Once, welcome back from lunch. My name is Karl Bokvist. I'm an equity analyst at ABG Sundal Collier, and today, at this Investor Days seminar, we have the pleasure of hosting Green Landscaping and CFO called Carl-Fredrik Meijer. We will begin with a presentation, and then afterwards, where I will kick off with some Q&A. So without further ado, Carl-Fredrik, thank you for being here, and please, the floor is yours.
Thank you very much. Thank you for listening to me for a couple of minutes. My name is Carl-Fredrik Meijer. I've been doing this for a very long time, over 10 years, in fact, which is quite a long tenure, and it's one of the success factors that I'm gonna talk about today, actually, that we've identified in our business. We are four people in the management team, Johan, Jakob, and Pierre, and we've been working together for nine years soon. And I joined as a head of M&A back in 2013, and then been CFO for the company since 2015. What is Green Landscaping? Just a brief sort of in the numbers. We are at nearly SEK 6 billion in revenue.
When I joined, we were at SEK 700 million, so it's, it, it's been a fantastic growth story. We have a healthy organic growth of 5% per year for the last 3 years. We've been growing at 35% in total, so we've done a lot of acquisitions, which I will come back to. We have reached an EBITA margin of nearly 9%, which is really good, I think, because the average in the industry is just below 5%. We have a capital structure or a debt to EBITDA of 2.5 times. There's been a lot of discussion about debt lately in the market.
Myself, consider between 2-3 times quite healthy, given the interest we pay, and that my expectation of return on equities is quite a lot higher than what we pay in interest. And we have SEK 8 billion in orders currently. Green Landscaping is a home for entrepreneurs. We are the leading player in the Nordics. It says here that we are a consolidator in Europe. I'd like to think of us as more of a collector and a strong owner partner to the companies. The business model is based on heavy decentralization, and I'm gonna talk more about what the advantages are of that. We have currently 50 companies in the group with their own brands, and we are present in five markets. What is our story?
Many of the companies, the 50 companies, they have a history going back a long time. So one of the oldest one is a company called Taimisto Huutokoski. It's well, it was founded in 1952. Then, somewhere around 2000, ISS, the facility company, started to buy companies and consolidate the market. And in 2010, 2009, 2010, FSN Capital bought that from ISS and bought four other companies, and then launched the brand, Green Landscaping. So that's when sort of the Green Landscaping journey began. For five years, focus was on growth and trying to find stability and profitability. It was tough, and in 2015, the current CEO, Johan, came on board, and we changed the strategy to a more decentralized strategy.
We adopted lean methodologies, we reduced cost, we looked at the Danaher Business System for those who are familiar with that, and we improved the profitability quite a lot. We did the IPO in early 2018, and then we bought the biggest competitor in Sweden, called Svensk Markservice. So from this phase, then we had improved the profitability a lot. We were at roughly SEK 1 billion in revenue, and Svensk Markservice was at SEK 850 million. So it was a quite big bite to chew. And we spent then most of 2018 and 2019 on integrating Svensk Markservice.
And out of that, and the old Green Landscaping came, 12, 13 new companies with their own brands, and the last one of them was launched in, actually in January 2022. So it took some time. So that was that phase, and in parallel, after 2019, in 2020, we started buying companies at a higher pace. And we bought, roughly 30 companies, from 2020 and expanded into 4 new markets with the decentralized model. So that's where we come from, our heritage, and gives you an idea of where we're going to. What do we do? We take care of parks and green areas for property owners. That's the middle one, middle box, 50% of our business. We take care of, road and winter services, 15%, so that's roughly two-thirds.
Those two boxes have long contracts, 2, 3, 4, 5, up to 10 years. Then we have one-third of the business. Landscaping is where we do shorter projects. So this is a lot of smaller and mid-sized projects, to enhance the sort of parks and could be playgrounds, could be yards, could be parks, up to very small – a lot of housing associations, fixing the sort of the green area around the building and stuff like that. We have 60% of our sales to public sector, 40% to other businesses, nearly 0% to consumers, so all B2B. To us, it's very important to be number one on the money.
We want to have the contract with the buyer and not being a sub-supplier to another company, because that gives us the power to be close to the customer, which is always good to have a satisfied customer, but it also gives us the possibility to have the power and use some subcontractors when needed. We are positioned in a big and robust market. The market today that we look at, where we're present, is SEK 450 billion, whereof Germany is SEK 350 billion of those. So it's a very large market. I mean, given our sales today is SEK 6 billion, you understand that our market share is quite small, and it's a very, very fragmented market. Especially now, when we're looking upon Germany, it's very, very fragmented.
I mean, we've been operating in Sweden for a long time. We have nearly 30 companies in Sweden. We bought around 15 companies in Norway. We have four companies in Finland, we have one in Lithuania, and as of this year, we have two companies in Germany. So it's the start for us, really, there. And it's not only Germany, it's also we're looking at, of course, the DACH area, so Austria and Switzerland as well. Something about the market characteristics. It's recurring revenue, so customers are recurring and returning to us, and we have the long year, multi-year contracts. It's the public sector. We like the split of having 60% to the public sector because it's a very stable customers and a very stable demand.
What we do is truly taking care of our cities, which is, considered infrastructure, so it's difficult for the, for the customers to reduce spend, to buy our services. So we like that mix, having 60/40. We have seen a robust growth of between 4% and 6%, per year, supported by mega trends. So we see that, we spend more on our cities. We want the cities to be greener. So this is why we have an above GDP growth, in this market and expect it to continue going forward. There are other trends as well, like security. It's very important to have safe cities.
I don't know if you think about it, if you see a schoolyard, where my children are going, they have a lot of installations today, lighting and a football field and play tools and stuff like that, that wasn't present when I went to school. So we are investing a lot in our outdoor areas. This also one of the trends. And of course, we've seen that many people are moving to the cities. So the cities are also growing, which of course makes our market bigger. There's also some delayed maintenance, especially in the sewage area, that we see that there is a big sort of i t needs to be invested more in our infrastructure, and we think that will happen going forward. Resilient customer base.
This is, of course, a hot topic today. How cyclical a company is. We've looked at, on the left-hand side, you will see the spend from municipalities on our type of services we do. It's been growing by 4%, like I said, and we've seen a dip in 2014, and we saw a dip in, or sort of a stagnation in 2018, where the market stopped to grow. And that's what we expect from our markets as well, that maybe we will see the growth slowing down, but we won't see a sharp decline in the demand. And another point is that what we do, we assess to be around 5% of the customer spend, roughly, in the outdoor areas of their total budget.
So it's a very small share of that. I'm sure, Carl, you will come back with some questions around this, I can expect. Let's see. Strong development. So we've been growing, like I said, from SEK 700 million when I joined, to nearly SEK 6 billion. We've during the last 2 years, we've seen a CAGR of 35%. We have had a steady growth in the EBITDA, so we've been from low single digits and moved to nearly 9%. And you have to remember here that we had SEK 2 billion of sales back in 2018, which were low-digit EBITDA numbers or margin. And then we've acquired nearly SEK 6 billion, sort of, what you say, small Ferrari type of companies with a margin of above 10%.
I'm coming back to that because we have actually improved the legacy 18 companies quite a lot. A home for entrepreneurs. This is very important for us to try to be the best owner for these type of companies. So there's a very important trust piece here when we talk to entrepreneurs that is potentially joining the group. It's important to allow them to continue to drive and make decisions in their companies. Because this is local business, you need to be very close to the customer. We are all large owners in the group, which is also something part of our culture, and the entrepreneurs, when we acquire them, they become owners in the group. So we pay, on average, 80% cash and 20% with shares in the group. So we're all owners sitting in the same group.
In fact, we own roughly 20% of the company, by the management and people working in the company. So that's the key thing for us in our sales pitch towards entrepreneurs when we talk to them, why joining Green Landscaping? As I mentioned, we bought 40, 40. We built many companies, and 40 companies since 2017, where most of them in the last years. So we started in 2020, really, by buying 7 companies then. That's was our entry point into Norway as well. And then in 2021, we expanded into Finland, and we continued to buy companies in Norway and Sweden. And then 2022, we bought a company in Lithuania, so the first one in that market. And then this year, we bought 2 companies in Germany.
South of Germany, I would say, Schmitt & Scalzo and Rheine. Yeah, going to leave it at that. Number one in Europe. So we've been quite successful in the Nordics. We've had time to shape our model and see what works and what doesn't work as well. We have now just started to being present in Continental Europe, and we expect that to continue going forward. Market is huge. There are many, many companies. We are extremely picky as well. I forgot to say that. We've turned down maybe 20 deals in the last quarter, so we get a lot of attention now and a lot of companies who wants to join us, and we say no to most of them. Talking about the M&A approach, what are we looking for?
We are really looking for the best companies in class. We are looking for companies with profitability of 10% or higher. We've been looking at that they have a steady growth. It's extremely important for us that they are decent, that they have high ethics, that we share those values. We want to have a strong brand in their community. We do, we call it cultural DD of the company. So we really spend time with people who know the company and spend time understanding the company. Will they fit into the group? Especially the top management, but that goes for all the employees. And of course, we have a very deep discussion about what you want to do in the future?
If we get the idea that or the understanding that actually they want to sell the company and then leave, we are not the right buyer for that company. We are looking for companies that we can shake hands and have a long-lasting relationship going forward with them. And of course, we need to be an attractive partner, if you look on the right-hand side of the picture, for these companies. And that's giving them a lot of authority to make decisions, being very decentralized and create strong financial incentives. That's why I talked about that they become owners in the group as well. Adding value. How am I on time? Okay, 3 minutes. This I can talk about for a long time. We have a wide spread between the companies in our group.
We have 22 companies with a margin above 10%. We have 18 companies between 5% and 10%, and we have 10 companies below 5%. So we are spending a lot of time. It was quite recently, and by recently, I mean in 2020, that before that, the best company we'd had in the group were at 13%. So it wasn't until a few years ago that we started to acquiring companies with much higher margin. And now we're spending a lot of time understanding what makes those companies make that margin by going, talking to them, understanding the culture, the way they work, the process, how they're doing the steps, choosing from demand to bidding until payment or cash, order to cash process. And it's quite interesting.
We share those then with the other companies to try to evolve them. And we've actually seen. So this group I was talking about, the 2018 group, they moved from low single-digit EBITDA margin to 7% now. So it's definitely possible to improve these companies. So that's quite exciting, actually. In terms of cap table, I told you that we own 20% of the group, roughly. We work in the company. We have two owners of flesh and blood, as you say, and then we have some institutional investors, and of course, a lot of retail investors in the company. Loans, they are maturing now in end of 2026. So we have bank loans with three banks.
We have, like I said, 2.5x as a covenant, or not the covenant, but with 2.5x in debt, which gives us a good headroom to the covenant with the bank, and that's the only covenant. We're paying somewhere around 6%, 5.5-6% in interest today on our loans. We have four financial targets. One is growth, 10% per year, both organic and acquisitions. We've surpassed that quite a lot. Actually, we've been growing by 41% last year. We have a target of 8% EBITDA margin, and we are now at nearly 9%.
We should not have a leverage above 2.5 times, and we're at 2.5 times, and we should make a dividend of 40% of net income, and we have not made a dividend. We have invested everything in growth so far. So to sum it up, it's a favorable market that we operate on. Low cyclicality, big exposure to public sector. It's large, we have a very small part of it, and it's fragmented. There are some mega trends driving the growth of the market that I talked about, urbanization and sustainability. We are the clear market leader today in both size and in profitability. We do have a model for value creation that we are sharpening all the time.
We have a proven M&A track record of these 40 M&A deals that we've done. We have strong ESG activities looking at sustainability. And I want to talk about the EPS growth. So the EPS growth has been fantastic over the years, but it has stagnated this year, even though the growth in sales and profit has continued to increase, and that is due to the higher interest. But we now sort of climbed that mountain and are at a what I think is a peak level in paying interest. So the EPS will continue to grow forward if we succeed in our plans. We own a lot of the company, and we are clearly aiming to be number one in Europe. Thank you.
Thank you. Thank you, Carl-Fredrik. So the first one, just going back a bit to over time, you've seen that the majority of your business stems from stable demand, so to say. And now you said-
Mm.
Y eah, given where we are, it might slow down a bit.
Mm.
First of all, I mean, what have you recently seen, given what we can read? Number two, if things turn a bit weaker, what are you doing, or what are your businesses doing to make sure they don't just pursue projects to get sales, that they actually focus on profitability?
Yeah. The good thing about having these 50 companies is that as a portfolio, it's working really well for us. But we have seen some companies continuing to improve despite this market, this tougher market, both in sales and in profitability. We have seen many companies going sort of sideways, operating as they have before. And we have seen some companies decline in both sales and profitability. And, well, that's to be expected all the time, I think. That's life. What I'm comfortable with is that we have these 50 really strong leaders in these companies who have the authority to act, and they are, you know, they are really good at listening with a ear to the ground and making sure that, do we need to do some things on the cost side?
How can we improve the sort of relationship with the customers or what we are offering? Do we need to find new customers, or b ut many of the companies, they have so long-lasting relationship that if they are a bit thin on orders or if they want more work, they can go to the customers and say that, "I actually have some capacity over.
Mm.
What work can we do now?" And usually the customer, "Oh, well, I have some things I want to be done.
Mm.
So I'm very comfortable with that these 50 leaders are close to the ground and making sound decisions about how to operate in if the market is tougher. What we saw last quarter was that around half of the companies in Sweden improved in profitability and made more money than Q3 last year, and we saw many of them being sort of at the same level, and then we had a few who declined. Unfortunately, it was some of the bigger ones that declined. You saw in Sweden, we had made less money in Q3 than we did last year.
M m-hmm. And then, my, my final one is just on the acquisition side. This is a company that has grown both organically and through acquisitions.
Yep.
How do you look at a company to determine that it has actually been resilient, and that it actually has been able to deliver strong, strong performance over a long period of time, and not just?
Yeah.
O ne or two years of-
Yeah.
G etting a good project?
I mean, that is difficult, of course, and requires spending a lot of time with the company. And it's not uncommon to see I mean, it's very rare for the companies to be at exactly the same level in both sales and profitability over a long time, and usually they develop quite a lot. And that's an important thing because sometimes investors, they look at our companies and say that, "Well, oh, you bought this company. It was making 10%, and now it's making 9%.
What happened?" And that has to do with this, that we look on the companies for the last 5, 10 years back, and if they are making this sort of had a hockey stick or made a lot of money just in the end, we will of course adjust the price and see what do we think is a sustainable profit level for this company, and adjust our price, what we pay for them, and then sort of shake hands on, "Okay, so we think that you are making this money over time. Is that correct? Do you believe that as well?" So we spend a lot of time analyzing the history. We spend a lot of time thinking about the future, what do we think is a sustainable profit level for this company?
Mm.
Then we shake hands and say that, "Okay, we like this level. Now let's try to develop the company together." And we like to invest in the companies once they come into the group. So sometimes we talk about a pattern we see that the companies are doing really well. We acquire them, and we get a little bit of dip in the year after or two. And then we've seen in the companies that they pick up again and sort of stabilize or return to their previous. And that could be that they have four teams today, and they can't do more work than that with the four teams, and then we agree that, "Let's create the fifth team." But that costs money in the beginning, before they have revenue and so on.
Mm.
So we like to invest in the companies, both in machines and in-
Mm.
People.
Understood. Thank you, Carl-Fredrik. Thank you for coming. Thank you for listening.
Thank you.
C oncludes this presentation.