Welcome to the Röko Q4 report conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions- and- answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to the speaker, CEO Fredrik Karlsson, CFO Johan Bladh. Please go ahead.
Okay. Welcome everybody. We will give some comments to our year-end report 2022. If you look at this first page, we have something we called net sales rolling 12 months. We are now at SEK 5 billion. On the profits, EBITDA profits, we're SEK 1 billion with a profit margin of 19%. What we have achieved that is actually in 3.5 years collect 22 companies with this kind of profit margin. That it actually helps in difficult years like 2022. All our companies have not been able to push through price increases to compensate for the inflation. Actually, if you look at our reported numbers in the year-end report, we've lost 1% margin points. Because we have such a high margin from the beginning, it's not too bad.
We have a good cash flow. We had after-tax cash flow of SEK 550 million. If you look in the year-end report on the performance of the mother company, we actually received from our daughter companies SEK 519 million, of which 37% was repayments of loans. We're actually able to get the cash flow up to the mother company. I'm going to comment a little bit on our minority debt, which is a little bit different to. Because we have in all our companies minorities, and it's about 30% on average. This minority debt, this is increased by every acquisition we make because all in every company the management remains invested or invest at the time of our acquisition.
In this year, we started reevaluate, make a reevaluation of the minority debt, which is basically everything is basically put call debt. Actually we increased the value by SEK 160 million due to this re-revaluation. It shows that all the companies we bought in 2019, in 2020 in aggregate have increased their profits. Now I'm handing over to Johan Bladh, our CFO.
Thank you, Fredrik. We can continue to look a little bit at the business segment development. Our companies are independent, but given similarities in their end markets and the possibility of knowledge sharing, we have grouped them into two segments, B2B and B2C. During the fourth quarter, we saw strong growth in net sales and EBITDA for the B2B segment. In B2C, we experienced sales growth but EBITDA declined. For the full year, we saw strong growth in net sales and EBITDA for both segments. As Fredrik mentioned before, we have seen and experienced something basically since Q2 this year, and it is that we have struggled to transfer cost increases to our customers in a sufficient manner. This holds true for both business segments.
On top of that, or as one of the reasons for it, we have an exposure to the U.S. dollar, where we procure more goods in U.S. dollar than we sell in U.S. dollar. The U.S. dollar appreciation against other currencies have impacted us negatively in the full year 2022. We can go on and speak a little bit more about what we are and our characteristics. We are a focused but sector agnostic serial acquirer, and we focus predominantly on a set of financial criteria, which is high margin businesses that have shown consecutive earnings growth historically. We like to invest in founder-owned and family businesses, and this is the only thing that we have done up until today.
As Fredrik mentioned before, which is the reason for this put call debt, we like it if local management remains or becomes shareholders in their companies. On average, they own 30% of the respective subsidiaries. Why are we sector agnostic, you may ask. The main reason for being sector agnostic is that we can cast a relatively wide net and be able to look at more opportunities and hence be selective in the ones that we acquire. The clear evidence of that is shown on the next page which shows Lifco's development since their IPO in 2014. Where the very focused segment, Dental has grown with approximately two times, whereas Systems Solutions, which is a sector agnostic part of their business, have grown 10 times in the same period.
That's really because you have more opportunities to assess and evaluate. If we look a little bit on how do we assess and evaluate our different investments, we are very focused on, as mentioned before, the first two or three here, which is high margin businesses with continuous growth in profits and that we like to back existing management teams, i.e. management in place. The key takeaway from this slide, otherwise, I would say is that we have become more stringent over time regarding our set of acquisition criteria. As you can see, the acquisitions listed here are in chronological order, and you see the number of, the frequency of X's become more prevalent towards the end.
While being stringent in our criteria, we have increased the pace of acquisitions since we started 3.5 years ago, and really took a step up in 2021, which we remained almost in or maintained almost in 2022. The main driver behind the step-up in acquisitions is that we have acquired larger companies in 21 and 22, as can be seen on the right-hand side. I think this has been a clear shift in focus from us, not an indication that we will always buy these larger companies going forward, but the likelihood that we will go back to the smaller ones from 2019 and 20 is probably not gonna happen. We have an overview of the portfolio companies that we have acquired up until today.
I think the key takeaway here is that the average entrepreneur who sells to us is actually not selling because he or she wants to retire immediately. They do it more as a long-term succession planning or taking some money off the table, which can be shown or can be seen to the left-hand side here, with most of them being in the 45 to 60 year bracket, and quite a lot of them actually even below 45 as well. We have acquired companies in five different countries in Northern Europe, and on aggregate, our companies are growing, which you could also see in our organic growth numbers. To summarize, we have a few slides on our current position on investment highlights.
We believe that our lean, decentralized, and experienced organization have shown capability to invest in profitable companies in Europe and to build a diversified group of companies. That we can continue to do so. Our shareholders have, since our initiation, increased their commitments with approximately SEK 1.1 billion, which was done in during 2022, and we have a shareholder approval for a new share issue of up to SEK 1 billion, which could happen in the current year or next year. This shows that we have committed shareholders and ensures that we can maintain relevance as acquirers in Europe going forward. What have we done up until today and where can we go?
In 3.5 years, we have grown to 1 billion SEK in rolling 12 months EBITDA, which is around the same level as Lifco were when at the time of their IPO in 2014. We are uncertain about the market climate, of course, going forward, even though I think we can be certain that it will be a little bit more challenging, at least in the near term. We also have a higher financial leverage with a net debt to EBITDA ratio above three times as of today, which is different from what Lifco had in 2014.
The leverage level we will aim to reduce to a similar level at the point of an IPO, and we shall see where we can get to. That was all in terms of slides from us. With that, we will open up for questions.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Christian Binder from Redeye. Please go ahead.
Hi, thanks so much for taking my question. I wonder whether you could elaborate on the current M&A market? In the report you write that it's more volatile and you expect maybe a lower number of transactions. Can you just elaborate on why that's the case, why there are less transactions and more volatile times?
What our feeling is, if we take the year 2022, as interest rates have increased, we feel less competition from private equity. Believe that's the reason why we've been able to go up in size, on average size, doing the acquisitions. I think you have a question on the multiples as well. I think there is one standard multiple for this kind of company is about 8x EBITA.
Not EBITDA, EBITA after D. We are close to that, what we are paying on average.
Right. Understood. Also a question regarding the minority debt. Can you just elaborate a little bit more on when is that gonna be exercised? Is it pretty much at your discretion or could it be that at a certain point, it's a pre-determined exercise and so to speak, you need to deploy cash on acquiring these minority stakes?
Yeah. The minority stakes, when we close the deal, we always sign a put and call option with the time, with a definite time. Normally, it is five to 10 years after closing. The first major year where they have a significant amount to pay out is 2026. As we treat this as bank debt, minority debt, we will actually finance it by bank loans. it won't impact any... We don't need any rights issue or anything like that.
Got it. Just the last one from my side. You write that you have around SEK 450 million, I think, in capital commitments. At the same time, you got approval for a larger share issue, and I guess everyone-
Yes
... is kind of speculating, about a potential listing. Just in theory, do you plan to use those capital commitments before potentially considering an IPO or anything of that sort?
It's as we don't really know as a. On IPO, we just want to. We have this, the recession. I don't know if they're going into it or if they're in it. I don't know how it will develop. With this money, they just to be able to go on without an IPO until they know what is going to happen with this recession. We will make maybe. I think right now we've done most of the preparations from the point of decisions until they have an IPO is about four months, and we haven't made the decision yet.
Right. Got it. That was all from my side. Thank you so much.
From Johan here, we got a question on the steadily grown or steady growth rate in average acquisition size and to what extent that results in more elevated multiples as competition for such sizable companies is a little bit more fierce. I think, we have paid on average almost exactly the same multiple each and every year that we have been in this business, so 2019, 2020, 2021 and 2022. It has been around 8x EBITDA As Fredrik alluded to. Then the second part of that question was if that's the reason behind the somewhat contracting Return on Capital Employed. I think, just to elaborate a little bit on that.
The Return on Capital Employed decreases 1 percentage point in the current year versus 2021. The main reason for that is that we completed a relatively large acquisition, our largest acquisition actually, to date on the 29th of December, which then has an impact on the Capital Employment or Capital Employed side of that calculation, but doesn't add anything to the profits. It's a, call it, timing issue to some extent. The other part of the response to the Capital Employed development is that we are growing relatively fast and we're growing predominantly through acquisitions. Capital employed is more or less a, it's more or less tied to what we pay for acquisitions.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad.
Okay. It seems that there are no more questions. Thanks a lot all to listening in to myself and Johan. Looking forward to the next quarterly conference call. Thank you very much. Bye-bye.
Thank you very much.