Good morning everyone, and welcome to the ABL Group Q1 Results. My name is Reuben Segal, I'm the Group CEO, and I'm also joined this morning by the Group CFO, Stuart Jackson, who will be presenting our financial results. First of all, just to let everyone know, there'll be a Q&A session at the end of this presentation, please feel free to either ask for the people in the audience or to place your questions online. As I said, I'm gonna give you a quick overview of the highlights of Q1. Stuart is then gonna go through the more detail of the financial results, I will round up with an operational outlook and our overall outlook on the industry and how we see ourselves positioned going forward. As always, the disclaimer is there.
Please feel free to read it at your own leisure. Jumping into the Q1 results. Overall, for the ABL Group, it was a very strong quarter. Overall, we finished the quarter with $45.2 million of revenues, which was an annual increase of around about 14%. If you take into consideration the removal of our Adjusting Business in H1 last year and the acquisition of Add Energy, this accounts for about 7% organic growth and around about 7% through acquisition. This was also the highest revenues reported ever in a quarter for ABL Group. It was a very strong top-line performance. In terms of EBIT and EBIT margin, we finished the quarter with $3.6 million of adjusted EBIT, which is up approximately 4% year-on-year. The actual EBIT, though, was affected by three factors.
First of all, through Add Energy. As everybody is aware, we acquired Add Energy last year, which was a loss-making business. In January and February, Add Energy re-reported a loss of approximately half a million U.S. dollars. However, I am also happy to report that in March, Add Energy broke even, and it is our intention to take Add Energy into profit during the rest of 2023. That is something that we said back in Q4. It is something we would like to reiterate again. In addition to that, we paid out annual inflationary pay rises across the entire ABL Group. Those inflationary pay rises took place on the first of January. As of course, any rate increases that we see will take place during the rest of 2023. Finally, it is also the company's strategy this year to grow the top line.
Last year, we spent a lot of time and effort to take the bottom line up, which we successfully did into double digits towards the end of last year. This year, we've made a particular decision to drive that top line as well. To do that, we have to bring on more people. To do that, we did that in Q1, and of course, utilization of our people coming in takes time to filter through into the system. Those three factors did affect our overall EBIT, but nevertheless, in our opinion, it was a very strong performance with $3.6 million and $2.7 of absolute EBIT. In addition, our net cash position was $16.3 million, slightly down quarter-on-quarter due to three factors. First of all, through FX.
Second of all, through working capital increase, which is normal for us during Q1. With all the various seasonal holidays, we had an increase in working capital days during the quarter. Finally, through the acquisition of AGR, we had the costs associated with the acquisition, which I will tell you more about AGR later on in the presentation. Of course, the integration of AGR has now commenced. More about AGR a little bit later. As I mentioned, we did close the acquisition of AGR. We announced it early, back end of Q1, we closed that acquisition on the 18th of April this year. It was a very good acquisition for ABL Group, and we are very happy with the way things are handling so far.
Finally, we are proposing a dividend of NOK 0.35 . This has been recommended to the AGM for payment in approximately June of Q2. That's a quick summary. Different than what we've done in the past, I'm now gonna hand across to Stuart, and Stuart is gonna take you through the overall financial data, and I will come back towards the end of the presentation and give you an operational update. Over to Stuart.
Good morning, everybody. Let me just take you through, I guess, a few more details around the financial numbers for the quarter. Firstly, as Reuben has mentioned on a revenue level and an EBITDA level, and I think we have solid performance. 14% growth in terms of revenue for the quarter. We're only at 8% growth in terms of the EBIT, but as I'll go through in a bit more detail on the income statement the specific reasons for that. Overall, I think a solid performance, and as Reuben has mentioned in Q1, we do have the impact of Add Energy coming through. Going into a bit more detail then, in terms of the different segments we have within the business.
You'll see in terms of OWC, the significant growth and continued growth that we have from that business, which is up 22% quarter-on-quarter. Most of the other areas are showing good improvement, maybe with the exception of the APAC region in Southeast Asia, where we're still underperforming in terms of our expectations. The Americas is behind where we were this time last year, but you do see progression since the fourth quarter when we took some remedial actions in that business itself. Adjusted EBITDA level, we're sitting at 8%-12% across the piece with the exception of Add Energy. I think that's a good solid level of margins for our business going forward. Add Energy for me is an aspect of timing.
We've taken remedial actions in the fourth quarter. We'll start to see the benefit of those actions coming through in the second quarter. We still anticipate over the year that Add Energy will be contributing to the business. You see from a corporate perspective, there's more of a negative in terms of our corporate impact. That's 'cause we're investing in the business more. We're making specific investments around HR, IT, the support, areas within the business. Turning then to the income statement. I guess there are three items I'd highlight here. The first in terms of the impact on EBIT. You look at staff costs.
Our staff costs are increasing by 21% compared to 14% in terms of the overall revenue level, which is why we're slightly behind in terms of the EBIT compared to this time last year. As Reuben mentioned, there are specific reasons attached to that. One is the impact of Add Energy. The second one is the inflationary rises we've had come through effective the 1st of January. The third one is really associated with recruitment. We see strong market conditions going forward, and therefore we're pushing the business to recruit earlier, so we have more capacity as the year unfolds. I want you to draw your attention to the FX line, so net FX gain loss. We have a $2.1 million impact in terms of FX coming through in this quarter.
I guess our description is unrealized revaluation of instruments denominated in non-functional currencies. What does that mean? Well, I guess the first thing is it's unrealized and it's non-cash. This is associated with the ASA company, the top company, being a NOK-denominated company. There's a 7% decline in terms of the value of the NOK against the dollar, and then when we consolidate that individual company back into our top company, we report in dollars. As a consequence, that translation brings into an FX loss for this quarter. The other side of that is that on the other comprehensive income, there's a $2.1 million benefit coming through to the equity, so a non-cash item. Finally, I draw your attention to the tax line.
I don't think you can measure tax on a quarterly basis. You have to look over a longer term. As I mentioned at Q4, we had an effective rate of tax through the year of 40%, and we've had that in previous years as well. In terms of that, the drivers of that, the first one that I would highlight would be withholding tax. We don't believe that we will. We're unlikely to recover the withholding tax we incur in different jurisdictions. As a consequence, the way we protect ourselves is to increase the revenue when we're doing our tendering. I guess I have a bit of a question whether that should be part of our cost of sales rather than our tax, but it comes through our tax line at present.
We're obviously generating profits, so in certain jurisdictions we have corporation tax liability coming through. Where we have losses in businesses, we don't take deferred tax assets, so I guess we have some latent value attached to those. Turning to the cash flow, we start with our profit for tax at NOK 0.3 million. There are certain adjusting items we've got in terms of depreciation, amortization, share-based payments. The changes in working capital, which we anticipated, this has really been driven by the increase in our receivables and our work in progress as we start to gear up the business a bit more. The other item I'd highlight would be in terms of our cash flow in financing activities.
This includes the $800,000 repayment we made to Nordea and the loan that we have there, as well as the debt service we have around our interest and our lease service. The end of the period with a revaluation on the cash on the balance sheet, we're at $28.8 million in terms of gross cash. On the balance sheet, $28.8 million there. We've deducted the short-term borrowings, which are now all short-term, our lending, 'cause it gets all repaid by the end of this year. We're at $16.3 million of net cash at the end of the period.
The other significant movement you see on the balance sheet would be the other current liabilities, that's, as I mentioned, the build-up of receivables and build-up of work in progress as the business starts to increase. Finally, I've mentioned around our borrowings, we have the maturity of the term loans at the end of this year. We're already having discussions with Nordea and other banks about new facilities for 2024 going forwards. Finally, in relation to AGR, Reuben will come back to this in terms of the strategic rationale and the drivers behind this transaction. Sorry, we're on dividends first. Dividends, I should just reiterate that no change from the position we had at the end of Q4.
We are proposing NOK 0.35 per share in terms of payment to shareholders. That goes to the AGM on the 31st of May. Now the one I jumped to, AGR. In terms of transaction here, this was completed on the 18th of April. The final purchase price was NOK 277.8 million . Slightly different to the original anticipation simply because we acquired less cash as part of the transaction. In terms of AGR coming across, it comes across debt-free. The integration of that business is already underway, and the majority of the aspects of Add Energy will be integrated into the AGR business, and this will be shown as a separate business line going forward.
You'll see that coming through as of Q2 of 2023, which is the first time that we'll be showing you results of the combined business. We have shown on the right-hand side just the pro forma impact, you know, had AGR been part of the business for the first quarter, an indication of where our EBIT, adjusted EBIT would be and our adjusted EBIT margins. With that, I'm gonna hand back to Reuben, who will take us through, I guess, the operations and market outlook.
Thank you, Stuart. Let's talk a little bit about AGR. I was delighted to announce that we closed the AGR transaction back in April 18th to be precise, and it's the largest single transaction that this company has done so far in its history. It was an excellent opportunity for us to grow our well services and our well management business. It was an opportunity that we felt fit very well within the strategic vision of the company. Closing that acquisition and the integration that's now taking place is excellent for ABL going forward. Who is AGR? They are a multidisciplinary engineering consulting company, basically related to well management and oil and gas-related activities. However, they are also transitioning into carbon capture, battery storage, and other energy transition-related projects.
In line with ABL's vision and strategy. Around about 81% of their revenues come from what we call resource solutions, which is basically placing people into other organizations. Around about 70% of the revenue is pure well and reservoir engineering, oil and gas focused, and also CCUS-related business and software. Software is a part of the company that we are gonna focus on going forward, as well as the Add Energy software solutions and also within ABL software solutions. It is a part of the company that we want to grow during 2023. Around about 2% of the revenue comes from software. However, 15% of the EBIT margin comes from software. It's an area that we want to try and strategically grow during 2023.
AGR is predominantly based in Australia, where Add Energy is also based. That makes ABL plus Add Energy plus AGR a very large competitor or a very large organization now down in Australia, I should say. In addition, they're based here in Oslo and also in Stavanger, where they have a large resource pool, and also in Aberdeen in the U.K. In total, AGR brings around about 375-380 total FTEs, of which is around about 90 people permanent staff, and the rest are full-time freelancers. Yes, going forward, another $80 million-$85 million of revenues with about 6% margin, as Stuart just mentioned. Overall, it fits in very nicely with the strategy of ABL, and it's a perfect acquisition for AGR, for ABL. Why exactly did we do the transaction?
There's a few things I'd like to mention. First of all, it takes us into new business areas. The new services in particular are related to the resource solutions. It is something that we do not do today within ABL. It brings a nice new service line into the group, and it's something we want to extend into our renewables business and also into our maritime and oil and gas business going forward. Predominantly right now, they are oil and gas focused. It also consolidates our position with Add Energy. Just talking about Add Energy for a moment. Add Energy, half the business is really in oil and gas-related activities with asset integrity, and the other half comes with well services.
We will integrate both the parts of the company partly into ABL and partly into Add Energy, and Add Energy will go into AGR. It's a good place for consolidation of our well services business. It also brings more CCUS and other type of energy transition services into ABL. Again, in line with our requirement and request to go further forward into this energy transition. Software solutions, again, combined with Add Energy and ABL will take this into a new service area going forward in 2023. In particular, if you look at the footprint of ABL and the footprint of AGR, it gives us the opportunity to take AGR's business into the global footprint of ABL. That is something that they've not been able to do in the past due to the various debt provisions that they had.
By removing the debt, becoming debt-free, it allows us to grow AGR across the whole globe. An excellent strategic opportunity for ABL, and we look forward to the integration of AGR going forward. Very briefly talking about our headcount. I said as a company, we said we want to grow the top line. It is important for us not only to grow the bottom line, but also to grow that top line. As everybody knows, getting hands-on resources is getting more and more difficult. I'm thankful to say that ABL has an excellent track record of getting our hands on resources and people and growing organically. Over the quarter, we increased our permanent headcount by 4% net, and we also increased the overall headcount, including subcontractors, by 3%. That takes us now over 1,100 people across the group.
If you then impose AGR on top of that takes us to approximately 1,500 people across the globe. A nice increase in headcount as well as revenues and as well as margin. As I mentioned, we will continue to recruit. There is a big drive on recruitment during 2023. Strong drive already taking place in Q1, and that drive will continue all the way through 2023 with organic growth. I've showed you this slide a few times. As you can see, the oil and gas side has started to increase. That is predominantly because we are now taking nine months of Add Energy, whereas last time I showed you it was only six months of Add Energy. Of course, Add Energy is predominantly oil and gas.
We place that revenue in our oil and gas bucket right now, that means that our renewables number looks like it's reduced to 28%, but it is still the fastest growing part of the organization at a well over 20% year-on-year. No one region is dominating. Europe at the moment is the largest region with 21% of our overall revenues. Add Energy now over a nine-month period equates to 8% of our overall revenues. A nice split in oil and gas, renewables, and maritime, and a nice split across the globe as well. Finally, how do we see things going forward? I think the exciting thing for ABL Group overall is that every part of our business is growing. The renewables sector, this is related to the offshore wind in particular, is growing and growing and growing.
People's forecasts back in 2022 are already being outstripped in 2023, and ABL is staying ahead. Remember, where ABL is working today is where you see installations taking place in 2025 and 2026 onwards. Don't look at what you see in 2022, 2023, look at what's happening in 2026, 2027. That is where ABL plays today, and we will continue that drive. The other nice thing is that our footprint in renewables and offshore wind in particular is staying global, and it is staying ahead of the growth that we're seeing. This is approximately a 22% year-on-year growth, and OWC, our renewables offshore wind part of the organization, is staying ahead of that growth. A very, very nice position for us going forward. Of course, oil and gas. As I mentioned last time, we are seeing an increase, a large increase in E&P spending.
Greenfield activity is starting to now take off. We are already seeing ourselves within the organization. We're winning much more work in marine warranty in Australia and Brazil and other parts where that spending is now coming through to our position in particularly marine warranty. The rig count, of course, is still very strong. You can see a slight downturn that is purely rigs being moved from location to location, as you see more activity picking up in the likes of the Middle East in particular, a lot more rigs moving across. We're also seeing a lot of activity picking up in West Africa, which will be a strong market for ABL going forward. All in all, the oil and gas sector is booming just as the offshore wind sector is booming, and ABL are positioned nicely in both in a global position. A quick summary.
As I said, Q1 for us was an excellent quarter. It was the highest revenues recorded in the company's history. It was an excellent position for us to be in. It was a strong EBIT performance as well. However, they were slightly affected by the three items we mentioned, in particular the pay rises that we gave, inflationary pay rises and Add Energy. I'd like to stress again, it is our intent to take Add Energy into profit. Q1 was not great in January and February, but in March they were breakeven, and we will continue to fix, and we'll continue to build, and we will continue to integrate Add Energy and eventually bring them into profit during 2023. The acquisition of AGR was an excellent opportunity for us. Already that integration is ongoing.
From what I can see already in the financial figures you've seen, Q1 was a very strong quarter already for AGR. It puts us in a nice position going forward once we combine them in Q2. It's a strong market outlook. Oil and gas is strong, offshore wind is strong, renewables is strong, but even our maritime sector is very stable, and we are a market leader in that sector. Again, nice position for us to be in. The capital efficiency of the company is good. We are strong in terms of our capital and our cash. We will be proposing to the AGM a payment of NOK 0.35 dividend, which equates to about $4.1 million, and we will suggest the same for a second dividend in the second half of 2023.
Final comment, which I always make, and we will make again, we made it back in Q4, and as you can see, we followed through with that. AGR was a good acquisition for us in Q1. We will continue to be active. If we see the right opportunity in oil and gas or maritime or offshore wind or renewables, we will look at those opportunities. We want to continue to grow this company organically through bringing on more people and also through M&A activity. If the right opportunity comes along, we will look at it. I think that's all we have to say. Overall, it was a good quarter.
To our staff that are listening, thank you very much for the hard work as always that they put in, and we look forward to presenting our Q2 results to you in due course. We'll stop there, and if anyone has any questions, either online or in the audience, please feel free to ask.
Yes. Tommy Johannessen , SpareBank 1 Markets. Can I start asking on the expected salary increase for 2023? How much of that was taken in the or included in the Q1 figures? Also, can you elaborate a bit about the phasing of expected rate increases corresponding to the salary increase through 2023?
We took a decision, as everyone. I mean, our only asset is our people. No people, no business. We took the decision to give pay rises of 5%-6% across the entire organization. That's the entire permanent staff and also freelancers as well. It wasn't only our permanent staff. Those pay rises hit our bottom line, or gross margins, everything. It hit a whole company on the first of January. It wasn't that it came in in February or March. We took that decision on the first of January. You see that straight in our figures today. In terms of rate increases, they're steady. We are seeing rate increases. We continue to see them. Of course, they come in as contracts phase out over Q1, Q2, and so on and so on.
We are still seeing rate increases. We are still able to push our rates, it didn't happen on first of January. You have this lag effect. We saw it in Q1 last year. You see it in Q1 this year. There's not a surprise. Last year we did not give the same level of pay raises as we gave this year. Sorry, the second question, I couldn't hear very well.
No that was.
That was, yeah.
That was it.
Yes, I mean, we're still seeing what we want to see is happening, across the board.
Perfect. Thank you. On Add Energy, you had breakeven in March.
Yes.
Is it fair to assume that you could deliver positive EBIT in that segment in Q2 already, or is it too early?
Well, I wouldn't like to say 100% yes. I don't wanna say no either. What we have done, we have taken the asset integrity side, and we've placed that into ABL. The well services side, we're placing into AGR. We will integrate that business fully into the company. What we saw in March, I think, is a good indicator of where things are going. We also looked at their software solutions, and we've played with that a little bit. Some of the costs that you see, particularly in the U.K., there was a large cost for the office. That has reduced in March as well, which of course is some of the improvement.
What I will say to you is the improvements will continue. I don't want to say to you on the 1st of March or the 1st of April, we are seeing a positive signs of improvement. Hard work is still ahead of us to get them in fully integrated. The intent is still to get them not only to break even, but into positive territory and adding to our bottom line during 2023.
Thank you. Last question on the geographical segments. You saw solid improvement on EBIT in Europe and Americas, while Middle East declined a little bit quarter-on-quarter and year-over-year. Could you talk a little bit about your outlook for the various regions through 2023?
Yeah, I can. Middle East, Middle East, all the rigs are in the Middle East. If you look at history, we've always done very well in the Middle East. There were some weird stuff that happened in the Middle East, nothing to do with our business. For instance, in ONGC, there were some boat-related issues which meant some of the rig moves didn't happen. In Saudi Arabia, there was a new rule that came into play with some of the operations. It had nothing to directly affect it to us. Yeah, I wouldn't like to take a month-on-month or a quarter-on-quarter in Middle East. Middle East is still an extremely strong market, and you're seeing more rigs coming into the Middle East and India.
Of course, monsoon season is coming, so there'll be a bit of a downwards trend in India in particular. Middle East is a strong market for the rest of 2023 onwards. The Americas, if you saw in the past, was a problem child for us. You've seen the figures. I think it was 11% margin, if I remember correctly. A lot of work has gone into there. Mexico is doing very, very well. Brazil is doing very, very well. It looks strong for the rest of 2023. Europe is doing excellently well. We are in maritime, oil and gas, renewables, we are all parts of the business in Europe in various different countries. Some are up, some are down. They also cover West Africa. The positive trend is there as well in Europe.
The only area where it's been a little bit hesitant for us is particularly in Southeast Asia. We have a lot more competition in Southeast Asia. There's a lot more small players picking here and fighting there for business. We're in a strong position. Our Chinese operation in particular, our Australia operation, which you're seeing is doing very, very well, winning a lot of new work, which will come in back end of Q4. Outlook for me is good across the whole organization. You'll get these ups and downs and pluses and minuses. I think if you go back to our Q1 in 2022, you did not see 11 and 12% across the board in ABL. It was more in the 3% and 4% and 5%. The position is strong.
Perfect. Thank you.
Any more questions online?
No more questions online, no more questions in the room.
Great. Okay. Well, thank you very much everyone for attending. We look forward to presenting our Q2 results in a few months time. Thank you.