TIDMIDHC
RNS Number : 6026O
Integrated Diagnostics Holdings PLC
02 June 2020
Integrated Diagnostics Holdings Plc
1Q 2020 Results Update
Tuesday, 2 June 2020
Integrated Diagnostics Holdings Plc records EGP 500 million in
1Q 2020 revenues; operations partly impacted by Covid-19
(London) Integrated Diagnostics Holdings ("IDH," "the Group," or
"the Company"), a leading consumer healthcare company with
operations in Egypt, Jordan, Sudan and Nigeria, released today
unaudited highlights of its financial and operational performance
in the first three months of 2020(1) , reporting total unaudited
revenues of EGP 500 million and unaudited net profits of EGP 102
million.
Results
1Q2020 1Q2019 change
===================== ======= ======= ========
Revenues* 500 546 -8%
--------------------- ------- ------- --------
Cost of Sales (257) (279) -8%
--------------------- ------- ------- --------
Gross Profit 243 268 -9%
--------------------- ------- ------- --------
Gross Profit Margin 49% 49% -
--------------------- ------- ------- --------
Operating Profit 159 200 -20%
--------------------- ------- ------- --------
EBITDA(2) 203 236 -14%
--------------------- ------- ------- --------
EBITDA Margin 41% 43% (2 pts)
--------------------- ------- ------- --------
Net Profit 102 124 -17%
--------------------- ------- ------- --------
Net Profit Margin 21% 23% (2 pts)
--------------------- ------- ------- --------
Cash Balance 745 763 -2%
--------------------- ------- ------- --------
* Excluding the 100 Million Healthy Lives Campaign from 1Q 2019
figures, consolidated revenues would have dropped by 3%
year-on-year. The 100 Million Healthy Lives campaign ran from
November 2018 through June 2019. The Group saw 409.4 thousand
patients under the campaign's umbrella and performed 4.4 million
tests. For the first quarter 2019 campaign-related tests were
c.1.63 million.
(1) By the terms regulating the company's listing on the LSE,
IDH is required to release reviewed financials at the half-year
mark and audited full-year financials. Management and the Board of
Directors have committed to providing performance updates in the
first and third quarters as an outgrowth of the Company's
commitment to transparency. All figures in this update are
accordingly unaudited and provided from Management accounts.
(2) EBITDA is calculated as operating profit plus depreciation
and amortization .
Financial Highlights
-- Revenues for the first quarter of the year came in at EGP 500
million, down 8% year-on-year on the back of a lower volumes in the
contract segment. The decline is largely due to the high base
effect as the comparable period reflected increased contract
volumes related to the 100 Million Healthy Lives Campaign in Egypt.
Excluding campaign-related volumes, the Group's consolidated
revenues records a 3% year-on-year decline in 1Q 2020, impacted by
the Covid-19 outbreak at the end of the quarter.
-- Gross profit was down 9% to EGP 243 million in 1Q 2020 with a
margin of 49%, unchanged versus 1Q 2019 due to lower raw material
costs.
-- Operating profit recorded EGP 159 million for the first three
months of the year, down 20% year-on-year. It is worth noting that
during the quarter, IDH incurred higher SG&A expenses related
to its new corporate headquarters and recorded higher bad debt
provisions.
-- EBITDA(2) for 1Q 2020 decreased 14% year-on-year to EGP 203
million, reflecting lower revenue and increased SG&A. EBITDA
margin for 1Q 2020 stood at 41% versus the 43% margin recorded in
the same quarter of last year.
-- Net profit was EGP 102 million in 1Q 2020 versus EGP 124
million in the first quarter of 2019. Net profit margin for the
period contracted to 21% compared to 23% in the same period of
2019.
-- Net cash flow from operating activities stood at EGP 210
million for 1Q 2020, with the Group maintain total cash balances of
EGP 745 million, reflecting a strong liquidity position.
Operational Highlights
-- IDH's branch network stood at 457 branches as of 31 March
2020, up from 422 branches as of 31 March 2019. Out of the 35 new
branches over the past twelve months, five were opened during 1Q
2020.
-- Total patients served stood at 1.6 million in 1Q 2020, down
21% year-on-year due to lower contract patients (-31% y-o-y), while
walk-in patients increased 16% year-on-year. Factoring out contract
patients related to the 100 Million Healthy Lives Campaign from 1Q
2019 figures, total patients records a 14% year-on-year decline in
1Q 2020.
-- Similarly, total number of tests performed decreased 28%
year-on-year to 6.1 million in 1Q 2020 due to lower contract
volumes. Total tests recorded a 10% year-on-year decline in 1Q 2020
when excluding campaign-related tests from the comparable
period.
-- Average revenue per test was EGP 82 for 1Q 2020, up 26%
year-on-year. It is important to note the 100 Million Healthy Lives
campaign had weighed down on average revenue per test in 1Q 2019.
Controlling for this, average revenue per test would still have
increased 8% year-on-year for the period.
-- IDH's average test per patient was down 8% year-on-year to
3.9 in 1Q 2020. Excluding the campaign, the average test per
patient would have increased 5% year-on-year.
-- Nigeria continued to capitalize on the recently acquired
state of art radiology equipment in 4Q2019, resulting in a
threefold surge in test volumes versus 1Q 2019.
-- Al-Borg Scan launched a second branch in Cairo which
commenced operations in February 2020. Al-Borg Scan continued to
increase its contribution to consolidated revenues, generating EGP
4.1 million in 1Q 2020 (+41% y-o-y).
Wayak, launched in September 2019 with the aim of offering its
patients healthcare management services, posted a negative EBITDA
of EGP 2.0 million.
Commenting on the Group's performance for the three-month
period, IDH Chief Executive Officer Dr. Hend El-Sherbini said:
"Overall, I am pleased with the Group's performance during the
first quarter of the year where the defensive nature of our
business and the resilience of our company has allowed us to
navigate a challenging environment. In the midst of varying degrees
of lockdowns and curfews across our geographies due to Covid-19,
IDH was able to maintain largely steady revenues when normalising
for the 100 Million Healthy Lives campaign in 1Q 2019."
"In Egypt, whilst all our branches remain operational, a
nationwide curfew has seen a downtrend in like-for-like volumes
starting late March through May. However, as consumers increasingly
adapt to the new norm and given the inelastic demand for our tests,
indicators are heading in the right direction and we are confident
that patients will continue to seek our services. While there is
limited visibility given the nature of the outbreak and the
measures in place to prevent the spread of Covid-19, we do
anticipate the outbreak to peak in Egypt within the coming weeks,
after which a pick up toward 2019 levels could begin during the
second half of the year. In the meantime, IDH has been partly
offsetting the impact through a ramp up of our house calls service
with increased marketing activities. Since its rollout in late
March, our house calls' contribution to revenue more than doubled,
and we will continue to push this convenient and free service to
our patients who are unable to visit one of our branches during
these critical times."
"In Jordan, IDH delivered strong results with revenues
increasing 9% in local currency terms. This comes despite the
temporary closure of 17 out of 19 branches in late March due to the
strict lockdown measures. Jordan is the only country where the
Group is testing for Covid-19 in the general population, and
operations have now recovered from the lockdown with all of
Biolab's branches having reopened during the first week of May.
"
"Similarly, in Sudan, where the Group's branches remained
operational during 1Q 2020 albeit at reduced hours, higher test
volumes and improved pricing led to a 50% growth in local currency
revenues. However, starting May the government imposed stricter
containment measures which left only six out of the 21 branches
remain operational at reduced hours. Once the government begins its
gradual easing of restrictions, we expect our business to be among
the first essential ones allowed to fully reopen, and thus do not
anticipate these closures to persist for longer periods. In
Nigeria, we witnessed a threefold increase in test volumes during
1Q 2020 owing to the newly acquired radiology equipment in late
2019. The Nigerian government imposed a complete lockdown in last
days of March that although left our branches operational, volumes
were impacted as the population remained under shelter in place
orders. This has since eased into a curfew starting May and we are
witnessing a gradual rebound in volumes in this fundamentally
strong market."
"Across our geographies, we continue to implement measures
outlined in our Crisis Management Plan with a focus on mitigating
health and safety risks, ensuring smooth operations and business
continuity whilst maintaining efficient stakeholder communication,
and assessing our financial resilience through stress tests to
better ascertain the financial impact on IDH. Our primary goal is
to ensure safe continuity of business activities and keeping
critical functions running. Most importantly, we are maintaining
adequate supplies of personal protective equipment for our
frontline staff and are implementing strict hygiene and physical
distancing protocols to limit the risk of infection."
"Meanwhile, our supply chain continues to function with minimal
disruption, and we have built up sufficient raw materials coverage
through to the end of September 2020. We are also prepared with the
necessary tools and IT infrastructure to allow for stable and
remote day-to-day operations. This preparedness extends across all
functions, including our marketing activities, customer
relationship management, SAP and laboratory management
systems."
"IDH remains strongly cash generative and we are focused on
prudent cash management with cost discipline and a reduction of
non-critical uses of cash. We are also leveraging government
initiatives to support cash flows, such as the payment of FY 2019
corporate taxes over three instalments. Finally, out of an
abundance of caution, we have taken some provisions to account for
the potential elongating of payment cycles, however, we have not
yet witnessed any impairments in receivables. Overall, IDH's strong
liquidity position and underleveraged balance sheet places us in a
very resilient position."
"In the coming months, our focus will remain on safety and
business continuity and minimizing the impact of Covid-19 as we
navigate through this unprecedented global crisis. As such, the
Group has put on hold any expansion plans during 2Q, including at
Al Borg Scan."
"In the longer term, management remains fundamentally optimistic
about the outlook for our business beyond the current crisis. IDH
continues to be served by supporting macroeconomic and industry
trends, strong market positions of its brands, and an effective
business model and clearly defined strategies that can deliver
long-term growth once the current crisis resolves."
Analyst and Investor Call Details
An analyst and investor call will be hosted at 2pm (UK) | 3pm
(Egypt) on Wednesday, 3 June 2020. You may dial in using the
conference call details below:
Country Dial In
International UK +44-20-3936-2999
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International US +1-646-664-1960
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UAE Toll Free 0800-0357-04553
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UK Toll Free 0800-640-6441
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US Toll Free +1-855-9796-654
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Conference ID: 815371
Participants can also join by web through this link and entering the access code 1253548.
About Integrated Diagnostics Holdings (IDH)
IDH is a leading consumer healthcare company in the Middle East
and Africa with operations in Egypt, Jordan, Sudan and Nigeria. The
Group's core brands include Al Borg and Al Mokhtabar in Egypt, as
well as Biolab (Jordan), Ultralab and Al Mokhtabar Sudan (both in
Sudan) and Echo-Scan (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
1,400 diagnostics tests. From its base of 457 branches as of 31
March 2020, 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 and
African 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.
IDH's forward-looking strategy rests on leveraging its
established business model to achieve four key strategic goals,
namely: (1) continue to expand customer reach; (2) increase the
number of tests per patient; (3) expand into new geographic markets
through selective, value-accretive acquisitions; and (4) introduce
new medical services by leveraging the Group's network and
reputable brand position. Learn more at idhcorp.com .
Shareholder Information
LSE: IDHC.L
Bloomberg: IDHC:LN
Listed: May 2015
Shares Outstanding: 150 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 three-month results 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 three-month 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.
Operational & Financial Review
IDH recorded revenues of EGP 500 million in the first quarter of
the year, down 8% year-on-year. The contraction came on the back of
a 23% year-on-year decline in contract revenues owing to the
comparable period's inflated figures on account of the 100 Million
Healthy Lives Campaign in Egypt. Excluding campaign-related figures
from 1Q 2019, the Group's consolidated revenues record a 3%
year-on-year decline in 1Q 2020, primarily due to Covid-19 related
lockdowns and curfews across the Group's geographies, and its
effect on patient volumes beginning mid-March 2020.
Revenue Growth Drivers
1Q2020 1Q2019
============================== ======== =======
Volume (27.6%) 28.1%
============================== ======== =======
Price & Mix 21.7% (4.8%)
============================== ======== =======
Foreign Currency Translation (2.7%) (0.9%)
============================== ======== =======
Total (8%) 22%
============================== ======== =======
Covid-19 Impact on Geographies
In Egypt, all of the Group's branches remained operational
albeit with reduced working hours in accordance with the
government-imposed curfews beginning late March. The dual-effect of
the campaign-related volumes in 1Q 2019 and the shorter working
hours during the tail end of the quarter led to a 10% year-on-year
decline in Egypt's revenue. Should we exclude the campaign's
effect, Egypt's revenue records a 4% y-o-y decline. As of date, the
health ministry has made testing for the SARS CoV-2 the exclusive
responsibility of state-owned laboratories. Should IDH be called on
to assist with testing in Egypt, the Group stands ready with the
necessary systems, risk matrix and trained staff to safely
administer the test.
In Jordan and Sudan, government-imposed curfews and lockdowns
led to the closure of some branches during March through May,
however, both countries reported growing patient and test volumes
in 1Q 2020. On the revenue front, Sudan reported growth versus the
previous year (50% revenue growth in local currency), while Jordan
maintained stable revenues year-on-year (9% growth in local
currency) despite the closure of 17 out of 19 branches in late
March. It is important to note that currently Jordan is the only
country where the Group is testing for Covid-19 in the general
population.
Finally, IDH's Nigerian operations reported a strong,
volume-driven rise in revenues for the quarter (51% growth in local
currency), as the geography's ramp-up in operations versus last
year outweighed the limited impact of Covid-19 curfews on branch
hours.
Revenue Growth Drivers by Country
1Q2020 1Q2019
========= ======= =======
Egypt (9%) 23%
========= ======= =======
Jordan (0.2%) 0.4%
========= ======= =======
Sudan 0.3% (1%)
========= ======= =======
Nigeria 0.2% (0.2%)
========= ======= =======
Total (8%) 22%
========= ======= =======
On the operational front, IDH expanded its geographic footprint
to 457 branches as at the end of March 2020. This is a 35-branch
increase from the 422 operational branches as at 31 March 2019,
five of which were opened during 1Q 2020. The Group's expansion
drive continues to be supported by its state-of-the-art Mega Lab
which allows IDH to deploy its Hub, Spoke and Spike business model
in Egypt to roll out capital-efficient "C" labs more rapidly. Over
the last year, branch additions included 34 labs in Egypt and two
in Nigeria while Sudan witnessed the closure of a non-performing
branch.
Branches by Country
31 March 2020 31 March 2019 Change
================ ============== ============== =============
Egypt 405 371 9%
================ ============== ============== =============
Jordan 19 19 -
================ ============== ============== =============
Sudan 21 22 (5%)
================ ============== ============== =============
Nigeria 12 10 20%
================ ============== ============== =============
Total Branches 457 422 8%
================ ============== ============== =============
Our Customers
IDH serves two principal types of clients: contract (corporate),
including institutions such as unions, private insurance companies
and corporations, and walk-in (individuals). The ratio of contract
to walk-in patients during the three-month period ended 31 March
2020 stood at 68:32 compared to the 78:22 ratio in the same quarter
last year. The decrease in contract patients as a share of the
total reflects a normalisation in contract volumes during the
period following the end of the 100 Million Healthy Lives campaign
in Egypt, which contributed 152 thousand patients in 1Q 2019.
Key Performance Indicators
Contract Segment Walk-in Segment Total
================== =========================== =========================== ===========================
1Q2019 1Q2020 Change 1Q2019 1Q2020 Change 1Q2019 1Q2020 Change
================== ======== ======== ======= ======== ======== ======= ======== ======== =======
Revenue (EGP
'000) 353,987 272,522 -23% 192,100 227,234 18% 546,087 499,757 -8%
% of Revenue 65% 55% 35% 45% 100% 100%
Patients ('000) 1,546 1,061 -31% 441 510 16% 1,986 1,571 -21%
% of Patients 78% 68% 22% 32% 100% 100%
Revenue per
Patient (EGP) 229 257 12% 436 445 2% 275 318 16%
Tests ('000) 6,982 4,485 -36% 1,447 1,621 12% 8,430 6,106 -28%
% of Tests 83% 73% 17% 27% 100% 100%
Revenue per
Test (EGP) 51 61 20% 133 140 6% 65 82 26%
Test per Patient 4.5 4.2 -6% 3.3 3.2 -3% 4.2 3.9 -8%
Revenue Analysis: Contribution by Patient Segment
The Group's contract segment recorded a 23% year-on-year fall in
revenues for the quarter, making up just 55% of consolidated
revenues for the period versus the 65% share in 1Q 2019. The
contraction was volume driven as contract patients fell 31% versus
the first quarter of 2019 and the number of tests performed
decreased 36% year-on-year in 1Q 2020. It is important to note that
the comparable period of 2019 included tests related to the 100
Million Healthy Lives campaign in Egypt which concluded at the end
of 1H 2019.
Average revenue per contract test increased to EGP 61, a 20%
year-on-year rise partially driven by a low base effect on the back
of volumes generated from the awareness campaign. Similarly,
average revenue per contract patient increased 12% year-on-year to
EGP 257 in the first three months of the year.
Revenues from IDH's walk-in segment made up 45% of IDH's total
revenues in 1Q 2020 at EGP 227 million, an 18% year-on-year rise.
Segment growth was dual driven by volume and price, with walk-in
patients and tests performed rising 16% and 12% respectively, and
with average revenue per walk-in patient and test up 2% and 6%
respectively.
The Group's overall average revenue per test increased 26%
year-on-year to EGP 82 in 1Q 2020. Factoring out the tests
performed as part of the 100 million Healthy Lives awareness
campaign during the first quarter of last year, average revenue per
test would have increased 8% year-on-year. On the other hand, IDH's
blended average revenue per patients was up 16% year-on-year to EGP
318.
Revenue Analysis: Contribution by Geography
Revenue Contribution by Country
1Q2020 1Q2019
========= ======= =======
Egypt 84.7% 86.3%
========= ======= =======
Jordan 11.6% 10.8%
========= ======= =======
Sudan 1.9% 1.5%
========= ======= =======
Nigeria 1.7% 1.4%
========= ======= =======
In Egypt, revenues were down 10% y-o-y to EGP 424 million on the
back of lower volumes. It is worth noting that 100 Million Healthy
Lives campaign was ongoing throughout 1Q 2019. Excluding its
impact, revenues would have declined by 4% y-o-y.
Egypt's revenues also include contributions from Al-Borg Scan,
IDH new radiology venture, which generated revenue of EGP 4.1
million in 1Q 2020, up 41% growth year-on-year. Al Borg Scan served
6.1 thousand patients in 1Q 2020, up 49% while total tests
performed increased 40% year-on-year to 8.1 thousand. The rapid
increase in volumes follows the commencement of operations of Al
Borg Scan's second branch in February 2020.
In Jordan, government-imposed curfews and lockdowns on the 21st
of March led to the closure of 17 branches, leaving two operational
one of which was performing Covid-19 testing. Nonetheless, IDH's
Jordanian operation managed to deliver a 9% y-o-y increase in
revenue in JOD terms. However, the appreciation of the EGP saw
revenues come in 2% below last year's figure to EGP 58 million in
1Q 2020. It is worth noting that all of Biolab's 19 branches were
reopened during the first week of May as the government began
easing containment measures.
Sudan reported revenue of EGP 10 million, up 22% versus the
previous year despite the government-imposed curfew, which came in
effect in the second half of March. In local currency, revenues
were up by a solid 50% year-on-year on account of higher test
volumes and improved pricing. The Company's Sudanese branches have
remained open during 1Q 2020 despite operating at reduced hours of
8am-7pm rather than 8am-11pm. It is important to note that starting
May 2020 only six out of the 21 branches were operational due to
the imposition of stricter measures by the government, with working
hours further reduced from the previously allowed 8am-7pm
window.
At the Group's Nigerian subsidiary, revenues recorded an 11%
year-on-year increase to EGP 9 million as the Group reaps the
rewards of its renovation and branch upgrade works. Revenue in NGN
terms was up 51% year-on-year, driven by higher tests performed
which increased by a solid 218% year-on-year in 1Q 2020.
Cost of Sales
IDH's cost of sales decreased 8% year-on-year to EGP 257 million
in 1Q 2020. The Group's gross profit recorded EGP 243 million in
the first quarter of the year, down 9% year-on-year. Gross profit
margin for the period was unchanged at 49%.
COGS Breakdown as a Percentage of Revenue
1Q2020 1Q2019
============================= ======= =======
Raw Materials 14.4% 19.6%
============================= ======= =======
Wages & Salaries 16.8% 15.5%
============================= ======= =======
Depreciation & Amortisation 7.8% 6.4%
============================= ======= =======
Other Expenses 12.3% 9.5%
============================= ======= =======
Total 51.3% 51.0%
============================= ======= =======
Raw material costs decreased 33% versus the same period of last
year to EGP 72 million. Raw material costs made up the second
largest of total consolidated COGS during the first quarter of the
year at 28.0%. The average raw material cost per test performed
during the quarter stood at EGP 11.8, down from the EGP 12.7 in the
first quarter of last year. Raw materials as a percentage of sales
decreased to 14.4% from last year's 19.6% reflecting a one-off
discount granted by suppliers. Going forward, raw materials as a
percentage of revenue is expected to normalise at circa 17%.
Direct salaries and wages made up the largest share of total
COGS during the quarter at 32.8% in 1Q 2020, as it reached EGP 84
million for the period, unchanged from last year's figure. The
contraction in IDH's consolidated revenues for the period saw
direct salaries and wages as a percentage of revenues increase to
16.8% for the quarter from 15.5% last year.
Direct depreciation and amortisation rose 13% year-on-year to
EGP 39 million on the back of growth in depreciation due to the
addition of new equipment at Al Borg-Scan and Nigeria. Direct
depreciation and amortization as a percentage of revenues increased
to 7.8% in 1Q 2020 from 6.4% last year.
EBITDA
IDH's consolidated EBITDA in the first quarter of 2020 declined
14% year-on-year to EGP 203 million, while EBITDA margin for the
period stood at 41% versus 43% in 1Q 2019. Lower margin was due to
top-line contraction and the consequent increase in SG&A as a
percentage of sales to 17%. IDH incurred increase SG&A expenses
related to its new corporate headquarters of EGP 2.2 million and
recorded a bad debt provision of EGP 10 million. Said provisions
are to account for the potential elongating of payment cycles due
to Covid-19.
In Egypt, EBITDA recorded EGP 188 million in 1Q 2020, down 17%
year-on-year . EBITDA margin stood at 44% during the quarter, down
4 percentage points from last year's figure impacted by the
Covid-19 outbreak along with establishing a bad debt provision. In
Jordan, IDH's operations reported a 3% year-on-year contraction in
EBITDA to EGP 16 million in 1Q 2020 due to the exchange rate
difference between the two reporting periods. The Egyptian pound
had appreciated from an average of EGP:JOD of 24.57 in 1Q 2019 to
22.06 in 1Q 2020. It should be noted that in JOD terms, EBITDA
witnessed an increase of 8% despite the closure of 17 branches
during the second half of March 2020. EBITDA margin was flat for
the quarter at 28%. Sudan's EBITDA for the quarter reported a 34%
year-on-year increase to EGP 1.9 million in 1Q 2020 (EBITDA grew by
66% in SDG terms). EBITDA margin stood at 20% compared to the 18%
margin recorded in 1Q2019. Finally, in Nigeria, EBITDA losses
narrowed to EGP 2 million from the negative EGP 8 million recorded
in the same quarter of last year. Losses narrowed due to an 11%
year-on-year increase in revenues (51% in NGN terms) and a 27%
year-on-year decrease in salaries expense during the quarter.
Regional EBITDA in Local Currency
mn 1Q 2020 1Q 2019 Change
----------------- -------- -------- -------
Egypt EGP 188 227 -17%
Jordan JOD 0.7 0.7 8%
Sudan SDG 7 4 66%
Nigeria NGN (58) (148) 61%
Interest Income / Expense
IDH recorded interest income of EGP 18.3 million in the first
quarter of 2020, up 19% year-on-year. Interest income increased on
the back of higher cash balances.
Interest expense recorded EGP 18 million in 1Q 2020 compared to
EGP 20 million in the comparable period of 2019. The decline in
interest expenses is due to consecutive rate cuts by the Central
Bank of Egypt during 2019 and 2020. Interest expense is broken down
as EGP 12.3 million related to IFRS 16; EGP 3.8 million related to
medium-terms loans for the Al Borg Scan expansion and the Group's
new headquarters in Cairo's Smart Village; and EGP 2.0 million
related to equipment lease.
Foreign Exchange
IDH recorded a net foreign exchange loss of EGP 6 million in 1Q
2020 compared to EGP 11 million in 1Q 2019. The figure is primarily
related to FX losses on the back of the SDG devaluation versus the
EGP.
Taxation
Tax expenses recorded in 1Q 2020 were EGP 51 million compared to
EGP 60 million in the same period of last year. The effective tax
rate was 33%, unchanged compared to 1Q 2019. There is no tax
payable for IDH's two companies at the holding level. Tax was paid
on profits generated by operating companies in Egypt, Jordan and
Sudan.
Net Profit
IDH's consolidated net profit contracted 17% year-on-year in 1Q
2020 to EGP 102 million. Net profit margin stood at 21% for the
period compared to 23% in 1Q 2019. Net profit margin contraction
was driven by lower revenues, relatively stable fixed costs along
with an increase in bad debt provisions and new headquarters
expenses.
Balance Sheet
On the assets side of the balance sheet, IDH held gross
property, plant and equipment (PPE) of EGP 1,151 million as at 31
March 2020, an increase from EGP 1,140 million as at 31 December
2019. The increase reflects regular CAPEX outlays during the
period.
Accounts receivable recorded EGP 240 million as at 31 December
2020 compared to EGP 261 million at year-end 2019. Accounts
receivables' days on hand (DOH) stood at 136 days, up from the 129
days as at year-end 2019 due to lower collection in March 2020
following the imposition of Covid-19-related measures. It should be
noted that accounts receivables DOH is calculated based on credit
revenues amounting to EGP 156 million in 1Q 2020, representing 57%
of contract revenues for the period.
The Group's "days inventory outstanding" increased to 117 days
at the close of the first quarter of the year compared to 82 days
as at 31 December 2019. The increase follows the Group's strategy
of increasing its inventory coverage period to mitigate for
potential supply disruptions due to Covid-19.
IDH's cash balances increased to EGP 745.1 million as at 31
March 2020 compared to EGP 630 million as at 31 December 2019.
On the liabilities side, accounts payable stood at EGP 148
million at 31 March 2020 versus EGP 145 million at year end 2019.
The Group's days payable outstanding (DPO) stood at 184 days
compared to 141 days at 31 December 2019.
Net cash stood at EGP 563 million as at 31 March 2020 versus EGP
455 million at year-end 2019, reflecting the Group's strong
liquidity position.
- Ends --
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London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFEAPKFEESEEFA
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June 02, 2020 02:00 ET (06:00 GMT)
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