Integrated Diagnostics Holdings Plc

9M 2023 Results

Thursday, 16 November 2023

Integrated Diagnostics Holdings Plc reports impressive 44% year-on-year conventional revenue expansion in 9M 2023, with consolidated figures surpassing the high Covid base of 9M 2022

(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or "the Company"), a leading provider of diagnostic services with operations in Egypt, Jordan, Nigeria, Sudan, and soon launching in Saudi Arabia, announced today its reviewed financial statements for the nine-month period ended 30 September 2023, booking its strongest quarter since the start of the year. IDH recorded consolidated revenues of EGP 1,182 in Q3 2023 million, yielding 40% year-on-year and 24% quarter-on-quarter growth rates.

When excluding¹ Covid-19-related contributions from the previous period, conventional revenues recorded a 51% year-on-year growth in Q3 2023. Impressive top-line performance during the quarter translated to improved results down the income statement, with net profit coming in at EGP 176 million and yielding an NPM of 15% in Q3 2023. This represents a significant improvement from the net loss of EGP 36 million recorded in Q3 2022 when IDH's bottom-line profitability had been weighed down by a one-off expense.

On a year-to-date basis, IDH recorded consolidated revenues of EGP 3,054 million, a 9% year-on-year expansion versus the high base of 9M 2022, which had included EGP 678 million in Covid-19-related² revenues (constituting 24% of the Company's top-line). Meanwhile, the Company booked conventional revenue growth of 44% year-on-year in 9M 2023, supported by a 16% year-on-year increases in test volumes coupled with a 24% year-on-year increase in average revenue per conventional test.

Further down the income statement, the Company posted a net profit of EGP 387 million in 9M 2023, representing a marginal 4% year-on-year decline from the figure reported in the same period of last year and yielding a net profit margin (NPM) of 13%.

Financial Results (IFRS)³

EGP mn	Q3 2022	Q3 2023	Change	9M 2022	9M 2023	Change
Revenues	846	1,182	40%	2,800	3,054	9%
Conventional Revenues	784	1,182	51%	2,123	3,054	44%
Covid-19-related Revenues	63	-	-	678	-	-
Cost of Goods Sold	(497)	(702)	41%	(1,619)	(1,916)	18%
Gross Profit	350	480	37%	1,182	1,138	-4%
Gross Profit Margin	41%	41%	-1 pts	42%	37%	-5 pts
Operating Profit	186	312	67%	749	577	-23%
Normalised EBITDA4	265	411	55%	974	873	-10%
EBITDA Margin	31%	35%	3 pts	35%	29%	-6 pts
Net Profit	(36)	176	-	403	387	-4%
Net Profit Margin	-4%	15%	19 pts	14%	13%	-2 pts
Cash Balance	816	794	-3%	816	794	-3%

Note: Throughout the document, percentage changes are calculated using the exact value (as per the Consolidated Financials) and not the corresponding rounded figure.

Key Operational Indicators⁵

EGP mn	9M 2022	9M 2023	Change
Branches	546	594	48
Patients ('000)	6,633	6,248	-6%
Revenue per Patient (EGP)	422	489	16%
Tests ('000)	24,359	26,468	9%
Conventional Tests ('000)	22,728	26,468	16%
Covid-19-related Tests ('000)	1,631	-	-
Revenue per Test	115	115	0%
Revenue per Conventional Test (EGP)	93	115	24%
Revenue per Covid-19-related Test (EGP)	416	-	-
Test per Patient	3.7	4.2	15%

 

 

[1] Starting Q1 2023, IDH has opted to stop reporting on its Covid-19-related revenues and test volumes due to their material insignificance to the consolidated figures and to Egypt's and Jordan's country-level results for the quarter. In the comparable period of last year (9M 2022) IDH had recorded EGP 678 million in Covid-19-related revenues and had performed 1.6 million Covid-19-related tests.

2 Covid-19-related tests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.

³ Important notice: In the Company's earnings releases covering the five quarters starting from Q4 2021 and ending Q4 2022, management had opted to present Alternative Performance Measures (APM) alongside IFRS-compliant figures as outlined on page 2 of the Company's FY 2022 Earnings Release. Starting in Q1 2023, due to the material insignificance of Covid-19-related revenues on consolidated results, the Company will only report IFRS-compliant figures. It is worth noting that revenues for the comparable period (9M 2022), include concession fees amounting to EGP 63 million paid by Biolab as part of its agreement with QAIA and Aqaba Port.

4 Normalised EBITDA is calculated as operating profit plus depreciation and amortization, excluding non-recurring expenses, specifically a EGP 12 million one-off expense owed to the Egyptian government for vocational training, EGP 6.5 million in pre-operating expenses in Saudi Arabia, and EGP 5.0 million impairment expense in Sudan due to the ongoing situation in the country.

5 Key operational indicators are calculated based on revenues for the periods of EGP 3,054 million and EGP 2,800 million for 9M 2023 and 9M 2022, respectively.

 

Important notice: In the Company's earnings releases covering the five quarters starting from Q4 2021 and ending Q4 2022, management had opted to present Alternative Performance Measures (APM) alongside IFRS-compliant figures as outlined on page 2 of the Company's FY 2022 Earnings Release. Starting in Q1 2023, due to the material insignificance of Covid-19-related revenues on consolidated results, the Company will only report IFRS-compliant figures. It is worth noting that revenues for the comparable period (9M 2022) include concession fees amounting to EGP 63 million paid by Biolab as part of its agreement with QAIA and Aqaba Port.

Introduction

 

i.    Financial Highlights

 

Quarterly Performance

·    IDH recorded its strongest quarterly performance since the start of the year in Q3 2023, capitalising on strong momentum seen during May and carrying on throughout the summer period. The quarter recorded a noticeable pickup in patient footfall and testing volumes, specifically in IDH's two largest markets, Egypt and Jordan.

·     IDH booked record test volumes in Q3 2023, surpassing the 10.0 million test mark for a single quarter for the first time. As a result, the Company booked total revenues of EGP 1,182 million, expanding 40% year-on-year and 24% quarter-on-quarter. Robust top-line performance compared to the previous quarter is a reflection of a normalisation in operations following a slow start to the year in 1H 2023 due to increased inflationary pressures, the holy month of Ramadan, and Eid vacations which affected operations.

·     In parallel, conventional revenues⁶ (excluding Covid-19 revenues in the comparative period) in Q3 2023 increased 51% year-on-year, up from EGP 784 million in Q3 2022.

 

 

Year-to-Date Performance

·     Conventional revenue during 9M 2023 amounted to EGP 3,054 million, representing a 44% year-on-year increase. Conventional revenue growth was driven by year-on-year increases of 16% and 24% in conventional test volumes and average revenue per conventional test, respectively.

·     Driven by strong quarterly performance, IDH recorded total revenues of EGP 3,054 million in 9M 2023, a 9% year-on-year increase.

·    This is a particularly noteworthy result when considering that the comparable 9M 2022 had included significant contributions from Covid-19-related⁷⁸ testing, amounting to EGP 678 million and constituting 24% of consolidated revenues. Total revenue growth came on the back of a 9% year-on-year increase in test volumes with average revenue per test remaining stable due to the high Covid base of 9M 2022.

⁶ Conventional (non-Covid) tests include IDH's full service offering excluding the Covid-19 related tests outlined below.

⁷ Covid-19-related tests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.

⁸ Covid-19-related revenue in 9M 2022 includes EGP 63 million in concession fees paid by Biolab to Queen Alia International Airport and Aqaba Port as part of its revenue sharing agreement

 

·    Gross Profit in Q3 2023 booked EGP 480 million, 37% above the figure recorded in Q3 2022 and 44% above Q2 2023.Meanwhile, IDH reported a gross profit margin (GPM) of 41%, unchanged compared to Q3 2022 and 6 points above the GPM booked in Q2 2023. Significantly improving gross profitability compared to the first two quarters of the year reflect a normalisation of profitability as the initial effects of the devaluation in FY 2022 and early FY 2023 began to fade.

On a nine-month basis, gross profit stood at EGP 1,138 million, down 4% year-on-year, and with an associated margin (GPM) of 37% compared to 42% in 9M 2022. Lower gross profitability on a year-to-date basis partially reflected rises in raw material costs due to higher average costs per kit on the back of rising inflation and a weaker EGP, coupled with higher direct salaries and wages costs to provide greater-than-usual increases in compensation packages to existing staff to compensate for inflationary pressures, as well as higher depreciation expenses.

·    Normalised EBITDA⁹ booked EGP 411 million, recording a remarkable year-on-year growth of 55% and with an EBITDA margin of 35%, 4% higher compared to Q3 2022. EBITDA profitability also showed solid improvements compared to previous quarters, up from 25% and 24% in Q1 2023 and Q2 2023, respectively. Ona year-to-date basis, normalised EBITDA stood at EGP 873 million in 9M 2023, down 10% year-on-year, and with an associated margin of 29% compared to 35% in 9M 2022. Lower EBITDA profitability on a year-to-date basis came on the back of the decreased gross profitability coupled with increased SG&A outlays in part reflecting the impact of a weaker EGP on USD-denominated expenses.

It is worth noting that normalised EBITDA has been adjusted for several one-offs including an EGP 12 million expense related to contributions owed to the Egyptian government vocational training fund for the previous five-year period, EGP 7 million in pre-operating expenses booked by IDH's new Saudi venture, and EGP 5 million impairment expense for Sudanese operations following the unfortunate political situation in the country.

 

9 Normalised EBITDA is calculated as operating profit plus depreciation and amortization, excluding non-recurring expenses, specifically a EGP 12 million one-off expense owed to the Egyptian government for vocational training, EGP 6.5 million in pre-operating expenses in Saudi Arabia, and EGP 5.0 million impairment expense in Sudan due to the ongoing situation in the country.

 

·     Net Profit booked EGP 176 million and yielded an NPM of 15% in Q3 2023 compared to a net loss of EGP 36 million one year prior. Net profit during the quarter also posted robust figures compared to the previous quarter, more than tripling the EGP 43 million booked in Q2 2023 and yielding an associated margin 9 points above Q2 2023.

Net profit in 9M 2023 recorded EGP 387 million, a 4% year-on-year decrease. IDH's NPM recorded 13% in 9M 2023, largely stable versus last year.

 

ii.  Operational Highlights

·      As at 30 September 2023, IDH's total branch network across its four markets stood at 594 branches, an increase of 48 branches in the past twelve-month period. During Q3 2023, IDH rolled out 6 new branches in its home market of Egypt, including one new Al-Borg Scan branch which commenced operations in September.

·      Conventional tests (excluding Covid-19 contributions in the base year) booked a record-high in Q3 2023, reaching 10.0 million tests for the first time and expanding 22% year-on-year and 19% quarter-on-quarter, further highlighting its strong growth momentum coupled with the normalisation of patient behaviour following the Covid-19 pandemic. Meanwhile, conventional tests reached 26.5 million tests in 9M 2023, a 16% year-on-year increase. Consolidated test volumes, which in 9M 2022 included 1.6 million Covid-19-related tests, grew 9% year-on-year.

·      Average revenue per conventional test increased 24% year-on-year to book EGP 115 in 9M 2023. Average revenue per conventional test was driven by both direct and indirect price adjustments in Egypt and Nigeria in response to ongoing inflation. It is worth highlighting that this figure was partially boosted by a 10% contribution from the translation effect resulting from the devaluation of the EGP over the past twelve months.

·      The Company served a total of 6.2 million patients during 9M 2023, 6% below last year's figure. The decline reflects the comparable period's high base due to Covid-19 contributions. Meanwhile, average test per patient rose to a record high 4.2 tests in 9M 2023, up from 3.7 tests one year prior. Continually surging average tests per patient reflect a post-Covid-19 patient normalisation coupled with the continued success of IDH's loyalty programme which launched in FY 2021.

 

iii. Updates by Geography

·      In Egypt (81.9% of total revenues), IDH booked its strongest quarterly performance of FY 2023, with conventional revenues (excluding Covid-19 contributions from the base year) expanding 49% year-on-year and 26% quarter-on-quarter, as the Company continues to build off the strong momentum witnessed starting May. In parallel, consolidated revenues increased 39% year-on-year in Q3 2023.

On a year-to-date basis, Egyptian operations recorded 39% year-on-year growth, reaching EGP 2,500 million during 9M 2023, driven by 18% increases in both test volumes and average revenue per test. In parallel, consolidated revenues in 9M 2023 increased 12% year-on-year, an impressive result given Covid-19-related contributions of 19% during 9M 2022.

·      In Jordan (15.2% of total revenues), in line with trends observed in Egypt, Biolab's conventional revenues expanded 13% year-on-year and 18% quarter-on-quarter in Q3 2023 to reach JOD 4.1 million, maintaining the strong momentum seen starting May 2023. Consolidated revenues declined 1% year-on-year from the high Covid base of Q3 2022. In EGP terms, conventional revenue posted growth rates of 82% year-on-year and 19% quarter-on-quarter, partially reflecting the translation effect resulting from a weaker EGP. On a nine-month basis, conventional revenues rose 10% year-on-year in JOD terms in 9M 2023, supported by a 10% growth in conventional testing volumes.

·      In Nigeria (2.6% of total revenues) Echolab booked 10% year-on-year and 11% quarter-on-quarter revenue growths in NGN terms in Q3 2023. Top-line expansion was primarily driven by 29% year-on-year and 4% quarter-on-quarter increases in average revenue per test in NGN terms, as IDH applies strategic price hikes to compensate for increasing inflation. On a year-to-date basis, revenues booked NGN 1,457 million in 9M 2023, expanding 16% year-on-year in NGN terms and supported by a 22% year-on-year rise in average revenue per test in local currency terms.

·     IDH's Sudanese operations (0.4% of total revenues) recorded revenue declines of 88% year-on-year and 62% quarter-on-quarter in Q3 2023 in EGP terms. Meanwhile, revenues declined 27% year-on-year in 9M 2023. IDH's operations in the country continue to be impacted by the ongoing conflict which has seen the closure of 16 of the country's 18 branches starting April 2023.

·     IDH remains on schedule to launch its first two Saudi Arabian branches in December 2023. The two branches will be located in Riyadh, enabling the Company to capitalise on the important growth opportunities offered by the city's growing and increasingly health-conscious population. The new venture was jointly funded by IDH (30%), Biolab (20%) and Fawaz Alhokair's healthcare subsidiary, Izhoor (50%). The venture aims to establish itself as a full-fledged clinical pathology diagnostic services provider boasting a branch network covering the entire Kingdom. The new venture will be fully consolidated on IDH's accounts.

iv. Management Commentary

Commenting on the Group's performance, IDH Chief Executive Officer Dr. Hend El-Sherbini said: "With the end of the year fast approaching, I am delighted to report an exceptional quarter, characterised by unprecedented financial and operational success and continuing to showcase the strength of IDH's underlying business and its future growth potential. While our results from the first half of the year were somewhat diluted by increasing inflationary environments, particularly in our home market, Egypt, as well as several seasonal slowdowns due to the holy month of Ramadan and other holidays, the Company's strong performance in the third quarter of the year has significantly outpaced the past two quarters. Strong growth in Q3 2023 has also reflected positively down the income statement, with our margins expanding significantly compared to the same quarter last year as well as compared to the first half of 2023. I am also proud to announce that this exceptional performance has enabled our year-to-date results to surpass the comparable period of last year, which had included sizeable contributions from Covid-19-related testing.

During Q3 2023, the Company continued building on its strong momentum witnessed starting in May of this year, conducting 10.0 million tests during the quarter, 21% higher than the figure recorded in Q3 2022, and the highest figure recorded in a single quarter in IDH's history. This quarter saw IDH increase its average number of tests per patient to 4.2 tests, another record high for the Company as its patient mix begins to normalise following the Covid-19-pandemic and it begins to harvest the fruit of its loyalty programme, which was introduced in FY 2021. This impressive performance has led to 40% year-on-year and 24% quarter-on-quarter increases in our consolidated top-line in Q3 2023.

Turning to our markets' individual performances, Egypt and Jordan both saw similar trends, with growing demand for our traditional test offering translating in steady rises in both conventional revenues and test volumes. In Egypt, we recorded a 49% year-on-year increase in conventional revenues in Q3 2023, driven by 24% and 20% rises in test volumes and average revenue per test, respectively, despite patients' purchasing power being impacted by rising inflation. Egyptian operations also witnessed an increase in the average number of tests per patient, rising to a record high 4.2 tests in 9M 2023, continuing to be driven by our successful loyalty programme which was introduced in FY 2021. Our results in Egypt were further buoyed by the impressive near doubling of revenues at our radiology venture, Al-Borg Scan, which constituted 5% of Egypt's revenue in Q3 2023. On this front, in line with our ramp up strategy for the venture, in September we inaugurated the venture's seventh branch moving us a step closer to realising our vision of providing patients with a one-stop-shop service offering featuring both pathology and radiology.

In Jordan, Biolab booked a 13% year-on-year increase in its conventional top-line in JOD terms, fuelled by a 13% increase in conventional test volumes for the period. In Nigeria, our operations recorded revenue expansion in NGN terms of 10% compared to Q3 2022, on the back of higher average revenue per test. Finally, Sudan's operations continued to be hindered by the ongoing conflict which has caused the closure of 16 out of our 18 branches starting in April of this year. As always, we will continue to closely monitor the situation and will provide the market with updates when available.

Further down the income statement, we were pleased to note the start of a gradual normalisation during the third quarter as the initial shock of the multiple devaluations of the EGP began to ease. More specifically, results in Q3 2023 showed significant improvements in profitability, with both our gross and EBITDA margins improving remarkably versus the first two quarters of 2023. Improved profitability was also apparent compared to Q3 2022, where the Company booked significant increases in both its EBITDA and net margins.

Finally, I am pleased to report that in the coming weeks, we will be officially launching our operations in Saudi Arabia, adding a fifth geography to our portfolio and entering one of the region's most attractive markets. Our first two branches in the country will both be located in the Kingdom's capital city, Riyadh, allowing us to take advantage of the important growth opportunities offered by the city's growing and increasingly health-conscious population. In light of the continued strengths of our results, the solid strategies in place, and the positive momentum enjoyed by our operations in Egypt and Jordan, we reaffirm our guidance of 30% conventional revenue growth, boosting our consolidated revenues to the EGP 4 billion mark, with a normalised EBITDA margin excluding one-off expenses and pre-operating expenses in Saudi Arabia of 28-30% for FY 2023."

- End -

Analyst and Investor Call Details

An analyst and investor call will be hosted at 1pm (UK) | 3pm (Egypt) on Tuesday, 21 November 2023. You can register for the call by clicking on this link.

For more information about the event, please contact: amoataz@EFG-HERMES.com

About Integrated Diagnostics Holdings (IDH)

IDH is a leading diagnostics services provider in the Middle East and Africa offering a broad range of clinical pathology and radiology tests to patients in Egypt, Jordan, Nigeria and Sudan. The Group's core brands include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab (Jordan), Ultralab and Al Mokhtabar Sudan (both in Sudan) and Echo-Lab (Nigeria). With over 40 years of experience, a long track record for quality and safety has earned the Company a trusted reputation, as well as internationally recognised accreditations for its portfolio of over 2,000 diagnostics tests. From its base of 552 branches as of 31 December 2022, IDH served over 8.7 million patients and performed more than 32.7 million tests in 2022. IDH will continue to add laboratories through a Hub, Spoke and Spike business model that provides a scalable platform for efficient expansion. Beyond organic growth, the Group targets expansion in appealing markets, including acquisitions in the Middle Eastern, African, and East Asian markets where its model is well-suited to capitalise on similar healthcare and consumer trends and capture a significant share of fragmented markets. IDH has been a Jersey-registered entity with a Standard Listing on the Main Market of the London Stock Exchange (ticker: IDHC) since May 2015 with a secondary listing on the EGX since May 2021 (ticker: IDHC.CA).

 

Shareholder Information

LSE: IDHC.L

EGX: IDHC.CA

Bloomberg: IDHC:LN

Listed on LSE: May 2015

Listed on EGX: May 2021

Shares Outstanding: 600 million

 

Contact

Nancy Fahmy

Investor Relations Director

T: +20 (0)2 3345 5530 | M: +20 (0)12 2255 7445 | nancy.fahmy@idhcorp.com

 

Forward-Looking Statements

These results for the nine-month period ended 30 September 2023 have been prepared solely to provide additional information to shareholders to assess the group's performance in relation to its operations and growth potential. These results should not be relied upon by any other party or for any other reason. This communication contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, and can be identified by the use of such words and phrases as "according to estimates", "aims", "anticipates", "assumes", "believes", "could", "estimates", "expects", "forecasts", "intends", "is of the opinion", "may", "plans", "potential", "predicts", "projects", "should", "to the knowledge of", "will", "would" or, in each case their negatives or other similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding business and management, future growth or profitability and general economic and regulatory conditions and other matters affecting the Group.

 

Forward-looking statements reflect the current views of the Group's management ("Management") on future events, which are based on the assumptions of the Management and involve known and unknown risks, uncertainties and other factors that may cause the Group's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The occurrence or non-occurrence of an assumption could cause the Group's actual financial condition and results of operations to differ materially from, or fail to meet expectations expressed or implied by, such forward-looking statements.

 

The Group's business is subject to a number of risks and uncertainties that could also cause a forward-looking statement, estimate or prediction to differ materially from those expressed or implied by the forward-looking statements contained in this communication. The information, opinions and forward-looking statements contained in this communication speak only as at its date and are subject to change without notice. The Group does not undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this communication.

Important notice: In the Company's earnings releases covering the five quarters starting from Q4 2021 and ending Q4 2022, management had opted to present Alternative Performance Measures (APM) alongside IFRS-compliant figures as outlined on page 2 of the Company's FY 2022 Earnings Release. Starting in Q1 2023, due to the material insignificance of Covid-19-related revenues on consolidated results, the Company will only report IFRS-compliant figures. It is worth noting that revenues for the comparable period (9M 2022) include concession fees amounting to EGP 63 million paid by Biolab as part of its agreement with QAIA and Aqaba Port.

Group Operational & Financial Review

i.    Revenue and Cost Analysis

Consolidated Revenue IDH's strong momentum observed starting in May 2023 carried into the summer, resulting in an exceptional set of results during Q3 2023. During Q3 2023, IDH booked conventional10 revenue growth of 51% year-on-year, reaching EGP 1,182 million. Conventional revenues were boosted by 22% and 23% year-on-year increases in test volumes and average revenue per conventional test, respectively. Strong growth during the third quarter of the year is also reflected in the Company's quarter-on-quarter performance, with IDH capitalising on strong growth momentum to record a 24% expansion compared to Q2 2023. Meanwhile, consolidated revenues increased 40% year-on-year, up from EGP 784 million one year prior. In parallel, the Company booked consolidated revenues of EGP 3,054 million in 9M 2023, a remarkable 9% year-on-year increase especially when considering the EGP 678 million11 contribution made from Covid-19-related12 testing to consolidated revenues in 9M 2022. Positive consolidated revenue growth for the period is mainly a reflection of exceptionally strong quarterly performance in Q3 2023, which boosted results and enabled the Company to record positive consolidated growth. Conventional revenue on a year-to-date basis increased 44% year-on-year from EGP 2,123 million in 9M 2022.   [10]  Conventional (non-Covid) tests include IDH's full service offering excluding the Covid-19 related tests outlined below. [11] Covid-19-related revenue in 9M 2022 includes EGP 63 million in concession fees paid by Biolab to Queen Alia International Airport and Aqaba Port as part of its revenue sharing agreement. [12] Covid-19-related tests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.

Revenue Analysis

	Q1 2022	Q1 2023	Q2 2022	Q2 2023	Q3 2022	Q3 2023	%	9M 2022	9M 2023	%
Total revenue (EGP mn)	1,180	915	774	957	846	1,182	40%	2,800	3,054	9%
Conventional revenue (EGP mn)	640	915	699	957	784	1,182	51%	2,123	3,054	44%
Covid-19-related revenue (EGP mn)	540	-	75	-	63	-	-	678	-	-
Contribution to Consolidated Results
Conventional revenue	54%	100%	90%	100%	93%	100%		76%	100%
Covid-19-related revenue	46%	-	10%	-	7%	-		24%	-

Test Volume Analysis

Total tests (mn)	8.4	8.0	7.6	8.5	8.4	10.0	20%	24.4	26.5	9%
Conventional tests performed (mn)	7.1	8.0	7.4	8.5	8.2	10.0	22%	22.7	26.5	16%
Total Covid-19-related tests performed (mn)	1.3	-	0.2	-	0.2	-	-	1.6	-	-
Contribution to Consolidated Results
Conventional tests performed	85%	100%	97%	100%	98%	100%		93%	100%
Total Covid-19-related tests performed	15%	-	3%	-	2%	-		7%	-

Revenue per Test Analysis

Total revenue per test (EGP)	140	114	102	113	101	118	17%	115	115	-
Conventional revenue per test (EGP)	90	114	94	113	96	118	23%	93	115	24%
Covid-19-related revenue per test (EGP)	431	-	454	-	361	-	-	416	-	-

 

 

Revenue Analysis: Contribution by Patient Segment   Contract Segment (63% of Group revenue) IDH's contract segment recorded conventional revenues of EGP 1,938 million during the nine-month period, expanding 49% year-on-year from the figure reported last year. Growth at the segment was driven by 21% and 23% increases in conventional test volumes and average revenue per conventional test, respectively.   Consolidated revenues at the segment recorded a 22% year-on-year increase in 9M 2023 on the back of increased volumes and prices. The contract segment's average tests per patient reached a record-high 4.4 tests, up from 4.1 tests in 9M 2022, reflecting a normalisation in patient mix following the Covid-19 pandemic and the success of IDH's loyalty programme which was introduced in FY 2021.   Walk-in Segment (37% of Group revenue) In parallel, IDH's walk-in segment posted conventional revenues of EGP 1,116 million, increasing 34% year-on-year in 9M 2023. Growth came on the back of a 34% year-on-year increase in average revenue per conventional test, while test volumes remained unchanged compared to the same time last year.   Meanwhile, consolidated revenue at the walk-in segment declined 8% year-on-year on the back of lower test volumes and reflecting a high base effect in the comparable period of 2022. In line with the trend noted in the contract segment, tests per patient at the walk-in segment increased to 3.6 tests in 9M 2023, well above historical figures as the Company books another record high.

Detailed Segment Performance Breakdown

	Walk-in Segment			Contract Segment			Total
	9M22	9M23	Change	9M22	9M23	Change	9M22	9M23	Change
Revenue (EGP mn)	1,214	1,116	-8%	1,584	1,938	22%	2,800	3,054	9%
Conventional Results (EGP mn)	830	1,116	34%	1,293	1,938	49%	2,123	3,054	44%
Total Covid-19-related revenue (EGP mn)	384	-	-	294	-	-	678	-	-
Patients ('000)	2,112	1,343	-36%	4,522	4,905	8%	6,633	6,248	-6%
% of Patients	32%	21%		68%	79%
Revenue per Patient (EGP)	575	831	44%	351	395	13%	422	489	16%
Tests ('000)	5,712	4,894	-14%	18,648	21,574	16%	24,359	26,468	9%
% of Tests	23%	18%		77%	82%
Conventional tests ('000)	4,891	4,894	-	17,837	21,574	21%	22,728	26,468	16%
Total Covid-19-related tests ('000)	821	-	-	810	-	-	1,631	-	-
Revenue per Test (EGP)	213	228	7%	85	90	6%	115	115	0.4%
Conventional Revenue per Test (EGP)	170	228	34%	72	90	23%	93	115	24%
Test per Patient	2.7	3.6	35%	4.1	4.4	7%	3.7	4.2	15%

 

Revenue Analysis: Contribution by Geography   Egypt (81.9% of Group revenue) IDH's home and largest market, Egypt, reported robust performance in Q3 2023, capitalising on the impressive growth trajectory witnessed starting in May 2023, and expanding both conventional and consolidated revenues on the back of increased test volumes and average revenue per conventional test. More specifically, Q3 2023 represented the strongest quarter for Egyptian operations in FY 2023, following anticipated seasonal slowdowns in the first half of the year.   On a conventional basis, revenue expanded 49% year-on-year and 26% quarter-on-quarter, reaching EGP 986 million on the back of increased test volumes and average revenue per test. Meanwhile, consolidated revenues increased 39% year-on-year compared to Q3 2022.   On a year-to-date basis, Egypt booked consolidated revenues of EGP 2,500 million, a 12% year-on-year expansion marking the full completion of the geography's post-Covid-19 recovery. This is particularly noteworthy when considering that the comparable period of last year included significant contributions of EGP 432 million from the Company's Covid-19-related testing. Consolidated revenue growth was supported by a 12% year-on-year increase in tests performed. Meanwhile, conventional revenues increased 39% year-on-year from EGP 1,803 in 9M 2022.   Al-Borg Scan IDH's fast-growing radiology venture continued its steady ramp up throughout Q3 2023, posting revenues of EGP 108 million in 9M 2023 and booking a top-line year-on-year growth rate of 86%. Revenue growth for the period was primarily driven by increased test volumes, which grew 50% year-on-year, partially due to the ramp up of new branches across the Greater Cairo area. In parallel, average revenue per test also rose by 24% year-on-year, reaching EGP 705 in 9M 2023.   In line with the impressive performance recorded by Al-Borg Scan, and its maintained operational ramp-up, IDH rolled out the venture's seventh branch in September of this year. The branch, located in Cairo's underpenetrated Nasr City neighbourhood, falls in line with the Company's strategic direction to expand its radiology business and establish itself as a leading play in the fragmented market.   House Calls In the nine months ended 30 September 2023, IDH's house call service in Egypt continued to make a robust contribution of 16% to total revenues in the country. This continues to be significantly ahead of the service's pre-pandemic contribution, highlighting the segment's growth potential, and the success of IDH's investment and ramp up strategy specifically throughout the Covid-19 pandemic.   Wayak During 9M 2023, Wayak completed 122 thousand orders, representing a 30% year-on-year increase. On the profitability front, the venture's EBITDA losses continued to narrow steadily, recording EGP 659 thousand in 9M 2023 versus the EGP 2,780 million in EBITDA losses booked in the comparable period of FY 2022.

 

Detailed Egypt Performance Breakdown

Revenue Analysis

EGP mn	Q1 2022	Q1 2023	Q2 2022	Q2 2023	Q3 2022	Q3 2023	%	9M 2022	9M 2023	%
Total Revenue	879	731	645	783	711	986	39%	2,235	2,500	12%
Conventional Revenue	549	731	591	783	662	986	49%	1,803	2,500	39%
Pathology Revenue	532	703	573	748	639	941	47%	1,745	2,392	37%
Radiology Revenue	17	28	19	35	23	45	99%	58	108	86%
Total Covid-19-related Revenue	330	-	53	-	49	-	-	432	-	-
Contribution to Consolidated Results
Conventional revenue	62%	100%	92%	100%	93%	100%		81%	100%
Pathology Revenue	61%	96%	89%	96%	90%	95%		78%	96%
Radiology Revenue	1.9%	3.8%	2.9%	4.5%	3%	5%		3%	4%
Total Covid-19-related revenue	38%	-	8%	-	7%			19%

Test Volume Analysis

Total Tests	7.3	7.3	6.9	7.8	7.6	9.3	21%	21.8	24.4	12%
Conventional Tests	6.5	7.3	6.7	7.8	7.5	9.3	24%	20.7	24.4	18%
Total Covid-19-related Tests	0.8	-	0.2	-	0.2	-	-	1.1	-
Contribution to Consolidated Results
Conventional tests performed	89%	100%	97%	100%	98%	100%		95%	100%
Total Covid-19-related tests performed	11%	-	3%	-	2%	-		5%	-

Revenue per Test Analysis

Total Revenue per Test	120	99	94	101	93	107	14%	102	103	0.1%
Revenue per Conventional Test	84	99	88	101	89	107	20%	87	103	18%

 

Jordan (15.2% of Group revenue) In Jordan, IDH's second-largest geography, the Company recorded conventional revenues of JOD 4.0 million in Q3 2023, increasing 13% year-on-year. This is primarily a reflection of increased conventional test volumes, which grew 13% year-on-year to reach 678 thousand tests in Q3 2023. Meanwhile, IDH recorded an 18% quarter-on-quarter revenue increase in local currency terms, fuelled by a 19% expansion in test volumes In EGP terms, conventional revenue growth for the quarter came in at 82% year-on-year, booking EGP 174 million for the quarter. Average revenue per conventional test was the main driver of growth in EGP terms, booking a 61% year-on-year expansion due to the weakening of the EGP since last year. It is worth noting that, in line with trends seen in Egypt, IDH's Jordanian operations have also started to see steady recovery starting May and throughout the summer period. Consolidated revenues declined 1% year-on-year during Q3 2023.   On a year-to-date basis, the Company recorded a conventional revenue growth of 10% year-on-year in local currency terms, reaching JOD 10.8 million in 9M 2023. Conventional growth for the period came on the back of a 10% year-on-year increase in conventional test volumes. In EGP terms, Jordanian operations booked an 86% year-on-year increase, reaching EGP 464 million compared to EGP 250 million one year prior. Growth in EGP terms includes significant contributions from the translation effect as a result of the devaluation of the EGP over the last twelve months. Consolidated revenue for the nine-month period remained 48% below last year's figure in JOD terms and 6% in EGP terms as the high base effect from Covid-19-related testing performed in the first part of 2022 continued to impact results.

Detailed Jordan Performance Breakdown

Revenue Analysis

EGP mn	Q1 2022	Q1 2023	Q2 2022	Q2 2023	Q3 2022	Q3 2023	%	9M 2022	9M 2023	%
Total Revenue	281	144	106	146	109	174	59%	496	464	-6%
Conventional Results	70	144	84	146	95	174	82%	250	464	86%
Total Covid-19-related Revenues (PCR and Antibody)	210	-	21	-	14	-	-	246	-
Contribution to Consolidated Results
Conventional Results	25%	100%	80%	100%	87%	100%		50%	100%
Total Covid-19-related Revenue (PCR and Antibody)	75%	-	20%	-	13%	-		50%	-

Test Volume Analysis

Total tests (k)	991	582	603	598	627	678	8%	2,221	1,858	-16%
Conventional tests performed (k)	519	582	572	598	599	678	13%	1,691	1,858	10%
Total Covid-19-related tests performed (k)	472	-	30	-	28	-	-	530	-
Contribution to Consolidated Results
Conventional tests performed	52%	100%	95%	100%	96%	100%		76%	100%
Total Covid-19-related tests performed	48%	-	5%	-	4%	-		24%	-

Revenue per Test Analysis

Total Revenue per Test	283	248	175	244	174	257	47%	223	250	12%
Revenue per Conventional Test	136	248	147	244	159	257	61%	148	250	69%

 

Nigeria (2.6% of revenue) Echo-Lab, IDH's Nigerian subsidiary, reported sustained top-line growth, recording revenue expansion of 16% year-on-year in local currency terms to reach NGN 1,457 million in 9M 2023. In EGP terms, Echo-Lab booked revenue growth of 44% year-on-year, rising to EGP 79 million in the nine-month period. Growth was spurred by 22% and 52% year-on-year increases in average revenue per test in NGN and EGP terms, respectively, with the latter partially reflecting a weakening of the EGP in the last year. Revenue growth for the period came despite a 5% year-on-year decline in test volumes, which reached 204 thousand tests during 9M 2023.   Sudan (0.4% of revenue) The Company's Sudanese operations continued to be impacted by the ongoing conflict which has led to the closure of 16 of the country's 18 branches starting in April 2023. More specifically, during 9M 2023, IDH booked revenues of SDG 207 million, 50% below the figure recorded the same time last year. In EGP terms, revenue reached EGP 11 million during the first nine months of the year, dropping 27% year-on-year from 9M 2023. IDH continues to closely monitor the situation as it unfolds and will update the market should any material aspects evolve.

 

 

 

Revenue Contribution by Country

	Q1 2022	Q1 2023	Q2 2022	Q2 2023	Q3 2022	Q3 2023	%	9M 2022	9M 2023	%
Egypt Revenue (EGP mn)	879	731	645	783	711	986	39%	2,235	2,500	12%
Conventional (EGP mn)	549	731	591	783	662	986	49%	1,803	2,500	39%
Pathology Revenue	532	703	573	748	639	941	47%	1,745	2,392	37%
Radiology Revenue	17	28	19	35	23	45	99%	58	108	86%
Covid-19-related (EGP mn)	330	-	53	-	49	-	-	432	-
Egypt Contribution to IDH Revenue	74.5%	79.9%	83.2%	81.8%	84.0%	83.5%		78.0%	80.1%
Jordan Revenue (EGP mn)	281	144	106	146	109	174	59%	496	464	-6%
Conventional (EGP mn)	70	144	84	146	95	174	82%	250	464	86%
Covid-19-related (EGP mn)	210	-	21	-	14	-	-	246	-
Jordan Revenues (JOD mn)	12.5	3.4	4.0	3.4	4.1	4.0	-1%	20.6	10.8	-48%
Conventional (JOD mn)	3.0	3.4	3.2	3.4	3.5	4.0	13%	9.8	10.8	10%
Jordan Revenue Contribution to IDH Revenue	23.7%	15.7%	13.7%	15.2%	12.9%	14.7%		17.7%	15.2%
Nigeria Revenue (EGP mn)	15	31	19	27	21	21	-1%	55	79	44%
Nigeria Revenue (NGN mn)	371	468	416	469	473	520	10%	1,260	1,457	16%
Nigeria Contribution to IDH Revenue	1.3%	3.4%	2.5%	2.8%	2.5%	1.8%		2.0%	2.6%
Sudan Revenue (EGP mn)	5.7	8.8	4.8	1.4	4.3	0.5	-88%	14.8	10.7	-27%
Sudan Revenue (SDG mn)	152	169	137	27	128	10	-92%	417	207	-50%
Sudan Contribution to IDH Revenue	0.5%	1.0%	0.6%	0.1%	0.5%	0.05%		0.5%	0.4%

 

Average Exchange Rate

	9M 2022	9M 2023	Change
USD/EGP	18.1	30.7	69.9%
JOD/EGP	25.5	43.0	68.9%
NGN/EGP	0.04	0.06	27.1%
SDG/EGP	0.04	0.05	45.7%

 

Patients Served and Tests Performed by Country

	9M 2022	9M 2023	Change
Egypt Patients Served (mn)	5.7	5.8	3%
Egypt Tests Performed (mn)	21.8	24.4	12%
Conventional tests (mn)	20.7	24.4	18%
Covid-19-related tests (mn)	1.1	-	-
Jordan Patients Served (k)	789	286	-64%
Jordan Tests Performed (k)	2,221	1,858	-16%
Conventional tests (k)	1,691	1,858	10%
Covid-19-related tests (k)	530	-	-
Nigeria Patients Served (k)	110	102	-8%
Nigeria Tests Performed (k)	215	204	-5%
Sudan Patients Served (k)	59	14	-76%
Sudan Tests Performed (k)	112	40	-64%
Total Patients Served (mn)	6.6	6.2	-6%
Total Tests Performed (mn)	24.4	26.5	9%

 

Branches by Country

	30 September 2022	30 September 2023	Change
Egypt	496	537	41
Jordan	21	27	6
Nigeria	12	12	-
Sudan	17	18	1
Total Branches	546	594	48

 

Cost of Goods Sold Cost of goods sold during the nine-month period reached EGP 1,916 million, increasing 18% compared to the EGP 1,619 million booked during 9M 2022. As a percentage of revenue, cost of goods sold stood at 63% in 9M 2023, up from 58% in the same period of the previous year. Higher cost of goods sold as a percentage of revenues reflected higher raw material costs, increased direct wages and salaries costs, as well as higher depreciation expenses. Cost of Goods sold Breakdown as a Percentage of Revenue 9M 2022 9M 2023 Raw Materials 20.1% 21.9% Conventional raw material costs as % of conventional revenues 17.0% 21.9% Covid-19-related raw material costs as % of Covid-19-related revenues 29.8% - Wages & Salaries 16.5% 19.2% Depreciation & Amortisation 7.2% 8.7% Other Expenses 14.1% 12.9% Total 57.8% 62.7%   Raw material costs (35% of consolidated cost of goods sold) remained the single largest contributor to cost of goods sold during the period. Raw materials recorded costs of EGP 668 million during 9M 2023, expanding 19% year-on-year, and constituting a total of 22% of revenues for the period versus 20% in the same period of the previous year. During the nine-month period, IDH reported a rise in the average cost of conventional test kits (21.9% of revenues in 9M 2023 compared to 17% in 9M 2022) on the back of rising inflation and a weaker EGP. The Company expects test kit prices as a share of revenue to gradually normalize in the coming months as the initial impact of the EGP devaluation begins to fade. It is also important to highlight that raw material outlays in 9M 2023 include a one-off EGP 15.5 million expense related to expired Covid-19-related test kits. Wages and salaries including employee share of profits (31% share of consolidated cost of goods sold) continued to be the second largest contributor to cost of goods sold during 9M 2023, coming at EGP 587 million, a year-on-year increase of 27%. Increased direct wages and salaries reflect higher than usual adjustments to compensation packages to compensate for unprecedented inflation as part of the Group's staff retention strategy. Furthermore, the translation effect due to a weaker EGP resulted in increased direct wages and salaries expenses in both Jordan and Nigeria. Direct Wages and Salaries by Region 9M 2022 9M 2023 Change Egypt (EGP mn) 362 445 23% Jordan (EGP mn) 84 118 41% Jordan (JOD mn) 3 3 -16% Nigeria (EGP mn) 12 22 79% Nigeria (NGN mn) 280 395 -41% Sudan (EGP mn) 3 3 -6% Sudan (SDG mn) 79 51 -35%   Direct depreciation and amortization costs (14% of consolidated cost of goods sold) rose 31% year-on-year, reaching EGP 266 million in 9M 2023. Higher depreciation and amortization costs for the period primarily reflect the addition of new branches to IDH's network, including the addition of the newly rolled out Al-Borg Scan branch. Other expenses (21% of consolidated cost of goods sold) booked EGP 395 million during 9M 2023, increasing a marginal 0.5% year-on-year. It is worth noting that other expenses for the comparable period, 9M 2022, had included EGP 63 million paid in concession fees as part of Biolab's agreement with Queen Alia International Airport and Aqaba Port to provide Covid-19-related testing to passengers in January and February of 2022. Excluding these fees, other expenses increased 20% year-on-year from EGP 330 million in 9M 2022. The increase in other expenses is attributable to increased cleaning, transportation, and consulting expenses to support the expansion of IDH's branch network in Egypt, and specifically Al-Borg Scan's growth. Additionally, in Nigeria, higher gasoline prices and repair and maintenance costs pushed other expenses up continuing to reflect a weaker Naira (versus the US dollar) and an increasing inflationary environment. Gross Profit IDH's gross profit booked EGP 480 million in Q3 2023, increasing 37% year-on-year. GPM for the quarter stood unchanged compared to Q3 2022 at 41% reflecting a normalisation in margins as the initial impact of the multiple EGP devaluations throughout FY 2022 and early FY 2023 begin to fade. It is important to note that gross profitability witnessed tangible growth compared to the first half of the year, increasing from a GPM of 35% in Q1 2023 and Q2 2023. On a year-to-date basis, the Company recorded gross profit of EGP 1,138 million during 9M 2023, down 4% year-on-year. The gross profit margin (GPM) stood at 37%, declining five percentage points from 42% in 9M 2022. Lower gross profitability during the period reflected the above-mentioned increase in cost of goods sold. Selling, General and Administrative Expenses SG&A outlays during 9M 2023 climbed to EGP 535 million, a 29% year-on-year increase. As a percentage of revenues, SG&A outlays constituted 18% of revenues, up from 15% in 9M 2022. Increased SG&A expenses came mainly on the back of: ·      Higher indirect wages and salaries expenses, which rose by 46% year-on-year to EGP 207 million. Indirect wages and salaries amounted to 7% of revenues in 9M 2023, compared to 5% one year prior. The increase can be attributed to USD-denominated directors' compensations, as well as the addition of a board member in the first quarter of last year (who received compensation starting March 2022). Indirect wages and salaries also reflect increased wage expenses in Jordan due to the translation effect from a weaker EGP. ·      Increased other expenses, which grew 36% year-on-year to EGP 222 million in 9M 2023. The increase in other expenses is mainly attributable to a weaker EGP which saw USD-denominated expenses (including auditor fees) at the holding level weigh on the consolidated figure. ·    One-off legal consultancy expenses related to the termination of the Pakistan deal in the first quarter of 2023 which stood at EGP 8 million. Selling, General and Administrative Expenses 9M 2022 9M 2023 Change Wages & Salaries         141 207 46% Accounting Fees 33 58 73% Professional Services Fees 27 44 63% Market - Advertisement expenses 87 77 -12% Other Expenses 92 99 8% Depreciation & Amortisation 23 30 28% Travelling and transportation expenses 12 20 74% Total         415 535 29%   EBITDA IDH reported normalised EBITDA13 of EGP 411 million, up an impressive 55% year-on-year and yielding an associated margin of 35% versus 31% in Q3 2022. Additionally, EBITDA profitability recorded significant improvement compared to the first two quarters of 2023, which booked EBITDA margins of 25% and 24% in Q1 2023 and Q2 2023, respectively. Higher EBITDA profitability is a direct reflection of IDH's gradual cost normalisation as the effects of the devaluation over the past year begin to fade. On a nine-month basis, the Company recorded a normalised EBITDA of EGP 873 million during the first nine months of 2023, down 10% year-on-year from the high base of 9M 2022 when Covid-19-related testing had boosted results. IDH reported an associated margin of 29%, declining six percentage points from 35% in 9M 2022. Decreased EBITDA profitability mainly reflects lower gross profitability coupled with higher SG&A expenses as discussed above. It is important to highlight that EBITDA is normalised for several one-off expenses, including an EGP 12 million non-recurring expense owed to the Egyptian government. expense is in accordance with article 134 of labour law on Vocational Guidance and Training issued by the Egyptian Government in 2003. In accordance with the law, IDH's Egyptian operations are required to provide 1% of net profits each year into a training fund. Integrated Diagnostics Holdings plc has taken legal advice and considered market practices in Egypt relating to the law, and more specifically whether vocational training courses undertaken by the Company's Egyptian subsidiaries suggest that obligations have been satisfied by in-house training programmes provided by those entities. Since the issue of the law, IDH's Egyptian subsidiaries have not been requested by the government to pay, nor have they voluntarily paid, any amounts into the external training fund. [13] Normalised EBITDA is calculated as operating profit plus depreciation and amortization, excluding non-recurring expenses, specifically a EGP 12 million one-off expense owed to the Egyptian government for vocational training, EGP 6.5 million in pre-operating expenses in Saudi Arabia, and EGP 5.0 million impairment expense in Sudan due to the ongoing situation in the country. EBITDA by Country In Egypt, the Company booked normalised EBITDA of EGP 359 million with a margin of 36% in Q3 2023, 53% above the figure booked in Q3 2022 when the Company's EBITDA margin stood at 33%. Compared to the previous quarter, Egyptian operations posted a 72% quarter-on-quarter growth with its EBITDA margin expanding by 10 points. Normalised EBITDA on a nine-month basis stood at EGP 766 million in 9M 2023, down 11% year-on-year. Meanwhile, IDH booked an EBITDA margin of 31%, down from 38% in 9M 2022. Lower EBITDA profitability is a reflection lower gross profitability coupled with increased SG&A outlays at the Company's Egyptian operations, which expanded 25% year-on-year in 9M 2023. In Jordan, IDH's subsidiary, Biolab, recorded normalised EBITDA of JOD 1.3 million in Q3 2023, increasing 7% year-on-year and 18% quarter-on-quarter. The normalised EBITDA margin stood at 31%, up from 29% in Q3 2022 and 22% in Q2 2023. In EGP terms, Jordan's normalised EBITDA came in at EGP 54 million and yielded a margin of 31%, increasing 73% year-on-year and 66% quarter-on-quarter from Q3 2022 and Q2 2023, respectively. It is important to note that EBITDA results in EGP terms were partially affected by the translation effect from a weakened EGP compared to Q3 2022. On a year-to-date basis, the Company booked a normalised EBITDA of JOD 2.9 million in 9M 2023, declining 44% year-on-year and yielding an associated margin of 26%. In EGP terms, normalised EBITDA remained marginally unchanged at EGP 123 million and with a margin of 26%, mainly due to the translation effect as a result of the weakening EGP. Lower EBITDA profitability is a result of lower gross profitability, which declined 45% year-on-year in JOD terms. In Nigeria, despite growing revenues in EGP and NGN terms, the Company's EBITDA losses widened, reaching NGN 61 million in Q3 2023 from NGN 43 million during the same period last year. Compared to the previous quarter, the Company recorded a narrowing of EBITDA losses, compared to NGN 111 million in Q2 2023. In EGP terms, EBITDA losses reached EGP 2.5 million in Q3 2023, expanding from a loss of EGP 1.9 million one year prior. Widening EBITDA losses were fuelled by lower gross profitability in the country, due to rising gasoline prices and increased inflation on the back of a weakened Naira. In Sudan, IDH booked normalised EBITDA loss of SDG 4 million, down from a loss of SDG 0.4 million in Q3 2022. In EGP terms, Sudanese operations yielded a normalised EBITDA loss of EGP 212 thousand during Q3 2023 compared to EGP 14 thousand one year prior. Widening EBITDA losses for the quarter were driven by the halting of operations in 16 of the country's 18 branches due to ongoing conflict since the beginning of the year. Regional EBITDA in Local Currency Mn 9M 2022 9M 2023 Change Egypt EBITDA EGP 857 766 -11% Margin   38% 31%   Jordan JOD 5.1 2.9 -44% Margin   25% 26%   Nigeria NGN -122 -294 -140% Margin   -10% -20%   Sudan SDG 4 20 445% Margin   1% 10%     Interest Income / Expense IDH's interest income in 9M 2023 reached EGP 46 million, down 44% from EGP 83 million during the comparable period of last year. Declined interest income for the period was mainly a result of lower cash balances due to the record cash dividends distributed during last year. Interest expense14 came in at EGP 115 million, rising 15% year-on-year from EGP 100 million in 9M 2022. Higher interest expenses are mainly attributable to: ·      Higher interest on lease liabilities related to IFRS 16 due to the addition of new branches to IDH's network. ·   Higher interest expenses following the CBE decision to increase rates by 1,000 bps since March 2022. It is important to note that IDH's interest bearing debt balance decreased to EGP 94 million as at 30 September 2023, from EGP 117 million at year-end 2022. Earlier in the year, as part of IDH's strategy to reduce foreign currency risk, the Company agreed with General Electric (GE) for the early repayment of its contractual obligation of USD 5.7 million. To finance the settlement, IDH utilized a bridge loan facility, with half the amount being funded internally, while the other half (amounting to EGP 55 million) was provided through a bridge loan by Ahly United Bank- Egypt (AUBE). Interest expenses related to the AUBE facility recorded EGP 18 million in 9M 2023. The bridge loan was fully settled in Q2 2023. Interest Expense Breakdown EGP mn 9M 2022 9M 2023 Change Interest on Lease Liabilities (IFRS 16) 53.8 69.0 28% Interest Expenses on Leases 14.9 19.4 30% Interest Expenses on Borrowings15 11.1 17.7 59% Bank Charges 11.1 8.8 -20% Loan-related Expenses on IFC facility16 8.9 - - Total Interest Expense 99.7 115.0 15%   14 Interest expenses on medium-term loans include EGP 18.0 related to the Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's facility with the Commercial International Bank (CIB) was fully repaid as of 5 April 2022. 15 Interest expenses on medium-term loans include EGP 18.0 related to the Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's facility with the Commercial International Bank (CIB) was fully repaid as of 5 April 2022. 16 Loan-related expenses on IFC facility represents commitment fees on the facility granted by IFC and Mashreq with a total value of USD 60 million. The facility was cancelled in May 2023. Foreign Exchange IDH recorded a foreign exchange gain of EGP 99 million during 9M 2023, up 80% year-on-year and partially reflecting intercompany balances revaluation.   Taxation Tax expenses, including both income and deferred tax, stood at EGP 197 million during 9M 2023, a decrease of 22% year-on-year from the EGP 251 million reported in 9M 2022. IDH's effective tax rate came in at 34%, down from 38% in the same period of the previous year. It is worth mentioning that there is no tax payable for IDH's two holding-level companies. Meanwhile, tax was paid from the Group's operating subsidiaries (Egypt 31%, Jordan 28%, Nigeria 0.1%). Taxation Breakdown by Region EGP Mn 9M 2022 9M 2023 Change Egypt 201.7 183.7 -9% Jordan 18.5 12.4 -33% Nigeria 30.5 -0.05 - Sudan 0.4 0.5 24% Total Tax Expenses 250.9 196.7 -22%   Net Profit IDH's net profit in Q3 2023 stood at EGP 176 million in Q3 2023, up from a net loss of EGP 36 million in Q3 2022, and with a margin of 15%. Improved bottom-line profitability is also apparent on a quarter-on-quarter basis, with the Company's NPM increasing from 4% in Q2 2023. On a nine-month basis, net profit recorded EGP 387 million, down 4% year-on-year. The Company posted a net profit margin (NPM) of 13% compared to 14% in 9M 2022. Non-Recurring Expenses IDH recorded several one-off expenses during the period, namely: ·      EGP 12.2 million owed to the Egyptian government for vocational training. ·      EGP 6.5 million due to pre-operating expenses in Saudi Arabia. ·      EGP 5.0 million in impairment expenses due to the ongoing conflict in Sudan. ·      EGP 16 million due to the expiration of Covid-19 testing kits. ·      EGP 2 million due to an information strategy agreement which was executed in 2023 for USD 54 thousand. ·      EGP 1 million due to one-off legal reports. ·      EGP 8 million due to one-off expenses related to the termination of the Pakistan termination. It is important to note that these expenses have been impacted by the devaluation of the EGP. Adjusting for these expenses, net profit would have booked EGP 191 million and yielded an NPM of 16% in Q3 2023 and EGP 437 million with an NPM of 14% in 9M 2023.

 

ii.  Balance Sheet Analysis

Assets Property, Plant and Equipment IDH booked gross property, plant and equipment (PPE) of EGP 2,453 million as at 30 September 2023, up from EGP 2,208 at 31 December 2022. The increase in CAPEX as a share of revenues during 9M 2023 is primarily attributable to the addition of branches to IDH's network (constituting 7% of revenues), while the remainder is due to the translation effect related to Jordan, Sudan, and Nigeria (constituting 1% of revenues).   Total CAPEX Addition Breakdown - 9M 2023 EGP mn % of Revenue Leasehold Improvements/new branches 138.9 4.6% Al-Borg Scan Expansion 69.7 2.3% Total CAPEX Additions Excluding Translation 208.9 6.8% Translation Effect 36.2 1.2% Total CAPEX Additions 245.1 8.0%   Accounts Receivable and Provisions Accounts receivable as at 30 September 2023 amounted to EGP 602 million, up 52% year-to-date from the figure recorded as at year-end 2022. Meanwhile, IDH's receivables' Days on Hand (DoH) stood at 145 days, increasing from 124 days as at 31 December 2022. Provision for doubtful account booked EGP 37 million during the first nine months of 2023, increasing from EGP 25 million in 9M 2022. Increases in provisions and receivable balance are a reflection of slower collection rates due to the economic downturns and inflationary environment which have characterized several of IDH's geographies throughout the past year, particularly in its largest market of Egypt. Inventory IDH's inventory balance as at the end of 9M 2023 amounted to EGP 365 million, up from EGP 265 million at year-end 2022. Meanwhile, Days Inventory Outstanding (DIO) stood at 135 days compared to 127 days at 31 December 2022. Increased DIO is a reflection of management strategy to accumulate inventory as a hedge against inflation over the past year. Cash and Net Debt/Cash Cash balances booked EGP 794 million at 30 September 2023, down from 816 million as at 31 December 2023. Declining cash balances are related to the previously discussed decision for the early repayment of IDH's contractual obligation of USD 5.7 million (equivalent to EGP 110 million) in line with its strategy to reduce foreign currency risk by utilizing internal resources coupled with a bridge loan facility provided by AUBE. The bridge loan facility was fully settled in the second quarter of the year.   EGP million 31 Dec 2022 30 Sep 2023 T-Bills               296 272 Time Deposits                  123 110 Current Accounts               378 376 Cash on Hand                 18 37 Total           816 794   IDH's net debt17 balance came in at EGP 356 million as of the end of 9M 2023, down 5% year-to-date from EGP 374 million as at year-end 2022.   17 The net cash/(debt) balance is calculated as cash and cash equivalent balances including financial assets at amortised cost, less interest-bearing debt (medium term loans), finance lease and Right-of-use liabilities.   EGP million 31 Dec 2022 30 Sep 2023 31 Dec 2021 Cash and Financial Assets at Amortised Cost18 816 794 2,350 Lease Liabilities Property (727) (814) 106 Total Financial Liabilities (Short-term and Long-term) (335) (233) Interest Bearing Debt ("Medium Term Loans") (127) (98) Net Cash/(debt) Balance  (374)  (356)            1,483 Note: Interest Bearing Debt includes accrued interest for each period.   18 As outlined in Note 18 of IDH's Consolidated Financial Statements, some term deposits and treasury bills cannot be accessed for over 3 months and are therefore not treated as cash. Term deposits which cannot be accessed for over 3 months stood at EGP 113 million in Q1 2023, versus EGP 123 million as at year-end 2022. Meanwhile, treasury bills not accessible for over 3 months stood at EGP 342 million in Q1 2023, up from EGP 296 million in FY 2022.   Lease liabilities and financial obligations on property stood at EGP 814 million as at the end of 9M 2023, with the increase driven by the rollout of 48 new branches across IDH's network over the past 12-month period. Meanwhile, financial obligations related to equipment came in at EGP 233 million as at 30 September 2023, down from EGP 335 million as at year-end 2023. The decline in financial obligations related to equipment is due to the early repayment of IDH's obligations with General Electric (GE) in line with the Company's efforts to hedge against foreign currency risk. Half of the settlement was financed by IDH internally, while the remainder was financed through a bridge loan facility from AUBE. Finally, interest bearing debt19 recorded EGP 94 million at the end of 9M 2023, down from EGP 116 million as at 31 December 2022. The decrease primarily reflects the repayment of EGP 17 million in accordance with Al-Borg Scan's medium term loan repayment schedule. 19 IDH's interest bearing debt as at 31 March 2023 included EGP 172 million to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances are excluding accrued interest for the period). It is worth noting that in order to finance the early repayment settlement with General Electric, the Company utilized a bridge loan facility of EGP 55 million. The facility was withdrawn in Q1 2023 and settled in Q2 2023.     Liabilities Accounts Payable20 Accounts payable as at 30 September 2023 stood at EGP 370 million, up from EGP 270 as at year-end 2022. Meanwhile, Days Payable Outstanding (DPO) amounted to 137 days, down from 151 days nine months earlier. 20 Accounts payable is calculated based on average payables at the end of each period.     Put Option The put option current liability is related to both: ·     The option granted in 2011 to Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The put option is in the money and exercisable since 2016 and is calculated as 7 times Biolab's LTM EBITDA minus net debt. Biolab's put option liability decreased following the significant decline in the venture's EBITDA for the period. ·    The option granted in 2022 to Izhoor, IDH, and Biolab as part of their JV agreement in Saudi Arabia. The option allows the non-defaulting party, at its sole and absolute discretion, to serve one or more written notices to the defaulting party. The notices enable the non-defaulting party to buy the defaulting party's shares at the fair price, sell its shares to the defaulting party at the fair price, or request the dissolution and liquidation of the JV company. It is important to note that the put option, which grants these rights to the non-defaulting party, does not have a specified expiration date. The put option non-current liability is related to the option granted in 2018 to the International Finance Corporation from Dynasty - shareholders in Echo Lab - and it is exercisable in 2024. The put option is calculated based on fair market value (FMV).

 

INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH" AND ITS SUBSIDIARIES             Consolidated Financial Statements for the nine-month period ended 30 September 2023

 

 

 

Consolidated statement of financial position as at 30 September 2023

		Notes	30 Sep 2023			31 Dec 2022
			EGP'000			EGP'000
Assets
Non-current assets
Property, plant and equipment		4	1,372,233			1,326,262
Intangible assets and goodwill		5	1,724,471			1,703,636
Right of use assets		6	689,718			622,975
Financial assets at fair value through profit and loss		7	-			18,064
Total non-current assets			3,786,422			3,670,937
Current assets
Inventories			365,433			265,459
Trade and other receivables		8	758,718			543,887
Financial assets at amortized cost		9	180,088			167,404
Current financial assets at fair value through profit and loss		7	24,534			-
Cash and cash equivalents		10	614,180			648,512
Total current assets			1,942,953			1,625,262
Total assets			5,729,375			5,296,199
Equity
Share capital			1,072,500			1,072,500
Share premium reserve			1,027,706			1,027,706
Capital reserves			(314,310)			(314,310)
Legal reserve			51,641			51,641
Put option reserve			(336,303)			(490,695)
Translation reserve			(78,996)			24,173
Retained earnings			1,171,361			783,081
Equity attributable to the owners of the Company			2,593,599			2,154,096
Non-controlling interests			425,104			292,885
Total equity			3,018,703			2,446,981
Non-current liabilities
Provisions			17,455			3,519
Non-current put option liability		12	26,616			51,000
Borrowings		13	67,465			93,751
Other financial obligations		14	873,174			914,191
Deferred tax liabilities		18-C	356,739			321,732
Total non-current liabilities			1,341,449			1,384,193
Current liabilities
Trade and other payables		11	764,864			701,095
Other financial obligations		14	173,483			148,705
Current put option liability		12	309,687			439,695
Borrowings		13	40,104			22,675
Current tax liabilities			81,085			152,855
Total current liabilities			1,369,223			1,465,025
Total liabilities			2,710,672			2,849,218
Total equity and liabilities			5,729,375			5,296,199
The accompanying notes form an integral part of these consolidated financial statements.
These condensed consolidated interim financial information were approved and authorized for issue by the Board of Directors and signed on their behalf on 15 November 2023 by:
Dr. Hend El Sherbini		Hussein Choucri
Chief Executive Officer		Independent Non-Executive Director

 

 

Consolidated income statement for the quarter and nine-month periods ended 30 September 2023

			For the three months period ended 30 September				For the nine months period ended 30 September
	Notes		2023		2022		2023		2022
			EGP'000		EGP'000		EGP'000		EGP'000
Revenue	21		1,181,736		846,251		3,053,678		2,800,316
Cost of sales			(702,037)		(496,581)		(1,916,045)		(1,618,776)
Gross profit			479,699		349,670		1,137,633		1,181,540
Marketing and advertising expenses			(50,972)		(58,641)		(163,445)		(151,209)
Administrative expenses	16		(123,383)		(99,626)		(377,723)		(263,818)
Impairment loss on trade and other receivable			(13,854)		(8,877)		(37,123)		(25,035)
Other income			(3,402)		3,834		(5,965)		7,305
Operating profit			288,088		186,360		553,377		748,783
Non-operating expense			12,200		-		-		-
Net fair value losses on financial assets at fair value			-		(141,092)		-		(141,092)
Finance costs	17		(41,831)		(49,593)		(114,957)		(99,718)
Finance income	17		16,264		9,016		145,745		146,286
Net finance cost			(25,567)		(40,577)		30,788		46,568
Profit before tax			274,721		4,691		584,165		654,259
Income tax expense	18-B		(98,310)		(40,337)		(196,704)		(250,853)
Profit for the period			176,411		(35,646)		387,461		403,406
Profit attributed to:
Equity holders of the parent			177,789		(18,186)		401,379		404,034
Non-controlling interests			(1,378)		(17,460)		(13,918)		(628)
			176,411		(35,646)		387,461		403,406
Earnings per share (expressed in EGP):
Basic and diluted earnings per share	20		0.30		(0.03)		0.67		0.67

 

The accompanying notes form an integral part of these condensed consolidated interim financial information.

 

Consolidated statement of comprehensive income/(expenses) for the quarter and six-month periods ended 30 September 2023

 

		For the three months period ended 30 September				For the six months period ended 30 September
		2023		2022		2023		2022
		EGP'000		EGP'000		EGP'000		EGP'000
Net profit		176,411		(35,646)		387,461		403,406
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations		(8,117)		34,378		(2,034)		111,686
Other comprehensive income / (Loss) for the period net of tax		(8,117)		34,378		(2,034)		111,686
Total comprehensive income for the period		168,294		(1,268)		385,427		515,092
Attributed to:
Equity holders of the parent		168,294		(13,640)		298,210		421,829
Non-controlling interests		-		12,372		87,217		93,263
		168,294		(1,268)		385,427		515,092

 

The accompanying notes form an integral part of these condensed consolidated interim financial information.

 

 

Consolidated statement of cash flows for the nine-month period ended 30 September 2023

	Notes		30 September 2023		30 September 2022
			EGP'000		EGP'000
Cash flows from operating activities
Profit for the period before tax			584,165		654,259
Adjustments
Depreciation of property, plant and equipment	4		191,692		146,433
Depreciation of right of use assets	6		98,027		73,959
Amortisation of intangible assets	5		5,810		5,211
Unrealised foreign currency exchange (gains) losses	17		(99,406)		85,736
Interest income	17		(46,339)		(83,194)
Interest expense	17		106,155		88,658
Bank Charges			8,803		11,060
Loss/(Gain) on disposal of Property, plant and equipment			(697)		312
Impairment in trade and other receivables			37,123		25,035
Impairment in goodwill			-		1,755
Equity settled financial assets at fair value			(6,470)		(3,427)
ROU Asset/Lease Termination			(590)		1,152
Hyperinflation (gains) losses	17		-		(7,736)
FV through P&L			-		141,092
Change in Provisions			13,936		406
Change in Inventories			(95,202)		(34,123)
Change in trade and other receivables			(219,352)		(158,214)
Change in trade and other payables			30,672		(223,795)
Cash generated from operating activities before income tax payment			608,327		724,579
Tax paid during period			(231,863)		(653,580)
Net cash generated from operating activities			376,464		70,999
Cash flows from investing activities
Interest received on financial asset at amortised cost			46,795		84,044
Payments for the purchase of financial assets at amortized cost			(192,955)		(348,139)
Proceeds for the sale of financial assets at amortized cost			190,134		1,656,815
Payments for acquisition of property, plant and equipment	4		(218,271)		(202,506)
Payments for acquisition of intangible assets	5		(2,150)		(2,382)
Proceeds from sale of Property, plant and equipment			2,163		9,552
Payments for shares bought			-		(999,376)
Proceeds for shares sold			-		858,284
Net cash flows generated (used in) from investing activities			(174,284)		1,056,292
Cash flows from financing activities
Proceeds from borrowings			68,055		7,411
Repayments of borrowings			(76,911)		(21,721)
Payment of finance lease liabilities			(210,496)		(41,912)
Dividends paid			-		(1,411,752)
Interest paid			(107,994)		(84,096)
Bank charge paid			(8,803)		(11,060)
Paid cash to non-controlling interest			(3,112)		-
Injection of cash to non-controlling interest			48,114		8,763
Net cash flows used in financing activities			(291,147)		(1,554,367)
Net increase in cash and cash equivalent			(88,967)		(427,076)
Cash and cash equivalents at the beginning of the year			648,512		891,451
Effect of exchange rate			54,635		65,215
Cash and cash equivalent at the end of the period	10		614,180		529,590

 

Non-cash investing and financing activities disclosed in other notes are:

·      Acquisition of right-of-use assets - note 6

·      Property plant and equipment - note 4

·      Put option liability - note 12

 

The accompanying notes form an integral part of these condensed consolidated interim financial information.