TIDMIDHC
RNS Number : 5609V
Integrated Diagnostics Holdings PLC
06 April 2023
Integrated Diagnostics Holdings Plc
FY 2022 Results
Thursday, 6 April 2023
Integrated Diagnostics Holdings Plc concludes 2022 reporting
solid 18% growth in non-Covid revenues
(Cairo and London) - Integrated Diagnostics Holdings ("IDH,"
"the Group," or "the Company"), a leading consumer healthcare
company with operations in Egypt, Jordan, Nigeria and Sudan,
released today its audited financial statements and operational
performance for the year ended 31 December 2022, reporting revenue
of EGP 3,605 million, 31% below the figure recorded in the previous
year. Revenues were supported by a sustained expansion in the
Company's conventional(1) (non-Covid) offering (81% of the
consolidated figure), which recorded a strong 18% year-on-year rise
in FY 2022, in part outweighing the anticipated drop in
Covid-19-related(2) revenues throughout the year.
Growth of IDH's conventional business was dual driven as both
conventional tests performed and average revenue per conventional
test expanded a solid 9% each versus the previous year. IDH
reported net profit for the year of EGP 527 million, with an
associated margin of 15%. Adjusting for the losses resulting from
transactions completed by the Company to secure the USD balance
needed to fulfil its FY 2021 dividend obligations to shareholders
and the one-off item related to Pakistan transaction fees, the
Group would have recorded a net profit of EGP 692 million in FY
2022, with a margin on revenue of 19%.
On a quarterly basis, conventional revenues recorded EGP 780
million in Q4 2022, a 31% year-on-year expansion, significantly
outpacing the year-on-year growth recorded last quarter and
signalling once again the underlying strength of the Group's
conventional business.
It is important to note that information in relation to the
Company's full year results has been extracted from our audited
annual report. Meanwhile, disclosures and statements in respect of
quarterly information are unaudited.
Financial Results (IFRS)
EGP mn Q4 2021 Q4 2022 Change FY 2021 FY 2022 Change
============================ ======== ======== ======== ======== ======== ========
Revenues 1,458 805 45% 5,225 3,605 -31%
---------------------------- -------- -------- -------- -------- -------- --------
Conventional Revenues 597 780 31% 2,452 2,903 18%
---------------------------- -------- -------- -------- -------- -------- --------
Covid-19-related Revenues 862 24 -97% 2,773 702 -75%
---------------------------- -------- -------- -------- -------- -------- --------
Cost of Sales (821) (524) -36% (2,421) (2,143) -11%
---------------------------- -------- -------- -------- -------- -------- --------
Gross Profit 638 281 -56% 2,804 1,462 -48%
---------------------------- -------- -------- -------- -------- -------- --------
Gross Profit Margin 44% 35% -9 pts 54% 41% -13 pts
---------------------------- -------- -------- -------- -------- -------- --------
Operating Profit 468 106 -77% 2,291 854 -63%
---------------------------- -------- -------- -------- -------- -------- --------
EBITDA (3) 537 175 -67% 2,501 1,150 -54%
---------------------------- -------- -------- -------- -------- -------- --------
Adjusted EBITDA (4) 537 197 -63% 2,530 1,172 -54%
---------------------------- -------- -------- -------- -------- -------- --------
Adjusted EBITDA Margin 37% 25% -12 pts 48% 33% -15 pts
---------------------------- -------- -------- -------- -------- -------- --------
Net Profit 345 123 -64% 1,493 527 -65%
---------------------------- -------- -------- -------- -------- -------- --------
Net Profit Margin 24% 15% -9 pts 29% 15% -14 pts
---------------------------- -------- -------- -------- -------- -------- --------
Cash Balance 2,350 816 -65% 2,350 816 -65%
---------------------------- -------- -------- -------- -------- -------- --------
Note (1): Throughout the document, percentage changes between
reporting periods are calculated using the exact value (as per the
Consolidated Financials) and not the corresponding rounded figure
.
Key Operational Indicators(5)
FY 2021 FY 2022 Change
================================== ======== ======== =======
Branches 502 552 50
---------------------------------- -------- -------- -------
Patients ('000) 10,317 8,721 -15%
---------------------------------- -------- -------- -------
Net Sales per Patient (EGP) 489 406 -17%
---------------------------------- -------- -------- -------
Tests ('000) 33,659 32,685 -3%
---------------------------------- -------- -------- -------
Conventional Tests ('000) 28,542 30,985 9%
---------------------------------- -------- -------- -------
Covid-19-related Tests ('000) 5,117 1,700 -67%
---------------------------------- -------- -------- -------
Net Sales per Test 150 108 -28%
---------------------------------- -------- -------- -------
Net Sales per Conventional Test
(EGP) 86 94 9%
---------------------------------- -------- -------- -------
Net Sales per Covid-19-related
Test (EGP) 507 376 -26%
---------------------------------- -------- -------- -------
Test per Patient 3.3 3.7 15%
---------------------------------- -------- -------- -------
1 Conventional (non-Covid) tests include all of the Group's test
offering with the exception of its Covid-19-related test offering
outlined below.
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 EBITDA is calculated as operating profit plus depreciation and
amortization.
4 Adjusted EBITDA is calculated as EBITDA excluding one-off
expenses incurred by the Group.
5 Key operational indicators are calculated based on net sales
for the year of EGP 3,542 million. More details on the difference
between net sales and total revenues is available below.
Important Notice: Treatment of Revenue Sharing Agreements and
Use of Alternative Performance Measures (APM)
As part of IDH's efforts to support local authorities in Jordan
in the fight against the pandemic, Biolab (IDH's Jordanian
subsidiary) secured several revenue-sharing agreements to operate
testing stations, primarily dedicated to PCR testing for Covid-19,
in multiple locations across the country including Queen Alia
International Airport (QAIA) and Aqaba Port. These agreements
kicked off in May 2021 at Aqaba Port and in August 2021 at QAIA.
However, following the decision by Jordanian authorities on 1 March
2022 to end mandatory testing, testing booths across both locations
recorded sharp declines in patient traffic.
Under these agreements, Biolab received the full revenue (gross
sales) for each test performed and paid a proportion to QAIA (38%
of gross sales excluding sales tax) and Aqaba Port (36% of gross
sales) as concession fees to operate in the facilities, thus
effectively earning the net of these amounts (net sales) for each
test supplied. Starting in Q4 2021, the treatment of these
agreements was altered in accordance with IFRS 15 paragraph B34,
which considers Biolab as a Principal (and not an Agent).
Subsequently, revenues generated from these agreements are reported
in the Consolidated Financial Statements as gross (inclusive of
concession fees) and the fees paid to QAIA and Aqaba Port are
reported as a separate line item in the direct cost. It is
important to note that sales generated from these agreements were
reflected on the Company's results in Q1 2022 only as the
agreements were terminated at the end of the first quarter of
2022.
In an effort to present an accurate picture of IDH's performance
for the twelve-month period ended 31 December 2022, throughout the
report management utilizes net sales of EGP 3,542 million for FY
2022 (IFRS revenues stand at EGP 3,605 million for the twelve-month
period). Net sales for the twelve-month period ended 31 December
2022 are calculated as total gross revenues excluding concession
fees and sales taxes paid as part of Biolab's revenue sharing
agreements with QAIA and Aqaba Port. This is a similar approach
taken by IDH in the Company's FY 2021 Results Announcement.
It is worth nothing that following the reduction in activity,
net sales will not be reported as an APM in 2023.
It is important to note that aside from revenue and cost of
sales, all other figures related to gross profit, operating profit,
EBITDA, and net profit are identical in the APM and IFRS
calculations. However, the margins related to the aforementioned
items differ between the two sets of performance indicators due to
the use of Net Sales in the APM calculations and the use of
Revenues for the IFRS calculations.
Adjustments Breakdown
EGP mn Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
================================ ======== ======== ======== ======== ========
Net Sales 1,117 774 846 805 3,542
-------------------------------- -------- -------- -------- -------- --------
QAIA and Aqaba Port Concession
Fees 63 0 0 0 63
-------------------------------- -------- -------- -------- -------- --------
Revenues 1,180 774 846 805 3,605
-------------------------------- -------- -------- -------- -------- --------
Cost of Net Sales (586) (473) (497) (524) (2,080)
-------------------------------- -------- -------- -------- -------- --------
Adjustment for QAIA, and
Aqaba Port Agreements (63) (0) (0) (0) (63)
-------------------------------- -------- -------- -------- -------- --------
Cost of Sales (649) (473) (497) (524) (2,143)
-------------------------------- -------- -------- -------- -------- --------
Adjustments by Country
EGP mn FY 2022 (IFRS) FY 2022 (APM)
============= =============== ==============
Egypt 2,894 2,894
------------- --------------- --------------
Jordan 612 549
------------- --------------- --------------
Nigeria 79 79
------------- --------------- --------------
Sudan 20 20
------------- --------------- --------------
Group total 3,605 3,542
------------- --------------- --------------
Note: differences between IFRS and APM figures are highlighted
in grey.
Alternative Performance Measures (APM)
EGP mn Q4 2021 Q4 2022 Change FY 2021 FY 2022 Change
==================================== ======== ======== ======== ======== ======== ========
Net Sales 1,281 805 -37% 5,048 3,542 -30%
------------------------------------ -------- -------- -------- -------- -------- --------
Conventional Revenue 597 780 31% 2,452 2,903 18%
------------------------------------ -------- -------- -------- -------- -------- --------
Covid-19-related Net Sales 684 24 -96% 2,596 639 -75%
------------------------------------ -------- -------- -------- -------- -------- --------
Cost of Net Sales (644) (524) -19% (2,244) (2,080) -7%
------------------------------------ -------- -------- -------- -------- -------- --------
Gross Profit 638 281 -56% 2,804 1,462 -48%
------------------------------------ -------- -------- -------- -------- -------- --------
Gross Profit Margin on
Revenue 50% 35% -15 pts 54% 41% -13 pts
------------------------------------ -------- -------- -------- -------- -------- --------
Gross Profit Margin on
Net Sales (6) 50% 35% -15 pts 56% 41% -15 pts
------------------------------------ -------- -------- -------- -------- -------- --------
Operating Profit 468 106 -77% 2,291 854 -63%
------------------------------------ -------- -------- -------- -------- -------- --------
EBITDA (7) 537 175 -67% 2,501 1,150 -54%
------------------------------------ -------- -------- -------- -------- -------- --------
Adjusted EBITDA (8) 537 197 -63% 2,530 1,172 -54%
------------------------------------ -------- -------- -------- -------- -------- --------
Adjusted EBITDA Margin
on Revenue 42% 25% -17 pts 48% 33% -15 pts
------------------------------------ -------- -------- -------- -------- -------- --------
Adjusted EBITDA Margin
on Net Sales 42% 25% -17 pts 50% 33% -17 pts
------------------------------------ -------- -------- -------- -------- -------- --------
Net Profit 345 123 -64% 1,493 527 -65%
------------------------------------ -------- -------- -------- -------- -------- --------
Net Profit Margin on Revenue 27% 15% -12 pts 29% 15% -14 pts
------------------------------------ -------- -------- -------- -------- -------- --------
Net Profit Margin on Net
Sales 27% 15% -12 pts 30% 15% -15 pts
------------------------------------ -------- -------- -------- -------- -------- --------
Cash Balance 2,350 816 -65% 2,350 816 -65%
------------------------------------ -------- -------- -------- -------- -------- --------
Note: differences between IFRS and APM figures are highlighted
in grey.
6 Gross profit, EBITDA, and net profit margins are calculated on
net sales for APM in both periods.
7 EBITDA is calculated as operating profit plus depreciation and
amortization.
8 Adjusted EBITDA is calculated as EBITDA excluding one-off
expenses incurred by the Group. These include one-off listing
expenses in FY 2021 of EGP 29.0 million related to IDH's dual
listing on the EGX, and one-off transaction expenses in FY 2022 of
EGP 22.3 million related to IDH's aborted acquisition in Pakistan.
Adjusted measures eliminate the one-off impacts of items in the
year to provide a measure of underlying performance which is
regularly utilized by management.
Important notice: The analysis provided in this section presents
both APM measures and IFRS comparisons when necessary. A
reconciliation between IFRS and APM measures is provided earlier in
this announcement.
Introduction
i. Financial Highlights
-- Conventional(9) Revenue (81% of consolidated revenue in FY
2022 and which includes IDH's full test offering except for
Covid-19-related tests) posted robust growth on the back of a
continued normalisation of patient traffic post-Covid-19, and
supporting consolidated net sales for FY 2022 which were otherwise
weighed down by a rapid decline in Covid-19-related business.
Conventional revenue expanded 18% year-on-year to EGP 2,903 million
in FY 2022, driven by a 9% year-on-year increase in both
conventional test volumes and average revenue per test. On a
quarterly basis, conventional revenue delivered an impressive 31%
year-on-year expansion to EGP 780 million, supported by a 12%
year-on-year increase in test volumes and a 16% rise in average
revenue per test (in part due to the post-devaluation translation
effect).
-- Simultaneously, and in line with the Company's expectations,
Covid-19-related(10) revenues (19% of consolidated revenue in FY
2022) recorded EGP 702 million in 2022, down 75% year-on-year.
Similarly, Covid-19-related net sales declined sharply, contracting
by 75% year-on-year to EGP 639 million in FY 2022. The decline
reflected a widespread fall in infection rates, the lifting of
government regulations on mandatory testing, as well as a reduction
in the average price of PCR and Antigen tests. On a quarterly
basis, IDH booked only EGP 24 million in Covid-19-related revenue
(identical to net sales) in Q4 2022, down 96% year-on-year.
-- Consolidated revenue declined 31% year-on-year to record EGP
3,605 million in 2022. Meanwhile, consolidated net sales recorded
EGP 3,542 million during FY 2022, a 30% year-on-year contraction.
The decline wholly reflects the fall in Covid-19-related business
which had boosted consolidated results in FY 2021. Lower
Covid-19-related revenues were partially offset by the strong
growth in conventional revenues. On a quarterly basis, consolidated
revenues (identical to net sales) declined 37% year-on-year to
reach EGP 805 million.
-- Gross Profit recorded EGP 1,462 million for FY 2022, down 48%
year-on-year from the EGP 2,804 million recorded in FY 2021. Gross
profit margin on revenue and net sales recorded 41% in FY 2022
versus a margin of 54% on revenue and 56% on net sales in FY 2021.
Lower gross profitability principally reflects a normalisation of
margins following the year-on-year decline in Covid-19-related
business which had significantly boosted net sales and
profitability in FY 2021. Gross profitability was also in part
weighed down by an increase in direct salaries and wages (related
to additional staffing requirements for the 50 new branches and
annual salary increases for existing employees), higher direct
depreciation expenses on new branch additions, and a slight
increase in raw material prices in the second half of the year
(reflecting the devaluation of the Egyptian pound throughout the
year). In Q4 2022, gross profit recorded EGP 281 million, down 56%
year-on-year primarily reflecting the reduction in the
significantly higher margin achieved by IDH's Covid-19-related
business in FY 2021 and similar reasons to those driving full-year
gross profitability. Gross profit margin on revenue (identical to
net sales) recorded 35% in Q4 2022.
-- EBITDA(11) recorded EGP 1,150 million in 2022, down 54% from
the EGP 2,501 million recorded last year. EBITDA margin on revenue
and net sales both stood at 32% for the year. Meanwhile, Adjusted
EBITDA,(12) which adjusts for non-recurring expenses incurred by
IDH in 2021 and 2022, came in at EGP 1,172 million in FY 2022,
representing a 54% year-on-year decrease. Adjusted EBITDA margin on
revenue recorded 33% in 2022 from 48% last year. Meanwhile,
Adjusted EBITDA margin on net sales of 33% versus 50% in FY 2021.
The decline is attributable to lower gross profitability for the
year coupled with an increase in SG&A expenses, primarily
related to increased marketing activities to support new branch
roll outs, and the launch of a new patient loyalty programme. In Q4
2022, EBITDA recorded EGP 197 million, down 63% year-on-year and
with an associated margin on revenue (identical to net sales) of
25%.
-- Net Profit recorded EGP 527 million for FY 2022, down 65%
year-on-year. Net profit margin on revenue normalised following the
exceptional profitability recorded throughout FY 2021, recording
15% in FY 2022 from 29% in FY 2021. Similarly, net profit margin on
net sales recorded 15% in FY 2022 versus 30% in the year prior. It
is important to note that adjusting for the losses resulting from
transactions completed by the Company to secure the USD balance
needed to fulfil its FY 2021 dividend obligations to shareholders
and transaction cost related to Pakistan transaction,(13) the Group
would have recorded a net profit of EGP 692 million in FY 2022,
with a margin on revenue of 19% and on net sales of 20%. In Q4
2022, net profit recorded EGP 123 million, down 64% year-on-year
and with a margin on revenue (identical to net sales) of 15%.
-- Earnings per share stood at EGP 0.90 in FY 2022 compared to EGP 2.35 in FY 2021.
9 Conventional (non-Covid) tests include IDH's full service
offering excluding the Covid-19 related tests outlined below.
1 (0) 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.
1 (1) EBITDA is calculated as operating profit plus depreciation
and amortization.
1 (2) Adjusted EBITDA is calculated as EBITDA excluding one-off
expenses incurred by the Group.
1 (3) In December 2021, the Company signed a sale and purchase
agreement to acquire 50% shareholding in Base Consultancy FZ LLC,
the holding company of Islamabad Diagnostic Centre ("IDC"). While
the original SPA, expired on 29 August 2022, IDH and the Seller
continued negotiations aimed at concluding a transaction on
modified terms. Despite the efforts of the parties, extensive
delays in the regulatory review process, the challenging global
economic environment and the condition precedent related to
repatriating funds, have resulted in the discontinuation in January
2023 of negotiations towards completing the transaction.
ii. Operational Highlights
-- IDH's revenue generating branch network reached 552 branches
as of 31 December 2022, an increase of 50 branches from the 502
branches recorded as of 31 December 2021.
-- Conventional tests(14) recorded 31.0 million during FY 2022,
a robust 9% year-on-year increase. The strong increase in
conventional tests partially offset the 67% year-on-year decrease
in Covid-19-related tests, which dropped to 1.7 million for FY
2022. Finally, total tests performed fell 3% year-on-year to 32.7
million tests.
-- Average net revenue per conventional test increased a solid
9% year-on-year in FY 2022 to reach EGP 94. Meanwhile, net revenue
per Covid-19-related test declined 26% year-on-year on the back of
a significant drop in the selling prices of PCR and Antigen tests.
As such, IDH's total average net revenue per test dropped 28%
year-on-year to record EGP 108 in FY 2022.
-- Total patients served by IDH throughout the year recorded 8.7
million, a 15% year-on-year decline from the 10.3 million patients
served in FY 2021. Meanwhile, the Group's tests per patient metric
increased to 3.7 in FY 2022 from 3.3 in FY 2021. The drop in total
patient volumes and the simultaneous increase in tests per patient
metric during FY 2022 both reflect the decrease in Covid-19-related
patients (who typically visited IDH's branches for single Covid-19
tests) and the normalisation in conventional patient traffic (who
typically visit the Group's branches for multiple tests).
-- Across both Egypt and Jordan (80.3% and 16.9% of consolidated
revenues in FY 2022), IDH continued to record sustained growth in
conventional revenue as both test volumes and average revenue per
conventional test increased versus the previous year. In Egypt
conventional revenue expanded 16% year-on-year, while in Jordan
conventional revenue was up 29% in EGP terms and 2% in JOD terms.
This partially offset a fall in Covid-19-related business.
-- In Nigeria (2.2% of consolidated net sales in FY 2022), IDH
continued to record robust revenue growth (up 47% year-on-year in
EGP terms and 24% in NGN terms) supported by an increasingly
favourable test mix and higher test volumes. Despite this,
Echo-Lab's profitability continued to be impacted by rising diesel
prices.
-- In Sudan (0.6% of consolidated net sales in FY 2022), IDH
recorded solid growth in both SDG and EGP terms, supported by
rising test prices.
(14) 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.
iii. Management Commentary
Commenting on the Group's performance, IDH Chief Executive
Officer Dr. Hend El-Sherbini said: "2022 has been a year of
confirmations for IDH which saw us demonstrate the resilience and
potential of our traditional business, the effectiveness of our
post-Covid-19 strategy, and the fundamentals of our markets. During
the past twelve months, the Company reaped the fruits of our
tremendous efforts over the last three years and delivered robust,
double-digit revenue growth at its conventional business, in line
with our guidance to investors and supported by record test
volumes. Meanwhile, we continued to push forward our multi-pronged
growth strategy, expanding our reach and service offering across
existing markets, whilst penetrating a new geography.
This year's successes came against a difficult operating
backdrop with our markets, and particularly our home market of
Egypt, facing an unprecedented mix of economic challenges stemming
from the ongoing conflict in Ukraine and lingering impacts of the
pandemic. Throughout the year, businesses in Egypt had to confront
a wide range of troubles starting with the multiple devaluations of
the Egyptian pound (EGP), which ended the year down more than 50%
(and was down 96% as at 12 March 2023), the subsequent rise in
inflation and interest rates, with the former reaching multi-year
highs and increasingly weighing on patients' purchasing power, and
the imposition of capital and import restrictions. In parallel, we
also witnessed currency devaluations in both Nigeria and Sudan, and
continued troubles related to global supply chains.
Despite these setbacks, the Company successfully leveraged its
resilient business model, proven strategies, leading market
positioning, and unmatched value proposition to deliver a
remarkable set of results in 2022 and position itself for new
growth in the coming years.
In light of the above and the results recorded in the first
three months of the year, we are confident that despite the ongoing
economic challenges witnessed in our geographies, we have put in
place the necessary strategies and mitigation mechanisms to
continue delivering double-digit conventional revenue growth in
2023."
- End -
Analyst and Investor Call Details
An analyst and investor call will be hosted at 1pm (UK) | 2pm
(Egypt) on Thursday, 6 April 2023. You can register for the call by
clicking on 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 pathology and radiology
tests to patients in Egypt, Jordan, Sudan and Nigeria. The Group's
core brands include Al Borg, Al Borg Scan and Al Mokhtabar in
Egypt, as well as Biolab (Jordan), Ultralab and Al Mokhtabar Sudan
(both in Sudan) and Echo-Lab (Nigeria). A long track record for
quality and safety has earned the Company a trusted reputation, as
well as internationally recognised accreditations for its portfolio
of over 2,000 diagnostics tests. From its base of 552 branches as
of 31 December 2022, IDH served over 8.7 million patients and
performs 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's expansion plans include acquisitions in
new Middle Eastern, African, and East Asian markets where its model
is well-suited to capitalise on similar healthcare and consumer
trends and capture a significant share of fragmented markets. IDH
has been a Jersey-registered entity with a Standard Listing on the
Main Market of the London Stock Exchange (ticker: IDHC) since May
2015 with a secondary listing on the EGX since May 2021 (ticker:
IDHC.CA).
Shareholder Information
LSE: IDHC.L
EGX: IDHC.CA
Bloomberg: IDHC:LN
Listed on LSE: May 2015
Listed on EGX: May 2021
Shares Outstanding: 600 million
Contact
Nancy Fahmy
Investor Relations Director
T: +20 (0)2 3345 5530 | M: +20 (0)12 2255 7445 |
nancy.fahmy@idhcorp.com
Forward-Looking Statements
These results for the year ended 31 December 2022 have been
prepared solely to provide additional information to shareholders
to assess the group's performance in relation to its operations and
growth potential. These results should not be relied upon by any
other party or for any other reason. This communication contains
certain forward-looking statements. A forward-looking statement is
any statement that does not relate to historical facts and events,
and can be identified by the use of such words and phrases as
"according to estimates", "aims", "anticipates", "assumes",
"believes", "could", "estimates", "expects", "forecasts",
"intends", "is of the opinion", "may", "plans", "potential",
"predicts", "projects", "should", "to the knowledge of", "will",
"would" or, in each case their negatives or other similar
expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements
containing information on future financial results, plans, or
expectations regarding business and management, future growth or
profitability and general economic and regulatory conditions and
other matters affecting the Group .
Forward-looking statements reflect the current views of the
Group's management ("Management") on future events, which are based
on the assumptions of the Management and involve known and unknown
risks, uncertainties and other factors that may cause the Group's
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the
Group's actual financial condition and results of operations to
differ materially from, or fail to meet expectations expressed or
implied by, such forward-looking statements.
The Group's business is subject to a number of risks and
uncertainties that could also cause a forward-looking statement,
estimate or prediction to differ materially from those expressed or
implied by the forward-looking statements contained in this
communication. The information, opinions and forward-looking
statements contained in this communication speak only as at its
date and are subject to change without notice. The Group does not
undertake any obligation to review, update, confirm or to release
publicly any revisions to any forward-looking statements to reflect
events that occur or circumstances that arise in relation to the
content of this communication.
Important notice: The analysis provided in this section presents
both APM measures and IFRS comparisons when necessary. A
reconciliation between IFRS and APM measures is provided earlier in
this announcement.
Chairman's Message
I am pleased to report that despite the exceptional challenges
faced in Egypt and across our other geographies, your Company
continued to deliver solid results in 2022, marked by impressive
growth in our traditional non-Covid-19 business and clear progress
on our longer-term value creation strategy.
Overcoming Challenges
Since March 2022, the fallout from the war in Ukraine and the
lingering global impact of Covid-19 had significant knock-on
effects on Egypt: The Egyptian pound has devalued by over 50%,
inflation has risen sharply, and interest rates are at multi-year
highs.
Despite these challenges, we once again demonstrated the
resilience of our business model and the appeal of our value
proposition, generating double digit year-on-year growth in
conventional revenue, which now stands a remarkable 33% above
pre-Covid-19 levels.
Throughout the year, we performed over 31 million conventional
tests - the highest test volumes ever recorded by IDH. In parallel,
we honoured our responsibility as a leading healthcare company by
sharing the burden of inflation with our patients, limiting price
increases to ensure our services remained accessible to the
millions of patients who entrust us with their health tests every
year. We will continue to pass on price rises judiciously and in a
manner that preserves our clear leadership in an increasingly
competitive market.
Also last year, we added new branches in Egypt, Jordan and
Nigeria, guaranteeing greater accessibility and coverage. We also
added new medical services, ensuring that our offering remained
competitive and in line with patients' evolving needs and
expectations.
We maintained the service quality for which our brands are
known.
IDH became the first provider in in 2022 in Africa to earn
American College of Radiology accreditation.
Expanding Our Footprint
We continue to enjoy strong organic growth prospects at the same
time that we continue to consider M&A opportunities across new
African, Middle Eastern, and Asian markets.
We look forward to officially launching operations in Saudi
Arabia in the coming months, marking our official entry in the
Kingdom's fast-growing and under-served diagnostic market. We are
confident that the strategic partnership of Biolab, IDH, and
Izhoor, a company owned by Fawaz Alhokair, will ensure we have the
mix of strengths needed to serve the Saudi people and ensure the
long-term success of this new venture.
In parallel, after thorough due diligence and in light of
social, economic, and political developments in Pakistan, IDH
decided not to pursue its planned acquisition of Islamabad
Diagnostics Centre.
We would like to thank Dr. Upal and his team for their continued
professionalism throughout the entire process and we wish them the
best in their future endeavours.
Our commitment to ESG
We are committed to expanding our global operations in a
sustainable and responsible manner. ESG is of fundamental
importance to our long-term strategy. Early last year, we issued
our first Sustainability Report, outlining our ESG vision and
strategy and providing a clear framework to evaluate our
performance and guarantee our accountability. Building on this, we
will continue to monitor and address all areas of ESG within our
new and existing geographies.
Risk Matrix
Management proactively monitors and revises our risk matrix and
heat map to ensure we have the right controls and governance in
place and ensuring business continuity processes.
A Growing Team
Over the last 12 months, we continued to strengthen our
management team with several new additions that have brought in new
skills and multi-discipline expertise.
We appreciate our loyal and hard-working workforce and
continuously evaluate and monitor their KPIs to help them develop
professionally, in line with their ambitions. We have prepared an
employee incentive plan to reward and incentivize our team for
their consistent efforts which is ready for roll out subject to
necessary approvals.
Our headquarter office in Smart Village continues to provide
significant benefits and economies of scale.
Gratitude to our Shareholders
Our gratitude goes out to our valued and loyal shareholders. We
are confident that the attractive underlying fundamentals of our
markets, our unique value proposition, and our proven strategy
should translate in an appreciation of our share price over the
coming period.
Your Company has always been committed to paying our
shareholders a regular dividend. Egypt's current foreign exchange
restrictions have posed a temporary challenge that has led your
Board to postpone a decision on dividend pay-out for the year ended
31 December 2022. We have not changed our dividend policy. As part
of our asset-light strategy, our dividend policy is to return to
shareholders the maximum amount of excess cash after taking careful
account of the capital needed to support operations, capital
expenditure plans, organic expansion opportunities, and potential
acquisitions.
We look forward to updating our valued shareholders on
developments following our Board meeting in August.
Heading into 2023, your Company is well placed to deliver new
growth and profitability whilst generating sustainable value for
its communities and shareholders.
Lord St John of Bletso
Chairman
Important notice: The analysis provided in this section presents
both APM measures and IFRS comparisons when necessary. A
reconciliation between IFRS and APM measures is provided earlier in
this announcement.
Chief Executive's Review
2022 has been a year of confirmations for IDH which saw us
demonstrate the resilience and potential of our traditional
business, the effectiveness of our post-Covid-19 strategy, and the
fundamentals of our markets. During the past twelve months, the
Company reaped the fruits of our tremendous efforts over the last
three years and delivered robust, double-digit revenue growth at
its conventional business, in line with our guidance to investors
and supported by record test volumes. Meanwhile, we continued to
push forward our multi-pronged growth strategy, expanding our reach
and service offering across existing markets, whilst penetrating a
new geography.
This year's successes came against a difficult operating
backdrop with our markets, and particularly our home market of
Egypt, facing an unprecedented mix of economic challenges stemming
from the ongoing conflict in Ukraine and lingering impacts of the
pandemic. Throughout the year, businesses in Egypt had to confront
a wide range of troubles starting with the multiple devaluations of
the Egyptian pound (EGP), which ended the year down more than 50%
(and was down 96% as at 12 March 2023), the subsequent rise in
inflation and interest rates, with the former reaching multi-year
highs and increasingly weighing on patients' purchasing power, and
the imposition of capital and import restrictions. In parallel, we
also witnessed currency devaluations in both Nigeria and Sudan, and
continued troubles related to global supply chains.
While economic troubles were on the rise, 2022 brought
significant positive developments in the fight against Covid-19. In
fact, following a new wave of infections in January and February,
we witnessed a widespread decrease of infection rates starting in
March of last year as countries made headway on their vaccination
campaigns, and individuals became increasingly able to coexist with
the virus. This supported the gradual lifting of all remaining
Covid-19-related regulations, including the removal of mandatory
testing and quarantines. As expected, this translated in a rapid
decline in our Covid-19-related revenue and net sales(15) as demand
and pricing for Covid-19-related testing fell throughout the
year.
Despite these setbacks, the Company successfully leveraged its
resilient business model, proven strategies, leading market
positioning, and unmatched value proposition to deliver a
remarkable set of results in 2022 and position itself for new
growth in the coming years.
Sustained Growth of Our Conventional Offering
Over the course of the last three years, despite the
pandemic-related challenges and opportunities, IDH never lost sight
of its conventional business, continuing to care for its
traditional patients' needs even at the height of the Covid-19
crisis. Our efforts not only focused on expanding our service
offering and delivery capabilities, but also on organising special
campaigns and launching dedicated test packages aimed at raising
healthcare awareness and ensuring continued affordability for
patients suffering from chronic diseases. Simultaneously, we also
focused on patient retention, aiming to build long-term
relationships with new patients initially acquired through our
Covid-19-dedicated offering.
Our efforts delivered the desired results in 2022, with
conventional revenue posting sustained growth throughout the year
dually driven by rising test volumes and increasingly favourable
pricing. More specifically, conventional revenue expanded 18%
year-on-year to record EGP 2.9 billion in 2022, on the back of a 9%
year-on-year increase in both conventional test volumes and average
net sale per test. What is arguably even more impressive, and what
clearly displays the effectiveness of our strategy over the last
three years, is the fact that our conventional revenue now stands
at a remarkable 33% above its pre-pandemic value, with test volumes
also recording 11% higher than their corresponding figure in 2019,
adjusting for increased testing due to the 100 million lives
campaign during 2019. Sustained growth in our conventional business
helped to partially offset a 75% year-on-year decline in
Covid-19-related revenue as both tests performed and average
revenue per test fell throughout the twelve-month period. Overall,
we recorded revenues of EGP 3.6 billion, down 31% year-on-year, and
net sales(16) of EGP 3.5 billion, down 30% from the previous year
when our consolidated results had been boosted by an exceptional
contribution made by our Covid-19-related offering.
Robust test volumes growth over the last twelve months, and in
the three years since the start of the pandemic, is directly
attributable to our investment strategy which has seen us devote
substantial resources to expand our delivery capabilities and
reach. In the year ended 31 December 2022, we inaugurated 52 new
branches, including 48 in Egypt, two in Jordan, and two in Nigeria.
This brought our total network to 552, with our Egyptian network
reaching the 500 mark, a historic achievement which saw us reaffirm
our leadership position in the local diagnostic market. Of the new
additions in Egypt, I was pleased to note the two new Al-Borg Scan
branches launched in 2022, which took our total radiology network
to six branches and enabled us to successfully capitalise on the
rapidly growing demand for our radiology offering. In parallel to
new branch roll outs, we have also been actively investing to make
our services more accessible through non-traditional avenues
including home services and digital. The former, which peaked in
popularity during the pandemic, continues to outperform our
expectations, contributing 18% of Egypt's revenues in 2022, well
above its pre-Covid-19 averages. This demonstrates our ability to
transform Covid-19-related opportunities into long-term gains for
the Company, which I am confident will continue to support our
revenues and profitability in the coming years. Similarly, we
continued to invest in our digital capabilities. Our AI-focused
subsidiary, Wayak, continued to ramp up operations with total
orders completed in 2022 jumping a solid 29% year-on-year and
EBITDA losses narrowing further. Meanwhile, we continued to enhance
our digital outreach channels making it increasingly easy for
patients to reserve their tests and access their results and
reports.
Regionally, in both Egypt and Jordan we recorded similar trends
as those witnessed at the consolidated level. In Egypt, despite the
fast-rising inflation, our conventional top-line expanded a solid
16% year-on-year to reach EGP 2.4 billion compared to EGP 2.1
billion in 2021. This saw conventional revenue contribute to 84% of
our Egyptian top-line for the year, significantly above the 51%
contribution made in the previous year. Meanwhile, Covid-19-related
revenues declined 78% year-on-year, making up just 16% of Egypt's
top-line compared to 49% in the previous twelve months. Total
revenues in Egypt for 2022, subsequently declined 30% versus their
corresponding value in 2021, as our test mix normalised throughout
the year. Egypt's top-line for the year were also buoyed by our
fast-growing radiology venture, Al-Borg Scan. Revenues at Al-Borg
Scan expanded an impressive 91% year-on-year in 2022 to reach EGP
85 million supported by new branch launches (four since October
2021) and an aggressive marketing campaign implemented by the team
throughout the past year. We expect the rapid growth trend to
continue in 2023 as Al Borg Scan cements its position in the highly
fragmented Egyptian market.
In Jordan, conventional revenues increased 29% year-on-year in
EGP terms partially reflecting the translation effect resulting
from the multiple devaluations of the Egyptian pound. We were also
pleased to note Biolab's year-on-year expansion in JOD terms
supported by rising conventional test volumes. Higher conventional
revenues were overshadowed by a 67% year-on-year decline in
Covid-19-related revenues (Covid-19-related net sales declined 68%
year-on-year) as demand decreased significantly. It is also worth
highlighting that due to the lifting of international travel
restrictions, Biolab's agreements to provide Covid-19-related
testing at Jordan's Queen Alia International Airport (QAIA) and
Aqaba Port were terminated at the end of the first quarter of 2022,
further weighing on the segment's performance for the year. As
such, overall revenue at Biolab declined 41% in EGP terms and 50%
in JOD terms. Similarly, net sales(17) decreased 37% year-on-year
in EGP terms and 47% in JOD terms.
Our Nigerian subsidiary, Echo-Lab, continued its impressive
expansion, growing 24% in NGN terms and up 47% year-on-year in EGP
terms. Top-line growth was supported by an increasingly favourable
test mix and higher test volumes despite the difficult operating
environment. Over the past year, we witnessed sustained growth in
Echo-Lab's average net sale per test reflecting the increase in the
number of patients visiting the venture to undergo the generally
higher-priced CT and MRI exams, directly in line with our
commercial strategy at the venture. It is also worth highlighting
that test and patient volumes in the first part of the year were
impacted by our decision to shut down two underperforming branches.
Volumes picked up again following the launch of two new branches in
the second quarter of 2022 and have remained strong since.
Echo-Lab's 2022 performance reaffirms our conviction in its growth
potential .
Finally, in Sudan, economic and political instability coupled
with the devaluation of the Sudanese Pound in March 2022,
significantly impacted our subsidiaries' operations and results.
Nonetheless, our Sudanese operations posted an impressive 63%
year-on-year rise in revenue in local currency terms on the back of
a 114% rise in the average revenue per test in SDG terms.
Further down the income statement, we observed a contraction in
gross, EBITDA, and net profitability largely reflecting a
post-Covid-19 normalisation. Gross profitability was also impacted
by increased outlays related to additional staffing requirements
for the new branches, annual salary increases, and a marginal
increase in raw material prices in the second half of the year
following the EGP's devaluation. Our ability to restrict the
increase in raw material costs despite the significant devaluation
of the EGP reflected both our proactive inventory management
strategy and our long-lasting relationships with major test kit
providers which enable us to consistently secure favourable pricing
for new stock. Meanwhile, EBITDA profitability was partially
impacted by higher marketing spending as we invested to support the
ramp up of new branches and of a new patient loyalty programme.
Finally, our bottom-line, which contracted 65% year-on-year, was
also impacted by losses resulting from transactions completed by
the Company to secure the USD balance needed to fulfil our 2021
dividend obligations to shareholders and transaction costs related
to the Pakistan transaction. Adjusting for these, net profit would
have recorded EGP 692 million in 2022, with a margin on revenue of
19% and on net sales of 20%.
Expanding Our Footprint
Over the years, we have adhered to a clearly defined inorganic
growth strategy centred on identifying and investing in greenfield
and brownfield assets in new African, Middle Eastern, and Asian
markets where our business model is best suited to capitalize on
healthcare trends and serve local communities. With this in mind,
in 2022 we signed a landmark agreement with Biolab and Fawaz
Alhokair's healthcare subsidiary, Izhoor, to launch a new
greenfield diagnostic venture in Saudi Arabia. Ultimately, we are
looking to build a full-fledged diagnostic services provider
capable of catering to the underserved demand for high quality
services in the Kingdom and supporting the local government's
ambitious healthcare agenda. I am particularly excited about
starting this journey with our two partners, both of whom bring
complementary experiences and resources which will play crucial
roles in guaranteeing the venture's success.
The Saudi Arabian market represents an ideal new addition to our
portfolio due to its attractive growth profile underpinned by
favourable demographics, an increasingly health-conscious patient
base, robust macroeconomic fundamentals, changing healthcare sector
dynamics in favour of private providers, and a supportive
regulatory framework. Overall, Saudi Arabia currently records some
of the highest per-capita spending on healthcare in the region,
with the number set to rise further in the coming years. Moreover,
reforming and developing the Kingdom's healthcare sector is a top
priority for the local government, with new regulatory reforms and
incentives rolled out to attract private sector participation.
Meanwhile, in Pakistan, we decided in early 2023 to forego
negotiations to acquire a 50% stake of the Islamabad Diagnostic
Center (IDC). Despite sustained negotiations and relentless efforts
on both sides, the current economic conditions and continued
regulatory hurdles have led to the termination of the transaction.
Nevertheless, we remain committed to researching and identifying
suitable potential markets for future investments, as IDH remains
adamant on realizing its long-term goal of expanding its footprint
to different markets across the Middle East, Africa, and Asia.
Our Commitment to Excellence
Sustaining and improving the quality of our services has always
been a central priority for the Group. This commitment to
excellence has translated in IDH earning prestigious accreditations
and certificates over the years, including multiple new ones in
2022.
Most notably, we received the American College of Radiology
(ACR) accreditation for both Al Borg Scan's nuclear medicine
(NucMed) and ultrasound units in August 2022. This makes Al Borg
Scan the first radiology centre in Africa, as well as one of the
select few in the Middle East, to boast this prestigious
accreditation which complements our previously obtained College of
American Pathologists (CAP) accreditation. Meanwhile, we have now
secured the Egyptian government's full General Authority for
Healthcare Accreditation and Regulation (GAHAR) for ten of our labs
(at the time of writing this report). This makes us the private
provider with the most GAHAR-accredited labs in the country and
will enable us to play a central role in supporting the roll out of
the Egyptian government's Universal Healthcare Insurance
system.
Our Sustainability Journey
As we continue to serve a growing community across four markets,
we have only renewed our commitment to building and developing our
environmental, social, and governance (ESG) monitoring and
compliance framework to ensure we continue to deliver sustainable
value to all stakeholders. In 2021, we issued our first ever
Sustainability Report, providing investors and stakeholders with an
initial strategy and monitoring framework. Meanwhile, we also
worked closely with a leading ESG consultant to design an
encompassing ESG strategy which will set clear long-term goals and
targets to guide our sustainability efforts in the coming years.
These goals will not only provide milestones for the Company, but
will also increase accountability to our investors, stakeholders,
and regulators. Once defined, our ESG strategy will be implemented
and monitored by a specialized ESG board committee. In addition to
publishing a GRI-compliant sustainability report, management is
enclosing the Task Force on Climate-related Financial Disclosures
(TCFD) in our 2022 annual report in line with listing
requirements.
As always, we continue to be supported and guided by our
seasoned Board of Directors which is comprised of leading
executives who have been overseeing all aspects of our business and
operations since IDH's listing on the LSE in 2015. The Board of
Directors is made up mainly of independent, non-executive directors
and is further supported by updated and robust policy
framework.
2023 Outlook
While progress has been made to overcome the economic challenges
faced throughout 2022, it has become increasingly apparent that
they will remain with us throughout 2023. Despite this, I am
confident that we possess the needed experience, resources, and
strategy to continue navigating them successfully. In fact, IDH
boasts a long track record of success in manoeuvring through
unanticipated times of economic turmoil, including the 2011
Egyptian Revolution and the devaluation of the Egyptian pound in
2016. With this in mind, our targets and priorities for the new
year remain unchanged and I look forward to reporting on our
progress throughout the coming year.
Front and central will be the continued double-digit growth of
our conventional business, in particular across our two largest
markets of Egypt and Jordan. To deliver on this, we are targeting
the roll out of an additional 20 to 25 branches, including three
new branches in Jordan and two new Al-Borg Scan branches in Egypt.
Meanwhile, on the pricing front, while throughout 2022 and early
2023 we introduced multiple price adjustments to partially account
for the fast-rising inflation in Egypt, we have thus far refrained
from passing on the full burden to patients. We believe that as a
leading healthcare provider in the country, we have a
responsibility to ensure that our services remain accessible to as
many patients as possible. Moreover, we are confident that
providing additional support to patients in time of financial need
will translate in increased loyalty, enhancing long-term patient
retention and revenue generation. Finally, across both geographies,
we are looking to leverage our market leading position to continue
attracting and retaining new patients to the Group offering them
appealing value propositions which only a Group boasting our scale
can offer.
In light of the above and the results recorded in the first
three months of the year, we are confident that despite the ongoing
economic challenges witnessed in our geographies, we have put in
place the necessary strategies and mitigation mechanisms to
continue delivering double-digit conventional revenue growth in
2023.
On the profitability front, we expect margins for the coming
year to remain healthy and broadly unchanged compared to the year
just ended despite rising inflation, in particular in Egypt.
Meanwhile, in the longer-term, we see margins converging back to
our historical averages as the impacts of the post-Covid-19
normalisation and the recent EGP devaluations subside. As always, a
main component of our cost control strategy has been the continued
collaboration with our main test kit providers to maintain adequate
stocks and secure new stock at competitive prices (with a less than
proportionate increase compared to inflation caused by the EGP
devaluation). At the same time, we are looking to introduce a wide
range of cost optimisation initiatives across the Group's main
functions to further streamline operations and extract additional
efficiencies where possible.
Dividend Policy and Proposed Dividend
While we maintain our long-term dividend policy that sees us
return to shareholders the maximum amount of excess cash after
taking careful account of the cash needed to support operations and
expansions, our Board of Directors will postpone the dividend
decision in light of the ongoing uncertainty and lack of foreign
currency availability in Egypt. We will review the situation in our
upcoming Board meeting in August and assess the Group's cash
position and the macroeconomic situation in Egypt at the time
before a decision is made and a distribution date is set.
Dr. Hend El-Sherbini
Chief Executive Officer
(15) A reconciliation between revenues (compliant with IFRS) and
net sales is available earlier in this release.
(16) Net Sales is calculated as revenues excluding commission
fees paid by Biolab as part of the company's revenue sharing
agreements with QAIA and Aqaba Port.
(17) Net Sales is calculated as revenues excluding commission
fees paid by Biolab as part of the company's revenue sharing
agreements with QAIA and Aqaba Port. In 2022, in Jordan, IDH
recorded revenue of EGP 612 million (down 42% year-on-year) and net
sales of EGP 549 million (down 37% year-on-year).
Important notice: The analysis provided in this section presents
both APM measures and IFRS comparisons when necessary. A
reconciliation between IFRS and APM measures is provided earlier in
this announcement.
Group Operational & Financial Review
i. Revenue and Cost Analysis
Consolidated Revenue
IDH witnessed sustained growth at its conventional business (which includes
IDH's full test roster except for its Covid-19-related offering) in
FY 2022 as patient traffic continued to normalise post-Covid-19 and
IDH capitalised on its post-pandemic growth strategy. Growth for the
year was dual driven as conventional test volumes and average revenue
per test each posted solid year-on-year expansions. Meanwhile, Covid-19-related(18)
revenues declined sharply throughout the year. Demand for Covid-19-related
tests fell rapidly starting in the second quarter of this year as infection
rates declined and governments lifted mandatory testing. Meanwhile,
price drops were primarily seen in the first quarter of the year. Combined
this saw the Group book consolidated revenue (IFRS) of EGP 3,605 million
in FY 2022, a 31% year-on-year decrease, and consolidated net sales(19)
of EGP 3,542 million, down 30% year-on-year. It is worth noting that
the year-on-year decline in part reflects the high base effect from
FY 2021 when the consolidated figure had been boosted by an exceptional
contribution made by IDH's Covid-19-related test offering.
Net Sales Analysis
Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 % FY FY %
2021 2022 2021 2022 2021 2022 2021 2022 2021 2022
------------------------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Total revenue (EGP
mn) 1,130 1,180 1,163 774 1,473 847 1,458 804 -45% 5,225 3,605 -31%
======================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Total net sales
(EGP mn) 1,130 1,117 1,163 774 1,473 847 1,281 804 -37% 5,048 3,542 -30%
======================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Conventional revenue
(EGP mn) 594 640 594 699 667 784 597 780 31% 2,452 2,903 18%
======================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Total Covid-19-related
revenue (EGP mn) 536 540 569 75 807 63 862 24 -97% 2,773 702 -75%
Total Covid-19-related
net sales (EGP mn) 536 477 569 75 807 63 685 24 -96% 2,596 639 -75%
Core Covid-19 net
sales (PCR, Antigen,
Antibody) (EGP mn) 399 421 431 62 760 54 627 19 -97% 2,217 556 -75%
Other Covid-19-related
net sales (EGP mn) 137 56 138 13 47 9 58 5 -91% 379 83 -78%
------------------------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Contribution to Consolidated Net Sales
======================================================================================================================
Conventional revenue 53% 57% 51% 90% 45% 93% 47% 97% 49% 82%
======================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Total Covid-19-related
net sales 47% 43% 49% 10% 55% 7% 53% 3% 51% 18%
Core Covid-19 net
sales (PCR, Antigen,
Antibody) 35% 38% 37% 8% 52% 6% 49% 2% 44% 16%
Other Covid-19-related
net sales 12% 5% 12% 2% 3% 1% 5% 1% 7% 2%
------------------------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Test Volume Analysis
Total tests (mn) 8.1 8.4 8.3 7.6 8.6 8.3 8.7 8.3 -5% 33.6 32.7 -3%
========================= ==== ==== ==== ==== ==== ===== ==== ===== ===== ====== ====== =====
Conventional tests
performed (mn) 6.8 7.1 6.9 7.4 7.5 8.2 7.3 8.3 14% 28.5 31.0 9%
========================= ==== ==== ==== ==== ==== ===== ==== ===== ===== ====== ====== =====
Core Covid-19 tests
performed (k) 407 837 387 109 882 135 935 47 -95% 2,611 1,128 -57%
Other Covid-19-related
tests performed (k) 874 417 933 95 284 39 416 21 -95% 2,507 572 -77%
------------------------- ---- ---- ---- ---- ---- ----- ---- ----- ----- ------ ------ -----
Contribution to Consolidated Results
---------------------------------------------------------------------------------------------------------
Conventional tests
performed 84% 85% 83% 97% 87% 99% 84% 99% 85% 95%
========================= ==== ==== ==== ==== ==== ===== ==== ===== ===== ====== ====== =====
Core Covid-19 tests
performed 5% 10% 5% 1% 10% 2% 11% 1% 8% 3%
Other Covid-19-related
tests performed 11% 5% 11% 1% 3% 0.5% 5% 0.3% 7% 2%
------------------------- ---- ---- ---- ---- ---- ----- ---- ----- ----- ------ ------ -----
Net Sale per Test Analysis
Total revenue per
test (EGP) 140 140 141 102 170 101 168 97 -42% 155 110 -29%
====================== ==== ==== ==== ==== ==== ==== ==== ==== ===== ==== ==== =====
Total net sale per
test (EGP) 140 133 141 102 170 101 147 97 -34% 150 108 -28%
Conventional revenue
per test (EGP) 87 90 86 94 89 96 82 94 16% 86 94 9%
Covid-19-related
net sale per test
(EGP) 418 380 431 367 692 361 507 354 -30% 507 376 -26%
(18) 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.
(19) A reconciliation between revenue and net sales is available
earlier in this announcement.
Net Sales Analysis: Contribution by Patient Segment
Contract Segment (58% of Group revenue)
Conventional revenue at IDH's contract segment (86% of total contract
revenue) recorded a significant expansion of 32% year-on-year to book
EGP 1,784 million in FY 2022 on the back of year-on-year increases in
test volumes and revenue per test. Test volumes benefitted from several
new initiatives introduced by management over the course of 2022, including
the inauguration of a new loyalty program for the first time in the contract
segment as well as a normalisation of IDH's patient mix as Covid-19-related
volumes subsided. The immediate effects of the newly introduced loyalty
programme were significant, with average tests per patient increasing
14% year-on-year to reach 4.1 in FY 2022 from 3.6 tests per patient in
the prior year. Despite the sustained expansion in the contract segment's
conventional revenue, a steep 80% year-on-year decrease in Covid-19-related(20)
contract revenue resulted in an overall contraction of contract revenue
of 28% year-on-year in FY 2022.
Walk-in Segment (42% of Group revenue)
Meanwhile, at IDH's walk-in segment, conventional revenue (constituting
74% of total walk-in revenue) reported a 2% year-on-year increase on
the back of 9% year-on-year rise in the average revenue per test which
more than offset a decline in conventional test volumes at the segment.
On the other hand, Covid-19-related revenue at the segment declined 68%
year-on-year to record EGP 400 million. Similarly, Covid-19-related net
sales(21) at the walk-in segment also declined 68% year-on-year to EGP
337 million. As a result, total revenues at the walk-in segment declined
to EGP 1,519 million in FY 2022, 35% below last year's figure. Meanwhile,
net sales at the walk-in segment decreased to EGP 1,456 million in FY
2022, a 33% year-on-year decline.
(20) 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.
(21) Covid-19-related walk-in net sales is calculated as
Covid-19-related walk-in revenues excluding concession fees paid as
part of Biolab's agreements with QAIA, KHIA, and Aqaba Port.
Key Performance Indicators
Walk-in Segment Contract Segment Total
========================= ======================= ========================= =========================
FY21 FY22 Change FY21 FY22 Change FY21 FY22 Change
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Revenue (EGP mn) 2,339 1,519 -35% 2,885 2,086 -28% 5,225 3,605 -31%
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Net sales (EGP mn) 2,163 1,456 -33% 2,885 2,086 -28% 5,048 3,542 -30%
Conventional Revenue
(EGP mn) 1,100 1,119 2% 1,352 1,784 32% 2,452 2,903 18%
Total Covid-19-related
net sales (EGP mn) 1,063 337 -68% 1,533 302 -80% 2,596 639 -75%
Patients ('000) 3,464 2,592 -25% 6,853 6,129 -11% 10,317 8,721 -15%
% of Patients 34% 30% 66% 70%
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Revenue per Patient
(EGP) 675 586 -13% 421 340 -19% 506 413 -18%
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Net sales per Patient
(EGP) 624 562 -10% 421 340 -19% 489 406 -17%
------------------------- ------ ------ ------- ------- ------- ------- ------- ------- -------
Tests ('000) 8,693 7,313 -16% 24,966 25,372 2% 33,659 32,685 -3%
% of Tests 26% 22% 74% 78%
Conventional tests
('000) 6,948 6,462 -7% 21,594 24,523 14% 28,542 30,985 9%
Total Covid-19-related
tests ('000) 1,745 851 -51% 3,372 849 -75% 5,117 1,700 -67%
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Revenue per Test (EGP) 269 208 -23% 116 82 -29% 155 110 -29%
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Net Sales per Test
(EGP) 249 199 -20% 116 82 -29% 150 108 -28%
========================= ====== ====== ======= ======= ======= ======= ======= ======= =======
Test per Patient 2.5 2.8 12% 3.6 4.1 14% 3.3 3.7 12%
------------------------- ------ ------ ------- ------- ------- ------- ------- ------- -------
Revenue Analysis: Contribution by Geography
Egypt (80.3% of Group revenue)
The Company's Egyptian operations delivered solid year-on-year growth
in conventional revenues, driven by higher test volumes and average
revenue per test. On the other hand, Covid-19-related revenues declined
sharply as both demand and prices decreased throughout the year. Lower
pricing reflected increased competition. This was particularly visible
in the 70% year-on-year drop in PCR test volumes for FY 2022 and the
44% year-on-year decline in the average revenue per PCR test in FY 2022
compared to FY 2021.
On a three-month basis, IDH experienced similar results, with conventional
revenues from Egyptian operations increasing 25% year-on-year to record
EGP 642 million. Covid-19-related revenues also decreased significantly,
recording EGP 17 million for the quarter and contributing only 2.6%
to Egypt's overall revenues for Q4 2022.
Al-Borg Scan
Al-Borg Scan, IDH's Egyptian radiology venture, recorded an impressive
91% year-on-year increase in revenues to book EGP 85.2 million during
FY 2022. The sustained top-line expansion was primarily driven by a
93% year-on-year rise in case volumes (patients served rose 89% for
the year). The continued operational ramp-up during FY 2022 was supported
by the opening of two new branches over the twelve-month period, with
Al Borg Scan's network now standing at a total of six strategically
located branches spanning the full Greater Cairo area. Meanwhile, IDH
also successfully obtained the ACR (American College of Radiology) accreditation
or both Al Borg Scan's nuclear medicine (NucMed) and ultrasound units,
making Al-Borg Scan the first radiology centre in Africa, as well as
one of the few radiology facilities in the Middle East, to boast this
prestigious certification. Throughout the year, IDH supported new branch
openings with large-scale marketing campaigns which played a key role
in growing patient volumes at the venture.
House Calls
IDH's house call service in Egypt recorded revenue of EGP 517 million
in FY 2022, contributing to 18% of Egypt's revenues for the year, well
above the service's pre-pandemic contributions. The robust contribution
was recorded despite the fall in Covid-19-related revenue generated
through the house call service as infection rates in the country declined
significantly starting March.
Wayak
Wayak recorded a 29% year-on-year increase in the number of orders,
which reached 132 thousand for FY 2022 compared to 102 thousand orders
during FY 2021. Meanwhile, the venture's EBITDA losses declined a solid
33% year-on-year to record EGP 3.8 million compared to negative EGP
5.7 million in FY 2022.
Detailed Egypt Revenue Breakdown
EGP mn Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 % FY FY %
2021 2022 2021 2022 2021 2022 2021 2022 2021 2022
------------------------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Total Revenue 921 879 1,014 645 1,187 711 987 659 -33% 4,108 2,894 -30%
Conventional Revenue 507 549 510 591 573 662 513 642 25% 2,103 2,444 16%
Radiology Revenue 9 17 11 19 11 23 14 27 93% 45 86 91%
Total Covid-19-related
Revenue 414 330 504 54 614 49 474 17 -96% 2,005 449 -78%
Core Covid-19
revenue (PCR,
Antigen, Antibody) 277 274 366 41 567 40 416 12 -97% 1,626 367 -77%
Other Covid-19-related
revenue 137 56 138 13 47 9 58 5 -91% 379 83 -78%
------------------------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Contribution to Consolidated Results
Conventional revenue 55% 62% 50% 92% 48% 93% 52% 97% 51% 84%
Radiology revenue 1.1% 2.9%
Total Covid-19-related
revenue 45% 37% 50% 8% 52% 7% 48% 3% 49% 16%
Core Covid-19
revenue (PCR,
Antigen, Antibody) 30% 31% 36% 6% 48% 6% 42% 2% 40% 13%
Other Covid-19-related
revenue 15% 6% 14% 2% 4% 1% 6% 1% 9% 3%
Jordan (16.9% of Group revenue)
IDH's Jordanian subsidiary, Biolab, delivered conventional revenue year-on-year
growth of 2% in JOD terms (in EGP terms revenue was up 29% year-on-year)
supported by a marginal rise in conventional test volumes for the year.
On the other hand, similar to trends witnessed in Egypt, Biolab's Covid-19-related
revenue and net sales(22) declined substantially throughout the year.
As such, total revenues in JOD terms declined 50% year-on-year to record
JOD 23.9 million (in EGP terms revenues were down 37% year-on-year).
Meanwhile, total net sales in JOD terms declined 47% year-on-year in
FY 2022 to record JOD 21.1 million (down 37% year-on-year in EGP terms).
Biolab's full-year revenues were supported by EGP 253 million in Covid-19-related
revenue booked during the year. Meanwhile, Covid-19-related net sales
recorded by Biolab in FY 2022 stood at EGP 189 million. During the year,
revenue and net sales generated by Biolab's Covid-19-related offering
were boosted by the company's agreements with Queen Alia International
Airport (QAIA) Aqaba Port, and King Hussain International Airport (KHIA).
More specifically, Biolab generated EGP 140 million in net sales at
QAIA and EGP 17 million in net sales at the Aqaba Port. It is worth
noting that while the testing stations experienced heavy traffic during
the first two months of the year, the lifting of mandatory testing saw
volumes decline sharply starting March 2022. Biolab's agreements with
all three locations were terminated at the end of Q1 2022.
On a quarterly basis, Biolab reported exceptional conventional net sales
growth of 66% year-on-year to record EGP 109 million. Overall revenues
from Jordanian operations declined to EGP 116 million, a 58% decrease
compared to the final quarter of the previous year entirely driven by
a substantial 97% year-on-year decrease in Covid-19-related revenues.
In fact, contributions from the Covid-19-related offering stood at just
6% in Q4 2022 versus 76% in the same period of last year.
(22) Biolab's net sales for the period are calculated as
revenues excluding concession fees paid to QAIA and Aqaba Port as
part of their revenue sharing agreement.
Detailed Jordan Net Sales Breakdown
The table presents Alternative Performance Measures (APM) for
each period (further information available earlier in the
release)
EGP mn Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 % FY FY %
2021 2022 2021 2022 2021 2022 2021 2022 2021 2022
------------------------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Total Revenue 190 280 133 105 268 109 454 116 -63% 1,046 612 -41%
======================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Total Net Sales 190 217 133 105 268 109 277 116 -58% 869 549 -37%
Conventional Revenue 68 70 68 84 76 95 66 109 65% 278 359 29%
Total Covid-19-related
Net Sales (PCR
and Antibody) 122 147 65 21 192 14 211 7 -97% 591 190 -68%
Contribution to Consolidated Results
Conventional Revenue 36% 32% 51% 80% 28% 87% 24% 94% 32% 65%
Total Covid-19-related
Net Sales (PCR
and Antibody) 64% 68% 49% 20% 71% 13% 76% 6% 68% 35%
Nigeria (2.2% of revenue)
The Company's Nigerian subsidiary, Echo-Lab, recorded an impressive
year-on-year revenue growth rate in NGN terms of 24% in FY 2022 as
average revenue per test increased 15% year-on-year in NGN terms and
tests performed rose 8% versus FY 2021.
Sustained growth in Echo-Lab's average revenue per test reflects the
increase in the number of patients visiting the venture to undergo
the generally higher-priced CT and MRI exams. It is worth highlighting
that the termination of operational activities at under-performing
branches in Q4 2021 impacted results in the first quarter of 2022.
Meanwhile, the launch of two new branches during the second quarter
of 2022 generated immediate positive contributions for Echo-Lab, boosting
revenues for the second half of the year. Echo-Lab now boasts 12 fully
operational branches across Nigeria. In EGP terms, revenue for the
year rose 47% to record EGP 79 million.
With regards to Q4 2022, Echo-Lab reported year-on-year revenue growth
in NGN terms of 24% on the back of a 34% rise in total tests performed
for the quarter. In EGP terms, revenue rose 80% year-on-year to reach
EGP 24 million.
Sudan (0.6% of revenue)
IDH's operations in Sudan booked revenue of SDG 547 million in FY 2022,
up 63% year-on-year on the back of a 114% rise in the average revenue
per test in SDG terms. In EGP terms, revenue recorded a 22% rise to
reach EGP 20 million. Throughout the year, IDH shut down two underperforming
branches in the country, taking the total number of operating branches
to 17 as at year-end 2022.
On a quarterly basis, revenue at the Group's Sudanese subsidiaries
increased by 5% year-on-year in SDG terms and by 24% year-on-year in
EGP terms.
Revenue/Net Sales Contribution by Country
The table presents Alternative Performance Measures (APM) for
each period (further information available earlier in the
release)
1Q 1Q 2Q 2Q 3Q 3Q 4Q 4Q FY FY
2021 2022 2021 2022 2021 2022 2021 2022 % 2021 2022 %
====================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Egypt Revenue
(EGP mn) 921 879 1,014 644 1187 711 987 659 -33% 4,108 2,894 -30%
Conventional
(EGP mn) 507 549 510 591 573 662 513 642 25% 2,103 2,444 16%
Covid-19-related
(EGP mn) 414 330 504 53 614 49 474 17 -96% 2,005 450 -78%
Egypt Contribution
to IDH Revenue 81.5% 74.5% 87.2% 83.2% 80.6% 83.9% 67.7% 82.0% 78.6% 80.3%
Egypt Contribution
to IDH Net Sales 81.5% 78.7% 87.2% 83.3% 80.6% 84.0% 77.0% 81.9% 81.4% 81.7%
====================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Jordan Revenue
(EGP mn) 190 281 134 106 269 109 454 116 -74% 1,046 612 -42%
Jordan Net Sales
(EGP mn) 190 217 133 105 268 109 277 116 -58% 869 549 -37%
Conventional
(EGP mn) 68 70 68 84 76 95 66 109 65% 278 359 29%
Covid-19-related
(EGP mn) 122 147 65 21 192 14 211 7 -97% 591 190 -68%
Jordan Revenues
(JOD mn) 8.6 12.5 6.1 4.0 12.2 4.0 20.6 3.4 -84% 47.5 23.9 -50%
Jordan Net Sales
(JOD mn) 8.6 9.6 6.0 4.0 12.2 4.0 12.6 3.4 -73% 39.4 21.0 -47%
Jordan Revenue
Contribution
to IDH Revenue 16.8% 23.8% 11.5% 13.7% 18.3% 12.9% 31.1% 14.4% 20.0% 17.0%
Jordan Net Sales
Contribution
to IDH Net Sales 16.8% 19.4% 11.5% 13.7% 18.2% 12.9% 21.6% 14.4% 17.2% 15.5%
====================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Nigeria Revenue
(EGP mn) 12 15 13 19 15 21 13 24 85% 53 79 47%
Nigeria Revenue
(NGN mn) 302 371 330 416 390 473 352 438 24% 1,374 1,698 24%
Nigeria Contribution
to IDH Revenue 1.1% 1.3% 1.1% 2.5% 1.0% 2.5% 0.9% 3.0% 1.0% 2.2%
Nigeria Contribution
to IDH Net Sales 1.1% 1.3% 1.1% 2.5% 1.0% 2.5% 1.0% 3.0% 1.1% 2.2%
Sudan Revenue
(EGP mn) 6.8 5.7 2.5 4.8 2.9 4.3 4.5 5.5 22% 16.7 20.3 22%
Sudan Revenue
(SDG mn) 61 152 67 137 82 128 125 130 4% 335 547 63%
Sudan Contribution
to IDH Revenue 0.6% 0.5% 0.2% 0.6% 0.2% 0.5% 0.3% 0.7% 0.3% 0.6%
Sudan Contribution
to IDH Net Sales 0.6% 0.5% 0.2% 0.6% 0.2% 0.5% 0.4% 0.7% 0.3% 0.6%
====================== ====== ====== ====== ====== ====== ====== ====== ====== ===== ====== ====== =====
Patients Served and Tests Performed by Country
FY 2021 FY 2022 Change
================================= ======== ======== =======
Egypt Patients Served (mn) 8.5 7.6 -11%
Egypt Tests Performed (mn) 29.7 29.5 -1%
Conventional tests (mn) 25.9 28.3 9%
Covid-19-related tests (mn) 3.8 1.2 -68%
================================= ======== ======== =======
Jordan Patients Served (k) 1,627 890 -45%
Jordan Tests Performed (k) 3,530 2,789 -21%
Conventional tests (k) 2,228 2,243 1%
Covid-19-related tests (k) 1,302 546 -58%
Nigeria Patients Served (k) 153 149 -3%
Nigeria Tests Performed (k) 281 303 8%
Sudan Patients Served (k) 70 70 N/A
Sudan Tests Performed (k) 182 139 -24%
================================= ======== ======== =======
Total Patients Served (mn) 10.3 8.7 -16%
Total Tests Performed (mn) 33.6 32.7 -3%
Branches by Country
31 December 31 December Change
2021 2022
================ ============ ============ =============
Egypt 452 500 48
================ ============ ============ =============
Jordan 21 23 2
================ ============ ============ =============
Nigeria 10 12 2
================ ============ ============ =============
Sudan 19 17 -2
================ ============ ============ =============
Total Branches 502 552 50
================ ============ ============ =============
Cost of Sales(23)
Cost of sales declined 11% year-on-year in FY 2022 to reach EGP 2,143
million. Similarly, cost of net sales declined 7% year-on-year to record
EGP 2,080 million in FY 2022 reflecting a fall in raw material outlays
as net sales dropped. On a quarterly basis, IDH recorded cost of sales
(identical in value between IFRS and APM measures) of EGP 524 million
in Q4 2022, 19% below last year's figure.
(23) Cost of net sales is calculated as cost of sales (IFRS) for the
period excluding commission fees paid to QAIA and Aqaba Port by Biolab
as part of its revenue sharing agreements with the two terminals. According
to IFRS 15, cost of sales recorded EGP 2,143 million in FY 2022, down
11% year-on-year.
Cost of Net Sales Breakdown as a Percentage of Net Sales % of Revenue % of Net Sales
============================= ================== ==================
FY 2021 FY 2022 FY 2021 FY 2022
============================= ======== ======== ======== ========
Raw Materials -18.9% -20.4% 19.6% 20.7%
============================= ======== ======== ======== ========
Wages & Salaries -12.2% -17.0% 12.6% 17.3%
============================= ======== ======== ======== ========
Depreciation & Amortisation -4.1% -7.9% 4.2% 8.0%
============================= ======== ======== ======== ========
Other Expenses -7.8% -12.4% 8.1% 12.6%
============================= ======== ======== ======== ========
Total -43.0% -57.7% 44.5% 58.6%
============================= ======== ======== ======== ========
Raw material costs including the cost of specialized analysis at other
laboratories (35% of consolidated cost of sales), made up the lion share
of total cost of net sales recording EGP 734 million in FY 2022, down
26% year-on-year. Although raw material costs declined in absolute terms,
as a percentage of net sales raw material expenses increased to 20.7%
in FY 2022 versus 19.6% in FY 2021. The increase primarily reflects
high raw material costs incurred in the second half of the year, and
particularly in the final quarter, in IDH's home market of Egypt following
the multiple devaluations of the EGP over the course of 2022. The increase
in raw material costs was widespread impacting both IDH's conventional
and Covid-19-related test offering. It is also worth noting that the
during the first quarter IDH's raw material to net sales ratio increased
significantly reflecting a large decline in the average selling price
of Covid-19-related tests during the quarter.
Wages and salaries including employee share of profits (29% share of
consolidated cost of sales) declined 3% year-on-year, recording EGP
613 million for FY 2022 and representing the second largest share of
consolidated cost of net sales. The decrease for the year is attributable
to lower employee share of profits, which declined reflecting lower
net profits for the twelve-month period. Direct wages & salaries (excluding
employee profit share), however, increased 17% year-on-year due to staffing
requirements at new branches and annual salary increases for existing
employees. It is worth noting that there was a 9% quarter-on-quarter
increase in direct wages and salaries (excluding profit share) in the
final three months of the year versus Q3 2022, in part reflecting the
translation effect in Jordan (EGP 9 million).
Direct depreciation and amortization costs (14% of consolidated cost
of sales) for the year recorded EGP 285 million for FY 2022, a 33% year-on-year
increase from the EGP 214 million recorded in FY 2021. Depreciation
and amortization expenses increased on the back of incremental depreciation
of new branches (mainly new radiology branches) (IFRS 16 right-of-use
assets), as the Company added 50 new branches during FY 2022.
Other expenses (21% of consolidated cost of sales) for the period increased
by 10% year-on-year to EGP 447 million. The year-on-year increase was
primarily attributable to higher branch cleaning and repair & maintenance
costs which together increased 41% year-on-year and made up 29% of total
other expenses for the year. This reflected both the roll out of new
branches in the year (+50) as well as the introduction of a new model
for the maintenance and cleaning of new and existing branches.
Gross Profit
Gross profit booked EGP 1,462 million for FY 2022, down 48% year-on-year.
IDH's gross profit margin on revenue stood at 41% in FY 2022 versus
54% in FY 2021. Similarly, IDH's gross profit margin(24) on net sales
recorded 41% FY 2022 versus 56% in FY 2021 when strong results from
IDH's Covid-19-related segment had boosted gross profitability. It is
worth highlighting that gross profit in absolute terms is identical
for both APM and IFRS in both FY 2022 and FY 2021.
Lower gross profitability for the year principally reflected a post-Covid-19
normalisation with Covid-19-related business declining sharply in FY
2022. Gross profitability was also weighed down by the aforementioned
increases in direct salaries and wages, as well as higher direct depreciation
expenses following the new branch additions. Gross profit was also partially
impacted by an increase in raw material prices in the second half of
the year reflecting the devaluation of the Egyptian pound (EGP) throughout
the year.
Gross profit for the fourth quarter recorded EGP 281 million, down 56%
year-on-year as gross profit normalized post-Covid-19. Gross profit
margin on net sales stood at 35% in Q4 2022 versus 50% in Q4 2021 (GPM
on revenue recorded 35% versus 44% last year) mainly driven by a post-Covid-19
normalization as well as an increase in wages and salaries and other
expenses.
(24) It is important to note that while in absolute terms the Gross
Profit figure is identical when using IFRS or APM, its margin differs
between the two sets of performance indicators.
Selling, General and Administrative Expenses
Total SG&A outlays amounted to EGP 608 million for the full year, an
18% year-on-year increase from the 513 million recorded in FY 2021.
Increases in SG&A expenses for the year are attributable to:
* An increase in accounting fees related to the
external auditor "PWC" which reached to EGP 38
million in FY 2022 compared to EGP 29 million in FY
2021, as well as a one-off legal consulting fee paid
by the Company during FY 2022. Both items were
impacted by the multiple devaluations of the EGP.
* Increased advertising expenses, which rose by 28%
compared to FY 2021, mainly related to marketing
efforts launched to support Al-Borg Scan's ramp-up
and to boost operations at newly launched branches.
Due to the economic circumstances faced across the Company's markets
of operation, IDH has booked higher provisions reflecting an increase
in the period of time it takes to collect from debtors as well as a
higher provision rate being applied to older balances.
Selling, General and Administrative Expenses FY 2021 FY 2022 Change
=============================== ======== ======== =======
Wages & Salaries 192 197 3%
=============================== ======== ======== =======
Accounting and professional
services fees 114 130 14%
=============================== ======== ======== =======
Market - Advertisement
expenses 97 123 27%
=============================== ======== ======== =======
Other Expenses 65 90 38%
=============================== ======== ======== =======
Depreciation & Amortisation 25 33 32%
=============================== ======== ======== =======
Impairment loss on
trade and other receivable 25 30 20%
=============================== ======== ======== =======
Travelling and transportation
expenses 11 17 55%
=============================== ======== ======== =======
Other income (16) (12) -25%
=============================== ======== ======== =======
Total 513 608 18%
=============================== ======== ======== =======
EBITDA
IDH's EBITDA(25) came in at EGP 1,150 million in FY 2022, down 54% from
the EGP 2,501 million recorded in the previous twelve months. Meanwhile,
adjusted EBITDA,(26) which excludes one-off expenses incurred by the
Group in FY 2021 and FY 2022, recorded EGP 1,172 million in FY 2022
compared to EGP 2,530 in FY 2021. Adjusted EBITDA margin on revenues
recorded 33% in FY 2022 versus 48% last year. Meanwhile, EBITDA margin
on net sales recorded 33% for the year down from 50% in FY 2021.(27)
Lower EBITDA level profitability is attributable to lower gross profitability
for the year coupled with the aforementioned increase in SG&A expenses
and particularly marketing outlays, and the launch of a new patient
loyalty programme. It is important to mention that the absolute values
of EBITDA and Adjusted EBITDA are identical for both IFRS and APM measures.
In line with the same trend witnessed on a full-year basis, Adjusted
EBITDA for Q4 2022 declined 63% compared to the same period of 2021
to record EGP 197 million.
(25) EBITDA is calculated as operating profit plus depreciation and
amortization and minus one-off fees incurred in FY 2021 related to the
Company's EGX listing completed in May 2021.
(26) Adjusted EBITDA is calculated as EBITDA excluding one-off expenses
incurred by the Group. These include one-off listing expenses in FY
2021 of EGP 29.0 million related to IDH's dual listing on the EGX, and
one-off transaction expenses in FY 2022 of EGP 22.3 million related
to IDH's aborted acquisition in Pakistan. Adjusted measures eliminate
the one-off impacts of items in the year to provide a measure of underlying
performance which is regularly utilized by management.
(27) It is important to note that while in absolute terms the EBITDA
figure is identical when using IFRS or APM, its margin differs between
the two sets of performance indicators.
EBITDA by Country
In Egypt, came in at EGP 1,031 million, down 53% year-on-year. Similarly,
Adjusted EBITDA recorded EGP 1,053 million for FY 2022, down 52% year-on-year.
EBITDA margin on revenue (IFRS and APM figures are identical) in Egypt
stood at 36% for the full year, declining from the high base of 54%
recorded in FY 2021. Adjusted EBITDA from IDH's Egyptian operations
contributed 90% to the Company's consolidated Adjusted EBITDA in FY
2022.
Biolab, IDH's Jordanian subsidiary, reported an EBITDA contraction of
59% in EGP terms and 63% in JOD terms. Similarly, EBITDA margin was
down both on revenues and net sales (IFRS and APM). Lower EBITDA profitability
reflected lower gross profits following a post-Covid-19 normalisation,
as well as increased expenses at the Company's testing booths in QAIA
and Aqaba Port.
In Nigeria, EBITDA losses recorded EGP 17.1 million for FY 2022, widening
significantly from EBITDA losses in FY 2021 despite the strong revenue
growth recorded by the venture in the past year. Widening EBITDA losses
were largely attributable to rising Diesel costs which posted a three-fold
year-on-year increase in FY 2022 from NGN 250 per litre in FY 2021 to
NGN 805 per litre in FY 2022. It is worth noting that Echo-Lab's branches
in Nigeria require electricity for which the company utilises its own
diesel powered generators, and therefore the rise in diesel prices has
a significant impact on the business.
In Sudan, the Company booked an EBITDA loss of SDG 1.9 million, a significant
improvement from the EBITDA losses of SDG 47 million booked in FY 2021.
In EGP terms, EBITDA recorded a loss of EGP 196 thousand in FY 2022,
up from the EGP 500 thousand loss recorded in FY 2021.
Regional EBITDA in Local Currency Mn FY 2021 FY 2022 Change
---------------------------------- --- ----- -------- -------- -------
Egypt EBITDA EGP 2,177 1,031 -53%
EBITDA margin on revenue 53% 36%
Egypt Adjusted EBITDA(28) EGP 2,206 1,053 -52%
Adj. EBITDA Margin on net sales 54% 36%
Jordan JOD 15.0 5.5 -63%
Margin on net sales (APM) 38% 26%
Margin on revenues (IFRS) 32% 23%
Nigeria NGN -179 -337 88%
Margin on revenue -13% -20%
Sudan SDG -10 -1.9 -81%
Margin on revenue -3% -0.3%
(28) Adjusted EBITDA in Egypt is calculated as EBITDA excluding one-off
expenses incurred by the Group. These include one-off listing expenses
in FY 2021 of EGP 29.0 million related to IDH's dual listing on the
EGX, and one-off transaction expenses in FY 2022 of EGP 22.3 million
related to IDH's aborted acquisition in Pakistan.
Interest Income / Expense
IDH recorded interest income of EGP 95 million for FY 2022, a 16% decrease
from the EGP 113 million recorded during FY 2021. Lower interest income
came on the back of lower cash balances over the twelve-month period
as IDH paid out a record cash dividend for FY 2021.
Interest expense booked EGP 136 million for the full year, increasing
15% year-on-year from EGP 118 million in 2021. The increase in attributable
to:
* Higher interest on lease liabilities related to IFRS
16 following the addition of new branches and the
renewal of medical equipment agreements with the
Group's main equipment suppliers.
* Fees amounting to EGP 12.5 million related to the US$
45 million facility with the International Finance
Corporation (IFC) granted in May 2021 and the US$ 15
million IFC syndicated facility from Mashreq Bank in
December 2021. Fees include commitment and
supervisory fees. It is worth nothing that fees
related to the IFC facility decreased 38%
year-on-year.
* Higher interest expenses following the CBE decision
to increase rates by 800 bps over the course of FY
2022. It is worth highlighting that IDH interest
bearing debt balance increased by EGP 18.3 million
year-on-year to reach EGP 116 million as at 31
December 2022 related to Ahly United Bank loan
granted to finance Al Borg-Scan expansionary plan.
The loan will be fully repaid in Jan 2027.
* Interest expenses related to IDH's Deferral Agreement
with Hena Holdings Ltd and Actis IDH Limited for
disbursement of the Company's FY 2021 dividend
amounting to EGP 3.4 million.
Interest Expense Breakdown EGP mn FY 2021 FY 2022 Change
===================================== ======== ======== =======
Interest on Lease Liabilities
(IFRS 16) 59.5 73.4 23%
===================================== ======== ======== =======
Interest Expenses on Leases 8.8 21.4 143%
===================================== ======== ======== =======
Bank Charges 20.0 12.9 -36%
===================================== ======== ======== =======
Loan-related Expenses
on IFC facility 20.3 12.5 -38%
===================================== ======== ======== =======
Interest Expenses on Borrowings(29) 9.4 11.9 27%
===================================== ======== ======== =======
Shareholder Dividend Deferral - 3.4 N/A
Agreement(30)
===================================== ======== ======== =======
Total Interest Expense 118.0 135.5 15%
===================================== ======== ======== =======
Foreign Exchange
The Company recorded a foreign exchange gain of EGP 188 million during
FY 2022 compared to a net foreign exchange loss of EGP 18 million recorded
in FY 2021.
Fair Value through Profit and Loss (FVTPL)
IDH booked a FVTPL loss related to Global Depository Receipts (GDRs)
of EGP 143 million in FY 2022. The loss is associated with transactions
undertaken by the Company to secure the necessary USD balance to fulfil
its FY 2021 dividend obligations to shareholders. As part of its strategy
to secure the necessary USD balance, the Company purchased GDRs in EGP
on the Egyptian Exchange (EGX) to later sell them on the London Stock
Exchange (LSE) for USD.
Taxation
Tax expenses (income tax and deferred tax) recorded in FY 2022 were
EGP 327 million compared to EGP 740 million in FY 2021. IDH's effective
tax rate stood at 38% in FY 2022 versus 33% in FY 2021. There is no
tax payable for IDH's two companies at the holding level, while tax
was paid on profits generated by its operating subsidiaries (Egypt 22.5%,
Jordan 21%, Nigeria 30% and Sudan 30%). The increase in effective tax
rate is mainly due to the increase in non-deductible expenses within
the Group.
Taxation Breakdown by Region EGP Mn FY 2021 FY 2022 Change
==================== ======== ======== =======
Egypt 704.8 274.3 -61%
==================== ======== ======== =======
Jordan 54.0 21.8 -59%
==================== ======== ======== =======
Nigeria -20.0 30.6 N/A
==================== ======== ======== =======
Sudan 1.0 0.4 -60%
==================== ======== ======== =======
Total Tax Expenses 739.8 327.1 -56%
==================== ======== ======== =======
Net Profit
IDH's consolidated net profit for the year booked EGP 527 million, a
65% year-on-year decrease. The Company's net profit margin on revenue
stood at 15% versus 29% in the prior year. Net profit margin on net
sales also stood at 15% compared to 30% in FY 2021. It should be highlighted
that EGP 22.3 million were recorded as transaction costs related to
the Pakistan deal.
Meanwhile, excluding FVTPL losses related to securing the USD balance
required for dividend obligations and the one-off item related to Pakistan
transaction fees, IDH would have recorded a net profit of EGP 692 million
for FY 2022, down 54% year-on-year and with a margin on revenue of 19%
and on net sales of 20%.
On a quarterly basis, net profit decreased 64% year-on-year, reaching
EGP 123 million for Q4 2022. It is worth highlighting that net profit
in absolute terms is identical for both IFRS and APM measures on both
a quarterly and full-year basis.
(29) Interest expenses on medium-term loans include EGP 11.6
related to the Group's facility with Ahli United Bank Egypt (AUBE)
& interest expense amounting to EGP 3.4 million was booked
related to shareholders dividends deferral agreement, and EGP 0.3
million related to CIB facility. Meanwhile, the Group's facility
with the Commercial International Bank (CIB) was fully repaid as of
5 April 2022.
(30) As announced on 27 July 2022, as part of IDH's agreement
with Hena Holdings Ltd and Actis IDH Limited (its two largest
shareholders) in consideration for the two shareholders agreeing to
defer their right to receive their pro rata share of the Dividend
Payment, IDH agreed to pay to each interest on the outstanding
amounts due at the rate of 10% per annum (with interest accruing on
a daily basis) for a two-month period starting 27 July 2022.
Payment to both shareholders was successfully completed on 18
August 2022.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH recorded gross property, plant and equipment (PPE) of EGP 2,219
million as at year-end 2022, up from the EGP 1,659 held as at year-end
2021. The rise in CAPEX as a share of net sales during 2022 is partially
attributable to the EGP 138 million spent on new radiology branches
in Egypt, as well as the EGP 190 million translation effect (associated
with Jordan, Sudan, and Nigeria) which resulted from the Egyptian Pounds
devaluation throughout the past twelve months.
Total CAPEX Addition Breakdown EGP Mn FY 2022 % of Net Sales
============================================= ======== ===============
Leasehold Improvements/new branches 231.0 6.5%
============================================= ======== ===============
Al-Borg Scan Expansion 138.5 3.9%
============================================= ======== ===============
Total CAPEX Additions Excluding Translation 369.5 10.4%
============================================= ======== ===============
Accounts Receivable and Provisions
As at year-end 2022, IDH's accounts receivable stood at EGP 432 million
versus EGP 371 million as at year-end 2021. Meanwhile, receivables'
Days on Hand (DOH) booked 124 days versus 107 days in 2021. The increase
in DoH for the year came reflected a rise in collection periods with
corporate customers during FY 2022 due to challenging economic conditions
faced in Egypt throughout the past twelve months.
Provision for doubtful accounts for FY 2022 stood at EGP 30 million,
a 21% year-on-year increase from the EGP 25 million booked during FY
2021. The rise in provisions reflects an increase in collection periods
from debtors as well as a higher provision rate being applied to older
balances.
Inventory
As at 31 December 2022, IDH's inventory balance stood at EGP 265 million,
up from the EGP 223 million balance as at year-end 2021. Simultaneously,
Days Inventory Outstanding (DIO) increased to 127 days as at 31 December
2022, up from 61 days as at year-end 2021. The increase in DIO is a
result of management decisions to proactively accumulate inventory as
part of its strategy to hedge against inflation as a result of the ongoing
devaluation of the Egyptian Pound.
Cash and Net Debt/Cash
Cash balances as at year-end 2022 decreased to EGP 816 million, a 65%
drop compared to the EGP 2,350 million recorded as at 31 December 2021.
The decrease in cash balances is due to the distribution of FY 2021
dividend obligations to shareholders in July and August 2022.
EGP million 31 Dec 31 Dec
2021 2022
================== ======= =======
T-Bills 1,461 293
================== ======= =======
Time Deposits 628 123
================== ======= =======
Current Accounts 239 382
================== ======= =======
Cash on Hand 22 18
================== ======= =======
Total 2,350 816
================== ======= =======
IDH's net debt(31) balance as at year-end 2022 stood at EGP 373 million,
compared to a net cash balance of EGP 1,483 as at year-end 2021. For
disclosures related to credit risk please refer to note 5 in the Company's
Financial Statements.
EGP million 31 Dec 31 Dec 31 Dec
2021 2022 2021
========================================= ======= ======= =======
Cash and Financial Assets at Amortised
Cost(32) 2,350 816 2,350
========================================= ======= ======= =======
Lease Liabilities Property (532) (727) 106
========================================= ======= ======= =======
Total Financial Liabilities (Short-term
and Long-term) (229) (335)
========================================= ======= ======= =======
Interest Bearing Debt ("Medium
Term Loans")(33) (106) (127)
========================================= ======= ======= =======
Net Cash/(debt) Balance 1,483 (373) 1,483
========================================= ======= ======= =======
Note: Interest Bearing Debt includes accrued interest for each period.
(31) 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.
(32) 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 60 million in FY 2022, versus
EGP 148 million as at year-end 2021. Meanwhile, treasury bills not accessible
for over 3 months stood at EGP 107 million in FY 2022, down from EGP
1,311 million in FY 2021.
(33) IDH's interest bearing debt as at 31 December 2022 included EGP
116 million to its facility with Ahli United Bank Egypt (AUBE) (outstanding
loan balances are excluding accrued interest for the period).
Lease liabilities and financial obligations on property increased to
EGP 727 million as of 31 December 2022, primarily due to the addition
of new branches to IDH's networks throughout the year (+50 new branches).
Meanwhile, financial obligations related to equipment increased to EGP
335 million as of year-end 2022, mainly due to the renewal of Company
contracts as well as equipment upgrades completed throughout the year.
Total financial obligations related to equipment also encompasses EGP
212 million spent on Al Borg Scan's equipment.
Finally, interest bearing debt increased to EGP 127 as of 31 December
2022. The rise is related to additional usage of MTL to finance Al Borg-Scan
expansions. It is worth highlighting that interest-bearing debt for
both periods included accrued interest. It is also important to note
that IDH's facility with the Commercial International Bank (CIB) has
been fully repaid as of April 2022.
Liabilities
Accounts Payable(34)
As at 31 December 2022, the Company's accounts payable balance stood
at EGP 270 million, a decrease from the EGP 311 million recorded as
at 31 December 2021. The Group's Days Payable Outstanding (DPO), on
the other hand, increased to 151 days as at year-end 2022 compared to
93 days as at 31 December 2021. The increase in DPO was primarily driven
by lower Covid-19-related kits demand.
Put Option
The put option current liability is related to the option granted in
2011 to Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The
put option is in the money and exercisable since 2016 and is calculated
as 7 times Biolab's LTM EBITDA minus net debt. Biolab's put option liability
decreased following the significant decline in the venture's EBITDA
for the period.
The put option non-current liability is related to the option granted
in 2018 to the International Finance Corporation from Dynasty - shareholders
in Echo Lab - and it is exercisable in 2024. The put option is calculated
based on fair market value (FMV).
(34) Accounts payable is calculated based on average payables at the
end of each year.
iii. Principal Risks, Uncertainties & Their Mitigation
As in any corporation, IDH has exposure to risks and
uncertainties that may adversely affect its performance. IDH
Chairman Lord St John of Bletso has emphasised that ownership of
the risk matrix is sufficiently important to the Group's long-term
success that it must be equally shared by the Board and senior
management. While no system can mitigate every risk - and some
risks, as at the country level, are largely without potential
mitigants - the Group has in place processes, procedures and
baseline assumptions that provide mitigation. The Board and senior
management agree that the principal risks and uncertainties facing
the Group include:
Specific Risk Mitigation
Country/regional risk - Economic Overall, management notes that IDH
& Forex has a resilient and defensive business
model and that the business continued
Egypt: The Group is subject to the to grow year-on-year through two
economic conditions of Egypt specifically revolutions, as well as under the
and, to a lesser extent, those of extremely difficult operating conditions
the other geographies. Egypt accounted faced between 2016 and 2022, during
for c.80% of our revenues in 2022 which time the country faced the
(2021: c.81%) and 90% of adjusted Covid-19 pandemic and several rounds
EBITDA (2021: 87%). of currency devaluation.
While the Russia-Ukraine war has IDH has historically taken a proactive
had significant economic repercussions approach to shield the business from
on countries all over the world, exchange rate fluctuations. As part
Egypt's dependency on both countries of IDH's mitigation strategy the
for wheat imports and tourism revenues, Company secures contracts with tenors
its high import bill, the widespread ranging from five to seven years
outflow of capital from emerging (with semi-fixed FX rates) and purchases
markets at the start of the war, laboratory test kits on contract
and the tight monetary conditions with volume-linked pricing. Moreover,
globally have left the country in thanks to IDH's significant volume
a particularly weak position. and scale, and its long-lasting supplier
As part of the government's plans relationships, the Company is in
to boost FX reserves and investor a favourable position to negotiate
confidence, the country finalised test kit prices with all its major
a US$ 3 billion loan from the IMF suppliers.
in December 2022. A central condition During FY 2022, only 12% of IDH's
within the agreement was the move cost of supplies (c.2% of revenues)
to a flexible exchange rate in the were payable in USD, minimising the
country. As a result of multiple Group's exposure to foreign exchange
devaluations throughout the year, (FX) scarcity and, in part, the volatility
in March 2023, the EGP was down 97% of the EGP. During the first part
year-on-year recording an EGP/US$ of 2022, the Group had secured its
rate of 30.9 in March 2023 from 15.7 stock at pre-devaluation rates, helping
in early March 2022 (prior to the to further minimise the impact of
first devaluation). Despite this, the devaluation. Moreover, during
pressure on the currency persists the course of 2022, the Company was
stemming from a strong US$, a US$ able to renegotiate supplier prices
shortage in the market, and further at a lower rate than the devaluation
speculation of a weaker currency. rates, which resulted in an overall
As a result of the devaluation, rising increase in the proportion of raw
global food and energy prices, and materials to sales of 20.7%, compared
import restrictions imposed throughout to 19.6% in 2021. Going forward,
most of 2022 by the CBE, Egypt recorded IDH's management will continue to
high and rising inflation throughout leverage its long-lasting relationships
2022, with inflation hitting a five-year with test kit providers to secure
high in January 2023 of 25.8%. In additional stock at competitive prices,
an attempt to rein in inflation, shielding our business from the impacts
the central bank has raised rates of rising inflation and the EGP devaluation.
by 800 bps higher since the beginning In an effort to mitigate high inflationary
of 2022. environment in Nigeria, management
is increasing prices and focusing
Foreign currency risk: The Group on cutting unnecessary cost.
is exposed to foreign currency risk The Group is closely monitoring the
on the cost side of the business. economic situation in Sudan and has
The majority of supplies it acquires implemented several price increases
are paid in EGP, but given they are to keep in step with inflationary
imported, their price will vary with pressures. IDH is also working to
the rate of exchange between the limit expatriate salaries and foreign
EGP and foreign currencies. In addition, currency needs by increasing dependence
a portion of supplies are priced on local hires.
and paid in foreign currencies.
Nigeria: Depreciation of the NGN
would make imported products and
raw materials more expensive and
would reduce Nigeria's contribution
to consolidated Company revenues.
Meanwhile, inflation in Nigeria surged
in 2022, reaching 21.3% in December
2022. Higher price levels were driven
by the sharp rise in diesel prices,
which increased from NGN 250 per
litre in 2021 to NGN 805 per litre
in 2022.
Sudan: Following substantial currency
devaluation in Sudan during 2018,
the currency lost 85% of its value.
In 2019, the SDG's official rate
versus the US$ remained relatively
stable at 45.11 as at 31 December
according to the Central Bank of
Sudan. However, in July 2020, the
Sudanese government announced it
would devalue its currency and cut
fuel subsidies due to a huge budget
deficit and an economic crisis aggravated
by the Covid-19 pandemic. In February
2021, the currency was devalued again,
and fuel subsidies were completely
removed in June 2021, which led to
a further increase in consumer prices.
In March 2022, the Sudanese government
floated the SDG, which saw the currency
end 2022 at a rate of 571.5 versus
the US$. Sudan's headline inflation
rate has been gradually declining
throughout 2022, ending the year
at a rate of 87.3%, down from 259.8%
in January 2022.
-------------------------------------------------
Country risk - Political & Security It is important to note that in FY
2022 Sudan made up just 0.6% of IDH's
Sudan: In 2019, severe political revenues. Moreover, while nationwide
unrest and protests led the military protests do affect patient and test
to remove long-time president Omar volumes in Sudan, the diagnostic
Al-Bashir. Following his removal, industry is relatively immune given
the military signed a power-sharing the inelastic demand for healthcare
agreement with an opposition coalition services. Additionally, management
in July 2019, with the aim of eventually in Sudan has been successful in offsetting
transferring power to a civilian the effect of lower volumes due to
government. On 25 October 2021, Sudan's protest with higher pricing, and
Prime Minister, Abdalla Hamdok, was in 2019, 2020, 2021, and 2022, the
detained by armed forces, and Army geography recorded solid year-on-year
chief General Abdel Fattah al-Burhan revenue growth in SDG terms. In FY
announced that the civilian government 2022, IDH's Sudanese operations also
and other transitional bodies have returned to growth in EGP terms.
been dissolved, leading to mass rallies IDH's management on the ground continues
and civilian unrest. The protests to monitor the evolving situation
led to the temporary closure of all and has put in place an all-encompassing
of IDH's Sudanese branches. All locations mitigation strategy to safeguard
were reopened within a few days and staff and patient wellbeing and protect
quickly gained back momentum. On IDH's operations in case of any future
21 November 2021, Mr. Hamdok took unrest.
office once again but later stepped It is worth highlighting that in
down on 2 January 2022. On 5 December FY 2022, Nigeria made up just 2.2%
2022, a new deal was signed between of IDH's consolidated revenues. Moreover,
military generals and political parties while nationwide security challenges
that would pave the way for a civilian-led do affect patient and test volumes
transition. However, civil unrest in the country, the diagnostic industry
and protests are continuing as the is relatively immune given the inelastic
country's future remains unclear. demand for healthcare services. This
The situation in Sudan is volatile, is showcased by the healthy rise
and continued civil unrest could in both patient and test volumes
adversely affect IDH's business. that has been recorded by the venture
It is worth noting that in December since IDH's takeover of operations
2020, the US removed Sudan from its in 2018. While security challenges
States Sponsors of Terrorism list. and ethnic tensions are relatively
The change in the country's designation hard to mitigate, IDH is continuously
is expected to allow Sudan to have evaluating its processes to safeguard
access to international funds and its employees and operations. Overall,
investment, including the International IDH applies rigorous standards to
Monetary Fund, paving the way for evaluating all aspects of its business
the country's economic growth. processes in Nigeria to ensure it
Nigeria: The country faces security is well-equipped to respond to the
challenges on several fronts, including evolving situation.
re-emerging ethnic tensions and resurgent
attacks by Islamist militants in
the northeast. Against the backdrop
of a sluggish economy and the slow
implementation of reforms, mounting
discontent could translate into further
social unrest.
Following the disbandment of the
special division known as Special
Anti-Robbery Squad (SARS) by the
Nigerian government in October 2020,
protests have decreased significantly
across the country, but a potential
escalation of civil unrest remains
possible. Throughout 2022, there
were several instances of escalation
following multiple terrorist attacks
and widespread cases of kidnapping.
Nigeria held elections in the first
quarter of 2023.
-------------------------------------------------
Covid-19 All of IDH staff use appropriate
protective equipment when interacting
The risks posed by Covid-19 on the with patients, including those suspected
business have declined significantly of having Covid-19 or any other infectious
in 2022 as vaccination campaigns disease. IDH is currently administering
ramped up, infection rates declined, PCR, Antibody, and Antigen testing
and governments and businesses continued for Covid-19 in Egypt and Jordan.
to effectively coexist with the virus. All of the Group's employees have
As of December 2022, no new restrictions been fully vaccinated during 2021,
have been imposed following the rise and they are subject to regular communications
of new Covid-19 variants throughout reminding them that they may not
the past year. As at the end of 2022, report to work if they have symptoms
the share of the population having of a Covid-19 infection.
received at least one Covid-19 vaccine Throughout the Covid-19 crisis, IDH
dose stood at approximately 46% in has maintained a strong focus on
Egypt, 47% in Jordan, 30% in Nigeria, growing its conventional (non-Covid19-related)
and 15% in Sudan, and all four countries business, which expanded 18% in FY
are currently free from any Covid-19 2022 versus FY 2021, and came in
related restrictions. 33% above pre-covid levels recorded
Covid-19 impact on IDH Financials in FY 2019 (adjusting for the contribution
Throughout FY 2022, IDH generated generated by the 100 Million Healthy
around 18% of its revenues from Covid-19-related Lives Campaign in 2019). As part
testing. In light of the increasing of the Group's post-Covid-19 strategy
roll-out of vaccines and the widespread in both Egypt and Jordan, IDH's focus
decline in infection rates, Covid-19-related has now turned to patient retention
revenues rapidly declined as the as it looks to maintain the new relationships
year progressed and in Q4 2022 made established during the pandemic thanks
up just 3% of total revenues versus to its Covid-19-dedicated offering.
43% in Q1 2022.
-------------------------------------------------
The Russia-Ukraine War As with similar situations in the
past, IDH expects protracted high
The conflict between Russia and Ukraine, inflation, in particular in Egypt,
which has been ongoing since February to have the most significant impact
2022, has negatively impacted the on patients who pay for their own
global economy and IDH's markets healthcare. IDH has been developing
of operation. In particular, IDH's marketing programmes targeted to
home and largest market of Egypt this patient segment with a strong
saw a rapid rise in inflation and health awareness message in combination
a large outflow of capital following with a compelling value component.
the outbreak of the conflict. This This includes offering bundled diagnostic
is due to multiple factors, including test packages for lifestyle-related
the country's reliance on the imports diseases and chronic health conditions,
of oil and wheat, coupled with a as well as an in-house point redemption
relatively weak FX position. Rising system. The Company is also exploring
inflation has increasingly eaten various solutions to offer more affordable
away at patients' purchasing power payment plans to retain patients
in the country. Fast-rising inflation despite rising inflation.
was also recorded across IDH's other At the same time, IDH enjoys a strong
markets. brand equity built over many years,
which has translated into strong
loyalty, ensuring that patients continue
to choose the Group as their trusted
diagnostic services provider irrespective
of the ongoing inflationary pressures.
On the costs front, IDH has been
actively working with suppliers to
negotiate favourable test kit prices
and contracts to mitigate the impact
of a weaker EGP on its raw material
cost base.
-------------------------------------------------
Global Supply Chain Disruptions IDH's management team continually
monitors the evolving situation and
The Russia-Ukraine conflict has exacerbated has taken proactive steps to build
supply chain disruptions that had up its inventory to shield the Group
already come about as a result of from any potential future disruptions.
restrictions imposed to curb the IDH is in continual dialogue with
spread of Covid-19, labour shortages, key suppliers to gauge the risk associated
and fast-rising demand for goods, with a shortage of materials and
causing delays and shortages worldwide. is yet to identify a weakness.
The ongoing global supply chain disruptions Throughout 2022 and in the first
has had limited impacts on IDH's part of 2023, thanks to IDH's proactive
operations throughout 2022 and in inventory build-up and sourcing strategy,
early 2023. the Group continued to face no problems
acquiring raw materials.
-------------------------------------------------
Supplier Risk IDH has strong, longstanding relationships
with its suppliers, to whom it is
IDH faces the risk of suppliers re-opening a significant regional client. Due
negotiations in the face of cost to the volumes of kits the Group
pressure owing to the prevailing purchases, IDH was typically able
inflationary environment and/or a to negotiate favourable pricing and
possible albeit limited devaluation maintain raw material costs increases
risk. at a rate slower than local currency
IDH's supplier risk is concentrated devaluation. It is worth highlighting
among three key suppliers - Siemens, that IDH's supplier relations were
Roche, and Sysmex- who provide it not impacted by Covid-19.
with kits representing 31% of the Total raw material costs as a percentage
total value of total raw materials of revenues stood at 20.4% in 2022
in 2022 (2021: 24%). versus 18.9% in 2021 (raw materials
to net sales stood at 20.7% in 2022
compared to 19.6% in 2021).
-------------------------------------------------
Remittance of dividend regulations As a foreign investor in Egypt, IDH
and repatriation of profit risk did not have issues with the repatriation
of dividends. However, starting in
The Group's ability to remit dividends early 2022, the Company has faced
abroad may be adversely affected significant difficulties in sourcing
by the imposition of remittance restrictions. the USD balance needed to fulfil
More specifically, under Egyptian its dividend obligations. Heading
law, companies must obtain government into 2023, the Company expects the
clearance to transfer dividends overseas difficulties to persist and is closely
and are subject to higher taxation monitoring the evolving situation
on payment of dividends. Additionally, to shield the business from potential
in line with the most recent devaluation challenges.
of the EGP, there have been significant
shortages of foreign currency at
Egyptian banks, with the ability
to source foreign currency becoming
more difficult under strict regulations.
-------------------------------------------------
Legal and regulatory risk to the The Group's general counsel and the
business quality assurance team work together
The Group's business is subject to, to keep IDH abreast of, and in compliance
and affected by, extensive, stringent, with, both legislative and regulatory
and frequently changing laws and changes.
regulations, as well as frequently On the antitrust front, the private
changing enforcement regimes, in laboratory segment (of which IDH
each of the countries in which it is a part) accounts for a small proportion
operates. Moreover, as a significant of the total market, which consists
player in the Egyptian private clinical of small private labs, private chain
laboratory market, the Group is subject labs, and large governmental and
to antitrust and competition-related quasi-governmental institutions.
restrictions, as well as the possibility
of investigation by the Egyptian
Competition Authority.
-------------------------------------------------
Risk from contract clients IDH diligently works to maintain
Contract clients, including private sound relationships with contract
insurers, unions, and corporations, clients. All changes to pricing and
account for 58% of Group revenues contracts are arrived at through
for the year. Should IDH's relationship discussion rather than blanket imposition
with these clients deteriorate, for by IDH. Relations are further enhanced
example if the Group were unable by regular visits to contract clients
to negotiate and retain similar fee by the Group's sales staff.
arrangements or should these clients In an effort to mitigate risks from
be unable to make payments to the contact clients, no single client
Group, IDH's business could be materially contract accounts for more than 3%
and adversely affected. of total revenues or 4% of contract
revenues.
-------------------------------------------------
Pricing pressure in a competitive, This is an external risk for which
regulated environment there exist few mitigants.
The Group may face pricing pressure In the event there is escalation
from various third-party payers, of price competition between market
including national health insurance, players, the Group sees its wide
syndicates, and other governmental national footprint as a mitigant;
bodies, which could materially and c.58% of IDH revenues in 2022 is
adversely affect its revenue. Pricing generated by servicing contract clients
may be restrained in cases by recommended (private insurer, unions, and corporations)
or mandatory fees set by the government's who prefer IDH's national network
ministries and other authorities. to patchworks of local players.
This risk may be more pronounced IDH has a limited ability to influence
in the context of the imminent inflationary changes to mandatory pricing policies
pressures following the recent depreciation imposed by government agencies, as
of the EGP. is the case in Jordan, where basic
The Group might face pricing pressure tests that account for the majority
from existing competitors and new of IDH's business in that nation
entrants to the market. are subject to price controls.
IDH enjoys a strong brand equity
in its markets of operation, which
enables all its brands to enjoy a
solid positioning in the markets
in which it operates. As such, IDH
is a price maker, especially in Egypt,
where the Group currently controls
the largest network of branches among
all private sector players. Moreover,
in its home market of Egypt, which
accounted for 80% of total revenues
in FY 2022, the Group faces no potential
risk of price regulation by the government.
-------------------------------------------------
Cybersecurity risks The Company has stringent control
over its data security and regularly
The Company controls a vast amount stress tests its IT infrastructure
of confidential data for its patients' to assess the robustness of its internal
records; to this end, there is a controls. Moreover, its cybersecurity
cybersecurity risk for both data controls and protocols are regularly
confidentiality and data security. updated to proactively address potential
shortcomings, keep them in full adherence
with data security regulations in
the Group's markets of operation,
and maintain them in line with global
best practices.
-------------------------------------------------
Business continuity risks IDH understands the need to support
Management concentration risk: IDH its future growth plans by strengthening
is dependent on the unique skills its human capital and engaging in
and experience of a talented management appropriate succession planning.
team. The loss of the services of The Company is committed to expanding
key members of that team could materially the senior management team, led by
and adversely affect the Company's its CEO Dr. Hend El Sherbini, to
operations and business. include the talent needed for a larger
Business interruption: IT systems footprint. The Group has constituted
are used extensively in virtually an Executive Committee led by Dr.
all aspects of the Group's business El Sherbini and composed of heads
and across each of its lines of business, of departments. The Executive Committee
including test and exam results reporting, meets every second week.
billing, customer service, logistics The Group has in place a full disaster
and management of medical data. Similarly, recovery plan, with procedures and
business interruption at one of the provisions for spares, redundant
Group's larger laboratory facilities power systems, and the use of mobile
could result in significant losses data systems as alternatives to landlines,
and reputational damage to the Group's among multiple other factors. IDH
business as a result of external tests its disaster recovery plans
factors such as natural disasters, on a regular basis, with regular
fire, riots, or extended power failures. updating and internal and external
The Group's operations therefore audits.
depend on the continued and uninterrupted In Egypt and Jordan, to mitigate
performance of its systems. the impact of potential branch closures
Business Interruption: across its on operations, the Group has been
geographies, the reimposition of ramping up its house call services.
restrictive measures related to Covid-19 Moreover, the Group's important role
(including curfews and lockdowns) in conducting PCR testing for Covid-19
could impact the working hours of in both Egypt and Jordan makes it
branches and in extreme cases could unlikely that branches would be closed,
lead to their temporary closure. even if new restrictive measures
were introduced.
-------------------------------------------------
Climate-related risks For the first time, the Company is
IDH's operations currently face low reporting, based on the Task Force
physical and transitional risks related on Climate-Related Financial Disclosures
to climate change. (TCFD) programme, disclosures to
provide stakeholders with a clear
framework to assess its climate-related
risks and opportunities. Overall,
the risk and opportunities related
to climate change are considered
immaterial, especially in the short-to-medium
term. For TCFD disclosures, please
refer to pages 80 to 84 of the Group's
Annual Report.
-------------------------------------------------
-End-
INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH"
AND ITS SUBSIDIARIES
Consolidated Financial Statements
for the year ended 31 December 2022
Consolidated statement of financial position as at 31 December
2022
Notes 2022 2021
EGP'000 EGP'000
------------------------------------------- ------- ------------- -------------
Assets
Non-current assets
Property, plant and equipment 11 1,326,262 1,061,808
Intangible assets and goodwill 12 1,703,636 1,658,867
Right of use assets 26 622,975 462,432
Financial assets at fair value through
profit and loss 14 18,064 10,470
Total non-current assets 3,670,937 3,193,577
Current assets
Inventories 15 265,459 222,612
Trade and other receivables 16 543,887 469,727
Financial assets at amortized cost 18 167,404 1,458,724
Cash and cash equivalents 17 648,512 891,451
------------- -------------
Total current assets 1,625,262 3,042,514
------------- -------------
Total assets 5,296,199 6,236,091
============= =============
Equity
Share capital 19 1,072,500 1,072,500
Share premium reserve 19 1,027,706 1,027,706
Capital reserves 19 (314,310) (314,310)
Legal reserve 19 51,641 51,641
Put option reserve 19 (490,695) (956,397)
Translation reserve 19 24,173 150,730
Retained earnings 783,081 1,550,976
Equity attributable to the owners
of the Company 2,154,096 2,582,846
Non-controlling interests 2 292,885 211,513
------------- -------------
Total equity 2,446,981 2,794,359
------------- -------------
Non-current liabilities
Provisions 21 3,519 4,088
Borrowings 24 93,751 76,345
Other financial obligations 26 914,191 645,196
Non-current put option liability 25 51,000 35,037
Deferred tax liabilities 9 321,732 332,149
Total non-current liabilities 1,384,193 1,092,815
Current liabilities
Trade and other payables 22 701,095 777,354
Other financial obligations 26 148,705 115,478
Current put option liability 23 439,695 921,360
Borrowings 24 22,675 21,721
Current tax liabilities 29 152,855 513,004
Total current liabilities 1,465,025 2,348,917
Total liabilities 2,849,218 3,441,732
------------- -------------
Total equity and liabilities 5,296,199 6,236,091
============= =============
The accompanying notes form an integral part of these consolidated
financial statements.
These consolidated financial statements were approved and authorised
for issue by the Board of Directors and signed on their behalf
on 05 April 2023 by:
Dr. Hend El Sherbini Hussein Choucri
Chief Executive Officer Independent Non-Executive
Director
Consolidated income statement for the year ended 31 December
2022
Notes 2022 2021
EGP'000 EGP'000
-------------------------------------------------------------------------------- ------ ------------ ------------
Revenue 6 3,605,047 5,224,712
Cost of sales 8.1 (2,142,984) (2,420,647)
------------ ------------
Gross profit 1,462,063 2,804,065
Marketing and advertising expenses 8.2 (213,151) (163,163)
Administrative expenses 8.3 (398,533) (370,014)
Impairment loss on trade and other receivable 16 (29,914) (24,656)
Other Income 11,726 15,828
------------ ------------
Operating profit 832,191 2,262,060
Net fair value losses on financial assets at fair value through profit or loss 8.8 (142,950) -
Finance costs 8.6 (135,586) (142,917)
Finance income 8.6 299,992 113,178
Net finance income /(costs) 8.6 164,406 (29,739)
------------ ------------
Profit before income tax 853,647 2,232,321
Income tax expense 9 (327,064) (739,815)
Profit for the year 526,583 1,492,506
============ ============
Profit attributed to:
Owners of the Company 541,110 1,412,609
Non-controlling interests (14,527) 79,897
526,583 1,492,506
============ ============
Earnings per share 10
Basic and diluted 0.90 2.35
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income for the year
ended 31 December 2022
2022 2021
EGP'000 EGP'000
------------------------------------------------------------------- ---------- -------------
Net profit for the year 526,583 1,492,506
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations 69,081 7,808
---------- -------------
Other comprehensive income for the year, net of tax 69,081 7,808
---------- -------------
Total comprehensive income for the year 595,664 1,500,314
========== =============
Attributable to:
Owners of the Company 414,553 1,417,722
Non-controlling interests 181,111 82,592
595,664 1,500,314
========== =============
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of cash flows for the year ended 31
December 2022
Note 2022 2021
EGP'000 EGP'000
--------------------------------------------------------- ------- ------------------------------ -------------
Cash flows from operating activities
Profit before tax 853,647 2,232,321
Adjustments for:
Depreciation of property, plant and equipment 11 206,993 151,826
Depreciation of right of use assets 26 103,099 79,617
Amortisation of intangible assets 12 7,251 7,201
Unrealised foreign exchange gains and losses 8.6 (188,442) 17,912
FV Through P&L 142,950 -
Finance income 8.6 (95,371) (113,178)
Finance Expense 8.6 135,586 118,029
Loss/(gain) on disposal of PPE 200 (78)
Impairment in trade and other receivables 16 29,914 24,656
Impairment in goodwill 1,755 -
Equity settled financial assets at fair
value (7,594) (866)
ROU Asset/Lease Termination 305 1,351
Hyperinflation (16,179) 6,976
Change in Provisions 21 (569) 681
Change in Inventories (30,159) (127,643)
Change in Trade and other receivables (53,445) (106,458)
Change in Trade and other payables (166,130) 351,803
Cash generated from operating activities
before income tax payment 923,811 2,644,150
------------------------------ -------------
Taxes paid (715,082) (374,305)
------------------------------ -------------
Net cash generated from operating activities 208,729 2,269,845
------------------------------ -------------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 10,212 6,627
Interest received on financial asset at
amortised cost 95,897 111,367
Payments for acquisition of property, plant
and equipment (299,762) (253,385)
Payments for acquisition of intangible
assets (9,076) (10,354)
Payments for the purchase of financial
assets at amortised cost (267,819) (1,599,238)
Proceeds from the sale of financial assets
at amortized cost 1,603,611 417,139
Payment for purchase of global depository
receipts (short-term investment) 8.8 (1,011,376) -
Proceeds from sale of global depository
receipts (short-term investments) 8.8 868,426 -
Net cash generated from/(used in) investing
activities 990,113 (1,327,844)
------------------------------ -------------
Cash flows from financing activities
Proceeds from borrowings 28 40,081 30,450
Repayment of borrowings 28 (21,721) (25,416)
Proceeds loan received from related party 27 17,025 -
Repayment loan paid to related party 27 (17,025) -
Payments of lease liabilities 28 (71,635) (50,227)
Payment of financial obligations 28 (29,206) (9,383)
Dividends paid (1,411,752) (478,748)
Interest paid 28 (119,308) (93,799)
Bank charge paid (12,909) (20,026)
Cash injection by owner of non-controlling 8,763 -
interest
Net cash flows used in financing activities (1,617,687) (647,149)
------------------------------ -------------
Net (decrease) increase in cash and cash
equivalents (418,845) 294,852
Cash and cash equivalents at the beginning
of the year 891,451 600,130
Effect of exchange rate 175,906 (3,531)
Cash and cash equivalents at the end of
the year 17 648,512 891,451
============================== =============
Non-cash investing and financing activities disclosed in other notes
are:
* acquisition of right-of-use assets - note 26
* Put option liability - note 23 and 25
The accompanying notes form an integral part of these consolidated
financial statements.
Consolidated statement of changes in equity for the year ended
31 December 2022
EGP'000 Share Share Capital Legal Put Translation Retained Total Non-Controlling Total Equity
Capital premium reserve reserve* option reserve earnings attributed interests
reserve to
the owners
of the
Company
----------------- ---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
As at 1
January 2022 1,072,500 1,027,706 (314,310) 51,641 (956,397) 150,730 1,550,976 2,582,846 211,513 2,794,359
Profit / (loss)
for the year - - - - - - 541,110 541,110 (14,527) 526,583
Other
comprehensive
(expense)/
income for the
year - - - - - (126,557) - (126,557) 195,638 69,081
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
Total
comprehensive
income - - - - - (126,557) 541,110 414,553 181,111 595,664
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
Transactions
with owners in
their capacity
as owners
Dividends - - - - - - (1,304,805) (1,304,805) (106,947) (1,411,752)
Impact of
hyperinflation - - - - - - (4,200) (4,200) (1,555) (5,755)
Movement in put
option
liabilities for
the year - - - - 465,702 - - 465,702 - 465,702
Acquisition of
non-controlling
interests
without change
in control - - - - - - - - 8,763 8,763
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
Total - - - - 465,702 - (1,309,005) (843,303) (99,739) (943,042)
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
At 31 December
2022 1,072,500 1,027,706 (314,310) 51,641 (490,695) 24,173 783,081 2,154,096 292,885 2,446,981
========== ========== ========== ========= ========== ============== ============ ============ ================ =============
As at 1 January
2021 1,072,500 1,027,706 (314,310) 49,218 (314,057) 145,617 603,317 2,269,991 156,383 2,426,374
Profit for the
year - - - - - - 1,412,609 1,412,609 79,897 1,492,506
Other
comprehensive
income for the
year - - - - - 5,113 - 5,113 2,695 7,808
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
Total
comprehensive
income - - - - - 5,113 1,412,609 1,417,722 82,592 1,500,314
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
Transactions
with owners in
their capacity
as owners
Dividends - - - - - - (455,182) (455,182) (23,566) (478,748)
Legal reserve
formed during
the year* - - - 2,423 - - (2,423) - - -
Impact of
hyperinflation - - - - - - (7,345) (7,345) (3,896) (11,241)
Movement in put
option
liabilities for
the year - - - - (642,340) - - (642,340) - (642,340)
Total - - - 2,423 (642,340) - (464,950) (1,104,867) (27,462) (1,132,329)
---------- ---------- ---------- --------- ---------- -------------- ------------ ------------ ---------------- -------------
At 31 December
2021 1,072,500 1,027,706 (314,310) 51,641 (956,397) 150,730 1,550,976 2,582,846 211,513 2,794,359
========== ========== ========== ========= ========== ============== ============ ============ ================ =============
* Under Egyptian Law each subsidiary must set aside at least 5% of its annual net profit into
a legal reserve until such time that this represents 50% of each subsidiary's issued capital.
This reserve is not distributable to the owners of the Company
.
(In the notes all amounts are shown in Egyptian Pounds "EGP'000"
unless otherwise stated)
1. Corporate information
The consolidated financial statements of Integrated Diagnostics
Holdings plc and its subsidiaries (collectively, "the Group") for
the year ended 31 December 2022 were authorised for issue in
accordance with a resolution of the directors on 05 April 2023.
Integrated Diagnostics Holdings plc "IDH" or "the company" is a
public company incorporated in Jersey. Has been established
according to the provisions of the Companies (Jersey) law 1991
under No. 117257. The registered office address of the Company is
12 Castle Street, St Helier, Jersey, JE2 3RT . The Company is a
dually listed entity, in both London stock exchange (since 2015)
and in the Egyptian stock exchange (in May 2021).
The principal activity of the Company is investments in all
types of the healthcare field of medical diagnostics (the key
activities are pathology and Radiology related tests), either
through acquisitions of related business in different jurisdictions
or through expanding the acquired investments IDH has. The key
jurisdictions that the group operates are in Egypt, Jordan,
Nigeria, and Sudan
The Group's financial year starts on 1 January and ends on 31
December each year.
2. Group information
Information about subsidiaries
T he c on s ol i da t ed f i na n cial st a t e me n ts of t he
G r oup i n cl u de:
Principal Country % Equity interest Non-Controlling
activities of interest
Incorporation
--------------------- ----------------
2022 2021 2022 2021
------------------------------------------------------------------ ------------ ------------ ------------ ------
Al Borg Laboratory Medical diagnostics
Company ("Al-Borg") service Egypt 99.3% 99.3% 0.7% 0.7%
Al Mokhtabar Company
for Medical Labs Medical diagnostics
("Al Mokhtabar") service Egypt 99.9% 99.9% 0.1% 0.1%
Medical Genetic Medical diagnostics
Center service Egypt 55.0% 55.0% 45.0% 45.0%
Al Makhbariyoun Medical diagnostics
Al Arab Group service Jordan 60.0% 60.0% 40.0% 40.0%
Golden Care for Holding company
Medical Services of SAMA Egypt 100.0% 100.0% 0.0% 0.0%
Integrated Medical
Analysis Company Medical diagnostics
(S.A.E) service Egypt 99.6% 99.6% 0.4% 0.4%
SAMA Medical Laboratories
Co. ("Ultralab
medical laboratory Medical diagnostics
") service Sudan 80.0% 80.0% 20.0% 20.0%
AL-Mokhtabar Sudanese Medical diagnostics
Egyptian Co. service Sudan 65.0% 65.0% 35.0% 35.0%
Integrated Diagnostics Intermediary Caymans
Holdings Limited holding company Island 100.0% 100.0% 0.0% 0.0%
Dynasty Group Holdings Intermediary England
Limited holding company and Wales 51.0% 51.0% 49.0% 49.0%
Eagle Eye-Echo Intermediary
Scan Limited holding company Mauritius 77.18% 76.5% 22.82% 23.5%
Medical diagnostics
Echo-Scan* service Nigeria 100.0% 100.0% 0.0% 0.0%
WAYAK Pharma Medical services Egypt 99.99% 99.99% 0.01% 0.01%
* The group consolidate "Echoscan" a subsidiary based in Nigeria
despite of 39.4% indirect ownership .
for more details refer to note 4.1.
Non-Controlling interest
Non-Controlling Interest is measured at the proportionate share
basis.
Financial information of subsidiaries that have material
non-controlling interests is provided below:
Proportion of equity interest held by non-controlling
interests:
Country of
incorporation 2022 2021
----------------------------------------------------------------- ------- -------
Medical Genetic Center Egypt 45.0% 45.0%
Al Makhbariyoun Al Arab Group (Hashemite Kingdom
of Jordan) Jordan 40.0% 40.0%
SAMA Medical Laboratories Co. " Ultra lab medical
laboratory " Sudan 20.0% 20.0%
Al Borg Laboratory Company Egypt 0.7% 0.7%
England
Dynasty Group Holdings Limited and Wales 49% 49%
Eagle Eye-Echo Scan Limited Mauritius 22.82% 23.53%
The summarised financial information of these subsidiaries is
provided below. This information is based on amounts before
inter-company eliminations.
Medical Al Makhbariyoun Al Alborg Other Dynasty Group Total
Genetic Arab Group Laboratory individually EGP'000 EGP'000
Center (Hashemite Kingdom Company immaterial
EGP'000 of Jordan) EGP'000 subsidiaries
EGP'000 EGP'000
------------- ------------------- ------------- ------------- -------------- ------------
Summarised statement
of profit or loss for
2022:
Revenue 383 611,840 1,210,716 2,348,371 78,864 4,250,174
(loss)/Profit (10,339) 57,917 266,201 470,492 (54,602) 729,669
Other comprehensive
(expense)/income - 134,909 - (3,796) 248,726 379,839
Total comprehensive
(expense)/income (10,339) 192,826 266,201 466,696 194,124 1,109,508
---------------------- ------------- ------------------- ------------- ------------- -------------- ------------
(loss)/Profit
allocated to
non-controlling
interest (4,655) 23,167 1,884 555 (11,913) 9,038
Other comprehensive
income/(expense)
allocated to
non-controlling
interest - 53,964 - (876) 140,041 193,129
====================== ============= =================== ============= ============= ============== ============
Summarised statement
of financial position
as at 31 December
2022:
Non-current assets 670 367,404 710,836 775,581 121,770 1,976,261
Current assets 1,909 247,636 428,668 1,212,429 14,130 1,904,772
Non-current
liabilities (27) (164,478) (516,784) (351,111) (11,286) (1,043,686)
Current liabilities (15,409) (189,371) (244,970) (449,373) (33,181) (932,304)
Net
(liabilities)/assets (12,857) 261,191 377,750 1,187,526 91,433 1,905,043
---------------------- ------------- ------------------- ------------- ------------- -------------- ------------
Net
(liabilities)/assets
attributable to
non-controlling
interest (5,788) 104,476 2,674 (993) 16,608 116,977
====================== ============= =================== ============= ============= ============== ============
Medical Al Alborg Other Dynasty Group Total
Genetic Center Makhbariyoun Laboratory subsidiaries EGP'000 EGP'000
EGP'000 Al Arab Group Company with
EGP'000 EGP'000 immaterial
NCI
EGP'000
--------------- -------------- --------------- -------------- -------------- ------------
Summarised statement
of Income for 2021:
Revenue 3,092 1,046,107 1,594,275 3,821,004 53,604 6,518,082
(loss)/Profit (2,627) 214,588 401,401 1,162,009 (8,795) 1,766,576
Other comprehensive
(expense)/income - (56) - 10,935 (4,733) 6,146
Total comprehensive
(expense)/income (2,627) 214,532 401,401 1,172,944 (13,528) 1,772,722
---------------------- --------------- -------------- --------------- -------------- -------------- ------------
(loss)/Profit
allocated to
non-controlling
interest (1,193) 86,747 2,841 (3,261) (5,237) 79,897
Other comprehensive
income/(expense)
allocated to
non-controlling
interest - 64 - 5,667 (3,036) 2,695
====================== =============== ============== =============== ============== ============== ============
Summarised statement
of financial position
as at 31 December
2021:
Non-current assets 682 211,430 541,782 707,847 90,509 1,552,250
Current assets 3,975 432,149 598,084 2,017,197 24,356 3,075,761
Non-current
liabilities (27) (76,599) (361,520) (303,142) 20,743 (720,545)
Current liabilities (7,148) (237,206) (266,796) (701,516) 28,313 (1,184,353)
Net
(liabilities)/assets (2,518) 329,774 511,550 1,720,386 163,921 2,723,113
---------------------- --------------- -------------- --------------- -------------- -------------- ------------
Net
(liabilities)/assets
attributable to
non-controlling
interest (1,143) 133,310 3,621 (4,626) 80,351 211,513
====================== =============== ============== =============== ============== ============== ============
3. Basis of preparation
Statement of compliance
Integrated Diagnostics Holdings plc "IDH" or "the company" has
been established according to the provisions of the Companies
(Jersey) law 1991 under No. 117257. The Company is a dually listed
entity, in both London stock exchange and in the Egyptian stock
exchange. The consolidated financial statements of the Group have
been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and the Companies
(Jersey) Law 1991.
Basis of measurement
The consolidated financial statements have been prepared on a
historical cost basis, except where adopted IFRS mandates that fair
value accounting is required which is related to financial assets
and liabilities measured at fair value.
New standards and interpretations adopted
The Group has applied the following amendments for the first
time for their annual reporting period commencing 1 January
2022:
-- Property, Plant and Equipment: Proceeds before intended use - Amendments to IAS 16,
-- Reference to the Conceptual Framework - Amendments to IFRS 3
-- Onerous Contracts - Cost of Fulfilling a Contract Amendments to IAS 37, and
-- Annual Improvements to IFRS Standards 2018-2020.
The amendments listed above did not have any impact on current
and prior years and not expected to affect future years.
New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2022 reporting period and have not been
early adopted by the company. These standards, amendments or
interpretations are not expected to have a material impact on the
group in the current or future reporting periods and on foreseeable
future transactions.
Going concern
These consolidated financial statements have been prepared on
the going concern basis. On 31 December 2022, the Group had (cash
and cash equivalent balance plus treasury bills / deposits minus
borrowing) amounting to KEGP 699,490 The Directors have considered
a number of downside scenarios, including the most severe but
plausible scenario, for a period of 16 months from the signing of
the financial statements. They have conducted multiple sensitivity
analyses to assess the impact of inflationary pressures,
particularly on the line items that are denominated in hard
currency also during the going concern assessment for the next 16
months. W e did not consider the Biolab put option since it is
improbable that the option will be exercised refer to (note 23).
They have also assessed the likelihood of any key one-off payments
arising such as dividends or those in respect of merger and
acquisition 'M&A' activity. Under all of these scenarios, there
remains significant headroom from a liquidity and covenant
perspective. Reverse stress tests have been performed to determine
the level of downside required to cause a liquidity or covenant
issue with these scenarios not considered plausible. Therefore, the
Directors believe the Group has the
ability to meet its liabilities as they fall due and the use of
the going concern basis in preparing the financial statements is
appropriate.
3.1. Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Group and its subsidiaries as at 31 December
2022. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee.
i. Subsidiaries
Subsidiaries are all entities over which the group has control.
The group controls an entity where the group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
group. They are deconsolidated from the date that control
ceases.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment of the transferred asset. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated statement of
income statement of comprehensive income, statement of changes in
equity and statement of financial position respectively.
ii. Changes in ownership interests
The group treats transactions with non-controlling interests
that do not result in a loss of control as transactions with equity
owners of the group. A change in ownership interest results in an
adjustment between the carrying amounts of the controlling and
non-controlling interests to reflect their relative interests in
the subsidiary. Any difference between the amount of the adjustment
to non-controlling interests and any consideration paid or received
is recognised in a separate reserve within equity attributable to
owners of the group.
When the group ceases to consolidate or equity account for an
investment because of a loss of control, joint control or
significant influence, any retained interest in the entity is
remeasured to its fair value, with the change in carrying amount
recognised in profit or loss. This fair value becomes the initial
carrying amount for the purposes of subsequently accounting for the
retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as
if the group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in
other comprehensive income are reclassified to profit or loss.
If the ownership interest in a joint venture or an associate is
reduced but joint control or significant influence is retained,
only a proportionate share of the amounts previously recognised in
other comprehensive income are reclassified to profit or loss where
appropriate.
3.2. Significant accounting policies
The accounting policies set out below have been consistently
applied to all the years presented in these consolidated financial
statements.
a) Business combinations
The acquisition method of accounting is used to account for all
business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the:
-- fair values of the assets transferred
-- liabilities incurred to the former owners of the acquired
business
-- equity interests issued by the group
-- fair value of any asset or liability resulting from a
contingent consideration arrangement, and
-- fair value of any pre-existing equity interest in the
subsidiary.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the
acquisition date. The group recognises any non-controlling interest
in the acquired entity on an acquisition-by-acquisition basis
either at fair value or at the non-controlling interest's
proportionate share of the acquired entity's net identifiable
assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
-- consideration transferred,
-- amount of any non-controlling interest in the acquired
entity, and
-- acquisition-date fair value of any previous equity interest
in the acquired entity over the fair value of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less
than the fair value of the net identifiable assets of the business
acquired, the difference is recognised directly in profit or loss
as a bargain purchase.
Where settlement of any part of cash consideration is deferred,
the amounts payable in the future are discounted to their present
value as at the date of exchange. The discount rate used is the
entity's incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent financier
under comparable terms and conditions.
Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value, with changes in fair
value recognised in profit or loss.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date. Any gains or losses arising from such
remeasurement are recognised in profit or loss.
b) Impairment of assets
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired. Other assets
are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
c) Fair value measurement
The Group measures financial instruments such as non-derivative
financial instruments and contingent consideration assumed in a
business combination at fair value at each balance sheet date.
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Fair value is
categorised into different levels in a fair value hierarchy based
on the inputs used in the valuation techniques as follows:
Ø Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
Ø Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable.
Ø Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
For the purpose of fair value disclosures, the Group has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy, as explained above.
The fair value less any estimated credit adjustments for
financial assets and liabilities with maturity dates less than one
year is assumed to approximate their carrying value. The fair value
of financial liabilities for disclosure purposes is estimated by
discounting the future contracted cash flows at the current market
interest rate that is available to the Group for similar
transactions.
d) Re v enue rec o gniti on:
Revenue represents the value of medical diagnostic services
rendered in the year and is stated net of discounts. The Group has
two types of customers: Walk-in patients and patients served under
contracts. For patients under contracts, rates are agreed in
advance on a per-test, client-by-client basis based on the
pricelists agreed within these contracts.
The following steps are considered for all types of
patients:
1. Identification of the Contracts: written contracts are agreed
between IDH and customers. The contracts stipulate the duration,
price per test and credit period.
2. Determining performance obligations are the diagnostics tests
within the pathology and radiology services. The performance
obligation is achieved when the customer receives their test
results, and so are recognised at point in time.
3. Transaction price: Services provided by the Group are
distinct in the contract, as the contract stipulates the series of
tests' names/types to be conducted along with its distinct
prices.
4. Allocation of price to performance obligations: Stand-alone
selling price per test is stipulated in the contract. In case of
discounts, it is allocated proportionally to all of tests prices in
the contract.
5. Revenue is being recorded after the satisfaction of the above mentioned conditions.
The group considers whether it is the principal or the agent in
each of its contractual arrangements. In line with IFRS 15 "Revenue
from contracts" in assessing the appropriate treatment of each
contract, factors that are considered include which party is
controlling the service being performed for the customer and bears
the inventory risk. Where the group is largely controlling the
service and bearing the inventory risk it is deemed to be the
principal and the full consideration received from the customer is
recognised as revenue, with any amounts paid to third parties
treated as cost of sales.
Customer loyalty program:
The group operates a loyalty program where customers accumulate
points for purchases made which entitle them to a discount on
future purchases. The points are valid for 12 months from the time
they are awarded. The value of points to be provided is based on
the expectation of what level will be redeemed in the future before
their expiration date. This amount is netted against revenue earned
and included as a contract liability and only recognised as revenue
when the points are then redeemed or have expired.
e) Income Taxes
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
i. Current tax
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
ii. Deferred tax
Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they
arise from the initial recognition of goodwill; deferred income tax
is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination and differences relating to investments in subsidiaries
to the extent that they will probably not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary
differences, the carry forward of unused tax credits and any unused
tax losses. Deferred tax assets are recognised to the extent that
it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilised. Deferred
tax is determined using tax rates (and laws) that have been enacted
or substantively enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realized, or
the deferred income tax liability is settled.
f) Foreign currency translation
i) Functional and presentation currency
Each of the Group's entities is using the currency of the
primary economic environment in which the entity operates ('the
functional currency'). The Group's consolidated financial
statements are presented in Egyptian Pounds, being the reporting
currency of the main Egyptian trading subsidiaries within the Group
and the primary economic environment in which the Group
operates.
ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions, and from the translation of monetary assets and
liabilities denominated in foreign currencies at year end exchange
rates, are generally recognised in profit or loss. They are
deferred in equity if they relate to qualifying cash flow hedges
and qualifying net investment hedges or are attributable to part of
the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are
presented in the statement of profit or loss, within finance costs.
All other foreign exchange gains and losses are presented in the
statement of profit or loss on a net basis within other
gains/(losses).
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets
and liabilities carried at fair value are reported as part of the
fair value gain or loss. For example, translation differences on
non-monetary assets and liabilities such as equities held at fair
value through profit or loss are recognised in profit or loss as
part of the fair value gain or loss, and translation differences on
non-monetary assets such as equities classified as at fair value
through other comprehensive income are recognised in other
comprehensive income.
g) Hyperinflationary Economies
The financial statements of "SAMA Medical Laboratories Co. and
AL-Mokhtabar Sudanese Egyptian Co." report their financial
statements in the currency of a hyperinflationary economy. In
accordance with IAS 29 financial reporting in Hyperinflationary
Economies, the financial statements of those subsidiaries were
restated by applying the consumer price index at closing rates in
December 2022 65,137 (2021 December, 31,423) before they were
included in the consolidated financial statements.
h) Property, plant and equipment
All property and equipment are stated at historical cost or fair
value at acquisition, less accumulated depreciation. Historical
cost includes expenditure that is directly attributable to the
acquisition of the items. Subsequent costs are included in the
asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the group and the cost of the
item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged
to the consolidated statement of income during the financial period
in which they are incurred. Land is not depreciated.
Depreciation expense is calculated using the straight-line
method to allocate the cost or to their residual value over their
estimated useful lives, as follows:
Buildings 50 years
Medical, electric and information systems equipment 4-10 years
Leasehold improvements 4-5 years
Fixtures, fittings & vehicles 4-16 years
The assets useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount. Gains and losses on disposals are
determined by comparing the proceeds with the carrying amount and
are recognised within 'Other (losses)/gains - net' in the
consolidated statement of income.
i) Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value at the date of
acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated
impairment losses.
Internally generated intangibles, excluding capitalised
development costs, are not capitalised and the related expenditure
is reflected in profit or loss in the period in which the
expenditure is incurred.
The useful lives of intangible assets are assessed as either
finite or indefinite.
Intangible assets with finite lives are amortised over the
useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at the end of
each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation
period or method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on intangible assets
with finite lives is recognised in the statement of income in the
expense category that is consistent with the function of the
intangible assets. The Group amortises intangible assets with
finite lives using the straight-line method over the following
periods:
- IT development and software 4-5 years
Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually, either
individually or at the cash-generating unit level. The assessment
of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective
basis.
Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred over
interest in net fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquiree and the fair
value of the non-controlling interest in the acquire.
Goodwill is stated at cost less any accumulated impairment
losses. For the purpose of impairment testing, goodwill acquired in
a business combination is allocated to each of the cash-generating
units (CGUs), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to
which the goodwill is allocated represents the lowest level within
the entity at which the goodwill is monitored for internal
management purposes. the impairment assessment is done on an annual
basis.
Brand
Brand names acquired in a business combination are recognised at
fair value at the acquisition date and have an indefinite useful
life.
The Group brand names are considered to have indefinite useful
life as the Egyptian brands have been established in the market for
more than 40 years and the health care industry is very stable and
continues to grow.
The brands are not expected to become obsolete and can expand
into different countries and adjacent businesses, in addition,
there is a sufficient ongoing marketing efforts to support the
brands and this level of marketing effort is economically
reasonable and maintainable for the foreseeable future.
Impairment of intangible assets
The Group tests annually whether goodwill and other intangibles
with indefinite lives have suffered any impairment. Impairment
exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair
value less costs of disposal and its value in use.
The recoverable amounts of cash generating units have been
determined based on value in use. The value
in use calculation is based on a discounted cash flow ("DCF")
model.
The cash flows are derived from the budget for the next five
years and do not include restructuring activities that the Group is
not yet committed to or significant future investments that will
enhance the asset's performance of the CGU being tested.
We test for impairment at the smallest grouping of CGUs at which
a material impairment could arise or at the lowest level at which
goodwill is monitored. References to testing being performed at a
CGU level throughout the rest of the financial statements is
referring to the grouping of CGUs at which at the test is
performed. The grouping of CGUs is shown in note 13 where the
assumptions for the impairment assessment are disclosed.
I) Financial instruments - initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
i. Financial assets
Classification
The group reclassifies debt investments when and only when its
business model for managing those assets changes.
The group classifies its investments in debt Instruments in the
following measurement categories:
-- those to be measured subsequently at fair value (either
through OCI or through income statement), and
-- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows.
For investment is equity instrument measured at fair value,
gains and losses will either be recorded in income statement or
OCI.
For investments in equity instruments that are not held for
trading, this will depend on whether the group has made an
irrevocable election at the time of initial recognition to account
for the equity investment at fair value through other comprehensive
income (FVOCI).
Recognition and derecognition
According to the standard purchases and sales of financial
assets are recognised on trade date, being the date on which the
group commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the
group has transferred substantially all the risks and rewards of
ownership.
Measurement
At initial recognition, the group measures a financial asset at
its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed
in profit or loss.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are solely
payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the
group's business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement
categories into which the group classifies its debt
instruments:
-- Amortised cost: Assets that are held for collection of
contractual cash flows, where those cash flows represent solely
payments of principal and interest, are measured at amortised cost.
Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss
arising on derecognition is recognised directly in profit or loss
and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as a
separate line item in the consolidated income statement.
-- FVOCI: Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the assets'
cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken
through OCI, except for the recognition of impairment losses,
interest income and foreign exchange gains and losses, which are
recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in
OCI is reclassified from equity to profit or loss and recognised in
other gains/(losses). Interest income from these financial assets
is included in finance income using the effective interest rate
method. Foreign exchange gains and losses are presented in other
gains/(losses), and impairment expenses are presented as separate
line item in the consolidated income statement.
-- FVPL: Assets that do not meet the criteria for amortised cost
or FVOCI are measured at FVPL. A gain or loss on a debt investment
that is subsequently measured at FVPL is recognised in profit or
loss and presented net within other gains/(losses) in the period in
which it arises. Management has assessed the underlying nature of
the investments and designated upon investment that this should be
treated as an investment held at fair value with movements going
through the income statement on the basis of the size of the
investment and the reasons for making the investment.
Equity instruments
The group subsequently measures all equity investments at fair
value. Where the group's management has elected to present fair
value gains and losses on equity investments in OCI, there is no
subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit
or loss as other income when the group's right to receive payments
is established.
Changes in the fair value of financial assets at FVPL are
recognised in other gains/(losses) in the statement of income as
applicable. Impairment losses (and reversal of impairment losses)
on equity investments measured at FVOCI are not reported separately
from other changes in fair value.
Impairment
The group assesses on a forward-looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost and FVOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit
risk. For trade receivables, the group applies the simplified
approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the
receivables.
Further disclosures relating to impairment of financial assets
are also provided in the following notes:
Ø Disclosures for significant estimates and assumptions Note 4.2
Ø Financial assets
Note 5
Ø Trade receivables Note 16
The Group uses an allowance matrix to measure the ECLs of trade
receivables from individual customers, which comprise a very large
number of small balances.
Loss rates are calculated using a 'roll rate' method based on
the probability of a receivable progressing through successive
stages of delinquency to write-off. Roll rates are calculated
separately for exposures in different segments based on credit risk
characteristics, age of customer relationship.
Loss rates are based on actual credit loss experience over the
past three years. These rates are multiplied by scalar factors to
reflect differences between economic conditions during the period
over which the historical data has been collected, current
conditions and the Groups view of economic conditions over the
expected lives of the receivables.
ii. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified at FVTPL if it
is classified as held for trading, financial liabilities at FVTPL
are measured at fair value and net gains and losses including any
interest expenses are recognised in profit or loss.
Put options included in put option liabilities are carried at
the present value of the redemption amount in accordance with IAS
32 in regard to the guidance on put option on an entity's own
equity shares. The group has written put options over the equity of
its (Bio Lab and Echo Scan) subsidiaries the option on exercise is
initially recognised at the present value of the redemption amount
with a corresponding charge directly to equity. The charge to
equity is recognised separately as written put options reserve and
that this is in line with paragraph 23 of IFRS 10 with the
non-controlling interests, adjacent to non-controlling interests in
the net assets of consolidated subsidiaries.
All of the Group's financial liabilities are classified as
financial liabilities carried at amortised cost using the effective
interest method. The Group does not use derivative financial
instruments or hedge account for any transactions. Unless otherwise
indicated, the carrying amounts of the Group's financial
liabilities are a reasonable approximation of their fair
values.
The Group's financial liabilities include trade and other
payables, put option liabilities, borrowings, and other financial
obligations.
Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement of
income.
iii. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities
simultaneously.
j) Impairment of non-financial assets
Further disclosures relating to impairment of non-financial
assets are also provided in the following notes:
Ø Disclosures for significant assumptions and estimates Note 4.2
Ø Goodwill and intangible assets Note 13
The Group assesses at each reporting date, whether there is an
indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the
Group estimates the asset's recoverable amount. An asset's
recoverable amount is the higher of an asset's or CGU's fair value
less costs of disposal and its value in use. The recoverable amount
is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less
costs of disposal, recent market transactions are taken into
account. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets
and forecast calculations, which are prepared separately for each
of the Group's CGUs to which the individual assets are allocated.
These budgets and forecast calculations generally cover a period of
five years. A long-term growth rate is calculated and applied to
project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the
statement of profit or loss in expense categories consistent with
the function of the impaired asset.
For assets excluding goodwill and indefinite lived intangible
assets, an assessment is made at each reporting date to determine
whether there is an indication that previously recognised
impairment losses no longer exist or have decreased.
If such indication exists, the Group estimates the asset's or
CGU's recoverable amount. A previously recognised impairment loss
is reversed only if there has been a change in the assumptions used
to determine the asset's recoverable amount since the last
impairment loss was recognised. The reversal is limited so that the
carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is
recognised in the consolidated income statement.
Goodwill is tested for impairment annually as at 31 October and
when circumstances indicate that the carrying value may be
impaired. Management takes into consideration any changes that
occur and have impacts between the impairment report date of 31
October and date of end year of 31 December.
Impairment is determined for goodwill by assessing the
recoverable amount of each CGU (or group of CGUs) to which the
goodwill relates. When the recoverable amount of the CGU is less
than its carrying amount, an impairment loss is recognised.
Impairment losses relating to goodwill cannot be reversed in future
periods.
Intangible assets with indefinite useful lives are tested for
impairment annually as at 31 October at the CGU level, as
appropriate, and when circumstances indicate that the carrying
value may be impaired.
Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs of disposal and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are largely independent cash
inflows (CGU). Prior impairments of non-financial assets (other
than goodwill) are reviewed for possible reversal at each reporting
date.
k) Inventories
Raw materials are stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and an
appropriate proportion of variable and fixed overhead expenditure,
the latter being allocated on the basis of normal operating
capacity. Costs are assigned to individual items of inventory on
the basis of weighted average costs. Costs of purchased inventory
are determined after deducting rebates and discounts. Net
realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
l) Cash and short-term deposits
Cash and short-term deposits in the statement of financial
position comprise cash at banks and on hand and short-term deposits
with original maturities of three months or less, which are subject
to an insignificant risk of changes in value.
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts as they are
considered an integral part of the Group's cash management .
m) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is
capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowings are removed from the statement of financial position
when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of
a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the
group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
n) Borrowing costs
General and specific borrowing costs that are directly
attributable to the acquisition, construction or production of a
qualifying asset are capitalised during the period of time that is
required to complete and prepare the asset for its intended use or
sale. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended use or
sale. Investment income earned on the temporary investment of
specific borrowings, pending their expenditure on qualifying
assets, is deducted from the borrowing costs eligible for
capitalisation. Other borrowing costs are expensed in the period in
which they are incurred.
o) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. When the
Group expects some or all of a provision to be reimbursed, for
example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is presented
in the statement of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as a finance
cost.
p) Pensions and other post-employment benefits
A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. The Group
has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay
all employees the benefits relating to employee service in the
current and prior periods. Obligations for contributions to defined
contribution pension plans are recognized as an expense in the
income statement in the periods during which services are rendered
by employees.
q) Segmentation
The Group has four operating segments based on geographical
location rather than two operating segments based on service
provided and considered as one reportable segment due to having
similar characteristics.
r) Leases as lessee (IFRS 16)
At the inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
As a lessee
At commencement or on modification of a contract that contains a
lease component, along with one or more other lease or non-lease
components, the Group accounts for each lease component separately
from the non-lease components. However, for the non-leases element
of the underlying asset, the Group has elected not to separate
non-lease components and account for the lease and non-lease
components as a single lease component. The Group allocates the
consideration in the contract to each lease component on the basis
of its relative stand-alone price and the aggregate stand-alone
price of the non-lease components.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the incremental borrowing rate for the IFRS 16
calculations. This is set based upon the interest rate attached to
the groups financing and adjusted, where appropriate, for specific
factors such as asset or company risk premiums.
Lease payments included in the measurement of the lease
liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date.
- amounts expected to be payable under a residual value guarantee; and
- the exercise price under a purchase option that the Group is reasonably certain to exercise,
- lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option, and
- penalties for early termination of a lease unless the Group is
reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
there is a change in the Group's estimate of the amount expected to
be payable under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase, extension or
termination option or if there is a revised in-substance fixed
lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, to the extent that the right-of-use asset is
reduced to nil, with any further adjustment required from the
remeasurement being recorded in profit or loss.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for lease of low-value assets and short-term
leases. The Group recognises the lease payments associated with
these leases as an expense on a straight-line basis over the lease
term.
4. Key judgments and critical accounting estimates
4.1. Judgement
Useful economic lives of Brands
Management have assessed that the brands within the group which
have a value have an indefinite life. This is based on their strong
history and existence in the market over a large number of years,
in addition to the fact that these brands continue to grow and
become more profitable. As the brands have been assigned an
indefinite life then they are not amortised and assessed for
impairment on an annual basis.
Control over subsidiaries
The group makes acquisitions that often see a non-controlling
interest retained by the seller. The assessment of if the group has
control of these acquisitions in order to consolidate is a critical
judgement in these financial statements.
The group consolidate the subsidiaries assessed for the
following reasons:
1) The group has the majority on shareholder stake
2) The group has the majority on the board of subsidiaries
3) The group has full control of the operations and is involved
in all decisions.
The group consolidate "Echoscan" a subsidiary based in Nigeria
despite of 39.4% indirect ownership for the following reasons:
1) The group has control over all intermediate entities between
the parent and Echoscan
2) The group has a technical service agreement which enables
them to direct and control the operations in Nigeria.
4.2. Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below.
The Group based its assumptions and estimates on parameters
available when the consolidated financial statements were prepared.
Existing circumstances and assumptions about future developments,
however, may change due to market changes or circumstances arising
that are beyond the control of the Group. Such changes are
reflected in the assumptions when they occur.
Impairment of intangible assets
The Group tests annually whether goodwill and other intangibles
with indefinite lives have suffered any impairment. Impairment
exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair
value less costs of disposal and its value in use.
The recoverable amounts of cash generating units have been
determined based on value in use. The value
in use calculation is based on a discounted cash flow ("DCF")
model.
The cash flows are derived from the budget for the next five
years and do not include restructuring activities that the Group is
not yet committed to or significant future investments that will
enhance the asset's performance of the CGU being tested. The
recoverable amount is sensitive to the discount rate used for the
DCF model as well as the expected future cash-inflows and the
growth rate used for extrapolation purposes. For more detailed
assumptions refer to (note 13).
Customer loyalty program
The group operates a loyalty program where customers accumulate
points for purchases made which entitle them to a discount on
future purchases to be utilised within one year. A contract
liability is recognised for the points awarded at the time of the
sale based on the expected level of redemption. At 31 December 2022
the level of points accumulated by customers which had not expired
was equivalent to 160 MEGP. The estimate made by management is how
much of this amount ought to be recognised as a liability based on
future usage. The level of future redemption is estimated using
historical data and adjustments for likely future trends in usage.
Therefore, upon initial recognition of the sale to a customer, if
management expects the group to be entitled to a breakage amount
(i.e., not all points will be redeemed and so it is highly probable
that there will be no significant reversal of revenue) this
breakage amount is recognised within revenue. This assessment is
reviewed periodically, to ensure that only revenue which is highly
probable not to result in a significant reversal in future periods
is recognised. Management has estimated that 61 MEGP out of the
total potential amount that could be redeemed is likely to be
utilised by customers. If the points utilised during the year were
10% more than estimated, this would result in an additional charge
of 6m EGP.
Impairment of financial assets
The loss allowances for financial assets are based on
assumptions about risk of default and expected loss rates. The
group uses judgement in making these assumptions and selecting the
inputs to the impairment calculation, based on the group's history
and existing market conditions, as well as forward-looking
estimates at the end of each reporting period. Details of the key
assumptions and inputs used are disclosed in note 16.
5. Financial assets and financial liabilities
2022 2021
EGP'000 EGP'000
----------- ----------
Cash and cash equivalents 648,512 891,451
Term deposits and treasury bills 167,404 1,458,724
Trade and other receivables (Note 16) 509,806 447,080
Total financial assets 1,325,722 2,797,255
=========== ==========
2022 2021
EGP'000 EGP'000
----------- ----------
Trade and other payables (Note 22) 628,313 749,272
Put option liability 490,695 956,397
Financial obligations 1,062,896 760,674
Loans and borrowings (Note 28) 127,420 105,694
Total other financial liabilities 2,309,324 2,572,037
=========== ==========
Total financial instruments* (983,602) 225,218
* The financial instruments exclude prepaid expenses, deferred
revenue, and tax (current tax, payroll tax, withholding
tax...etc).
The fair values of financial assets and liabilities are
considered to be equivalent to their book value.
The fair values measurements for all the financial assets and
liabilities have been categorized as Level 3, it is fair value
can't be determined by using readily observable measures and
Echo-Scan put option (note 25) has been categorized as Level 3 as
the fair value of the option is based on un-observable inputs using
the best information available in the current circumstances,
including the company's own projection and taking into account all
the market assumptions that are reasonably available.
Financial instruments risk management objectives and
policies
The Group's principal financial liabilities are trade and other
payables, put option liabilities, borrowings and other financial
liabilities. The Group's principal financial assets include trade
and other receivables, financial assets at amortised cost,
financial asset at fair value and cash and cash equivalents that
derive directly from its operations.
The Group is exposed to market risk, credit risk and liquidity
risk. The Group's overall risk management program focuses on the
unpredictability of markets and seeks to minimize potential adverse
effects on the Group's financial performance. The Group's senior
management oversees the management of these risks. The Board of
Directors reviews and agrees policies for managing each of these
risks, which are summarised below.
The board provides written principles for overall risk
management, as well as written policies covering specific areas,
such as foreign exchange risk, interest rate risk, and credit risk,
use of derivative financial instruments and non-derivative
financial instruments, and investment of excess liquidity.
- Market risk
Market risk is the risk that the fair value of future cash flows
of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest
rate risk, currency risk and other price risk, such as equity price
risk and commodity risk. Financial instruments affected by market
risk include borrowings and deposits.
The sensitivity analysis in the following sections relate to the
position as at 31 December 2022 and 2021. The sensitivity analysis
have been prepared on the basis that the amount of net debt, the
ratio of fixed to floating interest rates of the debt and the
proportion of financial instruments in foreign currencies are all
constant.
The analysis excludes the impact of movements in market
variables on provisions, and the non-financial assets and
liabilities of foreign operations. The following assumptions have
been made in calculating the sensitivity analysis:
Ø The sensitivity of the relevant consolidated income statement
item is the effect of the assumed changes in respective market
risks. This is based on the financial assets and financial
liabilities held at 31 December 2022 and 31 December 2021.
- Interest rate risk
The Group is trying to minimize its interest rate exposure,
especially in Egypt region, which has seen several interest rate
rises over the year. Minimising interest rate exposure has been
achieved partially by entering into fixed-rate instruments.
Exposure to interest rate risk
The interest rate profile of the Group's interest-bearing
financial instruments as reported to the management of the group is
as follows:
2022 2021
EGP'000 EGP'000
----------------------------------------- ---------- ---------
Fixed-rate instruments
Financial obligations (note 26) 1,062,896 760,674
CIB BANK Loans and borrowings (note 24) - 13,238
----------------------------------------- ---------- ---------
Variable-rate instruments
AUB BANK Loans and borrowings (note 24) 116,426 84,828
Cash flow sensitivity analysis for variable-rate instruments
A reasonable possible change of 100 basis points in interest
rates at the reporting date would have increased (decreased) profit
or loss by the amounts EGP 1,164k (2021: EGP 980K). This analysis
assumes that all other variables, remain constant.
- Foreign currency risk
Foreign currency risk is the risk that the fair value or future
cash flows of an exposure will fluctuate because of changes in
foreign exchange rates.
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the US Dollar, Sudanese Pound, the Jordanian Dinar
and Nigerian Naira. Foreign exchange risk arises from the Group's
operating activities (when revenue or expense is denominated in a
foreign currency), recognized assets and liabilities and net
investments in foreign operations. However, management aims to
minimize open positions in foreign currencies to the extent that is
necessary to conduct its activities.
Management has set up a policy to require group companies to
manage their foreign exchange risk against their functional
currency. Foreign exchange risk arises when future commercial
transactions or recognised assets or liabilities are denominated in
a currency that is not the entity's functional currency.
The rapid depreciation of the Egyptian pound in 2022 resulted in
an increase in expenses denominated in foreign currencies. The
total amount of these expenses in 2022 amounted to 15M EGP.
At year end, major financial assets / (liabilities) denominated
in foreign currencies were as follows:
31-Dec-22
-----------------------------------------------------------------------------------------------------------
Assets Liabilities Net exposure
-------------
Cash and cash Other Total Put option Finance Trade Total
equivalents assets assets lease payables liability
---------------------- -------- -------- ----------- ---------- ---------- ----------- -------------
US 13,112 - 13,112 - (299,128) (8,840) (307,968) (294,856)
JOD - - - (439,695) - - (439,695) (439,695)
31-Dec-21
-----------------------------------------------------------------------------------------------------------
Assets Liabilities Net exposure
-------------
Cash and cash Other Total Put option Finance Trade Total
equivalents assets assets lease payables liability
---------------------- -------- -------- ----------- ---------- ---------- ----------- -------------
US 364 9,481 9,845 - (56,744) (123,618) (180,362) (170,517)
JOD - - - (921,360) - - (921,360) (921,360)
The following is the exchange rates applied:
Average rate for the year ended
31-Dec-22 31-Dec-21
US Dollars 19.67 15.64
Euros 20.59 18.46
GBP 24.02 21.51
JOD 27.71 22.03
SAR 5.24 4.17
SDG 0.04 0.06
NGN 0.05 0.04
Spot rate for the year ended
31-Dec-22 31-Dec-21
US Dollars 24.70 15.65
Euros 26.27 17.73
GBP 29.70 21.12
JOD 34.78 22.05
SAR 6.57 4.17
SDG 0.04 0.04
NGN 0.06 0.04
At 31 December 2022, if the Egyptian Pound had
weakened/strengthened by 40% against the US Dollar with all other
variables held constant, total equity for the year would have
increased/decreased by EGP (118m) (2021: EGP 68m), mainly as a
result of foreign exchange gains/losses and translation reserve on
the translation of US dollar-denominated financial assets and
liabilities as at the financial position of 31 December 2022.
At 31 December 2022, if the Egyptian Pound had weakened /
strengthened by 10% against the Jordanian Dinar with all other
variables held constant, total equity for the year would have
increased/decreased by EGP (44m) (2021: EGP (92m)), mainly as a
result of foreign exchange gains/losses and translation reserve on
translation of JOD -denominated financial assets and liabilities as
at the financial position of 31 December 2022.
- Price risk
The group's exposure to equity securities price risk arises from
investments held by the group and classified in the balance sheet
as at fair value through profit or loss (FVPL) (note 14).
- Credit risk
Credit risk is the risk a financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and it arises principally from under
the Groups receivables. The Group is exposed to credit risk from
its operating activities (primarily trade receivables) and
financial assets at amortised cost, such as term deposits and
treasury bills.
Credit risk is managed on a group basis, except for credit risk
relating to accounts receivable balances. Each local entity is
responsible for managing and analysing the credit risk for each of
their new clients before standard payment and delivery terms and
conditions are offered. Credit risk arises from cash and cash
equivalents, derivative financial instruments and deposits with
banks and financial institutions, as well as credit exposures to
customers, including outstanding receivables and committed
transactions.
The cash balance and financial assets at amortized cost within
the group is held within financial institutions, 85% with a rating
of B3 and 7% is rated at least Aa3.
Trade re c eiva b les
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of
its customer base, including the default risk associated with the
industry and country or region in which customers operate. Details
of concentration of revenue are included in the operating segment
note (see Note 6).
The risk management committee has established a credit policy
under which each new customer is analysed individually for
creditworthiness before the Group's standard payment and delivery
terms and conditions are offered and credit limit is set for each
customer. The Group's review includes external ratings, if
available, financial statements, industry information and in some
cases bank references. Receivable limits are established for each
customer and reviewed quarterly. Any receivable balance exceeding
the set limit requires approval from the risk management committee.
Outstanding customer receivables are regularly monitored and the
average general credit terms given to contract customers are 45 -
60 days.
An impairment analysis is performed at each reporting date on an
individual basis for major clients. In addition, a large number of
minor receivables are grouped into homogenous groups and assessed
for impairment collectively. The calculation is based on actual
incurred historical data and expected future credit losses. The
Group does not hold collateral as security. That maximum exposure
to credit risk is disclosed in note 16.
Cash and cash equivalents
Credit risk from balances with banks and financial institutions
is managed by the Group's treasury department in accordance with
the Group's policy. Investments of surplus funds are made only with
approved counterparties and within credit limits assigned to each
counterparty. Counterparty credit limits are reviewed by the
Group's Board of Directors on an annual basis and may be updated
throughout the year subject to approval of the Group's management.
The limits are set to minimise the concentration of risks and
therefore mitigate financial loss through a counterparty's
potential failure to make payments.
The maximum exposure to credit risk at the reporting date is the
carrying value of cash and cash equivalents disclosed in Note
17.
- Li q ui d ity r isk
The Group's objective is to maintain a balance between
continuity of funding and flexibility through the use of finance
leases and loans.
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual undiscounted
cashflows:
31 December 2022 1 year or less 1 to 5 years more than 5 years Total
--------------- ------------- ------------------ ----------
Financial obligations 285,962 1,030,750 227,715 1,544,427
Put option liabilities 439,695 51,000 - 490,695
Borrowings 41,681 119,673 - 161,354
Trade and other payables 628,313 - - 628,313
1,395,651 1,201,423 227,715 2,824,789
=============== ============= ================== ==========
31 December 2021 1 year or less 1 to 5 years more than 5 years Total
--------------- ------------- ------------------ ----------
Financial obligations 211,242 701,084 191,229 1,103,555
Put option liabilities 921,360 35,037 - 956,397
Borrowings 31,107 94,490 - 125,597
Trade and other payables 749,272 - - 749,272
1,912,981 830,611 191,229 2,934,821
=============== ============= ================== ==========
Cash flow forecasting is performed in the operating entities of
the group and aggregated by group finance. Group finance monitors
rolling forecasts of the group's liquidity requirements to ensure
it has sufficient cash to meet operational needs. Such forecasting
takes into consideration the group's compliance with internal
financial position ratio targets and, if applicable external
regulatory or legal requirements - for example, currency
restrictions.
The group's management retain cash balances in order to allow
repayment of obligations in due dates, without taking into account
any unusual effects which it cannot be predicted such as natural
disasters. All suppliers and creditors will be repaid over a period
not less 30 days from the date of the invoice or the date of the
commitment.
6. Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the steering committee that makes
strategic decisions.
The preparation of the Group's consolidated financial statements
in conformity with adopted IFRSs requires management to make
judgements, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities.
The Group has four operating segments based on geographical
location rather than two operating segments based on service
provided, as the Group's Chief Operating Decision Maker (CODM)
reviews the internal management reports and KPIs of each geography.
The CODM does not separately review assets and liabilities of the
group by reportable segment.
The Group operates in four geographic areas, Egypt, Sudan,
Jordan, and Nigeria. As a provider of medical diagnostic services,
IDH's operations in Sudan are not subject to sanctions. The revenue
split adjusted EBITDA split (being the key profit measure reviewed
by CODM), impairment loss on trade receivables and net profit and
loss between the four regions is set out below.
Revenue by geographic location
-------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
------------- ------------- -------------- --------------- ----------
31-Dec-22 2,894,042 20,301 611,840 78,864 3,605,047
31-Dec-21 4,108,357 16,644 1,046,107 53,604 5,224,712
Adjusted EBITDA by geographic location
-----------------------------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Nonrecurring items Total
------------- ------------- -------------- --------------- -------------------- ----------
31-Dec-22 1,030,622 (196) 136,195 (17,087) 22,259 1,171,793
31-Dec-21 2,177,160 (500) 331,042 (6,998) 29,033 2,529,737
Impairment loss /(reversed of impairment) on trade receivables by geographic location
----------------------------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
------------------- ------------------- ------------------- -------------------- ---------
31-Dec-22 27,734 3 (628) 2,805 29,914
31-Dec-21 21,537 - 1,412 1,707 24,656
Net profit and loss by geographic location
-------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
------------- ------------- -------------- --------------- ----------
31-Dec-22 514,353 16,978 53,065 (57,813) 526,583
31-Dec-21 1,309,247 (22,533) 214,588 (8,796) 1,492,506
The operating segment profit measure reported to the CODM is
adjusted EBITDA, as follows:
2022 2021
EGP'000 EGP'000
---------- ----------
Profit from operations 832,191 2,262,060
Property, plant and equipment and right of use depreciation 310,092 231,443
Amortization of Intangible assets 7,251 7,201
EBITDA 1,149,534 2,500,704
---------- ----------
Nonrecurring items 22,259 29,033
Adjusted EBITDA 1,171,793 2,529,737
========== ==========
The non- current assets reported to CODM is in accordance with
IFRS are as follows:
Non-current assets by geographic location
-------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
------------- ------------- -------------- --------------- ----------
31-Dec-22 3,039,930 14,993 494,244 121,770 3,670,937
31-Dec-21 2,803,954 7,234 291,880 90,509 3,193,577
7. Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
The repatriation of a declared dividend from Egyptian group
entities are subject to regulation by Egyptian authorities. The
outcome of an Ordinary General Meeting of Shareholders declaring a
dividend is first certified by the General Authority for Investment
and Free Zones (GAFI).
Approval is subsequently transmitted to Misr for Central
Clearing, Depository and Registry (MCDR) to distribute dividends to
all shareholders, regardless of their domicile, following
notification of shareholders via publication in one national
newspapers.
The Group monitors capital on the basis of the net debt to
equity ratio. This ratio is calculated as net debt divided by total
equity. Net debt is calculated as (short-term and long-term
financial obligation plus short-term and long term borrowings) less
cash and cash equivalents and financial assets at amortised
cost.
2022 2021
EGP'000 EGP'000
---------- ------------
Financial obligations (note 26) 1,062,896 760,674
Borrowings (note 28) 127,420 105,694
Less: Financial assets at amortised cost (note 18) (167,404) (1,458,724)
Less: Cash and cash equivalents (Note 17) (648,512) (891,451)
---------- ------------
Net debt / (cash) 374,400 (1,483,807)
========== ============
Total Equity 2,446,981 2,794,359
---------- ------------
Net debt / (cash) to equity ratio 15.3% (53.1%)
No changes were made in the objectives, Policies, or processes
for managing capital during the years ended 31 December 2022 and 31
December 2021.
8. Expense
Included in consolidated income statement are the following:
8.1 Cost of sales
2022 2021
EGP'000 EGP'000
---------- ----------
Raw material 703,693 962,748
Cost of specialized analysis at other laboratories 30,756 24,086
Wages and salaries 613,495 635,407
Property, plant and equipment, right of use depreciation and Amortisation 284,740 213,919
Other expenses 510,300 584,487
Total 2,142,984 2,420,647
========== ==========
8.2 Marketing and advertising expenses
2022 2021
EGP'000 EGP'000
-------- --------
Advertisement expenses 123,442 96,745
Wages and salaries 54,750 44,739
Property, plant and equipment and amortisation 739 518
Other expenses 34,220 21,161
Total 213,151 163,163
-------- --------
8.3 Administrative expenses
2022 2021
EGP'000 EGP'000
--------- ---------------------------
Wages and salaries 142,689 146,929
Property, plant and equipment and right of use depreciation 31,864 24,207
Transactions fees related to aborted Pakistan acquisition 22,259 -
Other expenses 201,721 198,878
Total 398,533 370,014
--------- ---------------------------
8.4 Expenses by nature
2022 2021
EGP'000 EGP'000
---------- ----------
Raw material 703,693 962,748
Wages and Salaries 810,934 827,075
Property, plant and equipment, right of use depreciation and amortisation 317,343 238,644
Advertisement expenses 123,442 96,745
Cost of specialized analysis at other laboratories 30,756 24,086
Transportation and shipping 87,490 101,239
Cleaning expenses 74,290 60,488
Call Center 32,976 33,531
Hospital Contracts 14,357 39,051
Consulting Fees 142,012 112,398
Transactions fees related to aborted Pakistan acquisition 22,259 -
Utilities 49,453 28,307
License Expenses 30,492 19,792
Other expenses 315,171 409,720
Total 2,754,668 2,953,824
---------- ----------
8.5 Auditors' remuneration
The group paid or accrued the following amounts to its auditor
for the financial year ended 31 December 2022 and 2021 and its
associates in respect of the audit of the financial statements and
for other services provided to the group
2022 2021
EGP'000 EGP'000
-------- --------
Fees payable to the Company's auditor for the audit of the Group's annual financial statements 28,919 21,759
The audit of the Company's subsidiaries pursuant to legislation 9,443 6,998
Assurance services 197 302
38,559 29,059
======== ========
8.6 Net finance income/(costs)
2022 2021
EGP'000 EGP'000
---------- -----------
Loss on hyperinflationary net monetary position - (6,976)
Interest expense (122,677) (98,003)
Net foreign exchange loss - (17,912)
Bank Charges (12,909) (20,026)
---------- -----------
Total finance costs (135,586) (142,917)
---------- -----------
Interest income 95,371 113,178
Gain on hyperinflationary net monetary position 16,179 -
Net foreign exchange Gain 188,442 -
---------- -----------
Total finance income 299,992 113,178
---------- -----------
Net finance income / (cost) 164,406 (29,739)
========== ===========
8.7 Employee numbers and costs
The average number of persons employed by the Group (including
directors) during the year and the aggregate payroll costs of these
persons, analysed by category, were as follows:
2022 2021
------------------------- --------------------------------- ------
Medical Administration Total Medical Administration Total
and market and market
-------- --------------- ------ -------- --------------- ------
Average number
of employees 5,428 1,290 6,718 5,364 1,024 6,388
2022 2021
EGP'000 EGP'000
-------------------------------------------- ---------------------------------------------
Medical Administration and Total Medical Administration and Total
market market
-------- ------------------------ -------- -------- ------------------------- --------
Wages and salaries 566,385 185,628 752,013 600,527 183,611 784,138
Social security costs 36,053 8,925 44,978 26,735 6,003 32,738
Contributions to defined
contribution plan 11,057 2,886 13,943 8,145 2,054 10,199
Total 613,495 197,439 810,934 635,407 191,668 827,075
======== ======================== ======== ======== ========================= ========
Details of Directors' and Key Management remuneration and share
incentives are disclosed in the Remuneration Report, the
Remuneration Committee Report on note 27.
8.8 Fair value losses on financial assets at fair value through
profit or loss
During the third quarter of 2022, ALmokhtabar and Alborg
companies invested in Global Depositary Receipt (GDR) tradable in
stock exchanges, where the companies purchased 27,304 million
shares, EGP 1,011.4 M from the Egyptian Stock Exchange and sold
them during the same period on the London Stock exchange at USD
45.8 M excluding the transaction cost.
Number of shares '000 2022
------------
EGP'000
listed equity securities Shares bought 27,304 (1,011,376)
Shares sale 27,304 868,426
(142,950)
============
9. Income tax
a) Amounts recognised in profit or loss.
2022 2021
EGP'000 EGP'000
---------- ------------------
Current year tax (210,477) (579,262)
WHT suffered (122,731) (68,737)
---------- ------------------
Current tax (333,208) (647,999)
DT on undistributed reserves 46,554 (106,767)
DT on reversal of temporary differences (40,410) 14,951
Total Deferred tax 6,144 (91,816)
Tax expense recognized in profit or loss (327,064) (739,815)
========== ==================
b) Reconciliation of effective tax rate
The company is considered to be a UK tax resident, and subject
to UK taxation. Dividend income into the company is exempt from
taxation when received from a wholly controlled subsidiary, and
costs incurred by the company are considered unlikely to be
recoverable against future UK taxable profits and therefore form
part of our unrecognised deferred tax assets. Our judgement on tax
residency has been made based on where we hold board meetings, our
listing on the London Stock Exchange and interactions with
investors, and where our company secretarial function is physically
based. Our external company secretarial function manages a number
of activities of our parent and its board. Board meetings are
chaired in London and are now largely taking place physically in
London with the expectation of one physical board meeting a year in
Cairo.
2022 2021
EGP'000 EGP'000
--------- -----------------------
Profit before tax 853,647 2,232,321
Profit before tax multiplied by rate of corporation tax in Egypt of 22.5% (2021:
22.5%) 192,071 502,272
Effect of tax rate in UK of 19% (2021: UK 19%) 1,871 3,445
Effect of tax rates in Jordan, Sudan, and Nigeria of 21%, 30% and 30%
respectively (2021:
21%, 30% and 30%) (3,317) (6,676)
Tax effect of:
Recognition of previously unrecognised deferred tax - (24,435)
Deferred tax not recognised 19,960 28,132
Deferred tax arising on undistributed dividend 76,17 7 175,504
Non-deductible expenses for tax purposes - employee profit share 16,653 39,419
Non-deductible expenses for tax purposes - other 23,64 9 22,154
Tax expense recognised in profit or loss 327,064 739,815
========= =======================
Def e rr e d tax
Defe r re d t ax rel a t es to the f o ll o win g:
2022 2021
--------------------------------------------------------- ------------ ------------
Assets Liabilities Assets Liabilities
EGP'000 EGP'000 EGP'000 EGP'000
-------- ------------ -------- ------------
Property, plant and equipment (35,804) - (28,925)
Intangible assets (109,118) - (105,358)
Undistributed reserves from group subsidiaries (176,871) - (223,425)
Tax Losses 61 25,559 -
Total deferred tax assets - (liability) 61 (321,793) 25,559 (357,708)
(321,732) (332,149)
======== ============ ======== ============
All deferred tax amounts are expected to be recovered or settled
more than twelve months after the reporting period.
The difference between net deferred tax balances recorded on the
income statement is as follows:
2022 Net Balance 1 Deferred tax Effect of WHT tax Net Balance 31
January recognized in translation to paid December
profit or loss presentation
currency
------------------- ------------------- ------------------- ------------------- ------------- -------------------
Property, plant
and equipment (28,925) (6,315) (564) - (35,804)
Intangible assets (105,358) (3,760) - - (109,118)
Undistributed
dividend from
group
subsidiaries (223,425) (76,177) - 122,731 (176,871)
Tax losses 25,559 (30,335) 4,837 - 61
(332,149) (116,587) 4,273 122,731 (321,732)
=================== =================== =================== ============= ===================
2021 Net balance at 1 Deferred tax Effect of WHT tax paid Net balance 31
January recognised in translation to December
profit or loss presentation
currency
------------------- ------------------- ------------------- ------------------- ------------- -------------------
Property, plant
and equipment (18,333) (10,592) - - (28,925)
Intangible assets (106,702) 1,344 - - (105,358)
Undistributed
dividend from
group
subsidiaries (116,658) (175,504) - 68,737 (223,425)
Tax losses 1,360 24,199 - - 25,559
(240,333) (160,553) - 68,737 (332,149)
=================== =================== =================== ============= ===================
All movements in the deferred tax asset/liability in the year
have been recognised in the profit or loss account.
Deferred tax liabilities and assets have been calculated based
on the enacted tax rate at 31 December 2022 for the country the
liabilities and assets has arisen. The enacted tax rate in Egypt is
22.5% (2021: 22.5%), Jordan 21% (2021: 21%), Sudan 30% (2021: 30%)
and Nigeria 30% (2021: 30%).
* Undistributed reserves from group subsidiaries
The Group's dividend policy is to distribute any excess cash
after taking into consideration all business cash requirements and
potential acquisition considerations. The expectation is to
distribute profits held within subsidiaries of the Group in the
near foreseeable future. During 2015 the Egyptian Government
imposed a tax on dividends at a rate of 5% of dividends distributed
from Egyptian entities. On September 30, 2020, the Egyptian
government issued a law to increase the tax rate to 10%. As a
result, a deferred tax liability has been recorded for the future
tax expected to be incurred from undistributed reserves held within
the Group which will be taxed under the new legislation imposed and
were as follows:
2022 2021
EGP'000 EGP'000
--------- ---------
Al Mokhtabar Company for Medical Labs 44,640 85,546
Alborg Laboratory Company 31,035 38,545
Integrated Medical Analysis Company 83,277 75,841
Al Makhbariyoun Al Arab Group 17,919 23,493
176,871 223,425
========= =========
Unrecognized deferred tax assets
The following items make up unrecognised deferred tax assets.
The local tax law does not permit deductions for provisions against
income tax until the provision becomes realised. No deferred tax
asset has been recognised on tax losses for both Echo-Scan Nigeria
and Wayak Egypt due to the uncertainty of the available future
taxable profit, which the Group can use the benefits therefrom.
2022 2022 2021 2021
Gross Amount Tax Effect Gross Amount Tax Effect
EGP'000 EGP'000 EGP'000 EGP'000
------------- ----------- ------------------- --------------------
Impairment of trade receivables (Note 16) 136,981 30,821 101,183 22,766
Impairment of other receivables (Note 16) 8,604 1,936 8,585 1,932
Provision for legal claims (Note 21) 3,519 792 4,088 920
Tax losses* 382,999 93,768 320,391 78,142
------------- ----------- -------------------
532,103 127,317 434,247 103,760
Unrecognized deferred tax asset 127,317 103,760
There is no expiry date for the Unrecognized deferred tax
assets.
* The company has carried forward tax losses on which no
deferred tax asset is recognised as follows:
2022 2022 2021 2021
Gross Amount Tax Effect Gross Amount Tax Effect
Company Country EGP'000 EGP'000 EGP'000 EGP'000
------------------------------------- ------------------- ------------- ----------- ------------- -----------
Integrated Diagnostics Holdings plc Jersey 325,155 81,289 271,689 67,922
Dynasty Group Holdings Limited England and Wales 11,359 2,158 13,446 2,555
Eagle Eye-Echo Scan Limited Mauritius 1,839 276 3,556 533
WAYAK Pharma Egypt 20,564 4,627 16,269 3,660
Medical Genetic Center Egypt 15,156 3,410 6,421 1,445
Golden care Egypt 8,926 2,008 9,010 2,027
382,999 93,768 320,391 78,142
============= =========== ============= ===========
10. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit for the year
attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
year. There are no dilutive effects from ordinary share and no
adjustment required to weighted-average numbers of ordinary
shares.
The following table reflects the income and share data used in
the basic and diluted EPS computation:
2022 2021
-------- ----------
Profit attributable to ordinary equity holders of the parent for basic earnings EGP'000 541,110 1,412,609
Weighted average number of ordinary shares for basic and dilutive EPS'000 600,000 600,000
-------- ----------
Basic and dilutive earnings per share EGP'000 0.90 2.35
-------- ----------
Earnings per diluted share are calculated by adjusting the
weighted average number of shares by the effects resulting from all
the ordinary potential shares that causes this dilution.
The Company has no potentially dilutive shares as of the 31
December 2022 and 31 December 2021, therefore; the earnings per
diluted share are equivalent to basic earnings per share.
11. Property, plant and equipment
Land & Medical, & Leasehold Fixtures, Building & Payment on Total
Buildings electric improvements fittings & Leasehold account EGP'000
EGP'000 equipment EGP'000 vehicles improvements EGP'000
EGP'000 EGP'000 in
construction
EGP'000
-------------- ------------- ------------- ------------- ------------- -------------- ----------
Cost
At 1 January
2021 332,345 565,697 254,473 73,261 21,208 5,423 1,252,407
Additions* 51,357 285,848 75,993 25,630 4,016 1,338 444,182
Hyper
inflation - (8,740) - - - - (8,740)
Disposals (2,471) (8,042) (1,092) (1,567) - - (13,172)
Exchange
differences (348) (10,135) (2,317) (1,358) (1,141) - (15,299)
Transfers - - 8,146 - (8,146) - -
At 31
December
2021 380,883 824,628 335,203 95,966 15,937 6,761 1,659,378
Additions* 38,275 179,954 114,235 25,287 17,258 3,853 378,862
Hyper
inflation - 6,628 - - - - 6,628
Disposals - (6,877) (523) (8,617) - - (16,017)
Exchange
differences 7,803 107,534 53,675 20,559 246 - 189,817
Transfers - - 4,852 - (4,852) - -
At 31
December
2022 426,961 1,111,867 507,442 133,195 28,589 10,614 2,218,668
============== ============= ============= ============= ============= ============== ==========
Depreciation
and
impairment
At 1 January
2021 47,724 245,929 138,512 27,229 - - 459,394
Depreciation
charge for
the year 5,797 97,386 40,569 8,074 - - 151,826
Disposals - (4,522) (916) (1,185) - - (6,623)
Exchange
differences (31) (4,987) (935) (1,074) - - (7,027)
-------------- ------------- ------------- ------------- ------------- -------------- ----------
At 31
December
2021 53,490 333,806 177,230 33,044 - - 597,570
Depreciation
charge for
the year 6,765 131,569 58,404 10,255 - - 206,993
Disposals - (3,414) (457) (1,734) - - (5,605)
Exchange
differences 1,323 51,908 26,528 13,689 - - 93,448
At 31
December
2022 61,578 513,869 261,705 55,254 - - 892,406
Net book
value
-------------- ------------- ------------- ------------- ------------- -------------- ----------
At 31-12-2022 365,383 597,998 245,737 77,941 28,589 10,614 1,326,262
============== ============= ============= ============= ============= ============== ==========
At 31-12-2021 327,393 490,822 157,973 62,922 15,937 6,761 1,061,808
============== ============= ============= ============= ============= ============== ==========
*During year 2022 the additions include EGP 171 m related to
Alborg Scan branches, including 79m related to new equipment and
other 33m related to a new branch at Nasr city. This amount does
not Include any capitalised borrowing costs and is ready to
use.
During year 2021 the additions include EGP 154m related to
Alborg Scan branches, EGP 79.3m related to medical equipment and
new branch Capital Business EGP 48.7m. This amount does not Include
any capitalised borrowing costs and is ready to use.
12. Intangible assets and goodwill
Goodwill Brand Name Software Total
EGP'000 EGP'000 EGP'000 EGP'000
----------- ----------- --------- -----------
Cost
At 1 January 2021 1,261,808 383,922 67,157 1,712,887
Additions - - 10,354 10,354
Effect of movements in exchange rates (843) (13) (117) (973)
----------- ----------- --------- -----------
At 31 December 2021 1,260,965 383,909 77,394 1,722,268
----------- ----------- --------- -----------
Additions - - 9,076 9,076
Effect of movements in exchange rates 30,858 11,642 6,366 48,866
----------- ----------- --------- -----------
At 31 December 2022 1,291,823 395,551 92,836 1,780,210
=========== =========== ========= ===========
Amortisation and impairment
At 1 January 2021 1,849 - 51,283 53,132
Impairment* 341 47 - 388
Amortisation - - 7,201 7,201
Effect of movements in exchange rates 2,362 325 (7) 2,680
----------- ----------- --------- -----------
At 31 December 2021 4,552 372 58,477 63,401
Impairment* 1,755 - - 1,755
Amortisation - - 7,251 7,251
Effect of movements in exchange rates 66 9 4,092 4,167
At 31 December 2022 6,373 381 69,820 76,574
=========== =========== ========= ===========
Net book value
At 31 December 2022 1,285,450 395,170 23,016 1,703,636
----------- ----------- --------- -----------
At 31 December 2021 1,256,413 383,537 18,917 1,658,867
=========== =========== ========= ===========
* The Group sees there is an impairment indicator on the
goodwill related to Medical Genetics Center company due to the
negative free cash flow and EBITDA of the company.
13. Goodwill and intangible assets with indefinite lives (note
3.2-h)
Goodwill acquired through business combinations and intangible
assets with indefinite lives are allocated to the Group's CGUs as
follows:
2022 2021
EGP'000 EGP'000
---------- ----------
Medical Genetics Center
Goodwill - 1,755
---------- ----------
- 1,755
---------- ----------
Al Makhbariyoun Al Arab Group ("Biolab")
Goodwill 72,783 46,145
Brand name 31,785 20,152
---------- ----------
104,568 66,297
---------- ----------
Alborg Laboratory Company ("Al-Borg")
Goodwill 497,275 497,275
Brand name 142,066 142,066
639,341 639,341
---------- ----------
Al Mokhtabar Company for Medical Labs
("Al-Mokhtabar")
Goodwill 699,102 699,102
Brand name 221,319 221,319
920,421 920,421
---------- ----------
Echo-Scan
Goodwill 16,290 12,136
16,290 12,136
---------- ----------
Balance at 31 December 1,680,620 1,639,950
========== ==========
The G roup perf o rmed its an n u al im p a i rment te st in
October 2022. Nothing occurred between the impairment test and the
balance sheet date that would require the assumptions in the models
to be updated. T he G roup c o nsi d ers the r e la t io n s h ip b
e t w een i ts m ark et ca p i t al i sat i on a nd i ts b o ok val
u e, amo ng ot h er fa c to r s, w h en r e vie w i ng f or i n d i
cato rs of i m pa i r m e n t.
Assumptions used in value in use calculations and sensitivity to
changes in assumptions
IDH worked with Alpha Capital, management's expert, to prepare
an impairment assessments of the Group's CGUs. The assessment was
carried out based on business plans provided by IDH.
These plans have been prepared based on criteria set out
below:
Year 2022
Bio Lab Al-Mokhtabar Al-Borg Echo-Scan
-------- ------------- -------- ----------
Average annual patient growth rate
from 2023 -2029 5% 8% 8% 21%
Average annual price per test growth
rate from 2023 -2029 0% 6% 7% 5%
Annual revenue growth rate from 2023
-2029 3% 13% 13% 33%
Average gross margin from 2023 -2029 46% 51% 45% 81%
Terminal value growth rate from 1
January 2029 3% 5% 5% 4%
Discount rate 19% 25% 25% 28%
Year 2021
----------------------------------------------------
Ultra Lab Bio Lab Al-Mokhtabar Al-Borg Echo-Scan
--------- ------- ------------ ------- -----------
Average annual patient growth rate from 2022 -2026 4% 0.2% -0.1% 2% 26%
Average annual price per test growth rate from 2022 -2026 49% -7% -2% 3% 7%
Annual revenue growth rate from 2022 -2026 56% -5% 0.4% 6% 40%
Average gross margin from 2022 -2026 35% 38% 52% 48% 39%
Terminal value growth rate from 1 January 2027 3% 3% 5% 5% 3%
Discount rate 40.6% 14.8% 20.19% 20.4% 21.7%
Management have compared the recoverable amount of CGUs to the
carrying value of CGUs. The recoverable amount is the higher of
value in use and fair value less costs of disposal. In the exercise
performed and the assumptions noted above the value in use was
noted to be higher than the fair value less costs of disposal.
During year 2022, The management has conducted business plan
projection with the help of a management's expert, (Alpha Capital),
using the assumptions above to be able to calculate the net present
value of the asset in use and determine the recoverable amount. The
projected cash flows from 2024- 2029 have been based on detailed
forecasts prepared by management for each CGU and a terminal value
thereafter. Management have used experience and historical trends
achieved to determine the key growth rate and margin assumptions
set out above. The terminal value growth rate applied is not
considered to exceed the average growth rate for the industry and
geographic locations of the CGUs.
The Group performed a distinct sensitivity analysis for the
December 31, 2022 balances related to the Goodwill recorded for
Echo - Scan due to the challenges faced by the business given the
Nigerian market situation. The analysis is demonstrated as
follows:
Year 2022
Scenario CGU
Enterprise carrying
Value Value Headroom
EGP'000 EGP'000 EGP'000
Pathology number of patients growth was decreased starting FY25, with an average of -4% from
FY25-29 145,480 35,253 110,227
The total number of patients growth was decreased starting FY25, with an average of -4% from
FY25-29 133,774 35,253 98,521
Senstising Revenues by -20% across all years 97,341 35,253 62,088
As a sensitivity analysis, Management considered a change in the
discount rates of 2% increase to reflect additional risk that could
reasonably be foreseen in the marketplaces in which the Group
operates. This did not result in an impairment under any of the
CGUs.
Management has also considered a change in the terminal growth
rate by 1% decrease to reflect additional risk, which did not
result in any impairment under any of the CGUs.
This recoverable amount is then compared to the carrying value
of the asset as recorded in the books and records of IDH plc. The
WACC has been used considering the risks of each CGU. These risks
include country risk, currency risk as well as the beta factor
relating to the CGU and how it performs relative to the market.
The headroom between the carrying value and value in use as
follows:
Company Value in use CGU carrying value Headroom
EGP'000 EGP'000 EGP'000
------------- ------------- ------------------- ----------
Almokhtabar 3,757,764 1,421,626 2,336,138
Alborg 2,459,724 1,458,547 1,001,177
Bio Lab 513,395 295,185 218,210
Echo Scan 159,299 35,253 124,046
14. Financial asset at fair value through profit and loss
2022 2021
EGP'000 EGP'000
-------- --------
Equity investment* 18,064 10,470
Balance at 31 December 18,064 10,470
======== ========
* On August 17, 2017, Almakhbariyoun AL Arab (seller) has signed
IT purchase Agreement with JSC Mega Lab (Buyer) to transfer and
install the Laboratory Information Management System (LIMS) for a
purchase price amounted to USD 400 000, which will be in the form
of 10% equity stake in JSC Mega Lab. In case the valuation of the
project is less or more than USD 4,000,000, the seller stake will
be adjusted accordingly, in a way that the seller equity stake
shall not fall below 5% of JSC Mega Lab.
- ownership percentage in JSC Mega Lab at the transaction date
on April 8, 2019, and as of December 31, 2022, was 8.25%.
- On April 8, 2019, Al Mokhabariyoun Al Arab (Biolab) has signed
a Shareholder Agreement with JSC Mega Lab and JSC Georgia
Healthcare Group (CHG), whereas, BioLab Shall have a put option,
exercisable within 12 months immediately after the expiration of
five(5) year period from the signing date, which allows BioLab
stake to be bought out by CHG at a price of the equity value of
BioLab Shares/total stake (being USD 400,000.00) plus 15% annual
IRR (including preceding 5 Financial years). After the expiration
of above 12 months from the date of the put option period
expiration, which allows CHG to purchase Biolab's all shares at a
price of equity value of Biolab's stake (having value of USD
400,000) plus higher of 20% annual IRR or 6X EV/EBITDA (of the
financial year immediately preceding the call option exercise date.
In case the Management Agreement or the Purchase Agreement and/or
the SLA is terminated/cancelled within 6 months period from the
date of such termination/cancellation, CHG shall have a call
option, which allows the CHG to purchase Biolab's all Shares at a
price of the equity value of BioLab's stake in JSC Mega Lab (having
value of USD 400,000.00) plus 205 annual IRR. If JCI accreditation
is not obtained, immediately after the expiration of the additional
12 months period of the CHG shall have a call option (the
Accreditation Call option), exercisable within 6 months period,
which allows CHG to purchase BioLab's all Shares at a price of the
equity value of BioLab's stake in JSC Mega Lab (having value of USD
400,00.00) plus 20% annual IRR.
15. I n ven t o r ies
2022 2021
EGP'000 EGP'000
------------ ---------
Chemicals and operating supplies 265,459 222,612
265,459 222,612
============ =========
Dur i ng 2 022, EGP 703,693K (2021: EGP 962,748k) w as re c o g
nised as an expense for inventories, this was recognised in cost of
sales. The major balance of the raw material is represented in the
Kits, slow-moving items of those Kits are immaterial. It is noted
that day's inventory outstanding (based on the average of opening
and closing inventory) stands as 127 days at 31 Dec 2022. There has
been no impairment of inventory during 2022 (2021: EGP nil).
16. Trade and other receivables
2022 2021
EGP'000 EGP'000
--------- ---------
Trade receivables - net 395,220 371,051
Prepayments 34,081 22,647
Due from related parties note (27) 5,930 5,237
Other receivables 106,363 67,974
Accrued revenue 2,293 2,818
543,887 469,727
========= =========
As at 31 December 2022, the expected credit loss related to
trade and other receivables was EGP 145,586K (2021: EGP 109,768k).
Below show the movements in the provision for impairment of trade
and other receivables:
2022 2021
EGP'000 EGP'000
--------- ---------
At 1 January 109,768 86,237
Charge for the year 29,914 24,656
Utilised - -
Unused amounts reversed - (32)
Exchange differences 5,904 (1,093)
At 31 December 145,586 109,768
========= =========
The Group allocates each exposure to a credit risk grade based
on data that is determined to be predictive of the risk of loss
(historical customer's collection, Customers' contracts conditions)
and applying experienced credit judgement. Credit risk grades are
defined using qualitative and quantitative factors that are
indicative of the risk of default.
Expected credit loss assessment is based on the following:
1. The customer list was divided into 9 sectors,
2. Each sector was divided according to customers aging,
3. Each sector was studied according to the historical events of
each sector. According to the study conducted, the expected default
rate was derived from each of the aforementioned period,
4. General economic conditions.
The results of the quarterly assessment will increase/decrease
the percentage allocated to each period. Balances overdue by at
least one year are fully provided for. On a quarterly basis, IDH
revises its forward-looking estimates and the general economic
conditions to assess the expected credit loss.
Impairment of trade and notes receivables
The requirement for impairment of trade receivables is made
through monitoring the debts aging and reviewing customer's credit
position and their ability to make payment as they fall due. An
impairment is recorded against receivables for the irrecoverable
amount estimated by management. At the year end, the provision for
impairment of trade receivables was EGP 136,981K (31 December 2021:
EGP 101,183K)
A reasonable possible change of 100 basis points in the expected
credit loss at the reporting date would have increased (decreased)
profit or loss by the amount of EGP 5,241K. This analysis assumes
that all other variables remain constant.
The following table provides information about the exposure to
expected credit loss (ECL) for trade receivables from individual
customers for the nine segments at:
Weighted average Gross carrying Loss
loss rate amount allowance
31-Dec-22 EGP'000 EGP'000 EGP'000
----------------------------- ------------------- ---------------------- -----------------------------
Current (not past due) 1.11% 174,249 (1,927)
1-30 days past due 4.06% 85,072 (3,451)
31-60 days past due 4.55% 65,470 (2,982)
61-90 days past due 13.61% 32,563 (4,433)
91-120 days past due 18.12% 25,868 (4,688)
121-150 days past due 27.81% 19,275 (5,360)
More than 150 days past due 88.00% 129,704 (114,140)
Gross carrying Loss
Weighted average amount allowance
loss rate
31-Dec-21 EGP'000 EGP'000 EGP'000
----------------------------- ------------------- ---------------------- -----------------------------
Current (not past due) 0.00% 151,592 -
1-30 days past due 1.79% 85,764 (1,532)
31-60 days past due 5.25% 74,505 (3,911)
61-90 days past due 5.89% 31,028 (1,828)
91-120 days past due 9.06% 17,469 (1,582)
121-150 days past due 18.45% 8,576 (1,582)
More than 150 days past due 87.89% 103,300 (90,748)
As at 31 D e c e m b e r, the ag e ing a n al y s is of t r ade
r e c e iva b les i s as f ol l ow s:
Total < 30 days 30-60 days 61-90 days > 90 days
======== ========== =========== =========== ==========
2022 395,220 253,943 62,488 28,130 50,659
2021 371,051 235,824 70,594 29,200 35,433
17. Cash and cash equivalents
2022 2021
------------ ---------
Cash at banks and on hand 399,957 261,430
Treasury bills (less than 3 months) 185,513 150,431
Term deposits (less than 3 months) 63,042 479,590
------------ ---------
648,512 891,451
============ =========
Cash at b an ks e ar ns i n t er e st at f l oat i ng ra t es
bas ed on d ai ly b ank d e pos it r at e s. S h or t -t e rm d e
pos i ts and treasury bills a re m ade for va r y i ng p e r i ods
of b e t w een o ne d ay a nd t h r ee mo n t h s, d e p en d i ng
on t he i mm e d i ate cash r e q ui r em e n ts of the G rou p, a
nd e a rn inte r est at the re sp ect i ve s hor t - t erm d e p o
s it weighted average rate 8.17% (2021: 7.75%) and Treasury bills
13.30% (2021: 12.44%) per annum.
18. Financial assets at amortised cost
2022 2021
EGP'000 EGP'000
-------- ----------
Term deposits (more than 3 months) 60,200 148,136
Treasury bills (more than 3 months) 107,204 1,310,588
-------- ----------
167,404 1,458,724
The maturity date of the fixed term deposit and treasury bills
is between 3-12 months and the effective interest rate on the
treasury bills is 12.92% (2021: 12.44%) and deposits is 5.34%
(2021: 7.75%).
19. Share capital and reserves
The Company's ordinary share capital is $150,000,000 equivalent
to EGP 1,072,500,000.
All shares are authorised and fully paid and have a par value
$0.25.
31-Dec-22 31-Dec-21
In issue at beginning of the
year 600,000,000 600,000,000
In issue at the end of the
year 600,000,000 600,000,000
The table below shows the number of shares held by Hena Holdings Limited
and Actis IDH BV as well as how many shares are then held which are floating
and not held by companies that do not have individuals on the board of
the Group. Ordinary shares Ordinary shares
Ordinary share capital Number of % of contribution Par value
Name shares USD
Hena Holdings Limited 160,250,305 26.71% 40,062,576
Actis IDH B V 126,000,000 21% 31,500,000
Free floating 313,749,695 52.29% 78,437,424
600,000,000 100% 150,000,000
Capital reserve
The capital reserve was created when the Group's previous parent
company, Integrated Diagnostics Holdings LLC - IDH (Caymans)
arranged its own acquisition by Integrated Diagnostics Holdings
PLC, a new legal parent. The balances arising represent the
difference between the value of the equity structure of the
previous and new parent companies.
Legal reserves
Legal reserve was formed based on the legal requirements of the
Egyptian law governing the Egyptian subsidiaries. According to the
Egyptian subsidiaries' article of association 5% (at least) of the
annual net profit is set aside to from a legal reserve. The
transfer to legal reserve ceases once this reserve reaches 50% of
the entity's issued capital. If the reserve falls below the defined
level, then the entity is required to resume forming it by setting
aside 5% of the annual net profits until it reaches 50% of the
issued share capital.
Put option reserve
Through acquisitions made within the Group, put option
arrangements have been entered into to purchase the remaining
equity interests in subsidiaries from the vendors at a subsequent
date. At acquisition date an initial put option liability is
recognised and a corresponding entry recognised within the put
option reserve. After initial recognition the accounting policy for
put options is to recognise all changes in the carrying value of
the liability within put option reserve. When the put option is
exercised by the vendors the amount recognised within the reserve
will be reversed.
Translation reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
20. Distributions made and proposed
2022 2021
EGP'000 EGP'000
Cash dividends on ordinary shares declared
and paid:
US$ 0.116 per qualifying ordinary share (2021:
US$ 0.0485) 1,304,805 455,182
1,304,805 455,182
After the balance sheet date, the following
dividends were proposed by the directors (the
dividends have not been provided for): - 1,300,000
Nil per share (2021: EGP 2.17) per share - 1,300,000
21. Provisions
Provision for legal
claims
EGP'000
At 1 January 2022 4,088
Provision made during the year 3,950
Provision used during the year (3,997)
Provision reversed during the year (522)
At 31 December 2022 3,519
Current -
Non- Current 3,519
Provision for legal
claims
EGP'000
At 1 January 2021 3,217
Provision made during the year 2,146
Provision used during the year (993)
Provision reversed during the year (282)
At 31 December 2021 4,088
Current -
Non- Current 4,088
Legal claims provision
The amount comprises the gross provision in respect of legal
claims brought against the Group. Management's opinion, after
taking appropriate legal advice, is that the outcome of these legal
claims will not give rise to any significant loss beyond the
amounts provided as at 31 December 2022.
22. Trade and other payables
2022 2021
EGP'000 EGP'000
Trade payables 269,782 311,321
Accrued expenses 241,060 325,677
Due to related parties note (27) 25,058 13,234
Other payables 98,204 99,040
Deferred revenue 60,948 24,603
Accrued finance cost 6,043 3,479
701,095 777,354
23. Current put option liability
2022 2021
EGP'000 EGP'000
Put option - Biolab Jordan 439,695 921,360
439,695 921,360
The accounting policy for put options after initial recognition
is to recognise all changes in the carrying value of the put
liability within equity.
Through the historical acquisitions of Makhbariyoun Al Arab the
Group entered into separate put option arrangements to purchase the
remaining equity interests from the vendors at a subsequent date.
At acquisition a put option liability has been recognised for the
net present value for the exercise price of the option.
The options is calculated at seven times EBITDA of the last 12
months - Net Debt and exercisable in whole from the fifth
anniversary of completion of the original purchase agreement, which
fell due in June 2016. The vendor has not exercised this right at
31 December 2022. It is important to note that the put option
liability is treated as current as it could be exercised at any
time by the NCI. However, based on discussions and ongoing business
relationship, there is no expectation that this will happen in next
21 months. The option has no expiry date.
24. Borrowings
The terms and conditions of outstanding loans are as
follows:
Currency Nominal Maturity 31 Dec 22 31 Dec 21
interest rate
A) CIB BANK EGP Secured rate 9.5% 5 April 2022 - 13,238
B) AUB BANK EGP CBE corridor rate*+1% 26 January 2027 116,426 84,828
- 116,426 98,066
Amount held as:
Current liability 22,675 21,721
Non- current liability 93,751 76,345
116,426 98,066
A) In April 2017 AL-Mokhtabar for medical lab, one of IDH
subsidiaries, was granted a medium term loan amounting to EGP 110m
from Commercial International Bank "CIB Egypt" to finance the
purchase of the new administrative building for the group. Starting
May 2021, the loan has been secured through restricted time
deposits, It is also important to note that the Company's facility
with the Commercial International Bank (CIB) was fully repaid as of
April 2022.
B) In July 2018, AL-Borg lab, one of IDH subsidiaries, was
granted a medium term loan amounting to EGP 130.5m from Ahli United
Bank "AUB Egypt" to finance the investment cost related to the
expansion into the radiology segment. As at 31 December 2022 only
EGP 125 M had been drawn down from the total facility available
with 9m had been repaid. Loan withdrawal availability period was
extended till July 2023 and the loan will be fully repaid by
January 2027.
The loan contains the following financial covenants which if
breached will mean the loan is repayable on demand:
1. The financial leverage shall not exceed 0.7 throughout the period of the loan
"Financial leverage": total bank debt divided by net equity
2. The debt service ratios (DSR) shall not be less than 1.35 starting 2020
"Debt service ratio": cash operating profit after tax plus
depreciation for the financial year less annual maintenance on
machinery and equipment adding cash balance (cash and cash
equivalents) divided by total financial payments.
"Cash operating profit": Operating profit after tax, interest
expense, depreciation and amortization, is calculated as follows:
Net income after tax and unusual items adding Interest expense,
Depreciation, Amortisation and provisions excluding tax related
provisions less interest income and Investment income and gains
from extraordinary items.
"Financial payments": current portion of long-term debt
including interest expense and fees and dividends
distributions.
3. The current ratios shall not be less than 1.
"Current ratios": Current assets divided current
liabilities.
*As at 31 December 2022 corridor rate 17.25% (2021: 9.25%)
AL- Borg company didn't breach any covenants for MTL
agreements.
During 2021 the group signed two agreements of debt facilities.
The debt package includes the US$ 45.0 million facilities secured
an 8-year period starting from International Finance Corporation
(IFC), and an additional US$ 15.0 million IFC syndicated facility
from Mashreq Bank in Dec 2022 debt has not been withdrawn by IDH.
The company incurred 12.5 M EGP for the year ended 31 December
2022, and 20.3M EGP for the year ended 31 December 2021. as
commitment Fees and supervisory fees related to this agreement.
25. Non-current put option liability
2022 2021
EGP'000 EGP'000
Put option liability* 51,000 35,037
51,000 35,037
*According to definitive agreements signed on 15 January 2018
between Dynasty Group Holdings Limited and International Finance
Corporation (IFC) related to the Eagle Eye-Echo Scan Limited
transaction, IFC has the option to put it is shares to Dynasty
Group Holdings Limited in year 2024. The put option price will be
calculated on the basis of the fair market value determined by an
independent valuer.
According to the International Private Equity and Venture
Capital Valuation Guidelines, there are multiple ways to calculate
the put option including Discounted Cash Flow, Multiples, Net
assets. Multiple valuation was applied and EGP 51 million was
calculated as the valuation as at 31 December 2022 (2021; EGP 35m).
In line with applicable accounting standards with IAS 32 the entity
has recognised a liability for the present value of the exercise
price of the option price. The ramp-up of Echo-Scan operations
driven by the new radiology equipment installed during Q4 2019 in
Lagos and the following years yielding a Compounded Annual Growth
Rate of 36% from 2023 to 2025.
26. Financial obligations
The Group leases property and equipment. Property leases include
branches, warehouse, parking and administration buildings. The
leases typically run for average period from 5-10 years, with an
option to renew the lease after that date. Lease payments are
renegotiated with renovation after the end of the lease term to
reflect market rentals. For certain leases, the Group is restricted
from entering into any sub-lease arrangements. The property leases
were entered into as combined leases of land and buildings.
Adding to remaining agreement signed in 2015, to service the
Group's state-of-the-art Mega Lab. The agreement periods are 5 and
8 years which is deemed to reflect the useful life of the
equipment. If the minimum annual commitment payments are met over
the agreement period ownership of the equipment supplied will
legally transfer to the IDH. The finance asset and liability has
been recognised at an amount equal to the fair value of the
underlying equipment. This is based on the current cost price of
the equipment supplied provided by the suppliers of the agreement.
The averaged implicit interest rate of finance obligation has been
estimated to be 9.85%. The equipment is being depreciated based on
units of production method as this most closely reflects the
consumption of the benefits from the equipment.
Information about the agreements for which the Group is lessee
is presented below.
a) Right-of-use assets
Buildings Buildings
2022 2021
EGP'000 EGP'000
Balance at 1 January 462,432 354,688
Addition for the year 214,846 198,402
Depreciation charge for the year (103,099) (79,617)
Terminated Contracts (13,564) (7,643)
Exchange differences 62,360 (3,398)
Balance at 31 December 622,975 462,432
b) Other Financial obligations
Future minimum financial obligation payments under leases and
sales purchase contracts, together with the present value of the
net minimum lease payments are, as follows:
2022 2021
EGP'000 EGP'000
*Financial liability- laboratory equipment 335,470 228,870
*Lease liabilities building 727,426 531,804
1,062,896 760,674
*The financial obligation liabilities for the laboratory
equipment and building are payable as follows:
Minimum payments Interest Principal
At 31 December 2022 2022 2022 2022
EGP'000 EGP'000 EGP'000
Less than one year 285,962 137,257 148,705
Between one and five years 1,030,750 314,656 716,094
More than 5 years 227,715 29,618 198,097
1,544,427 481,531 1,062,896
Minimum payments Interest Principal
At 31 December 2021 2021 2021 2021
EGP'000 EGP'000 EGP'000
Less than one year 211,242 95,764 115,478
Between one and five years 701,084 227,314 473,770
More than 5 years 191,229 19,803 171,426
1,103,555 342,881 760,674
c) Amounts other financial obligations recognised in consolidated income statement
2022 2021
EGP'000 EGP'000
Interest on lease liabilities 73,393 68,352
Expenses related to short-term lease 87,962 18,875
27. Related party transactions disclosures
The significant transactions with related parties, their nature
volumes and balance during the period 31 December 2022 and 2021 are
as follows:
2022
Related Party Nature of Nature of relationship Transaction Amount
transaction amount of due from
the year / (to)
EGP'000 EGP'000
Expenses
ALborg Scan (S.A.E)* paid on behalf Affiliate** - 351
Expenses
International Fertility (IVF)** paid on behalf Affiliate*** 4 1,771
Entity owned by Company's board
H.C Security Provide service member 220 (99)
Provided
Life Health Care service Entity owned by Company's CEO 424 2,518
Put option
Dr. Amid Abd Elnour liability Bio. Lab C.E.O and shareholder 481,665 (439,695)
Current account Bio. Lab C.E.O and shareholder (20,008) (20,008)
Put option
International Finance corporation (IFC) liability Echo-Scan shareholder (15,963) (51,000)
International Finance corporation (IFC) Current account Echo-Scan shareholder 12,292 (623)
Integrated Treatment for Kidney Diseases (S.
A.E) Rental income Entity owned by Company's CEO 116 1,290
Medical Test
analysis 381
Loan
Dr. Hend El Sherbini*** arrangement CEO** 17,025 -
shareholders'
dividends
deferral
HENA HOLDINGS LTD agreement shareholder (2,373) (2,373)
shareholders'
dividends
deferral
ACTIS IDH LIMITED agreement shareholder (1,955) (1,955)
(509,823)
2021
Related Party Nature of Nature of relationship Transaction Amount
transaction amount of due from
the year /to
EGP'000 EGP'000
Expenses
ALborg Scan (S.A.E)* paid on behalf Affiliate 1 351
Expenses
International Fertility (IVF)** paid on behalf Affiliate - 1,767
Entity owned by Company's board
H.C Security Provide service member (243) (319)
Life Health Care Provide service Entity owned by Company's CEO (11,232) 2,094
Put option
Dr. Amid Abd Elnour liability Bio. Lab C.E.O and shareholder (639,093) (921,360)
Put option Eagle Eye - Echo Scan limited
International Finance corporation (IFC) liability shareholder (3,247) (35,037)
Eagle Eye - Echo Scan limited
International Finance corporation (IFC) Current account shareholder (12,915) (12,915)
Integrated Treatment for Kidney Diseases
(S.A.E) Rental income Entity owned by Company's CEO (298) 1,025
Medical Test
analysis 530
Total (964,394)
* ALborg Scan is a company whose shareholders include Dr.
Moamena Kamel (founder of IDH subsidiary Al-Mokhtabar Labs).
** International Fertility (IVF) is a company whose shareholders
include Dr. Moamena Kamel (founder of IDH subsidiary Al-Mokhtabar
Labs).
*** During the year 2022, Dr. Hend (C.E.O) granted a loan to IDH
Cayman amounting to USD 750K. and the loan was settled by Al
Mokhtabar on behalf of IDH Cayman for EGP 17m at the prevailing
exchange rate of US$/EGP 22.70. The loan was not interest
bearing.
Chief Executive Officer Dr. Hend El-Sherbini and her mother, Dr.
Moamena Kamel jointly hold the 26.7% of shares held by Hena
Holdings Limited, Hena Holdings Limited is a related party and
received dividends of USD 17,745,953 in year 2022 and USD 7,419,644
received in year 2021.
During the year payments relating to lease obligations of Biolab
were made to entities considered to be related parties due to the
interest in them held by Dr Amid Abd Elnour. Payments made during
2022 were JOD 241,038 (EGP 6,679,163) and during 2021 were JOD
665,461 (EGP 14,660,106).
Terms and conditions of transactions with related parties
O u ts t an d ing b a l an c es at the ye a r-end are un s ec u
red a nd in t ere st f ree a nd se t tle m ent o c curs in c a sh.
There h a ve b e en no gu a ran t ees pr o vi d ed or re c ei v ed
f or any rel a ted p ar ty recei v a b les or p a y a ble s. F or t
he ye ar ended 31 De c em b er 20 22, the G ro up h as n ot rec o
rded a ny im p a i rment of rec e iv a bles rel a ting to am o unts
o wed by rel a ted p ar t ies ( 20 21: nil). This a s ses s ment is
u n de r t a ken ea ch fin a nci al ye ar thr o u gh ex a min i ng
the fi na n c i al p o si t i on of the rel a ted p ar ty a nd the
m a rket in whi ch the rel a ted p ar ty o per a tes.
IDH opts to pay up to 1% of the net after-tax profit of the
subsidiaries Al Borg and Al Mokhtabar to the Moamena Kamel
Foundation for Training and Skill Development. Established in 2006
by Dr. Moamena Kamel, a Professor of Pathology at Cairo University
and founder of IDH subsidiary Al-Mokhtabar Labs and mother to the
CEO Dr. Hend El Sherbini. The Foundation allocates this sum to
organisations and groups in need of assistance. The foundation
deploys an integrated program and vision for the communities it
helps that include economic, social, and healthcare development
initiatives. In 2022 EGP 8,934 K (2021: EGP 9,578K) was paid to the
foundation by the IDH Group in relation to profits earned for
companies Al Borg and Al Mokhtabar in the prior year.
Com p en s atio n of k ey m ana g em e nt p e rsonn el of the
Group
Key management people can be defined as the people who have the
authority and responsibility for planning, directing, and
controlling some of the activities of the Company, directly or
indirectly.
The amounts disclosed in the table are the amounts recognised as
an expense during the reporting period related to key management
personnel.
2022 2021
EGP'000 EGP'000
Short-term employee benefits 48,078 55,082
Total compensation paid to key management personnel 48,078 55,082
28. Reconciliation of movements of liabilities to cash flows arising from financing activities
Other loans Other financial
EGP'000 and borrowings obligation
Balance at 1 January 2022 105,694 760,674
Proceeds from loans and borrowings 40,081 -
Repayment of borrowings (21,721) -
Payment of liabilities - (100,841)
Interest paid (24,513) (94,795)
Exchange differences - 122,376
Total changes from financing cash flows (6,153) (73,260)
New agreements signed in the period - 293,946
Terminated contracts during the year - (13,259)
Interest expense 27,879 94,795
Total liability-related other changes 27,879 375,482
Balance at 31 December 2022 127,420 1,062,896
Other loans Other financial
EGP'000 and borrowings obligation
Balance at 1 January 2021 96,455 459,043
Proceeds from loans and borrowings 30,450 -
Repayment of borrowings (25,416) -
Payment of liabilities - (59,610)
Interest paid (25,446) (68,354)
Total changes from financing cash flows (20,412) (127,964)
New agreements signed in the period - 367,534
Terminated contracts during the year - (6,292)
Interest expense 29,651 68,353
Total Liability - related other changes 29,651 429,595
Balance as at 31 December 2021 105,694 760,674
29. Current tax liabilities
2022 2021
EGP'000 EGP'000
Debit withholding Tax (Deduct by customers from sales invoices) (26,166) (34,166)
Income Tax 162,773 521,929
Credit withholding Tax (Deduct from vendors invoices) 7,719 17,922
Other 8,529 7,319
152,855 513,004
30. Post Balance Sheet Events
-- Subsequent to the year end-the Company completed the
incorporation of medical health development a limited liability
company located in the kingdom of Saudi Arabia with a total stake
of 51% directly or indirectly. The new company will be operated in
the same field as the group proclitic health care diagnostics
service.
-- IDH management has decided to irrevocably terminate the IFC
loan agreement as the intended purpose of the loan, which was to
finance an acquisition in Pakistan, was not realized.
-- The Group has effectively reduced its exposure to foreign
currency risk by coming to an agreement with General Electric (GE)
for the early repayment of its contractual obligation of USD 5.7
million. As of March 28, 2023, the remaining obligation balance
stood at USD 5.0 million, with USD 0.7 million having been repaid
since the contract was initiated in 2020. The Group and GE have
agreed to settle this balance early for USD 3.55 million, payable
in EGP, equivalent to EGP 110 million.
To finance the settlement, The Group will utilize a bridge loan
facility, with half of the amount being funded internally and the
other half provided by a loan from Ahly United Bank - Egypt. The
management anticipates fully repaying the loan before the end of
the second quarter of 2023.
31. Con t inge nt liab i lit i es
As required by article 134 of the labour law on Vocational
Guidance and Training issued by the Egyptian Government in 2003, Al
Borg Laboratory Company and Al Mokhtabar Company for Medical Labs
are required to conform to the requirements set out by that law to
provide 1% of net profits each year into a training fund.
Integrated Diagnostics Holdings plc have taken legal advice and
considered market practice in Egypt relating to this and more
specifically whether the vocational training courses undertaken by
Al Borg Laboratory Company, Al Mokhtabar Company for Medical Labs
and Integrated medical analysis suggest that obligations have been
satisfied through training programmes undertaken in-house by those
entities. Since the issue of the law on Vocational Guidance and
Training, Al Borg Laboratory Company , Al Mokhtabar Company for
Medical Labs and Integrated medical analysis have not been
requested by the government to pay or have voluntarily paid any
amounts into the external training fund. Should a claim be brought
against Al Borg Laboratory Company, Al Mokhtabar Company for
Medical Labs and Integrated medical analysis, an to up to 46m EGP
could become payable, however this is not considered probable.
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END
FR UVRUROAUSRUR
(END) Dow Jones Newswires
April 06, 2023 02:00 ET (06:00 GMT)
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