TIDMIDHC
RNS Number : 8870P
Integrated Diagnostics Holdings PLC
23 November 2016
For the purpose of the Transparency Directive the Home Member
state of the issuer is the United Kingdom.
Integrated Diagnostics Holdings Plc
9M2016 Results Update
London, 23 November 2016
Integrated Diagnostics Holdings Plc Update on 9M2016 Results
(London) Integrated Diagnostics Holdings ("IDH" or "the Group"),
IDHC on the London Stock Exchange, the largest fully integrated
private-sector provider of medical diagnostics services in Egypt,
Jordan and Sudan, released today unaudited highlights of its
financial and operational performance in the first nine months of
2016, reporting unaudited net profit of EGP 200.4 million on total
unaudited revenues of EGP 846.8 million.(1) Unaudited EBITDA stood
at EGP 380.1 million in 9M2016, representing period-on-period
growth of 80% against reported EBITDA and a 14% year-on-year
increase against the normalized(2) figure in the same period last
year.
IDH Chief Executive Officer Dr. Hend El-Sherbini said:
"I am very pleased with the Group's performance in 3Q2016. All
key indicators accelerated at a faster pace than the previous two
quarters in 2016 with revenues up 17% year-on-year, number of test
at 10% and number of patients recording a 7% year-on-year increase.
Improved performance was driven by our focused marketing strategy
and strong brands, leading to gains in total patient numbers.
Particularly noteworthy is stability in our higher-margin walk-in
patient segment despite the prevailing high-inflation
environment.
"On a nine-month basis, we are reporting a 14% rise in revenues.
EBITDA for the period was just over EGP 380 million, and profit
after tax declined slightly, weighed-down by EGP 48 million in
foreign exchange losses owing to accounting treatments associated
with sourcing USD at a parallel market rate higher than the
official one at the time. We are accordingly confirming our
guidance of FY2016 revenue growth of c.15% while maintaining EBITDA
margins in our historical range despite the impact of recent
economic reforms in Egypt including the introduction of a 13%
value-added tax and the float of the Egyptian pound. We expect that
the devaluation will see us record benefits on the revenue and
EBITDA lines and that our foreign exchange loss would narrow in the
final quarter of 2016. We are confident that our strong brand
equity, responsive business model and marketing reach will allow us
to move past any temporary near-term slowdown in consumer
spending."
Results (EGP mn,
unless otherwise
stated)
3Q16 3Q15 % change 9M16 9M15 % change
======================= ====== ====== ========= ====== ====== =========
Revenue 294.3 252.0 17% 846.8 745.3 14%
----------------------- ------ ------ --------- ------ ------ ---------
Operating Profit 125.3 98.0 28% 349.4 185.5 88%
----------------------- ------ ------ --------- ------ ------ ---------
EBITDA 135.2 109.4 24% 380.1 211.1 80%
----------------------- ------ ------ --------- ------ ------ ---------
EBITDA Margin 46% 43% 3 pts 45% 28% 17 pts
----------------------- ------ ------ --------- ------ ------ ---------
Normalized EBITDA 135.2 109.4 24% 380.1 334.0 14%
----------------------- ------ ------ --------- ------ ------ ---------
Normalized EBITDA 0.1
Margin 46% 43% 3 pts 45% 45% pts
----------------------- ------ ------ --------- ------ ------ ---------
Net Profit 73.9 75.6 -2% 200.4 97.8 105%
----------------------- ------ ------ --------- ------ ------ ---------
Net Profit Margin 25% 30% -5 pts 24% 13% 11 pts
----------------------- ------ ------ --------- ------ ------ ---------
Normalized Net Profit 73.9 75.6 -2% 200.4 220.7 -9%
----------------------- ------ ------ --------- ------ ------ ---------
Normalized Net Profit
Margin 25% 30% -5 pts 24% 30% 6 pts
----------------------- ------ ------ --------- ------ ------ ---------
Earnings per Share
(EGP) 0.48 0.49 -2pts 1.3 0.6 69 pts
----------------------- ------ ------ --------- ------ ------ ---------
([1]) By the terms regulating the company's listing on the LSE,
IDH is required to release audited financials at the half- and
full-year marks. Management and the Board of Directors have
committed to providing performance updates in the first and third
quarters as an outgrowth of the Company's commitment to
transparency. All figures in this update are accordingly unaudited
and provided from Management accounts.
(2) EBITDA for the 9M2015 period was normalized for one-time IPO
related expenses of EGP 122.9 million.
Financial& Operational Highlights
-- Revenues rose 17% over 3Q2015 to EGP 294.3 million, exceeding
the 9M2016 pace of 14% period-on-period. The 3Q2016 revenue
increase was driven by a 7% gain in the total number of patients
served, which helped to bring the number of patients served to flat
year-on-year for 9M2016. Revenue growth was also driven by a10%
increase in the total number of tests in the third quarter versus
the prior year, which exceeded the 3% gain for 9M2016.
-- Gross profit rose 24% over 3Q2015 to EGP 164.9 million, exceeding the 9M2016 pace of 15% period-on-period. Expressed as a percentage of revenues, cost of sales declined in 3Q2016 to 44% from 47% in 3Q2015 primarily as a result of operational efficiencies realized in operating the Mega Lab, which was commissioned in 3Q2015 to replace IDH's two legacy A Labs. This helped cost of sales in 3Q2016to close at 45% of sales, down from 46% in the comparative period despite a high-inflation environment in the Group's principal market of Egypt.
-- EBITDA rose24% over 3Q2015 to EGP 135.2million. For 9M2016,
the gain was 80% period-on-period to EGP 380.1 million when
compared to the EGP 211.1 million reported last year. Meanwhile,
EBITDA posted a 14% year-on-year growth when compared to 9M2015
normalized(3) figure of EGP 334.0 million.
-- Net profit of EGP200.4 million for 9M2016, more than double
the EGP 97.8 million for the comparative period. Setting aside EGP
48 million in foreign exchange losses in 9M2016, net profit for the
period would have been EGP 248.4 million in 9M2016. Meanwhile, net
profit for 9M2015 would have stood at EGP 220.7 million if
non-recurring expenses of EGP 122.9 million related to the Group's
IPO on the London Stock Exchange were set aside.
-- Total tests increased10% in 3Q2016 to 6.0 million, which was
a stronger rate of gain than the flat performance for 6M2016,
resulting in a 3% increase in total tests for 9M2016. Total
patients served in 3Q2016 was 1.5 million, an increase of 7% year
on year, compensating for the decline in 1H2016 and delivering a
flat 9M2016.Tests per patient were up 3% in 3Q2016 and 4% in 9M2016
period-on-period.
-- Average revenue per patient rose 10% over 3Q2015 to EGP 201.6
while average revenue per test increasing 7% period-on-period to
EGP 49.0, a bit below year-to-date trends. For 9M2016, average
revenue per patient rose 14%, while average revenue per test gained
10%.
(3) EBITDA for the 9M2015 period was normalized for one-time IPO
related expenses of EGP 122.9 million.
About Integrated Diagnostics Holdings (IDH)
IDH is the largest fully integrated private-sector medical
diagnostics services provider in Egypt. Jordan and Sudan,
comprehensively offering pathology and molecular diagnostics,
genetics testing and basic radiology. IDH's core brands include Al
Borg and Al Mokhtabar in Egypt, as well as Biolab (Jordan),
Ultralab and Al Mokhtabar Sudan (both in Sudan) and the Medical
Genetics Center, which operates in Egypt. IDH is listed on the
London Stock Exchange (ticker: IDHC) and was founded in 2012 by the
merger of Al Borg and Al Mokhtabar, the most established
diagnostics services brands in Egypt.
IDH's forward looking strategy rests on leveraging its
established business model to achieve five key strategic goals,
namely: (1) continue to expand customer reach; (2) increase the
number of tests per patient; (3) use the Mega Lab's enlarged
capacity to provide services to third party labs and hospitals; (4)
introduce new medical services by leveraging the Group's network
and reputable brand position; and (5) expand into new geographic
markets through selective, value accretive acquisitions. Learn more
at idhcorp.com.
Shareholder Information
LSE: IDHC.L
Bloomberg: IDHC:LN
Listed: May 2015
Shares Outstanding: 150 million
Contact
Mr. Sherif El-Ghamrawi
Investor Relations Director
T: +20 (0)2 3345 5530 | M: +20 (0)10 0447 8699 |
sherif.elghamrawi@idhcorp.com
Forward-Looking Statements
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 Company.
Forward-looking statements reflect the current views of the
Company'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
Company'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 Company'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 Company'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
prospectus. 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 Company does not
undertake any obligation to review, update, confirm or to release
publicly any revisions to any forward-looking statements to reflect
events that occur or circumstances that arise in relation to the
content of this communication.
Operational& Financial Review
Key Performance Indicators
3Q16 3Q15 % change
Walk-In Corporate Total Walk-In Corporate Total Walk-In Corporate Total
Clients Clients Clients Clients Clients Clients
========== ==================== ==================== ==================== ==================== ==================== ==================== ======== ========== ======
Revenue
(EGP
mn) 117.4 176.8 294.3 104.8 147.2 252.0 12% 20% 17%
% of
Revenue 40% 60% 100% 42% 58% 100%
Patients
('000) 415 1,044 1,459 420 949 1,369 -1% 10% 7%
% of
Patients 28% 72% 100% 31% 69% 100%
Revenue
per
Patient
(EGP) 282.8 169.4 201.6 249.7 155.0 184.0 13% 9% 10%
Tests
('000) 1,451 4,559 6,011 1,406 4,078 5,483 3% 12% 10%
% of
Tests 24% 76% 100% 26% 74% 100%
Revenue
per
Test
(EGP) 80.9 38.8 49.0 74.6 36.1 46.0 8% 7% 7%
Test per
Patient 3.5 4.4 4.1 3.3 4.3 4.0 4% 2% 3%
9M16 9M15 %change
========== =================================================================== ================================================================== ============================
Walk-In Corporate Total Walk-In Corporate Total Walk-In Corporate Total
Clients Clients Clients Clients Clients Clients
========== ===================== ===================== ===================== ===================== ===================== ==================== ======== ========== ======
Revenue
(EGP
mn) 336.1 510.8 846.8 308.6 436.6 745.2 9% 17% 14%
% of
Revenue 40% 60% 100% 41% 59% 100%
Patients
('000) 1,208 3,075 4,283 1,308 2,992 4,300 -8% 3% 0%
% of
Patients 28% 72% 100% 30% 70% 100%
Revenue
per
Patient
(EGP) 278.1 166.1 197.7 235.9 145.9 173.3 18% 14% 14%
Tests
('000) 4,082 13,665 17,747 4,372 12,832 17,204 -7% 6% 3%
% of
Tests 23% 77% 100% 25% 75% 100%
Revenue
per
Test
(EGP) 82 37 48 71 34 43 17% 10% 10%
Test per
Patient 3 4 4 3 4 4.0 1% 4% 4%
Total Branches by Geography
9M16 9M15 % change
==================== ============ ================= =========
Egypt 303 272 11%
Jordan 13 11 18%
Sudan 23 25 -8%
Total IDH Branches 339 308 10%
Operational Review
IDH delivered a solid operational performance in 3Q2016 and
9M2016. At the end of 9M2016, IDH operated 339 branches; an
increase of 31 branches (10%) period-on-period: 303 branches in
Egypt (+11%), 23 in Sudan (-8%) and 13 in Jordan (+18%).
Average revenue per patient increased 10% to EGP 201.6in 3Q2016
compared to the same period a year ago, while average revenue per
test increased 7% to EGP 49.0. Total tests completed, at 6.0
million, were 10% higher period-on-period. For 9M2016, average
revenue per patient rose 14% to EGP 197.7, whilst average revenue
per test gained 10% to EGP 48.00, and total tests completed stood
at 17.7 million, or3% higher period-on-period.
Across the Group's footprint, IDH served 1.5 million patients in
3Q2016, up 7% from 3Q2015, as a 10% increase in corporate clients
more than offset a 1% decline in walk-in patients. Group-wide for
9M2016, IDH served 4.3 million patients, approximately the same
number over the same period a year ago, as a 3% gain in corporate
clients offset an 8% decline in walk-in patients.
The ratio of corporate to walk-in patients served during 9M2016
was 72:28 compared with 70:30 in 9M2015.The general shift in
patient mix since late 2015 in favour of those served on corporate
contracts reflects natural market dynamics in Egypt. The trend has
been encouraged by continued high inflation, which is eroding
consumer spending power and pushing consumers to utilize any
coverage / benefits available to them.
Financial Review
Revenue
Total revenue increased 14% in 9M2016 to EGP 846.8 million
(9M2015: EGP 745.2 million). Better price and mix on corporate
clients contributed 5.4ppt of growth, while better price and mix
for walk-in patients accounted for 3.9 ppt. Volume growth and
foreign exchange gains from Jordan and Sudan contributed 4.3
ppt.
Existing branches accounted for 88% of revenue growth, while new
branches accounted for 12%. Average revenue per patient rose 14%
period-on-period; revenue per test was up 10%; and tests per
patient climbed 4%, underscoring the resilience of the medical
diagnostics segment to both macro headwinds and the impact of high
inflation on consumer spending.
IDH's corporate clients (also referred to as contract clients),
who in 9M2016 represented 60% of the Group's revenues (9M2015:59%),
include institutions such as unions, private insurance companies
and corporations who typically enter one year, renewable contracts
at agreed rates per test and on a per client basis. During 9M2016,
IDH served 3.1 million patients under those contracts, performing
13.7 million tests.
IDH derived 40% of its revenue in 9M2016 from walk-in clients
(9M2015:41%), with the total number of walk-in patients -8%
period-on-period. In Egypt, the Group's largest market, the number
of walk-in patients declined 7%, while the number of tests
performed fell 8%. 3Q2016 numbers for Egypt outpaced the 9M2016
performance, with walk-in patients' volume flat and 4% more tests
performed.
Cost of Sales
Expressed as a percentage of revenues, cost of sales represented
45% in 9M2016, less than the 46% recorded in 9M2015, helped by
lower Chemicals and Supplies costs and despite significant
inflation in Egypt, the Group's primary market. In absolute terms,
cost of sales rose 12% period-on-period to EGP 381.9 million,
driven primarily by increased spending on Wages and Salaries, which
climbed 23%.
Wages and salaries accounted for 38% of total Group cost of
sales in 9M2016 (9M2015: 34%); the category remains the single
largest contributor to COGS. Chemicals and supplies fell to 33% of
total cost of sales in 9M2016 from 39% a year ago.
EBITDA
EBITDA for 9M2016 stood at EGP 380.1 million (9M2015: EGP 211.1
million), up 80% period-on-period. EBITDA growth was constrained in
part by the rising cost of wages and salaries as well as the
increase in administrative expenses. For the first nine months, the
Group's EBITDA margin stood at 44.9% against a normalised figure of
44.8% in the same period of the previous year. EBITDA margin for
the same period of 2015 was 28%.
Egyptian operations contributed 94% of EBITDA in 9M2016; Jordan
contributed 4% and Sudan 2%.
Net Finance Cost
The Group recorded net finance cost of EGP 7.3 million in 9M2016
against net finance income of EGP 0.6 million in the same period
last year. Net finance costs include both finance income of EGP
13.6 million (9M2015: 5.9 million) and finance cost of EGP 6.3
million (9M2015: 5.3 million). It should be noted that finance cost
mainly represents interest from finance leasing.
Taxation
Income tax expenses recorded on the income statement in 9M2016
totalled EGP 94.6 million compared to EGP 90.6 million in 9M2015.
There is no tax payable in the two IDH holding companies (Jersey
and Cayman). All tax is paid within the operating companies in
Egypt, Jordan and Sudan.
It worth mentioning that deferred tax in 9M2016 amounted to EGP
13.8 million compared to EGP 0.6 million in 9M2015.
The Group's dividend policy is to distribute any excess cash
after taking into consideration all business cash requirements and
potential acquisition considerations. As a result, a deferred tax
liability is recognised for the 5% tax on dividends for the future
expected distribution payable by Egyptian entities under Egyptian
tax legislation.
Net Earnings
Net profit for the nine-month period (pre non-controlling
interest) in 9M 2016 was EGP 200.4 million, compared to EGP 97.8
million recorded in 9M2015. Results for the first nine months of
this year reflect the impact of EGP 48 million in foreign exchange
losses (discussed above) against a forex gain of EGP 2.9 million in
the comparative period.
Management also notes that net profit of EGP 97.8 million in
9M2015 includes non-recurring expenses of EGP 122.9 million related
to the Group's IPO on the London Stock Exchange.
Balance Sheet
Through the historic acquisitions of Makhbariyoun Al Arab and
Golden Care Medical Services the Group entered two separate put
option arrangements to purchase the remaining equity interests from
the vendors at a subsequent date. The options are exercisable in
whole from the fifth anniversary of completion of the original
purchase agreement falling due in June 2016. At acquisition a put
option liability has been recognized for the net present value for
the exercise price of the option. In July 2016, the Group was
notified by the vendors of Golden Care Medical Services the put
option had been exercised. IDH held an Extraordinary General
Assembly Meeting (EGM) in October 2016 at which shareholders
approved the purchase of the shares under the put option. Payment
for the shares will be disbursed to the seller (and transfer of the
shares effected) after the General Authority for Investment and
Free Zones approves the EGM filing.
Recent Corporate Developments
Non-Executive Director Ahmed Badreldin, a member of the
Company's Board of Directors since 2011 has resigned for the IDH
Board of Directors effective 22 November 2016. Mr. Badreldin is a
partner at The Abraaj Group, where he supported the creation of IDH
starting from The Abraaj Group's acquisition of c75% stake in Al
Borg in 2008. During his service on IDH's Board of Directors, Mr.
Badreldin supported IDH in the development of the Company's
strategy during the successful initial public offering on the
London Stock Exchange.
Outlook
IDH's forward-looking strategy rests on leveraging its
established business model to achieve five key strategic goals,
namely: (1) continue to expand customer reach; (2) increase the
number of tests per patient; (3) use the Mega Lab's enlarged
capacity to provide services to third-party labs and hospitals; (4)
introduce new medical services by leveraging the Group's network
and reputable brand position; and (5) expand into new geographic
markets through selective, value-accretive acquisitions.
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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