Ladies and gentlemen, a warm welcome to our first, albeit rather late, web conference of this year. We are presenting the long-awaited preliminary figures for the past financial year 2025. I look back at my manuscript from last year. At that time, I referred to 2024 as a year in which there had been a great deal of back and forth worldwide. This year, the issue is somewhat smaller in scale, but no less important for us. There was again a great deal of back and forth, but this time clearly because of ERP. The annual financial statements were shaped very strongly by this new and very powerful system of Microsoft. They were also shaped by the new group structure that we established in the justified expectations of major growth momentum. In mid-2025, we carved production out of the traditional 2G Energietechnik entity and transferred it to a separate company.
We did the same with the international activities, which are now bundled in a dedicated sales and service company. What used to be a traditional parent company-based group with 2G Energietechnik at its center and several rather coincidental foreign sales and service entities around it has been transformed into a focus group of companies. This structure is intended to enable sustainable double-digit growth in the coming years. As you may already have noticed in the title, we have moved from 2G in a world full of opportunities to 2G ready for takeoff. Before turning to 2025, however, let us first look at 2026 and in particular at order intake. That makes clear why we gave ourselves a new group structure, why we took on an ERP change, and why we remained so extraordinarily optimistic despite all the challenges associated with this ERP transition.
As announced in our latest corporate news, the data center order from May was in fact followed by additional order for data center in June. These data center orders do not stand alone. For quite some time, we have spoken of a world full of opportunities and that is now materializing. Significant orders have been added from the domestic market as well as from the new mining segment. The mining order in particular is remarkable. It is intended to be only the starting point for further similar orders. Its volumes amounts to a mid-double-digit megawatt range. Of course, this is still clearly below what we are currently seeing in data center, but it is far larger than anything we have previously seen as the largest order in company history.
You may recall the California nursing home chain from two years ago, which ordered more than 30 earthquake-proof and hydrogen-capable CHP plants with a volume of around EUR 17.5 million. That was our largest order so far until recently. So where do we stand for the first half of the year? We firmly expect order intake above EUR 400 million in the first half year. To put that into perspective, in 2025, which we will discuss in more detail in a moment, we delivered and invoiced revenues amounting to only EUR 230 million in new equipment business. Against that backdrop, the current order intake is truly remarkable. That is why we already narrowed our sales guidance to the upper end in May and issued new sales guidance for 2027 of EUR 570 million-EUR 620 million. In any case, there will be no shortage of orders.
Importantly, even the new large orders outside our traditional business are backed by prepayments. Otherwise, we would not report them as order intake. As usual, we will communicate the more detailed breakdown, especially the geographical distribution, in the second half of July in a corporate news. It remains exciting. The preparation of the 2025 annual financial statements was exciting as well, but they are now available. First of all, let me once again explain why we had to postpone publication. As I already explained at the Spring Conference in Frankfurt, the new ERP system caused problems in the initial booking of cost of goods sold, specifically in the new production company, 2G Heek GmbH, and only there. At first glance, one might say that this was purely internal and therefore had no external impact. That is correct. However, from a practical point of view, the starting position was dramatic.
Hundreds of booking lines had to be reviewed, assessed, and posted correctly, or at least presented correctly. Which production order had been completed and therefore had to be included in cost of goods sold? Which order belonged to work in progress? How did valuation surcharges affect inventories that had only been booked retroactively? Was obsolescence calculated correctly if cost of goods sold had not been posted correctly? And could we rule out that this problem had occurred anywhere other than the new production company? The answer, by the way, is yes. It really occurred only in that one company. There was also the question of the lowest value principle for the inventories that had to be corrected manually. This was an enormous amount of detailed work in an ERP system that was still unfamiliar to everyone involved at that time.
The problem were therefore dramatic from an operational processing perspective, which was bad enough. Our employees worked with tremendous commitment to finalize the financial statements. At the same time, however, there was little room for debate in terms of accounting policy. We worked closely, early, and in a reflect relationship of trust with PwC. That was only logical because, in the end, there was nothing to hide. So, yes, it was truly unpleasant, but it was also good to see that the team stands together when it matters. Better together, as our website says. Let us now turn to the KPIs of the past year in comparison with the years since 2021. After a strong first half, we did see visible braking effects in net sales. Specifically, the switch to the new ERP system took place in the middle of the year.
Even so, net sales still increased by 6% to almost EUR 400 million. The lack of service contribution with its effective margins, one-off ERP costs, and one-time effects in sales, not only for data center but in several fields, led to a temporary decline in the EBIT margin to 6.6%. EBIT therefore came in at EUR 26.3 million. As a result, the decline is not quite as dramatic as the chart may suggest. In fact, EBIT declined only by 21%. Having said that, it remains just as annoying as it is temporary. The broader overview of the four most important KPIs of the year shows one additional point. In terms of total output, we clearly delivered on our promise of 10%+ inflation. Total output rose by a solid 12% to just under EUR 410 million. Liquidity, by contrast, normalized after having been exceptionally high in December 2024.
At that time, we had collected substantial prepayments in connection with deliveries for and into Ukraine. Overall, net sales increased by 6%. At the same time, we again expanded the new equipment business significantly by a good 11%. Service, by contrast, only reached the prior year's level. Its share therefore declined to 43% of total net sales. The reason is that the ERP rollout in the service business confronted us with a truly enormous task. From an IT perspective, the service business had still been stuck in a kind of founding area setup with numerous partial applications, custom solutions, and systems discontinuities. While for the machinery business, we can say that the new ERP makes us fit for the future. For the service business, it was equally clear that the new ERP was already necessary just to master the present.
Bills of materials, deployment planning, master data for materials and for the machines installed in the field, dispatching procedures, dashboards, and much more had to be standardized and transferred into the new system. In addition, the service world has now become an integral part of one overall ERP system consisting of production, project management, sales, and service. In other words, this was a highly complex knot to untie. And in the process, we encountered issues that we had not anticipated and that apparently also overwhelmed our consultants. That knot did in fact slow us down in the second half of the year. This is regrettable because in the first half, service had still been fully on track. More specifically, this affected the very lucrative business with special service orders outside the routine business.
These special assignments require a long lead time and very close coordination with customers in order to plan the highly individual deployment carefully. At times, customers noticed that 2G was very busy with itself. Response times were too long and deployment planning was not as precise as they were used to. Having said that, this was less of an issue in the ongoing day-to-day business. Emergency assignments in the event of damage or similar incidents were, of course, handled immediately as always. Even the normal routine business resumed quickly after a rather brief period of disruption. So the picture was clear. Special operations were problematic, while routine business quickly got back on track. The results can be seen here. Service revenues increased by only marginally to EUR 169 million. The small consolidation is that the long-term growth trend in absolute terms remains intact.
Let us now move to the split between domestic and abroad markets. The share of abroad sales increased further from 44% to now 49%. Clearly, Germany remained weak, down 3%. However, this relates only to the net sales actually realized in 2025. As mentioned, order intake was considerably more encouraging, at least from the second half of the year onwards. At the same time, the U.S. and Eastern Europe in particular, were very strong. Overall, abroad business now accounts for EUR 195 million, an increase of 17%. When looking only at new equipment business, the increase is even more pronounced. The share of abroad sales rises from 53% to 60%. 2G is therefore clearly making major progress in internationalization, ready for takeoff. In short, where did this international growth come from? Essentially, from two markets. First, from the very strong deliveries to Ukraine.
You may recall that in the fourth quarter of 2024, we received enormous order intake, some of which we were able to deliver already in Q4 2024. However, the majority was only delivered in the first half of 2025. Second, the new equipment business in the U.S.A. also developed very positively. It was up by just under 50% year-on-year, and this was achieved without data center business, but rather with traditional CHP plants. Let us now turn to the consolidated income statement. As mentioned, net sales increased by 6% to EUR 398.4 million, an increase of almost EUR 23 million. One striking feature, the change in work in progress and finished goods. At first glance, it appears to have increased sharply. In reality, however, this is mainly due to the exceptional situation at year-end 2024.
At that time, a large number of plants had been delivered into Ukraine tenders and could be invoiced immediately long before commissioning. This was not the case this year. In that sense, the situation is now normalizing again. Plants were built and delivered by year-end, but under German commercial law, they were not yet finally invoiced, because customer acceptance had not yet been declared. One could theoretically adjust net sales for the deferring inventory effects of 2024 and 2025, and then recalculate growth. But that is not necessary because this effect is already reflected in total output. And t here we can see that the factory achieved a very robust growth rate despite all the frictions. Total output increased by more than 12%. As you know, that corresponds to our well-known formula of 10%+ inflation. One item I skipped over was other own work capitalized.
For the sake of completeness, it should be noted that from summer 2025 to onwards, the cost of the ongoing ERP project were no longer capitalized. Once the rollout took place, these costs were recognized through the income statement. The year-on-year earnings effects from this item alone was still EUR 1.4 million due to the ERP costs capitalized in 2024. Other operating income increased by EUR 2.1 million to now EUR 6.7 million. Without going too deeply into the details, the majority of this came from currency effects. These positive currency effects were almost completely offset by currency effects recognized under other operating expenses. The increase recognized here as income amounted to EUR 1.4 million. The second largest increase came from insurance reimbursements, which were EUR 0.7 million higher than in the previous year.
This rise was mainly related to the settlement of an older machinery damage case, which has now been finalized with the insurer. Of course, there were further influences on other operating income as well, but from here on, the items become rather granular. Let us move on to cost of materials. They were extremely stable at 59.8% of total output, which is almost perfectly in line with the previous year. This stability is pleasing insofar as the service share of total net sales fell by 2 percentage points from 2024 - 2025, while service is known to be the significantly higher margin business. Against that background, it is a good sign that the margin remained so stable at the gross level. As you know, in the total cost method, a change in margin would primarily be reflected in the cost of materials ratio.
More noticeable was the increase in personnel costs. These rose again by almost 18%, corresponding to an increase of nearly EUR 13 million. There are several main reasons for this. First, on a purely technical basis, we acquired several smaller service companies in 2024 and 2025, notably ServioTec and especially KWK-tec in Germany. Naturally, these acquisitions also brought significantly higher personnel costs into the consolidated financial statements. This accounts for a good EUR 3 million of the total EUR 13 million increase. At the same time, the existing companies have remained also active as they are working on building up the heat pump and data center product segments. Please note, for heat pump, the build-up is not confined to sales colleagues and project engineers. In this segment, R&D, the service business, future production, quality management, and other areas are also being expanded continuously.
In addition, we are also seeing some capacity expansions at headquarters level. After all, the ERP project has to be mastered, the small M&A transactions have to be processed clearly, and IFRS cannot simply be introduced en passant . With the strong increase in the top line that we expect for 2026 and then even more clearly for 2027, this ratio should normalize again. Let us now turn to depreciation and amortization. This increased by EUR 1.2 million, largely in connection with the broader IT project and not just ERP. To recap, we did not only replace the ERP system, we also replaced the document management system, lifecycle management, and HR software. Depreciation on these systems naturally started to accrue in the second half of this year. But it was not only depreciation that increased.
IT costs in a broader sense also affected other operating expenses, which rose by a substantial EUR 11.8 million. Around EUR 5 million of this increase is related in a broader sense to the IT project. The higher international share in machinery sales also translated into higher freight costs, adding almost EUR 2 million. Even though we can report considerable sales success during the quarter, this is by no means automatic. Hence, advertising and trade fair expenses increased by almost EUR 1 million. In addition, there was a higher expense from a currency exchange, the counterpart to the currency-related other operating income mentioned earlier. Here too, the expense from currency translation amounted to a good EUR 1 million, while currency gains and losses virtually offset each other overall. Beyond that, the remaining items again become very granular and can be read in the annual report.
All of this ultimately led to an EBIT not reaching the prior year level of EUR 33.3 million. At EUR 26.3 million, however, EBIT was still broadly comparable with the level achieved in 2023. Nevertheless, the EBIT margin in 2025 was clearly below the level of prior years. Even so, an EBIT margin of 6.6% remains. This is not pretty, but it can largely be explained by two broad factors. First, cost related to the IT project, and second, the build-up of the heat pump and data center segments, whose development efforts cannot be described as unsuccessful. Ultimately, in our view, there is no need to hide behind a 6.6% EBIT margin. Let us now turn to operating working capital. This increased sharply by EUR 61.1 million. However, this can easily be explained. The fourth quarter of 2024 was characterized by large orders for the fastest possible delivery into Ukraine.
These orders came with substantial advance payments. In addition, almost every CHP plant for Ukraine could be invoiced nearly immediately. This had several consequences. First, inventories were low because the consumption of materials did not end up as work in progress, but was converted directly into net sales. Second, prepayments received were high. Both of these effects have now normalized. Inventories stand at EUR 126 million, which is an increase of 42%, but still essentially reflects normalization. Two further consequences arose from this special situation in Q4 2024. First, trade receivables were low because nearly every invoiced plant could largely be offset against prepayments already received and therefore did not appear on the balance sheet as a receivable. Second, trade payables were also low. After all, we had received the high prepayments in return for very prompt delivery.
In this logic, we in turn had to pass on a good portion of these prepayments to our suppliers so that the key components could be delivered as quickly as possible. What actually remains as a meaningful item is prepayment received without connections to orders. Traditionally, this position consists of two components. First, accruals in connection with service contracts. Customers pay the monthly installment, which we defer here until the service has actually been rendered by us. Second, prepayments received for machinery before internal scheduling has taken place. If the customer order had already been scheduled internally, the prepayment would have been reclassified from the liability side to the asset side. There, it would have reduced inventories in the sense that this part of inventories is already specifically covered by a customer prepayment. So why do prepayments received without connections to orders decline in 2025? The explanation is simple.
At the end 2024, the organization was focused almost exclusively on anonymous Ukraine orders. In 2025, that was no longer the case. This means that customer orders scheduling once again took place as quickly as usual. As a result, prepayments received did not remain without a connections to the individual customer order for very long and were therefore reclassified quickly from the liabilities side to the asset side. That is what we see here. In other words, the increase in operating working capital is closely linked to the exceptional situation in the previous year. Incidentally, two years ago, in 2023, operating working capital stood at a good EUR 110 million. That was lower than at year-end 2025, but overall, at a fairly similar level, especially when taking net sales growth into account. Let us now turn to the development of liquidity. We have already discussed the EBIT.
We have also discussed depreciation and amortization. We have just gone through the striking changes in operating working capital in detail. Incidentally, the figures shown here cannot be reconciled one-to-one with the operating working capital presented earlier. The newly consolidated companies, especially KWK-tec and ServioTec, both in Germany, are included in working capital there but have been adjusted out here. That is logic to a certain extent, but admittedly, also somewhat complicated. Then there is an adjustment for changes in provisions included in EBIT that are purely operational in nature, amounting to a plus of EUR 5.8 million. This is followed by another adjustment for other operational changes with a cash outflow of EUR 8.5 million here, compared with an inflow of EUR 1.3 million in previous years. The difference of EUR 9.8 million is significant. However, it is explained almost entirely by VAT effects.
In addition, there was a cash outflow for income tax payments of EUR 12 million, which fits well with the previous year. The result is a negative cash flow from operating activities of EUR 38.6 million. That sounds alarming, but it was within the expected range. After all, year-end 2024 was characterized by enormous advance payments for the Ukrainian business. In 2025, by contrast, we delivered what was agreed and in many cases received only small residual payments. In this logic, cash flow from operating activities had to be substantially negative. That is entirely normal. Nevertheless, investments obviously still had to be made.
These included EUR 3 million for the vehicle fleet, mostly service vehicles, EUR 2.4 million for the new assembly hall, including the new administrative building, which is in use since March, EUR 1.4 million for the implementation of the new IT systems, and EUR 0.6 million in advance payments for further investments in buildings at The Hague site, including the new parking garage. The remainder mainly related to tools and operating and office equipment. This results in a negative free cash flow of EUR 47.5 million compared with a positive free cash flow of EUR 41.8 million in the previous year. Let us now look at the financing effects. In brief, the various transactions were as follows. Dividend payment of EUR 3.6 million, whereas EUR 3.0 million in previous year. Payment for further interest of EUR 0.1 million compared with EUR 0.7 million in the previous year.
And net inflows from financial loans of EUR 3.1 million compared with a net outflow of EUR 1.6 million in the previous year. This reflects the financing of the new production hall. In total, cash flow from financing activities inclusive dividend amounted to a cash outflow of EUR 1.6 million compared with EUR 5.4 million in the previous year. If we take the cash outflow from operating activities of EUR 38.6 million and add the cash outflows for investing and financing activities, we arrive at a total net change in cash of EUR -49.4 million. In other words, the exceptionally high advance payments from Ukrainian business that we collected in Q4 2024 were, as expected, consumed again in the course of 2025. Cash as of December 31st, therefore, declined for a very small positive residual amount. That does not look particularly nice, but it was not a surprise either.
Looking back at last year's notes, one could almost say that this development had been announced. In any case, we were prepared for it. Ladies and gentlemen, that concluded the discussion of the annual figures for the past financial year. As mentioned at the beginning, the current financial year has so far been shaped very much by acquisition efforts, in particular for data center, but also in mining worldwide, and importantly, by a lively domestic market. In previous years, a chart was usually shown to explain how the gap between backlog and sales guidance would be closed. We can spare ourselves that chart this year. On the one hand, we are already at the end of June. On the other hand, the situation is clear. There will be no shortage of orders in the coming quarters. Of course, as already mentioned, data center and mining are not self-runners.
We still need to remain active and push hard, but we are ready for takeoff. And what the launchpad could look like can be seen in the forecast. We see the well-known forecast for 2026, with a net sales up to EUR 490 million and an EBIT margin of midpoint 10%. We are optimistic that our net sales growth will now move beyond the formula of 10%+ inflation. For 2027, the forecast is net sales of EUR 570 million-EUR 620 million, with an EBIT margin above 11%. That means that from 2025 - 2027, the company would already achieve growth clearly above 20%. From 2028 onwards, our ultra-modern and very large assembly hall will then provide additional capacities. In addition, the first multi-container power plant from the data center and mining segment will begin to generate substantial service demand. These power plants typically run 24/7 throughout the year.
By 2028, the heat pump business will also already have a meaningful installed base in the field. Heat pumps likewise accumulate high annual operating hours and therefore require a substantial amount of service work. That is why there is every reason to expect more going forward. Ready for takeoff. Thank you very much for listening.