Transcendent Group: Interim report January-June 2021

The second quarter 2021 (second quarter 2020)

• Total revenue amounted to SEK 60.9 million (49.5), an increase of 23.0 percent compared to the corresponding period last year.
• EBITDA amounted to SEK 11.5 million (2.0).
• The EBITDA margin amounted to 18.8 percent (4.0).
• Operating profit (EBIT) amounted to SEK 8.8 million (–0.9).
• The EBIT margin amounted to 14.4 percent (–1.9).
• Profit before tax amounted to SEK 8.1 million (–2.5).
• Cash flow amounted to –3.3 MSEK (6.0).
• The average number of employees amounted to 116 (133).
• Earnings per share amounted to 1.03 SEK (–0.26).

The first half of 2021 (first half of 2020)

• Total revenue amounted to SEK 111.9 million (100.5), an increase of 11.2 percent compared to the corresponding period last year.
• EBITDA amounted to SEK 18.4 million (3.4).
• The EBITDA margin amounted to 16.5 percent (3.3).
• Operating profit (EBIT) amounted to SEK 13.1 million (–2.3).
• The EBIT margin amounted to 11.7 percent (–2.3).
• Profit before tax amounted to SEK 12.3 million (–2.8).
• Cash flow amounted to –7.5 MSEK (1.6).
• The average number of employees amounted to 114 (133).
• Earnings per share amounted to 1.60 SEK (–0.35).

Significant events in the second quarter of 2021

• Håkan Berg is appointed CEO of Transcendent Group Regulatory Technology AB.
• In April, Transcendent Group announced that the company is ranked as Norway’s third best place to work in the small company category of Great Place to Work’s annual top list. It is the fourth consecutive year that the Norwegian subsidiary reached the top list. Last year Transcendent Group was ranked as Norway’s fourth best workplace.
• In April, the merger of Transcendent Group Sverige AB and Transcendent Group Väst AB was completed.
• In April, Transcendent Group announced it expects its first quarter 2021 results to deviate positively from previous seasonal patterns.
• Martin Bohlin is appointed new CEO of the company's Danish business. Martin Bohlin will succeed Heidi Gliese Hylleborg and will retain his current role as CEO of Transcendent Group Sweden.

Significant events after the end of the quarter

• In July, Transcendent Group reported a preliminary growth of approximately 23 percent in the second quarter of 2021 and an operating profit (EBIT) that deviates positively from previous seasonal patterns.

Comments from CEO Martin Malm:

“The second quarter of the year was successful for Transcendent Group and I am very pleased to state that we are showing high growth and profitability.

Thanks to a greater demand for our services, and thus an increased occupancy rate in the quarter, we were already on 19 July able to communicate that we were demonstrating high growth. Total revenues in the quarter amounted to SEK 60.9 million, which is an increase of 23.0 percent compared with the corresponding period last year. Corresponding period last year was characterized by uncertainty linked to the pandemic. Our operating profit (EBIT) amounts to SEK 8.8 million, corresponding to an operating (EBIT) margin of 14.4 percent. I am particularly pleased with the combination of growth and profitability, as it illustrates the good underlying demand for GRC services in all our markets.

Growth is driven by a general increase in demand for GRC services with a clear trend in the increasing demand for services in the cyber security area. We have previously expressed that cyber security is an increasingly important topic for all companies, organizations and authorities and we now see how demand in the area is accelerating at a rapid pace. Transcendent Group is well-positioned to take advantage of the growing demand in the area.

With an increased occupancy rate, lower staff turnover and the recruitment of more experienced consultants who are ready to support our customers in the GRC area, I currently see no change of trend of our positive development curve. Given that we are increasing the pace of new recruitments in all markets, labour costs will increase during the second half of the year, but this is a prerequisite for continued growth. I estimate that we will also be able to deliver stronger operating margins and growing sales for the third quarter compared with previous seasonal patterns.”

Link to the report

The report is attached to this press release and is available at https://transcendentgroup.com/investor-relations/