Good afternoon. We welcome you to the Sonae's nine months 2022 results conference call. During the presentation hosted by Mr. João Dolores, Sonae's CFO, all participants will be on a listen-only mode. There will be an opportunity to ask questions after his presentation. If you wish to ask a question during the Q&A session, you may do so by pressing the star key followed by one on your telephone keypad. If you're experiencing any difficulty in listening to the conference at any time, please make sure you have your headset fully plugged in, or alternatively, please try calling from a different device. I'll now hand the conference over to Mr. João Dolores. Please go ahead, sir.
Hello, everyone. Welcome to Sonae's results conference call for the third quarter of 2022. As usual, besides myself and the investor relations team, we have on the call Cristina Novais from Bright Pixel Capital, Hugo Martins from Zeitreel, Luís Mota Duarte from Sierra, Paulo Simões from Worten, and also Rui Almeida from MC. As you all know, the last months have been quite challenging as the geopolitical and macroeconomic instability continues to provide a challenging backdrop with significant impacts on our businesses and on our daily lives. Energy prices persisted at very high levels, and supply chain disruptions were exacerbated by the war in Ukraine and continued to impact both our businesses and our customers. As such, the inflation rates escalated again in the quarter, driven by energy, but especially by food inflation, which reached new heights at the end of September.
We saw inflation of around 15% in food retail in Q3 and 11% in total in the first nine months of the year. It's worth mentioning that the growth in consumer food prices has been much lower than in food production prices, showing that retailers have been absorbing parts of the purchase price increases in an effort to protect families and their budgets. Additionally, reference interest rates returned to positive ground and started already to impact consumer budgets. As a consequence, equity markets suffered a significant hit in Q3, and Sonae's share price fell roughly 30% from June to September.
We've since seen a solid recovery in the last few weeks, and our share price have increased substantially and is now close to 1 EUR per share again, which still represents a large discount versus the intrinsic valuation of our assets, as we will see in a minute. Regarding our portfolio management activities, Bright Pixel continued to actively manage its investments with around EUR 20 million invested in portfolio expansion and also a number of follow-ons in existing assets. In Q4 already, the sale of Maxive to Thales was finally concluded and will represent an important level of cash proceeds for the group.
Also, as you know, at the end of Q3, Sonaecom announced the termination of the partnership at ZOPT, a move which is fully aligned with our intention to remain a reference shareholder of NOS and to ensure the adequate conditions for the company to deploy its strategy. In the quarter, we also continued to increase our direct shareholdings in NOS, and we now own a stake which is equivalent to 37.4% split between Sonaecom and Sonae. We are confident that this level of shareholding is adequate for the level of economic exposure and influence we want to maintain in the company. Sonae's net asset value amounted to almost EUR 4 billion at the end of September, 3% above the level we saw at the end of June.
This was mainly backed by the operational improvements in our businesses and also by the increased NAV at both Sierra and Bright Pixel. Sierra's NAV increased 3% versus June, overcoming EUR 1 billion, mainly driven by the positive direct results in the period, a positive FX evolution, and also capital gains from asset sales. Sierra's direct result performance was driven by a good set of operational indicators, which continued to recover well from pandemic levels, with shopping center retail sales remaining significantly above 2019 levels, which shows the quality and resilience of the company's real estate portfolio and also the services, business lines which performed quite well.
Concerning Bright Pixel, the active NAV stood at EUR 457 million at the end of September, implying a 10% growth versus June, which reflects the impact of recent acquisitions as well as the positive evolution of the value of existing investments. NAV continues to be more than double the amount of invested capital in this sub-holding. NOS had a negative contribution to Sonae's NAV evolution in the quarter as the pressure on equity capital markets also weighed on the company's share price. In any case, NOS had a quite solid performance in Q3 with strong growth and improving profitability. Now let's take a look at our consolidated results.
Sonae's consolidated turnover increased 15% year-on-year in the quarter, surpassing EUR 2 billion, mainly fueled by MC, but with important contributions also from the other retail businesses, which led to a 10% growth in the first nine months to EUR 5.5 billion. MC continued to reinforce its leadership position in the context of rising food inflation that more than offset the decrease in volumes in the food format. Non-food formats continued to benefit from the normalization of consumption after the pandemic restrictions back in 2021. Total turnover increased 16% year-on-year in Q3 with a like-for-like evolution of 13.3% in the business.
Worten also had an important contribution towards our consolidated top-line performance with a double-digit growth to EUR 315 million in Q3 and a like-for-like of 8.5%. Fostered by the positive contribution of seasonal category sales and in year-to-date terms, the positive trend of the last two quarters pushed turnover to grow 4% in total and Worten to continue to reinforce its market share in the Portuguese market, both online and offline. As for Zeitreel, in Q3, we continued to witness a recovery to pre-pandemic levels. Total turnover grew by 8% year-on-year in Q3 to EUR 102 million, with a particularly positive contribution from retail operations. A quick note regarding our online sales.
Despite the deceleration of e-commerce sales in the market, our businesses continue to develop their digital value propositions, and Sonae's overall online sales actually grew year-on-year in Q3 as we continue to lead our markets in both the physical and digital channels. Consolidated underlying EBITDA increased 7% year-on-year to EUR 181 million. However, with a lower margin versus last year, driven by the cost pressures that we are feeling across all businesses, mainly in what regards energy and also due to the investment in prices to ensure the most competitive offerings in the market. MC in particular saw its operating margin decrease by 100 basis points to 9.9% and was the main driver of the group's 664 basis points decrease in underlying EBITDA margin.
Still, our businesses were able to sustain these pressures with an outstanding level of resilience and a clear long-term perspective on our value propositions and also our competitive positions. Consolidated EBITDA reached EUR 224 million in Q3, 5% below last year, mainly due to the pressure on our operating profitability and also to the capital gain from the sale of Maxmat back in 2021. Therefore, our EBITDA margin contracted by 2.4 percentage points to 11% in the quarter. Direct results in Q3 stood at EUR 101 million, a decrease of EUR 14 million year-on-year following the EBITDA contraction we saw before. Indirect result was slightly above last year in the quarter and benefited mostly from Bright Pixel portfolio evaluations. Therefore, net results in total reached EUR 92 million, 4% below last year.
Overall, despite the challenging context and also the strong level of investment in the quarter, both operational and financial investment, the group registered a healthy level of cash flow generation that reached EUR 81 million. Consolidated net debt actually increased year-on-year, but this was well expected given the level of M&A CapEx that was deployed in the last 12 months, namely with the acquisition of Grosvenor 10% stake in Sierra, the investment in NOS, the acquisitions and follow-on investments of Bright Pixel Capital, and also the investments made by Sierra to execute its strategy. Our financial position allows us to continue to invest, to reinforce our value propositions, ensure our portfolio companies have the best conditions to succeed, and also create value in the long run. If we look at our key leverage ratios, these remain at quite conservative levels.
MC and NOS continue to have investment grade leverage levels. Sierra continues to show a prudent level of loan to value, and Sonae's own LTV remains well below the 15% threshold. The group's capital structure remains quite solid, with comfortable liquidity levels, and we are fully financed until early 2024 and with an average cost of debt of around 1%. Going forward, the outlook remains uncertain, obviously. Energy supply, particularly of natural gas, will remain a source of concern in most countries, while inflation rates are expected to stay high for a while, forcing central banks to continue to raise interest rates. However, given our financial position and the quality of our portfolio and our team, we continue to be well positioned for what's ahead. Thank you. That's it from that for now. You can now open the session to Q&A.
Ladies and gentlemen, the Q&A session starts now. As a reminder, if you wish to ask a question, please press star followed by one on your telephone keypad. Our first question comes from José Rito from CaixaBank. Please go ahead.
Yes. Hi, good afternoon. I have one question on Sonae MC. What is your view in terms of food inflation over the coming months? Should we expect that food inflation continues to increase? And on these environments, any reason to assume that EBITDA should not grow over the next quarter? We have been seeing that despite the margin dilution, the top line has been more than offset, and this EBITDA has been increasing. Some view on how to expect this to evolve over the next quarter. And finally, on hedging, energy hedging, if you have already contracted anything going into 2023. That will be my questions on Sonae MC, then I can come back later.
Okay. Thanks, José. I will hand it over to Rui to tackle the first question on MC.
Hi, José. Well, regarding the first question, it's very difficult to answer to that question because frankly, we don't know. Well, as João said a while ago, the inflation rate continues to increase in Portugal. In fact, in the third quarter, we reached 15% in terms of food inflation in our stores and also in the market. In the last few years that we are witnessing in our stores, the inflation rate is not decreasing. The prices continue to go up very aggressively in the last months. We frankly don't know what will happen in the future.
What we can see, and is very important, is the inflation in the producer side is much higher compared to the inflation on the consumer side. We generally measure the inflation in our stores, especially the inflation on consumer side, which is in last quarter was pretty much 15%. If we measure the inflation on the producer side, in accordance with data that the National Institute of Statistics in Portugal is providing us, the inflation in the price index from the producers is much higher. It's almost reaching levels of more than 25%. Yes, the inflation is not giving any sign that will start to slow down. It's giving some signs that it will prevail for very high in the future, as well said by again.
We need to cope with that situation in the future. It's again, frankly, we don't know. We are now looking to the market. We are reacting to what is happening in the market. As I mentioned a while ago, again, we are absorbing part of the inflation that we retailers are absorbing part of the inflation that we are now having in the market. Production is increasing more than we are seeing at the selling side. In terms of EBITDA figures. Well, frankly, we, as I mentioned to you in the very beginning of this year, we fight to continue to increase, it's our ambition to continue to increase the EBITDA figures, at the maximum, optimizing all the operation that we have.
If the margin, the EBITDA margin will decrease as a percentage of the NAV probably, because we are focused in EBITDA margin in Euros, and that's probably what will happen. We again, we are continuously focused in EBITDA in Euros and in free cash flow in Euros as well. Again, we are focused in maintaining our assets very well profitable and very attractive. What we will have in the future, well, frankly, it's very soon to give you a clue about what will happen in terms of EBITDA figures. In terms of energy, for 2023, we will have roughly 55% of our energy totally hedged in our portfolio of assets. Thank you.
On the energy, is 25%, how it compares to 2022? How much was the percentage that was hedged at the beginning of the year?
Wait. Sorry, I didn't understand. Could you repeat your question, please?
You mentioned that 25% is hedged in 2022.
No. In 2023 is, will be 55%.
And how much was this year at the beginning of 2022?
Well, it was at the beginning, it was about 20%, as I mentioned in the very beginning of this year.
Okay. Thank you.
The next question comes from the line of João Pinto from JB Capital Markets. Please go ahead.
Hi. Good morning, everyone, and thanks for taking my questions. On Sonae MC, on the 100 basis points fall in EBITDA margin in the third quarter, can you tell us how much of it was gross margin drop? I'm just trying to understand the different drivers of trading down and price investments versus OpEx inflation. Also, could you elaborate on the trading down in Portugal, which changes you're seeing in the consumer behavior? And finally on capital allocation, you have increased your position this year in NOS. Do you plan to increase further? You're happy with your position? I mean, just to better understand your capital allocation. Thank you.
Thank you, João. I'll take the capital allocation question first, and then I'll hand it over to Rui to answer the two questions on MC. So as I mentioned at the beginning, we currently have a position in NOS, which is roughly around 37.4%, direct and indirect stake in the company. We feel comfortable with that level of exposure. We feel that that level of economic exposure, together with the level of influence that we have in the company, is sufficient for us to ensure that the company has the right conditions to execute its strategy. Our short-term plan is not to further increase our exposure to the company right now. Rui, do you wanna take the MC questions?
Sure. Hi, João. Well, two questions.
Two very important questions. Well, starting by the trading down. Trading down for us is the sort of things that is happening. Well, the first measure that we are witnessing in terms of trading down is our private label is gaining some weight. In fact, comparing to the third quarter that we had in last year, the private label is accounting for more three percentage points in terms of weight in our portfolio of products. Again, speaking only of fast-moving consumer goods, because, as you may know, it's very difficult to give you a figure for private label in terms of fresh produce and also in Bazaar. Because covering Bazaar, the majority of the brands are totally controlled by us.
That's the figure. Then I'll just give you some figures about fast-moving consumer goods in order to have you very or at least simple figures to compare to other players. Because that's probably when we compare to other players is only in fast-moving consumer goods. What is happening at the private label in our stores is the weight of private label in our stores is increasing significantly. Again, it's very difficult to give you proper figures regarding the trading down. For instance, in terms of fish, we are witnessing that there are certain types of fishes like sole, bass, bream, et cetera, we are selling less than we were selling in terms of kilos comparing to last year.
Because they are noble fishes and more expensive fishes and people are trading down that consumption of fish to less expensive fishes. For instance, in terms of meat, we are witnessing that people are preferring to buy pork and instead of buying beef. That's another issue that for instance, we are witnessing in our stores. Again, in terms of fruits, well, they don't buy much tropical fruits, such as grapes comparing to what they were buying last year. We are seeing that situation.
As you may understand, those fruits are more expensive and give us much more levels of EBITDA figures in Euros, comparing to what we were having in last year. Again, we are selling quite well, and we are doing quite well. We are increasing the level of customers in our stores, and we are doing quite well, and we are appreciating very, very much the value proposition we are offering. Consumers are also appreciating the value proposition they are receiving. This combination is quite positive for us. In terms of gross margin, I'll just give you some figures. In the last quarter, we decreased our EBITDA margin by one percentage point.
Half of that figure is pretty much explained by the increasing very dramatic increase in prices in terms of energy. It's due to the weight of energy that we have in our company. We also have efficiency gains that compensate part of the decrease we have in commercial margin in terms of due to the investment in prices that João mentioned a while ago, in order to continue to be more effective in our value proposition. Also due to the fact that the trading down because due to this trading down effect, mainly due to the fact that we are selling more at private label.
As you may understand, in commercial terms, the gross margin is pretty much difficult to define, to measure. The fact that our private label is less expensive comparing to the suppliers brand, and the operation costs due to deal with those products in our stores are pretty much the same. The EBITDA margin of the private label is lesser comparing to the suppliers brand. It is one of the reasons that our margin is being impact by this trading down phenomenon. The majority of this impact in terms of EBITDA is related to the energy costs we supported during the third quarter of this year. Thank you.
Thank you. Thank you very much, Rui. If I may just one question on Worten, because we saw a great acceleration between the second quarter and the third quarter. I would like to know, to have some color on the drivers for this good sales performance in the third quarter.
Sure. Paulo, do you want to take that?
Yeah. Hi, João. Well, the main driver, as João already mentioned, was the seasonal category sales. We had a particularly hot summer, and that really drove sales significantly. That was good. Also inflation helped in terms of value of euro sold, also helped. Those are the two drivers, inflation and seasonal categories.
Many thanks.
Sorry, last one, which is important. We gained market share. It's also important to say we have been able to gain market share in all geographies, both online and offline. It was a good performance also operational from the company, of course.
Yes, I would-
It's very clear.
I would stress this last point. I think it's important to mention that Worten has been gaining market share both offline and online. The execution of its strategy, which leverages an omni-channel experience with an expansion of categories also in the marketplace and a very strong offering in terms of services, has been quite instrumental and successful in ensuring the performance of the business in the last couple of quarters.
Thank you very much.
Thank you, João.
The next question comes from the line of António Seladas from AS Independent Research. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. Three questions. The first two related with Sonae Sierra. If you could provide some breakdown on capital spending or explain why the figures were so high. Second question is related with the yields that have been increasing. Should we assume that NAV will go down by the end of the year or not necessarily because your execution has been also strong? Really nice. Very strong. The third question is related with costs about Sonae MC, and sorry to insist on this issue, but it's important as you can imagine. From my understanding, or if you can explain, you cover 55% of the energy that you're going to consume in 2022 to 2023 was already hedged.
That it means that your energy bill will go down versus taking into consideration, for instance, the current energy prices or not necessarily? Thank you very much.
Okay. Thank you, António. I will hand it over to both Rui and Luís to take the questions. I would just mention that regarding this last question, I mean it's no certainty that our energy bill will go down obviously, because half of our energy consumption is not hedged, and we don't know what the evolution in the market price will be. Obviously we are more protected. We are more confident also because we are not only hedging a significant part of our consumption, but we are also deploying a number of energy efficiency measures, which are quite important. We are increasing, for instance, the deployment of photovoltaic panels in our facilities as well. This all contributes to hedge the risk.
Obviously, we do not know what's going to happen in the market in the next year. Our actual energy bill at the end of 2023 will be very much dependent still on what happens in the market. I will ask Rui to comment on the sector and also for Luís to comment on the other question.
From my side, I don't have anything to add to your comment, Luís. Totally correct. Again, the most important for us is we set up several PPAs, power purchase agreements. We are totally committed to in order to give some commitment in terms of energy. In terms of energy, we are basically buying, agreeing to buy green energy. These power purchase agreements are based on solar energy, wind energy, and also electric energy. That is totally due to that situation.
We set up several agreements with several companies in order to buy those or in order to have those power purchase agreements set up for the next five to 10 years.
Nevertheless, the prices for the PPAs are-
António,
Are below the current stock prices, I guess.
Exactly. For those PPAs, exactly. They are below the current prices. Yes, i t's true. But the problem is that quite frankly, we don't know what will happen in the other 45% of the consumption that we'll have 'cause it is in spot market. I mean, again, in the spot market, we know we don't know what will happen on average, in terms of average that we will pay in the next year. But again, we have 55% hedged for next year.
Yes. I understand. It's just asking you. We assume the current energy prices will stay for 2023. I guess that your energy bills will go down. What I was asking. Okay.
Yes. That's what. Yeah, António. That's what we are expecting.
Okay. Thank you very much.
Hey, Luís.
Okay. Good afternoon. António, to your first question, I mean, we set up a strategy roughly a year ago, and what you're seeing now is the execution of that strategy. We're making investments across the different growth strategies that we had identified. We're talking about growth investments growth CapEx in the typical areas like in development and investment management, which can be investment vehicles or other types of real estate related investment strategies. So it's growth and it's completely core to our strategy. The other area I would say. Sorry, the other question is a much more difficult question because I mean, looking at purely the fundamentals, if we look at shopping centers today, we are seeing month after month, the highest sales that we've ever seen in our shopping centers.
We are performing significantly above 2019 levels. We have real growth in our centers. From a resilience point of view, from a COVID impact point of view, we're very comfortable that the shopping centers have returned and have exceeded 2019 levels on a consistent basis. We're seeing that throughout on a month-to-month basis. From a risk profile point of view, shopping centers have been intact and recording strong performance. If we look at more macroeconomic figures, if you look at the spread of yields against the risk-free rate, and yes, we've all seen the risk-free rate increase, but we've also seen the risk-free rate decrease over time, and yields have not followed that.
If we just look at yields in shopping centers compared to the risk-free rate, we are very close to what the average spread has been over the last many years. If we also look at the spread of shopping center yields against other real estate sectors, we are at a record spread, which means that there is a significant gap between shopping center yields and other asset classes, which in reality, what I'm saying, purely looking at fundamentals, there is a strong argument to say that shopping center yields should not be affected by the current market dynamics. Having said that, given sentiment and given general macro sentiment, we are expecting yields to expand.
In our December evaluations. I have to emphasize that it's a reflection of sentiment, and of simplification rather than anything related with fundamental performance of this asset class.
Okay, thank you, Luís. Thank you, António, for your questions.
The next question comes from the line of Artur Amaro from CaixaBank. Please go ahead.
Hi. Good afternoon, everyone. I think most of the questions have been answered. Just a quick one if you can give us an opinion about the current fuss regarding the possibility of the Portuguese government creating a special tax on abnormal profits, whatever that means for the retail sector. That would be my first question. The second one, if I understood correctly, you said that 55% of your energy costs are covered for next year. If we assume that the energy prices won't go up much more, could we see a stabilization of the EBITDA margin next year? That would be my second question. Thank you.
Okay, thank you, Artur. Maybe I'll cover the first question, and then I'll ask Rui to comment on your second one. You know, on the first question, look, we still don't know how this tax will be implemented, and what the impact for Sonae will be. What I can tell you is that we do not recognize the concept of abnormal or excessive profits. We are not seeing extraordinary profits in any of our businesses that result from taking advantage of the inflationary context. On the contrary, as you saw, we are feeling a tremendous pressure on our cost base, and we are seeing margins actually deteriorate. So I think we should really demystify this idea.
We continue to operate in an extremely competitive market where all the players are fighting for market share and trying to offer the best value for money to consumers. This context, together with very high energy costs, places a huge pressure on profitability. The image that some people are trying to create, I believe is simply not true. I would also add that the food retail sector was essential to support the country during the pandemic period with very difficult operational challenges, additional costs. We are now being faced with another very challenging context, and we are trying to mitigate the impact of inflationary pressures on consumers, as Rui rightly pointed out. Talking about excessive profits really makes no sense to us.
I will ask Rui to cover the topic on energy costs. Rui.
Hi, Artur. Thank you for your question. Well, in fact, as I mentioned a while ago, we have roughly 50% or 5% of our energy consumption for next year to hedge. Yes. If the prices in the spot market are to maintain in the next year with the prices at levels we have today, yes, we have a sort of an advantage, a very significant advantage for next year. If the margins will stabilize or increase, frankly, we don't know because it will depend on the market evolution, what the reaction, what will happen in terms of evolution of prices, trading of phenomena, et cetera, et cetera, et cetera. In fact, I tend to agree with you.
We have an advantage comparing in terms of energy prices to this year. Yes.
Thank you very much. Just another quick one, if I may. Can you give us a little, an idea of how much, what's the percentage of the promotions on your side? I remember by the time of the IPO, the figures that were available is that roughly we would have something around 55% of promotion-
Exactly.
of the way to promotion.
Exactly. Yes.
Sorry.
Yes. Yes. As in the figures, I've kept pretty much basically maintaining it 50%-55% in our company.
Okay.
On average on the market are pretty much the same, 50%, you know, slightly above or less than those figures, but we maintain those figures. We are maintaining those figures in terms of policy and in terms of value proposal that we are offering it to our customers.
Okay. Thank you very much. That's it from my side.
Thank you.
Thank you, Artur. I believe we have a question on the chat. The question is from Teresa Rocha, and it reads: Is it possible to share the current levels of MC and Worten market shares and their recent evolution? I will maybe ask Rui and Paulo to briefly comment on the recent evolution of the market shares of both businesses. Rui, do you want to start with MC?
Sure. As I mentioned in a lot of the previous conference calls we had with the investors, it's very difficult to give you a proper figure regarding the market share. There are several institutions that are offering some figures, and we follow generally Nielsen figures to measure the evolution of our market share. In fact, in the first nine months of this year, our market share is increasing by 30 basis points comparing to last year, which is fantastic. We are increasing market share.
In fact, one figure that we are getting is even we are increasing market share in a like-for-like basis, which is very positive. To give you a proper figure about our market share. Well, according to the internal research that we do, our market share is roughly above 24%. But again, there are no institution that is providing us with a very scientific figure regarding the market share. We have some figures, but it depends on the poll or it depends on the sample that they are getting. The correct figure for market share will be very difficult because we don't have much accurate information from all competitors or all players in the Portuguese market.
Thank you.
All right. Paulo, do you wanna touch upon the Worten's evolution in terms of market share?
Sure. We have the same difficulty as Rui was mentioning. It's very difficult to have a clear market share number. Anyway, I've mentioned in the past, Worten is around 30% market share in Portugal and has been gaining market share consistently as far as our estimates are telling us. We usually follow the GfK panel, which is a subset of the market. It doesn't cover the full market, then we try to estimate how the full market is evolving. The gain of market share in 2022 is around 0.4 percentage points, and this follows a gain of around one percentage point last year. Quite good performance of the company in terms of market share gain, as I mentioned before.
Thank you, Paulo.
The next question comes from the line of José Rito from CaixaBank. Please go ahead.
Yes, hi again. I have three new questions. The first one on NAV for Bright Pixel. If you can provide NAV evolution excluding new investments. I would like to have sense of how much was the like-for-like evolution, if possible. Because there's always capital increases, new investments, assets being sold. If you can say how much was the NAV evolution excluding all these M&A activity. And also related with this, what could be the impact on the NAV of Bright Pixel related also with the rise in interest rates? We have been seeing a decline in asset valuation, startups, with layoffs. My question is, if this could also impact the NAV of Bright Pixel. That would be my first question. Second on the food tech.
This has been also a business that has been under pressure and the trading down is also affecting this kind of categories. If you can provide how Gosh! sales have been evolving, and if you think that recent decline in valuations in the market could also be an opportunity to further increase Sonae's role in this Food tech business. Final on Sierra, a question on what is included in the business plan in terms of investment. We saw the increase recently on the net debt. Just to know exactly how much could be the increase going forward in terms of new investments. Thank you.
Okay, thank you, José. I'll maybe ask Cristina to answer the couple of questions on Bright Pixel first, and then we'll take the other ones afterwards.
Okay. Thank you. Well, the first one relating the NAV evolution in the quarter. We have increased more or less EUR 30 million, and it's nothing related with Maxive. Maxive was already adjusted in the last quarter with the acquisition that was already aligned. It's the value was the same at the end of the quarter. Related to the second question, from the market perspective, and the tech winter is there, of course, and we know there are a great uncertainty in the market, but up to now, our NAV hasn't been affected by that. As you know, we have a very conservative approach in our investment. We never played the games of 2000, 2021 with high valuations and with less support for that. We never played that game.
We are very conservative, and we have a very quality portfolio. Up to now, we don't have any impact in NAV. On the contrary, of course, we have been investing in recent rounds in our companies, in our portfolio companies, and all of them were higher than the last round. We are improving our NAV. The uncertainty in the market is there, and we don't know what the future will come. Up to now, we have good signs. Liquidity in the market.
Mm-hmm.
Is still very high. Our segments are very hot, Cybersecurity, Digital. Up to now, we are confident and we believe that in fact, with this, cool down on the market, we will have great opportunity to invest.
Okay. Okay, thank you.
I would also add that, and I'm not sure if that was your questions there, but I would also add that the increase in NAV is driven by both new investments and also.
Yeah.
Revaluations-
Mm-hmm.
Upward revaluations of current assets.
Mm-hmm.
The revaluations of our existing assets played an important role in the evolution of the NAV in the last 12 months.
Yeah.
Sorry.
Mm-hmm. Okay. Regarding, maybe I'll take the one on Gosh, and then I'll ask Luís to cover the question on Sonae Sierra. Yeah. Gosh has been performing well. What we have done since we've acquired the company is we have been executing a value creation plan to grow the company from the initial level of sales to a level of sales which is significantly above the initial one. We are trying to do that at this moment in time. Early signs are good. We are seeing sales increase month by month. We are getting new listings in new supermarket chains. We are getting access to new accounts in terms of food services.
We are quite confident that the value creation plan that we designed or developed at the time of the acquisition we will be able to achieve that. Our goal is to grow in the U.K. Mainly, although we have launched the product as well in Portugal, but our main market is the U.K., and so we will continue to invest significantly in the British market where we see the highest potential for growth. We will probably next year have more news on this asset to share with you with a bit more granularity. I will ask Luís to cover the Sierra question now.
Sure. On Sierra and on your question around future investments. A couple of context points to start with. First, I mean, we will and we are firmly self-funding, meaning that we are investing capital to the extent we have excess cash sitting on our balance sheet and to the extent we generate it, and we generate it through operations, through asset sales, and through profits from the investments we make. The types of investments that we make today with this strategy is obviously in development, as I mentioned, and on these developments, these typically are done with a degree of leverage standard for these types of investments, which tends to be in the order of, say, 50%-60% LTCs.
We invested on our balance sheet, and we invested typically in partnerships with other investors. These are investments on our balance sheet. On the investment management side, we tend to either co-invest in the vehicles but with small positions, therefore it's not very cash, it doesn't require significant cash investments. The third stream of CapEx investments tends to do with M&A. M&A to the extent that it adds to the growth and to the strengthening of our core competencies. Of course, in our nature, we always keep an opportunistic eye for different opportunities that might arise, particularly in the market conditions as we expect them to be going forward.
Our level of investment will really depend on the level of our capital recycling policy, but we are in a net investment position as we speak. We have a meaningful amount of cash sitting on our balance sheet, which we are investing as we speak, but investing in growth initiatives and always conscious of the current market conditions that fit perfectly with our prudent and conservative style.
Okay. Understood. I would assume that no major asset sales are expecting in 2023. We should still be in the phase of ramp up of this strategy in the sense that you'll still, let's say, consume net cash. You are saying that you are self-funding, you have the cash, but net debt continue to increase over the coming quarters, right?
That is exactly right. Yes.
Okay. Understood.
Okay. Thanks, sir.
The next question comes from the line of António Seladas from AS Independent Research. Please go ahead.
Sorry, it was a follow-up question related with CF and capital spending, but I guess that you already answered it. We should expect more of these figures of capital spending in the coming quarters, is what I understood from your answer, your prior answer.
That is exactly right, because it's perfectly in line with our strategy. Having said that, in the current volatile market conditions, we have to be prudent, and we will continue to be prudent. On one hand, there might be opportunistic approaches to those investments, but on the other hand, we will also keep an eye on the evolution of those conditions. The short answer to your question is yes, we will continue to invest, and we will be net cash consumptive over the next 12-18 months.
Okay. Thank you very much.
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Thank you very much. Thanks everyone for all the questions and for attending our Q3 results call. Just as a final note, we are living under turbulent conditions, but I believe the performance of the group has been quite resilient, and we are happy with the performance that we've had over the last few months, and we are confident as well in the next few months, going up to the end of the year. We will speak again in the full year results conference call in March. I wish everyone a good end of the year as well. Let's speak, be in touch in March. Bye-bye. Thanks.
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