Ladies and gentlemen, welcome to the SFC Energy publication of the Annual Report 2024 Conference Call. I'm Vicky, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Dr. Peter Podesser, CEO. Please go ahead, sir.
Thank you very much, Vicky, for the introduction. Good morning to all of you, ladies and gentlemen, and thank you for taking the time to join us for the presentation of the audited consolidated financial figures and also on the occurrence of the publication of our annual report. I think we are going to focus naturally first on those numbers of the previous year, but then also a second focus will be today on a more detailed outlook for 2025.
In order not to make it too repetitive compared to our end of February preliminary results, I will focus on a summary on the revenue part, whereas Daniel is giving a more detailed insight naturally on the margin development, margin profile, and balance sheet structure. Getting into the midst of it, we have delivered in 2024 another record year, significant organic growth here, 22.5%. At the same time, and I think that's again something we need to stress and want to stress at this point in time and lay emphasis on, is significantly expanding our profitability. That's again the key differentiator mostly to, I think, the fuel cell players active predominantly in hydrogen and the mobility sector.
We have expanded our leadership position here in the stationary fuel cell business, and we have again also improved the performance of our power management division and getting into the sectors quickly. Being here on the 27th of March, we are concluding the Q1 of 2025. You also see us, well, prepared, but also, I think, with justified confidence to deliver another record year also in 2025 when you look at our outlook. We are proud of what our teams, we all together have achieved here in the last fiscal year, transformational changes in terms of structure, expansion on the international side.
We are extremely grateful to our customers and business partners for their trust and continued trust in us and continued loyalty to us and our technology. Overall, I think on the market, on the revenue side, the fastest growing end market, and we will elaborate on this more when we go into the outlook, defense and public security with over 60% growth here in this customer group with a strong focus here also in Asia. Still, yeah, India as a region, fastest growing last year, more than 86% of growth there.
Europe is the largest region, again, with a consistent growth, and this is driven by our industrial backbone, the industrial business, the industrial fuel cell business growing 36% constantly. That is dEFOYnitely one of the stability factors of our growth strategy. If we look into this industrial part of the business, I think it is worthwhile to mention that especially our power solutions, our off-grid power solutions where we bring our EFOY fuel cells out to power CCTV cameras, is one of the key drivers. There is a massive change in this industry where physical guards are replaced out of cost, but also reliability reasons, by technology solutions. Why do we need a fuel cell for this?
Because most of it is temporary, part of it is off-grid, and therefore a grid connection is sometimes simply too costly. What the fuel cell adds to a battery and solar combination is weather and climate independent, dependable power, which is important again for our customers to perform their surveillance duties. In terms of numbers, we are seeing now key players in these industries transforming their offering to what they call mobile surveillance units, cameras on trailers, on towers that are again replacing physical guards. Lower cost, higher reliability. Another reason why they need fuel cells is higher power demand.
Besides the normal CCTV cameras, significant AI capabilities are built in, which require higher power levels where a battery and solar combination in most areas is not sufficient anymore. Very positive on this part of the business, amongst others. We have built a worldwide leading position here with customers growing in Asia, where we initially started this in Singapore. The US, yes, we had some contraction last year, second half of the year with a big customer, but that was more an individual consolidation than anything else. In Europe, I mentioned this already.
If we now look into, let's say, the segments, yeah, I think the picture is pretty similar to what we saw or is reflecting again the same thing we showed before. Clean Energy is the biggest segment here, now almost amounting to 70% of the total revenue, first time surpassing, sorry, EUR 100 million revenue here with a growth rate of +27%. The smaller one, Clean Power Management, delivering a solid and stable growth here of almost 13% is an important part of our business. Worthwhile and really noticeable here is also the expansion of our customer base there.
Our initiatives, especially to get into the semiconductor and semiconductor equipment industry, bear fruit. We are happy and proud to see a customer like ASML moving into the top three customers of this segment with a significant also growth perspective there. If we now look into the incoming or into the start of the year order intake, again, I think that's a good basis to see how we want to generate our growth this year. The first time we had a backlog above EUR 100 million, EUR 104.5 million, and last year's sharply increased order intake was EUR 167 million. We feel a good basis and a strong and solid base for entering the year.
As said, as we are already at the end of Q1, we have seen still active and dynamic market environment here throughout the regions. Besides the defense part, I will also elaborate on our plans in the US and the situation we are seeing there right now when we look into the outlook. For the time being, I would like to hand over to Daniel to lead you now through our financial results and the respective details there too.
Good morning, everybody. Thank you for joining this call. As Peter mentioned, let me guide you to our profitability development as well as balance sheet items and cash flow. First of all, to summarize, again, we had a very successful year, which is reflected in what we consider to be strong KPIs across the board. Peter already mentioned revenues increased by 22.5%. Our EBITDA adjusted margin was 15.2%, which is 2.4 percentage points higher than what we saw in 2023. Our EBIT adjusted margin went up to 10.7%, which is 2.5 percentage points higher than in 2023.
Our cash flow from operating activities amounted to EUR 16.5 million, which is more than three times what we've seen in 2023. Going into the individual KPIs and the margins, we'll start with the gross margin. On a year-to-year basis, we've been able to increase our gross margin a bit over one percentage point, 1.4 percentage point, in spite of slightly higher costs for our membranes, which we sourced in 2024 almost entirely from our new facility in Swindon. What is included in our gross profit, and you may have seen that if you looked at the Q4 numbers, is an extraordinary provision of EUR 1.5 million in the segment Clean Energy, which we made in the fourth quarter and hit our COGS.
That provision was made for a faulty part that we received from a supplier. On a cautious basis, we've made that provision. If we excluded that provision from our gross profit and looked at it from a like-to-like perspective, then the gross margin would have been 42.8%. Overall, we made progress, as you've seen, on our gross margin, the key drivers being the profitability of both segments. Gross profit reached EUR 59.3 million, which exceeded last year's number significantly with EUR 12.5 million or 26.8%. This is the highest gross margin that we have had in the past. As mentioned, it is a combination of various factors.
Of course, higher revenues, which are leading to relatively lower production overhead per unit. It is a consequent pricing strategy in both segments. It is a result of a favorable product mix in both segments. In the segment Clean Energy, also driven by increased defense revenue. In the segment Clean Power Management, driven by attractive customer order for standard power management platforms. Last but not least, normalized cost for remote materials. I mentioned that already in the Q3 quarter, very little impairment on existing inventory.
Looking at the gross margin per segment, the gross margin or gross profit for the segment Clean Energy was EUR 46.9 million, which compares to EUR 36.3 million in 2023. That translates into a gross margin of 46.6% compared to 46% in 2023. Remember, as I mentioned before, that we took a EUR 1.5 million extraordinary provision in that segment. If we adjusted the gross profit for that provision, then the gross margin would have been 48.1%, which on a like-to-like basis is an increase or expansion of the gross margin of 2.1 percentage points.
Drivers, its product mix towards, as I mentioned already in Q3, higher attractive businesses. It is the defense businesses, is the industrial applications. Clean Power Management, we're looking at a gross profit of EUR 12.5 million comparing to EUR 10.5 million in 2023. That translates into a gross margin of 28.2% compared to 26.7%. You also see that we had an expansion of the gross margin in that segment. It is a combination of lower unit cost, overhead cost as the segment revenues increasing, and also the sale of higher revenue, higher priced products. Our midterm, long-term gross margin growth has remained the same.
We see it in the segment Clean Energy way above 44% to 45%. In the segment Clean Power Management, way above 30%. There is a bit of a way to go in the later segment. Coming to the group reported EBITDA, reported EBITDA was EUR 20.2 million comparing to EUR 14.6 million. Margin was 30.9% comparing to 20.4%. In the group EBITDA, the reported EBITDA, as always, there are non-recurring expenses as incomes included, which will lead us then to the group adjusted EBITDA. Those non-recurring expenses income amounted to the expense of EUR 1.8 million in 2024.
That compares to a much lower number in 2023, where the negative impact was EUR 540,000. Largest position in those non-recurring expenses are the net expenses for the long-term incentive programs, these are stock option programs and PSP, which amounted to EUR 1.4 million in 2024 and were significantly higher than what we've seen in 2023. This is due to not only, but also to new programs which were granted to a number of senior managers of SFC Group. You saw that transaction-related expenses increased from EUR 490,000 to EUR 925,000 in 2024, which gives you a clear indicator of the level of engagement we have on those projects.
You've seen that we did close purchase of assets in Denmark from Ballard, which is part of our M&A and corporate development activities. You've always seen that we had in 2024 a specific income of Badwill amounting to EUR 550,000. This comes as a result of the purchase price allocation of the transaction acquiring the assets in Denmark from Ballard. Adjusting our reported EBITDA for those impacts will reach our adjusted EBITDA, which in 2024 amounted to EUR 18.2 million comparing to EUR 11.9 million in 2023. That again translates into a margin of 15.2% versus 12.8%, an absolute growth of the relative growth of the adjusted EBITDA of 45.2%.
We are well above the level of 2023. We are also particularly happy that we were able to further manage the expansion of our adjusted EBITDA margin coming up to 15.2%, as mentioned before, and that is 2.4 percentage points higher than in 2023. That is well within our midterm target range, even though we are convinced that there is further upside potential in the next years to come.
The overall good figure is attributable to, first of all, the solid gross margin gain that we had, and then also operating leverage, especially with regards to sales and marketing expenses, and a much improved other operating result, the operating result resulting mostly from exchange rate gains and losses. Let us briefly review the key drivers behind the absolute EBITDA increase and also bring forward some of the discussion of the operational expenses. First of all, gross margin expenses, I already mentioned it.
The key driver is not one single factor. It's a mix of various factors eventually resulting in the expansion of the gross margin, 1.4 percentage point, or relatively in comparison to last year, a positive contribution to the adjusted EBITDA of EUR 1.4 million. Secondly, the operational leverage of scaling. We are committed to staying disciplined with our costs, as you know. Also there, it's not one single factor, but let me look especially at sales and marketing expenses that increased under proportionately with respect to revenue. G&A, and you have seen that in R&D, increased slightly above revenue growth. I will dig into this a little bit later.
Adjusted sales and marketing expenses account for 37% of the total operating cost and increased notably on an absolute level relatively to revenue. However, they decreased. Adjusted sales and marketing expenses came up to 11.1% of revenues, worth 13% in the previous years. That's a two percentage point relatively less. Adjusted R&D expenses, and hardly surprising given sort of the fixed cost character of the R&D expenses, increased slightly higher than sales, resulting in a cost-to-revenue relation of 5% versus 4.5% in 2023, so 0.5 percentage points higher in relation to sales.
Last but not least, the adjusted G&A expenses and their group also higher than G&A, than revenue, sorry, resulting in a G&A expense revenue ratio of 13.2%, which is above the 12.4% which we saw in 2023. I give you some of the reasons why this is the case later. Depreciation amortization to get to the EBIT were EUR 6.5 million comparing to EUR 5.5 million in 2023. As in the previous years, about 40% of the depreciation is related to right-of-use assets or IFRS 16. That is EUR 2.6 million. It is a bit more recently higher from what we have seen in 2023, which has to do with the new facilities that we opened and have in the P&L for the full year, including UK and Romania too.
Depreciation without the IFRS 16 impacts come up to EUR 3.7 million, out of which the larger part, EUR 1.8 million, is from CapEx R&D. Other tangible intangible assets come up to EUR 1.9 million. That brings us to the EBIT. The EBIT and adjusted EBIT accounted amounted to EUR 15.6 million, translating into a margin of 10.7%. That compares to EUR 9.7 million and 8.2% in 2023. Significantly higher as the EBITDA. Sales and marketing expenses, I already mentioned that absolute growth, but relatively smaller with 11.1% ratio to revenues compared to 30% in 2023. What are the key drivers? A little surprise. It's personnel expenses and travel expenses.
We had a higher headcount in 2024. Inspired, you may see that the personnel expenses did not increase significantly on that level. That has to do a lot with the utilization of personnel expense accruals that we dissolved in 2024. The key driver really here is a number of factors. It's not one single factor. Overall, we saw that those costs developed favorably. R&D expenses, total adjusted R&D spend. The money that we invested in R&D was EUR 11 million compared to EUR 8.6 million. How is these EUR 11 million made up? That is, first of all, the R&D, adjusted R&D that we expensed over the P&L. That was EUR 7.2 million compared to EUR 5.3 million in 2023. We add the R&D expenses that we capitalized, which was EUR 3.2 million, slightly higher than the EUR 2.9 million that we saw in 2023.
We add also the subsidies that we received that was EUR 700,000, significantly higher to the EUR 400,000 that we've seen in 2023. If we add up those three numbers, we come to the EUR 11 million that we have spent or invested in R&D. Key drivers in R&D, also not a big surprise. It's first of all, headcount. The second largest position in there is material that is being used in R&D. Personal expenses have halved, increased. That is a mix of headcount, but also increased salaries and wages and pay for our personal that we have. If we look at the total R&D spend in relation to revenue, we come to 7.6%. That compares to 7.3% in 2023.
A little bit higher. In the long term, we are looking at 6% to 7% of our revenue for R&D spend. Let us go into G&A expenses, which increased significantly compared to the previous years. You followed us through the quarters and seen that those costs have gone up. The increase was 31%. Adjusted G&A came up to EUR 19.2 million compared to EUR 14.6 million in 2023. We announced that we would have higher costs here. That corresponds to 13.2% of revenue above the 12.4% of revenue that we've seen last year. What are the key drivers behind that? It is, again, mostly personal.
We had a higher average headcount in G&A, increased the number from 58 to 73 persons with the largest additions in the finance department, in risk management, in internal control department, and IT resources across the group. These are highly experienced and qualified specialists most of the time, who also tend to be a little bit higher paid in terms of wages. We also had an addition, higher IT advisory expenses in connection with the introduction of the ERP system, SAP, which we intend to launch later on this year. We also had higher travel expenses in that division, mostly hand in hand with our international expansion.
Let me go to key balance sheet items. We want to start with the fixed assets and the intangible assets and the CapEx for 2024. The total gross CapEx, including right-of-use and IFRS 16 accounting impact on this CapEx, amounted to EUR 9.2 million, which is up by EUR 2.8 million from 2023. The main driver behind the EUR 9.2 million was really the investment in the MEA production in the UK, as well as expansion of production capacity in SFC Romania. Now, to reconcile that CapEx, what you see in the cash flow statement, and that is a bit specific this year, you would have to add another EUR 3 million, which we spent for the acquisition of the assets for SFC Denmark.
That is shown as CapEx. However, what we acquired is mostly inventory. You would not see that increase in the PP&E fixed asset. You would see that increase in the inventory. However, it's shown as CapEx for accounting purposes also in the cash flow statements. The total CapEx split between intangible assets and PP&E, intangible assets 36%, PP&E 64%. You see a bit of an inverse tendency in the last year. Normally, the CapEx on intangibles is higher than on tangibles, with the intangibles driven mostly by R&D, by capitalized R&D. Capitalized R&D made in 2024, EUR 3.2 million from the CapEx compared to EUR 2.9 million in 2023.
Cash and cash equivalent, cash freely available, EUR 60.5 million. On the level of last year, we had EUR 59.8 million, a very solid position. As we consider financial debt, increased to EUR 4.1 million from EUR 3.8 million in 2023. Same thing as last year, same thing as over the whole year. These are working capital lines, which we utilize SFC Netherlands and SFC Canada. That brings us then to a net cash position, which was stable at EUR 56.4 million compared to EUR 56.1 million in 2023, a very healthy position. Equity increased by EUR 11.1 million, mostly driven by the positive earnings that we had and a net profit that was EUR 9.4 million in 2024.
Equity ratio still very solid, 71.1% comparing to 72.6% in the previous year. Cash flow from operations before change in net working capital, very good, very solid, EUR 21.8 million, 39% higher from 2023. The net working capital changed by EUR 5.3 million in total. So that's where the first, some of the cash went into.That compares to EUR 11 million in 2023. Please go back to what I said previously, the acquisition of the inventory in context with the SFC and SFC Denmark from Ballard, roughly EUR 3 million is not included in that networking capital change.
If you then look at the networking capital and how does it relate to revenues, it's about 26% of revenues compared to 32% in the last year. What we see is that we are full on track with getting more effective to a more effective level of working capital and also decrease or manage our inventory properly. Largest impact on the change in networking capital was the increase of accounts receivable, which went up significantly by year-end, resulting in a negative cash impact of EUR 8.5 million. The days of sales outstanding at year-end were 90 days comparing to 88 days in 2023. Basically on the same level.
Remember, this is only looking at it at the year-end. As you know, we tend to shift most or quite a bit of our revenue at the end of the quarter. Automatically, the days of sales outstanding tend to be a little bit higher at the end of the quarter. I mentioned the inventory increased slightly with a negative cash impact of EUR 1.9 million. You would want to add the EUR 3 million out of the acquisition of assets. That would then be EUR 4.9 million, but you'll see in the cash flow statement the EUR 1.9 million in the change in networking capital and the other EUR 3 million you would see in the CapEx. That gives us days of inventory, roughly 131 days. That compares to 128 days in 2023.
Pretty much on the same level with, of course, the higher inventory resulting from the acquisition in Denmark at the end of the year. I would say relatively we are a bit better than 2023. Analog with accounts payable, sorry, the accounts receivable, also the accounts payable increased and they increased by EUR 2.8 million, which is days of payables outstanding of 97 days, much higher than the 66 days that we have in 2023. After tax payment and after the change in net working capital, we've seen a cash flow from operating activities of EUR 14.5 million.
From those EUR 45 million, we had a cash flow, we deduct the cash flow from investing activities, as I mentioned before, of EUR 11.1 million, so much higher than the normal run rate that we have on that, on the CapEx level, given the expansion and the acquisition that we made. We also deduct the cash flow from financing activities, which amounted to EUR 3.1 million, a bit higher than in the previous years. These are mostly leasing payments. That brings us then in a change in cash of EUR 280,000. We were positive in a change in cash.
However, remember, in the fourth quarter, we made that acquisition of Ballard above EUR 3 million, which, of course, also ate into our cash generation. Without that acquisition, which we were very happy that we made, obviously, our cash profile would have been higher. With that, I will return to Peter.
Thank you very much, Daniel. After some of those impressive numbers, let me direct your attention now to, let's say, what is, let's say, this year's work and this year's outlook. As said, we are already one quarter into the year, so I think we have a pretty good view of it. Let me just summarize a couple of elements. We have a guidance out there of rounded EUR 161 million, a targeted revenue to EUR 181 million targeted revenue. Again, as said, rounded figures. Overall, we see an active and good demand, as mentioned before already, across the different regions and across our businesses.
I think we have a very specific situation now in our defense and public security business, what I think one would call a game-changing environment, which we see over time very favorable here for SFC Energy and our products offered. Europe, also Germany, we have witnessed massive changes here now down to constitutional changes to generate and provide the basis for a very favorable spending environment on defense activities. I think we all learned, not just at the Munich Security Conference, but also before, that the changed view of the new American administration makes ourselves now responsible for our security and safety here in Europe.
That translates into those spending plans. Why do we think we are positioned well for this? I think the underlying part is an ever-growing demand of power in the field. No matter what type of warfare we are looking at, the patterns are changing. We are coming away from the more traditional way to, let's say, AI-based, cybersecurity-based types of, let's say, warfare. If we take a single data point here, when we developed our first portable solutions for soldiers, everybody was telling us this is sufficient to have, let's say, 600 watt-hours or 25 watt nominal power here on the backpack with a number of batteries.
Right now, we are seeing about, let's say, three times the wattage level needed. We are, let's say, also seeing, let's say, new types of vehicles being used, just to mention unmanned aerial vehicles, battery-powered vehicles. We have been building up solutions here for highly agile charging solutions, which we see also as a significant potential here on the product side. More, let's say, very strict fact-based, our products are qualified with a number of defense organizations. We have been investing in this, and some of you know this over the last minimum 15, but more 20 years. We are registered.
Our systems are NATO qualified, and they are ready to use, which is an instruction many of those defense organizations now get to make sure they do not start a lengthy development project, but they are taking ready-to-use products. This is where SFC has dEFOYnitely a good head start. Judgment here, how many years? I would say at least a couple of years to be more specific here. What do we expect here? For 2025, I think the one or the other project really getting into at least our order book. Still, procurement cycles are as they are, although they are accelerated.
Naturally, over the midterm, I think we have to look at the different scenario. Whereas we were, let's say, conservatively looking at this still a year ago with, let's say, a total 20% revenue deriving from defense customers in our midterm plan, I think the scenario now could go up to also a ratio of 40% possible in defense and security. Again, we have the products and our products are qualified. US, second element. What is our US plan? Yeah, we have moved some of our activities, the customer-centric activities already last year to Orem here, Salt Lake City, outside of Salt Lake City, set up sales service repair center.
The reason was to be more closer and to have higher proximity to our customers. It was not a counter tariff Q1sure. Naturally, over the last couple of weeks and months, we have now developed our counter measures here against the terrorists. The first one here still between Canada and the US, we are seeing tariffs now implemented. We have been shipping our fuel cartridges from Canada to the US. We have built up a significant stock in the US over the last two months that gives us a runway until mid-year, good mid-year this year. Until then, we will have local filling set up, process is running.
Assembly and production, basically copying what we did in India. We are launching or we have been launching a program here for local assembly in the US. I think we are now looking at the 150-day plan to be able to do so. If we are good in the next two, three days, we are signing some more lease agreements here for buildings in the vicinity. In an August timeframe, latest September, we should be up and running here locally. In Q1, we have done significant shipments to the US to build up stock with key customers at their site, but also at our own site to cover the gap here. There is some pull-in effect here to be expected on the revenue side in Q1.
M&A still, as Daniel said, we saw it also in the spending here on transaction-related activities. We are looking at projects in Europe, in Southeast Asia, and as already and consistently communicated in the US, either complementary technology or faster market access. I think you can expect us to come up with some news aggressively looking at within Q2. Operational excellence and capacity expansion after India, Romania, Germany, and naturally the UK with our membrane production. As said, US is on the plan and the ramp-up in Denmark is on the plan.
Growing the business, growing the teams requires new organizational concept, good processes, but also good systems. Daniel mentioned this. One of our biggest spend is also in 2025 to digitize all our processes and then finally base it on an ERP system, but also to improve naturally cybersecurity to the highest standards. We have made our experiences here years back worthwhile spend. Product and technology. Yeah, I mentioned this. We do a very interesting customer development project here in the Netherlands here in the semiconductor industry.
We are launching a new initiative on our defense and public security product offering, power increase, ease of use to increase our competitive advantage there. We are consolidating our offering here on the hydrogen side with the newly acquired product offerings from Ballard. Last but not least, cloud capabilities, a very supportive element for our sales, for customer loyalty, for improving the performance of our product on the customer end. We are providing operating data to the customer. We are analyzing it, including AI-based approaches here.
This helps us to understand what do our customers need to change maybe in their specific situation to increase lifetime of the product. Additional for us, yeah, it is again building up entry hurdles against potential competitors. At the same time, it is a potential new income stream. With this, where do our EBITDA and EBIT outlooks lie? We plan to expand EBITDA to a range of EUR 24.7 to 28.2 million. On EBIT level, both of it adjusted to EUR 17.5 to 20.6 million. There is a lot of still investment, some variables here on the cost that come in, especially also the build-up in the US.
Therefore, we have this range in there. For those of you who, I would say, see the lower end on the conservative side, yeah, we have been reliably forecasting here over years. We do not change this approach, but we also do not change our ambition. Our ambition naturally also lies on the upper end of those expectations. With this, we hand over to Vicky, and we are looking forward to your questions and comments.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question from Carsten von Blumenthal, First Berlin Equity Research. Please go ahead.
Good morning, Peter. Good morning, Daniel. Congratulations to great results. I have a question regarding German politics and the implications for you. We have this EUR 500 billion infrastructure program. Do you believe that you could directly benEFOYt from this? We have defense spending more or less out of the debt break. That means Germany can spend much more on defense. Do you believe that the German army will thus order more product from SFC? Good morning, Carsten. Thank you very much.
Yeah, German politics, yeah, not up to me to comment now on the politics, but I think those developments here, if you look at the programs that are out there, infrastructure, defense, and then part of the whole package also needs to be linked to energy transition programs. Yes, I think we are fitting into all the three elements here. Defense and public security, briefly touched upon it before. We do not expect, let's say, procurement cycles to fundamentally change and be eliminated. There is always a timeline to it. As said, we are qualified with our products, be it man-portable, man-women portable, be it on vehicles or dismounted.
That's why, yes, we also expect naturally more activity here in our home market. We are seeing really immediate projects coming up, for example, at the NATO procurement agency here through the UK. We have, I'd say, programs that we have been following up with parts of the armed forces in France now being accelerated in testing. There is a visible change in speed. Infrastructure, yeah, if you look at what we do here on the surveillance part here for critical infrastructure, this is where we clearly fit in. I mean, energy transition per se, I think, is, yeah, also good amongst others for our higher power hydrogen offering here.
Therefore, you see us in a positive mode here in regards to those changes.
Perfect. Thanks for that. You mentioned in the call the technological change in CCTV or to watch CCTV in the surveillance service industry. And recently, you reported that Bau Watch, one of your clients, placed a follow-up order. Could you elaborate on further clients you have won there or you may win? How, I mean, this is the second big driver in your defense and public security segment, the CCTV industry. You have a large US client, which last year had a bit of problems, but should be back on the growth path soon. There are certainly other US clients. Perhaps you could elaborate on this important growth driver for your company.
Yeah, absolutely. And just also for the sake of clarity, our CCTV business is in our civilian part of the business. We consider it industrial because a big part of it is with non-government customers. So the big part of it is really, let's say, in the industrial part of the fuel cell business. And if you look into the US, we were gratefully working under an exclusive relationship with our largest customer, LiveView, for a period of two years. We are now out of this period. Yeah, the industry naturally sees those solutions. I think we are now with, let's say, the top competitors already also in their offering coming in, first couple of dozens, hundreds of systems being shipped to there too within this year.
If we look into North America, there is one dominant player domiciled in Canada by the name of GardaWorld, so a 130,000 plus headcount operation with worldwide activities. We have our first fieldings out there with them, and we are working on an expansion in this. This is basically one of the competitors to the Securitas and the likes. They are building a mobile security unit division. Again, our product simply fits expanding power needs and simply helping uptime. This is where, let's say, those operators also make their money. The more hours they can rent this equipment out, the better it is.
The same we see here in Europe. All over right now, this is, let's say, the most active part of our civilian business, counting up to 40% to 45% of the industrial sales we are doing.
Okay, that helps a lot. Thank you for clarifying that it is also the industrial part. Seeing that your defense business is growing strongly, do you expect further gross margin expansion of the group in 2025?
Good morning, Carsten. Hi, this is Daniel. The answer is yes, not only driven by obviously defense business, but depending on how much of defense revenue a project will be realized in 2024, that would have an additional positive impact on the gross margin as those products, and that is also known news, tend to be much higher margin than the industrial products that we supply.
Perfect. Thanks for that. One last question from my side. You have some hydrogen fuel cell business that I'm pretty sure will be stronger in a few years. Now you have the final figures. Could you give us a revenue figure? How much revenue did you realize in hydrogen fuel cells in 2024?
Overall, if we look into the Clean Energy part here with approximately EUR 100 million, I think that's also no secret. We adjusted also our planning here. We are doing around 3%, slightly below 3% of this revenue in hydrogen and hydrogen-related projects. I think this reflects also the overall environment here. We are happy we have calibrated our efforts, but also our resource allocation from R&D to sales to the levels that are needed. Still, this year, we expect this to grow to, let's say, a high single-digit million level revenue.
Doubling or tripling this, I think, is the realistic expectation with the pipeline we have, which just recently signed a significant contract now for our new entity in Denmark with a cable network operator for hydrogen fuel cells backup power solutions out there in the field. An existing customer we took over from Ballard.
All right. When you say below 3%, you mean group revenue or segment revenue?
Segment.
Segment. Perfect. Excellent. Thank you very much for taking my questions.
Thank you.
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Thank you very much. I think, as always, do not hesitate to reach out to Susan, daniel, myself for further questions and clarifications. Thank you for your time and your loyalty to us. Thank you. Goodbye.
Thank you.
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