Welcome to ABL Group's Q1 2026 presentation. My name is Hege Norheim. I'm the CEO of ABL Group, and I will be presenting the results together with our CFO, Stuart Jackson, who will join me in a minute. Let me start by drawing your attention to the disclaimer, which I will leave for you to read and absorb on your own, and onto the summary of our Q1 results. Let me start by establishing that ABL Group is on track building the platform for 20% ROCE in 2027. Q1 results shows this, as mentioned during my last presentation of Q4, with some restructuring costs, continuous work on improving agility in the business to changing markets, as well as investments in structures and technology that will take some time before it materializes in improved performance.
Our revenue this quarter is down compared to last year, last quarter, and last year, mainly driven by low seasonal activity in our North Sea marine operations in one of our brands, AGR. However, with the third vessel added in the fleet, which can operate contracts in sub-sea operations, P&A or plug and abandonment, cable campaigns, and decommissioning segments which are showing high level of activity, we believe AGR will show improved performance going forward. Also results in Longitude negatively impacted by delays in anticipated project awards are also expected to improve with high-order intake around quarter end. Worth noticing on our revenue and results is also that our ABL segment business in the Middle East has been very strong despite the conflict, due to a hardworking team in the region which has delivered strong results.
Q1 adjusted EBIT was on par with Q4 of $3.1 million and 3.7% margin. This was positively impacted by non-cash items of $1.1 million. As mentioned, ongoing cost reductions and investments in efficiencies are expected to show improved profitability going forward. Negative cash flow from restructuring provisions in Q4 led to increased net debt during the quarter as expected. This is also impacted by the conflict in the Middle East, where slower cash collection actually is one impact on the company. Let me start with a quick reminder of who we are and where we operate. ABL Group is a global technical consultancy driving safety and sustainability in energy and oceans, with around 2,000 employees across 77 offices in 43 countries. We have been through rapid growth, partly due to acquisitions, and are now 10x the size we were in 2018.
We operate in three markets, oil and gas, renewables, and maritime, and through four segments, ABL, AGR, OWC, and Longitude, where ABL is by far the largest segment in terms of EBIT contributions. A few words on our four brands. ABL, a global leader in loss prevention and loss management. AGR are specialists in drilling well and subsurface. OWC are renewable specialists and environmental consultants, and finally, Longitude, who delivers third-party design and engineering end-to-end projects in energy and maritime. ABL Group does about 8,000 projects per year. To showcase what typically is done by the different brands, we want to highlight one for each of them here for you. ABL segment in Q1 has won, amongst many other projects, a marine warranty survey contract, ExxonMobil's Hammerhead Deepwater development offshore Guyana, covering FPSO installation and complex marine operations.
The project will be executed in 2027 and 2028 and reinforces ABL's long-standing relationship with ExxonMobil across the Stabroek block. AGR in the quarter added, as previously mentioned, the AHTS vessel Aquaman II to its fleet to service clients in the North Sea on P&A, plug and abandonment, and subsea decommissioning work. We believe this vessel, together with the two in the fleet already, Ross Eagle and Sunny Lady, will have a strong offering in the months to come. Sorry. From OWC projects, I will highlight a typical technical due dil they do for buyers or sellers or lenders across sectors. The project was for Q ENERGY France as a buyer of a stake in Pennavel, expected to be France's first commercial floating wind farm to be operational in 2031. Finally, from Longitude, we highlight their new PSV design launched during the quarter.
A few years back, we acquired a ship design company called OSD-IMT, which has a strong reputation in the market, and we are seeing good traction for our new designs. Before I let Stuart take you through the more detailed financial update, I want to draw your attention to two proposals made by the board to the general assembly later in May. The first one is renaming the group back to its root, Aqualis. The reason for this is to eliminate confusion currently arising from dual use of ABL, both at group level and segment. This will allow the expert brands to be the ones in the market targeting their segment clients. It also follows naturally from the drive we have of giving the segments more autonomy and commercial focus. The group brand Aqualis will mainly focus towards investors, growth initiatives, and support services with real synergies.
The logo you see here in the legacy is the legacy one and only meant as a placeholder while we are redesigning before implementation later this year. The second proposal for the AGM is to give the board the authority to relist the company on the Euronext Growth Market with two qualifications. One, the acceptance in Norwegian law of Euronext shares as part of ASK Holdings, which is currently being discussed among Norwegian lawmakers. We will not submit a relisting application before that is in place. Second, that the relisting is approved by the Oslo Stock Exchange. With that, over to Stuart.
Thank you, Hege. Good morning, good afternoon, everybody. I'd just like to take you through a bit more color in terms of the financials for the quarter. Firstly, the bridge we have in relation to revenue and EBIT. As Hege's mentioned, from a revenue perspective, the main downturn in terms of our revenue to NOK 82.4 million was the activities associated with AGR. This is their seasonally low quarter for vessel operations, so it's as expected. In relation to our adjusted EBIT, we see we're relatively flat in terms of 3.2 to 3.1 compared to the fourth quarter. Some ups and downs in that respect. OWC, despite a slight negative, I think they've had very strong performance, and I'll come to that on the segment slide.
For AGR's perspective, there's some small flow-through from the vessel operations downturn in revenue. But that's a relatively low margin pass-through business, so it has less impact in terms of the EBIT. More of the impact here has been the well control operations during the quarter have had a pretty low quarter in terms of activity. From the Longitude perspective, you also see a negative position here. You recall, as we've said a number of times, this is a generally lumpy business. There's lots of turnkey contracts, so it's very dependent on where we are in either completion of projects or commencements of projects. We have good orders coming through in terms of our Longitude business, but actually we haven't had that much activity in the first quarter associated with commencement of those businesses.
That's been a drag in terms of the earnings through that quarter compared to Q4 of 2025. The significant positive, as Hege mentioned, we have a historical provision where the risk profile has changed. As a result of that, we've released NOK 1.1 million of that provision. This is a non-cash item, obviously non-recurring item. Beyond that NOK 1.1 million, obviously there's an improvement in terms of corporate costs, and that's reflecting the restructuring activities that we took in the back half of 2025. Turning to the segments and firstly ABL. As I mentioned, ABL I think has had a very strong quarter.
We did have to make a provision of NOK 0.3 million in relation to a bad debt in Mexico as a result of one of our clients filing for bankruptcy after the quarter-end. That hit has been taken, but even with that, we're sitting at 17.5% in terms of the EBIT margin for this sector, this segment, and obviously this is the largest segment within the business. Absent the activity in the Americas, the other three regions, APAC, Europe, Middle East, and the Middle East region have had very strong performance during the quarter. As Hege mentioned, despite the activities in the back half of the quarter, the Middle East region has performed very well during this period.
In relation to AGR, as I've mentioned, sort of two different pressures on revenue and EBIT. The pressure on revenue is the vessel operations, where we've had less activity and a seasonally low quarter. The pressure on EBIT has been around the well control activities. We just had a slower quarter than we had in the fourth quarter of 2025. I would say underlying this, we also have the Australian region, which is actually doing very well in terms of performance within the AGR business. As Hege mentioned, we're also taking on board a third vessel. We secured access to that, we anticipate as the season starts to change, that we'll have more activity associated with the vessel activities in the AGR business going forward.
From an OWC perspective, you're aware that we've been taking restructurings in OWC throughout 2025, and actually we've taken further restructuring activities in the first quarter of 2026. This business is, you know, it's had an improvement in terms of EBIT margin, but it's bouncing around the breakeven level. Yeah, we need to see an improvement in the market to help us in terms of recovery in this business. The good news is that the sales activity we've had through the first quarter has been higher than anticipated, so we're confident this will start to pick up as we go forward. Finally, in terms of the segments, the Longitude segment. As I mentioned, you know, commencements and completions are important in terms of timing of EBIT in this sector.
We've had a slight downturn in terms of the volume of activity in Q1, but a more significant downturn in terms of the EBIT margin, because we haven't had the commencements of the projects we anticipated, and therefore we're incurring the cost of the people without the revenue coming through at the same time. We are, as we said with OWC, we're also seeing with Longitude, higher order intake than we've had recently. you know, we're confident this market will start to pick up as we progress through 2026. That's the segment. We put them all back together in terms of the group results and look at the abbreviated financials. From an income statement perspective, revenue down 7% and operating costs down 9%, so broadly in line with each other.
Do recall the NOK 1.1 million provision release goes through our operating costs, so that's impacting that level. The other major change you'll see in terms of depreciation, amortization, obviously we made impairments in Q4 of 2025, we're back to a more normalized level in terms of depreciation and amortization as we go through Q1. That leaves us with an EBIT on the face of the income statement of NOK 1.6 million, we have our adjustments to EBIT. I'd highlight firstly restructuring and integration costs, so lower than we had in Q4, as I said, we still have restructuring that we've been going through in Q1, we've adjusted those out of our EBIT as they won't be a recurrent item.
We have the normal adjustments around M&A activities, PPA activities, et cetera, which gives us NOK 3.1 million in terms of the EBIT performance through the quarter, so similar level to where we were in Q4 and at 3.7% in terms of revenue. Turning to the cash flow, just highlight the net cash outflow from operations was NOK 4.5 million during the quarter. You'll see from the top of this statement that NOK 6.3 million out in terms of working capital. We have a buildup in working capital traditionally within the first quarter, so that's as expected. We do have restructuring costs going through in the quarter, so that's a one-off item.
As Hege mentioned, from a payment perspective, we have seen an interruption of payments in the Middle East in the back part of the quarter, but that has rectified itself in April, so we've had very strong receipts in the Middle East during April. In terms of investing and financing activities, not much to mention other than the drawdown of NOK 4 million under the RCF to manage the working capital facility position we have within the business during the quarter. That leaves us with NOK 12.1 million in terms of cash at the end of the quarter. From our balance sheet position, NOK 12.1 million cash, NOK 24.2 billion in terms of the short-term borrowing, so a net debt position of NOK 12.1 billion at the end of the quarter.
Reflecting the cash flow outflow from operations and then the drawing under the RCF during that period. Working capital, as you see, the ratio we have of looking at our working capital balance relative to the last three months of revenue, an uptick in terms of Q1. We ordinarily have an uptick in Q1 because of seasonality. We expect that to come down as we move into Q2. In addition, we've had a higher step up because of the Middle East interruption in terms of payments and receipts from that period. The other thing I'd highlight in terms of the RCF, during the quarter, we have completed the extension of the RCF, its maturity has moved from 2027 to 2029. Finally from myself, dividend payment.
We mentioned before we're anticipating a dividend payment of NOK 0.45 per share. This will go to the AGM on 27th of May for approval and then payment in the middle of June. In terms of dollar amount, this represents $6.4 million, an increase despite the fact that the dividend per share is keeping flat, and that's as a result of the appreciation of the NOK during the period. Obviously, this payment comes out in NOK. In terms of maintaining our dividend level, what I'd say is, you know, we're confident in terms of where we sit from a financial perspective at present. We're confident in our markets going forward and therefore, we're confident in sustaining this level of dividend payment as we move forward. I'll pass back to Hege.
Thank you, Stuart. Let me round off with some comments on our markets. As mentioned, in the beginning of our presentation, almost 75% of our revenues come from the oil and gas sector across our segments or brands. We all know that the market is impacted by the conflict in the Middle East, both long-term and short-term. Parts of our business lines are related to big investment decisions and new developments. These are expected to be somewhat pushed out in time due to the sense of uncertainty in the short run. On the other hand, we see a need for energy and diversification, and potentially also a following maintained higher price on oil seems to indicate more investments going forward in the mid and longer term.
Our more operational services like jackup rig moves have held up well despite the conflict in the Middle East reducing offshore activity. We have seen the number of contracted rigs fall as regional oil companies seem to be using the conflict as an opportunity to recontract. We expect these numbers to recover. Our business is also increasingly found in the renewable segment, both offshore wind and onshore. We did exit the U.S. renewable markets in Q4. The growth in our revenues are strong in Asia. We see an increased focus on energy security and independence driving interest in renewable developments, especially in Asia. The Middle East conflict has also delayed the ongoing reductions in financing costs and commodity costs, putting pressures on projects profitability.
We see that large bankable markets and developers are pushing through while the smaller are still struggling. The maritime market renders about 10% of our revenues, twice of this in the ABL segment and is very stable. With the conflict in the Middle East, however, we have seen an uptick in the need for our help due to increased claims to insurance companies, as well as a shift to China. The Far East for vessel repairs, which also increases costs and claims. To summarize, reduced revenues and group profitability in Q1 2026, but ABL segment was stable underlying performance despite turmoil from the Middle East conflict. AGR reduced performance driven by seasonal impact on marine operations.
OWC improved from previous quarter, recovering from the slowdown in Europe and stop in the U.S., and challenges in Longitude driven by delays in contract awards. We are proposing semi-annual dividend of NOK 0.45 per share to be paid in June this year, and we have a positive outlook through 2026 and 2027. Yes, ongoing and new conflicts maintain energy market volatility, delaying client decisions. There are short-term pains as offshore activity is reduced in the conflict areas and inflation financing cost remains elevated. The mid-long term, we are positive as energy security increasingly seems important, reflected in discussions with clients across all energy sources and our war risk insurance market activities and higher repair cost underpins increased activity in the ABL's maritime business.
We remain active in M&A, and we expect improving performance through 2026 from cost and efficiency initiatives targeting Return on Capital Employed of 20% in 2027. With that, I think we open up for questions.
We have multiple questions online. First, you mentioned war risk insurance market and higher repair costs underpins increasing activity in ABL's maritime business. Can you give any concrete examples of new mandates won specifically because of elevated war risk activity, and is it possible to quantify this as a revenue opportunity?
I think we would say we don't comment on specific mandates given to the business per se. I think it's clear that we find ourselves with a very strong brand in the insurance market for war risk and war insurance. This activity is certainly increasing, and we've seen high activity in the Middle East servicing these clients.
In Q4 2025, ABL's Middle East performance was described as particularly strong on rig moves and MWS. In Q1, the margin came down from 18.4% to 17.5%. Is the modest decline a mix shift issue, or does it reflect any conflict-related project delays and cancellations in the region?
Well, we see the activity in the business in the Middle East as incredibly strong, yeah, given the conflict and the, you know, the environment they're working in at the moment. I think the ABL segment's results are more or also impacted by the down writing of bad debt in Mexico, which is a one-off.
Group adjusted EBIT margin has been range bound between 3.6% and 4.2% for the past 5 quarters. What is the phased roadmap from 3.7% today to the significantly increased margin required for 20% ROCE?
I think we, as I've said, are quite bullish on the outlook on the revenue side, so we will continue that growth in the business. As I've also alluded to, we are working on the businesses being agile in their local markets. We are a global company, diversified, I would say, in terms of both market segments as well as, you know, a lot of business is very local. Our ability to adjust to the local markets is one of our main focus areas to build a platform towards increased profitability.
We are doing investments to make sure that we become more efficient as a group. Those are the main pillars I would say to respond to or to increase our profitability, which we feel quite good about the path we are on.
I think there are things that we can control and things we have less control. Things we can control is the cost within the business relative to what's going on in the market. That's why you've seen in, you know, the back half of 2025 and also in the first quarter of 2026, we've had restructuring costs. We've been managing that cost base relative to what's going in the market. The bit we have less control over is what's happening in the market. I think, you know, we've indicated as we've gone through this presentation, some of our businesses are showing positive signs as we go into 2026, so that'll help in terms of the overall improvement of the business.
Remind people that, you know, whilst we've been at a lower level because, you know, markets have been down over this period, you know, we're seeing better signs going forward, and our target through the cycle would be the 6.5% for the mix of businesses that we have.
In Q4, the CFO said restructuring costs would continue into Q1. That process would be completed. Q1 still shows $0.7 million of restructuring charges. Is the restructuring truly complete, or are there further charges expected in Q2?
I'd say from my perspective, you know, our restructuring activities and adjustment of EBIT is complete through the Q1 period. That's for managing the current activity. We continue to look at how we can become more efficient in the business. I wouldn't preclude that we make changes at some stage in the future, but you know, the program we've been having at present has come to an end at the end of the first quarter.
In Q4, the CFO described Longitude as having a very strong backlog position and a weighted pipeline. If the pipeline was strong in February, why did project awards slip further in Q1? Is this a client decision-making problem driven by macro oil price uncertainty or a competitive issue?
I think there's a differentiation between award and commencement. Award is nice to have, but commencement of project is the more important aspect of it. I think there have been some delays in terms of commencement of those projects we got awarded in the back part of Q4 last year and into Q1 of this year. That's where therefore we don't have the revenue associated with those, but we have the people there ready to start those projects.
The AR7 offshore wind allocation round in the U.K. was flagged as a green shoot at Q4 2025. Has AR7 actually translated into new contract awards for OWC in Q1, or is execution still lagging?
I think we still await how this will impact OWC. That's it has not turned into execution of projects for us yet. We remain, you know, positive in working on the U.K. activities in OWC.
You state, "We remain active in consolidation of the energy consultants industry." Given the higher net debt, are you actively in dialogue on any near-term bolt-on deals? What is the leverage ceiling you're comfortable with before pausing M&A?
Wanna take that one?
Yeah. We're active in terms of looking at opportunities. We haven't closed anything in the last three quarters probably. There is an active pipeline that's being managed and negotiation is going on. The benefit we have of the RCF facility in place is that using our existing cash, our own cash or the RCF facility to finance the acquisition of new businesses. Historically, we've been using shares to do that, which has been a far more costly way of acquiring businesses. I think with the extension of the RCF facility we have, we have negotiated accordions attached to that facility, so we can increase the facility as our performance improves. You know, we have the firepower to then go into the market and make acquisitions.
Both our existing cash and the RCF put us in a strong negotiating position against other people when we're doing that.
On the question of Euronext Growth. Can you please elaborate on your thinking behind the proposal to relist to Euronext Growth? Cost and resource savings appear minimal compared to the cost of lower visibility and potentially reduced trading liquidity. Alternatively, a small investment in marketing promotion could enhance liquidity and valuation. Furthermore, if delisted, the company could remain untradeable until regulations allow ASK to hold growth shares. Any thoughts on the timing there?
This is a proposal from the board to the AGM. Their view is that this is a marketplace that seems adequate for a company like ours that are growing and with opportunity to then have less costs involved in trading. We think this is going to work out well for the company. The timing of it will remain unclear until we see how the regulations in Norway proceed. I think that's really the answer.
The final question online is, why do you show a revenue EBIT bridge from Q4 to Q1? I thought it would be more relevant to look at Q1 2026 versus Q1 2025.
Well, I think, despite the fact I've mentioned seasonality 2x this quarter, traditionally our business has been far more seasonal, and therefore we've made the comparison back to the previous year. We think it's less seasonal at the moment, so it's more important to look to the previous quarter. As we have acquisitions coming through, it allows us to pick up the difference of acquisitions a lot more effectively as we're talking about the numbers. We do continue to provide month months of, sorry, 5 quarters in terms of comparison.
We have no further questions.
Thank you.