Integrated Diagnostics Holdings Plc

1H 2024 Results

Wednesday, 28 August 2024

Integrated Diagnostics Holdings plc delivers strong 33% year-on-year revenue growth in 1H 2024

(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 Saudi Arabia, announced today its unaudited financial statements for the six-month period ended 30 June 2024. IDH recorded revenues of EGP 2,498 million, a 33% increase year-on-year driven by higher test volumes and increased average revenues per test. Strong revenue performance, combined with IDH's ongoing cost optimization efforts, has improved profitability across the board. The Group posted an EBITDA of EGP 668 million, up 45% year-on-year, with an increased EBITDA margin of 27% compared to 25% in 1H 2023. Additionally, the company saw significant net profit growth of 127% year-on-year, reaching EGP 480 million and achieving an expanded net profit margin (NPM) of 19%.

 

On a quarterly basis, revenues reached EGP 1,327 million in Q2 2024, representing a 39% increase year-on-year. Net profit saw substantial growth, rising 84% year-on-year to total EGP 78 million.

 

Financial Results (IFRS)

EGP mn	Q2 2023	Q2 2024	Change	1H 2023	1H 2024	Change
Revenues	957	1,327	39%	1,872	2,498	33%
Cost of Sales	(623)	(831)	33%	(1,214)	(1,573)	30%
Gross Profit	333	497	49%	658	925	41%
Gross Profit Margin	34.8%	37.4%	2.6 pts	35.1%	37.0%	1.9 pts
Operating Profit	136	215	57%	265	435	64%
EBITDA[1]	234	338	44%	462	668	45%
EBITDA Margin	24.5%	25.4%	0.9 pts	24.7%	26.7%	2.0 pts
Net Profit	43	78	84%	211	480	127%
Net Profit Margin	4.5%	5.9%	1.4 pts	11.3%	19.2%	7.9 pts
Cash Balance[2]	666	1,254	88%	666	1,254	88%

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

 

Key Operational Indicators[3]

EGP mn	1H 2023	1H 2024	Change
Branches	588	591[4]	3
Patients ('000)	3,917	4,119	5%
Revenue per Patient (EGP)	478	606	27%
Tests ('000)	16,465	17,822	8%
Revenue per Test	114	140	23%
Test per Patient	4.2	4.3	3%

 

 

 

 

 

Introduction

 

i.    Financial Highlights

·      IDH recorded consolidated revenues of EGP 2,498 million in the first half of 2024, increasing 33% year-on-year from EGP 1,872 million in 1H 2023. Growth was supported by an 8% year-on-year rise in test volumes and a 23% year-on-year increase in average revenue per test. On a three-month basis, IDH's consolidated revenues grew 39% year-on-year to EGP 1,327 million.

Revenue Progression  (EGP mn)	Test Volumes Progression  (mn)	Revenue Progression  (EGP mn)	Test Volumes Progression  (mn)

·      Gross profit for the six-month period recorded EGP 925 million, reflecting a 41% increase from EGP 658 million in 1H 2023. The gross profit margin stood at 37% in 1H 2024, up from 35% in the same period last year, underscoring the effectiveness of IDH's cost optimization efforts. On a quarterly basis, gross profit recorded EGP 497 million, up 49% year-on-year, with a higher margin of 37% versus 35% in Q2 2023.

·      EBITDA[5] recorded EGP 668 million in the first half of 2024, up 45% from EGP 462 million in the same period last year. The EBITDA margin improved to 27% from 25% in 1H 2023. Higher EBITDA profitability was driven by revenue growth that outpaced the rise in costs and SG&A expenses. Moreover, IDH continues to implement cost optimization efforts amid inflationary pressures, which reflect positively on margins. In Q2 2024, EBITDA came in at EGP 338 million, up 44% year-on-year with a stable margin of 25%.

·      Net profit for 1H 2024 reached EGP 480 million, representing a notable 127% year-on-year increase from 1H 2023. The Net Profit Margin (NPM) expanded to 19%, up 8 percentage points from the 11% recorded in 1H 2023. On a quarterly basis, net profit grew 84% year-on-year to EGP 78 million, with an associated net profit margin of 6%, up from 4% in the same period of the previous year.

 

ii.  Operational Highlights

·      At the end of 1H 2024, IDH's branch network stood at 591 branches, up by 3 branches compared to 1H 2023. In the first half of the year, IDH launched 20 new branches in Egypt and two inaugural branches in Saudi Arabia. During the same period, IDH closed one of its branches in Jordan located in Jordan's airport due to a decrease in testing following the COVID-19 pandemic, as well as all 18 branches in Sudan due to the ongoing conflict.

·      During the first half of the year, IDH conducted 17.8 million tests across its geographies, reflecting an 8% year-on-year increase from 16.5 million tests in 1H 2023.

·      The average revenue per test reached EGP 140 in 1H 2024, up 23% compared to EGP 114 in 1H 2023. This increase was largely attributed to strategic price increases introduced by IDH to address inflationary pressures in its primary markets, including Egypt and Nigeria.

·      During the first half of 2024, IDH served 4.1 million patients, up 5% year-on-year, with the average number of tests per patient reaching a record-high of 4.3, highlighting the success of IDH's strategies to attract and retain patients while promoting increased testing. The continued rise in average tests per patient underscores the effectiveness of IDH's initiatives, including its loyalty program introduced in FY 2021, which remains a key driver in enhancing patient testing.

 

iii. Updates by Geography

·      In Egypt (82.8% of total revenues in 1H 2024), IDH saw significant growth during the first half of 2024, generating EGP 2,069 million in revenues, up 37% year-on-year. Revenue growth was primarily fuelled by a 25% year-on-year rise in the average revenue per test, reaching EGP 125 in 1H 2024, and further strengthened by a 10% year-on-year expansion in test volumes, with IDH conducting 16.5 million tests in the first half of the year. On a quarterly basis, IDH's Egyptian operations recorded revenues of EGP 1,080 million in Q2 2024, an increase of 38% year-on-year.

·      IDH's Jordanian subsidiary (15.4% of total revenues in 1H 2024), Biolab, recorded revenues of JOD 6.5 million, down 4% year-on-year, largely attributed to a 2% reduction in test volumes during 1H 2024 as a result of the ongoing geopolitical situation in the region. The average revenue per test in Jordan declined a marginal 2% year-on-year during the period due to stringent pricing regulations imposed on Jordan's health sector. In EGP terms, operations in Jordan reported revenues of EGP 386 million, representing a 33% year-on-year increase due to the translation effect from a weakened EGP.

·      In Nigeria (1.5% of total revenues in 1H 2024), Echo-Lab achieved a 37% year-on-year growth in revenues in local currency, reaching NGN 1,284 million during the first half of 2024, driven by a 65% year-on-year increase in the average revenue per test. However, test volumes in Nigeria recorded 113 thousand in 1H 2024, down 17% year-on-year due to the continued impact of inflationary pressures affecting patients' purchasing power. In EGP terms, revenues in Nigeria recorded EGP 39 million, down 33% year-on-year, impacted by both lower test volumes and average revenues per test due to the devaluation of the Nigerian Naira.

·      Biolab KSA, IDH's newest venture in Saudi Arabia (0.2% of total revenues in 1H 2024) began operations in Q1 2024 with one branch opening in January and another in March. The company generated revenues of SAR 339 thousand in 1H 2024, performing 7 thousand tests in 1H 2024 with an average revenue per test of SAR 46. The company continues to run targeted campaigns to attract patients, which is evident through its impressive quarterly results. In Q2 2024, the company's revenue reached SAR 281 thousand, compared to SAR 58 thousand in the first quarter of the year, driven by more than a threefold increase in the number of patients as well as a higher average revenue per test. IDH sees significant potential in the Saudi market and continues to actively expand in this region. In EGP terms, Saudi operations reported revenues of EGP 4 million, with an average revenue per test of EGP 579 during the six-month period.

 

·      In Q1 2024, IDH decided to suspend all operations indefinitely in Sudan due to the ongoing conflict, leading to the closure of its 18 branches in the country.

iv. Management Commentary

 

Commenting on the Group's performance, IDH Chief Executive Officer Dr. Hend El-Sherbini said: "I am pleased to report that IDH has successfully built on a strong start to the year, delivering an impressive performance characterized by substantial consolidated revenue growth and improved profitability. This continued upward trajectory highlights the resilience of IDH's business model amid various economic and regional challenges, underscoring our ability to achieve consistent results and capitalize on opportunities for future growth.

During the first half of 2024, IDH achieved a robust 33% year-on-year revenue increase, driven by a combination of higher test volumes and effective pricing strategies yielding higher average revenues per test. This strong top-line growth, coupled with disciplined cost management, has been pivotal in our solid financial performance across the income statement. Notably, our success in managing SG&A expenses, which decreased as a share of revenue, underscores our commitment to optimizing costs and enhancing operational efficiency. Consequently, our EBITDA grew by 45% year-on-year, with the margin expanding to 27%, up from 25% last year, highlighting the resilience of our business model in adapting to changing economic conditions.

Breaking down our results by regions, our core market in Egypt displayed remarkable resilience, achieving a 37% year-on-year revenue growth. Despite the challenges of rising inflation and its impact on patients' purchasing power, we saw a growing demand for our services, with test volumes expanding 10% year-on-year and average revenue per test rising 25% year-on-year. We have continued to solidify our market leadership by expanding our service offerings and extending our reach into underpenetrated areas, adding 20 new branches since the beginning of 2024. We are particularly delighted with the progress of our radiology venture, Al-Borg Scan, which remains a central focus of our growth strategy. The expansion of Al-Borg Scan reflects our commitment to enhancing our service offerings in this critical area and aligns with our diversification strategy. These initiatives are yielding tangible results, with the radiology sector now contributing 5.0% to Egyptian revenues, up from 4.2% last year.

In Jordan, geopolitical instability impacted our performance in the first half of the year, resulting in a slight decline in revenue in local currency terms, primarily due to its effect on medical tourism and reduced test volumes. On the other hand, Nigeria saw a robust 37% year-on-year increase in revenue in local currency terms, driven by higher revenue per test. This growth reflects our revenue mix optimization strategy, which has focused on higher-priced tests, along with annual price increases we have implemented to counteract the effects of record-high inflation in the country. However, it is important to note that multiple devaluations of the Nigerian naira over the past two years, coupled with the removal of diesel subsidies, have significantly strained our patients' purchasing power, resulting in decreased test volumes and lower revenues in EGP terms.

Turning to Saudi Arabia, where we officially commenced operations in Q1 2024 with the opening of two branches in Riyadh, our growth has been encouraging. We are excited about expanding in this market, given its favourable demographics, growing population, and rising demand for healthcare services. The diagnostics sector remains fragmented, with no dominant players, presenting IDH with an excellent environment to implement our proven business model. We are confident that Saudi Arabia will quickly become a key market for IDH. Since our launch, our comprehensive branding strategy, which included outdoor advertising, social media campaigns, community event sponsorships, and partnerships with local healthcare providers, has yielded strong results. In Q2 2024, our revenue in Saudi Arabia surged to SAR 281 thousand, up from SAR 58 thousand in Q1 2024, driven by a significant increase in patient numbers and higher revenue per test.

 

Looking ahead, our strategic focus remains steadfast. In Egypt, we expect continued growth driven by recent economic reforms and a gradual improvement in purchasing power. With over four decades of experience in the diagnostics sector, we are particularly excited about the significant potential in our radiology venture. As the economy stabilizes, we see a tremendous opportunity to further capitalize on this growth area, leveraging our enhanced capabilities to deliver even greater value across the region. In Saudi Arabia, we are intensifying our efforts to fully capitalize on the market's potential, with plans to expand our network of branches across the Kingdom. While we remain mindful of the challenges ahead, particularly in navigating currency fluctuations and inflationary pressures in some of our key markets, our proactive risk management strategies, including price adjustments and cost control measures, have so far mitigated these impacts, and we are confident in our ability to sustain our growth trajectory. As such, we are reaffirming our guidance of approximately 30% revenue growth in FY 2024, with an expected EBITDA margin of around 30% for the year, excluding non-recurring expenses and results from our newly inaugurated venture in Saudi Arabia.

Following up on our OTP from the EGX, IDH has received preliminary approval to proceed with the delisting of its shares. IDH and the EGX coordinated the process, with the Special Operations Market (OPR) operating from August 18th to August 22nd. During this period, 18,673,728 shares were subscribed. IDH then purchased these shares on August 26th, and the buyback settlement is to be completed by August 28th. Afterwards, IDH will transfer its shares from the EGX to the London Stock Exchange (LSE).

To conclude, our commitment remains unchanged in prioritizing the well-being of our patients and stakeholders, as we continue to deliver exceptional quality care to our growing patient base across Egypt, Jordan, Nigeria, and Saudi Arabia.

 

- End -

Analyst and Investor Call Details

An analyst and investor call will be hosted at 1pm (UK) | 3pm (Egypt) on Monday, 2 September 2024. You can learn more details and 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, Sudan, and Saudi Arabia. The Group's core brands include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab (Jordan), Echo-Lab (Nigeria), Ultralab and Al Mokhtabar Sudan (both in Sudan), and Biolab KSA (Saudi Arabia). 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 3,000 diagnostics tests. From its base of 601 branches as of 31 December 2023, IDH served over 8.5 million patients and performed more than 36.1 million tests in 2023. 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 (i) whose shares are admitted to the equity shares (transition) category (previously, the standard listing segment) of the Official List of the UK Financial Conduct Authority and admitted to trading on the main market for listed securities of the London Stock Exchange (ticker: IDHC) since May 2015, and (ii) with a secondary listing on the Egyptian Exchange 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

Tarek Yehia

Investor Relations Director

T: +20 (0)2 3332 1126 | M: +20 10 6882 6678 | tarek.yehia@idhcorp.com

Forward-Looking Statements

These results for the quarter ended 30 June 2024 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 and Cost Analysis

Consolidated Revenue IDH maintained its strong performance throughout the first half of 2024, with revenues growing 33% year-on-year to reach EGP 2,498 million in 1H 2024. Revenue growth was driven by an 8% year-on-year rise in test volumes and a 23% increase in average revenue per test, which stood at EGP 140 during the period. Higher average revenues per test continued to reflect the strategic price increases implemented across Egyptian and Nigerian operations to counteract mounting inflationary pressures in these markets. Revenue Analysis   1H 2023 1H 2024 % Total revenue (EGP mn) 1,872 2,498 33% Test Volume Analysis Total tests (mn) 16.5 17.8 8% Revenue per Test Analysis Total revenue per test (EGP) 114 140 23%

Revenue Analysis: Contribution by Patient Segment   Contract Segment (65% of Group revenue in 1H 2024) At IDH's contract segment, revenues reached EGP 1,632 million, marking a 37% year-on-year increase. Average revenue per test grew by 23% year-on-year, reaching EGP 109 in 1H 2024. In parallel, test volumes totaled 14.9 million, an 11% increase compared to the same period last year.   The segment also maintained its record-high average tests per patient, with 4.5 tests in 1H 2024, up from 4.4 tests in the comparable period last year. This was supported by IDH's loyalty program, introduced in FY 2021, which continues to deliver positive results for the Group.   Walk-in Segment (35% of Group revenue in 1H 2024) Meanwhile, in IDH's walk-in segment, revenues reached EGP 866 million during the six-month period, up 28% year-on-year, driven by a 33% increase in revenue per test, which averaged EGP 301 in 1H 2024. The company conducted 2.9 million walk-in tests during the period, a 4% year-on-year decrease as more walk-in patients shifted to IDH's contract segment. The average tests per patient in this segment saw a slight 2% year-on-year decline, recording 3.5 tests during the period.

 

Detailed Segment Performance Breakdown

	Walk-in Segment			Contract Segment			Total
	1H23	1H24	Change	1H23	1H24	Change	1H23	1H24	Change
Revenue (EGP mn)	679	866	28%	1,193	1,632	37%	1,872	2,498	33%
Patients ('000)	833	814	-2%	3,084	3,305	7%	3,917	4,119	5%
% of Patients	21%	20%		79%	80%
Revenue per Patient (EGP)	815	1,064	31%	387	494	28%	478	606	27%
Tests ('000)	3,008	2,880	-4%	13,457	14,942	11%	16,465	17,822	8%
% of Tests	18%	16%		82%	84%
Revenue per Test (EGP)	226	301	33%	89	109	23%	114	140	23%
Test per Patient	3.6	3.5	-2%	4.4	4.5	4%	4.2	4.3	3%

 

Revenue Analysis: Contribution by Geography   Egypt (82.8% of Group revenue) IDH's home and largest market, Egypt, maintained its strong growth momentum, recording revenues of EGP 2,069 million in 1H 2024, a 37% year-on-year increase. Growth at the segment was primarily dual driven by a 10% increase in test volumes as well as a 25% rise in average revenue per test, attributed to repricing strategies implemented to counter the inflationary environment.   On a quarterly basis, IDH's Egyptian operations recorded revenues of EGP 1,080 million in Q2 2024, an increase of 38% year-on-year.   Al-Borg Scan IDH's rapidly growing radiology venture, Al-Borg Scan, continued its upward trajectory in the six-month period, with revenues reaching EGP 104 million, a substantial 65% year-on-year increase. Growth was supported by a 33% year-on-year increase in scans performed reaching 121 thousand during 1H2024. Furthermore, the average revenue per test grew 24% year-on-year to EGP 856 in 1H 2024. Al-Borg Scan continues to grow its operations through its network of seven branches across the Greater Cairo area, positioning itself as a leader in the fragmented Egyptian radiology market.   House Calls During 1H 2024, IDH's house call services continued its significant contribution to the country's results, constituting 18% of total revenues. This contribution sits comfortably above pre-pandemic average, highlighting the segment's growth potential and the effectiveness of the Group's post-pandemic growth strategy.   Wayak Finally, IDH's Egyptian subsidiary, Wayak, aims to leverage the Company's expanding patient database to develop electronic medical records and provide personalized services. In the first half of 2024, Wayak achieved revenues of EGP 7 million, marking a 60% year-on-year increase. This growth came after fulfilling 100 thousand orders during the first six months of the year, reflecting a 21% rise compared to 1H 2023.                 Detailed Egypt Performance Breakdown Revenue Analysis EGP mn 1H 2023 1H 2024 % Total Revenue 1,514 2,069 37% Pathology Revenue 1,451 1,966 35% Radiology Revenue 63 104 65% Contribution to Consolidated Results Pathology Revenue 96% 95%   Radiology Revenue 4.2% 5.0%   Test Volume Analysis Total Tests 15.1 16.5 10% Revenue per Test Analysis Total Revenue per Test 100 125 25%

 

 

Jordan (15.4% of Group revenue in 1H 2024) In IDH's second largest market, Jordan, Biolab, recorded revenues of JOD 6.5 million, down 4% year-on-year, largely attributed to a 2% reduction in test volumes during 1H 2024 weighed down by the ongoing geopolitical instability in the region. The average revenue per test in Jordan remained relatively stable, showing only a 2% year-on-year decline during the period due to stringent pricing regulations. In EGP terms, Jordanian operations booked a 33% year-on-year increase, posting EGP 386 million in 1H 2024. Higher revenues in EGP terms reflected an 36% year-on-year increase in average revenue per test, due to the translation effect following the devaluation of the Egyptian pound.   On a quarterly basis, Biolab recorded JOD 3.3 million in Q2 2024, down 4% year-on-year. In EGP terms, it recorded EGP 221 million, up 51% year-on-year, due to the translation effect of a weaker Egyptian pound.     Detailed Jordan Performance Breakdown Revenue Analysis EGP mn 1H 2023 1H 2024 % Total Revenue 290 386 33% Test Volume Analysis Total Tests ('000)             1,180             1,154 -2% Revenue per Test Analysis Total Revenue per Test 246 334 36%

 

▲37%

Nigeria (1.5% of Group revenue in 1H 2024) Echo-Lab, IDH's Nigerian subsidiary, posted a 37% year-on-year growth in revenues in local currency, reaching NGN 1,284 million during the first half of 2024. Growth was driven by a 65% increase in the average revenue per test. Meanwhile, test volumes in Nigeria were down 17% year-on-year, booking 113 thousand for 1H 2024, as inflationary pressures continued to significantly impact the population's purchasing power. In EGP terms, Echo-Lab booked EGP 39 million in revenues during 1H 2024, down 33% year-on-year. In addition to declining test volumes at the market, average revenue per test declined to EGP 341 during the six-month period, reflecting the translation effect from multiple devaluations of the Naira over the past year.   Quarterly operations in Nigeria generated NGN 682 million, marking a 45% increase compared to the previous year. In EGP terms, it amounted to EGP 23 million, reflecting a 15% decrease year-on-year.     Saudi Arabia (0.2% of Group revenue in 1H 2024) IDH expanded its footprint into Saudi Arabia in the first quarter of 2024, launching two Biolab KSA locations in Riyadh, the capital. The first branch opened in January, and the second followed in March 2024. Saudi Arabia's promising demographics, rapidly expanding economy, and a fragmented diagnostics sector present considerable opportunity for IDH. The goal of this expansion is to become a comprehensive provider of clinical pathology diagnostic services, with a widespread network of branches across the Kingdom.   In its first operational half of the year, Biolab KSA posted revenues of SAR 339 thousand, performing 7 thousand tests and booking an average revenue per test of SAR 46. In Q2 2024 alone, the company's revenue reached SAR 281 thousand compared to SAR 58 thousand in the first quarter, driven by more than a threefold increase in the number of patients as well as a higher revenue per test.   Sudan Due to the ongoing situation in Sudan, which started with the eruption of violent conflict in April 2023, IDH has decided to halt all operations in the country starting in Q1 2024. All 18 of IDH's branches in the country have now been indefinitely shut down.

 

Revenue Contribution by Country

	1H 2023	1H 2024	Change
Egypt Revenue (EGP mn)	1,514	2,069	37%
Pathology Revenue (EGP mn)	1,451	1,966	35%
Radiology Revenue (EGP mn)	63	104	65%
Egypt Contribution to IDH Revenue	80.9%	82.8%
Jordan Revenue (EGP mn)	290	386	33%
Jordan Revenues (JOD mn)	6.8	6.5	-4%
Jordan Revenue Contribution to IDH Revenue	15.5%	15.4%
Nigeria Revenue (EGP mn)	58	39	-33%
Nigeria Revenue (NGN mn)	937	1,284	37%
Nigeria Contribution to IDH Revenue	3.1%	1.5%
Saudi Arabia Revenue (EGP k)		4,246	-
Saudi Arabia Revenue (SAR k)	-	339	-
Saudi Arabia Contribution to IDH Revenue	-	0.2%

 

Average Exchange Rate

	1H 2023	1H 2024	Change
USD/EGP	30.7	42.0	37%
JOD/EGP	42.8	59.1	38%
NGN/EGP	0.1	0.03	-52%
SAR/EGP		11.2	N/A

 

Patients Served and Tests Performed by Country

	1H 2023	1H 2024	Change
Egypt Patients Served (mn)	3.7	3.9	6%
Egypt Tests Performed (mn)	15.1	16.5	10%
Jordan Patients Served (k)	183	172	-6%
Jordan Tests Performed (k)	1,180	1,154	-2%
Nigeria Patients Served (k)	69	59	-14%
Nigeria Tests Performed (k)	136	113	-17%
Saudi Arabia Patients Served (k)	-	1	-
Saudi Arabia Tests Performed (k)	-	7	-
Total Patients Served (mn)	3.9	4.1	5%
Total Tests Performed (mn)	16.5	17.8	8%

 

Branches by Country

	30 June 2023	30 June 2024	Change
Egypt	531	551	20
Jordan	27	26	-1
Nigeria	12	12	-
Saudi Arabia	-	2	2
Sudan[6]	18	-	-18
Total Branches	588	591	3

 

 

 

 

 

 

 

 

 

Cost of Goods Sold IDH reported cost of goods sold at EGP 1,573 million for the first half of the year, reflecting a 30% year-on-year increase. As a percentage of revenue, cost of goods sold accounted for 63.0% in 1H 2024, down from 64.9% in the same period last year. The reduction in the cost of goods sold as a percentage of revenue was mainly attributed to lower direct wages and salaries, as well as reduced depreciation expenses relative to revenue. Cost of Goods sold Breakdown as a Percentage of Revenue 1H 2023 1H 2024 Raw Materials 21.5% 21.5% Wages & Salaries 20.4% 19.5% Depreciation & Amortisation 9.4% 8.5% Other Expenses 13.5% 13.4% Total 64.9% 63.0%   Raw material costs (34% of consolidated cost of goods sold in 1H 2024) the largest contributor to cost of goods sold in 1H 2024, totalled EGP 538 million, which represents a 34% increase year-on-year. As a percentage of revenue, raw materials stood at 21.5%, at par with 1H 2023. Wages and salaries including employee share of profits (31% share of consolidated cost of goods sold) remained the second largest contributor to the cost of goods sold during the period, posting EGP 488 million, a 28% year-on-year increase. As a percentage of revenue, direct wages and salaries accounted for 19.5%, down from 20.4% in the same period last year. This decline is a direct result of IDH's optimized headcount compared to the previous year.   Direct Wages and Salaries by Region 1H 2023 1H 2024 Change Egypt (EGP mn) 287 358 25% Jordan (EGP mn) 78 109 40% Jordan (JOD mn) 2 2 1% Nigeria (EGP mn) 16 11 -32% Nigeria (NGN mn) 272 358 32% Saudi Arabia (EGP mn) - 11 - Saudi Arabia (SAR k) - 978 -   Direct depreciation and amortization costs (14% of consolidated cost of goods sold) rose to EGP 212 million in 1H 2024, marking a 20% increase compared to the previous year. These costs represented 8.5% of revenues, down slightly from the figure recorded in 1H 2023. The rise in depreciation expenses is attributed to the expansion of IDH's branch network, which saw the addition of 7 new branches in Egypt over the past six months and 20 over the past year. Other expenses (21% of consolidated cost of goods sold) recorded EGP 335 million in 1H 2024, reflecting a 32% increase year-on-year. As a percentage of revenues, these expenses remained steady at 13.4%, consistent with the same period last year. The main components of other expenses during this time were repair and maintenance fees, hospital contracts, and cleaning costs.                 Gross Profit The Company reported a gross profit of EGP 925 million for the first six months of the year, representing a 41% year-on-year increase compared to the previous year. The Gross Profit Margin (GPM) also improved to 37%, up from 35% in 1H 2023. Improved margins were achieved by reducing the cost of goods sold as a percentage of revenue, enhancing fixed asset utilization to lower depreciation, and optimizing headcount to decrease direct salary expenses relative to revenue.   Selling, General and Administrative (SG&A) Expenses SG&A expenses for 1H 2024 totaled EGP 490 million, marking a 25% increase year-on-year. As a percentage of revenues, SG&A accounted for 20%, down from 21% in the same period last year. The rise in SG&A expenses was mainly due to the following factors: ·      Higher indirect wages and salaries reached EGP 173 million, a 23% increase compared to the previous year. This rise was driven by annual wage increases and the translation effect from Jordanian salaries as well as Saudi Arabian salaries due to a weakened EGP. However, indirect salaries and wages as a percentage of revenue decreased to 6.9% from 7.5% in 1H 2023, thanks to the optimization of IDH's headcount. ·      G&A other expenses rose by 38% year-on-year to EGP 175 million, primarily due to increased accounting and professional fees quoted in foreign currency impacted by a weaker EGP in the income statement. Advertising expenses increased by 50% year-on-year to support the ramp-up of the company's operations in Saudi Arabia, which began in Q1 2024. These expenses now represent 43% of the company's total advertising costs. Selling, General and Administrative Expenses 1H 2023 1H 2024 Change Wages & Salaries 141 173 23% Accounting and Professional Fees 70 103 47% Market - Advertisement expenses 52 78 50% Other Expenses 74 78 5% Depreciation & Amortisation 20 21 5% Impairment loss on trade and other receivable 23 17 -26% Travelling and transportation expenses 14 18 28% Other (income)/expense 3 (1) N/A Total 393 490 25%   EBITDA During 1H 2024, IDH achieved an EBITDA of EGP 668 million, representing a 45% year-on-year increase, driven by the continued normalization of costs over the past 12 months. The EBITDA margin also improved to 27%, up from 25% in 1H 2023.   It is worth noting that EBITDA has been impacted by the recent expansion of IDH's operations in Saudi Arabia and the EGX delisting fees of EGP 99.4 million. Adjusting for non-recurring items, IDH would have recorded EBITDA of EGP 767 million, reflecting a margin of 30.7%.   EBITDA by Country In Egypt, IDH reported an EBITDA of EGP 663 million for 1H 2024, a 63% increase compared to the previous year. The EBITDA margin rose significantly to 32%, up from 27% a year earlier. Improved profitability in the region was driven by a 3.0 percentage point reduction in SG&A expenses to 16%, primarily due to lower advertising costs.   In Jordan, IDH's subsidiary Biolab reported an EBITDA of JOD 1.5 million for 1H 2024, a 6% decrease from the previous year, with a margin of 23%, relatively stable to the margin in 1H 2023. In EGP terms, EBITDA amounted to EGP 89 million, marking a 29% year-on-year increase and a margin of 23%. The growth in EBITDA when converted to EGP is attributed to the devaluation of the EGP over the past year.   In Nigeria, ongoing economic challenges and rising inflation have impacted IDH's cost base, resulting in increased EBITDA losses for the first half of the year. In 1H 2024, EBITDA losses amounted to NGN 436 million, down from NGN 233 million in the same period of 2023. When converted to EGP, EBITDA losses were EGP 13 million in 1H 2024, an improvement from EGP 15 million the previous year. This reduction in EBITDA losses in EGP terms is due to the translation effect of the devaluation of the Nigerian Naira.   In Saudi Arabia, EBITDA losses amounted to SAR 6 million as the new venture starts to scale up its operations. In EGP terms, these EBITDA losses totalled EGP 70 million.   Regional EBITDA in Local Currency   1H 2023 1H 2024 Change Egypt EBITDA EGP mn 407 663 63% Margin   27% 32% Jordan EBITDA JOD mn 1.6 1.5 -7% Margin   24% 23% Nigeria EBITDA NGN mn -233 -436 87% Margin   -25% -34% Saudi Arabia EBITDA SAR mn - -6.1 - Margin   - -   Interest Income / Expense IDH's interest income recorded EGP 55 million, increasing considerably from EGP 30 million in 1H 2023. Higher interest income during the quarter period the increase in interest rates imposed by the CBE during the past 12 months.   Interest expense[7] stood at EGP 89 million, up 17% year-on-year in 1H 2024. The marginal increase in interest expenses were mainly driven by:   ·      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 in December 2023 and February 2024. It is important to note that IDH's interest bearing debt [8] (excluding accrued interest) decreased to EGP 94 million as at 30 June2024, from EGP 111 million at year-end 2023. In 2023, 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 11 million in Q2 2024. The bridge loan was fully settled in Q2 2023. ·      Fast track payments worth EGP 3.7 million, which encompass discounts provided for the rapid payment of receivables in 1H 2024.       Interest Expense Breakdown EGP mn 1H 2023 1H 2024 Change Interest on Lease Liabilities (IFRS 16) 45.2 53.8 19% Interest Expenses on Leases 13.7 12.6 -8% Interest Expenses on Borrowings[9] 11.6 12.2 5% Bank Charges 5.4 6.3 18% Fast Track Payment - 3.7 - Total Interest Expense 75.9 88.6 17%   Foreign Exchange IDH booked a foreign exchange gain of EGP 297 million in 1H 2024, up from EGP 102 million during the same period of the previous year. The foreign exchange gain was due to intercompany balances revaluation.   Taxation Tax expenses, including income and deferred tax, rose to EGP 207 million during 1H 2024, up from EGP 98 million one year prior. IDH's effective tax rate slightly declines to 30% in 1H 2024. The decline in effective tax rate for the first half compared to IDH's historical averages is primarily due to the increase in foreign exchange gain recorded during the periods as a result of intercompany transactions. It is important to highlight that there is no tax payable for IDH's two holding-level companies.   Taxation Breakdown by Region EGP Mn 1H 2023 1H 2024 Change Egypt 91.4 194.9 113% Jordan 6.6 11.5 74% Nigeria -0.1 0.0 N/A KSA - 0.9 - Total Tax Expenses 98.4 207.3 111%   Net Profit IDH booked a net profit of EGP 480 million in 1H 2024, a 127% year-on-year increase due to the substantial increase in foreign exchange gain from intercompany transactions. Meanwhile, the Company's Net Profit Margin (NPM) came in at 19% compared to 11% in 1H 2023.   When accounting for contributions from foreign exchange gains during both periods, IDH booked an adjusted net profit of EGP 183 million in 1H 2024, growing 68% year-on-year from EGP 109 million during the same period of last year. The Company's adjusted net profit margin stood at 7% during the period, up from 6% in 1H 2023.

ii.  Balance Sheet Analysis

Assets Property, Plant and Equipment IDH recorded property, plant and equipment (PPE) cost of EGP 2,921 million as of 30 June 2024, up from EGP 2,554 million at the end of 2023. The increase in CAPEX as a share of revenue during the past six-month period is largely due to the addition of new branches, renovation of existing branches, improvements of IDH's headquarters (constituting 2.5% of revenues), in addition to the translation effect related to Jordan, Nigeria, and Saudi Arabia (comprising 12.2% of revenues).   Total CAPEX Addition Breakdown - 1H 2024 EGP mn % of Revenue Leasehold Improvements/new branches 60.9 2.4% Al-Borg Scan Expansion 2.4 0.1% Total CAPEX Additions Excluding Translation 63.3 2.5% Translation Effect 303.6 12.2% Total CAPEX Additions 366.9 14.7%   Trade Receivables and Provisions Net trade receivables at 30 June 2024 amounted to EGP 753 million, up 32% year-to-date. Meanwhile, IDH's net receivables' Days on Hand (DoH) booked 146 days, up from 134 days at the end of 2023. Provision for doubtful accounts in 1H 2024 was recorded at EGP 17 million, a decrease from EGP 23 million in the previous year. This reduction is attributed to improved economic conditions, increased stability, and reduced inflation, which have led to a noticeable increase in collected amounts during the accounting period.   Inventory At 30 June 2024, IDH booked an inventory balance of EGP 462 million, up 23% compared to the end of 2023. Meanwhile, Days Inventory Outstanding (DIO) increased to 148 days, from 133 days at 31 December 2023. Increased DIO highlights management's proactive strategy of accumulating inventory to hedge against inflationary pressures. Cash and Net Debt Cash balances and financial assets at amortised cost at 30 June 2024 reached EGP 1,254 million, up from EGP 835 million at year-end 2023.   EGP million 31 Dec 2023 30 June 2024 Treasury Bills 133 256 Time Deposits  289 322 Current Accounts 391 624 Cash on Hand 21 52 Total 835 1,254   IDH's net debt[10] balance came in at EGP 35 million as of the end of 1H 2024, down from EGP 361 million as at year-end 2023.         EGP million 31 Dec 2023 30 June 2024 Cash and Financial Assets at Amortised Cost[11] 835 1,254 Lease Liabilities Property* (828) (944) Total Financial Liabilities (Short-term and Long-term) (240) (236) Interest Bearing Debt ("Medium Term Loans") (128) (109) Net Debt Balance  (361)  (35) Note: Interest Bearing Debt includes accrued interest for each period. *If excluding Lease Liabilities Property (IFRS 16), IDH would have recorded net cash of EGP 909 million   Lease liabilities and financial obligations on property came in at EGP 944 million at the end of Q2 2024, with the increase attributed to the translation effect of JOD-denominated liabilities in Jordan following the devaluation of the EGP in early 2024. Meanwhile, financial obligations related to equipment stood at EGP 236 million as at 30 June 2024, with the increase attributable to increases in USD-linked contracts with equipment suppliers following the devaluation of the Egyptian Pound. Finally, interest bearing debt[12] (excluding accrued interest) reached EGP 94 million at the end of Q2 2024, down from EGP 111 million at year-end 2023.   Liabilities Trade Payable[13] Trade payable as of 30 June 2024 stood at EGP 283 million, up from EGP 272 million at the end of 2023. Meanwhile, Days Payable Outstanding (DPO) came in at 98 days, down from 113 days at 31 December 2023. Put Option The put option current liability stood at EGP 456 million as at 30 June 2024, up from EGP 314 million at 31 December 2023, and 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. ·      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).     The put option non-current liability amounted to EGP 42 million at the end of 1H 2024, up from EGP 43 million at 31 December 2023, and is related to 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.           Principle 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. In the short term, other factors influencing the economic landscape include rising geopolitical stability, inflationary pressures in Egypt and Nigeria, and currency devaluation in both countries. These factors may weigh on the cost base in the near future. 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 28 August 2024

 

 

INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH" AND ITS SUBSIDIARIES             Consolidated Interim Financial Statements for the quarter ended 30 June 2024

 

 

Consolidated statement of financial position as at 30 June 2024

 

	Notes	30 June 2024		31 December 2023
		EGP'000		EGP'000
		(Unaudited)		(Audited)
Assets
Non-current assets
Property, plant and equipment	4	1,489,713		1,414,725
Intangible assets and goodwill	5	1,783,585		1,710,183
Right of use assets	6	778,462		683,025
Total non-current assets		4,051,760		3,807,933
Current assets
Inventories		462,465		374,650
Trade and other receivables	8	960,109		727,235
Financial assets at fair value through profit and loss	7	40,134		25,157
Financial assets at amortized cost	9	456,902		161,098
Cash and cash equivalents	10	797,347		674,253
Total current assets		2,716,957		1,962,393
Total assets		6,768,717		5,770,326
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	12	(497,838)		(356,583)
Translation reserve		(364,254)		(82,341)
Retained earnings		1,810,855		1,280,287
Equity attributable to the owners of the Company		2,786,300		2,678,900
Non-controlling interests		765,517		421,888
Total equity		3,551,817		3,100,788
Non-current liabilities
Provisions		20,635		17,758
Borrowings	13	53,972		67,465
Other financial obligations	14	959,217		891,350
Non-current put option liability	12	41,733		42,786
Deferred tax liabilities	19-C	433,912		374,729
Total non-current liabilities		1,509,469		1,394,088
Current liabilities
Trade and other payables	11	816,631		637,761
Other financial obligations	14	220,469		176,704
Current put option liability	12	456,105		313,796
Borrowings	13	40,105		43,680
Current tax liabilities		174,121		103,509
Total current liabilities		1,707,431		1,275,450
Total liabilities		3,216,900		2,669,538
Total equity and liabilities		6,768,717		5,770,326
The accompanying notes form an integral part of these consolidated financial statements.
This condensed consolidated interim financial information was approved and authorised for issue by the Board of Directors and signed on their behalf on 28 August 2024 by:
Dr. Hend El Sherbini		Hussein Choucri
Chief Executive Officer		Independent Non-Executive Director

 

Consolidated income statement for the quarter ended 30 June 2024

 

	Notes	30 June 2024		30 June 2023
		EGP'000		EGP'000
		(Unaudited)		(Unaudited)
Revenue	21	2,497,840		1,871,942
Cost of sales		(1,572,938)		(1,214,008)
Gross profit		924,902		657,934
Marketing and advertising expenses		(142,075)		(112,473)
Administrative expenses	16	(331,531)		(254,340)
Impairment loss on trade and other receivable		(17,198)		(23,269)
Other (expenses)/income		838		(14,763)
Operating profit		434,936		253,089
Net fair value losses on financial assets at fair value	17	(10,474)
Finance costs	18	(88,636)		(75,879)
Finance income	18	351,553		132,234
Net finance (costs)/income		262,917		56,355
Profit before income tax		687,379		309,444
Income tax expense	19-B	(207,310)		(98,394)
Profit for the period		480,069		211,050
Profit attributed to:
Owners of the Company		530,568		223,590
Non-controlling interests		(50,499)		(12,540)
		480,069		211,050
Earnings per share	21
Basic and diluted		0.88		0.37
The accompanying notes form an integral part of these consolidated financial statements.

 

 

 

 

 

Consolidated statement of comprehensive income for the quarter ended 30 June 2024

		30 June 2024		30 June 2023
		EGP'000		EGP'000
		(Unaudited)		(Unaudited)
Net profit for the period		480,069		211,050
Items that may be reclassified to profit or loss: Exchange difference on translation of foreign operations		64,160		(10,151)
Other comprehensive income for the period, net of tax		64,160		(10,151)
Total comprehensive income for the period		544,229		200,899
Attributable to:		248,655		114,652
Owners of the Company		295,574		86,247
Non-controlling interests		544,229		200,899

 

 

 

 

Consolidated statement of cash flows for the quarter ended 30 June 2024

	Note	30 June 2024			30 June 2023
		EGP'000			EGP'000
		(Unaudited)			(Unaudited)
Cash flows from operating activities
Profit before tax		687,379			309,444
Adjustments for:
Depreciation of property, plant and equipment	4	146,071			126,755
Depreciation of right of use assets	6	82,201			65,632
Amortisation of intangible assets	5	4,595			3,872
Interest income	17	(54,760)			(30,075)
Interest expense	17	78,554			70,496
Bank Charges		10,081			5,383
Gain on disposal of Property, plant and equipment		2,651			(603)
Impairment in trade and other receivables		17,198			23,269
Equity settled financial assets at fair value		(14,977)			(5,526)
ROU Asset/Lease Termination		(1,575)			(348)
Unrealised foreign currency exchange (gains) losses	17	(296,793)			(102,159)
FV Through P&L		10,474			-
Change in Provisions		2,877			12,644
Change in Inventories		(69,932)			(90,933)
Change in trade and other receivables		(168,206)			(103,219)
Change in trade and other payables		101,474			33,226
Net cash generated from operating activities		537,312			317,858
Tax paid during period		(81,883)			(157,734)
Net cash generated from operating activities		455,430			160,124
Cash flows from investing activities
Interest received on financial asset at amortised cost		54,925			30,494
Payments for the purchase of financial assets at amortized cost		(333,179)			(150,423)
Proceeds for the sale of financial assets at amortized cost		55,391			138,815
Payments for acquisition of property, plant and equipment	4	(70,319)			(164,174)
Payments for acquisition of intangible assets	5	(880)			(1,401)
Proceeds from sale of Property, plant and equipment		1,067			1,874
Payment for purchase of global depository receipts (short-term investment)	17	(151,710)			-
Proceeds from sale of global depository receipts (short-term investments)	17	141,236			-
Net cash flows generated (used in) from investing activities		(303,469)			(144,815)
Cash flows from financing activities
Proceeds from borrowings		6,117			54,936
Repayments of borrowings		(23,185)			(63,418)
Interest paid		(77,763)			(67,735)
Bank charges paid		(10,081)			(5,383)
Payment of finance lease liabilities		(99,617)			(161,410)
Cash injection by owner of non-controlling interest		48,055			-
Net cash flows used in financing activities		(156,474)			(243,010)
Net (decrease) increase in cash and cash equivalents		(4,513)			(227,701)
Cash and cash equivalents at the beginning of the year		674,253			648,512
Effect of exchange rate		127,607			54,769
Cash and cash equivalents at the end of the period	10	797,347			475,580
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 on pages 7 - 22 form an integral part of these consolidated financial statements.