1.

Reporting entity

Theon International PLC (“The Company) together with its subsidiaries form the Group “Theon Sensors”

(“The Group”).

Theon International PLC was incorporated in Cyprus on 10 August 2021 as a private limited liability

Company under the provisions of the Cyprus Companies Law, Cap. 113, is domiciled in the country of its

incorporation

and was converted to a Public Limited Liability Company on 13 September 2021.

Its

registered office is at 5 Agios Antonios Street, 1st floor, Office 102, 2002 Nicosia, Cyprus.

The Company was incorporated with the purpose to acquire the 100% of the issued share capital of Theon

Sensors AG, a Company incorporated in Switzerland.

The acquisition agreements were concluded on 27

August 2021. Theon Sensors AG is the owner of the following companies:

•

Theon Sensors SA, Greece (100%),

•

Theon Sensors MEA FZC, United Arab Emirates (99%),

•

Theon Deutschland GmbH, Germany (100%),

•

Theon Sensors Far East Long Ltd., Singapore (100%) and

•

Theon Sensors USA Inc. USA (100%)

The Group is a leading developer and manufacturer of customizable night vision, thermal imaging systems

and Electro

-

Optical ISR systems for military and security applications in Europe with a global footprint. The

Group was founded in 1997 and has since become one of the most relevant players in the segment with

offices in Athens, Cyprus, Kempen, Arlington, Abu Dhabi, Dubai, Zug, Copenhagen, and Singapore, coupled

with manufacturing facilities in Athens, Wetzlar and

Plymouth. THEON's commercial presence extends to

68 countries, of which 24 are members of NATO, with almost 150.000 systems manufactured and sold as

of 2023.

The Group is involved in the manufacture and trade of a large range of sensors, and in particular it

manufactures night vision systems, thermal systems (thermal sights) and other innovative electro

-

optical

equipment and equipment for defence and security applications.

The Group’s objects are to manufacture, maintain, repair and trade in high

-

tech sensors and thermal

imaging instruments, vision instruments, distance meters, daytime and night

-

time sights, high

-

tech and

microelectronics products, to provide all manner of information and advice about the operation of those

products, to act as agent for and/or to broker the conclusion of all manner of contracts relating to those

products, to brief individuals about the above work, to provide advice and services to foreign and

Greek

companies.

The Group is today one of the market leaders in night vision systems for military and security applications,

with production facilities and head offices in Athens.

The main product categories

are:

•

Night vision monoculars and binoculars;

•

Full range of night vision sights and thermal imaging instruments;

•

Sights for night driving and upgrade kits for armoured vehicles;

•

Night vision and thermal imaging systems for vehicles and digital platiorms;

All products of the Group

are compatible and fully tested for compliance with military standards, focusing

on highly effective and ergonomically advanced systems that increase the safety and performance of

soldiers during night operations.

One of the featured advantages is that systems can be adjusted to meet the specific requirements of end

users. Following flexible procedures, we can promptly respond to adjustment requests within a short

period.

The Group

also advises clients about the right system for them for the specific purpose and the mission

profile and provides training services at all levels. Professional and full atier

-

sales support is yet another

key feature of the Group's international success, as it provides customised support and maintenance

solutions.

All Group

sensor systems are stringently checked following military standard testing procedures and using

exacting quality assurance and quality control criteria. The Group

maintains a Quality Management

System, which complies with the requirements of standard EN ISO 9001:2015, an Environmental

Management System as per standard EN ISO 14001:2015 and a Security System in the Supply Chain as per

standard 28000:2007 with the following scope of certification: Planning, Manufacture and Trade of

Electro

-

optical Systems and Sensors. Group

manufacturing facilities and staff have NATO security clearance

for defence projects.

For the acquisition of the share capital of Theon Sensors AG, the Group

issued on 13 September 2021,

199.000 ordinary shares of €1,00 each in exchange for 204.082 issued and fully paid shares in Theon

Sensors AG.

Until 19th September 2023, the Group

was listed on the Emerging Companies Market of the Cyprus Stock

Exchange. Thereatier, the Group

delisted its’ shares. It is noted that, on the same date, the Group’s shares

were also delisted from the Central Securities Depository and Central Registry, in accordance with Article

19 of the Securities and Cyprus Stock Exchange (Central Securities Department and Central Registry) Law.

On November 14, 2023, the Company's general shareholder meeting resolved to affect a share split of 1

to

1

00 and

resolved to increase the share capital from €200.000 to €600.000 using Company retained

earnings and at

the same time reduce the nominal value per Share from €1,00 to €0,01, increasing the

number of existing

shares from 200.000 to 60.000.000.

On November 16, 2023, in connection with the planned Private Placement and Admission to Trading, the

Company's general shareholder meeting resolved to authorize the Board of Directors to affect an increase

in the

Company's share capital by up to €150.000 for the issuance of up to 15.000.000 Shares, excluding

preemption

rights for Existing Shareholders as of the date of this Prospectus, in connection with the Private

Placement.

On November 23, 2023, the Company's general shareholder meeting resolved to create a second class of

restricted

Non

-

Voting Shares with a nominal value of €0.01 each, increasing the issued share capital from

€600.000 to

€60.000,10.

On February 7, 2024, the Group listed its shares on the regulated market of Euronext Amsterdam,

achieving one of the first IPOs in Europe. A total of 15,4 million ordinary shares, consisting of 10 million

newly issued ordinary shares and 5,4 million existing ordinary shares (including 1,4 million shares of the

over

-

allotment option), were placed with institutional and private investors as part of the private

placement. The total number of offer shares placed in the private placement corresponds to 22% of th

e

share capital of the Group.

The Group debuted with issue price at €10,00 per share. During the first days of trading, the over

-

allotment

option has been partially exercised, leading to a total number of shares placed in the private placement of

14,3 m, leaving a free

-

float below 21%.

Post

-

IPO and until the moment of this publication the share price

has had an upward trend and surpassed €13, fueled by the geopolitical instability, favorable release of

initiation of coverage reports and announcement of new contracts.

Theon International PLC does no longer hold a stake in European Sensor Systems SA, Greece, as it was sold

during 2023 for an amount of € 30.954.

Operating environment of the Group

The Group

assesses the

impact of

changes on the global economic environment on the markets in which

it operates.

The global macroeconomic and financial environment shows

signs of improvement, however,

there is still some uncertainty. The Group's Management assesses continuously the possible impact of any

changes to the macroeconomic and financial environment in global level, in order to ensure that all the

necessary action and measures are taken to minimise any effects on the Group’s activities.

Management

considers that the projected increase in defense and security expenditure worldwide will have a positive

impact on the Group's financial results in 2024.

The Management

team continuously assesses the trends in our sector and by evaluating the new

conditions that are emerging plans measures designed to optimise its financials.

The global energy crisis

that started in 2021 is characterized by the ongoing energy shortage around the world, but also by the

rapid increase in its prices, affecting countries in Europe and Asia. Greece was facing a significant increase

in prices for all forms of energy. The Group

was not significantly affected by the energy crisis in 2022 &

2023.

The Group

does not operate in Ukrainian, Gaza, Yemen, nor does it have a large exposure to commodities

affected by the crisis in Yemen, Ukraine, and Gaza (such as energy or agriculture, so its financials have not

been affected. In any case, because this is an ongoing event, management is monitoring developments

and is ready to take the necessary measures if necessary.

Especially given the risks the Red Sea crisis is

throwing Yemen, the Group

is not exposed to any Supply risk.

It continuously assesses the situation and

its possible impact and promptly takes all the necessary and effective measures and actions to minimize

any impact on its business.

2.

Basis of accounting

These consolidated financial statements have been prepared in accordance with International Financial

Reporting Standards (IFRS) as adopted by the European Union (EU) and the requirements of the Cyprus

Company Law, Cap. 113. They were authorised for issue by the Company’s Board of Directors on

1

9

April

2024.

3.

Basis of measurement

The consolidated financial statements have been prepared in accordance with the historical cost or

deemed cost principle except provision for staff retirement indemnities, lease liabilities which are

measured at present value and other financial assets which are measured at fair value, keeping each year

separate, ensuring uniform presentation.

Going concern

Management assesses the Group’s financial position in relation to the risks the Group faces, its capital

adequacy and any major uncertainties relating to the Group's ability to continue operating in the

foreseeable future, and in particular for at least 12

months from the date of the approval of the financial

statements.

Management considers that the financial statements can safely be prepared on a going concern basis,

since there are no major uncertainties in relation to the Group’s ability to continue to operate in the

foreseeable future.

4.

Functional and presentation currency

These consolidated financial statements are presented in euro, which is the Group’s functional currency.

All amounts have been rounded up to no decimals, unless otherwise indicated.

5.

Consolidated Financial Statements

The consolidated financial statements of the Group for the year ended 31 December 2023 consist of the

financial statements of the parent Company and its subsidiaries in accordance with international financial

reporting standards (IFRS) and the Interpretations issued by the IFRS Interpretations Commi

tee as

adopted by the European Union.

Preparation of the financial statements in accordance with the IFRS requires the use of certain important

accounting estimates and the exercise of judgement by Management in applying the accounting policies.

The financial statements areas where estimates are particularly important are outlined in Note

6.

The consolidated Statement of Financial Position on 31 December 2023 and the Profit or Loss and Other

Comprehensive income for the respective year include the financial statements of Theon International PLC

and its subsidiaries and were prepared on the assumption that were a Group since 1 January 2020.

For the purposes of preparing the consolidated financial statements, the method of Business

Combinations under Common Control was followed, where the book value method (“book

-

value

accounting” or “Predecessor Value method”) is applied. The assets and liabilities of the acquired company

were recognised based on their current book values instead of fair values.

The Management has adopted

this method of business combination since the new business structure does not affect the shareholding

structure and minority interests.

Furthermore, no resources were spent outside the group because of this

restructuring.

Therefore, the Consolidated Statement of Financial Position and the Consolidated Statement of

Comprehensive Income on 31 December 2023 are presented as the sum of the respective financial

statements of the parent and its subsidiaries as if they had been combined during the accounting periods

included in these financial statements. The difference between the acquisition price of a company and the

book value of the corresponding net assets is presented as “merger

reserve” in the reserves.

6.

Use of judgements and estimates

In preparing these consolidated financial statements, Management has exercised judgement and used

accounting

estimates that affect the application of accounting policies and the reported amounts of assets

and liabilities, income, and expenses. Actual results may differ from these estimates.

The significant judgements made by Management in applying the Group’s accounting policies and the key

sources of estimation uncertainty were the same as those described in the last annual financial

statements.

a.

Judgment

In preparing these

consolidated

financial statements, management has made judgements and estimates

that affect the application of accounting policies and the reported amounts of assets and liabilities,

income, and expenses. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group’s accounting policies and the key

sources of estimation uncertainty were the same as those described in the last annual financial statements

and they are as follows:

Net

realisable value of inventories

T

he Group

uses its judgment derived from its experience in the industry in which it operates to make the

best estimate of future selling prices of its inventory. On a consistent basis, the current selling prices

prevailing just before and atier the date of the Consolidated Financial Statements are used as the basis for

making estimates unless there is certainty that the inventories at the date of the Financial Statements will

be disposed of at predetermined dates in the future with the result that the estimated selling prices at

those dates are used to make the relevant calculations.

b.

Assumptions and estimation uncertainties

The preparation of financial statements requires the Management to make estimates and assumptions,

which affect the disclosures in the financial statements.

The estimates and judgements are based on experience

-

based data and other factors, including the

expectations of future events which are considered reasonable under specific circumstances.

These estimates and assumptions form the basis for taking decisions about the book values of assets and

liabilities that are not readily available from other sources. The resulting accounting estimates will, by

definition, seldom equal the related actual results. The estimates and assumptions that entail risk of

causing significant changes in the amounts of assets and liabilities within the next fiscal year are presented

below.

Provision for doubtiul debts

The allowance for expected credit losses for trade receivables and contract assets are calculated at

individual level when there is an indication of impairment. For receivables and contract assets without any

indication of impairment the expected credit losses are based on historical data combined with forward

-

looking macroeconomic factors affecting credit risk, such as country risk.

Expected loss rates are updated

at every reporting date.

Details of the key assumptions and inputs used are disclosed

in Note 36, Credit

risk section.

7.

Material accounting policies

a.

Consolidation

Business combinations

The acquisition method of accounting is used to account for all business combinations

when all the

activities and assets acquired meet the definition of a business and control is transferred to the Group. To

determine whether a particular set of activities and assets constitutes a business, the Group assesses

whether the set of assets and activities acquired includes at least one input and a substantive process and

whether the

processes applied to those inputs have the ability to contribute to the creation of outputs.

The Group has the option to apply on a transaction level a "concentration control" that allows a simplified

assessment of whether an acquired set of activities and assets is not a business. This optional

"concentration control" is met if substantially all the fair value of the gross assets acquired is aggregated

into a single identifiable asset or a set of similar identifiable assets. Where se

tlemen

t of any part of cash

consideration is deferred, the amounts payable in the future are discounted

to their present value as at

the date of exchange. The discount rate used is the interest rate at which the Group

could borrow from an

independent source under corresponding terms and conditions (incremental borrowing rate). The

consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets

transferred, the liabilities incurred to the former owners of the acquired business, the equity interests

issued by the group, the fair value of any

asset or liability resulting from a contingent consideration

arrangement, and the fair value of any pre

-

existing equity interest in the subsidiary. The excess of the

consideration transferred, the amount of any non

-

controlling interest in the acquired entity, and the

acquisition

-

date fair value of any previous equity interest in the acquired entity over the fair value of the

net identifiable assets acquired is recorded as goodwill.

Any goodwill arising is checked annually for

impairment. If those amounts are less than the fair value of the net identifiable assets of the business

acquired, the difference is recognised directly in profit or loss as a bargain purchase.

Transaction costs are

expensed when incurred, unless related to the issuance of bonds or equity securities.

The price does not include amounts related to any pre

-

existing relationship setlemen

t. These amounts

are generally recognized in the results. Any price payable by the Group is initially recognized at its fair value

at the date of acquisition and is categorized either in equity or as a financial liability. Amounts that have

been classified as a financial liability are reassessed at fair value and any changes are recognized in profit

or loss. There is no subsequent measurement for amounts that have been recorded in equity.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to or

entitled to variable returns from its involvement with the entity and has the ability to influence those

returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated (full

consolidation) from the date on which control is transferred to the group and are deconsolidated from the

date that such control ceases. Accounting policies of subsidiaries have been changed where necessary to

ensure consistency with the policies adopted by the

G

roup.

Associates

Associates are all entities over which the group has significant influence but not control or joint control.

Investments in associates are accounted for using the equity method of accounting, a

tier ini

tially being

recognised at cost.

Eliminations

Transactions between Group companies, balances and unrealized gains and losses (excluding foreign

exchange gains and losses) related to transactions between Group companies are eliminated. Also

unrealized losses and unrealized gains are eliminated, but only to the extent that there is no indication of

impairment.

b.

Foreign currency

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the Group companies using

the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses arising

from the se

tlemen

t of such transactions during the period and the translation of monetary items

denominated in foreign currencies at year end exchange rates

are recognized in profit or loss. Non

-

monetary items denominated in foreign currencies and valued at historical cost are translated at the

exchange rates ruling at that date. Non

-

monetary items denominated in foreign currencies and valued at

fair value are translated at the exchange rates ruling at the dates of the fair value when the fair value was

determined. In this case, the resulting exchange differences from the change in fair value are recognised

in profit or loss or directly in other comprehensive income, depending on the item.

Business activitie

s abroad

The assets and liabilities of the companies participating in the consolidation and which are initially

presented in a currency other than the presentation currency of the Group have been translated into euro

at the closing rate of the balance sheet date. Income and expenses are translated into the Group's

presentation currency at the average exchange rates during the reporting period (unless the average

exchange rate is a reasonable approximation of the cumulative effect of the exchange rates prevailing at

the dates of the transactions, in which case the income and expenses are translated at the exchange rates

prevailing on the dates of the transactions). All resulting exchange differences are recognised in other

comprehensive income

and cumulatively in the foreign currency balance sheet reserve of the net position

except for the portion of those differences allocated to non

-

controlling interests, when any. When a foreign

operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain

or loss on sale.

c.

Property, plant and equipment

Tangible assets are measured at historical cost less accumulated depreciation and any impairment loss,

apart from the plots/lots category which is measured at historical cost less any impairment losses.

The historical cost of tangible assets includes all expenses directly associated with acquisition of the

tangible assets. Subsequent costs are included in the asset’s carrying amount or recognised as a separate

asset, as appropriate, only when it is probable that future economic benefits associated with the item will

flow to the group and the cost of the item can be measured reliably.

T

he carrying amount of any component accounted for as a separate asset is derecognised when replaced.

All other repairs and maintenance are charged to profit or loss during the reporting period in which they

are incurred.

Subsequent expenditure is depreciated either over the remaining useful life of the asset or the period up

to the next planned improvement to the tangible asset, whichever is shorter.

Depreciation of all tangible assets is calculated using the straight

-

line method over the useful life of the

assets.

The useful life of each asset category is presented below:

Asset category

Useful life

Buildings

25 years

Machinery and equipment

10 years

Motor vehicles

6,2 to 8,3 years

Fixtures and fittings

5-10 years

Computers

2-5 years

The residual values and useful lives of tangible assets are re

-

examined and adjusted at the end of each

reporting period if that is considered necessary.

Where the carrying amount of an asset is greater than its recoverable amount, the value of the asset is

writen down

to the recoverable amount.

Each tangible asset and each important part thereof initially recognised is derecognised upon sale or when

no future economic gain is expected from use or sale thereof.

Gains and losses which arise from the sale of tangible assets are calculated as the difference arising

between the proceeds from sale and the carrying amount and included in profit or loss.

Interest from loans taken out specifically or generally to finance the construction of tangible assets is

capitalised in the year in which it arises, during the tangible asset construction period, where the

recognition criteria are met.

d.

Investment property

Investment property is investments that relate to all those properties (including land, buildings or parts of

buildings or both) that are held by the Group either to earn rentals or for capital appreciation or both and

are not used in commercial or other activities of the Group. Investment property is measured at cost less

accumulated depreciation and impairment.

Repairs and maintenance are recognised in the period in which they are incurred. Significant subsequent

expenditure is capitalised if they result in an increase in the useful life of the property, enhance its

productive capacity, or reduce operating

costs. Transfers of property from the category of investment

property shall be made only when there is a change in use, evidenced by the commencement of the

Group's own use or the commencement of the development with the intent to sale. Where the carrying

amount of an asset is greater than its recoverable amount, the value of the asset is adjusted to the

recoverable amount.

The useful life of the investment property is 25 years.

e.

Intangible assets

Intangible assets acquired separately are recorded at historical cost. Atier ini

tial recognition, intangible

assets continue to be measured at historical cost, less the accumulated depreciation and accumulated

impairment losses.

Intangible assets generated in

-

house are capitalised if the relevant expenditure is associated with an

intention on Management’s part, and a technical capability, to complete the intangible asset (for use or

sale), if there is a strong likelihood that there will be future financial gains and that there is a reliable

system for measuring such costs.

In all other cases, the relevant cost is recognised as an expense.

The Group’s intangible assets have a limited useful life and are amortised over their useful life. They are

tested for impairment when there are signs that some intangible assets may have suffered impairment.

Intangible assets whose usage period is contractually specified are amortised over that period. Such assets

without a usage period specified in contract are amortised based on estimated useful economic life.

The useful life and amortisation method for intangible assets with a specific useful life are re

-

examined at

least in each year in which financial statements are prepared. Changes to the expected useful life or

expected method by which future financial gains accrue for each intangible asset are treated as a change

in an accounting estimate. The amortization cost of intangible assets is recognised in the income

statement.

Amortisation of all intangible assets is calculated using the straight

-

line method over the useful life of the

assets. The estimated useful life of the most important categories of intangible assets coincides with the

depreciation rates in the tax laws, since in the view of the Group

management team, they correctly reflect

the estimated useful economic life of the assets.

Useful life is as follows:

f.

Impairment of tangible & intangible assets

Tangible assets with an unlimited life (such as land) are not depreciated or tested annually for impairment.

Tangible and intangible assets which can be depreciated, are tested for impairment in case events or

changes in the circumstances suggest that the carrying amount may no longer be recoverable. An

impairment loss is recognised in profit and loss for the amount by which the asset’s carrying amount

exceeds its recoverable amount.

For the purposes of impairment testing, assets are grouped together in the lowest category for which

there are separately identifiable cash inflows which are largely independent of the cash inflows from other

assets or groups of assets (cash

-

generating units). Non

-

financial assets other than goodwill that suffered

an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

The recoverable value of assets is either the fair value of asset less sale costs or the value in use, whichever

is higher.

Asset category

Useful life

Other intangibles

10 years

Internally generated intangibles

5-10 years

Contractual specified

1 year

g.

Leases

When recognising

a contract as a lease, the Group examines all relevant facts and circumstances, and

excludes short

-

term leases (of less than 12 months) and leases where the leased property has low value.

When a contract is or contains a lease, each lease element is recognised separately from the non

-

lease

elements of the contract, unless the Group

opts, as appropriate, for the sake of simplification to apply

uniform recognition as a practical solution.

The Group as lessee

At the lease start date, the lessee recognises the asset with a right to use and a lease liability.

Initial measurement of the right to use the assets includes the lease liability, any rents paid on the rental

period start date or prior to it, less any lease incentives collected, any initial direct costs incurred by the

lessee and an estimate of the cost

of returning the leased property to the state specified in the lease

agreement.

The initial measurement of the lease liability includes the current value of rents discounted using the

presumed lease interest rate. If that interest rate cannot be easily set, the lessee’s differential borrowing

rate is used.

Subsequently, the right to use the asset is reduced by the accumulated depreciation and impairment losses

and any re

-

measurements of the lease liability is adjusted.

Subsequently the lease liability increases the interest on the lease liability, and is reduced by the payment

of rental costs, and is re

-

measured when the leased property is revalued, or the lease is amended.

The Group as lessor

The Group classifies the lease either as an operating lease or finance lease. Leases where the Group does

not in effect transfer all risks and rewards of ownership are classified as operating leases.

When the assets are leased in the context of operating leases, they are presented in the statement of

financial position in accordance with the nature of each asset.

Rental costs under operating leases are recognised

in the results using the straight

-

line method over the

duration of the lease.

Initial direct costs incurred when signing an operating lease are added to the book value of the leased

asset and are recognised in expenses over the term of the lease on the same basis of recognition as

revenues from rental income.

Any rental income is recognised as revenues in the period in which they are generated.

h.

Inventories

Inventories are valued at acquisition cost or net realisable value, whichever is lower.

Acquisition cost is calculated using the average weighted cost method. The cost of finished goods and work

in progress consists of the cost of raw materials, direct labour costs, other direct costs and general

industrial overheads associated with production (in accordance with normal production capacity). Net

realisable value is the estimated sale price in the normal course of business, less the estimated selling and

transaction costs.

Any loss resulting from measuring stocks/inventories at net realisable value, when it is below acquisition

cost, is recognised in impairment losses and affects the cost of sales in the income statement. Where there

are particularly high impairment losses for stocks/inventories, the relevant amounts are shown in the

‘Asset impairment’ account in the income statement to ensure fair presentation.

Appropriate provisions are made for impaired, obsolete, and slow

-

moving inventories. Write

-

downs of

inventories to net realisable value and other losses from inventories are recognised in the income

statement in the period they occur.

i.

T

rade accounts receivable

Trade receivables are the balances owed by customers from the sale of goods or provision of services in

the context of the Group’s normal course of business

Trade receivables are initially recognised at their fair

value and later valued at the carrying amount by using the effective interest rate method, less impairment

losses,

and subsequently

measured

at amortised cost using the effective interest rate method, less

impairment losses. The Group shows any unreserved rights over the consideration of contracts

with

customers separately as a trade receivable.

j.

Cash and cash equivalents

Cash and cash equivalents include cash, demand deposits, short

-

term, up to 3 months from the date of

acquisition, investments and term deposits, highly liquid and zero risk.

Cash equivalents in the cash flow statement include not just cash and sight deposits but also short

-

term

highly liquid investments and bank overdratis, when applicable.

Bank overdratis are shown in liabili

ties under short

-

term loan liabilities. Cash and cash equivalents entail

negligible risk of a change in their value

k.

Share capital

Ordinary and preference shares without voting rights are shown in the “share capital” account in Equity.

The share capital shows the value of Company shares which have been issued and are in circulation.

l.

Loans and borrowings

Loan obligations are initially recognised at fair value, net of transaction costs incurred

(bank charges and

bank or third

-

party commission). In subsequent periods, the loan obligations are measured at amortised

cost

using the effective interest rate method.

Loan obligations are classified as short

-

term liabilities apart from cases where the Group has the

unreserved right to defer se

tlemen

t of its liability for at least 12 months atier the repor

ting date.

m.

Income tax

Tax for the period consists of current and deferred tax. Tax is recognised in the Income Statement except

to the extent that it relates to items recognised in other comprehensive income or directly in equity. In

this case, tax is recognised in other comprehensive income or directly in equity, respectively.

Income tax is calculated based on the tax laws adopted or substantively adopted at the end of the

reporting period in the countries where the Group

and its subsidiaries operate and generate taxable

income. Management periodically evaluates the positions taken in the tax returns when applicable tax

laws are subject to interpretation and forms provisions, when needed, based on the amounts expected to

be paid to the tax authorities.

n.

Deferred tax

Deferred income tax is calculated using the liability method, based on temporary differences between the

tax base of assets and liabilities and the corresponding amounts shown in the financial statements.

Deferred tax assets are recognised to the extent that there will be a future taxable profit for use of the

temporary difference generated by the deferred tax assets.

Deferred tax liabilities are recognised for all taxable temporary adjustments. A deferred tax asset is

recognised for deductible temporary differences to the extent that it is expected that the temporary

difference will be reversed in the future and there will be an adequate future taxable profit for use of the

temporary difference.

o.

Employee benefits

Pension and other post-

employment obligations

The Group does not participate in pension and other post

-

employment benefit plans or defined benefit,

or defined contribution plans apart from the statutory social security schemes which are mandatory by

the laws.

Defined Contribution Plans

Defined contribution plans mean pension plans where the Group pays fixed contributions to a separate

entity. The Group has no legal or presumed obligation to pay additional contributions in the case where

the fund’s resources would not be adequate to pay employees benefits for their service, relating to the

current period and past periods.

For defined contribution plans, the Group pays the mandatory contributions required by public social

security funds. Once the contributions are paid, the Group is not obliged to pay any additional

contributions. Regular contributions are recognised as a cost of employee benefits when they become

payable.

Any prepaid contributions are recognised as an asset to the extent that prepayment would lead to a

reduction in future payments or the return of cash.

Defined Benefit Plans

Defined benefit plan means a pension plan or plan involving other post

-

employment benefits which is not

a defined contribution plan. Post

-

employment benefit obligations at the end of the current period and

previous period were calculated in line with an actuarial study using the projected credit unit method.

The obligation arising from defined benefit plans is the present value of the commitment to provide a

defined benefit on the date the financial statements are prepared, less the fair value of any assets the plan

has.

The present value of the commitment to provide a defined benefit is calculated using the discount rate for

corporate bonds with a high credit rating in €, whose term approximates the duration of the relevant

pension obligation.

The cost of past service is recognised in the results, broken down into current cost of service and cost of

past service, gains and losses from reductions and the cost of se

tling pay.

The net financial income or expenses are recognised in financial expenses.

Re

-

assessments, broken down into actuarial gains or losses and the difference between the estimated and

actual performance of the plan’s assets, are recognised in the statement of financial position in the

“retained earnings” account through the statement of other comprehensive income for the period. The

re

-

assessments are not reclassified in the income statement in subsequent periods.

Employment termination benefits

Employment termination benefits are payable when an employee’s employment is terminated by the

Group before the normal retirement date or when the employee agrees to voluntarily leave in return for

these benefits.

The Group records these benefits on whichever of these dates is first: a) when the Group can no longer

withdraw the offer of such benefits and b) when the Group recognises an expense from restructuring

which is in the context of implementing IAS 37, which includes payment of employment termination

benefits.

Where an offer to encourage voluntary redundancy is made, employment termination benefits are

calculated based on the number of employees who are expected to accept the offer. Employment

termination benefits due 12 months a

tier the end of the repor

ting period are discounted at present value.

Employee profit sharing and bonus schemes

The obligation to provide benefits to employees in the form of profit sharing or performance bonuses is

entered in the “other provisions” account when there is an official scheme and the amounts to be paid

have been specified before the date on which the financial statements are published, or if previous Group

practices have given rise to a strong expectation from employees that they will be paid a performance

bonus / profit share

-

out and the amount can be estimated before the date on which the financial

statements are approved.

p.

Government grants

Government grants are recognised at fair value where there is a reasonable assurance that the grant will

be received, and the Group will comply with all relevant conditions.

Government grants relating to expenses are recognised as income in the period in which the subsidised

expenses are incurred.

Government grants relating to the purchase of tangible assets are included in the non

-

current liabilities as

deferred income grants and credited to profit or loss on a

straight

-

line method over the expected useful

life of the relevant assets.

Subsequent to initial recognition, state grants are depreciated by transfer to the Income Statement as

expenses, in the same period and in a manner corresponding to the transfer to Income Statement of the

book value of the asset subsidised.

Government grants relating to expenses are initially recognised as liabilities in the period in which they

are collected or in the period when approval for them is finalised and it is certain that they will be collected.

State grants concerning expenses are transferred to profit and loss as revenue for the period when the

subsidised expenses are charged in profit and loss.

q.

Provisions

Provisions are liabilities where the time or amount is uncertain.

Provisions are recognised

when there is a present legal or presumed commitment because of past events;

it is likely that an outilow of resources will be needed to se

tle

the commitment and the amount required

can be reliably estimated. When the Group expects to be compensated for a loss which it has suffered (as

in the case of insurance contracts for example) and it is fully certain that the amount will be collected, the

specific compensation is recognised as a separate receivable. The cost associated with each provision is

presented in the income statement, in net of any compensation.

Provisions are not recognised for future operating losses. The Group forms a provision for onerous

contracts when the financial gain expected to flow from such contracts is less than the unavoidable cost

of complying with contractual obligations.

Restructuring provisions include penalties for early termination of leases and payment of employment

termination benefits and are recorded in the period in which the Group acquires the legal or presumed

obligation to make payment. Costs associated with the Group’s normal business activity are not entered

in provisions before binding events occur.

When time affects the value of money in a significant way, provisions are measured at the present value

of the expenditure expected to be required to se

tle

the liability, using a pre

-

tax interest rate which reflects

the current market estimates of the value of money over time and risks associated with the liability, as the

discounting rate. An increase in the provision due to the passage of time is recognised as a financial

expense.

r.

Revenue recognition

Revenue from contracts with customers

The Group’s revenues derive from A) the sale of night vision systems, thermal systems (thermal sights),

other innovative electro

-

optical equipment and equipment for application to Defense and Security, and B)

the provision of training / maintenance services related to the above sales.

The Group recognizes revenue, excluding interest and dividend income and other related income from

financial instruments recognized under IFRS 9, upon the transfer of promised services to customers in

amounts that reflect the consideration to which the Group expects to be entitled in exchange for those

goods based on the following five

-

step approach:

Step 1:

Identify the contract for the sale of the goods.

Step 2:

Identify the separate performance obligations arising from the contract with the customer.

Step 3:

Determination of the transaction price.

Step 4:

Allocate the transaction price to the obligations under the contract.

Step 5:

Recognition of revenue as the entity satisfies its obligations under the contract with the customer.

Revenue is recognized, in accordance with IFRS 15, at the amount that the entity expects to be entitled to

as consideration for the transfer of goods when the customer obtains control of the goods, specifying the

timing of the transfer of control

-

either at a point in time or over time.

Revenue is defined as the consideration amount in exchange for the services or goods transferred to a

customer, excluding amounts received on behalf of third parties (value added tax, other sales taxes).

The Group recognizes revenue when (or as) it satisfies its performance obligation to fulfil a contract by

transferring the goods or services promised to the customer. The time of transfer of control is usually when

the goods have been shipped to the customer's location, unless otherwise specified in the terms of the

contract. The terms governing contracts with customers are consistent with international commercial

terms (Incoterms). Receivable from the customer is recognized when there is an unconditional right for

the entity to receive the consideration for the performed obligations of the contract to the customer.

The Group has determined that sales of night vision, thermal and other equipment is a distinct

performance obligation. The Group has concluded that revenue from the sale of products meets the

criteria to be recognized at a particular point in time since it

does not meet the recognition criteria to

recognized over time. Transaction price is determined in the contract and it does not include variable

consideration.

The Group does not enter contracts where the period between the sale of goods promised to the customer

and payment by the customer exceeds one year. Therefore, the Group does not adjust the transaction

price for the time value of money. Sales Invoices are issued the date that products are shipped to customer

locations and they are generally payable between 0 and 120 days.

Revenue from training and maintenance services is a distinct performance obligation where revenue is

recognized over time since the customer simultaneously receives and consumes the benefits provided by

the entity's performance as the entity performs. The transaction price is determined in the contract, and

it does not include variable consideration. Progress is determined based on the cost

-

to

-

cost method.

The Group does not provide volume discounts to customers.

The Group

provides warranty for its products and has assessed that the warranty is not a separate

performance obligation since it is assurance warranty in order products to comply with agreed upon

specifications. As a result, provision for warranty is accounted in accordance with IAS 37.

Contract assets

A contract assets is recognized when a performance obligation is satisfied, meaning the work is complete

and revenue has been recognized, but the payment remains conditional on the entity’s future

performance.

Contract liability

A contract liability is recognised if a payment is received or a payment is due

–

whichever is earlier

–

from

a customer before Group transfers the related goods or services. Contract liabilities are recognised as

revenue when the Group fulfils its performance obligation under the contract (i.e., transfers control of the

related goods or services to the customer).

s.

Dividend distribution

Dividends to shareholders are recognised

as a liability for the period in which Management’s proposal for

distribution is approved by the annual Ordinary General Meeting of Shareholders

.

t.

Financial assets and financial liabilities

Classification and initial measurement

At initial recognition financial assets are classed in two categories, one where valuation is done at the

amortised cost and one where valuation is done at fair value. The criteria which must be taken into account

in order to decide on how financial assets are to be initially categorised are as follows:

The business model used by the business to manage such assets. There are 3 types of business models:

•

The business model where the objective is to hold financial instruments to collect the contractual

cash flows (hold to collect);

•

the business model where the goal is achieved either by collecting the contractual cash flow or by

selling the financial assets (hold to collect and sell);

•

other business models;

The characteristics of the instruments’ contractual cash flows.

In order for a financial instrument to be classed as valued at amortised cost, all the following criteria must

be met:

•

the instrument must be under a business model where the objective is to hold financial

instruments to collect the contractual cash flows;

•

the contractual terms governing the asset must exclusively seek cash flows of principal and

interest on the unpaid principal which must be paid on specific dates (known as Solely Payments

of Principal and Interest

-

SPPI);

If an instrument meets such criteria but is held both for sale and to collection of contractual cash flows, it

must be classed in the ‘valued at fair value’ category through other results entered directly in equity.

Instruments not falling into any of the two classification categories must be valued at fair value through

profit and loss.

Subsequent measurement of financial assets

For measurement purposes the Group divides financial assets into the following categories:

•

financial assets valued at amortised costs (primarily non-interest-bearing receivables from

customers) and

•

financial assets valued at fair value through profit and loss (primarily investments in equity

instruments for profit)

The following rules apply to these categories:

Financial assets valued at

amorsed cost

(loans and receivables)

This category includes instruments which meet the following requirements:

•

They are under a business model where the objective is to hold financial instruments to collect

the contractual cash flows;

•

The contractual terms governing the asset must refer to the Solely Payments of Principal and

Interest

-

SPPI, which must be paid on specific dates;

This category is valued at amortised

cost using the effective interest rate model and is periodically

examined for signs of expected impairment losses.

It includes current assets unless their effective term is over 12 months from the date on which the financial

statements are prepared, and Management’s intention is to hold them for a longer period until they

mature.

Financial assets at fair value through profit and loss

This category includes financial assets:

•

which there is an intention to sell within a short period in order to capitalise on short

-

term market

fluctuations (commercial por

tiolio). The Group places a limited number of shares in this category

•

which do not meet the classification criteria for some other category

•

which the Group chose at initial valuation to value at fair value by transferring the difference

arising to the results. Such an irrevocable choice can be made when in doing so eliminates any

accounting asymmetry which arises from valuation of such financial assets in a different way (such

as carrying cost) compared to related financial instruments (such as derivatives, which are valued

at fair value through profit and loss)

Assets in this category are classed as current assets.

Subsequent measurement of financial liabilities

To measure financial liabilities the Group values them at the carrying amount.

Financial liabilies valued at amorzed cost

These liabilities bear interest using the effective interest rate method.

This category includes liabilities to credit institutions and customers.

Impairment of financial assets

When the Consolidated financial statements are prepared, the Group recognises impairment for expected

credit risk losses for customer receivables.

At the end of each period for which the Consolidated financial statements are prepared, the Group

assesses whether there are signs that a financial asset or a Group of financial assets has been impaired.

Signs of impairment can include the fact that debtors or a Group of debtors face serious financial

difficulties, an inability to pay interest or the principal, the probability that they will become bankrupt or

engage in some other form of financial restructuring, and where there are observable data which indicate

that there is a measurable reduction in the estimated future cash flows.

If in a subsequent period, the impairment figure is reduced,

and the reduction can be objectively

correlated to an event atier ini

tial recognition of the impairment (such as an improvement in the debtor’s

creditworthiness) the reversal of the previously recognised impairment loss is recognised in the income

statement.

Impairment is based on expected credit risk losses associated with the probability of default within the

next 12 months, unless there is a major increase in credit risk from the time of initial recognition, where

the expected credit risk losses are recognised over the instrument's entire life.

For impairment

measurement purposes, the Group divides financial assets into the following categories based on credit

risk:

Stage 1:

This includes performing credit facilities which have no major rise in credit risks compared to the

date of initial recognition. In this stage the expected credit risk losses are recognised based on the

probability of default over the next 12 months;

Stage 2:

This includes performing credit facilities where there has been a major increase in the credit risk

since initial recognition. In this stage, expected credit risk losses are recognised over the instrument’s

entire life;

Stage 3

: includes non

-

performing/impaired credit facilities. In this stage, expected credit risk losses are

recognised over the instrument’s entire life;

The Group defines significant increase in credit risk for financial assets whose balance of receivables is

past due by more than 180 days, there are no guaranteed, there is not commitment of payment close atier

the year end, they are not receivables where final customer are governments and transnational

organizational or receivables from foreign countries past due 180 days are political & economical

instability. The Group defines default of trade receivables for customers whose balance of receivables is

past due by more than 360 days, and there are no guarantees since the entity's final customers are mainly

government or transnational organizations with remote risk of default. A major increase in credit risk arises

by comparing the risk of default on the reporting date against the risk of default on the initial recognition

date for all performing credit facilities, including credit facilities which have no past

-

due days.

Derecognition of financial assets

Financial assets (or a part of a financial asset or part of a Group of financial assets, as appropriate) cease

to be recognised when:

•

the rights to an inflow of cash resources have expired or;

•

the Group retains the right to an inflow of cash resources from a specific asset but has

simultaneously undertaken an obligation to a third party to fully pay them without major delay, in

the form of a transfer agreement or;

•

the Group has transferred the right to an inflow of cash from a specific asset and at the same time

has: (a) either materially transferred all risks and rewards of ownership or (b) has not materially

transferred all risk and rewards of ownership but has transferred control over the specific asset;

•

the Group's write off policy is when it has exhausted its legal actions against the customers

.

Where the Group has transferred the rights to an inflow of cash resources from a specific asset but at the

same time has not materially transferred all risks and rewards or control of the specific asset, the asset is

recognised to the extent of the Group’s

continuing involvement in the asset. A corresponding liability is

also recognised.

Continuing involvement in the form of a guarantee over the transferred asset is valued at either the initial

value of the asset or the maximum amount the Group may be called to pay, whichever is lower.

The Group’s

write off policy is when it has exhausted its legal actions against its customers.

Derecognition of financial liabilities

Financial liabilities cease to be recognised when the relevant obligation is cancelled or has expired. Where

a financial liability is replaced by another one from the same lender with materially different terms, or

where the terms of an existing obligation

have materially changed, the swap or change is considered to be

derecognition of the initial obligation and recognition of a new obligation. The difference with current

values is recognised in the income statement.

u.

Borrowing cost

General and specific borrowing costs that are directly a

tribu

table to the acquisition, construction or

production of a qualifying asset are capitalised during the period of time that is required to complete and

prepare the asset for its intended use or sale.

Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended

use or sale. The Group considers that a time of over 4 months is an extensive time period.

All other borrowing costs are expensed as incurred. Borrowing costs consist of the interest and other costs

that an entity incurs in connection with the borrowing of funds.

v.

Trade accounts payable

Trade payables are obligations to pay for goods or services acquired from suppliers in the normal course

of the Group’s business.

Trade payables are recorded as short

-

term liabilities where payment is made within 1 year (and/or more

if the time period is part of the Group’s normal operating cycle). If not, they are presented as long

-

term

liabilities.

Trade payables are initially recognised at fair value and are subsequently measured at the carrying amount

using the effective interest rate method.

w.

Derivatives and hedge accounting

The Group holds derivative financial instruments to hedge cash flows and fair value. Derivatives include

futures to hedge the financial risk arising from changes in the exchange rate with foreign currencies

(mainly USD).

The results from the se

tled operations of financial risk Managemen

t are recognized through profit or loss

when they are realized (foreign currency contracts). Derivatives are initially and subsequently recognized

at their fair value. The method by which profits and losses are recognized depends on whether derivatives

are designated as a fair value or cash flow hedging instrument. Derivatives are recognized when the

transactions entered into by the Group as hedges for the fair value of receivables, liabilities or

commitments (fair value hedges) or very probable transactions (cash flow hedges).

When entering into transactions the Group records the proportion between hedged assets and hedging

assets and the relevant financial risk Management strategy. When entering into the contract and

thereatier the es

timate is recorded about the high effectiveness of hedging both for fair value hedges and

for cash flow hedges. As for future transaction hedging, the probability to complete the transaction is

substantiated.

Fair value hedging

Changes in the fair value of derivatives which are defined as fair value hedges are posted through profit or

loss as are the changes in the fair value of the hedged assets which are a

tribu

ted to the risk offset.

Cash Flow hedges

The effective proportion of the change in the fair value of derivatives defined as cash flow change hedges

is posted to an Equity Reserve. The gain or loss on the non

-

effective proportion is posted through profit or

loss. The amounts posted as an Equity Reserve are carried forward to the results of the periods where the

hedged assets affect profits or losses. In cases of hedging forecast future transactions which result in

recognition of a non

-

monetary asset (e.g., inventory) or liability, profits or losses

which had been posted

to equity are carried forward to acquisition cost of the non

-

financial asset generated.

When a hedging instrument matures or is sold or when the hedging proportion no longer meets the hedge

accounting criteria, the profits and losses accrued to Equity remain as a reserve and are carried forward

to the results when the hedge affects profits or

losses. In the case of a hedge on a forecast future

transaction which is no longer expected to be realized, the profits or losses accrued to Equity are

transferred to the statement of profit or loss.

x.

Earnings per share

Earnings per share are calculated by dividing the profit a

tribu

table to owners of the Group, excluding any

costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares

outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the

year and excluding treasury shares. There were no bonds convertible into shares or other potential

securities convertible into shares that are less profitable during the reporting period, and therefore no

diluted

earnings per share have been calculated.

y.

Expenses

Expenses are recognized in the income statement on an accrued basis. Interest expenses recognized on

an accrual basis.

z.

Share buy back

When shares recognised as equity are repurchased, the amount of the consideration paid, which includes

directly a

tribu

table costs, net of any tax effects, is recognised as a deduction from equity (Treasury Share

Reserve). Repurchased shares are classified as treasury

shares and are presented in the Treasury Share

Reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as

an

increase in Treasury Share Reserve and the

resulting surplus or deficit on the transaction is presented

within retained earnings.

8.

Adoption of new Standards, Interpretations, Revisions and Amendments to existing

Standards

by the European Union (EU)

From 1st January 2023 the Group has adopted all amendments in IFRS as these were adopted by the

European Union (“EU”) which relate to its operations. These Amendments and Interpretations did not

have a significant impact on the financial statements of the Group.

The following Standards, amendments and interpretations have been issued from International

Accounting Standards Board (IASB), have been adopted by the EU and they are effective from annual

periods beginning on or atier 1st January 2023.

a.

New Standards, Interpretations, Revisions and Amendments to existing Standards

adopted by the EU

•

IAS 1 Presentation of Financial Statements

(Amendments): Classification of Liabilities as Current

or Non-current

and Non-

current Liabilities with covenants

(effective for annual periods beginning on or

atier 1 January 2024)

In 2020, the IASB has amended IAS 1 to promote consistency in application and clarify the requirements

on determining if a liability is current or non

-

current. Under existing IAS 1 requirements, companies

classify a liability as current when they do not have an unconditional right to defer se

tlemen

t of the

liability for at least twelve months atier the end of the repor

ting period. As part of its amendments, the

IASB has removed the requirement for a right to be unconditional and instead, now requires that a right

to defer se

tlemen

t must have substance and exist at the end of the reporting period. Similar to existing

requirements in IAS 1, the classification of liabilities is unaffected by management’s intentions or

expectations about whether the Group

will exercise its right to defer se

tlemen

t or will choose to se

tle

early.

On 31 October 2022 the IASB issued further

amendments to IAS 1 i.e. Non

-

current liabilities with

covenants. The new amendments aim to improve the information an entity provides when its right to

defer setlemen

t of a liability is subject to compliance with

covenants within twelve months atier the

reporting period. The amendments clarify that only covenants with which a Group

must comply on or

before the reporting date affect the classification of a liability as current or non

-

current. Covenants with

which the Group

must comply

atier

the reporting date (i.e. future covenants) do not affect a liability’s

classification at that date. However, when non

-

current liabilities are subject to future covenants,

companies will now need to disclose information to help users understand the risk that those liabilities

could become repayable within 12 months atier the repor

ting date.

The amendments also clarify how a Group

classifies a liability that can be se

tled in i

ts own shares (e.g.

convertible debt).

When a liability includes a counterparty conversion option that involves a transfer of

the Group’s own equity instruments, the conversion option is recognised as either equity or a liability

separately from the host liability under IAS 32

Financial Instruments: Presentation. The IASB has now

clarified that when a Group

classifies the host liability as current or non

-

current, it can ignore only those

conversion options that are recognised as equity. Companies may have interpreted the existing IAS 1

requirements differently when classifying convertible debt. Therefore, convertible debt may become

current.

•

IFRS 16

Leases

(Amendments): Lease Liability in Sale and Leaseback

(effective for annual periods

beginning on or atier 1 January 2024)

The IASB has issued amendments to IFRS 16

Leases

, which add to requirements explaining how a

Group

accounts for a sale and leaseback atier the date of the transac

tion. A sale and leaseback is a

transaction for which a Group

sells an asset and leases that same asset back for a period of time from

the new owner. IFRS 16 includes requirements on how to account for a sale and leaseback at the date

the transaction takes place. However, IFRS 16 had not specified how to measure the transaction when

reporting a

tier that date. The amendments issued in September 2022 impact how a seller

-

lessee

accounts for variable lease payments that arise in a sale and leaseback transaction.

The

amendments

introduce a new accounting model for variable payments and will require seller

-

lessees to reassess and potentially restate sale and leaseback transactions entered into since 2019.

The amendments confirm the following: (1) On initial recognition, the seller

-

lessee includes variable

lease payments when it measures a lease liability arising from a sale and leaseback transaction. (2)

After initial recognition, the seller

-

lessee applies the general requirements for subsequent accounting

of the lease liability such that it recognises no gain or loss relating to the right of use it retains.

b.

Standards, Interpretations, Revisions and Amendments to existing Standards

not

endorsed by the EU

The following New Standards, Amendments and Interpretations have been issued by the International

Accounting Standards Board (IASB) but are not yet effective for annual periods starting 1st January 2023.

•

IAS 7

Statement of Cash Flows

(Amendments)

and IFRS 7 Financial Instruments:

Disclosures

(Amendments)

– Supplier Finance Arrangements

(effective for annual periods beginning on or a

tier 1

January 2024)

The amendments introduce two new disclosure objectives

–

one in IAS 7 and another in IFRS 7

–

to

enable the users of the financial statements in understanding and assessing the effects of supplier

finance arrangements on an entity’s liabilities, cash flows

and exposure to liquidity risk as well as the

impact to the entity if supplier finance arrangements were no longer available.

The amendments do not define the supplier finance arrangements. Instead, the amendments describe

the characteristics of an arrangement for which an entity is required to provide the information.

Specifically, all the following characteristics should apply:

-

a finance provider pays amounts that the entity owes to its suppliers;

-

the entity agrees to pay under the terms and conditions of the arrangements on the same date or

at a later date than its suppliers are paid; and

-

the entity is provided with extended payment terms or suppliers benefit from early payment

terms, compared with the related invoice payment due date.

•

IAS 21

The Effects of Changes in Foreign Exchange Rates (

Amendments):

Lack of Exchangeability

(effective for annual periods beginning on or a

tier 1 January 2025)

The amendments, as issued in August 2023, aim to clarify when a currency is exchangeable into

another currency and how a Group

estimates a spot rate when a currency lacks exchangeability.

According to the amendments, a currency is exchangeable into another currency when a Group

is able

to exchange that currency for the other currency at the measurement date and for a specified purpose.

When a currency is not exchangeable at the measurement date, the Group

will be required to estimate

a spot rate as the rate that would have been applied to an orderly exchange transaction between

market participants under prevailing economic conditions. The amendments contain no specific

requirements for estimating a spot rate, but they set out a framework under which an entity can

determine the spot rate at the measurement date using an observable exchange rate without

adjustment or another estimation technique.

Companies will be required to provide also new disclosures to help users assess the impact of a

currency not being exchangeable to the entity’s financial performance, financial position, and cash

flows. To achieve this objective, entities will disclose information about the nature and financial

impacts of a lack of exchangeability, the spot exchange rate(s) used, the estimation process and risks

to the Group

because the currency is not exchangeable.

•

IFRS 10

Consolidated Financial Statements

(Amendments) and IAS 28

Investments in Associates and

Joint Ventures

(Amendments): Sale or Contribution of Assets between an Investor and its Associate

or Joint Venture

(effective date postponed indefinitely; early adoption continues to be permi

ted)

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and

those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate

or joint venture. The main consequence of the amendments is that a full gain or loss is recognised

when a transaction involves a business (as defined in IFRS 3). A partial gain or loss is recognised when

a transaction involves assets that do not constitute a business. In December 2015, the IASB postponed

the effective date of this amendment indefinitely pending the outcome of its research project on the

equity method of accounting.

The Boad of Directors expects that the adoption of these standards or interpretations in future periods

will not have material effect on the consolidated financial statements.

9.

Revenue

a.

Disaggregation of revenue from contracts with customers

In the following table, revenue is disaggregated by primary geographical market, major products and

timing of revenue recognition.

For the year ended 31 December

2023

2022

in euro

Restated*

Primary geographic markets

Europe

178.679.985

92.913.957

Asia

22.127.515

22.714.495

Americas

17.904.379

27.126.465

Africa

-

73.380

Oceania

11.025

66.463

218.722.904

142.894.760

Major product categories

Night

202.674.167

126.527.039

Thermal

12.233.656

13.015.333

Misc

1.699.175

688.523

Other

2.115.906

2.663.865

218.722.904

142.894.760

Timing of revenue recognition

Products transferred at a point in time

218.128.624

137.505.351

Products and services transferred over time

594.280

5.389.409

218.722.904

142.894.760

Revenue from contracts with customers

218.722.904

142.894.760

218.722.904

142.894.760

Total Revenue

218.722.904

142.894.760

3 European customers

(23%, 14% and 12% respectively)

individually comprise more than 10% of total

revenue in 2023

regarding Night vision products

(2022: 2 European customers

accounting for 18% and

10% respectively

for Night vision contracts as well).

The Group

has two divisions which are night and thermal divisions.

Segmentation is based on the fact

that the above range of products are managed separately, relevant devices have different technologies,

characteristics, and components (tubes/sensors), specifically, night vision products have image

intensification technology and thermal products have thermal imaging technology.

The Group

has outstanding customer orders records (backlog) which amount to €192,3 million as of

31.12.20223 (31.12.2022:

€253m), which are expected to be executed and recognized in revenue during

the years 2024 & 2025.

b.

Contract balances

2023

2022

in euro

Restated*

Receivables which are included in trade accounts

receivable

46.087.790

67.996.704

Contract Liabilities

(5.240.112)

(26.237.209)

Total

40.847.678

41.759.495

Analysis and movement of contract liabilies:

in euro

Client down

payments

Deferred

income

Total

Balance as at 1 January 2022 as restated

5.618.148

-

5.618.148

Revenue recognised

(5.618.148)

-

(5.618.148)

New contract liabilities outstanding at year end

20.456.989

5.780.220

26.237.209

Balance as at 31 December 2022 as restated

20.456.989

5.780.220

26.237.209

in euro

Client down

payments

Deferred

income

Total

Balance as at 1 January 2023

20.456.989

5.780.220

26.237.209

Revenue recognised

(16.297.102)

(5.780.220)

(22.077.322)

New contract liabilities outstanding at year end

957.051

123.172

1.080.223

Balance as at 31 December 2023

5.116.938

123.172

5.240.110

10.

Income and expenses

a.

Other income

in euro

2023

2022

Subsidies received

370

1.974

Unused provisions

-

130.720

Various revenues from sales

11.026

91.549

Revenue from disposal of property, plant and equipment

20.030

53.517

Income from rent

119.700

135.106

Other income

345.515

1.073.550

Total

496.641

1.486.416

Regarding 2022, €735.000 relates to the reversal of sales commissions.

b.

Other expenses

in euro

2023

2022

Taxes and duties

(1.247

)

(3.536

)

FX differencies

-

8.964

Prior years' expenses

(65.439

)

(55.278

)

Other expenses

(25.466

)

(301.481

)

Total

(92.152

)

(351.331

)

c.

Expenses by nature

2023

2022

in euro

Restated*

Change in inventories

(130.142.070)

(78.215.503)

Employee wages and salaries and other benefits

(10.320.191)

(7.559.137)

Third party remuneration and expenses

(16.243.688)

(10.824.374)

Taxes & duties

(121.177)

(160.654)

Depreciation & amortisation

(1.270.084)

(1.475.887)

Foreign exchange losses / (gains)

107.405

(617.678)

Sundry expenses

(3.138.056)

(3.029.410)

Provisions

(5.356)

(20.339)

Transportation expenses

(1.184.415)

(1.052.867)

Travelling expenses

(1.072.190)

(841.521)

Total cost of sales, administrative, selling and distribution

and

research and development expenses

(163.389.822)

(103.797.370)

The independent auditors’ remuneration regarding the statutory audits of the annual financial statements

amounted to €232.089 (2022: €68.854). Non audit services provided totaled €265.440 (2022: €22.690).

Third

-

party remuneration and expenses mainly consist of production subcontracting fees and sales

commissions paid to agents.

Sundry expenses mainly comprise utilities, repair and maintenance fees, insurance fees, car fleet costs,

hospitality and advertising expenses.

Staff costs

in euro

2023

2022

Salaries

7.555.270

5.374.332

Employer's contributions

1.673.295

1.229.112

Insurance

111.972

89.805

Staff leaving indemnity

23.322

19.645

Other benefits

1.296.284

1.055.396

DnD Capitalisation

(339.952)

(209.153)

Total

10.320.191

7.559.137

The Group employed 272 employees on average in 2023, while the respective amount was 213 throughout

2022.

11.

Net finance costs

For the year ended 31 December

in euro

Note

2023

2022

Bank deposit receipts

297.831

(281)

Dividends received

-

17.046

Gain from sales of financial asset

188.899

-

Foreign exchange gains

182.039

-

Other financial income

12.350

-

Finance income

681.119

16.765

Interest on long

-

term loans

27.

(217.263)

(165.603)

Interest on short

-

term loans

27.

(2.264.423)

(644.534)

Foreign exchange losses

(3.063.483)

(1.001.124)

Other finance expenses

(1.557.384)

(608.928)

Interest on lease liabilities

33.

(35.034)

(32.358)

Finance expenses

(7.137.587)

(2.452.547)

Net finance costs recognised in profit or loss

(6.456.468)

(2.435.782)

12.

Earnings per share

a.

Profit for the year

atier tax

Restated*

in euro

2023

2022

Profit for the year after tax

36.095.588

30.000.618

b.

Weighted

–

average number of ordinary shares (basic and diluted)

2023

2022

Issued ordinary shares 1st January

200.000

200.000

Issued ordinary shares 14th November

400.000

-

600.000

200.000

Share split from €1 to €0,01 14th November

60.000.000

20.000.000

Weight average number of ordinary shares at 31 December

60.000.000

20.000.000

Earnings per share

0,6

1,5

During 2023, the number of ordinary shares outstanding increased as a result of a share split. Therefore,

the calculation of basic and diluted earnings per share for all periods presented was adjusted

retrospectively.

On November 14, 2023, the Group's general shareholder meeting resolved to affect a share split of 1 to

1

00 and resolved to increase the share capital from €200.000,00 to €600.000,00 using Group

retained

earnings and at the same time reduce the nominal value per Share from €1,00 to €0,01, increasing the

number of existing shares from 200.000 to 60.000.0

0

0.

13.

Employee benefits

a.

Actuarial assumptions

in euro

2023

2022

Discount rate

3,0%

3,5%

Future salary growth

2,4%

2,4%

Inflation rate

2,1%

2,2%

Longevity

EVK 2000

Incapability

EVK 2000 * 50%

Retirement age

62

The defined benefits liabilities derive from the requirements of Law 2112/1920 as modified by Law

4093/2012. According to decision adopted in May 2021 by the IFRS Interpretations Commi

tee

differentiates the way in which the Basic Principles of IAS 19 were

applied in Greece.

The application of this final decision to the a

tached consolida

ted Financial Statements results in the

distribution of benefits over the last 16 years until the retirement date of the employees following the

scale of Law 4093/2012. Law 4808/2021 equates the compensation of salaried employees with salaried

employees.

b.

Defined benefit liability

The employee benefits analysis of the Group is the following:

in euro

2023

2022

Balance at 1 January

162.026

162.035

Included in Profit or

Loss

Current service cost

52.837

29.725

Interest cost

5.316

1.094

58.153

30.819

Included in Other comprehensive income

Actuarial loss / (gain) arising from:

Financial assumptions

3.676

(13.663)

Experience adjustment

(3.359)

(2.338)

317

(16.001

)

Other

Benefits paid

(22.176)

(14.827)

Balance at 31 December

198.320

162.026

The actuarial estimate of obligations has been prepared in accordance with the relevant legislation

contained in Laws 2112/1920 and 3026/1954 and amended by Laws 4093/2012, 4336/2015 and

4194/2013.

They are pension benefits specified in the relevant legislation paid once the employee retires. Greek labour

law provides for compensation when one retires from work. The amount is based on length of service at

the Group, taking into account the pay on the

date of departure.

Compensation for retirement is not funded from special funds.

The Group has not developed a special benefits plan for employees other than those specified in the

relevant legislation, to be used for the payment of benefits to all employees who leave the Group.

The present value of the defined benefit obligation, the normal cost of current employee and, where

appropriate, the cost of past service are calculated using the projected unit credit method (IAS 19).

During 2022 and based on a decision of the International Financial Reporting Standards Interpretations

Commitee (IFRIC) on

the application of IAS 19 to this actuarial liability, the actuarial liability was allocated

in such a way that it is now recognised

only in relation to the last 16 years of service before retirement.

c.

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding

other assumptions constant, would have affected the defined benefit obligation by the amount shown

below:

Increase

Decrease

in euro

2023

2022

2023

2022

Discount rate (0,5% movement)

176.213

148.122

183.091

153.216

Future salary growth (0,5% movement)

183.094

153.232

176.179

148.083

14.

Income taxes

The Group's income tax differs from the theoretical amount that would result using the current tax rate

on the Group's results. The difference is as follows:

According to the Swiss Federal Tax Administration, Theon AG paid the amount of € 1.457.391

as

withholding tax on dividends paid to Theon PLC.

Regarding the Greek Subsidiary “Theon Sensors SA”: (“Greek Subsidiary”)

The tax rate on profits from the business activity of legal persons in Greece for the year 2023 based on

Article 120 of Law No. 4799/2021 amounts to

22%

(2022: 22%).

The Group's income tax differs from the theoretical amount that would result using the current tax rate

on the Group's results. The difference is as follows:

2023

2022

in euro

Restated

*

Current tax

(13.244.295

)

(8.421.821

)

Deferred tax

(583.581

)

421.200

Previous year's tax expense

56.747

204.546

Tax Expense

(13.771.129

)

(7.796.075

)

Reconciliation of effective tax rate

2023

2022

in euro

Restated

*

Profit before tax

49.866.717

37.796.693

Tax rate using the Group's domestic tax rate

40,4%

(20.161.579

)

26,7%

(10.093.414

)

Deductible temporary diffs (no DT recognition)

(192.450

)

1.298

Expenses not recognised for tax purposes

(16,1%)

8.050.599

(5,6%)

2.100.453

Prior year income tax

(0,1%)

56.747

(0,5%)

204.546

Reversal of prior year deferred tax

0,1%

(50.781

)

-

Other movements

(16.274

)

(8.958

)

Overseas taxes

2,9%

(1.457.391

)

-

-

Tax Expense

(13.771.129

)

(7.796.075

)

Effective tax rate

27,6%

20,6%

The Greek Subsidiary has obtained tax compliance certificates with unqualified opinion by its certified

auditor for each fiscal year from 2011 up to and including 2021 according to Greek tax laws (years 2011

-

2013 pursuant to the provisions of Article 82 of

Law No. 2238/1994 and years 2014

-

2022 pursuant to the

provisions of Arcle 65Α of Law No. 4174/2013). Tax compliance cerficate for the year ended 31

December 2023 is sll in progress and expected to be completed within 2024.

The Greek Subsidiary does not expect addional taxes and surcharges to occur in the context of the audit

of the Greek tax authories for the years 2016 up to 2022. Accordingly, based on risk analysis criteria and

as part of the audits carried out on companies that have received tax compliance cerficates with

unqualified opinion by a cerfied auditor, the Greek subsidiary may be selected by the Greek tax

authories for a tax audit. The Group’s Management esmates that no significant differences will arise

from this assurance work.

The Greek subsidiary is audited by the Tax Authories based on an audit instrucon served on it at the

end of January 2023. This audit covers the 2018 and 2019 financial years. That audit is sll under way and

the Greek subsidiary has not received any other audit instrucon from the tax authories for the 2020 to

2022 financial years. Addionally, the Management of the Group esmates that, in case of possible re-

audits by the tax authories, no addional tax disputes will arise with a significant impact on the

consolidated financial statements.

The tax rates on the profits of the rest subsidiaries of the Group, based on their country of tax residence

are as follows:

•

Theon Internaonal PLC, Cyprus:

12,5%

•

Theon Sensors AG, Switzerland:

11,9%

•

Theon Sensors MEA FZC, United Arab Emirates:

0%

•

Theon Sensors Far East Ltd, Singapore:

16%

•

Τ Industries DK ApS, Denmark:

23,5%

•

Τ Industries Inc, USA:

35%

15.

Deferred tax

2022 Restated*

Recognised in

Balance at 31 December

in euro

Net

balance at

1 January

PnL

OCI

Net

Deferred

tax assets

Deferred

tax

liabilities

Trade receivables

34.828

281.290

-

316.118

316.118

-

Leases liabilities

241.286

(47.337

)

-

193.949

193.949

-

Right of use assets

(234.672)

48.848

-

(185.824)

-

(185.824)

Derivatives

7.740

(16.951)

-

(9.211)

-

(9.211)

Employee benefits

32.091

4.562

(3.520)

33.133

33.133

-

Deferred income

160.042

168.121

-

328.163

328.163

-

Trade payables

(27.209)

(56.420)

-

(83.629)

-

(83.629)

Other items

(17)

39.087

-

39.070

39.070

-

Net tax assets (liabilities)

214.089

421.200

(3.520)

631.769

910.433

(278.664)

2023

Recognised in

Balance at 31 December

in euro

Net

balance at

1 January

PnL

OCI

Net

Deferred

tax assets

Deferred

tax

liabilities

Property, plant and equipment

-

(131.680)

-

(131.680)

-

(131.680)

Trade receivables

316.118

(288.610)

-

27.508

27.508

-

Leases liabilities

193.949

(12.698)

-

181.251

181.251

-

Right of use assets

(185.824)

16.168

-

(169.656)

-

(169.656)

Derivatives

(9.211)

(1.566)

-

(10.777)

-

(10.777)

Inventories

-

125.704

-

125.704

125.704

-

Employee benefits

33.133

6.301

70

39.504

39.504

-

Provision / accruals

-

44.537

-

44.537

44.537

-

Deferred income

328.163

(328.163)

-

-

-

-

Trade payables

(83.629)

40.044

-

(43.585)

-

(43.585)

Other items

39.070

(53.618)

-

(14.548)

-

(14.548)

Net tax assets (liabilities)

631.769

(583.581)

70

48.258

418.504

(370.247)

16.

Inventories

2023

2022

in euro

Restated*

Finished goods and work in progress

16.578.514

12.284.889

Raw materials and various materials

41.157.191

18.900.712

Raw materials and various materials in transit

5.877.757

2.835.973

Inventories

63.613.462

34.021.574

In 2023, inventories of €130,1m (2022: €78,2m) were recognized as an expense during the year and are

included in Cost of Sales.

During the year ended 31 December 2023, the Group wrote down finished goods inventory by €915.637

(2022: €302.305). The write

-

down was included in cost of sales in the consolidated financial statement of

profit or loss.

The increase in inventories is due to increased demand for the Group’s products.