REG - Integrated Diag Hdgs - 1st Quarter Results
08/06/2022 09:00
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RNS Number : 1369O Integrated Diagnostics Holdings PLC 08 June 2022
Integrated Diagnostics Holdings Plc
Q1 2022 Results
Wednesday, 8 June 2022
Integrated Diagnostics Holdings Plc kicks off 2022 delivering a strong first
quarter in line with last year's performance, supported by sustained growth
in conventional business
(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or
"the Company"), a leading consumer healthcare company with operations in
Egypt, Jordan, Sudan and Nigeria, released today its reviewed financial
statements and operational performance for the quarter ended 31 March 2022,
recording revenue of EGP 1,180 million, up 5% compared to the same three
months of last year. The Group's top-line was supported by a sustained
expansion in conventional revenues, which recorded EGP 640 million in Q1 2022,
standing well above the Group's pre-Covid-19 levels. Net profit recorded EGP
314 million for the three-month period, down 8% from Q1 2021, with an
associated margin of 27%, well above the Group's historical averages.
Financial Results (IFRS)
EGP mn Q1 2021 Q1 2022 Change
Revenues 1,130 1,180 5%
Cost of Sales (491) (649) 32%
Gross Profit 638 532 -17%
Gross Profit Margin 57% 45% -11 pts
Operating Profit 548 396 -28%
EBITDA(1) 600 468 -22%
EBITDA Margin 53% 40% -13 pts
Net Profit 342 314 -8%
Net Profit Margin 30% 27% -4 pts
Cash Balance 1,324 2,659 101%
Note (1): Throughout the 1Q 2022 Earnings release, percentage changes between
reporting periods are calculated using the exact value (as reported in the
Company's Consolidated Financials) and not the corresponding rounded figure.
Key Operational Indicators(2)
Q1 2021 Q1 2022 change
Branches 483 520 37
Patients ('000) 2,359 2,649 12%
Revenue per Patient (EGP) 479 422 -12%
Tests ('000) 8,062 8,402 4%
Conventional Tests ('000) 6,781 7,148 5%
Revenue per Test (EGP) 140 133 -5%
Revenue per Conventional Test (EGP) 88 90 2%
Test per Patient 3.4 3.2 -7%
1 EBITDA is calculated as operating profit plus depreciation and
amortization.
2 Key operational indicators are calculated based on net sales for the quarter
of EGP 1,117 million. More details on the difference between net sales and
total revenues is available below.
Important Notice: Treatment of Revenue Sharing Agreements and Use of
Alternative Performance Measures
As part of IDH's efforts to support local authorities in Egypt and Jordan in
the fight against the pandemic, Biolab (IDH's Jordanian subsidiary) secured
several revenue-sharing agreements to operate testing stations, primarily
dedicated to PCR testing for Covid-19, in multiple locations across the
country including Queen Alia International Airport (QAIA) and Aqaba Port. More
specifically, Biolab's partnership with KHIA started in August 2020, followed
by the company's agreement with Aqaba Port which kicked off in May 2021, and
its partnership with QAIA which commenced in August 2021. It is worth noting
that the decision by Jordanian authorities on 1 March 2022 to end mandatory
testing led to a sharp decline in patient traffic at Biolab's testing booths.
Under these agreements, Biolab received the full revenue (gross sales) for
each test performed and pays a proportion to QAIA (38% of gross sales
excluding sales tax) and Aqaba Port (36% of gross sales) as concession fees to
operate in the facilities, thus effectively earning the net of these amounts
(net sales) for each test supplied. Starting in Q4 2021, the treatment of
these agreements has been altered in accordance with IFRS 15 paragraph B34,
which considers Biolab as a Principal (and not an Agent). Subsequently,
revenues generated from these agreements are reported in the Consolidated
Financial Statements as gross (inclusive of concession fees) and the fees
paid to QAIA and Aqaba Port are reported as a separate line item in the direct
cost.
In an effort to present an accurate picture of IDH's performance for the
quarter, throughout the report management utilizes net sales of EGP 1,117
million for Q1 2022 (IFRS revenues stand at EGP 1,180 million for the quarter.
Net sales for the quarter are calculated as total gross revenues excluding
concession fees and sales taxes paid as part of Biolab's revenue sharing
agreements with Queen Alia International Airport (QAIA) and Aqaba Port.
It is important to note that aside from revenue and cost of sales, all other
figures related to gross profit, operating profit, EBITDA, and net profit are
identical in the APM and IFRS calculations. However, the margins related to
the aforementioned items differ between the two sets of performance indicators
due to the use of Net Sales in the APM calculations and the use of Revenues
for the IFRS calculations.
Adjustments Breakdown
EGP mn Q1 2022
Net Sales 1,117
QAIA and Aqaba Port Concession Fees 63
Revenues (IFRS) 1,180
Cost of Net Sales (586)
Adjustment for QAIA and Aqaba Port Agreements (63)
Cost of Sales (IFRS) (649)
Adjustments by Country
EGP mn Q1 2022 Q1 2022
(IFRS) (APM)
Egypt 879 879
Jordan 281 217
Sudan 6 6
Nigeria 15 15
Total 1,180 1,117
Financial Results (APM)
EGP mn Q1 2021 Q1 2022 Change
Net Sales 1,130 1,117 -1%
Cost of Net Sales (491) (586) 19%
Gross Profit 638 532 -17%
Gross Profit Margin on Net Sales 57% 48% -9 pts
Operating Profit 548 396 -28%
EBITDA(3) 600 468 -22%
EBITDA Margin on Net Sales 53% 42% -11 pts
Net Profit 342 314 -8%
Net Profit Margin on Net Sales 30% 28% -2 pts
Cash Balance 1,324 2,659 101%
3 EBITDA is calculated as operating profit plus depreciation and amortization.
Introduction
i. Financial Highlights
· Net Sales recorded EGP 1,117 million in the first quarter of 2022,
just 1% below last year's figure, a particularly noteworthy result in light of
the large contribution from Covid-19-related(4) tests included in the first
three months of 2021. Net sales for the period were supported by both IDH's
conventional offering, which posted solid year-on-year growth in the quarter,
and the Group's Covid-19-related offering, which continued to make a robust
contribution despite recording a year-on-year contraction in revenues. More
specifically, IDH recorded a robust 8% year-on-year increase in net sales
generated by its conventional offering, supported by a 5% increase in
conventional tests performed versus last year. As such, conventional testing
made up 57% of consolidated net sales for the quarter, up from 53% this time
last year. Solid growth in conventional net sales almost fully offset an 11%
year-on-year decline in Covid-19-related net sales, which contracted on the
back of a significant decline in the average price of Covid-19-related testing
(average price of PCR tests fell 51% year-on-year in Q1 2022). Subsequently,
the Group's Covid-19-related offering made up just 43% of total net sales for
the three-month period, versus 47% in Q1 2021.
· Gross Profit recorded EGP 532 million in Q1 2022, down 17%
year-on-year. Gross Profit Margin on net sales stood at 48%, in line with the
Group's pre-Covid-19 performance, but nine percentage points below the margin
recorded in Q1 2021. The contraction in gross profitability partially reflects
a rise in raw materials as percentage of net sales following a significant
fall in the average price of Covid-19-related tests (for example, the average
PCR price was down 51% year-on-year). Lower gross profitability is also
attributable to a year-on-year increase in direct salaries and wages during
the three-month period related to additional staff employed at Aqaba Port's
Covid-19-dedicated testing booths.
· Operating Profit recorded EGP 396 million in Q1 2022, down 28%
year-on-year. operating profit margin on net sales stood at 35% for the
quarter, down from the 49% recorded this time last year.
· EBITDA(5) recorded EGP 468 million in Q1 2022, down 22% year-on-year
and with an associated margin on net sales of 42% versus 53% in Q1 2021 and
unchanged versus Q4 2021. Lower margins versus last year reflects relatively
lower gross profitability combined with higher SG&A outlays for the
period.
· Net Profit recorded EGP 314 million in Q1 2022, down 8% year-on-year.
Net profit margin on net sales stood at 28% for the quarter, up 1% compared to
the 27% margin recorded in Q4 2021, and standing well above the Group's
historical averages.
· It is worth highlighting that during the Company's annual general
meeting (AGM) held in London on 7 June 2022, IDH's shareholders approved a
record-breaking dividend distribution of EGP 2.17 per share, or EGP 1.3
billion (US$ 69.5 million) in aggregate, to shareholders in respect of the
financial year ended 31 December 2021. The exact US dollar amount is subject
to the exchange rate at the time of the upstreaming from the subsidiaries to
the holding company. This represents a remarkable increase compared to a final
dividend of US$ 29.1 million distributed for the previous financial year.
(4)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
(5)EBITDA is calculated as operating profit plus depreciation and
amortization.
(6)Calculated on USD/EGP exchange rate of 18.70/1 as of 7 June 2022.
ii. Operational Highlights
· IDH's branch network stood at 520 branches as at 31 March 2022, up
from 483 branches as of 31 March 2021.
· Total tests performed increased 4% year-on-year to reach 8.4 million
in Q1 2022. Test volume growth was driven by higher demand for both IDH's core
Covid-19 (PCR, antigen, and antibody) and conventional test offering, the
latter expanding 5% versus Q1 2021.
· Average revenue per test7 recorded EGP 133 in Q1 2022, a decrease of
5% year-on-year driven by lower prices for Covid-19-related tests.
· Total patients served increased 12% year-on-year to reach 2.6 million
in Q1 2022. Average test per patient declined to 3.2 are in Q1 2022 from 3.4
in Q1 2021, as patients visiting IDH's branches and testing booths for single
Covid-19-related tests remained high particularly in the month of January.
· In Egypt, IDH recorded revenue of EGP 879 million in Q1 2022, down 4%
versus Q1 2021, and contributing to 79% of IDH net sales for the quarter. The
year-on-year decline came on the back of a 20% fall in Covid-19-related
revenue recorded during the quarter, which declined despite a new wave of
infections recorded in January 2022. The decline was partially outweighed by a
solid increase in conventional revenues in Egypt, which expanded 8%
year-on-year and 7% quarter-on-quarter during Q1 2022. Revenues generated by
house call services in the country declined 20% year-on-year in Q1 2022,
contributing to 21% of the country's top-line for the three-month period.
· Al-Borg Scan continued its steady ramp up, recording revenues of EGP
17 million, up 89% year-on-year. Revenue growth was supported by a 94% and 88%
year-on-year increase in test and patient volumes, respectively. The steady
growth in volumes comes as a direct result of new branch rollouts over the
last year. More specifically, IDH has opened three new branches between
September 2021 and March 2022, with the total number of branches now standing
at five. The Group plans to roll out two additional branches before year-end
2022.
· Wayak recorded a near five-fold year-on-year increase in consolidated
revenue in Q1 2022. Coupled with management's cost optimisation strategy, this
is continuing to support a steady narrowing of the venture's consolidated
EBITDA losses.
· In Jordan, net sales reached EGP 217 million (IFRS revenues(8)
recorded EGP 281 million in Q1 2022), representing a 14% increase versus the
same three months of 2021. Net sales growth for the quarter, saw the country's
contribution to total consolidated net sales reach 19%, up from 17% in the
same three months of last year. The expansion in net sales was supported by
both Biolab's Covid-19-related and conventional offering. Revenue generated by
Covid-19-related tests expanded 20% year-on-year, making up 68% of the
country's net sales. The increase was largely supported by volumes generated
by Biolab's multiple revenue sharing agreements to perform PCR testing for
international passengers, with the company's agreement with QAIA, which
started in August 2021, generating EGP 140 million in the quarter. In
parallel, revenue generated by Biolab's conventional test offering increased
4% year-on-year in the first quarter of the year.
· IDH's Nigerian operations reported year-on-year revenue growth of 19%
in Q1 2022. Top-line growth was supported by a 25% year-on-year increase in
average revenue per test which came on the back of a rise in demand for the
generally higher-priced MRI and CT testing, highlighting the rising popularity
of the venture's radiology offering.
· In Sudan, IDH recorded a 16% year-on-year contraction in revenues as
tests performed declined 25% versus the same three months of last year. In
local currency terms, IDH's Sudanese operations reported a 149% year-on-year
increase in revenue as management continued to successfully increase test
prices in step with inflation.
(7)Calculated on net sales for the period.
(8)Biolab's revenues for the quarter are calculated as net sales and including
concession fees paid to QAIA and Aqaba Port as part of their revenue sharing
agreements.
iii. Management Commentary
Commenting on the Group's performance, IDH chief Executive Officer Dr. Hend
El-Sherbini said: "I am happy to report that IDH witnessed a strong start to
2022, as we continued to drive steady growth in our conventional business
while effectively catering to the needs of Covid-19 patients during the wave
of new infections recorded in Egypt during the first part of the quarter. More
specifically, during Q1 2022, IDH recorded net sales in excess of EGP 1.1
billion, largely unchanged from last year's first quarter. The remarkable
performance was primarily supported by the steady growth of our conventional
business, which offset a decline in Covid-19-related revenues during the
period. In fact, our conventional net sales expanded a solid 8% versus last
year supported by growing demand for our services, with conventional tests
performed increasing 5% versus Q1 2021. We were very happy to note the 12%
year-on-year increase in patients served, as our attractive and expanded
offering continued to draw an increasing number of patients to the Group.
Solid growth in our conventional business outweighed an 11% year-on-year
decline in Covid-19-related revenues which came on the back of a large fall in
the average price per Covid-19-related test versus last year coupled with a
significant decline in demand during the month of March as infection rates
fell sharply. Meanwhile, on the volumes front we recorded a marginal 2%
year-on-year fall in Covid-19-related test performed as demand remained high
across both Egypt and Jordan, in particular during January and February. It is
worth noting that in Egypt, demand for Covid-19-related testing peaked in
January as the country experienced a new wave of infections which later
subsided as we moved further into the quarter. In Jordan, demand was driven by
our testing booths across international travel terminals in Amman and Aqaba.
Similar to Egypt, traffic remained high during January and February, before
dropping sharply as Jordan's government ended mandatory testing on 1 March
2022.
Looking at our geographies in more detail, across both Egypt and Jordan our
conventional business continued to grow steadily with net sales expanding 8%
and 4% versus Q1 2021, respectively. In Egypt, this was supported by a solid
7% year-on-year rise in conventional tests performed as we continued to
leverage our growing footprint and visibility, and expanded service offering
to capture a leading share of demand. This enabled us to successfully offset a
20% year-on-year fall in Covid-19-related revenues which declined despite a
new wave of infections recorded in January and February of this year.
Meanwhile in Jordan, Covid-19-related revenues continued growing, coming in
20% above last year's figure, in part boosted by our multiple revenue-sharing
agreements to perform PCR testing for international passengers. Combined with
the steady growth of our conventional offering in the country, this saw Biolab
report a solid 14% year-on-year increase in net sales(9), contributing to a
record 19% of consolidated net sales for the three-month period. In Nigeria,
Echo-lab continued to report solid year-on-year growth, with revenues
expanding 19% versus last year's first quarter. We were particularly happy to
note the growing demand for Echo-lab's radiology offering, with both MRI and
CT exams recording rising patient interest. Finally, in Sudan we reported a
16% contraction in revenues versus the first three months of 2021 as our
results continue to be impacted by the sharp devaluation of the Sudanese Pound
in February 2021. However, thanks to management's efforts to raise prices in
pace with inflation, revenue in local currency terms expanded 149%
year-on-year. During the quarter, in an effort to optimise our Sudanese
operations further, we opted to shut down two underperforming branches taking
the number of operational branches in the country to 17. It is also important
to mention that despite the challenging operating environment and heightened
uncertainty faced in the country, operations across all other branches are
continuing without major interruptions.
We entered 2022 with a clear and ambitious strategy aimed at driving new,
sustainable growth across our operations and guarantee continued value
creation as we transition in a post-Covid-19 reality. At the three-month mark,
I am very pleased with the progress made across all fronts in particular in
our home market of Egypt and in Jordan. Across both countries, our focus is
shifting towards capitalising on the post-Covid-19 rebound in conventional
testing while actively working to maintain the new relationships we were able
to establish during the pandemic thanks to our Covid-19-dedicated offering. To
deliver on this, we have recently launched a new dedicated loyalty programme,
rolled out multiple marketing campaigns, and began making more effective use
of the large pool of patient data at our disposal to provide increasingly
tailored services and boost cross-selling. We are also looking to leverage our
popular house call service to continue driving growth across both markets. The
service, which generated 18% of our total net sales for the quarter, was
ramped up significantly over the past two years in response to heightened
demand and continues to represent an important driver of future growth for
IDH. Our house call services' convenient offering represents an increasingly
attractive alternative for patients looking to access our services from the
comfort of their homes. This is not only enabling us to sell more tests per
patient than at our traditional branches, but has also seen us penetrate new
segments of the population and develop long-term relationships with a broader
patient base. At the same time, we are expanding our branch network, having
rolled out an additional 20 branches in Egypt during the first three months of
the year, and are continuing to take full advantage of our expanded visibility
and service offering to grow our market share across both countries. It is
also important to highlight the continued quarter-on-quarter improvements of
our radiology venture Al-Borg Scan, which recorded a 20% quarter-on-quarter
and an 89% year-on-year increase in revenues during the first three months of
the year. To capitalise on this success, we inaugurated the venture's fifth
branch at the start of March 2022. We are proud to have a radiology branch
network covering the entire Greater Cairo area from east to west, and plan to
open at least two more branches in the coming months to broaden our reach and
strengthen our branch equity further. Of course, while we are working
tirelessly to deliver on our post-Covid-19 strategy, we remain fully committed
to helping Egyptian and Jordanian authorities combat possible future waves in
infections, continuing to provide patients with widespread access to our
Covid-19-related offering going forward. Finally, we are looking forward to
receiving the remaining regulatory approvals to finalise our partnership with
Islamabad Diagnostic Centre (IDC) in Pakistan.
Looking ahead, we remain committed to delivering exceptional value to our
patients, shareholders, and wider communities, and drive solid growth across
our business. We are without a doubt faced with difficult operating conditions
both globally and in our home market of Egypt. On the global front, the world
economy is still coming to grips with the long-term economic spill overs of
the pandemic and the impact of the ongoing Russia-Ukraine war. Meanwhile, on
the home front we have been witnessing double-digit inflation and a c.18%
devaluation of the Egyptian Pound versus the US Dollar. Despite this, we are
confident that our proven track record in navigating similar turbulent times
and the strong mitigation frameworks we have in place provide abundant
protection across our operations. Thanks to our proactive inventory build-up
and sourcing strategy we are facing no issues in securing raw materials and
continue to hold sufficient inventories to cover three months of operations,
in line with our standard operating policy. Moreover, our stock until 30 June
2022 has been secure at pre-devaluation rates and, going forward, we will
continue to leverage our long-lasting relationships with test kit providers to
secure additional stock at competitive prices, shielding our business from the
impacts of rising inflation and the EGP devaluation.
In recent weeks, following the expected slowdown related to the holy month of
Ramadan and the Eid holiday, we have witnessed a steady acceleration of
patient traffic across our branch network. We expect this rapid normalisation
of patient flow to support a further acceleration of growth of our
conventional business, further boosting our optimism for the remainder of
2022. In light of this, we are revising our full-year guidance, with the
Company now on track to deliver conventional revenue year-on-year growth of at
least 18% to 20%. These revised estimates, which assume no additional
contributions from our Covid-19-related offering, further highlight our
confidence in the business' potential going forward.
Finally, we are also delighted to announce that during our annual general
meeting held on 7 June 2022 in London, shareholders approved the distribution
of a record-breaking dividend of EGP 1.3 billion in aggregate in respect of
the financial year ended 31 December 2021. Our ability to reward shareholders
even in the midst of such difficult times demonstrates our business' strong
cash-generating abilities and our unwavering confidence in its future growth
potential and in the solid fundamentals of our industry."
(9)Revenue stood at EGP 281 million, up 48% year-on-year.
Analyst and Investor Call Details
An analyst and investor call will be hosted at 2pm (UK) | 3pm (Egypt) on
Wednesday, 8 June 2022. You can access the call by clicking on this link
(https://efghermesevents.webex.com/mw3300/mywebex/default.do?nomenu=true&siteurl=efghermesevents&service=6&rnd=0.281252069594469&main_url=https%3A%2F%2Fefghermesevents.webex.com%2Fec3300%2Feventcenter%2Fevent%2FeventAction.do%3FtheAction%3Ddetail%26%26%26EMK%3D4832534b00000005f3a1ec673218184f2342551b78f0455b76d4e322cdbd659eff0cc8c2dca46a14%26siteurl%3Defghermesevents%26confViewID%3D228880326171036429%26encryptTicket%3DSDJTSwAAAAXqpAKNxKlVjlm74x4NtDgQscJH0APGJ4r3RvHiIjClSA2%26)
, and you may dial in using the conference call details below:
• Event number: 2372 285 1168
• Event password: 7qdVVHnZT46
For more information about the event, please contact: halaa@EFG-HERMES.com
(mailto:halaa@EFG-HERMES.com)
About Integrated Diagnostics Holdings (IDH)
IDH is a leading consumer healthcare company in the Middle East and Africa
with operations in Egypt, Jordan, Sudan and Nigeria. The Group's core brands
include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab
(Jordan), Ultralab and Al Mokhtabar Sudan (both in Sudan) and Echo-Lab
(Nigeria). A long track record for quality and safety has earned the Company a
trusted reputation, as well as internationally recognised accreditations for
its portfolio of over 2,000 diagnostics tests. From its base of 520 branches
as of 31 March 2022, IDH will continue to add laboratories through a Hub,
Spoke and Spike business model that provides a scalable platform for efficient
expansion. Beyond organic growth, the Group's expansion plans include
acquisitions in new Middle Eastern, African, and East Asian markets where its
model is well-suited to capitalise on similar healthcare and consumer trends
and capture a significant share of fragmented markets. IDH has been a
Jersey-registered entity with a Standard Listing on the Main Market of the
London Stock Exchange (ticker: IDHC) since May 2015 with a secondary listing
on the EGX since May 2021 (ticker: IDHC.CA).
Shareholder Information
LSE: IDHC.L
EGX: IDHC.CA
Bloomberg: IDHC:LN
Listed on LSE: May 2015
Listed on EGX: May 2021
Shares Outstanding: 600 million
Contact
Nancy Fahmy
Investor Relations Director
T: +20 (0)2 3345 5530 | M: +20 (0)12 2255 7445 | nancy.fahmy@idhcorp.com
(mailto:nancy.fahmy@idhcorp.com)
Forward-Looking Statements
These results for the quarter ended 31 March 2022 have been prepared solely to
provide additional information to shareholders to assess the group's
performance in relation to its operations and growth potential. These results
should not be relied upon by any other party or for any other reason. This
communication contains certain forward-looking statements. A forward-looking
statement is any statement that does not relate to historical facts and
events, and can be identified by the use of such words and phrases as
"according to estimates", "aims", "anticipates", "assumes", "believes",
"could", "estimates", "expects", "forecasts", "intends", "is of the opinion",
"may", "plans", "potential", "predicts", "projects", "should", "to the
knowledge of", "will", "would" or, in each case their negatives or other
similar expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements containing
information on future financial results, plans, or expectations regarding
business and management, future growth or profitability and general economic
and regulatory conditions and other matters affecting the Group.
Forward-looking statements reflect the current views of the Group's management
("Management") on future events, which are based on the assumptions of the
Management and involve known and unknown risks, uncertainties and other
factors that may cause the Group's actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the Group's actual
financial condition and results of operations to differ materially from, or
fail to meet expectations expressed or implied by, such forward-looking
statements.
The Group's business is subject to a number of risks and uncertainties that
could also cause a forward-looking statement, estimate or prediction to differ
materially from those expressed or implied by the forward-looking statements
contained in this communication. The information, opinions and forward-looking
statements contained in this communication speak only as at its date and are
subject to change without notice. The Group does not undertake any obligation
to review, update, confirm or to release publicly any revisions to any
forward-looking statements to reflect events that occur or circumstances that
arise in relation to the content of this communication.
Group Operational & Financial Review
i. Revenue/Net Sales and Cost Analysis
Revenue/Net Sales
Consolidated Analysis
IDH recorded total revenue of EGP 1,180 million in the first three months of
the year, up 5% year-on-year. Consolidated net sales(10) recorded EGP 1,117
million, down 1% compared to the EGP 1,130 million recorded in the same
quarter of 2021. Net sales for the period were supported by both IDH's
conventional offering, which posted solid year-on-year growth in the quarter,
and the Group's Covid-19-related(11) offering, which continued to make a
robust contribution despite recording a year-on-year contraction in revenues.
During the quarter, IDH continued to deliver steady growth in conventional net
sales supported by rising conventional test volumes, which are now growing in
line with the Group's pre-pandemic trend. More specifically, during the
quarter IDH recorded an 8% year-on-year rise in conventional net sales, with
conventional test volumes performed rising 5% versus Q1 2021. Conventional net
sales were also in part supported by a 2% year-on-year increase in average
revenue per test, as growth at the Group's contract segment was more
pronounced during the first three months of the year.
Meanwhile, owing largely to a widespread decline in the average price per
Covid-19-related test, IDH's Covid-19-related net sales contracted 11%
year-on-year during the quarter. In Q1 2022, the Group recorded a fall in the
average price per Covid-19-related test (the average price per PCR test fell
by 51% year-on-year), as prices decreased significantly in both Egypt and
Jordan. On the volumes front, despite having recorded strong demand in January
and February as Egypt experienced a new wave of infections, a widespread
decline in demand during March saw total Covid-19-related tests performed fall
2% versus the comparable period of last year. Geographically, the decline in
Covid-19-related net sales is fully attributable to lower revenues in Egypt
driven by a substantial reduction in the average price per test. This more
than offset the solid 20% year-on-year rise in Covid-19-related net sales
reported by the Group's Jordanian operations.
House Call Service
The Group's consolidated net sales were also in part supported by its house
call services in Egypt and Jordan, which generated EGP 196 million in revenue
in Q1 2022, representing a 24% year-on-year decrease. Geographically, in Egypt
house call services generated EGP 187 million in revenue, contributing 21% to
the country's revenue for the quarter compared to a 25% contribution made this
time last year. Meanwhile, in Jordan house call revenue stood at EGP 9
million, making up 4% of the country's net sales for the three month period.
Finally, it is worth noting that in the first quarter of 2022, average net
sales per house call test stood at EGP 161, significantly above the Group's
average of EGP 133.
Detailed Consolidated Performance Breakdown
Q1 2021 Q1 2022
Total net sales (EGP mn) 1,130 1,117
Total tests (mn) 8.1 8.4
Conventional test net sales (EGP mn) 594 640
Conventional tests performed (mn) 6.8 7.1
Total Covid-19-related test net sales (EGP mn) 536 477
Core Covid-19 tests (PCR, Antigen, Antibody) (EGP mn) 399 421
Core Covid-19 tests performed (k) 407 837
Other Covid-19-related tests (EGP mn) 137 56
Other Covid-19-related tests performed (k) 874 417
Contribution to Consolidated Results
Conventional test net sales 53% 57%
Conventional tests performed 84% 85%
Total Covid-19-related tests 47% 43%
Core Covid-19 tests (PCR, Antigen, Antibody) 35% 38%
Core Covid-19 tests performed 5% 10%
Other Covid-19-related tests 12% 5%
Other Covid-19-related tests performed 11% 5%
(10)A reconciliation between revenue and net sales is available earlier in
this announcement.
(11)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
Net Sales Analysis: Contribution by Patient Segment
Contract Segment
Total revenue(12) generated by IDH's contract segment recorded EGP 645 million
in Q1 2022, up 8% from the same quarter last year. Meanwhile, net sales
generated by the Group's contract segment expanded 7% year-on-year to record
EGP 643 million in Q1 2022. The increase was supported by a 5% year-on-year
rise in contract tests performed. The segment's contribution to total net
sales subsequently increased to reach 58% from 53% in Q1 2021.
Covid-19-related(13) testing contributed 38% of contract net sales in the
first three months of the year down from 44% this time last year. Controlling
for contributions made by Covid-19-related tests during the year, the contract
segment would record an 18% year-on-year increase in conventional test net
sales supported by a 10% increase in tests performed and a 7% expansion in
average net sales per test.
In Jordan, the Group's partnership with Queen Alia International Airport
(QAIA), generated net sales of EGP 140 million in the three months to 31
March 2022. As part of the agreement, Biolab carried out 293 thousand PCR
tests, representing 62% of total PCR tests performed in Jordan for the
quarter. At the same time, Biolab's agreements with Aqaba's King Hussein
International Airport (KHIA) and Aqaba Port contributed an additional EGP 18
million to the segment. It is worth noting that Biolab's partnership with KHIA
started in August 2020, followed by the company's agreement with Aqaba Port
which kicked off in May 2021, and its partnership with QAIA which commenced in
August 2021. It is also worth highlighting that while the testing booths
recorded strong demand during January and February, following the Jordanian
government's decision to end mandatory testing on 1 March 2022 traffic decline
substantially.
Walk-in Segment
The Group's walk-in segment recorded total revenue of EGP 535 million in the
first three months of the year, up marginally year-on-year. On the other hand,
walk-in net sales for the quarter declined 10% year-on-year to record EGP 474
million in Q1 2022. The decline, which came fully on the back of an 11% fall
in average net sales per walk-in test (walk-in tests performed came in 1%
above last year's figure), saw the segment's contribution to total net sales
for the quarter fall to 42% from 47% last year. Meanwhile, the contribution of
Covid-19-related tests to the walk-in segment stood at 48% in Q1 2022,
compared to 51% in Q1 2021. Excluding Covid-19-related contributions,
conventional walk-in net sales recorded a 6% decrease versus the same quarter
of last year, as a 10% decline in conventional walk-in tests volumes. It is
important to note that despite the decline, walk-in segment test volumes
remain 2% ahead of pre-Covid-19 levels.
(12)A reconciliation between revenue and net sales is available earlier in
this announcement.
(13)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
(10)A reconciliation between revenue and net sales is available earlier in
this announcement.
(11)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
Net Sales Analysis: Contribution by Patient Segment
Contract Segment
Total revenue(12) generated by IDH's contract segment recorded EGP 645 million
in Q1 2022, up 8% from the same quarter last year. Meanwhile, net sales
generated by the Group's contract segment expanded 7% year-on-year to record
EGP 643 million in Q1 2022. The increase was supported by a 5% year-on-year
rise in contract tests performed. The segment's contribution to total net
sales subsequently increased to reach 58% from 53% in Q1 2021.
Covid-19-related(13) testing contributed 38% of contract net sales in the
first three months of the year down from 44% this time last year. Controlling
for contributions made by Covid-19-related tests during the year, the contract
segment would record an 18% year-on-year increase in conventional test net
sales supported by a 10% increase in tests performed and a 7% expansion in
average net sales per test.
In Jordan, the Group's partnership with Queen Alia International Airport
(QAIA), generated net sales of EGP 140 million in the three months to 31
March 2022. As part of the agreement, Biolab carried out 293 thousand PCR
tests, representing 62% of total PCR tests performed in Jordan for the
quarter. At the same time, Biolab's agreements with Aqaba's King Hussein
International Airport (KHIA) and Aqaba Port contributed an additional EGP 18
million to the segment. It is worth noting that Biolab's partnership with KHIA
started in August 2020, followed by the company's agreement with Aqaba Port
which kicked off in May 2021, and its partnership with QAIA which commenced in
August 2021. It is also worth highlighting that while the testing booths
recorded strong demand during January and February, following the Jordanian
government's decision to end mandatory testing on 1 March 2022 traffic decline
substantially.
Walk-in Segment
The Group's walk-in segment recorded total revenue of EGP 535 million in the
first three months of the year, up marginally year-on-year. On the other hand,
walk-in net sales for the quarter declined 10% year-on-year to record EGP 474
million in Q1 2022. The decline, which came fully on the back of an 11% fall
in average net sales per walk-in test (walk-in tests performed came in 1%
above last year's figure), saw the segment's contribution to total net sales
for the quarter fall to 42% from 47% last year. Meanwhile, the contribution of
Covid-19-related tests to the walk-in segment stood at 48% in Q1 2022,
compared to 51% in Q1 2021. Excluding Covid-19-related contributions,
conventional walk-in net sales recorded a 6% decrease versus the same quarter
of last year, as a 10% decline in conventional walk-in tests volumes. It is
important to note that despite the decline, walk-in segment test volumes
remain 2% ahead of pre-Covid-19 levels.
(12)A reconciliation between revenue and net sales is available earlier in
this announcement.
(13)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
Key Performance Indicators
Walk-in Segment Contract Segment Total
1Q21 1Q22 Change 1Q21 1Q22 Change 1Q21 1Q22 Change
Net sales^ (EGP mn) 529 474 -10% 600 643 7% 1,130 1,117 -1%
Total Covid-19-related net sales (EGP mn) 271 230 -15% 265 247 -7% 536 477 -11%
Patients ('000) 800 971 21% 1,559 1,678 8% 2,359 2,649 12%
% of Patients 34% 37% 66% 63%
Net sales per Patient (EGP) 661 488 -26 385 383 0% 479 422 -12%
Tests ('000) 2,124 2,144 1% 5,938 6,258 5% 8,062 8,402 4%
% of Tests 26% 26% 74% 74%
Total Covid-19-related tests ('000) 429 614 43% 852 641 -25% 1,281 1,254 -2%
Net Sales per Test (EGP) 249 221 -11% 101 103 2% 140 133 -5%
Test per Patient 2.7 2.2 -17/% 3.8 3.7 -2% 3.4 3.2 -7%
Revenue Analysis: Contribution by Geography
Egypt
In Egypt, IDH reported revenue(14) of EGP 879 million, down 4% from the EGP
920 million recorded this time last year. The decline came on the back of a 6%
year-on-year fall in average revenue per test following a significant fall in
the average price per Covid-19-related test during the period (average price
per PCR test in Egypt declined 44% year-on-year). Meanwhile, net sales
generated from conventional tests increased by 8% and 7% on a year-on-year and
quarter-on-quarter, respectively. Growth was supported by a 7% increase in
conventional test volumes compared to the same quarter last year.
Overall, IDH served 2.0 million patients in Egypt and performed 7.3 million
tests in Q1 2022, both up 2% from the first three months of 2021.
(14)It is important to note that revenues and net sales in Egypt, Nigeria and
Sudan are identical in absolute terms. A reconciliation between revenue and
net sales is available earlier in this announcement.
House Call Service
IDH's house call service in Egypt recorded revenue of EGP 187 million in Q1
2022, down 20% from the first three months of last year. The decline came on
the back of 21% year-on-year fall in Covid-19-related revenue generated
through the house call service as infection rates in the country declined
significantly throughout March.
Al-Borg Scan
IDH has been actively investing to ramp up its radiology venture, Al-Borg
Scan. Over the past nine months, the Group has rolled out three additional
branches taking the total number of branches up to five. While all three
remain in their ramp up phases, IDH is recording growing contributions from
each one, with all three playing a central role in driving steady growth
across both volumes and revenues. More specifically, in Q1 2022 Al-Borg Scan's
revenues rose 89% year-on-year to record EGP 17 million. Top-line growth came
on the back of a 94% year-on-year rise in radiology tests performed (patients
served was up 88% for the quarter). To build on this momentum, in the coming
months IDH is planning to inaugurate two additional branches to expand its
reach across Greater Cairo and capitalise on the service's increasing
popularity.
Detailed Egypt Revenue Breakdown
EGP mn Q1 2021 Q1 2022
Total Revenue 920 879
Conventional Revenue 507 549
Total Covid-19-related Revenue 414 330
Core Covid-19 tests (PCR, Antigen, Antibody) 277 274
Other Covid-19-related tests 137 56
Contribution to Consolidated Results
Conventional tests 55% 62%
Total Covid-19-related tests 45% 38%
Core Covid-19 tests (PCR, Antigen, Antibody) 30% 31%
Other Covid-19-related tests 15% 6%
Jordan
In Jordan, IDH recorded revenue of EGP 281 million in Q1 2022, up 48%
year-on-year. Meanwhile, net sales(15) expanded 14% year-on-year to reach EGP
217 million in Q1 2022. Growth in net sales came on the back of a 30%
year-on-year rise in tests performed which more than offset a 12% decline in
net sales per test. During the quarter, Covid-19-related revenue stood at EGP
147 million, contributing to 68% of Biolab's net sales (Covid-19-related test
volumes made up 48% of total tests performed). Covid-19-related net sales in
Jordan was boosted by contributions of EGP 140 million from Biolab's new
partnership with QAIA coupled with the EGP 18 million in net sales coming from
its partnerships with KHIA and Aqaba Port. As part of these agreements, Biolab
has been operating testing stations across all three locations primarily
focused on PCR testing for Covid-19 to passengers arriving in Jordan. The
stations which recorded strong demand in January and February have since
witnessed a decline in traffic following the end of mandatory testing in the
country. Meanwhile, conventional test net sales increased 4% year-on-year,
despite a 4% decline in test volumes versus last year. Finally, the country's
net sales continued to be supported by Biolab's house call service which
generated EGP 9 million in net sales in Q1 2022, down 61% year-on-year.
(15)Biolab's net sales for the period are calculated as revenues excluding
concession fees paid to QAIA and Aqaba Port as part of their revenue sharing
agreement.
Detailed Jordan Net Sales Breakdown
EGP mn Q1 2021 Q1 2022
Total Net Sales 190 217
Conventional Net Sales 68 70
Total Covid-19-related Net Sales (PCR and Antibody) 122 147
Contribution to Consolidated Results
Conventional Net Sales 36% 32%
Total Covid-19-related Net Sales (PCR and Antibody) 64% 68%
Nigeria
Echo-Lab, the Group's Nigerian subsidiary, reported revenue growth of 19%
versus the same three months of last year, with the venture's top-line
recording EGP 15 million in Q1 2022. In local currency terms revenue was up
23% year-on-year on the back of a 25% increase in average revenue per test.
The increase was supported by the increased number of CT and MRI exams
performed during the period, both of which are relatively higher-priced
services. It is important to note that during Q1 2022 management decided to
shut down its operational activities in the PPP branches due to their
under-performance on the profitability level. This subsequently led to a
decline in the number of tests performed during the quarter compared to the
same period last year. Management is planning to open two additional branches
during this year, bringing the total number of operational branches 12.
Sudan
In Sudan, IDH recorded revenues of EGP 6 million, down 16% from the first
quarter of last year. The country's results continue to be impacted by the
devaluation of the Sudanese pound in early 2021 with the average SDG/EGP rate
in Q1 2022 standing at 0.04 versus 0.11 in Q1 2021. Nonetheless, management's
continued success in raising prices in step with inflation throughout the year
saw revenue in local currency terms grow an impressive 149% in Q1 2022.
Net Sales Contribution by Country
Q1 2021 Q1 2022 Change
Egypt Net Sales (EGP mn) 920 879 -4%
Covid-19-related (EGP mn) 414 330 -20%
Egypt Contribution 81% 79%
Jordan Net Sales (EGP mn) 190 217 14%
Covid-19-related (EGP mn) 122 147 20%
Jordan Revenues (EGP mn) (IFRS) 190 281 48%
Jordan Net Sales (JOD mn) 8.6 9.6 12%
Jordan Revenues (JOD mn) (IFRS) 8.6 12.5 45%
Jordan Contribution 17% 19%
Nigeria Net Sales (EGP mn) 12 15 19%
Nigeria Net Sales (NGN mn) 302 371 23%
Nigeria Contribution 1.1% 1.3%
Sudan Net Sales (EGP mn) 7 6 -16%
Sudan Net Sales (SDG mn) 61 152 149%
Sudan Contribution 0.6% 0.5%
---
Patients Served and Tests Performed by Country
Q1 2021 Q1 2022 Change
Egypt Patients Served (mn) 2.0 2.0 2%
Egypt Tests Performed (mn) 7.2 7.3 2%
Covid-19-related tests (mn) 1.1 0.8 -26%
Jordan Patients Served (k) 301 552 83%
Jordan Tests Performed (k) 762 991 30%
Covid-19-related tests (k) 224 472 111%
Nigeria Patients Served (k) 38 33 -11%
Nigeria Tests Performed (k) 65 62 -5%
Sudan Patients Served (k) 19 28 47%
Sudan Tests Performed (k) 62 47 -25%
Total Patients Served (mn) 2.4 2.6 12%
Total Tests Performed (mn) 8.1 8.4 4%
Branches by Country
31 March 2021 31 March 2022 Change
Egypt 431 472 41
Jordan 20 21 1
Nigeria 12 10 -2
Sudan 20 17 -3
Total Branches 483 520 37
-Cost of Net Sales(16)
IDH's cost of net sales rose 19% year-on-year to record EGP 586 million in the
first quarter of 2022, rising at a faster pace than the Group's revenue for
the three-month period. This weighed down on the Group's gross profit which
recorded EGP 532 million in Q1 2022, down 17% from last year. It is important
to note that gross profit for the quarter was identical in absolute terms
between IFRS and APM measures. IDH's gross profit margin(17) on revenue
recorded 45% in Q1 2022 versus 57% last year. Meanwhile, IDH's gross profit
margin on net sales(18) recorded 48% in Q1 2022 versus 57% in Q1 2021.
Cost of Net Sales Breakdown as a Percentage of Net Sales
Q1 2021 Q1 2022
Raw Materials 19.3% 22.6%
Wages & Salaries 12.4% 14.9%
Depreciation & Amortisation 4.1% 5.8%
Other Expenses 7.7% 9.1%
Total 43.5% 52.4%
Raw material costs, which include cost of specialized analysis at other
laboratories, recorded EGP 253 million for the first quarter of the year,
continuing to make up the largest share of total COGS at 43%. As a share of
net sales, raw material costs increased to 22.6% in Q1 2022 compared to 19.3%
in the previous year. This increase is primarily attributable to a substantial
reduction in the average selling price of Covid-19-related tests during the
quarter (PCR tests were priced 51% lower in Q1 2022 than in Q1 2021). Prices
were down in both Egypt and Jordan on both a year-on-year and
quarter-on-quarter basis.
Direct salaries and wages for the year rose 19% year-on-year to EGP 167
million, making the second largest share of total COGS at 28%.
Direct depreciation and amortisation increased 39% year-on-year in the first
three months of the year to EGP 64 million, largely due to the incremental
amortisation of new branches (IFRS 16 right-of-use assets).
Other expenses for the first quarter of 2022 increased 18% year-on-year to EGP
102 million. The increase was principally due to higher transportation costs
related to IDH's house call service, increased utilities mainly due to the
addition of 37 new branches throughout the year, and increased repair and
maintenance outlays.
(16)Cost of net sales is calculated as cost of sales (IFRS) for the period
excluding commission fees paid to QAIA and Aqaba Port by Biolab as part of its
revenue sharing agreements with the two terminals. According to IFRS 15, cost
of sales recorded EGP 649 million in Q1 2022, up 32% year-on-year.
(17)It is important to note that while in absolute terms the Gross Profit
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
(18)A reconciliation between revenue and net sales is available earlier in
this announcement.
Selling, General and Administrative Expenses
Total SG&A outlays stood at EGP 135 million in Q1 2022, representing a 50%
year-on-year increase for the quarter. Higher SG&A costs came on the back
of rising salaries and marketing spending, coupled with higher call center
costs and higher fees for external auditing services.
Marketing and advertising expenses came in at EGP 23 million in Q1 2022, up
63% year-on-year. The increase largely reflects an overall expansion in IDH's
marketing and advertisement efforts which for the last year has seen the
Company launch targeted campaigns across a wide variety of channels mainly to
support the ramp up of its radiology venture, Al-Borg Scan.
EBITDA
IDH's EBITDA(19) recorded EGP 468 million in the first three months of 2022,
down 22% from the same three months a year ago. It is important to note that
EBITDA for the quarter was identical in absolute terms between IFRS and APM
measures. EBITDA margin on consolidated revenue recorded 40% in Q1 2022 versus
53% in the same quarter of a year ago. Meanwhile, EBITDA margin on net sales
declined to 42% in Q1 2022 from 53% in Q1 2021.(20) The decline in EBITDA
level profitability comes primarily on the back of lower gross profitability
for the three month period coupled with higher sales and marketing outlays
versus last year.
In IDH's home market of Egypt, EBITDA recorded EGP 395 million in Q1 2022
EBITDA margin on net sales stood at 45% in the three-month period versus 57%
this time last year.
In JOD terms, Biolab's EBITDA recorded JOD 3.3 million, down 5% year-on-year.
EBITDA margin on revenue recorded 26% in Q1 2022 down from 41% this time last
year. Meanwhile, EBITDA margin on net sales for the three months period
recorded 34% versus 41% in Q1 2021. The decrease in Biolab's EBITDA margin
(from 41% to 34%) is mainly attributable to higher expenses related to
Biolab's testing booths in QAIA and Aqaba Port.
Operations in Nigeria posted an EBITDA loss of EGP 1.2 million compared to a
loss of EGP 0.5 million in the same three months of last year. It is important
to note that Nigeria's annual inflation rate reached c.16.8% mainly due to
increased energy prices. Due to Echo-Lab's reliance on diesel-powered
generators across labs, the doubling of fuel prices compared to the same
period of last year weighed down on the venture's margins.
Finally, in Sudan the Company recorded an EBITDA of EGP 0.1 million in Q1
2022, down from the EGP 1.1 million in EBITDA recorded this time last year.
EBITDA for the quarter continued to be impacted by the sharp SDG devaluation
in February 2021. In SDG terms EBITDA declined 199% year-on-year.
Regional EBITDA in Local Currency
Mn Q1 2021 Q1 2022 Change
Egypt EGP 522 395 -24%
Margin on net sales 57% 45%
Jordan JOD 3.5 3.3 -5%
Margin on net sales 41% 35%
Margin on revenues (IFRS) 41% 27%
Nigeria NGN -11 -31 181%
Margin on net sales -4% -8%
Sudan SDG -3.84 3.81 -199%
Margin on net sales -6% 3%
(19)EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in Q1 2021 related to the
Company's EGX listing completed in May 2021.
(20)It is important to note that while in absolute terms the Normalised EBITDA
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
Interest Income / Expense
The Group reported interest income of EGP 45 million in Q1 2022, up 123%
year-on-year on the back of higher cash balances during the quarter coupled
with an optimised cash allocation between T-bills and time deposits.
Interest expense recorded EGP 33 million in the quarter, up 58% year-on-year.
The increase in attributable to:
· Higher interest on lease liabilities related to IFRS 16 following the
addition of new branches in Egypt and Jordan and the renewal of medical
equipment agreements with the Group's main equipment suppliers.
· Higher bank charges reflecting an increased penetration of, and
reliance on, POS machines and electronic payments in both Egypt and Jordan
during the three-month period.
· Loan-related expenses incurred by IDH during the period is largely in
line with last year. That being said, interest expenses are expected to
increase following the CBE decision to increase rates by 300 bps year-to-date.
· Fees amounting to EGP 1.9 million related to the US$ 45 million
facility with the International Finance Corporation (IFC) granted in May 2021.
Fees include front-end fee, syndication fee, and legal advisory fees.
.
Interest Expense Breakdown
EGP mn Q1 2021 Q1 2022 Change
Interest on Lease Liabilities (IFRS 16) 14.3 16.9 18%
Interest Expenses on Borrowings(21) 2.7 2.5 8%
Loan-related Expenses on IFC facility - 1.9 N/A
Interest Expenses on Leases 1.5 4.7 224%
Bank Charges 2.5 7.1 184%
Total Interest Expense 21.0 33.1 58%
(21)Interest expenses on medium-term loans divided as EGP 0.3 million related
to IDH's medium term facility with the Commercial International Bank (CIB) and
EGP 2.2 million to the Group's facility with Ahli United Bank Egypt (AUBE).
Foreign Exchange
IDH recorded a net foreign exchange gain of EGP 61 million in the first three
months of 2022 compared to an EGP 15 million FX loss in the comparable three
months of last year. The figure reflects the US Dollar balance held at the
Group along with the intercompany balances revaluation.
Taxation
Tax expenses recorded EGP 157 million in the first quarter of the year versus
EGP 181 million in Q1 2021. The effective tax rate stood at 33% for the
three-month period ended 31 March 2022 versus 35% in Q1 2021. The lower
effective tax rate largely reflects the large balance of Treasury bills held
by IDH's Egyptian Subsidiaries.
Taxation Breakdown by Region
EGP Mn Q1 2021 Q1 2022 Change
Egypt 165.3 143.6 -13%
Jordan 15.4 13.6 -12%
Nigeria 0.02 (0.05) N/A
Sudan (0.03) 0.05 N/A
Total Tax Expenses 180.7 157.2 -13%
Net Profit
IDH's consolidated net profit for the first quarter of the year stood at EGP
314 million, down 8% from the same three months of last year. It is important
to note that net profit for the quarter was identical in absolute terms
between IFRS and APM measures. Net profit margin on consolidated revenue
recorded 27% for the quarter, versus 30% in Q1 2021. Meanwhile, net profit
margin on net sales(22) stood at 28% in Q1 2022, representing a two percentage
point contraction from the first quarter of 2021. The decline in net
profitability for the quarter comes on the back of lower EBITDA profitability
for the period. Despite this, net profit margin recorded well above the
Group's historical averages for the quarter.
(22)It is important to note that while in absolute terms the net profit figure
is identical when using IFRS or APM, its margin differs between the two sets
of performance indicators.
Jordan
In Jordan, IDH recorded revenue of EGP 281 million in Q1 2022, up 48%
year-on-year. Meanwhile, net sales(15) expanded 14% year-on-year to reach EGP
217 million in Q1 2022. Growth in net sales came on the back of a 30%
year-on-year rise in tests performed which more than offset a 12% decline in
net sales per test. During the quarter, Covid-19-related revenue stood at EGP
147 million, contributing to 68% of Biolab's net sales (Covid-19-related test
volumes made up 48% of total tests performed). Covid-19-related net sales in
Jordan was boosted by contributions of EGP 140 million from Biolab's new
partnership with QAIA coupled with the EGP 18 million in net sales coming from
its partnerships with KHIA and Aqaba Port. As part of these agreements, Biolab
has been operating testing stations across all three locations primarily
focused on PCR testing for Covid-19 to passengers arriving in Jordan. The
stations which recorded strong demand in January and February have since
witnessed a decline in traffic following the end of mandatory testing in the
country. Meanwhile, conventional test net sales increased 4% year-on-year,
despite a 4% decline in test volumes versus last year. Finally, the country's
net sales continued to be supported by Biolab's house call service which
generated EGP 9 million in net sales in Q1 2022, down 61% year-on-year.
(15)Biolab's net sales for the period are calculated as revenues excluding
concession fees paid to QAIA and Aqaba Port as part of their revenue sharing
agreement.
Detailed Jordan Net Sales Breakdown
EGP mn Q1 2021 Q1 2022
Total Net Sales 190 217
Conventional Net Sales 68 70
Total Covid-19-related Net Sales (PCR and Antibody) 122 147
Contribution to Consolidated Results
Conventional Net Sales 36% 32%
Total Covid-19-related Net Sales (PCR and Antibody) 64% 68%
Nigeria
Echo-Lab, the Group's Nigerian subsidiary, reported revenue growth of 19%
versus the same three months of last year, with the venture's top-line
recording EGP 15 million in Q1 2022. In local currency terms revenue was up
23% year-on-year on the back of a 25% increase in average revenue per test.
The increase was supported by the increased number of CT and MRI exams
performed during the period, both of which are relatively higher-priced
services. It is important to note that during Q1 2022 management decided to
shut down its operational activities in the PPP branches due to their
under-performance on the profitability level. This subsequently led to a
decline in the number of tests performed during the quarter compared to the
same period last year. Management is planning to open two additional branches
during this year, bringing the total number of operational branches 12.
Sudan
In Sudan, IDH recorded revenues of EGP 6 million, down 16% from the first
quarter of last year. The country's results continue to be impacted by the
devaluation of the Sudanese pound in early 2021 with the average SDG/EGP rate
in Q1 2022 standing at 0.04 versus 0.11 in Q1 2021. Nonetheless, management's
continued success in raising prices in step with inflation throughout the year
saw revenue in local currency terms grow an impressive 149% in Q1 2022.
Net Sales Contribution by Country
Q1 2021 Q1 2022 Change
Egypt Net Sales (EGP mn) 920 879 -4%
Covid-19-related (EGP mn) 414 330 -20%
Egypt Contribution 81% 79%
Jordan Net Sales (EGP mn) 190 217 14%
Covid-19-related (EGP mn) 122 147 20%
Jordan Revenues (EGP mn) (IFRS) 190 281 48%
Jordan Net Sales (JOD mn) 8.6 9.6 12%
Jordan Revenues (JOD mn) (IFRS) 8.6 12.5 45%
Jordan Contribution 17% 19%
Nigeria Net Sales (EGP mn) 12 15 19%
Nigeria Net Sales (NGN mn) 302 371 23%
Nigeria Contribution 1.1% 1.3%
Sudan Net Sales (EGP mn) 7 6 -16%
Sudan Net Sales (SDG mn) 61 152 149%
Sudan Contribution 0.6% 0.5%
---
Patients Served and Tests Performed by Country
Q1 2021 Q1 2022 Change
Egypt Patients Served (mn) 2.0 2.0 2%
Egypt Tests Performed (mn) 7.2 7.3 2%
Covid-19-related tests (mn) 1.1 0.8 -26%
Jordan Patients Served (k) 301 552 83%
Jordan Tests Performed (k) 762 991 30%
Covid-19-related tests (k) 224 472 111%
Nigeria Patients Served (k) 38 33 -11%
Nigeria Tests Performed (k) 65 62 -5%
Sudan Patients Served (k) 19 28 47%
Sudan Tests Performed (k) 62 47 -25%
Total Patients Served (mn) 2.4 2.6 12%
Total Tests Performed (mn) 8.1 8.4 4%
Branches by Country
31 March 2021 31 March 2022 Change
Egypt 431 472 41
Jordan 20 21 1
Nigeria 12 10 -2
Sudan 20 17 -3
Total Branches 483 520 37
-Cost of Net Sales(16)
IDH's cost of net sales rose 19% year-on-year to record EGP 586 million in the
first quarter of 2022, rising at a faster pace than the Group's revenue for
the three-month period. This weighed down on the Group's gross profit which
recorded EGP 532 million in Q1 2022, down 17% from last year. It is important
to note that gross profit for the quarter was identical in absolute terms
between IFRS and APM measures. IDH's gross profit margin(17) on revenue
recorded 45% in Q1 2022 versus 57% last year. Meanwhile, IDH's gross profit
margin on net sales(18) recorded 48% in Q1 2022 versus 57% in Q1 2021.
Cost of Net Sales Breakdown as a Percentage of Net Sales
Q1 2021 Q1 2022
Raw Materials 19.3% 22.6%
Wages & Salaries 12.4% 14.9%
Depreciation & Amortisation 4.1% 5.8%
Other Expenses 7.7% 9.1%
Total 43.5% 52.4%
Raw material costs, which include cost of specialized analysis at other
laboratories, recorded EGP 253 million for the first quarter of the year,
continuing to make up the largest share of total COGS at 43%. As a share of
net sales, raw material costs increased to 22.6% in Q1 2022 compared to 19.3%
in the previous year. This increase is primarily attributable to a substantial
reduction in the average selling price of Covid-19-related tests during the
quarter (PCR tests were priced 51% lower in Q1 2022 than in Q1 2021). Prices
were down in both Egypt and Jordan on both a year-on-year and
quarter-on-quarter basis.
Direct salaries and wages for the year rose 19% year-on-year to EGP 167
million, making the second largest share of total COGS at 28%.
Direct depreciation and amortisation increased 39% year-on-year in the first
three months of the year to EGP 64 million, largely due to the incremental
amortisation of new branches (IFRS 16 right-of-use assets).
Other expenses for the first quarter of 2022 increased 18% year-on-year to EGP
102 million. The increase was principally due to higher transportation costs
related to IDH's house call service, increased utilities mainly due to the
addition of 37 new branches throughout the year, and increased repair and
maintenance outlays.
(16)Cost of net sales is calculated as cost of sales (IFRS) for the period
excluding commission fees paid to QAIA and Aqaba Port by Biolab as part of its
revenue sharing agreements with the two terminals. According to IFRS 15, cost
of sales recorded EGP 649 million in Q1 2022, up 32% year-on-year.
(17)It is important to note that while in absolute terms the Gross Profit
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
(18)A reconciliation between revenue and net sales is available earlier in
this announcement.
Selling, General and Administrative Expenses
Total SG&A outlays stood at EGP 135 million in Q1 2022, representing a 50%
year-on-year increase for the quarter. Higher SG&A costs came on the back
of rising salaries and marketing spending, coupled with higher call center
costs and higher fees for external auditing services.
Marketing and advertising expenses came in at EGP 23 million in Q1 2022, up
63% year-on-year. The increase largely reflects an overall expansion in IDH's
marketing and advertisement efforts which for the last year has seen the
Company launch targeted campaigns across a wide variety of channels mainly to
support the ramp up of its radiology venture, Al-Borg Scan.
EBITDA
IDH's EBITDA(19) recorded EGP 468 million in the first three months of 2022,
down 22% from the same three months a year ago. It is important to note that
EBITDA for the quarter was identical in absolute terms between IFRS and APM
measures. EBITDA margin on consolidated revenue recorded 40% in Q1 2022 versus
53% in the same quarter of a year ago. Meanwhile, EBITDA margin on net sales
declined to 42% in Q1 2022 from 53% in Q1 2021.(20) The decline in EBITDA
level profitability comes primarily on the back of lower gross profitability
for the three month period coupled with higher sales and marketing outlays
versus last year.
In IDH's home market of Egypt, EBITDA recorded EGP 395 million in Q1 2022
EBITDA margin on net sales stood at 45% in the three-month period versus 57%
this time last year.
In JOD terms, Biolab's EBITDA recorded JOD 3.3 million, down 5% year-on-year.
EBITDA margin on revenue recorded 26% in Q1 2022 down from 41% this time last
year. Meanwhile, EBITDA margin on net sales for the three months period
recorded 34% versus 41% in Q1 2021. The decrease in Biolab's EBITDA margin
(from 41% to 34%) is mainly attributable to higher expenses related to
Biolab's testing booths in QAIA and Aqaba Port.
Operations in Nigeria posted an EBITDA loss of EGP 1.2 million compared to a
loss of EGP 0.5 million in the same three months of last year. It is important
to note that Nigeria's annual inflation rate reached c.16.8% mainly due to
increased energy prices. Due to Echo-Lab's reliance on diesel-powered
generators across labs, the doubling of fuel prices compared to the same
period of last year weighed down on the venture's margins.
Finally, in Sudan the Company recorded an EBITDA of EGP 0.1 million in Q1
2022, down from the EGP 1.1 million in EBITDA recorded this time last year.
EBITDA for the quarter continued to be impacted by the sharp SDG devaluation
in February 2021. In SDG terms EBITDA declined 199% year-on-year.
Regional EBITDA in Local Currency
Mn Q1 2021 Q1 2022 Change
Egypt EGP 522 395 -24%
Margin on net sales 57% 45%
Jordan JOD 3.5 3.3 -5%
Margin on net sales 41% 35%
Margin on revenues (IFRS) 41% 27%
Nigeria NGN -11 -31 181%
Margin on net sales -4% -8%
Sudan SDG -3.84 3.81 -199%
Margin on net sales -6% 3%
(19)EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in Q1 2021 related to the
Company's EGX listing completed in May 2021.
(20)It is important to note that while in absolute terms the Normalised EBITDA
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
Interest Income / Expense
The Group reported interest income of EGP 45 million in Q1 2022, up 123%
year-on-year on the back of higher cash balances during the quarter coupled
with an optimised cash allocation between T-bills and time deposits.
Interest expense recorded EGP 33 million in the quarter, up 58% year-on-year.
The increase in attributable to:
· Higher interest on lease liabilities related to IFRS 16 following the
addition of new branches in Egypt and Jordan and the renewal of medical
equipment agreements with the Group's main equipment suppliers.
· Higher bank charges reflecting an increased penetration of, and
reliance on, POS machines and electronic payments in both Egypt and Jordan
during the three-month period.
· Loan-related expenses incurred by IDH during the period is largely in
line with last year. That being said, interest expenses are expected to
increase following the CBE decision to increase rates by 300 bps year-to-date.
· Fees amounting to EGP 1.9 million related to the US$ 45 million
facility with the International Finance Corporation (IFC) granted in May 2021.
Fees include front-end fee, syndication fee, and legal advisory fees.
.
Interest Expense Breakdown
EGP mn Q1 2021 Q1 2022 Change
Interest on Lease Liabilities (IFRS 16) 14.3 16.9 18%
Interest Expenses on Borrowings(21) 2.7 2.5 8%
Loan-related Expenses on IFC facility - 1.9 N/A
Interest Expenses on Leases 1.5 4.7 224%
Bank Charges 2.5 7.1 184%
Total Interest Expense 21.0 33.1 58%
(21)Interest expenses on medium-term loans divided as EGP 0.3 million related
to IDH's medium term facility with the Commercial International Bank (CIB) and
EGP 2.2 million to the Group's facility with Ahli United Bank Egypt (AUBE).
Foreign Exchange
IDH recorded a net foreign exchange gain of EGP 61 million in the first three
months of 2022 compared to an EGP 15 million FX loss in the comparable three
months of last year. The figure reflects the US Dollar balance held at the
Group along with the intercompany balances revaluation.
Taxation
Tax expenses recorded EGP 157 million in the first quarter of the year versus
EGP 181 million in Q1 2021. The effective tax rate stood at 33% for the
three-month period ended 31 March 2022 versus 35% in Q1 2021. The lower
effective tax rate largely reflects the large balance of Treasury bills held
by IDH's Egyptian Subsidiaries.
Taxation Breakdown by Region
EGP Mn Q1 2021 Q1 2022 Change
Egypt 165.3 143.6 -13%
Jordan 15.4 13.6 -12%
Nigeria 0.02 (0.05) N/A
Sudan (0.03) 0.05 N/A
Total Tax Expenses 180.7 157.2 -13%
Net Profit
IDH's consolidated net profit for the first quarter of the year stood at EGP
314 million, down 8% from the same three months of last year. It is important
to note that net profit for the quarter was identical in absolute terms
between IFRS and APM measures. Net profit margin on consolidated revenue
recorded 27% for the quarter, versus 30% in Q1 2021. Meanwhile, net profit
margin on net sales(22) stood at 28% in Q1 2022, representing a two percentage
point contraction from the first quarter of 2021. The decline in net
profitability for the quarter comes on the back of lower EBITDA profitability
for the period. Despite this, net profit margin recorded well above the
Group's historical averages for the quarter.
(22)It is important to note that while in absolute terms the net profit figure
is identical when using IFRS or APM, its margin differs between the two sets
of performance indicators.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH held gross property, plant and equipment (PPE) of EGP 1,774 million as at
31 March 2022, up from the EGP 1,653 million as at year-end 2021. Meanwhile,
CAPEX outlays excluding payments on account and accounting for the impact of
hyperinflation, represented 10.9% of consolidated net sales in Q1 2022. The
increase in CAPEX outlays as a share of total net sales for the quarter is in
part attributable to EGP 41 million spent on new radiology branches (Capital
Business Park Branch in West Cairo) during the period and EGP 56 million
translation effect (mainly related to Jordan) resulting from the depreciation
of the Egyptian Pound during the quarter.
Total CAPEX Breakdown
EGP Mn Q1 2022 % of Net Sales
Al-Borg Scan Expansion 40.5 3.6%
Translation Effect 56.3 5.0%
Leasehold Improvements/others 24.9 2.2%
Total CAPEX Additions 121.7 10.9%
Accounts Receivable and Provisions
As at 31 March 2022, accounts receivables' Days on Hand (DOH) recorded at 115
days compared to 107 days at year-end 2021. The increase reflects the large
balance related to the airlines deals in QAIA airport, characterized by a
relatively higher credit period. Accounts receivables' DOH is calculated
based on credit revenues(23)) amounting to EGP 312 million during Q1 2022.
The receivables balance in Egypt and Jordan stood at EGP 391 million as at 31
March 2022. More specifically, in Egypt account receivables' DOH increased to
102 days as at the end of the current reporting period compared to 96 days as
at year-end 2021.Accounts receivables' DOH for Egypt is calculated based on
credit revenues amounting to EGP 258 million during Q1 2022. Meanwhile, in
Jordan accounts receivables' DOH increased to 186 days from 154 days as at
year-end 2021 largely due to agreements with various airline companies as part
of QAIA and KHIA agreements. Accounts receivables' DOH for Jordan is
calculated based on credit revenues amounting to EGP 47 million during the
first quarter of 2022.
Provision for doubtful accounts established during the three-month period
ended 31 March 2022 amounted to EGP 7 million, up from EGP 5 million in the
same three months of last year
(23)Credit revenues relates to patients who paid for IDH's services on credit.
Inventory
As at 31 March 2022, the Group's inventory balance reached EGP 255 million, up
from EGP 223 million as at year-end 2021. Meanwhile, days Inventory
Outstanding (DIO) increased to 87 days as at 31 March 2022 from 61 days as at
year-end 2021. The increase largely reflects management's decision to
accumulate inventory in a trial to overcome any disruption that might result
from the global supply chain challenges.
Cash and Net Debt/Cash
IDH's cash balances increased to EGP 2,659 million as at 31 March 2021 up from
EGP 2,350 million as at 31 December 2021.
EGP million 31 Dec 2021 31 Mar 2022 31 Dec 2021
Time Deposits 628 1,126 628
T-Bills 1,461 1,451 1,461
Current Accounts 239 69 239
Cash on Hand 22 12 22
Total 2,350 2,659 2,350
Net cash balance(24) amounted to EGP 1,724 million as at 31 March 2022
compared to EGP 1,488 million as of 31 December 2021.
EGP million 31 Dec 2021 31 Mar 2022 31 Dec 2021
Cash and Financial Assets at Amortised Cost(25) 2,350 2,659 2,350
Interest Bearing Debt ("Medium Term Loans")(26) 102 100 106
Lease Liabilities Property 532 574 532
Long-term Equipment Liabilities 229 261 229
Net Cash Balance 1,488 1,724 1,483
Note: Interest Bearing Debt includes accrued interest for each period.
Lease liabilities on property recorded EGP 574 million as at 31 March 2022, up
from the EGP 532 million booked as at year-end 2021. The increase is driven by
the addition of new branches throughout the first three months of the year.
Meanwhile, financial obligations related to equipment recorded EGP 261 million
as at the end of the current reporting period, up from EGP 229 million as of
year-end 2021, largely reflecting the renewal of the Company's contracts and
the addition of new equipment. Total financial obligations related to
equipment in Q1 2022 includes EGP 122 million for equipment at Al-Borg Scan.
The rise in interest-bearing debt is related to IDH's two medium-term
facilities with Commercial International Bank (CIB) and Ahli United Bank of
Egypt (AUBE). More specifically, IDH's interest-bearing debt as at 31 March
2022 is split as EGP 13.2 million related to its medium-term facility with CIB
and EGP 85 million related to its facility with AUBE. It is worth noting that
interest-bearing debt in both periods excludes accrued interest.
Liabilities
Accounts Payable(27)
As at the end of March 2022, accounts payable balance recorded EGP 277 million
down from EGP 311 million as of 31 December 2021. Despite this, the Group's
days payable outstanding (DPO) increase to 107 days as at 31 March 2022 from
93 days as at 31 December 2021. The increase is mainly related to lower
Covid-19-related kits consumption coupled with the renegotiation of extended
payment terms with the Group's test kit suppliers.
Put Option
The put option current liability is related to the option granted in 2011 to
Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The put option is in
the money and exercisable since 2016 and is calculated as 7 times LTM EBITDA
minus net debt. Biolab's put option liability increased following the
depreciation of the Egyptian Pound by around 16% as at 31 March 2022 compared
to year-end 2021.
The put option non-current liability is related to the option granted in 2018
to the International Finance Corporation from Dynasty - shareholders in Echo
Lab - and it is exercisable in 2024. The put option is calculated based on
fair market value (FMV).
(24)The net cash balance is calculated as cash and cash equivalent balances
including includes financial assets at amortised cost, less interest-bearing
debt (medium term loans), finance lease and Right-of-use liabilities.
(25)As outlined in Note 9 of IDH's Consolidated Financial Statements, some
term deposits and treasury bills cannot be accessed for over 90 days and are
therefore not treated as cash. Term deposits which cannot be accessed for over
90 days stood at EGP 201 million in Q1 2022, while there were no such term
deposits in the previous year. Meanwhile, treasury bills not accessible for
over 90 days stood at EGP 1,230 million in Q1 2022, down from EGP 1,310
million in FY 2021.
(26)IDH's interest bearing debt as at 31 March 2022 is split as EGP 13 million
related to its medium term facility with the Commercial International Bank
(CIB) and EGP 85 million to its facility with Ahli United Bank Egypt (AUBE)
(outstanding loan balances are excluding accrued interest for the period).
(27)Accounts payable is calculated based on average payables at the end of
each year.
Accounts Receivable and Provisions
As at 31 March 2022, accounts receivables' Days on Hand (DOH) recorded at 115
days compared to 107 days at year-end 2021. The increase reflects the large
balance related to the airlines deals in QAIA airport, characterized by a
relatively higher credit period. Accounts receivables' DOH is calculated
based on credit revenues(23)) amounting to EGP 312 million during Q1 2022.
The receivables balance in Egypt and Jordan stood at EGP 391 million as at 31
March 2022. More specifically, in Egypt account receivables' DOH increased to
102 days as at the end of the current reporting period compared to 96 days as
at year-end 2021.Accounts receivables' DOH for Egypt is calculated based on
credit revenues amounting to EGP 258 million during Q1 2022. Meanwhile, in
Jordan accounts receivables' DOH increased to 186 days from 154 days as at
year-end 2021 largely due to agreements with various airline companies as part
of QAIA and KHIA agreements. Accounts receivables' DOH for Jordan is
calculated based on credit revenues amounting to EGP 47 million during the
first quarter of 2022.
Provision for doubtful accounts established during the three-month period
ended 31 March 2022 amounted to EGP 7 million, up from EGP 5 million in the
same three months of last year
(23)Credit revenues relates to patients who paid for IDH's services on credit.
Inventory
As at 31 March 2022, the Group's inventory balance reached EGP 255 million, up
from EGP 223 million as at year-end 2021. Meanwhile, days Inventory
Outstanding (DIO) increased to 87 days as at 31 March 2022 from 61 days as at
year-end 2021. The increase largely reflects management's decision to
accumulate inventory in a trial to overcome any disruption that might result
from the global supply chain challenges.
Cash and Net Debt/Cash
IDH's cash balances increased to EGP 2,659 million as at 31 March 2021 up from
EGP 2,350 million as at 31 December 2021.
EGP million 31 Dec 2021 31 Mar 2022 31 Dec 2021
Time Deposits 628 1,126 628
T-Bills 1,461 1,451 1,461
Current Accounts 239 69 239
Cash on Hand 22 12 22
Total 2,350 2,659 2,350
Net cash balance(24) amounted to EGP 1,724 million as at 31 March 2022
compared to EGP 1,488 million as of 31 December 2021.
EGP million 31 Dec 2021 31 Mar 2022 31 Dec 2021
Cash and Financial Assets at Amortised Cost(25) 2,350 2,659 2,350
Interest Bearing Debt ("Medium Term Loans")(26) 102 100 106
Lease Liabilities Property 532 574 532
Long-term Equipment Liabilities 229 261 229
Net Cash Balance 1,488 1,724 1,483
Note: Interest Bearing Debt includes accrued interest for each period.
Lease liabilities on property recorded EGP 574 million as at 31 March 2022, up
from the EGP 532 million booked as at year-end 2021. The increase is driven by
the addition of new branches throughout the first three months of the year.
Meanwhile, financial obligations related to equipment recorded EGP 261 million
as at the end of the current reporting period, up from EGP 229 million as of
year-end 2021, largely reflecting the renewal of the Company's contracts and
the addition of new equipment. Total financial obligations related to
equipment in Q1 2022 includes EGP 122 million for equipment at Al-Borg Scan.
The rise in interest-bearing debt is related to IDH's two medium-term
facilities with Commercial International Bank (CIB) and Ahli United Bank of
Egypt (AUBE). More specifically, IDH's interest-bearing debt as at 31 March
2022 is split as EGP 13.2 million related to its medium-term facility with CIB
and EGP 85 million related to its facility with AUBE. It is worth noting that
interest-bearing debt in both periods excludes accrued interest.
Liabilities
Accounts Payable(27)
As at the end of March 2022, accounts payable balance recorded EGP 277 million
down from EGP 311 million as of 31 December 2021. Despite this, the Group's
days payable outstanding (DPO) increase to 107 days as at 31 March 2022 from
93 days as at 31 December 2021. The increase is mainly related to lower
Covid-19-related kits consumption coupled with the renegotiation of extended
payment terms with the Group's test kit suppliers.
Put Option
The put option current liability is related to the option granted in 2011 to
Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The put option is in
the money and exercisable since 2016 and is calculated as 7 times LTM EBITDA
minus net debt. Biolab's put option liability increased following the
depreciation of the Egyptian Pound by around 16% as at 31 March 2022 compared
to year-end 2021.
The put option non-current liability is related to the option granted in 2018
to the International Finance Corporation from Dynasty - shareholders in Echo
Lab - and it is exercisable in 2024. The put option is calculated based on
fair market value (FMV).
(24)The net cash balance is calculated as cash and cash equivalent balances
including includes financial assets at amortised cost, less interest-bearing
debt (medium term loans), finance lease and Right-of-use liabilities.
(25)As outlined in Note 9 of IDH's Consolidated Financial Statements, some
term deposits and treasury bills cannot be accessed for over 90 days and are
therefore not treated as cash. Term deposits which cannot be accessed for over
90 days stood at EGP 201 million in Q1 2022, while there were no such term
deposits in the previous year. Meanwhile, treasury bills not accessible for
over 90 days stood at EGP 1,230 million in Q1 2022, down from EGP 1,310
million in FY 2021.
(26)IDH's interest bearing debt as at 31 March 2022 is split as EGP 13 million
related to its medium term facility with the Commercial International Bank
(CIB) and EGP 85 million to its facility with Ahli United Bank Egypt (AUBE)
(outstanding loan balances are excluding accrued interest for the period).
(27)Accounts payable is calculated based on average payables at the end of
each year.
iii. Cash Flow Analysis
Net cash flow from operating activities recorded EGP 309 million in Q1 2022
continuing to demonstrate IDH's strong cash generation ability. New cash flow
from operating activities declined from EGP 488 million the same three months
of last year.
-End-
INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH"
AND ITS SUBSIDIARIES
Consolidated Financial Statements
for the quarter ended 31 March 2022
Consolidated statement of financial position as at 31 March 2022
Notes 31 March 2022 31 March 2021
EGP '000 EGP '000
Assets
Non-current assets
Property, plant and equipment 4 1,112,344 1,061,808
Intangible assets and goodwill 5 1,670,693 1,658,867
Right of use assets 6 502,949 462,432
Financial assets at fair value through profit and loss 7 12,312 10,470
Total non-current assets 3,298,298 3,193,577
Current assets
Inventories 254,924 222,612
Trade and other receivables 8 508,174 469,727
Financial assets at amortized cost 9 1,430,153 1,458,724
Cash and cash equivalents 10 1,228,728 891,451
Total current assets 3,421,979 3,042,514
Total assets 6,720,277 6,236,091
EQUITY AND LIABILITIES
Equity
Share Capital 1,072,500 1,072,500
Share premium reserve 1,027,706 1,027,706
Capital reserve (314,310) (314,310)
Legal reserve 51,641 51,641
Put option reserve (1,127,337) (956,397)
Translation reserve 164,671 150,730
Retained earnings 1,849,154 1,550,976
Equity attributable to the equity holders of the parent 2,724,025 2,582,846
Non-controlling interests 292,814 211,513
Total equity 3,016,839 2,794,359
Non-current liabilities
Provisions 3,484 4,088
Borrowings 13 76,345 76,345
Other financial obligations 15 708,203 645,196
Non-current put option liability 14 36,806 35,037
Deferred tax liabilities 19-C 384,230 332,149
Total non-current liabilities 1,209,068 1,092,815
Current liabilities
Trade and other payables 11 656,059 777,354
Other financial obligations 15 126,541 115,478
Current put option liability 12 1,090,531 921,360
Borrowings 13 21,721 21,721
Current tax liabilities 599,518 513,004
Total current liabilities 2,494,370 2,348,917
Total liabilities 3,703,438 3,441,732
Total equity and liabilities 6,720,277 6,236,091
These condensed consolidated interim financial information were approved and
authorized for issue by the Board of Directors and signed on their behalf on 7
June 2022 by:
__________________
___________________
Dr. Hend El Sherbini Hussein Choucri
Chief Executive Officer Independent Non-Executive Director
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated income statement for the quarter ended 31 March 2022
Notes Q1 2022 Q1 2021
EGP '000 EGP '000
(Unreviewed)
Revenue 22 1,180,479 1,129,538
Cost of sales (648,793) (491,131)
Gross profit 531,686 638,407
Marketing and advertising expenses (40,764) (28,806)
Administrative expenses 17 (86,300) (70,921)
Impairment loss on trade and other receivable (7,178) (5,084)
Other (expense)/income (1,082) 4,085
Operating profit 396,362 537,681
Finance costs 18 (33,060) (35,687)
Finance income 18 108,045 20,273
Net finance cost 74,985 (15,414)
Profit before tax 471,347 522,267
Income tax expense 19-B (157,214) (180,672)
Profit for the period 314,133 341,595
Profit attributed to:
Equity holders of the parent 296,609 326,032
Non-controlling interests 17,524 15,563
314,133 341,595
Earnings per share (expressed in EGP):
Basic and diluted earnings per share 21
0.49 0.54
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of comprehensive income/(expenses) for the quarter
ended 31 March 2022
Q1 2022 Q1 2021
EGP '000 EGP '000
(Unreviewed)
Net profit 314,133 341,595
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations 77,308 14,436
Other comprehensive income for the period net of tax 77,308 14,436
Total comprehensive income for the period 391,441 356,031
Attributed to:
Equity holders of the parent 310,550 335,893
Non-controlling interests 80,891 20,138
391,441 356,031
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of cash flows for the quarter ended 31 March 2022
Note Q1 2022 Q1 2021
EGP '000 EGP '000
(Unreviewed)
Cash flows from operating activities
Profit for the period before tax 471,347 522,267
Adjustments
Depreciation of property, plant and equipment 46,048 32,460
Depreciation of right of use assets 23,926 17,966
Amortisation of intangible assets 1,949 1,521
Gain on disposal of Property, plant and equipment (4) (19)
Impairment in trade and other receivables 7,178 5,084
Interest income 18 (45,247) (20,273)
Interest expense 18 25,916 18,248
Bank Charges 7,144 2,516
Equity settled financial assets at fair value (1,842) (841)
ROU Asset/Lease Termination 1,743 (410)
Hyperinflation 18 (1,664) -
Unrealised foreign currency exchange loss 18 (61,134) 14,735
Change in Provisions (331) 37
Change in Inventories (28,598) (20,238)
Change in trade and other receivables (78,311) (162,222)
Change in trade and other payables (58,801) 77,114
Net cash from operating activities 309,319 487,944
Cash flows from investing activities
Proceeds from sale of Property, plant and equipment 184 390
Interest received on financial asset at amortised cost 8,180 19,473
Payments for acquisition of property, plant and equipment 4 (33,363) (30,439)
Payments for acquisition of intangible assets 5 (843) (171)
Payments for the purchase of financial assets at amortized cost (312,592) (172,117)
Proceeds for the sale of financial assets at amortized cost 341,163 126,924
Net cash flows generated from/ (used in)investing activities 2,729 (55,941)
Cash flows from financing activities
Proceeds from borrowings - 2,617
Payment of finance lease liabilities (8,535) (12,405)
Payment of financial obligations
Interest paid (28,688) (14,947)
Bank charge paid (7,144) (2,516)
Net cash flows used in financing activities (44,367) (27,250)
Net increase in cash and cash equivalent 267,681 404,753
Cash and cash equivalents at the beginning of the year 891,451 600,130
Effect of exchange rate 69,596 (2,267)
Cash and cash equivalent at the end of the period 10 1,228,728 1,002,616
Non-cash investing and financing activities disclosed in other notes are
· acquisition of right-of-use assets - note 26
· Property plant and equipment - note 11
· Put option liability - note 23 and 25
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of changes in equity for the quarter ended 31 March
2022
EGP '000 Attributable to owners of the Parent
Share Share Capital Legal Put option reserve Translation Retained earnings Total attributable to the owners of the Parent Non-controlling interests Total equity
capital
premium reserve
reserve
reserve*
reserve
At 1 January 2022 1,072,500 1,027,706 (314,310) 51,641 (956,397) 150,730 1,550,976 2,582,846 211,513 2,794,359
Profit for the period - - - - - - 296,609 296,609 17,524 314,133
Other comprehensive income for the period - - - - - 13,941 - 13,941 63,367 77,308
Total comprehensive income at 31 March 2022 - - - - - 13,941 296,609 310,550 80,891 391,441
Transactions with owners of the Company
Contributions and distributions
Movement in put option liabilities - - - - (170,940) - - (170,940) - (170,940)
Impact of hyperinflation - - - - - - 1,570 1,570 409 1,979
Total contributions and distributions - - - - (170,940) - 1,570 (169,370) 409 (168,961)
Balance at 31 March 2022 1,072,500 1,027,706 (314,310) 51,641 (1,127,337) 164,671 1,849,155 2,724,026 292,813 3,016,839
At 1 January 2021 1,072,500 1,027,706 (314,310) 49,218 (314,057) 145,617 603,317 2,269,991 156,383 2,426,374
Profit for the period - - - - - - 326,032 326,032 15,563 341,595
Other comprehensive loss for the period - - - - - 9,861 - 9,861 4,575 14,436
Total comprehensive income at 31 March 2021(Unreviewed) - - - - - 9,861 326,032 335,893 20,138 356,031
Transactions with owners of the Company
Contributions and distributions
Legal reserve formed during the period - - - 2,423 - - (2,423) - - -
Movement in put option liabilities - - - - (226,945) - - (226,945) - (226,945)
Impact of hyperinflation - - - - - - (14,987) (14,987) (5,934) (20,921)
Total contributions and distributions - - - 2,423 (226,945) - (17,410) (241,932) (5,934) (247,866)
Balance at 31 March 2021(Unreviewed) 1,072,500 1,027,706 (314,310) 51,641 (541,002) 155,478 911,939 2,363,952 170,588 2,534,540
*Under Egyptian Law, each subsidiary in Egypt must set aside at least 5% of
its annual net profit into a legal reserve until such time that this
represents 50% of each subsidiary's issued capital.
This reserve is not distributable to the owners of the Company.
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
(In the notes all amounts are shown in Egyptian Pounds "EGP'000" unless
otherwise stated)
1. Reporting entity
Integrated Diagnostics Holdings plc "IDH" or "the Company" is a Company which
was incorporated in Jersey on 4 December 2014 and established according to the
provisions of the Companies (Jersey) Law 1991 under Registered No. 117257.
These condensed consolidated interim financial information as at and for the
three months ended 31 March 2022 comprise the Company and its subsidiaries
(together referred as the 'Group'). The Company is a dually listed entity, in
both London Stock Exchange (since 2015) and in the Egyptian Exchange (during
May 2021).
The principal activities of the Company and its subsidiaries (together "The
Group") include investments in all types of the healthcare field of medical
diagnostics (the key activities are pathology and Radiology related tests),
either through acquisitions of related business in different jurisdictions or
through expanding the acquired investments they have. The key jurisdictions
that the Group operates are in Egypt, Jordan, Nigeria and Sudan.
The Group's financial year starts on 1 January and ends on 31 December of each
year.
These condensed consolidated interim financial information were approved for
issue by the Directors of the Company on 7 June 2022.
2. Basis of preparation
A) Statement of compliance
These condensed consolidated interim financial information have been prepared
as per IAS 34 'Interim Financial Reporting' (As adopted by the IASB). as the
accounting policies adopted are consistent with those of the previous
financial year ended 31 December 2021 and corresponding interim reporting
period.
These condensed consolidated interim financial information do not include all
the information and disclosures in the annual consolidated financial
Statement, and should be read in conjunction with the financial Statement
published as at and for the year ended 31 December 2021 which is available at
www.idhcorp.com (http://www.idhcorp.com) ,. In addition, results of the three
month period ended 31 March 2022 are not necessary indicative for the results
that may be expected for the financial year ending 31 December 2022.
B) Basis of measurement
The condensed consolidated interim financial information has been prepared on
the historical cost basis except where adopted IFRS mandates that fair value
accounting is required which is related to the financial assets and
liabilities measured at fair value.
C) Functional and presentation currency
These condensed consolidated interim financial information is presented in
Egyptian Pounds (EGP'000). The functional currency of the majority of the
Group's entities is the Egyptian Pound (EGP) and is the currency of the
primary economic environment in which the Group operates.
The Group also operates in Jordan, Sudan and Nigeria and the functional
currencies of those foreign operations are the local currencies of those
respective territories, however due to the size of these operations, there is
no significant impact on the functional currency of the Group, which is the
Egyptian Pound (EGP).
3. Significant accounting policies
In preparing these condensed consolidated interim financial information, the
significant judgments made by the management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those that were applied to the consolidated financial information for
the year ended 31 December 2021."The preparation of these condensed
consolidated interim financial information requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these estimates. Information about
significant areas of estimation uncertainty and critical judgement in applying
accounting policies that have the most significant effect on the amount
recognised in the condensed consolidated interim financial statement is
described in note 2.2 of the annual consolidated financial information
published for the year ended 31 December 2021. In preparing these condensed
consolidated interim financial information, the significant judgments made by
the management in applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those that were applied to the
consolidated financial information for the year ended 31 December 2021".
4. Property, plant and equipment
Land & buildings Medical, electric Leasehold Fixtures, fittings & vehicles Building & Leasehold assets in the course of construction Payment Total
& information
improvements
system equipment on
account
Cost
At 1 January 2022 380,883 824,628 335,203 95,966 15,937 6,761 1,659,378
Additions - 53,136 8,658 1,721 1,490 - 65,005
Hyper inflation - 1,482 - - - - 1,482
Disposals - (353) (453) (318) - - (1,124)
Transfers - - 256 - (256) - -
Exchange differences 2,302 30,440 15,509 6,727 1,357 - 56,335
At 31 March 2022 383,185 909,333 359,173 104,096 18,528 6,761 1,781,076
Depreciation
At 1 January 2022 53,490 333,806 177,230 33,044 - 597,570
Depreciation for the period 1,539 29,925 12,127 2,457 - - 46,048
Disposals - (326) (414) (204) - - (944)
Exchange differences 372 14,405 7,231 4,051 - - 26,059
At 31 March 2022 55,401 377,810 196,174 39,348 - - 668,732
Net book value at 31 March 327,784 531,523 162,999 64,748 18,528 6,761 1,112,344
At 31 December 2021 327,393 490,822 157,973 62,922 15,937 6,761 1,061,808
5. Intangible assets and goodwill
Intangible assets represent goodwill acquired through business combinations
and brand names.
Goodwill Brand name Software Total
Cost
Balance at 1 January 2022 1,260,965 383,909 77,394 1,722,268
Additions - - 843 843
Effect of movements in exchange rates 9,293 2,957 1,184 13,434
Balance at 31 March 2022 1,270,258 386,866 79,421 1,736,545
Amortisation and impairment
Balance at 1 January 2022 4,552 372 58,477 63,401
Amortisation - - 1,949 1,949
Effect of movements in exchange rates - - 502 502
Balance at 31 March 2022 4,552 372 60,928 65,852
Carrying amount
Balance at 31 December 2021 1,256,413 383,537 18,917 1,658,867
Balance at 31 March 2022 1,265,706 386,494 18,493 1,670,693
Goodwill impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment. No
indicators of impairment have been identified during the three months ended 31
March 2022.
6. Right-of-use assets
31 March 31 December 2021
2022
Balance at 1 January 462,432 354,688
Addition for the period / year 57,097 198,402
Depreciation charge for the period / year (24,444) (79,617)
Terminated contracts (8,034) (7,643)
Exchange differences 15,898 (3,398)
Balance 502,949 462,432
7. Financial asset at fair value through profit and loss
31 March 2022 31 December 2021
Equity investments* 12,312 10,470
12,312 10,470
* On August 17, 2017, Almakhbariyoun AL Arab (seller) has signed IT
purchase Agreement with JSC Mega Lab (Buyer) to transfer and install the
Laboratory Information Management System (LIMS) for a purchase price amounted
to USD 400 000, which will be in the form of 10% equity stake in JSC Mega Lab.
In case the valuation of the project is less or more than USD 4,000,000, the
seller stake will be adjusted accordingly, in a way that the seller equity
stake shall not fall below 5% of JSC Mega Lab.
- ownership percentage in JSC Mega Lab at the transaction date on
April 8, 2019, and as of March 31, 2022, was 8.25%.
- On April 8, 2019, Al Mokhabariyoun Al Arab (Biolab) has signed a
Shareholder Agreement with JSC Mega Lab and JSC Georgia Healthcare Group
(CHG), whereas, BioLab Shall have a put option, exercisable within 12 months
immediately after the expiration of five(5) year period from the signing date,
which allows BioLab stake to be bought out by CHG at a price of the equity
value being USD 400,000 plus 15% annual Interred Rate of Return (IRR). In case
the Management Agreement or the Purchase Agreement and/or the Service level
Agreement is terminated/cancelled within 6 months period from the date of such
termination/cancellation, CHG shall have a call option, which allows the CHG
to purchase Biolab's Strake in JSC Megalab having value of USD 400,000.00 plus
20% annual Interred Rate of Return (IRR). If JCI accreditation is not
obtained, immediately after the expiration of the 12 months period, CHG shall
have a call option (the Accreditation Call option), exercisable within 6
months period, allowing CHG to purchase BioLab's Shares in JSC Mega Lab at a
price of the equity value of USD 400,00.00 plus the 20% annual IRR.
After 12 months from the date of the put option period expiration, CHG to
purchase Biolab's Stake in JSC Megalab having value of USD 400,000 plus higher
of 20% annual IRR or 6X EV/EBITDA (of the financial year immediately preceding
the call option exercise date).
8. Trade and other receivables
31 March 2022 31 December 2021
Trade receivables - net 398,618 371,051
Prepayments 34,848 22,647
Due from related parties note (16) 3,459 5,237
Accrued revenue 3,513 2,818
Other receivables 67,736 67,974
508,174 469,727
9. Financial assets at amortised cost
31 March 31 December 2021
2022
Term deposits (more than 90 days) 200,934 148,136
Treasury bills (more than 90 days) 1,229,219 1,310,588
1,430,153 1,458,724
The maturity date of the treasury bills and Fixed-term deposits is between
3-12 months and have average interest rates of 12.53% and 8.50% respectively.
10. Cash and cash equivalents
31 March 2022 31 December 2021
Cash at banks and on hand 81,467 261,430
Treasury bills (less than 90 days) 222,139 150,431
Term deposits (less than 90 days) 925,122 479,590
1,228,728 891,451
11. Trade and other payables
31 March 2022 31 December 2021
Trade payable 277,051 311,321
Accrued expenses 252,379 325,677
Due to related parties note (16) 13,025 13,234
Other payables 73,702 99,040
Deferred revenue 37,711 24,603
Accrued finance cost 2,191 3,479
656,059 777,354
12. Current put option liability
31 March 2022 31 December 2021
Put option - Biolab Jordan 1,090,531 921,360
1,090,531 921,360
The accounting policy for put options after initial recognition is to
recognise all changes in the carrying value of the put option liability within
equity.
Through the historic acquisitions of Makhbariyoun Al Arab the Group entered
into separate put option arrangements to purchase the remaining equity
interests from the vendors at of a subsequent date. At acquisition, a put
option liability has been recognised at the net present value of the exercise
price of the option.
The option is calculated at seven times EBITDA of the last 12 months minus Net
Debt and its exercisable in whole starting the fifth anniversary of completion
of the original purchase agreement, which fell due in June 2016. The vendor
has not exercised this right at 31 March 2022. It is important to note that
the put option liability is treated as current as it could be exercised at any
time by the NCI. However, based on discussions and ongoing business
relationship, there is no expectation that this will happen in next 18 months.
The option has no expiry date.
13. Loans and borrowings
Currency Nominal interest rate Maturity 31 March 2022 31 December 2022
CIB - Bank EGP Secured rate 9.5% 5 April 2022 13,238 13,238
AUB - Bank EGP CBE corridor rate+1% 26 April 2026 84,828 84,828
98,066 98,066
Amount held as:
Current liability 21,721 21,721
Non- current liability 76,345 76,345
98,066 98,066
A) In April 2017 AL-Mokhtabar for medical lab, one of IDH subsidiaries,
was granted a medium-term loan amounting to EGP 110m from the Commercial
International Bank "CIB Egypt" to finance the purchase of the new
administrative building for the Group. As at 31 March 2022, the loan has been
secured through restricted time deposits.
B) In July 2018, AL-Borg lab, one of IDH subsidiaries, was granted a
medium term loan amounting to EGP 130.5m from the Ahli United Bank "AUB Egypt"
to finance the investment cost related to the expansion into the radiology
segment. As at 31 March 2022 only EGP 84.4m had been drawn down from the
total facility available. The loan contains the following financial covenants
which if breached will mean the loan is repayable on demand:
1. The financial leverage shall not exceed 0.7 throughout the period of
the loan
"Financial leverage": total bank debt divided by net equity
2. The debt service ratios (DSR) shall not be less than 1.35 starting
2020
"Debt service ratio": cash operating profit after tax plus depreciation for
the financial year less annual maintenance on machinery and equipment adding
cash balance (cash and cash equivalent ) divided by total financial payments.
"Cash operating profit": Operating profit after tax, interest expense,
depreciation and amortisation, is calculated as follows: Net income after tax
and unusual items adding Interest expense, Depreciation, Amortisation and
provisions excluding tax related provisions less interest income and
Investment income and gains from extraordinary items.
"Financial payments": current portion of long-term debt including finance
lease payments, interest expense and fees and dividends distributions.
Loans and borrowings (continued)
3. The current ratios shall not be less than 1.
"Current ratios": Current assets divided current liabilities.
The terms and conditions of outstanding loans are as follows:
* As at 31 March 2022 corridor rate 10.25% (2021: 9.25%)
AL- Borg company didn't breach any covenants for MTL agreements.
C) Last year the Group signed two agreements of debt facilities. The
debt package includes US$ 45.0 million secured facilities with the tenor of an
8-year starting May 2021 from the International Finance Corporation (IFC), and
an additional US$ 15.0 million IFC syndicated facility from Mashreq Bank. in
as at 31 March 2022, the debt ratty has not been withdrawn by IDH.
14. Non-current put option liability
31 March 31 December 2021
2022
Put option liability* 36,806 35,037
36,806 35,037
* According to the definitive agreements signed on 15 January 2018
between Dynasty Group Holdings Limited and the International Finance
Corporation (IFC) related to the Eagle Eye-Echo scan transaction, IFC has the
option to put it is shares to Dynasty in year 2024. The put option price will
be calculated on the basis of the fair market value determined by an
independent valuator.
15. Other Financial obligations
31 March 31 December
2022 2021
Lease liabilities - buildings 574,163 531,804
Financial obligations- laboratory equipment 260,581 228,870
834,744 760,674
The financial obligations for the laboratory equipment and building are
payable as follows:
31 March 2022
Minimum Interest Principal
payments
Less than one year 231,413 104,872 126,541
Between one and five years 720,180 224,284 495,896
More than five years 252,090 39,783 212,307
1,203,683 368,939 834,744
31 December 2021
Minimum payments Interest Principal
Less than one year 211,242 95,764 115,478
Between one and five years 701,084 227,314 473,770
More than Five years 191,229 19,803 171,426
1,103,555 342,881 760,674
Amounts recognised in profit or loss:
For the three months ended 31 March
2022 2021
(Unreviewed)
Interest on lease liabilities 16,861 14,276
Expenses related to short-term lease 5,757 5,219
16. Related party transactions
The significant transactions with related parties, their nature volumes and
balance during the period 31 March 2022 are as follows:
31 March 2022
Related Party Nature of transaction Nature of relationship Transaction amount of the period Balance
ALborg Scan (S.A.E)* Expenses paid on behalf Affiliate - 351
International Fertility (IVF)** Expenses paid on behalf Affiliate - 1,767
H.C Security Provided service Entity owned by Company's board member (12) (331)
Life Health Care Provide service Entity owned by Company's CEO (1,791) 303
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder (169,171) (1,090,531)
International Finance corporation (IFC) Put option liability Eagle Eye - Echo Scan limited shareholder (7,311) (42,348)
International Finance corporation (IFC) Current account Eagle Eye - Echo Scan limited shareholder 221 (12,694)
Integrated Treatment for Kidney Diseases (S.A.E.) Rental income Entity owned by Company's CEO 61 1,036
Medical Test analysis 72
Total (1,142,447)
Related party transactions (continued)
31 December 2021
Related Party Nature of transaction Nature of relationship Transaction amount of the year Balance
ALborg Scan (S.A.E)* Expenses paid on behalf Affiliate 1 351
International Fertility (IVF)** Expenses paid on behalf Affiliate - 1,767
H.C Security Provide service Entity owned by Company's board member (243) (319)
Life Health Care Provide service Entity owned by Company's CEO (11,232) 2,094
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder (639,093) (921,360)
International Finance corporation (IFC) Put option liability Eagle Eye - Echo Scan limited shareholder (3,247) (35,037)
International Finance corporation (IFC) Current account Eagle Eye - Echo Scan limited shareholder (12,915) (12,915)
Integrated Treatment for Kidney Diseases (S.A.E) Rental income Entity owned by Company's CEO 1,025
(298)
530
(964,394)
Related party transactions (continued)
* ALborg Scan is a company whose shareholders include Dr. Moamena Kamel
(founder of IDH subsidiary Al-Mokhtabar Labs).
** International Fertility (IVF) is a company whose shareholders include
Dr. Moamena Kamel (founder of IDH subsidiary Al-Mokhtabar Labs).
Compensation of key management personnel of the Group
The amounts disclosed in the table are the amounts recognised as an expense
during the reporting period related to key management personnel.
31 March 31 March
2022 2021
(Unreviewed)
Short-term employee benefits 25,424 12,871
25,424 12,871
17. General and administrative expenses
For the three months ended 31 March
2022 2021
(Unreviewed)
Wages and salaries 33,931 27,013
Depreciation 6,483 4,890
Amortisation 920 638
Other expenses 44,966 38,380
Total 86,300 70,921
18. Net finance cost
For the three months ended
31 March
2022 2021
(Unreviewed)
Finance income
Interest income 45,247 20,273
Net foreign exchange gain 61,134 -
Gain on hyperinflationary net monetary position 1,664 -
Total finance income 108,045 20,273
Finance cost
Loss on hyperinflationary net monetary position
Bank charges (7,144) (2,516)
Interest expense (25,916) (18,436)
Net foreign exchange (loss) - (14,735)
Total finance cost (33,060) (35,687)
Net finance cost 74,985 (15,414)
On March 21, 2022, the Central Bank of Egypt raised prices by 100 basis points
and allowed its prices against the US dollar, which was imposing inflationary
pressures in the short to medium term. Inflation rates are expected to average
between 13% and 15% during 2022.
19. Tax
A) Tax expense
Tax expense is recognised based on management's best estimate of the
weighted-average annual income tax rate expected for the full financial year
multiplied by the pre-tax income of the interim reporting period.
B) Income tax
Amounts recognised in profit or loss as follow:
For the three months ended 31 March
2022 2021
(Unreviewed)
Current tax:
Current period (101,360) (138,810)
Deferred tax:
Deferred tax arising on undistributed reserves in subsidiaries (55,225) (40,712)
Relating to origination and reversal of temporary differences (629) (1,150)
Total Deferred tax expense - (55,854) (41,862)
Tax expense recognised in profit or loss (157,214) (180,672)
C) Deferred tax liabilities
Deferred tax relates to the following:
31 March 31 December
2022 2021
Property, plant and equipment (28,544) (28,925)
Intangible assets (106,530) (105.358)
Undistributed reserves from Group subsidiaries (278,649) (223,425)
Provisions and financial obligation 29,493 25,559
Net deferred tax liabilities (384,230) (332,149)
20. Financial instruments
The Group has reviewed the financial assets and liabilities held at 31 March
2022. It has been deemed that the carrying amounts for all financial
instruments are a reasonable approximation of fair value. All financial
instruments are deemed Level 3.
Contingent liabilities
As required by article 134 of the labour law on Vocational Guidance and
Training issued by the Egyptian Government in 2003, Al Borg Laboratory Company
and Al Mokhtabar Company for Medical Labs are required to conform to the
requirements set out by that law to provide 1% of net profits each year into a
training fund. During the year, Integrated Diagnostics Holdings plc have taken
legal advice and considered market practice in Egypt relating to this and more
specifically whether the vocational training courses undertaken by Al Borg
Laboratory Company and Al Mokhtabar Company for Medical Labs suggest that
obligations have been satisfied through training programmes undertaken
in-house by those entities. Since the issue of the law on Vocational Guidance
and Training, Al Borg Laboratory Company and Al Mokhtabar Company for Medical
Labs have not been requested by the government to pay or have voluntarily paid
any amounts into the external training fund. The board of Integrated
Diagnostics Holdings plc have concluded that an outflow of funds is not
probable.
Should a claim be brought against Al Borg Laboratory Company and Al Mokhtabar
Company for Medical Labs, an amount of between EGP 24.5m to EGP 33 m could
become payable, however this is not considered probable.
21. Earnings per share
For the three months ended 31 March
2022 2021
(Unreviewed)
Profit attributed to owners of the parent 296,609 326,032
Weighted average number of ordinary shares in issue 600,000 600,000
Basic and diluted earnings per share 0.49 0.54
The Company has no potential diluted shares as at 31 March 2022 and 31 March
2021, therefore; the earnings per diluted share are equivalent to basic
earnings per share.
22. Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the steering
committee that makes strategic decisions.
The Group has four operating segments based on geographical location rather
than two operating segments based on service provided, as the Group's Chief
Operating Decision Maker (CODM) reviews the internal management reports and
KPIs of each geography.
The Group operates in four geographic areas, Egypt, Sudan, Jordan, and
Nigeria. As a provider of medical diagnostic services, IDH's operations in
Sudan are not subject to sanctions. The revenue split, EBITDA split (being the
key profit measure reviewed by CODM) net profit and loss between the four
regions is set out below.
Revenue by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Total
31 March 2022 879,490 5,672 280,514 14,803 1,180,479
31 March 2021 (Unreviewed) 920,462 6,753 189,870 12,453 1,129,538
EBITDA by geographic location
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
31 March 2022 395,056 86 74,312 (1,169) 468,285
31 March 2021 (Unreviewed) 511,268 1,088 77,727 (455) 589,628
Net profit / (loss) by geographic location
For three month period ended Egypt region Sudan region Jordan region Nigeria region Total
31 March 2022 269,516 2,756 45,030 (3,169) 314,133
31 March 2021 (Unreviewed) 303,095 (10,315) 51,516 (5,659) 338,637
Revenue by type Net profit by type
For the three months ended 31 March For the three months ended 31 March
2022 2021 2022 2021
(Unreviewed) (Unreviewed)
Pathology* 1,148,804 1,107,927 330,024 343,701
Radiology 31,675 21,611 (15,891) (2,106)
1,180,479 1,129,538 314,133 341,595
Revenue by categories
For the three months ended
31 March
2022 2021
(Unreviewed)
Walk-in 535,105 529,361
Corporate 645,374 600,177
1,180,479 1,129,538
* 31 March 2022 figure includes Covid-19 related Pathology tests
amounted to EGP 540m (31 March 2021: EGP 535m).
Non-current assets by geographic location
Egypt region Sudan region Jordan region Nigeria region Total
31 March 2022 2,853,476 8,025 335,245 101,552 3,298,298
31 December 2021 2,803,954 7,234 291,880 90,509 3,193,577
Segment reporting (continued)
The operating segment profit measure reported to the CODM is EBITDA, as
follows:
For the three months period ended 30 March
2022 2021
(Unreviewed)
Profit from operations 396,362 537,681
Property, plant and equipment depreciation 46,048 28,897
Right of use depreciation 23,926 17,966
Amortisation of Intangible assets 1,949 5,084
EBITDA 468,285 589,628
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. END QRFEAXKPEDXAEEARecent news on Integrated Diagnostics Holdings
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