Good morning, everyone. My name is Hege Norheim. I'm the CEO of ABL Group, and I'm here to present our Q3 results together with our CFO, Stuart Jackson. We will be going through our results for Q3. I will give you some highlights in the beginning, the summary. I will add some comments from me as the new CEO as to how we will be approaching the next period. Stuart will take us through the financial review as well as me then summarizing at the end some comments on operations and outlook. I would like to also say for anybody who has questions in the room or online, please do add them to our chat so that we can address them at the end. We will have a Q&A session at the end.
Let me start by drawing your attention to the disclaimer in the presentation, and feel free to read this afterwards. Okay, our results for Q3. On the revenue side, we've seen growth year-on-year, 2% up to $87.8 million. We've had a nice contribution from our acquisitions, Proper Marine and Techconsult, in this period of $8.9 million. We've seen organic growth across all segments in our business except from the AGR segment, which saw lower revenues coming out of their vessel and resourcing business during the last quarter. Our adjusted EBIT has reached $3.7 million this quarter. That's up from $3 million year-on-year, which gives us an EBIT margin this quarter of 4.2%, which we are quite proud of compared to the 3.4% a year ago.
Particularly, we would like to draw attention to the ABL margin, ABL segment margin, which has grown year-on-year from 17.4% - 20.2% in this quarter. Our net debt position is moving into a $2.6 million negative this quarter compared to a $1 million net cash last quarter. Stuart will be addressing the cash flow in his presentation in more detail. We are also declaring a semiannual dividend for this coming up, which will be paid in November of NOK 0.45 per share as well. Okay, let me move to a few comments on my tenure coming up. I was appointed 15th of September, two weeks left of the quarter we are actually currently reporting on. I'm in my fifth or sixth week. I have experience from the board, more than two years on the board of ABL Group. I would say relevant experiences from the industry.
I've been 13 years in oil and gas, Norsk Hydro and Equinor. I've also been in the renewable business in Freyr Battery, as well as held positions almost a decade as an advisor to the Prime Minister's Office in Norway, the Finance Minister in Norway. I've been consulting in Sopra Steria and a company called Spencer Stuart on the global space. I joined the company after an enormous growth period. We've tenfolded ABL Group since 2019 with 180 employees and 18 offices to what we see today of more than 2,000 employees and 77 offices across the globe. That strategy of growth remains unchanged. That is a very important message from me today. We are very happy to have our former CEO, Reuben Segal, to take on the lead to continue that growth. He has certainly proven his ability to do that over the last six, seven years.
We are looking forward to working together for him to drive that growth going forward. We remain active in consolidating and believing in the business of consolidating the energy consulting industry across the globe. Strengthening sales is a priority going forward. We also think that this is a time where we can improve our efficiency, improve our performances further by maybe tweaking on the way we are working together. We will be focusing now on really driving decentralized accountability across the business, making sure that our country offices and our business lines out there close to our markets, our clients are able to capture the opportunities that arise and also adjust our offices as market potentially moves negatively through the periods going forward.
Decentralized accountability and really sort of creating that or capturing our ability to be agile and diversified across the globe is going to be a big focus for us going forward. We will also keep investing in efficiency through using IT. Here, we will be very cost-benefit focused and really make sure that we reap benefits for every investment we make. We also think that there's been a wonderful period of investing in group services in terms of creating systems and structures and processes and tools that can drive efficiency in the business, secure our cybersecurity, giving the opportunity for our businesses to grow efficiently.
Those group services now are maybe in a period where we will be right-sizing them for the future, where we will reap those benefits, take a timeout on some of the building of group services, and focus on operating those great standards that we put in place as well. We announced a market alignment plan driving efficiency the last quarter. We've been working on that for more than four, five, six months already. We believe that we will be seeing the results of that going forward very much. The job now is to make that a culture, not a plan, that we are, as I said, able out there in the business to capture the swings in the market up and down and adjust in an agile way, making that a part of our culture. That will be a focus going forward.
We will be focusing on free cash flow, very important, obviously, and targeting, importantly, as we have said before, a return on capital up towards 20% and into and through 2027. On that note, I think I will let you take us from there, Stuart.
Let me take you through, I guess, some of the details attached to the financials for this quarter. Firstly, just in terms of the snapshot of where the business has been in the quarter, ABL has had a reasonably strong quarter. We're back above 20% in terms of our EBIT margin, which is obviously important for the overall group because this is really the engine of the profitability of the group. Across the AGR and OWC sectors, no material change really from where we were in Q2 in terms of EBIT margin. I'll come on to a bit more detail in terms of the activity level in AGR, which has been slightly down during the quarter. Longitude, this is really driven, as we've said before, by the lumpiness of the business. Project completions, project commencements. During Q3, we've had no project completions, which we've seen earlier in previous quarters.
We've got some commencements which have been slightly delayed. We're carrying the cost of the people as we wait for those projects to commence. From a corporate cost perspective, we're sitting at 7.4% of revenue. In absolute dollar terms, this is the same as Q2, but it's up as a percentage of revenue because the revenue overall compared to Q2 is down. That gives us the 4.2% EBIT margin, which Hege has already mentioned. Turning then to a little more detail around the segments. From an ABL perspective, as I said, it's had a very good quarter, above 20% in terms of EBIT margin. The areas where we've been, I guess, more familiar in the past. We've had very strong activity within the Middle East region, particularly on rig moves, which has been a very positive impact. We've had some improvement in the Americas region in terms of profitability.
You'd also heard that Pemex is starting to make payments. Those haven't trickled down to us yet. The activity within Mexico of cash moving through the system is happening. We'll get our receipts shortly. From an OWC perspective, as I mentioned, not much change in the position from where we were in Q2, maintaining the improvement we've had from cost reductions earlier in the periods. We're winning work in this sector, which is good. Some of those commencements are a bit delayed. We're also diversifying away from our concentration on the offshore wind market into other areas of renewables within OWC. Longitude, as I mentioned, is a lumpy business. We haven't had as many commencements in Q3 as we anticipated. Some of the projects we've been working on, the next phase have been delayed.
We're carrying the cost of those people as we move forward to commence with the projects in Q4. From an AGR perspective, as Hege mentioned, slightly tougher market in AGR during Q3 from the resourcing side, which has been slightly down on where we've been previously. That may well wander into 2026 in terms of that market. Also, on the vessel operations side, we've had a lower level of vessel operations in Q3 relative to Q2. That's taken our revenue down. The positive side of that is that whilst there's an impact on revenue levels, there's less of an impact on the EBIT levels, particularly the vessel operations as a pass-through almost in terms of margin. There's very limited impact in that respect.
Finally, corporate costs, as I mentioned before, in absolute terms, the same as we had in Q2, although the percentage has gone up because the revenue in overall terms has gone down. The abbreviated financials, the positive side, revenue up on ABL because of an active quarter with Middle East rig moves. Longitude, an AGR, and a comparison back to this time last year. Obviously, we have Techconsult and Proper Marine, which have been consolidated in Q3 of 2025 but weren't there 12 months ago. The other side of that from a revenue perspective, the lower activity on the resourcing side in AGR and the lower activity on the vessel operations in AGR. That gives us an EBIT of $3 million, a clean EBIT of $3 million.
You'll see below some of the adjustments we have to EBIT, which are the traditional adjustments around M&A transaction costs and also acquisition costs, which are classified as operating costs for IFRS purposes, and then the amortization of RPPA. Getting to the profit before tax, there's a positive impact in terms of FX. That's the revaluation of instruments denominated in non-functional currencies, including the intercompany positions we have within the group. In overall terms, then $3.7 million on the EBIT at 4.2% in terms of margin. Turning then to the cash flow. In overall terms, a cash outflow of $3.3 million during the quarter, many elements to that. We start from our profit before tax of $6.9 million and the adjustments for non-cash items.
The largest driver in terms of the cash position is the changes in working capital that happened during the quarter with a net outflow of $4.7 million through the Q3 of 2025. Predominantly, that's driven by AGR's activity around vessel operations. If we went back to Q2, we had a significant inflow of prepayments attached to projects in the AGR sector. That's cash we have on our balance sheet, which during Q3, we then executed the work. We have the cash in the business already. That execution has occurred as we went through Q3. At the end of Q3, the customer had a dry hole. The remainder of the contract is getting canceled. We will see as we go into Q4 an unwinding of the remaining cash that sits on the balance sheet.
It would have gone into the activities associated with delivering the rest of the work, but that's not happening. That will now go back to the client. That leaves us with a net $3.3 million in terms of overall movement on cash. Not much happening on the financing and investing activities through the quarter. Financing activities, we did have an inflow of $1.1 million, which was associated with employee share option exercises that happened in September. That's counted by the lease payments and the debt service payments we have on a quarterly basis. In overall terms, our cash balance after FX revaluation is sitting at $15.3 million. Going to the balance sheet, a couple of items here. Firstly, dealing with the cash and the debt position. $15.3 million of cash.
We have on the balance sheet $17.9 million in relation to our debt position, which gives us the net debt position of $2.6 million at the end of the quarter. Other items to note, working capital ratio, a couple of items to note here. Firstly, we reported the step down in Q2. This was the prepayments we received in during that quarter, which we reported in aggregate terms was $9.5 million. The largest element was the one contract I mentioned in AGR. What's happened as we've gone into Q3, we've obviously utilized some of that cash in terms of executing the work. The cash is sitting on the balance sheet. It has effects on our working capital position. Also, as the overall revenue for the group is down in the quarter compared to Q2, it steps up the percentage of revenue when we measure the working capital position.
Lastly, in terms of the balance sheet position, drawings under the $14 million revolving credit facility sitting at $18.4 million. We've also added a $5.5 million overdraft facility to give us a bit more flexibility around the operational side of the business. A lot of cash and available resources are sitting within the group at present. I'll just remind you the maturity of the revolving credit facility is January 2027. We have two one-year extensions attached to that. Finally, moving on to the dividend. As Hege mentioned, we're very focused around returns to shareholders, be that in terms of return on capital employed or as we're dealing with here, cash going back to shareholders. We maintain the policy of looking to maximize returns to shareholders.
We're confident in the markets we're in long term, and we think we're well positioned within those markets despite the fact they have some near-term weaknesses. That's also why we've taken the actions in OWC a lot earlier, but also across the group now in terms of the market alignment plan to improve profitability and improve the cash generation from the operations. In terms of dividend for this half year, we are declaring a dividend of NOK 0.45 per share, corresponding to a $6 million payment of cash to shareholders at the end of November. With that, I'll pass back to Hege.
Thank you, Stuart. Good. Let me just touch on our staff situation. I think this is a familiar slide for those who follow us. We have shown, and as I've alluded to earlier, a growth year-on-year. In this period of the last two years of our staff, but this is mainly through acquisitions, 18%. The share of freelancers in the last year has been unchanged. In this last quarter, as we've already touched upon, the AGR business, resourcing business has also then meant that we see some downturn on the use of freelancers in our business. I think I'll leave it with that. We wanted to share with you some of our projects that we're very proud of. These are some chosen ones, one for each segment. As you know, we work in oil and gas. We work in renewables. We work in maritime.
We have four segments addressing these markets across the 77 offices. There's a lot of projects and a lot of excellent work going on with our clients. We've chosen four to exemplify the kind of work that we actually do. Let me start with an ABL project from this period or this quarter, Eastern Green Link 2, which is a contract of marine warranty survey that we will be doing on the interconnector between Scotland and England on transport and installation work in that very important project, a national project for Scotland and England. In AGR, we're very happy to announce that it's already been announced that we were able to sell a license to the Indonesian national oil company, PTTEP, in Malaysia. Our software is a drilling and well management software that they will now be using to optimize and manage their risks.
In OWC, we chose a project for a Portugal wind farm where they are doing geophysical and geotechnical surveys. Our contract was to be the client rep, helping the client oversee those surveys being done. Very exciting. A very cool project for Longitude, where we won a project and have been doing engineering of a vertical injector conversion of a cable lay barge that now will be able to work according to the Jones Act. It will be first of its kind in the U.S. to do so. Briefly on markets going forward, oil and gas market, a lot of people work on this. We normally look quite carefully on the E&P upstream CapEx development, which drives our business, particularly the marine warranty surveys that we do. I think we can say this year has been quite flat in terms of E&P CapEx development.
Our view will be, or our expectations is that this will also be quite flattish into 2026. There are developments that might indicate an increased CapEx in the upstream industry, particularly concerns around reserve replacement ratios. We now see the IEA and other analysts talk about that. On the other hand, we do see that offshore spending through the FIDs is not picking up, which would be important for us. We will have to keep an eye, obviously, on the CapEx growth in the E&P. We are directing our performance going forward towards a flat development here. Rig markets, also very important for us, drives our rig move services. Here, we also see a continuous, as you've seen in the last two years, a high level, but quite flat development or robust development, let's put it that way, with some regional volatilities, however, that we are looking at closely.
On renewables, the curve has been moving to the right, as we say, over some time. We do believe, and we have had a slowdown over the last years, we believe that the long-term view here is still strong. We are ready for that. We will be approaching the next year cautiously also as to when this will pick up. We will continue then to diversify in the renewable sector by growing and investing in our onshore renewable services, which currently constitutes around 17% year to date in 2025 of our total renewable business. I think on that note, to summarize, our performance in Q3, improved group profitability with an increase in the EBIT margin from 4.2 %, up from 3.4% year-on-year. The ABL segment is delivering its best quarter since Q3 two years ago, which is really well, with an EBIT margin of 20.2%.
Mixed AGR performance, strong performance in Australia, offset by lower vessel revenues and resourcing market headwinds in Norway. OWC on track for continued recovery, decreased activity and profitability in Longitude as projects are moving to the right. We will be following those up going forward. Semiannual dividend declared on NOK 0.45 per share to be paid in November. Our outlook, we are preparing for a flat 2026 in our oil and gas and renewable markets and maritime, maintaining a strong position in a relatively stable market. Very important, our M&A activities will remain. We will remain active in the market, consolidating our industry globally. I think that's our presentation.
We can have some Q&A. The first question here, can you say something about the expected development for the ABL segment going forward and what you see as a normalized level?
We don't normally guide on segment level, but I think if you look at the trends for ABL, I think we should be seeing a good performance around where we are today and going forward.
The next question is on Longitude. Can you give some more color on the projects, which is moved to the right, and what kind of projects are these related to? Do you also expect this for Q4 and into 2026?
We don't see any structural changes in Longitude's business. What we've seen this quarter, and Longitude normally has a business that will fluctuate through the quarters. We've seen that before. We think the long trend again on Longitude remains quite solid, and there's no structural changes in the market as far as we see it.
A lot of the activity in Longitude is slumped some work. When we have completions of that work, if we've been successful in completing it with less hours than we anticipated, we get a big bump in profitability at the end of that. We haven't had some of those coming through in Q3 because we hadn't had completions then. There's an aspect of no completions, and there's an aspect of some of the projects we're due to commence haven't commenced yet.
The next question, you say you expect material impact from cost reductions in 2026. In which segments are these the most related to? Is it possible to quantify the impact?
I think you can support me here. I think we've already worked on this in the OWC segment, which had choppy markets for a while already. That will continue. I think there are opportunities in most of the segments. Some of the segments have grown a lot over the last years, and taking out efficiencies, there's opportunities for that. I think we will see a continuous improvement on the EBIT margin. That's our definite goal.
Yeah, we've called it a market alignment plan because when markets are weaker, we need to focus on the costs. When markets get stronger, we need to focus on the right areas to invest as well. We'll see those opportunities coming up. As I said, across the segments, all segments are going through this review at present. All of the corporate segments or corporate activities will go through this review as well. We'll see reductions in the corporate costs going forward.
Will we see a rush of project completions in Longitude in Q4?
I don't think you should jump to that conclusion. We have a number of projects going on in Longitude. Some of those completed the last couple of quarters we've had, where we've had strong results. I don't think there are many completions for Q4, but we will be commencing the projects that have been delayed somewhat.
The next one, going forward, how will you fund your M&A growth on cash flow and your shares, debt?
The strategy we adopted a couple of years ago was to move away from issuing shares to support M&A activities and to utilize our own cash. At that time, we had in the region of $30 million of cash sitting on the balance sheet, which is probably not a very efficient use of cash for an investment vehicle. We've been investing that in the acquisitions over the last couple of years, which is why you've seen our cash balance come down over that period. We also augment that, obviously, with the revolving credit facility, which provides us capital to draw on cash quite quickly to complete transactions and therefore put us in a strong position when we're doing M&A.
The combination of cash on the balance sheet, the additional cash we expect to generate in the business going forward as we improve profitability, and then the availability of the revolving credit facility provides us a pretty strong firepower in terms of carrying on with M&A.
A question on AGR. What kind of measures are you taking in order to improve profitability?
Maybe I can start. I think AGR, the resourcing business, is one where we use a lot of freelancers. That’s an agility inbuilt. AGR has shown over several business periods that they are very agile and able to adjust their cost base as the market goes up or down. I think particularly the fact that we are using a lot of freelancers in that business gives us that agility and opportunity to adjust the cost base.
I think the volume attached to AGR is obviously the resourcing business, which is showing a bit of weakness. The profitability we can drive through AGR also comes from the vessel operations activity. When we see vessels which are on hire and we have added service to them, we get the opportunity for higher profitability within AGR.
The next one, how will you implement the transition priorities, the likely scope of impact, and when can we expect these initiatives to have an impact?
The market adjustment plan has been implemented over the last month. We think that the full effect of those will really come into play as of 1st of January . I think we will see in the fourth quarter some of those upfront costs that adjustments like that sometimes will require. I think the right sizing of group activities and how we will really start driving efficiency through the investments we have done in the past at Group to put in place processes and structures and tools across the segments will all really start playing out next year.
Good. The next question, can you give us some more color on why you still are maintaining the focus on growth as profitability over the past quarters has been weak? Would it not be more prudent to first focus on enhancing the current portfolio of businesses and improve cash flow and profitability?
I think the acquisition activity that we've had over the whole period, all in all, has been quite successful. It has both given us revenue growth as well as profitability. I think the challenges over the last period with choppy markets in first renewables and then in oil and gas have given us an opportunity to now really focus, sort of refocus not just on growth, but on profitable growth and on efficiency, and that those opportunities will be reaped now. This is going to be a both. We will do both going forward, I think, quite successfully.
Good. I think we can open up for questions from the audience. More questions? I think we have covered all the questions. Yeah.
Thank you.