Good morning, everybody. Welcome to CSAM's presentation of the financial report for the first quarter of 2021. I am Sverre Flatby, the CEO of CSAM, and I have taken the liberty of waking up our CFO as well. Einar, welcome.
Yeah, thank you, Sverre. My name is Einar Bonnevie, CFO of CSAM. We are happy to present the first quarter numbers for you. First, for those of you who would like to follow CSAM and follow the news, there's now a formal press release page where you can subscribe to our news. Quite easily fill in your name and email address, the news type you like, and it's fully GDPR compliant, and you will be up to date on all news on CSAM.
Great. Let's move on to our highlights for the first quarter this year. I'm happy to tell you that this quarter we had a revenue growth of 40%. I think everybody remembers that have followed us before, that our growth target is just between 35% and 40% to reach NOK 1 billion in 2025. We're quite proud of the fact that we can start with that pace. This is our first clean quarter. We had our IPO in the fourth quarter last year, so of course, with some focus there. This is our first quarter with a real business, as you see. Not only that, the most precious part of our business is, of course, the recurring revenue streams from these specialized entities in the healthcare sector.
25% growth in recurring revenue is, of course, also showing that the stable, predictable underlying business here with low churn is still there and growing. That's very good. In addition, another highlight is, of course, the EBITDA, which is showing that we are growing also there, 18% first quarter last year and 19% this year. Of course, it also gives us the information that our operations are running with positive cash flow, and that is also important while growing. I think those three elements here would give you some kind of taste of how good we are performing at the moment. Then, of course, our roll-up story, what is CSAM about? It's of course, an acquisition story, and we are continuing that. The first quarter milestone, the acquisition of Carmenta Public Safety, is quite important.
I will go through the details of that acquisition, of course, the summary of that, in addition to the three highlights mentioned, of course, should give you the comfort that we are on the pace we need to be to reach our targets. Not only the first quarter, but just after, we've had a couple of other highlights here. Of course, a NOK 200 million bond tap issue just after the first quarter is an important aspect of our growth story as well. That gives us the additional capital in addition to what we have from the IPO, of course, to continue the acquisition targets work with those the months to come. Of course, we are still just in the middle of the second quarter and to get more cash to do acquisitions the rest of the year, of course, is important as well.
To grow, we need competence on all levels of this organization. We are very happy to welcome Gunnar Bjørkavåg, who has been a former chair of Visma, also entering our board to help us design the future and to accelerate our M&A capabilities. That's all good news. To remind you all what this is all about, what is CSAM? What are we for? I think it's important to understand the difference between CSAM as an eHealth company and many others. We have chosen a very specific strategy, quite a unique one. The three first words here, eHealth, niches, and software defines us.
I think we are the only one stating this and focusing only on that, and that has made it possible for us to become the leading provider in the Nordics, but also with, of course, a potential in Europe and the rest of the world. I think that is important to understand, and our software is related to highly specialized processes in healthcare that are there for many, many decades, and they are rarely changed. That means that is the reason for the low churn in our business. This is highly specialized. What are we actually doing? I think most of you in your family, among friends, will reach milestones in life where things happen.
These things normally could be positive things like if you see this couple on the picture thinking about having a child, or they're talking about a recent acute incident, or somebody, a friend, or a family has had cancer. In any of those situations. You will probably see that healthcare personnel helping you as a patient, some kind of small CSAM component will be at work somewhere. Maybe even you won't notice, even the healthcare provider won't notice at the moment, these small add-on components to these workflow processes are what we're doing. That makes it also very interesting for our people to work at CSAM because this is something useful, this is important for healthcare, important for patients. That's the general thing about CSAM. Then we're passing the first quarter, of course, our systems, our components are in different niches.
Just to briefly go through some of them here, Medication Management, and especially within oncology, we are still the de facto leading provider of specialized solution for people there. There are three different user groups. You have the oncologists that actually design cures using our software to create cures, and these algorithms make sure that you as a patient get the right cure. You have the user group in the picture here, creating these cures, producing these cures. Of course, that is quite as important. The third user group, the nurse in the hospitals that actually administers in giving you the right cures. This business is still very important, although it's the smallest one of our niches. It has been growing fast all of the years since we acquired it in 2008.
Again, it's important, it's long-term, over decades, and this is defining CSAM's niche strategy, actually. In the first quarter, what happened within our Women & Child Health? Well, being the leading Nordic player is, of course, one thing, and delivering to hospitals in Norway, Sweden, and Finland. We also acquired something just before the fourth quarter, meaning that during or before the first quarter, meaning during our first quarter now, we have been integrating the acquisition Fertsoft, which we acquired just before New Year's Eve. That is also important to understand with CSAM, we are not just buying a company and let it grow on itself. It's being integrated. That means our Women & Child Health business has been strengthened through the first quarter, and also the ability to grow, the ability to create better margin is already there.
Quite important, and also another one defining us and also with a high volume of projects in the first quarter is the Blood Management systems. These are used, most of the most important providers in Norway, Sweden, and Denmark are using this software, and have been using it for decades. That means if you look at a quarter, nothing really happens in negative, positive way. It's just going on and on and on. These customers have been using their competence to secure that these systems are getting more and more related to their quality management systems, accreditation, certification, et cetera. These type of solutions, it has been installed since 1969, and that says something about churn. Since these types of solutions are connected to different types of clinical procedures, it rarely changes.
If you look at the user groups here, you have the patients that give blood or tissues to be used in hospitals. You have those who secure the storage of these products. You have those who distribute them into the clinical environments in many, many hospitals in the Nordics. It's also quite a good business for us and a long-term business as well. Also, of course, for the first quarter, most importantly, of course, the Public Safety area of CSAM is growing fast and is an important thing for society. There we had an acquisition, which of course, I will go into and describe further. We have been much, much stronger through the first quarter here, not only in the Nordics, but also in Europe.
I will go through that specifically since this is a huge thing for us in the first quarter of 2021. We have Medical Imaging, also same type of long-term recurring revenue streams from components used in different types of smaller processes inside hospitals. These are not like big X-rays or stuff like the bigger companies are using as more general deliveries of software. These are highly specialized. Normally then, being highly specialized, they will stay there and be integrated with the different application architectures in hospitals around in the Nordics. Talking about integration, a growing area for CSAM is definitely our last niche, which is the Connected Healthcare area. This business area is growing for one reason.
All of these niches that we have that have this important role in healthcare, they need to be integrated to fully exchange information between different types of solutions, like the general EPR solutions, journal systems, if you like DIPS in Norway, Cambio in Sweden, or Epic in Copenhagen. All of these systems need to integrate with these niches. To do that, we have components to secure these types of integration. We have a lot of different types of components here. That's why it's growing. Since all these hospitals are different, they're using different components, different approaches to integration, we can deliver it all. It has been a fantastic journey for us since the company was actually founded based on Connected Healthcare in 2005. In 2005, what really happened? Why was actually CSAM able to become a success?
I think being created by a national hospital, we were inside the complex clinical environment understanding what really happened. The first five years, CSAM was created as a company with a small export to Sweden, and we already at that point in time categorized all those complex small systems to put them together and then started our thinking about acquisitions. We managed on our own to do this the first five years, and then we managed to also grow that business over the years, and we were lucky to get on board a private equity company, Priveq. With their fund in 2015, we were able to accelerate our M&A story, and that acceleration made it possible for us to become, five years ago, the leading niche player within e-Health in the Nordics.
After the fourth quarter IPO, it's possible for us, obviously, to further accelerate the M&A processes. You see the last acquisition, which happened in the first quarter, and we are reporting now the first quarter. I will give you some information on what that specific acquisition means to us. This is quite a big business if you compare it to CSAM with NOK 230 million turnover last year, and an acquisition of SEK 80 million is of course a big one. However, it's a very important one, and it fits very well into our current business within the emergency and acute. As you see, it was acquired at a reasonable price, and then of course, it gives us a new situation. Why is it so important? Well, this is really something that helps saving lives.
The operators around in Europe are using this software the same as our current software, is of course, very important, and then it fits well when it comes to our strategic position as the niche player. Then again, it has important customers, many customers in many countries. However, it's also the spine of the national service in Sweden, the 112 emergency service. Of course, that again strengthens us very much in the Nordics. Not only in the Nordics, of course, we now address a huge market with our software based in this segment. Of course, 45 million citizens in Europe are addressed through this acquisition because now a lot of operators in Europe are using that software specifically to save lives.
Then again, the combination strengthen the Nordics and increasing our export to Europe with a very risk manageable way because we have customers here, we have the same software distributed, and we have the ability to get further synergies with our current business within the emergency and acute. In many ways, the most perfect acquisition ever. Of course, most of you, we've communicated our simple goal of having a NOK 1 billion turnover in 2025. Of course, this transaction alone actually shows you how we are going to do this and how we are approaching to secure the plan going forward. Also, how do we get the margins?
I mentioned we have a positive cash flow from operations. We have to do that in a structured manner. You will probably understand as we're doing a serial of acquisitions, that we have to have a multiple setup of projects that do integrations. CSAM wants to be one organization only. That means there are no separate companies doing separate work. To do that, we have a model buy, integrate, and build. That is what creates the margins here. What we do, if you look at the specifics here, Fertsoft we acquired just before New Year's Eve. They're in past the M1 already and are fully integrated, working inside our niche Women & Child Health.
Now, of course, the acquisition of Carmenta, which happened in February, of course, so they are part of our first quarter numbers, but of course, the work with integration has more time to go there. We normally take 24 months before we restore the 30% margin that we want to have while we're growing. This is how we do it, a structured manner, a portfolio of common parallel projects that we're doing. That is what really creates the margin as we grow. Then, of course, what are we going to do? Where do we come from? What are we going to do? I'm quite sure you can see from our history where we came from, what we have been doing, going from an innovation company, being leading in Norway and then in the Nordics, and then now starting in Europe.
Of course, we have the ambition, in addition to being the leading Nordic player, since few companies so far has chosen this very specific, highly specialized niche orientation, we think we are able to be an important player in Europe this year, and we are going to go for being a leading Nordic player in 2025. Of course, the rest of the world is there, so we will have the ambition, and I think you will see from the proof of the pudding actually in the first quarter already. If you look at the 2020 full year numbers and the spread of our business, our customers, and employees, you will see we had some distribution in Europe. However, if you look at the first quarter, you will see 7% in Europe.
Also, if you look at the numbers here, now the diversified recurring revenue streams are fully represented in the Nordics better related to the citizens and the sizes of the countries. We are quite comfortable now that this quarter gives you really comfort that we are able to reach this plan, which is not a secret to anybody. We have shown almost all stakeholders this slide all the time for a couple of years, and I think the first quarter simply showing you that the first step here in the first quarter gives us all the comfort that we will at least reach that target and maybe be even ahead. Having said that, I think you're here for a reason. I woke you up for a reason, Einar. Let's move on to the financials and give the audience a bit more specifics about the numbers.
Absolutely. Thank you very much, Sverre. I'd like to take you through the financials, and after that, we'll have a Q&A session. The highlights first. We had revenues in the first quarter of more than NOK 76 million, and that represents a year-over-year, quarter 2021 versus quarter 2020 of 40%. We are extremely satisfied with that. The recurring revenue is growing as well, at more than NOK 53 million. That's a growth of more than 25%. The margin is growing as well, both in numbers and in percent, from 18%-19% in Q1, in spite of the acquisition activities going on. In Norwegian kroner, the EBITDA reached more than NOK 14 million in the quarter. It's also safe to say that the EBITDA is somewhat impacted by acquisition costs and M&A activities going on in the quarter. All right.
These were the highlights. Let's move on to take a look at the recurring revenues, the most precious part of CSAM's income stream. I'm happy and pleased to announce that the recurring revenue is growing and it keeps on growing. It has been from 2016. What you see here on the bar charts are the last four quarters, the rolling last four quarters. You see that on an annualized basis, we announced NOK 184 million. This is surely good news to the bondholders that are with us, backing us, and also a perfect foundation for the M&A story and the roll-up story that CSAM is. Again, the counterparties here, public hospitals in the Nordics and a decreasing part in Europe, very low churn, inflation adjustment in almost all their contracts. This just keeps on ticking. As you can see, first-class counterparties.
Let's take a deeper look into Q1 and the revenue growth and the margins and CapEx. That is really what you can summarize that easily. Let's first take a look at the development in sales. You see, again, sales increasing from NOK 54.7 million in first quarter 2020 up to almost NOK 77 million in the first quarter of 2021. We are firing on all cylinders. All parts of revenues are growing and again, reaching a total growth of 40%, which is very, I believe, in line with what we have communicated and what our ambitions are. I think it's, again, remember that we acquired Carmenta in mid-February, so it's only been accounted for two out of the three months in the quarter.
The pro forma numbers, if you had included it for a whole quarter, would have been sales of approximately NOK 84 million, and that would have represented more than 50% growth in the quarter. Again, there's more to come. Let's take a look at the EBITDA. Again, the EBITDA is growing from NOK 9.8 million last year to more than NOK 14 million this year. That represents a growth from 18% to 19% margin. That, again, in spite of the cost associated with the M&A activities. Again, it is not because we have put a lot of cost on the balance sheet. On the contrary, capitalized R&D keeps coming down. This quarter, both in kroner, in NOK, and in percent as part of total sales, from almost NOK 8 million last year to NOK 6.9 million this quarter. In percent, from 14% of sales, down to 9% of sales.
A little below what we have guided you on in CapEx on average of around 10%. We are not going to change that. Happy to say that this simply means that the cash flow from operating activities is as strong as it was last year. With this backdrop, I'd just like to take it back to our plans and our ambitions. We have a market with a good underlying growth. We will continue to focus on niche and specialized software. We are building on and focusing on the long-term recurring revenues. We will grow as fast as it is possible to grow organically. It will be between 5% and 10%, sometimes a little less, sometimes a little more, like this quarter. All in all, we aim to grow to more than NOK 1 billion in 2025. That remains.
In order to grow from 2020 to 2025 to NOK 1 billion in sales, we need to grow at an annual pace of approximately 40%. Currently, we're a bit ahead of that plan. We just keep on rocking. That was it. Let's move on to the questions. Again, you can submit questions on Nimio, and we'll just handle them one by one.
Yeah.
Okay.
Any questions there?
Any questions? Yeah, as a matter of fact, there are some questions. It's one that from Eddie, and the question is, You have said Q3 is seasonally weak and Q4 especially strong. How do Q2 usually compare to Q1? Any seasonality in Carmenta? Will you give a first shot on that one, Sverre, and I can follow up?
First of all, with Carmenta, as with all our other niches, the seasonality when it comes to recurring revenue is none at all. When you're talking about seasonality, it has to do with new projects or services or added smaller license deliveries, et cetera. In a way, it's quite predictable. That's the most important thing. When it comes to Q1, Q2, I think for this year, there were no big difference between Q1 and Q2 either, as it hasn't been the previous years. When it comes to specific numbers and percentages, Einar, you could probably answer that better.
Yes. The Q2 is a very ordinary quarter, so it's neither especially weak nor especially strong. I think nothing special about Q2. It's normally a robust quarter, and we have no indications that this year will be any different. As you said, the Carmenta business is just tagging along, so nothing special on Carmenta. All right. Another question from Eddie, and it's probably for me, this one. 9% CapEx in Q1, do you want to stay around that percentage of sale going forward or increase or decrease? We have previously guided you on a CapEx level of around 10%, and we maintain that guiding. Another one of the few guidings we have done. 9%, maybe it will be 11% next quarter, but expect around 10%. It was a little less this quarter.
It's maybe important to remind people what is really CapEx in the real life here when it comes to the hospitals. Well, it is business cases where we create components that the customers buy to add recurring revenue. They're adding value to their processes, and we're getting added recurring revenue. We don't want it to be too low because it represent a growth potential for the future. That is why it's there. It's not only financials.
Not only financials. Here is one I believe is for you, because it links back to the press release where you state, based on the development in first quarter, we will reach our NOK 1 million sales targets, and I think it continues faster than planned.
Yeah. It's not NOK 1 million, I hope it's NOK 1 billion. Yes, of course. If you saw Einar's detailed presentation, the bubble on the first quarter sales, you will see that if you pro forma add Carmenta business, and you see we already have integrated the Fertsoft business, you will see that we are actually growing more than 50%. It's in the middle of the second quarter. We are not lazy people. We are not going to stop here. I feel that we are on our way, and I think we are ahead of the plan based on that fact. Of course, the market is there, and we continue doing what we're doing. We're quite comfortable that that's the right way of putting it.
Okay. Here's a question that we get from time to time, split between organic growth, M&A, and any FX effects.
Yes, we normally tell people organic growth within the niches. Remember the three words, eHealth niches and software. As long as we stick to that strategy, these niches rarely change. There's really no lot of tenders going on. It's really not an organic business. Where is the organic growth? Well, it's normally between 5% and 10% based on sales to current customers. That's most of it. Almost all, actually. If you look at it that way, it will be between 5% and 10%, and it is all the time. We are not focusing too much on that, actually, as management. That is part of the predictability. If you hire 50 salespeople, you will not get more than 5% to 10% anyway. That's because it's staying there forever, in a way.
That is how we see it, and that's why we focus on what really matters for the value creation of CSAM, is to get more of those recurring revenue streams through acquisitions. In a way, if you want the answer, well, it's between 5% and 10%, maybe this quarter a bit higher. Again, we don't expect that to change, we're not focusing. That's my conclusion. We're not focusing on that because it's predictable as the rest.
That's right. If you want to do some calculations yourself, you know that two things have changed in the first quarter 2021 compared to the first quarter of 2020, and that is the inclusion of Fertsoft, which we acquired at the very, very end of last year, and then which has been included for three months, and Carmenta, which has been included for two months. You know the approximate sales of both of those. Those are public information. Assume Fertsoft for three months and Carmenta for two, That is the acquired part, and you do the math. The FX effects, just to answer that one. The overall Norwegian kroner has strengthened versus all our trading currencies this quarter, in the first quarter. That has the opposite effect of what we saw last year. We are not reporting specifically on FX effects.
Last year was an exception to that rule as we had exceptional FX movements. As a general rule, we don't report on FX effects specifically. All right. Another one from Carl, and that links also to the organic growth versus the acquired growth, recurring software revenues in Q1, 25%. Again, it comes back to really the same question. This is a variety of the same question as we just addressed. Nothing really special on recurring versus the total sales. That said, the income composition from the companies that we acquire, we are very often different from what they look like in CSAM when they've been there for a very long time. We are using time to renegotiate contracts to improve the income composition.
That is typically what we do during the buy, integrate, and build phase, or M1, M2, M3, the first 24 months when after we acquire the business, we try to improve the income composition as well. That is the effect that you're seeing in this quarter when you compare the growth in recurring revenue to the growth in total revenue, and that is the income composition. There's room for improvement there, and we will improve it. All right. The next one, and that, I believe you can't be too specific on this one, Sverre, but there's a question about the M&A pipeline. Can you add some flavor to the M&A pipeline? Is there anything going on?
Yeah, the flavor would be it tastes good. To put it this way, our pipeline is really a database that we have created from the beginning of the company story in 2005, where we categorized in a national hospital all of those important smaller niches that has these same type of characteristics that are related to these specialized solutions. Based on that, we got also the overview of the Nordics and European players that actually has that type of software. We have a huge database. That's one thing. Secondly, we have been working with the pipeline specifically by talking to companies over years. Meaning that we feel that we are comfortable when we're talking about our five-year plan based on the history we have with acquisitions and also what we recently showed you in the first quarter.
I think it's fair to say that this pipeline is what CSAM is about. Other companies might look at a lot of tenders focusing on this. Our business is really about this pipeline. I think if you ask me to add a flavor, we are comfortable that we will reach our target. As I mentioned today, I think we are ahead of the plan, and it's just the second quarter.
Yes,indeed. Here is a question from Oliver. Again, coming back to organic growth, what was the organic growth in Q1? Looks like it was above 10%. If so, what is the reason for this strong growth? I guess you have just done the calculation, Oliver. You may be right. What is the reason for this strong growth? I'd say there are, again, variations from quarter to quarter. We have guided you on a market growth of 5% - 10%. We said at CSAM we will grow along with the market, sometimes a little less, sometimes a little more. Q1 appears to be a strong quarter. I'd say nothing special, natural variations. You will see fluctuations between the quarter, sometimes a little less, sometimes a little more. Shouldn't worry you. Look at the long-term picture.
If you're invested for the long term, look how we develop in the long term. We aim to grow with the market 5%-10%, sometimes a little more, and then the rest through acquisitions to reach the NOK 1 billion. That remains. Anything you want to add, Sverre?
No, I think it's important to understand the whole value creation model. I would rather do one acquisition and focus on that and secure 50% growth and then you see the total growth there. Rather that than focus on getting an organic growth from 6%-7%, something like that. Of course, our salespeople are doing that all the time. Then again, I think you have to understand the business we've chosen, the strategy we've chosen to be in here, when you focus on highly specialized components, they are there almost forever. The other side of that is that we cannot change so much the organic growth. Again, let's move forward with the high growth and then keep saying 5%-10% that's going to be. This time, yes, a bit over, but that's not our main focus.
Speaking of sales, this next one from John. Can you specify when you will reach your sales targets?
No, I don't think we should guide very specifically, but I think if you see the specifics here, what happened in the first quarter and the pro forma model that Einar showed you with the 50% over that growth, I think you will see that as long as we stick to our strategy here with these acquisitions and we actually continue doing what we have done, and also the rest of this year and the years to come, and as mentioned with the pipeline question, I think we are comfortable there as well, then I think we are ahead of the plan. Of course, we would like to perform as much as we can. At least we will keep our promise and secure the 25 targets. That's the simple answer.
Yeah, we're a bit old school.
Yeah, a bit boring, actually.
We do what we say we do. All right. Here's a question which I believe is more for me than you.
Yeah
which is about the development in working capital. Again, those who have followed us and also have been with us since the IPO, you know that we have an active view on working capital. We have a negative working capital, which is positive, and our target is -10 or better, and it is better. Typically, we advance annually, quarterly, semi-annually in advance, and we're typically very cash-rich at the beginning of the year, and then we deplete those reserves somewhat operationally through the year. What you have seen in the past, there are no changes there, really. We don't report on this specifically, but there are no changes. We have had, we have, and we will continue to have a very active view on net working capital and capital management. All right.
Another one which I also believe may be more for me than for you, Sverre, unless you want to go into EBIT adjustment, et cetera. This is from Carl again. Can you say anything regarding EBIT adjusted for goodwill depreciation, PPA amortization is at on an LTM basis? What we can say there is that when it comes to PPA, so Power Plant and all the fixed assets, almost nothing. If you look at a balance sheet, you'll see that it's dominated by intangibles. Typically, those intangibles are either developed IP but for the most part, it comes through acquisitions. When we do an acquisition, we do an acquisition analysis and see what is actually we acquired, and it can be one of three things: It's IP, it's customer contracts, and anything we can't identify is goodwill.
Goodwill and customer contracts amortized over 10 years and IP over five years, whether it's acquired or developed. The amortizations are linked to the intangibles. You can just assume that the level given the current business, that the level in the first quarter is fairly representative for the year. Mind you will see a notable increase in amortization from previous periods. Obviously, as we acquire a company and we pay NOK 150 million for Carmenta, that of course increases our amortizations as well. Should we do any more acquisitions through the year, that will again affect amortizations. That is really what will affect the amortizations and the EBIT. Okay. There's a question from Eddie regarding your communicated ambition for 2030.
Still a little time to reach that. Regarding the number one in the world by 2030 ambition, what is your view on competition for that position?
Mm-hmm.
Are we alone?
We're not alone. Actually, we have been alone when it comes to creating this position as the leading Nordic player, because we have chosen specifically to create a portfolio within these highly specialized areas. So far, I haven't seen any competitor doing exactly that. Of course, there are competitors inside each of our niches in different markets as always, but they are also targets. That's one thing. You have the other type of competition, like the good acquirers like Constellation Software, people like Nexus, and that type of companies that of course will also be in this market acquiring companies. There will be competition.
When we say that we are able to be dominant in Europe and the rest of the world, I think so far, since we are focused specifically on this, there are a lot of companies in the size of Carmenta and plus minus that will make it possible for us to actually continue this within different niches that we have, but also other niches. That's why, although our competition there, I think we are fairly in a good position after having trained for 10 years with this acquisition strategy, and I think we have the freshest and most important value in our pipeline database as well. I feel quite happy of our position in the competition, although there are, of course, competitors as well.
Okay. Let's take another one from Oliver. That is again, on the Q1 breakdown. Approximately what were M&A transaction costs in Q1 and any other non-recurring or lump cost items in Q1? Again, we have decided not to report specifically on one-off costs or M&A costs. They are all included in the numbers. The numbers we have presented, reported numbers, they are all inclusive. No one-offs to be adjusted for. We're not going to report specifically on that. I think it's safe to assume that there are M&A cost and transactions costs impacting the Q1 results, especially when you've done such a big transaction as Carmenta and also had high M&A activity in general, as Sverre described.
What we have guided, that you will find in the report and described in the report, is that in 2020, audit costs, which are at least were considerable for a group like ours, they were booked in the second quarter last year. They are in their entirety booked in the first quarter this year. If you want to have an absolutely fair comparison between first quarter 2021 and 2020, you could add another NOK 1 million or NOK 1.5 million to the EBITDA this year, because the Q1 this year is burdened by costs that were recognized in the second quarter the last year. You could say the EBITDA this quarter actually a little better than it appears.
I think it's also important to add that the reason for us deciding not to report or adjust EBITDA is that M&A is what we're doing all the time. I think we should just give you respect.
Okay, another one from Eddie, and that relates to accounting and the stock exchange. Any stats on moving to another stock exchange? I assume you're referring to the main list on Oslo Stock Exchange or maybe on Stockholm and change to IFRS. Currently, there are no plans to move away from Euronext Growth. I'm not saying that it will not change in the future. It can change. The IFRS question is very much related to the stock exchange. If we were to move to the main list, we would have to adjust our accounting principles as well and move to IFRS.
That said, right now we are accounting and consolidating according to GAAP, in this case, NGAAP, and local GAAP in the various countries in which we operate. The difference between GAAP and IFRS is not extreme. You will see some on amortization, and you will see some on office leases, but there's not really a huge difference in this respect. That said, no plans currently.
You'll be the first to know.
Okay. So far, what seems like to be the last question, Sverre, and that's from Herman. I guess this goes to you. What are your biggest challenges with regards to the M&A pipeline generally and specifically right now?
Challenges is of course, the ability to secure an accelerated ability to make acquisitions because, of course, we have created a plan that we feel are, in a way, as Einar mentioned, conservative. We are able to reach it. What I'm working on all the time is, of course, to see how can we manage to accelerate, and that is always a challenge. It has to do with the sequence of things, making the right decisions, the right niches, the right geography. That is a constant challenge to do the right thing every time. However, it's a challenge which is part of the game, and we don't look at that challenge as a problem. It's more like a very interesting position to be in actually now.
We see that the pipeline is full in that sense that the world as a target area, the European growth I have already shown you the first quarter, and we see that there are more and more exciting companies coming to us as well. As I mentioned before, the MDR directive, which is new regulations in the European Union, creates a bit problem for smaller acquisition objects because the cost of being in business increases and getting more and more people contacting us as a good acquirer. We are a good home for their solutions. I think, yes, there are challenges like getting the right object at the right time. On the other hand, there are numerous ones in our database, so we are just looking forward to move on and to reach our target at least. That's the simple answer.
Well, sometimes the simple answers are the good ones. I guess what you're saying is that we're just going to continue to do what we have been doing for the last 10, 15 years.
Yes, I think so. Hopefully that answers the questions about pipeline. We cannot, of course, go into details, but I think the whole thing here is about the specific strategy we have chosen, the focus on highly specialized components, and so far being leading in the Nordic and also growing in Europe. I think we are in the pole position to actually be a European champion and also a world champion over time. We stick to that plan, and hopefully you get comfort when you look at the numbers the first quarter as well.
Yeah. That was really the end of the questions. No more questions. Before I leave it over to you, Sverre, to conclude, I just want to say thank you for your support and for your engagement and for your questions. Over to you to conclude, Sverre.
Yes. I think just to summarize the highlights, 40% growth, 25% growth in recurring revenue, the EBITDA 19%. I think what we've done so far is securing the growth according to plan. I think we're a bit ahead, and hopefully that should give you comfort that we are on the right way. Having said that, stay healthy. Thank you for watching and looking forward to seeing you the next time.