REG - Integrated Diag Hdgs - Half-year Report
12/09/2022 08:30
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RNS Number : 0844Z Integrated Diagnostics Holdings PLC 12 September 2022
Integrated Diagnostics Holdings Plc
1H 2022 Results
Monday, 12 September 2022
Integrated Diagnostics Holdings Plc delivers robust growth in traditional
offering demonstrating underlying strength
(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or
"the Company"), a leading consumer healthcare company with operations in
Egypt, Jordan, Sudan and Nigeria, released today its reviewed financial
statements and operational performance for the six-month period ended 30 June
2022, recording revenue (compliant with IFRS) of EGP 1,954 million and net
profit of EGP 439 million. During the period, IDH's conventional business
continued to demonstrate its underlying strength and growth potential,
recording robust year-on-year growth and helping to offset the decline in
Covid-19-related(1) revenues for the period. More specifically, IDH's
conventional business (comprising 69% of total revenues) recorded a solid 13%
year-on-year increase in revenue during 1H 2022, on the back of a 6% rise in
test volumes. Similarly, in Q2-2022, IDH's conventional offering recorded a
remarkable 18% year-on-year and 9% quarter-on-quarter rise in revenues, with
the robust growth versus Q1-2022 coming despite the seasonal slowdown related
to the holy month of Ramadan and the Eid holidays. Consolidated revenues for
the quarter recorded EGP 774 million, while net profit stood at EGP 125
million in Q2 2022. As noted above, consolidated results for the three- and
six-month periods ended 30 June 2022 were weighed down by a significant
slowdown in Covid-19-related business owing to a widespread decline in
infection rates, the lifting of mandatory testing for international
travellers, and a substantial decline in the average price per
Covid-19-related test.
Financial Results (IFRS)
EGP mn 1H 2021 1H 2022 Change
Revenues 2,293 1,954 -15%
Conventional Revenues 1,188 1,339 13%
Covid-19-related Revenues 1,105 615 -44%
Cost of Sales (988) (1,122) 14%
Gross Profit 1,305 832 -36%
Gross Profit Margin 57% 43% -14 pts.
Operating Profit 1,094 562 -49%
EBITDA(2) 1,203 709 -41%
EBITDA Margin 52% 36% -16 pts.
Net Profit 668 439 -34%
Net Profit Margin 29% 22% -7 pts.
Cash Balance 1,587 2,182 37%
Note (1): Throughout the 1H 2022 Earnings Release, percentage changes between
reporting periods are calculated using the exact value (as reported in the
Company's Consolidated Financials) and not the corresponding rounded figure.
Key Operational Indicators(3)
1H 2021 1H 2022 Change
Branches 495 538 43
Patients ('000) 4,673 4,541 -3%
Revenue per Patient (EGP) 491 416 -15%
Tests ('000) 16,318 16,004 -2%
Conventional Tests ('000) 13,717 14,547 6%
Covid-19-related Tests ('000) 2,601 1,458 -44%
Revenue per Test (EGP) 141 118 -16%
Revenue per Conventional Test (EGP) 87 92 6%
Revenue per Core Covid-19 Test (EGP) 425 389 -8%
Revenue per Other Covid-19-related Test (EGP) 152 134 -12%
Test per Patient 3.5 3.5 N/A
(1)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
(2)EBITDA is calculated as operating profit plus depreciation and
amortization.
(3)Key operational indicators are calculated based on net sales for the six
month period of EGP 1,891 million. More details on the difference between net
sales and total revenues is available below.
Important Notice: Treatment of Revenue Sharing Agreements and Use of
Alternative Performance Measures
As part of IDH's efforts to support local authorities in Egypt and Jordan in
the fight against the pandemic, Biolab (IDH's Jordanian subsidiary) secured
several revenue-sharing agreements to operate testing stations, primarily
dedicated to PCR testing for Covid-19, in multiple locations across the
country including Queen Alia International Airport (QAIA) and Aqaba Port.
These agreements kicked off in May 2021 at Aqaba Port and in August 2021 at
QAIA. However, following the decision by Jordanian authorities on 1 March
2022 to end mandatory testing, testing booths across both locations recorded
sharp declines in patient traffic.
Under these agreements, Biolab received the full revenue (gross sales) for
each test performed and paid a proportion to QAIA (38% of gross sales
excluding sales tax) and Aqaba Port (36% of gross sales) as concession fees to
operate in the facilities, thus effectively earning the net of these amounts
(net sales) for each test supplied. Starting in Q4 2021, the treatment of
these agreements was altered in accordance with IFRS 15 paragraph B34, which
considers Biolab as a Principal (and not an Agent). Subsequently, revenues
generated from these agreements are reported in the Consolidated Financial
Statements as gross (inclusive of concession fees) and the fees paid to QAIA
and Aqaba Port are reported as a separate line item in the direct cost. It is
important to note that sales generated from these agreements were reflected on
the Company's results in Q1 2022 only as the agreements were terminated
starting in the second quarter of the year.
In an effort to present an accurate picture of IDH's performance for the
six-month period ended 30 June 2022, throughout the report management utilizes
net sales of EGP 1,891 million for 1H 2022 (IFRS revenues stand at EGP 1,954
million for the six-month period). Net sales for the first half of the year
are calculated as total gross revenues excluding concession fees and sales
taxes paid as part of Biolab's revenue sharing agreements with QAIA and Aqaba
Port.
It is important to note that aside from revenue and cost of sales, all other
figures related to gross profit, operating profit, EBITDA, and net profit are
identical in the APM and IFRS calculations. However, the margins related to
the aforementioned items differ between the two sets of performance indicators
due to the use of Net Sales in the APM calculations and the use of Revenues
for the IFRS calculations.
Adjustments Breakdown
EGP mn 1H 2022
Net Sales 1,891
QAIA and Aqaba Port Concession Fees 63
Revenues (IFRS) 1,954
Cost of Net Sales (1,059)
Adjustment for QAIA and Aqaba Port Agreements (63)
Cost of Sales (IFRS) (1,122)
Adjustments by Country
EGP mn 1H 2022 1H 2022
(IFRS) (APM)
Egypt 1,524 1,524
Jordan 386 323
Sudan 10 10
Nigeria 33 33
Total 1,954 1,891
Note: differences between IFRS and APM figures are highlighted in grey.
Financial Results (APM)
IFRS APM
EGP mn 1H 2021 1H 2022 Change 1H 2021 1H 2022 Change
Net Sales 2,293 1,954 -15% 2,293 1,891 -18%
Conventional Net Sales 1,188 1,339 13% 1,188 1,339 13%
Covid-19-related Net Sales 1,105 615 -44% 1,105 552 -50%
Cost of Net Sales (988) (1,122) 14% (988) (1,059) 7%
Gross Profit 1,305 832 -36% 1,305 832 -36%
Gross Profit Margin on Net Sales 57% 43% -14 pts 57% 44% -13 pts
Operating Profit 1,094 562 -49% 1,094 562 -49%
EBITDA(4) 1,203 709 -41% 1,203 709 -41%
EBITDA Margin on Net Sales 52% 36% -16 pts 52% 38% -15 pts
Net Profit 668 439 -34% 668 439 -34%
Net Profit Margin on Net Sales 29% 22% -7 pts 29% 23% -6 pts
Cash Balance 1,587 2,182 37% 1,587 2,182 37%
Note: differences between IFRS and APM figures are highlighted in grey.
(4)EBITDA is calculated as operating profit plus depreciation and
amortization.
Introduction
i. Financial Highlights
· Net Sales recorded EGP 1,891 million in 1H 2022, 18% below last
year's figure which had been boosted by strong contributions from
Covid-19-related offering. During the period, IDH continued to record robust
year-on-year growth in conventional net sales, once more displaying the
business' underlying strength and growth potential. This helped offset the
significant decline in Covid-19-related(5) net sales for the period, owing to
lower infection rates, the lifting of mandatory testing for international
passengers, and declining average test prices. On a quarterly basis,
consolidated net sales fell 34% year-on-year in Q2 2022 on the back of a large
contraction in Covid-19-related net sales. Meanwhile, conventional net sales
continued their steady expansion during the second quarter, a particularly
noteworthy result in light of the expected seasonal slowdown related to the
holy month of Ramadan and Eid impacting results for April and May.
· More specifically, IDH's conventional offering recorded EGP 1,339
million in 1H 2022 up 13% year-on-year and continuing to support consolidated
net sales for the six-month period. The segment's continued growth now sees it
contribute to 71% of consolidated net sales up from 52% this time last year.
The solid year-on-year growth was supported by a robust 6% increase in both
test volumes and average revenue per test. On a quarterly basis, conventional
net sales expanded an impressive 18% year-on-year and 9% quarter-on-quarter
continuing to display the business' underlying strength. Growth was supported
by growing test volumes which expanded 7% year-on-year and 4%
quarter-on-quarter.
· During the six-month period, IDH's Covid-19-related net sales
recorded EGP 552 million versus the EGP 1,105 million recorded in 1H 2021. As
such, the segment made up just 29% of total net sales in 1H 2022 versus 48% in
1H 2021. The segment's performance in the first six months of the year was
significantly impacted by results for the second quarter, with
Covid-19-related net sales declining 87% year-on-year and 84%
quarter-on-quarter to record EGP 75 million in Q2 2022.
· Gross Profit recorded EGP 832 million in 1H 2022, down 36%
year-on-year. Gross profit margin on net sales stood at 44% compared to 57% in
1H 2021. Lower gross profitability comes on the back of a significant fall in
the average price of Covid-19-related tests (including a 52% fall in the
average price of PCR tests) which reflected in a rise in raw materials as
percentage of net sales for the period. The contraction in gross profitability
is also in part attributable to an increase in direct salaries and wages
versus last year related to additional staff employed at the testing booths at
Aqaba Port and QAIA and across IDH's newly rolled out branches, as well as an
annual salary increase for IDH's staff. In Q2 2022, IDH recorded a gross
profit of EGP 300 million, down 55% year-on-year and with an associated margin
of 39%. Lower gross profitability for the quarter in part reflects the
expected seasonal slowdown related to the holy month of Ramadan and Eid
vacation.
· EBITDA(6) recorded EGP 709 million in the six-month period,
representing a 41% year-on-year decrease. EBITDA margin on net sales stood at
38% compared to 52% in 1H 2021. The year-on-year contraction comes on the back
of lower gross profitability coupled with higher SG&A outlays for the
period mainly related to marketing activities. On a quarterly basis, EBITDA
recorded EGP 241 million in Q2 2022, down 60% year-on-year and with an
associated margin of 31%.
· Net Profit recorded EGP 439 million in 1H 2022, down 34%
year-on-year. Net profit margin on net sales stood at 23% for the period, in
line with the Group's pre-Covid-19 averages.
(5)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.
(6)EBITDA is calculated as operating profit plus depreciation and
amortization.
ii. Operational Highlights
· IDH's branch network reached 538 branches as at 30 June 2022, up from
495 branches as at 30 June 2021 and 502 branches at year-end 2021.
· Conventional tests performed, which made up the majority of total
tests in 1H 2022, recorded 14.5 million, up a solid 6% versus last year. This
largely compensated for a 44% year-on-year decline in Covid-19-related tests
performed. As such total test volumes contracted 2% year-on-year to record
16.0 million in 1H 2022.
· Average revenue per test(7) recorded EGP 118 in 1H 2022, a
year-on-year decline of 16% driven by lower average revenue per
Covid-19-related(8) tests (down 11% year-on-year). On the other hand, average
revenue per conventional test increased 6% year-on-year in 1H 2022.
· Total patients served decreased 3% in 1H 2022 to record 4.5 million.
Meanwhile, average test per patient stood unchanged at 3.5 in 1H 2022.
· In Egypt (80.6% share of consolidated net sales), IDH recorded
revenue of EGP 1,524 million in 1H 2022, down 21% year-on-year. IDH's Egyptian
operations recorded a solid 12% year-on-year increase in conventional revenues
(75% of Egypt's total revenues) on the back of rising test volumes. Meanwhile,
Covid-19-related revenues declined 58% year-on-year due to lower test volumes
as infections rates decreased, mandatory testing for travellers was lifted,
the average price for all Covid-19-related tests decline substantially.
Finally, Egypt's revenues were supported by a 19% contribution from the
Group's house call services.
· Al-Borg Scan recorded revenues of EGP 35 million, representing a 78%
year-on-year increase. Revenue growth was supported by an 85% and 77%
year-on-year increase in test and patient volumes, respectively. Growing
volumes at the venture have come on the back of new branch rollouts (+3 over
the last twelve months). In the coming months, the Group is planning to expand
its radiology branch network further through the roll out of two additional
branches.
· Wayak recorded a 364% year-on-year increase in consolidated revenue,
which stood at EGP 8.7 million in 1H 2022 versus EGP 1.9 million in 1H 2021.
Higher revenues in part reflect a 47% year-on-year rise in delivery orders
which reached 64.3 thousand in 1H 2022. Combined with management's continued
cost optimisation efforts, this is driving a steady narrowing of the venture's
consolidated EBITDA losses. More specifically, EBITDA losses contracted to EGP
1.7 million from EGP 3.41 million.
· In Jordan (17.1% share of consolidated net sales), net sales reached
EGP 323 million (IFRS revenues(9) recorded EGP 386 million in 1H 2022),
unchanged from last year's figure. During the period, Biolab recorded a 14%
year-on-year increase in conventional net sales, while Covid-19-related net
sales contracted 10% reflecting lower test prices.
· IDH's Nigerian operations (1.8% share of consolidated net sales)
recorded revenues of EGP 33 million in 1H 2022, up 32% from the comparable
period of 2021, and reflecting the rising demand for the generally
higher-priced MRI and CT testing. Excluding the two branches which were closed
down earlier this year, test and patients volumes would be up 25% and 19%
year-on-year, respectively.
· In Sudan (0.6% share of consolidated net sales), IDH recorded a
remarkable 13% year-on-year increase in revenues during the first six months
of 2022. This marked the first revenue increase in EGP terms in over a year
and came on the back of a 40% increase in average revenue per test. In local
currency terms growth was even more pronounced with IDH's Sudanese operations
reporting a 125% year-on-year increase in revenue.
(7)Calculated on net sales for the period.
(8)Covid-19-related tests include both Core Covid-19 tests (PCR, Antigen, and
Antibody) as well as Other Covid-19-related tests.
(9)Biolab's revenues for the quarter are calculated as net sales and including
concession fees paid to QAIA and Aqaba Port as part of their revenue sharing
agreements.
iii. Management Commentary
Commenting on the Group's performance, IDH Chief Executive Officer Dr. Hend
El-Sherbini said: "I am pleased to present another set of solid financial and
operational results, which saw us build on a strong start to the year to
deliver further growth in our conventional business despite a difficult
operating environment. I was particularly happy to note the robust
year-on-year and quarter-on-quarter growth delivered by our conventional
service offering during the second quarter of the year, a noteworthy
achievement in light of the seasonal slowdown associated with the holy month
of Ramadan and Eid holiday. The segment's steady expansion comes as a direct
result of our multi-pronged growth and investment strategy which has enabled
us to continue delivering exceptional value to our patients despite the
unprecedented challenges faced over the last several years. Looking at the
numbers in more detail, conventional net sales recorded a robust 13%
year-on-year expansion in 1H 2022. Meanwhile in Q2 2022, conventional net
sales expanded 18% year-on-year and an impressive 9% quarter-on-quarter. In
both periods, growth was supported by higher test and patient volumes, once
more showcasing the attractiveness of our value proposition and the business'
strong future growth potential. Moreover, our ability to consistently grow our
business irrespective of ongoing challenges, has enabled our conventional
revenues to currently stand an impressive 32% above pre-pandemic revenues
recorded in the first half of 2019 once controlling for contributions from the
100 Million Healthy Lives campaign. Robust growth at the conventional segment
is helping to offset the significant decline in our Covid-19-related(10) net
sales both on a quarterly and year-to-date basis. More specifically, starting
in March we recorded sharp declines across both Egypt and Jordan on the back
of lower infection rates, a lifting of mandatory testing for international
travellers, and a widespread decline in Covid-19 test prices.
On a geographic basis, across both Egypt and Jordan, we are continuing to
leverage our market leading position, expanded product offering and patient
base, increased service delivery capabilities, and growing visibility to
deliver robust growth in our conventional business. We were very pleased to
note the 12% year-on-year growth in conventional revenues delivered by our
home of Egypt, which continued to expand in line with recent trends despite
rising inflation and an above-average number of public holidays during the
months of April and May. Egypt's performance continued to be bolstered by
rising contributions from our fast-growing radiology venture, Al-Borg Scan,
which in early August obtained the prestigious ACR accreditation for its
nuclear medicine unit. Across both Egypt and Jordan, we are continuing to
focus on retaining the thousands of new patients acquired through our
Covid-19-related services over the past two years. Initiatives on this front
have included the launch of a dedicated loyalty programme, the roll out of
multiple marketing campaigns, and the enhancement of our cross-selling
capabilities through a more effective use of patient data. In parallel, we are
continuing to invest in growing our direct-to-patient reach, further
developing our branch network, house call service, and digital offering. Here
it is worth highlighting that thanks to our efforts to ramp up our house call
capabilities over the last two years, the service is continuing to make
contributions to consolidated net sales well above its pre-pandemic averages.
Looking at our other geographies, in Nigeria we recorded a solid year-on-year
revenue growth supported by a record-breaking second quarter performance, and
reflecting the growing popularity of the venture's radiology offering. It is
also worth stressing that when controlling for branch closures in the first
quarter of the year, both test and patient volumes posted strong year-on-year
growth proving that the venture's revamp strategy is continuing to deliver the
desired results despite the fast-rising inflation experienced in recent
months. On an equally positive note, we witnessed the return to year-on-year
growth in EGP terms of our operations in Sudan demonstrating the underlying
potential of the Sudanese market.
While we expect the current operational challenges to persist throughout the
rest of 2022, I firmly believe that the robust mitigation measures we have put
in place provide ample protection against possible future disruptions to the
business. Coupled with our flexible business model and the inherently
counter-cyclical nature of the healthcare industry, this sees us well placed
to take full advantage of the vast growth opportunities offered by our
markets. Looking at our mitigation strategy in more detail, as with similar
situations in the past, we expect protracted high inflation, in particular in
Egypt, to have the most significant impact on patients who pay for their own
healthcare. With this in mind, we have been developing our marketing programs
to target them with a strong health awareness message in combination with a
compelling value component. This includes offering bundled diagnostic test
packages for lifestyle-related diseases and chronic health conditions as well
as an in-house point redemption system. We are also exploring various
solutions to offer more affordable payment plans to help our patients during
the ongoing difficulties. At the same time, I am confident that the brand
equity we have built over many years has translated into strong loyalty, and I
am certain that patients will continue to choose us as their trusted
diagnostic services provider irrespective of the ongoing inflationary
pressures. Meanwhile, thanks to our proactive inventory build-up and sourcing
strategy we continue to face no problems acquiring raw materials and we hold
sufficient inventories to cover four months of operations. Going forward, we
are confident that our long-lasting relationships with test kit suppliers we
enable us to continue procuring stock at competitive prices.
In light of the aforementioned and our robust performance in the first half of
the year, we are maintaining our full-year guidance, with the Company on track
to record conventional revenue year-on-year growth of around 20%. It is worth
noting that these estimates assume no additional contributions from our
Covid-19-related offering.
On a similar note, I am happy to report that despite the challenging
conditions faced on the foreign exchange markets over the past several months,
we have successfully completed the payment of the entire full-year 2021
dividend to all shareholders. The distribution of a record-breaking USD 69.6
million dividend reaffirms our trust in the business' fundamental strength and
sustainability, and its potential going forward."
(10)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.
- End -
Analyst and Investor Call Details
An analyst and investor call will be hosted at 2pm (UK) | 3pm (Egypt) on
Tuesday, 13 September 2022. You can register for the call by clicking on this
link (https://zoom.us/webinar/register/WN_0sjk3qbQQgK9LuzssDrx5A) , and you
may dial in using the conference call details below:
· Webinar ID: 928 3447 8622
· Webinar Passcode: 651028
For more information about the event, please contact: amr.amin@cicapital.com
(mailto:amr.amin@cicapital.com)
About Integrated Diagnostics Holdings (IDH)
IDH is a leading consumer healthcare company in the Middle East and Africa
with operations in Egypt, Jordan, Sudan and Nigeria. The Group's core brands
include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab
(Jordan), Ultralab and Al Mokhtabar Sudan (both in Sudan) and Echo-Lab
(Nigeria). A long track record for quality and safety has earned the Company a
trusted reputation, as well as internationally recognised accreditations for
its portfolio of over 2,000 diagnostics tests. From its base of 538 branches
as of 30 June 2022, IDH will continue to add laboratories through a Hub, Spoke
and Spike business model that provides a scalable platform for efficient
expansion. Beyond organic growth, the Group's expansion plans include
acquisitions in new Middle Eastern, African, and East Asian markets where its
model is well-suited to capitalise on similar healthcare and consumer trends
and capture a significant share of fragmented markets. IDH has been a
Jersey-registered entity with a Standard Listing on the Main Market of the
London Stock Exchange (ticker: IDHC) since May 2015 with a secondary listing
on the EGX since May 2021 (ticker: IDHC.CA).
Shareholder Information
LSE: IDHC.L
EGX: IDHC.CA
Bloomberg: IDHC:LN
Listed on LSE: May 2015
Listed on EGX: May 2021
Shares Outstanding: 600 million
Contact
Nancy Fahmy
Investor Relations Director
T: +20 (0)2 3345 5530 | M: +20 (0)12 2255 7445 | nancy.fahmy@idhcorp.com
(mailto:nancy.fahmy@idhcorp.com)
Forward-Looking Statements
These results for the six-month period ended 30 June 2022 have been prepared
solely to provide additional information to shareholders to assess the group's
performance in relation to its operations and growth potential. These results
should not be relied upon by any other party or for any other reason. This
communication contains certain forward-looking statements. A forward-looking
statement is any statement that does not relate to historical facts and
events, and can be identified by the use of such words and phrases as
"according to estimates", "aims", "anticipates", "assumes", "believes",
"could", "estimates", "expects", "forecasts", "intends", "is of the opinion",
"may", "plans", "potential", "predicts", "projects", "should", "to the
knowledge of", "will", "would" or, in each case their negatives or other
similar expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements containing
information on future financial results, plans, or expectations regarding
business and management, future growth or profitability and general economic
and regulatory conditions and other matters affecting the Group.
Forward-looking statements reflect the current views of the Group's management
("Management") on future events, which are based on the assumptions of the
Management and involve known and unknown risks, uncertainties and other
factors that may cause the Group's actual results, performance or achievements
to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the Group's actual
financial condition and results of operations to differ materially from, or
fail to meet expectations expressed or implied by, such forward-looking
statements.
The Group's business is subject to a number of risks and uncertainties that
could also cause a forward-looking statement, estimate or prediction to differ
materially from those expressed or implied by the forward-looking statements
contained in this communication. The information, opinions and forward-looking
statements contained in this communication speak only as at its date and are
subject to change without notice. The Group does not undertake any obligation
to review, update, confirm or to release publicly any revisions to any
forward-looking statements to reflect events that occur or circumstances that
arise in relation to the content of this communication.
Group Operational & Financial Review
i. Revenue/Net Sales and Cost Analysis
Revenue/Net Sales
Consolidated Analysis
During both Q2 2022 and 1H 2022, IDH continued to record robust growth in
conventional revenues supported by both higher volumes and average revenue per
test. It is especially important to note that conventional revenues in Q2 2022
expanded an impressive 18% year-on-year and 9% quarter-on-quarter despite
results for the months of April and May being weighed down by the expected
slowdown related to the holy month of Ramadan and Eid holidays. The steady
growth in IDH's conventional revenues further demonstrates the business'
underlying strength and future growth potential.
Meanwhile, IDH recorded a significant contract in Covid-19-related(11)
offering on the back of lower infection rates across both Egypt and Jordan,
the lifting of mandatory testing for international travellers, and a
substantial decline in the average price per Covid-19-related test. In fact,
during the first half of the year, the average price of PCR tests fell 45% in
Egypt and 44% in Jordan compared to 1H 2021. It is worth noting that the
segment's decline largely came in the second quarter of the year, outweighing
a strong start to the year which had seen the Group's Covid-19-related
offering record strong demand in the months of January and February.
As such, IDH recorded total consolidated revenue of EGP 1,954 million in the
first half of the year, representing a 15% year-on-year decline. Consolidated
net sales(12) recorded EGP 1,891 million, down 18% from the comparable period
of last year which had included strong contributions from the Group's
Covid-19-related offering. On a quarterly basis, consolidated net sales
recorded EGP 774 million, down 34% versus Q2 2021 and 31% versus the first
quarter of 2022.
House Call Service
The Group's consolidated net sales were also supported by its house call
services in Egypt and Jordan, which recorded revenues of EGP 307 million in
the first half of the year and contributed to 16% of consolidated net sales
for the six-month period. The service continued to make a robust contribution,
well above the service's pre-pandemic averages. The robust set of results
continue to reflect the significant investments undertaken by the Group over
the last two years to boost its house call capacity and cater to the growing
demand for the service.
(11)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
(12)A reconciliation between revenue and net sales is available earlier in
this announcement.
Detailed Consolidated Performance Breakdown
The table presents Alternative Performance Measures (APM) for each period
(further information available above)
Q1 2021 Q1 2022 Change Q2 2021 Q2 2022 Change 1H 2021 1H 2022 Change
Total net sales (EGP mn) 1,130 1,117 -1% 1,164 774 -34% 2,293 1,891 -18%
Total tests (mn) 8.1 8.4 4% 8.3 7.6 -8% 16.3 16.0 -2%
Conventional test net sales (EGP mn) 594 640 8% 594 699 18% 1,188 1,339 13%
Conventional tests performed (mn) 6.8 7.1 5% 6.9 7.4 7% 13.7 14.5 6%
Total Covid-19-related test net sales (EGP mn) 536 477 -11% 569 75 -87% 1,105 552 -50%
Core Covid-19 tests (PCR, Antigen, Antibody) (EGP mn) 399 421 6% 431 62 -86% 830 483 -42%
Core Covid-19 tests performed (k) 407 837 106% 387 109 -72% 793 946 19%
Other Covid-19-related tests (EGP mn) 137 56 -59% 138 13 -91% 275 68 -75%
Other Covid-19-related tests performed (k) 874 417 -52% 933 95 -90% 1,807 512 -72%
Contribution to Consolidated Results
Conventional test net sales 53% 57% 51% 90% 52% 71%
Conventional tests performed 84% 85% 84% 97% 84% 91%
Total Covid-19-related tests 47% 43% 49% 10% 48% 29%
Core Covid-19 tests (PCR, Antigen, Antibody) 35% 38% 37% 8% 36% 26%
Core Covid-19 tests performed 5% 10% 5% 1% 5% 6%
Other Covid-19-related tests 12% 5% 12% 2% 12% 4%
Other Covid-19-related tests performed 11% 5% 11% 1% 11% 3%
Net Sales Analysis: Contribution by Patient Segment
Contract Segment (58% of total net sales)
Conventional revenues at IDH's contract segment expanded an impressive 24%
year-on-year in 1H 2022 supported by an 11% increase in tests performed and a
12% expansion in average net sales per test. However, a significant decline in
revenues from the segment's Covid-19-related(13) offering saw total revenue at
the contract segment (identical in value to net sales for the period) contract
13% from 1H 2022.
Walk-in Segment (42% of total net sales)
The Group's walk-in segment recorded conventional revenues largely in line
with the figure recorded in the same six months of 2021 as lower test volumes
were offset by an increase in average revenue per test. Meanwhile,
Covid-19-related walk-in net sales declined 44% year-on-year (revenue(14)
declined 32% year-on-year) on the back of both lower test volumes and average
revenue per test. This saw total revenue at the walk-in segment decline 17%
year-on-year, and total walk-in net sales for the period fall 23%
year-on-year.
The walk-in segment's results were supported by Biolab's partnership with
Queen Alia International Airport (QAIA) which generated net sales of EGP 140
million in the six months to 30 June 2022. However, following the decision by
Jordanian authorities on 1 March 2022 to end mandatory testing, Biolab's
booths recorded sharp declines in patient traffic.
(13)Covid-19-related tests include both core Covid-19 tests (Polymerase Chain
Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory
and clotting markers including, but not limited to, Complete Blood Picture,
Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein
(CRP), which the Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these tests
witnessed following the outbreak of Covid-19.
(14)A reconciliation between revenue and net sales is available earlier in
this announcement.
Key Performance Indicators
The table presents Alternative Performance Measures (APM) for each period
(further information available on above)
Walk-in Segment Contract Segment Total
1H21 1H22 Change 1H21 1H22 Change 1H21 1H22 Change
Net sales^ (EGP mn) 1,029 794 -23% 1,264 1,097 -13% 2,293 1,891 -18%
Conventional net sales (EGP mn) 522 512 -2% 666 827 24% 1,188 1,339 13%
Total Covid-19-related net sales (EGP mn) 507 282 -44% 598 270 -55% 1105 552 -50%
Patients ('000) 1,523 1,513 -1% 3,150 3,027 -4% 4,673 4,541 -3%
% of Patients 33% 33% 67% 67%
Net sales per Patient (EGP) 676 524 -22% 401 362 -10% 491 416 -15%
Tests ('000) 4,164 3,849 -8% 12,153 12,155 0% 16,318 16,004 -2%
% of Tests 26% 24% 74% 76%
Conventional tests ('000) 3,406 3,135 -8% 10,311 11,412 11% 13,717 14,547 6%
Total Covid-19-related tests ('000) 758 714 -6% 1,843 744 -60% 2,601 1,458 -44%
Net Sales per Test (EGP) 247 206 -17% 104 90 -13% 141 118 -16%
Test per Patient 2.7 3.0 -7% 3.9 4.0 4% 3.5 3.5 1%
Revenue Analysis: Contribution by Geography
Egypt (80.6% of net sales)
During the first six months of the year, IDH's Egyptian operations recorded a
robust 12% year-on-year expansion in conventional revenues, supported by an
increase in conventional tests performed and in the average revenue per
conventional test. This partially offset a significant decline in
Covid-19-related revenues for the period following both a fall in both the
demand for, and average price of, Covid-19-related test during the period. For
example, during 1H 2022 IDH performed 16% less PCR tests than a year prior,
and recorded a 45% decline in the average price per PCR test versus 1H 2021.
As such, consolidated revenue(15) in IDH's largest market declined 21%
year-on-year in the first six months of the year.
Similar trends held on a quarterly basis, with revenues down 36% year-on-year
on the back of an 89% year-on-year decline in Covid-19-related net sales.
Meanwhile, IDH's conventional offering in Egypt continued its steady expansion
in Q2 2022 increasing 16% year-on-year and 8% quarter-on-quarter. The latter
is an especially noteworthy result in light of the expected seasonal slowdown
related to the holy month of Ramadan and Eid holidays which impacted results
in the months of April and May this year.
House Call Service
IDH's house call service in Egypt recorded revenue of EGP 292 million in 1H
2022, contributing to 19% of Egypt's revenues for the period, well above the
service's pre-pandemic contributions. The remarkable contribution was recorded
despite the fall in Covid-19-related revenue generated through the house call
service as infection rates in the country declined significantly starting
March.
Al-Borg Scan
IDH's fast-growing radiology venture continued to record remarkable results
with revenues expanding 78% year-on-year to record EGP 35 million in 1H 2022.
Top-line growth came on the back of an 85% year-on-year rise in radiology
tests performed (patients served was up 77% for the six-month period). Steady
growth at the venture in directly attributable to the significant investments
undertaken by IDH since the venture's launch back in 2018, with total
investment costs as at 30 June 2022 having reached EGP 382 million. More
specifically, over the last twelve months IDH has added three new branches,
taking the total number of radiology branches in Egypt to five. While all
three new branches remain in their ramp up phases, the Group is recording
growing contributions from each one, with all three helping to drive steady
growth in test and patient volumes as well as revenues. To build on this
momentum, in the coming months IDH is planning to inaugurate two additional
branches to expand its reach across Greater Cairo and capitalise on the
service's increasing popularity. Moreover, it is worth highlighting that in
early August 2022, Al-Borg Scan obtained ACR (American College of Radiology)
accreditation for its nuclear medicine unit. Al-Borg Scan is the first
radiology company to receive this certification in Africa and is testament to
the high service quality consistently delivered by the venture and the Group
as a whole.
(15)It is important to note that revenues and net sales in Egypt, Nigeria and
Sudan are identical in absolute terms. A reconciliation between revenue and
net sales is available earlier in this announcement.
Detailed Egypt Revenue Breakdown
The table presents Alternative Performance Measures (APM) for each period
(further information available on page 2)
EGP mn Q1 2021 Q1 2022 Change Q2 2022 Q2 2022 Change 1H 2021 1H 2022 Change
Total Revenue 920 879 -4% 1,015 645 -36% 1,935 1,524 -21%
Conventional Revenue 507 549 8% 510 591 16% 1,017 1,140 12%
Total Covid-19-related Revenue 414 330 -20% 504 53 -89% 918 384 -58%
Core Covid-19 tests (PCR, Antigen, Antibody) 277 274 -1% 366 41 -89% 643 315 -51%
Other Covid-19-related tests 137 56 -59% 138 13 -91% 275 68 -75%
Contribution to Consolidated Results
Conventional tests 55% 62% 50% 92% 53% 75%
Total Covid-19-related tests 45% 38% 50% 8% 47% 25%
Core Covid-19 tests (PCR, Antigen, Antibody) 30% 31% 36% 6% 33% 21%
Other Covid-19-related tests 15% 6% 14% 2% 14% 4%
Jordan (17.1% of net sales)
In Jordan, IDH recorded revenue of EGP 386 million in 1H 2022, up 19% versus
the same period of 2021. Meanwhile, net sales(16) recorded EGP 323 million,
unchanged from 1H 2021. During the period, solid growth in conventional net
sales fully offset a decline in Covid-19-related net sales. The latter's
decline came following a decrease in infection rates, the removal of mandatory
testing, and a fall in the average price for the offering. It is worth noting
that despite the decline in Covid-19-related net sales for the period, the
segment continued to make up the largest proportion of Biolab's net sales (52%
in 1H 2022 versus 58% last year). It is also worth highlighting that strong
demand for Covid-19-related tests in the first part of the year supported a
47% year-on-year increase in the number of Covid-19-related tests performed
for the six-month period. Finally, the country's net sales continued to be
supported by Biolab's house call service which generated EGP 15 million in net
sales in 1H 2022, making up 5% of total net sales in Jordan.
Covid-19-related net sales in Jordan were supported by contributions of EGP
140 million from Biolab's partnership with QAIA. As part of the agreement,
Biolab carried out 293 thousand PCR tests, representing 59% of total PCR tests
performed in Jordan for the first half of the year. At the same time, Biolab's
agreements with KHIA and Aqaba Port contributed an additional EGP 18 million
to the segment. The stations recorded strong demand in January and February
before witnessing a sharp decline in traffic following the end of mandatory
testing in the country.
During the second quarter, Biolab recorded revenue (net sales were identical
for the quarter) of EGP 106 million, down 21% year-on-year. The decline was
fully driven by a contraction in Covid-19-related revenue for the quarter, as
Biolab shut down its testing booths in Aqaba Port and QAIA and recorded a
widespread decline in infections. Meanwhile, Biolab's conventional net sales
expanded an 23% year-on-year. It is worth highlighting that strong
year-on-year growth in second quarter largely reflects a devaluation of the
Egyptian pound during the period.
(16)Biolab's net sales for the period are calculated as revenues excluding
concession fees paid to QAIA and Aqaba Port as part of their revenue sharing
agreement.
Detailed Jordan Net Sales Breakdown
The table presents Alternative Performance Measures (APM) for each period
(further information available on page 2)
EGP mn Q1 2021 Q1 2022 Change Q2 2021 Q2 2022 Change 1H 2021 1H 2022 Change
Total Net Sales 190 217 14% 134 106 -21% 324 323 -
Conventional Net Sales 68 70 4% 68 84 23% 136 155 14%
Total Covid-19-related Net Sales (PCR and Antibody) 122 147 20% 65 21 -67% 187 168 -10%
Contribution to Consolidated Results
Conventional Net Sales 36% 32% 51% 80% 42% 48%
Total Covid-19-related Net Sales (PCR and Antibody) 64% 68% 49% 20% 58% 52%
Nigeria (1.8% of net sales)
Echo-Lab, the Group's Nigerian subsidiary, recorded revenues of EGP 33 million
in 1H 2022, up 32% versus the same six months of last year. In local currency
terms, revenue was up 25% year-on-year on the back of a 33% increase in
average revenue per test during the period. The increase reflects the
increased number of CT and MRI exams performed during the six-month period,
both of which are relatively higher-priced services. It is important to note
that during Q4 2021 management decided to shut down its operational activities
in the PPP branches due to their under-performance on the profitability level.
This subsequently weighed on tests volumes for the first half of 2022, with
tests performed and patients served down 1% and 6, respectively. Controlling
for the branch closures, Echo-Lab would record a 25% year-on-year increase in
tests performed and a 19% year-on-year rise in patients served in 1H 2021. In
line with the venture's growth strategy, Echo-Lab rolled out two new branches
during the second quarter of the year, bringing the total number of
operational branches to 12.
During Q2 2022, IDH's Nigeria operations recorded revenue growth of 45% on the
back of a 2% year-on-year rise in tests performed and a 41% increase in
average revenue per test during the period.
Sudan (0.6% of net sales)
In Sudan, IDH recorded revenues of EGP 10 million, up 13% from the first half
of last year supported by a 40% year-on-year rise in average revenue per test.
This marks the first year-on-year increase in EGP terms recorded by the
Group's Sudanese operations in over a year, demonstrating the underlying
potential of the Sudanese market which has been impacted by multiple political
and economic crises over the last couple of years. On a similar note, in local
currency terms, revenue expanded a solid 125% in the first six months of the
year.
In the second quarter of the year, IDH recorded revenue growth in EGP terms of
91% in Sudan supported by a more than twofold year-on-year increase in the
average revenue per test for the quarter.
Net Sales Contribution by Country
The table presents Alternative Performance Measures (APM) for each period
(further information available on page 2)
1Q21 1Q22 Change 2Q21 2Q22 Change 1H21 1H22 Change
Egypt Net Sales (EGP mn) 920 879 -4% 1,015 645 -36% 1,935 1,524 -21%
Conventional (EGP mn) 507 549 8% 510 591 16% 1,017 1,140 12%
Covid-19-related (EGP mn) 414 330 -20% 504 53 -89% 918 384 -58%
Egypt Contribution 81.5% 78.7% 87.2% 83.3% 84.4% 80.6%
Jordan Net Sales (EGP mn) 190 217 14% 134 106 -21% 324 323 N/A
Conventional (EGP mn) 68 70 4% 68 84 23% 136 155 14%
Covid-19-related (EGP mn) 122 147 20% 65 21 -67% 187 168 -10%
Jordan Revenues (EGP mn) (IFRS) 190 281 48% 134 106 -21% 324 386 19%
Jordan Net Sales (JOD mn) 8.6 9.6 12% 6.0 4.0 -33% 14.6 13.7 -7%
Jordan Revenues (JOD mn) (IFRS) 8.6 12.5 45% 6.1 4.0 -34% 14.7 16.5 12%
Jordan Contribution 16.8% 19.4% 11.5% 13.7% 14.1% 17.1%
Nigeria Net Sales (EGP mn) 12.5 14.8 19% 12.9 18.6 45% 25 33 32%
Nigeria Net Sales (NGN mn) 302 371 23% 330 416 27% 631 787 25%
Nigeria Contribution 1.1% 1.3% 1.1% 2.4% 1.1% 1.8%
Sudan Net Sales (EGP mn) 6.8 5.7 -16% 2.5 4.8 91% 9 10 13%
Sudan Net Sales (SDG mn) 61 152 149% 67 137 103% 129 289 125%
Sudan Contribution 0.6% 0.5% 0.2% 0.6% 0.4% 0.6%
Patients Served and Tests Performed by Country
1H 2021 1H 2022 Change
Egypt Patients Served (mn) 4.1 3.8 -8%
Egypt Tests Performed (mn) 14.6 14.2 -3%
Conventional tests (mn) 12.4 13.2 7%
Covid-19-related tests (mn) 2.3 1.0 -58%
Jordan Patients Served (k) 502 670 33%
Jordan Tests Performed (k) 1,447 1,594 10%
Conventional tests (k) 1,105 1,092 -1%
Covid-19-related tests (k) 342 502 47%
Nigeria Patients Served (k) 75 70 -6%
Nigeria Tests Performed (k) 136 135 -1%
Sudan Patients Served (k) 33 46 39%
Sudan Tests Performed (k) 104 84 -19%
Total Patients Served (mn) 4.7 4.5 -3%
Total Tests Performed (mn) 16.3 16.0 -2%
Branches by Country
30 June 2021 30 June 2022 Change
Egypt 443 488 45
Jordan 21 21 N/A
Nigeria 12 12 N/A
Sudan 19 17 -2
Total Branches 495 538 43
Cost of Net Sales(17)
IDH's cost of net sales rose 7% year-on-year to record EGP 1,059 million in 1H
2022. Combined with the year-on-year decrease in consolidated net sales for
the period, this weighed down on the Group's gross profit which recorded EGP
832 million in 1H 2022, down 36% from last year. It is important to note that
gross profit for the first six months of the year is identical in absolute
terms between IFRS and APM measures. IDH's gross profit margin(18) on revenue
recorded 43% in 1H 2022 versus 57% last year. Meanwhile, IDH's gross profit
margin on net sales(19) recorded 44% in 1H 2022 versus 57% in the same six
months of 2021.
In the second quarter of the year, IDH recorded cost of sales (identical in
value to cost of net sales) of EGP 473 million, down 5% year-on-year. Gross
profit for the quarter recorded EGP 300 million, with a margin of 39% for the
quarter versus 57% in Q2 2021 when a large contribution from Covid-19-related
tests had significantly boosted gross profitability. Lower gross profitability
for the quarter also partially reflects the expected slowdown related to the
holy month of Ramadan and Eid vacation.
Cost of Net Sales Breakdown as a Percentage of Net Sales
1H 2021 1H 2022
Raw Materials 18.1% 20.9%
Wages & Salaries 12.9% 17.4%
Depreciation & Amortisation 4.2% 7.0%
Other Expenses 7.8% 10.7%
Total 43.1% 56.0%
Raw material costs, which include cost of specialized analysis at other
laboratories, recorded EGP 396 million for the first half of the year,
continuing to make up the largest share of total COGS at 37%. As a share of
net sales, raw material costs increased to 20.9% in 1H 2022 compared to 18.1%
in the same six months of the previous year. This increase is primarily
reflective of the substantial reduction in the average selling price of
Covid-19-related tests during the period in both Egypt and Jordan (PCR tests
were priced 52% lower in 1H 2022 than in 1H 2021).
Direct salaries and wages rose 11% year-on-year to EGP 329 million in 1H 2022,
making the second largest share of total COGS at 31%. The increase versus last
year is primarily attributable to the additional staff employed at Aqaba Port
and QAIA airport, an annual salary increase of around 15%, and the additional
staff employed across the newly added branches (+43 new branches vs 1H21).
Additional salary expenses related to Biolab's testing booths amounted to JOD
549 thousand (EGP 13.6 million) during 1H 2022, noting that starting April
Biolab ceased its operational activities across all booths.
Direct depreciation and amortisation increased 35% year-on-year in the first
half of the year to record EGP 132 million, largely due to the incremental
amortisation of new branches (IFRS 16 right-of-use assets).
Other expenses for the first six months of 2022 increased 13% to record EGP
202 million. The increase principally reflected higher maintenance costs in
Egypt, as well as higher utility expenses related to the 43 additional
branches rolled out in the twelve months to 30 June 2022.
(17)Cost of net sales is calculated as cost of sales (IFRS) for the period
excluding commission fees paid to QAIA and Aqaba Port by Biolab as part of its
revenue sharing agreements with the two terminals. According to IFRS 15, cost
of sales recorded EGP 1,122 million in 1H 2022, up 14% year-on-year.
(18)It is important to note that while in absolute terms the Gross Profit
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
(19)A reconciliation between revenue and net sales is available earlier in
this announcement.
Selling, General and Administrative Expenses
Total SG&A outlays stood at EGP 269 million in 1H 2022, representing a 27%
year-on-year increase for the six-month period. The increase in SG&A costs
was mainly a result of rising salaries and marketing expenses, as well as
higher fees for external auditing services.
Marketing and advertising expenses came in at EGP 54 million in 1H 2022,
representing a 48% year-on-year increase. The increase reflects an overall
expansion in IDH's marketing and advertisement efforts which for the last year
has seen the Company roll out targeted campaigns across multiple channels
predominantly to support Al-Borg Scan's ramp up.
EBITDA
IDH's EBITDA(20) came in at EGP 709 million in the first half of 2022, down
41% from the figure recorded this time last year. It is important to note that
EBITDA for the period is identical in absolute terms between IFRS and APM
measures. EBITDA margin on consolidated revenue recorded 36% in 1H 2022 versus
52% in the same six-month period of a year ago. Meanwhile, EBITDA margin on
net sales declined to 38% in 1H 2022 from 52% in 1H 2021.(21) The decline in
EBITDA level profitability comes on the back of lower gross profitability for
the period coupled with higher sales and marketing outlays versus the first
six months of 2021.
In IDH's home market of Egypt, EBITDA recorded EGP 622 million in 1H 2022.
EBITDA margin on net sales stood at 41% for the period versus 56% this time
last year.
In Jordan, IDH recorded an EBITDA of EGP 91 million, down 31% from the same
six months of last year. In JOD terms, Biolab's EBITDA recorded JOD 4.0
million, a 33% year-on-year decrease. EBITDA margin on revenue recorded 24% in
1H 2022 down from 40% this time last year. Meanwhile, EBITDA margin on net
sales for the six-month period recorded 29% versus 41% in 1H 2021. The
decrease in Biolab's EBITDA margin is mainly attributable to lower gross
profitability for the period as well as higher expenses related to Biolab's
testing booths in QAIA and Aqaba Port.
Operations in Nigeria posted an EBITDA loss of EGP 3.3 million in 1H 2022
compared to a loss of EGP 4.3 million this time last year. It is important to
highlight that EBITDA profitability during the period was impacted by a 462%
year-on-year increase in the country's diesel prices (responsible for 11% of
Echo-Lab's cost base). Controlling for this, the venture would have been on
track to turn positive in early 2022.
Finally, in Sudan the Company recorded an EBITDA of EGP 0.1 million in 1H
2022, down from the EGP 0.7 million in EBITDA recorded this time last year. In
SDG terms EBITDA stood at SDG 4.1 million in 1H 2022 compared to an EBITDA
loss of SDG 14 million in the same six months of 2021.
Regional EBITDA in Local Currency
Mn 1H 2021 1H 2022 Change
Egypt EGP 1,075 622 -42%
Margin on net sales 56% 41%
Jordan JOD 5.9 4.0 -33%
Margin on net sales 41% 29%
Margin on revenues (IFRS) 40% 24%
Nigeria NGN -111 -80 -28%
Margin on net sales -18% -10%
Sudan SDG -14 4.1 N/A
Margin on net sales -11% 1%
( )
(20)EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in 1H 2021 related to the
Company's EGX listing completed in May 2021.
(21)It is important to note that while in absolute terms the Normalised EBITDA
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
Interest Income / Expense
The Group reported interest income of EGP 75 million in 1H 2022, up 67%
year-on-year reflecting higher cash balances during the period, an optimised
cash allocation between T-bills and time deposits, and a 300 basis point
cumulative interest rate hike enacted by the CBE during the six-month period.
Interest expense recorded EGP 64 million in the first six months of the year,
up 18% versus 1H 2021. The increase in attributable to:
· Higher interest on lease liabilities related to IFRS 16 following the
addition of new branches in Egypt and Jordan and the renewal of medical
equipment agreements with the Group's main equipment suppliers.
· Higher bank charges reflecting an increased penetration of, and
reliance on, POS machines and electronic payments in both Egypt and Jordan
during the six-month period.
· Higher interest expenses following the CBE decision to increase rates
by 300 bps year-to-date.
· Fees amounting to EGP 5.9 million related to the US$ 45 million
facility with the International Finance Corporation (IFC) granted in May 2021
and the US$ 15 million IFC syndicated facility from Mashreq Bank in December
2021. Fees include commitment and supervisory fees.
Interest Expense Breakdown
EGP mn 1H 2021 1H 2022 Change
Interest on Lease Liabilities (IFRS 16) 28.9 34.9 21%
Interest Expenses on Borrowings(22) 4.8 5.2 8%
Loan-related Expenses on IFC facility 12.5 5.9 -53%
Interest Expenses on Leases 2.8 9.3 231%
Bank Charges 5.4 8.8 64%
Total Interest Expense 54.4 64.1 18%
(22)Interest expenses on medium-term loans include EGP 4.2 million 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.
Foreign Exchange
IDH recorded a net foreign exchange gain of EGP 69 million in the first half
of 2022 compared to an EGP 19 million FX loss in the comparable period of last
year partially reflecting intercompany balances revaluation.
Taxation
Tax expenses recorded EGP 211 million in the first half of the year versus EGP
367 million in 1H 2021. The effective tax rate stood at 32% for the six months
to 30 June 2022 versus 35% in the same period of last year. The lower
effective tax rate principally reflects the large balance of Treasury bills
held by IDH's Egyptian subsidiaries.
Taxation Breakdown by Region
EGP Mn 1H 2021 1H 2022 Change
Egypt 342.5 196.0 -43%
Jordan 24.4 14.6 -40%
Nigeria (0.1) (0.2) N/A
Sudan 0.0 0.1 N/A
Total Tax Expenses 366.8 210.5 -43%
Net Profit
IDH's consolidated net profit for the first half of the year stood at EGP 439
million, down 34% from the same six months of last year. It is important to
note that net profit for the period was identical in absolute terms between
IFRS and APM measures. Net profit margin on consolidated revenue recorded 22%
in 1H 2022, versus 29% in 1H 2021. Meanwhile, net profit margin on net
sales(23) stood at 23% in 1H 2022, in line with the Group's pre-pandemic
averages, but down six percentage points compared to 29% this time last year.
The decline in net profitability for the six-month period comes on the back of
lower EBITDA profitability. In Q2 2022, net profit recorded EGP 125 million,
down 62% from Q2 2021 and with a net profit margin of 16%. Lower net
profitability for the quarter also in part reflected the seasonal slowdown
related to the holy month of Ramadan and Eid vacation which impacted the
months of April and May.
(23)It is important to note that while in absolute terms the net profit figure
is identical when using IFRS or APM, its margin differs between the two sets
of performance indicators.
Raw material costs, which include cost of specialized analysis at other
laboratories, recorded EGP 396 million for the first half of the year,
continuing to make up the largest share of total COGS at 37%. As a share of
net sales, raw material costs increased to 20.9% in 1H 2022 compared to 18.1%
in the same six months of the previous year. This increase is primarily
reflective of the substantial reduction in the average selling price of
Covid-19-related tests during the period in both Egypt and Jordan (PCR tests
were priced 52% lower in 1H 2022 than in 1H 2021).
Direct salaries and wages rose 11% year-on-year to EGP 329 million in 1H 2022,
making the second largest share of total COGS at 31%. The increase versus last
year is primarily attributable to the additional staff employed at Aqaba Port
and QAIA airport, an annual salary increase of around 15%, and the additional
staff employed across the newly added branches (+43 new branches vs 1H21).
Additional salary expenses related to Biolab's testing booths amounted to JOD
549 thousand (EGP 13.6 million) during 1H 2022, noting that starting April
Biolab ceased its operational activities across all booths.
Direct depreciation and amortisation increased 35% year-on-year in the first
half of the year to record EGP 132 million, largely due to the incremental
amortisation of new branches (IFRS 16 right-of-use assets).
Other expenses for the first six months of 2022 increased 13% to record EGP
202 million. The increase principally reflected higher maintenance costs in
Egypt, as well as higher utility expenses related to the 43 additional
branches rolled out in the twelve months to 30 June 2022.
(17)Cost of net sales is calculated as cost of sales (IFRS) for the period
excluding commission fees paid to QAIA and Aqaba Port by Biolab as part of its
revenue sharing agreements with the two terminals. According to IFRS 15, cost
of sales recorded EGP 1,122 million in 1H 2022, up 14% year-on-year.
(18)It is important to note that while in absolute terms the Gross Profit
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
(19)A reconciliation between revenue and net sales is available earlier in
this announcement.
Selling, General and Administrative Expenses
Total SG&A outlays stood at EGP 269 million in 1H 2022, representing a 27%
year-on-year increase for the six-month period. The increase in SG&A costs
was mainly a result of rising salaries and marketing expenses, as well as
higher fees for external auditing services.
Marketing and advertising expenses came in at EGP 54 million in 1H 2022,
representing a 48% year-on-year increase. The increase reflects an overall
expansion in IDH's marketing and advertisement efforts which for the last year
has seen the Company roll out targeted campaigns across multiple channels
predominantly to support Al-Borg Scan's ramp up.
EBITDA
IDH's EBITDA(20) came in at EGP 709 million in the first half of 2022, down
41% from the figure recorded this time last year. It is important to note that
EBITDA for the period is identical in absolute terms between IFRS and APM
measures. EBITDA margin on consolidated revenue recorded 36% in 1H 2022 versus
52% in the same six-month period of a year ago. Meanwhile, EBITDA margin on
net sales declined to 38% in 1H 2022 from 52% in 1H 2021.(21) The decline in
EBITDA level profitability comes on the back of lower gross profitability for
the period coupled with higher sales and marketing outlays versus the first
six months of 2021.
In IDH's home market of Egypt, EBITDA recorded EGP 622 million in 1H 2022.
EBITDA margin on net sales stood at 41% for the period versus 56% this time
last year.
In Jordan, IDH recorded an EBITDA of EGP 91 million, down 31% from the same
six months of last year. In JOD terms, Biolab's EBITDA recorded JOD 4.0
million, a 33% year-on-year decrease. EBITDA margin on revenue recorded 24% in
1H 2022 down from 40% this time last year. Meanwhile, EBITDA margin on net
sales for the six-month period recorded 29% versus 41% in 1H 2021. The
decrease in Biolab's EBITDA margin is mainly attributable to lower gross
profitability for the period as well as higher expenses related to Biolab's
testing booths in QAIA and Aqaba Port.
Operations in Nigeria posted an EBITDA loss of EGP 3.3 million in 1H 2022
compared to a loss of EGP 4.3 million this time last year. It is important to
highlight that EBITDA profitability during the period was impacted by a 462%
year-on-year increase in the country's diesel prices (responsible for 11% of
Echo-Lab's cost base). Controlling for this, the venture would have been on
track to turn positive in early 2022.
Finally, in Sudan the Company recorded an EBITDA of EGP 0.1 million in 1H
2022, down from the EGP 0.7 million in EBITDA recorded this time last year. In
SDG terms EBITDA stood at SDG 4.1 million in 1H 2022 compared to an EBITDA
loss of SDG 14 million in the same six months of 2021.
Regional EBITDA in Local Currency
Mn 1H 2021 1H 2022 Change
Egypt EGP 1,075 622 -42%
Margin on net sales 56% 41%
Jordan JOD 5.9 4.0 -33%
Margin on net sales 41% 29%
Margin on revenues (IFRS) 40% 24%
Nigeria NGN -111 -80 -28%
Margin on net sales -18% -10%
Sudan SDG -14 4.1 N/A
Margin on net sales -11% 1%
( )
(20)EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in 1H 2021 related to the
Company's EGX listing completed in May 2021.
(21)It is important to note that while in absolute terms the Normalised EBITDA
figure is identical when using IFRS or APM, its margin differs between the two
sets of performance indicators.
Interest Income / Expense
The Group reported interest income of EGP 75 million in 1H 2022, up 67%
year-on-year reflecting higher cash balances during the period, an optimised
cash allocation between T-bills and time deposits, and a 300 basis point
cumulative interest rate hike enacted by the CBE during the six-month period.
Interest expense recorded EGP 64 million in the first six months of the year,
up 18% versus 1H 2021. The increase in attributable to:
· Higher interest on lease liabilities related to IFRS 16 following the
addition of new branches in Egypt and Jordan and the renewal of medical
equipment agreements with the Group's main equipment suppliers.
· Higher bank charges reflecting an increased penetration of, and
reliance on, POS machines and electronic payments in both Egypt and Jordan
during the six-month period.
· Higher interest expenses following the CBE decision to increase rates
by 300 bps year-to-date.
· Fees amounting to EGP 5.9 million related to the US$ 45 million
facility with the International Finance Corporation (IFC) granted in May 2021
and the US$ 15 million IFC syndicated facility from Mashreq Bank in December
2021. Fees include commitment and supervisory fees.
Interest Expense Breakdown
EGP mn 1H 2021 1H 2022 Change
Interest on Lease Liabilities (IFRS 16) 28.9 34.9 21%
Interest Expenses on Borrowings(22) 4.8 5.2 8%
Loan-related Expenses on IFC facility 12.5 5.9 -53%
Interest Expenses on Leases 2.8 9.3 231%
Bank Charges 5.4 8.8 64%
Total Interest Expense 54.4 64.1 18%
(22)Interest expenses on medium-term loans include EGP 4.2 million 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.
Foreign Exchange
IDH recorded a net foreign exchange gain of EGP 69 million in the first half
of 2022 compared to an EGP 19 million FX loss in the comparable period of last
year partially reflecting intercompany balances revaluation.
Taxation
Tax expenses recorded EGP 211 million in the first half of the year versus EGP
367 million in 1H 2021. The effective tax rate stood at 32% for the six months
to 30 June 2022 versus 35% in the same period of last year. The lower
effective tax rate principally reflects the large balance of Treasury bills
held by IDH's Egyptian subsidiaries.
Taxation Breakdown by Region
EGP Mn 1H 2021 1H 2022 Change
Egypt 342.5 196.0 -43%
Jordan 24.4 14.6 -40%
Nigeria (0.1) (0.2) N/A
Sudan 0.0 0.1 N/A
Total Tax Expenses 366.8 210.5 -43%
Net Profit
IDH's consolidated net profit for the first half of the year stood at EGP 439
million, down 34% from the same six months of last year. It is important to
note that net profit for the period was identical in absolute terms between
IFRS and APM measures. Net profit margin on consolidated revenue recorded 22%
in 1H 2022, versus 29% in 1H 2021. Meanwhile, net profit margin on net
sales(23) stood at 23% in 1H 2022, in line with the Group's pre-pandemic
averages, but down six percentage points compared to 29% this time last year.
The decline in net profitability for the six-month period comes on the back of
lower EBITDA profitability. In Q2 2022, net profit recorded EGP 125 million,
down 62% from Q2 2021 and with a net profit margin of 16%. Lower net
profitability for the quarter also in part reflected the seasonal slowdown
related to the holy month of Ramadan and Eid vacation which impacted the
months of April and May.
(23)It is important to note that while in absolute terms the net profit figure
is identical when using IFRS or APM, its margin differs between the two sets
of performance indicators.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH held gross property, plant and equipment (PPE) of EGP 1,888 million as at
30 June 2022, up from the EGP 1,653 million as at year-end 2021. The increase
in CAPEX outlays as a share of total net sales for the six-month period is in
part attributable to EGP 67 million spent on new radiology branches (Capital
Business Park Branch in West Cairo) during the period and EGP 69 million
translation effect (mainly related to Jordan) resulting from the depreciation
of the Egyptian Pound since the start of the year.
Total CAPEX Breakdown
EGP Mn 1H 2022 % of Net Sales
Al-Borg Scan Expansion 66.7 3.5%
Translation Effect 68.6 3.6%
Leasehold Improvements/new branches 100.3 5.3%
Total CAPEX Additions 235.6 12.5%
Accounts Receivable and Provisions
As at 30 June 2022, accounts receivables' Days on Hand (DOH) recorded at 118
days compared to 107 days at year-end 2021. The increase reflects the large
balance related to the airlines deals in QAIA airport, characterized by a
relatively higher credit period. Accounts receivables' DOH is calculated
based on credit revenues(24) amounting to EGP 592 million during 1H 2022.
The receivables balance in Egypt and Jordan stood at EGP 374 million as at 30
June 2022. More specifically, in Egypt account receivables' DOH increased to
104 days as at the end of the current reporting period compared to 96 days as
at year-end 2021. Accounts receivables' DOH for Egypt is calculated based on
credit revenues amounting to EGP 500 million during the six-month period.
Meanwhile, in Jordan accounts receivables' DOH increased to 203 days as at 30
June 2022 from 154 days as at year-end 2021 largely due to agreements with
various airline companies as part of QAIA and KHIA agreements. Accounts
receivables' DOH for Jordan is calculated based on credit revenues amounting
to EGP 79 million during the first half of 2022.
Provision for doubtful accounts established during the first half of 2022
amounted to EGP 16 million, up from EGP 10 million in the same six months of
last year. The increase in provisions reflects the slowdown in collections
during the holy month of Ramadan and Eid vacation.
(24)Credit revenues relates to patients who paid for IDH's services on credit.
Inventory
As at 30 June 2022, the Group's inventory balance reached EGP 243 million, up
from EGP 223 million as at year-end 2021. Meanwhile, days Inventory
Outstanding (DIO) increased to 109 days as at 30 June 2022 from 61 days as at
year-end 2021. The increase largely reflects management's decision to
accumulate inventory as part of its proactive strategy to shield the business
from any disruption that might result from the global supply chain challenges
and protect the Company's margins from a potential devaluation of the Egyptian
pound. It should be noted that as at 31 July 2022, IDH held sufficient
inventory to cover the Group's needs for a four-month period.
Cash and Net Debt/Cash
IDH's cash balances increased to EGP 2,182 million as at 30 June 2022 up from
EGP 2,350 million as at 31 December 2021.
EGP million 31 Dec 2021 30 Jun 2022
Time Deposits 628 68
T-Bills 1,461 525
Current Accounts 239 1,572
Cash on Hand 22 18
Total 2,350 2,182
Net cash balance(25) amounted to EGP 1,321 million as at 30 June 2022 compared
to EGP 1,488 million as of 31 December 2021.
EGP million 31 Dec 2021 30 Jun 2022
Cash and Financial Assets at Amortised Cost(26) 2,350 2,182
Interest Bearing Debt ("Medium Term Loans")(27) 102 89
Lease Liabilities Property 532 602
Long-term Equipment Liabilities 229 260
Net Cash Balance 1,488 1,321
Note: Interest Bearing Debt includes accrued interest for each period.
Lease liabilities on property recorded EGP 602 million as at 30 June 2022, up
from the EGP 532 million booked as at year-end 2021. The increase is driven by
the addition of new branches throughout the first half of the year. Meanwhile,
financial obligations related to equipment recorded EGP 260 million as at the
end of the current reporting period, up from EGP 229 million as of year-end
2021, for the most part reflecting the renewal of the Company's contracts and
the addition of new equipment. Total financial obligations related to
equipment for the period includes EGP 121 million for equipment at Al-Borg
Scan. Meanwhile, interest-bearing debt declined to EGP 89 million as at 30
June 2022 from EGP 102 million as at 31 December 2021. More specifically,
IDH's interest-bearing debt as at 30 June 2022 comprised EGP 84.4 million
related to its facility with AUBE. It is worth highlighting that
interest-bearing debt in both periods excludes accrued interest. It is also
important to note that the Company's facility with the Commercial
International Bank (CIB) was fully repaid as of April 2022.
(25)The net cash balance is calculated as cash and cash equivalent balances
including includes financial assets at amortised cost, less interest-bearing
debt (medium term loans), finance lease and Right-of-use liabilities.
(26)As outlined in Note 9 of IDH's Consolidated Financial Statements, some
term deposits and treasury bills cannot be accessed for over 90 days and are
therefore not treated as cash. Term deposits which cannot be accessed for over
90 days stood at EGP 4 million in 1H 2022, versus EGP 148 million as at
year-end 2021. Meanwhile, treasury bills not accessible for over 90 days stood
at EGP 511 million in 1H 2022, down from EGP 1,310 million in FY 2021.
(27)IDH's interest bearing debt as at 30 June 2022 included EGP 84.4 million
to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances
are excluding accrued interest for the period).
Liabilities
Accounts Payable(28)
As at the end of 30 June 2022, accounts payable balance recorded EGP 230
million down from EGP 311 million as of 31 December 2021. Despite this, the
Group's days payable outstanding (DPO) increased to 126 days from 93 days as
at 31 December 2021. The increase largely reflects both lower Covid-19-related
kits consumption and the renegotiation of extended payment terms with the
Company's test kit suppliers.
(28)Accounts payable is calculated based on average payables at the end of
each year.
Put Option
The put option current liability is related to the option granted in 2011 to
Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The put option is in
the money and exercisable since 2016 and is calculated as 7 times LTM EBITDA
minus net debt. Biolab's put option liability increased following the
depreciation of the Egyptian pound by around 20% as at 30 June 2022 compared
to year-end 2021.
The put option non-current liability is related to the option granted in 2018
to the International Finance Corporation from Dynasty - shareholders in Echo
Lab - and it is exercisable in 2024. The put option is calculated based on
fair market value (FMV).
Dividend Payment
During the Company's annual general meeting (AGM) held in London on 7 June
2022, IDH's shareholders approved a record-breaking dividend distribution for
the financial year ended 31 December 2022 of EGP 2.17 per share, or EGP 1.3
billion (US$ 69.5 million(29)) in aggregate. The dividend's payment date was
scheduled for 27 July 2022. In light of the ongoing difficulties in obtaining
US dollars in the foreign exchange markets, IDH's management agreed to
distribute the Dividend over two tranches. The first tranche was paid out to
all minority shareholders on 27 July, as originally schedule. Meanwhile, the
Company signed a deferral agreement with its two largest shareholders, HENA
Holdings Ltd and Actis IDH Limited, to postpone their payment date. IDH
distributed the second tranche to the dividend to its two largest shareholders
over two instalments on the 11 August and 18 August 2022.
(29)Calculated on a USD/EGP exchange rate of 18.70/1 as of 7 June 2022.
Accounts Receivable and Provisions
As at 30 June 2022, accounts receivables' Days on Hand (DOH) recorded at 118
days compared to 107 days at year-end 2021. The increase reflects the large
balance related to the airlines deals in QAIA airport, characterized by a
relatively higher credit period. Accounts receivables' DOH is calculated
based on credit revenues(24) amounting to EGP 592 million during 1H 2022.
The receivables balance in Egypt and Jordan stood at EGP 374 million as at 30
June 2022. More specifically, in Egypt account receivables' DOH increased to
104 days as at the end of the current reporting period compared to 96 days as
at year-end 2021. Accounts receivables' DOH for Egypt is calculated based on
credit revenues amounting to EGP 500 million during the six-month period.
Meanwhile, in Jordan accounts receivables' DOH increased to 203 days as at 30
June 2022 from 154 days as at year-end 2021 largely due to agreements with
various airline companies as part of QAIA and KHIA agreements. Accounts
receivables' DOH for Jordan is calculated based on credit revenues amounting
to EGP 79 million during the first half of 2022.
Provision for doubtful accounts established during the first half of 2022
amounted to EGP 16 million, up from EGP 10 million in the same six months of
last year. The increase in provisions reflects the slowdown in collections
during the holy month of Ramadan and Eid vacation.
(24)Credit revenues relates to patients who paid for IDH's services on credit.
Inventory
As at 30 June 2022, the Group's inventory balance reached EGP 243 million, up
from EGP 223 million as at year-end 2021. Meanwhile, days Inventory
Outstanding (DIO) increased to 109 days as at 30 June 2022 from 61 days as at
year-end 2021. The increase largely reflects management's decision to
accumulate inventory as part of its proactive strategy to shield the business
from any disruption that might result from the global supply chain challenges
and protect the Company's margins from a potential devaluation of the Egyptian
pound. It should be noted that as at 31 July 2022, IDH held sufficient
inventory to cover the Group's needs for a four-month period.
Cash and Net Debt/Cash
IDH's cash balances increased to EGP 2,182 million as at 30 June 2022 up from
EGP 2,350 million as at 31 December 2021.
EGP million 31 Dec 2021 30 Jun 2022
Time Deposits 628 68
T-Bills 1,461 525
Current Accounts 239 1,572
Cash on Hand 22 18
Total 2,350 2,182
Net cash balance(25) amounted to EGP 1,321 million as at 30 June 2022 compared
to EGP 1,488 million as of 31 December 2021.
EGP million 31 Dec 2021 30 Jun 2022
Cash and Financial Assets at Amortised Cost(26) 2,350 2,182
Interest Bearing Debt ("Medium Term Loans")(27) 102 89
Lease Liabilities Property 532 602
Long-term Equipment Liabilities 229 260
Net Cash Balance 1,488 1,321
Note: Interest Bearing Debt includes accrued interest for each period.
Lease liabilities on property recorded EGP 602 million as at 30 June 2022, up
from the EGP 532 million booked as at year-end 2021. The increase is driven by
the addition of new branches throughout the first half of the year. Meanwhile,
financial obligations related to equipment recorded EGP 260 million as at the
end of the current reporting period, up from EGP 229 million as of year-end
2021, for the most part reflecting the renewal of the Company's contracts and
the addition of new equipment. Total financial obligations related to
equipment for the period includes EGP 121 million for equipment at Al-Borg
Scan. Meanwhile, interest-bearing debt declined to EGP 89 million as at 30
June 2022 from EGP 102 million as at 31 December 2021. More specifically,
IDH's interest-bearing debt as at 30 June 2022 comprised EGP 84.4 million
related to its facility with AUBE. It is worth highlighting that
interest-bearing debt in both periods excludes accrued interest. It is also
important to note that the Company's facility with the Commercial
International Bank (CIB) was fully repaid as of April 2022.
(25)The net cash balance is calculated as cash and cash equivalent balances
including includes financial assets at amortised cost, less interest-bearing
debt (medium term loans), finance lease and Right-of-use liabilities.
(26)As outlined in Note 9 of IDH's Consolidated Financial Statements, some
term deposits and treasury bills cannot be accessed for over 90 days and are
therefore not treated as cash. Term deposits which cannot be accessed for over
90 days stood at EGP 4 million in 1H 2022, versus EGP 148 million as at
year-end 2021. Meanwhile, treasury bills not accessible for over 90 days stood
at EGP 511 million in 1H 2022, down from EGP 1,310 million in FY 2021.
(27)IDH's interest bearing debt as at 30 June 2022 included EGP 84.4 million
to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances
are excluding accrued interest for the period).
Liabilities
Accounts Payable(28)
As at the end of 30 June 2022, accounts payable balance recorded EGP 230
million down from EGP 311 million as of 31 December 2021. Despite this, the
Group's days payable outstanding (DPO) increased to 126 days from 93 days as
at 31 December 2021. The increase largely reflects both lower Covid-19-related
kits consumption and the renegotiation of extended payment terms with the
Company's test kit suppliers.
(28)Accounts payable is calculated based on average payables at the end of
each year.
Put Option
The put option current liability is related to the option granted in 2011 to
Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The put option is in
the money and exercisable since 2016 and is calculated as 7 times LTM EBITDA
minus net debt. Biolab's put option liability increased following the
depreciation of the Egyptian pound by around 20% as at 30 June 2022 compared
to year-end 2021.
The put option non-current liability is related to the option granted in 2018
to the International Finance Corporation from Dynasty - shareholders in Echo
Lab - and it is exercisable in 2024. The put option is calculated based on
fair market value (FMV).
Dividend Payment
During the Company's annual general meeting (AGM) held in London on 7 June
2022, IDH's shareholders approved a record-breaking dividend distribution for
the financial year ended 31 December 2022 of EGP 2.17 per share, or EGP 1.3
billion (US$ 69.5 million(29)) in aggregate. The dividend's payment date was
scheduled for 27 July 2022. In light of the ongoing difficulties in obtaining
US dollars in the foreign exchange markets, IDH's management agreed to
distribute the Dividend over two tranches. The first tranche was paid out to
all minority shareholders on 27 July, as originally schedule. Meanwhile, the
Company signed a deferral agreement with its two largest shareholders, HENA
Holdings Ltd and Actis IDH Limited, to postpone their payment date. IDH
distributed the second tranche to the dividend to its two largest shareholders
over two instalments on the 11 August and 18 August 2022.
(29)Calculated on a USD/EGP exchange rate of 18.70/1 as of 7 June 2022.
iii. Cash Flow Analysis
Net cash flow from operating activities recorded EGP 34 million in 1H 2022
continuing to demonstrate IDH's strong cash generation ability. Net cash flow
from operating activities declined from EGP 866 million the same six months of
last year.
Principal Risks and Uncertainties
As in any corporation, IDH has exposure to risks and uncertainties that may
adversely affect its performance. The Board and senior management agree that
the principal risks and uncertainties facing the Group include political and
economic risks in Egypt, the Middle East and Nigeria, foreign currency
exchange rate variability and associated risks, changes in regulation and
regulatory actions, damage to the Group's reputation, failure to maintain the
Group's high quality standards and accreditations, failure to maintain good
relationships with healthcare professionals and end users, pricing pressures
and business interruption of the Group's testing facilities, among others.
Other short-term risks include operational disruptions related the Covid-19
pandemic; delays in branch openings and renovations in Nigeria and
difficulties in growing Echo-Lab's customer base; prolonged political unrest
in Sudan that can adversely affect patient and test volumes, while further
currency devaluation risks will limit the compensatory effect of price
increases; rising inflation and continued supply chain disruptions may weigh
on the Group's cost base in the short-term.
Statement of Directors' Responsibilities
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge, the interim management report
includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
For and on behalf of the Board of Directors
Dr. Hend El Sherbini
Executive Director
11 September 2022
-End-
INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH"
AND ITS SUBSIDIARIES
Consolidated Financial Statements
for the six month period ended 30 June 2022
Consolidated statement of financial position as at 30 June 2022
Notes 30 June 2022 31 December 2021
EGP'000 EGP'000
ASSETS
Non-current assets
Property, plant and equipment 4 1,173,807 1,061,808
Intangible assets and goodwill 5 1,672,444 1,658,867
Right of use assets 6 519,711 462,432
Financial assets at fair value through profit and loss 7 13,018 10,470
Total non-current assets 3,378,980 3,193,577
Current assets
Inventories 242,840 222,612
Trade and other receivables 8 491,577 469,727
Financial assets at amortized cost 9 514,497 1,458,724
Cash and cash equivalents 10 1,667,624 891,451
Total current assets 2,916,538 3,042,514
Total assets 6,295,518 6,236,091
EQUITY AND LIABILITIES
Equity
Share Capital 1,072,500 1,072,500
Share premium reserve 1,027,706 1,027,706
Capital reserve (314,310) (314,310)
Legal reserve 51,641 51,641
Put option reserve (936,896) (956,397)
Translation reserve 177,195 150,730
Retained earnings 663,686 1,550,976
Equity attributable to the equity holders of the parent 1,741,522 2,582,846
Non-controlling interests 199,244 211,513
Total equity 1,940,766 2,794,359
Non-current liabilities
Provisions 3,708 4,088
Borrowings 13 76,345 76,345
Other financial obligations 15 724,200 645,196
Non-current put option liability 14 39,733 35,037
Deferred tax liabilities 19-C 264,114 332,149
Total non-current liabilities 1,108,100 1,092,815
Current liabilities
Trade and other payables 11 610,907 777,354
Shareholders dividend 24 1,304,805 -
Other financial obligations 15 137,022 115,478
Current put option liability 12 897,163 921,360
Borrowings 13 8,483 21,721
Current tax liabilities 288,272 513,004
Total current liabilities 3,246,652 2,348,917
Total liabilities 4,354,752 3,441,732
Total equity and liabilities 6,295,518 6,236,091
These condensed consolidated interim financial information were approved and
authorized for issue by the Board of Directors and signed on their behalf on
11 September 2022 by:
__________________
___________________
Dr. Hend El Sherbini Hussein Choucri
Chief Executive Officer Independent Non-Executive Director
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated income statement for the quarter and six-month periods ended 30
June 2022
For the three months period For the six months period
ended 30 June ended 30 June
Notes 2022 2021 2022 2021
EGP'000 EGP'000 EGP'000 EGP'000
Revenue 23 773,586 1,163,632 1,954,065 2,293,170
Cost of sales (473,402) (496,742) (1,122,195) (987,873)
Gross profit 300,184 666,890 831,870 1,305,297
Marketing and advertising expenses (51,804) (37,848) (92,568) (66,655)
Administrative expenses 17 (77,892) (105,212) (164,192) (176,132)
Impairment loss on trade and other receivable (8,980) (5,181) (16,158) (10,265)
Other income 4,553 8,346 3,471 12,431
Operating profit 166,061 526,995 562,423 1,064,676
Finance costs 18 (31,087) (39,212) (64,147) (74,900)
Finance income 18 43,247 24,975 151,292 45,248
Net finance cost 12,160 (14,237) 87,145 (29,652)
Profit before tax 178,221 512,758 649,568 1,035,024
Income tax expense 19-B (53,302) (186,142) (210,516) (366,814)
Profit for the period 124,919 326,616 439,052 668,210
Profit attributed to:
Equity holders of the parent 125,611 320,410 422,220 646,440
Non-controlling interests (692) 6,206 16,832 21,770
124,919 326,616 439,052 668,210
Earnings per share (expressed in EGP):
Basic and diluted earnings per share 22 0.21 0.53 0.70 1.08
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 June 2022
For the three months period ended 30 June For the six months period ended 30 June
2022 2021 2022 2021
EGP'000 EGP'000 EGP'000 EGP'000
Net profit 124,919 326,616 439,052 668,210
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations 25,983 (2,062) 103,291 12,375
Other comprehensive income / (Loss) for the period net of tax 25,983 (2,062) 103,291 12,375
Total comprehensive income for the period 150,902 324,554 542,343 680,585
Attributed to:
Equity holders of the parent 138,135 320,692 448,685 656,583
Non-controlling interests 12,767 3,862 93,658 24,002
150,902 324,554 542,343 680,585
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of cash flows for the six month period ended 30 June
2022
Notes 30 June 2022 30 June 2021
EGP'000 EGP'000
Cash flows from operating activities
Profit for the period before tax 649,568 1,035,024
Adjustments
Depreciation of property, plant and equipment 95,184 59,068
Depreciation of right of use assets 48,215 46,677
Amortisation of intangible assets 3,439 3,049
loss/(Gain )on disposal of Property, plant and equipment 523 (45)
Impairment in trade and other receivables 16,158 10,265
Interest income 18 (75,443) (45,248)
Interest expense 18 55,342 49,011
Bank Charges 8,805 -
Equity settled financial assets at fair value (2,548) (678)
ROU Asset/Lease Termination (408) (464)
Hyperinflation 18 (6,471) 1,204
Unrealised foreign currency exchange loss 18 (69,378) 19,321
Change in Provisions (380) 72
Change in Inventories (15,888) (41,444)
Change in trade and other receivables (81,073) (103,537)
Change in trade and other payables (85,084) 74,710
Cash generated from operating activities before income tax payment 540,562 1,106,985
Tax paid during period (506,375) (240,624)
Net cash generated from operating activities 34,187 866,361
Cash flows from investing activities
Proceeds from sale of Property, plant and equipment 5,999 3,036
Interest received on financial asset at amortised cost 25,224 44,866
Payments for acquisition of property, plant and equipment 4 (143,424) (86,530)
Payments for acquisition of intangible assets 5 (1,505) (1,104)
Payments for the purchase of financial assets at amortized cost (309,952) (309,835)
Proceeds for the sale of financial assets at amortized cost 1,266,048 257,404
Net cash flows generated from/ (used in)investing activities 842,390 (92,163)
Cash flows from financing activities
Proceeds from borrowings - 2,617
Repayments of borrowings (13,238) (12,708)
Payment of finance lease liabilities (17,239) (32,401)
Dividends paid (88,766) (21,998)
Interest paid (58,276) (48,640)
Bank charge paid (8,805) -
Net cash flows used in financing activities (186,324) (113,130)
Net increase in cash and cash equivalent 690,253 661,068
Cash and cash equivalents at the beginning of the year 891,451 600,130
Effect of exchange rate 85,920 (3,215)
Cash and cash equivalent at the end of the period 10 1,667,624 1,257,983
The accompanying notes form an integral part of these condensed consolidated
interim financial information.
Consolidated statement of changes in equity for the six month period ended 30
June 2022
Attributable to owners of the Parent
EGP '000 Share Share Capital Legal Put option reserve Translation Retained earnings Total attributable to the owners of the Parent Non-controlling interests Total equity
capital
premium reserve
reserve
reserve*
reserve
At 1 January 2022 1,072,500 1,027,706 (314,310) 51,641 (956,397) 150,730 1,550,976 2,582,846 211,513 2,794,359
Profit for the period - - - - - - 422,220 422,220 16,832 439,052
Other comprehensive income for the period - - - - - 26,465 - 26,465 76,826 103,291
Total comprehensive income at 30 June 2022 - - - - - 26,465 422,220 448,685 93,658 542,343
Transactions with owners of the Company
Contributions and distributions
Dividends - - - - - - (1,304,805) (1,304,805) (106,947) (1,411,752)
Movement in put option liabilities - - - - 19,501 - - 19,501 - 19,501
Impact of hyperinflation - - - - - - (4,705) (4,705) 1,020 (3,685)
Total contributions and distributions - - - - 19,501 - (1,309,510) (1,290,009) (105,927) (1,395,936)
Balance at 30 June 2022 1,072,500 1,027,706 (314,310) 51,641 (936,896) 177,195 663,686 1,741,522 199,244 1,940,766
At 1 January 2021 1,072,500 1,027,706 (314,310) 49,218 (314,057) 145,617 603,317 2,269,991 156,383 2,426,374
Profit for the period - - - - - - 646,440 646,440 21,770 668,210
Other comprehensive income for the period - - - - - 10,143 - 10,143 2,232 12,375
Total comprehensive income at 30 June 2021 - - - - - 10,143 646,440 656,583 24,002 680,585
Transactions with owners of the Company
Contributions and distributions
Dividends - - - - - - (454,472) (454,472) (21,998) (476,470)
Legal reserve formed during the period - - - 2,423 - - (2,423) - - -
Movement in put option liabilities - - - - (303,990) - - (303,990) - (303,990)
Impact of hyperinflation - - - - - - (15,794) (15,794) (6,277) (22,071)
Total contributions and distributions - - - 2,423 (303,990) - (472,689) (774,256) (28,275) (802,531)
Balance at 30 June 2021 1,072,500 1,027,706 (314,310) 51,641 (618,047) 155,760 777,068 2,152,318 152,110 2,304,428
*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.
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
six months ended 30 June 2022 comprise the Company and its subsidiaries
(together referred as the 'Group'). The Company is a dually listed entity, in
both London Stock Exchange (since 2015) and in the Egyptian Exchange (during
May 2021).
The principal activities of the Company and its subsidiaries (together "The
Group") include investments in all types of the healthcare field of medical
diagnostics (the key activities are pathology and Radiology related tests),
either through acquisitions of related business in different jurisdictions or
through expanding the acquired investments they have. The key jurisdictions
that the Group operates are in Egypt, Jordan, Nigeria and Sudan.
The Group's financial year starts on 1 January and ends on 31 December of each
year.
These condensed consolidated interim financial information were approved for
issue by the Directors of the Company on 11 September 2022.
2. Basis of preparation
A) Statement of compliance
These condensed consolidated interim financial information have been prepared
as per IAS 34 'Interim Financial Reporting' (As adopted by the IASB). as the
accounting policies adopted are consistent with those of the previous
financial year ended 31 December 2021 and corresponding interim reporting
period.
These condensed consolidated interim financial information do not include all
the information and disclosures in the annual consolidated financial
Statement, and should be read in conjunction with the financial Statement
published as at and for the year ended 31 December 2021 which is available at
www.idhcorp.com (http://www.idhcorp.com) . In addition, results of the six
month period ended 30 June 2022 are not necessary indicative for the results
that may be expected for the financial year ending 31 December 2022.
B) Basis of measurement
The condensed consolidated interim financial information has been prepared on
the historical cost basis except where adopted IFRS mandates that fair value
accounting is required which is related to the financial assets and
liabilities measured at fair value.
C) Functional and presentation currency
These condensed consolidated interim financial information is presented in
Egyptian Pounds (EGP'000). The functional currency of the majority of the
Group's entities is the Egyptian Pound (EGP) and is the currency of the
primary economic environment in which the Group operates.
The Group also operates in Jordan, Sudan and Nigeria and the functional
currencies of those foreign operations are the local currencies of those
respective territories, however due to the size of these operations, there is
no significant impact on the functional currency of the Group, which is the
Egyptian Pound (EGP).
3. Significant accounting policies
In preparing these condensed consolidated interim financial information, the
significant judgments made by the management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those that were applied to the consolidated financial information for
the year ended 31 December 2021."The preparation of these condensed
consolidated interim financial information requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these estimates. Information about
significant areas of estimation uncertainty and critical judgement in applying
accounting policies that have the most significant effect on the amount
recognised in the condensed consolidated interim financial statement is
described in note 3.2 of the annual consolidated financial information
published for the year ended 31 December 2021. In preparing these condensed
consolidated interim financial information, the significant judgments made by
the management in applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those that were applied to the
consolidated financial information for the year ended 31 December 2021".
4. Property, plant, and equipment
Land & buildings Medical, electric Leasehold Fixtures, fittings & vehicles Building & Leasehold assets in the course of construction Payment on account Total
& information
improvements
system equipment
Cost
At 1 January 2022 380,883 824,628 335,203 95,966 15,937 6,761 1,659,378
Additions 38,275 71,111 44,936 6,177 13,504 1,063 175,066
Hyper inflation - 1,784 - - - - 1,784
Disposals - (674) (453) (7,675) - - (8,802)
Transfers - - 2,669 - (2,669) - -
Exchange differences 2,810 37,155 18,894 8,078 1,677 - 68,614
At 30 June 2022 421,968 934,004 401,249 102,546 28,449 7,824 1,896,040
Depreciation
At 1 January 2022 53,490 333,806 177,230 33,044 - 597,570
Depreciation for the period 3,224 62,253 24,861 4,846 - - 95,184
Disposals - (613) (414) (1,253) - - (2,280)
Exchange differences 454 17,496 8,860 4,949 - - 31,759
At 30 June 2022 57,168 412,942 210,537 41,586 - 722,233
Net book value at 30 June 2022 364,800 521,062 190,712 60,960 28,449 7,824 1,173,807
At 31 December 2021 327,393 490,822 157,973 62,922 15,937 6,761 1,061,808
5. Intangible assets and goodwill
Intangible assets represent goodwill acquired through business combinations
and brand names.
Goodwill Brand name Software Total
Cost
Balance at 1 January 2022 1,260,965 383,909 77,394 1,722,268
Additions - - 1,505 1,505
Effect of movements in exchange rates 11,031 3,652 1,444 16,127
Balance at 30 June 2022 1,271,996 387,561 80,343 1,739,900
Amortisation and impairment
Balance at 1 January 2022 4,552 372 58,477 63,401
Amortisation - - 3,439 3,439
Effect of movements in exchange rates - - 616 616
Balance at 30 June 2022 4,552 372 62,532 67,456
Carrying amount
Balance at 30 June 2022 1,267,444 387,189 17,811 1,672,444
Balance at 31 December 2021 1,256,413 383,537 18,917 1,658,867
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 six months ended 30
June 2022.
6. Right-of-use assets
30 June 2022 31 December 2021
Balance at 1 January 462,432 354,688
Addition for the period / year 94,959 198,402
Depreciation charge for the period / year (48,215) (79,617)
Terminated contracts (8,406) (7,643)
Exchange differences 18,941 (3,398)
519,711 462,432
7. Financial asset at fair value through profit and loss
30 June 2022 31 December 2021
Equity investments* 13,018 10,470
13,018 10,470
* On August 17, 2017, Almakhbariyoun AL Arab (seller) has signed IT
purchase Agreement with JSC Mega Lab (Buyer) to transfer and install the
Laboratory Information Management System (LIMS) for a purchase price amounted
to USD 400 000 in the form of 10% equity stake in JSC Mega Lab. In case the
valuation of the project is less or more than USD 4,000,000, the seller stake
will be adjusted accordingly, in a way that the seller equity stake shall not
fall below 5% of JSC Mega Lab.
- ownership percentage in JSC Mega Lab at the transaction date on
April 8, 2019, and as of June 30, 2022, was 8.25%.
- On April 8, 2019, Al Mokhabariyoun Al Arab (Biolab) has signed a
Shareholder Agreement with JSC Mega Lab and JSC Georgia Healthcare Group
(CHG), whereas, BioLab Shall have a put option, exercisable within 12 months
immediately after the expiration of five(5) year period from the signing date,
which allows BioLab stake to be bought out by CHG at a price of the equity
value being USD 400,000 plus 15% annual Interred Rate of Return (IRR). In case
the Management Agreement or the Purchase Agreement and/or the Service level
Agreement is terminated/cancelled within 6 months period from the date of such
termination/cancellation, CHG shall have a call option, which allows the CHG
to purchase Biolab's Stake in JSC Megalab having value of USD 400,000.00 plus
20% annual Interred Rate of Return (IRR). If JCI accreditation is not
obtained, immediately after the expiration of the 12 months period, CHG shall
have a call option (the Accreditation Call option), exercisable within 6
months period, allowing CHG has the right to purchase BioLab's Shares in JSC
Mega Lab at a price of the equity value of USD 400,00.00 plus the 20% annual
IRR.
After 12 months from the date of the put option period expiration, CHG to has
the right purchase Biolab's Stake in JSC Megalab having value of USD 400,000
plus higher of 20% annual IRR or 6x EV/EBITDA (of the financial year
immediately preceding the call option exercise date).
8. Trade and other receivables
30 June 2022 31 December 2021
Trade receivables - net 384,617 371,051
Prepayments 28,716 22,647
Due from related parties note (16) 7,323 5,237
Accrued revenue 1,648 2,818
Other receivables 69,273 67,974
491,577 469,727
9. Financial assets at amortised cost
30 June 2022 31 December 2021
Term deposits (more than 90 days) 3,726 148,136
Treasury bills (more than 90 days) 510,771 1,310,588
514,497 1,458,724
The maturity date of the treasury bills and Fixed-term deposits is between
3-12 months and have average interest rates of 13.18% and 8.50% respectively.
10. Cash and cash equivalents
30 June 2022 31 December 2021
Cash at banks and on hand 1,589,519 261,430
Treasury bills (less than 90 days) 13,744 150,431
Term deposits (less than 90 days) 64,361 479,590
1,667,624 891,451
11. Trade and other payables
30 June 2022 31 December 2021
Trade payable 230,299 311,321
Accrued expenses 225,387 325,677
Due to related parties note (16) 11,230 13,234
Other payables 86,800 99,040
Deferred revenue 52,984 24,603
Accrued finance cost 4,207 3,479
610,907 777,354
12. Current put option liability
30 June 31 December 2021
2022
Put option - Biolab Jordan 897,163 921,360
897,163 921,360
The accounting policy for put options after initial recognition is to
recognise all changes in the carrying value of the put option liability within
equity.
Through the historic acquisitions of Makhbariyoun Al Arab, the Group entered
into separate put option arrangements to purchase the remaining equity
interests from the vendors at of a subsequent date. At acquisition, a put
option liability has been recognised at the net present value of the exercise
price of the option.
The option is calculated at seven times (7x) EBITDA of the last 12 months
minus Net Debt, and its exercisable in whole starting the fifth anniversary of
completion of the original purchase agreement, which fell due in June 2016.
The vendor has not exercised this right at 30 June 2022. It is important to
note that the put option liability is treated as current as it could be
exercised at any time by the NCI. However based on discussions and ongoing
business relationship, there is no expectation that this will happen in the
next 18 months. The put option has no expiry date.
13. Loans and borrowings
Currency Nominal interest rate Maturity 30 June 2022 31 December 2021
CIB - Bank EGP Secured rate 9.5% 5 April 2022 - 13,238
AUB - Bank EGP CBE corridor rate+1% 26 April 2026 84,828 84,828
84,828 98,066
Amount held as:
Current liability 8,483 21,721
Non- current liability 76,345 76,345
84,828 98,066
A)
In July 2018, AL-Borg lab, one of IDH subsidiaries, was granted a medium-term
loan amounting to EGP 130.5m from the Ahli United Bank "AUB Egypt" to finance
the investment cost related to the expansion into the radiology segment. As at
30 June 2022 only EGP 84.8m had been drawn down from the total facility
available. The loan contains the following financial covenants which if
breached will mean the loan is repayable on demand:
1. The financial leverage shall not exceed 0.7 throughout the period of
the loan
"Financial leverage": total bank debt divided by net equity
2. The debt service ratios (DSR) shall not be less than 1.35 starting
2020
Loans and borrowings (continued)
"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 June 2022 corridor rate is 12.25% (2021: 9.25%)
AL- Borg company didn't breach any covenants related to the MTL agreement.
B) Last year the Group signed two debt facilities agreements. The debt
package includes US$ 45.0 million secured facility with the tenor of 8-year
starting May 2021 from the International Finance Corporation (IFC), and an
additional US$ 15.0 million IFC syndicated facility from Mashreq Bank. As at
30 June 2022, the debt facility has not been drawn by IDH.
14. Non-current put option liability
30 June 31 December 2021
2022
Put option liability* 39,733 35,037
39,733 35,037
* According to the definitive agreements signed on 15 January 2018
between Dynasty Group Holdings Limited and the International Finance
Corporation (IFC) related to the Eagle Eye-Echo scan transaction, IFC has the
option to put its shares to Dynasty in the year 2024. The put option price
will be calculated on the basis of fair market value determined by an
independent valuator.
15. Other Financial obligations
30 June 2022 31 December 2021
Lease liabilities - buildings 601,703 531,804
Financial obligations- laboratory equipment 259,519 228,870
861,222 760,674
The financial obligations for the laboratory equipment and building are
payable as follows:
30 June 2022
Minimum payments Interest Principal
Less than one year 249,937 112,915 137,022
Between one and five years 809,055 239,675 569,380
More than five years 174,300 19,480 154,820
1,233,292 372,070 861,222
31 December 2021
Minimum payments Interest Principal
Less than one year 211,242 95,764 115,478
Between one and five years 701,084 227,314 473,770
More than Five years 191,229 19,803 171,426
1,103,555 342,881 760,674
Amounts recognised in profit or loss:
For the three months ended 30 June For the six months ended 30 June
2022 2021 2022 2021
Interest on lease liabilities 18,065 14,597 34,926 28,872
Expenses related to short-term lease 9,387 3,420 15,144 8,639
16. Related party transactions
The significant transactions with related parties, their nature volumes and
balance during the period 30 June 2022 are as follows:
30 June 2022
Related Party Nature of transaction Nature of relationship Transaction amount of the period Balance
ALborg Scan (S.A.E)* Expenses paid on behalf Affiliate - 351
International Fertility (IVF)** Expenses paid on behalf Affiliate - 1,767
H.C Security Provided service Entity owned by Company's board member 56 (263)
Life Health Care Provide service Entity owned by Company's CEO 1,956 4,050
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder 24,197 (897,163)
International Finance corporation (IFC) Put option liability Eagle Eye - Echo Scan limited shareholder (4,696) (39,733)
International Finance corporation (IFC) Current account Eagle Eye - Echo Scan limited shareholder 1,948 (10,967)
Integrated Treatment for Kidney Diseases (S.A.E.) Medical services Entity owned by Company's CEO - 1,155
130
Total (940,803)
Related party transactions (continued)
31 December 2021
Related Party Nature of transaction Nature of relationship Transaction amount of the year Balance
ALborg Scan (S.A.E)* Expenses paid on behalf Affiliate 1 351
International Fertility (IVF)** Expenses paid on behalf Affiliate - 1,767
H.C Security Provide service Entity owned by Company's board member (243) (319)
Life Health Care Provide service Entity owned by Company's CEO (11,232) 2,094
Dr. Amid Abd Elnour Put option liability Bio. Lab C.E.O and shareholder (639,093) (921,360)
International Finance corporation (IFC) Put option liability Eagle Eye - Echo Scan limited shareholder (3,247) (35,037)
International Finance corporation (IFC) Current account Eagle Eye - Echo Scan limited shareholder (12,915) (12,915)
Rental income Medical services Entity owned by Company's CEO 1,025
Integrated Treatment for Kidney Diseases (S.A.E) (298)
530
Total (964,394)
* ALborg Scan is a company whose shareholders include Dr. Moamena Kamel
(founder of IDH subsidiary Al-Mokhtabar Labs).
** International Fertility (IVF) is a company whose shareholders include
Dr. Moamena Kamel (founder of IDH subsidiary Al-Mokhtabar Labs).
Related party transactions (continued)
Compensation of key management personnel of the Group
The amounts disclosed in the table are the amounts recognised as an expense
during the reporting period related to key management personnel.
30 June 2022 30 June 2021
Short-term employee benefits 33,746 35,617
33,746 35,617
17. General and administrative expenses
For the three months ended 30 June For the six months ended 30 June
2022 2021 2022 2021
Wages and salaries 32,979 34,623 66,910 61,636
Depreciation 7,440 5,659 14,843 11,187
Other expenses 37,473 64,930 82,439 103,309
Total 77,892 105,212 164,192 176,132
18. Net finance cost
For the three months ended 30 June For the six months
ended 30 June
2022 2021 2022 2021
Interest income 30,196 24,975 75,443 45,248
Net foreign exchange gain 8,244 - 69,378 -
Gain on hyperinflationary net monetary position (Sudan companies) 4,807 - 6,471 -
Total finance income 43,247 24,975 151,292 45,248
Loss on hyperinflationary net monetary position - (1,204) - (1,204)
Bank Charges (1,661) (2,848) (8,805) (5,364)
Interest expense (29,426) (30,574) (55,342) (49,011)
Net foreign exchange loss - (4,586) - (19,321)
Total finance costs (31,087) (39,212) (64,147) (74,900)
Net finance income /(cost) 12,160 (14,237) 87,145 (29,652)
On March 21, 2022, the Central Bank of Egypt raised the corridor rate by 100
basis points and on May 19, 2022, an additional increase of 200 basis point
took place.
19. Tax
A) Tax expense
Tax expense is recognised based on management's best estimate of the
weighted-average annual income tax rate expected for the full financial year
multiplied by the pre-tax income of the interim reporting period.
B) Income tax
Amounts recognised in profit or loss as follow:
For the three months ended 30 June For the six months
ended 30 June
2022 2021 2022 2021
Current tax:
Current year tax (58,479) (143,535) (159,839) (282,345)
Deferred tax:
DT on undistributed reserves 6,672 (43,068) (48,553) (83,780)
DT on reversal of temporary differences (1,495) 461 (2,124) (689)
Total Deferred tax 5,177 (42,607) (50,677) (84,469)
Tax expense recognized in profit or loss (53,302) (186,142) (210,516) (366,814)
C) Deferred tax liabilities
Deferred tax relates to the following:
30 June 31 December
2022 2021
Property, plant and equipment (30,052) (28,925)
Intangible assets (106,518) (105,358)
Undistributed reserves from Group subsidiaries (157,961) (223,425)
Provisions and financial obligations 30,417 25,559
Net deferred tax liabilities (264,114) (332,149)
20. Financial instruments
The Group has reviewed the financial assets and liabilities held at 30 June
2022. It has been deemed that the carrying amounts for all financial
instruments are a reasonable approximation of fair value. All financial
instruments are deemed Level 3.
21. Contingent liabilities
As required by article 134 of the labour law on Vocational Guidance and
Training issued by the Egyptian Government in 2003, Al Borg Laboratory Company
and Al Mokhtabar Company for Medical Labs are required to conform to the
requirements set out by that law to provide 1% of net profits each year into a
training fund. During the year, Integrated Diagnostics Holdings plc have taken
legal advice and considered market practice in Egypt relating to this and more
specifically whether the vocational training courses undertaken by Al Borg
Laboratory Company and Al Mokhtabar Company for Medical Labs suggest that
obligations have been satisfied through training programmes undertaken
in-house by those entities. Since the issue of the law on Vocational Guidance
and Training, Al Borg Laboratory Company and Al Mokhtabar Company for Medical
Labs have not been requested by the government to pay or have voluntarily paid
any amounts into the external training fund. The board of Integrated
Diagnostics Holdings plc have concluded that an outflow of funds is not
probable.
Should a claim be brought against Al Borg Laboratory Company and Al Mokhtabar
Company for Medical Labs, an amount of between EGP 26.8m to EGP 60m could
become payable, however this is not considered probable due to the specialized
and differential training programs that the group provides to its medical and
administrative professionals on an annual basis, which is one of the
requirements imposed by the international accreditation bodies.
22. Earnings per share
For the three months ended 30 June For the six months ended 30 June
2022 2021 2022 2021
Profit attributed to owners of the parent 125,611 320,410 422,220 646,440
Weighted average number of ordinary shares in issue 600,000 600,000 600,000 600,000
Basic and diluted earnings per share 0.21 0.53 0.70 1.08
The Company has no potential diluted shares as at 30 June 2022 and 30 June
2021, therefore; the earnings per diluted share are equivalent to basic
earnings per share.
23. Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the steering
committee that makes strategic decisions.
The Group has four operating segments based on geographical location rather
than two operating segments based on service provided, as the Group's Chief
Operating Decision Maker (CODM) reviews the internal management reports and
KPIs of each geography.
The Group operates in four geographic areas, Egypt, Sudan, Jordan, and
Nigeria. As a provider of medical diagnostic services, IDH's operations in
Sudan are not subject to sanctions. The revenue split, EBITDA split (being the
key profit measure reviewed by CODM) net profit and loss between the four
regions is set out below.
Revenue by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 644,550 4,797 105,621 18,618 773,586
30-June-21 1,014,597 2,514 133,648 12,873 1,163,632
Revenue by geographic location
For the six months period ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 1,524,040 10,469 386,135 33,421 1,954,065
30-June-21 1,935,059 9,267 323,518 25,326 2,293,170
EBITDA by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 226,684 (23) 16,478 (2,163) 240,976
30-June-21 534,796 (377) 53,296 (3,873) 583,842
EBITDA by geographic location
For the six months period ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 621,740 63 90,790 (3,332) 709,261
30-June-21 1,046,064 711 131,023 (4,328) 1,173,470
Segment reporting (continued)
Net profit / (loss) by geographic location
For the three months ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 124,044 1,522 2,441 (3,088) 124,919
30-June-21 310,160 (4,486) 31,731 (10,789) 326,616
Net profit / (loss) by geographic location
For the six months period ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 393,560 4,278 47,471 (6,257) 439,052
30-June-21 616,213 (14,801) 83,247 (16,449) 668,210
Revenue by type Net profit by type
For the three months ended 30 June For the three months ended 30 June
2022 2021 2022 2021
Pathology 736,467 1,140,057 147,694 331,357
Radiology 37,119 23,575 (22,775) (4,741)
773,586 1,163,632 124,919 326,616
Revenue by type Net profit by type
For the six months period ended 30 June For the six months period ended 30 June
2022 2021 2022 2021
Pathology 1,885,271 2,247,984 477,718 675,057
Radiology 68,794 45,186 (38,666) (6,847)
1,954,065 2,293,170 439,052 668,210
Revenue by categories Revenue by categories
For the three months ended 30 June For the six months period ended 30 June
2022 2021 2022 2021
Walk-in 319,548 499,678 854,653 1,029,039
Corporate 454,038 663,954 1,099,412 1,264,131
773,586 1,163,632 1,954,065 2,293,170
* 30 June 2022 figure includes Covid-19 related Pathology tests
amounted to EGP 615 m (30 June 2021: EGP 1,104 m).
Segment reporting (continued)
Non-current assets by geographic location
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
30-June-22 2,937,484 9,104 329,326 103,066 3,378,980
31-Dec-21 2,803,954 7,234 291,880 90,509 3,193,577
The operating segment profit measure reported to the CODM is EBITDA, as
follows:
For the three months ended 30 June For six months period ended 30 June
2022 2021 2022 2021
Profit from operations 166,061 526,995 562,423 1,064,676
49,136 26,608 95,184 59,068
Property, plant and equipment depreciation
Right of use depreciation 24,289 28,711 48,215 46,677
Amortization of Intangible assets 1,490 1,528 3,439 3,049
EBITDA 240,976 583,842 709,261 1,173,470
Non-recurring expenses - 18,797 - 29,034
Normalised EBITDA 240,976 602,639 709,261 1,202,504
24. Distributions made and proposed
30 June 31 December 2021
2022
EGP'000 EGP'000
Cash dividends on ordinary shares declared and not paid:
US$ 0.116 per share (2021 nil) 1,304,805 -
1,304,805 -
Cash dividends on ordinary shares declared and paid: - 455,182
Nil per qualifying ordinary share (2021: 0.0485) per share - 455,182
25. Subsequent events
A) Due to the current economic situation in Egypt, IDH board of Directors
has decided to pay dividends over two rounds as follows:
- Round 1 -> Minority Shareholders the deadline on the 27th of
July 2022
- Round 2 -> Hena Holdings & Actis
IDH signed a deferral agreement with principal shareholders (Hena Holdings and
Actis) who have agreed to receive their dividends in two tranches (on the 11th
of August 2022 and the 18th of August 2022) with an interest rate of 10% per
annum.
In relation to this agreement, IDH has incurred an Interest Expense of USD
174.5 K.
B) In relation to the share purchase agreement (the "SPA") signed on 20
December 2021 by IDH (or "the Company") for the acquisition of a 50% stake in
Islamabad Diagnostic Center ("IDC"), IDH has notified Evercare IGA Holdings
Limited (the "Seller") of its decision to terminate the SPA on 29 August 2022.
Termination has become inevitable as the Long-stop Date (which had already
been extended for a period of three months) has occurred without the
satisfaction of all condition's precedent ("CPs"). However, negotiations with
the Seller are ongoing, with Pakistan's evolving economic challenges and
geopolitical situation to be important considerations in the completion of the
negotiations. In case the Company reaches an agreement with the Seller, an
amended SPA will be signed and a new Long-stop Date set.
C) IDH (or "the Company") will implement an Employee Stock Ownership Plan
("ESOP") for the senior management starting Q3 2022.
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. END IR GRGDCIBBDGDDRecent news on Integrated Diagnostics Holdings
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