Ladies and gentlemen, welcome to the Sdiptech Q1 Report 2019. Today, I am pleased to present CEO Jakob Holm and CFO Bengt Lejdström. Throughout this call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. I will now hand you over to Jakob. Please begin.
Thank you very much. Yes. Hello, everybody. We move forward as usually to page number two. We could also move forward to page number three in the presentation. To start off, I just would like to say that we are very happy to present a strong report, 25% growth in sales and 50% growth in EBITDA, a margin increase, and a substantially improved cash flow generation. That was just to start off with some key numbers that we are happy to present. As always, I would want to repeat some of the underlying fundamentals for our business. We start off with the long-term trends and move forward to page number four in the presentation. Sdiptech is active in the infrastructure sector. The infrastructure sector is characterized by a long-term volume demand. On one hand, the infrastructure surrounding us is aging.
It was built in the Western Europe during the '50s, '60s, and '70s to a large extent. It is aging. There's a large need to rebuild it. Also, the capacity requirements continue to grow. Water consumption continues to grow. Power and energy consumption continues to grow. Transportation volumes also grow, both for people and for goods. All in all, it is an important investment priority and a good underlying growth. Move forward to the next slide. In addition to volume growth, there's also good and a continuous pace of change to implement improvements into our infrastructures. To start off, it starts off with the really basic human ambitions that we have to increase sustainability, efficiency, and safety in our societies.
We as consumers, we always expect more, more efficient transport systems, more sustainable energy systems, more safe and secure open environments in our societies, just to mention a few. Regulations are continuously updated. Everything is implemented as upgrades in our infrastructure. There is a continuous pace of change for improvements. Our focus is on niche companies within infrastructures. Niche companies are actually a very good and ideal home for specialists. This is our position in the growing market. We move forward to the next slide. Sdiptech is an infrastructure technology group. We have a good growth, as we said, with strong underlying market trends. Currently employees are about 1,100. We are organized in 30 P&L business units. Our year-on-year sales growth is strong, about 40% on a compound yearly basis.
We move forward to page number seven and can also move forward to page number eight. As of January 2019, we have organized ourselves into three new business areas. As we grow, we have gained a critical mass of both sales and profits in more market-oriented business areas, and we are happy to have the opportunity now to organize ourselves towards that. I would introduce them to you by moving forward to the next page number nine. The first new business area is what we call water and energy, with sub-segments being water and sanitation and also power and energy. We have 13 business units, profit and loss units within the business area. The share of our profit, EBITDA, is 37% on a last 12-month basis.
We have organized the companies in the lower end of the slide here to sort them out as the acquisitions that we have done prior to 2018. You can see seven companies there, and also an addition of six companies that we have acquired the last 15 months. Out of these six companies that we have acquired, we have two companies within the power and energy sub-segment, Multitech and Centralmontage AB, and four companies in the water and sanitation segment. RIA, Vera Klippan, Pure Water Scandinavia, and also Water Treatment Products. These companies typically provide niche solutions for municipalities, but also for industries. Solutions that are more or less mandatory for our customers to implement due to the nature of water and energy segments. We move forward to the next business area on the next slide.
Special infrastructure solutions that consists of three sub-segments: air and climate control, safety and security, transportation. Currently, the business area consists of eight business units. The share of our total EBITDA is quite similar to power and energy, 36%. The acquisitions during the last 15 months, Optyma Security Systems, part of the sub-segment safety and security. Stockholmradio, Arrow, and RedSpeed International is in the transportation sub-segment, and KSS Klimat- & Styrsystem in the air and climate control sub-segment. We move forward to the third and final business area. Property technical services with a sub-segment elevator, and we call it other. I will describe these companies to you in a short while. This business area is really the origin of Sdiptech. We started off in the technical services area. However, this area is not in focus for future acquisitions.
We believe and we see that the other two business areas have stronger underlying trends as well as stronger business models. Anyway, property technical services is an important part of our business. Nine business units currently. The share of our profits is 27%, which makes it, from a profit perspective, our smallest business area. However, from a sales perspective, it's the largest one at SEK 730 million. If we have a look at the lower end of the slide, starting off from the left-hand side, we've organized our companies here to describe to you the different nature of the businesses. On the left-hand side, we have our service renovation and modernization businesses in Stockholm. Beside that one, we have a same type of business, however, in Vienna, also Aufzüge Friedl. Our third and final elevator area is where the customers and the market are new elevators.
In Stockholm and Vienna, we focus on the existing elevator service and renovation of those, and for the companies Metus and Liftsystems, the market is around new elevators in Europe, where Germany is the largest market. Finally, we have our sub-segment that we call other. It consists of Castella Entreprenad and Tello Service Partner. Castella provides shell completion services to property owners. It's lightweight constructions and predominantly plaster gypsum inner walls. Tello Service Partner provides services, renovation of rooms, but also to install security equipment on roofs. There we have our property technical services business area. We have done no acquisitions over the past 15 months, and there will be no more in the future, the way we plan our business right now. We move forward to current trading. We can flip over to page number 13.
I'm happy to present to you the quarterly highlights. I should also mention that normally Bengt should take this section, but he has some issues with his voice. We will save it for some potential questions. But I'm happy to take it. To start off, we have a good market situation and a good demand. Most of our areas, our business areas, water and energy, special infrastructure solutions, the demand is strong. Also in our elevator business is healthy with a good demand. Net sales increase up 25% in the quarter. EBITDA increased 51%. The EBITDA's increase is partly from, of course, increased net sales, but also from an increased profitability margin. It's up from 10% last year to 12.3% this year.
I'm also very happy to present a strong cash flow generation of 111% compared to 26% last year. The organic growth is strong for our two business areas, water and energy, especially infrastructure solutions. In total, both areas demonstrated 11% organic growth in the quarter. Our elevator business continues to develop positively, improve profitability, and increase profits in the quarter. The business has had a good rebound and is in a healthy condition. However, we saw an opposite development within the shell completion area. We have, over the years, took advantage of this strong new housing market in Stockholm. The first quarter in 2018, the previous year, was also exceptionally strong. Compared to that strong quarter last year, the decrease in the shell completion area is also amplified. We have a better mix of customers.
Customers not only from the new housing market, but from municipalities and from commercial offices, hotels, et cetera. We have a better mix of customers, although they are not on the same levels as they were in the very strong new housing market. That is not to be expected. We also know that the second quarter last year was very strong. However, for the Q3 and Q4 period, we believe that we will come into a more comparable results versus last year. On an overall level, the outlook is very positive. We do have an unchanged view on growing profit levels. We have a healthy demand in almost all areas and also new acquisitions delivered to the results. Finally, we signed an agreement with Nordea, an important agreement regarding bank financing of SEK 800 million.
An important step, it also strengthens our muscles and scope for further acquisitions and growth in the future. We move forward to page number 14. This is the graph demonstrating our growth on 12-month basis. Net sales up 37% over the past 12 months. EBITDA score is up 52%, our profits grow more than our net sales. This is due to partly, as I think all of you know, that we have in our elevator business, we have a planned shift to less but more profitable projects. Net sales in those areas have come down. On the other hand, the profits have gone up as we have planned. Also we have seen a good growth in high margin businesses, and also new acquisitions with high margins add to the profit levels. On an overall basis, our margins are increasing.
We move forward to next page, number 15. This is the financial development in first quarter. I think we have mentioned all the numbers already. On a 12-month basis, which is on the rightmost column, we have mentioned a few as well, but I'm happy to repeat the growth of 37% and 52% in net sales and EBITDA Star, and increasing profit margins as well, which we're happy to present. I will also ask Bengt to comment on the net bank debt and net debt figures.
Yes. Thank you, Jakob. For the ones of you who have been following us for some while, you know that in our acquisition model, we, apart from paying some upfront cash to the sellers of the companies, we let them make a reinvestment into Sdiptech, which is a debt for us. It's a debt for a future payment. We call it a conditional consideration. Typically, that one is paid out four to five years after the acquisition. Anyhow, we book it as a debt, which means that our debt in the group is quite high compared to the existing running business. Since we expect the companies to improve their EBIT, we pay a little bit more to the sellers of the companies.
All in all, when you look at our net debt to EBITDA, they can seem a little bit high because of this fact that debt level is really representing in a higher EBITDA level than it's currently booked and reported. When we report these numbers you see on this slide, which is also in the report, we have taken our average net debt for the last four quarters and then put it against the EBITDA for the last 12 months. You see that the ratio is 3.3 right now, if we exclude these conditional considerations and only take our financial debt, it's 0.84. That is healthy levels
Thank you, Bengt. We move forward to the next slide, we will dig into each business area. We start off with water and energy. This is a quite busy slide, I will guide you. We start off on the table down on the left side. Net sales are up 69% to SEK 150 million in the first quarter. Profit levels, EBITDA star are up 123% to SEK 26.1 million. Also the profit margin, EBITDA star margin, is rising. It's up from 13% to 17%. In the business area, during the quarter, we see an extra strong demand from our customers that are energy distributors, that demand specific equipment when they build out the power distribution systems. We also see a strong demand from within the electrical automation market. Thirdly, we see strong demand in the water treatment market segment.
These are the three areas where we see extra strong growth. I would ask you to move up to the graph on the left-hand side, I would like to point out the development of our margins there. We have rising margins in the business area. We expect for the full year 2019 that margins will end up in the range between 16%-18% for the full year 2019. We move forward to the next business area, special infrastructure solutions. Once again, I ask you to start down in the left corner. Start off with net sales in the quarter, growing 66% up to SEK 100 million. Profit EBITDA star growing 51% to SEK 20 million. The profitability margin, EBITDA star, has come in at 20.6%. It's a slight reduction from the first quarter previous year, mainly due to acquisition activities.
If we have a look at the graph up on the left, we have a better, more stable representation for the 12-month figures. The margins are stable between 18%-20%. This is also what we expect for the full year of 2019, 18%-20% profit margin. On the customer side, we see an extra strong demand from cooling markets. There's a lot of work to be done to upgrade cooling systems to more environmentally friendly cooling fluids. It's an ongoing work that takes time, especially for our retail customers that are forced to upgrade their cooling solutions. It's a positive change for the environment and a lot of business for us. We also have, compared to last year, seen a good growth from security solutions in the U.K., which is also a part of the organic growth in this area.
I think I will be satisfied with that. We move forward to the third business area, property technical services. Once again, I ask you to start down to the left. Net sales came in at SEK 172 million, which is a reduction 9% compared to the first quarter last year. Profit levels down to SEK 9.3 million compared to SEK 14 million last year, EBITDA margin also decreasing down to 5.4% in the quarter. The reason for this development is from the decreased sales is partly that we have had an ongoing planned focus on fewer but more profitable projects within our elevator business. It's also partly from a slowdown in the new housing business in Stockholm. This affected our operations in Shell Completion, as I said. I said that we have, over the past years, took advantage of the strong new housing market situation in Stockholm.
Now we do have a better mix, it's of course difficult for us now in the first quarter, but also in the second quarter 2019 to come in at the same levels as we had during the peak. For Q3 and Q4, we have a good outlook to match the levels from previous year. If we move up, what does this mean in total? If we combine the elevator businesses with the shell completion. We can have a look at the graph up on the left-hand side. The profitability levels are fairly stable, slightly below 8%. During the year, we do expect the margins to strengthen and to come up between 8%-10% in the later quarters of 2019. Okay. We move forward to next slide 19. Just to shortly present the acquisitions during first quarter.
RedSpeed International, which is part of our Special Infrastructure Solutions business area, is a supplier of solutions to the traffic enforcement industry. Typically, cameras for monitoring speed and other behavior in traffic. The main market is the U.K. The second acquisition in the quarter, Water Treatment Products, included in the Water and Energy business area, specialized in formulas and also manufacture them of specific chemical mixtures to treat contaminated water. It's a growing market, unfortunately, we could say from an environmental perspective, but it's an important part to treat and clean the water coming from industries and also municipalities. The U.K. is once again the largest market for water treatment products. Two fantastic companies, and we are happy to include them in our group. We move forward to next slide 20. This is just a summary of the acquisitions completed over the last five quarters, 15 months.
The acquisitions that I've done have all been in the business areas that in focus for our future growth, Water and Energy and Special Infrastructure Solutions. We could also note that four of the acquisitions have been in the U.K., where we see a more favorable market for acquisitions compared to what we can see in Scandinavia and especially in Sweden, where we experience increasing price expectations from owners of companies. However, we do not experience the same situation in the U.K., and we are happy that we have developed the U.K. market from an acquisitional perspective. This enables us to continue our acquisitional growth in a good way. Finally, we end up with the last slide 21. Just a summary of everything.
Sdiptech as a group focused on the infrastructure sector, a good long-term growth driven by underinvestment in the infrastructure section, growing demand, and as well as a continuous drive for changes and improvements, regulations as part of the sector. On a more short-term outlook is positive. The positive trend in growth continues. The market situation is good with a good demand. Newly added acquisitions always contribute with results. From the current level of SEK 195 million EBITDA Star, we have a positive outlook that will continue to grow on the quarters to come. With that said, I will open up for questions for the audience.
Thank you. Ladies and gentlemen, if you have a line is now open.
Hi. Strong growth in both water and energy and special infrastructure solutions. Were any large order or similar boasting growth in this quarter?
We had extra strong good order that we have delivered in both Q4 and Q1 to power distributors. This is a large order, but it is not a temporary order from that perspective, if that is what you are thinking about, but we do see large orders from power distributors.
Okay, thanks. One more question, if I may. You had rather high acquisitions cost in this quarter. Could you give any guidance going forward?
First of all, we report the acquisition costs in connection with when we finalize the acquisition. It's actually costs, if you take for this quarter, we have made two pretty big acquisitions in the U.K., which we started, of course, already during the fall of last year. We took the actual cash flow, so to say, for those activities last year and earlier this year. From a reporting perspective, we book them as costs now in the quarter. That represent, you could say some costs that are more or less commission-based in relation to the size of the companies, but also lawyers, other financial due diligence experts, et cetera, which, of course, is a little bit more expensive for us when we acquire in the U.K. instead of in Scandinavia, where we have more of our own resources.
We also had some costs coming in from the acquisition in Q4 as well. It was a bit extra high this quarter, not the normal level, so to say, because of the nature of those acquisitions. If that was answer to your question?
Absolutely. That's all for me. Thanks.
Thank you. Fredrik?
Thank you. Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad. There seems to be no further questions at this point, I will hand the word back to the speaker for any closing comments.
We just say thank you everyone for listening. We will meet again for the second quarter's presentation. Thank you. Bye-bye.
This now concludes our conference call. Thank you all for attending. You may now disconnect your line.