Thank you very much, and welcome from my side, Matthias Täubl here, CEO of AURELIUS Equity Opportunities. Warm welcome to the presentation of the first nine months and the Q3 of this year. I'm here together with Richard Schulze-Muth, our CFO, who will give you more detailed figures in a couple of minutes time on the numbers. Let's talk about the highlights. Where are we right now? In general, a fair summary would be we have a very strong balance sheet and around EUR 285 million of cash. This strong balance sheet meets operating performance and then the P&L, which is currently impacted by the overall macroeconomic disruptions in the markets. The keywords here are energy prices, inflation, general still hiccups in the supply chain, supply chain issues, labor shortages.
All these ingredients we do see and it doesn't come as a surprise, definitely also the recession ahead in some of the legal restrictions does impact the operational performance of our portfolio companies, which is then reflected in a still very solid operating EBITDA of EUR 160 million, close to EUR 165 million. A slight decline year-over-year. Given the overall market circumstances, still a very solid performance. This is also then reflected in the net asset value, where we'll talk about in a minute in more detail. Mid term, long term, I think nothing has changed. We remain optimistic when it comes to the robustness of our, of our portfolio companies. For the moment, I think it doesn't come as too much of a big surprise that the overall macroeconomic developments is also impacting our portfolio companies.
On the transaction side, we have been quite active when it comes to transactions on the buy side, seven add-on acquisitions, seven co-investments, where from two of them are not closed yet, and four exits. One of these exits happened in October, so not in the first nine months, but it was a very successful one we will talk about in a minute as well in more detail. On the shareholder value side, nothing has changed. Our overall strategy stays in place and remains. Definitely we will have a more detailed conversation about this one early next year when we have a more detailed outlook, hopefully by then and maybe the dust has settled a little bit overall on the macroeconomic side. Let me now hand over to Richard Schulze-Muth, who will give you the details to the numbers.
Thanks, Matthias. Welcome also from my side to our Q3 2022 Earnings Call, and let me talk you through our nine months 2022 key figures. Our consolidated revenues came in with EUR 2.351 million. On an annualized basis, revenues from continued operations were EUR 3.092 million compared to EUR 2.436 million in Q3 2021. The EBITDA of the combined group was EUR 182.3 million compared to EUR 175.6 million in Q3 2021. The EUR 182.3 million are split as follows. The bargain purchase is zero, so in the last nine months, the AEO acquisitions have led to goodwill so far.
The restructuring and non-recurring expenses are EUR 45.7 million, so over EUR 10 million lower than in the same period for last year, showing here sort of performance and no further restructuring need on portfolio. The earnings resulting from the fair value revaluation of co-investments as of thirtieth September 2021 are EUR 14.1 million, and this is related to co-investments that are longer than six months with us, i.e. besides APS and Nveo, as of the last quarter, Minova. The increase in valuation of the co-investments pursuant to the equity method accounting is pro-rata book profit that goes for the AURELIUS Equity Opportunities P&L. Gains on exit are EUR 50.1 million in the first nine months of 2022, and these are coming mainly from the successful AKAD exit and the Hammerl exit.
The operating EBITDA is EUR 163.8 million. This is 10% lower than the operating EBITDA as of Q2 2021 half year numbers. The reasons for this are mainly increased energy costs, the transportation, and the material costs. The purchased goods and services rose by 32% compared to Q3 2021 to EUR 1.455 million. The cash compared to year-end 2021 has reduced to EUR 284.6 million as of thirtieth September 2022, and this was mainly driven by the deal activity in the first nine months with seven add-ons and five co-investments, the dividend payment in June, and the share buybacks of approximately EUR 35 million.
Free holding cash in AEO and the holding companies, including the proceeds from the Briar exit, and Matthias will talk in a minute, in October, is over EUR 200 million. Therefore, we have sufficient firepower for upcoming deal opportunities and if needed, financial support for our portfolio companies. The equity ratio remains stable at 25.3% as of 30th September 2022. Move to page six. On page six, you can see a split of our portfolio in total consolidated revenues and operating EBITDA by three categories: segment, portfolio status, and vintage. The revenues from continued operations by segment, you see here service and solution with EUR 279 million, the industrial production with EUR 847 million, and retail and consumer product with EUR 1,094 million.
The operating EBITDA margin of the segment service and solutions was EUR 24.9 million, and retail and consumer products with EUR 109.5 million is still good and stable. The operating EBITDA margin of the segment industrial production with EUR 41.3 million came down in line with the current market environment, as Matthias just mentioned, increased energy costs, the transportation costs and material costs. The operating EBITDA of the segment other was - EUR 26 million, driven by the holding costs of AEO and holding companies, including the transaction costs here relating to the acquisitions and exits in the first nine months and the management compensation relating to those. By portfolio status, you can see that the portfolio companies in the improvement phase contributing an operating EBITDA of EUR 21.5 million.
BMC moved up into the optimization phase, and the portfolio companies in the optimization phase and growth phase contributing the majority of the operating EBITDA of over EUR 154 million. By vintage, you can see that there's a strong operational performance of the 18-38 months vintage frame of EUR 78.7 million, resulting mainly from Distrelec, Zentia and Rivus. They have developed very well and strengthen here the respective operational performance of portfolio companies in this vintage frame. Let's move on to our NAV on page seven. The total NAV for 30th September 2022 was EUR 909 million, a decrease of 9% compared to half year 1 2022.
The NAV as of 30th September for industrial production was EUR 337.3 million, a decrease of 14%, which is related to the weaker operational performance of portfolio companies in this segment due to the challenging market environment with the energy costs and the material costs and the supply chain pressure in that regard. In the sector retail and consumer product, the NAV as of 30th September was EUR 306.2 million. Silvan, EIG and Distrelec are still performing strong, but the overall retail and consumer sentiment is clouding. The NAV as of 30th September for the sector services and solutions was roughly EUR 52 million. The decrease is mainly due to the development in one portfolio company in this segment, which has a potential material negative impact on revenues in the next years.
The NAV of the other segment was approximately EUR 154 million. The valuation here consists of the cash of AURELIUS Equity Opportunities and the non-operating holding companies. Our brand company, Blaupunkt, is included there as well. As you know, the nominal amount of our Nordic bond is deducted here, and the treasury shares are not included in the calculation. The NAV of the co-investments, these investments we are doing together with the AURELIUS European Opportunities IV fund was EUR 59.9 million. That includes APS, Nveo and Minova at fair value, CTD Tiles, McKesson, the Pluradent and Dental Bauer Group, and Footasylum at acquisition costs. This valuation leads to an NAV net per share of 33.59 EUR at 30th September 2022, and the treasury shares are not included in this calculation.
Generally, the NAVs are calculated consistently based on a DCF model, and we use the actuals as of 30th June 2022, including the budget of the portfolio companies until end of 2024. We assume the conservative growth rate of 0.5% thereafter and have a WACC of 12.43 in average. The WACC was increased compared to half year one, 2022. At this point it was 11.21%.
The increase in the WACC is mainly driven by the increase of the risk-free interest rate, which raised from beginning of the year from 1.2% for Germany to 2.09%, and for the U.K., 1.13% to 3.76%, an increase of 2% or 2.6% respectively. This increased, of course, the cost of equity and debt costs accordingly. I think we can skip page eight, as this is more a narrative for later to read on the different sectors.
Finally, on page nine, you can see the NAV by vintage as of the 30th September 2022. You can see that the majority of the NAV comes from the portfolio companies with holding periods of over 36 months, in line with the AURELIUS support and the stable operational performance of the portfolio companies in these vintages. The NAV of the co-investments is EUR 49.9 million and is contributing actually 6% of the total NAV together with the portfolio companies that are not longer than 18 months with AURELIUS, and it's roughly 10% of the NAV. Now I hand over back to Matthias.
Thank you, Richard. Let's talk about the transactions year-to-date then. Let's start with the add-on acquisitions. As you know, accelerating the transformation and the growth of our portfolio companies via an organic growth, which means add-on acquisitions, is one of the main levers we do have. Therefore, we have seen a couple of them already, typically aim for five to six a year. We have seen seven in the first nine months already. Despite them, there are among them a couple of them, like for example, CameraNU in the Netherlands. It's a business for our portfolio company, EIG. So the retailer of semi-professional and professional photographers and equipment. Talking about a revenue of EUR 60 million, around EUR 60 million, so quite decent in size for an add-on acquisition.
On the other side, some smaller ones, like for example, for VHE, RTL Simprosil in Latin America, which is also a geographic expansion, but also a transformational add-on acquisition or two of them for our automotive aftermarket supplier in Norway, NDS, which has acquired Hovdan and Nordic Wash. Both of them have a more transformational add-on acquisition, so they are bring an additional product mix to the table, which is beneficial in the diversification of NDS. Always what is linked to this add-on acquisitions typically as well is of course, quite high synergies here as well, which makes it even more attractive to us. Going forward, I think this is still something where we have a strong focus on doing add-on acquisition for our portfolio companies, definitely.
For some of our competitors, for our portfolio companies, it's difficult as well at this point in time. Therefore, there is a lot of opportunities out there for doing add-on acquisitions. Of course, we have to be careful at the same time as some of them are also heavily impacted by the current situation. We need to pick the right ones. On the exit side, we have seen four exits to date, three of them in the first nine months, and Briar Chemicals just recently. Needless to say, I think that's at this point in time, given the overall macroeconomic circumstances, it's not the ideal time for doing exits. We are always in contact with potential buyers of our portfolio companies.
We have mentioned in the last couple of months already that we do have some portfolio companies in our portfolio who are more or less ready for an exit. This remains unchanged, but of course we need to be really careful. There is no pressure to sell it if the purchase price is not right from our point of view. Definitely this is a more challenging discussion right now than it might be in a couple of months' time again. Definitely, Briar, we will talk about in a minute in more detail, a very successful one, but also AKAD, our distance learning university, which we exited in February this year, was a very successful one with a purchase price above EUR 45 million.
The exit of Briar, it's a typical blueprint case study for what we as Aurelius do. It's a corporate carve-out. It's everything linked to transformation of this business, making an independent standalone contract manufacturer and then sell it to a strategic one who will take this company to the next level. We bought this company from Bayer. It was more or less a kind of a manufacturing site in the U.K. and Norwich for Bayer, and therefore also revenue-wise, it was pretty much 100% related to Bayer. It's CDMO, so a contract developer and manufacturer for agricultural chemical products. What we have then done to this company with our task force is the typical transformational measures we did put in place. We have put in place efficiency improvement projects.
We have also streamlined and improved the business competitive position by adding new products to the portfolio of Briar. Also Briar has undergone rebranding after the acquisition, of course. Therefore, we were able not only to increase the revenue, but also at the same time, reduce the dependency on Bayer. As of now, around about 75% of the revenue is still related to Bayer, which means one-third is with external customers, third-party customers already, despite this very still strong relationship with Bayer as a strategic supplier to them. Briar was able to gain, for example, BASF or ADAMA as new customers. The outlook shows that by 2026, only 35% of the revenue should be linked to Bayer anymore.
It's really a kind of a standalone company focused on a variety of different customers. The transaction itself, when it did come to the exit, we sold it to Safex Chemicals India Limited, which is a strategic buyer backed by one of the biggest private equity funds in India. We sold it for EUR 83 million, quite a significant purchase price, which translates into a 20% premium compared to the net asset value we have seen for this company in the Q1 of 2022. The deal was done as a share deal, signed and closed in October, which means the cash is already on our bank account. On the co-investment side, we're very active there. We have seen seven transactions year-to-date. Two of them, Axvar and Sappi, not closed yet.
The other ones are already signed and closed as well. Agfa Offset Solutions, one of the recent acquisitions, or signed acquisitions so far. It's Agfa Offset Solutions and around about EUR 750 million in revenue, around about 1,700 employees, active in 75 countries, so very a global footprint. They are producing everything what is needed when it comes to offset printing, so like offset plates, graphic films and equipment services, but also software and chemicals. It's a typical carve-out situation with all the ingredients. Where we have to build up some standalone structure here as well. It's on the IT side, where we have to perform the carve-out, as well on the management side, where some of the existing management teams will stay behind with Agfa Offset Solutions.
We have to really build a standalone company here, and this is exactly what our sweet spot looks like. Same applies for Sappi, where we have signed a deal together with the fund as a co-investment deal for free, acquiring three European sites based in Finland, Germany, and the Netherlands. Quite decent in size, with a revenue above EUR 1 billion, around about 1,400 employees, spread over these three manufacturing sites. Again, same ingredients. It's a typical carve-out from Sappi, the big corporate, South African corporate. We have to build up the standalone structure so that this company can run on its own feet with a lot of potential to further grow when we have this more entrepreneurial spirit in the company.
On the next page, let's talk about one of these just recently signed and closed deals, Footasylum deal we have signed and closed in August this year. It's an omni-channel athleisure retailer based in U.K., headquartered close to Manchester in Rochdale. Very interesting background of the transaction. This company was bought by JD Sports, one of the biggest streetwear and fashion streetwear sports retailers in not only the U.K., but also in the U.S. The CMA, the market authorities in U.K. didn't give green light for this deal finally, so JD had to sell this business again. Needless to say that this was not really an option to sell it to a competitor, and therefore we bought this in a very attractive transaction.
It's around about EUR 350 million in revenue. It's quite decent in profitability, around about 7% EBITDA margin. Decent, but not where it can be when we compare it to the competitors. It's in all the ingredients there to make this happen and possible. We bought it for an enterprise value of EUR 45 million. We do have a lot of really good mix of products. We have all the big brands included in the portfolio, like Nike, Adidas, The North Face, New Balance. It's a decent footprint, around about 61 stores right now, five different websites for different brands and also a very interesting wholesale channel.
All the ingredients with which we can optimize but also further accelerate the growth of this Footasylum. This means that this will also lead to an increased profitability additional to our efficiency improvement measures we have put in place. Very excited about this company. Definitely also, of course, impacted at the moment by the overall retail sentiment, especially in the U.K., but mid-term and long-term, we're very excited about this portfolio company. This brings me to the overall status of our portfolio. As you can see on page 15, where we do have the holding period on the x-axis and then on the y-axis, the three different levels, improvement, optimization, and growth. The three levels of maturity. As you can see, it's very balanced.
On the right side, you can see the numbers for the first nine months, revenue and operating EBITDA. By nature, the companies who have just recently been acquired, a little bit less profitable. Overall, EUR 21.5 million of operating EBITDA, whereas the companies who are with us for a little bit longer, well, we have improved the situation. They're already into profitability, is responsible for EUR 84.1 million. Overall message stays the same. It's a robust portfolio. It's balanced when it comes to industries, when it comes to countries. I'm not worried about the midterm and long-term view on our portfolio. As we have seen, the short-term view, of course, is a little bit more difficult to predict as it is quite challenging, the current market macroeconomic environment.
The same applies on page 16, where we have now also added the co-investments. Which are shown here with this green circle, and on the right-hand side, it's not the revenue and the EBITDA, but this is the net asset value for our own portfolio companies, but then also for the co-investment side shown here on the right-hand side of this page. Again, it's also the co-investments, a very, very balanced one where you can see we have some of them in the improvement phases, but some of them already in the optimization phases and contributing quite nicely to our net asset value. Long-term, I hope this will increase further. I'm pretty sure this will increase further. Same applies than what I said before. We need to be careful.
We need to stay close to our portfolio companies in the upcoming months with our task force, making sure that all the not so nice ingredients we do see right now, like, energy price increase, like inflation, like the supply chain issues, are handled in a proper way. Also, our current core topics remain unchanged. We still are focusing very much on the expansion of our investment focuses. Yeah, have seen in the recent transactions, we have a nicely filled pipeline going forward as well. Definitely we will remain and stay picky, as of course, there are some of the potential targets out there, quite heavily influenced by the current market circumstances, and so therefore we will remain careful.
Overall, the expenditure of our investment focus is definitely one of our core topics, despite making damn sure then when we have an increased investment focus and therefore also, maybe more and, a bigger portfolio of companies that our operating model will stay in place. This entrepreneurial spirit, on-site operational engagement, all the ingredients which are needed to perform a proper carve-out in a timely and fresh manner. This is still one of our main topics. Last but not least, our ESG approach in all different angles. Is it on a holding level, or is it on our portfolio company level when it comes to tendering processes, for example, but of course also for our investors, it's important that we are working on our ESG approach.
We have hired another employee who will start on the 1st December and will then help not only our holding, but also the portfolio companies to sharpen the ESG approach and really make sure that we are focusing on the right things there. Finally, when it comes to the outcome, I think we mentioned most of the topics here already. Staying close to our portfolio companies with our operational task force is key. Making sure that we pick the right companies going forward. It's a nicely filled pipeline, so it's more about picking the right ones here. Short-term view on our operational performance is a really challenging one given the overall market circumstances. Definitely, we can see that some impacts of the potential recession ahead is impacting our portfolio companies as well.
Mid-term, long-term, I'm not worried and remain optimistic when it comes to the robustness of our portfolio companies, but for the upcoming months, it's definitely about staying close and making quick decisions here so that the impact is limited. Finally, the other topics, I think most of them we mentioned already, it's about shareholder value. We will discuss early next year in more detail then, given hopefully by then when we have a little bit better understanding of how the upcoming months might look like, and also the ESG approach I've mentioned already. Overall, optimistic and positive outlook, but maybe difficult to predict, as I said, for the upcoming months, but mid-term and long-term, I remain positive for our portfolio and also for the business model itself.
Thank you very much for listening for a moment, and I would now like to open the lines for questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question from the queue, please press star two. Again, please press star one to ask a question over the phone. We will take the first question from Gerhard Schwarz from Baader Bank. Please go ahead.
Yes, hello. Gerhard Schwarz here. I got a question on your operating margin. The Q3, you cited rising costs via a couple of lines, but overall I think also the revenue side in the Q3 was a tad weaker than I would have expected. Can you give me some guidance if this was basically more a seasonal issue, so a weak Q3 in general, or if there have been some new issues that have hurt this quarter in particular?
Yeah. Thank you, Gerhard, for the question. Maybe I'll take this one. It's not a seasonal issue, to be honest. Typically, Q3 and Q4 is what is the stronger ones on our side as well, so it's not really a huge cycle and then therefore it's quite balanced. Q3 and Q4 typically is a little bit strong on our side as well. Therefore, yes, it's more linked to the overall recession-like circumstances or that we can see in some areas, especially when it comes to in the retail area, but also some the industrial area, that we do see some issues.
Sometimes it's not so much about the demand, customer demand, but it's also sometimes about supply chain, for example, in our industry, for the portfolio companies in the industry segments, and they have some difficulties. For example, if customers don't get all the parts in place, therefore it means that they are then so much reliant on our products and therefore they.
It's getting delayed. I don't think this is a general long-term decline in revenue. What we do see is that all the ingredients, definitely in retail, it's more about the recession, which is impacting it. On the industry side, it's more the supply chain, which is leading to a delay, and this is the status quo for the moment. Yes.
Okay, thank you. Maybe I have a follow-on question regarding the valuation because of the portfolios because actually we saw a 13% decline in the NAV of the portfolio companies as you have been laying out. This certainly was also driven by the quite significant increase in the WACC you have been applying for the valuation, which was up 1.22 percentage points since midyear. Can you say something about the rationale for that? Is that something where you have also made some kind of precautionary effect again to warrant against a further increase on the WACC going forward? Yeah. What are your thoughts there?
Yeah, let me pick this up. Coming to the WACC, which is here, the main driver of this. As you know, we are calculating this on the basis of the individual peer groups. The peer groups here are set at the initial consolidation, and they're not changing over a period. We use here the Capital IQ. When you go into that, you see here that the WACC increase is mainly driven here by the, I mentioned that earlier, the increase of the risk-free interest rate, which rose from the beginning of the year.
Most likely will increase further towards or in Q4 as we all read here over the respective central bank decisions. I think there was an earlier question in one of the previous calls where how this is baked into the WACC. This is here now with the steps in July, September and October taken here from the respective central banks. Of course, the majority in it. In addition to that, there is of course risk premium included in the WACC for some individual portfolio companies in connection with the market environment and their individual operation performance or risk or in what phase of the restructuring phase they are in.
This is of course included here in the current trading and the actuals as of 30th September, the trading year, and particularly in September and now in October to see that. This is then the subjective individual and risk premium here for some of the portfolio companies included in the industry production.
Richard, maybe you can line out once again what's the current WACC average compared to the Q2. I'm not sure, Gerd, you mentioned one point something%. I think it's not the correct number.
Right. Actually it's 12.43% on average, and it's ranging from 8.12% to 18.23% here with respect to respective individual portfolio companies. Compared to half year 2021, where it was 11.21%.
0.21.
This has increased to over 1.2%. I mean, as a general rough increase here of 0.5% in WACC is converting roughly to a 5% NAV reduction, i.e., EUR 35 million.
Great. Thank you for clarification. As you mentioned, one further question that I made, because you mentioned the rising central bank rate. There are different approaches for this risk-free rate in the market. The ones that would rather use money markets that are closer to the central bank rates or others that would use longer-term bond yields or ten-year bond yields in it, for instance. Are your risk-free rate estimates closer to the money market rate, which would mean as the ECB keeps hiking, are then your risk-free rate assumption rising in the future? Or is it more linked to capital market rates, meaning ten-year bond yields or five-year bond yields, where probably most of the further hikes is already in the price?
Say again. Maybe it's just me, but I hear you very silent. Is that just me, Matthias, or is it the same for you? I could not follow completely.
No, same for me. Gerd, maybe you can summarize or repeat the question.
Yeah. Sorry. My question was on the risk-free rate that you use in the WACC calculation. Is it more that you are looking at the money market rates when determining the risk-free rates, or is it more a capital market interest rate, so 10-year bond yield, for instance, which is certainly already pricing in future rate moves by the central bank, and therefore this would make a difference for the future evolution of your risk-free rate if the ECB would hike rates further?
The question is if this will translate into a higher risk-free rate estimate, in your models, or if this is basically mostly in the price as 10-year bond yields have risen to price in further increases, already. It's clear. Thanks. It's the latter one, i.e., we're using the 30-year government bonds for Germany and the U.K.
30-year bonds.
Mm-hmm.
Okay. That's great. Thank you.
The next question comes from Marie-Thérèse Grübner from Hauck Aufhäuser Investment Banking.
Yes, good afternoon. Can you hear me well?
Yes. Thanks.
Yes.
Perfect. Couple of questions on my side. First of all, again, coming back to the NAV and in light of what Gerhard was just asking. Is it fair to assume that at least the bulk of the NAV correction is now behind us, and we can expect some minor cuts going forward? That was my first point. If you don't mind, I would ask the two others once you've responded to this one.
Yeah. We are just in the budgeting process for that. We are looking into that and follow that and of course have in mind what let's say the short-term outlook will be. We're just assessing this year for the upcoming period in that respect. We are again in the middle of the budgeting process.
Again, is it fair to assume that the bulk of the correction is behind us? I mean, you know, companies have been warning in the market with respect to deteriorating, you know, gross profit margins, personnel costs for a while now, right? I'm seeing that your kind of correction and the way it's reflected in the NAV is coming a bit late in, you know what I mean? Now companies are realizing on the contrary that they're not too conservative. This is why I'm asking if you think that this is basically more or less it or whether or not we should be expecting a worsening.
Yeah.
We can maybe start. When I jump in here. As you know, our NAV is based on a three-year forecast discounted cash flow method.
Mm-hmm.
Therefore, definitely the biggest impact which we do see right now, where we have more predictability, which means that current trading outlook for the Q4 and then for the Q1 and Q2 of next year.
Mm-hmm.
This is baked in already, more or less. Of course, nobody knows exactly how the recession like current circumstances might further develop, therefore we need to scale a bit more careful here, to have a clear predictability. But I do not expect that it's worsening a lot in the upcoming months or more or less this has been baked in already. Therefore,
Mm-hmm.
I hope that answers your question.
Yeah. That makes it actually.
Yeah. Correct. Maybe let me jump in, Matthias. That's exactly. I mean, we did that step and it's coming now based on trading year and the respective outlook. This is baked in and the rest then subject to budgeting and outlook here for the next year.
All right. Great. The next question I have is regarding your three segments, services, industrials, retail and consumer. Can you give us a sense for each of what you are seeing in terms of growth rates at top line level and EBITDA margin development for next year? I mean, what is it that we should be assuming, you know, increases of X, EBITDA margin deterioration or increase of X? I mean, what could you give us a bit of guidance there in terms of these three subsegments?
That's a tricky one, to be honest, if we would do this in a non-serious way. Definitely what we do see that it is difficult also that the revenue growth of course is driven by inflation.
Mm-hmm.
In a couple of our industries as well. Definitely on the retail sector, I would not expect too much of really quantity driven growth in the upcoming year.
Mm-hmm.
Especially the first and Q2 will remain very bumpy. Everything beyond this is really hard to predict. Therefore, hopefully the third and Q4 is to catch up then maybe the more tricky first and Q2.
Mm-hmm.
Therefore, I wouldn't expect really quantity driven growth. Of course, inflation driven growth might be well the case. On the margin side, pretty much the same. It is definitely we do see in some areas that it is more difficult to pass the prices through.
Mm.
That there is some resilience from the customers to accept this and then maybe they hold back a little bit more than what we have seen in the past.
Okay.
The same applies or no, not the same, but it's a similar outcome finally on the industrial side more, as I said before. It's not so much that we do see that the customers in our main customers for our main portfolio companies have general issues. The market, the underlying market is, you know, we are typically in the asset-rich niche markets. This is still okay. Of course, definitely we do see some recession-like impacts there as well, but it's doing okay-ish. Definitely what is more difficult to predict, as I've mentioned before, is what we see that some of the customers have difficulties to solve the supply chain issues and therefore they are impacted.
I don't know, for example, for Moveero, producer of the wheels for the agricultural tractors. This is still a very healthy underlying industry, but many customers have difficulties to get all the parts which is needed to build the tractor, and therefore they don't need the wheels then as ordered. Therefore we do see some backlog where they're pushing back some of these orders then. Therefore I do not expect a growth, a huge growth here as well in the upcoming three quarters. Everything beyond then, I still remain optimistic for the longer view, but short term view is hard today.
Okay. All right.
I agree to that. In addition, again, it's more the budgeting process. Then, when this is done, we will include here in our annual report, of course, the outlook here going forward for 2023.
All right. Thank you. Then one more question regarding the strong decline in NAV and services and solution. You were referring to a particular company where you're concerned about the outlook for next year. I mean, is it fair to assume that the EBITDA margin for that particular segment should be going down, at least, you know, I don't know, five points or three points next year? What is it, maybe can you shed some light.
Yes. This is more the risk premium for that because there is an ongoing discussion and the outcome, you know, could have been a material outcome. If this is true.
Mm-hmm.
Yes. It's a bit pending at the moment because there are negotiations here when it comes to customer contract.
Okay. Got it. All right. I have questions regarding your war chest, more than EUR 200 million, after the, you know, including the proceeds from Briar. Does this mean that we can, you know, we in the capital markets can hope that you can, you know, use some of that at least to pay a dividend which is a bit more than EUR 150? Or what, how do you see it from today's standpoint?
Yes. As you know, we typically do make our proposal for the AGM somewhere when we are closer to the AGM, which would mean in the Q1 next year. A lot of things can change until then. At the moment, we, you know that we have an ongoing buyback program up and running.
Mm-hmm.
We do think at the moment this is creating a lot of value for our shareholders, given the current share price compared to the net asset value.
Mm-hmm.
This is still where we try to find the right balance. In general it, our strategy remains unchanged. A decision what we would like to propose to the AGM will be made in the Q1.
Perfect. Okay. No, that's fine. Thank you very much.
We'll now take the next question from Rafael Gurska from Pareto Securities.
Yes. Hello. Thank you for having me. I have two questions just. The first is regarding the so-called underperformer currently in your portfolio, which suffers from the market environment. On the other side, your restructuring costs were even lower compared to Q2. Looks like that your companies or your portfolio companies don't need external support or were there some capital injections or financial support to single portfolio companies in Q3? And if so, in which amount, or do you expect some financial measures here in the future to support the currently struggling companies, and it seems that in particular the newly acquired companies in the improvement phase are struggling.
Yeah.
No, it's as you said. Peter go first. Yeah. Sorry.
Yeah. When it comes to the restructuring and non-recurring expenses, this is more the one-off. In general, we have to say that the overall portfolio is stable and therefore we have of course reduced restructuring and non-recurring expenses on that. But the difficulties we see at the moment are not this one-off. It's more general margin topic, but not related to restructuring or non-recurring expenses. Generally, we have to say it's a more stable portfolio with less one-off restructuring and non-recurring expenses. Therefore you see the reduction here from EUR 56.5 from last year to EUR 45.7 this year.
Okay. With regard to potential support to these companies which are currently struggling, do you see a necessity or?
We've mentioned in the beginning when it comes to the firepower we have, and it could be that the one or other might need some support here with the actual developments, and we have the financial power here to support. Is there any that is extraordinary at the moment? No, it's more about support when it comes to working capital topics, et cetera, but that is exactly what we've always done when it comes to the support of our portfolio companies. No, nothing big at the moment and that is worth to mention. It's more an ordinary course.
Okay. Good. Then the second question is regarding the cost inflation and just to get a better feeling where you're currently struggling the most to adjust your prices or to increase your prices. I mean, this is also general trend what we see at other companies, and there is always opportunity to increase the price with a certain time lag. How is this to your companies in particular with the current quarter, so with the Q4? Do you think you are able to adjust at least a certain portion here or is this a situation which will continue also in the Q4 situation?
I think it really depends on the industry itself. Now, if you think about, for example, NDS, the automotive aftermarket in Norway, everything which needs to be done to make your car winter fit in Norway, this will be done. Any kind of extraordinary spend, maybe this will not be done right now in this current circumstances, especially given the energy prices also for private households also in Norway, where maybe you wouldn't expect it, but even there they were rocketing. Therefore, this is definitely where I would expect this impact stays in place for a little bit longer. Everything which is more industry B2B related, definitely we have some pushback when it comes to energy prices because, we do see some, in some areas that the energy prices are decreasing already again.
This is a kind of difficult situation between where they are right now and then maybe the midterm and long-term outlook to get price increases in place. This is definitely where we have challenging discussions. It has been easier at the beginning. It's more challenging right now, and this is what I would expect to remain in place for the upcoming at least two quarters, for sure.
Okay, good. Maybe the last one, housekeeping question regarding the firepower for M&A. I mean, we have seen the cash position. The question is, to which extent you are in a position to use this for M&A? What would be your firepower?
As mentioned earlier, we have now free holding cash in AEO and the holding companies of over EUR 200 million. Therefore, we have sufficient firepower here to cover the upcoming deal opportunities, as well as I mentioned, the financial support of portfolio companies, so we feel well equipped in that respect.
Okay. Fine. Thank you. That's it from me. Thanks.
That will conclude today's Q&A session. I would now like to hand it back off to Mr. Täubl for closing remarks.
Thank you very much for listening. Thank you very much for your questions. I think the homework we have in front of us is crystal clear. We need to stay close to our portfolio companies as we have outlines to make sure that the impact is limited. Longer midterm outlook, I would say, remain positive, but for the upcoming months, we have to stay close to our portfolio companies, which we will do to make sure that we reserve the shareholder value here. Thank you very much for listening, and have a