Welcome to this third quarter presentation for Borgestad. First, an introduction of ourself. With me today, as previous quarters as well, we have Bendik Persch Andersen, the CEO of Höganäs Borgestad Group. My name is Pål Feen Larsen, and I am the CEO of Borgestad ASA. Before we start, I would like to inform you that a Q&A session will be held after the presentation, and you may enter your questions through the chat function. The presentation deck is also available at borgestad.no and in a more extended version than we will present here today. This quarter represents another strong quarter for Borgestad Group. Höganäs Borgestad continued to deliver solid operational performance, reflecting good underlying operation across underlying business. At the same time, Agora Bytom continued its positive development, further supporting the overall performance for the group. September also marked an important milestone for Borgestad.
After a long process, the group finally received the decision from the Swedish Supreme Administrative Court regarding the sale-leaseback transaction of the two production properties in Bjuv. The court decided to not grant leave to appeal, thereby removing the outstanding condition for completing the transaction. Following the decision, the final transaction agreement was signed in the beginning of October, and the transaction was closed mid of October this year. With the Bjuv transaction completed, Höganäs Borgestad will now continue its works to determine the optimal long-term setup for group's production. Several alternatives have previously been assessed, and the objective is to identify a solution that support efficient operations, competitiveness, and the group long-term development. Importantly, this leaseback arrangement in Bjuv provides Höganäs Borgestad with the flexibility to continue production at the existing facilities up to five years.
This provide sufficient time to evaluate alternatives carefully and implement the preferred long-term solution in a controlled manner. The strong operational performance combined with a solid financial position and completion of the sale-leaseback transaction has further strengthened the group financial flexibility. Considering this development, I am particularly pleased that the board of directors has resolved to distribute a dividend of NOK 1.5 per share. This represents an important milestone for Borgestad and allows us to return capital to our shareholders while maintaining a strong financial position. Including the dividend announced today, Borgestad has distributed a total dividends of NOK 2.8 per shares since May 2025, corresponding to approximately NOK 100 million in return to shareholders over the last one and a half years. If the current operations performance continues, Borgestad expects to continue distributing excess cash to shareholders through dividends.
For third quarter, Borgestad Group delivered a result before tax of NOK 48 million compared to NOK 47 million in Q3 2025. Year-to-date revenues ended at NOK 886 million compared to NOK 876 million, and EBITDA at NOK 121 million compared to adjusted NOK 103 million for first nine months in 2025. Last 12 months, adjusted EBITDA margin for the group ended at 12.1%. Höganäs Borgestad has increased EBITDA margin from 7.5% fiscal year 2025 to 9.9% last 12 months 2026. Agora Bytom stabilized EBITDA margin last quarters above 50% and achieved an EBITDA margin of 54% in the quarter. Both segments are performing well financially. Interest-bearing debt and net interest-bearing debt decreases per September 30th, 2026 compared to same date in 2025. Available liquidity stood at NOK 138 million, and this is before the sale-leaseback transaction was completed in actually fourth quarter or mid of October.
To sum up, Borgestad Group remains solid and fully financed. Let's go into Agora Bytom details. Rental income in NOK decreased by 0.7% in Q3 2026 year-on-year, reflecting a negative currency effect from the depreciation of the euro against the Norwegian krone. Measured in EUR, growth remained positive and with rental income up 8.4% in Q3 year-over-year. The trend for Agora Bytom is positive, and we review a positive trend month by month, both in revenue and EBITDA. Agora Bytom had a debt as of September 30th at EUR 28.2 million. In June 2024, Agora Bytom entered into an interest hedging covering 70% of the outstanding loan amount. As euro interest rates rise these days, Agora Bytom remains well-positioned with 70% of its outstanding debt hedged until maturity end of December 2028.
As of September 30th, 2026, occupancy based on signed leases was 96.8%, a decrease of 0.6% points from June 30th. Agora Bytom has a leasable area of 34,200 sq m. As shown in the graph, Agora Bytom has developed occupancy rates strongly in recent years, including increasing leasable area with 1,100 sq m by reducing common area. The occupancy rate is expected to stabilize going forward. Management is currently evaluating the conversion of approximately 800 sq m to reduce the space occupied by existing tenants and create new office space in the center. If completed, the project is expected to generate approximately EUR 100,000 in additional annual rental income. Agora Bytom benefits from a diverse tenant base and a healthy weighted average unexpired lease term of about 3.5 years to four years, ensuring low contract duration risk and high visibility for years ahead.
Contract duration is well spread over time, with the first due top 10 tenants in Q1 2028, and more than 60% of contract measured by number of square meters is due in 2030 or later. Tenant turnover at Agora Bytom increased 1.5% in Q3 2026 compared to the same period in 2025. Last 12 months, turnover increased by 1.2%. Number of visitors are stable at 4.7 million visitors per year. Bendik, then let's go into Herøya Industripark.
Yeah. Thank you, Pål. First of all, it's a pleasure reporting the figures for the third quarter for Herøya Industripark. We delivered revenues of NOK 354 million and an EBIT of NOK 56.3 million compared to NOK 333 million and NOK 49.6 million in last year's third quarter, respectively. This improvement reflects the positive impact of cost reduction measures, improved operational efficiency, and ongoing internal improvement initiatives, but also the fact that we once again completed several really successful projects thanks to great project management and efforts by everyone involved.
Market conditions are, as we communicated in the Q2 presentation, slightly showing signs of improvements following an extended period in which customers have postponed maintenance and investments. While this is obviously encouraging, customers remain highly cost-sensitive, and the competitive environment continues to be characterized by significant price pressure. We therefore remain cautious about the pace of the recovery, but see a gradually improving underlying market.
Internally, we have continued to strengthen the business during the quarter. Several targeted initiatives have been implemented to improve governance, project execution, and cost control. These measures are already contributing to a more disciplined organization, although we still see further improvements, and we will continue this work going forward. As part of our ongoing efforts to streamline the group and focus our resources on the core business, we have decided to discontinue a loss-making subsidiary in Sweden during the fourth quarter. While this is a relatively limited part of the group today, the decision reflects our continued focus on simplifying the organization, addressing underperforming activities, and improving profitability. Overall, we remain cautiously positive. Market conditions are gradually moving in the right direction, while the measures we are taking internally should further strengthen the business and provide a solid foundation for improved performance going forward.
As previously highlighted, the Nordic refractory business has a clear seasonal pattern, with the majority of projects taking place during the warmer periods. This is evident in the second and third quarter, which historically represent around 26% and 31% of our annual revenues. Combined with the relatively high fixed cost in our operations, these fluctuations naturally have a meaningful impact on our quarterly profitability. With that backdrop, we delivered a somewhat weaker than expected first quarter, which was caused partly by a slower market, but also the fact that we had some project-related issues, which was highlighted in the first quarter presentation. Since then, the development has been very strong. We delivered a record strong second quarter, followed by an even stronger third quarter, so this quarter, which was the best quarter that we have ever delivered as a group.
At the same time, the impact of our commercial efforts should be viewed over a longer horizon. The sales cycles in our industry is typically long, with a minimum 6- 12 months, and in many cases also several years between the initial customer dialogue and actual project execution. Consequently, initiatives being pursued today will not necessarily translate into revenues immediately, but should increasingly contribute to activity and growth through 2027 and 2028. Looking at our trailing 12-month performance, the EBIT margin has improved to 7.5%, up from 5.6% at the end of the first quarter and 6.2% for the full year 2025. This reflects the continued focus on profitability, cost control, and operational efficiency, combined with strengthened commercial efforts in all three countries.
While quarterly results will continue to fluctuate due to project timing and seasonality, the underlying development is positive, and we remain committed to our medium-term target of an EBIT margin of 10%. As part of this work, as I mentioned in the intro, we are currently discontinuing one of our subsidiaries, which has been loss-making for several years. The decision reflects a broader ambition to exit activities where we do not have a clear competitive advantage and create a more focused and profitable group. This subsidiary in question has negatively impacted our trailing 12-month EBIT by approximately SEK 12 million , and its discontinuation, together with the resulting sharper operational focus, is therefore expected to have a meaningful positive impact on group profitability from 2027 and onwards.
As previously communicated, and as mentioned by Pål in the introduction, the sale-leaseback of our two properties in Bjuv was delayed for almost three years due to the legal process surrounding the municipality's approval of the transaction. In September, the Swedish Supreme Administrative Court declined the grant to leave appeal, which brought the legal process to an end and allowed us to move forward with the transaction. The sale-leaseback was subsequently completed now in mid-October, which means that the properties have now been sold to the Bjuv Municipality, while Höganäs Borgestad will continue to lease and operate the properties for the time being. The completion removes a longstanding uncertainty for the group and represents an important milestone as we move forward with the longer-term production setup. With the transaction completed, let me briefly summarize the key terms of the transaction.
The properties were sold for approximately SEK 139 million , resulting in an estimated accounting gain of around SEK 113 million , which will be recognized in the fourth quarter. The proceeds are paid in three installments, with 60% received at closing in October, and the remaining 40% over the following two years. At closing, we also used parts of the proceeds to reduce interest-bearing debt by SEK 10 million . From an operational perspective, we will continue to lease the production facilities in Bjuv. The lease initially covers the full 52,000 sq m for the first two years, rent-free, before decreasing to around 35,000 sq m after two years. Importantly, the agreement provides us with significant flexibility. The lease has a maximum term of five years, but we can terminate whenever we have a solution for long-term production ready at any time, with six months' notice time.
Overall, the transaction strengthened our financial position while giving us the flexibility and time needed to determine and implement the future production setup.
Let's look at the financials for Borgestad as a whole. Revenue increased by 5.8% in the third quarter 2026 and 1.1% year-to-date compared to same period last year. EBIT in the third quarter ended at NOK 60.7 million compared to EBIT of NOK 54 million in Q3 2025, reflecting improved profitability within Höganäs Borgestad Group as the main contributor. EBIT in first nine months 2026 ended at NOK 85.7 million compared to adjusted same period 2025 at NOK 51 million. Including EBIT year-to-date 2026, a write-down of fixed assets in connection with a tenant change in Agora Bytom is implemented. Net financials are stable year-over-year, both for a quarter and the year-to-date, except for a foreign currency loss in third quarter of NOK 5.7 million. It's also worth mentioning that the sale-leaseback transaction is not included in the figures, as communicated both by Bendik and myself.
The transaction was closed in mid-October and will have a positive impact of NOK 112.67 million in the fourth quarter. Working capital stands at NOK 281.2 million compared to NOK 352.1 million as of September 30th, 2025, mainly driven by a decrease in trade receivables and inventory within Höganäs Borgestad. Per September 30th, total interest-bearing debt stood at NOK 453.8 million, while net interest-bearing debt was at NOK 348.2 million.
Reducing working capital has been a key priority for the group, and meaningful progress was achieved during Höganäs Borgestad's high season this year. Further improvements are targeted for 2027, supported by specific initiatives that have already been identified. Net cash flow from operating activities for the third quarter was positive by NOK 16 million compared to a positive NOK 29.3 million at the same period last year. Year-to-date cash flow from operating activities was positive with NOK 11.3 million and negative with NOK 63.4 million same period last year.
Cash flow from investment activities during the first nine months is negative with NOK 20.2 million, and it's a 50/50 split between investments in Agora Bytom and Höganäs Borgestad. Net cash flow from financial activities is negative with NOK 38.1 million first nine months compared to a positive NOK 4.6 million year-to-date in 2025. The main difference is the utilization of bank overdraft that is lower in the first nine months of 2026. Per September 30th, available liquidity stood at NOK 137.8 million, including undrawn credit facilities, meaning that Borgestad has a good financial and liquidity situation. The graph shows the composition of gross debt, including lease liabilities. Borgestad maintains a sound and balanced debt position with Agora Bytom's loan-to-value ratio below 50%. Höganäs Borgestad's debt is at NOK 43.3 million at the end of September.
As Bendik mentioned, the debt was further reduced by SEK 10 million upon completion of the sale-leaseback transaction in mid-October. A blended leverage ratio of 2.5x represents a strong level for Borgestad, particularly given that most of the group's debt is linked to Agora Bytom property. Borgestad remains confident in the long-term perspective of its assets. In addition to continuing the operational development of Höganäs Borgestad and Agora Bytom, the group will actively evaluate consolidation opportunities within the refractory business. Borgestad believes that selective acquisitions may strengthen market positions, expand capabilities, and increase scale, and contribute to long-term shareholder values. The fragmented nature of parts of the refractory market may present attractive opportunities for strategic growth through acquisition. Borgestad remains committed to execute its strategy for both Höganäs Borgestad and Agora Bytom, which holds both strong market positions in its local markets.
The group's ongoing focus is improving profitability and further strengthening operational performances. Borgestad has not changed its position that has been communicated over a while. Agora Bytom is an asset which is going to be sold when board and management believes that timing is correct. With increased interest rates in the Eurozone, we do not believe that timing is at this point in time. Then, Bendik, I think we leave over to the Q&A session.
Yeah. We have four questions, starting with a question on Höganäs Borgestad. The presentation describes Höganäs Borgestad as on track to deliver on the medium-term 10% EBIT targets. What do you see as the most important drivers on that path, and how much of it is within your own control rather than dependent on the market recovery? Well, I would say that this target of 10% is based on the current market conditions. We strongly believe that this is fully in our own control. We should be able to achieve 10% by continuing our internal improvements. The discontinuation of the loss-making subsidiary in Sweden is obviously one of those efforts. But in addition to that, we have quite varying profitability on project execution, somewhat person-dependent project execution, which we continue to improve.
I would say that, of course, the market is affecting our profitability to a large degree, but this is also to a large degree within our own control. Yeah. Next question, what are the plans regarding the sale of Agora Bytom?
Yeah, I think I actually addressed it in the outlooks, but Agora is to be sold. The decision to exit Agora Bytom has been taken, but we will wait until we have information that the liquidity and the market position is good, and that we can have a good and comfortable sale process. So, at the time being, it's not been executed.
Yeah. Then we have two more questions on Höganäs Borgestad. Starting with, "The leaseback gives you up to five years to decide on the long-term production setup. What are the main criteria you will weigh when choosing between the alternatives?" If we take a step back, look in our back mirror, we closed down our main bricks production in 2021, production of commodity bricks, so standard shapes, which we are currently sourcing. The production we have today is highly specialized, and both special tailored bricks and monolithics, so unshaped products. These product categories are vital to our current business, and we therefore say vital to find a long-term good setup for this production. On the main criteria, I would say that we need to find a good solution, efficient, to find an efficient logistics and also maintain key competence.
We have high competency within the group, and that will be key criteria. I would say those two will be the main criteria when choosing between the alternatives. Next, you note that the market conditions are showing signs of improvements after a period of postponed projects, while the order book stood at NOK 106 million at the end of the quarter, compared with NOK 145 million a year ago. In which customer segments or geographies is the important improvements most visible, and how should we interpret the lower order book in that light? I would actually say that what I am really pleased about with this improvement over the last few quarters is that it is a general improvement in all three countries. We are showing good signs across the boards.
We also see that it is a positive development across several, I would say most of our segments in which we operate. Of course, the lower order book, it is a good question. The order book only reflects the signed orders, and it is not necessarily a good representation of the business going forward, as a lot of our business is, let us say, highly We know that it is coming, but it is not necessarily signed orders. I would not put too much emphasis on the order book.
Which is also shown in the history.
In the history, yeah. We have Let me just go to new question. "When the sale of Agora Bytom is completed, what are your plans with the cash generated from the sale?
I think then I can recall and communicate what the chair of the board actually communicated a while ago. When Agora Bytom is sold, the cash is, and again, is planned to be distributed to shareholders as dividend. If or when we are going to make new investments in the future, we will do that through fundraising or, yeah-
Capital raise.
Capital raise also, yeah.
Okay. That was all the questions.
Thank you very much for attending, and have a nice weekend when the time comes. Thank you.