TIDMIDHC
RNS Number : 0374Z
Integrated Diagnostics Holdings PLC
15 May 2019
Integrated Diagnostics Holdings Plc
1Q2019 Results Update
Wednesday, 15 May 2019
Integrated Diagnostics Holdings Plc records strong revenue
growth and robust profitability in the first quarter of 2019
(London) Integrated Diagnostics Holdings ("IDH," "the Group," or
"the Company"), a leading consumer healthcare company with
operations in Egypt, Jordan, Sudan and Nigeria, released today
unaudited highlights of its financial and operational performance
in the first quarter of 2019(1) , reporting unaudited net profit of
EGP 122 million on total unaudited revenues of EGP 546 million.
Results
1Q2019 1Q2018 change
===================== ======= ======== ========
Revenues 546 446 22%
--------------------- ------- -------- --------
Cost of Sales 281 229 23%
--------------------- ------- -------- --------
Gross Profit 265 217 22%
--------------------- ------- -------- --------
Gross Profit Margin 49% 49% -
--------------------- ------- -------- --------
Operating Profit 197 150 32%
--------------------- ------- -------- --------
EBITDA(2) 236 167 42%
--------------------- ------- -------- --------
EBITDA Margin 43% 37% 6 pts
--------------------- ------- -------- --------
Net Profit 122 110 11%
--------------------- ------- -------- --------
Net Profit Margin 22% 25% (3 pts)
--------------------- ------- -------- --------
Cash Balance 763 664 15%
--------------------- ------- -------- --------
(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 is calculated as operating profit plus depreciation
and amortization.
Financial Highlights
-- Revenue grew 22% to EGP 546 million in 1Q2019 on account of
higher patient and test volumes. Egypt delivered a strong 27%
increase in revenue which helped compensate for slower growth in
Jordan on account of economic challenges and contraction in Sudan
due to the political unrest and currency devaluation.
-- Gross profit in 1Q2019 recorded EGP 265 million, up 22% y-o-y
in line with revenue growth. Gross profit margin remained stable at
49%.
-- Operating profit recorded a 32% y-o-y increase to EGP 197 million in 1Q2019.
-- EBITDA was up a strong 42% y-o-y to EGP 236 million in
1Q2019, supported by revenue growth, lower SG&A expenses as
well as the effect of adopting IFRS 16 on operating leases and the
reclassification of related rent expenses. Normalising for the IFRS
16 effect, EBITDA records EGP 222 million in 1Q2019, up 33% and
with a four percentage-point expansion in EBITDA margin to 41%.
-- Net profit recorded EGP 122 million in 1Q2019, up 11%
year-on-year and with a 22% margin versus 25% in 1Q2018.
Normalising for the effect of IFRS 16, net profit records EGP 134
million in 1Q2019, up 22% year-on-year and with a stable margin at
25%.
-- Net cash flow from operating activities of EGP 179 million in
1Q2019 up from EGP 105 million last year, reflecting a strong
cash-generating ability and indicating the non-cash nature of IFRS
16 related reclassifications.
Operational Highlights
-- IDH opened 27 branches and closed four non-performing
branches taking network to 421 branches as of 31 March 2019
compared to 398 branches in 1Q2018.
-- Total patients served increased 18% year-on-year to 2.0
million in 1Q2019, while total tests recorded 8.4 million, up 28%
over 1Q2018.
-- Contract test volumes were supported by the nation-wide 100
million Healthy Lives awareness campaign in Egypt, which
contributed c.1.63 million tests.
-- Average revenue per test inched down 4% year-on-year in
1Q2019 as volume growth was skewed toward the contract segment.
Excluding tests related to the 100 million Healthy Lives campaign,
average revenue per test increased 12% year-on-year. Meanwhile
IDH's average revenue per patient was up 4% during the quarter.
-- IDH's average test per patient increased 9% year-on-year
while average cost per test declined 4% in 1Q2019 on account of
higher volumes and favourable economies of scale.
-- Continued operational progress with Nigeria expansion with
existing branches being refurbished and renovated.
-- Good momentum with radiology unit, Al-Borg Scan as operations ramped up.
Commenting on the Group's performance for the first quarter, IDH
Chief Executive Officer Dr. Hend El-Sherbini said:
"Our Group's performance in the first quarter of the year builds
on our track record of delivering strong and consistent results
year-on-year and is in line with our performance targets for 2019.
IDH delivered a 22% increase in revenue and was successful in
maintaining strong profitability in the quarter, with our gross
profit margin remaining stable at 49% despite growth being skewed
toward the typically lower-margin contract segment. This was
supported by the key fact that our business in fundamentally about
COGS and economies of scale, with higher volumes awarding us cost
advantages as reflected in our declining average cost per
test."
"I am particularly pleased with IDH's role in the 100 million
Healthy Lives awareness campaign, where the strength of our brands
and breadth of our branch network has allowed us to actively
participate in this nation-wide effort to eradicate Hepatitis C.
While the mass nature of these types of initiatives apply downward
pressure on average test pricing, they are ultimately a net
positive for our business. In an under-served market with a
relatively low test per patient ratio, government initiatives like
this will increase awareness and directly benefit our business as
people become more proactive and adopt a preventative approach to
healthcare with regular testing."
"I also am glad to report that IDH's new radiology venture with
Al-Borg Scan in Egypt is already delivering positive results and
contributing to the Group's growth and profitability. Our target
for the year will see us ramp up operations with additional branch
openings planned for 2019. Meanwhile in Nigeria, our value-building
phase is progressing well, with branch renovations and
refurbishment well underway. In Sudan, management has taken
concrete steps to mitigate the ongoing unrest and currency
devaluation, adopting a strategy of capacity optimisation and cost
control, including replacing expatriate staff with local hires,
which has delivered expanded profitability despite downward
pressure on revenue."
"Almost halfway into the year, I remain confident in our ability
to meet our growth targets and thus reiterate our guidance for
annual revenue growth of over 20% and an EBITDA margin of c. 40% at
our established businesses."
About Integrated Diagnostics Holdings (IDH)
IDH is a leading consumer healthcare company in the Middle East
and Africa with operations in Egypt, Jordan, Sudan and Nigeria. The
Group's core brands include Al Borg and Al Mokhtabar in Egypt, as
well as Biolab (Jordan), Ultralab and Al Mokhtabar Sudan (both in
Sudan) and Echo-Scan (Nigeria). A long track record for quality and
safety has earned the Company a trusted reputation, as well as
internationally recognised accreditations for its portfolio of over
1,400 diagnostics tests. From its base of 421 branches as of 31
March 2019, 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
Mr. Sherif El-Ghamrawi
Investor Relations Director
T: +20 (0)2 3345 5530 | M: +20 (0)10 0447 8699 |
sherif.elghamrawi@idhcorp.com
Hudson Sandler (International media relations)
Dan de Belder
Bertie Berger
T: +44 (0) 207 7964133 | idh@hudsonsandler.com
Forward-Looking Statements
These Year-End Results have been prepared solely to provide
additional information to shareholders to assess the group's
performance in relation to its operations and growth potential.
These Year-End Results should not be relied upon by any other party
or for any other reason. This communication contains certain
forward-looking statements. A forward-looking statement is any
statement that does not relate to historical facts and events, and
can be identified by the use of such words and phrases as
"according to estimates", "aims", "anticipates", "assumes",
"believes", "could", "estimates", "expects", "forecasts",
"intends", "is of the opinion", "may", "plans", "potential",
"predicts", "projects", "should", "to the knowledge of", "will",
"would" or, in each case their negatives or other similar
expressions, which are intended to identify a statement as
forward-looking. This applies, in particular, to statements
containing information on future financial results, plans, or
expectations regarding business and management, future growth or
profitability and general economic and regulatory conditions and
other matters affecting the Group.
Forward-looking statements reflect the current views of the
Group's management ("Management") on future events, which are based
on the assumptions of the Management and involve known and unknown
risks, uncertainties and other factors that may cause the Group's
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by these forward-looking statements. The
occurrence or non-occurrence of an assumption could cause the
Group's actual financial condition and results of operations to
differ materially from, or fail to meet expectations expressed or
implied by, such forward-looking statements.
The Group's business is subject to a number of risks and
uncertainties that could also cause a forward-looking statement,
estimate or prediction to differ materially from those expressed or
implied by the forward-looking statements contained in this
communication. The information, opinions and forward-looking
statements contained in this communication speak only as at its
date and are subject to change without notice. The Group does not
undertake any obligation to review, update, confirm or to release
publicly any revisions to any forward-looking statements to reflect
events that occur or circumstances that arise in relation to the
content of this communication.
Operational & Financial Review
IDH recorded revenue growth of 22% year-on-year in 1Q2019 driven
by higher patient and test volumes primarily by the Group's
contract segment. Revenue growth was particularly robust in IDH's
home market of Egypt, which recorded a 27% year-on-year growth in
revenue driven by the Group's core pathology business and further
supported state-sponsored 100 million Healthy Lives awareness
campaign. IDH's strong brands and extensive branch network allowed
the Group to play a key role in awareness campaign, which delivered
21% of total tests performed in Egypt and contributed c.31% to
Egypt's revenue growth in the quarter. Egypt's performance was
further buoyed by the ramp up of operations at the new Al Borg Scan
branch - the Group's radiology unit - which contributed c.3% to
Egypt's total revenue growth in 1Q2019.
Egypt's outperformance during the quarter helped offset slower
contributions from other geographies that were weighed down by
economic challenges and political unrest. In Jordan, austerity
measures implemented by the government took a toll on consumer
confidence leading to a modest 3% year-on-year increase in Biolab's
revenue in 1Q2019. Nonetheless, operations in Jordan benefitted
from increased efficiencies, recording a 14% increase in gross
profit and a more than twofold increase in bottom-line. In Sudan,
political unrest and currency devaluation led to 26% year-on-year
revenue decline in EGP terms. It is worth noting, however, that
despite the ongoing protests across several Sudanese cities, the
Group's on-the-ground performance recorded a 39% year-on-year
growth in SDG terms. Finally, with Nigeria's operation still
undergoing restructuring, including branch renovations and
upgrades, revenue declined 8% year-on-year in 1Q2019. However the
Board remains confident in this acquisition and market
potential.
Revenue Growth Drivers by Geography
1Q2019 1Q2018
========= ======= =======
Egypt 23% 25%
========= ======= =======
Jordan 0.4% 2%
========= ======= =======
Sudan (1%) (0.6%)
========= ======= =======
Nigeria (0.2%) 2.5%
========= ======= =======
Total 22% 29%
========= ======= =======
In terms of volume and pricing, the 100 million Healthy Lives
awareness campaign helped drive a 40% year-on-year increase in
IDH's total contract tests, and contributed c.19% to total test
volumes. The lower-priced nature of the campaign and Egypt's large
contribution to consolidated revenues weighed down on average price
per test which decreased 4% year-on-year, leaving IDH's revenue
growth during the quarter to be entirely volume-driven. Excluding
the campaign's effect, average revenue per test increased 12%
year-on-year.
Revenue Growth Drivers
1Q2019 1Q2018
============================== ======= =======
Volume 28% 8%
============================== ======= =======
Price & Mix (5%) 23%
============================== ======= =======
Foreign Currency Translation (1%) (2%)
============================== ======= =======
Total 22% 29%
============================== ======= =======
Despite the negative contribution from pricing and mix to
revenue growth in 1Q2019, management was successful in maintaining
profitability thanks to increased operational efficiency and
cost-control initiatives. IDH's scale-driven cost savings led to an
overall decline in average cost per test, which offset the lower
average pricing per test and delivered a gross profit performance
that mirrored revenues with a 22% year-on-year increase and a
stable gross profit margin at 49%. Furthermore, the decline in
SG&A expenses as a percentage of revenues helped drive a 33%
year-on-year increase in normalised EBITDA (excluding 1Q2019 gains
related to IFRS 16 implementation) and a four percentage-point
expansion in normalised EBITDA margin to 41%. EBITDA growth was
also supported by a positive contribution from Sudan following the
reduction in salaries as the Group implements its staff
localisation programme, and is also in excess of a negative EBITDA
contribution from Nigeria which is still in the value-building
phase.
On the operational front, IDH expanded its geographic footprint
to operate a network of 421 branches as of 31 March 2019, up 6%
year-on-year compared to the 398 branches operated at close of the
same quarter last year. The Group's expansion drive is supported by
its state-of-the-art Mega Lab which allows IDH to deploy its Hub,
Spoke and Spike business model in Egypt to roll out
capital-efficient "C" labs more rapidly. Branch additions included
26 labs in Egypt and one in Jordan while Sudan witnessed the
closure of four branches non-performing branches.
Branches by Country
31 March 2019 31 March 2018 Change
================ ============== ============== ==============
Egypt 370 344 8%
================ ============== ============== ==============
Jordan 19 18 6%
================ ============== ============== ==============
Sudan 22 26 (15%)
================ ============== ============== ==============
Nigeria 10 10 -
================ ============== ============== ==============
Total Branches 421 398 6%
================ ============== ============== ==============
Our Customers
IDH serves two principal types of clients: contract (corporate),
including institutions such as unions, private insurance companies
and corporations who enter into one-year renewable contracts at
agreed rates per-test and on a per-client basis, and walk-in
(individuals). Within each of these categories, the Group also
offers a house call service, and within the contract segment, a
lab-to-lab service.
Total patients served reached 2.0 million clients between both
segments, up 18% y-o-y, while total test performed were 8.4 million
in 1Q2019, up 28% year-on-year.
The ratio of contract to walk-in patients during 1Q2019 was
78:22 compared with 72:28 in 1Q2018, reflecting the accelerated
growth in contract volumes during the quarter driven by the 100
million Healthy Lives awareness campaign in Egypt. The ratio is
also in line with the general market-wide shift in patient mix in
recent years and is a natural consequence of market dynamics in
Egypt, as companies are extending additional benefits to their
staffs. The trend has been encouraged by continued high inflation,
which is eroding consumer spending power and thus putting
incremental pressure on corporations to provide either health
insurance or corporate plans.
Key Performance Indicators
1Q2019 1Q2018 % change
===================== ============================= ============================= ===========================
Walk-In Contract Total Walk-In Contract Total Walk-In Contract Total
===================== ======== ========= ======== ======== ========= ======== ======== ========= ======
Revenue (EGP
'000) 198,930 347,157 546,087 178,733 267,400 446,133 11% 30% 22%
% of Revenue 36% 64% 100% 40% 60% 100%
Patients ('000) 441 1,546 1,986 475 1,213 1,688 -7% 27% 18%
% of Patients 22% 78% 100% 28% 72% 100%
Revenue per Patient
(EGP) 451 225 275 376 220 264 20% 2% 4%
Tests ('000) 1,447 6,982 8,430 1,596 4,983 6,579 -9% 40% 28%
% of Tests 17% 83% 100% 24% 76% 100%
Revenue per Test
(EGP) 137 50 65 112 54 68 23% -7% -4%
Test per Patient 3.3 4.5 4.2 3.4 4.1 3.9 -2% 10% 9%
Revenue Analysis: Contribution by Patient Segment
In 1Q2019, contract clients represented 64% of IDH's total
revenues compared to 60% last year. Total revenue from the segment
was up 30% year-on-year to EGP 347 million, driven entirely by
higher patient and test volumes. In 1Q2019, IDH served 1.5 million
contract patients contracts (+27%) and performed 7.0 million
contract tests (+40%). Contract volumes were buoyed by the 100
million Healthy Lives campaign. The state-sponsored campaign was
launched by the Egyptian President with the goal of eliminating
Hepatitis C in Egypt by the end of 2019. The campaign kicked off in
November 2018 and is expected to run through to the end of May
2019, and has contributed c.9% of total contract revenues for the
1Q2019 and c.23% (1.6 million) of total contract tests.
Average revenue per contract test in the contract segment was
down 7% year-on-year to EGP 50, while average revenue per contract
patient increased 2% in 1Q2019 to EGP 225. It is worth noting that
the decline in average revenue per test was due to the increased
volumes generated from the awareness campaign, where the price per
test is set at lower levels due to the mass nature of the campaign.
Nonetheless, the strong volume-driven growth at the segment saw it
contribute over 79% to IDH's consolidated revenue growth for the
quarter.
Meanwhile, revenues from IDH's walk-in segment contributed 36%
to IDH's total revenues in 1Q2019 compared to 40% last year. Total
segment revenues were up 11% year-on-year to EGP 199 million in
1Q2019, with growth being price-driven as patient and test volumes
were weighed down by a slow performance in Sudan on account of the
ongoing protest in several cities. Walk-in clients totalled 441
thousand in 1Q2019, down 7% year-on-year, while walk-in tests
numbered 1.4 million during the quarter, down 9% versus 1Q2018.
Slower volumes in the walk-in segment were offset by better
pricing and mix as the Group was successful in passing-on price
increases to consumers who have increasingly adapted to new price
levels following the late 2016 devaluation of the Egyptian pound.
IDH's average revenue per walk-in test which increased 23%
year-on-year to EGP 137 1Q2019, while average revenue per walk-in
patient which increased 20% to EGP 451 during the same period.
Overall the walk-in segment contributed c.21% to IDH's consolidated
revenue growth in 1Q2019.
The Group's blended average revenue per test was down 4%
year-on-year to EGP 65 in 1Q2019, however, factoring out the tests
under the 100 million Healthy Lives awareness campaign, average
revenue per test would have increased 12% year-on-year to EGP 76.
On the other hand, IDH's blended average revenue per patients was
up 4% year-on-year to EGP 275. Management expects these key metrics
to normalise once the effect of the campaign phases out, with the
Group's in-house efforts such as targeting the walk-in segment with
tactical marketing campaigns providing additional pricing
support.
Revenue Analysis: Contribution by Geography
On a geographic basis, Egypt contributed 86% of total revenues
in 1Q2019 (1Q2018: 83%), followed by Jordan at 11% (1Q2018: 13%),
Sudan at 1.5% (1Q2018: 2.4%) and finally Nigeria which contributed
1.4% to total revenues (1Q2018: 1.9%).
IDH's home market of Egypt recorded revenue growth of 27%
year-on-year to EGP 471 million in 1Q2019, with growth being driven
by both the contract and walk-in segments. IDH served a total of
1.9 million patients in Egypt during the quarter and performed a
total of 7.9 million tests. On a segment basis, contract patients
in Egypt reached 1.5 million in 1Q2019 who received 6.6 million
tests (including 1.6 million tests related to the 100 million
Healthy Lives awareness campaign). The contract segment in Egypt
recorded revenues of EGP 317 million in 1Q2019, up 32%
year-on-year. Meanwhile, walk-in patient volumes were up 1%
year-on-year to 388 thousand in 1Q2019 and received a total of 1.2
million tests, remaining largely flat versus 1Q2018. Walk-in
segment revenues in Egypt were EGP 154 million in 1Q2019, up 18% on
account of better pricing and mix.
Revenues from the Group's operations in Jordan recorded EGP 59
million in 1Q2019, up 3% year-on-year. Growth comes despite the
economic challenges and austerity measures such as the increase in
salaries tax by 5-7%, which took a toll on consumers' purchasing
power, particularly the middle class. Nonetheless, the Group's
Jordanian subsidiary Biolab delivered a strong operational
performance, with total number of patients climbing 5% year-on-year
to 69 thousand in 1Q2019 and total tests performed rising 2% to 408
thousand during the same period.
In Sudan, results continue to be affected by the effect of the
Sudanese pound's devaluation between the comparable periods, with
revenue recording a 26% year-on-year decline to EGP 8.0 million in
1Q2019. In SDG terms, revenues were up 39% in 1Q2019 despite lower
patient and test volumes due to the ongoing political unrest and
protests across several cities. Growth in SGD terms was primarily
driven by price increases in the walk-in segment as the Group
passes on increases in step with currency devaluation.
In Nigeria, revenues recorded EGP 7.8 million in 1Q2019, down 8%
year-on-year. Nigeria's value-adding phase is progressing, with
existing branches being refurbished and renovated as well as
rolling out new branches and procuring new state-of-art pathology
and radiology equipment.
Cost of Sales
IDH's cost of sales recorded EGP 281 million in 1Q2019, up 23%
year-on-year and remaining largely stable as a percentage of
revenues. Gross profit for the Group was up 22% to EGP 265 million
in 1Q2019, with gross profit margin maintained at 49% during the
quarter.
COGS Breakdown as a Percentage of Revenue
1Q2019 1Q2018
================== ======= =======
Raw Materials 20.2% 20.1%
================== ======= =======
Wages & Salaries 15.5% 16.9%
================== ======= =======
Depreciation 6.8% 3.4%
================== ======= =======
Other Expenses 8.9% 11.0%
================== ======= =======
Total 51.4% 51.3%
================== ======= =======
Raw materials costs, including cost of tests sent abroad,
recorded EGP 111 million in 1Q2019, up 23% year-on-year and
constituting the largest share of COGS at 39%. This translates into
an average raw material cost per test of EGP 13.1, down 4%
year-on-year despite the prevailing double-digit inflation and the
lower contribution margin of tests related to the 100 million
Healthy Lives campaign. Total raw materials as a percentage of
sales remained largely stables at 20.2% in 1Q2019 compared to 20.1%
in 1Q2019. Factoring out the effect of the campaign tests, raw
materials as a percentage of sales would have declined to 18.9% in
1Q2019, reflecting management's efficiency and cost-reduction
initiatives.
Constituting the second-largest share of COGS, direct salaries
and wages were up 13% year-on-year to EGP 85 million in 1Q2019.
However, as a percentage of sales, direct salaries and wages
declined almost 1.5 percentage points to 15.5% in 1Q2019 down from
16.9% in the previous year. The decline comes on account of lower
salaries in Sudan as management implements its staff localisation
plan as well as the closure of non-performing branches in the
country.
Other expenses, including branch utilities recorded EGP 48
million in 1Q2019, remaining largely stable compared to the EGP 49
million, yet decreasing as a percentage of sales to 8.9% from 11.0%
in 1Q2018. The decline was driven by lower rent expenses from 3.3%
of sales to 0.3% in 1Q2019 reflecting the effect of implementing
IFRS 16. Meanwhile utilities expenses increased 19% year-on-year
driven by the increase in the number of branches as well as fuel
and energy price hikes in July 2018, however remained stable as a
percentage of sales.
Direct depreciation and amortisation more than doubled from EGP
15 million in 1Q2018 to EGP 37 million in 1Q2019 as the Group
capitalised leases amounting to EGP 268 million (gross) related to
the implementation of IFRS 16. Consequently, direct depreciation
and amortisation as a percentage of sales increased to 6.8% in
1Q2019 compared to 3.4% last year.
EBITDA
IDH recorded a consolidated EBITDA of EGP 236 million, up a
strong 42% year-on-year increase, while EBITDA margin expanded six
percentage points to 43%. The implementation of IFRS 16 contributed
21% to EBITDA growth for the period, where normalising for its
effect would leave EBITDA up 33% year-on-year to EGP 222 million
and with an EBITDA margin of 41% versus 37% in 1Q2018.
Operational EBITDA growth and margin expansion were driven by
strong gains in Egypt, which recorded an EBITDA margin of 48% in
1Q2019 compared to 44% in the previous year. Improvements in Egypt
were supported by cost efficiencies, with lower cost of specialised
testing sent abroad as the Group increasingly relies on its Mega
Lab, and a decrease in salaries as a percentage of sales. Jordan's
Biolab also recorded strong EBITDA gains on 117% year-on-year and
margin expansion to 28% (20% excluding IFRS16) compared to 13% in
1Q2018.
Meanwhile, Sudan generated a positive EBITDA of EGP 1.4 million
and an EBITDA margin of 18% (10% excluding IFRS 16) compared to a
negative 4% in 1Q2018. The improved performance is attributable to
the decrease in salaries as a percentage of sales from 50% in
1Q2018 to 38% in 1Q2019, driven by lower salaries paid in US$ to
expatriates as IDH pushes forward with its staff localisation
program in Sudan. Finally, Nigeria recorded a negative EBITDA of
EGP 8.4 million in 1Q2019, with operations still in the
value-building phase.
IFRS 16 Effect on Regional EBITDA
EBITDA Excluding Margin Rent Expense EBITDA Including Margin
IFRS 16 IFRS 16
============ ================= ======= ============= ================= =======
Egypt 217 46% 9 226 48%
============ ================= ======= ============= ================= =======
Jordan 12 20% 5 17 28%
============ ================= ======= ============= ================= =======
Sudan 0.8 10% 0.6 1.4 18%
============ ================= ======= ============= ================= =======
Nigeria(3) (8) - - (8) -
============ ================= ======= ============= ================= =======
Total 222 41% 15 236 43%
============ ================= ======= ============= ================= =======
(3) The effect of IFRS 16 on Nigeria's EBITDA will be assessed
in 2Q2019
Interest Income / Expense
IDH recorded interest income of EGP 15 million in 1Q2019, down
12% year-on-year compared to EGP 17 million in 1Q2018. Interest
income declined following the Central Bank of Egypt's rate cuts in
early 2019, along with the utilization of cash balances to purchase
USD 18 million during 1Q2019 to secure the dividends' payment in
June 2019.
Interest expense recorded EGP 20 million in 1Q2019 compared to
EGP 3 million in the first quarter of 2018. The substantial
increase was driven by the implementation of IFRS 16 which added
EGP 12 million to the quarter's interest expense. IDH also recorded
EGP 6 million in borrowing costs related to medium term loans for
the Al Borg Scan expansion and the Group's new headquarters in
Cairo's Smart Village.
Foreign Exchange
IDH recorded a net foreign exchange loss of EGP 11 million in
1Q2019 compared to EGP 9 million in 1Q2018. The figure is primarily
related to FX transactions related to secure liquidity for the June
2019 dividend distribution.
Taxation
Tax expenses recorded in 1Q2019 were EGP 60 million compared to
EGP 45 million in 1Q2018. The effective tax rate was 33% compared
to 29% last year, with the increase attributable to:
-- The adoption of IFRS 16 where any cost/expenses related to
this standard are not tax deductible.
-- Starting January 2019, the Jordanian corporate tax rate increased 1% to reach 21%.
There is no tax payable for IDH's two companies at the holding
level. Tax was paid on profits generated by operating companies in
Egypt and Jordan.
Net Profit
IDH's consolidated net profit recorded EGP 122 million in 1Q2019
up 11% y-o-y on the back of top-line and EBITDA growth. Net profit
normalized for the effect of IFRS 16 records EGP 134 million, up
22% year-on-year with a stable 25% net profit margin.
Net Effect of IFRS 16 on Net Profit
Depreciation Interest Rent Net Effect
======== ============= ========= ===== ===========
Egypt (7.7) (6.8) 9.3 (5.2)
======== ============= ========= ===== ===========
Jordan (4.9) (2.6) 4.6 (2.9)
======== ============= ========= ===== ===========
Sudan (2.3) (2.2) 0.6 (3.9)
======== ============= ========= ===== ===========
Total (14.9) (11.7) 14.6 (12.0)
======== ============= ========= ===== ===========
Balance Sheet
On the assets side of the balance sheet, IDH held gross
property, plant and equipment (PPE) of EGP 1,007 million as at 31
March 2019, up from EGP 983 million at 31 December 2018. The
increase reflects CAPEX outlays for the addition and renovation of
branches totalling EGP 33 million, including the new Al Borg Scan
branch, and reflects foreign currency translation adjustments of
EGP 9 million.
Accounts receivable recorded EGP 258 million as at 31 March 2019
compared to EGP 220 million at year-end 2018. Accounts receivable
days-on-hand (DOH) normalised back to 122 days following the
increase witnessed at year-end 2018 on account of the 100 Million
Healthy Lives Campaign. It is worth mentioning that the campaign's
receivables balance was EGP 49 million at the close of the quarter.
Excluding campaign-related receivables, DoH would decrease to 118
days.
The Group's "days inventory outstanding" decreased to 75 days at
the close of the quarter compared to 82 days as at 31 December
2018.
IDH's cash balances increased to EGP 762 million as at 31 March
2019 from EGP 664 million as at 31 December 2018, driven by the
increase in cash flow generated from operations.
On the liabilities side, accounts payable stood at EGP 186
million at 31 March 2019 versus EGP 158 million at year end 2018.
The Group's days payable outstanding (DPO) slightly decreased to
144 days from 145 days at 31 December 2018.
The adoption of IFRS 16 led to the addition of EGP 27 million in
short-term lease liabilities and EGP 223 million in long-term lease
liabilities as at 31 March 2019.
- Ends --
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFEAESLFLFNEAF
(END) Dow Jones Newswires
May 15, 2019 02:01 ET (06:01 GMT)
Integrated Diagnostics (LSE:IDHC)
Historical Stock Chart
From Apr 2024 to May 2024
Integrated Diagnostics (LSE:IDHC)
Historical Stock Chart
From May 2023 to May 2024