are synergistically developed programs in which all divisions and all engineers are talking to each other. And I think this is the main difference, that there is a coordination in terms of how we develop the new technologies for the multi-domain application, let's say dual-use hybrid war applications and so on and so forth. Concerning our estimate of the competitiveness in the future landscape of hybrid war, that, of course, is a very complicated question. Let me tell you something we are now developing. We're studying more than developing. And if you see in some of the important sites where the statistics are developed today, for defense and so on, you see that, for instance, the cost of the of the Ukrainian war is in the range of a fractional trillion point four or so over the years. But then you read that the forecast for the damage caused by cyber war, cyber attack in the future is going to grow exponentially. In 2020, the cyber crime caused losses for approximately one trillion in a year. The forecast for 2030 is one trillion per month. So obviously, if you compare the expectation of the market that will be involved in the anti-threat for the war, this is much bigger than the conventional defense. It's hard to say what part of this market can be targeted by a company at the moment. No one has this kind of statistics. This is what we're doing now. We're trying to evaluate where we can focus our attention. And for sure, cyber threats will be central. For sure, there will be infrastructural threats that can be primarily reduced by satellite observation. So all those things are being analysed at the moment. I think by March 12, we're going to bring you some forecast, at least at large, of what could be our positioning and what could be the size of the hybrid war projects products in terms of financials and the r&d effort whereas the one in terms of a standard war let's say multi-domain war that's much more clear and when exactly where to go you will get all the numbers in a couple of weeks time very comprehensive thank you very much roberto thank you sam so next question is coming from alessandro pozzi from mediobanca please go ahead

Hi, thank you for taking the question, sir. I have three, if I may. The first one on aerostructures I think it's positive to see that you've turned a profit in Q4, even though it was mainly driven by contingencies. Can you perhaps quantify what was the impact of contingencies in Q4? And while on the topic, in your opening remarks, you mentioned the deal is getting closer with your portfolio. with your partner, can you perhaps maybe tell us what the new JV in aerostructure could look like? What could be the perimeter and what could be the potential for growth there? The second question on margins, I think you've broken down the elements of the margin increase volumes versus mix. I was wondering what is the impact also from the cost efficiency that you are implementing into allowing the company to increase margins at the EBITDA level? And final question, free cash flow. I think it's good to see that you're increasing cash conversion. Can you give us a sense of whether there was any positive working capital impact on cash flow? I'm thinking more in terms of advanced payments. Thank you.

right so alessandro uh i'll give you a partial answer and then of course uh i will ask alice uh giuseppe to um to complete the the answer um so concerning uh free operating cash flow i will leave the stage directly to giuseppe in a minute concerning to margin and cost efficiency you know we had the a maniac approach in cost saving I will not bother you anymore every six months telling you how much we are saving in the saving plan, but I can assure you we are exactly on track. That famous 1.8 billion savings done on the direct procurement, it's absolutely in agenda. It's at reach. There is a strong commitment. So no departure from the commitment. Second, a lot of efficiency in the production. The capacity boost that we mentioned, we presented to you a few months ago, is now operating in most of the hardware platforms where there is a lot of work to be done. We're incorporating IVECO for the land defence. We are doing a lot of optimization also in helicopters. Electronics, obviously, I mean, I think you noted how fast was growing electronics. I think we were growing from a few billions to almost eight this year. So obviously electronics has to update its own organization because it's so central in the payload strategy and in all the joint ventures that Leonardo is doing. I mean, We are providing weapons and sensors and payloads to land defense, to the G-CAP, to the drones. So basically, this is, at large, all electronics. There, we are working a lot in efficiency and reorganization. Not reorganization, but efficiency in the organization. That includes hiring new engineers, hiring new people, improving the industrial capability. So those things are rolling. It's a continuous progress. What I can say, but then, of course, Giuseppe will be more precise, the fact that in three years we grew up by, let's say, 20% to 30% orders and revenues, and by 40% and 80% EBITDA and preoperative cash flow means that Though with some jet lag, with some delay, you do see now that things are improving the way we want it. Of course, Giuseppe is monitoring this with very specific measures that we'll tell you. But I can guarantee there is absolute attention and commitment in the company to keep all those parameters in terms of efficiency and margins high. Concerning aerostructures, yeah, the deal is getting closed. is getting close indeed. At the beginning, the company will be a 50-50 company. You have to consider that it's very important for the trust of our customers, that are important customers, such as Airbus and Boeing, that we have to guarantee that, of course, we keep the standard. Meanwhile, we build something much bigger with a much bigger market. We are making the calculation how big this market could be. So this will be disclosed very soon. But I can tell you, I mean, it's by far more than what we have now in terms of aerostructures. It's substantially higher, maybe triple or so. Let's see for the numbers also what will be the incentives policy that the uh the country we're we're talking to uh we'll be able to put on the table but the numbers are definitely quite big i think that in the future we will be able to place uh the position in terms of size of the new company in the top three around the world let's say as an indication okay which is definitely much bigger than infrastructure okay about the the release Look, concerning me, I would be ready yesterday. Concerning our partner, I think they're also impatient. But as I said, there are also kind of political steps that they're not in our hands. But the agreement is that we give the exclusivity for foreclosing up to June. So I believe that, yeah, that should be the range.

About the release of contingency in the structure, the order of magnitude is about 15.15 million. Consider also that we had an acceleration on the delivery rate just in the last quarter, so we delivered and we took a marginal so small in the last quarter over something that has been produced earlier and it was in the stocks. But the order of magnitude is in that range, 15, 20 million. About the cost efficiency, Roberto has perfectly replied. So, of course, it is included in the improvement you see in the EBITDA when we talk about improvement of profitability is driven by these efficiency actions. And free operating cash flow, it's, of course, it's a mix of different divisions, different type of contracts. We got some advanced payments as is customary on the export contracts. On the other hand, in some divisions, we had a negative impact deriving from the acceleration of the production. So overall, the working capital is going to contribute more or less in line with last year, so slightly negative to the free operating cash flow. And by the way, it is important to underline that the more we grow, especially on the international market, the more we get recurring advances. So it's a recurring event, I mean.

Okay, thank you. The next question is coming from Carlo Siranzo from Bank of America. Please go ahead.

Hi, guys. Good afternoon, and thanks for taking my questions. I actually have two, if I may. First one, I would like to come back to our structures. And regarding the split in the joint venture, the 50-50, is it always going to be 50-50, or could you progressively transfer ownership to the partner down the line? And then I just wanted to see if you can share a little bit of color on the electronics Europe margin in 2025 The joint venture contribution basically looks like there is very little margin improvement year over year. So what are the reasons that have prevented you from increasing margins a little bit more in 2025? Is it mix? Is it R&D? Is it phasing of some contracts? Thank you.

OK, thank you, Carlo. I'm going to answer first about the aerostructures. I think I can safely say that the original, the starting 50-50 is going to change primarily because this is a long pathway towards transferring or doubling technologies are very complex like in aerospace. And I believe that it's very natural to think that while we make the new plant in the partner country, We need to train and create the conditions to produce components that are certificated. So what I imagine normally is that you improve the quality of the fabrication, you gain certification, and then you can transfer more and more their activities while you develop brand new activities somewhere else. Yes, I believe that with progressing the standard of the industrial setup, industrial capability in the new company, there will be the possibility to change the ratio between the share among the two partners. So I think so. Now, the timing for that, it depends on the results. how fast the quality will grow, how soon they will be capable to reach the right standard for aviation authorities and so on and so forth. But we're totally committed. And the good thing is that we're not making something to make it shorter. We are expanding substantially the product portfolio. And of course, there is even more job force that will be employed. It's really a think big program. It's not a think small program. So for sure, there will be an evolution. dictated by the standard of qualification, the standard of fabrication. Concerning the margin of electronics, of course, I'll leave the stage to Giuseppe in a minute, but I just want to wrap up one thing. The big program where you expect, how to say, big margins and big money to come are land defense, Rheinmetall. That started one year ago, and we delivered the first, I think, six infantry vehicles, and we are presently developing the... complete version, what we call the Italian version, that integrates all the sensors and the weapons and command and control and electronics into the machine. I think the first machine will be delivered in the next months. And then we are now starting to work on the MBT main battle tank prototype. So if you see the order profile that we presented in the plan, but I will eventually update this, remind you in the presentation on March, the delivery should rise in 2028, 2029, 2030 with about 100 pieces per year. At that point, you will see massive impact because there will be massive transfer of those technology. At the moment, we are talking about small units, six seven ten maybe and also at still at the development level because we are especially on the main battle tank we are making the the first problem with working on the on the on the first prototypes so i think there is a kind of little jet lag between when you start producing the platforms or delivering the first five six platforms and when you go into the massive production which is expected to be in the next two three years i think for the Infantry vehicle is from 27, the massive growth. I think next year is something like 15. I don't remember exactly, but 27 grows. And for the main battle tank, it's around 29, 30. So at that point, you would see big numbers coming. The second big program is drones. Now, drones, we had a spectacular acceleration because in eight months, that is in April, we will have the first mid-size drones produced and assembled in Ronchi del Legionario, our plant there. in Northern Italy, and we are working on a daily basis with Bicar to integrate brand new technologies. There are important things that we'll tell you in two weeks when we will present the update of the plan, telling you that we are making a really paramount effort on accelerating drones and unmanned flying objects, including rotorcraft, not only fixed wing, but also there, before selling hundreds of pieces that will be kind of one year, six months of delay. We have to demonstrate the machines landing in special conditions or serving in a crew, sorry, in a swarm, operating in a swarm. So those things are planned for the next few months. Once again, you will see the impact on electronics immediately after. GCAP, well, I mean, you know, this is a longer program, but again, there we are investing money So I think this is quite normal. But the very good thing is that we are slightly ahead of schedule with the drones, absolutely on schedule with the land defense systems. And the GCAP is doing well. And by the way, it remains the only one program worldwide. So I believe that you will see the development of the margins and the numbers of electronics in due time without any surprise.

Yeah, and Carlos, about the margins in electronics, when we look at Europe only, it has been increasing over the year. It was 10.3, I think, in 2024, and now it's close to 11%. So, again, the slight increase of electronics is due to a dilution coming from the JV, so not from the trend of...

electronics europe which is going which is doing very well so of course r d is increasing said but we are paying back with the profitability we we are we are producing so yeah and also one last remark uh of course you've seen uh our intention our plan with the michelangelo dome that we presented just a few months ago and will be a strong part of the of the future plan and there uh even if you our platform agnostic so in principle we could not sell a single platform in principle there will be a lot of electronics in terms of Raiders sensors weapons and command and control modules that will be immediately added to the portfolio so I expect that also to be an important source of upside for the electronics profit margins, but also for the entire group. It's going to be something big, collective, for all the divisions. Okay, thank you, Carlos. Thank you, Carlos.

Now the next question is coming from Martino D'Ambrogio from Equita.

Thank you. Good afternoon, everybody. Again on aerostructures, sorry. Just to have a a rough figure on what was the free cash flow, because we know the EBTA, but what was the free cash flow for outer structures standalone in 2025? And just a follow-up on the previous answer. If I understand correctly, I don't know if it's your main goal or if it's an option, but there is a possibility to see Leonardo going below 50% of the new entity.

i have another question later okay i i will start from the free operating cash flow you know the the loss at a bt level this year was something like minus 130 of course we we invest in our structure we are still investing in our structure because to be prepared to the plan roberto was describing In any case, we need to invest. So the investment this year was about 40, 45 million. So you can easily get that the free operating cash flow was negative in the area of 0.2 billion.

Concerning your question, Martino, about deconsolidating, let me say in my rude language, yeah, I don't see any problem in the future. The point is that this is not simply consolidating or deconsolidating. The point is that we have to provide an horizon, a future to the entire to the entire infrastructure business, not only connected to our infrastructure. traditional customer, but also to military machines and extending, expanding the market to big airlines and so on and so forth, so that they consolidate or consolidate. In any case, this has to be positive on itself. Having said this, yeah, I think that we will evaluate with great attention that the quality of the manufacturing will reach the right standard. And at that point, we can easily change our share, no problem at all. Anyway, you know, the workforce will be unaffected. I think the market, the player will be very big, on a very big market, on a large market area in the world, so I think the vision is very positive, the outlook is very positive.

Okay, thank you. And the second question is on two future opportunities any update on the uk jumbo helicopter order and on the recent agreement you signed with an indian partners is this something that could be reflected in your business plan in the next business plan or it's more much farther away

Martino, I'm bound for maybe 24 hours to confidentiality issues. If you have the patience to wait 24 hours, we're going to talk again. What can I tell you more? Okay, so about the... I can tell you that we've been working very, very intensively with our UK branch and with the UK government. Let's wait for one, two days and things will come clear. Sorry, which was India? No, no, not for India, only for UK. Giuseppe is going to tell you.

Yeah, related to India, we set up a partnership with Adani Group, which is instrumental for addressing the growing Indian military demand, creating a hub for helicopter manufacturing and sustainment. You know that there will be the need to replace 1,000 units in the next few years. So it's a very big market for us. We are currently responding to Navy and Army tenders for about 300 helicopters. However, we see also strong potential on the civil market because of the kind of the country. I think also in the civil market there is a strong potential, so it is our best interest to be present there in the way we can.

Yeah, Martino, sorry, because I never like to keep analysts and investors hanging on, you know, I will tell you tomorrow, in three months, so I don't like this, the way I'm transparent is against my nature, let's say. But I can tell you one thing. As long as I will be here for the next years, I promise that Leonardo will be an international company, a truly multinational company, not an Italian company, but a multinational company. In this respect, you can imagine how important for me, for us, is that our second and third domestic countries, such as UK and US, are fundamental to be considered a truly multinational company with very high tech capability and not simply a domestic company making domestic defence. I'm telling you this, I'm anticipating you this, because the commitment that I got with the authorities in UK is that I strongly want a powerful, complete, committed Leonardo UK, because this is essential not only for us, for our multinational vision, but also for the future of the continental European defence. I know the UK is not the European Commission, but it's Europe, continentally. So this was my first statement with the authorities, and I think it will be reflected in the forthcoming decisions. So I'm very, very optimistic.

Thank you, Martina.

Thank you, Roberto.

Thank you. Let's go to the next question from Sebastian Groh of BNP Paribas. Please go ahead.

Hi, good afternoon. First of all, can you hear me well? Okay, cool. So, yeah, then. Hi, Claudia, Roberto, and Giuseppe. Thanks for taking the questions I do ask. The first one would be around defense electronics. Giuseppe, you pointed to the four drivers behind the EBITDA and the ES segment. Apparently, MBDA has played an increasingly important role over the last years. And based on the disclosure that we received from Airbus last week, it looks as if MBDA's operating profit margin declined by about 200 basis points. And that is by almost 20% revenue growth. So the question I'm having simply is, what is the driver behind this margin contraction? And can you provide any more color, how to think of the cadence with regard to the mentioned 44 billion order backlog at NVDA? Then I would have one more around aeronautics, but maybe we can take the yes question first.

Okay. Yeah, relating to MBDA, I think, again, the company is performing very well. It's well above the double digit. It was even higher last year, probably. But, you know, again, it's more than 10% return on sales. Of course, they are investing a lot. They are preparing themselves to execute a 44 billion backlog. So they are investing both in CapEx and in R&D to be ready to execute that backlog. But the main impact that you see in our numbers, as I said, it's below the line because of the increased tax charge they have in France. It was supposed to be a one-off. Probably it will be also in 2026, confirmed for 2026. But it's tax charge, which was not there in 2024.

Okay, gotcha. And can you eventually give some guidance or indication at least in regards to the future top-line dynamics at MBDA? I think we have seen now over the last three years growth rate accelerating from about with single digits to then 10% in 24 and now getting close to 20, I said, in the year 25. So how to think really about the trajectory of that 44 billion backlog?

We will reflect, as usual, the net profit in our numbers. Of course, I cannot give you guidance about the MBDA performance in the future. I know what they are doing. We will reflect in our plan. But I cannot give you guidance on the top line of MBDA because it's something they have to do.

Okay, fair enough. Then let's move on quickly to aeronautics, please, and more specifically here to the aircraft business. I noticed that the margin was down year on year, which I assume is due to the consolidation of the GCAP program. And talking about that very consolidation, it looks as if GCAP added about $300 million or so to revenues. However, the EBITDA addition was less than $10 million from what I could reconcile. So I guess my question is how to think of the future sales and margin trajectory for the GCAP program in particular year?

You were perfect in getting the right answer because of course in GCAP we have aircraft is acting as a prime of course so the margin is a little bit diluted not at group level because of course also the other divisions are contributing to GCAP but if you look at aircraft stand alone of course there is a small dilution But in terms of trends for the future, I think, I mean, based on the programs that we were mentioning, Eurofighter, M346, C27J, JSAF, I think the manned, I think the profile of aircraft is very solid.

Thank you very much both.

Thank you, thank you. Next question is coming from Afonso Osorio from Barclays.

Hello, yeah, thank you for taking my question as well. I'll just stick to these M&A deals that we've been doing here. So two questions, I think it's quite quick. The first one on the Iveco deal. Thank you, Roberto, for all the detail you've given us. You mentioned giving the exclusivity for six months to Rheinmetall, but given that you will close the deal by March, how should we think about the contribution from this business for you specifically this year in 2026? Are you basically assuming 100% contribution for you this year, or will you, in two weeks' time, give the targets for 2026, assuming you sell a part of that ceramic tile? And then the second question is on, and apologies for coming back to your structures, but just to double-check, will you consolidate still the numbers or deconsolidate the numbers once you announce the JV? Thank you.

Okay. Alfonso, concerning IVECO, so at the beginning, let's say we close and we bite it all while our partners are discussing, waiting to understand what could be the situation with the with the antitrust. This seems to be usual now. Also with Brom is the same. We need to wait. We do all the industrial work and then we have to wait for months and months to see what happens with the antitrust. So, okay, let's see. Obviously, by the time we buy it, this will be fully incorporated in our finance and our balance sheet. And by the way, as I said, it's absolutely not bad because... They have a very good backlog of orders. The margins of the trucks are absolutely not bad. This is a double digit, quite solid. I should also mention that we are discussing about future programs for big artillery mounted on trucks, and therefore that could be also instrumental to the creation of new products. So I believe that that's a very, very safe situation in terms of industry product. Also, I'd like to tell you more industrial detail in the plant of Piacenza. There's currently a double capacity in that in the same plant, they produce both trucks and armored vehicles. So even in the case we decide to split this, so to carve out, we need to do some industrial optimisation and so this would require some months. So it's absolutely under control. Whatever we do, I could say whatever we do for the next maybe couple of years would be anyway safe. I think the decision should be made before depending on the outcome of the antitrust and at that point we will see. As I said before, there are other companies that would be interested, having no problem with the antitrust. But of course, we would privilege at the moment the relationship with Rheinmetall because this was the plan. If this will not be possible, we're going to have other solutions. But as I said, we are ready to go to work. We have the pipeline of orders. Things are running. We didn't stop one day the plants. So it's really safe, the situation.

Yeah, regarding the potential deconsolidation of our structure, of course, as Roberto was describing, the partner is not only a financial partner, it's a financial partner with an industrial strong interest in the combination. So, of course, the governance we are discussing reflect this point they of course they want to have also an industrial involvement in the company which is leading to a governance which we will see progressively but it will be 50 50 in all the decision and therefore not allowing us to consolidate our structure okay thank you

We can proceed with the next question from Christophe Menard from Deutsche Bank.

Before taking my question, I have three. The first one is on, you mentioned prepayments. Can you tell us what level of prepayments you had at company level in 25 and how it compares to 2024? Second question is on aerostructure. Again, you mentioned a number of investments that could be coming in the future. What would be the free cash flow outlook for aerostructure as a consequence? I mean, we understand there will be some EBITDA break-even going forward, but should we expect a a series of CapEx investment in the coming years. And the last question is, it's probably a little bit granular, but on defense electronics in Q4 in Europe, it seems the sales dropped quite a lot. Is there any reason for this? I mean, I have, versus my expectation, I have a miss of around 600 million. So I just wanted to see whether that was related to a specific program. Thank you.

Okay. Relating the first question, you know, we look at the working capital as a wall. So I think I said working capital is contributing negatively, the same area then in 2024. Of course, the line items may be different, but the overall contribution of working capital is in that range. Aerostructure, I said, I mean, we are progressing also with executing our industrial plan in our structure. And of course, as part of this plan, we have an investment plan to digitalize the factories to improve the efficiency. of the of the divisions and so of course we are investing and this is consistent with what we are discussing with the partner but that was instrumental for our partner to accept and evaluate very well our standalone plan without those improvements would have been less attractive yeah but this was i mean this is kind of past you is done yeah and so this is factored in our plan when we say that it will be a break even in 28 29 now we will see the updated plan but can easily understand that we are there we are still there and the investments are already included in that plan um q4 electronics i think compared to last year electronics europe was something like seven percent higher but the point is that back of what i was saying when commenting the cash flow as a general trend we are working a lot to make the trend more linear over the year not to focus on the last quarters for deliveries, invoices, cash-in. This is a big effort. Of course, the results you see that we do improve. We do better in the first three quarters. Maybe we are less focused on the fourth quarter. But this is important to us as an action because, I mean, you can have a better management of cash flow only if you are able to make this trend more linear. so you see maybe the negative side of the coin but for us it's an effort to be more linear over the year we will not be again positive cash positive probably during the year because of the trend of the payments of the customers but knowing that we're to be able to progress on making more linear our milestone our invoicing and our revenues

Thank you, Christophe. Thank you very much for the details. Thank you. We move on with the last question coming from Adrien Rabier from Bernstein.

Hi, thank you for taking my question. I just had one, please. A few months ago, you told us you were reviewing the Hensworth tech, so I was wondering if you had any update on that side, please.

Thank you for the question. I spoke recently to the CEO of Ensold. Actually, the plan was to meet end of February, beginning of March to update the mutual situation, primarily their situation in Germany. And then very likely I will go to Germany, talk to the authorities to see if and how we can proceed with the deal. There are different options on the table. One could be essentially selling part of the shares to let the German government, for instance, to grow in their share in Enso, like it's happening in other companies. But we are very open to this. So all the options are on the table. And I think by March, end of February, beginning of March, we should have a touch base. uh having said this uh the numbers of end sold are okay they are the only expected no no particular no particular warning about that so we decided we were trying to to go towards the conclusion uh by the the first uh the second quarter basically so by before the summer to see what to do thank you very much thanks for speaking welcome

Thank you. Thank you. Thank you all for your participation in our conference call at this point. And we hope to see you all in Rome on the 12th of March for our business plan update. Thank you and good afternoon.