TIDMIDHC
RNS Number : 7868F
Integrated Diagnostics Holdings PLC
19 November 2020
Integrated Diagnostics Holdings Plc
9M 2020 Results Update
Thursday, 19 November 2020
Integrated Diagnostics Holdings Plc delivers impressive top- and
bottom-line growth in 3Q 2020 of 23% and 39%, respectively,
supported by a broad-based recovery in the Group's operations
(London) Integrated Diagnostics Holdings ("IDH," "the Group," or
"the Company"), a leading consumer healthcare company with
operations in Egypt, Jordan, Sudan and Nigeria, released today
unaudited highlights of its financial and operational performance
for the quarter and nine-month periods ended 30 September 2020(1) ,
recording revenue of EGP 720 million and a net profit of EGP 201
million in 3Q 2020. On a year-to-date basis, revenue recorded EGP
1,670 million with a net profit of EGP 375 million for 9M 2020.
([1]) By the terms regulating the company's listing on the LSE,
IDH is required to release its audited financials at the full-year
mark. Management and the Board of Directors have committed to
providing the company's reviewed financials at the half-year mark
and 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.
Results*
(EGP mn)
9M2020 9M2019 change
===================== ======= ======= ========
Revenues** 1,670 1,649 1%
--------------------- ------- ------- --------
Cost of Sales (840) (856) -2%
--------------------- ------- ------- --------
Gross Profit 830 793 5%
--------------------- ------- ------- --------
Gross Profit Margin 50% 48% 2 pts
--------------------- ------- ------- --------
Operating Profit 575 573 -
--------------------- ------- ------- --------
EBITDA(2) 710 686 4%
--------------------- ------- ------- --------
EBITDA Margin 43% 42% 1 pts
--------------------- ------- ------- --------
Net Profit 375 361 4%
--------------------- ------- ------- --------
Net Profit Margin 22% 22% -
--------------------- ------- ------- --------
Cash Balance 465 432 8%
--------------------- ------- ------- --------
*The results for 9M 2019 and 9M 2020 reflect the adoption of
IFRS 16.
**Excluding the 100 Million Healthy Lives Campaign from 9M 2019
figures, consolidated revenues would have expanded 4% year-on-year.
The 100 Million Healthy Lives campaign ran from November 2018
through June 2019. In the six months to 30 June 2019 IDH served 224
thousand patients under the campaign's umbrella and performed 2.4
million tests. Total campaign-related revenue in 9M 2019 reached
EGP 47 million.
(2) EBITDA is calculated as operating profit plus depreciation
and amortization.
Financial Highlights
-- Revenue for the third quarter of the year recorded EGP 720
million, up an impressive 23% versus 3Q 2019 and 60% versus 2Q
2020, with the Group recording one of the fastest year-on-year
growth rates for a single quarter on record. Top-line growth was
supported by the gradual lifting of restrictive measures, which saw
the reopening of all branches during 3Q 2020, and IDH's ability to
adapt its service offering to the changing dynamics by ramping up
its house call service and offering Covid-19-related testing(3) in
Egypt and Jordan. On a nine-month basis, revenue reached EGP 1,670
million, up 1% versus 9M 2019 (a 4% year-on-year rise when
excluding contributions from the 100 Million Healthy Lives campaign
("the campaign") in 9M 2019).
-- Gross profit expanded 30% year-on-year in 3Q 2020 to EGP 384
million, with an associated margin of 53% versus 50% in 3Q 2019 and
45% in 2Q 2020. Gross profit growth for the quarter came on the
back of the remarkable top-line growth recorded by the Group. In 9M
2020, gross profit expanded 5% year-on-year to EGP 830 million,
with an associated margin of 50% versus 48% in 9M 2019. Gross
profit growth was supported by lower raw material costs as well as
lower wages and salaries for 9M 2020.
-- Operating profit expanded 45% year-on-year in 3Q 2020 to
reach EGP 299 million. On a year-to-date basis, operating profit
was largely unchanged versus 9M 2019 at EGP 575 million in 9M 2020,
as IDH booked EGP 35 million in cautionary provisions to account
for elongated cash collection cycles during the period. It is
important to note that in 3Q 2020, IDH booked an additional EGP 7
million in provisions, compared to the EGP 28 million booked in the
first half of the year as cash collection cycles improved.
-- EBITDA(2) in 3Q 2020 was up 40% year-on-year to EGP 343
million, supported by improved gross profitability for the quarter.
EBITDA margin for the quarter stood at 48% versus 42% and 36% in 3Q
2019 and 2Q 2020, respectively. For 9M 2020, EBITDA recorded EGP
710 million, up 4% year-on-year with an associated margin of 43%
compared to 42% in the same period last year, despite the higher
provisions booked during the period.
-- Net profit expanded an impressive 39% year-on-year in 3Q 2020
to EGP 201 million, as revenue growth for the period trickled down
to the Group's bottom-line. Net profit margin recorded 28% in the
third quarter of the year compared to 25% in the same three months
of last year. Net profit was up 4% year-on-year to EGP 375 million
in 9M 2020, with a net profit margin of 22%, unchanged versus last
year.
-- Net cash flow from operating activities was EGP 370 million
in 9M 2020, with the Group's total cash balances decreasing to EGP
465 million as at 30 September 2020 from EGP 631 million as at
year-end 2019, reflecting the distribution of USD 28 million (EGP
451 million) in dividends for FY 2019 paid in September of this
year. The Group reported net cash(4) amounting to EGP 304 million
as at 30 September 2020 compared to EGP 447 million at year-end
2019.
(3) Covid-19-related tests include PCR and antibody testing as
well as a bundle of inflammatory and clotting markers such as
Complete Blood Picture, ESR, D-Dimer, Ferritin and CRP, among
others.
(4) Net debt is calculated as cash and cash equivalent balances
less interest-bearing debt (medium term loans) and finance lease.
Please note that the net debt calculation excludes liabilities due
to IFRS 16).
Operational Highlights
-- IDH's branch network included 471 branches as at 30 September
2020, up from 452 branches as at 31 December 2019, as IDH resumed
its branch rollout plan for the year. The Group added 9 branches to
its Egyptian network during the third quarter of the year.
-- IDH served 4.8 million total patients in 9M 2020, a 14%
year-on-year decline (down 11% excluding the campaign's
contribution to 9M 2019) on the back of the impact of Covid-19 on
operations during the months of March, April, and May. Total
patients served in 3Q 2020 was largely in line with the figure
recorded in the same quarter a year ago supported by a wide-spread
recovery of activity across the Group's countries of operation. On
a quarter-on-quarter basis, the number of patients served witnessed
a recovery of 43% in 3Q 2020 versus the previous quarter.
-- Total number of tests performed was down 19% year-on-year (a
9% drop when factoring out the campaign's contribution to 9M 2019)
to 18.8 million in 9M 2020 due to the impact of Covid-19 earlier in
the year. However, during 3Q 2020 tests performed were up an
impressive 46% quarter-on-quarter as operations continued their
steady recovery across the Group's territories.
-- Average revenue per test expanded 25% year-on-year to EGP 89
for the nine-month period ended 30 September 2020, partially due to
the low base effect of the campaign in 9M 2019. Controlling for the
campaign's effect, average revenue per test would have still
increased 15% year-on-year in 9M 2020, on the back of the annual
price hikes at the start of the year combined with the generally
higher-priced Covid-19-related tests offered by the Group during
the period.
-- IDH's average test per patient declined 5% year-on-year to
3.9 in 9M 2020. However, excluding the campaign, average test per
patient would have increased 2% versus the same nine-month period
of 2019.
-- Following a wide-spread easing of restrictive measures across
the Group's countries of operation during the third quarter of the
year, IDH was able to reopen its entire branch network during the
quarter and return to normal operating hours across all territories
by late July of this year.
-- In Egypt volumes were supported by a ramp up of the house
calls service (20% of Egypt's 9M 2020 revenue) and by increased
demand for Covid-19-related testing (13% of total revenue for Egypt
in 9M 2020).
-- In Jordan, the Group continued to be at the forefront of PCR
testing for Covid-19 during the third quarter of 2020, with
Covid-19 testing contributing to around 32% and 24% of IDH's
revenue in Jordan during 3Q 2020 and 9M 2020, respectively.
Starting in October, the government has reinstituted a night-time
curfew from 10pm to 6am from Saturday to Thursday, with a full
24-hour lockdown on Fridays. This is, however, not expected to have
material impacts on Biolab's operations. Thus far, all of Biolab's
19 branches are operating normally with the Company also providing
a house call service for its patients.
-- In Nigeria, tests performed in 9M 2020 were up 26% versus 9M
2019 with revenue in local currency up 39% year-on-year as IDH
continued to capitalize on the increased brand awareness and demand
for Echo-Lab's high-quality services. During 3Q 2020, IDH's
Nigerian operations turned EBITDA-positive supported by a strong
ramp up in sales during the quarter.
-- Al-Borg Scan continues to ramp up its operations as revenues
expanded 62% year-on-year in 9M 2020. In February 2020, the company
launched a second branch in Cairo and is continuing to make good
progress towards the launch of a third branch.
Commenting on the Group's performance for the nine-month period,
IDH Chief Executive Officer Dr. Hend El-Sherbini said: "Throughout
the third quarter of 2020, we observed a strong and broad-based
recovery across our territories, with the Group posting one of its
strongest year-on-year growth rates for a single quarter at 23%.
The robust growth for the quarter filtered down to our bottom-line
which expanded 39% year-on-year in the three months to 30 September
2020. Top-line growth for the quarter was supported by the gradual
lifting of restrictive measures related to Covid-19, which allowed
for the reopening of all our branches, combined with our continued
ability to adapt our service offering to cater to patient needs
during these uncertain times.
The impressive third quarter performance lessened the impact of
the first half of the year and helped drive top- and bottom-line
growth on a year-to-date basis as well, a commendable achievement
in light of the unprecedented global crisis. The Group's revenue
and net profit for the nine-month period ended 30 September 2020
expanded 1% and 4% year-on-year, respectively.
In our home market of Egypt, we continued to ramp up our house
call services and in June began offering PCR testing for Covid-19,
further expanding our roster of Covid-19 indicative tests. This
helped IDH build on the upward momentum witnessed in June and
supported the Group's third quarter performance. We also
experienced robust contributions coming from Al Borg Scan, which
now operates out of two branches having kicked off operations of
its second branch in February of this year. Over the last nine
months, our radiology venture reported an impressive 76%
year-on-year rise in patients served and a 62% year-on-year
increase in revenue. On this front, we are actively working towards
the roll out of the venture's third branch, which we expect to
launch in the first quarter of next year. We are also in the
process of completing the necessary modules to obtain ACR (American
College of Radiology) accreditation for Al Borg Scan's branches, a
process we expect to conclude by next year.
In Nigeria, our operations turned EBITDA positive for the first
time during the third quarter of the year, following a surge in
sales for the period as we continued to capitalize on the increased
brand awareness and demand for Echo-Lab's high-quality services.
EBITDA for the quarter was supported by our cost control efforts
and service mix optimisation strategy in the country, which has
seen the Group focus increasingly on pushing its radiology and
pathology services.
In Jordan, where Biolab has been at the forefront of PCR testing
for Covid-19 since the very start of the crisis, we continued to
record strong demand for both PCR testing and for all our services
in general. This helped drive a 21% year-on-year revenue expansion
in local currency terms for 9M 2020, with PCR testing making up
nearly one fourth of the country's top-line for the nine-month
period.
Finally, in Sudan, the progressive lifting of government-imposed
restrictive measure during the third quarter of 2020, saw the
reopening of all 21 branches in late July, with revenues in SDG
terms expanding 8% year-on-year in the quarter. While high
inflation and a weak SDG continue to pose challenges for the Group,
the lifting of sanctions has opened up important growth
opportunities for our operations in the coming years. With the
country now open to international suppliers; the Group will be able
to directly import test kits and in turn improve its operational
efficiency and profitability.
While there is still no clear visibility on the magnitude of a
second wave of Covid-19 infections in our countries of operation,
management is confident that the Group has the adequate safety and
business continuity safeguards in place to weather possible
disruptions to operations while guaranteeing the safety of our
staff and patients. Under the oversight of a dedicated team, the
Group has implemented a strict health and safety protocol which can
be further tightened were the number of daily new cases to increase
over the coming weeks. With IDH now offering PCR testing for
Covid-19 in both Egypt and Jordan, the Group is well positioned to
help local authorities contain a possible second wave. IDH has also
further improved its inventory management frameworks since the
start of the crisis back in March, and now has measures in place to
ensure an ample supply of kits at all times, shielding the Group
from potential supply chain disruptions. On the collection front,
despite the Group booking EGP 35 million in cautionary provisions
to account for elongated cash collection cycles during the first
nine months of the year, IDH enjoys a solid relationship with
insurers and management expects cash collection cycles to normalise
going forward.
Overall, our Group maintains a strong financial position, with a
liquid balance sheet thanks to a strong cash generation profile and
over EGP 304 million in net cash balances. The Group's confidence
in the fundamental strength and sustainability of its financial
position has seen IDH distribute USD 28 million in dividends in
September of this year, an important accomplishment given the
difficulties faced globally during 2020.
Heading into the final weeks of the year, we expect the robust
recovery witnessed in the third quarter to carry through to the end
of 2020. This leaves management confident that despite the
unprecedented challenges presented by the global pandemic, and at a
time when businesses across the world are facing existential
threats, IDH will still be able to deliver full-year top line
growth in 2020 with an EBITDA margin in excess of 40%."
Analyst and Investor Call Details
An analyst and investor call will be hosted at 1pm (UK) | 3pm
(Egypt) on Thursday, 19 November 2020. You may register for the
conference call at this link . Once the registration is complete,
you will receive a confirmation email containing your personal Zoom
meeting details.
If you experience any issues while registering for the call or
connecting to it, please contact Anna Smirnova at
ASmirnova4@rencap.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 1,400 diagnostics tests. From its base of 471
branches as of 30 September 2020, IDH will continue to add
laboratories through a Hub, Spoke and Spike business model that
provides a scalable platform for efficient expansion. Beyond
organic growth, the Group's expansion plans include acquisitions in
new Middle Eastern and African markets where its model is
well-suited to capitalise on similar healthcare and consumer trends
and capture a significant share of fragmented markets. IDH has been
a Jersey-registered entity with a Standard Listing on the Main
Market of the London Stock Exchange (ticker: IDHC) since May
2015.
IDH's forward-looking strategy rests on leveraging its
established business model to achieve four key strategic goals,
namely: (1) continue to expand customer reach; (2) increase the
number of tests per patient; (3) expand into new geographic markets
through selective, value-accretive acquisitions; and (4) introduce
new medical services by leveraging the Group's network and
reputable brand position. Learn more at idhcorp.com .
Shareholder Information
LSE: IDHC.L
Bloomberg: IDHC:LN
Listed: May 2015
Shares Outstanding: 150 million
Contact
Nancy Fahmy
Investor Relations Director
T: +20 (0)2 3345 5530 | M: +20 (0)12 2255 7445 |
nancy.fahmy@idhcorp.com
Forward-Looking Statements
These results for the nine-month period ended 30 September 2020
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 nine-month results should
not be relied upon by any other party or for any other reason. This
communication contains certain forward-looking statements. A
forward-looking statement is any statement that does not relate to
historical facts and events, and can be identified by the use of
such words and phrases as "according to estimates", "aims",
"anticipates", "assumes", "believes", "could", "estimates",
"expects", "forecasts", "intends", "is of the opinion", "may",
"plans", "potential", "predicts", "projects", "should", "to the
knowledge of", "will", "would" or, in each case their negatives or
other similar expressions, which are intended to identify a
statement as forward-looking. This applies, in particular, to
statements containing information on future financial results,
plans, or expectations regarding business and management, future
growth or profitability and general economic and regulatory
conditions and other matters affecting the Group .
Forward-looking statements reflect the current views of the
Group's management ("Management") on future events, which are based
on the assumptions of the Management and involve known and unknown
risks, uncertainties and other factors that may cause the Group's
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the
Group's actual financial condition and results of operations to
differ materially from, or fail to meet expectations expressed or
implied by, such forward-looking statements.
The Group's business is subject to a number of risks and
uncertainties that could also cause a forward-looking statement,
estimate or prediction to differ materially from those expressed or
implied by the forward-looking statements contained in this
communication. The information, opinions and forward-looking
statements contained in this communication speak only as at its
date and are subject to change without notice. The Group does not
undertake any obligation to review, update, confirm or to release
publicly any revisions to any forward-looking statements to reflect
events that occur or circumstances that arise in relation to the
content of this communication.
Operational & Financial Review
Revenue
IDH reported revenue of EGP 1,670 million in the first nine months of
the year, up 1% versus the same period of 2019. The year-to-date performance
was supported by a strong third quarter, which saw the Group close up
23% versus 3Q 2019, one of its strongest year-on-year revenue growth
rates for a single quarter. IDH's strong and broad-based recovery was
driven by the easing of Covid-19 containment measures across its territories,
the continued ramp up of its house call services in Egypt, and the increased
demand for Covid-19-related testing(5) in Egypt and Jordan. Covid-19-related
testing made up around 14% of consolidated revenue for the nine-month
period to 30 September 2020.
Controlling for the revenue generated by the campaign during the comparable
period of 2019, IDH would have recorded a 4% year-on-year expansion in
revenue for 9M 2020.
(5) Covid-19-related tests include PCR and antibody testing as well
as a bundle of inflammatory and clotting markers such as Complete Blood
Picture, ESR, D-Dimer, Ferritin and CRP, among others.
Revenue Analysis: Contribution by Patient Segment
Contract Segment
At the Group's contract segment, revenue declined 5% year-on-year in
9M 2020, with the segment contributing to 55% of consolidated revenue
versus 59% in the same period of last year. The year-on-year decline
came on the back of a 22% fall in tests performed versus 9M 2019. The
decrease in tests performed reflects the impact of Covid-19-related restrictions,
which weighed down on volumes during the second quarter of 2020, and
the normalisation in contract volumes following the end of the campaign
in Egypt. The campaign had contributed 224 thousand patients and 2.4
million tests to the contract segment during the comparable period of
last year.
Additionally, during 2019 management had analysed the segmentation of
Egypt's patient base leading to a reclassification between walk-ins and
contract volumes. Factoring out campaign-related tests from 9M 2019 figures
and controlling for the reclassification, contract revenue would record
a 9% year-on-year rise supported by Covid-19-related testing, which contributed
to around 15% of contract revenues for the period.
Walk-in Segment
Revenue from IDH's walk-in segment increased 10% year-on-year in 9M 2020,
contributing to 45% of IDH's consolidated top-line in 9M 2020 up from
the 41% contribution this time last year. When controlling for the 2019
reclassifications, walk-in revenue would record a marginal 1% year-on-year
decline in 9M 2020 owing to a 17% year-on-year decrease in tests performed.
It should be noted that Covid-19-related testing contributed to approximately
14% of walk-in revenues in 9M 2020.
Key Performance Indicators Contract Segment Walk-in Segment Total
================ ========================= ======================= ===============================
9M20 9M19 Change 9M20 9M19 Change 9M20 9M19 Change
================ ======= ======= ======= ====== ====== ======= =========== ===== ===========
Revenue
(EGP mn) 921 968 -5% 749 681 10% 1,670 1,649 1%
% of Revenue 55% 59% 45% 41% 100% 100%
Patients ('000) 3,261 4,025 -19% 1,531 1,562 -2% 4,792 5,587 -14%
% of Patients 68% 72% 32% 28% 100% 100%
Revenue per
Patient
(EGP) 282 240 17% 489 436 12% 348 295 18%
Tests ('000) 13,780 17,780 -22% 4,984 5,298 -6% 18,765 23,078 -19%
% of Tests 73% 77% 27% 23% 100% 100%
Revenue per
Test
(EGP) 67 54 23% 150 129 17% 89 71 25%
Test per
Patient 4.2 4.4 -4% 3.3 3.4 -4% 3.9 4.1 -5%
---------------- ------- ------- ------- ------ ------ ------- ------- --------- -----------
KPIs Adjusted for the Campaign and Reclassifications*
-----------------------------------------------------------------------------------------------------
Revenue
(EGP mn) 921 848 9% 749 754 -1% 1,670 1,602 4%
% of Revenue 55% 53% 45% 47% 100% 100%
Tests 13,780 14,636 -6% 4,984 6,000 -17% 18,765 20,635 -9%
% of Tests 73% 71% 27% 29% 100% 100%
Revenue per
Test
(EGP) 67 58 15% 150 126 20% 89 78 15%
* Adjustments related to the 100 Million Healthy Lives campaign include
subtracting 224 thousand patients, 2.4 million tests and revenue of EGP
47 million for the 9M 2019 contract segment's KPIs. Additionally, reclassification
adjustments include the transfer of 702 thousand tests in 9M 2019 and
associated revenue of EGP 73 million from the contact segment to walk-ins.
Revenue Analysis: Contribution by Geography
Egypt
Revenue from Egypt came in largely flat in 9M 2020 at EGP 1,407 million.
Controlling for the high base effect due to the campaign in 9M 2019 ,
revenue from Egypt would have increased by 3% year-on-year in 9M 2020
supported by the ramp up of IDH's home call service and increased demand
for Covid-19-related testing, which helped offset a decline in branch
traffic earlier in the year. The performance was supported by a 21% year-on-year
rise in revenue during 3Q 2020.
In 9M 2020, IDH's house call service contributed to 20% of Egypt's revenues
versus just 10% in 9M 2019, while Covid-19-related testing made up around
13% of the country's revenue. Egypt's revenues were further supported
by contributions from Al-Borg Scan, IDH radiology venture, which generated
revenue of EGP 16 million in 9M 2020, up 62% year-on-year. Al Borg Scan's
two branches served 24 thousand patients in the first nine months of
the year, up 76% year-on-year, and performed more than 30 thousand tests
during the period, up 69% versus 9M 2019.
IDH served 4.3 million patients in Egypt and performed 17.0 million tests,
down by 16% and 20% year-on-year, respectively. When controlling for
the campaign, patients served and test performed in 9M 2020 would have
declined 12% and 10% year-on-year, respectively. During 3Q 2020, the
Group recorded a 42% and 46% quarter-on-quarter increase in patients
served and tests performed versus 2Q 2020, respectively. The recovery
in patients served and test performed witnessed since June has been supported
by the progressive lifting of restrictive measure and the subsequent
normalisation in activity across the country, combined with the ramp
up of the Group's house call services and Covid-19-related tests offering.
Jordan
In Jordan, revenue recorded EGP 218 million in 9M 2020, up 13% versus
the same period of last year and contributing to 13% of total consolidated
revenue for the period. In JOD terms, revenue expanded 21% year-on-year
in 9M 2020 as restrictive measures were progressively lifted and all
branches returned to normal operating hours starting in May of this year.
IDH's Jordanian operations recorded a 47% year-on-year revenue expansion
in JOD terms for 3Q 2020 as patients served increased 47% versus 3Q 2019.
Biolab has been administering PCR testing for Covid-19 in Jordan since
the onset of the outbreak, with Covid-19-related tests making up around
24% of total revenues generated by the Group's operations in Jordan in
the nine months to 30 September 2020.
Nigeria
At the Group's Nigerian subsidiary, revenue increased 18% year-on-year
to EGP 25 million in 9M 2020. Year-on-year revenue growth in local currency
terms came in at 39% for 9M 2020, supported by growing volumes as IDH
continues to leverage increased brand awareness and demand for its services.
In 9M 2020, patients served and tests performed were up 24% and 26% year-on-year,
respectively. This is especially impressive in light of the Covid-19-related
disruptions experienced earlier in the year, including a complete lockdown
and limited traffic as people adhered to shelter-in-place orders. In
3Q 2020, revenues in NGN terms witnessed a 58% increase versus 3Q 2019.
Sudan
The Group's Sudanese operations recorded a 17% year-on-year fall in revenue
to EGP 21 million in 9M 2020 largely due to SDG devaluation. However,
in SDG terms, revenue reported a 2% year-on-year rise in 9M 2020 despite
a 26% year-on-year decline in patients served during the period. During
the third quarter of 2020, government-imposed restrictions were progressively
lifted, with all 21 branches allowed to reopen in late July of this year.
This saw revenues in SDG terms expand 8% year-on-year in 3Q 2020, versus
the 61% year-on-year contraction recorded in 2Q 2020.
Revenue Contribution by Country 9M 2020 9M 2019 Change
====================== ======== ======== =======
Egypt Revenue (EGP
mn) 1,407 1,410 N/A
Egypt Contribution 84.2% 85.5%
====================== ======== ======== =======
Jordan Revenue (EGP
mn) 218 193 13%
Jordan Revenue (JOD
mn) 9.8 8.1 21%
Jordan Contribution 13.0% 11.7%
====================== ======== ======== =======
Nigeria Revenue (EGP
mn) 25 21 18%
Nigeria Revenue (NGN
mn) 620 446 39%
Nigeria Contribution 1.5% 1.3%
Sudan Revenue (EGP
mn) 21 25 -17%
Sudan Revenue (SDG
mn) 69 68 2%
Sudan Contribution 1.2% 1.5%
====================== ======== ======== =======
---
Branches by Country 30 September 2020 31 December 2019 Change
================ ================== ================= =============
Egypt 419 399 20
================ ================== ================= =============
Jordan 19 19 -
================ ================== ================= =============
Nigeria 12 13 -1
================ ================== ================= =============
Sudan 21 21 -
================ ================== ================= =============
Total Branches 471 452 19
================ ================== ================= =============
Cost of Goods Sold
IDH's cost of goods sold declined 2% year-on-year to EGP 840 million
in 9M 2020. Consequently, IDH's gross profit expanded 5% year-on-year
to EGP 830 million in 9M 2020, with an associated margin of 50% versus
48% in the same period a year ago.
COGS Breakdown as a Percentage of Revenue 9M 2020 9M 2019
============================= ======== ========
Raw Materials 16.4% 18.5%
============================= ======== ========
Wages & Salaries 16.0% 17.7%
============================= ======== ========
Depreciation & Amortisation 7.1% 6.1%
============================= ======== ========
Other Expenses 10.8% 9.6%
============================= ======== ========
Total 50.3% 51.9%
============================= ======== ========
Raw material costs decreased 10% year-on-year to EGP 273 million in 9M
2020, reflecting a one-off discount granted by suppliers earlier in the
year. Raw material outlays as a percentage of sales declined to 16.4%
in 9M 2020 from last year's 18.5%, partially due to the impact of the
campaign on IDH's revenue per test during the comparable period of last
year. Raw material costs made up the largest share of total consolidated
COGS during the period at 32.5%.
Direct salaries and wages made up the second largest share of total COGS
in 9M 2020 at 31.8%, having declined 9% year-on-year to reach EGP 267
million for the period. Salaries and wages also declined as a percentage
of sales to 16.0% in the nine months to 30 September 2020 versus 17.7%
in the same period of 2019. The decline came on the back of the previous
recognition of EGP 20 million in profit shares during the comparable
period of 2019, and lower salaries in Nigeria following the restructuring
that took place during the second half of 2019. Additionally, IDH incurred
lower bonuses, incentive, and overtime payments during the curfew periods.
Direct depreciation and amortisation was up 18% year-on-year in 9M 2020
to EGP 119 million, largely due to a rise in depreciation following the
addition of new equipment at Al Borg-Scan and Nigeria, as well as the
incremental amortisation of additional branches (IFRS 16 right-of-use
assets). Direct depreciation and amortization as a percentage of revenues
increased to 7.1% in the first nine months of the year from 6.1% in 9M
2019.
EBITDA
IDH's consolidated EBITDA expanded 4% year-on-year to EGP 710 million
in 9M 2020, with an associated margin of 43% versus 42% in 9M 2019. EBITDA
growth was supported by stronger gross profit which offset higher SG&A
outlays for the period and a doubtful accounts provision of EGP 35 million
for elongated cash collection cycles booked in 9M 2020. It is important
to note that in 3Q 2020, IDH booked EGP 7 million in provisions compared
to the EGP 28 million booked in the first six months of the year, testament
to the steady normalisation in the Group's collection rates. In the third
quarter of the year, IDH recorded a 40% year-on-year expansion in EBITDA
to EGP 343 million, with an associated margin of 48% versus 42% in the
same quarter of 2019.
In Egypt, EBITDA recorded EGP 636 million in 9M 2020, flat versus the
same nine-month period of 2019. EBITDA margin stood unchanged at 45%
in 9M 2020 as lower salary expenses for the period and strong 3Q 2020
revenues offset the aforementioned doubtful accounts provision and the
impact of Covid-19 on the country's operations earlier in the year.
IDH's Jordanian operations recorded a 10% year-on-year rise in EBITDA
to EGP 77 million in 9M 2020, as operations in the country continued
to recover following the Covid-19-related disruptions earlier in the
year. In local currency terms, EBITDA grew 18% year-on-year during the
period. EBITDA margin recorded 35% in 9M 2020 versus 36% in the same
period of 2019.
In Nigeria, EBITDA losses continued to narrow to EGP 4 million in 9M
2020 from the negative EGP 26 million recorded in 9M 2019. Decreased
losses came on the back of an 18% year-on-year rise in revenues (39%
in NGN terms) and an 30% year-on-year decrease in salary expenses during
the period.
It is worth highlighting that IDH's Nigerian operations posted a positive
EBITDA during 3Q 2020 on the back of a solid ramp up in sales during
the period.
Finally, Sudan's EBITDA recorded EGP 1 million in 9M 2020, down 76% year-on-year
with an EBITDA margin of 6% compared to 22% in the same period of last
year. EBITDA was impacted by branch closures on account of Covid-19,
with most branches in the country only allowed to reopen in late July
of this year.
Regional EBITDA in Local Currency mn 9M 2020 9M 2019 Change
----------------- -------- -------- -------
Egypt EGP 636 636 -
Jordan JOD 3.5 2.9 18%
Nigeria NGN (94) (545) -83%
Sudan SDG 4 15 -70%
Interest Income / Expense
IDH recorded interest income of EGP 44 million in 9M 2020, up 55% year-on-year.
Interest income increased due to higher cash balances as the Group had
postponed to September 2020 the distribution of USD 28 million (EGP 451
million) in dividends for FY 2019.
Interest expense recorded EGP 53 million in 9M 2020 versus EGP 49 million
in the same period of 2019. The increase in interest expenses is due
to higher interest of right-of-use assets following the addition of new
branches. This offset the decrease in interest expenses on borrowings
which benefitted from the lower interest rate environment following a
cumulative 350 basis point cut in interest rates by the CBE between January
and September 2020.
Interest Expense Breakdown 9M 2020 9M 2019 Change
============================ ======== ======== =======
Interest of 'Right-of-Use'
Assets (IFRS 16) 38.4 25.6 50%
============================ ======== ======== =======
Interest Expenses on
Borrowings(6) 11.8 16.0 -26%
============================ ======== ======== =======
Interest Expenses on
Leases 3.0 6.9 -57%
============================ ======== ======== =======
Total Interest Expense 53.1 48.5 10%
============================ ======== ======== =======
(6) Related to medium-terms loans for the Al Borg Scan expansion (EGP
4.5 million) and the Group's new headquarters in Cairo's Smart Village
(EGP 5.3 million).
Foreign Exchange
IDH recorded a net foreign exchange loss of EGP 10 million in 9M 2020
compared to EGP 13 million in the comparable period of 2019. The figure
is primarily related to FX losses on the back of the SDG devaluation
versus the EGP.
Taxation
Tax expenses recorded in the first nine months of the year were EGP 182
million compared to EGP 180 million in 9M 2019. The effective tax rate
stood unchanged at 33% in 9M 2020. There is no tax payable for IDH's
two companies at the holding level, while tax was paid on profits generated
by operating subsidiaries.
Net Profit
IDH's consolidated net profit was EGP 375 million in 9M 2020, up 4% year-on-year
as revenue growth for the period trickled down to the Group's bottom-line.
Net profit margin stood at 22% in 9M 2020, remaining stable from the
same period of last year.
Balance Sheet
On the assets side of the balance sheet, IDH held gross property, plant
and equipment (PPE) of EGP 1,232 million as at 30 September 2020, an
increase from EGP 1,181 million as at 31 December 2019. The increase
reflects regular CAPEX outlays during the period.
Accounts receivable recorded EGP 284 million as at 30 September 2020
compared to EGP 261 million at year-end 2019. Accounts receivables' Days
on Hand (DOH) stood at 147 days, versus 129 days as at 31 December 2019
due to lower collection in 2Q 2020 following the imposition of Covid-19-related
measures. It should be noted that accounts receivables DOH is calculated
based on credit revenues amounting to EGP 529 million in 9M 2020, representing
57% of contract revenues for the period.
The Group's Days Inventory Outstanding (DIO) increased to 97 days as
at 30 September 2020, up from 82 days as at 31 December 2019. The increase
follows the Group's strategy of increasing its inventory coverage period
to mitigate for potential supply disruptions due to Covid-19. More specifically,
during the period, IDH significantly increased its stock of PCR test
kits in anticipation of a rise in demand for PCR tests in the coming
months. However, this is down from the 130 days recorded as at the end
of the second quarter of 2020, reflecting a gradual normalisation in
the Group's inventory turnover cycle.
IDH's cash balances decreased to EGP 465 million as at 30 September 2020
compared to EGP 631 million as at 31 December 2019, reflecting the distribution
of EGP 451 million in dividends for FY 2019 paid in September 2020. As
at 30 September 2020, IDH recorded a net cash position(7) amounting to
EGP 304 million.
On the liabilities side, accounts payable stood at EGP 141 million at
30 September 2020 versus EGP 145 million at year-end 2019. The Group's
days payable outstanding (DPO) stood at 151 days compared to 141 days
at 31 December 2019.
(7) Net debt is calculated as cash and cash equivalent balances less
interest-bearing debt (medium term loans) and finance lease. Please note
that the net debt calculation excludes liabilities due to IFRS 16).
- Ends --
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