Hi, and welcome to today's webcast with Sdiptech. Today we have and CFO Bengt Lejdström with us. My name is Kristofer Berggren, and I work for Finwire. After the presentation, there will be a Q&A session, so if you have any questions, please visit finwire.tv and click on this webcast, and there you will find a form where you can write your questions. But that will be for the Q&A session after the presentation. With that said, I hand over the word to Jakob and Bengt.
Thank you very much, and hello, and welcome, everybody. As always, it's me, Jakob Holm, CEO, and Bengt Lejdström, CFO, presenting. Quick agenda to jump off, to summarize the 2021 year, look at the acquisitions in the Q4. Bengt will walk us through the financial development, and then finally an outlook for the future. Okay. To start off with, some key figures that we would like to highlight. One is, of course, the profitability margin that continues to increase, so we're very pleased to see that it's grown up to 18.7% for the entire group, so that's worth mentioning.
The second one is, of course, the growth metric for our operating profit grown at 47% over the year, which of course is a significant growth. That is really based upon a few things, but one is a continued strong organic sales at about 10%, margin expansion that we saw now up to 18.7%, but also that the new acquisitions are growing well. For instance, Rolec providing charging solutions for electric vehicles. All in all, significant growth in profits, and we're very pleased to present that of course. If we look at the year-on-year growth, the profit growth has been 36% over the past years. As you can see, we're growing even faster this recent year.
We have a focus on high-margin positions. That's very important to us. That's the type of companies that we focus on to acquire, but that's also how we develop our companies with strong market positions. I would also like to mention which we're very happy to see since we have the focus on infrastructure, we also see that the new acquisitions that join the group have to a higher extent complementary technology and also complementary market segments. More and more we are operating as a cohesive group, which is of course part of our strategy, and that's also in one way how we also differentiate ourselves compared to many of the other acquirers in the industry. Okay.
To summarize the year 2021, there is a continued strong demand for our products and services. Infrastructure is a good market from that perspective. The need to install and buy our products is there regardless of turmoil in the surrounding world or anything like that. The demand is consistent and strong, 10% up this year. Margin expansion continued, as we said. Here we would like to mention that our recent acquisition, Certus, whose primary customers are container ports, the customers have purposely delayed a couple of projects since they now have a clear focus to manage with the increasing volumes in all the container ports. That's the priority number one at the moment. We all understand why.
It's not a big concern. The deliveries will come eventually. We're also happy to present that we continue to deliver on our financial targets. We have done so for a couple of years. The 8% organic profit growth, that's in the middle of our target. I would also like to mention on that point that over the past three years, we have delivered organic growth between 8%-11%. We're very happy to present that as well. We increased our acquisitions target from SEK 90 million to SEK 150 million, SEK 120 million to SEK 150 million, and we actually delivered upon that already the first year.
Our leverage is also controlled, which is comforting for future growth. We've also launched sustainability goals, and we've implemented a new way of working to really ensure that we are driving the right type of activities to reach our sustainability goals. That's a very ambitious program that we have launched and that is up and running now. We're very happy to have achieved that as well. Some additional changes that have also been important, the divestment of the majority of our units in the former business area, Property Technical Services. The reason for doing that was, of course, to increase the overall quality in the group and the margins in the group.
That was a strategic step and also part of how we are streamlining the group towards infrastructure and high quality business units. We took a natural step to Nasdaq Stockholm Large Cap in June, which was a good step to take, part of our evolution. From a geographic perspective, we have invested a lot to really establish ourselves in the markets that we believe a lot in. We have great potential that we have created over a number of years in the U.K. and Italy. By having feet on the ground, recruiting people, opening offices, we have a better way to actually dig into that potential. Finally, we are expanding our business area, Water & Energy.
This is really the background. Water and energy are important resources for our planet. There is a growing demand, but the supply is, of course, a challenge. With that perspective, there are other important resources that are important to manage in best possible way for the planet. With that said, we see growth opportunities in some additional areas as well, and we will therefore actually change the name from the business area Water & Energy to Resource Efficiency. The overall theme is about managing the resources that we have on our planet in an efficient way, and the purpose is, of course, to increase the sustainability surrounding us.
To start off with the bioeconomy, it's a very important area. It's very much about circular economies, and the European Union has said that this is a very important response to the challenges that we have ahead of us. We have identified a number of interesting acquisition opportunities in that area as well, and our recent acquisition, Agrosistemi, which I will present in a moment, is a great example in the bioeconomy area. Waste management, the same theme, is also very important, so these four segments will together create the business area Resource Efficiency. To summarize the acquisitions for 2021, we did acquire up to SEK 158 million, four great companies.
As we've said all the time, we focus on doing a few very strong acquisitions, high-quality companies, high-margin companies, rather than acquiring a lot of companies. I hope that's clear for everyone. The divestments we've done is also in the same theme to increase quality. We've started off in a good way with Agrosistemi in the Q1, corresponding to SEK 20 million of acquired EBIT. Okay. Having looked at the acquisitions for the Q4, starting off with CERTUS Automation from the Netherlands, very interesting company.
What they do is really that they provide solutions to automate the handling of containers in ports, terminals, as part of the solution is a software which is highly sophisticated to identify images, and in that way, do the identification of containers, registration, positioning, and so on. Everything can be done in an automatic way. As an effect, the company's really contributing to two goals, two of United Nations Sustainable Development Goals. One, the first one is really based upon that the safety is really improved in the harbors, since the need for human intervention is really reduced with the automatic handling, so very important.
Also, the truck and ship flows are being optimized, which also reduce emissions. This will be included in the business area Special Infrastructure Solutions, or it has been included since October 2021. The acquisition that we did a couple of weeks ago, Agrosistemi, and as I said, this is a perfect example of bioeconomy and the new business area Resource Efficiency. What Agrosistemi does is that they take biological sludge from wastewater treatment plants. They purify that sludge. They take away additional contaminations, and they translate it or transforms it into organic fertilizers that then are sold to the farming industry.
This is a very interesting company that really contributes to a circular economy based on biological materials and then also addressing a number of Sustainable Development Goals. One of them is about these kind of fertilizers. They really help to fight desertification, and it's a good way to restore destroyed soil, and a number of positive aspects with this type of products. We're very happy to add Agrosistemi to the Sdiptech Group. By that, we move over to the financial development and Bengt.
Thank you, Jakob. Yeah, we had a very strong development in 2021. You can see on this slide, we increased sales with 30%, of which almost 11% was organic, which is quite high if you look in historical terms, but also a sign of that the underlying demand is strong within these industrial sectors. You can see on the chart to the right, the split of the sales between different countries. You have been following us for some time, you notice that the part which U.K. is representing is increasing every quarter, more or less, because all of the acquisitions we have done there and also the great development of those units.
You can also see that in the pie called Other is now 11%, which represent more or less, you could say, exports. As we acquire more product-based companies, of course, then export potentials are increasing. A good example is, of course, Certus, which has a big part of its sales on the global level. There are also other companies within the group that are having good development in their export activities. When it comes to the share of product sales for our group, it's now about 50%, which is increasing also steadily and not the least since we divested our elevator service companies.
We think, believe very much in having the proprietary products in our portfolio, and we can then, of course, then steer and develop our sales in different ways than compared with offering services. If you looked upon the margin on this slide, it has developed well over the years and over the quarters during 2021. We have improved it more than two percentage points since last year, and now 18.7%, slightly below what we expected. There were some specific issues here in quarter four that Jakob already mentioned, and I will also get back to that. Looking on the profit first, it increased 47%, as mentioned, of which all in all for the full year, it was 8% organic profit growth, and the rest then mainly from acquisitions.
Actually, the acquisitions had 53% increase, but we also divested almost 10% of the profit from last year. You can see here on the right side the split between the different components. It all adds up to the 47%. During this period of the pandemic, our organic growth has been up and down. All in all, if you take a weighted average annual organic growth, it was even 9.4%. I mean, we reported 11% last year and 8% this year, but so on average, 9.4%. During the quarter, we had profit increase by 52%. That's extremely good, and 35% of that was organic, which is of course even better.
Much of that coming from having some earlier delayed projects in some of our companies that we now have delivered. Because of this scalable business model means that we could get much of that down to the profit line and also increase the EBIT margin. It was up to 20.5% for the quarter. Of course, the 35% organic profit growth could not be expected quarter on quarter going ahead. We are still very pleased to see that very good final months of the year 2021, which added up then to a successful full year.
If we then turn to the business areas, the one formerly known as Water & Energy, now called Resource Efficiency from now on, had a tremendous increase of sales, much of course, because of the big acquisition of Rolec early in the year and also IDE later on in September. Also most of the companies within this business area had a solid organic growth as well. EBIT margin increased also, of course, because of acquisitions, but also that the scalable business models could then get use of the sales increase and put it down to the bottom line.
All in all, EBITA*, our profit measurement, increased by 115%, or 116, you could say. We now have an EBIT margin for the quarter at 24.8%, but for the last twelve months, 24.3%. That's of course very good. In this business area, we added the Agrosistemi in January, and with that one included, we are 16 business units within the Resource Efficiency business area. If we then look at Special Infrastructure Solutions, which since previous last quarter includes the former business units of Property Technical Services. As Jakob mentioned, we divested 7 out of the 9. There are 2 left, and they are included now in this business area.
In all the historic numbers you can see in this chart and in our reports, we have them pro forma, added the companies that were present at those times into the business area, especially infrastructure solutions. For this business area, we didn't do really much acquisitions in the early part of 2021. We made an add-on acquisition of Ficon to our Finnish Hilltip company with snow removal equipment, then we added Certus in October. As Jakob mentioned then, the Certus company, we have a high expectation on that one, but they were then seeing delayed project deliveries in already ordered products, as we did during 2020 and 2021 in other business units because of effects from the pandemic.
Now it's mainly, as Jakob also mentioned, that the customers in the container ports, they have tremendous volume increase in number of containers to handle. At the same time as their staff, they are on sick leave and other issues around restrictions, which of course make them focus on their customers and to deliver containers and then take these automation projects as a next step. We are quite sure that this will pick up during 2022 and be back to normal levels soon enough. That also meant that there were some sales, of course, from this company. They have some recurring revenues from maintenance contracts, but the profit level wasn't that impressive, and that reduces the overall margin for the business area, but also for the group as a whole.
Still, as I said, for this year, it should be back to more normal levels quite soon. The EBITDA increased anyhow by 18% up to SEK 93.5 million for the quarter. We also have there some of the existing companies performing really well. Including the Certus since quarter four, we are now 16 business units also in this business area. Some additional metrics on the group level. We're happy to see that our cash conversion is back to more normal levels, 92% for the quarter. We had some weak cash conversion ratios during quarter two and quarter three.
There were buildups of inventories in the business units, and that was with intention to be prepared for any problems in the supply of components from the pandemic or from other aspects. We also saw a sales increase, obviously, with this sales increase organic, which meant also that accounts receivables were increasing. Now we are more back to the normal levels. We should be around 90%-100%. Ninety-two is quite okay. For the full year, it was 71%, picking up from the lower levels, but still below last year. Anyhow, a decent cash flow, we think.
Looking upon earnings per share, that was perhaps not what you could expect for this quarter and for the full year, and we tried to explain that in the report. There is also an appendix to this presentation that you find on our website with a bridge. There is a bridge also in the report between our operating profits, the EBITA*, and down all the way to earnings after tax, which is then the earnings per share. We had it during 2021 in total, a number of cost items that are not, you could say, typical, so they are more of a one-off.
To start with, we adjusted the contingent considerations for our earn-out, meaning the amount of considerations we will pay, based on the profit development in the companies that we have acquired recently. Since they are performing very well, better than we expected when we acquired them and also along the way, we had to increase those provisions in our balance sheet, but that means a cost. That was a big part. That was all in all SEK 40 million or SEK 43 million for the full year, SEK 40 million in the quarter. Not tax deductible, that was more than SEK 1 per share.
Of course, that's a little bit of normal business, you could say, perhaps, with our dynamic model of valuing earn-out debt. Another part which is more one-off is the costs for our previous divestments, the one we did last year, 2021, added up to also a bit above 1 SEK per share. If you consider that the year before that, 2020, had included some profits from divestments of almost the same level, you could reason that our earnings per share actually increased with 43%, from 2020 to 2021. Much of this is of course bookkeeping. It's not cash flow, as you can see from our cash conversion and our cash flow in absolute numbers. Anyhow, it is what it is.
Much of this is not recurring cost items that you will see for 2022. We will hopefully be able to present much better earnings per share now, going ahead. Our debt leverage is also important as an acquiring company, as Sdiptech is. As Jakob said, we have a very sound leverage level, a little bit above one when it comes to our financial debt. That's the debt we need to pay regardless of our results. If we include all the contingent considerations, which is debts that we will pay if profits are as good or better mainly than today's level, we're a little bit above three. You to be fair enough, you should compare those numbers then with a higher profit level to get the more correct feeling of the leverage.
We focus on the net financial debt, which is quite below our internal targets of 2.5, so it's not even half of that. Yeah, to some outlook.
Yes. Okay. Thank you. Thank you, Bengt. This is the final slide. One thing that we would like to summarize after two years of the pandemic is that I think that we've demonstrated a resilience and a profitable growth despite challenges that have been surrounding us over the years. We're very happy to prove that with actual numbers. Having looked at the table there to demonstrate the organic development on both the sales side and on the profit side, it has been strong. It can go up and down from one quarter to another. But on an overall basis, the growth rates are very stable. And we've had restrictions, we've had shutdowns, excuse me, we've had material shortages.
Anyway, we've delivered a solid organic growth. We had a high sick leave in the beginning of 2022. I think there's no company that has been totally immune against that. We have had some delayed deliveries. However, we've seen that a number of times now over the past two years, and we've demonstrated that we have the ability to catch up on that. We will do that as soon as it's possible, and we see some positive signs in all our markets that the restrictions are easing up and also that the sick leaves are coming down. Actually positive view on that as well.
Profitability going forward, as the way the group stands right now, we believe it's fair to say that we will establish around 20% profitability margin for the entire group. But then of course, new acquisitions, there will be an effect from those as well. But the way we stand now, 20% is approximately what anyone should expect. Looking forward, we are very eager to deliver in 2022. We've increased our growth targets. We did it because we're ready to do it, so we're comfortable to deliver on that. We've established ourselves in new geographies. We've divested some more weaker part of the group. So we are really looking forward to a strong year 2022, with a great organization to deliver upon that.
With that, we open up for questions.
Great. Thank you, Jakob and Bengt for that, for the presentation. Let's start with the first one, and this is from Carl-Oskar Wikström from Berenberg. Can you develop on the organic growth? You mentioned postponed deliveries. Are there any of these that follow into 2022? Yeah, that's the first question.
Yeah, and as always, when it's delayed or postponed deliveries that have already been booked, they will be delivered eventually. We saw that already in 2020 during the fall, catching up, and we saw that again this year, not the least in quarter four, that we were catching up on some of these delayed projects. That you could say this extra high organic profit growth, 35%, came to some parts from that catching up effect. Now going into 2022, there are still some projects to catch up, and the major part of that is from our then Certus Dutch company. That one is not counted as organic growth yet. That will have to wait until the end of this year before that is in the books of organic growth.
Thank you. Next question. Margin hit from port customers, what is the view here? Are they coming back? Does it also provide a similar dynamic to the above? With the above, a reference to if there were-
Yeah
specific deliveries into 2022 that was affected.
Yeah, of course. We expect this company to be back to their normal levels at least during 2022. As we said in the press release, they should be around roughly 20%-25% profit margin when they're in normal delivery mode, so to say, with their customers.
Okay, thank you. If we look at the M&A then, in terms of M&A, are you now going to target Italy and Benelux or continuing M&A in the UK?
Our core markets when it comes to M&A is of course Sweden. However, that has been, for us, a bit difficult to do acquisitions because of high prices at the moment. Anyway, it's a core market for us. Another core market is United Kingdom. It will always be core market for us. Now we're also adding Italy as the core market since we have also established ourselves with an office and people there. We will continue to develop Netherlands in same way. We have not yet established ourselves with an office there, so there's no decision made on that.
We will continue to focus on all of these core markets and also the other Nordic companies, Sweden, Norway, Finland, Denmark as well. We focus on all of these markets. United Kingdom is important to us.
Okay, thank you. Now we have some questions from Victor Hansen at Nordea. How should we view central cost run rate? Is it about SEK 50 million?
Yeah. During 2021, we had some strategic projects. We, not the least, we made the listing on Nasdaq Large Cap, and that costs quite a lot of money. All these strategic projects and establishing ourselves in the new geographies also cost money. We don't expect the same level for 2022. Perhaps around SEK 50 could be a decent guess.
Okay, thank you. Next question. How has the pandemic and logistics chaos impacted your capital efficiency? Will you be able to improve efficiency here ahead?
Yeah. I guess the question is relating to working capital or capital employed, returns.
Yes, exactly.
As we said, we had to build assets in both inventories but also the strong sales increase also added accounts receivable and similar items on the balance sheet. I think the major part that's in the equation of return on capital employed at least is the goodwill and other intangible assets from our acquisitions. As we acquire great companies, good profit levels at ordinary multiples, you could say that we typically pay, as we have said, around 7x-9x EBIT, adds a lot of assets into our balance sheet. Of course, if you include that as we do in the capital employed, that makes it quite tricky to improve that dramatically in the short period.
When it comes to return on the working capital, we are working on it. I think we will see some reductions in the working capital itself during this year now when we're back to a little bit more normal activities and scenarios. Yeah, let's say that.
Okay, thank you. Next question. The White House just announced that they will invest $46 billion on charging solutions for electric vehicles. It will be interesting to hear more about the outlook for Rolec, although they are not on the U.S. market.
Well, the market, as everyone knows, is growing in a strong way. Rolec has a strong position on the U.K. market as being a provider of very complete solutions. They have important position there. Of course, it is a positive outlook. Rolec, it is also important for everyone to remember that Rolec also delivers charging equipment to marinas and caravan parks, and those markets grow normally at 5%. Rolec's overall growth is a blend between the electric vehicle high growth rates and these more mature markets. Of course, the outlook is promising, although we will not provide our expectations on the growth rate for that particular business unit.
Okay, thank you. Next question here is from Karl Bokvist at . Your view on acquisition multiples going forward. Looking at 2021, you paid a total consideration of roughly, I think it was SEK 1.6 billion for your acquisition that had a total EBITDA of almost SEK 160 million, which implies 10x compared to your prior level of 7-9x. Do you think this is a new level, so in terms of company valuations for the companies to acquire?
I think that we have a mix there of numbers. Yes, if you account for what we have booked as acquired assets, the number is probably correct. I don't have it top of my mind right now at SEK 1.6 billion, but that also includes our provisions for future payments of contingent consideration that are only payable if the profit level increases. If you want to see the true picture, you should look at what we communicate in our press releases where we say the valuation at acquisition, the enterprise value at time of acquisition, and there we are still around SEK 7 billion-SEK 9 billion.
Okay, thank you. Another question from Carl here. What was the organic growth for W&E and SIS?
Good question. We don't disclose those numbers since 2021, so I'm afraid we do not mention that number.
Okay. Let me see what we have next here for questions. There's a lot of questions regarding M&A multiples. This is from Victor Hansen at Nordea. At what date was Certus consolidated?
They have been included since the 1st of October, and in our report, you can read towards the end what exactly each of the acquisitions have contributed during 2021 in terms of sales and profit. When it comes to the profit figures there, they also include costs, for example, amortization of intangible assets. There you can find a good view of how much each acquisition contributed during 2021. Also looking at our press releases, you get some kind of feeling what we expect going forward.
Okay, thank you. Is there a minimum profit level where Sdiptech is looking at for acquisitions?
We look at profitability. When we source our companies, we don't go below 15%, since we believe that if you are below 15% in EBIT margin, then you are exposed to competition that is effective and too tough. We target companies that are above 15%.
Okay. Thank you. We've got a last question here, and it's regarding a more general question regarding the M&A environment. What's your view on the M&A environment? The question is, from what I understand, there's a lot of competition on good companies. Have you seen an increase in prices for the companies, for example?
Yes, we do, and primarily in the Nordics, and specifically Sweden. The acquisition activity is extremely high in Sweden. It's been so for a number of years. It's accelerated in 2021 as well, and that's of course due to the low interest rates, the stimulus from the central banks and so on, so there's a lot of capital in the market. We don't see the same type of competition on other markets, although the price levels are also higher in the U.K. and Italy compared to a couple of years ago. Actually, it's better for us from an acquisition perspective that interest rates can come up and that the stimulus from the central banks will be closed.
In that way, we will come back to a more normal situation, and probably a lot of the new acquisitional players that have entered the market over the past one or two years, they will run into trouble, get difficulties, and that will create a more normal market for the future.
Okay, great. Thanks a lot. That was the final question for this Q&A session. Thanks a lot to Jakob and Bengt for your presentation and answer to all our questions. Thank you for all the questions from the viewers. With that said, we will end this presentation, and I hope to see you again on the next presentation with Sdiptech. Thank you all, and have a good day.