Welcome to the Sdiptech Q2 Report 2019. Throughout this call, all participants will be in listen only mode, and afterwards there'll be a question and answer session. Today, I am pleased to present CEO Jakob Holm and CFO Bengt Lejdström. Please begin your meeting.
Thank you very much. We just jump right away into the presentation. Welcome, everybody. We move forward to the second page of the presentation. Actually, we move forward all the way until page number four in the presentation, where we will start to just a brief introduction of the company and our business areas. Sdiptech, we are an infrastructure technology group, as you all know. Our offering is directed towards the infrastructure sector, currently about 1,100 employees. Our business is conducted in our subsidiaries, 31 at this moment. We have a steady growth in net sales on a compound annual basis, 38% since 2016. Mainly driven by acquisitions, but also deriving from solid organic growth over the years. We move forward to the next page number five.
Just briefly, I would like to touch upon the underlying trends in the market for the infrastructure sector. There is some long-term underlying growth in the infrastructure sector based on that the infrastructure surrounding us is aging. When we talk about the infrastructure sector, it's different segments in terms of the energy segments sector, water sector, transportation sectors, and so on. The infrastructures were built during the '50s, '60s, and '70s. They are aging, and there's a need to upgrade and rebuild them. Due to increasing living standards in our societies, the capacity requirements continue to grow. A lot of investments need to be done over many years to deal with the increasing demands within the sector. We move forward to the next page. This is more about a few timeless drivers of change that drives the pace of change within the infrastructure sector.
Going back to increasing living standards and awareness about the environment surrounding us, the global climate changes, and so on. Sustainability, efficiency, and safety are strong drivers of change from these societies, but also from consumers, policymakers, and so on. A lot of the improvements within the societies and the increase in living standards, they are implemented in the infrastructures surrounding us. This calls for specialized technologies, specialized products, solutions, and services to deal with the upgrades that continuously exist within the infrastructure sector. This is also an ideal home for niched technology companies, and this is also the business model that Sdiptech has, is to identify successful niched technology-based companies within the infrastructure sector.
We do have the underlying demand in the market and also a good basis to grow through acquisitions since there are a lot of niche companies in the infrastructure sector. We move forward to the next page and move forward when we start looking at the business areas. We move forward to page number eight, where we start off with our business area, Water & Energy. This business area currently, last 12 months, has for the sales at approximately SEK 550 million, an operating profit margin, EBITDA* at 18% currently. When we look at the operating profit EBITDA*, this is our largest business area accounting for 43% of the EBITDA* within the group. I could just give you some examples that is going on within the market. If we start off by looking at the water area.
In total in Europe, there are water sewage and freshwater pipes totaling 7 million kilometers, and a lot of these systems are aging. Actually, there's a leakage within freshwater pipes in Europe accounting for the consumption corresponding to 200 million people in Europe. There's a lot of leakage in there due to aging pipes. The consumption increases, of course, due to high living standards, the electrification within the societies, also digitization, of course. One example from Sweden and Stockholm, new subways being planned for Stockholm. Actually, the capacity in the power distribution networks is a limiting factor to expand the subway. This is, of course, some serious issues that politicians are dealing with and also calls for a lot of investments. That's just one example within the energy infrastructure sector.
Based on these underlying trends, our companies, which you can find below in the slide, are focused on, of course, to deliver specialized products and solutions within these sectors. The customers are mainly municipalities, both on the Water & Energy side, energy companies on the power and energy side, industries, also on the Water & Energy side. Really important customers for well-functioning societies. That's a brief introduction of our Water & Energy business area. We move forward to the next slide and have a look at our second business area, Special Infrastructure Solutions. Sales at about SEK 380 million, an operating profit margin at 21%. If we look at the operating profit, the EBITDA*, it's our second-largest business area, accounting for 35% of the operating profit. I can give you some examples of sub-segments there are Air, Climate & Control, Safety & Security, Transportation.
Some trends that are quite strong now in the Air, Climate & Control area is about upgrading cooling systems to reduce the global warming potential. This is an area where the regulations from the European Union calls for changes, and we are heavily involved in upgrading the cooling systems for instance, grocery stores in Stockholm. Another example is in the Air, Climate & Control areas to deliver products and control systems for indoor climate control, that is heating and cooling for real estate. The main driver behind this is to reduce the power consumptions, which is a good business case for the real estate owners. We're also heavily involved in upgrading those kind of systems within the Air, Climate & Control area. Within the Safety & Security sub-segment, we are actively involved in U.K. to upgrade access control and surveillance systems for hospitals.
That's unfortunately a growing demand to ensure security in hospitals. We're upgrading that in London at the moment. If we have a look at the transportation sector, the global road network capacity has increased since 1990 by 88%. That is actually the capacity in the road network up 88%. However, the global freight traffic during the same period has gone up 218%. Of course, the transportation systems are heavily loaded, and under-dimensioned, and there's a big need to expand all the systems, also including the traffic surveillance, which we are involved in with the company Redspeed International. That's just an introduction about a few of the trends going on in the area, Special Infrastructure Solutions. The demand and the need is growing and also on a long-term basis.
By that, we move forward to the next page, number 10, introduction to our third business area, Property Technical Services. From a sales perspective, it's our largest area, about SEK 700 million. However, if we look at our earnings, it's actually the smallest, accounting for 23% of our operating profit at EBITDA*. We've gathered our companies here that provide technical services to real estate owners. There is a long-term need to maintain, repair, service, modernize, et cetera, of equipment within properties. We offer services throughout the entire life cycle management for elevators. There could be fluctuations in demand due to ups and downs in the new construction market. However, on a long term, there's always strain. There's a need to repair. The equipment is being aging. Upgrades are continuously required. There's a long-term demand within the technical service sector.
Within the elevators area, we are active throughout the entire life cycle, as I said, with taking care of service of elevators in Stockholm, and also in Vienna. We provide products and services for the new elevator business in Europe. We have also collected two of our other companies with services towards real estate owners in shell completion, Castella Entreprenad, and roof maintenance, Tello Service Partner. Our development focus for this business area is on profitability improvement. It's a continuous work, and we are pretty successful in terms of that work. I think Bengt will come back to that when we come to the current trading section of the presentation. We move forward to the next page, number 11. Our recent acquisition, Cryptify AB. Cryptify provides software products and solutions for secure mobile communication.
A sample of customers are, for instance, the NATO headquarters, and also the Defence Equipment and Support organization in U.K., the government offices in Sweden, Regeringskansliet, as it is called in Swedish. These kinds of organizations, they have a restricted security classification, as it is called, and a need for complete solutions in terms of encrypting mobile communications is very important. Cryptify provides the entire processes, also the backend processes for managing encryption keys and so on. Some high-profile clients there, and we are very happy to include Cryptify in the Special Infrastructure Solutions business area. We move forward to the next slide, 12, which is just a summary over the acquisitions that we have completed since starting 2018. 11 acquisitions in total, including the latest one, Cryptify, in Sweden.
As you can see there, all acquisitions have been completed within our expanding business areas, Water & Energy and Special Infrastructure Solutions. That's where we have our acquisitional growth focus within these two business areas. With the business area, Property Technical Services, we are focused on profitability improvement instead. By that, we move forward to page 13, and I will hand over to Bengt to take you through the current trading.
Yes. Thank you, Jakob. We can move to slide 14. A summary over our development the last 12 months. As you can see, we have had a 28% growth in our sales and a 39% growth in our profits, which then also means that we have had an increase in our margins through this period. I will come back to now how that has been divided between the different business areas. Before that, turning to page 15, some quarterly highlights. We reported a net sales increase today, 19%, up to almost SEK 450 million. All in all, we see a very good market situation for our companies within our business areas, especially for the Water & Energy and Special Infrastructure Solutions companies, where we could see, in total, a 17% organic sales growth.
Within our third business area, the Property Technical Services, we had, as planned, a reduction with 11%. I say as planned because we are doing activities within the elevator companies to go for more profitable projects and with higher margins, but instead a bit lower volumes. We are not focusing there on organic sales growth, but organic profit growth. We also have, in that business area, with our company within the shell completion, we have also some decrease in sales volume because of the housing sector in Stockholm. There has been a correction of the demand in that business sector. Also some large projects previous year in this quarter, of course, then increased the difference between this year and last year, as was in last quarter as well in Q1.
We do not expect this trend to continue for the second half of the year because then we have some other comparative figures from last year. All in all, we had a 1% organic growth, but it was, as I said, we think it's very good growth in our two business areas where we focus on the organic sales growth. Looking upon the profit growth, we have had in total this year for the first six months an 8% increase organically. If we add the 38% profit growth from the acquisitions, we come up in 46% during the first half year. In our EBITDA* measurement. In the quarter, it increased 42% to SEK 63 million, and the margin increased to 14%. That was more than two percentage points from last year.
We also managed to have this earnings increase all the way to the bottom line, so the earnings per share after taxes was up 74%. We have the trend for the margin increase, you could also find in the last 12 months figures as we could see. We're continuously working and focusing on margin increases throughout the group. Let's see, perhaps the 14% is pretty high. We come back to what we expect from the different business areas in the coming slides. The cash flow was also strong from our operating activities, which of course also is good. We generate cash. We have generated almost SEK 200 million in the last 12 months. Cash that goes primarily to investments in new companies in our acquisitions activities. The corresponding cash conversion or cash generation was 78% within the quarter.
The outlook, we continue to work with the profit growth, we haven't changed our view on the positive profit growth potential going forward. We will continue the development work within the Water & Energy and Special Infrastructure Solutions areas. We will continue with the profitability enhancements within the elevator business and the Property Technical Services business area. What we could say also for our acquisition work is that we have been building up our internal team throughout this year, which also means that we will now be phasing out the external team that has supported us so far, which then, of course, makes the acquisition costs will be significantly lower going forward when this is completed towards the end of this year.
It also means that the M&A team will be even closer to our business so we can work even more efficient with the process of acquiring new companies. Turning to next page, slide 16, is a summary of some key figures. We have talked about the net sales and profit increase, and also our earnings per share. Cash flow, as I said, has been very good, and we're working with those activities related to that as well within the group. Our leverage, you could see at the bottom of this slide, we have the total net debt to our EBITDA. The reported EBITDA is 2.7, and our net bank debt, what we owe our financial institutions, is 0.8. This is measured over an average debt over the last four quarters. There's still room for more acquisitions within these figures.
Turning to next page, slide 17, we have our business area, Water & Energy. We could see a very good sales growth within the quarter. It was 64%, of which organic was 13%. The profit increased even more to 118% or to SEK 32 million, which then, of course, signals that the margin was quite substantially better. As you can also see here, it was increased from 10% to 19.3%. We guide that the margin for this business area will be in between 16% and 18% for the full year, and you can see the trend in the graph on the slide. For the last 12 months, we are now at 18%.
That has been a good development, we have had some units with the high margin units that has had a high order intake, especially in the water and sanitation, and also in the quality measurements of electrical energy, have had a very good quarter. Also the recently acquired units, which also have a higher profit margin than the average, has supported this development. The acquisitions this year has been the Water Treatment Products in the U.K., which we acquired in February, which was then fully included in this quarter with its turnover and profit. Turning next page 18, we have Special Infrastructure Solutions. Also there, we see a growth in sales, 37%, of which organic was 23%, which we are very happy to see.
The profit increased a little bit less, 30%, which means the margin were actually lower than last year. This is also according to plan since companies we have acquired roll in with their profit margins. We're guiding that this business area will have some 18%-20% for the Full Year 2019 in margin, and you can see from the trend in the graph that that's where we're heading. Even though we have had and have a higher margin for the last 12 months, 21%. There has been strong demand within Air & Climate, as Jakob mentioned, within cooling, for example, cooling solutions and climate control, and also in the Safety & Security with camera surveillance business have also had good demand and turnover during this quarter. Turning to next slide, 19. We have finally the Property Technical Services business area.
As I said, we have a decrease with 11% this quarter, but that was planned because we're shifting to the more profitable segments within the elevator business, but also then having some negative trends in the housing sector in Stockholm, especially, that impacted our shell completion operations and the business area in total. We're of course, dealing with that, so we're directing our orders in the shell completion business towards more commercial and public type of real estate instead of housing. We look forward to having this decrease not being as big as this quarter's for the rest of the year. It's not expected to the same extent for Q3 or Q4. The profit EBITDA* decreased with some 19%, but the margin was more or less the same as last year, 9.5% compared to 10.4%.
Also in this graph, you can see our trend for the margin. We say it should be around 8%-10%. That's been very steady between 7% and 8%. We have a few more things to fix, but we're good on the way. We haven't done any acquisitions this year. Also as Jakob mentioned, we're focusing more on the existing business units to have them up in their profits. Yeah, that was the business areas.
Okay. Thank you, Bengt. That sums up. If we move forward to page number 20, just to sum up our presentation. We have a good profit growth. Our most important goal is to grow our profit levels every year. We are happy to present that we are doing that on a continuous basis now. We have the long-term growth trends within the infrastructure sectors, especially in our new business areas, Water & Energy, and Special Infrastructure Solutions. There is a good and strong demand there, which in many areas is not connected to the overall temperature in the economics. This investing in infrastructure is something that needs to be done regardless of the economic temperature.
We are happy to be well-positioned there and looking forward, we have an unchanged positive view on growing profit levels, where acquisitions that are rolling in and have a good organic profit growth underlying. Based on that, we thank you for your time and open up for any potential questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad now. We have a question from the line of Fredrik Nilsson from Redeye. Please go ahead. Your line is open.
Hello. Fredrik Nilsson from Redeye here. You had very strong organic growth in both Water & Energy and Special Infrastructure Solutions. Were there any large projects or large orders boosting the figures in this quarter?
No, not any, sort of say that it would be affected by one or two special projects. No, it has been a good demand overall, especially in some companies that have a high margin. No, it has been quite spread out through the companies.
Okay. Thanks. One more question, if I may. You are back to normal margins in Property Technical Services in this quarter. Do you think you're back to normal levels for good, or was there anything special boosting margin in this quarter?
Well, as you can see, we had a 9.5% all in all for the business area in this quarter, which is higher than the last 12 months. This quarter is typically a strong quarter as Q4 is. Yeah, especially for the service businesses in Stockholm and Vienna, we have had to really turn them around, and they're making profits, and also good demand out in the European from our Croatian company. I would say we still stick to our guiding there between the 8% and 10% for the full year.
Okay. The guidance actually says a gradual normalization without any timeframe, really. That's how I interpret it, at least. Okay.
Yeah. We couldn't say exactly, but that's where we're heading. Right now, as to say the quarter where we're in that spread, so yeah.
Okay. Thanks. That's all for me.
Just as a reminder, if you do have any further questions, please press zero one on your telephone keypad now. There are currently no further questions registered, so I'll hand the call back to the speakers. Please go ahead.
Okay. Well, we say thank you everybody for listening in, and we will talk to you in three months from now for the third quarter presentation.
Thank you very much.
This now concludes the conference call. Thank you all for attending. You may now disconnect your lines.