REG - Integrated Diag Hdgs - 3rd Quarter Results
16/11/2023 07:00
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RNS Number : 6173T Integrated Diagnostics Holdings PLC 16 November 2023
Integrated Diagnostics Holdings Plc
9M 2023 Results
Thursday, 16 November 2023
Integrated Diagnostics Holdings Plc reports impressive 44% year-on-year conventional revenue expansion in 9M 2023, with consolidated figures surpassing the high Covid base of 9M 2022
(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or
"the Company"), a leading provider of diagnostic services with operations in
Egypt, Jordan, Nigeria, Sudan, and soon launching in Saudi Arabia, announced
today its reviewed financial statements for the nine-month period ended 30
September 2023, booking its strongest quarter since the start of the year. IDH
recorded consolidated revenues of EGP 1,182 in Q3 2023 million, yielding 40%
year-on-year and 24% quarter-on-quarter growth rates.
When excluding(1) Covid-19-related contributions from the previous period,
conventional revenues recorded a 51% year-on-year growth in Q3 2023.
Impressive top-line performance during the quarter translated to improved
results down the income statement, with net profit coming in at EGP 176
million and yielding an NPM of 15% in Q3 2023. This represents a significant
improvement from the net loss of EGP 36 million recorded in Q3 2022 when IDH's
bottom-line profitability had been weighed down by a one-off expense.
On a year-to-date basis, IDH recorded consolidated revenues of EGP 3,054
million, a 9% year-on-year expansion versus the high base of 9M 2022, which
had included EGP 678 million in Covid-19-related(2) revenues (constituting 24%
of the Company's top-line). Meanwhile, the Company booked conventional revenue
growth of 44% year-on-year in 9M 2023, supported by a 16% year-on-year
increases in test volumes coupled with a 24% year-on-year increase in average
revenue per conventional test.
Further down the income statement, the Company posted a net profit of EGP 387
million in 9M 2023, representing a marginal 4% year-on-year decline from the
figure reported in the same period of last year and yielding a net profit
margin (NPM) of 13%.
Financial Results (IFRS)(3)
EGP mn Q3 2022 Q3 2023 Change 9M 2022 9M 2023 Change
Revenues 846 1,182 40% 2,800 3,054 9%
Conventional Revenues 784 1,182 51% 2,123 3,054 44%
Covid-19-related Revenues 63 - - 678 - -
Cost of Goods Sold (497) (702) 41% (1,619) (1,916) 18%
Gross Profit 350 480 37% 1,182 1,138 -4%
Gross Profit Margin 41% 41% -1 pts 42% 37% -5 pts
Operating Profit 186 312 67% 749 577 -23%
Normalised EBITDA(4) 265 411 55% 974 873 -10%
EBITDA Margin 31% 35% 3 pts 35% 29% -6 pts
Net Profit (36) 176 - 403 387 -4%
Net Profit Margin -4% 15% 19 pts 14% 13% -2 pts
Cash Balance 816 794 -3% 816 794 -3%
Note: Throughout the document, percentage changes are calculated using the
exact value (as per the Consolidated Financials) and not the corresponding
rounded figure.
Key Operational Indicators(5)
EGP mn 9M 2022 9M 2023 Change
Branches 546 594 48
Patients ('000) 6,633 6,248 -6%
Revenue per Patient (EGP) 422 489 16%
Tests ('000) 24,359 26,468 9%
Conventional Tests ('000) 22,728 26,468 16%
Covid-19-related Tests ('000) 1,631 - -
Revenue per Test 115 115 0%
Revenue per Conventional Test (EGP) 93 115 24%
Revenue per Covid-19-related Test (EGP) 416 - -
Test per Patient 3.7 4.2 15%
1 Starting Q1 2023, IDH has opted to stop reporting on its Covid-19-related
revenues and test volumes due to their material insignificance to the
consolidated figures and to Egypt's and Jordan's country-level results for the
quarter. In the comparable period of last year (9M 2022) IDH had recorded EGP
678 million in Covid-19-related revenues and had performed 1.6 million
Covid-19-related tests.
2 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.
(3) Important notice: In the Company's earnings releases covering the five
quarters starting from Q4 2021 and ending Q4 2022, management had opted to
present Alternative Performance Measures (APM) alongside IFRS-compliant
figures as outlined on page 2 of the Company's FY 2022 Earnings Release.
Starting in Q1 2023, due to the material insignificance of Covid-19-related
revenues on consolidated results, the Company will only report IFRS-compliant
figures. It is worth noting that revenues for the comparable period (9M 2022),
include concession fees amounting to EGP 63 million paid by Biolab as part of
its agreement with QAIA and Aqaba Port.
4 Normalised EBITDA is calculated as operating profit plus depreciation and
amortization, excluding non-recurring expenses, specifically a EGP 12 million
one-off expense owed to the Egyptian government for vocational training, EGP
6.5 million in pre-operating expenses in Saudi Arabia, and EGP 5.0 million
impairment expense in Sudan due to the ongoing situation in the country.
5 Key operational indicators are calculated based on revenues for the periods
of EGP 3,054 million and EGP 2,800 million for 9M 2023 and 9M 2022,
respectively.
Important notice: In the Company's earnings releases covering the five
quarters starting from Q4 2021 and ending Q4 2022, management had opted to
present Alternative Performance Measures (APM) alongside IFRS-compliant
figures as outlined on page 2 of the Company's FY 2022 Earnings Release.
Starting in Q1 2023, due to the material insignificance of Covid-19-related
revenues on consolidated results, the Company will only report IFRS-compliant
figures. It is worth noting that revenues for the comparable period (9M 2022)
include concession fees amounting to EGP 63 million paid by Biolab as part of
its agreement with QAIA and Aqaba Port.
Introduction
i. Financial Highlights
Quarterly Performance
· IDH recorded its strongest quarterly performance since the start of
the year in Q3 2023, capitalising on strong momentum seen during May and
carrying on throughout the summer period. The quarter recorded a noticeable
pickup in patient footfall and testing volumes, specifically in IDH's two
largest markets, Egypt and Jordan.
· IDH booked record test volumes in Q3 2023, surpassing the 10.0
million test mark for a single quarter for the first time. As a result, the
Company booked total revenues of EGP 1,182 million, expanding 40% year-on-year
and 24% quarter-on-quarter. Robust top-line performance compared to the
previous quarter is a reflection of a normalisation in operations following a
slow start to the year in 1H 2023 due to increased inflationary pressures, the
holy month of Ramadan, and Eid vacations which affected operations.
· In parallel, conventional revenues(6) (excluding Covid-19 revenues
in the comparative period) in Q3 2023 increased 51% year-on-year, up from EGP
784 million in Q3 2022.
Year-to-Date Performance
· Conventional revenue during 9M 2023 amounted to EGP 3,054 million,
representing a 44% year-on-year increase. Conventional revenue growth was
driven by year-on-year increases of 16% and 24% in conventional test volumes
and average revenue per conventional test, respectively.
· Driven by strong quarterly performance, IDH recorded total
revenues of EGP 3,054 million in 9M 2023, a 9% year-on-year increase.
· This is a particularly noteworthy result when considering that the
comparable 9M 2022 had included significant contributions from
Covid-19-related(78) testing, amounting to EGP 678 million and constituting
24% of consolidated revenues. Total revenue growth came on the back of a 9%
year-on-year increase in test volumes with average revenue per test remaining
stable due to the high Covid base of 9M 2022.
(6) Conventional (non-Covid) tests include IDH's full service offering
excluding the Covid-19 related tests outlined below.
(7) 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.
(8) Covid-19-related revenue in 9M 2022 includes EGP 63 million in concession
fees paid by Biolab to Queen Alia International Airport and Aqaba Port as part
of its revenue sharing agreement
· Gross Profit in Q3 2023 booked EGP 480 million, 37% above the figure
recorded in Q3 2022 and 44% above Q2 2023.Meanwhile, IDH reported a gross
profit margin (GPM) of 41%, unchanged compared to Q3 2022 and 6 points above
the GPM booked in Q2 2023. Significantly improving gross profitability
compared to the first two quarters of the year reflect a normalisation of
profitability as the initial effects of the devaluation in FY 2022 and early
FY 2023 began to fade.
On a nine-month basis, gross profit stood at EGP 1,138 million, down 4%
year-on-year, and with an associated margin (GPM) of 37% compared to 42% in 9M
2022. Lower gross profitability on a year-to-date basis partially reflected
rises in raw material costs due to higher average costs per kit on the back of
rising inflation and a weaker EGP, coupled with higher direct salaries and
wages costs to provide greater-than-usual increases in compensation packages
to existing staff to compensate for inflationary pressures, as well as higher
depreciation expenses.
· Normalised EBITDA(9) booked EGP 411 million, recording a remarkable
year-on-year growth of 55% and with an EBITDA margin of 35%, 4% higher
compared to Q3 2022. EBITDA profitability also showed solid improvements
compared to previous quarters, up from 25% and 24% in Q1 2023 and Q2 2023,
respectively. Ona year-to-date basis, normalised EBITDA stood at EGP 873
million in 9M 2023, down 10% year-on-year, and with an associated margin of
29% compared to 35% in 9M 2022. Lower EBITDA profitability on a year-to-date
basis came on the back of the decreased gross profitability coupled with
increased SG&A outlays in part reflecting the impact of a weaker EGP on
USD-denominated expenses.
It is worth noting that normalised EBITDA has been adjusted for several
one-offs including an EGP 12 million expense related to contributions owed to
the Egyptian government vocational training fund for the previous five-year
period, EGP 7 million in pre-operating expenses booked by IDH's new Saudi
venture, and EGP 5 million impairment expense for Sudanese operations
following the unfortunate political situation in the country.
9 Normalised EBITDA is calculated as operating profit plus depreciation and
amortization, excluding non-recurring expenses, specifically a EGP 12 million
one-off expense owed to the Egyptian government for vocational training, EGP
6.5 million in pre-operating expenses in Saudi Arabia, and EGP 5.0 million
impairment expense in Sudan due to the ongoing situation in the country.
· Net Profit booked EGP 176 million and yielded an NPM of 15% in Q3
2023 compared to a net loss of EGP 36 million one year prior. Net profit
during the quarter also posted robust figures compared to the previous
quarter, more than tripling the EGP 43 million booked in Q2 2023 and yielding
an associated margin 9 points above Q2 2023.
Net profit in 9M 2023 recorded EGP 387 million, a 4% year-on-year decrease.
IDH's NPM recorded 13% in 9M 2023, largely stable versus last year.
ii. Operational Highlights
· As at 30 September 2023, IDH's total branch network across its
four markets stood at 594 branches, an increase of 48 branches in the past
twelve-month period. During Q3 2023, IDH rolled out 6 new branches in its home
market of Egypt, including one new Al-Borg Scan branch which commenced
operations in September.
· Conventional tests (excluding Covid-19 contributions in the base
year) booked a record-high in Q3 2023, reaching 10.0 million tests for the
first time and expanding 22% year-on-year and 19% quarter-on-quarter, further
highlighting its strong growth momentum coupled with the normalisation of
patient behaviour following the Covid-19 pandemic. Meanwhile, conventional
tests reached 26.5 million tests in 9M 2023, a 16% year-on-year increase.
Consolidated test volumes, which in 9M 2022 included 1.6 million
Covid-19-related tests, grew 9% year-on-year.
· Average revenue per conventional test increased 24% year-on-year
to book EGP 115 in 9M 2023. Average revenue per conventional test was driven
by both direct and indirect price adjustments in Egypt and Nigeria in response
to ongoing inflation. It is worth highlighting that this figure was partially
boosted by a 10% contribution from the translation effect resulting from the
devaluation of the EGP over the past twelve months.
· The Company served a total of 6.2 million patients during 9M
2023, 6% below last year's figure. The decline reflects the comparable
period's high base due to Covid-19 contributions. Meanwhile, average test per
patient rose to a record high 4.2 tests in 9M 2023, up from 3.7 tests one year
prior. Continually surging average tests per patient reflect a post-Covid-19
patient normalisation coupled with the continued success of IDH's loyalty
programme which launched in FY 2021.
iii. Updates by Geography
· In Egypt (81.9% of total revenues), IDH booked its strongest
quarterly performance of FY 2023, with conventional revenues (excluding
Covid-19 contributions from the base year) expanding 49% year-on-year and 26%
quarter-on-quarter, as the Company continues to build off the strong momentum
witnessed starting May. In parallel, consolidated revenues increased 39%
year-on-year in Q3 2023.
On a year-to-date basis, Egyptian operations recorded 39% year-on-year growth,
reaching EGP 2,500 million during 9M 2023, driven by 18% increases in both
test volumes and average revenue per test. In parallel, consolidated revenues
in 9M 2023 increased 12% year-on-year, an impressive result given
Covid-19-related contributions of 19% during 9M 2022.
· In Jordan (15.2% of total revenues), in line with trends observed
in Egypt, Biolab's conventional revenues expanded 13% year-on-year and 18%
quarter-on-quarter in Q3 2023 to reach JOD 4.1 million, maintaining the strong
momentum seen starting May 2023. Consolidated revenues declined 1%
year-on-year from the high Covid base of Q3 2022. In EGP terms, conventional
revenue posted growth rates of 82% year-on-year and 19% quarter-on-quarter,
partially reflecting the translation effect resulting from a weaker EGP. On a
nine-month basis, conventional revenues rose 10% year-on-year in JOD terms in
9M 2023, supported by a 10% growth in conventional testing volumes.
· In Nigeria (2.6% of total revenues) Echolab booked 10%
year-on-year and 11% quarter-on-quarter revenue growths in NGN terms in Q3
2023. Top-line expansion was primarily driven by 29% year-on-year and 4%
quarter-on-quarter increases in average revenue per test in NGN terms, as IDH
applies strategic price hikes to compensate for increasing inflation. On a
year-to-date basis, revenues booked NGN 1,457 million in 9M 2023, expanding
16% year-on-year in NGN terms and supported by a 22% year-on-year rise in
average revenue per test in local currency terms.
· IDH's Sudanese operations (0.4% of total revenues) recorded revenue
declines of 88% year-on-year and 62% quarter-on-quarter in Q3 2023 in EGP
terms. Meanwhile, revenues declined 27% year-on-year in 9M 2023. IDH's
operations in the country continue to be impacted by the ongoing conflict
which has seen the closure of 16 of the country's 18 branches starting April
2023.
· IDH remains on schedule to launch its first two Saudi Arabian
branches in December 2023. The two branches will be located in Riyadh,
enabling the Company to capitalise on the important growth opportunities
offered by the city's growing and increasingly health-conscious population.
The new venture was jointly funded by IDH (30%), Biolab (20%) and Fawaz
Alhokair's healthcare subsidiary, Izhoor (50%). The venture aims to establish
itself as a full-fledged clinical pathology diagnostic services provider
boasting a branch network covering the entire Kingdom. The new venture will be
fully consolidated on IDH's accounts.
iv. Management Commentary
Commenting on the Group's performance, IDH Chief Executive Officer Dr. Hend
El-Sherbini said: "With the end of the year fast approaching, I am delighted
to report an exceptional quarter, characterised by unprecedented financial and
operational success and continuing to showcase the strength of IDH's
underlying business and its future growth potential. While our results from
the first half of the year were somewhat diluted by increasing inflationary
environments, particularly in our home market, Egypt, as well as several
seasonal slowdowns due to the holy month of Ramadan and other holidays, the
Company's strong performance in the third quarter of the year has
significantly outpaced the past two quarters. Strong growth in Q3 2023 has
also reflected positively down the income statement, with our margins
expanding significantly compared to the same quarter last year as well as
compared to the first half of 2023. I am also proud to announce that this
exceptional performance has enabled our year-to-date results to surpass the
comparable period of last year, which had included sizeable contributions from
Covid-19-related testing.
During Q3 2023, the Company continued building on its strong momentum
witnessed starting in May of this year, conducting 10.0 million tests during
the quarter, 21% higher than the figure recorded in Q3 2022, and the highest
figure recorded in a single quarter in IDH's history. This quarter saw IDH
increase its average number of tests per patient to 4.2 tests, another record
high for the Company as its patient mix begins to normalise following the
Covid-19-pandemic and it begins to harvest the fruit of its loyalty programme,
which was introduced in FY 2021. This impressive performance has led to 40%
year-on-year and 24% quarter-on-quarter increases in our consolidated top-line
in Q3 2023.
Turning to our markets' individual performances, Egypt and Jordan both saw
similar trends, with growing demand for our traditional test offering
translating in steady rises in both conventional revenues and test volumes. In
Egypt, we recorded a 49% year-on-year increase in conventional revenues in Q3
2023, driven by 24% and 20% rises in test volumes and average revenue per
test, respectively, despite patients' purchasing power being impacted by
rising inflation. Egyptian operations also witnessed an increase in the
average number of tests per patient, rising to a record high 4.2 tests in 9M
2023, continuing to be driven by our successful loyalty programme which was
introduced in FY 2021. Our results in Egypt were further buoyed by the
impressive near doubling of revenues at our radiology venture, Al-Borg Scan,
which constituted 5% of Egypt's revenue in Q3 2023. On this front, in line
with our ramp up strategy for the venture, in September we inaugurated the
venture's seventh branch moving us a step closer to realising our vision of
providing patients with a one-stop-shop service offering featuring both
pathology and radiology.
In Jordan, Biolab booked a 13% year-on-year increase in its conventional
top-line in JOD terms, fuelled by a 13% increase in conventional test volumes
for the period. In Nigeria, our operations recorded revenue expansion in NGN
terms of 10% compared to Q3 2022, on the back of higher average revenue per
test. Finally, Sudan's operations continued to be hindered by the ongoing
conflict which has caused the closure of 16 out of our 18 branches starting in
April of this year. As always, we will continue to closely monitor the
situation and will provide the market with updates when available.
Further down the income statement, we were pleased to note the start of a
gradual normalisation during the third quarter as the initial shock of the
multiple devaluations of the EGP began to ease. More specifically, results in
Q3 2023 showed significant improvements in profitability, with both our gross
and EBITDA margins improving remarkably versus the first two quarters of 2023.
Improved profitability was also apparent compared to Q3 2022, where the
Company booked significant increases in both its EBITDA and net margins.
Finally, I am pleased to report that in the coming weeks, we will be
officially launching our operations in Saudi Arabia, adding a fifth geography
to our portfolio and entering one of the region's most attractive markets. Our
first two branches in the country will both be located in the Kingdom's
capital city, Riyadh, allowing us to take advantage of the important growth
opportunities offered by the city's growing and increasingly health-conscious
population. In light of the continued strengths of our results, the solid
strategies in place, and the positive momentum enjoyed by our operations in
Egypt and Jordan, we reaffirm our guidance of 30% conventional revenue growth,
boosting our consolidated revenues to the EGP 4 billion mark, with a
normalised EBITDA margin excluding one-off expenses and pre-operating expenses
in Saudi Arabia of 28-30% for FY 2023."
- End -
Analyst and Investor Call Details
An analyst and investor call will be hosted at 1pm (UK) | 3pm (Egypt) on
Tuesday, 21 November 2023. You can register for the call by clicking on this
link
(https://efghermesevents.webex.com/webappng/sites/efghermesevents/meeting/register/ca9e6f579dba49e9a9e58c2e9be244be?ticket=4832534b000000066e6aafcec52b4919395d487353ea2444b012273bd95ca111b0db937de9dda820×tamp=1700070474628&RGID=r669873a524558f8b214db7fa2c98cb16)
.
For more information about the event, please contact: amoataz@EFG-HERMES.com
(mailto:amoataz@EFG-HERMES.com)
About Integrated Diagnostics Holdings (IDH)
IDH is a leading diagnostics services provider in the Middle East and Africa
offering a broad range of clinical pathology and radiology tests to patients
in Egypt, Jordan, Nigeria and Sudan. 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). With over 40
years of experience, 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 552 branches as of 31 December 2022, IDH served over 8.7 million
patients and performed more than 32.7 million tests in 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 targets expansion in appealing markets, including acquisitions in
the 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 2023 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.
Important notice: In the Company's earnings releases covering the five
quarters starting from Q4 2021 and ending Q4 2022, management had opted to
present Alternative Performance Measures (APM) alongside IFRS-compliant
figures as outlined on page 2 of the Company's FY 2022 Earnings Release.
Starting in Q1 2023, due to the material insignificance of Covid-19-related
revenues on consolidated results, the Company will only report IFRS-compliant
figures. It is worth noting that revenues for the comparable period (9M 2022)
include concession fees amounting to EGP 63 million paid by Biolab as part of
its agreement with QAIA and Aqaba Port.
Group Operational & Financial Review
i. Revenue and Cost Analysis
Consolidated Revenue
IDH's strong momentum observed starting in May 2023 carried into the summer,
resulting in an exceptional set of results during Q3 2023. During Q3 2023, IDH
booked conventional(10) revenue growth of 51% year-on-year, reaching EGP 1,182
million. Conventional revenues were boosted by 22% and 23% year-on-year
increases in test volumes and average revenue per conventional test,
respectively. Strong growth during the third quarter of the year is also
reflected in the Company's quarter-on-quarter performance, with IDH
capitalising on strong growth momentum to record a 24% expansion compared to
Q2 2023. Meanwhile, consolidated revenues increased 40% year-on-year, up from
EGP 784 million one year prior.
In parallel, the Company booked consolidated revenues of EGP 3,054 million in
9M 2023, a remarkable 9% year-on-year increase especially when considering the
EGP 678 million(11) contribution made from Covid-19-related(12) testing to
consolidated revenues in 9M 2022. Positive consolidated revenue growth for the
period is mainly a reflection of exceptionally strong quarterly performance in
Q3 2023, which boosted results and enabled the Company to record positive
consolidated growth. Conventional revenue on a year-to-date basis increased
44% year-on-year from EGP 2,123 million in 9M 2022.
1(0 )Conventional (non-Covid) tests include IDH's full service offering
excluding the Covid-19 related tests outlined below.
1(1 ) Covid-19-related revenue in 9M 2022 includes EGP 63 million in
concession fees paid by Biolab to Queen Alia International Airport and Aqaba
Port as part of its revenue sharing agreement.
1(2 ) 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.
Revenue Analysis
Q1 Q1 2023 Q2 2022 Q2 2023 Q3 2022 Q3 2023 % 9M 2022 9M 2023 %
2022
Total revenue (EGP mn) 1,180 915 774 957 846 1,182 40% 2,800 3,054 9%
Conventional revenue (EGP mn) 640 915 699 957 784 1,182 51% 2,123 3,054 44%
Covid-19-related revenue (EGP mn) 540 - 75 - 63 - - 678 - -
Contribution to Consolidated Results
Conventional revenue 54% 100% 90% 100% 93% 100% 76% 100%
Covid-19-related revenue 46% - 10% - 7% - 24% -
Test Volume Analysis
Total tests (mn) 8.4 8.0 7.6 8.5 8.4 10.0 20% 24.4 26.5 9%
Conventional tests performed (mn) 7.1 8.0 7.4 8.5 8.2 10.0 22% 22.7 26.5 16%
Total Covid-19-related tests performed (mn) 1.3 - 0.2 - 0.2 - - 1.6 - -
Contribution to Consolidated Results
Conventional tests performed 85% 100% 97% 100% 98% 100% 93% 100%
Total Covid-19-related tests performed 15% - 3% - 2% - 7% -
Revenue per Test Analysis
Total revenue per test (EGP) 140 114 102 113 101 118 17% 115 115 -
Conventional revenue per test (EGP) 90 114 94 113 96 118 23% 93 115 24%
Covid-19-related revenue per test (EGP) 431 - 454 - 361 - - 416 - -
Revenue Analysis: Contribution by Patient Segment
Contract Segment (63% of Group revenue)
IDH's contract segment recorded conventional revenues of EGP 1,938 million
during the nine-month period, expanding 49% year-on-year from the figure
reported last year. Growth at the segment was driven by 21% and 23% increases
in conventional test volumes and average revenue per conventional test,
respectively.
Consolidated revenues at the segment recorded a 22% year-on-year increase in
9M 2023 on the back of increased volumes and prices. The contract segment's
average tests per patient reached a record-high 4.4 tests, up from 4.1 tests
in 9M 2022, reflecting a normalisation in patient mix following the Covid-19
pandemic and the success of IDH's loyalty programme which was introduced in FY
2021.
Walk-in Segment (37% of Group revenue)
In parallel, IDH's walk-in segment posted conventional revenues of EGP 1,116
million, increasing 34% year-on-year in 9M 2023. Growth came on the back of a
34% year-on-year increase in average revenue per conventional test, while test
volumes remained unchanged compared to the same time last year.
Meanwhile, consolidated revenue at the walk-in segment declined 8%
year-on-year on the back of lower test volumes and reflecting a high base
effect in the comparable period of 2022. In line with the trend noted in the
contract segment, tests per patient at the walk-in segment increased to 3.6
tests in 9M 2023, well above historical figures as the Company books another
record high.
Detailed Segment Performance Breakdown
Walk-in Segment Contract Segment Total
9M22 9M23 Change 9M22 9M23 Change 9M22 9M23 Change
Revenue (EGP mn) 1,214 1,116 -8% 1,584 1,938 22% 2,800 3,054 9%
Conventional Results (EGP mn) 830 1,116 34% 1,293 1,938 49% 2,123 3,054 44%
Total Covid-19-related revenue (EGP mn) 384 - - 294 - - 678 - -
Patients ('000) 2,112 1,343 -36% 4,522 4,905 8% 6,633 6,248 -6%
% of Patients 32% 21% 68% 79%
Revenue per Patient (EGP) 575 831 44% 351 395 13% 422 489 16%
Tests ('000) 5,712 4,894 -14% 18,648 21,574 16% 24,359 26,468 9%
% of Tests 23% 18% 77% 82%
Conventional tests ('000) 4,891 4,894 - 17,837 21,574 21% 22,728 26,468 16%
Total Covid-19-related tests ('000) 821 - - 810 - - 1,631 - -
Revenue per Test (EGP) 213 228 7% 85 90 6% 115 115 0.4%
Conventional Revenue per Test (EGP) 170 228 34% 72 90 23% 93 115 24%
Test per Patient 2.7 3.6 35% 4.1 4.4 7% 3.7 4.2 15%
Revenue Analysis: Contribution by Geography
Egypt (81.9% of Group revenue)
IDH's home and largest market, Egypt, reported robust performance in Q3 2023,
capitalising on the impressive growth trajectory witnessed starting in May
2023, and expanding both conventional and consolidated revenues on the back of
increased test volumes and average revenue per conventional test. More
specifically, Q3 2023 represented the strongest quarter for Egyptian
operations in FY 2023, following anticipated seasonal slowdowns in the first
half of the year.
On a conventional basis, revenue expanded 49% year-on-year and 26%
quarter-on-quarter, reaching EGP 986 million on the back of increased test
volumes and average revenue per test. Meanwhile, consolidated revenues
increased 39% year-on-year compared to Q3 2022.
On a year-to-date basis, Egypt booked consolidated revenues of EGP 2,500
million, a 12% year-on-year expansion marking the full completion of the
geography's post-Covid-19 recovery. This is particularly noteworthy when
considering that the comparable period of last year included significant
contributions of EGP 432 million from the Company's Covid-19-related testing.
Consolidated revenue growth was supported by a 12% year-on-year increase in
tests performed. Meanwhile, conventional revenues increased 39% year-on-year
from EGP 1,803 in 9M 2022.
Al-Borg Scan
IDH's fast-growing radiology venture continued its steady ramp up throughout
Q3 2023, posting revenues of EGP 108 million in 9M 2023 and booking a top-line
year-on-year growth rate of 86%. Revenue growth for the period was primarily
driven by increased test volumes, which grew 50% year-on-year, partially due
to the ramp up of new branches across the Greater Cairo area. In parallel,
average revenue per test also rose by 24% year-on-year, reaching EGP 705 in 9M
2023.
In line with the impressive performance recorded by Al-Borg Scan, and its
maintained operational ramp-up, IDH rolled out the venture's seventh branch in
September of this year. The branch, located in Cairo's underpenetrated Nasr
City neighbourhood, falls in line with the Company's strategic direction to
expand its radiology business and establish itself as a leading play in the
fragmented market.
House Calls
In the nine months ended 30 September 2023, IDH's house call service in Egypt
continued to make a robust contribution of 16% to total revenues in the
country. This continues to be significantly ahead of the service's
pre-pandemic contribution, highlighting the segment's growth potential, and
the success of IDH's investment and ramp up strategy specifically throughout
the Covid-19 pandemic.
Wayak
During 9M 2023, Wayak completed 122 thousand orders, representing a 30%
year-on-year increase. On the profitability front, the venture's EBITDA losses
continued to narrow steadily, recording EGP 659 thousand in 9M 2023 versus the
EGP 2,780 million in EBITDA losses booked in the comparable period of FY 2022.
Detailed Egypt Performance Breakdown
Revenue Analysis
EGP mn Q1 2022 Q1 2023 Q2 2022 Q2 2023 Q3 2022 Q3 2023 % 9M 2022 9M 2023 %
Total Revenue 879 731 645 783 711 986 39% 2,235 2,500 12%
Conventional Revenue 549 731 591 783 662 986 49% 1,803 2,500 39%
Pathology Revenue 532 703 573 748 639 941 47% 1,745 2,392 37%
Radiology Revenue 17 28 19 35 23 45 99% 58 108 86%
Total Covid-19-related Revenue 330 - 53 - 49 - - 432 - -
Contribution to Consolidated Results
Conventional revenue 62% 100% 92% 100% 93% 100% 81% 100%
Pathology Revenue 61% 96% 89% 96% 90% 95% 78% 96%
Radiology Revenue 1.9% 3.8% 2.9% 4.5% 3% 5% 3% 4%
Total Covid-19-related revenue 38% - 8% - 7% 19%
Test Volume Analysis
Total Tests 7.3 7.3 6.9 7.8 7.6 9.3 21% 21.8 24.4 12%
Conventional Tests 6.5 7.3 6.7 7.8 7.5 9.3 24% 20.7 24.4 18%
Total Covid-19-related Tests 0.8 - 0.2 - 0.2 - - 1.1 -
Contribution to Consolidated Results
Conventional tests performed 89% 100% 97% 100% 98% 100% 95% 100%
Total Covid-19-related tests performed 11% - 3% - 2% - 5% -
Revenue per Test Analysis
Total Revenue per Test 120 99 94 101 93 107 14% 102 103 0.1%
Revenue per Conventional Test 84 99 88 101 89 107 20% 87 103 18%
Jordan (15.2% of Group revenue)
In Jordan, IDH's second-largest geography, the Company recorded conventional
revenues of JOD 4.0 million in Q3 2023, increasing 13% year-on-year. This is
primarily a reflection of increased conventional test volumes, which grew 13%
year-on-year to reach 678 thousand tests in Q3 2023. Meanwhile, IDH recorded
an 18% quarter-on-quarter revenue increase in local currency terms, fuelled by
a 19% expansion in test volumes In EGP terms, conventional revenue growth for
the quarter came in at 82% year-on-year, booking EGP 174 million for the
quarter. Average revenue per conventional test was the main driver of growth
in EGP terms, booking a 61% year-on-year expansion due to the weakening of the
EGP since last year. It is worth noting that, in line with trends seen in
Egypt, IDH's Jordanian operations have also started to see steady recovery
starting May and throughout the summer period. Consolidated revenues declined
1% year-on-year during Q3 2023.
On a year-to-date basis, the Company recorded a conventional revenue growth of
10% year-on-year in local currency terms, reaching JOD 10.8 million in 9M
2023. Conventional growth for the period came on the back of a 10%
year-on-year increase in conventional test volumes. In EGP terms, Jordanian
operations booked an 86% year-on-year increase, reaching EGP 464 million
compared to EGP 250 million one year prior. Growth in EGP terms includes
significant contributions from the translation effect as a result of the
devaluation of the EGP over the last twelve months. Consolidated revenue for
the nine-month period remained 48% below last year's figure in JOD terms and
6% in EGP terms as the high base effect from Covid-19-related testing
performed in the first part of 2022 continued to impact results.
Detailed Jordan Performance Breakdown
Revenue Analysis
EGP mn Q1 2022 Q1 2023 Q2 2022 Q2 2023 Q3 2022 Q3 2023 % 9M 2022 9M 2023 %
Total Revenue 281 144 106 146 109 174 59% 496 464 -6%
Conventional Results 70 144 84 146 95 174 82% 250 464 86%
Total Covid-19-related Revenues (PCR and Antibody) 210 - 21 - 14 - - 246 -
Contribution to Consolidated Results
Conventional Results 25% 100% 80% 100% 87% 100% 50% 100%
Total Covid-19-related Revenue (PCR and Antibody) 75% - 20% - 13% - 50% -
Test Volume Analysis
Total tests (k) 991 582 603 598 627 678 8% 2,221 1,858 -16%
Conventional tests performed (k) 519 582 572 598 599 678 13% 1,691 1,858 10%
Total Covid-19-related tests performed (k) 472 - 30 - 28 - - 530 -
Contribution to Consolidated Results
Conventional tests performed 52% 100% 95% 100% 96% 100% 76% 100%
Total Covid-19-related tests performed 48% - 5% - 4% - 24% -
Revenue per Test Analysis
Total Revenue per Test 283 248 175 244 174 257 47% 223 250 12%
Revenue per Conventional Test 136 248 147 244 159 257 61% 148 250 69%
Nigeria (2.6% of revenue)
Echo-Lab, IDH's Nigerian subsidiary, reported sustained top-line growth,
recording revenue expansion of 16% year-on-year in local currency terms to
reach NGN 1,457 million in 9M 2023. In EGP terms, Echo-Lab booked revenue
growth of 44% year-on-year, rising to EGP 79 million in the nine-month period.
Growth was spurred by 22% and 52% year-on-year increases in average revenue
per test in NGN and EGP terms, respectively, with the latter partially
reflecting a weakening of the EGP in the last year. Revenue growth for the
period came despite a 5% year-on-year decline in test volumes, which reached
204 thousand tests during 9M 2023.
Sudan (0.4% of revenue)
The Company's Sudanese operations continued to be impacted by the ongoing
conflict which has led to the closure of 16 of the country's 18 branches
starting in April 2023. More specifically, during 9M 2023, IDH booked revenues
of SDG 207 million, 50% below the figure recorded the same time last year. In
EGP terms, revenue reached EGP 11 million during the first nine months of the
year, dropping 27% year-on-year from 9M 2023. IDH continues to closely monitor
the situation as it unfolds and will update the market should any material
aspects evolve.
Revenue Contribution by Country
Q1 2022 Q1 2023 Q2 2022 Q2 2023 Q3 2022 Q3 2023 % 9M 2022 9M 2023 %
Egypt Revenue (EGP mn) 879 731 645 783 711 986 39% 2,235 2,500 12%
Conventional (EGP mn) 549 731 591 783 662 986 49% 1,803 2,500 39%
Pathology Revenue 532 703 573 748 639 941 47% 1,745 2,392 37%
Radiology Revenue 17 28 19 35 23 45 99% 58 108 86%
Covid-19-related (EGP mn) 330 - 53 - 49 - - 432 -
Egypt Contribution to IDH Revenue 74.5% 79.9% 83.2% 81.8% 84.0% 83.5% 78.0% 80.1%
Jordan Revenue (EGP mn) 281 144 106 146 109 174 59% 496 464 -6%
Conventional (EGP mn) 70 144 84 146 95 174 82% 250 464 86%
Covid-19-related (EGP mn) 210 - 21 - 14 - - 246 -
Jordan Revenues (JOD mn) 12.5 3.4 4.0 3.4 4.1 4.0 -1% 20.6 10.8 -48%
Conventional (JOD mn) 3.0 3.4 3.2 3.4 3.5 4.0 13% 9.8 10.8 10%
Jordan Revenue Contribution to IDH Revenue 23.7% 15.7% 13.7% 15.2% 12.9% 14.7% 17.7% 15.2%
Nigeria Revenue (EGP mn) 15 31 19 27 21 21 -1% 55 79 44%
Nigeria Revenue (NGN mn) 371 468 416 469 473 520 10% 1,260 1,457 16%
Nigeria Contribution to IDH Revenue 1.3% 3.4% 2.5% 2.8% 2.5% 1.8% 2.0% 2.6%
Sudan Revenue (EGP mn) 5.7 8.8 4.8 1.4 4.3 0.5 -88% 14.8 10.7 -27%
Sudan Revenue (SDG mn) 152 169 137 27 128 10 -92% 417 207 -50%
Sudan Contribution to IDH Revenue 0.5% 1.0% 0.6% 0.1% 0.5% 0.05% 0.5% 0.4%
Average Exchange Rate
9M 2022 9M 2023 Change
USD/EGP 18.1 30.7 69.9%
JOD/EGP 25.5 43.0 68.9%
NGN/EGP 0.04 0.06 27.1%
SDG/EGP 0.04 0.05 45.7%
Patients Served and Tests Performed by Country
9M 2022 9M 2023 Change
Egypt Patients Served (mn) 5.7 5.8 3%
Egypt Tests Performed (mn) 21.8 24.4 12%
Conventional tests (mn) 20.7 24.4 18%
Covid-19-related tests (mn) 1.1 - -
Jordan Patients Served (k) 789 286 -64%
Jordan Tests Performed (k) 2,221 1,858 -16%
Conventional tests (k) 1,691 1,858 10%
Covid-19-related tests (k) 530 - -
Nigeria Patients Served (k) 110 102 -8%
Nigeria Tests Performed (k) 215 204 -5%
Sudan Patients Served (k) 59 14 -76%
Sudan Tests Performed (k) 112 40 -64%
Total Patients Served (mn) 6.6 6.2 -6%
Total Tests Performed (mn) 24.4 26.5 9%
Branches by Country
30 September 2022 30 September 2023 Change
Egypt 496 537 41
Jordan 21 27 6
Nigeria 12 12 -
Sudan 17 18 1
Total Branches 546 594 48
Cost of Goods Sold
Cost of goods sold during the nine-month period reached EGP 1,916 million,
increasing 18% compared to the EGP 1,619 million booked during 9M 2022. As a
percentage of revenue, cost of goods sold stood at 63% in 9M 2023, up from 58%
in the same period of the previous year. Higher cost of goods sold as a
percentage of revenues reflected higher raw material costs, increased direct
wages and salaries costs, as well as higher depreciation expenses.
Cost of Goods sold Breakdown as a Percentage of Revenue
9M 2022 9M 2023
Raw Materials 20.1% 21.9%
Conventional raw material costs as % of conventional revenues 17.0% 21.9%
Covid-19-related raw material costs as % of Covid-19-related revenues 29.8% -
Wages & Salaries 16.5% 19.2%
Depreciation & Amortisation 7.2% 8.7%
Other Expenses 14.1% 12.9%
Total 57.8% 62.7%
Raw material costs (35% of consolidated cost of goods sold) remained the
single largest contributor to cost of goods sold during the period. Raw
materials recorded costs of EGP 668 million during 9M 2023, expanding 19%
year-on-year, and constituting a total of 22% of revenues for the period
versus 20% in the same period of the previous year. During the nine-month
period, IDH reported a rise in the average cost of conventional test kits
(21.9% of revenues in 9M 2023 compared to 17% in 9M 2022) on the back of
rising inflation and a weaker EGP. The Company expects test kit prices as a
share of revenue to gradually normalize in the coming months as the initial
impact of the EGP devaluation begins to fade. It is also important to
highlight that raw material outlays in 9M 2023 include a one-off EGP 15.5
million expense related to expired Covid-19-related test kits.
Wages and salaries including employee share of profits (31% share of
consolidated cost of goods sold) continued to be the second largest
contributor to cost of goods sold during 9M 2023, coming at EGP 587 million, a
year-on-year increase of 27%. Increased direct wages and salaries reflect
higher than usual adjustments to compensation packages to compensate for
unprecedented inflation as part of the Group's staff retention strategy.
Furthermore, the translation effect due to a weaker EGP resulted in increased
direct wages and salaries expenses in both Jordan and Nigeria.
Direct Wages and Salaries by Region
9M 2022 9M 2023 Change
Egypt (EGP mn) 362 445 23%
Jordan (EGP mn) 84 118 41%
Jordan (JOD mn) 3 3 -16%
Nigeria (EGP mn) 12 22 79%
Nigeria (NGN mn) 280 395 -41%
Sudan (EGP mn) 3 3 -6%
Sudan (SDG mn) 79 51 -35%
Direct depreciation and amortization costs (14% of consolidated cost of goods
sold) rose 31% year-on-year, reaching EGP 266 million in 9M 2023. Higher
depreciation and amortization costs for the period primarily reflect the
addition of new branches to IDH's network, including the addition of the newly
rolled out Al-Borg Scan branch.
Other expenses (21% of consolidated cost of goods sold) booked EGP 395 million
during 9M 2023, increasing a marginal 0.5% year-on-year. It is worth noting
that other expenses for the comparable period, 9M 2022, had included EGP 63
million paid in concession fees as part of Biolab's agreement with Queen Alia
International Airport and Aqaba Port to provide Covid-19-related testing to
passengers in January and February of 2022. Excluding these fees, other
expenses increased 20% year-on-year from EGP 330 million in 9M 2022. The
increase in other expenses is attributable to increased cleaning,
transportation, and consulting expenses to support the expansion of IDH's
branch network in Egypt, and specifically Al-Borg Scan's growth. Additionally,
in Nigeria, higher gasoline prices and repair and maintenance costs pushed
other expenses up continuing to reflect a weaker Naira (versus the US dollar)
and an increasing inflationary environment.
Gross Profit
IDH's gross profit booked EGP 480 million in Q3 2023, increasing 37%
year-on-year. GPM for the quarter stood unchanged compared to Q3 2022 at 41%
reflecting a normalisation in margins as the initial impact of the multiple
EGP devaluations throughout FY 2022 and early FY 2023 begin to fade. It is
important to note that gross profitability witnessed tangible growth compared
to the first half of the year, increasing from a GPM of 35% in Q1 2023 and Q2
2023.
On a year-to-date basis, the Company recorded gross profit of EGP 1,138
million during 9M 2023, down 4% year-on-year. The gross profit margin (GPM)
stood at 37%, declining five percentage points from 42% in 9M 2022. Lower
gross profitability during the period reflected the above-mentioned increase
in cost of goods sold.
Selling, General and Administrative Expenses
SG&A outlays during 9M 2023 climbed to EGP 535 million, a 29% year-on-year
increase. As a percentage of revenues, SG&A outlays constituted 18% of
revenues, up from 15% in 9M 2022. Increased SG&A expenses came mainly on
the back of:
· Higher indirect wages and salaries expenses, which rose by 46%
year-on-year to EGP 207 million. Indirect wages and salaries amounted to 7% of
revenues in 9M 2023, compared to 5% one year prior. The increase can be
attributed to USD-denominated directors' compensations, as well as the
addition of a board member in the first quarter of last year (who received
compensation starting March 2022). Indirect wages and salaries also reflect
increased wage expenses in Jordan due to the translation effect from a weaker
EGP.
· Increased other expenses, which grew 36% year-on-year to EGP 222
million in 9M 2023. The increase in other expenses is mainly attributable to a
weaker EGP which saw USD-denominated expenses (including auditor fees) at the
holding level weigh on the consolidated figure.
· One-off legal consultancy expenses related to the termination of the
Pakistan deal in the first quarter of 2023 which stood at EGP 8 million.
Selling, General and Administrative Expenses
9M 2022 9M 2023 Change
Wages & Salaries 141 207 46%
Accounting Fees 33 58 73%
Professional Services Fees 27 44 63%
Market - Advertisement expenses 87 77 -12%
Other Expenses 92 99 8%
Depreciation & Amortisation 23 30 28%
Travelling and transportation expenses 12 20 74%
Total 415 535 29%
EBITDA
IDH reported normalised EBITDA(13) of EGP 411 million, up an impressive 55%
year-on-year and yielding an associated margin of 35% versus 31% in Q3 2022.
Additionally, EBITDA profitability recorded significant improvement compared
to the first two quarters of 2023, which booked EBITDA margins of 25% and 24%
in Q1 2023 and Q2 2023, respectively. Higher EBITDA profitability is a direct
reflection of IDH's gradual cost normalisation as the effects of the
devaluation over the past year begin to fade.
On a nine-month basis, the Company recorded a normalised EBITDA of EGP 873
million during the first nine months of 2023, down 10% year-on-year from the
high base of 9M 2022 when Covid-19-related testing had boosted results. IDH
reported an associated margin of 29%, declining six percentage points from 35%
in 9M 2022. Decreased EBITDA profitability mainly reflects lower gross
profitability coupled with higher SG&A expenses as discussed above.
It is important to highlight that EBITDA is normalised for several one-off
expenses, including an EGP 12 million non-recurring expense owed to the
Egyptian government. expense is in accordance with article 134 of labour law
on Vocational Guidance and Training issued by the Egyptian Government in 2003.
In accordance with the law, IDH's Egyptian operations are required to provide
1% of net profits each year into a training fund. Integrated Diagnostics
Holdings plc has taken legal advice and considered market practices in Egypt
relating to the law, and more specifically whether vocational training courses
undertaken by the Company's Egyptian subsidiaries suggest that obligations
have been satisfied by in-house training programmes provided by those
entities. Since the issue of the law, IDH's Egyptian subsidiaries have not
been requested by the government to pay, nor have they voluntarily paid, any
amounts into the external training fund.
1(3 ) Normalised EBITDA is calculated as operating profit plus depreciation
and amortization, excluding non-recurring expenses, specifically a EGP 12
million one-off expense owed to the Egyptian government for vocational
training, EGP 6.5 million in pre-operating expenses in Saudi Arabia, and EGP
5.0 million impairment expense in Sudan due to the ongoing situation in the
country.
EBITDA by Country
In Egypt, the Company booked normalised EBITDA of EGP 359 million with a
margin of 36% in Q3 2023, 53% above the figure booked in Q3 2022 when the
Company's EBITDA margin stood at 33%. Compared to the previous quarter,
Egyptian operations posted a 72% quarter-on-quarter growth with its EBITDA
margin expanding by 10 points.
Normalised EBITDA on a nine-month basis stood at EGP 766 million in 9M 2023,
down 11% year-on-year. Meanwhile, IDH booked an EBITDA margin of 31%, down
from 38% in 9M 2022. Lower EBITDA profitability is a reflection lower gross
profitability coupled with increased SG&A outlays at the Company's
Egyptian operations, which expanded 25% year-on-year in 9M 2023.
In Jordan, IDH's subsidiary, Biolab, recorded normalised EBITDA of JOD 1.3
million in Q3 2023, increasing 7% year-on-year and 18% quarter-on-quarter. The
normalised EBITDA margin stood at 31%, up from 29% in Q3 2022 and 22% in Q2
2023. In EGP terms, Jordan's normalised EBITDA came in at EGP 54 million and
yielded a margin of 31%, increasing 73% year-on-year and 66%
quarter-on-quarter from Q3 2022 and Q2 2023, respectively. It is important to
note that EBITDA results in EGP terms were partially affected by the
translation effect from a weakened EGP compared to Q3 2022.
On a year-to-date basis, the Company booked a normalised EBITDA of JOD 2.9
million in 9M 2023, declining 44% year-on-year and yielding an associated
margin of 26%. In EGP terms, normalised EBITDA remained marginally unchanged
at EGP 123 million and with a margin of 26%, mainly due to the translation
effect as a result of the weakening EGP. Lower EBITDA profitability is a
result of lower gross profitability, which declined 45% year-on-year in JOD
terms.
In Nigeria, despite growing revenues in EGP and NGN terms, the Company's
EBITDA losses widened, reaching NGN 61 million in Q3 2023 from NGN 43 million
during the same period last year. Compared to the previous quarter, the
Company recorded a narrowing of EBITDA losses, compared to NGN 111 million in
Q2 2023. In EGP terms, EBITDA losses reached EGP 2.5 million in Q3 2023,
expanding from a loss of EGP 1.9 million one year prior. Widening EBITDA
losses were fuelled by lower gross profitability in the country, due to rising
gasoline prices and increased inflation on the back of a weakened Naira.
In Sudan, IDH booked normalised EBITDA loss of SDG 4 million, down from a loss
of SDG 0.4 million in Q3 2022. In EGP terms, Sudanese operations yielded a
normalised EBITDA loss of EGP 212 thousand during Q3 2023 compared to EGP 14
thousand one year prior. Widening EBITDA losses for the quarter were driven by
the halting of operations in 16 of the country's 18 branches due to ongoing
conflict since the beginning of the year.
Regional EBITDA in Local Currency
Mn 9M 2022 9M 2023 Change
Egypt EBITDA EGP 857 766 -11%
Margin 38% 31%
Jordan JOD 5.1 2.9 -44%
Margin 25% 26%
Nigeria NGN -122 -294 -140%
Margin -10% -20%
Sudan SDG 4 20 445%
Margin 1% 10%
Interest Income / Expense
IDH's interest income in 9M 2023 reached EGP 46 million, down 44% from EGP 83
million during the comparable period of last year. Declined interest income
for the period was mainly a result of lower cash balances due to the record
cash dividends distributed during last year.
Interest expense(14) came in at EGP 115 million, rising 15% year-on-year from
EGP 100 million in 9M 2022. Higher interest expenses are mainly attributable
to:
· Higher interest on lease liabilities related to IFRS 16 due to
the addition of new branches to IDH's network.
· Higher interest expenses following the CBE decision to increase rates
by 1,000 bps since March 2022. It is important to note that IDH's interest
bearing debt balance decreased to EGP 94 million as at 30 September 2023, from
EGP 117 million at year-end 2022. Earlier in the year, as part of IDH's
strategy to reduce foreign currency risk, the Company agreed with General
Electric (GE) for the early repayment of its contractual obligation of USD 5.7
million. To finance the settlement, IDH utilized a bridge loan facility, with
half the amount being funded internally, while the other half (amounting to
EGP 55 million) was provided through a bridge loan by Ahly United Bank- Egypt
(AUBE). Interest expenses related to the AUBE facility recorded EGP 18 million
in 9M 2023. The bridge loan was fully settled in Q2 2023.
Interest Expense Breakdown
EGP mn 9M 2022 9M 2023 Change
Interest on Lease Liabilities (IFRS 16) 53.8 69.0 28%
Interest Expenses on Leases 14.9 19.4 30%
Interest Expenses on Borrowings(15) 11.1 17.7 59%
Bank Charges 11.1 8.8 -20%
Loan-related Expenses on IFC facility(16) 8.9 - -
Total Interest Expense 99.7 115.0 15%
1(4) Interest expenses on medium-term loans include EGP 18.0 related to the
Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's
facility with the Commercial International Bank (CIB) was fully repaid as of 5
April 2022.
1(5) Interest expenses on medium-term loans include EGP 18.0 related to the
Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's
facility with the Commercial International Bank (CIB) was fully repaid as of 5
April 2022.
1(6) Loan-related expenses on IFC facility represents commitment fees on the
facility granted by IFC and Mashreq with a total value of USD 60 million. The
facility was cancelled in May 2023.
Foreign Exchange
IDH recorded a foreign exchange gain of EGP 99 million during 9M 2023, up 80%
year-on-year and partially reflecting intercompany balances revaluation.
Taxation
Tax expenses, including both income and deferred tax, stood at EGP 197 million
during 9M 2023, a decrease of 22% year-on-year from the EGP 251 million
reported in 9M 2022. IDH's effective tax rate came in at 34%, down from 38% in
the same period of the previous year. It is worth mentioning that there is no
tax payable for IDH's two holding-level companies. Meanwhile, tax was paid
from the Group's operating subsidiaries (Egypt 31%, Jordan 28%, Nigeria 0.1%).
Taxation Breakdown by Region
EGP Mn 9M 2022 9M 2023 Change
Egypt 201.7 183.7 -9%
Jordan 18.5 12.4 -33%
Nigeria 30.5 -0.05 -
Sudan 0.4 0.5 24%
Total Tax Expenses 250.9 196.7 -22%
Net Profit
IDH's net profit in Q3 2023 stood at EGP 176 million in Q3 2023, up from a net
loss of EGP 36 million in Q3 2022, and with a margin of 15%. Improved
bottom-line profitability is also apparent on a quarter-on-quarter basis, with
the Company's NPM increasing from 4% in Q2 2023. On a nine-month basis, net
profit recorded EGP 387 million, down 4% year-on-year. The Company posted a
net profit margin (NPM) of 13% compared to 14% in 9M 2022.
Non-Recurring Expenses
IDH recorded several one-off expenses during the period, namely:
· EGP 12.2 million owed to the Egyptian government for vocational
training.
· EGP 6.5 million due to pre-operating expenses in Saudi Arabia.
· EGP 5.0 million in impairment expenses due to the ongoing
conflict in Sudan.
· EGP 16 million due to the expiration of Covid-19 testing kits.
· EGP 2 million due to an information strategy agreement which was
executed in 2023 for USD 54 thousand.
· EGP 1 million due to one-off legal reports.
· EGP 8 million due to one-off expenses related to the termination
of the Pakistan termination. It is important to note that these expenses have
been impacted by the devaluation of the EGP.
Adjusting for these expenses, net profit would have booked EGP 191 million and
yielded an NPM of 16% in Q3 2023 and EGP 437 million with an NPM of 14% in 9M
2023.
Raw material costs (35% of consolidated cost of goods sold) remained the
single largest contributor to cost of goods sold during the period. Raw
materials recorded costs of EGP 668 million during 9M 2023, expanding 19%
year-on-year, and constituting a total of 22% of revenues for the period
versus 20% in the same period of the previous year. During the nine-month
period, IDH reported a rise in the average cost of conventional test kits
(21.9% of revenues in 9M 2023 compared to 17% in 9M 2022) on the back of
rising inflation and a weaker EGP. The Company expects test kit prices as a
share of revenue to gradually normalize in the coming months as the initial
impact of the EGP devaluation begins to fade. It is also important to
highlight that raw material outlays in 9M 2023 include a one-off EGP 15.5
million expense related to expired Covid-19-related test kits.
Wages and salaries including employee share of profits (31% share of
consolidated cost of goods sold) continued to be the second largest
contributor to cost of goods sold during 9M 2023, coming at EGP 587 million, a
year-on-year increase of 27%. Increased direct wages and salaries reflect
higher than usual adjustments to compensation packages to compensate for
unprecedented inflation as part of the Group's staff retention strategy.
Furthermore, the translation effect due to a weaker EGP resulted in increased
direct wages and salaries expenses in both Jordan and Nigeria.
Direct Wages and Salaries by Region
9M 2022 9M 2023 Change
Egypt (EGP mn) 362 445 23%
Jordan (EGP mn) 84 118 41%
Jordan (JOD mn) 3 3 -16%
Nigeria (EGP mn) 12 22 79%
Nigeria (NGN mn) 280 395 -41%
Sudan (EGP mn) 3 3 -6%
Sudan (SDG mn) 79 51 -35%
Direct depreciation and amortization costs (14% of consolidated cost of goods
sold) rose 31% year-on-year, reaching EGP 266 million in 9M 2023. Higher
depreciation and amortization costs for the period primarily reflect the
addition of new branches to IDH's network, including the addition of the newly
rolled out Al-Borg Scan branch.
Other expenses (21% of consolidated cost of goods sold) booked EGP 395 million
during 9M 2023, increasing a marginal 0.5% year-on-year. It is worth noting
that other expenses for the comparable period, 9M 2022, had included EGP 63
million paid in concession fees as part of Biolab's agreement with Queen Alia
International Airport and Aqaba Port to provide Covid-19-related testing to
passengers in January and February of 2022. Excluding these fees, other
expenses increased 20% year-on-year from EGP 330 million in 9M 2022. The
increase in other expenses is attributable to increased cleaning,
transportation, and consulting expenses to support the expansion of IDH's
branch network in Egypt, and specifically Al-Borg Scan's growth. Additionally,
in Nigeria, higher gasoline prices and repair and maintenance costs pushed
other expenses up continuing to reflect a weaker Naira (versus the US dollar)
and an increasing inflationary environment.
Gross Profit
IDH's gross profit booked EGP 480 million in Q3 2023, increasing 37%
year-on-year. GPM for the quarter stood unchanged compared to Q3 2022 at 41%
reflecting a normalisation in margins as the initial impact of the multiple
EGP devaluations throughout FY 2022 and early FY 2023 begin to fade. It is
important to note that gross profitability witnessed tangible growth compared
to the first half of the year, increasing from a GPM of 35% in Q1 2023 and Q2
2023.
On a year-to-date basis, the Company recorded gross profit of EGP 1,138
million during 9M 2023, down 4% year-on-year. The gross profit margin (GPM)
stood at 37%, declining five percentage points from 42% in 9M 2022. Lower
gross profitability during the period reflected the above-mentioned increase
in cost of goods sold.
Selling, General and Administrative Expenses
SG&A outlays during 9M 2023 climbed to EGP 535 million, a 29% year-on-year
increase. As a percentage of revenues, SG&A outlays constituted 18% of
revenues, up from 15% in 9M 2022. Increased SG&A expenses came mainly on
the back of:
· Higher indirect wages and salaries expenses, which rose by 46%
year-on-year to EGP 207 million. Indirect wages and salaries amounted to 7% of
revenues in 9M 2023, compared to 5% one year prior. The increase can be
attributed to USD-denominated directors' compensations, as well as the
addition of a board member in the first quarter of last year (who received
compensation starting March 2022). Indirect wages and salaries also reflect
increased wage expenses in Jordan due to the translation effect from a weaker
EGP.
· Increased other expenses, which grew 36% year-on-year to EGP 222
million in 9M 2023. The increase in other expenses is mainly attributable to a
weaker EGP which saw USD-denominated expenses (including auditor fees) at the
holding level weigh on the consolidated figure.
· One-off legal consultancy expenses related to the termination of the
Pakistan deal in the first quarter of 2023 which stood at EGP 8 million.
Selling, General and Administrative Expenses
9M 2022 9M 2023 Change
Wages & Salaries 141 207 46%
Accounting Fees 33 58 73%
Professional Services Fees 27 44 63%
Market - Advertisement expenses 87 77 -12%
Other Expenses 92 99 8%
Depreciation & Amortisation 23 30 28%
Travelling and transportation expenses 12 20 74%
Total 415 535 29%
EBITDA
IDH reported normalised EBITDA(13) of EGP 411 million, up an impressive 55%
year-on-year and yielding an associated margin of 35% versus 31% in Q3 2022.
Additionally, EBITDA profitability recorded significant improvement compared
to the first two quarters of 2023, which booked EBITDA margins of 25% and 24%
in Q1 2023 and Q2 2023, respectively. Higher EBITDA profitability is a direct
reflection of IDH's gradual cost normalisation as the effects of the
devaluation over the past year begin to fade.
On a nine-month basis, the Company recorded a normalised EBITDA of EGP 873
million during the first nine months of 2023, down 10% year-on-year from the
high base of 9M 2022 when Covid-19-related testing had boosted results. IDH
reported an associated margin of 29%, declining six percentage points from 35%
in 9M 2022. Decreased EBITDA profitability mainly reflects lower gross
profitability coupled with higher SG&A expenses as discussed above.
It is important to highlight that EBITDA is normalised for several one-off
expenses, including an EGP 12 million non-recurring expense owed to the
Egyptian government. expense is in accordance with article 134 of labour law
on Vocational Guidance and Training issued by the Egyptian Government in 2003.
In accordance with the law, IDH's Egyptian operations are required to provide
1% of net profits each year into a training fund. Integrated Diagnostics
Holdings plc has taken legal advice and considered market practices in Egypt
relating to the law, and more specifically whether vocational training courses
undertaken by the Company's Egyptian subsidiaries suggest that obligations
have been satisfied by in-house training programmes provided by those
entities. Since the issue of the law, IDH's Egyptian subsidiaries have not
been requested by the government to pay, nor have they voluntarily paid, any
amounts into the external training fund.
1(3 ) Normalised EBITDA is calculated as operating profit plus depreciation
and amortization, excluding non-recurring expenses, specifically a EGP 12
million one-off expense owed to the Egyptian government for vocational
training, EGP 6.5 million in pre-operating expenses in Saudi Arabia, and EGP
5.0 million impairment expense in Sudan due to the ongoing situation in the
country.
EBITDA by Country
In Egypt, the Company booked normalised EBITDA of EGP 359 million with a
margin of 36% in Q3 2023, 53% above the figure booked in Q3 2022 when the
Company's EBITDA margin stood at 33%. Compared to the previous quarter,
Egyptian operations posted a 72% quarter-on-quarter growth with its EBITDA
margin expanding by 10 points.
Normalised EBITDA on a nine-month basis stood at EGP 766 million in 9M 2023,
down 11% year-on-year. Meanwhile, IDH booked an EBITDA margin of 31%, down
from 38% in 9M 2022. Lower EBITDA profitability is a reflection lower gross
profitability coupled with increased SG&A outlays at the Company's
Egyptian operations, which expanded 25% year-on-year in 9M 2023.
In Jordan, IDH's subsidiary, Biolab, recorded normalised EBITDA of JOD 1.3
million in Q3 2023, increasing 7% year-on-year and 18% quarter-on-quarter. The
normalised EBITDA margin stood at 31%, up from 29% in Q3 2022 and 22% in Q2
2023. In EGP terms, Jordan's normalised EBITDA came in at EGP 54 million and
yielded a margin of 31%, increasing 73% year-on-year and 66%
quarter-on-quarter from Q3 2022 and Q2 2023, respectively. It is important to
note that EBITDA results in EGP terms were partially affected by the
translation effect from a weakened EGP compared to Q3 2022.
On a year-to-date basis, the Company booked a normalised EBITDA of JOD 2.9
million in 9M 2023, declining 44% year-on-year and yielding an associated
margin of 26%. In EGP terms, normalised EBITDA remained marginally unchanged
at EGP 123 million and with a margin of 26%, mainly due to the translation
effect as a result of the weakening EGP. Lower EBITDA profitability is a
result of lower gross profitability, which declined 45% year-on-year in JOD
terms.
In Nigeria, despite growing revenues in EGP and NGN terms, the Company's
EBITDA losses widened, reaching NGN 61 million in Q3 2023 from NGN 43 million
during the same period last year. Compared to the previous quarter, the
Company recorded a narrowing of EBITDA losses, compared to NGN 111 million in
Q2 2023. In EGP terms, EBITDA losses reached EGP 2.5 million in Q3 2023,
expanding from a loss of EGP 1.9 million one year prior. Widening EBITDA
losses were fuelled by lower gross profitability in the country, due to rising
gasoline prices and increased inflation on the back of a weakened Naira.
In Sudan, IDH booked normalised EBITDA loss of SDG 4 million, down from a loss
of SDG 0.4 million in Q3 2022. In EGP terms, Sudanese operations yielded a
normalised EBITDA loss of EGP 212 thousand during Q3 2023 compared to EGP 14
thousand one year prior. Widening EBITDA losses for the quarter were driven by
the halting of operations in 16 of the country's 18 branches due to ongoing
conflict since the beginning of the year.
Regional EBITDA in Local Currency
Mn 9M 2022 9M 2023 Change
Egypt EBITDA EGP 857 766 -11%
Margin 38% 31%
Jordan JOD 5.1 2.9 -44%
Margin 25% 26%
Nigeria NGN -122 -294 -140%
Margin -10% -20%
Sudan SDG 4 20 445%
Margin 1% 10%
Interest Income / Expense
IDH's interest income in 9M 2023 reached EGP 46 million, down 44% from EGP 83
million during the comparable period of last year. Declined interest income
for the period was mainly a result of lower cash balances due to the record
cash dividends distributed during last year.
Interest expense(14) came in at EGP 115 million, rising 15% year-on-year from
EGP 100 million in 9M 2022. Higher interest expenses are mainly attributable
to:
· Higher interest on lease liabilities related to IFRS 16 due to
the addition of new branches to IDH's network.
· Higher interest expenses following the CBE decision to increase rates
by 1,000 bps since March 2022. It is important to note that IDH's interest
bearing debt balance decreased to EGP 94 million as at 30 September 2023, from
EGP 117 million at year-end 2022. Earlier in the year, as part of IDH's
strategy to reduce foreign currency risk, the Company agreed with General
Electric (GE) for the early repayment of its contractual obligation of USD 5.7
million. To finance the settlement, IDH utilized a bridge loan facility, with
half the amount being funded internally, while the other half (amounting to
EGP 55 million) was provided through a bridge loan by Ahly United Bank- Egypt
(AUBE). Interest expenses related to the AUBE facility recorded EGP 18 million
in 9M 2023. The bridge loan was fully settled in Q2 2023.
Interest Expense Breakdown
EGP mn 9M 2022 9M 2023 Change
Interest on Lease Liabilities (IFRS 16) 53.8 69.0 28%
Interest Expenses on Leases 14.9 19.4 30%
Interest Expenses on Borrowings(15) 11.1 17.7 59%
Bank Charges 11.1 8.8 -20%
Loan-related Expenses on IFC facility(16) 8.9 - -
Total Interest Expense 99.7 115.0 15%
1(4) Interest expenses on medium-term loans include EGP 18.0 related to the
Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's
facility with the Commercial International Bank (CIB) was fully repaid as of 5
April 2022.
1(5) Interest expenses on medium-term loans include EGP 18.0 related to the
Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's
facility with the Commercial International Bank (CIB) was fully repaid as of 5
April 2022.
1(6) Loan-related expenses on IFC facility represents commitment fees on the
facility granted by IFC and Mashreq with a total value of USD 60 million. The
facility was cancelled in May 2023.
Foreign Exchange
IDH recorded a foreign exchange gain of EGP 99 million during 9M 2023, up 80%
year-on-year and partially reflecting intercompany balances revaluation.
Taxation
Tax expenses, including both income and deferred tax, stood at EGP 197 million
during 9M 2023, a decrease of 22% year-on-year from the EGP 251 million
reported in 9M 2022. IDH's effective tax rate came in at 34%, down from 38% in
the same period of the previous year. It is worth mentioning that there is no
tax payable for IDH's two holding-level companies. Meanwhile, tax was paid
from the Group's operating subsidiaries (Egypt 31%, Jordan 28%, Nigeria 0.1%).
Taxation Breakdown by Region
EGP Mn 9M 2022 9M 2023 Change
Egypt 201.7 183.7 -9%
Jordan 18.5 12.4 -33%
Nigeria 30.5 -0.05 -
Sudan 0.4 0.5 24%
Total Tax Expenses 250.9 196.7 -22%
Net Profit
IDH's net profit in Q3 2023 stood at EGP 176 million in Q3 2023, up from a net
loss of EGP 36 million in Q3 2022, and with a margin of 15%. Improved
bottom-line profitability is also apparent on a quarter-on-quarter basis, with
the Company's NPM increasing from 4% in Q2 2023. On a nine-month basis, net
profit recorded EGP 387 million, down 4% year-on-year. The Company posted a
net profit margin (NPM) of 13% compared to 14% in 9M 2022.
Non-Recurring Expenses
IDH recorded several one-off expenses during the period, namely:
· EGP 12.2 million owed to the Egyptian government for vocational
training.
· EGP 6.5 million due to pre-operating expenses in Saudi Arabia.
· EGP 5.0 million in impairment expenses due to the ongoing
conflict in Sudan.
· EGP 16 million due to the expiration of Covid-19 testing kits.
· EGP 2 million due to an information strategy agreement which was
executed in 2023 for USD 54 thousand.
· EGP 1 million due to one-off legal reports.
· EGP 8 million due to one-off expenses related to the termination
of the Pakistan termination. It is important to note that these expenses have
been impacted by the devaluation of the EGP.
Adjusting for these expenses, net profit would have booked EGP 191 million and
yielded an NPM of 16% in Q3 2023 and EGP 437 million with an NPM of 14% in 9M
2023.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH booked gross property, plant and equipment (PPE) of EGP 2,453 million as
at 30 September 2023, up from EGP 2,208 at 31 December 2022. The increase in
CAPEX as a share of revenues during 9M 2023 is primarily attributable to the
addition of branches to IDH's network (constituting 7% of revenues), while the
remainder is due to the translation effect related to Jordan, Sudan, and
Nigeria (constituting 1% of revenues).
Total CAPEX Addition Breakdown - 9M 2023
EGP mn % of Revenue
Leasehold Improvements/new branches 138.9 4.6%
Al-Borg Scan Expansion 69.7 2.3%
Total CAPEX Additions Excluding Translation 208.9 6.8%
Translation Effect 36.2 1.2%
Total CAPEX Additions 245.1 8.0%
Accounts Receivable and Provisions
Accounts receivable as at 30 September 2023 amounted to EGP 602 million, up
52% year-to-date from the figure recorded as at year-end 2022. Meanwhile,
IDH's receivables' Days on Hand (DoH) stood at 145 days, increasing from 124
days as at 31 December 2022.
Provision for doubtful account booked EGP 37 million during the first nine
months of 2023, increasing from EGP 25 million in 9M 2022. Increases in
provisions and receivable balance are a reflection of slower collection rates
due to the economic downturns and inflationary environment which have
characterized several of IDH's geographies throughout the past year,
particularly in its largest market of Egypt.
Inventory
IDH's inventory balance as at the end of 9M 2023 amounted to EGP 365 million,
up from EGP 265 million at year-end 2022. Meanwhile, Days Inventory
Outstanding (DIO) stood at 135 days compared to 127 days at 31 December 2022.
Increased DIO is a reflection of management strategy to accumulate inventory
as a hedge against inflation over the past year.
Cash and Net Debt/Cash
Cash balances booked EGP 794 million at 30 September 2023, down from 816
million as at 31 December 2023. Declining cash balances are related to the
previously discussed decision for the early repayment of IDH's contractual
obligation of USD 5.7 million (equivalent to EGP 110 million) in line with its
strategy to reduce foreign currency risk by utilizing internal resources
coupled with a bridge loan facility provided by AUBE. The bridge loan facility
was fully settled in the second quarter of the year.
EGP million 31 Dec 2022 30 Sep 2023
T-Bills 296 272
Time Deposits 123 110
Current Accounts 378 376
Cash on Hand 18 37
Total 816 794
IDH's net debt(17) balance came in at EGP 356 million as of the end of 9M
2023, down 5% year-to-date from EGP 374 million as at year-end 2022.
(17) The net cash/(debt) balance is calculated as cash and cash equivalent
balances including financial assets at amortised cost, less interest-bearing
debt (medium term loans), finance lease and Right-of-use liabilities.
EGP million 31 Dec 2022 30 Sep 2023 31 Dec 2021
Cash and Financial Assets at Amortised Cost(18) 816 794 2,350
Lease Liabilities Property (727) (814) 106
Total Financial Liabilities (Short-term and Long-term) (335) (233)
Interest Bearing Debt ("Medium Term Loans") (127) (98)
Net Cash/(debt) Balance (374) (356) 1,483
Note: Interest Bearing Debt includes accrued interest for each period.
(18) As outlined in Note 18 of IDH's Consolidated Financial Statements, some
term deposits and treasury bills cannot be accessed for over 3 months and are
therefore not treated as cash. Term deposits which cannot be accessed for over
3 months stood at EGP 113 million in Q1 2023, versus EGP 123 million as at
year-end 2022. Meanwhile, treasury bills not accessible for over 3 months
stood at EGP 342 million in Q1 2023, up from EGP 296 million in FY 2022.
Lease liabilities and financial obligations on property stood at EGP 814
million as at the end of 9M 2023, with the increase driven by the rollout of
48 new branches across IDH's network over the past 12-month period.
Meanwhile, financial obligations related to equipment came in at EGP 233
million as at 30 September 2023, down from EGP 335 million as at year-end
2023. The decline in financial obligations related to equipment is due to the
early repayment of IDH's obligations with General Electric (GE) in line with
the Company's efforts to hedge against foreign currency risk. Half of the
settlement was financed by IDH internally, while the remainder was financed
through a bridge loan facility from AUBE.
Finally, interest bearing debt(19) recorded EGP 94 million at the end of 9M
2023, down from EGP 116 million as at 31 December 2022. The decrease primarily
reflects the repayment of EGP 17 million in accordance with Al-Borg Scan's
medium term loan repayment schedule.
(19) IDH's interest bearing debt as at 31 March 2023 included EGP 172 million
to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances
are excluding accrued interest for the period). It is worth noting that in
order to finance the early repayment settlement with General Electric, the
Company utilized a bridge loan facility of EGP 55 million. The facility was
withdrawn in Q1 2023 and settled in Q2 2023.
Liabilities
Accounts Payable(20)
Accounts payable as at 30 September 2023 stood at EGP 370 million, up from EGP
270 as at year-end 2022. Meanwhile, Days Payable Outstanding (DPO) amounted to
137 days, down from 151 days nine months earlier.
2(0) Accounts payable is calculated based on average payables at the end of
each period.
Put Option
The put option current liability is related to both:
· 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 option granted in 2022 to Izhoor, IDH, and Biolab as part of
their JV agreement in Saudi Arabia. The option allows the non-defaulting
party, at its sole and absolute discretion, to serve one or more written
notices to the defaulting party. The notices enable the non-defaulting party
to buy the defaulting party's shares at the fair price, sell its shares to the
defaulting party at the fair price, or request the dissolution and liquidation
of the JV company. It is important to note that the put option, which grants
these rights to the non-defaulting party, does not have a specified expiration
date.
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).
Accounts Receivable and Provisions
Accounts receivable as at 30 September 2023 amounted to EGP 602 million, up
52% year-to-date from the figure recorded as at year-end 2022. Meanwhile,
IDH's receivables' Days on Hand (DoH) stood at 145 days, increasing from 124
days as at 31 December 2022.
Provision for doubtful account booked EGP 37 million during the first nine
months of 2023, increasing from EGP 25 million in 9M 2022. Increases in
provisions and receivable balance are a reflection of slower collection rates
due to the economic downturns and inflationary environment which have
characterized several of IDH's geographies throughout the past year,
particularly in its largest market of Egypt.
Inventory
IDH's inventory balance as at the end of 9M 2023 amounted to EGP 365 million,
up from EGP 265 million at year-end 2022. Meanwhile, Days Inventory
Outstanding (DIO) stood at 135 days compared to 127 days at 31 December 2022.
Increased DIO is a reflection of management strategy to accumulate inventory
as a hedge against inflation over the past year.
Cash and Net Debt/Cash
Cash balances booked EGP 794 million at 30 September 2023, down from 816
million as at 31 December 2023. Declining cash balances are related to the
previously discussed decision for the early repayment of IDH's contractual
obligation of USD 5.7 million (equivalent to EGP 110 million) in line with its
strategy to reduce foreign currency risk by utilizing internal resources
coupled with a bridge loan facility provided by AUBE. The bridge loan facility
was fully settled in the second quarter of the year.
EGP million 31 Dec 2022 30 Sep 2023
T-Bills 296 272
Time Deposits 123 110
Current Accounts 378 376
Cash on Hand 18 37
Total 816 794
IDH's net debt(17) balance came in at EGP 356 million as of the end of 9M
2023, down 5% year-to-date from EGP 374 million as at year-end 2022.
(17) The net cash/(debt) balance is calculated as cash and cash equivalent
balances including financial assets at amortised cost, less interest-bearing
debt (medium term loans), finance lease and Right-of-use liabilities.
EGP million 31 Dec 2022 30 Sep 2023 31 Dec 2021
Cash and Financial Assets at Amortised Cost(18) 816 794 2,350
Lease Liabilities Property (727) (814) 106
Total Financial Liabilities (Short-term and Long-term) (335) (233)
Interest Bearing Debt ("Medium Term Loans") (127) (98)
Net Cash/(debt) Balance (374) (356) 1,483
Note: Interest Bearing Debt includes accrued interest for each period.
(18) As outlined in Note 18 of IDH's Consolidated Financial Statements, some
term deposits and treasury bills cannot be accessed for over 3 months and are
therefore not treated as cash. Term deposits which cannot be accessed for over
3 months stood at EGP 113 million in Q1 2023, versus EGP 123 million as at
year-end 2022. Meanwhile, treasury bills not accessible for over 3 months
stood at EGP 342 million in Q1 2023, up from EGP 296 million in FY 2022.
Lease liabilities and financial obligations on property stood at EGP 814
million as at the end of 9M 2023, with the increase driven by the rollout of
48 new branches across IDH's network over the past 12-month period.
Meanwhile, financial obligations related to equipment came in at EGP 233
million as at 30 September 2023, down from EGP 335 million as at year-end
2023. The decline in financial obligations related to equipment is due to the
early repayment of IDH's obligations with General Electric (GE) in line with
the Company's efforts to hedge against foreign currency risk. Half of the
settlement was financed by IDH internally, while the remainder was financed
through a bridge loan facility from AUBE.
Finally, interest bearing debt(19) recorded EGP 94 million at the end of 9M
2023, down from EGP 116 million as at 31 December 2022. The decrease primarily
reflects the repayment of EGP 17 million in accordance with Al-Borg Scan's
medium term loan repayment schedule.
(19) IDH's interest bearing debt as at 31 March 2023 included EGP 172 million
to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances
are excluding accrued interest for the period). It is worth noting that in
order to finance the early repayment settlement with General Electric, the
Company utilized a bridge loan facility of EGP 55 million. The facility was
withdrawn in Q1 2023 and settled in Q2 2023.
Liabilities
Accounts Payable(20)
Accounts payable as at 30 September 2023 stood at EGP 370 million, up from EGP
270 as at year-end 2022. Meanwhile, Days Payable Outstanding (DPO) amounted to
137 days, down from 151 days nine months earlier.
2(0) Accounts payable is calculated based on average payables at the end of
each period.
Put Option
The put option current liability is related to both:
· 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 option granted in 2022 to Izhoor, IDH, and Biolab as part of
their JV agreement in Saudi Arabia. The option allows the non-defaulting
party, at its sole and absolute discretion, to serve one or more written
notices to the defaulting party. The notices enable the non-defaulting party
to buy the defaulting party's shares at the fair price, sell its shares to the
defaulting party at the fair price, or request the dissolution and liquidation
of the JV company. It is important to note that the put option, which grants
these rights to the non-defaulting party, does not have a specified expiration
date.
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).
INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH"
AND ITS SUBSIDIARIES
Consolidated Financial Statements
for the nine-month period ended 30 September 2023
Consolidated statement of financial position as at 30 September 2023
Notes 30 Sep 2023 31 Dec 2022
EGP'000 EGP'000
Assets
Non-current assets
Property, plant and equipment 4 1,372,233 1,326,262
Intangible assets and goodwill 5 1,724,471 1,703,636
Right of use assets 6 689,718 622,975
Financial assets at fair value through profit and loss 7 - 18,064
Total non-current assets 3,786,422 3,670,937
Current assets
Inventories 365,433 265,459
Trade and other receivables 8 758,718 543,887
Financial assets at amortized cost 9 180,088 167,404
Current financial assets at fair value through profit and loss 7 24,534 -
Cash and cash equivalents 10 614,180 648,512
Total current assets 1,942,953 1,625,262
Total assets 5,729,375 5,296,199
Equity
Share capital 1,072,500 1,072,500
Share premium reserve 1,027,706 1,027,706
Capital reserves (314,310) (314,310)
Legal reserve 51,641 51,641
Put option reserve (336,303) (490,695)
Translation reserve (78,996) 24,173
Retained earnings 1,171,361 783,081
Equity attributable to the owners of the Company 2,593,599 2,154,096
Non-controlling interests 425,104 292,885
Total equity 3,018,703 2,446,981
Non-current liabilities
Provisions 17,455 3,519
Non-current put option liability 12 26,616 51,000
Borrowings 13 67,465 93,751
Other financial obligations 14 873,174 914,191
Deferred tax liabilities 18-C 356,739 321,732
Total non-current liabilities 1,341,449 1,384,193
Current liabilities
Trade and other payables 11 764,864 701,095
Other financial obligations 14 173,483 148,705
Current put option liability 12 309,687 439,695
Borrowings 13 40,104 22,675
Current tax liabilities 81,085 152,855
Total current liabilities 1,369,223 1,465,025
Total liabilities 2,710,672 2,849,218
Total equity and liabilities 5,729,375 5,296,199
The accompanying notes form an integral part of these consolidated financial
statements.
These condensed consolidated interim financial information were approved and
authorized for issue by the Board of Directors and signed on their behalf on
15 November 2023 by:
Dr. Hend El Sherbini Hussein Choucri
Chief Executive Officer Independent Non-Executive Director
Consolidated income statement for the quarter and nine-month periods ended 30
September 2023
For the three months period For the nine months period
ended 30 September ended 30 September
Notes 2023 2022 2023 2022
EGP'000 EGP'000 EGP'000 EGP'000
Revenue 21 1,181,736 846,251 3,053,678 2,800,316
Cost of sales (702,037) (496,581) (1,916,045) (1,618,776)
Gross profit 479,699 349,670 1,137,633 1,181,540
Marketing and advertising expenses (50,972) (58,641) (163,445) (151,209)
Administrative expenses 16 (123,383) (99,626) (377,723) (263,818)
Impairment loss on trade and other receivable (13,854) (8,877) (37,123) (25,035)
Other income (3,402) 3,834 (5,965) 7,305
Operating profit 288,088 186,360 553,377 748,783
Non-operating expense 12,200 - - -
Net fair value losses on financial assets at fair value - (141,092) - (141,092)
Finance costs 17 (41,831) (49,593) (114,957) (99,718)
Finance income 17 16,264 9,016 145,745 146,286
Net finance cost (25,567) (40,577) 30,788 46,568
Profit before tax 274,721 4,691 584,165 654,259
Income tax expense 18-B (98,310) (40,337) (196,704) (250,853)
Profit for the period 176,411 (35,646) 387,461 403,406
Profit attributed to:
Equity holders of the parent 177,789 (18,186) 401,379 404,034
Non-controlling interests (1,378) (17,460) (13,918) (628)
176,411 (35,646) 387,461 403,406
Earnings per share (expressed in EGP):
Basic and diluted earnings per share 20 0.30 (0.03) 0.67 0.67
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of comprehensive income/(expenses) for the quarter and
six-month periods ended 30 September 2023
For the three months period ended 30 September For the six months period ended 30 September
2023 2022 2023 2022
EGP'000 EGP'000 EGP'000 EGP'000
Net profit 176,411 (35,646) 387,461 403,406
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations (8,117) 34,378 (2,034) 111,686
Other comprehensive income / (Loss) for the period net of tax (8,117) 34,378 (2,034) 111,686
Total comprehensive income for the period 168,294 (1,268) 385,427 515,092
Attributed to:
Equity holders of the parent 168,294 (13,640) 298,210 421,829
Non-controlling interests - 12,372 87,217 93,263
168,294 (1,268) 385,427 515,092
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 2023
Notes 30 September 2023 30 September 2022
EGP'000 EGP'000
Cash flows from operating activities
Profit for the period before tax 584,165 654,259
Adjustments
Depreciation of property, plant and equipment 4 191,692 146,433
Depreciation of right of use assets 6 98,027 73,959
Amortisation of intangible assets 5 5,810 5,211
Unrealised foreign currency exchange (gains) losses 17 (99,406) 85,736
Interest income 17 (46,339) (83,194)
Interest expense 17 106,155 88,658
Bank Charges 8,803 11,060
Loss/(Gain) on disposal of Property, plant and equipment (697) 312
Impairment in trade and other receivables 37,123 25,035
Impairment in goodwill - 1,755
Equity settled financial assets at fair value (6,470) (3,427)
ROU Asset/Lease Termination (590) 1,152
Hyperinflation (gains) losses 17 - (7,736)
FV through P&L - 141,092
Change in Provisions 13,936 406
Change in Inventories (95,202) (34,123)
Change in trade and other receivables (219,352) (158,214)
Change in trade and other payables 30,672 (223,795)
Cash generated from operating activities before income tax payment 608,327 724,579
Tax paid during period (231,863) (653,580)
Net cash generated from operating activities 376,464 70,999
Cash flows from investing activities
Interest received on financial asset at amortised cost 46,795 84,044
Payments for the purchase of financial assets at amortized cost (192,955) (348,139)
Proceeds for the sale of financial assets at amortized cost 190,134 1,656,815
Payments for acquisition of property, plant and equipment 4 (218,271) (202,506)
Payments for acquisition of intangible assets 5 (2,150) (2,382)
Proceeds from sale of Property, plant and equipment 2,163 9,552
Payments for shares bought - (999,376)
Proceeds for shares sold - 858,284
Net cash flows generated (used in) from investing activities (174,284) 1,056,292
Cash flows from financing activities
Proceeds from borrowings 68,055 7,411
Repayments of borrowings (76,911) (21,721)
Payment of finance lease liabilities (210,496) (41,912)
Dividends paid - (1,411,752)
Interest paid (107,994) (84,096)
Bank charge paid (8,803) (11,060)
Paid cash to non-controlling interest (3,112) -
Injection of cash to non-controlling interest 48,114 8,763
Net cash flows used in financing activities (291,147) (1,554,367)
Net increase in cash and cash equivalent (88,967) (427,076)
Cash and cash equivalents at the beginning of the year 648,512 891,451
Effect of exchange rate 54,635 65,215
Cash and cash equivalent at the end of the period 10 614,180 529,590
Non-cash investing and financing activities disclosed in other notes are:
· Acquisition of right-of-use assets - note 6
· Property plant and equipment - note 4
· Put option liability - note 12
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 2023
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 2023 1,072,500 1,027,706 (314,310) 51,641 (490,695) 24,173 783,081 2,154,096 292,885 2,446,981
Profit for the period - - - - - - 401,379 401,379 (13,918) 387,461
Other comprehensive income for the period - - - - - (103,169) - (103,169) 101,135 (2,034)
Total comprehensive income at 30 September 2023 - - - - - (103,169) 401,379 298,210 87,217 385,427
Transactions with owners of the Company
Contributions and distributions
Dividends - - - - - - - - - -
Legal reserve formed during the period - - - - - - - - - -
Movement in put option liabilities - - - - 154,392 - - 154,392 - 154,392
Impact of hyperinflation - - - - - - (13,099) (13,099) - (13,099)
Paid share from non-controlling interest (3,112) (3,112)
Non-controlling interests cash injection in subsidiaries during the period - - - - - - - - 48,114 48,114
Total contributions and distributions - - - - 154,392 - (13,099) 141,293 45,002 186,295
Balance at 30 September 2023 1,072,500 1,027,706 (314,310) 51,641 (336,303) (78,996) 1,171,361 2,593,599 425,104 3,018,703
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)
Legal reserve formed during the period - - - - - - - - - -
Movement in put option liabilities - - - - 266,958 - - 266,958 - 266,958
Impact of hyperinflation - - - - - - (6,910) (6,910) 1,446 (5,464)
Non-controlling interest 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
*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 2023 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, Sudan and Saudi Arabia.
The Group's financial year starts on 1 January and ends on 31 December of each
year.
This condensed consolidated interim financial information were approved for
issue by the Directors of the Company on 15 November 2023.
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 2022 and corresponding interim reporting
period.
These condensed consolidated interim financial information do not include all
the information and disclosures in the annual consolidated financial
Statement, and should be read in conjunction with the financial Statement
published as at and for the year ended 31 December 2022 which is available at
www.idhcorp.com (http://www.idhcorp.com) ,. In addition, results of the nine
month period ended 30 September 2023 are not necessary indicative for the
results that may be expected for the financial year ending 31 December 2023.
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, Nigeria and Saudi Arabia 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 2022."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 2022. 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 2022".
4. Property, plant and equipment
Land & buildings Medical, electric Leasehold Fixtures, fittings & vehicles Project under construction Payment on account Total
& information
improvements
system equipment
Cost
At 1 January 2023 426,961 1,111,867 507,442 133,195 28,589 10,614 2,218,668
Additions 8,554 88,320 45,285 16,104 69,148 270 227,681
Hyperinflation effect - (13,098) - - - - (13,098)
Disposals - (3,316) (503) (1,852) - (5,671)
Exchange differences 2,727 2,966 23,095 7,373 33 - 36,194
Transfers - 36,300 29,918 (66,218) - -
At 30 September 2023 438,242 1,223,039 605,237 154,820 31,552 10,884 2,463,774
Depreciation
At 1 January 2023 61,578 513,869 261,705 55,254 - 892,406
Depreciation for the period 5,339 113,197 61,121 12,035 - - 191,692
Disposals - (2,275) (440) (1,490) - - (4,205)
Exchange differences 632 1,031 8,243 1,742 - - 11,648
At 30 September 2023 67,549 625,822 330,629 67,541 - - 1,091,541
Net book value at 30 September 370,693 597,217 274,608 87,279 31,552 10,884 1,372,233
At 31 December 2022 365,383 597,998 245,737 77,941 28,589 10,614 1,326,262
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 2023 1,291,823 395,551 92,836 1,780,210
Additions - - 2150 2,150
Effect of movements in exchange rates 14,552 7,911 4,102 26,565
Balance at 30 September 2023 1,306,375 403,462 99,088 1,808,925
Amortisation and impairment
Balance at 1 January 2023 6,373 381 69,820 76,574
Amortisation - - 5,810 5,810
Effect of movements in exchange rates 80 11 1,979 2,070
Balance at 30 September 2023 6,453 392 77,609 84,454
Carrying amount
Balance at 30 September 2023 1,299,922 403,070 21,479 1,724,471
Balance at 31 December 2022 1,285,450 395,170 23,016 1,703,636
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 2023.
6. Right-of-use assets
30 September 2023 31 December 2022
Balance at 1 January 622,975 462,432
Addition for the period / year 127,261 214,846
Depreciation charge for the period / year (98,027) (103,099)
Terminated contracts (5,092) (13,564)
Exchange differences 42,601 62,360
Balance 689,718 622,975
7. Financial asset at fair value through profit and loss
30 September 2023 31 December 2022
Non-current equity investments - 18,064
Current equity investments 24,534 -
24,534 18,064
*On August 17, 2017, Almakhbariyoun AL Arab (seller) has signed IT purchase
Agreement with JSC Mega Lab (Buyer) to transfer and install the Laboratory
Information Management System (LIMS) for a purchase price amounted to USD 400
000, which will be in the form of 10% equity stake in JSC Mega Lab. In case
the valuation of the project is less or more than USD 4,000,000, the seller
stake will be adjusted accordingly, in a way that the seller equity stake
shall not fall below 5% of JSC Mega Lab.
- Ownership percentage in JSC Mega Lab at the transaction date on April
8, 2019, and as of September 30, 2023, 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,
These assets have therefore been reclassified as current assets in the
financial information as of June 30, 2023, which allows BioLab stake to be
bought out by CHG at a price of the equity value being USD 400,000 plus 15%
annual Interred Rate of Return (IRR).
- In case the Management Agreement or the Purchase Agreement and/or the
Service level Agreement is terminated/cancelled within 6 months period from
the date of such termination/cancellation, CHG shall have a call option, which
allows the CHG to purchase Biolab's Strake in JSC Megalab having value of USD
400,000.00 plus 20% annual Interred Rate of Return (IRR).
- If JCI accreditation is not obtained, immediately after the
expiration of the 12 months period, CHG shall have a call option (the
Accreditation Call option), exercisable within 6 months period, allowing CHG
to purchase BioLab's Shares in JSC Mega Lab at a price of the equity value of
USD 400,00.00 plus the 20% annual IRR.
- After 12 months from the date of the put option period expiration,
CHG to purchase Biolab's Stake in JSC Megalab having value of USD 400,000 plus
higher of 20% annual IRR or 6X EV/EBITDA (of the financial year immediately
preceding the call option exercise date).
8. Trade and other receivables
30 September 2023 31 December 2022
Trade receivables - net 601,525 395,220
Prepayments 60,119 34,081
Due from related parties note (15) 1,562 5,930
Other receivables 93,677 106,363
Accrued revenue 1,835 2,293
758,718 543,887
9. Financial assets at amortised cost
30 September 2023 31 December 2022
Term deposits (more than 3 months) 49,245 60,200
Treasury bills (more than 3 months) 130,843 107,204
180,088 167,404
The maturity date of the treasury bills and Fixed-term deposits are between
3-12 months and have average interest rates treasury bills of EGP 22.03% and
Fixed-term deposits of EGP and JOD 5.20 and 5.38% respectively.
10. Cash and cash equivalents
30 September 2023 31 December 2022
Cash at banks and on hand 412,815 399,957
Treasury bills (less than 3 months) 140,971 185,513
Term deposits (less than 3 months) 60,394 63,042
614,180 648,512
11. Trade and other payables
30 September 2023 31 December 2022
Trade payable 370,089 269,782
Accrued expenses 215,193 241,060
Due to related parties note (15) 28,661 25,058
Other payables 95,118 98,204
Deferred revenue 52,097 60,948
Accrued finance cost 3,706 6,043
764,864 701,095
12. Put option liability
30 September 2023 31 December 2022
Current put option - Biolab Jordan 271,136 439,695
Current put option - Eagle Eye-Echo scan 38,551 -
309,687 439,695
30 September 2023 31 December 2022
Non-current put option - Eagle Eye-Echo scan - 51,000
Non-current put option - Medical Health Development 26,616 -
26,616 51,000
Put option - Biolab Jordan
The accounting policy for put options after initial recognition is to
recognise all changes in the carrying value of the put option liability within
equity.
Through the historic acquisitions of Makhbariyoun Al Arab the Group entered
into separate put option arrangements to purchase the remaining equity
interests from the vendors at of a subsequent date. At acquisition, a put
option liability has been recognised at the net present value of the exercise
price of the option.
The option is calculated at seven times EBITDA of the last 12 months minus Net
Debt and its exercisable in whole starting the fifth anniversary of completion
of the original purchase agreement, which fell due in June 2016. The vendor
has not exercised this right at 30 September 2023. 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
relationships, there is no expectation that this will happen in next 18
months. The option has no expiry date.
Put option - Eagle Eye-Echo scan
According to the definitive agreements signed on 15 January 2018 between
Dynasty Group Holdings Limited and the International Finance Corporation (IFC)
related to the Eagle Eye-Echo scan transaction, IFC has the option to put it
is shares to Dynasty in year 2024. The put option price will be calculated on
the basis of the fair market value determined by an independent valuator.
Put option - Medical Health Development
According to this joint venture agreement made on October 27th, 2022, between
Business Flower Holding LLC, Integrated Diagnostics Holdings plc and al
Makhbaryoun al Arab LLC, in cases of bankruptcy and stumbling, a
non-struggling party is entitled to implement any of the following options for
a struggling party's share without reference to it:
(A) sell to the Non-Defaulting Party its Shares at the Fair Price of such
Shares.
(B) buy the Non-Defaulting Party's Shares at the Fair Price of such Shares.
(C) requesting the dissolution and liquidation of the Company.
Due to the execution of the put option in the case specified above, the option
has been classified as a non-current liability in exchange for equity rights
for the Group.
13. Loans and borrowings
Currency Nominal interest rate Maturity 30 September 2023 31 December 2022
AUB - Bank EGP CBE corridor rate+1% 26 January 2027 94,451 116,426
AUB - Bank EGP Secured 7% 3 December 2023 13,118 -
107,569 116,426
Amount held as:
Current liability 40,104 22,675
Non- current liability 67,465 93,751
107,569 116,426
A) In July 2018, AL-Borg lab, one of IDH subsidiaries,
was granted a medium term loan amounting to EGP 130.5m from Ahli United Bank
"AUB Egypt" to finance the investment cost related to the expansion into the
radiology segment. As at 30 September 2023 only EGP 108 M had been drawn down
from the total facility available with 72M had been repaid. Loan withdrawal
availability period was extended till July 2023 and the loan will be fully
repaid by January 2027.
The loan contains the following financial covenants which if breached will
mean the loan is repayable on demand:
1. The financial leverage shall not exceed 0.7 throughout the period
of the loan
"Financial leverage": total bank debt divided by net equity.
2. The debt service ratios (DSR) shall not be less than 1.35 starting
2020
"Debt service ratio": cash operating profit after tax plus depreciation for
the financial year less annual maintenance on machinery and equipment adding
cash balance (cash and cash equivalent ) divided by total financial payments.
"Cash operating profit": Operating profit after tax, interest expense,
depreciation and amortisation, is calculated as follows: Net income after tax
and unusual items adding Interest expense, Depreciation, Amortisation and
provisions excluding tax related provisions less interest income and
Investment income and gains from extraordinary items.
"Financial payments": current portion of long-term debt including finance
lease payments, interest expense and fees and dividends distributions.
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 2023 corridor rate 20.25% (2022:
17.25%)
13. Loans and borrowings (continued)
AL- Borg company didn't breach any covenants for MTL agreements.
IDH opted to reduce its exposure to foreign currency risk by agreeing with
General Electric (GE) for the early repayment of its dollar obligation. The
Group and GE have agreed to settle this balance early for USD 3.55 million,
payable in EGP, equivalent to EGP 110 million.
To finance the settlement, IDH utilized a bridge loan facility, with half of
the amount (EGP 55 million) being funded internally and the other half (EGP 55
million) provided by a loan from Ahly United Bank - Egypt, this credit
facility was fully repaid during the six-month period ending 30 June 2023.
14. Other Financial obligations
30 September 2023 31 December 2022
Lease liabilities building 813,717 727,426
Financial liability- laboratory equipment 232,940 335,470
1,046,657 1,062,896
The financial obligations for the laboratory equipment and building are
payable as follows:
30 September 2023
Minimum payments Interest Principal
Less than one year 282,085 108,602 173,483
Between one and five years 1,016,173 288,382 727,791
More than five years 184,256 38,873 145,383
1,482,514 435,857 1,046,657
31 December 2022
Minimum payments Interest Principal
Less than one year 285,962 137,257 148,705
Between one and five years 1,030,750 314,656 716,094
More than Five years 227,715 29,618 198,097
1,544,427 481,531 1,062,896
Amounts recognised in profit or loss:
For the three months ended For the nine months ended
30 September
30 September
2023 2022 2023 2022
Interest on lease liabilities 23,823 9,111 69,044 44,037
Expenses related to short-term lease 3,116 4,644 8,307 19,788
14. Related party transactions
The significant transactions with related parties, their nature volumes and
balance during the period 30 September 2023 are as follows:
30 September 2023
Related Party Nature of transaction Nature of relationship Transaction amount of the year Amount due from / (to)
EGP'000 EGP'000
ALborg Scan (S.A.E)* Expenses paid on behalf Affiliate (351) -
International Fertility (IVF)** Expenses paid on behalf Affiliate (1,771) -
H.C Security Provide service Entity owned by Company's board member (7) (106)
Life Health Care Provided service Entity owned by Company's CEO (5,505) (2,987)
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder 168,560 (271,135)
Current account Bio. Lab C.E.O and shareholder 6,345 (13,663)
International Finance corporation (IFC) Put option liability Echo-Scan shareholder 12,448 (38,551)
International Finance corporation (IFC) Current account Echo-Scan shareholder 623 -
Integrated Treatment for Kidney Diseases (S.A.E) Collection Entity owned by Company's CEO (200)
Medical Test analysis 72 1,562
Hena Holdings Ltd shareholders' dividends deferral agreement shareholder (63) (2,435)
Actis IDH Limited shareholders' dividends deferral agreement shareholder (1,005) (2,960)
Medical Health Development Put option liability Affiliate (26,616) (26,616)
Dr. Kalid Ismail Current account Wayak C.E.O and shareholder (6,510) (6,510)
(363,401)
15. Related party transactions (continued)
31 December 2022
Related Party Nature of transaction Nature of relationship Transaction amount of the year Amount due from / (to)
EGP'000 EGP'000
AL borg Scan (S.A.E)* Expenses paid on behalf Affiliate - 351
International Fertility (IVF)** Expenses paid on behalf Affiliate 4 1,771
H.C Security Provide service Entity owned by Company's board member 220 (99)
Life Health Care Provided service Entity owned by Company's CEO 424 2,518
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder 481,665 (439,695)
Current account Bio. Lab C.E.O and shareholder (20,008) (20,008)
International Finance corporation (IFC) Put option liability Echo-Scan shareholder (15,963) (51,000)
International Finance corporation (IFC) Current account Echo-Scan shareholder 12,292 (623)
Integrated Treatment for Kidney Diseases (S.A.E) Rental income Entity owned by Company's CEO 116 1,290
Medical Test analysis 381 -
Dr. Hend El Sherbini Loan arrangement CEO 17,025 -
HENA HOLDINGS LTD shareholders' dividends deferral agreement shareholder (2,373) (2,373)
ACTIS IDH LIMITED shareholders' dividends deferral agreement shareholder (1,955) (1,955)
(509,823)
* ALborg Scan is a company whose shareholders include Dr. Moamena Kamel
(founder of IDH subsidiary Al-Mokhtabar Labs).
** International Fertility (IVF) is a company whose shareholders include
Dr. Moamena Kamel (founder of IDH subsidiary Al-Mokhtabar Labs).
Compensation of key management personnel of the Group
The amounts disclosed in the table are the amounts recognised as an expense
during the reporting period related to key management personnel.
30 September 2023 30 September 2022
Short-term employee benefits 52,872 39,027
52,872 39,027
16. General and administrative expenses
For the three months ended 30 September For the nine months ended 30 September
2023 2022 2023 2022
Wages and salaries 52,720 34,352 159,931 101,262
Depreciation 7,936 6,867 24,576 19,782
Amortisation 1,560 1,031 4,649 2,959
Consulting fees 32,066 23,800 100,420 57,864
Other expenses 29,101 33,576 88,147 81,951
Total 123,383 99,626 377,723 263,818
17. Net finance cost
For the three months ended 30 September For the nine months ended 30 September
2023 2022 2023 2022
Finance income
Interest income 16,264 7,751 46,339 83,194
Net foreign exchange gain - - 99,406 55,356
Gain on hyperinflationary net monetary position - 1,265 - 7,736
Total finance income 16,264 9,016 145,745 146,286
Finance cost
Net foreign exchange loss (2,753) (14,022) - -
Bank charges (3,420) (2,255) (8,803) (11,060)
Interest expense (35,658) (33,316) (106,154) (88,658)
Total finance cost (41,831) (49,593) (114,957) (99,718)
Net finance (cost)/income (25,567) (40,577) 30,788 46,568
18. 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
2023 2022 2023 2022
Current tax:
Current period (74,558) (20,292) (162,126) (180,131)
WHT suffered - (100,906) - (100,906)
Current tax (74,558) (121,198) (162,126) (281,037)
Deferred tax:
Deferred tax arising on undistributed reserves in subsidiaries (23,157) 113,285 (34,064) 64,732
Relating to origination and reversal of temporary differences (595) (32,424) (514) (34,548)
Total Deferred tax expense (23,752) 80,861 (34,578) 30,184
Tax expense recognised in profit or loss (98,310) (40,337) (196,704) (250,853)
C. Deferred tax liabilities
Deferred tax relates to the following:
30 September 2023 31 December 2022
Property, plant and equipment (34,500) (35,804)
Intangible assets (111,365) (109,118)
Undistributed reserves from Group subsidiaries (210,874) (176,810)
Net deferred tax liabilities (356,739) (321,732)
19. Financial instruments
The Group has reviewed the financial assets and liabilities held at 30
September 2023. 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.
20. Earnings per share
For the three months ended 30 September For the nine months ended 30 September
2023 2022 2023 2022
Profit attributed to owners of the parent 177,789 (18,186) 401,379 404,034
Weighted average number of ordinary shares in issue 600,000 600,000 600,000 600,000
Basic and diluted earnings per share 0.30 (0.03) 0.67 0.67
The Company has no potential diluted shares as at 30 September 2023 and 30
September 2022, therefore; the earnings per diluted share are equivalent to
basic earnings per share.
21. 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 five 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 five geographic areas, Egypt, Sudan, Jordan, Nigeria and
Saudi Arabia. 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 five
regions is set out below.
Revenue by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 986,160 532 173,992 21,052 - 1,181,736
30-September-22 711,195 4,317 109,372 21,367 - 846,251
Revenue by geographic location
For the nine months period ended Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 2,499,833 10,726 464,247 78,872 - 3,053,678
30-September-22 2,235,235 14,786 495,507 54,788 - 2,800,316
EBITDA by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 347,223 (5,227) 54,344 (2,471) (6,511) 387,358
30-September-22 235,623 (14) 31,447 (1,931) - 265,125
21. Segment reporting (continued)
EBITDA by geographic location
For the nine months period ended Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 754,085 (3,978) 122,846 (17,536) (6,511) 848,906
30-September-22 857,363 49 122,237 (5,263) - 974,386
Net profit / (loss) by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 175,813 (5,449) 21,243 (8,652) (6,544) 176,411
30-September-22 (13,555) 547 14,718 (37,356) - (35,646)
Net profit / (loss) by geographic location
For the nine months period ended Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 401,734 (1,812) 32,555 (38,472) (6,544) 387,461
30-September-22 380,005 4,825 62,189 (43,613) - 403,406
Revenue by type Net profit by type
For the three months For the three months
ended 30 September ended 30 September
2023 2022 2023 2022
Pathology 1,115,644 802,245 198,065 (2,876)
Radiology 66,092 44,006 (21,652) (32,770)
1,181,736 846,251 176,413 (35,646)
Revenue by type Net profit by type
For the nine months For the nine months
ended 30 September ended 30 September
2023 2022 2023 2022
Pathology 2,866,836 2,687,516 485,870 474,842
Radiology 186,842 112,800 (98,407) (71,436)
3,053,678 2,800,316 387,463 403,406
21. Segment reporting (continued)
Non-current assets by geographic location
Egypt region Sudan region Jordan region Nigeria region Saudi Arabia Total
30-September-23 3,070,167 3,847 606,928 80,423 25,057 3,786,422
31-December-22 3,039,930 14,993 494,244 121,770 - 3,670,937
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
2023 2022 2023 2022
Profit from operations 288,088 186,360 553,377 748,783
Property, plant and equipment depreciation 64,937 51,249 191,692 146,433
Right of use depreciation 32,395 25,744 98,027 73,959
Amortization of Intangible assets 1,938 1,772 5,810 5,211
EBITDA 387,358 265,125 848,906 974,386
Non-recurring expenses 23,730 - 23,730 -
Normalised EBITDA 411,088 265,125 872,636 974,386
22. Distributions made
30 September 31 December 2022
2023
EGP'000 EGP'000
Cash dividends on ordinary shares declared and paid:
Nil per qualifying ordinary share US$ 0.116 per share - 1,304,805
- 1,304,805
During the year ended December 31, 2022 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.
23. Important events
On March 8, 2023, the Group completed the establishment of Medical Health
Development Company, a limited liability company based in Saudi Arabia with a
total stake of 51% directly and indirectly through one of the Group's
subsidiaries, where Integrated Diagnostics Holdings (IDH) owns 30% and Al
Makhbaryoun Al Arab LLC ("Biolab")-Jordan a subsidiary owns 21%.
The Central Bank of Egypt increased the interest rate by 200 points, to reach
19.25% instead of 17.25%. This was by a decision of the Monetary Policy
Committee, according to the meeting held on March 30, 2023. And increased the
interest rate by 100 points, to reach 20.25% instead of 19.25%. This was by a
decision of the Monetary Policy Committee, according to the meeting held on 6
August 2023.
During April 2023, an armed conflict began in Sudan that led to security
unrest across the country. Business has been temporarily frozen in the
branches of the Sudan Laboratory Company and Ultra Lab until further notice,
which will greatly affect the profits of the geographical sector in the
subsequent period. The Group's management is closely monitoring the situation
and is currently evaluating the impact of these events on the Group's business
results and activities. Therefore, the company's management has evaluated the
business results, and a provision has been formed for 5 M.
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