REG - Integrated Diag Hdgs - 3rd Quarter Results
17/11/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221117:nRSQ6900Ga&default-theme=true
RNS Number : 6900G Integrated Diagnostics Holdings PLC 17 November 2022
Integrated Diagnostics Holdings Plc
3(rd) Quarter Results
Thursday, 17 November 2022
Integrated Diagnostics Holdings Plc reports sustained growth in non-Covid
offering showcasing the fundamental strength and potential of the 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 nine-month period ended 30
September 2022, reporting revenue (compliant with IFRS) of EGP 2.8 billion. In
line with the trend seen earlier in the year, IDH's conventional business
(which includes IDH's full service roster excluding Covid-19-related tests)
continued to showcase its underlying strength and potential, delivering a
solid 14% year-on-year expansion, partially offsetting the expected decline in
Covid-19-related(1) revenues for the nine-month period. Growth at IDH's
conventional business (which made up 76% of total revenues) was supported by a
solid 7% increase in test volumes, testament to the robust underlying demand
for the Company's conventional test portfolio. Likewise, on a quarterly basis,
conventional revenues expanded 17% year-on-year and 12% quarter-on-quarter in
Q3 2022, making it the strongest three-month period performance ever recorded
by the Group's conventional offering. Meanwhile, consolidated revenue for the
third quarter stood at EGP 846 million, with the Group recording a net loss of
EGP 36 million in Q3 2022. It is important to note that controlling for the
losses resulting from transactions completed by the Company to secure the USD
balance needed to fulfil its FY2021 dividend obligations to shareholders, the
Group would have recorded a net profit of EGP 544 million in 9M 2022 and EGP
105 million in Q3 2022.
It is worth highlighting that while the table below presents IDH's nine-month
performance compliant with IFRS, throughout the release the Company has opted
to utilise Alternative Performance Measures as outlined in the following
section.
Financial Results (IFRS)
EGP mn 9M 2021 9M 2022 Change
Revenues 3,767 2,800 -26%
Conventional Revenues 1,855 2,123 14%
Covid-19-related Revenues 1,911 678 -65%
Cost of Sales (1,600) (1,619) 1%
Gross Profit 2,167 1,182 -45%
Gross Profit Margin 58% 42% 15%
Operating Profit 1,823 749 -59%
EBITDA2 1,992 974 -51%
EBITDA Margin 53% 35% 18%
Net Profit 1,148 403 -65%
Net Profit Margin 30% 14% 16%
Cash Balance 2,350 694 -70%
Note (1): Throughout the document, percentage changes between reporting
periods are calculated using the exact value (as per the Consolidated
Financials) and not the corresponding rounded figure.
Key Operational Indicators3
9M 2021 9M 2022 Change
Branches 507 546 39
Patients ('000) 7,480 6,633 -11%
Net Sales per Patient (EGP) 504 413 -18%
Tests ('000) 24,960 24,359 -2%
Conventional Tests ('000) 21,194 22,728 7%
Covid-19-related Tests ('000) 3,766 1,631 -57%
Net Sales per Test (EGP) 151 112 -26%
Net Sales per Conventional Test (EGP) 88 93 7%
Net Sales per Core Covid-19 Test (EGP) 949 497 -48%
Net Sales per Other Covid-19-related Test (EGP) 154 140 -9%
Test per Patient 3.3 3.7 10%
( )
(1)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.
(2)EBITDA is calculated as operating profit plus depreciation and
amortization.
(3)Key operational indicators are calculated based on net sales for the
six-month period of EGP 1,891 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.
These agreements kicked off in May 2021 at Aqaba Port and in August 2021 at
QAIA. However, following the decision by Jordanian authorities on 1 March 2022
to end mandatory testing, testing booths across both locations recorded sharp
declines in patient traffic.
Under these agreements, Biolab received the full revenue (gross sales) for
each test performed and paid 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 was 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. It is
important to note that sales generated from these agreements were reflected on
the Company's results in Q1 2022 only as the agreements were terminated
starting in the second quarter of the year.
In an effort to present an accurate picture of IDH's performance for the
nine-month period ended 30 September 2022, throughout the report management
utilizes net sales of EGP 2,737 million for 9M 2022 (IFRS revenues stand at
EGP 2,800 million for the nine-month period). Net sales for the nine-month
period ended 30 September 2022 are calculated as total gross revenues
excluding concession fees and sales taxes paid as part of Biolab's revenue
sharing agreements with 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 9M 2022
Net Sales 2,737
QAIA and Aqaba Port Concession Fees 63
Revenues (IFRS) 2,800
Cost of Net Sales (1,556)
Adjustment for QAIA and Aqaba Port Agreements (63)
Cost of Sales (IFRS) (1,619)
Adjustments by Country
EGP mn 9M 2022 9M 2022
(IFRS) (APM)
Egypt 2,235 2,235
Jordan 496 432
Sudan 15 15
Nigeria 55 55
Total 2,800 2,737
Note: differences between IFRS and APM figures are highlighted in grey.
Financial Results (APM)
IFRS APM
EGP mn 9M 2021 9M 2022 Change 9M 2021 9M 2022 Change
Net Sales 3,767 2,800 -26% 3,767 2,737 -27%
Conventional Net Sales 1,855 2,123 14% 1,855 2,123 14%
Covid-19-related Net Sales 1,911 678 -65% 1,911 614 -68%
Cost of Net Sales (1,600) (1,619) 1% (1,600) (1,556) -3%
Gross Profit 2,167 1,182 -45% 2,167 1,182 -45%
Gross Profit Margin(4) 58% 42% 15% 58% 43% 14%
Operating Profit 1,823 749 -59% 1,823 749 -59%
EBITDA5 1,992 974 -51% 1,992 974 -51%
EBITDA Margin(4) 53% 35% 18% 53% 36% 17%
Net Profit 1,148 403 -65% 1,148 403 -65%
Net Profit Margin(4) 30% 14% 16% 30% 15% 16%
Cash Balance 2,350 694 -70% 2,350 694 -70%
Note: differences between IFRS and APM figures are highlighted in grey.
4Gross profit, EBITDA, and net profit margins are calculated on net sales for
APM in both periods.
(5)EBITDA is calculated as operating profit plus depreciation and
amortization.
Introduction
i. Financial Highlights
· Conventional net sales (78% of consolidated net sales in 9M 2022),
which encompass IDH's full service roster excluding Covid-19-related tests,
continued their steady expansion as patients' behaviours continued to
normalise following the Covid-19-related slowdown in 2020 and 2021. In 9M
2022, conventional net sales recorded EGP 2,123 million expanding 14%
year-on-year and continuing to support consolidated net sales for the period.
The solid year-on-year expansion came on the back of a 7% year-on-year
increase in both conventional tests performed and average revenue per
conventional test. Similarly, on a quarterly basis, conventional net sales
increased 17% year-on-year and 12% quarter-on-quarter to record EGP 784
million. The impressive result, which was supported by a 9% year-on-year and
an 11% quarter-on-quarter increase in test volumes.
· Meanwhile, in line with the Company's expectation, IDH's
Covid-19-related6 net sales (22% of consolidated net sales in 9M 2022)
recorded EGP 614 million for the nine-month period, down significantly from
the EGP 1,911 million recorded in 9M 2021. On a quarterly basis,
Covid-19-related net sales declined 92% year-on-year and 16%
quarter-on-quarter recording EGP 63 million for Q3 2022. Lower
Covid-19-related net sales on a year-to-date and quarterly basis came on the
back of a widespread decline in infection rates, the lifting of mandatory
testing for international passengers, and declining average test prices.
· Consolidated Net Sales recorded EGP 2,737 million in 9M 2022, 27%
below last year's figure in part reflecting the exceptionally high base
resulting from the large contribution made by the Group's Covid-19-related
offering during 9M 2021. On a quarterly basis, consolidated net sales
contracted 43% year-on-year to EGP 846 million in Q3 2022.
· Gross Profit recorded EGP 1,182 million in 9M 2022, a 45%
year-on-year decline. Gross profit margin on net sales normalised to record
43% versus 58% in 9M 2021. Lower gross profitability comes primarily on the
back of a significant fall in Covid-19-related revenues during the nine-month
period as demand and average prices contracted significantly. It is worth
noting that the fall in demand was most evident in the second and third
quarters while the year-on-year decline in average prices was most evident
throughout the first quarter. The contraction in gross profitability also
partially reflects year-on-year increases in direct salaries and wages
(related to additional staff employed IDH's new branches and to an annual
staff salary increase), and in cleaning and maintenance expenses related to
the new facility management model with upgraded standards along with the roll
out of the 39 new branches. Similar trends were seen on a quarterly basis,
with gross profit contracting on the back of the substantial decline in
Covid-19-related revenues (Q3 2021 saw the Group record the largest
Covid-19-related revenue figure since the launch of the service). More
specifically, the Company recorded a gross profit of EGP 350 million in Q3
2021, down 59% year-on-year. Gross profit margin on net sales normalised to
record 41%, down from the 58% margin recorded in Q3 2021, but up three
percentage points versus Q2 2022. It should be noted that raw material as a
percentage of revenue witnessed an increase of 1% following the sustained
devaluation of the Egyptian pound which started in March 2022.
· EBITDA7 recorded EGP 974 million in 9M 2022, down 51% versus 9M 2021.
EBITDA margin on net sales stood at 36% compared to 53% last year. Lower
EBITDA profitability reflects both lower gross profitability and a broad-based
increase in SG&A outlays, mainly related to IDH's marketing activities. On
a quarterly basis, EBITDA stood at EGP 265 million in Q3 2022, down 66%
year-on-year and with an associated margin of 31%. It is worth highlighting
that IDH's EBITDA in the third quarter was partially weighed down by higher
accounting fees, higher operational expenses related to newly rolled out
branches, higher marketing expenses, as well as increased expenses related to
the recently launched loyalty program.
· Net Profit recorded EGP 403 million in 9M 2022, down 65% year-on-year
and with an associated margin on net sales of 15% for the period. On a
three-month basis, IDH recorded a net loss of EGP 36 million. Meanwhile,
excluding losses resulting from transactions completed by the Company to
secure the USD needed to fulfil its FY 2021 dividend obligations, the Group
would have recorded net profit of EGP 544 million in 9M 2022 and EGP 105
million in Q3 2022, with associated margins on net sales of 20% and 12%.
6Covid-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.
7EBITDA is calculated as operating profit plus depreciation and amortization.
ii. Operational Highlights
· IDH's branch network reached 546 branches as at 30 September 2022, up
from 507 branches as at 30 September 2021 and 502 branches at year-end 2021.
· Conventional tests performed (which includes IDH's full service
roster excluding Covid-19-related testing), which made up the lion share of
total tests in 9M 2022, recorded 22.7 million, up a robust 7% versus last
year. This largely compensated for a 57% year-on-year decline in
Covid-19-related tests performed. As such total test volumes fell just 2%
year-on-year to record 24.4 million in 9M 2022.
· Average revenue per test8 recorded EGP 112 in 9M 2022, a 26%
year-on-year decline driven by lower average revenue per Covid-19-related(9)
tests (down 26% year-on-year in 9M 2022). On the other hand, average revenue
per conventional test increased 7% year-on-year in 9M 2022 to record EGP 93.
· Total patients served decreased 11% year-on-year standing at 6.6
million for 9M 2022. Meanwhile, average test per patient improved
significantly to record 3.7 in 9M 2022 from 3.3 in 9M 2021 with the increase
reflecting the simultaneous decline in Covid-19-realted patients (which
typically visited branches from single Covid-19 testing) and the sustained
rise in conventional patients (who typically request more tests per visit).
· The Company's Egyptian operations recorded a robust 13% year-on-year
increase in conventional revenues (81% of Egypt's total revenues) supported by
an 8% rise in test volumes and a 5% rise in average revenue per conventional
tests. This offset in part the expected decline in Covid-19-related revenues,
with the segment reporting revenue of EGP 432 million for the nine-month
period, down 72% year-on-year as demand for Covid-19-related testing subsided
starting March 2022. Egypt's revenues were also supported by an 18%
contribution from the Group's house call services. Overall, IDH recorded
revenue in its home and largest market of EGP 2,235 million in 9M 2022 (81.7%
share of consolidated net sales), a 28% year-on-year contraction.
· Al-Borg Scan recorded revenues of EGP 58 million, representing an
impressive 87% year-on-year increase. Revenue growth came on the back of an
83% and 86% year-on-year increase in test and patient volumes, respectively.
Growing volumes in the first nine months of the year have been supported by
new branch rollouts (+3 in the twelve months to 30 September 2022). Building
on this, IDH launched the venture's sixth branch in October 2022. In parallel,
the Company obtained ACR (American College of Radiology) accreditation for
both the venture's nuclear medicine (NucMed) and ultrasound units.
· Wayak recorded consolidated revenues of EGP 13.7 million in 9M 2022,
up significantly from the EGP 3.2 million recorded in the same period of last
year. Strong top-line growth was supported by a 36% year-on-year rise in
delivery orders which reached 94 thousand in 9M 2022. Combined with
management's continued cost optimisation efforts, this is driving a steady
narrowing of the venture's consolidated EBITDA losses, which reached an
all-time low in the month of September 2022. More specifically, EBITDA losses
contracted to EGP 2.78 million in 9M 2022 from EGP 4.56 million in 9M 2021.
· In Jordan, Biolab recorded an 18% year-on-year rise in conventional
net sales, partially offsetting a 52% contraction in Covid-19-related net
sales during 9M 2022. This saw total net sales in Jordan (15.8% share of
consolidated net sales), record EGP 432 million (IFRS revenues1(0) recorded
EGP 496 million in 9M 2022), representing a 27% year-on-year decline from last
year's figure.
· IDH's Nigerian operations (2.0% share of consolidated net sales)
recorded revenues of EGP 55 million in 9M 2022, up 36% from the same nine
months of 2021. Top-line growth was supported by a 36% year-on-year rise in
average revenue per test reflecting the rising demand for the generally
higher-priced MRI and CT testing. It is worth highlighting that excluding the
two branches which were closed down earlier this year, revenue and test
volumes would be up 40% and 24% year-on-year, respectively.
· In Sudan (0.5% share of consolidated net sales), IDH recorded a
remarkable 21% year-on-year increase in revenues during 9M 2022 supported by a
52% increase in average revenue per test. Meanwhile, in local currency terms,
IDH's Sudanese operations recorded a 98% year-on-year increase in revenue.
8 Calculated on net sales for the period.
9 Covid-19-related tests include both Core Covid-19 tests (PCR, Antigen, and
Antibody) as well as Other Covid-19-related tests.
(10)Biolab's revenues for the period 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: "As we near the end of 2022, I am happy to report yet
another strong set of operational and financial figures which continue to
highlight the strength of our business and its potential going forward. In
fact, mid-way through the final quarter of the year, we remain well on track
to record double-digit full-year growth, a remarkable achievement in light of
the difficult macroeconomic environment faced across our markets and more
generally across the world. More specifically, in recent months we have had to
confront significant currency devaluations in three of our four markets with
the subsequent spike in inflation rates eating at patients' purchasing power.
Despite this, we have continued to record robust double-digit growth in our
conventional business (which includes our full service roster excluding
Covid-19-related testing) across all four markets, backed by healthy volume
growth. During the nine-month period ended 30 September 2022, we witnessed 14%
year-on-year growth in conventional revenues, on the back of a 7% rise in the
number of conventional tests performed. This sees our conventional revenues
and test volumes currently stand an impressive 33% and 18% above levels
recorded in the same nine-months of 2019 (prior to Covid-19), further evidence
that our growth strategy over the last three years has delivered the desired
results. Strong growth in conventional revenues continues to help offset the
expected drop in Covid-19-related revenues as infection rates subsided
starting March 2022. We also witnessed a robust improvement in our testing per
patient metric, displaying both the rising contribution of our conventional
business (which is generally associated with higher testing per patient), and
the effectiveness of our newly rolled out loyalty programmes.
We were particularly pleased with the performance reported by our home and
largest market of Egypt, which recorded a 13% year-on-year increase in
conventional revenues. Growth was even more remarkable on a quarterly basis
with conventional revenues recording 16% year-on-year and 12%
quarter-on-quarter growth during Q3 2022. In both periods, top-line growth was
supported by robust increases in test volumes, a noteworthy achievement
considering the inflationary pressures faced by patients in the market. Here
it is worth mentioning that thanks to our solid financial position, which sees
us consistently record EBITDA margins well ahead of industry averages, we
continue to provide patients with protection and support during the ongoing
challenging period. In fact, despite the more than 50% depreciation in the EGP
since March 2022, we have refrained from passing on the burden to our patients
through price increases during the past months. While this decision has put
some additional pressure on our margins in the short-term, we are confident
that our experience in successfully navigating similar situations will enable
us to drive margins back up to our historical averages once the current
challenges subside and create long term value. Elsewhere across our footprint,
we recorded similar trends in Jordan, with Biolab reporting solid growth in
its conventional business on both a year-to-date and quarterly basis. In
Nigeria, despite the unprecedented surge in Diesel prices, Echo-Lab,
maintained its strong trajectory when controlling for the branch closures that
weighed on the venture's results in the first part of the year. Finally, in
Sudan we were very pleased to record positive top-line growth for the second
quarter in a row.
Despite the short-term challenges currently faced by the business, we remain
optimistic on its long-term growth prospects, and have continued to invest to
deliver on our long-term growth strategy. Since the start of the year, we have
rolled out 44 new branches further expanding our on-the-ground presence across
multiple new strategic locations. We have also continued to invest in the ramp
up of our Egyptian radiology venture, Al-Borg Scan, and over the last twelve
months we have more than doubled the number of Al-Borg Scan branches to cover
all of Greater Cairo. In parallel, we recently obtained ACR accreditation for
both the venture's nuclear medicine and ultrasound units, making Al-Borg Scan
the sole radiology center in Africa to boast this prestigious certification.
Across both our pathology and radiology branches, we have also continued to
invest in enhancing the quality of the services offered as well as the look
and feel of the branches. In parallel, we have also launched several loyalty
programs tailored to our different patient segments. Meanwhile, investments to
enhance our house call capabilities are continuing to pay off, with the
service's contribution standing well above pre-Covid-19 averages, and the
convenience it offers to patients enabling us to tap into previously
underpenetrated segments of the market. At the same time, we have also been
actively working to expand out footprint and penetrate new geographies. On
this front, I am delighted to report that a few weeks ago we announced the
signing of a joint venture agreement with Biolab and Izhoor Holding, a company
owned by Fawaz Alhokair, to launch a new full-fledged pathology diagnostic
services provider in Saudi Arabia. This deal is directly in line with our
long-term regional expansion strategy which sees us target high-growth markets
where our operational model and proven expertise are well-suited to deliver
high-quality care to as many patients as possible. The new venture will be
operated by the Biolab team and will benefit from the complementary strengths
and experiences brought by IDH and our partners.
The recent devaluation of the EGP, following the Central Bank's decision to
move towards a durably flexible exchange rate, has seen the overall value lost
against the dollar since March of this year reach 55%. With this move, which
we expect to benefit the country in the long-term, come a new set of
short-term challenges for both businesses and consumers. Nonetheless, we are
confident that strong fundamentals across our markets of operation will
continue to support the growth outlook for both the diagnostic industry and
our business. Going forward, our trusted brands, strong supplier
relationships, growing patient reach and flexible business model will continue
to be our greatest strengths as we work to deliver on our growth targets and
preserve our margins in the midst of an evolving macroeconomic backdrop. With
all this in mind, despite the current macroeconomic challenges, we continue to
target double-digit full-year conventional revenue growth, largely in line
with our full-year guidance prior to recent macro developments. It is worth
noting that these estimates assume no additional contributions from our
Covid-19-related offering which, as expected, has witnessed a sharp decline in
demand starting March of this year."
- End -
Analyst and Investor Call Details
An analyst and investor call will be hosted at 1pm (UK) | 3pm (Egypt) on
Monday, 21 November 2022. You can register for the call by clicking on this
link (https://zoom.us/webinar/register/WN_2CGCHgtXR52f8pz2dJxYUg) , and you
may dial in using the conference call details below:
· Webinar ID: 917 8531 3568
· Webinar Passcode: 146259
For more information about the event, please contact: amr.amin@cicapital.com
(mailto:amr.amin@cicapital.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 546 branches
as of 30 September 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 nine-month period ended 30 September 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
In line with trends seen earlier in the year, IDH's conventional business
continued to record robust growth on both a quarterly and year-to-date basis,
supported by higher test volumes and average revenue per test. It is worth
highlighting that IDH's conventional business posted strong 16% year-on-year
and 12% quarter-on-quarter growth in Q3 2022.
At the same time, in line with expectations, the Company continued to record a
rapid decline in its Covid-19-related1(1) revenue across both its home market
of Egypt and Jordan as demand for Covid-19-related testing declined further on
the back of lower infection rates and the lifting of mandatory testing.
On a consolidated basis, IDH recorded total revenue of EGP 2,800 million in
the nine months ended 30 September 2022, down 26% year-on-year. Consolidated
net sales1(2) recorded EGP 2,737 million, 27% below the value recorded in the
comparable period of last year which had been boosted by strong contributions
from the Group's Covid-19-related offering. On a three-month basis,
consolidated net sales recorded EGP 846 million, down 43% versus Q3 2021, but
a solid 9% above net sales in Q2 2022 when traffic had been partially impacted
by the holy month of Ramadan and Eid vacation. The decline in revenue and net
sales on both a year-to-date and quarterly basis also partially reflects the
exceptionally high base resulting from the large contribution made by the
Group's Covid-19-related offering during 9M 2021.
Detailed Consolidated Performance Breakdown
The table presents Alternative Performance Measures (APM) for each period
(further information available earlier in the release)
Q1 2021 Q1 2022 % Q2 2021 Q2 2022 % Q3 2021 Q3 2022 % 9M 2021 9M 2022 %
Total net sales (EGP mn) 1,130 1,117 -1% 1,164 774 -34% 1,473 846 -43% 3,767 2,737 -27%
Total tests (mn) 8.1 8.4 4% 8.3 7.6 -8% 8.6 8.3 -3% 25.0 24.4 -2%
Conventional test net sales (EGP mn) 594 640 8% 594 699 18% 667 784 17% 1,855 2,123 14%
Conventional tests performed (mn) 6.8 7.1 5% 6.9 7.4 7% 7.5 8.2 9% 21.2 22.7 7%
Total Covid-19-related test net sales (EGP mn) 536 477 -11% 569 75 -87% 806 63 -92% 1,911 614 -68%
Core Covid-19 tests (PCR, Antigen, Antibody) (EGP mn) 399 421 6% 431 62 -86% 760 54 -93% 1,590 537 -66%
Core Covid-19 tests performed (k) 407 837 106% 387 109 -72% 882 135 -85% 1,676 1,081 -36%
Other Covid-19-related tests (EGP mn) 137 56 -59% 138 13 -91% 47 9 -81% 321 77 -76%
Other Covid-19-related tests performed (k) 874 417 -52% 933 95 -90% 284 39 -86% 2,091 550 -74%
Contribution to Consolidated Results
Conventional test net sales 53% 57% 51% 90% 45% 93% 49% 78%
Conventional tests performed 84% 85% 84% 97% 87% 98% 85% 93%
Total Covid-19-related tests 47% 43% 49% 10% 55% 7% 51% 22%
Core Covid-19 tests (PCR, Antigen, Antibody) 35% 38% 37% 8% 52% 6% 42% 20%
Core Covid-19 tests performed 5% 10% 5% 1% 10% 2% 7% 4%
Other Covid-19-related tests 12% 5% 12% 2% 3% 1% 9% 3%
Other Covid-19-related tests performed 11% 5% 11% 1% 3% 0.5% 8% 2%
11Covid-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.
12A reconciliation between revenue and net sales is available earlier in this
announcement.
Net Sales Analysis: Contribution by Patient Segment
Contract Segment (58% of total net sales)
Conventional revenues at IDH's contract segment (82% of total contract net
sales) posted strong year-on-year growth of 26% in 9M 2022 supported by a 12%
increase in volumes. During the period, volumes were boosted by several
initiatives conducted by management including the introduction of a new
loyalty program that was not previously activated for contract segment
patients. It is worth highlighting that supported by the new loyalty
programme, test per patient at the segment reached its highest-ever level in
9M 2022. However, the sharp 74% year-on-year contraction in
Covid-19-related1(3) revenues (18% of consolidated contract revenues)
generated by the Group's contract segment saw total revenue at the segment
(identical in value to net sales for the period) decline 26% versus the same
nine months of last year.
Walk-in Segment (42% of total net sales)
Meanwhile, at the Group's walk-in segment, conventional revenue (72% of total
walk-in net sales) came in largely unchanged from the same period a year
before as a contraction in tests performed was offset by a rise in the average
revenue per test. Similar to the contract segment, during the nine-month
period Covid-19-related net sales (28% of total walk-in net sales) contracted
sharply, falling 59% versus 9M 2021 (revenue1(4) declined 51% year-on-year).
As such, total revenue at the walk-in segment declined 25% year-on-year, while
total net sales were down 29% versus 9M 2021.
It is worth noting that results posted by the walk-in in the nine months to 30
September 2022 were bolstered by contributions of EGP 140 million coming from
by Biolab's partnership with Queen Alia International Airport (QAIA). However,
following the decision by Jordanian authorities on 1 March 2022 to end
mandatory testing, Biolab's booths recorded sharp declines in patient traffic
and operations at the booths were terminated starting in the second quarter of
2022.
Key Performance Indicators
The table presents Alternative Performance Measures (APM) for each period
(further information available earlier in the release)
Walk-in Segment Contract Segment Total
9M21 9M22 Change 9M21 9M22 Change 9M21 9M22 Change
Net sales (EGP mn) 1,619 1,153 -29% 2,148 1,584 -26% 3,767 2,737 -27%
Conventional net sales (EGP mn) 828 830 0.2% 1,027 1,293 26% 1,855 2,123 14%
Total Covid-19-related net sales (EGP mn) 791 323 -59% 1,120 291 -74% 1,911 614 -68%
Patients ('000) 2,488 2,112 -15% 4,992 4,522 -9% 7,480 6,633 -11%
% of Patients 33% 32% 67% 68%
Net sales per Patient (EGP) 651 546 -16% 430 350 -19% 504 413 -18%
Tests ('(''000) 6,491 5,712 -12% 18,469 18,648 1% 24,960 24,359 -2%
% of Tests 26% 23% 74% 77%
Conventional tests ('000) 5,282 4,891 -7% 15,911 17,837 12% 21,194 22,728 7%
Total Covid-19-related tests ('000) 1,209 821 -32% 2,558 810 -68% 3,766 1,631 -57%
Net Sales per Test (EGP) 249 202 -19% 116 85 -27% 151 112 -26%
Test per Patient 2.6 2.7 4% 3.7 4.1 11% 3.3 3.7 10%
1(3)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.
14A reconciliation between revenue and net sales is available earlier in this
announcement.
Revenue Analysis: Contribution by Geography
Egypt (81.7% of net sales)1(5)
IDH's Egyptian operations recorded solid year-on-year growth at its
conventional segment, on the back of both higher test volumes and average
revenue per test. Meanwhile, in line with recent trends and management's
expectations, revenue generated by the Group's Covid-19-related offering in
the country continued its rapid decline. This in part reflected lower demand
for the offering as infection rates in the country decreased and mandatory
testing was lifted. In parallel, lower revenues also came on the back of a
further decline in the average price of Covid-19-related testing. For example,
during 9M 2022 IDH performed 52% less PCR tests than a year prior, and
recorded a 46% decline in the average revenue per PCR test versus 9M 2021.
On a quarterly basis, IDH recorded a very similar trend, with revenues
generated from its conventional offering growing 16% year-on-year and 12%
quarter-on-quarter during Q3 2022. Meanwhile, revenues from IDH's
Covid-19-related offering contracted by 92% versus the same three months of
2021 on the back of both lower volumes and prices.
Al-Borg Scan
IDH's fast-growing radiology venture, which remains in its ramp up phase,
continued to deliver impressive results with revenues expanding 87%
year-on-year to reach EGP 58 million in 9M 2022. Revenue growth was supported
by an 83% year-on-year rise in radiology exams performed (with patients served
up 86% versus 9M 2021). Strong volume growth has been supported by the roll
out of three new branches over the last twelve months. Building on this, IDH
completed the roll out of a sixth branch in early October 2022. In parallel,
the Group successfully obtained ACR (American College of Radiology)
accreditation for both the venture's nuclear medicine (NucMed) and ultrasound
units, making Al-Borg Scan the first radiology centre in Africa, and one of
the only radiology facilities in the Middle East, to boast this prestigious
certification. It is worth highlighting that management launched an aggressive
marketing campaign to support the opening of Al Borg-scan new branches opened
during the last six months.
Detailed Egypt Revenue Breakdown
The table presents Alternative Performance Measures (APM) for each period
(further information available earlier in the release)
EGP mn Q1 2021 Q1 2022 % Q2 2022 Q2 2022 % Q3 2021 Q3 2022 % 9M 2021 9M 2022 %
Total Revenue 920 879 -4% 1,015 645 -36% 1,187 711 -40% 3,122 2,235 -28%
Conventional Revenue 507 549 8% 510 591 16% 573 662 16% 1,590 1,803 13%
Total Covid-19-related Revenue 414 330 -20% 504 53 -89% 614 49 -92% 1,531 432 -72%
Core Covid-19 tests (PCR, Antigen, Antibody) 277 274 -1% 366 41 -89% 567 40 -93% 1,210 355 -71%
Other Covid-19-related tests 137 56 -59% 138 13 -91% 47 9 -81% 321 77 -76%
Contribution to Consolidated Results
Conventional tests 55% 62% 50% 92% 48% 93% 51% 81%
Total Covid-19-related tests 45% 38% 50% 8% 52% 7% 49% 19%
Core Covid-19 tests (PCR, Antigen, Antibody) 30% 31% 36% 6% 48% 6% 39% 16%
Other Covid-19-related tests 15% 6% 14% 2% 4% 1% 10% 3%
1(5)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.
Jordan (15.8% of net sales)
During the nine-month period, net sales generated by Biolab's conventional
testing offering expanded a solid 18% versus the previous year, with the
segment making up the larger share of total net sales for the period.
Meanwhile, Covid-19-related net sales continued their decline as infection
rates decreased, mandatory testing was lifted, and average pricing declined.
As such, IDH recorded revenue of EGP 496 million in 9M 2022 in Jordan, down
16% from the same period of last year. Net sales1(6) stood at EGP 432 million,
down 27% from 9M 2021.
During the nine-month period, Covid-19-related net sales in Jordan were
supported by contributions of EGP 140 million from Biolab's partnership with
QAIA. The stations recorded strong demand in January and February before
witnessing a sharp decline in traffic following the end of mandatory testing
in the country. All three agreements were terminated starting in the second
quarter of this year.
During the third quarter, Biolab recorded revenue (net sales were identical
for the quarter) of EGP 109 million, down 59% year-on-year. The decline versus
last year came wholly on the back of lower Covid-19-related revenues for the
quarter, with Biolab's conventional offering recording an impressive 25%
year-on-year rise in revenues for Q3 2022.
Detailed Jordan Net Sales Breakdown
The table presents Alternative Performance Measures (APM) for each period
(further information available earlier in the release)
EGP mn Q1 2021 Q1 2022 % Q2 2021 Q2 2022 % Q3 2021 Q3 2022 % 9M 2021 9M 2022 %
Total Net Sales 190 217 14% 134 106 -21% 269 109 -59% 592 432 -27%
Conventional Net Sales 68 70 4% 68 84 23% 76 95 25% 213 250 18%
Total Covid-19-related Net Sales (PCR and Antibody) 122 147 20% 65 21 -67% 192 14 -93% 380 182 -52%
Conventional Net Sales 36% 32% 51% 80% 28% 87% 36% 58%
Total Covid-19-related Net Sales (PCR and Antibody) 64% 68% 49% 20% 71% 13% 64% 42%
( )
(16)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.
Nigeria (2.0% of net sales)
Echo-Lab, the Group's Nigerian subsidiary, recorded revenue of EGP 55 million
in 9M 2022, representing a 36% year-on-year expansion. In local currency
terms, revenue was up 23% year-on-year supported by a 36% increase in the
average revenue per test for the nine-month period. The increase in part
reflects rising demand for the generally higher-priced CT and MRI exams during
the period. It is important to note that during Q4 2021 management decided to
shut down its operational activities in the PPP branches due to their
under-performance on the profitability level. This subsequently weighed on
tests volumes for the first part of 2022, with tests performed coming in flat
year-on-year and patient volumes declining 6% versus last year. Controlling
for the branch closures, Echo-Lab would record a 24% year-on-year increase in
tests performed and a 40% year-on-year rise in revenues in 9M 2022 in part
boosted by two new branch roll outs completed during the second quarter of the
year. Following the two additions, Echo-Lab's network now stands at 12
operational branches.
During Q3 2022, IDH's Nigeria operations recorded revenue growth of 43% on the
back of a 2% year-on-year increase in tests performed and a 40% rise in
average revenue per test during the quarter.
Sudan (0.5% of net sales)
IDH's Sudanese operations reported revenues of EGP 15 million, 21% above the
revenue figure recorded in the same nine months of last year. Top-line growth
reflected a 52% year-on-year expansion in the average revenue per test during
the period. In local currency terms, revenue expanded a solid 98% year-on-year
during the nine-month period.
In the third quarter of the year, IDH recorded revenue growth in EGP terms of
48% in Sudan supported by an 89% year-on-year increase in the average revenue
per test for the quarter.
Net Sales Contribution by Country
The table presents Alternative Performance Measures (APM) for each period
(further information available earlier in the release)
1Q21 1Q22 % 2Q21 2Q22 % 3Q21 3Q22 % 9M21 9M22 %
Egypt Net Sales (EGP mn) 920 879 -4% 1,015 645 -36% 1187 711 -40% 3,122 2,235 -28%
Conventional (EGP mn) 507 549 8% 510 591 16% 573 662 16% 1,590 1,803 13%
Covid-19-related (EGP mn) 414 330 -20% 504 53 -89% 614 49 -92% 1,531 432 -72%
Egypt Contribution 81.5% 78.7% 87.2% 83.3% 80.5% 84.0% 82.9% 81.7%
Jordan Net Sales (EGP mn) 190 217 14% 134 106 -21% 269 109 -59% 592 432 -27%
Conventional (EGP mn) 68 70 4% 68 84 23% 76 95 25% 213 250 18%
Covid-19-related (EGP mn) 122 147 20% 65 21 -67% 192 14 -93% 380 182 -52%
Jordan Revenues (EGP mn) (IFRS) 190 281 48% 134 106 -21% 269 109 -59% 592 496 -16%
Jordan Net Sales (JOD mn) 8.6 9.6 12% 6.0 4.0 -33% 121212.2 4.0 -676767% 262626.9 17.7 -343434%
Jordan Revenues (JOD mn) (IFRS) 8.6 12.5 45% 6.1 4.0 -34% 12.2 4.0 -67% 26.9 20.6 -242424%
Jordan Contribution 16.8% 19.4% 11.5% 13.7% 18.2% 12.9% 15.7% 15.8%
Nigeria Net Sales (EGP mn) 12.5 14.8 19% 12.9 18.6 45% 15 21 43% 40 55 36%
Nigeria Net Sales (NGN mn) 302 371 23% 330 416 27% 390 473 21% 1,021 1,260 23%
Nigeria Contribution 1.1% 1.3% 1.1% 2.4% 1.0% 2.5% 1.1% 2.0%
Sudan Net Sales (EGP mn) 6.8 5.7 -16% 2.5 4.8 91% 2.9 4.3 48% 12 15 21%
Sudan Net Sales (SDG mn) 61 152 149% 67 137 103% 82 128 56% 211 417 98%
Sudan Contribution 0.6% 0.5% 0.2% 0.6% 0.2% 0.5% 0.3% 0.5%
Patients Served and Tests Performed by Country
9M 2021 9M 2022 Change
Egypt Patients Served (mn) 6.3 5.7 -10%
Egypt Tests Performed (mn) 22.1 21.8 -1%
Conventional tests (mn) 19.1 20.7 8%
Covid-19-related tests (mn) 3.0 1.1 -63%
Jordan Patients Served (k) 1,031 789 -23%
Jordan Tests Performed (k) 2,482 2,221 -11%
Conventional tests (k) 1,698 1,691 -0.4%
Covid-19-related tests (k) 784 530 -32%
Nigeria Patients Served (k) 117 110 -6%
Nigeria Tests Performed (k) 215 215 -
Sudan Patients Served (k) 47 59 25%
Sudan Tests Performed (k) 140 112 -20%
Total Patients Served (mn) 7.5 6.6 -11%
Total Tests Performed (mn) 25.0 24.4 -2%
Branches by Country
30 September 2021 30 September 2022 Change
Egypt 455 496 41
Jordan 21 21 -
Nigeria 12 12 -
Sudan 19 17 -2
Total Branches 507 546 39
-Cost of Net Sales1(7)
IDH's cost of net sales declined 3% year-on-year to record EGP 1,556 million
in 9M 2022. Despite the decline, the significant contraction in net sales on
the back of lower Covid-19-realted revenues for the period weighed down on
gross profit which contracted 45% year-on-year to record EGP 1,182 million in
9M 2022. It is important to note that gross profit for the nine-month period
is identical in absolute terms between IFRS and APM measures. IDH's gross
profit margin1(8) on revenue recorded 42% in 9M 2022 versus 58% last year.
Meanwhile, IDH's gross profit margin on net sales19 recorded 43% in 9M 2022
versus 58% in the same nine months of last year.
On a quarterly basis, IDH recorded cost of sales (identical in value between
IFRS and APM measures) of EGP 497 million, 19% below last year's figure. Raw
material as a percentage of revenues witnessed an increase of 1% following the
continuous devaluation of the Egyptian pound starting 21 March 2022. It is
also worth noting that the new model applied by management for the
maintenance/cleaning of new/existing branches led to an increase in other
direct expenses for the quarter. Gross profit for the quarter recorded EGP 350
million, down 59% year-on-year, and with a margin of 41% for the quarter
versus 58% in Q3 2021. It is worth highlighting that on a quarter-on-quarter
basis, gross profit for Q3 2022 came in 16% above the figure recorded in the
previous three months, with the associated margin expanding two percentage
points versus Q2 2022.
Cost of Net Sales Breakdown as a Percentage of Net Sales
9M 2021 9M 2022
Raw Materials 18.3% 20.5%
Wages & Salaries 12.5% 16.8%
Depreciation & Amortisation 4.0% 7.4%
Other Expenses 7.6% 12.1%
Total 42.5% 56.8%
Raw material costs, which include cost of specialized analysis at other
laboratories, reached EGP 562 million in 9M 2022, continuing to make up the
largest portion of total COGS at 36%. As a share of net sales, raw material
costs increased to 20.5% in 9M 2022 compared to 18.3% in the same nine months
of 2021. This increase is primarily reflective of the substantial reduction in
the average selling price of Covid-19-related tests during the period in both
Egypt and Jordan (the average price per PCR test was down 26% year-on-year in
9M 2022). It is worth noting that the year-on-year decline in average
Covid-19-related test prices was most notable in the first quarter of the
year. Meanwhile, in Q3 2022, raw material as a percentage of net sales reached
19.6% from 18.7% in the same three months of last year following the
devaluation of the Egyptian pound.
Direct salaries and wages, which includes employee share of the profits,
declined 2% year-on-year to EGP 461 million in 9M 2022, making the second
largest share of total COGS at 30%. The year-on-year decline is wholly
attributable to lower employee share of the profits. On the other hand, direct
salary and wages posted a 20% year-on-year increase mainly reflecting the
additional staff employed at Aqaba Port and QAIA airport, an annual salary
increase of around 15%, and the additional staff employed across the newly
added branches (+39 new branches versus 9M 2021). Additional salary expenses
related to Biolab's testing booths amounted to JOD 549 thousand (EGP 13.6
million) during 9M 2022, noting that starting April, Biolab ceased its
operational activities across all booths. In the third quarter of the year,
direct salaries and wages as a share of net sales decreased to reach 15.6%
from 21.0% last quarter, reflecting a decrease in the employee profit shares
driven by the decrease in net profits recorded by the Group's Egyptian
operations.
Direct depreciation and amortisation increased 33% year-on-year to record EGP
202 million in 9M 2022, largely due to the incremental amortisation of new
branches (IFRS 16 right-of-use assets).
Other expenses for the nine-month period increased 16% to record EGP 330
million. The increase principally reflects higher maintenance costs in Egypt,
as well as higher operational expenses related to the 39 additional branches
rolled out in the twelve months to 30 September 2022. It should be noted that
cleaning and maintenance expenses increased 44% year-on-year.
17Cost 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 1,619 million in 9M 2022, up 1% year-on-year.
1(8)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.
1(9)A reconciliation between revenue and net sales is available earlier in
this announcement.
Selling, General and Administrative Expenses
Total SG&A outlays recorded EGP 433 million in 9M 2022, representing a 26%
year-on-year increase. The increase in SG&A costs was mainly a result of
rising salaries and marketing expenses, as well as higher fees for external
auditing services.
Marketing and advertising expenses came in at EGP 87 million in the nine
months to 30 September 2022, up 44% from last year. The increase reflects an
overall expansion in IDH's marketing and advertisement efforts which for the
last year has seen the Company roll out targeted campaigns across several
channels predominantly to support Al-Borg Scan's ramp up.
EBITDA
IDH's EBITDA2(0) declined in the nine months of 30 September 2022, reflecting
lower gross profitability for the period coupled with higher SG&A
expenses, and in particular higher marketing expenses and accounting fees
versus the same nine months of last year. Higher marketing fees comes as IDH
expanded its marketing efforts in particular to support Al-Borg Scan's ramp
up. It is important to note that EBITDA for the period is identical in
absolute terms between IFRS and APM measures. EBITDA margin on consolidated
revenue recorded 35% in 9M 2022 versus 53% in the same period of last year.
Meanwhile, EBITDA margin on net sales normalised to reach 36% in 9M 2022 from
53% in 9M 2021.2(1)
Similar to the trend witnessed on a year-to-date basis, EBITDA in the third
quarter contracted by 66% on the back of lower gross profitability and higher
SG&A outlays during the three-month period.
In IDH's home market of Egypt, EBITDA recorded EGP 857 million in 9M 2022.
EBITDA margin on net sales stood at 38% for the nine-month period versus 56%
last year. Egypt EBITDA contributed around 88% of the Group's EBITDA in the
nine-month period.
In Jordan, Biolab reported a contraction in EBITDA profitability in both EGP
and JOD terms. The decrease in Biolab's EBITDA profitability mainly reflects
lower gross profitability for the nine-month period as well as higher expenses
related to Biolab's testing booths in QAIA and Aqaba Port.
EBITDA losses in Nigeria during the first nine months of the year were
impacted by a 220% year-on-year increase in Echo-Lab's diesel costs
(responsible for 12% of Echo-Lab's cost base). Controlling for this, the
venture would have remained on course to turn EBITDA positive in 2022.
In Sudan, IDH reported a positive EBITDA of SDG 3.7 million in 9M 2022, a
marked improvement from the EBITDA loss reported this time last year. In EGP
terms, EBITDA recorded EGP 49 thousand in 9M 2022, down from the EGP 181
thousand in EBITDA recorded this time last year.
Regional EBITDA in Local Currency
Mn 9M 2021 9M 2022 Change
Egypt EGP 1,761 857 -51%
Margin on net sales 56% 38%
Jordan JOD 10.7 5.1 -52%
Margin on net sales 46% 28%
Margin on revenues (IFRS) 40% 25%
Nigeria NGN -133 -122 -8%
Margin on net sales -13% -10%
Sudan SDG -29 3.7 N/A
Margin on net sales -14% 1%
2(0)EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in 9M 2021 related to the
Company's EGX listing completed in May 2021.
2(1)It is important to note that while in absolute terms the 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 83 million in the first nine months
of 2022, up 20% year-on-year reflecting higher cash balances during the
period, an optimised cash allocation between T-bills and time deposits, and a
300-basis point cumulative interest rate hike enacted by the CBE since the
start of the year.
Interest expense recorded EGP 100 million in 9M 2022, up 20% versus 9M 2021.
The increase in attributable to:
· Higher interest on lease liabilities related to IFRS 16 following the
addition of new branches 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 period.
· Higher interest expenses following the CBE decision to increase rates
by 300 bps since the start of 2022.
· Fees amounting to EGP 8.8 million related to the US$ 45 million
facility with the International Finance Corporation (IFC) granted in May 2021
and the US$ 15 million IFC syndicated facility from Mashreq Bank in December
2021. Fees include commitment and supervisory fees.
Interest Expense Breakdown
EGP mn 9M 2021 9M 2022 Change
Interest on Lease Liabilities (IFRS 16) 44.0 53.8 22%
Interest Expenses on Borrowings2(2) 7.0 11.1 59%
Loan-related Expenses on IFC facility 14.6 8.9 -39%
Interest Expenses on Leases 4.8 14.9 209%
Bank Charges 12.5 11.1 -12%
Total Interest Expense 82.9 99.7 20%
2(2)Interest expenses on medium-term loans include EGP 7.4 million related to
the Group's facility with Ahli United Bank Egypt (AUBE) & interest expense
amounting to EGP 3.4 million was booked related to shareholders dividends
deferral agreement. EGP 0.3 million related to CIB facility. Meanwhile, the
Group's facility with the Commercial International Bank (CIB) was fully repaid
as of 5 April 2022.
Foreign Exchange
IDH recorded a net foreign exchange gain of EGP 55 million in the nine months
to 30 September 2022, versus a net foreign exchange loss of EGP 18 million in
the same period of last year.
Fair Value through Profit and Loss (FVTPL)
During 9M 2022, the Company booked a FVTPL loss related to GDR of EGP 141
million. The loss is related to the transactions completed by IDH to secure
the USD balance needed to fulfil its FY2021 dividend obligations to
shareholders.
Taxation
Tax expenses recorded EGP 251 million in 9M 2022 versus EGP 610 million in 9M
2021. The effective tax rate stood at 38% in 9M 2022 versus 35% in the same
nine-month period of 2021. The increase in the effective tax rate reflects the
FX loss booked by the Company and its tax implication that is currently under
investigation with the Egypt's Tax Authority. It is worth noting that the
effective tax rate will decrease significantly in case the Tax Authority
approves the FX loss related to GDR (EGP 141 million).
Taxation Breakdown by Region
EGP Mn 9M 2021 9M 2022 Change
Egypt 567.8 201.7 -64%
Jordan 42.4 18.5 -56%
Nigeria (0.5) 30.5 N/A
Sudan 0.1 0.2 252%
Total Tax Expenses 609.8 250.9 -59%
Net Profit
Net Profit recorded EGP 403 million in 9M 2022, down 65% year-on-year. Net
profit margin on consolidated revenue stood at 14% in 9M 2022 versus 30% in 9M
2021. Meanwhile, net profit margin on net sales recorded 15% for the period.
On a three-month basis, IDH recorded a net loss of EGP 36 million. Meanwhile,
excluding FX losses resulting from transactions completed by the Company to
secure the USD needed to fulfil its FY 2021 dividend obligations, IDH would
have recorded net profit of EGP 544 million in 9M 2022 and EGP 105 million in
Q3 2022, with associated margins on net sales of 20% and 12%. It is important
to note that net profit and adjusted net profit for both periods were
identical in absolute terms between IFRS and APM measures.
Raw material costs, which include cost of specialized analysis at other
laboratories, reached EGP 562 million in 9M 2022, continuing to make up the
largest portion of total COGS at 36%. As a share of net sales, raw material
costs increased to 20.5% in 9M 2022 compared to 18.3% in the same nine months
of 2021. This increase is primarily reflective of the substantial reduction in
the average selling price of Covid-19-related tests during the period in both
Egypt and Jordan (the average price per PCR test was down 26% year-on-year in
9M 2022). It is worth noting that the year-on-year decline in average
Covid-19-related test prices was most notable in the first quarter of the
year. Meanwhile, in Q3 2022, raw material as a percentage of net sales reached
19.6% from 18.7% in the same three months of last year following the
devaluation of the Egyptian pound.
Direct salaries and wages, which includes employee share of the profits,
declined 2% year-on-year to EGP 461 million in 9M 2022, making the second
largest share of total COGS at 30%. The year-on-year decline is wholly
attributable to lower employee share of the profits. On the other hand, direct
salary and wages posted a 20% year-on-year increase mainly reflecting the
additional staff employed at Aqaba Port and QAIA airport, an annual salary
increase of around 15%, and the additional staff employed across the newly
added branches (+39 new branches versus 9M 2021). Additional salary expenses
related to Biolab's testing booths amounted to JOD 549 thousand (EGP 13.6
million) during 9M 2022, noting that starting April, Biolab ceased its
operational activities across all booths. In the third quarter of the year,
direct salaries and wages as a share of net sales decreased to reach 15.6%
from 21.0% last quarter, reflecting a decrease in the employee profit shares
driven by the decrease in net profits recorded by the Group's Egyptian
operations.
Direct depreciation and amortisation increased 33% year-on-year to record EGP
202 million in 9M 2022, largely due to the incremental amortisation of new
branches (IFRS 16 right-of-use assets).
Other expenses for the nine-month period increased 16% to record EGP 330
million. The increase principally reflects higher maintenance costs in Egypt,
as well as higher operational expenses related to the 39 additional branches
rolled out in the twelve months to 30 September 2022. It should be noted that
cleaning and maintenance expenses increased 44% year-on-year.
17Cost 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 1,619 million in 9M 2022, up 1% year-on-year.
1(8)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.
1(9)A reconciliation between revenue and net sales is available earlier in
this announcement.
Selling, General and Administrative Expenses
Total SG&A outlays recorded EGP 433 million in 9M 2022, representing a 26%
year-on-year increase. The increase in SG&A costs was mainly a result of
rising salaries and marketing expenses, as well as higher fees for external
auditing services.
Marketing and advertising expenses came in at EGP 87 million in the nine
months to 30 September 2022, up 44% from last year. The increase reflects an
overall expansion in IDH's marketing and advertisement efforts which for the
last year has seen the Company roll out targeted campaigns across several
channels predominantly to support Al-Borg Scan's ramp up.
EBITDA
IDH's EBITDA2(0) declined in the nine months of 30 September 2022, reflecting
lower gross profitability for the period coupled with higher SG&A
expenses, and in particular higher marketing expenses and accounting fees
versus the same nine months of last year. Higher marketing fees comes as IDH
expanded its marketing efforts in particular to support Al-Borg Scan's ramp
up. It is important to note that EBITDA for the period is identical in
absolute terms between IFRS and APM measures. EBITDA margin on consolidated
revenue recorded 35% in 9M 2022 versus 53% in the same period of last year.
Meanwhile, EBITDA margin on net sales normalised to reach 36% in 9M 2022 from
53% in 9M 2021.2(1)
Similar to the trend witnessed on a year-to-date basis, EBITDA in the third
quarter contracted by 66% on the back of lower gross profitability and higher
SG&A outlays during the three-month period.
In IDH's home market of Egypt, EBITDA recorded EGP 857 million in 9M 2022.
EBITDA margin on net sales stood at 38% for the nine-month period versus 56%
last year. Egypt EBITDA contributed around 88% of the Group's EBITDA in the
nine-month period.
In Jordan, Biolab reported a contraction in EBITDA profitability in both EGP
and JOD terms. The decrease in Biolab's EBITDA profitability mainly reflects
lower gross profitability for the nine-month period as well as higher expenses
related to Biolab's testing booths in QAIA and Aqaba Port.
EBITDA losses in Nigeria during the first nine months of the year were
impacted by a 220% year-on-year increase in Echo-Lab's diesel costs
(responsible for 12% of Echo-Lab's cost base). Controlling for this, the
venture would have remained on course to turn EBITDA positive in 2022.
In Sudan, IDH reported a positive EBITDA of SDG 3.7 million in 9M 2022, a
marked improvement from the EBITDA loss reported this time last year. In EGP
terms, EBITDA recorded EGP 49 thousand in 9M 2022, down from the EGP 181
thousand in EBITDA recorded this time last year.
Regional EBITDA in Local Currency
Mn 9M 2021 9M 2022 Change
Egypt EGP 1,761 857 -51%
Margin on net sales 56% 38%
Jordan JOD 10.7 5.1 -52%
Margin on net sales 46% 28%
Margin on revenues (IFRS) 40% 25%
Nigeria NGN -133 -122 -8%
Margin on net sales -13% -10%
Sudan SDG -29 3.7 N/A
Margin on net sales -14% 1%
2(0)EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in 9M 2021 related to the
Company's EGX listing completed in May 2021.
2(1)It is important to note that while in absolute terms the 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 83 million in the first nine months
of 2022, up 20% year-on-year reflecting higher cash balances during the
period, an optimised cash allocation between T-bills and time deposits, and a
300-basis point cumulative interest rate hike enacted by the CBE since the
start of the year.
Interest expense recorded EGP 100 million in 9M 2022, up 20% versus 9M 2021.
The increase in attributable to:
· Higher interest on lease liabilities related to IFRS 16 following the
addition of new branches 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 period.
· Higher interest expenses following the CBE decision to increase rates
by 300 bps since the start of 2022.
· Fees amounting to EGP 8.8 million related to the US$ 45 million
facility with the International Finance Corporation (IFC) granted in May 2021
and the US$ 15 million IFC syndicated facility from Mashreq Bank in December
2021. Fees include commitment and supervisory fees.
Interest Expense Breakdown
EGP mn 9M 2021 9M 2022 Change
Interest on Lease Liabilities (IFRS 16) 44.0 53.8 22%
Interest Expenses on Borrowings2(2) 7.0 11.1 59%
Loan-related Expenses on IFC facility 14.6 8.9 -39%
Interest Expenses on Leases 4.8 14.9 209%
Bank Charges 12.5 11.1 -12%
Total Interest Expense 82.9 99.7 20%
2(2)Interest expenses on medium-term loans include EGP 7.4 million related to
the Group's facility with Ahli United Bank Egypt (AUBE) & interest expense
amounting to EGP 3.4 million was booked related to shareholders dividends
deferral agreement. EGP 0.3 million related to CIB facility. Meanwhile, the
Group's facility with the Commercial International Bank (CIB) was fully repaid
as of 5 April 2022.
Foreign Exchange
IDH recorded a net foreign exchange gain of EGP 55 million in the nine months
to 30 September 2022, versus a net foreign exchange loss of EGP 18 million in
the same period of last year.
Fair Value through Profit and Loss (FVTPL)
During 9M 2022, the Company booked a FVTPL loss related to GDR of EGP 141
million. The loss is related to the transactions completed by IDH to secure
the USD balance needed to fulfil its FY2021 dividend obligations to
shareholders.
Taxation
Tax expenses recorded EGP 251 million in 9M 2022 versus EGP 610 million in 9M
2021. The effective tax rate stood at 38% in 9M 2022 versus 35% in the same
nine-month period of 2021. The increase in the effective tax rate reflects the
FX loss booked by the Company and its tax implication that is currently under
investigation with the Egypt's Tax Authority. It is worth noting that the
effective tax rate will decrease significantly in case the Tax Authority
approves the FX loss related to GDR (EGP 141 million).
Taxation Breakdown by Region
EGP Mn 9M 2021 9M 2022 Change
Egypt 567.8 201.7 -64%
Jordan 42.4 18.5 -56%
Nigeria (0.5) 30.5 N/A
Sudan 0.1 0.2 252%
Total Tax Expenses 609.8 250.9 -59%
Net Profit
Net Profit recorded EGP 403 million in 9M 2022, down 65% year-on-year. Net
profit margin on consolidated revenue stood at 14% in 9M 2022 versus 30% in 9M
2021. Meanwhile, net profit margin on net sales recorded 15% for the period.
On a three-month basis, IDH recorded a net loss of EGP 36 million. Meanwhile,
excluding FX losses resulting from transactions completed by the Company to
secure the USD needed to fulfil its FY 2021 dividend obligations, IDH would
have recorded net profit of EGP 544 million in 9M 2022 and EGP 105 million in
Q3 2022, with associated margins on net sales of 20% and 12%. It is important
to note that net profit and adjusted net profit for both periods were
identical in absolute terms between IFRS and APM measures.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH held gross property, plant and equipment (PPE) of EGP 1,998 million as at
30 September 2022, up from the EGP 1,653 million as at year-end 2021. The
increase in CAPEX outlays as a share of total net sales for the nine-month
period is in part attributable to EGP 154 million spent on new radiology
branches (Capital Business Park Branch in West Cairo, Maadi, and Nasser City)
during the period and EGP 79 million translation effect (related to Jordan and
Nigeria) resulting from the depreciation of the Egyptian Pound since the start
of the year.
Total CAPEX Breakdown
EGP Mn 9M 2022 % of Net Sales
Al-Borg Scan Expansion 153.6 5.6%
Translation Effect 79.3 2.9%
Leasehold Improvements/new branches 112.2 4.1%
Total CAPEX Additions 345.2 12.6%
Accounts Receivable and Provisions
As at 30 September 2022, accounts receivables' Days on Hand (DOH) recorded at
121 days compared to 107 days at year-end 2021. The rise reflects the increase
in collection periods with the Company's private insurance clients in 2022
compared to 2021.
Provision for doubtful accounts established during 9M 2022 amounted to EGP 25
million, up from EGP 18 million in the same nine months of last year. The
increase in provisions reflects the Company's conservative approach when
calculating the expected default rate for each segment.
Inventory
As at 30 September 2022, the Group's inventory balance reached EGP 262
million, up from EGP 223 million as at year-end 2021. Meanwhile, days
Inventory Outstanding (DIO) increased to 121 days as at 30 September 2022 from
61 days as at year-end 2021. The increase largely reflects management's
decision to accumulate inventory as part of its proactive strategy to shield
the business from any disruption that might result from the global supply
chain challenges and protect the Company's margins from a further devaluation
of the Egyptian pound. It should be noted that as at 31 October 2022, IDH held
sufficient inventory to cover the Group's needs for a four-month period.
Cash and Net Debt/Cash
IDH's cash balances decreased to EGP 694 million as at 30 September 2022 from
EGP 2,350 million as at 31 December 2021. Reflecting the distribution of the
FY 2021 dividend to shareholders completed in August 2022.
EGP million 31 Dec 2021 30 Sep 2022
Time Deposits 628 80
T-Bills 1,461 170
Current Accounts 239 425
Cash on Hand 22 19
Total 2,350 694
IDH's net debt2(3) balance as at 30 September 2022 amounted to EGP 339 million
as at 30 September 2022 compared to a net cash balance of EGP 1,488 million as
of 31 December 2021.
EGP million 31 Dec 2021 30 Jun 2022 31 Dec 2021
Cash and Financial Assets at Amortised Cost2(4) 2,350 694 2,350
Interest Bearing Debt ("Medium Term Loans")(2)(5) 102 89 106
Lease Liabilities Property 532 645 532
Long-term Equipment Liabilities 229 299 229
Net Cash Balance 1,488 (339) 1,483
Note: Interest Bearing Debt includes accrued interest for each period.
Lease liabilities on property recorded EGP 645 million as at 30 September
2022, up from the EGP 532 million booked as at year-end 2021. The rise
primarily reflected the addition of new branches throughout the nine months to
30 September 2022. Meanwhile, financial obligations related to equipment
recorded EGP 299 million as at 30 September 2022, up from EGP 229 million as
of year-end 2021. This increase largely reflects the renewal of the Company's
contracts and the addition of new equipment. Total financial obligations
related to equipment for the period includes EGP 166 million for equipment at
Al-Borg Scan. Meanwhile, interest-bearing debt declined to EGP 89 million as
at the end of the current reporting period from EGP 102 million as at 31
December 2021. More specifically, IDH's interest-bearing debt as at 30
September 2022 comprised EGP 85.6 million related to its facility with AUBE.
It is worth highlighting that interest-bearing debt in both periods excludes
accrued interest. It is also important to note that the Company's facility
with the Commercial International Bank (CIB) was fully repaid as of April
2022.
Liabilities
Accounts Payable2(6)
As at 30 September 2022, accounts payable balance recorded EGP 224 million
down from EGP 311 million as of 31 December 2021. Despite this, the Group's
days payable outstanding (DPO) increased to 134 days from 93 days as at
year-end 2021. The increase largely reflects both lower Covid-19-related kits
consumption.
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 Biolab's LTM
EBITDA minus net debt. Biolab's put option liability decreased following the
significant decline in the venture's EBITDA for the period.
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).
2(3)The net cash/(debt) 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.
2(4)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 3.7 million in 9M 2022, versus EGP 148 million as at
year-end 2021. Meanwhile, treasury bills not accessible for over 90 days stood
at EGP 161 million in 9M 2022, down from EGP 1,311 million in FY 2021.
2(5)IDH's interest bearing debt as at 30 September 2022 included EGP 83.8
million to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan
balances are excluding accrued interest for the period).
2(6)Accounts payable is calculated based on average payables at the end of
each year.
Dividend Payment
The Company completed the full payment of its FY 2021 dividend on 18 August
2022. The distribution of the full-year dividend was completed over two
phases, with all of IDH's shareholders except for its two principal
shareholders (Hena Holdings Ltd and Actis IDH Limited, both of which had
agreed to defer the payment of their pro rata share of the dividend) receiving
the payment as scheduled on 27 July 2022. IDH distributed the second tranche
to the dividend to its two largest shareholders over two instalments on the 11
August and 18 August 2022. The distribution of a record-breaking USD 69.6
million (EGP 1.4 billion) dividend reaffirms IDH's trust in the business'
fundamental strength and sustainability, and its potential going forward.
Accounts Receivable and Provisions
As at 30 September 2022, accounts receivables' Days on Hand (DOH) recorded at
121 days compared to 107 days at year-end 2021. The rise reflects the increase
in collection periods with the Company's private insurance clients in 2022
compared to 2021.
Provision for doubtful accounts established during 9M 2022 amounted to EGP 25
million, up from EGP 18 million in the same nine months of last year. The
increase in provisions reflects the Company's conservative approach when
calculating the expected default rate for each segment.
Inventory
As at 30 September 2022, the Group's inventory balance reached EGP 262
million, up from EGP 223 million as at year-end 2021. Meanwhile, days
Inventory Outstanding (DIO) increased to 121 days as at 30 September 2022 from
61 days as at year-end 2021. The increase largely reflects management's
decision to accumulate inventory as part of its proactive strategy to shield
the business from any disruption that might result from the global supply
chain challenges and protect the Company's margins from a further devaluation
of the Egyptian pound. It should be noted that as at 31 October 2022, IDH held
sufficient inventory to cover the Group's needs for a four-month period.
Cash and Net Debt/Cash
IDH's cash balances decreased to EGP 694 million as at 30 September 2022 from
EGP 2,350 million as at 31 December 2021. Reflecting the distribution of the
FY 2021 dividend to shareholders completed in August 2022.
EGP million 31 Dec 2021 30 Sep 2022
Time Deposits 628 80
T-Bills 1,461 170
Current Accounts 239 425
Cash on Hand 22 19
Total 2,350 694
IDH's net debt2(3) balance as at 30 September 2022 amounted to EGP 339 million
as at 30 September 2022 compared to a net cash balance of EGP 1,488 million as
of 31 December 2021.
EGP million 31 Dec 2021 30 Jun 2022 31 Dec 2021
Cash and Financial Assets at Amortised Cost2(4) 2,350 694 2,350
Interest Bearing Debt ("Medium Term Loans")(2)(5) 102 89 106
Lease Liabilities Property 532 645 532
Long-term Equipment Liabilities 229 299 229
Net Cash Balance 1,488 (339) 1,483
Note: Interest Bearing Debt includes accrued interest for each period.
Lease liabilities on property recorded EGP 645 million as at 30 September
2022, up from the EGP 532 million booked as at year-end 2021. The rise
primarily reflected the addition of new branches throughout the nine months to
30 September 2022. Meanwhile, financial obligations related to equipment
recorded EGP 299 million as at 30 September 2022, up from EGP 229 million as
of year-end 2021. This increase largely reflects the renewal of the Company's
contracts and the addition of new equipment. Total financial obligations
related to equipment for the period includes EGP 166 million for equipment at
Al-Borg Scan. Meanwhile, interest-bearing debt declined to EGP 89 million as
at the end of the current reporting period from EGP 102 million as at 31
December 2021. More specifically, IDH's interest-bearing debt as at 30
September 2022 comprised EGP 85.6 million related to its facility with AUBE.
It is worth highlighting that interest-bearing debt in both periods excludes
accrued interest. It is also important to note that the Company's facility
with the Commercial International Bank (CIB) was fully repaid as of April
2022.
Liabilities
Accounts Payable2(6)
As at 30 September 2022, accounts payable balance recorded EGP 224 million
down from EGP 311 million as of 31 December 2021. Despite this, the Group's
days payable outstanding (DPO) increased to 134 days from 93 days as at
year-end 2021. The increase largely reflects both lower Covid-19-related kits
consumption.
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 Biolab's LTM
EBITDA minus net debt. Biolab's put option liability decreased following the
significant decline in the venture's EBITDA for the period.
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).
2(3)The net cash/(debt) 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.
2(4)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 3.7 million in 9M 2022, versus EGP 148 million as at
year-end 2021. Meanwhile, treasury bills not accessible for over 90 days stood
at EGP 161 million in 9M 2022, down from EGP 1,311 million in FY 2021.
2(5)IDH's interest bearing debt as at 30 September 2022 included EGP 83.8
million to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan
balances are excluding accrued interest for the period).
2(6)Accounts payable is calculated based on average payables at the end of
each year.
Dividend Payment
The Company completed the full payment of its FY 2021 dividend on 18 August
2022. The distribution of the full-year dividend was completed over two
phases, with all of IDH's shareholders except for its two principal
shareholders (Hena Holdings Ltd and Actis IDH Limited, both of which had
agreed to defer the payment of their pro rata share of the dividend) receiving
the payment as scheduled on 27 July 2022. IDH distributed the second tranche
to the dividend to its two largest shareholders over two instalments on the 11
August and 18 August 2022. The distribution of a record-breaking USD 69.6
million (EGP 1.4 billion) dividend reaffirms IDH's trust in the business'
fundamental strength and sustainability, and its potential going forward.
-End-
INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH"
AND ITS SUBSIDIARIES
Consolidated Financial Statements
for the nine-month period ended 30 September 2022
Consolidated statement of financial position as at 30 September 2022
Notes 30 September 2022 31 December 2021
EGP'000 EGP'000
ASSETS
Non-current assets
Property, plant and equipment 4 1,231,817 1,061,808
Intangible assets and goodwill 5 1,673,279 1,658,867
Right of use assets 6 557,002 462,432
Financial assets at fair value through profit and loss 7 13,897 10,470
Total non-current assets 3,475,995 3,193,577
Current assets
Inventories 262,091 222,612
Trade and other receivables 8 550,663 469,727
Financial assets at amortized cost 9 164,793 1,458,724
Cash and cash equivalents 10 529,590 891,451
Total current assets 1,507,137 3,042,514
Total assets 4,983,132 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 (689,439) (956,397)
Translation reserve 168,525 150,730
Retained earnings 643,295 1,550,976
Equity attributable to the equity holders of the parent 1,959,918 2,582,846
Non-controlling interests 208,038 211,513
Total equity 2,167,956 2,794,359
Non-current liabilities
Provisions 4,221 4,088
Borrowings 13 65,864 76,345
Other financial obligations 15 808,051 645,196
Non-current put option liability 14 41,536 35,037
Deferred tax liabilities 20-C 297,353 332,149
Total non-current liabilities 1,217,025 1,092,815
Current liabilities
Trade and other payables 11 646,389 777,354
Other financial obligations 15 136,358 115,478
Current put option liability 12 647,904 921,360
Borrowings 13 17,892 21,721
Current tax liabilities 149,608 513,004
Total current liabilities 1,598,151 2,348,917
Total liabilities 2,815,176 3,441,732
Total equity and liabilities 4,983,132 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
16 November 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 and nine-month periods ended 30
September 2022
For the three months period For the nine months period
ended 30 September ended 30 September
Notes 2022 2021 2022 2021
EGP'000 EGP'000 EGP'000 EGP'000
Revenue 24 846,251 1,473,411 2,800,316 3,766,581
Cost of sales (496,581) (612,146) (1,618,776) (1,600,019)
Gross profit 349,670 861,265 1,181,540 2,166,562
Marketing and advertising expenses (58,641) (41,273) (151,209) (107,928)
Administrative expenses 17 (99,626) (82,969) (263,818) (259,101)
Impairment loss on trade and other receivable (8,877) (7,816) (25,035) (18,081)
Other income 3,834 (135) 7,305 12,296
Operating profit 186,360 729,072 748,783 1,793,748
Net fair value gains/(losses) on financial assets at fair value through profit 18 (141,092) - (141,092) -
or loss
Finance costs 19 (49,593) (31,994) (99,718) (105,161)
Finance income 19 9,016 25,571 146,286 69,086
Net finance cost (40,577) (6,423) 46,568 (36,075)
Profit before tax 4,691 722,649 654,259 1,757,673
Income tax expense 20-B (40,337) (242,961) (250,853) (609,775)
Profit for the period (35,646) 479,688 403,406 1,147,898
Profit attributed to:
Equity holders of the parent (18,186) 454,236 404,034 1,100,676
Non-controlling interests (17,460) 25,452 (628) 47,222
(35,646) 479,688 403,406 1,147,898
Earnings per share (expressed in EGP):
Basic and diluted earnings per share 23 (0.03) 0.76 0.67 1.83
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of comprehensive income/(expenses) for the quarter and
nine-month periods ended 30 September 2022
For the three months period ended 30 September For the nine months period ended 30 September
2022 2021 2022 2021
EGP'000 EGP'000 EGP'000 EGP'000
Net profit (35,646) 479,688 403,406 1,147,898
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations 34,378 (4,285) 111,686 8,090
Other comprehensive income / (Loss) for the period net of tax 34,378 (4,285) 111,686 8,090
Total comprehensive income for the period (1,268) 475,403 515,092 1,155,988
Attributed to:
Equity holders of the parent (13,640) 449,464 421,829 1,106,047
Non-controlling interests 12,372 25,939 93,263 49,941
(1,268) 475,403 515,092 1,155,988
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of cash flows for the nine month period ended 30
September 2022
Notes 30 September 2022 30 September 2021
EGP'000 EGP'000
Cash flows from operating activities
Profit for the period before tax 654,259 1,757,673
Adjustments
Depreciation of property, plant and equipment 146,433 105,616
Depreciation of right of use assets 73,959 58,918
Amortisation of intangible assets 5,211 5,002
loss/(Gain )on disposal of Property, plant and equipment 312 (208)
Impairment in trade and other receivables 25,035 18,081
Impairment on goodwill 1,755 -
Interest income 19 (83,194) (69,086)
Interest expense 19 88,658 55,822
Bank Charges 11,060 -
Equity settled financial assets at fair value (3,427) (768)
ROU Asset/Lease Termination 1,152 1,038
Hyperinflation 19 (7,736) 4,628
Unrealised foreign currency exchange loss 19 85,736 17,588
FV Through P&L 18 141,092 -
Change in Provisions 406 392
Change in Inventories (34,123) (95,002)
Change in trade and other receivables (158,214) (127,907)
Change in trade and other payables (223,795) 183,011
Cash generated from operating activities before income tax payment 724,579 1,914,798
Tax paid during period (653,580) (273,881)
Net cash generated from operating activities 70,999 1,640,917
Cash flows from investing activities
Proceeds from sale of Property, plant and equipment 9,552 6,255
Interest received on financial asset at amortised cost 84,044 68,048
Payments for acquisition of property, plant and equipment 4 (202,506) (177,580)
Payments for acquisition of intangible assets 5 (2,382) (8,285)
Payments for the purchase of financial assets at amortized cost (348,139) (904,779)
Proceeds for the sale of financial assets at amortized cost 1,656,815 325,388
Payments for shares bought (999,376) -
Proceeds for shares sale 858,284 -
Net cash flows generated from/ (used in)investing activities 1,056,292 (690,953)
Cash flows from financing activities
Proceeds from borrowings 7,411 20,724
Repayments of borrowings (21,721) (12,708)
Payment of finance lease liabilities (41,912) (68,372)
Dividends paid (1,411,752) (478,748)
Interest paid (84,096) (56,696)
Bank charge paid (11,060) -
Injection of cash by non-controlling interest 8,763 -
Net cash flows used in financing activities (1,554,367) (595,800)
Net increase in cash and cash equivalent (427,076) 354,164
Cash and cash equivalents at the beginning of the year 891,451 600,130
Effect of exchange rate 65,215 (3,591)
Cash and cash equivalent at the end of the period 10 529,590 950,703
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of changes in equity for the nine month period ended 30
September 2022
Attributable to owners of the Parent
EGP '000 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 - - - - - - 404,034 404,034 (628) 403,406
Other comprehensive income for the period - - - - - 17,795 - 17,795 93,891 111,686
Total comprehensive income at 30 September 2022 - - - - - 17,795 404,034 421,829 93,263 515,092
Transactions with owners of the Company
Contributions and distributions
Dividends - - - - - - (1,304,805) (1,304,805) (106,947) (1,411,752)
Movement in put option liabilities - - - - 266,958 - - 266,958 - 266,958
Impact of hyperinflation - - - - - - (6,910) (6,910) 1,446 (5,464)
Non-controlling interests cash injection in subsidiaries during the period - - - - - - - - 8,763 8,763
Total contributions and distributions - - - - 266,958 - (1,311,715) (1,044,757) (96,738) (1,141,495)
Balance at 30 September 2022 1,072,500 1,027,706 (314,310) 51,641 (689,439) 168,525 643,295 1,959,918 208,038 2,167,956
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 - - - - - - 1,100,676 1,100,676 47,222 1,147,898
Other comprehensive income for the period - - - - - 5,371 - 5,371 2,719 8,090
Total comprehensive income at 30 September 2021 - - - - - 5,371 1,100,676 1,106,047 49,941 1,155,988
Transactions with owners of the Company
Contributions and distributions
Dividends - - - - - - (455,182) (455,182) (23,566) (478,748)
Legal reserve formed during the period - - - 2,423 - - (2,423) - - -
Movement in put option liabilities - - - - (495,620) - - (495,620) - (495,620)
Impact of hyperinflation - - - - - - (11,556) (11,556) (5,766) (17,322)
Total contributions and distributions - - - 2,423 (495,620) - (469,161) (962,358) (29,332) (991,690)
Balance at 30 September 2021 1,072,500 1,027,706 (314,310) 51,641 (809,677) 150,988 1,234,832 2,413,680 176,992 2,590,672
*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
nine months ended 30 September 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 16 November 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
Statements, and should be read in conjunction with the financial Statements
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 nine
month period ended 30 September 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 3.2 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 on account Total
& information
improvements
system equipment
Cost
At 1 January 2022 380,883 824,628 335,203 95,966 15,937 6,761 1,659,378
Additions 38,275 152,702 53,254 9,996 23,526 3,853 281,606
Hyper inflation - 2,863 - - - - 2,863
Disposals - (6,029) (499) (8,217) - - (14,745)
Transfers - - 2,669 - (2,669) - -
Exchange differences 3,307 44,335 22,504 9,135 43 - 79,324
At 30 September 2022 422,465 1,018,499 413,131 106,880 36,837 10,614 2,008,426
Depreciation
At 1 January 2022 53,490 333,806 177,230 33,044 - 597,570
Depreciation for the period 4,987 94,224 39,916 7,306 - - 146,433
Disposals - (2,852) (427) (1,602) - - (4,881)
Exchange differences 549 20,651 10,645 5,642 - - 37,487
At 30 September 2022 59,026 445,829 227,364 44,390 - - 776,609
Net book value at 30 September 2022 363,439 572,670 185,767 62,490 36,837 10,614 1,231,817
Net book value 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 - - 2,382 2,382
Effect of movements in exchange rates 13,046 4,944 3,335 21,325
Balance at 30 September 2022 1,274,011 388,853 83,111 1,745,975
Amortisation and impairment
Balance at 1 January 2022 4,552 372 58,477 63,401
Amortisation - - 5,211 5,211
Impairment* 1,755 - - 1,755
Effect of movements in exchange rates - - 2,329 2,329
Balance at 30 September 2022 6,307 372 66,017 67,456
Carrying amount
Balance at 30 September 2022 1,267,704 388,481 17,094 1,673,279
Balance at 31 December 2021 1,256,413 383,537 18,917 1,658,867
*The Group sees there is an impairment indicator on the goodwill related to
Medical Genetics Center company due to the negative free cash flow and EBITDA
of the company.
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 nine months ended 30
September 2022, except the mentioned above.
6. Right-of-use assets
30 September 2022 31 December 2021
Balance at 1 January 462,432 354,688
Addition for the period / year 155,777 198,402
Depreciation charge for the period / year (73,960) (79,617)
Terminated contracts (10,381) (7,643)
Exchange differences 23,134 (3,398)
557,002 462,432
7. Financial asset at fair value through profit and loss
30 September 2022 31 December 2021
Equity investments* 13,897 10,470
13,897 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 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 September 30, 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 Stake 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 has the right 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 has
the right 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
30 September 2022 31 December 2021
Trade receivables - net 396,154 371,051
Prepayments 38,337 22,647
Due from related parties note (16) 7,495 5,237
Accrued revenue 1,968 2,818
Other receivables * 106,709 67,974
550,663 469,727
9. Financial assets at amortised cost
30 September 2022 31 December 2021
Term deposits (more than 90 days) 3,726 148,136
Treasury bills (more than 90 days) 161,067 1,310,588
164,793 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 13.76 % and 8.50% respectively.
10. Cash and cash equivalents
30 September 2022 31 December 2021
Cash at banks and on hand 444,133 261,430
Treasury bills (less than 90 days) 8,937 150,431
Term deposits (less than 90 days) 76,520 479,590
529,590 891,451
11. Trade and other payables
30 September 2022 31 December 2021
Trade payable 223,511 311,321
Accrued expenses 245,113 325,677
Due to related parties note (16) 19,296 13,234
Other payables 83,249 99,040
Deferred revenue 69,939 24,603
Accrued finance cost 5,281 3,479
646,389 777,354
12. Current put option liability
30 September 2022 31 December 2021
Put option - Biolab Jordan 647,904 921,360
647,904 921,360
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 (7x) EBITDA of the last 12 months
minus Net Debt, and its exercisable in whole starting the fifth year of
completion of the original purchase agreement, which fell due in June 2016.
The vendor has not exercised this right at 30 September 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 the
next 18 months. The put option has no expiry date.
13. Loans and borrowings
Currency Nominal interest rate Maturity 30 September 2022 31 December 2021
CIB - Bank EGP Secured rate 9.5% 5 April 2022 - 13,238
AUB - Bank EGP CBE corridor rate+1% 26 April 2026 83,756 84,828
83,756 98,066
Amount held as:
Current liability 17,892 21,721
Non- current liability 65,864 76,345
83,756 98,066
A) 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 30 September 2022 only EGP 92.2m had been drawn down from the
total facility available, It is also important to note that the Company's
facility with the Commercial International Bank (CIB) was fully repaid as of
April 2022. 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
Loans and borrowings (continued)
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.
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 30 September 2022 corridor rate is 12.25% (2021: 9.25%)
AL- Borg company didn't breach any covenants related to the MTL agreement.
B) Last year the Group signed two debt facilities agreements. The debt
package includes US$ 45.0 million secured facility with the tenor of 8-year
starting May 2021 from the International Finance Corporation (IFC), and an
additional US$ 15.0 million IFC syndicated facility from Mashreq Bank. As at
30 September 2022, the debt facility has not been drawn by IDH.
14. Non-current put option liability
30 September 31 December 2021
2022
Put option liability* 41,536 35,037
41,536 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 its shares to Dynasty in the year 2024. The put option price
will be calculated on the basis of fair market value determined by an
independent valuator.
15. Other Financial obligations
30 September 2022 31 December 2021
Lease liabilities - buildings 645,231 531,804
Financial obligations- laboratory equipment 299,178 228,870
944,409 760,674
The financial obligations for the laboratory equipment and building are
payable as follows:
30 September 2022
Minimum payments Interest Principal
Less than one year 253,868 117,510 136,358
Between one and five years 908,428 268,370 640,058
More than five years 197,810 29,817 167,993
1,360,106 415,697 944,409
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 30 September For the nine months ended 30 September
2022 2021 2022 2021
Interest on lease liabilities 9,111 14,597 44,037 53,761
Expenses related to short-term lease 4,644 3,420 19,788 14,143
16. Related party transactions
The significant transactions with related parties, their nature volumes and
balance during the period 30 September 2022 are as follows:
30 September 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 238 (81)
Life Health Care Provide service Entity owned by Company's CEO 2,122 4,216
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder 273,456 (647,904)
Current account - (15,738)
International Finance corporation (IFC) Put option liability Eagle Eye - Echo Scan limited shareholder (6,499) (41,536)
International Finance corporation (IFC) Current account Eagle Eye - Echo Scan limited shareholder 9,438 (3,477)
Integrated Treatment for Kidney Diseases (S.A.E.) Rental income Entity owned by Company's CEO 376 1,161
Medical services (240)
Total (701,241)
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)
Rental income Medical services Entity 1,025
owned by Company's CEO
Integrated Treatment for Kidney Diseases (S.A.E) (298)
530
Total (964,394)
* 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).
Related party transactions (continued)
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.
30 September 2022 30 September 2021
Short-term employee benefits 39,027 47,617
39,027 47,617
17. General and administrative expenses
For the three months ended 30 September For the nine months ended 30 September
2022 2021 2022 2021
Wages and salaries 34,352 36,239 101,262 97,875
Depreciation 7,898 6,050 22,741 17,237
Other expenses 57,376 40,680 139,815 143,989
Total 99,626 82,969 263,818 259,101
18. Financial assets at fair value through profit or loss
During the third quarter of 2022, ALmokhtabar and Alborg companies invested in
Global Depositary Receipt (GDR) tradable in stock exchanges, where the
companies purchased 26.83 million shares, EGP 999.3 M from the Egyptian
Stock Exchange and sold them during the same period on the London Stock
exchange at USD 45.3 M excluding the transaction cost. The group had
classified this transaction at fair value through profit or loss (FVPL).
19. Net finance cost
For the three months ended 30 September For the nine months ended 30 September
2022 2021 2022 2021
Interest income 7,751 23,838 83,194 69,086
Net foreign exchange (losses) /gain - 1,733 55,356 -
Gain on hyperinflationary net monetary position- Sudan subsidiaries 1,265 - 7,736 -
Total finance income 9,016 25,571 146,286 69,086
Loss on hyperinflationary net monetary position- Sudan subsidiaries - (3,424) - (4,628)
Bank Charges (2,255) (7,137) (11,060) (12,501)
Interest expense (33,316) (21,433) (88,658) (70,444)
Net foreign exchange gain /(loss) (14,022) - - (17,588)
Total finance costs (49,593) (31,994) (99,718) (105,161)
Net finance income /(cost) (40,577) (6,423) 46,568 (36,075)
On March 21, 2022, the Central Bank of Egypt raised the corridor rate by 100
basis points and on May 19, 2022, an additional increase of 200 basis point
took place.
20. 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 30 September For the nine months ended 30 September
2022 2021 2022 2021
Current tax:
Current period tax (20,292) (182,332) (180,131) (464,677)
WHT suffered (100,906) - (100,906) -
Current tax (121,198) (182,332) (281,037) (464,677)
Deferred tax:
DT on undistributed dividends 113,285 (55,518) 64,732 (139,298)
DT on reversal of temporary differences (32,424) (5,111) (34,548) (5,800)
Total Deferred tax expense 80,861 (60,629) 30,184 (145,098)
Tax expense recognized in profit or loss (40,337) (242,961) (250,853) (609,775)
C) Deferred tax liabilities
Deferred tax relates to the following:
30 September 31 December
2022 2021
Property, plant and equipment (32,093) (28,925)
Intangible assets (106,630) (105,358)
Undistributed dividends from Group subsidiaries (158,691) (223,425)
Provisions and financial obligations 61 25,559
Net deferred tax liabilities (297,353) (332,149)
21. Financial instruments
The Group has reviewed the financial assets and liabilities held at 30
September 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.
22. 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 and Integrated Medical Analysis 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 period, 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 and Integrated Medical Analysis 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.
Should a claim be brought against Al Borg Laboratory Company , Al Mokhtabar
Company for Medical Labs and Integrated medical analysis, an amount of between
EGP 26.6m to EGP 68m could become payable, due to the specialized and
differential training programs that the group provides to its medical and
administrative professionals on an annual basis, which is one of the
requirements imposed by the international accreditation bodies.
23. Earnings per share
For the three months ended 30 September For the nine months ended 30 September
2022 2021 2022 2021
Profit attributed to owners of the parent (18,186) 454,236 404,034 1,100,676
Weighted average number of ordinary shares in issue 600,000 600,000 600,000 600,000
Basic and diluted earnings per share (0.03) 0.76 0.67 1.83
The Company has no potential diluted shares as at 30 September 2022 and 30
September 2021, therefore; the diluted earnings per share are equivalent to
basic earnings per share.
24. 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
30- September -22 711,195 4,317 109,372 21,367 846,251
30- September -21 1,186,803 2,912 268,770 14,926 1,473,411
Revenue by geographic location
For the nine months period ended Egypt region Sudan region Jordan region Nigeria region Total
30- September -22 2,235,235 14,786 495,507 54,788 2,800,316
30- September -21 3,121,862 12,179 592,288 40,252 3,766,581
EBITDA by geographic location
For the three months ended Egypt Sudan region Jordan region Nigeria Total
region region
30- September -22 235,623 (14) 31,447 (1,931) 265,125
30- September -21 686,341 (530) 104,853 (850) 789,814
EBITDA by geographic location
For the nine months period ended Egypt Sudan region Jordan region Nigeria region Total
region
30- September -22 857,363 49 122,237 (5,263) 974,386
30- September -21 1,732,405 181 235,876 (5,178) 1,963,284
Net (loss) / profit by geographic location
For the three months ended Egypt Sudan region Jordan region Nigeria Total
region region
30- September -22 (13,555) 547 14,718 (37,356) (35,646)
30- September -21 419,407 (3,923) 68,430 (4,226) 479,688
Segment reporting (continued)
Net profit / (loss) by geographic location
For the nine months period ended Egypt region Sudan region Jordan region Nigeria region Total
30- September -22 380,005 4,825 62,189 (43,613) 403,406
30- September -21 1,035,621 (18,724) 151,677 (20,676) 1,147,898
Revenue by type Net profit by type
For the three months For the three months
ended 30 September ended 30 September
2022 2021 2022 2021
Pathology 802,245 1,447,618 (2,876) 485,116
Radiology 44,006 25,793 (32,770) (5,428)
846,251 1,473,411 (35,646) 479,688
Revenue by type Net profit by type
For the nine months For the nine months
ended 30 September ended 30 September
2022 2021 2022 2021
Pathology 2,687,516 3,695,602 474,842 1,160,173
Radiology 112,800 70,979 (71,436) (12,275)
2,800,316 3,766,581 403,406 1,147,898
Revenue by categories Revenue by categories
For the three months For the nine months
ended 30 September ended 30 September
2022 2021 2022 2021
Walk-in 353,839 589,813 1,208,492 1,618,852
Corporate 492,412 883,598 1,591,824 2,147,729
846,251 1,473,411 2,800,316 3,766,581
* 30 September 2022 figure includes Covid-19 related Pathology tests
amounted to EGP 678 m (30 September 2021: EGP 1,531 m).
Segment reporting (continued)
Non-current assets by geographic location
For the year ended Egypt Sudan region Jordan region Nigeria Total
region region
30- September -22 2,988,831 10,335 371,172 105,657 3,475,995
31-Dec-21 2,803,954 7,234 291,880 90,509 3,193,577
The operating segment profit measure reported to the CODM is EBITDA, as
follows:
For the three months ended 30 September For nine months period ended 30 September
2022 2021 2022 2021
Profit from operations 186,360 729,072 748,783 1,793,748
51,249 46,548 146,433 105,616
Property, plant and equipment depreciation
Right of use depreciation 25,744 12,241 73,959 58,918
Amortization of Intangible assets 1,772 1,953 5,211 5,002
EBITDA 265,125 789,814 974,386 1,963,284
Non-recurring expenses - - - 29,034
Normalised EBITDA 265,125 789,814 974,386 1,992,318
25. Distributions made
30 September 2022 31 December 2021
EGP'000 EGP'000
Cash dividends on ordinary shares declared and paid:
Nil per qualifying ordinary share US$ 0.116 per share (2021: 0.0485) per share 1,304,805 455,182
1,304,805 455,182
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
0.116 US$ per share or US$ 69.6 million in aggregate, then in Q3, it paid off.
26. Significant event:
Dr. Hend El Sherbini, Integrated Diagnostics Holdings' chief executive
officer, has purchased 7.3 million additional shares in the Company. This is
in line with her commitment to deliver on the Company's growth and value
creation strategy. The purchases was completed between 1 August and 12 August
by Hena Holdings Limited ("Hena Holdings"), the vehicle through which Dr. Hend
El Sherbini owns her shares and were announced on the London Stock Exchange
(LSE) and the Egyptian Stock Exchange. Following the transaction, Hena
Holdings' stake in IDH has increased to 26.71% from 25.5%, continuing to
represent the single largest interest in the Company.
27. Subsequent events:
A) On October the Monetary Policy Committee decided at its meeting to raise
the rates of the overnight deposit and lending rates and the price of the main
operation of the Central Bank by 200 basis points to reach 13.25%, 14.25%, and
13.75%, respectively. The price has also been raised Credit and Discount
increased by 200 basis points to reach 13.75%.
It is expected that the increase in global and domestic prices will lead to a
higher general inflation rate than its counterpart The target by the Central
Bank of 2% (±7 percentage points) on average during the fourth quarter of
2022.
B) Integrated Diagnostics Holdings signed a new joint venture contract
between Al Makhbaryoun Al Arab LLC ("Biolab") and Business Flower Holding LLC
to establish a new diagnostic company in Saudi Arabia. IDH consisting of IDH
and its Jordanian subsidiary "Biolab" will own 50% plus 1 share, and Business
Flower HOLDING LLC will own 50% minus 1 share.
This contract has an investment cost of USD 19.7 million (SAR 73.7 million).
IDH's equity investment into the Saudi-established company is estimated to
stand at USD 4.7 million, of which IHD will contribute USD 2.8 million and
Biolab with USD 1.9 million. The plan is to start the operations within four
to six months from the signing of the agreement on 27 October 2022, subject to
the receipt of all the necessary regulatory approvals and licenses.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END QRTEANFKFAFAFFARecent news on Integrated Diagnostics Holdings
See all newsREG - Integrated Diag Hdgs - Annual Financial Report & Notice of AGM
AnnouncementREG - Integrated Diag Hdgs - Final Results
AnnouncementREG - Integrated Diag Hdgs - Notice of Results
AnnouncementREG - Integrated Diag Hdgs - IDH INCREASES STAKE IN BIOLAB KSA
AnnouncementREG - Integrated Diag Hdgs - 3rd Quarter Results
Announcement