Hi, good morning. My name is Reuben Segal. I'm the Group CEO of the ABL Group, and I'm delighted to be joined here by my colleague, Dean Zuzic, our Group CFO, to present our Q3 figures. The plan for today, this morning, is I will go through the highlights of the operation during Q3.
Dean will give you some of the financials that took place during the quarter, and I will finish off with an outlook going ahead. Also, for people online, welcome. I know this is also being streamed live this morning at ADIPEC, the oil and gas exhibition in Abu Dhabi. Welcome to all my colleagues and our clients over in Abu Dhabi. The usual disclaimer is there. Feel free to read it in your own time. It's long, it's wordy, but feel free when you have time.
Let's go into Q3. Normally I stand here for Q3, or in the past, we've stood here in Q3, this being traditionally a weaker quarter. This is not the case this year. We have been talking for the last 12 months about how we've been trying to diversify away from being reliant on one region and one business line, and a particular time of year. That has come through this time in Q3. Traditionally, Q3 is quieter with monsoon seasons and summer vacations, et cetera. This is not the case this time.
I'm delighted to announce that we've had record revenues of $44.1 million for the quarter, and this is made up including the new acquisition of Add Energy, which accounts for about $5.5 million of that overall revenue. This is a 16% increase over last year period, and around about an 8% increase year-on-year growth as compared if you remove Adjusting Business and you remove the Add Energy business.
Even the ABL business is still growing year- on- year and quarter- on- quarter. This is also driven primarily by our renewables business and also by our engineering specialist business in Longitude, and they're running at around about 23% and 33% growth year-on-year. An excellent quarter overall for the organization.
In addition to the revenue growth, we've also had an excellent growth in EBIT and EBIT margin. For Q3, we had an EBIT of $4 million, which is double the same period last year. It's an extraordinary increase, particularly during what is traditionally a quiet quarter for the organization.
This is a 9% margin for the quarter that includes Add Energy and around about 10.5% margin if you exclude Add Energy. If you remember, we talked about Add Energy and what they bring to the company. There's an integration process ongoing at the moment, and already it's going ahead of where we would like it to be. More on Add Energy a little bit later.
Our EBIT margin was also very strong, an EBIT of NOK 3.3 million, which as you can see, is a significant increase over this period last year of NOK 1.3 million. An excellent quarter. In addition to the operations side, in terms of revenue and margins and EBIT, is also excellent cash generation.
Mainly out of our operations, we were able to have a net cash of $15.1 million, which is a significant increase over Q2. This is also driven by the share option scheme which we have for our staff, which added an additional $1.7 million to our cash generation. All in all, every part of the business did exceptionally well during the quarter.
We also completed the acquisition of Add Energy, and Add Energy is now being integrated into the company, and that is going at full pace, in line with what we anticipated. An excellent quarter. I'd like to take this opportunity to thank our staff and our colleagues. Great job during the quarter, and look forward to the same results in Q4.
The three traditional sectors, you've heard this before, renewables in our maritime and also in oil and gas, and the services that we provide in each. Not much change to this since we last spoke. In our consulting and engineering business, this is where we have our engineering, our first-party engineering, our technical due diligence, which we're building more and more into that side of the business. I will show you some projects. Yeah, and it moves forward very well.
In our loss prevention business, this is traditionally marine warranty, in oil and gas, in renewables, et cetera, et cetera. We're a market leader in marine warranty, and we maintain our position. In loss management, this is our P&I and hull and machinery business, again, across the globe in maritime, and again, we are the market leader in this type of business.
A little bit more on Add Energy. They also bring integrity management. They bring well control and well engineering to the organization, as well as digital and also various products. This is something new to the organization, and I'm going to touch on that in a few moments. Not much change in the headcount during the quarter. Again, traditionally, Q3 is a lower quarter in terms of offshore operations, particularly in the Middle East.
You would traditionally see a dip in the headcount during Q3. This was not the case as much during the course of Q3 this year. We're now running at over 1,060 employees. It's still in the same 62 offices, in the same 83 countries. We are still continuing to grow that and will continue to grow that going forward.
I'm gonna just focus on this a little bit because this is what made the difference to us during Q3. Apart from the traditional oil and gas being 50% and renewables being 31% and still growing, and our maritime being 19%, it's the graph on the right-hand side, the table on the right, which I wanted to focus on a little bit.
We have been pushing very hard to be less reliant on one region, one business line, and one particular service. With the acquisition of Add Energy, this is only for one quarter, and of course, this is a 12-month period. With Add Energy now 3% over a 12-month period, this will add more services and make us less reliant on one particular region.
In the past, we've been very reliant on the Middle East, for instance, for profitability. That is not so much the case this time in Q3. No one region is more than 22% of our overall revenues, and as you can see, it's a nice even spread across the organization. That again makes us very nimble and very agile and helps us to achieve the results that we have in Q3.
An excellent all-round effort to try and spread out our revenues. A few projects that happened during Q3, some interesting projects because they're slightly different than what we normally present, but it is the direction that the organization is going. We want to go more towards net zero. We want to go more towards renewables, more towards carbon capture and so on and so on, with the energy transition, which is still our target of 50%.
As I mentioned, Add Energy brings digital hardware and software solutions to ABL Group, which we did not have previously. In the past, it's all about hours, selling hours. With the addition of Add Energy, we have what we call the Aavis, the relief well inspection tool.
This is a piece of hardware that is being developed by Add Energy, and Trendsetter, our partner over in the U.S. We don't sell this piece of kit, we sell the right to use this piece of kit. In the event of a major well blowout, which we hope won't happen, but should it happen, God forbid, you are able to use this piece of kit to help control the well and hopefully kill the well.
This piece of IP has been developed by Add Energy, along with Trendsetter. Every time we sell this piece of kit, Add Energy or now ABL Group receives 40% of those revenues. Typical clients such as Chevron, and Woodside are our clients, and it just gives an added portfolio and an added piece of business to ABL Group which we did not have before.
They have additional other services as well with digital, and we're gonna develop these going forward. It's a nice addition to the ABL Group. This one for Spirit Energy is more traditional. It's more of where we are and what we've been doing over the past 10 years.
This is a marine warranty project up in the north of Scotland. This is in the North Sea and also in the Irish Sea. It is a three-year contract with a 1 + 1 + 1 extension for decommissioning. It is handled by our Aberdeen office in collaboration also with Canada and Norway, and is for the entire field decommissioning for topside jackets and so on.
Again, part of the energy transition and a part of cleaning up, some of the old stuff which hangs around, which we still need to remove. It's a traditional ABL business, but again, moving more into the energy transition. Another very interesting project that's happened, you've all heard over the recent months about energy security.
As a consequence, Europe had to look at different ways to ensure energy security. This is an LNG project for EemsEnergyTerminal over in Holland, and it was the implementation of an LNG import terminal. This is two FLNGs with which ABL did the technical due diligence for these two vessels. They're also assisting with the commissioning and the installation work, and support services.
This is one of the fastest installations of an LNG terminal anywhere in the world, and ABL has been right at the center of it, assisting them with the installation. It's a fast-track project and very well handled. We want to continue to push into new areas in renewables. We've recently started to dive in Africa, and in particular in South Africa.
This is for 2 GW of renewable energy. It is 1.5 GW of solar energy and about half a gigawatt of onshore wind energy. This is for various clients on behalf of, I'm not gonna say the whole word, for REIPPPP, which is the South African procurement program down in South Africa. We're working for various clients, and we are handling and assisting them with various parts of the due diligence.
If and when these projects go ahead, we hope they will go ahead, our intention is to stay with these projects all the way through to installation and commissioning. It absolutely fits with where we want to be as a company. New style of business, renewable energy transition in a developing market down in South Africa.
It's not only that. Even our renewables is starting to go into biofuels as well. Again, it's exactly where we said as a company we wanted to go. This is a new biofuel plant being built over in Holland on behalf of Shell Energy and Chemicals Park. We are the marine warranty. Sounds a bit strange being a marine warranty being onshore, but we are handling all the project cargo that takes place for this facility.
When it is built, it will be supplying HVO, which is known as renewable diesel. I'm not sure the details of renewable diesel, but it's a renewable diesel plant that is being built, and we are handling all the marine warranty for this installation. Again, fits in with our path and our strategy and our vision for ABL Group.
The last project, it's not the biggest project, but it's a strategic project. We are helping QatarEnergy for their emergency response plan and also their risk assessments of their fields. This is in case a vessel should go walkabout in the field. They don't want them to hit the various installations, and we're assisting them with their emergency response plans and technical assistance to ensure this won't happen.
This project has already kicked off and will finish and complete by the end of Q1. The main reason for this and promoting this is it's for QatarEnergy. Qatar is an area we've been pushing and driving much more into during the course of this year, and it's our first project for QatarEnergy. A big well done to the team over in Qatar.
Last slide before I hand over to Dean. Again, we continue with growing. We want to grow in all ways, shapes, and forms, but our organic growth is about our people and bringing more people into the organization. We've been able to increase our headcount by 10% during the last quarter. This is predominantly driven, of course, by the acquisition of Add Energy.
If you actually take out Adjusting Business as well, it is still a growth across the organization, which is the key thing. It's not only about bringing on Add Energy. We continue growing people in all sectors, all business, all regions of the organization. However, the subcontractor mix is a little bit down.
It's down to 26%, but that is purely because of Q3 and purely because we have the monsoon season, so we don't have as much rig moving operations take place. It's very normal, it's very traditional, and that will pick back up again in going into Q4. We continue to grow. It's a flexible base. We like that. That's exactly where we want to be to allow us to take these humps and lumps and troughs and peaks during the likes of Q3.
It's been very valuable and very profitable to us during Q3. Of course, recruitment is ongoing. We're still driving for recruitment, we're still looking for more people, we're still adding to the organization, and we will continue to do so in Q4 and going forward. That's my gambit for now. I'm gonna hand over to Dean, and he will take you through some of the financials.
Thank you, Reuben. Let me just start by saying that there will be a Q&A session at the end of the presentation, and you will be able to ask questions through the chat section in the webcast. The financials.
Reuben has already gone through this. Just a quick recap. Revenues came in at $44.1 million for the quarter as a whole. It's a 16% jump from the same quarter of last year. 8% increase if we adjust for Add Energy and the sale of the Adjusting Business during these last 12 months. EBIT doubled. Our Adjusted EBIT went from $2 million - $4 million, which we are extremely satisfied with.
Again, just to remind that Add Energy actually had a negative contribution, so we more than doubled on a year-to-year comparison basis. If we look at our segments, we see the same development that we have seen throughout this year.
Our growth driven primarily by our renewables business, OWC, and by the specialist engineers. OWC consultancy increased revenues by 23% compared to the same quarter last year, while Longitude has an increase of 33%. Add Energy, of course, has a contribution. They account for approximately 8% of our revenues in Q3, $5.5 million.
Worth noticing also is that there we do see a slight increase in revenues in the Asia-Pacific and in the Middle East regions, while our European business and our Americas business has slightly lower revenues in Q3 this year than what they had last year.
Strong EBIT contribution from Longitude, 20%, APAC 14%. We have Europe and the Middle East that came in at 10%. We had a slight drop in the Americas business, which has been the most challenging in Q3. Add Energy margin, as I mentioned, negative by - 2% for Q3. Going through the income statement quickly.
We have mentioned $44.1 million in revenues, which is up from $38 million in the same quarter of last year. Reported EBIT $3.3 million compared to $1.3 million last year. Adjusted EBIT $4 million. Adjusted EBIT $2 million, which is a doubling, more than a doubling, if we adjust for Add Energy.
EBIT margin of 9%, 10.5%, double digits, which is the second quarter in a row if we exclude Add Energy. The adjustments we make are the same every, I mean, quarter. They relates to share-based compensations, M&A transaction costs, and other extraordinary and non-cash items. They total, as I mentioned, $0.7 million for Q3.
Our depreciation and amortization costs are $0.9 million, consisting of $0.4 million depreciation on the right-of-use assets, and we do have a $0.1 million amortization of intangible assets following the acquisition of LOC and now Add Energy also, but it has not increased significantly and is still around $0.1 million.
Worth mentioning this quarter too are some special financial items. We did recognize a negative goodwill from the acquisition of Add Energy of $740,000. Our finance expenses did increase somewhat, but that is due to the refinancing of our loans and some extra financial costs related to the acquisition of Add Energy.
Normalized, you can expect around $200,000, should be our normal financial expenses per quarter going forward. Strong financial position. We had a very good cash flow this quarter. We ended the quarter with net cash of $15.1 million, up from $8.7 million in Q2. We had $29.3 million in cash on our bank accounts at the end of our quarter, compared to $18.7 million at the end of Q2. Our bank debt increased somewhat.
I mentioned, I mean, the refinancing related to the Add Energy acquisition and our debt went from $10 at the end of Q2 to $14.2 at the end of Q3. The repayment schedule is $0.9 million per quarter as we move forward.
Capitalized leases of $8.9, and these include also capitalized leases from Add Energy that came into our balance sheet now in Q3. Net cash flow, as I mentioned, $11.2 million, $5.7 from operations, while $5.5 came from increased debts and from proceeds from a share issue in relation to option exercise in Q3. Working capital is very good.
We did say, I have said earlier that we do have a goal to get down to 80%, in the course of 2023. We are down at 76% now. I mean, again, worth mentioning that it's extremely positive now in Q3 and driven again by the integration of Add.
Do not expect a 76% as we go forward. We have said that 80% is our target and our expectation is that our working capital will start moving up towards 80% but stay stable at that level as we move forward. Dividend, again, good news for our shareholders.
The board has approved a dividend of NOK 0.3 for the second half of 2023, which means that we in total will have paid out NOK 0.6 per share in 2023, corresponding to about $5.9 million. Shareholders owning the shares at the end of November 4th, which is tomorrow, basically are entitled to the NOK 0.3 dividends. Payout date should be expected around November 11th, and the share will go ex-dividend on Monday the 7th. That was so much from me. Reuben, back to you.
Take that. Thanks. Okay. Thank you, Dean Zuzic. As I hope you can all agree, it has been an excellent quarter in all respects. It is the highest revenue quarter that this company has ever had. Of course, that does include Add Energy. But even putting Add Energy to one side, for Q3, which is traditionally a weaker quarter, it has been the best quarter that this company has ever had in terms of revenue generation.
If you also look at our EBIT margin and our EBIT for the quarter, it's also record-breaking for Q3. A lot of hard work has gone in to do that. A lot of things have happened over the last year or two to get us to that position so that we're no longer reliant on one business, one region, one location, one segment.
We continue to drive, we continue to push, and this has been an excellent quarter for Q3. A big well done. Apart from those, the cash as well, as Dean has mentioned, has been exceptional. There's been a big drive to get the cash into the organization during the quarter, and that has resulted in record cash flows as well across the organization, including, of course, we had the share options which we put in there as well.
Nevertheless, the cash generated by operations was also excellent during Q3. We acquired Add Energy in the back end of Q2. First of July, they joined our organization. There is an ongoing process to integrate Add Energy into the organization, and from first of January, they'll be fully fledged and fully into the business the way we would like them to be.
That operation is ongoing right now with more announcements to come. We believe we're ahead of where we want to be. The fact that we've already got them to a very close to breakeven position in such a short period of time is exactly the way that this organization operates. A good quarter for Add Energy as well.
The way we see the market going forward, there is no change. The renewable industry continues to run at pace. We are growing at pace. We are recruiting and recruiting and recruiting in the renewables side. We see no stop in that at all. We have decided as an organization to drive renewables and to keep growing that headcount at the cost to some extent of gross margin and all of that. Nevertheless, we will continue to grow our renewables business.
The oil and gas side of things is also exceptionally strong. We can see more growth in the operations side, and going forward into 2023 and 2024, we expect to see the same in the CapEx side as well. That is going very well across the organization. Rates are continuing to harden as well, which we like.
Going forward, as Dean Zuzic has just announced, we have just declared another dividend. That means for this year we have paid out a total or will have paid out a total of NOK 0.6 per share, which is a good return on investment, I believe, for our shareholders. We continue to keep driving for operational excellence for our shareholders. Going forward, we continue the ambition of 50% from renewables and energy transition-related businesses.
You've seen some of the projects that we are going exactly in the direction. If you see where we were this time last year to see where we are this year, the level of projects, the type of projects we're doing are very different, and we continue that drive towards energy transition, now at 31%, with our target still being 50%.
Last but not least, we continue to consolidate. We believe we had an excellent acquisition with Add Energy this year. It was the right acquisition for this company. It was the right size for this company for this year. That is already seeing the benefits. Going forward, we will continue with our M&A activity as long as it's within the right sector and it fits within the structure of ABL Group, but we will continue to consolidate going forward.
That's really all I had to say for today, myself and Dean Zuzic. A big thank you to everyone, our shareholders, our owners and our board and all our team, and in particular our staff for an excellent quarter. Well done to everybody. Thank you very much for your time and attention today. We are open to any questions. I don't know if there's any questions in the room or online. In the room.
We do have one question online here. The question is: The margin in OWC looks a bit lower than the average. Are there high growth costs there due to the higher growth rate, so it should improve as the growth slows down o r are there worries that it will be harder to reach the 10% margin goal as renewables eat more and more of the cake?
Overall, renewables does not make today what you see in oil and gas. However, as an organization, we have said very clearly we want to keep growing renewables. There is a cost to that growth. We are bringing on people. The headcount in renewables this year is extraordinary. We continue to drive and drive and drive.
When you bring people on inside renewables or any business, they're not highly utilized overnight. That is a strategic decision that we have taken to grow the business. We have a choice. We can either stop and increase the margin in renewables, or we grow the revenue and increase the headcount. Our intent is to increase the headcount. We've made that very clear, and we will continue to do that.
They're running at 5%-6%. If we stopped, we could get that to 10%. We have made it very clear to our renewables team, keep growing that top line, keep growing the headcount across all businesses. There's no surprise that they're running at 5%-6%.
As I say, I mean, just to understand the magnitude of this, I think very crucial, correct me if I'm wrong, around 70-80 people this year. Basically, these people are going on half. I mean, profitability takes 6-9 months until we get full effect from them.
Yeah, I mean.
We bear the costs, and we don't get them in revenues until 12 months have gone past, at least.
Remember, the source of the people joining the company. These are not people with 40, 50 years of experience that you just bring on board and overnight they become 80% utilized. That cannot happen. A lot of them are graduates, as well, young in their careers, and we bring them on board, and it takes time to train them and bring them into our way. Of course, therefore, there's a direct impact on our utilization and ultimately our profitability. Nothing unexpected. In line with what we hoped. Do we have any further questions?
There is one additional question here. Can you please provide any insight to the acquisition of H.O.S.E. International ?
Well, it's just happened, but it's a very small acquisition, and it's very strategic for what we want to do in the inspection services, rig inspection. We can say a little bit more about it in Q4. It's only happened last week. It's a very small acquisition. I mean, it's not adding huge numbers to our top line. It's purely allows us to do more that we wanted to do in rig inspection services. That's probably the best I can say for now.
Then we've reached the end of our questions.
That's great. Once again, thank you very much, everyone. If for any reason we don't see you between now and the end of the year, have a great holiday season, and we look forward to seeing you again in Q1 next year. Thank you.