TIDMIDHC
RNS Number : 8940I
Integrated Diagnostics Holdings PLC
21 April 2022
Integrated Diagnostics Holdings Plc
FY 2021 Results
Thursday, 21 April 2022
Integrated Diagnostics Holdings Plc concludes outstanding 2021
reporting revenues in excess of EGP 5 billion and record-high
margins
(Cairo and London) - Integrated Diagnostics Holdings ("IDH,"
"the Group," or "the Company"), a leading consumer healthcare
company with operations in Egypt, Jordan, Sudan and Nigeria,
released today its audited financial statements and operational
performance for the year ended 31 December 2021, reporting revenue
of EGP 5,225 million, up 97% compared to FY 2020. Profitability
came in at an all-time high, with adjusted EBITDA 1 growing 116%
year-on-year to record EGP 2,530 million, and net profit recording
a 145% year-on-year increase to reach EGP 1,493 million in FY 2021.
In the final quarter of the year, IDH reported revenue of EGP 1,458
million, 48% above the previous year's figure, and net profit of
EGP 345 million, up 47% from the comparable three month period of
2020. 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.
In light of IDH's outstanding performance for the twelve months
ended 31 December 2021, IDH's board of directors has recommended a
dividend distribution of EGP 2.17 per share, or EGP 1.3 billion in
aggregate, to shareholders (exact US dollar amount is subject to
the exchange rate at the time of the upstreaming from the
subsidiaries to the holding company). This represents a significant
increase compared to a final dividend of US$ 29.1 million
distributed for the previous financial year.
Financial Results (IFRS)
EGP mn Q4 2020 Q4 2021 Change FY 2020 FY 2021 Change
=========================== ======== ======== ========= ======== ============== ========
Revenues 986 1,458 48% 2,656 5,225 97%
--------------------------- -------- -------- --------- -------- -------------- --------
Cost of Sales (474) (821) 73% (1,314) (2,421) 84%
--------------------------- -------- -------- --------- -------- -------------- --------
Gross Profit 513 638 24% 1,343 2,804 109%
--------------------------- -------- -------- --------- -------- -------------- --------
Gross Profit Margin 52% 44% -8.3 pts 51% 54% 3.1 pts
--------------------------- -------- -------- --------- -------- -------------- --------
Adjusted Operating Profit
2 410 468 14% 986 2,292 132%
--------------------------- -------- -------- --------- -------- -------------- --------
Adjusted EBITDA(1) 460 537 17% 1,171 2,530 116%
--------------------------- -------- -------- --------- -------- -------------- --------
Adjusted EBITDA Margin 47% 37% -9.8 pts 44% 48% 4.4 pts
--------------------------- -------- -------- --------- -------- -------------- --------
Net Profit 234 345 47% 609 1,493 145%
--------------------------- -------- -------- --------- -------- -------------- --------
Net Profit Margin 24% 24% - 23% 29% 5.6 pts
--------------------------- -------- -------- --------- -------- -------------- --------
Cash Balance 877 2,350 168% 877 2,350 168%
--------------------------- -------- -------- --------- -------- -------------- --------
Note (1): Adjusted operating profit, EBITDA and adjusted EBITDA
are measures utilized by management in assessing performance of the
group. These adjusted measures eliminate the one off impacts of
items in the year to provide a measure of underlying performance.
EBITDA is an important measure as it shows the performance of the
Group and the Group's ability to reinvest funds generated and this
is a widely used term for acquisitive businesses such as
ourselves.
Note (2): Throughout the FY 2021 Earnings release, percentage
changes between reporting periods are calculated using the exact
value (as reported in the Company's Consolidated Financials) and
not the corresponding rounded figure.
Note (3): Quarterly results are unaudited.
Key Operational Indicators3
FY 2020 FY 2021 change
=========================== ======== ======== =======
Branches 481 502 21
--------------------------- -------- -------- -------
Patients ('000) 7,113 10,317 45%
--------------------------- -------- -------- -------
Revenue per Patient (EGP) 373 489 31%
--------------------------- -------- -------- -------
Tests ('000) 27,073 33,659 24%
--------------------------- -------- -------- -------
Revenue per Test (EGP) 98 150 53%
--------------------------- -------- -------- -------
Test per Patient 3.8 3.3 -14%
--------------------------- -------- -------- -------
(1) Adjusted EBITDA is calculated as operating profit plus
depreciation and amortization and excluding one-off fees incurred
in FY 2021 (EGP 29.0 million) related to the Company's dual listing
on the EGX completed in May 2021.
(2) Adjusted Operating Profit excludes one-off fees incurred in
FY 2021 (EGP 29.0 million) related to the Company's dual listing on
the EGX completed in May 2021.
(3) Key operational indicators are calculated based on net sales
for the year of EGP 5,048 million. More details on the difference
between net sales and total revenues is available below.
Important Notice: Treatment of Revenue Sharing Agreements and
Use of Alternative Performance Measures
As part of IDH's efforts to support local authorities in Egypt
and Jordan in the fight against the pandemic, Biolab (IDH's
Jordanian subsidiary) secured several revenue-sharing agreements to
operate testing stations, primarily dedicated to PCR testing for
Covid-19, in multiple locations across the country including Queen
Alia International Airport (QAIA) and Aqaba Port. Under these
agreements, Biolab receives the full revenue (gross sales) for each
test performed and pays a proportion to QAIA (38% of gross sales)
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. During Q3 2021,
management had reported the net sales generated from these
contracts. The treatment has been altered during Q4 2021 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.
For IFRS purposes Biolab is considered the principal in this
relationship and record the full amount received as revenue. For
internal purposes management considers the net amount earned to be
net sales, and have therefore included this measure as an
"alternative performance measure" (APM) alongside the IFRS measure
when describing the business' performance. The decision to present
APMs reflects the Directors' view that they provide the user of the
accounts with additional information to the IFRS information
reported to help understand the performance of the business, and is
consistent with how the Company's performance is reviewed
internally. Moreover, it allows further comparability when
describing the performance of the Group's regions and year-on-year
analysis.
Throughout the report, management utilizes net sales of EGP
5,048 million for FY 2021 (IFRS revenues stand at EGP 5,225 million
for the year), and cost of net sales of EGP 2,244 million (IFRS
cost of sales recorded EGP 2,421 million). Net sales for the period
are calculated as total gross revenues (IFRS compliant measure)
excluding concession fees and sales taxes paid as part of Biolab's
revenue sharing agreements with Queen Alia International Airport
(QAIA) and Aqaba Port.
It is important to note that aside from revenue and cost of
sales, all other figures related to gross profit, operating profit,
EBITDA, and net profit are identical in the APM and IFRS
calculations. However, the margins related to the aforementioned
items differ between the two sets of performance indicators due to
the use of Net Sales in the APM calculations and the use of
Revenues for the IFRS calculations. More specifically, under the
APM, in FY 2021 IDH reported a gross profit margin on net sales of
56%, an EBITDA margin on net sales of 50%, and a net profit margin
on net sales of 30%. Under the IFRS regime, gross profit margin
recorded 54%, EBITDA margin stood at 48%, and net profit margin
recorded 29%. Furthermore, this amendment has no impact on the
prior year reported revenues.
Adjustments Breakdown
EGP mn Q4 2021 FY 2021
================================================ ======== ========
Net Sales 1,281 5,048
------------------------------------------------ -------- --------
QAIA and Aqaba Port Concession Fees 177 177
------------------------------------------------ -------- --------
Revenues 1,458 5,225
------------------------------------------------ -------- --------
Cost of Net Sales (644) (2,244)
------------------------------------------------ -------- --------
Adjustment for QAIA, and Aqaba Port Agreements (177) (177)
------------------------------------------------ -------- --------
Cost of Sales (821) (2,421)
------------------------------------------------ -------- --------
Adjustments by Country
EGP mn Q4 2021 Q4 2021 FY 2021 FY 2021
(IFRS) (IFRS)
(APM) (APM)
============= ======== ======== ======== ========
Egypt 986 986 4,108 4,108
------------- -------- -------- -------- --------
Jordan 454 277 1,046 869
------------- -------- -------- -------- --------
Nigeria 13 13 54 54
------------- -------- -------- -------- --------
Sudan 4 4 17 17
------------- -------- -------- -------- --------
Group total 1,458 1,281 5,225 5,048
------------- -------- -------- -------- --------
Alternative Performance Measures (APM)
EGP mn Q4 2020 Q4 2021 Change FY 2020 FY 2021 Change
============================ ======== ======== ========= ======== ======== ========
Net Sales 986 1,281 30% 2,656 5,048 90%
---------------------------- -------- -------- --------- -------- -------- --------
Cost of Net Sales (474) (644) 36% (1,314) (2,244) 71%
---------------------------- -------- -------- --------- -------- -------- --------
Gross Profit 513 638 24% 1,343 2,804 109%
---------------------------- -------- -------- --------- -------- -------- --------
Gross Profit Margin on
Net Sales 52% 50% -2.2 pts 51% 56% 5.0 pts
---------------------------- -------- -------- --------- -------- -------- --------
Adjusted Operating Profit* 410 468 14% 986 2,292 132%
---------------------------- -------- -------- --------- -------- -------- --------
Adjusted EBITDA** 460 537 17% 1,171 2,530 116%
---------------------------- -------- -------- --------- -------- -------- --------
Adjusted EBITDA Margin
on Net Sales 47% 42% -4.7 pts 44% 50% 6.1 pts
---------------------------- -------- -------- --------- -------- -------- --------
Net Profit 234 345 47% 609 1,493 145%
---------------------------- -------- -------- --------- -------- -------- --------
Net Profit Margin on Net
Sales 24% 27% 3.2 pts 23% 30% 6.6 pts
---------------------------- -------- -------- --------- -------- -------- --------
Cash Balance 877 2,350 168% 877 2,350 168%
---------------------------- -------- -------- --------- -------- -------- --------
*Adjusted Operating Profit excludes one-off fees incurred in FY
2021 (EGP 29.0 million) related to the Company's dual listing on
the EGX completed in May 2021.
** Adjusted EBITDA is calculated as operating profit plus
depreciation and amortization and excluding one-off fees incurred
in FY 2021 (EGP 29.0 million) related to the Company's dual listing
on the EGX completed in May 2021.
Note (1): Adjusted operating profit, EBITDA and adjusted EBITDA
are measures utilized by management in assessing performance of the
group. These adjusted measures eliminate the one off impacts of
items in the year to provide a measure of underlying performance.
EBITDA is an important measure as it shows the performance of the
Group and the Group's ability to reinvest funds generated and this
is a widely used term for acquisitive businesses such as
ourselves.
Note (2): Quarterly results are unaudited.
Important notice: A reconciliation between IFRS and APM measures
is provided earlier in this announcement.
Introduction
i. Financial Highlights
-- Net Sales surpassed the EGP 5 billion mark to record EGP
5,048 million in FY 2021, representing a 90% year-on-year
expansion. Net sales growth for the year was dual driven, with
total tests performed increasing 24% year-on-year and average price
per test expanding 53% versus FY 2020. Consolidated net sales were
supported by strong demand for both IDH's Covid-19-related4 and
conventional tests portfolios, with the segments contributing to
51% and 49% of consolidated FY 2021 net sales, respectively.
Covid-19-related tests witnessed high demand throughout FY 2021,
supported by rising infection rates in the first half of the year
and the widespread lifting of travel bans in the second half of
2021. On the conventional tests front, demand recorded a sustained
recovery following the Covid-19-related slowdown experienced in the
previous year, with conventional test net sales expanding 22%
versus FY 2020, and coming in 13% above pre-covid levels recorded
in FY 2019. On a quarterly basis, net sales stood at EGP 1,281
million in Q4 2021, up 30% versus Q4 2020.
-- It is important to note that within the Covid-19-related
tests classification, the Company includes 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. During
the twelve months to 31 December 2021, core Covid-19 tests made up
44% of the Company's consolidated net sales, while other
Covid-19-related tests made an 8% contribution to consolidated net
sales for the year.
-- Throughout the year, IDH's ability to effectively ramp up its
house call capabilities in both Egypt and Jordan, saw the service
make a significant contribution to consolidated net sales. More
specifically, net sales generated from the service expanded an
impressive 87% year-on-year in FY 2021, with its contribution to
total net sales standing at 20%, unchanged from the previous year.
It is worth highlighting that tests performed through IDH's house
call service, are offered at the same price as at traditional
branches, with an additional house call delivery fee charged to
patients to cover the chemist transportation costs.
-- Gross Profit grew 109% year-on-year in FY 2021 to record EGP
2,804 million. Gross Profit Margin on net sales stood at 56%, a
solid five percentage point expansion compared to the previous
twelve months. Improved gross profitability continued to be
supported by strong net sales growth and the subsequent dilution of
fixed costs for the year such as direct salaries and wages and
other expenses. On a three-month basis, gross profit came in at EGP
638 million in Q4 2021, representing a 24% increase from Q4 2020.
Gross profit margin on net sales for the quarter recorded 50%
versus 52% in the same three months of 2020 and 58% during Q3 2021.
Lower gross profit margins versus both periods reflects a decline
in the average price of Covid-19-related tests during the quarter
as well as lower demand for Covid-19-related tests as the spike in
demand from passengers traveling abroad witnessed in the third
quarter of 2021 subsided.
-- Adjusted Operating Profit5 recorded EGP 2,292 million, up
132% year-on-year. Adjusted operating profit margin on net sales
stood at 45% for the year, up eight percentage points from FY 2020.
Strong operating profit growth came on the back of solid gross
profitability for the year, and was further buoyed by the
normalisation of provisions booked in FY 2021, which stood at EGP
25 million down from the EGP 42 million recorded in FY 2020 to
account for expected credit losses in accordance with IFRS 9.
-- Adjusted EBITDA6 increased 116% year-on-year in FY 2021 to
reach EGP 2,530 million, while EBITDA margin on net sales expanded
six percentage points to record 50% for the year. Strong EBITDA
profitability was supported by the Company's strong net sales
growth for the year and the subsequent dilution of its fixed costs.
In Q4 2021, adjusted EBITDA recorded EGP 537 million, 17% above the
previous year's figure and with an adjusted EBITDA margin on net
sales of 42% for the quarter, down from 47% in Q4 2020 and 54% in
Q3 2021. Lower margins versus both periods reflect relatively lower
gross profitability combined with increased marketing and
administrative expenses for the quarter.
-- Net Profit reached EGP 1,493 million in FY 2021, up 145%
versus FY 2020. Net profit margin on net sales expanded seven
percentage points from FY 2020 to record 30% for the year. The
remarkable net profit growth comes on the back of strong EBITDA
level profitability and despite the Company booking EGP 29 million
in one-off fees related to its dual-listing in May 2021 as well as
EGP 20 million in fees related to the IFC loan also secured in May
2021. In the last three months of the year, net profit recorded EGP
345 million, up 47% year-on-year and with an associated margin on
net sales of 27% versus 24% in the same quarter of 2020.
-- Earnings per share stood at EGP 2.35 in FY 2021 compared to EGP 0.99 in FY 2020.
-- IDH's board of directors has recommended a dividend
distribution of EGP 2.17 per share, or EGP 1.3 billion in
aggregate, to shareholders in respect of the financial year ended
31 December 2021 (exact US dollar amount is subject to the exchange
rate at the time of the upstreaming from the subsidiaries to the
holding company). This represents a significant increase compared
to a final dividend of US$ 29.1 million distributed for the
previous financial year.
4 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.
5 Adjusted Operating Profit excludes one-off fees incurred in FY
2021 (EGP 29.0 million) related to the Company's dual listing on
the EGX completed in May 2021.
(6) Adjusted EBITDA is calculated as operating profit plus
depreciation and amortization and minus one-off fees incurred in FY
2021 (EGP 29 million) related to the Company's EGX listing
completed in May 2021.
ii. Operational Highlights
-- IDH's branch network stood at 502 branches as at year-end
2021, up from 481 branches as of 31 December 2020.
-- Total tests performed increased 24% year-on-year to reach
33.7 million in FY 2021. Test volume growth was driven by both
strong demand for IDH's Covid-19-related7 test offering, which
nearly doubled versus the previous year, coupled with a 15%
year-on-year increase in conventional tests performed. During the
final quarter of the year, IDH performed 8.7 million tests, up 5%
year-on-year.
-- Average revenue per test increased 53% year-on-year to EGP
150 in FY 2021. Controlling for the generally higher value
Covid-19-related(7) tests, average revenue per test increased 7%
versus the previous year.
-- Total patients served surpassed the 10 million mark for the
first time, reaching 10.3 million in FY 2021, an increase of 45%
from the previous year. Average test per patient declined to 3.3 in
FY 2021 from 3.8 in FY 2020 due to the increasing number of
patients who visited the Group's labs for single Covid-19 tests
(PCR, Antigen and Antibody) throughout the year.
-- In Egypt, IDH recorded revenue of EGP 4,108 million
(contributing to 81% of IDH net sales), up 89% year-on-year in FY
2021 on the back of solid growth in both patient and test volumes.
Revenue growth in IDH's home market was supported by both
Covid-19-related(7) and conventional tests, and was further boosted
by the Group's house call service which in the twelve months ended
on 31 December 2021 saw its revenue nearly double, contributing 23%
of Egypt's revenues versus 22% in FY 2020. Throughout 2021, demand
for conventional tests continued to recover following the
Covid-19-related slowdown recorded in 2020, with conventional test
revenue increasing 23% year-on-year on the back of a 15%
year-on-year increase in conventional test volumes.
-- Al-Borg Scan recorded year-on-year revenue growth of 81%,
with the venture's revenues reaching EGP 45 million in FY 2021.
Revenue growth was supported by solid growth in volumes, with both
tests performed and patients served standing 70% above the
preceding year's figures. To capitalise on Al-Borg Scan's growing
popularity, the Group inaugurated two Al-Borg Scan branches in the
second half of 2021, and a third in March 2022. In the coming
months, IDH is looking to inaugurate additional branches to expand
its reach across Greater Cairo.
-- Wayak recorded strong year-on-year standalone revenue growth
in FY 2021, which when combined with management's cost optimisation
strategy continued to support a narrowing of the venture's
standalone EBITDA losses in FY 2021 versus the previous year.
-- Meanwhile, in Jordan net sales reached EGP 869 million (IFRS
revenues8 recorded EGP 1,046 million in FY 2021), representing a
112% expansion versus the previous year. Strong growth for the
year, saw the country's contribution to total consolidated net
sales reach a record high of 17.2%, up from 15.4% in the previous
twelve months. The impressive performance was supported by solid
growth in both tests performed and average revenue per test.
Covid-19-related tests made up 68% of the country's net sales with
the contribution further bolstered by Biolab's multiple
revenue-sharing partnerships. In particular, Biolab's agreement
with Queen Alia International Airport (QAIA) generated c. EGP 185
million in the five months from August to December 2021,
contributing to 21% of the country's total net sales for the year.
In parallel, demand for Biolab's conventional test offering rose
steadily throughout the year, with the number of conventional tests
performed and net sales generated during FY 2021 increasing 28% and
26% year-on-year, respectively.
-- In Georgia, where Biolab has partnered with Georgia
Healthcare Group (GHG) to establish a 7,500 sqm Mega Lab, the ramp
up phase is progressing as scheduled, with Biolab concluding the
roll out of the new Laboratory Information Management System (LIMS)
across all of GHG's 76 medical facilities (7 hospitals and 69
clinics) in 1H 2021. The Mega Lab is the region's largest
diagnostic medical laboratory which will leverage the advanced
technological systems provided by Biolab to connect more than 40
hospitals and diagnostic centers that are part of GHG's network. As
compensation for the LIMS roll out, Biolab has received an 8.025%
equity interest in Mega Lab. Moreover, in exchange for management
services, which Bio Lab will be supplying for a two-year period
with the option to extend, the company will receive an annual fee
as well as a fixed percentage of Mega Lab's annualized EBITDA.
-- IDH's Nigerian operations reported year-on-year revenue
growth of 49% in FY 2021, on the back of a 16% and 31% year-on-year
rise in patients served and tests performed, respectively.
Consistent revenue growth coupled with successful cost optimisation
efforts implemented by the venture's new management team, see
Echo-Lab on track to turn EBITDA positive in early 2022.
-- In Sudan, despite the operational difficulties and heightened
uncertainty faced throughout the past year, operations are
continuing without major interruptions. While results for the year
were significantly impacted by the devaluation of the Sudanese
Pound in February 2021, in local currency terms, IDH's Sudanese
operations reported year-on-year revenue growth of 159%, as
management continued to successfully raise test prices in step with
inflation.
(7) Covid-19-related tests include both core Covid-19 tests
(Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as
other routine inflammatory and clotting markers including, but not
limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate
(ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the
Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these
tests witnessed following the outbreak of Covid-19.
8 Biolab's revenues for the period are calculated as net sales
and including concession fees paid to QAIA and Aqaba Port as part
of their revenue sharing agreements.
iii. Management Commentary
Commenting on the Group's full-year performance, IDH Chief
Executive Officer Dr. Hend El-Sherbini said: "2021 was an
exceptional year for IDH which saw our 5,000 employees serve more
than 10 million patients and perform more tests than ever before,
helping us deliver outstanding financial results. In parallel, we
added new services to our roster, expanded our reach across both
digital and physical channels, enhanced the overall experience of
our patients, grew our footprint, and completed our dual-listing on
the Egyptian Exchange, complementing our LSE listing. This saw us
end the year having built new foundations on which to drive the
next phase of growth across all our markets.
Heading into 2022, there are several exciting developments I am
looking forward to across both new and existing markets. In Egypt
and Jordan, we are aiming to capitalise on our market leading
position, expanded product offering and patient base, increased
service delivery capabilities, and growing visibility to continue
delivering robust growth in the year ahead. In particular, we are
eager to capitalise on the post-Covid-19 rebound in conventional
testing as patients' focus shifts back to conventional healthcare
as the threat of Covid-19 subsides. Moreover, across both markets,
our attention will now pivot towards patient retention as well look
to maintain the new relationships we were able to establish during
the pandemic thanks to our Covid-19-dedicated offering. In Nigeria,
thanks to the consistent revenue growth and the stellar work being
done by Dr. Bhatia and his team to streamline operations, Echo-Lab
is on track to turn EBITDA positive in 2022. We are confident that
the investments undertaken since the acquisition of Echo-Lab back
in 2018 have built a stronger, leaner, and growth-oriented business
which is well-placed to take full advantage of the significant
growth
opportunities offered Nigeria's diagnostics market.
In the first few months of the new year, globally we have been
confronted with a new set of challenges related to the long-term
economic spill overs of the pandemic coupled with the impacts of
the ongoing Russia-Ukraine war. Supply chain issues, fast-rising
consumer demand, and the increased volatility in commodity prices
which has been exacerbated by the ongoing war in Eastern Europe,
are continuing to push up prices, with countries around the world
recording inflation figures not seen for many years. In light of
rising inflation, central banks around the world have commenced a
cycle of monetary tightening, with many raising interest rates for
the first time in years. Here in Egypt, on 21 March 2022, the
Central Bank raised policy rates by 100bps and allowed the Egyptian
Pound to devalue by more than 17% against the US Dollar. Despite
the heightened uncertainty following the announcement, we are
confident that our proven track record in navigating similar
turbulent times and the strong mitigation frameworks we have in
place provide ample protection from the short and longer-term
impacts of the decision."
- End -
Analyst and Investor Call Details
An analyst and investor call will be hosted at 2pm (UK) | 3pm
(Egypt) on Tuesday, 26 April 2022. You can access the call by
clicking on this link, and you may dial in using the conference
call details below:
-- Event number: 2379 872 7421
-- Event password: 2FHc5saY2Cn
For more information about the event, please contact:
halaa@EFG-HERMES.com
About Integrated Diagnostics Holdings (IDH)
IDH is a leading consumer healthcare company in the Middle East
and Africa with operations in Egypt, Jordan, Sudan and Nigeria. The
Group's core brands include Al Borg, Al Borg Scan and Al Mokhtabar
in Egypt, as well as Biolab (Jordan), Ultralab and Al Mokhtabar
Sudan (both in Sudan) and Echo-Lab (Nigeria). A long track record
for quality and safety has earned the Company a trusted reputation,
as well as internationally recognised accreditations for its
portfolio of over 2,000 diagnostics tests. From its base of 502
branches as of 31 December 2021, 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 2021 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: A reconciliation between IFRS and APM measures
is provided earlier in this announcement.
Chairman's Message
I am pleased to report that despite the continued operational
challenges posed by Covid-19, your Company delivered an outstanding
performance in 2021, providing its services to a record number of
patients, while laying new foundations from which to generate
sustainable growth in the coming years.
Record-Breaking Results
In our seventh year as a publicly listed company on the London
Stock Exchange, we were proud to see our revenue surpass EGP 5
billion for the first time, growing year-on-year by over 90%.
Leveraging on our expanded service offerings, we attracted a
record number of patients to our laboratories, serving over 10
million patients in 2021.
In both Egypt and Jordan, we continued to honour our
responsibility as a leading healthcare provider, assisting local
authorities tackle the pandemic and supporting the recovery of
international travel.
During the year, we performed more than 2.6 million PCR,
antigen, and antibody tests, and continued to improve our delivery
capabilities to bring our services to as many people as
possible.
We also achieved a robust recovery in our conventional business
offerings, which now exceeds our pre-Covid-19 levels enhancing our
long established track record in our core business.
In Nigeria, following our restructuring of the business and with
our strong management team we achieved solid and sustainable
results. We are expecting Echo-Lab to turn EBITDA positive in the
coming months.
A Forward-looking Business
As firm believers in proactive healthcare, at IDH we take pride
in our ability to deliver service excellence today, while always
keeping an eye to the future. Throughout the year, we continued to
invest in developing all aspects of our business, from adding new
services to our portfolio and world-class doctors to our team, to
expanding our delivery channels and enhancing our digital
infrastructure.
We have successfully expanded our house call services.
We have also accomplished steady growth of our radiology
venture, Al-Borg Scan.
In the ever burgeoning data analytics business environment, we
are exploring ways to utilize our vast database to develop new
services increasingly tailored to patients' individual needs.
We continue to ensure strict data privacy and remain vigilant in
strengthening our IT infrastructure to proactively address all
cybersecurity risks.
Expanding our Footprint
Your Company continues to enjoy strong organic growth momentum
while constantly evaluating potential M&A opportunities across
new African, Middle Eastern, and Asian markets.
On this front, we look forward to potentially adding Pakistan to
our footprint and commencing our partnership with Islamabad
Diagnostics Centre and Dr. Uppal once all pending conditions
precedent are satisfied. The combination of our two businesses will
see us well-placed to meet the country's growing healthcare
needs.
Environmental, Social, and Governance (ESG)
We are proud to have published our first Sustainability Report
and are cognizant of our social responsibilities while seeking to
constantly monitor and address all areas of ESG within the business
in Egypt and elsewhere in our offices around the world.
Management regularly monitors and revises our risk matrix and
heat map to ensure we have the right checks and balances in place
and ensuring business continuity processes.
A United Team
We have benefitted hugely over the past three years having most
of our team working out of our headquarters in Cairo's Smart
Village.
We value our loyal and hard-working workforce and constantly
review their KPIs to help them progress professionally in line with
their ambitions while providing a long-term incentive programme
(LTIP) starting 2022.
We have also recently expanded and strengthened your Company's
Board of Directors, welcoming Yvonne Stillhart as a Non-Executive
Director. Yvonne brings a wealth of experience across multiple
sectors, and replaces James Nolan who stepped down in September of
last year.
We are enormously grateful to James for his excellent service
and wise counsel to IDH.
Broadening our Shareholder Base
IDH's shares are now listed on both the London Stock Exchange
and Egyptian Stock Exchange. We are confident that this will expand
our shareholder base to include local institutional and retail
investors in Egypt, while increasing liquidity and visibility in
our largest market.
In 2022 we also welcomed IFC as a strategic shareholder, and
look forward to carrying on working closely together to continue
meeting the strong demand for healthcare services across our
footprint.
As our countries of operation prepare to transition into a
post-Covid-19 world, your Company is well positioned to maintain
growth and profitability and continue delivering exceptional and
consistent value to patients and shareholders.
Lord St John of Bletso
Chairman
Important notice: A reconciliation between IFRS and APM measures
is provided earlier in this announcement.
Chief Executive's Review
2021 was an exceptional year for IDH which saw our 5,000
employees serve more than 10 million patients and perform more
tests than ever before, helping us deliver outstanding financial
results. In parallel, we added new services to our roster, expanded
our reach across both digital and physical channels, enhanced the
overall experience of our patients, grew our footprint, and
completed our dual-listing on the Egyptian Exchange, complementing
our LSE listing. This saw us end the year having built new
foundations on which to drive the next phase of growth across all
our markets.
Similar to the previous year, 2021 was heavily impacted both
economically and socially by Covid-19, as countries around the
world combatted various waves of new infections and confronted
multiple new variants. Despite this, 2021 was also a turnaround
year for the fight against the pandemic as vaccines were gradually
rolled out and governments and individuals became increasingly
willing to coexist with the virus, driving widespread economic
recovery from the previous year's lows.
In the midst of a challenging operating environment, we
displayed a remarkable ability to adapt to changing market and
demand dynamics and consistently cater to the evolving needs of our
growing patient base, ensuring we continue to provide our
communities with access to high quality, affordable healthcare and
diagnostic services. Over the past twelve months, we continued to
effectively care for both our conventional and Covid-19 patients
leveraging an expanded branch network, a ramped-up house call
service, and a growing digital presence to make our services
increasingly accessible and our payment methods increasingly
convenient. Our efforts translated in significant improvements in
our patients' overall experience, with the Group's net promoter
score for the year recording consistently above the 80 mark, ahead
of last year's value and well above industry averages.
During 2021, we continued to serve our Covid-19 patients by
ensuring we were well-equipped to handle peaks in demand when
infection rates increased, while promptly adapting our offering to
the requirements of patients. In the twelve months to 31 December
2021, we performed over 2.6 million PCR, antigen and antibody
tests, continuing to provide patients and healthcare workers with a
trustworthy first line of defence against the virus. At the same
time we secured multiple partnerships with international air
carriers and regional healthcare providers like National Aviation
Services (NAS) Kuwait and Pure Health UAE to conduct PCR testing
for passengers traveling from Egypt to other regional destinations.
We also offered PCR testing for passengers on a walk-in basis, and
were the first lab in Egypt to provide QR codes on travel
certificates. This enabled us to not only to play an important role
in supporting the recovery of international travel, but also
ensured that we successfully captured a leading market share for
the service.
In parallel, despite the challenges posed by the pandemic, we
never lost sight of the needs of our conventional patients,
continuing to care for them even at the height of the Covid-19
crisis. Our efforts focused on expanding our service offering and
delivery capabilities, as well as organising special campaigns to
raise healthcare awareness specifically targeting patients
suffering from chronic diseases, a particularly vulnerable category
in light of the ongoing pandemic.
Throughout the year, we also devoted increasing attention and
resources towards developing our digital infrastructure to expand
our reach, provide new services to our patients, and improve their
overall experience. Highlights for the year included the roll out
of multiple new patient touch points including a revamped IDH app,
a new chatbot function, as well as an additional call centre. At
the same time, we also made it increasingly convenient for our
patients to pay for our services.
Record-breaking Growth and Operational Results
Our ability to transform the business in step with changing
demand dynamics enabled us to build on an already strong 2020, to
deliver a formidable set of operational and financial results in
2021. More specifically, in the twelve months to 31 December 2021,
we recorded consolidated revenue of EGP 5.2 billion, up 97%
year-on-year and representing the highest full-year revenue figure
on record. Meanwhile, net sales expanded an impressive 90% from the
previous year, coming in at EGP 5.0 billion in FY 2021. Net sales
growth for the year was dual driven, as we performed 24% more tests
than in the previous year and recorded a 53% year-on-year rise in
average price per test versus 2020.
Throughout the year, consolidated net sales was supported by
strong demand for both our Covid-19-related and conventional tests
portfolios, with each segment contributing to around half of
consolidated net sales for the year. On the conventional tests
front, demand recorded a sustained recovery following the
Covid-19-related slowdown experienced in the previous year, with
conventional test net sales expanding 22% versus 2020, and coming
in a noteworthy 13% above pre-Covid-19 levels recorded in 2019.
Volume and net sales growth for the year also reflected our
ongoing investments to expand our delivery capabilities, which over
the course of 2021 saw us grow our patient reach across both
traditional branches and our house call service. On the one hand,
we inaugurated 23 new branches in Egypt and an additional branch in
Jordan, taking the total number of operational branches as at
year-end 2021 to 502. Our ability to consistently rollout new
branches within and outside the Greater Cairo area currently sees
us operate the largest network of branches amongst private players
in the country, enabling us to strengthen our brand name and
maintain our leadership position in the market. Moreover, it is
also important to note that our Mega Lab, which continues to be the
sole CAP-accredited facility in Egypt, typically operates at around
55% of its maximum capacity leaving abundant room for further
growth. In 2021, we also continued to work closely with local
authorities in Egypt to obtain the necessary certifications to take
part in the government's Universal Healthcare Insurance (UHI)
system which is being rolled out across the entire country. As at
year-end 2021, IDH had 13 out of the 19 UHI-accredited labs in the
country, with several more of our labs looking to obtain
accreditation in the coming year. On the other hand, in response to
the growing demand for our house call services in both Egypt and
Jordan, we continued to ramp up our house call capabilities. In our
home market of Egypt, where sample collected directly in patient
homes made up 23% of the country's revenues for the year, we added
a second call centre, expanded our house call team to an average of
400 chemists, and streamlined logistics to further decrease
turnaround times. On this last point, we were particularly happy to
note our success in keeping turnaround times strictly below 24
hours even throughout the multiple peaks in infection rates
witnessed in 2021. Our ability to effectively ramp up the service
to match its growing popularity is enabling us to perform over five
thousand house visits per day, the most out of any other player in
the market, and process over ten thousand calls each day.
Regionally, in Egypt, as with the consolidated performance, our
revenues were supported by both our Covid-19-related test offering,
which in 2021 made up 49% of the country's revenues, as well as the
country's conventional test offering, which made up the remaining
51%. During the year, we continued to lead the market in terms of
core Covid-19 tests performed, further testament to the high
quality of our offering and the extensive reach of our services. At
the same time, we observed a sustained recovery in our conventional
business, with revenues generated by conventional tests increasing
a solid 23% versus the previous year supported by a 15% rise in
conventional tests performed and a 7% expansion in average revenue
per conventional test.
Egypt's revenues were further buoyed by revenues generated by
our house call service, which expanded an impressive 94% versus
2020, contributing an additional EGP 935 million to the country's
total revenues for the year. Meanwhile, at our fast-growing
radiology venture, Al-Borg Scan, we witnessed a solid 81%
year-on-year increase in revenue to EGP 45 million supported by a
70% year-on-year rise in both tests performed and patients served,
which recorded 78 thousand and 62 thousand, respectively. I am
particularly happy to note the growing success of Al-Borg Scan,
which is helping us to capitalise on the important growth
opportunities offered by Egypt's fragmented radiology market while
delivering on our vision of providing patients with a one-stop-shop
service offering featuring both pathology and radiology. To
capitalise on the rising patient demand for our radiology services,
we inaugurated two new Al-Borg Scan branches in 2021 and a third in
March 2022. In the coming months, we plan to continue launching
additional branches, further expanding our reach across Great
Cairo. Finally, it is also worth
highlighting Wayak's growing market traction, with the venture
continuing to expand its patient base and product offering. The
company's EBITDA losses have narrowed significantly and management
has ambitious plans to build on this momentum by rolling out
multiple new services in 2022.
Jordan was the standout performer for the year, with Biolab
reporting year-on-year net sales growth of 112% and contributing a
record share of consolidated net sales at 17.2%. During the year,
Covid-19-related tests contributed to 68% of Biolab's net sales as
the venture continued to record strong demand at both its regular
branches and across its testing booths located in the country's
main airports and ports. In fact, Covid-19-related net sales in
Jordan was boosted by strong contributions from Biolab's new
partnership with Queen Alia International Airport, King Hussain
International Airport, and Aqaba Port. As part of these agreements,
Biolab has been operating testing stations across all three
locations primarily focused on offering PCR testing for Covid-19 to
passengers arriving in Jordan. Through these initiatives, Biolab
was able to continue playing a frontline role in the country's
fight against the pandemic and simultaneously expand its patient
base and reach across new segments of the population. Meanwhile, we
were also very pleased to note the robust recovery in Biolab's
conventional test net sales, which increased 26% year-on-year on
the back of a solid rise in conventional tests performed.
In Nigeria, we continued to record steady revenue growth
throughout the entire year on the back of growing test and patient
volumes. In 2021, Echo-Lab's revenues expanded 49% year-on-year on
the back of a 31% increase in tests performed coupled with a 14%
rise in average revenue per test. Growing volumes continue to
highlight the effectiveness of our investments to revamp Echo-Lab's
operations and the success of our targeted marketing efforts. The
consistent growth delivered by our Nigerian operations also reflect
the incredible work done by Dr. Alok Bhatia, who joined Echo-Lab as
CEO in March 2021. Dr. Bhatia and his team have brought the skills
and expertise needed to deliver on our long-term vision for
Echo-Lab and we look forward to reaping the rewards of their hard
work in the coming years.
Finally, in Sudan our results for the year were heavily impacted
by the devaluation of the Sudanese Pound in February 2021 as well
as the rise in social and political unrest witnessed in the final
months of the year. However, management's continued success in
raising prices in step with inflation, saw revenue in local
currency terms grow an impressive 159% in 2021. It is also worth
highlighting that despite the operational difficulties and
heightened uncertainty faced throughout the past year, operations
are continuing without major interruptions.
Further down the income statement, we reported impressive margin
expansions at all levels of profitability supported by strong
revenue growth and the subsequent dilution of IDH's fixed costs.
More specifically gross profit for the year more than doubled with
a five-point margin expansion. Meanwhile, EBITDA adjusted for
one-off listing fees expanded 116% with a margin on net sales of
50%, up six percentage points from 2020 (adjusted EBITDA margin on
revenues stood at 48% in FY 2021). Strong adjusted EBITDA level
profitability supported a 145% year-on-year expansion in net profit
which reached EGP 1,493 million in 2021. Net profit margin on net
sales expanded seven percentage points versus 2020 to record 30%
for the year (net profit margin on revenues stood at 29% in FY
2021). It is worth highlighting that the remarkable net profit
growth comes despite the Company booking EGP 29 million in one-off
fees related to our dual-listing as well as EGP 20 million in fees
related to the IFC loan secured in May of last year.
Expanding Our Footprint
While effectively serving our patients and delivering
exceptional results across our existing geographies, we also worked
to expand our footprint into new territories. On this front, in
December 2021, we signed a sale and purchase agreement to acquire
50% of Islamabad Diagnostic Centre (IDC), one of Pakistan's
largest, most respected, and fastest growing integrated diagnostics
companies, for a total consideration of USD 72.35 million. The
deal, which is currently pending regulatory approval, would see us
partner with IDC's founder and CEO, Dr Rizwan Uppal, and acquire a
stake in an established provider with a strong track-record, solid
financial performance, and an ambitious growth plan. The
transaction will see us add a fifth country to our footprint and
help us further diversify our revenue base in line with our
long-term strategy. IDC will be fully consolidated on IDH's
accounts following the completion of the transaction and the
transfer of funds to the Evercare Group. Under the agreement, IDH
will hold four of the seven seats on IDC's board. The transaction,
which is subject to the satisfaction of a number of conditions
precedent should be completed later in 2022.
With a population of over 200 million, 63% of which is under the
age of 30, Pakistan boasts an attractive demographic profile
providing long-term sustainable demand for quality healthcare
services. Meanwhile, like many of the markets we currently operate
in, its healthcare industry is characterised by a widening
demand-supply gap for high quality healthcare services, a high
degree of out-of-pocket payments (medical expenses not reimbursed
by insurance), and increasingly favourable regulations aimed at
encouraging private sector participation. Similar to our existing
businesses, IDC boasts an established position in the Pakistani
market with network of over 85 branches across 30 cities, and
offers a full roster of pathology and radiology diagnostic
services. These characteristics make IDC the perfect partner for
IDH, and Pakistan an ideal location where our proven business model
is well placed to drive new value and help meet the rising demand
for high quality healthcare.
Dual-listing on the EGX
Adding to this past year's list of achievements, in May 2021 we
successfully completed our dual-listing on the Egyptian Exchange
(EGX), successfully meeting our goal of offering IDH's unique value
proposition to the widest investor base possible. With our shares
now listed on the both the LSE and the EGX and tradeable in a fully
fungible manner, we have provided local retail and institutional
investors as well as global emerging markets specialists who
regularly invest through the EGX with the possibility to capitalize
on our attractive growth profile. We remain optimistic that going
forward investors will find having two venues on which to trade IDH
shares increasingly useful, realizing our target of having a larger
number of the Company's shares being traded on the EGX.
Our Sustainability Journey
Across our operations, we continue to place a strong focus on
strengthening our environmental, social and governance (ESG)
monitoring and compliance frameworks to ensure we continue working
to the betterment of our communities and safeguarding the interests
of all our stakeholders. Throughout 2021, we devoted our attention
to developing a more assertive road map that draws clear guidelines
and methods to monitor, evaluate, and improve our sustainability
practices. Under the guidance of a top-tier ESG consultant, we
undertook a rigorous ESG assessment across all functions to
highlight key sustainability initiatives while identifying areas of
improvement. This allowed us to set the foundation for future ESG
implementation by internally mapping key performance indicators to
the newly developed sustainability framework. As a critical sector,
the healthcare industry stands at the threshold of each of the UN's
Sustainable Development Goals (SDGs). Throughout our operations, we
have direct impacts on a number of key SDGs, and indirectly impact
multiple others. Through our Sustainability Report, we were able to
successfully share with our peers and wider community our
contributions across all 17 SDGs, providing stakeholders with a
clear framework to benchmark our contributions and hold us
accountable in the years to come.
In a world where investment decisions are being taken with an
increasing focus on the ESG profile of a company, we have provided
investors with an in-depth analysis of our ESG performance,
facilitating their due diligence processes. On this front, we have
dedicated a chapter of the report to address our investors'
inquiries related to our ESG performance and strategy, aligning
ourselves with the global action plan set by the Principles of
Responsible Investment. As we leave 2021 behind us, we are proud of
the progress made on this front, but remain cognizant that of the
long road ahead of us. As we enter this exciting new chapter for
IDH, we welcome all our stakeholders to share their insights and
help us generate additional social and environmental value for our
communities.
Throughout this process, we have been closely guided by our
world-class Board of Directors, which has been overseeing all
aspects of the business since our listing on the LSE in 2015. Our
Board is composed in the majority by independent, non-executive
directors and is backed by a robust and constantly enhanced policy
framework. In early 2022, our Board of Directors was further
strengthened with the appointment of Ms. Yvonne Stillhart, as a
Non-Executive Director. Yvonne is a seasoned Senior Executive
working with innovation and growth driven companies across a wide
range of industries and geographical regions, including Europe,
USA, North Africa and Sub-Saharan Africa.
Dividend Policy and Proposed Dividend
In view of the strong cash-generative nature of our business and
its asset-light strategy, our dividend policy is to return to
shareholders the maximum amount of excess cash after taking careful
account of the cash needed to support operations and expansions. As
such, IDH is delighted to recommend a final dividend in respect of
the financial year ended 31 December 2021 of EGP 2.17 per share, or
EGP 1.3 billion in aggregate. The equivalent value, which will
depend on the exchange rate at the time of the upstreaming from the
subsidiaries to the holding company, represents a significant
increase from the dividend of US$ 29.1 million distributed for the
previous financial year.
2022 Outlook
We kicked off 2022 recording another surge in Covid-19
infections across our markets as the highly-infective Omicron
variant became increasingly prevalent. Throughout this new wave, in
both Egypt and Jordan we continued to provide our patients with
widespread access to Covid-19-related testing, helping to keep our
communities safe and providing local authorities with vital support
in the fight against the virus. In the final weeks of the first
quarter, as vaccines continued to be rolled out, we witnessed a
sustained decline in new infections with governments around the
world signalling a strong will to transition into a post-Covid-19
normality. While the Group remains vigilant and ready to respond to
possible new waves in infections, we are prepared and excited to
kickstart our post-pandemic strategy and venture into a new chapter
of sustainable growth. During the course of 2021, while our
priority remained helping governments combat the Covid-19 pandemic,
we also worked tirelessly to improve all aspects of the business
and lay solid foundations on which to build out next phase of
development and value creation.
Heading into 2022, there are several exciting developments I am
looking forward to across both new and existing markets. In Egypt
and Jordan, we are aiming to capitalise on our market leading
position, expanded product offering and patient base, increased
service delivery capabilities, and growing visibility to continue
delivering robust growth in the year ahead. In particular, we are
eager to capitalise on the post-Covid-19 rebound in conventional
testing as patients' focus shifts back to conventional healthcare
as the threat of Covid-19 subsides. Moreover, across both markets,
our attention will now pivot towards patient retention as well look
to maintain the new relationships we were able to establish during
the pandemic thanks to our Covid-19-dedicated offering. On this
front, we have recently launched a new dedicated loyalty programme
in partnership with a leading loyalty solutions provider, and are
working to roll out multiple new marketing campaigns making full
use of our growing social media presence. In parallel, we are also
leveraging our enhanced digital and data analytics capabilities to
monitor patient records and disease cycles, and provide tailored
services and increase cross-selling. Our efforts continue to ensure
that our patients enjoy a hassle-free experience from start to
finish, further enhancing their overall experience. At the same
time, we are targeting the roll out of an additional 25 to 30
branches in and outside the Greater Cairo area, and continue to
take advantage of the abundant spare capacity at our house call
division to further scale up the service. In Nigeria, thanks to the
consistent revenue growth and the stellar work being done by Dr.
Bhatia and his team to streamline operations, Echo-Lab is on track
to turn EBITDA positive in 2022. We are confident that the
investments undertaken since the acquisition of Echo-Lab back in
2018 have built a stronger, leaner, and growth-oriented business
which is well-placed to take full advantage of the significant
growth opportunities offered Nigeria's diagnostics market. Finally,
in Sudan, we are continuing to monitor the ongoing political and
social instability and have put in place strong mitigation
strategies to protect our people and operations.
Beyond our current markets, we are also looking forward to
obtaining the remaining regulatory approvals and add Pakistan to
our footprint. IDC is expected to generate substantial value from
the very start and we are thrilled to kick off our partnership with
Dr. Uppal in the coming months. In parallel, we will continue to
assess other potential value-accretive acquisition opportunities
both across new and existing markets in Africa, the Middle East,
and Asia which present similar characteristics to our current
markets and where our operational model would be best-suited to
drive long-term value creation.
A Turbulent Start to the Year
In the first few months of the new year, globally we have been
confronted with a new set of challenges related to the long-term
economic spill overs of the pandemic coupled with the impacts of
the ongoing Russia-Ukraine war. Supply chain issues, fast-rising
consumer demand, and the increased volatility in commodity prices
which has been exacerbated by the ongoing war in Eastern Europe,
are continuing to push up prices, with countries around the world
recording inflation figures not seen for many years. In light of
rising inflation, central banks around the world have commenced a
cycle of monetary tightening, with many raising interest rates for
the first time in years.
Here in Egypt, on 21 March 2022, the Central Bank raised policy
rates by 100bps and allowed the Egyptian Pound to devalue by more
than 17% against the US Dollar. Despite the heightened uncertainty
following the announcement, we are confident that our proven track
record in navigating similar turbulent times and the strong
mitigation frameworks we have in place provide ample protection
from the short and longer-term impacts of the decision. Going
forward, we will continue to keep a close eye on the evolving
situation, and have taken proactive steps to build up our inventory
to safeguard ourselves from any potential future disruptions.
I would like to conclude by thanking all my colleagues for their
exceptional work over the course of the last year. 2021 was the
outstanding year that it was in great part due to your relentless
efforts to deliver on our vision and goals. I am honoured to have
the opportunity to work with you, and I am confident that by
working together we will be able to continue delivering exceptional
value in 2022.
Dr. Hend El-Sherbini
Chief Executive Officer
Important notice: A reconciliation between IFRS and APM measures
is provided earlier in this announcement.
Group Operational & Financial Review
i. Revenue/Net Sales and Cost Analysis
Revenue/Net Sales
Consolidated Analysis
IDH reported total revenues of EGP 5,225 million in FY 2021, up 97%
year-on-year. Consolidated net sales9 surpassed the EGP 5 billion mark,
recording EGP 5,048 million in FY 2021, up 90% versus FY 2020. The
remarkable growth was dual driven with tests performed during the year
growing 24% and average price per test rising 53% year-on-year.
On a service basis, net sales growth was supported by both IDH's Covid-19-related1
(0) and conventional test portfolios, both of which recorded growing
demand during the period. IDH's Covid-19-related offering contributed
to just over half of consolidated net sales in FY 2021 compared to
the 24% contribution made in FY 2020. The segment witnessed high demand
throughout the entire year, supported by rising infection rates in
the first half of the year and the widespread lifting of travel bans
in the second half of 2021.
In parallel, a steady recovery in demand for conventional tests, saw
conventional net sales expand 22% year-on-year supported by a 15% year-on-year
rise in tests performed and a 7% increase in average price per conventional
test. Conventional test net sales for the year stood 13% above its
pre-pandemic level, a testament to the Company's impressive ability
to expand its service accessibility and delivery capabilities, to drive
a rapid recovery across its conventional test portfolio despite the
difficult operating conditions faced over the last two years.
On a quarterly basis, consolidated revenue recorded EGP 1,458 million,
up 48% year-on-year, while net sales recorded EGP 1,281 million, up
30% year-on-year. Despite the strong growth versus the previous year,
net sales for the quarter posted a 13% quarter-on-quarter decline.
This was largely attributable to a 17% quarter-on-quarter decline in
net sales generated by IDH's core Covid-19 tests, which recorded EGP
627 million in Q4 2021 versus EGP 760 million in Q3 2021. Falling Covid-19-related
net sales reflect both a decrease in average price of Covid-19-related
tests as well as lower demand generated by passengers traveling abroad
as the surge in traveling-related demand witnessed in Q3 2021 following
the lifting of travel bans subsided.
House Call Service
The Group's consolidated net sales was buoyed by its house call services
in Egypt and Jordan, which generated EGP 990 million in revenue in
FY 2021, up 87% versus the previous year. By test type, in FY 2021
revenue net sales generated by core Covid-19 tests stood at EGP 544
million, making up 55% of total house call revenue for the year. Geographically,
in Egypt house call services generated EGP 935 million in revenue,
contributing 23% to the country's revenue. Meanwhile, In Jordan house
call revenue stood at EGP 55 million, making up 6% of the country's
revenue for the year. It is worth highlighting that in FY 2021, average
net sales per house call test stood at EGP 202, significantly above
the Group's average of EGP 150.
9 A reconciliation between revenue and net sales is available
earlier in this announcement.
(10) Covid-19-related tests include both core Covid-19 tests
(Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as
other routine inflammatory and clotting markers including, but not
limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate
(ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the
Company opted to include in the classification as "other
Covid-19-related tests" due to the strong rise in demand for these
tests witnessed following the outbreak of Covid-19.
Detailed Consolidated Performance Breakdown
Q1 Q1 2021 Q2 2020 Q2 2021 Q3 2020 Q3 2021 Q4 2020 Q4 2021 FY 2020 FY 2021
2020
------------------- ------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total net sales
(EGP mn) 500 1,130 450 1,164 720 1,473 986 1,281 2,656 5,048
Total tests
(mn) 6.1 8.1 5.1 8.3 7.5 8.6 8.3 8.7 27.1 33.7
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Conventional
test net sales
(EGP mn) 495 594 367 594 568 667 577 597 2,007 2,452
Conventional
tests performed
(mn) 6.1 6.8 4.6 6.9 7.0 7.5 7.3 7.3 24.9 28.5
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Covid-19-related
test net sales
(EGP mn) 5 536 83 569 152 806 409 684 649 2,596
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Core Covid-19
tests (PCR,
Antigen,
Antibody)
(EGP mn) 5 399 26 431 92 760 314 627 437 2,217
Core Covid-19
tests performed
(k) 4 407 42 387 92 882 300 935 438 2,610
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Other
Covid-19-related
tests (EGP
mn) 0 137 57 138 60 47 95 58 213 379
Other
Covid-19-related
tests performed
(k) 0 874 531 933 477 284 714 416 1,722 2,507
------------------- ------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Contribution to consolidated results
----------------------------------------------------------------------------------------------------------------------
Conventional
test net sales 99% 53% 82% 51% 79% 45% 59% 47% 76% 49%
Conventional
tests performed 100% 84% 89% 84% 92% 87% 88% 84% 92% 85%
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Covid-19-related
tests 1% 47% 18% 49% 21% 55% 41% 53% 24% 51%
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Core Covid-19
tests (PCR,
Antigen,
Antibody) 1% 35% 6% 37% 13% 52% 32% 49% 16% 44%
Core Covid-19
tests performed 0% 5% 1% 5% 1% 10% 4% 11% 2% 8%
=================== ======= ======== ======== ======== ======== ======== ======== ======== ======== ========
Other
Covid-19-related
tests 0% 12% 13% 12% 8% 3% 10% 5% 8% 8%
Other
Covid-19-related
tests performed 0% 11% 10% 11% 6% 3% 9% 5% 6% 7%
Note: Quarterly results included in the table above are
unaudited.
Net Sales Analysis: Contribution by Patient Segment
Contract Segment
Revenue generated by IDH's contract segment reached EGP 3,062 million
in FY 2021, representing a 113% year-on-year increase versus the previous
twelve months. Meanwhile, net sales generated by the Group's contract
segment more than doubled year-on-year to record EGP 2,885 million in
FY 2021 supported by a 25% increase in contract tests performed and
a 61% rise in the average net sales per contract test. The segment's
contribution to total net sales subsequently increased to reach 57%
from 54% in FY 2020. Covid-19-related(11) testing contributed 53% of
contract net sales in FY 2021 as the Company continued to record strong
patient demand in both Egypt and Jordan. Controlling for contributions
made by Covid-19-related tests during the year, the contract segment
would record a 23% year-on-year increase in conventional test net sales
on the back of a 17% increase in tests performed and a 6% expansion
in average net sales per test.
The contract segment's results include contributions from IDH's multiple
partnerships to conduct PCR testing for passengers. More specifically,
IDH's agreement with Pure Health UAE and with National Aviation Services
Kuwait (NAS) generated EGP 89 million and EGP 91 million, respectively,
in FY 2021. The number of PCR tests performed during the year as part
of IDH's partnerships with Pure Health stood at 83 thousand, making
up 7% of total PCR tests performed in Egypt for the year. Meanwhile,
tests performed as part of the Company's agreement with NAS stood at
51 thousand, representing 4% of total PCR tests performed in Egypt during
FY 2021.
In Jordan, the Group's partnership with Queen Alia International Airport
(QAIA) generated net sales of EGP 185 million. As part of the agreement,
Biolab carried out 503 thousand PCR tests, representing 41% of total
PCR tests performed in Jordan for the year. At the same time, Biolab's
agreements with Aqaba's King Hussein International Airport (KHIA) and
Aqaba Port contributed an additional EGP 107 million to the segment.
It is worth noting that Biolab's partnership with KHIA started in August
2020, followed by the company's agreement with Aqaba Port which kicked
off in May 2021, and its partnership with QAIA which commenced in August
2021.
Walk-in Segment
The Group's walk-in segment recorded revenue and net sales (IFRS and
APM measures for walk-in segment were identical for the year) of EGP
2,162 million in FY 2021, up 77% versus the previous year. The year-on-year
growth was supported by a 23% increase in tests performed and a 44%
increase in average price per test. The segment's contribution to total
net sales stood at 43% versus the 46% in FY 2020. Meanwhile, the contribution
of Covid-19-related tests to the walk-in segment stood at 49% in FY
2021, compared to 26% in FY 2020. Excluding Covid-19-related contributions,
conventional walk-in net sales recorded a 21% increase versus the previous
year, as conventional walk-in tests volumes grew 9% year-on-year and
net sales per conventional walk-in test increased 11% versus FY 2020.
1 (1) Covid-19-related tests include both core Covid-19 tests (Polymerase
Chain Reaction (PCR), Antigen, and Antibody) as well as other routine
inflammatory and clotting markers including, but not limited to, Complete
Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin
and C-reactive Protein (CRP), which the Company opted to include in
the classification as "other Covid-19-related tests" due to the strong
rise in demand for these tests witnessed following the outbreak of Covid-19.
Key Performance Indicators
Walk-in Segment Contract Segment Total
========================= ======================= ========================= ===============================
FY20 FY21 Change FY20 FY21 Change FY20 FY21 Change
========================= ====== ====== ======= ======= ======= ======= ======= ======= =============
Net sales^ (EGP mn) 1,222 2,162 77% 1,434 2,885 101% 2,656 5,048 90%
Total Covid-19-related
net sales (EGP mn) 314 1,063 239% 335 1,533 357% 649 2,596 300%
Patients ('000) 2,288 3,464 51% 4,825 6,853 42% 7,113 10,317 45%
% of Patients 32% 34% 68% 66%
Net sales per Patient
(EGP) 534 624 17% 297 421 42% 373 489 31%
------------------------- ------ ------ ------- ------- ------- ------- ------- ------- -------------
Tests ('000) 7,052 8,693 23% 20,021 24,966 25% 27,073 33,659 24%
% of Tests 26% 26% 74% 74%
Total Covid-19-related
tests ('000) 659 1,745 165% 1,501 3,372 125% 2,160 5,117 137%
Net Sales per Test
(EGP) 173 249 44% 72 116 61% 98 150 53%
Test per Patient 3.1 2.5 -19% 4.1 3.6 -12% 3.8 3.3 -14%
------------------------- ------ ------ ------- ------- ------- ------- ------- ------- -------------
Revenue Analysis: Contribution by Geography
Egypt
In Egypt, IDH reported revenue of EGP 4,108 million, 89% above the previous
year's figure and contributing to 81.4% of total net sales for the year.
The impressive result was supported by a 21% year-on-year rise in test
performed coupled with a 56% year-on-year increase in average revenue
per test. As with the consolidated performance, Egypt's revenues were
supported by both the Group's Covid-19-related1 (2) test offering which
in FY 2021 made up 49% of the Egypt's revenues, as well as the country's
conventional test offering, which made up the remaining 51% of Egypt's
revenues. When controlling for contributions made by Covid-19-related
tests during the year, revenue generated by conventional tests increased
a solid 23% versus the previous year supported by a 15% rise in conventional
tests performed and a 7% expansion in average revenue per conventional
test.
On a quarterly basis, net sales generated by IDH's Egyptian operations
reached EGP 986 million in Q4 2021, up 29% versus the final three months
of FY 2020. Despite the strong year-on-year rise, on a quarter-on-quarter
basis, revenue declined 17% primarily driven by lower revenue generated
by the Company's core Covid-19 test offering versus the previous quarter.
Lower Covid-19-related revenue reflect a more than 21% quarter-on-quarter
fall in the average price for core Covid-19 test during Q4 2021 coupled
with lower demand from international travellers, which had boosted results
in the third quarter following a widespread lifting of international
travel restrictions.
House Call Service
IDH's house call service in Egypt, which has been successfully ramped
up to capitalise on the service's growing popularity, recorded revenue
of EGP 935 million in FY 2021, up 94% year-on-year. The service's contribution
to the country's revenues stood at 23% in FY 2021, versus the 22% contribution
made in FY 2020. Core Covid-19 tests performed through its house call
service made up 30% of total core Covid-19 tests performed by IDH in
the country throughout the year. It is also important to note that,
tests performed through IDH's house call service are offered at the
same price as at traditional branches, with only an additional house
call delivery fee charged to patients to cover the transportation costs
of the chemist.
Al-Borg Scan
IDH's fast-growing radiology venture, Al-Borg Scan, reported revenue
of EGP 45 million in FY 2021, a solid 81% year-on-year increase. Revenue
growth was supported by a 70% rise in both tests performed and patients
served versus the previous year. To capitalise on Al-Borg Scan's growing
popularity, the Group inaugurated two Al-Borg Scan branches in the second
half of 2021, and a third in March 2022. In the coming months, IDH is
looking to inaugurate additional branches to expand its reach across
Greater Cairo.
Overall, IDH served 8.5 million patients in Egypt and performed 29.7
million tests in FY 2021, up 34% and 21% year-on-year, respectively.
(12) Covid-19-related tests include both core Covid-19 tests (Polymerase
Chain Reaction (PCR), Antigen, and Antibody) as well as other routine
inflammatory and clotting markers including, but not limited to, Complete
Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin
and C-reactive Protein (CRP), which the Company opted to include in
the classification as "other Covid-19-related tests" due to the strong
rise in demand for these tests witnessed following the outbreak of Covid-19.
Detailed Egypt Revenue Breakdown
EGP mn Q1 Q1 2021 Q2 2020 Q2 2021 Q3 2020 Q3 2021 Q4 2020 Q4 2021 FY 2020 FY 2021
2020
------------------- ------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Revenue 424 920 381 1,015 602 1,187 767 986 2,173 4,108
Conventional
Revenue 424 507 314 510 482 573 493 513 1,713 2,103
Total
Covid-19-related
Revenue 0 414 67 504 120 614 273 474 460 2,005
Core Covid-19
tests (PCR,
Antigen,
Antibody) 0 277 10 366 60 567 178 416 248 1,626
Other
Covid-19-related
tests 0 137 57 138 60 47 95 58 213 379
------------------- ------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Contribution to Egypt Net Sales
----------------------------------------------------------------------------------------------------------------------
Conventional
tests 100% 55% 82% 50% 80% 48% 64% 52% 79% 51%
Total
Covid-19-related
tests 0% 45% 18% 50% 20% 52% 36% 48% 21% 49%
Core Covid-19
tests (PCR,
Antigen,
Antibody) 0% 30% 3% 36% 10% 48% 23% 42% 11% 40%
Other
Covid-19-related
tests 0% 15% 15% 14% 10% 4% 12% 6% 10% 9%
Note: Quarterly results included in the table above are
unaudited.
Jordan
In Jordan, the Group recorded revenue of EGP 1,046 million in FY 2021,
up 156% from the previous year. Meanwhile, IDH's Jordanian operations
saw net sales1 (3) more than double year-on-year to reach EGP 869 million
for the year, up 113% versus FY 2020. Net sales growth was driven by
an 75% increase in test performed coupled with a 21% rise in Biolab's
average net sales per test. During the year, Covid-19-related tests
contributed to 68% of Biolab's net sales and to 37% of its tests performed.
Covid-19-related net sales in Jordan was boosted by contributions of
EGP 185 million from Biolab's new partnership with QAIA coupled with
the EGP 107 million in net sales coming from its partnerships with KHIA
and Aqaba Port. As part of these agreements, Biolab has been operating
testing stations across all three locations primarily focused on PCR
testing for Covid-19 to passengers arriving in Jordan. The stations
also offer additional diagnostic tests to patients including rapid PCR
testing for Covid-19 for departing passengers and other, more generic
diagnostic tests. Meanwhile, conventional test net sales increased 26%
year-on-year on the back of a 28% increase in conventional tests performed.
Meanwhile, the country's net sales continued to be supported by Biolab's
house call service which generated EGP 55 million in net sales in FY
2021, up 12% year-on-year.
In Q4 2021, Jordan's net sales recorded EGP 277 million, representing
a 45% increase from Q4 2020 and up 3% versus Q3 2021 (Jordan's revenues
(IFRS) in Q4 2021 recorded EGP 454 million, up 137% versus Q4 2020).
During the quarter, Biolab's partnership with QAIA generated EGP 101
million in net sales while net sales from its partnerships with KHIA
and Aqaba Port stood at EGP 48 million. In Q4 2021, PCR tests performed
as part of Biolab's agreement with QAIA recorded 278 thousand (55% of
Jordan's total PCR tests for the quarter). In parallel, during the quarter
Biolab performed 118 thousand PCR tests at KHIA and Aqaba Port, representing
23% of total PCR tests carried out by Biolab in the year. Robust volumes
generated though these agreements more than offset a general decrease
in demand for Covid-19-related testing as infection rates declined following
the continued ramp up of the country's vaccination campaign.
Detailed Jordan Net Sales Breakdown
EGP mn Q1 2020 Q1 2021 Q2 2020 Q2 2021 Q3 2020 Q3 2021 Q4 2020 Q4 2021 FY 2020 FY 2021
------------------ -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Net Sales 58 190 59 134 100 269 191 277 409 869
Conventional
Net Sales 53 68 44 68 68 76 55 66 220 278
Total
Covid-19-related
Net Sales (PCR
and Antibody) 5 122 16 65 32 192 136 211 189 591
Contribution to Jordan Net Sales
----------------------------------------------------------------------------------------------------------------------
Conventional
Net Sales 91% 36% 74% 51% 68% 28% 29% 24% 54% 32%
Total
Covid-19-related
Net Sales (PCR
and Antibody) 9% 64% 26% 49% 32% 72% 71% 76% 46% 68%
Note: Quarterly results included in the table above are
unaudited.
1 (3) 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.
Nigeria
At the Group's Nigerian subsidiary, revenue expanded 49% year-on-year
to reach EGP 54 million in FY 2021. Growth was even more pronounced
in local currency terms with revenue up 53% year-on-year supported by
a 31% year-on-year expansion in tests performed (patients served were
up 16%) coupled with a 14% rise in average revenue per test. Over the
last two years, Echo-Lab's has consistently delivered solid volume growth
thanks to an effective revamp strategy which has involved the complete
renovation of the venture's branches combined with the rollout of targeted
marketing campaigns aimed at stimulating demand for the venture's services.
Volumes for the year also benefitting from a gradual normalisation of
traffic following the easing of restrictive measures enforced to curb
the spread of Covid-19 throughout 2020.
In Q4 2021, IDH's Nigeria operations recorded year-on-year revenue growth
of 18% to record EGP 13.4 million. As part of the venture's revamp strategy,
Echo-Lab's management team was strengthened with several key hires.
Most notably, Dr. Alok Bhatia, an industry expert with over 25 years
of experience in the field, joined Echo-Lab as CEO in March 2021.
Sudan
Finally in Sudan, IDH reported a 56% year-on-year contraction in revenue
to EGP 17 million for the year. The country's results continue to be
significantly impacted by the devaluation of the Sudanese pound in early
2021 with the average SDG/EGP rate in FY 2021 standing at 0.05 versus
0.29 in FY 2020. Nonetheless, management's continued success in raising
prices in step with inflation throughout the year, saw revenue in local
currency terms grow an impressive 159% in FY 2021.
Net Sales Contribution by Country FY 2020 FY 2021 Change
========================= ======== ======== =======
Egypt Net Sales (EGP
mn) 2,173 4,108 89%
Covid-19-related (EGP
mn) 460 2,005 335%
Egypt Contribution 82% 81%
========================= ======== ======== =======
Jordan Net Sales (EGP
mn) 409 869 112%
Covid-19-related (EGP
mn) 189 591 213%
Jordan Revenues (EGP
mn) (IFRS) 409 1,046 156%
Jordan Net Sales (JOD
mn) 19 39 113%
Jordan Revenues (JOD
mn) (IFRS) 18 47 157%
Jordan Contribution 15% 17%
========================= ======== ======== =======
Nigeria Net Sales (EGP
mn) 36 54 49%
Nigeria Net Sales (NGN
mn) 898 1,373 53%
Nigeria Contribution 1% 1%
Sudan Net Sales (EGP
mn) 38 17 -56%
Sudan Net Sales (SDG
mn) 129 335 159%
Sudan Contribution 1.4% 0.3%
========================= ======== ======== =======
---
Patients Served and Tests Performed by Country FY 2020 FY 2021 Change
================================= ======== ======== =======
Egypt Patients Served (mn) 6.3 8.5 34%
Egypt Tests Performed (mn) 24.4 29.7 21%
Covid-19-related tests (mn) 1.9 3.8 102%
================================= ======== ======== =======
Jordan Patients Served (k) 550 1,627 196%
Jordan Tests Performed (k) 2,011 3,529 75%
Covid-19-related tests (k) 269 1,302 383%
Nigeria Patients Served (k) 131 153 16%
Nigeria Tests Performed (k) 215 281 31%
Sudan Patients Served (k) 130 70 -46%
Sudan Tests Performed (k) 409 182 -55%
================================= ======== ======== =======
Total Patients Served (mn) 7.1 10.3 45%
Total Tests Performed (mn) 27.1 33.7 24%
Branches by Country 31 December 31 December Change
2020 2021
================ ============ ============ =============
Egypt 429 452 23
================ ============ ============ =============
Jordan 20 21 1
================ ============ ============ =============
Nigeria 12 10 -2
================ ============ ============ =============
Sudan 20 19 -1
================ ============ ============ =============
Total Branches 481 502 21
================ ============ ============ =============
-Cost of Net Sales14
IDH's cost of net sales rose 71% year-on-year to record EGP 2,244 million15
in FY 2021, rising at a slower pace than the Group's revenue for the
year. This supported a 109% year-on-year rise in IDH's gross profit
for FY 2021 which recorded EGP 2,804 million. IDH's gross profit margin
on consolidated revenue recorded 54% in FY 2021 versus 51% in the previous
year. Meanwhile, gross profit margin on net sales of 56% versus 51%
in FY 2020.
Cost of Net Sales Breakdown as a Percentage of Net Sales FY 2020 FY 2021
============================= ======== ========
Raw Materials 18.4% 19.6%
============================= ======== ========
Wages & Salaries 14.7% 12.6%
============================= ======== ========
Depreciation & Amortisation 6.1% 4.2%
============================= ======== ========
Other Expenses 10.3% 8.1%
============================= ======== ========
Total 49.5% 44.4%
============================= ======== ========
Raw material costs, which include cost of specialized analysis at other
laboratories, recorded EGP 987 million for the year, continuing to make
up the largest share of total COGS at 44%. As a share of net sales,
raw material costs increased to 19.6% in FY 2021 compared to 18.4% in
the previous year. This increase is primarily attributable to higher
raw material costs as a share of net sales recorded by Biolab, driven
by both the retesting of Covid-19 positive cases in the first part of
the year, and by additional fees incurred by the company as part of
its revenue sharing agreement with QAIA. On a quarterly basis, raw material
costs as a share of on net sales reached 23% in Q4 2021 versus 19% in
Q3 2021. This is mainly attributable to IDH's Egyptian operations which
saw their raw material to net sales ratio expand five percentage points
quarter-on-quarter in Q4 2021, on the back of a 23% decline in the average
price of core Covid-19 tests coupled with a 12% increase in the average
cost per PCR test kit versus the third quarter of this year.
Direct salaries and wages for the year rose 63% year-on-year to EGP
635 million, making the second largest share of total COGS at 28%. The
increase comes on the back of a 116% year-on-year rise in the share
of profits allocated to direct salaries and wages to EGP 175 million
in FY 2021 from EGP 81 million in FY 2020 following higher net profit
recorded at its Egyptian operations,1 (6) in addition to higher bonuses
and incentives paid during FY 2021 in light of this year's record-breaking
performance.
Direct depreciation and amortisation increased 31% year-on-year in FY
2021 to EGP 214 million, principally due to the incremental amortisation
of new branches (IFRS 16 right-of-use assets).
Other expenses for the year increased 49% versus FY 2020, to record
EGP 407 million. The increase was primarily driven by higher transportation
costs related to IDH's house call service, and increased utilities and
cleaning expenses mainly due to the net addition of 21 new branches
throughout the year.
(14) 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.
15 According to IFRS 15, cost of sales recorded EGP 2,421 million in
FY 2021, up 84% year-on-year. In the final quarter of the year, IDH
recorded a cost of sales of EGP 821 million. Meanwhile, gross profit
margin recorded 44% in Q4 2021 versus 52% in Q4 2020.
(16) According to IAS1, employee profit share is recorded in wages
and salaries.
Selling, General and Administrative Expenses
Total SG&A outlays for the year stood at EGP 513 million, up 44% from
FY 2020. The increase was driven by rising salaries and marketing spending,
coupled with higher call center costs and a new contract with PwC for
external auditing services.
Marketing and advertising expenses came in at EGP 97 million in FY 2021,
up 57% year-on-year. The increase largely reflects an overall expansion
in IDH's marketing and advertisement efforts, which throughout the year
saw the Company launch targeted campaigns across a wide variety of channels.
EBITDA
IDH's adjusted EBITDA(17) recorded EGP 2,530 million (identical in absolute
terms when using IFRS or APM) in the twelve months to 31 December 2021,
up a solid 116% versus the previous year. Adjusted EBITDA margin on
consolidated revenue recorded 48% in FY 2021 versus 44% in the previous
year. Meanwhile, adjusted EBITDA margin on net sales expanded to 50%
in FY 2021 versus 44% in FY 2020.1 (8) Improved EBITDA level profitability
was supported by robust revenue growth for the year and the subsequent
dilution of fixed costs. EBITDA growth was also supported by a decrease
in level of receivable provisions for expected credit, which recorded
EGP 25 million versus the EGP 42 million booked in the previous twelve
months to account for expected credit losses in accordance with IFRS
9. It is important to note that adjusted EBITDA excludes one-off listing
fees of EGP 29 million incurred in FY 2021 related to the Company's
dual listing on the EGX completed in May 2021.
On a three-month basis, adjusted EBITDA expanded 17% year-on-year to
record EGP 537 million in the final quarter of 2021 (identical in absolute
terms between IFRS and APM). However, on a quarter-on-quarter basis
normalized EBITDA declined 32% versus Q3 2021 mainly due to a quarter-on-quarter
decrease in net sales and concurrent increase in outlays for the quarter,
in particular sales and marketing expenses. Adjusted EBITDA margin on
consolidated revenue recorded 37% in Q4 2021 versus 47% in the same
quarter of the previous year. Meanwhile, adjusted EBITDA margin on net
sales stood at 42% for the quarter, down from 47% recorded in Q4 2020
and the 54% margin recorded in Q3 2021.
In IDH's home market of Egypt, EBITDA recorded EGP 2,206 million in
FY 2021, up 112% year-on-year on the back of strong revenue growth.
EBITDA margin on net sales increased six percentage points to 54% the
year.
IDH's Jordanian operations recorded EBITDA of EGP 331 million in FY
2021, up 155% versus the previous year on the back of strong growth.
In local currency terms, EBITDA grew 156% compared to the previous year.
EBITDA margin on net sales recorded 38% in FY 2021 compared to 32% in
FY 2020. It is important to note that Jordan's EBITDA calculated using
revenues for the year (in compliance with IFRS), recorded the same absolute
value as the APM figure for the year which utilises net sales. However,
EBITDA margin calculated on revenues (IFRS compliant) would stand at
32% in FY 2021 unchanged versus last year.
Operations in Nigeria posted an EBITDA loss of EGP 7 million, in line
with the previous year's figure. Losses for the year partially reflect
a one-off EGP 4.4 million adjustment related to the previous year. Controlling
for the one-off adjustment, EBITDA losses would come in at EGP 2.6 million,
significantly narrowing from the previous year's figure. In light of
the steady improvements witnessed throughout 2021, Nigeria is expected
to turn EBITDA positive during the first half of 2022.
1 (7) Adjusted 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.
1 (8) It is important to note that while in absolute terms the Normalised
EBITDA figure is identical when using IFRS or APM, its margin differs
between the two sets of performance indicators.
Finally, in Sudan the Company recorded an EBITDA loss of EGP 0.5 million
in FY 2021, compared to a positive EBITDA of EGP 6.1 million in FY 2020.
EBITDA for the year was impacted by the sharp SDG devaluation in February
2021. In SDG terms EBITDA declined 148% year-on-year.
Regional EBITDA in Local Currency Mn FY 2020 FY 2021 Change
--------------------------- ------ ------- -------- -------- --------
Egypt EGP 1,041 2,206 112%
Margin on net sales 48% 54%
Jordan JOD 6 15 156%
Margin on net sales 32% 38%
Margin on revenues (IFRS) 32% 32%
Nigeria NGN -170 -179 6%
Margin on net sales -19% -13%
Sudan SDG 21 -10 -148%
Margin on net sales 16% -3%
Interest Income / Expense
IDH recorded interest income of EGP 113 million in FY 2021, up 113%
year-on-year on the back of higher cash balances during the year coupled
with an optimised cash allocation between T-bills and time deposits.
Interest expense recorded EGP 118 million in the twelve months to year-end
2021, up 65% year-on-year. The increase in attributable to:
* Higher interest on lease liabilities related to IFRS
16 following the addition of new branches in Egypt
and Jordan and the renewal of medical equipment
agreements with our main equipment suppliers.
* Higher bank charges resulting from increased
penetration of, and reliance on, POS machines and
electronic payments in both Egypt and Jordan during
the period. It is important to note that bank charges
recorded by IDH's Jordanian operations represented
58% of total bank charges during FY 2021, which is
mainly related to Biolab's partnership with QAIA.
* Loan-related expenses incurred by IDH during the
period as the Company secured a new eight-year US$ 45
million facility with the International Finance
Corporation (IFC) in May 2021. More specifically, IDH
booked loan-related expenses of EGP 20.3 million in
FY 2021 including a front-end fee, syndication fee,
and legal advisory fees.
Interest Expense Breakdown EGP Mn FY 2020 FY 2021 Change
=============================== ======== ======== =======
Interest on Lease Liabilities
(IFRS 16) 51.4 59.5 16%
=============================== ======== ======== =======
Interest Expenses on
Borrowings1 (9) 12.4 9.4 -24%
=============================== ======== ======== =======
Loan-related Expenses - 20.3 N/A
on IFC facility
=============================== ======== ======== =======
Interest Expenses on
Leases 4.1 8.8 117%
=============================== ======== ======== =======
Bank Charges 3.7 20.0 445%
=============================== ======== ======== =======
Total Interest Expense 71.5 118.0 65%
=============================== ======== ======== =======
(19) Interest expenses on medium-term loans divided as EGP 2.6 million
related to its medium term facility with the Commercial International
Bank (CIB) and EGP 6.5 million to its facility with Ahli United Bank
Egypt (AUBE).
Foreign Exchange
IDH recorded a net foreign exchange loss of EGP 18 million in FY 2021
compared to EGP 13 million in FY 2020. The figure largely reflects FX
losses on the back of the SDG devaluation versus the EGP in February
2021.
Taxation
Tax expenses recorded EGP 740 million in FY 2021 versus EGP 360 million
in the previous twelve months. The effective tax rate stood at 33% for
the year versus 37% in FY 2020. The lower effective tax rate largely
reflects the recognition of Echo-Scan's deferred tax assets. It is important
to note that there is no tax payable for IDH's two companies at the
holding level, while tax was paid on profits generated by operating
subsidiaries.
Taxation Breakdown by Region EGP Mn FY 2020 FY 2021 Change
==================== ======== ======== =======
Egypt 340.6 704.8 107%
==================== ======== ======== =======
Jordan 19.0 54.0 184%
==================== ======== ======== =======
Nigeria -1.0 -20.0 N/A
==================== ======== ======== =======
Sudan 1.0 1.0 0%
==================== ======== ======== =======
Total Tax Expenses 359.6 739.8 106%
==================== ======== ======== =======
Net Profit
IDH's consolidated net profit expanded 145% year-on-year in FY-2021
to record EGP 1,493 million (identical in absolute terms between IFRS
and APM measures). Net profit margin on consolidated revenue recorded
29% for the year, versus 23% in FY 2020. Meanwhile, net profit margin2
(0) on net sales stood at 30% for the year, up seven percentage points
from the previous twelve month period. Net profitability improvements
for the year were supported by strong revenue growth coupled with the
dilution of fixed costs, and normalising provisions for the year. In
Q4 2021, net profit stood at EGP 345 million, up 47% year-on-year. Net
profit margin on consolidated revenue stood at 24% unchanged year-on-year.
Net profit margin on net sales recorded 27%, up three percentage points
year-on-year.
2 (0) It is important to note that while in absolute terms the net profit
figure is identical when using IFRS or APM, its margin differs between
the two sets of performance indicators.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH held gross property, plant and equipment (PPE) of EGP 1,659 million
as at year-end 2021, up from the EGP 1,252 million as of 31 December
2020. Meanwhile, CAPEX outlays excluding payments on account and accounting
for the impact of hyperinflation, represented 8.6% of consolidated net
sales in FY 2021. The increase in CAPEX outlays as a share of total
net sales for the year is in part attributable to EGP 115.7 million
in equipment related to the Reagent deals and to EGP 53.7 million spent
on the purchase of a new radiology branch during the year. It is worth
noting that IDH engages in Reagent deals whereby the majority of its
testing equipment is provided at no upfront payment as part of a wider
agreement to purchase a minimum volume of kits from the equipment supplier.
These contracts typically have tenors ranging from 5 to 7 years, with
the equipment substituted following the contract's renewal.
Total CAPEX Breakdown EGP Mn FY 2021 % of Net
Sales
=============================== ======== =========
Mega Lab 132.5 2.6%
=============================== ======== =========
Al-Borg Scan Expansion 154.0 3.1%
=============================== ======== =========
Leasehold Improvements/others 147.6 2.9%
=============================== ======== =========
Total CAPEX Additions 434.1 8.6%
=============================== ======== =========
Accounts Receivable and Provisions
As at 31 December 2021, accounts receivables' Days on Hand (DOH) stood
at 107 days compared to 144 days at year-end 2020. The significant decline
witnessed throughout the year highlights a sustained improvement in
collections versus the previous year. Accounts receivables' DOH is calculated
based on credit revenues (credit revenues relates to patients who paid
for IDH's services on credit) amounting to EGP 1.28 billion during FY
2021.
The receivables balance in Egypt and Jordan stood at EGP 366 million
as at year-end 2021. More specifically, in Egypt account receivables'
DOH declined to 96 days as at 31 December 2021 compared to 145 days
as at year-end 2020. Accounts receivables' DOH for Egypt is calculated
based on credit revenues amounting to EGP 1.04 billion during FY 2021.
Meanwhile, in Jordan accounts receivables' DOH increased from 150 days
to 154 days as at year-end 2021 largely due to agreements with various
airline companies as part of QAIA and KHIA agreements. Accounts receivables'
DOH for Jordan is calculated based on credit revenues amounting to EGP
221 million during FY 2021.
Provision for doubtful accounts established during the twelvemonths
to 31 December 2021 amounted to EGP 25 million, down from the EGP 42
million booked in the previous year.
Inventory
As at year-end 2021, the Group's inventory balance reached EGP 223 million,
up from EGP 100 million as at year-end 2020. Meanwhile, days Inventory
Outstanding (DIO) decreased to 61 days as at year-end 2021 from 72 days
as at year-end 2020. The decline largely reflects the high turnover
of PCR testing for Covid-19.
Cash and Net Debt/Cash
IDH's cash balances increased to EGP 2,350 million as at year-end 2021
compared to EGP 877 million as at 31 December 2020.
EGP million 31 Dec 2020 31 Dec 2021
================== ============ ============
Time Deposits 162 628
================== ============ ============
T-Bills 461 1,461
================== ============ ============
Current Accounts 234 239
================== ============ ============
Cash on Hand 19 22
================== ============ ============
Total 877 2,350
================== ============ ============
Net cash balance2 (1) amounted to EGP 1,483 million as of year-end 2021,
an increase of 361% compared to EGP 321 million as of 31 December 2020.
EGP million 31 Dec 2020 31 Dec 2021
======================================== ============ ============
Cash and Financial Assets at Amortised
Cost(22) 877 2,350
======================================== ============ ============
Interest Bearing Debt ("Medium
Term Loans")(23) 96 106
======================================== ============ ============
Lease Liabilities Property 390 532
======================================== ============ ============
Long-term Equipment Liabilities 69 229
======================================== ============ ============
Net Cash Balance 321 1,483
======================================== ============ ============
Note: Interest Bearing Debt includes accrued interest for each period.
2 (1) The net cash balance is calculated as cash and cash equivalent
balances including includes financial assets at amortised cost, less
interest-bearing debt (medium term loans), finance lease and Right-of-use
liabilities.
2 (2) As outlined in Note 18 of IDH's Consolidated Financial Statements,
some term deposits and treasury bills cannot be accessed for over 90
days and are therefore not treated as cash. Term deposits which cannot
be accessed for over 90 days stood at EGP 148 million in FY 2021, while
there were no such term deposits in the previous year. Meanwhile, treasury
bills not accessible for over 90 days stood at EGP 1,311 million in
FY 2021, up from EGP 277 million in FY 2020.
(23) IDH's interest bearing debt as at year-end 2021 is split as EGP
13 million related to its medium term facility with the Commercial International
Bank (CIB) and EGP 85 million to its facility with Ahli United Bank
Egypt (AUBE).
Lease liabilities on property stood at EGP 532 million as at year-end
2021, up from the EGP 390 million booked as at year-end 2020. The increase
is attributable to the addition of new branches throughout 2021. Meanwhile,
financial obligations related to equipment recorded EGP 229 million
as of 31 December 2021, up from EGP 69 million as of year-end 2020,
reflecting the renewal of the Company's contracts and the addition of
new equipment. The main components of total financial obligations related
to equipment in FY 2021 included EGP 116 million related to equipment
at IDH's Mega Lab, and EGP 54 million for equipment at Al-Borg Scan.
The rise in interest-bearing debt is related to IDH's two medium-term
facilities with Commercial International Bank (CIB) and Ahli United
Bank of Egypt (AUBE). More specifically, IDH's interest-bearing debt
as of year-end 2021 is split as EGP 13 million related to its medium-term
facility with CIB and EGP 85 million related to its facility with AUBE.
It is worth noting that interest-bearing debt in both twelve-month periods
includes accrued interest.
Liabilities
Accounts Payable(24)
As of year-end 2021, accounts payable balance recorded EGP 311 million
up from EGP 178 million as of 31 December 2020. Nonetheless, the Group's
days payable outstanding (DPO) decreased to 93 days as of year-end 2021
down from 127 days as at 31 December 2020. The decline is mainly related
to the fact that PCR testing kit suppliers are paid within a period
of 15 days.
Put Option
The put option current liability is related to the option granted in
2011 to Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The
put option is in the money and exercisable since 2016 and is calculated
as 7 times LTM EBITDA minus net debt. Biolab's put option liability
increased following the subsidiary's EBITDA year-on-year growth of 155%
in EGP terms. The vendor has not exercised this right at 31 December
2021. It is important to note that the put option liability is treated
as current as it could be exercised at any time by the non-controlling
interest (NCI). However, based on discussions and ongoing business relationship,
there is no expectation that this will happen in next 18 months.
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).
2 (4) Accounts payable is calculated based on average payables
at the end of each year.
iii. Cash Flow Analysis
Net cash flow from operating activities recorded EGP
2,269 million in FY 2021 compared to EGP 883 million
in FY 2020. The 157% year-on-year increase versus FY
2020 demonstrates once more IDH's strong cash generation
ability.
iv. 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:
Country/regional risk - Economic Overall, management notes that IDH
& Forex has a resilient business model and
The Group is subject to the economic that the business continued to grow
conditions of Egypt specifically year-on-year through two revolutions,
and, to a lesser extent, those of as well as under extremely difficult
the other geographies. Egypt accounted operating conditions in 2016 and
for c. 81% of our revenues in 2021 in 2020.
(2020: 82%). Foreign investors welcomed March
2022 CBE move as it demonstrated
the Egyptian government's willingness
Economic risk: On the 21st of March to improve investment climate.
2022, the Central Bank of Egypt (CBE) IDH management is closely monitoring
raised policy rates by 100bps and the impact of the rise of inflation
allowed the Egyptian Pound (EGP) on its cost base, especially raw
to depreciate against the United material. The risk is partially mitigated
States Dollar (USD) by around 17%, given its long-term contractual agreement
which will impose Inflationary pressures with its raw material suppliers.
in the short to medium term. Inflation
rates are expected to average around
13% to 15% during 2022, up from 5.9%
in December 2021. Moreover, GDP growth
in FY22/23 was revised downward to
5.5% from 5.7% by the Egyptian government
in March 2022.
----------------------------------------------------
Country/regional risk - Economic During FY2021, only 10% of IDH's
& Forex cost of supplies (c.2% of revenues)
are payable in US dollars, minimising
Foreign currency risk: The Group the Group's exposure to foreign exchange
is exposed to foreign currency risk (FX) scarcity and in part, the volatility
on the cost side of the business. of the Egyptian pound.
The majority of supplies it acquires
are paid in Egyptian pounds (EGP),
but given they are imported, their
price will vary with the rate of
exchange between the EGP and foreign The Group is closely monitoring the
currencies. In addition, a portion economic situation in Sudan and has
of supplies are priced and paid in implemented several price increases
foreign currencies. to keep instep with inflationary
High Inflation in Sudan: Following pressures. IDH is also working to
substantial currency devaluation limit expatriate salaries and foreign
in Sudan during 2018 the currency currency needs by increasing dependence
lost 85% of its value. In 2019, the on local hires.
Sudanese Pound's official rate versus
the US Dollar remained relatively
stable at 45.11 as 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 coronavirus pandemic.
In February 2021, the Sudanese government
announced it would float the Sudanese
Pound in an effort to bridge the
gap with the forex prices at the
parallel market. This led to a significant
increase in the currency rates. The
US Dollar rate for instance rose
from SDG 55 to more than SDG 375.
This was followed by the removal In Nigeria, until currency exchange
of fuel subsidies in June 2021, which policy is clarified and there is
again led to the increase of consumer greater visibility regarding profit
prices. According to data from Sudan's repatriation, IDH expects to reinvest
Central Bureau of Statistics, the early profits into its Nigerian business.
country's headline inflation rate Dividend payments are expected to
averaged 359% in 2021, up from 163% be repatriated after the completion
in 2020. of the branch roll-out plan.
Nigeria: Capital controls could make
profit repatriation difficult in
the short term.
Nigeria: Depreciation of the Naira
would make imported products and
raw materials more expensive and
would reduce Nigeria's contribution
to consolidated Company revenues.
Whilst capital controls have helped
the official exchange converge with
the black market rate, the central
bank has yet to allow the naira to
float freely.
----------------------------------------------------
Country risk - Political & Security It is important to note that in FY
Sudan is currently undergoing a significant 2021 Sudan made up just 0.3% of IDH's
political transition which began net sales. Moreover, while nationwide
in 2019 when severe political unrest protests do affect patient and test
and protests led the military to volumes in Sudan, the diagnostic
remove long-time president Omar Al-Bashir. industry is relatively immune given
Following his removal, the military the inelastic demand for healthcare
signed a power-sharing agreement services. Additionally, management
with an opposition coalition in July in Sudan has been successful in offsetting
2019, with the aim of eventually the effect of lower volumes due to
transferring power to a civilian protest with higher pricing, and
government. On 25 October 2021, Sudan's in 2019, 2020, and 2021 the geography
Prime Minister was detained by armed recorded solid year-on-year revenue
forces, and Army chief General Abdel growth in SDG terms.
Fattah al-Burhan announced that the In December 2020, US removed Sudan
civilian government and other transitional from its States Sponsors of Terrorism
bodies have been dissolved. Throughout list. The change in the country's
November, the country witnessed several designation is expected to allow
mass rallies and increased civil Sudan to have access to international
unrest with protesters asking for funds and investment, including the
the reinstatement of the civilian International Monetary Fund, paving
Prime Minister, Abdalla Hamdok. The the way for the country's economic
protests led to the temporary closure growth.
of all of IDH's Sudanese branches. IDH's management on the ground continues
All locations were reopened within to monitor the evolving situation
a few days and quickly gained back and has put in place an all-encompassing
momentum. On 21 November 2021, Mr. mitigation strategy to safeguard
Hamdok took office once again but staff and patient wellbeing and protect
later stepped down on 2 January 2022. IDH's operations.
Civil unrest and protests are continuing While this is relatively hard to
as the country's future remains unclear. mitigate, IDH is continuously evaluating
The situation in Sudan is volatile its processes to safeguard its employees
and continued civil unrest could and operations. Overall, IDH applies
adversely affect IDH's business. rigorous standards to evaluating
all aspects of its business processes
Nigeria faced security challenges in Nigeria to ensure it is well-equipped
on several fronts, including re-emerging to respond to the evolving situation.
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.
The government dissolved the special
division known as SARS (Special Anti-Robbery
Squad) in October 2021. In late 2020
and throughout 2021, protests have
decreased significantly across the
country but a potential escalation
of civil unrest remains possible.
----------------------------------------------------
Covid-19 All of IDH staff use appropriate
The ongoing Covid-19 pandemic presents protective equipment when interacting
business continuity risks to IDH with patients, including those suspected
including, but not limited to, supply-chain of having Covid-19 or any other infectious
disruptions, government enforced disease. IDH is currently administering
quarantines and their effect on IDH's PCR, Antibody, and Antigen testing
business operations and risk of infection for Covid-19 in Egypt and Jordan.
among IDH employees. In 2021, the All of the Group's employees have
rollout of vaccines across its countries been fully vaccinated during 2021
of operation coupled with governments' and they are subject to regular communications
willingness and ability to coexist reminding them that they may not
with the virus, saw restrictions report to work if they have symptoms
imposed to curb the spread being of a Covid-19 infection.
lifted and operations running normally The effective rollout of vaccines
throughout the year. No new restrictions and the increasing ability and willingness
have been imposed following the rise of governments to coexist with the
of new Covid-19 variants throughout virus and its variants have supported
the year, with countries across IDH's a steady recovery of the global economy
footprint continuing to push forward throughout 2021.
their vaccination campaigns. As at Throughout the Covid-19 crisis, IDH
the end of March 2022, the share has maintained a strong focus on
of the population having received growing its conventional (non-Covid-19-related)
at least one Covid-19 vaccine dose business, which in FY 2021 expanded
stood at approximately: 45% in Egypt, 22% versus FY 2020, and came in 13%
45% in Jordan, 10% in Nigeria, and above pre-covid levels recorded in
at 13% in Sudan. FY 2019. Moreover, in both Egypt
Covid-19 global economic impact: and Jordan, IDH enjoys a market leading
Rising inflation rates, supply chain position and plans to capitalise
disruptions, and the rise of new, on its expanded product offering
more fast-spreading Covid-19 variants and patient base, increased service
continue to pose a threat for the delivery capabilities, and growing
global economic recovery. visibility to continue delivering
Covid-19 impact on IDH Financials growth in the year ahead. Across
Throughout FY 2021, IDH generated both markets, the Group's strategy
around 50% of its revenues from Covid-19-related will now pivot towards patient retention
testing. In light of the increasing as it looks to maintain the new relationships
roll out of vaccines and the widespread established during the pandemic thanks
decline in infection rates, Covid-19-related to its Covid-19-dedicated offering.
revenues are expected to gradually
decline throughout 2022.
----------------------------------------------------
Global Supply Chain Disruptions IDH's management team continually
Throughout 2021, restrictions imposed monitors the evolving situation and
to curb the spread of Covid-19, labour have taken proactive steps to build
shortages, and fast-rising demand up its inventory to shield the Group
for goods saw global supply chains from any potential future disruptions.
come under strong pressure causing IDH is in continual dialogue with
delays and shortages worldwide. The key suppliers to gauge the risk associated
ongoing global supply chain disruptions with a shortage of materials and
have had no impacts on IDH's operations is yet to identify a weakness.
throughout the year. IDH's test kits are purchased on
fixed-price contracts with tenors
ranging from five to seven years,
providing effective protection from
short-term price fluctuations.
----------------------------------------------------
Supplier risk IDH has strong, longstanding relationships
IDH faces the risk of suppliers re-opening with its suppliers, to whom it is
negotiations in the face of cost a significant regional client. Due
pressure owing to the prevailing to the volumes of kits the Group
inflationary environment and/or a purchases, IDH is able to negotiate
possible albeit limited devaluation favourable pricing and maintain raw
risk. material costs increases at a rate
IDH's supplier risk is concentrated slower than inflation. It is worth
amongst three key suppliers - Siemens, highlighting that IDH's supplier
Roche and BM (Sysmex)- who provide relations were not impacted by COVID-19.
it with kits representing 24% of Total raw materials costs as a percentage
the total value of total raw materials of net sales were 19.6% in 2021 compared
in 2021 (2020: 52%). with 18.4% in 2020.
----------------------------------------------------
Remittance of dividend regulations As a foreign investor in Egypt, IDH
and repatriation of profit risk does not have issues with the repatriation
The Group's ability to remit dividends of dividends, yet given the recent
abroad may be adversely affected depreciation in the EGP value, the
by the imposition of remittance restrictions. Company foresees probable delays
More specifically, under Egyptian in FX sourcing and repatriation.
law, companies must obtain government As a provider of medical diagnostic
clearance to transfer dividends overseas services, IDH's operations in Sudan
and are subject to higher taxation are not subject to sanctions. Notably,
on payment of dividends. in October 2017 the US lifted a host
of sanctions imposed 20 years ago
that included a comprehensive trade
embargo, a freeze on government assets
and tight restrictions on financial
institutions dealing with the country.
More recently, in December 2020 the
US removed Sudan from its States
Sponsors of Terrorism list.
----------------------------------------------------
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 quasigovernmental
to antitrust and competition-related 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 c. 57% of the Group's contracts are arrived at through
net sales in 2021. 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 IDH's attractiveness to contract
be unable to make payments to the clients is enhanced by the extent
Group, IDH's business could be materially of its national network.
and adversely affected. It should be highlighted that, excluding
the contributions from IDH's multiple
partnerships to conduct PCR testing
for passengers (Pure Health, NAS,
QAIA), which in 2021 generated EGP
365 million in contract segment net
sales, no single client contract
accounts for more than 1% of total
net sales or 1.4% of contract net
sales.
----------------------------------------------------
Pricing pressure in a competitive, This is an external risk for which
regulated environment there exist few mitigants.
The Group faces 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, other governmental bodies, national footprint as a mitigant;
which could materially and adversely c. 57% of IDH net sales in 2021 is
affect its revenue. Pricing may be generated by servicing contract clients
restrained in cases by recommended (private insurer, unions and corporations)
or mandatory fees set by government 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 Egyptian Pound. 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 amongst
all private sector players. Moreover,
in its home market of Egypt, which
in FY 2021 accounted for 81.4% of
total revenues, the Group faces no
potential risk of price regulation
by the government.
----------------------------------------------------
Cybersecurity risks The Company has stringent control
The Company controls a vast amount over its data security and regularly
of confidential data for its patients' stress tests its IT infrastructure
records; to this end, there is a to assess the robustness of its internal
cybersecurity risk for both data controls. Moreover, its cybersecurity
confidentiality and data security. controls and protocols are regularly
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.
fire, riots or extended power failures. In Egypt and Jordan, to mitigate
The Group's operations therefore the impact of potential branch closures
depend on the continued and uninterrupted on operations, the Group has been
performance of its systems. ramping up its house call services.
Business Interruption: across its Moreover, the Group's important role
geographies, the reimposition of in conducting PCR testing for Covid-19
restrictive measures related to Covid-19 in both Egypt and Jordan makes it
(including curfews and lockdowns) unlikely that branches would be closed
could impact the working hours of even if new restrictive measures
branches and in extreme cases could were introduced.
lead to their temporary closure.
----------------------------------------------------
-End-
INTEGRATED DIAGNOSTICS HOLDINGS plc - "IDH"
AND ITS SUBSIDIARIES
Consolidated Financial Statements
for the year ended 31 December 2021
Consolidated statement of financial position as at 31 December
2021
Notes 2021 2020
EGP'000 EGP'000
------------------------------------------ ------- ------------ -----------------------
Assets
Non-current assets
Property, plant and equipment 11 1,061,808 793,013
Intangible assets and goodwill 12 1,658,867 1,659,755
Right of use assets 26 462,432 354,688
Financial assets at fair value through
profit and loss 14 10,470 9,604
Total non-current assets 3,193,577 2,817,060
Current assets
Inventories 15 222,612 100,115
Trade and other receivables 16 469,727 383,480
Financial assets at amortized cost 18 1,458,724 276,625
Cash and cash equivalents 17 891,451 600,130
------------ -----------------------
Total current assets 3,042,514 1,360,350
------------ -----------------------
Total assets 6,236,091 4,177,410
============ =======================
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 49,218
Put option reserve 19 (956,397) (314,057)
Translation reserve 19 150,730 145,617
Retained earnings 1,550,976 603,317
Equity attributable to the owners
of the Company 2,582,846 2,269,991
Non-controlling interests 2 211,513 156,383
------------ -----------------------
Total equity 2,794,359 2,426,374
------------ -----------------------
Non-current liabilities
Provisions 21 4,088 3,408
Borrowings 24 76,345 67,617
Other financial obligations 26 645,196 398,525
Non-current put option liability 25 35,037 31,790
Deferred tax liabilities 9 332,149 240,333
Total non-current liabilities 1,092,815 741,673
Current liabilities
Trade and other payables 22 777,354 383,623
Other financial obligations 26 115,478 60,517
Current put option liability 23 921,360 282,267
Borrowings 24 21,721 25,416
Current tax liabilities 29 513,004 257,540
Total current liabilities 2,348,917 1,009,363
Total liabilities 3,441,732 1,751,036
------------ -----------------------
Total equity and liabilities 6,236,091 4,177,410
============ =======================
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 20 April 2021 by:
Dr. Hend El Sherbini Hussein Choucri
Chief Executive Officer Independent Non-Executive
Director
Consolidated income statement for the year ended 31 December
2021
Notes 2021 2020
EGP'000 EGP'000
----------------------------------------------- ------ ------------ ----------------------------
Revenue 6 5,224,712 2,656,264
Cost of sales 8.1 (2,420,647) (1,313,688)
------------ ----------------------------
Gross profit 2,804,065 1,342,576
Marketing and advertising expenses 8.2 (163,163) (107,216)
Administrative expenses 8.3 (370,014) (221,874)
Impairment loss on trade and other receivable 16 (24,656) (42,131)
Other Income 15,828 14,191
------------ ----------------------------
Operating profit 2,262,060 985,546
Finance costs 8.6 (142,917) (84,107)
Finance income 8.6 113,178 67,643
Net finance costs 8.6 (29,739) (16,464)
------------ ----------------------------
Profit before income tax 2,232,321 969,082
Income tax expense 9 (739,815) (359,600)
Profit for the year 1,492,506 609,482
============ ============================
Profit attributed to:
Owners of the Company 1,412,609 594,015
Non-controlling interests 79,897 15,467
1,492,506 609,482
============ ============================
Earnings per share 10
Basic and Diluted 2.35 0.99
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of comprehensive income/(expenses) for
the year ended 31 December 2021
2021 2020
EGP'000 EGP'000
---------------------------------------------------------------- ----------- -----------------
Net profit for the year 1,492,506 609,482
Other comprehensive income/(expenses):
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations 7,808 (20,292)
----------- -----------------
Other comprehensive income/(expenses) for the year, net of tax 7,808 (20,292)
----------- -----------------
Total comprehensive income/loss for the year 1,500,314 589,190
=========== =================
Attributable to:
Owners of the Company 1,417,722 583,809
Non-controlling interests 82,592 5,381
1,500,314 589,190
=========== =================
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of cash flows for the year ended 31
December 2021
Note 2021 2020
EGP'000 EGP'000
------------------------------------------------- ------ ------------ -------------
Cash flows from operating activities
Profit before tax 2,232,321 969,082
Adjustments for:
Depreciation of property, plant and equipment 11 151,826 118,632
Depreciation of right of use assets 26 79,617 60,803
Amortisation of intangible assets 12 7,201 5,926
Unrealised foreign exchange gains and losses 8.6 17,912 12,580
Finance income 8.6 (113,178) (53,120)
Finance Expense 8.6 118,029 71,527
Gain on disposal of Property, plant and
equipment (78) (98)
Impairment in trade and other receivables 16 24,656 42,131
Equity settled financial assets at fair
value (866) (3,213)
ROU Asset/Lease Termination 1,351 (609)
Hyperinflation 6,976 (14,523)
Change in Provisions 21 681 (1,866)
Change in Inventories (127,643) (17,121)
Change in Trade and other receivables (106,458) (140,563)
Change in Trade and other payables 351,803 53,822
Cash generated from operating activities
before income tax payment 2,644,150 1,103,390
------------ -------------
Taxes paid (374,305) (220,875)
------------ -------------
Net cash generated from operating activities 2,269,845 882,515
------------ -------------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 6,627 5,316
Interest received on financial asset at
amortised cost 111,367 51,187
Payments for acquisition of property, plant
and equipment (253,385) (118,372)
Payments for acquisition of intangible
assets (10,354) (7,638)
Decrease / (increase) in restricted cash - 247
Payments for the purchase of financial
assets at amortized cost (1,599,238) (112,115)
Proceeds for the sale of financial assets
at amortized cost 417,139 57,107
Net cash used in investing activities (1,327,844) (124,268)
------------ -------------
Cash flows from financing activities
Proceeds from borrowings 28 30,450 11,727
Repayment of borrowings 28 (25,416) (25,416)
Payments of lease liabilities (50,227) (33,509)
Payment of financial obligations (9,383) (9,237)
Dividends paid (478,748) (450,737)
Interest paid (93,799) (73,736)
Bank charge paid (20,026) -
Injection of cash by non-controlling interest - 17,372
Net cash flows used in financing activities (647,149) (563,536)
------------ -------------
Net increase in cash and cash equivalents 294,852 194,711
Cash and cash equivalents at the beginning
of the year 600,130 408,892
Effect of exchange rate (3,531) (3,473)
Cash and cash equivalents at the end of
the year 17 891,451 600,130
============ =============
Non-cash investing and financing activities disclosed in other notes
are:
* acquisition of right-of-use assets - note 26
* Property plant and equipment - note 11
* 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 2021
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 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
========== ========== ========== ========= ========== ============== ========== ============ ================ =============
As at 1 January
2020 1,072,500 1,027,706 (314,310) 46,330 (229,164) 155,823 456,661 2,215,546 144,710 2,360,256
Profit for the
year - - - - - - 594,015 594,015 15,467 609,482
Other
comprehensive
expense for the
year - - - - - (10,206) - (10,206) (10,086) (20,292)
---------- ---------- ---------- --------- ---------- -------------- ---------- ------------ ---------------- -------------
Total
comprehensive
income - - - - - (10,206) 594,015 583,809 5,381 589,190
---------- ---------- ---------- --------- ---------- -------------- ---------- ------------ ---------------- -------------
Transactions
with owners in
their capacity
as owners
Dividends - - - - - - (441,855) (441,855) (8,882) (450,737)
Legal reserve
formed during
the year* - - - 2,888 - - (2,888) - - -
Impact of
hyperinflation - - - - - - (2,616) (2,616) (2,198) (4,814)
Movement in put
option
liabilities for
the year - - - - (84,893) - - (84,893) - (84,893)
Non-controlling
interest cash
injection in
subsidiaries
during the year - - - - - - - - 17,372 17,372
---------- ---------- ---------- --------- ---------- -------------- ---------- ------------ ---------------- -------------
Total - - - 2,888 (84,893) - (447,359) (529,364) 6,292 (523,072)
---------- ---------- ---------- --------- ---------- -------------- ---------- ------------ ---------------- -------------
At 31 December
2020 1,072,500 1,027,706 (314,310) 49,218 (314,057) 145,617 603,317 2,269,991 156,383 2,426,374
========== ========== ========== ========= ========== ============== ========== ============ ================ =============
* 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
.
Notes to the Consolidated Financial Statements - For the Year
Ended 31 December 2021
(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 2021 were authorised for issue in
accordance with a resolution of the directors on 20 April 2022.
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 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
--------------------- ----------------
2021 2020 2021 2020
------------------------------------------------------------------ ------------ ------- ------------ ------
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 76.5% 76.5% 23.5% 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 37% indirect ownership for more details refer to note
4-2.
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 2021 2020
----------------------------- ------- -------
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 23.53% 23.53%
The summarised financial information of these subsidiaries is
provided below. This information is based on amounts before
inter-company eliminations.
Other
Al Alborg subsidiaries
Medical Genetic Makhbariyoun Laboratory with
Center Al Arab Group Company immaterial NCI Dynasty Group Total
EGP'000 EGP'000 EGP'000 EGP'000 EGP'000 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
Profit (2,627) 214,588 401,401 1,162,009 (8,795) 1,766,576
Other
comprehensive
income - (56) - 10,935 (4,733) 6,146
Total
comprehensive
income (2,627) 214,532 401,401 1,172,944 (13,528) 1,772,722
----------------- ---------------- --------------- ---------------- --------------- -------------- -------------
Profit allocated
to
non-controlling
interest (1,193) 86,747 2,841 (3,261) (5,237) 79,897
Other
comprehensive
income
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 1,629,987
Current assets 3,975 432,149 598,084 2,017,197 24,356 3,051,276
Non-current
liabilities (27) (76,599) (361,520) (303,142) 20,743 (741,272)
Current
liabilities (7,148) (237,206) (266,796) (701,516) 28,313 (1,216,878)
Net assets (2,518) 329,774 511,550 1,720,386 163,921 2,723,113
----------------- ---------------- --------------- ---------------- --------------- -------------- -------------
Net assets
attributable to
non-controlling
interest (1,143) 133,310 3,621 (4,626) 80,351 211,513
================= ================ =============== ================ =============== ============== =============
Other
subsidiaries
Al Alborg with
Medical Genetic Makhbariyoun Laboratory immaterial Dynasty
Center Al Arab Group Company NCI Group Total
EGP'000 EGP'000 EGP'000 EGP'000 EGP'000 EGP'000
---------------- --------------- ---------------- --------------- -------------- -------------
Summarised
statement of
profit or loss
for 2020:
Revenue 2,822 409,069 911,923 1,731,237 36,089 3,091,140
Profit (3,412) 71,043 238,889 454,318 (26,832) 734,006
Other
comprehensive
expense - (2,691) - 1,060 (15,789) (17,420)
Total
comprehensive
income (3,412) 68,352 238,889 455,378 (42,621) 716,586
----------------- ---------------- --------------- ---------------- --------------- -------------- -------------
Profit allocated
to
non-controlling
interest (1,549) 28,719 1,691 2,599 (15,992) 15,468
Other
comprehensive
expense
allocated to
non-controlling
interest - (1,088) - 263 (9,261) (10,086)
================= ================ =============== ================ =============== ============== =============
Summarised
statement of
financial
position as at
31 December
2020:
Non-current
assets 736 183,237 357,303 556,725 113,941 1,211,942
Current assets 4,105 155,185 436,895 1,040,393 43,615 1,680,193
Non-current
liabilities (27) (64,249) (199,597) (216,983) (23,621) (504,477)
Current
liabilities (4,705) (104,517) (254,625) (462,853) (24,121) (850,821)
Net assets 109 169,656 339,976 917,282 109,814 1,536,837
----------------- ---------------- --------------- ---------------- --------------- -------------- -------------
Net assets
attributable to
non-controlling
interest 49 68,582 2,405 40,324 45,023 156,383
================= ================ =============== ================ =============== ============== =============
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
2021:
-- Covid-19-Related Rent Concessions - amendments to IFRS 16,
-- Interest Rate Benchmark Reform - Phase 2 - amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
-- Annual Improvements to IFRS Standards 2018-2020, and
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - amendments to IAS 12.
The amendments listed above did not have any impact on current
and prior years and 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 2021 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. At 31 December 2021, the Group had net
assets amounting to KEGP 2,794,359. 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 also assessed the likelihood of
any key one-off payments arising such as dividends or those in
respect of 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
2021. 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 enu e 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 24 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.
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) 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.
h) 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 are 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 an 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.
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. Judgement and 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 37% 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. 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 2021 the level of points accumulated by
customers which had not expired was equivalent to 24m EGP. 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 24m EGP out of the total
potential amount that could be redeemed is likely to be utilised by
customers
5. Financial assets and financial liabilities
The fair values of all financial assets and financial
liabilities by class shown in the balance sheet are as follows:
2021 2020
EGP'000 EGP'00
---------- ------------------------------
Cash and cash equivalent 891,451 600,130
Short term deposits - treasury bills 1,458,724 276,625
Trade and other receivables (Note 16) 447,080 364,117
Total financial assets 2,797,255 1,240,872
========== ==============================
2021 2020
EGP'000 EGP'00
---------- ------------------------------
Trade and other payables 749,272 380,201
Put option liability 956,397 314,057
Financial obligation 760,674 459,043
Loans and borrowings 101,545 96,455
Total other financial liabilities 2,567,888 1,249,756
========== ==============================
Total financial instruments* 229,367 (8,884)
* The financial instruments exclude prepaid expenses, deferred
revenue, and tax (current tax, payroll tax, withholding
tax,...etc).
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 26) 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 asset at amortised cost, financial
asset at fair value and cash and cash equivalent 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 in 2021 and 2020 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 exclude 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 2021 and 2020.
- Interest rate risk
The Group is trying to minimize its interest rate exposure,
especially in Egypt region, which has seen several interest rate
cuts over the last two years. 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 follow:
2021 2020
EGP'000 EGP'000
----------------------------------------- --------- ---------
Fixed-rate instruments
Financial obligation (note 26) 760,674 459,043
CIB BANK Loans and borrowings (note 24) 13,238 -
----------------------------------------- --------- ---------
Variable-rate instruments
AUB BANK Loans and borrowings (note 24) 84,828 93,033
The Group does not account for any fixed-rate financial
liabilities at FVTPL. Therefore, a change in interest rates at the
reporting date would not affect profit or loss.
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 980K (2020: EGP 930K). 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.
At year end, major financial assets / (liabilities) denominated
in foreign currencies were as follows (the amounts presented are
shown in thousands in EGP):
31-Dec-21
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Assets Liabilities Net exposure
--------------------
Cash and cash equivalents Other Total Put option Finance Trade Total
assets assets lease payables liability
-------------------------------- --------------------------- ------------------- ------------------ -------------------- ------------------- ----------------- --------------------
US 917,673 11,880 929,553 - (56,744) (140,808) (197,552) 732,001
Euros 397 - 397 - - (342) (342) 55
JOD 297,154 112,409 409,563 (921,360) (93,999) (171,481) (1,186,840) (777,277)
SDG 1,010 604 1,614 - (850) (1,718) (2,568) (954)
NGN 8,591 5,094 13,685 (35,037) (9,104) (9,413) (53,554) (39,869)
31-Dec-20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Assets Liabilities Net exposure
--------------------
Cash and cash equivalents Other Total Put option Finance Trade Total
assets assets lease payables liability
-------------------------------- --------------------------- ------------------- ------------------ -------------------- ------------------- ----------------- --------------------
US 81,956 5,138 87,094 - (67,764) (29,120) (96,884) (9,790)
Euros 176 - 176 - - (1,588) (1,588) (1,412)
JOD 76,954 62,062 139,015 (282,266) (75,365) (70,489) (428,121) (289,106)
SDG 2,429 2,712 5,140 - (6,682) (6,376) (13,058) (7,918)
NGN 8,749 9,211 17,960 (31,790) (14,825) (14,574) (61,189) (43,229)
The following is the exchange rates applied:
Average rate for the year ended
31-Dec-21 31-Dec-20
US Dollars 15.64 15.71
Euros 18.46 17.85
GBP 21.51 20.25
JOD 22.03 22.13
SAR 4.17 4.21
SDG 0.06 0.29
NGN 0.04 0.04
Spot rate for the year ended
31-Dec-21 31-Dec-20
US Dollars 15.65 15.66
Euros 17.73 19.23
GBP 21.12 21.38
JOD 22.05 22.06
SAR 4.17 4.18
SDG 0.04 0.28
NGN 0.04 0.04
At 31 December 2021, if the Egyptian Pound had
weakened/strengthened by 10% against the US Dollar with all other
variables held constant, total equity for the year would have
increased/decreased by EGP (73m) (2020: EGP (0.9m)), 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 2021.
At 31 December 2021, 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 77m (2020: EGP 28m), 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 2021.
At 31 December 2021, if the Egyptian Pound had weakened /
strengthened by 25% against the Sudanese Pound with all other
variables held constant, total equity for the year would have
increased/decreased by by EGP
0.238 (2020: EGP (1.9m)), mainly as a result of foreign exchange
gains/losses and translation reserve on the translation of SDG -
denominated financial assets and liabilities as at the financial
position of 31 December 2021.
At 31 December 2021, if the Egyptian Pound had weakened /
strengthened by 10% against the Nigeria Naira with all other
variables held constant, total equity for the year would have
increased/decreased by EGP 3.9m (2020: 4.3m), mainly as a result of
foreign exchange gains/losses and translation reserve on the
translation of Naira - denominated financial assets and liabilities
as at the financial position of 31 December 2021.
- 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, 86% with a rating
of B+ and 7% is rated at least BB.
Trad e 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.
In response to the COVID-19 pandemic, the risk management committee
has also been performing more frequent reviews of sales limits for
customers in regions and industries that are severely impacted.
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. Any receivables
balances over 365 days are fully provided for by the group.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of financial assets 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 it y 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 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
=============== ============= ================== ==========
31 December 2020 1 year or less 1 to 5 years more than 5 years Total
--------------- ------------- ------------------ ----------
Financial obligations 126,999 463,646 131,605 722,250
Put option liabilities 282,267 31,790 - 314,057
Borrowings 33,977 70,001 11,252 115,230
Trade and other payables 380,201 - - 380,201
823,444 565,437 142,857 1,531,738
=============== ============= ================== ==========
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, 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-21 4,108,357 16,644 1,046,107 53,604 5,224,712
31-Dec-20 2,173,411 37,695 409,069 36,089 2,656,264
Adjusted EBITDA by geographic location
-----------------------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Dual listing Total
fees
------------- ------------- -------------- --------------- -------------- ----------
31-Dec-21 2,177,160 (500) 331,042 (6,998) 29,033 2,529,737
31-Dec-20 1,041,359 6,100 129,885 (6,826) - 1,170,518
Impairment loss on trade receivables by geographic location
----------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
------------- ------------- -------------- --------------- -------
31-Dec-21 21,537 - 1,412 1,707 24,656
31-Dec-20 38,051 440 3,230 410 42,131
Net profit and loss by geographic location
---------------------------------------------------------------------------
For the year ended Egypt region Sudan region Jordan region Nigeria region Total
------------- ------------- -------------- --------------- ------------
31-Dec-21 1,309,247 (22,533) 214,588 (8,796) 1,492,506
31-Dec-20 557,743 7,529 71,043 (26,833) 609,482
The following additional analysis of performance by service has
been provided as it is also reviewed by the CODM:
Revenue by categories
2021 2020
EGP'000 EGP'000
----------- -----------
Walk-in 2,162,415 1,119,953
Contract 3,062,297 1,536,311
-----------
5,224,712 2,656,264
=========== ===========
Revenue Analysis Performance
2021 2020
--------------------- ----------------------------
EGP'000 EGP'000
--------------------- ----------------------------
Conventional test revenues 2,352,870 1,945,327
Covid-19-related test revenue 2,773,043 649,000
Radiology 98,799 61,937
5,224,712 2,656,264
===================== ============================
Net profit by type
2021 2020
--------------------- ----------------------------
EGP'000 EGP'000
--------------------- ----------------------------
Pathology 1,528,132 645,307
Radiology (35,626) (35,826)
1,492,506 609,482
===================== ============================
Pathology profits include profits from conventional tests and
Covid 19 tests.
The operating segment profit measure reported to the CODM is
EBITDA, as follows:
2021 2020
EGP'000 EGP'000
---------- --------------
Profit from operations 2,262,060 985,546
Property, plant and equipment and Right of use depreciation 231,443 179,046
Amortization of Intangible assets 7,201 5,926
EBITDA 2,500,704 1,170,518
---------- --------------
Nonrecurring items "Dual listing fees" 29,033 -
Adjusted EBITDA 2,529,737 1,170,518
========== ==============
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-21 2,803,954 7,234 291,880 90,509 3,193,577
31-Dec-20 2,415,220 24,132 263,767 113,941 2,817,060
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.
2021 2020
EGP'000 EGP'000
--------------------- -------------------
Financial obligations (note 26) 760,674 459,043
Borrowings 105,693 96,455
Less: Financial assets at amortised cost (note 18) (1,458,724) (276,625)
Less: Cash and cash equivalents (Note 17) (891,451) (600,130)
--------------------- -------------------
Net debt (1,483,808) (321,257)
===================== ===================
Total Equity 2,794,359 2,426,374
--------------------- -------------------
Net debt to equity ratio -53.1% -13.2%
No changes were made in the objectives, policies or processes
for managing capital during the years ended 31 December 2021 and 31
December2020.
8. Expense
Included in consolidated income statement are the following:
8.1 Cost of sales
2021 2020
EGP'000 EGP'000
---------- ----------
Raw material 962,748 466,679
Cost of specialized
analysis at other laboratories 24,086 20,992
Wages and salaries 635,407 390,020
Property, plant and equipment, right of use depreciation and Amortisation 213,919 162,928
Other expenses 584,487 273,069
Total 2,420,647 1,313,688
========== ==========
8.2 Marketing and advertising expenses
2021 2020
EGP'000 EGP'000
------------------------------ ------------------------------
Advertisement expenses 96,745 61,530
Wages and salaries 44,739 30,187
Property, plant and equipment and Amortisation 518 340
Other expenses 21,161 15,158
Total 163,163 107,215
------------------------------ ------------------------------
8.3 Administrative expenses
2021 2020
EGP'000 EGP'000
--------------------------- ---------------------------
Wages and salaries 146,929 104,211
Property, plant and equipment and Right of use
depreciation 24,207 21,704
Other expenses 198,878 95,959
Total 370,014 221,874
--------------------------- ---------------------------
8.4 Expenses by nature
2021 2020
EGP'000 EGP'000
---------- ----------
Raw material 962,748 466,679
Wages and Salaries 827,075 524,419
Property, plant and equipment, right of use depreciation and Amortisation 238,644 184,972
Advertisement expenses 96,745 61,530
Cost of specialized
analysis at other laboratories 24,086 20,991
Transportation and shipping 101,239 73,570
cleaning expenses 60,488 50,967
Call Center 33,531 16,822
Hospital Contracts 39,051 19,227
consulting Fees 112,398 47,743
Utilities 28,307 34,891
License Expenses 19,792 15,776
Other expenses 409,720 125,189
Total 2,953,824 1,642,776
---------- ----------
8.5 Auditors' remuneration
The group paid or accrued the following amounts to its auditor
PWC year 2021 (KPMG 2020) and its associates in respect of the
audit of the financial statements and for other services provided
to the group
2021 2020
EGP'000 EGP'000
-------- --------
Fees payable to the Company's auditor for the audit of the Group's annual financial statements 21,759 8,544
The audit of the Company's subsidiaries pursuant to legislation 6,998 4,008
Tax compliance and advisory services - 55
Assurance services 302 -
29,059 12,607
======== ========
8.6 Net finance costs
2021 2020
EGP'000 EGP'000
---------------- ---------------
Loss on hyperinflationary net monetary position (6,976) -
Interest expense (98,003) (67,851)
Net foreign exchange loss (17,912) (12,580)
Bank Charges (20,026) (3,676)
---------------- ---------------
Total finance costs (142,917) (84,107)
================ ===============
2021 2020
EGP'000 EGP'000
---------------- ---------------
Interest income 113,178 53,120
Gain on hyperinflationary net monetary position - 14,523
---------------- ---------------
Total finance income 113,178 67,643
---------------- ---------------
Net finance cost (29,739) (16,464)
================ ===============
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:
2021 2020
------------------------ --------------------------------- ------
Medical Administration Total Medical Administration Total
and market and market
-------- --------------- -------------- -------- --------------- ------
Average number
of employees 5,364 1,024 6,388 4,813 798 5,611
2021 2020
EGP'000 EGP'000
------------------------------------- -----------------------------------
Medical Administration Total Medical Administration Total
--------- --------------- --------- -------- --------------- --------
Wages and salaries 600,527 183,611 784,138 363,397 127,655 491,052
Social security costs 26,735 6,003 32,738 19,736 5,269 25,005
Contributions to defined contribution
plan 8,145 2,054 10,199 6,888 1,473 8,361
Total 635,407 191,668 827,075 390,021 134,397 524,418
========= =============== ========= ======== =============== ========
Details of Directors' and Key Management remuneration and share
incentives are disclosed in the Remuneration Report, the
Remuneration Committee Report on note 27.
9. Income tax
a) Amounts recognised in profit or loss
2021 2020
EGP'000 EGP'000
----------- ----------
Current year tax (579,262) (268,796)
WHT suffered (68,737) (24,470)
----------- ----------
Current tax (647,999) (293,266)
DT on undistributed reserves (106,767) (67,124)
DT on reversal of temporary differences 14,951 790
Total Deferred tax (91,816) (66,334)
Tax expense recognized in profit or loss (739,815) (359,600)
=========== ==========
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. During the year and due
to the ongoing impact of Covid, although our board meetings are
still actively managed through London, directors have largely
attended virtually. Our view is our tax residency has not changed,
however if it were deemed that the company was no longer a UK tax
resident, our assessment is this would not lead to a material
change to the taxation payable by the group.
2021 2020
EGP'000 EGP'000
------------------------------- ---------------------
Profit before tax 2,232,321 969,082
Profit before tax multiplied by rate of corporation tax in
Egypt of 22.5% (2020: 22.5%) 502,272 218,044
Effect of tax rate in UK of 19% (2020: Jersey 0%) 3,445 (346)
Effect of tax rates in Cayman, Jordan, Sudan and Nigeria of
0%, 21%, 30% and 30% respectively
(2020: 0%, 21%, 30% and 30%) (6,676) 9,855
Tax effect of: -
Recognition of previously unrecognised deferred tax (24,435) -
Deferred tax not recognised 28,132 20,454
Deferred tax arising on undistributed dividend 175,504 91,593
Non-deductible expenses for tax purposes - employee profit
share 39,419 18,223
Non-deductible expenses for tax purposes - other 22,154 1,777
Tax expense recognised in profit or loss 739,815 359,600
=============================== =====================
Def e rr e d tax
Defe r re d t ax rel a t es to the f o ll o win g:
2021 2020
------------------------ --------------------- --------
Assets Liabilities Assets Liabilities
------
EGP'000 EGP'000 EGP'000 EGP'000
--------- ------------------- ------ ----------- --------------
Property, plant and equipment - (28,925) - (18,334)
Intangible assets - (105,358) - (106,702)
Undistributed reserves from group
subsidiaries* - (223,425) - (116,657)
Tax Losses 25,559 - 1,360 -
Total deferred tax assets - liability 25,559 (357,708) 1,360 (241,693)
(332,149) - (240,333)
========= =================== ====== =========== ==============
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:
2021 Net Balance 1 January Deferred tax recognized WHT tax Net Balance 31 December
in profit or loss paid
------------------------- ------------------------ ------------------------ ------------- ------------------------
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)
======================== ======================== ============= ========================
2020 Net balance at 1 Deferred tax recognised WHT tax paid Net balance 31 December
January in profit or loss
------------------------- ------------------------ ------------------------ ------------- ------------------------
Property, plant and
equipment (17,460) (873) (18,333)
Intangible assets (108,365) 1,663 (106,702)
Undistributed dividend
from group subsidiaries (49,534) (91,593) 24,469 (116,658)
Tax losses 1,360 - 1,360
(173,999) (90,803) 24,469 (240,333)
======================== ======================== ============= ========================
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 2021 for the country the
liabilities and assets has arisen. The enacted tax rate in Egypt is
22.5% (2020: 22.5%), Jordan 21% (2020: 21%), Sudan 30% (2020: 30%)
and Nigeria 30% (2020: 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:
2021 2020
EGP'000 EGP'000
--------- ---------
Al Mokhtabar Company for Medical Labs 85,546 58,558
Alborg Laboratory Company 38,545 24,122
Integrated Medical Analysis Company 75,841 22,319
Al Makhbariyoun Al Arab Group 23,493 11,659
223,425 116,658
========= =========
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.
2021 2021 2020 2020
Gross Amount Tax Effect Gross Amount Tax Effect
EGP'000 EGP'000 EGP'000 EGP'000
------------------- -------------------- ------------- -----------
Impairment of trade receivables
(Note 16) 101,183 22,766 77,727 17,489
Impairment of other receivables
(Note 16) 8,585 1,932 8,509 1,915
Provision for legal claims
(Note 21) 4,088 920 3,134 705
Tax losses* 320,391 78,142 107,341 29,736
------------------- -------------------- -------------
434,247 103,760 196,711 49,845
Unrecognized deferred tax
asset 103,760 49,845
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 follow:
2021 2021 2020 2020
Gross Amount Tax Effect Gross Amount Tax Effect
Company Country EGP'000 EGP'000 EGP'000 EGP'000
------------------------------------- ------------------- -------------- ------------ ------------- -----------
Integrated Diagnostics Holdings plc Jersey 271,689 67,922 - -
Dynasty Group Holdings Limited England and Wales 13,446 2,555 12,371 2,350
Eagle Eye-Echo Scan Limited Mauritius 3,556 533 1,222 183
Echo-Scan Nigeria - - 81,450 24,435
WAYAK Pharma Egypt 16,269 3,660 8,503 1,913
Medical Genetic Center Egypt 6,421 1,445 3,795 854
Golden care Egypt 9,010 2,027 - -
320,391 78,142 107,341 29,736
============== ============ ============= ===========
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:
2021 2020
EGP'000 EGP'000
---------- ----------
Profit attributable to ordinary equity holders of the parent for basic earnings 1,412,609 594,015
Weighted average number of ordinary shares for basic and dilutive EPS 600,000 600,000
---------- ----------
Basic and dilutive earnings per share 2.35 0.99
---------- ----------
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 potential diluted shares as of the 31
December 2021 and 31 December 2020, therefore; the earnings per
diluted share are equivalent to basic earnings per share.
11. Property, plant and equipment
Medical, & Fixtures, Building & Leasehold
Land & electric Leasehold fittings & improvements in Payment on
Buildings equipment improvements vehicles construction account Total
EGP'000 EGP'000 EGP'000 EGP'000 EGP'000 EGP'000 EGP'000
----------- ----------- ------------- ----------- ----------------------- ----------- ----------
Cost
At 1 January
2020 332,353 483,370 225,281 66,461 19,924 4,099 1,131,488
Additions 555 84,615 32,473 8,703 5,011 1,324 132,681
Hyper
inflation - 8,628 - - - - 8,628
Disposals - (2,675) (638) (522) (2,789) - (6,624)
Exchange
differences (563) (8,241) (2,643) (1,381) (938) - (13,766)
At 31
December
2020 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
=========== =========== ============= =========== ======================= =========== ==========
Depreciation
and
impairment
At 1 January
2020 39,718 180,046 105,108 21,070 - - 345,942
Depreciation
charge for
the year 8,057 70,454 33,967 6,154 - - 118,632
Disposals 5 (2,380) 87 881 - - (1,407)
Exchange
differences (56) (2,191) (650) (876) - - (3,773)
----------- ----------- ------------- ----------- ----------------------- ----------- ----------
At 31
December
2020 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
Net book
value
----------- ----------- ------------- ----------- ----------------------- ----------- ----------
At 31-12-2021 327,393 490,822 157,973 62,922 15,937 6,761 1,061,808
=========== =========== ============= =========== ======================= =========== ==========
At 31-12-2020 284,621 319,768 115,961 46,032 21,208 5,423 793,013
=========== =========== ============= =========== ======================= =========== ==========
*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 2020 1,264,086 384,414 59,558 1,708,058
Additions - - 7,639 7,639
Effect of movements in exchange rates (2,278) (492) (40) (2,810)
----------- ----------- --------- -----------
At 31 December 2020 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
=========== =========== ========= ===========
Amortisation and impairment
At 1 January 2020 1,849 - 45,373 47,222
Amortisation - - 5,926 5,926
Effect of movements in exchange rates - - (16) (16)
----------- ----------- --------- -----------
At 31 December 2020 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
=========== =========== ========= ===========
Net book value
At 31 December 2021 1,256,413 383,537 18,917 1,658,867
----------- ----------- --------- -----------
At 31 December 2020 1,259,959 383,922 15,874 1,659,755
=========== =========== ========= ===========
* The impairment amount in goodwill and brand name related to
Ultra lab company in Sudan has full impaired in impairment study
due to the severe devaluation of SDG currency.
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:
2021 2020
EGP'000 EGP'000
---------- ----------
Medical Genetics Center
Goodwill 1,755 1,755
---------- ----------
1,755 1,755
---------- ----------
Al Makhbariyoun Al Arab Group ("Biolab")
Goodwill 46,145 46,174
Brand name 20,153 20,165
---------- ----------
66,298 66,339
---------- ----------
Golden Care for Medical Services ("Ultralab")
Goodwill - 2,703
Brand name - 372
- 3,075
---------- ----------
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 12,136 12,950
12,136 12,950
---------- ----------
Balance at 31 December 1,639,950 1,643,881
---------- ----------
The G roup perf o rmed its an n u al im p a i rment te st in
October 2021. 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 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%
Year 2020
----------------------------------------------------
Ultra Lab Bio Lab Al-Mokhtabar Al-Borg Echo-Scan
--------- ------- ------------ ------- ---------
Average annual patient growth rate from 2021 -2025 8% 6% 5% 5% 25%
Average annual price per test growth rate from 2021 -2025 2% 0% 7% 7.5% 9.5%
Annual revenue growth rate from 2021 -2025 11% 6% 12% 13% 54%
Average gross margin from 2021 -2025 36.5% 46.4% 55% 49% 53%
Terminal value growth rate from 1 January 2026 1% 2% 3% 3% 2%
Discount rate 34.5% 18.6% 20.3% 20.3% 20%
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 2021, 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 2022- 2026 have been based on detailed
forecasts prepared by management for each CGU and a terminal value
thereafter. Management have used experience and historic 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.
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 has not result to 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
------------- -------------------- --------------------- ----------------------
Almokhtabar 3,373,147 1,161,565 2,211,582
Alborg 2,727,434 1,007,779 1,719,655
Bio Lab 572,968 152,963 420,005
Echo Scan 233,476 44,190 189,286
14. Financial asset at fair value through profit and loss
2021 2020
EGP'000 EGP'000
-------- ---------
Equity investment* 10,470 9,604
Balance at 31 December 10,470 9,604
======== =========
* 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, 2021, 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
2021 2020
EGP'000 EGP'000
--------- ---------
Chemicals and operating supplies 222,612 100,115
222,612 100,115
========= =========
Dur i ng 2 021, EGP 962,748k (2020: EGP 466,679k) 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 61 days at 31 Dec 2021.
No impairment of inventory during the year 2021.
16. Trad e and other recei v ab l es
2021 2020
EGP'000 EGP'000
--------- ---------
Trade receivables - net 371,051 325,770
Prepayments 22,647 19,363
Due from related parties note (27) 5,237 2,910
Other receivables 67,974 34,431
Accrued revenue 2,818 1,006
469,727 383,480
========= =========
As at 31 December 2021, the expected credit loss related to
trade and other receivables was EGP 109,768K (2020: EGP 86,237k).
Below show the movements in the provision for impairment of trade
and other receivables:
2021 2020
EGP'000 EGP'000
--------- --------
At 1 January 86,237 44,528
Charge for the year 24,656 42,131
Utilised - (3,629)
Unused amounts reversed (32) (837)
Exchange differences (1,093) 4,044
At 31 December 109,768 86,237
========= ========
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
Based on the expected credit loss assessment, an additional
provision was calculated for the year, yielding an additional
Expected Credit Losses (ECL) for IDH Group amounting to EGP 24
million. On quarterly basis, IDH revises its forward-looking
estimates and the general economic conditions to assess the
expected credit loss, which will be mainly based on current and
expected inflation rates. 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.
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 101,183K (31 December 2020:
EGP 77,727K)
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 4,347K. This analysis assumes
that all other variables remain constant.
The following table provides information about the exposure to
credit risk and ECLs for trade receivables from individual
customers For the nine segments at:
Weighted average Gross carrying Loss
loss rate amount allowance
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 -365days past due 87.89% 103,300 (90,748)
Weighted average Gross carrying Loss
loss rate amount allowance
31-Dec-20 EGP'000 EGP'000 EGP'000
--------------------------------- ----------------- ------------------------ -----------------------------
Current (not past due) 0.00% 187,705 -
1-30 days past due 5.06% 63,771 (3,228)
31-60 days past due 6.18% 46,097 (2,847)
61-90 days past due 13.61% 17,322 (2,358)
91-120 days past due 18.85% 9,816 (1,850)
121-150 days past due 36.38% 6,436 (2,341)
More than 150-365 days past due 89.98% 72,350 (65,103)
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
=============== ================== ================== ================ ========================
2021 371,051 235,824 70,594 29,200 35,433
2020 325,770 248,248 43,250 14,964 19,308
17. C ash and cash equivalents
2021 2020
---------- --------
Cash at banks and on hand 261,430 253,225
Treasury bills (less than 90 days) 150,431 184,525
Term deposits (less than 90 days) 479,590 162,380
---------- --------
891,451 600,130
========== ========
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 7.75% (2020: 7%) and Treasury bills
12.44% (2020: 10%) per annum.
18. Financial assets at amortised cost
2021 2020
EGP'000 EGP'000
---------- --------------------------------
Term deposits (more than 90 days) 148,136 -
Treasury bills (more than 90 days) 1,310,588 276,625
---------- --------------------------------
1,458,724 276,625
==========
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 12.44% (2020: 10%) and deposits is 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.
Ordinary shares Ordinary shares
31-Dec-21 31-Dec-20
In issue at beginning of the year 600,000,000 150,000,000
In issue at the end of the year 600,000,000 600,000,000*
Ordinary share capital Number of shares % of contribution Par value
Name USD
Hena Holdings Limited 152,982,356 25.50% 38,245,589
Actis IDH B V 126,000,000 21.00% 31,500,000
Free floating 321,017,644 53.50% 80,254,411
600,000,000 100% 150,000,000
* At the Extraordinary General Meeting of the Company held on 23
December 2020, it was resolved that the Company's existing issued
ordinary share capital of 150,000,000 ordinary shares of US$1.00
each (the "Existing Ordinary Shares") will be sub-divided into
600,000,000 ordinary shares of US$0.25 each (the "New Ordinary
Shares") (the "Sub-Division"). The Sub-Division was successfully
completed with effect from 24 December 2020.
Capital reserve
The capital reserve was created when the Group's previous parent
company, Integrated Diagnostics Holdings LLC - IDH (Caymans)
arranged its own acquisition by Integrated Diagnostics Holdings
PLC, a new legal parent. The balances arising represent the
difference between the value of the equity structure of the
previous and new parent companies.
Legal reserves
Legal reserve was formed based on the legal requirements of the
Egyptian law governing the Egyptian subsidiaries. According to the
Egyptian subsidiaries' article of association 5% (at least) of the
annual net profit is set aside to from a legal reserve. The
transfer to legal reserve ceases once this reserve reaches 50% of
the entity's issued capital. If the reserve falls below the defined
level, then the entity is required to resume forming it by setting
aside 5% of the annual net profits until it reaches 50% of the
issued share capital.
Put option reserve
Through acquisitions made within the Group, put option
arrangements have been entered into to purchase the remaining
equity interests in subsidiaries from the vendors at a subsequent
date. At acquisition date an initial put option liability is
recognised and a corresponding entry recognised within the put
option reserve. After initial recognition the accounting policy for
put options is to recognise all changes in the carrying value of
the liability within put option reserve. When the put option is
exercised by the vendors the amount recognised within the reserve
will be reversed.
Translation reserve
The foreign currency translation reserve is used to record
exchange differences arising from the translation of the financial
statements of foreign subsidiaries.
20. Distributions made and proposed
2021 2020
EGP'000 EGP'000
Cash dividends on ordinary shares declared and
paid:
US$ 0.0485 per qualifying ordinary share (2020:
US$ 0.19) 455,182 441,855
455,182 441,855
After the balance sheet date, the following
dividends were proposed by the directors (the
dividends have not been provided for): 1,300,000 455,831
EGP 2.17 per share (2020: $0.049) per share 1,300,000 455,831
21. Provisions
Egyptian Government Provision for Total
Training Fund for legal claims EGP'000
employees EGP'000
EGP'000
At 1 January 2021 191 3,217 3,408
Provision made during the
year - 2,146 2,146
Provision used during the
year - (993) (993)
Provision reversed during
the year (191) (282) (473)
At 31 December 2021 - 4,088 4,088
Current
Non- Current - 4,088 4,088
Egyptian Government Provision Total
Training Fund for for legal EGP'000
employees claims
EGP'000 EGP'000
At 1 January 2020 191 5,082 5,273
Provision made during the year - 3,194 3,194
Provision used during the year - (5,040) (5,040)
Provision reversed during the
year - (19) (19)
At 31 December 2020 191 3,217 3,408
Non- Current 191 3,217 3,408
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 2021.
In addition to the provisions for legal claims recognised, there
is also an Arbitration Claim that has been made and includes the
Company as a respondent. No provision is recognised for this claim,
as the Group believes it will succeed in this matter as
demonstrated by previous claims by the claimant that have been
successfully defended.
22. Trade and other payables
2021 2020
EGP'000 EGP'000
Trade payables 311,321 177,603
Accrued expenses 325,677 151,201
Due to related parties note (27) 13,234 439
Other payables 99,040 50,959
Deferred revenue 24,603 -
Accrued finance cost 3,479 3,421
777,354 383,623
23. Current put option liability
2021 2020
EGP'000 EGP'000
Put option - Biolab Jordan 921,360 282,267
921,360 282,267
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 historic 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 2021. 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
18 months. The option has no expiry date.
24. Loan and borrowings
The terms and conditions of outstanding loans are as
follows:
Currency Nominal Maturity 31 Dec 21 31 Dec 20
interest rate
A) CIB BANK EGP Secured rate 9.5% 5 April 2022 13,238 38,654
B) AUB BANK EGP CBE corridor rate*+1% 26 April 2026 84,828 54,379
- 98,066 93,033
Amount held as:
Current liability 21,721 25,416
Non- current liability 76,345 67,617
98,066 93,033
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.
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 2021 only
EGP 84.8m had been drawn down from the total facility available.
The loan contains the following financial covenants which if
breached will mean the loan is repayable on demand:
1. The financial leverage shall not exceed 0.7 throughout the period of the loan
"Financial leverage": total bank debt divided by net equity
2. The debt service ratios (DSR) shall not be less than 1.35 starting 2020
"Debt service ratio": cash operating profit after tax plus
depreciation for the financial year less annual maintenance on
machinery and equipment adding cash balance (cash and cash
equivalent ) divided by total financial payments.
"Cash operating profit": Operating profit after tax, interest
expense, depreciation and 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 2021 corridor rate 9.25% (2020: 9.25%)
AL- Borg company didn't breach any covenants for MTL
agreements.
The group signed two agreements of debt facilities. The debt
package includes the US$ 45.0 million facilities secured an 8-year
period starting May 2021 from International Finance Corporation
(IFC), and an additional US$ 15.0 million IFC syndicated facility
from Mashreq Bank in Dec 2021 debt has not been withdrawn by
IDH.
25. Non-current put option liability
2021 2020
EGP'000 EGP'000
Put option liability* 35,037 31,790
35,037 31,790
*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 35 million was
calculated as the valuation as at 31 December 2021 (2020; EGP 32m).
In line 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 40% from 2022 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
2021 2020
EGP'000 EGP'000
-
Balance at 1 January 354,688 264,763
Addition for the year 198,402 152,030
Depreciation charge for the year (79,617) (60,803)
Terminated Contracts (7,643) (1,302)
Exchange differences (3,398) -
Balance at 31 December 462,432 354,688
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:
2021 2020
EGP'000 EGP'000
*Financial liability- laboratory equipment 228,870 69,123
*Lease liabilities building 531,804 389,920
760,674 459,043
*The financial obligation liabilities for the laboratory
equipment and building are payable as follows:
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
Minimum payments Interest Principal
At 31 December 2020 2020 2020 2020
EGP'000 EGP'000 EGP'000
Less than one year 126,999 66,481 60,518
Between one and five years 463,646 176,312 287,334
More than 5 years 131,605 20,415 111,190
722,250 263,208 459,042
c) Amounts other financial obligations recognised in consolidated income statement
2021 2020
EGP'000 EGP'000
Interest on lease liabilities 68,352 58,864
Expenses related to short-term lease 18,875 13,771
27. Related party transactions disclosures
The significant transactions with related parties, their nature
volumes and balance during the period 31 December 2021 and 2020 are
as follows:
2021
------------------------------------------
Related Party Nature of transaction Nature of Transaction amount Amount due from /
relationship of the year (to)
EGP'000 EGP'000
ALborg Scan Expenses paid on
(S.A.E)* behalf Affiliate 1 351
International Expenses paid on
Fertility (IVF)** behalf Affiliate - 1,767
Entity owned by
Company's board
H.C Security Provide service member (243) (319)
Entity owned by
Life Health Care Provide service Company's CEO (11,232) 2,094
Bio. Lab C.E.O and
Dr. Amid Abd Elnour Put option liability shareholder (639,093) (921,360)
International
Finance Eagle Eye - Echo Scan
corporation (IFC) Put option liability limited shareholder (3,247) (35,037)
International
Finance Eagle Eye - Echo Scan
corporation (IFC) Current account limited shareholder (12,915) (12,915)
Integrated
Treatment for
Kidney Diseases Entity owned by
(S.A.E) Rental income Company's CEO (298) 1,025
Medical Test analysis 530
Total (964,394)
====================
2020
------------------------------------------
Related Party Nature of transaction Nature of Transaction amount Amount due from
relationship of the year
EGP'000 EGP'000
ALborg Scan Expenses paid on
(S.A.E)* behalf Affiliate 6 350
International Expenses paid on
Fertility (IVF)** behalf Affiliate (3,449) 1,767
Entity owned by
Company's board
H.C Security Provide service member (412) (76)
Entity owned by
Life Health Care Provide service Company's CEO (11,058) (363)
Bio. Lab C.E.O and
Dr. Amid Abd Elnour Put option liability shareholder (83,126) (282,267)
International
Finance Eagle Eye - Echo Scan
corporation (IFC) Put option liability limited shareholder (1,757) (31,790)
Integrated Rental income Entity owned by -
Treatment for Company's CEO
Kidney Diseases
(S.A.E)
Medical Test analysis 588 793
Total (311,586)
====================
* 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).
Chief Executive Officer Dr. Hend El-Sherbini and her mother, Dr.
Moamena Kamel jointly hold the 25.5% of shares held by Hena
Holdings Limited, Hena Holdings Limited is a related party and
received dividends of USD 7,419,644 in year 2021 and USD 7,151,925
received in year 2020.
Terms and conditions of transactions with related parties
The transactions with the rel a ted p ar t ies a re ma de on t
erms e q uiv a le nt to th o se th at pre v a il in tr a ns a ct i
on s. 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 21, 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 20: 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 2021 EGP 9,578 K (2020: EGP 6,510K) was paid to the
foundation by the IDH Group.
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.
2021 2020
EGP'000 EGP'000
Short-term employee benefits 55,082 51,556
Total compensation paid to key management personnel 55,082 51,556
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 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 - 367,533
Terminated contracts during the year - (6,292)
Interest expense 29,651 68,353
Total liability-related other changes 29,651 429,594
Balance at 31 December 2021 105,694 760,673
Other loans Other financial
EGP'000 and borrowings obligation
Balance at 1 January 2020 111,750 338,073
Proceeds from loans and borrowings 11,727 -
Repayment of borrowings (25,416) -
Payment of liabilities - (42,746)
Interest paid (14,160) (59,576)
Total changes from financing cash flows (27,849) (102,321)
New agreements signed in the period - 166,339
Terminated contracts during the year - (1,912)
Interest expense 12,554 58,864
Total Liability - related other changes 12,554 223,291
Balance as at 31 December 2020 96,455 459,043
29. Current tax liabilities
2021 2020
EGP'000 EGP'000
Debit withholding Tax (Deduct by customers from sales invoices) (34,166) (37,282)
Income Tax 521,929 281,777
Credit withholding Tax (Deduct from vendors invoices) 17,922 9,672
Other 7,319 3,373
513,004 257,540
30. Post Balance Sheet Events
On the 20th of December 2021, Integrated Diagnostics Holdings
Plc announced the signing of a sale and purchase agreement (the
"SPA") to acquire 50% shareholding in Base Consultancy FZ LLC, the
holding company of Islamabad Diagnostic Centre Limited ("IDC"),
from the Evercare Group, an emerging markets healthcare delivery
platform managed by TPG for a total consideration of US$ 72.35
million. The transaction, which is subject to the satisfaction of a
number of key conditions precedent including, but not limited to,
the receipt of regulatory approval from the Competition Commission
of Pakistan, will see IDH acquire a stake in one of Pakistan's
leading diagnostic providers and partner with the founder Dr Rizwan
Uppal. IDC will be fully consolidated on IDH's accounts following
the completion of the transaction and transfer of funds to the
Evercare Group. The transaction is expected to close in the first
half of 2022. IDH plans to finance the transaction through a
combination of existing cash and committed debt facilities. The
debt package includes the US$ 45.0 million facility secured an
8-year period starting May 2021 from International Finance
Corporation (IFC), and an additional US$ 15.0 million IFC
syndicated facility from Mashreq Bank.
On 21 March 2022, the Central Bank raised policy rates by 100bps
and allowed the Egyptian Pound to devalue by more than 17% against
the US Dollar which is expected to impose Inflationary pressures in
the short to medium term. Inflation rates are expected to average
around 13% to 15% during 2022, up from 5.9% in December 2021.
Moreover, GDP growth in FY22/23 was revised downward to 5.5% from
5.7% by the Egyptian government in March 2022. The Group is closely
monitoring the situation and the impact that may arise.
31. Con t inge n t 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 and Al Mokhtabar Company for Medical
Labs suggest that obligations have been satisfied through training
programmes undertaken in-house by those entities. Since the issue
of the law on Vocational Guidance and Training, Al Borg Laboratory
Company and Al Mokhtabar Company for Medical Labs have not been
requested by the government to pay or have voluntarily paid any
amounts into the external training fund. Should a claim be brought
against Al Borg Laboratory Company and Al Mokhtabar Company for
Medical Labs, an amount of between EGP 24m to EGP 54m could become
payable, however this is not considered probable.
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