Good morning, and welcome to the Q3 update for Arendals Fossekompani. My name is Benjamin Golding, and I'm the CEO of Arendals Fossekompani. Together with me here today is CFO Lars Peder Fensli. Arendals Fossekompani is a long-term industrial investment company. We invest in B2B growth companies operating within the energy and/or technology space, and we drive sustainable value creation in our portfolio companies through active ownership. Today, Arendals Fossekompani holds six main investments, in addition to a number of smaller assets. Our companies have presence across the globe. Over time, AFK has built a diversified portfolio of B2B companies focusing on industrial technology and energy. Volue and our other smaller investments are pure software companies. NSSLGlobal delivers both software, hardware, and data services, while Enrix and Tekna are world leaders in cutting-edge industrial technologies related to advanced materials, additive manufacturing, and induction heating and power transfer.
In addition to this, AFK also owns a real estate portfolio consisting of properties related to our businesses, as well as some local real estate development projects. Finally, hydropower is our oldest business, which we've owned for over 100 years. We have controlling interests in all companies except Volue. Here, we hold 40% and co-own the company together with Advent International and Generation Investment Management. Our portfolio spans the entire life cycle, from startup through growth equity to mature companies. Over the last year, we have continued to execute our clear strategy to optimize, de-risk, and focus the portfolio toward growth equity and more mature companies. In line with this strategy, we will not pursue new Early-Phase investments. Last quarter, we made organizational changes in order to optimize cost and simplify the governance of our existing early-phase investments.
After the close of the quarter, we took another step in executing our strategy of reducing early-phase exposure by divesting Factlines. Moving to the right in this picture, we find our growth companies. These are larger and have more mature business models and have access to a wider range of financing options. Our focus here is to develop asset value using a typical private equity toolbox, while at the same time maintaining the unique benefits that come with our long-term ownership horizon, our deep industrial roots, and our flexibility in terms of partnership models. The mature businesses on the right of the figure generate cash that is used for dividends and to drive organic and inorganic growth in the less mature parts of the portfolio. Our business model is to create value through forward-looking investment, disciplined capital allocation, and active ownership.
We divest when we assess that we are no longer the best owner. We continuously work to optimize this picture to ensure balance between cash generation on the one hand and attractive capital allocation options on the other. Now, let's take a look at the highlights from the quarter. Group revenue ended at NOK 853 million, down from NOK 909 million last year. The 6% decline year-on-year was primarily driven by a challenging quarter for ENRX and lower hydropower production. As a result of lower revenues, group operating profit came in at NOK 33 million, corresponding to a margin of 4%. Earnings after tax ended at NOK 733 million in the quarter due to a financial gain in Volue. Despite lower revenue and operating profit numbers, on group level, we note several solid achievements in the individual portfolio companies in the quarter.
Volue delivered 24% revenue growth year-on-year and a cash EBITDA margin of 19%. NSSLGlobal saw high airtime and project completions, delivering a strong quarter with a healthy operating margin of 19%. Tekna reached an important milestone, delivering its first positive EBITDA quarter since IPO. Now, let's take a closer look at our main portfolio companies. Volue is one of Norway's largest software companies. The company delivers software solutions for energy and grid. The company aims to become the number one software provider for the European energy system by 2030. Performance in the quarter has been strong, both in terms of growth and margin expansion. With an ARR growth of 22% and a cash EBITDA margin of 19%, the company is delivering its second consecutive quarter as a rule of 40 company. The strong growth in recurring revenue is contributing to scale effects, which are driving profitability.
In the quarter, Volue's insight and trading solutions have shown strong momentum due to the introduction of 15-minute time resolution in the power markets. This is driving the need for accurate price forecasts and software solutions. Volue completed the divestment of its infrastructure business unit to FSN in the quarter, realizing a NOK 1.8 billion gain. After the close, the company also completed the acquisition of SmartPulse, a leading full-suite trading and battery optimization platform for asset owners and aggregators across Europe. The acquisition will accelerate Volue's expansion into Central and Eastern Europe. Through our ownership partnership with private equity players Advent International and Generation Investment Management, we have a clear and united goal to contribute to accelerate growth and value creation in the company. We will measure our success in ARR growth and cash EBITDA margin. These KPIs drive the value of the company.
With our 40% stake, Volue is and will continue to be a cornerstone in the overall value development story of Arendals Fossekompani. ENRX is a leading manufacturer of industrial heating and charging systems based on induction technology. The company saw a revenue decline of 12% in the quarter and a negative operating profit of EUR 0.9 million. The negative operating profit was due to the relatively low heat revenue in the quarter. This was driven by challenging market conditions, particularly in North America and China. Since early this year, the heat business has been experiencing longer sales cycles. Customers are pushing investment decisions out in time due to uncertainty created by political turmoil, unstable tariff schemes, and tension in the US-China trading relations.
In addition, a global oversupply in the automotive production capacity has negatively affected the demand for hardening machines, which is an important product category within Enrix's heat business. Despite revenue decline year-on-year in the quarter, Enrix is maintaining its heat market share as market conditions are affecting all players in the industry. Enrix's charge business saw a revenue decline of EUR 0.9 million year-on-year. The market for industrial induction charging is still at a relatively early stage, resulting in lumpy revenue and order intake. Enrix is taking both short and long-term actions to adapt to the challenging market conditions and increase profitability and cash generation across the group. These include revenue initiatives, process optimization programs, as well as personnel and material cost reductions. In the immediate term, several cost reduction initiatives will be completed in Q4, with expected run rate effects in Q1.
Enrix holds a strong position in the industrial heating segment, but the market for heating products is expected to remain challenging over the coming 12-18 months. Customer decision-making processes will continue to take longer than normal as high uncertainty is dampening customers' investment appetite. Enrix will continue to implement cost reductions in the coming months to adapt to the market outlook and improve profitability and cash generation. NSSLGlobal provides secure satellite communications for defense, government, and the maritime sector. Revenue came in at GBP 24.9 million, corresponding to a 5% growth year-on-year in local currency. The growth was driven by high airtime traffic and completion of certain large projects in the quarter. The company also delivered a healthy 19% operating margin in the quarter. NSSLGlobal saw robust sales momentum, winning new contracts and contract extensions worth GBP 16.8 million.
The demand remains strong, with 12 multi-million-pound tender opportunities in pipeline. NSSLGlobal's strong market position is underpinned by a solid customer base, proven technology, innovative products, and a strong customer-centric organization and culture. We see significant growth opportunities within projects in the coming years and continued growth of the defense segment. Tekna is a leading manufacturer of plasma systems and metal nanopowders used for 3D printing for defense, aerospace, medical, and automotive industries. Tekna generated a revenue of CAD 8.3 million in the quarter, corresponding to a top-line growth of 9% year-on-year in local currency. The growth was driven by a record-breaking quarter in the materials business, which grew its revenue by 28% year-on-year. The materials order intake, on a trailing 12-month basis, was CAD 32.5 million, equivalent to a 40% growth year-on-year.
As a result of strong materials growth, favorable product mix, and operating cost reductions, Tekna has delivered its first quarter of positive EBITDA since IPO, and this marks an important milestone for the company. Tekna is also further strengthening its position by resetting its balance. After the close of the quarter, the company announced that it has entered into a financing agreement with Scotiabank and that it is planning to execute a fully underwritten NOK 300 million rights issue. With this, Tekna has fully funded its business plan toward its 2030 targets. Hydropower production in the quarter was 83 gigawatt-hours, down 48% from last year. This was due to limited snow reservoirs in Q1 and low precipitation and inflow during Q2 and the first half of Q3. The average power price in the NO2 price area was EUR 67 per megawatt-hour, up from 38 year-on-year.
Not enough to offset the low production. As a result, total revenue from hydropower in the quarter ended at NOK 59 million, with an operating profit of NOK 36 million. Our smaller early-phase investments are reported under other investments. These investments include Qantali, a provider of data analysis for the seafood industry; Veit, providing analysis related to green certification and carbon markets; UTel, providing solutions for monitoring telecom networks; and Select, providing software for managing large-scale battery parks. In the quarter, Veit and UTel delivered double-digit ARR growth year-on-year. We expect to see continued ARR growth over the coming quarters, driven by product development and increasing sales capacity. I'll now hand over to CFO Lars Peder Fensli, who will provide additional comments on the financials.
Thank you, Benjamin. As summarized already, Volue reports a strong quarter with top-line growth and solid margin expansion.
As a result of the divestment of its infrastructure business, Volue recognized an accounting gain of NOK 1.8 billion in the quarter. Just as a reminder to the audience, AFK recognizes financial results in Volue based on our ownership of 40%. The consolidated operating profit for the group is in the quarter negatively impacted by low hydropower production and lower revenue and operating profit in ENRX, partly offset by improved operating profit in Tekna. Also worth highlighting is NSSLGlobal, continuing to deliver strong results with improved operating margin in the quarter. Consolidated earnings after tax ended at NOK 733 million, reflecting a solid share of profits from associated companies on the back of Volue's divestment of the infrastructure business. Arendals Fossekompani parent company's financial position remains solid. Available cash end of quarter amounted to NOK 720 million.
In addition, the parent company has earned drawn credit facilities of NOK 2 billion, thereby securing available liquidity of NOK 2.8 billion. Net debt, which excludes shareholder loans, was at the end of the quarter NOK 131 million. Looking into outlook for the year, in line with previous quarter's guiding, we expect operating profit for the group in 2025 to be lower than last year. The decline is driven mainly by forecasted lower hydropower production and expected reduction in operating profit from NSSLGlobal and ENRX. Tekna expects operating profit to be in line with last year, whilst Volue expects improved operating profit compared to the previous year. With that, I will have Benjamin join me.
Thank you, Lars Peder Fensli. Finally, let's recap our priorities. Our overarching goal is to deliver an attractive total shareholder return through actively and systematically building net asset value.
We do this by working on three key priorities. We develop value in our existing portfolio companies through active ownership. We work to optimize the overall portfolio, both to ensure a composition that provides the best possible risk-adjusted return, but also to ensure balance between cash generation on the one hand and attractive capital allocation options on the other. We identify and execute value-creating transactions and structural opportunities, both at the portfolio level and at the parent company level. An underlying prerequisite for this is a strong balance sheet that gives us financial flexibility to support our existing portfolio, but also capture opportunities when they become actionable. Now, we'll move over to the Q&A session. First, we'll take a couple of minutes to review the questions.
Okay, then we will move to the Q&A session. We have received a few questions, which we will walk through.
We will start with two questions related to Volue, Benjamin. First one, Volue has been very active over the past year with two divestments and two acquisitions. How do you see the company developing going forward?
With the divestments of infrastructure and Schematic, we obviously have Volue completed its transformation to a pure-play energy and grid software company. Also, the acquisitions of PowerBot and SmartPulse have strengthened Volue in its core segments. Going forward, we aim for continued double-digit organic growth as we broaden our position in the European market. We also expect continued M&A activity throughout the coming year. We are also pleased to see that the company now has delivered two consecutive quarters as a rule of 40 company. That is also the ambition to maintain that performance level going forward.
Next one, also related to Volue. Congratulations on great progress in Volue. Impressive. Could you share any comments on whether proceeds from the infrasale will solely be used for M&A or also dividends up to AFK?
Yeah, so the plan is to use those proceeds for M&A in Volue. So we do not plan to dividend them up to AFK. No. Okay.
We'll move then to a question related to ENRX. In ENRX, you are implementing cost cuts with effect from quarter one 2026. Could you comment on how you expect these measures to affect the margins near term? Is it sufficient to bring EBITDA margins back to plus 10%? Or will also the market need to improve?
Yes, it's correct that we're implementing measures. We do expect those measures to improve, positively impact the EBITDA margin going forward. And we do plan for a softer market.
The cost basis dimensioned, we're dimensioning the cost base for that. We don't provide explicit guiding on margin levels, but we do predict a gradual recovery to historic margin levels. We don't provide explicit exact guiding on that.
Last one related to AFK's M&A agenda. You state that you have a solid balance sheet. What are your ambitions for developing the portfolio going forward?
Over the past one to two years, we have made significant changes in the portfolio in order to have fewer, larger, and more mature core investments in the portfolio. We do see significant unrealized potential in our existing companies as they are. This is currently our main focus. As such, we're not dependent on doing new acquisitions on an AFK level in order to deliver attractive shareholder return. Main priority is on.
Realizing the full value potential in our existing companies. Of course, having said that, we are an investment company, so we'll continuously monitor and follow up a pipeline of opportunities. Obviously, our overarching ambition is to deliver an attractive long-term sustainable net asset value growth based on our portfolio.
Okay. This seems to be all questions for now, and this then concludes the Q&A session. Thank you all for participating.