Good morning, ladies and gentlemen, and welcome to this presentation of the Q1 report for CSAM Health Group. The report can be downloaded on NewsWeb or from csamhealth.com. This webcast will comprise a 40-minute presentation followed by a live Q&A session. You can type in your questions at any time during the presentation and we will address them later. A recording of this webcast will be found on csamhealth.com and will be uploaded shortly after presentation ends. I now have the pleasure of handing over to the Chief Executive Officer of CSAM, Mr. Sverre Flatby. Sverre, the stage is indeed yours.
Thank you Einar, and, good morning everyone. It's a pleasure for me to share first quarter highlights with you today. Before that, let us start the usual way. I think it's important to say what you see here is a rock solid description of our strategy. We became the leading Nordic player based on a very specific strategy, and we stick to that, and we're going to stick to that. The three first word here, healthcare, specialized, and software is the important strategy we chose. Now with not only the leading Nordic player, but also have an increasing growth outside Nordic as well.
Also, if you think about it after two years of pandemic situation and now with a quite disturbing situation in Europe, still this type of business is not affected by this external event, making it a very protected situation for CSAM, which is very good and is also shown by our first quarter numbers. Again, why are these systems so important? Well, if you look at the three dimensions here, one is for society, what we are doing, and secondly, the healthcare workers and the healthcare institutions that need tools to do their job. Most of all, and ultimately, the patients and the couple you see here, whether they are thinking about having a child or maybe somebody has had cancer in the family, or maybe somebody just called 911.
In all of those situations, type of CSAM components are at work in these situations at most hospitals and acute institutions in the Nordics. This is the good thing also not for the business itself, but obviously for the employees in CSAM. We are here for a reason and it matters what we're doing. Having said that, it's doing good things. We also have to do good when it comes to business. Before we dive into some of these business areas, obviously we see during the first quarter this year a quite an increased activity among customers. I think the reason is after two years of pandemic situation that customers now are preparing and ramping up some of the things they had to prioritize lower during the pandemic situation.
Now, we see that in most of these areas that activity is increasing and the summary of that obviously gives us a good view of what's going to happen this year and in years to come. Let me go through some of these and what they mean, and also some status this quarter. Starting with the Medication Management, as you can see from the percentages here is still a small part of our business, but an important one. These tools that we have within Medication Management is handling cancer treatment medication within cancer. These type of solutions, what has happened in the first quarter, we have new deliveries to new customers. We have new components coming up that are important to customers.
For instance, integration components like receiving laboratory results into the protocols and into the process, in these systems are important. That means for us that we sell more, integration components to our current customers. Also, the mobility aspect of this, the patients at home. As you probably know, hospitals want to have the patients at home more than they want them in the hospital. Cancer treatment is also there that pills, needed to be taken home can be registered in an app and then also go back to the process tools inside the hospitals. This type of value chain is now increasing, meaning new components, new add-ons for CSAM. That is a good development, within Medication Management. Is also happening with Women's and Children's Health. We also there have new installations, new consolidated regional solutions, etc.
I think it's also important to see that new versions, new web-based tools, also integrations with the tools that the pregnant lady has at home. The summary of that is also increasing and giving us the possibility to sell add-ons to current customers.
We also see new tenders coming up, which is not very often in these areas, but that's also part of what we see, as I mentioned in general, that the increased activity is coming. Also within medical imaging, we see more tenders, higher activity, and also higher focus on mobility, like our add-on module CIMA, which is an iPhone and mobility web-based app that handles, for instance, like you see in the picture here with an old camera, you could also use the iPhone for instance to take a picture and then automatically put that into the workflow inside the hospital process. That is also add-on modules coming up, which is relevant to most of our imaging customers. Also connected healthcare.
As you know, obviously, c onnected healthcare is also a subgroup of most of our niches because all of the hospitals that we have, almost all in the Nordics and also outside the Nordics, they are different. When they are different, they need different types of integration components. That is the Connected Healthcare platform, obviously, that we will always sell throughout all the business, new components. In addition, we have separate components within connected healthcare, like S7, which is a platform where you can co-communicate and collaborate between patients, community healthcare, and hospitals, but also infrastructure components like XDS with capturing storage, et cetera, of imaging. There's a set of components there that support the rest of the business.
If you look at Health Analytics, which you all know is a quite new business area in CSAM, started with the acquisition of MedSciNet in 2021, and then further this quarter, we made an acquisition which put together a new business area for us, which is growing and which is very important. It's not only important when it comes to the synergy between, more than one acquisition, but also the synergy that comes with the fact that data, within Health Analytics is coming from these other niches that we have. This creates a very good possibility for us in the future, and it also serves the customers with very important components for their business. This is a need that is growing in healthcare in general in the world today.
We have Public Safety, which you can see still is our biggest area. Within Public Safety, we have a high activity, a delivery activity, development activity, and based on a ramp-up we have told you before we did in the fourth quarter. Obviously now we are working hard to deliver and to grow within Public Safety, not only in the Nordics, but also in new countries like the U.S., and the U.K., where we won contracts in the fourth quarter, and they have to be delivered, obviously. This is a growth area for us, not only in the first quarter, but also in the years to come. Finally, the Blood Management area, which is a specialized laboratory system. This is obviously a Nordic leading software.
As you probably noticed last year, we had a contract, NOK 100 million contract with the Danish national regions. That makes it possible for us to increase over time, also within Blood Management in the Nordics. As you probably see from the first quarter, that there are more license sales this quarter than the fourth quarter and also more than the first quarter last year. Part of that license is obviously now the delivery within Blood Management as well, since we have this contract in addition to our current business.
All in all, to summarize, as I said initially, that we see higher activity after the pandemic, and the customers are ramping up their projects and also ordering more add-on components, which is very good, the critical part of what we think is important when it comes to organic growth. Let me then summarize. It's not only being the leading player in the Nordics now, we see that our diversification is quite increased and to almost extreme when it comes to different hospitals, different regions, different countries, and extremely important organizations around the world. I think we've come to a situation now where we have proven that our model is not only working in the Nordics, but also in the rest of the world. Let me go into the specific highlights of the quarter.
As you see, an income around NOK 96 million for the quarter. If we had taken into consideration the currency fluctuation, maybe it's just around the 100 mark, actually. We think this and 25% growth compared to the first quarter last year is good, and it shows that it works and it's stable and according to plan. Then if you look at the part of the income that is really important to all of us is obviously the recurring part, and especially because it's not only recurring for a short-term period or the risk of churn because these systems, as you know, are tied to highly complex processes inside hospitals. You see some examples of hospitals here that have been our customers for decades.
This is the hard work we're doing every day and also in the first quarter, is to show that the recurring revenue is what's mirroring the value creation that is really going on here at CSAM. Many times we've been asked about organic growth. Since our 40% average growth we have in our plan to reach NOK 1 billion in 2025, we haven't focused much on organic growth, also because organic growth normally in the last five years has been between 5%-10%, and we think it's going to stay that way. We see that in the first quarter, it's about 10% just below or just over actually. Still that will fluctuate a bit. It's also quite predictable.
Depends on some deliveries within the quarter and maybe one next quarter and so forth. We think that what we see here is a natural organic growth this quarter. I will then, or Einar, my colleague, will explain a bit more specifically how we measure organic growth. We have to do that since we are acquiring a lot of companies, and we are integrating all of these companies and products and portfolios, then we have to have a methodology when we measure it that is clear every quarter going forward. We're quite happy with that. From now on, we're going to report this organic growth. Then also, I think it's important to say the income quality has not only to do with the part that is software and the part that is recurring.
It's also important to see the value of the income when it comes to how much COGS we have. As you see, it's quite high quality, 92% gross margin. is actually very good. I think that also displays through the first quarter that our value creation over time here is following the plan. This is also what we see going forward is important with our focus on the real value of income quality like licenses and recurring revenue streams. Then EBITDA some of you were a bit worried in the fourth quarter seeing a negative EBITDA. There was some one-offs there so we were quite comfortable, and we still are, and we see that 16% EBITDA is quite good according to plan.
Obviously, it has, although we have a 30% margin as the target, we cannot have that while we are integrating five acquisitions. Obviously, now with the NOK 15 million EBITDA for the first quarter, 16% is quite good. Also in percentage, a bit lower than the first quarter last year. On the other hand, we had a lot more integration projects going on. That means we are quite happy with the 16% EBITDA first quarter 2022. It's continuing growth and business outside the Nordics. We think the diversification of our business is important, not only between these business areas, but also geographically.
We see that a big interest from companies and important organizations outside the Nordics, and that growth systematically is increasing over time, which is important to our business over time as well. Then, obviously, one milestone in the first quarter was an acquisition. Although it's a quite small acquisition, it's important in that sense that Health Analytics, which we are building systematically, are growing. We doubled Health Analytics through this acquisition in the first quarter, put together with our recent acquisition in the last year. I think that is also another tick in the box that we are following the plan with a combination of organic growth and acquisition to reach our goal of NOK 1 billion in 2025.
That is good news and a good thing for CSAM and an important milestone. We have used this specific slide many times, and I think it's fair to say it stays there, and it's the same. We said we're going to do this before we IPO'd in 2020, and we're following that plan. I would like to repeat the three boxes in the bottom here, which is critical to understand and to read CSAM. Because healthcare itself, the green in the bottom here, has these things with it that nobody can mess with it like pandemics or even these disturbing times in Europe. It's a safe place to be.
The blue one here also represents our strategy, which is important as well because these software components are inside critical processes that are there for many years. The summary of that creates the gray box, which is highly predictable recurring revenues with very little churn. With this platform, we've shown you also now specifically in the first quarter, we have some organic growth, normally between 5%-10%, now a bit in the upper part, even above. I think this is how we're going to work, and this is how it's going to continue to do it. However, the most important thing with CSAM is obviously to get hold of other recurring revenue streams that has the same characteristics.
To do that we cannot wait 10-20 years for a tender, then we have to acquire these recurring revenue streams. That we do through very systematic work within the M&A department. We plan to continue doing that, and also this year and the next years to come, to secure that we reach NOK 1 billion in 2025. In that sense, we are following the plan we have communicated earlier. I also get the questions many times, so many times that we would like to present it and explain it during the quarterly presentation as well. Because we have communicated specifically a 30% target margin for a business that has been in our hands for two years. Then when we have a lot of acquisitions going on, what is actually happening?
What's the specifics when you do something? Most of our acquisitions, we've done 15 of them, they are underperforming businesses. What, how can we then get a healthy business with 30% margin out of that? I think the most important thing is our 3 Cs, customer code competence. In a way, we are not investing in a company, in a business and looking at their EBITDA, we are looking at these three things. Because if they are there with high quality, then we can put it into a more efficient system and actually get that type of return with 30% margin. That is important. This is what we do every day, this is how we work. Then to explain these 3 Cs, we have a system, a model itself on how we handle the customers.
Please remember, we have almost all the hospitals in the Nordics as customers with a mix of type of components, and we're using the same model, same type of dialogue, the same approach with everything. Meaning that we obviously have a scalability in the model itself. That means we can handle the contracts, customer dialogues, and handling this differently. That there you can see the 92% gross margin coming up in the first quarter this year is obviously partly because we have a model that works when we acquire new companies. That is important to understand on the customer side. Similarly, we obviously with handling software, we know how to do that.
Software in production in hospitals and how you maintain them, how you use them, how do you develop them and how you fix errors, et c., you have a structure and an ability to do that differently than a smaller company. When we acquire companies, we can offer and create a better situation for the product itself. That is also partly why it's possible to increase the EBITDA margin. Thirdly, with the competence part, obviously we have competencies here in CSAM from before we acquire companies, so we can together create a more efficient test and support approach to this by sharing resources differently. That is a scalability factor in addition.
That is also why how we can handle these recurring revenue streams with a lower cost, which also is a very specific way to handle customers and code. Finally, also specifically cost reductions. As you probably know, many of those businesses we acquire, they don't have a specific cost discipline approach. It's normally inherited from creating one system, a very good system, a good recurring revenue streams over time, but really not a business focus. We see that very simple things we can do during buy, integrate, and build is to save costs. It's not a very secret source. It's very simple actually. These are elements like consultants, expensive cars, expensive offices, et c., that we can change over time.
The summary of all these activities are structured in a task list in the buy, integrate, and build model. It's all of these things together that really creates this margin expansion. When we tell you about buy, integrate, and build, buy, integrate, and build is something that happens per object as a portfolio. It's very specific, and these three milestones or these three elements, buy, integrate, and build is one thing, but during the integration, which is normally a 24-month project, you have important milestones with all of these task lists that I mentioned is delivered to the managers in the business areas to handle systematically per integration object or target.
This is very important for you when you read our numbers and understand what we're doing because if you read our first quarter numbers, which in a way are quite good, and you could ask me, "Why is there not 30% margin instead of 16%?" Well, the answer is actually here, because we acquire these companies that are sub-performing in a way to get there, to do all these customers, code, competence, cost savings, et cetera, and fully integrate them, it will obviously take time. This timeline is showing you that we are in the first half of 2022, we still have five integration projects going on. Obviously it will take time, as you see here, about the second half of 2023 before all of those are finished.
The finish line there should be a 30% margin on the summary of the current business plus the activities going on. Obviously, in the meantime, we'll probably acquire more companies and then you have to re-look at the complete picture to read our numbers. I think that is quite important when it comes to understanding our value creation. Again, as a summary, you saw that we have more than 90% gross margin and 92% actually, and in the first quarter. That is the summary of these things that I went through. This is how we do it and this is how we systematically work to get the 30% margin when these projects are finished. Obviously, at the same time working on M&As to secure further growth in addition.
What we think we have shown you, the plans we have communicated, the history we have with successful acquisitions. We've also shown you from 2019 to 2020 that we can go from 19%, 15% in EBITDA to close to 30%, when we do no acquisition as we didn't in 2020. We're going to do the same methodology, and we think we have the possibility to become a notable player in Europe. We see it's growing and also in the rest of the world in the next planning period, next 10 years. We're feeling quite good with our history, our current position, the first quarter, and our ability to be a winner also in Europe and the rest of the world. It's not only talk.
Obviously, you see from the point in time where we IPO'd and now the first quarter numbers that it's gradually increasing the diversification here and also mirroring better the balance between Norway and Sweden as part of the business, and then obviously the rest of the world increasing to 12%, which is really good news. Having said that, I guess we should go over to more detailed financial presentation, and I'll give the word to my colleague, Einar. Here you are, Einar.
Thank you, Sverre. Let's have a look at the numbers. First and foremost, the recurring revenue. Here you see the development from first quarter 2017 until the first quarter 2022, and you see that they are increasing steadily every quarter. Based on the last four quarters, we are now exceeding NOK 260 million per annum, the run rate is of course even higher. The growth in recurring revenue is more than 40%, from the measured Q1 2022 versus Q1 2021, so the annual growth. Again, the counterpart is here, public hospitals or large hospitals in the Nordics and in Europe are very limited churn, so real high quality.
Great comfort for bondholders, great comfort for also shareholders, when you invest in CSAM with an M&A strategy as we have. 25% revenue growth, measured Q1 2022 versus Q1 2021. You see we are just south of NOK 100 million in total revenue in the first quarter. Also keep in mind that the first quarter, the Norwegian krone strengthened against almost all our trading currencies. Approximately half of the sales are in Swedish krone, and then a lot in Euro or Danish krone pegged to the Euro. We were hit by that. But still a very robust revenue stream.
The quality of earnings, so if you look at the software revenue, so either the license sales themselves or the recurring software revenue, increasing from comprising 75% of total sales to 78% of total sales in this quarter. If you look at the cost base, you'll see that compared to the same quarter last year, you see almost unchanged other costs and actually lower COGS, but higher salary and personnel. The lower COGS, again, as Sverre mentioned, the increased gross margin, so resulting in more sales of SaaS products and less hardware and third-party products and consultants. The salary and personnel, as we said, as you know, we have acquired since the first quarter last year, we have acquired four or actually five businesses.
Carmenta was included from February last year. We'd done you know before that, Fertsoft also included. When we acquire businesses, we acquire the businesses with all that they contain, including all personnel. It takes a while to adjust the cost of salary and personnel with sales, and that is through the buy, integrate, and build model, that's what I just explained. In addition, we have mentioned that we have an increased order backlog. We have increased sales and increased demand, and we are hiring, and we are expanding the cost base. You will understand it takes a little while before you hire people until they become productive.
We have also been forced to hire in some consultants part-time meantime until we have permanent staff in place. This is as predicted a part of the process. It will be right-sized during the 24-month buy, integrate, and build period. The EBITDA margin 16% the first quarter versus 19% in first quarter last year. But then again, the CapEx is a little lower, 1% lower, so the EBITDA less CapEx about almost on par with last year, in spite of the massive growth through acquisitions. You'll also note that on par with last year, but a strong improvement from the fourth quarter in 2021. The one-off costs were not repeated this quarter.
The organic growth 10.5% in local currency. It says here quarter-over-quarter, and we also see in some of the questions coming in. To be very precise, it's Q1 2022 versus Q1 2021, so actually the annual growth we measured Q1 versus this year versus Q1 last year. Sorry for any confusion there. I hope it's now very clear. We have been asked, you know, about organic growth repeatedly, and we said we need to do it properly. Some of the challenges have of course been, you know, as a company that grows fast through acquisitions, trade in many currencies, how do we measure it to make sure that it is consistent, repeatable and also auditable?
All right. What have we done? We said first we will measure in local currency. I mean, we're not hedging. We're not trading currencies. We measure everything in local currency. That is the official number. But in brackets you'll see we measure them and inform what it would be in NOK. 10.5% in local currency, 7% in NOK, and there you see the currency effect, the strength in the Norwegian krone that I was referring to on average. Second, CSAM is a software company. We are focusing on selling software and related services. We are not measuring other income. It would have been tempting this quarter because we dispose of the Swedish scanner business, but we're not including that. That is not repeatable.
We can only sell it once, unfortunately. The other part of the other income is, like, you know, reimbursing freight costs and, you know things that doesn't really matter. We're not including that in the measure. Again, we're not including hardware sales either. We're a software company, again, software and related services. Hardware really falls out of that. Either it's like scanner business that we just disposed of which isn't strategic at all, or it can be some semi-related sale of hardware like tablets for ambulances. Again, it's not a core area. We do it as a service to the customer, but it's not something we focus on.
We're measuring software and related services, and that is what kind of company we are, and that's what we measure. There's a challenge because when we acquire a company, the income quality, the accounting quality, the quality of the accounts and the accounting principles may not comply with CSAM. They may not accrue income or cost in the same way as we do. Whenever possible, we will measure also pro forma, and when we have high-quality data, we can do that. We have that for all businesses that we acquired through the last year, except for MedSciNet, Optima, and Carmenta acquired this year.
We have excluded them from the calculation this time. What's the effect? The effect is that we assume they contribute zero to the organic growth. The significance, how much do they comprise of total income? Around 5%. The error isn't big anyway, but we just want to be transparent and very clear how we've done the calculation with you. What we used as the base year in line with the portfolio. In line with classic portfolio theory, we have used the first quarter of 2021 as the base quarter. Okay. That is how it is.
On the view graph on the right here you will see just, you know, how it is, just for illustration. We've had a lot of questions about net working capital as well, so we have done the calculation also here to, you know, present to you how that looks. In CSAM, we have a target of net working capital of minus 10% or better. Of course, the lower the number, the better it is, the less capital we use in the operations. You will observe a couple of things. You see we are indeed, you know, within said 10% or better. At the year-end, we were at minus 13, so we were still, you know, within our target.
By the end of the first quarter, the working capital situation improved from -13% to -21%. The other observation we can make is that, yes, we're within target and improved from the year-end, but still, we are not so good as we were in the first quarter last year. This relates to the acquisition of the companies, many companies that we have done over the last year. The companies that we have acquired, they haven't had the same focus on net working capital as we do. It will take some time to improve it through buy, integrate, and build process.
First, we focus on the business to make them profitable, to improve the operations, and then we will focus on net working capital. All in due course. We will be there, but it will take a little time. All right. Again, who are our investors? We appreciate you very much. Approximately one-third in Norwegian, approximately 1/3 in Sweden, approximately 1/3 Anglo American, and also in the rest of Europe and the Nordics. Most of the investors, they are long-term institutional investors. We also have increasing number of smaller investors, and you are all heartily welcome. What hasn't changed are, you know, management and key persons, I mean, the old founding fathers. We are still here.
We haven't sold a single share since the IPO, and we have no plans to do so either. Why wouldn't we sell any shares? Because we think this is an exceptionally interesting business to be in, and we will continue to run the business. I mean, regardless of the stock price going up and down, we will focus on the business, and we will focus on doing what we can do best, and that is to operate and run this business and make it even more efficient and grow it through acquisitions.
Based on you know, the same business, the underlying markets they're growing steadily 5%-10% per annum, continue to focus on recurring revenue, and we will acquire businesses as we have done in the past and to continue the M&A track. We will keep our eyes steady on the NOK 1 billion target in 2025. All right. Before we go into the Q&A session, if you wanna stay up to date on what's happening in CSAM, subscribe to our newsletter and you will be the very first to know. Right. Here we are. Let's go to the Q&A session shall we, Sverre?
Sure.
All right. Here is a question, and I guess this one is to you Sverre. Can you explain license sales in more detail and how it relates to your recurring software revenue? How on earth is this linked together?
That's a good question. Obviously, people using these terms differently, but it's a very specific thing that we have done. Normally, a license sales is a one-time thing. You sell a license, the right to use some software. Also in the contracts you have to pay an annual amount of about 25%. It differs +- a bit, but on average, 25%. If you have some license sales, 25% of that will normally then be recurring revenues in addition. That is the main principle.
Since we are in the first quarter now talking about this, you see there are several license objects sold there within, among others, this ProSang Blood Management part from Denmark, and then also other things within maternity and Medication Management. There are different types every time, but within they have the same type of contract actually with one-time license + 25% recurring revenue. That should be the specific answer to that, Einar.
All right. We have some questions pertaining to the growth. One was regarding the annual report, we disclosed revenue per product group, including LIMS. This goes to. There was a question over the decline in LIMS and Medication Management, and it seemed like we're down year-on-year. Part three of the same question, How can I match that with the fact that you state that your organic growth usually hovers around 5%-10% annually? From Mr. or Mrs. Anonymous, I assume it's the same person, also reading the report and asking about the organic growth 10.5% year-over-year or quarter-over-quarter.
I think I'll address all these questions as one, if I may. First, when it comes to organic growth before the first quarter this year, we have said repeatedly that we haven't measured it, and we haven't done the calculation. We said that we will start reporting on this from the first quarter of 2022, which indeed we have. Again, we haven't done the calculation, if I could mention it and comment it, I would, but since I can't, I won't. The organic growth year-over-year, quarter-over-quarter, as we said, sorry for the confusion if you read the report, it is indeed Q1 2022 versus Q1 2021. It's year-over-year, measured quarter by quarter.
Going forward in the next report, we will, you know, do it the same way and also build a record so you can follow the graph. Here is a question from Oliver regarding mergers and acquisitions. How have you seen the M&A pipeline and private market valuations developing lately? Do you wanna start on that, Sverre? I can fill in a comment or two if needed.
Yes, I guess it's quite simple to see what's going on in the listed companies when it comes to valuation these days. I think it's now, to put it this way, many are sobering up and thinking that, you know, the world is the world and it's also, you know, reflects the same situation in other places. Yes, I think it's easier to see that valuation should be harmonized with the listed companies as well. In that sense also we see that, you know, the pipeline and the targets, there are more of them and I think they are at a better price. That is my gut feeling at the moment, having had some dialogues going on. Don't you agree, Einar?
I agree. I would also say that, speaking of net working capital, and being in a position, if you look at the balance sheet section and you see the cash position at the end of Q1 versus the end of last year, even though we have indeed acquired a company in the meantime and settled it in cash, we have almost, down to the last crown, at the exact same cash position. I say we are in a good position, and we have a lot of freedom to operate. I think, you know, it's a bit of the. I mean, it's a tide water effect. Right now there's, I'd say, for software companies, growth companies, tech companies, we all experience there's a low tide. At least, Distrib is loaded with cash.
All right. Continuing on M&A, here is a question from Henrik Larsen. He's asking: "How large is the relevant M&A space for you?" What do you say, Sverre?
Well it's a good question, and we have, as I mentioned before, created a database that we started with in 2005, where we came from a national hospital, Rikshospitalet in Norway, and we categorized all of the systems in the national hospital, giving us the possibility to see what type of vendors, what type of viable solutions are there. We have continued to use that database to get a view of different types of vendors in the Nordics, in Europe and also in the rest of the world. As we see it, if you look at the market in the Nordics, it's about relevant 3 billion NOK as a specialized healthcare market.
If you multiply our first quarter with four and see our rough sales this year, you will see that we are at 10%-ish of that market, meaning there's a lot of targets in the Nordics alone. However, if you look at the European Union market, you'll see that that is about 10 x bigger. I would say that there's a lot of targets relevant to us only in Nordics and Europe. I think it's fair to say the volume of targets is really not the problem here. What we are working on every day is to make sure that we do the exactly right thing. Why is that?
If you look at Public Safety, which is our biggest business area, it was NOK 15 million in 2016. It is now more than NOK 150 million in annual sales, and this is systematically built through a very specific M&A strategy to find the right targets at the right time. You see the same with the smaller part, Health Analytics, that we have actually acquired one in 2021 and second one in 2022. It's very specific, and it's more important to us to do the right thing, to get the right recurring revenue stream, the right type of sticky business put together, rather than acquiring a lot of volume that is not having the right characteristic at the right time.
It's not only the volume, but also the right thing, and I think we've done the right things so far with the 15 acquisitions we have done, and we're going to continue to reach the NOK 1 billion in 2025.
Thank you Sverre. I think I'll continue with a follow-up question from Mr. Larsen. He's further asking, How will new acquisitions be funded? Will you go back to the bond market or are you preferring bank financing or issuing new shares? Maybe I can give the first shot on that. There are indeed many ways to skin a cat and each, you know, acquisition is different, and it's funding, it's also pertaining to who are the owners, are they? Is the company owned by a financial investor by you know, a middle-aged entrepreneur? Is it a generation change?
I mean all this really matters in how you want to do the financing and what is the right financing for the right situation, also combining with how much what is the valuation of the company. But as I was just mentioning about the cash position in CSAM, we have a very strong cash position. For you know, to continue the growth to reach the 40% annual target, we really you know, if no other options were available, we would still have the cash to do that, I believe. But again, we believe that the bond market is still open to us.
One of the attractions of CSAM is the very strong and high degree of recurring software revenue. Very low churn, very high quality counterparties. That should allow you to continue to use bond financing or some kind of debt in the equation. Then you have seller credits, you have earn-outs. There are, again, many ways to this. So we believe that cash or funding will be available without having to issue new shares at the current price level. If we look at a situation where we want to continue to grow, you know, 40% per annum, at least for this year and maybe into next. Okay. Then another question about liquidity.
How do you think about your liquidity under the current market conditions as your cost of capital has increased, and continuing, due to a decrease in the share price? I guess I can make a first stab at that one as well. The liquidity is always an issue. As I said, when we presented the shareholder structure, we're blessed with, you know, a very high degree of buy and hold forever long-term institutional investors. The flip side of that coin is that liquidity is somewhat limited. It is what it is. Again, if you don't have to issue new shares at the share price, the share price won't really, and you are not diluted. The share price is what it is.
I think it was Warren Buffett who once said that in the short run, the market is a voting machine. In the long run, it is a weighing machine. I guess what Sverre and I can do, and the rest of management, is to continue to focus on doing the right things from an operational perspective. In the long run, we believe that the share price will reflect that. The law of physics will indeed work in finance as well. Then there comes another question also from Mr. Anonymous. How come it takes the same time for a small acquisition and a large acquisition to integrate via your buy-and-build model? How is this Sverre?
Yeah that's a good question. I think when you saw my presentation here with the customers, code, competence, the customers are the same. As I mentioned, we have almost all hospitals in the Nordics, for instance, and also a growing number outside. How their behavior when it comes to how they handle vendors, it always takes time to do things. That is the same whether you have a small contract or a big contract. What you have to do is have a process with customers. You discuss with them, then you have to deliver, renegotiate a contract, payment terms, selling add-on modules, which will take time. That is why. We always say that we have to buy-and-build is created based on the reality inside hospitals.
It's not just a PowerPoint thing. That is why we have to do it like that. The same thing goes with if you have to reduce the number of heads in a business. Obviously you can't do that within one quarter. Now we're going to do something else with the number of heads. It's not possible. All of these activities are very specific, and they take time, and we have a model. That's why it has to be the same for the small and for the big acquisitions.
Okay. There's a question from Mark. You have significant amortizations and interest. When do you plan to show a positive net profit? All right. The amortizations, they are all linked to intangible assets and, you know, amortizing them over a period of either five or 10 years. Apart from CapEx, which you have seen has been, you know, between 6%, 7%, and now 8%, too, over the last year. It is very much reduced from what it had been, you know, if you go a couple of years back. Almost all intangible assets and the growth of them linked to acquisitions. It's either, you know, IP or goodwill or customer value, customer contracts.
Since booked value, equity value is very close to zero, almost the entire acquisition price will be intangible assets in some way on the balance sheet. It's amortized. But keep in mind that these are calculated costs. These have no cash effect other than you know leading to not having to pay any taxes. The cash was paid out when the transaction was settled, and now we are amortizing it. That is roughly this quarter, or roughly a little above NOK 20 million per quarter. Interest, which is payable, approximately one third of that, so around NOK 7 million per quarter.
I guess the very short answer to the question, Mark, is that as long as we continue to grow as fast as we do through acquisitions and we pay, you know, and there is a distance between booked equity and what we pay, which is still limited. All the transactions have been EV/Sales between one and two. I think it has been, you know, very sensible in that respect. We will continue to amortize, and we will continue to see, you know, huge amortizations. That is the short answer. Again, no cash effect on the amortizations. Okay. There's a question from Pippi. I guess that is one.
Is there a CPI adjustment, so consumer price index, I assume, Pippi is referring to, clause for customer maintenance in the contracts? What can you say about that, Sverre?
Yeah. It's since we have inherited all of our contracts from fifteen different acquisitions, they are somewhat different in different countries. However most of them, I would say more than 90% actually, would have some kind of adjustment there, and most of them are related to the CPI, the ordinary inflation protection, to put it that way. That is the general answer.
Okay Again from anonymous, I think maybe this is a follow-up question from the previous one. In the 2021 annual report, you disclosed your revenue per product group and almost every single group including LIMS, and why is that? The very simple answer is the annual report is delivered according to NRS and NGAAP, and it's a requirement in the accounting standard that we disclose that information, so that is why it is. We simply comply with the regulation. Okay. A follow-up question to that one, I believe. Your organic growth is usually between 5%-10%. Why almost all revenue lines per group were down year-on-year in 2021, including LIMS? I think this was maybe repetition of a previous question. As we said, we haven't done the calculation.
We haven't published that for 2021. We are publishing the organic growth as from 2022, and we have just showed you and went through that. Also anonymized related to personnel costs. Personnel cost as % of sales increased also for reasons unrelated to mergers and acquisitions. How do you expect this to evolve? I guess, yes, it's a correct observation as we saw that almost all cost items were either unchanged or I mean, in nominal numbers, compared to Q1 2021, and actually down for the COGS, but salary increased.
One is related to M&A, another one related to M&A, but not so obvious, is that sometimes you have some competence and it takes time to, and you need to add some competence and replace it. The other one is that we are, as Sverre mentioned, strengthening the organization to enable us to take the next step of growth. The third thing is related to an increased order backlog, and we need extra personnel to take care of that backlog. Some of the personnel, we have to say, "Shall we delay the project or shall we hire in temporary personnel?" We have decided to do the last one.
Gradually, temporary personnel will be replaced by permanent personnel, and we'll do it as soon and as fast as we can, and that will cut the costs for that item. Also more directly, we think, you know, long term it will come back to the levels we've seen in the past. If you go one year back, we are right on time, where we said we'd be. The hour is gone. It has been fantastic. Thank you very much for all your questions. With that, I'll hand it over to you, Sverre, to round it off.
Thank you. Thank you all for watching, and I hope you enjoyed this presentation of a quite robust quarter. Until we see you next time, I hope you will join us in the 30th of August when we present the second quarter. Until next time stay safe.