Integrated Diagnostics Holdings Plc

Q1 2022 Results

Wednesday, 8 June 2022

Integrated Diagnostics Holdings Plc kicks off 2022 delivering a strong first quarter in line with last year's performance, supported by sustained  growth in conventional business

(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or "the Company"), a leading consumer healthcare company with operations in Egypt, Jordan, Sudan and Nigeria, released today its reviewed financial statements and operational performance for the quarter ended 31 March 2022, recording revenue  of EGP 1,180 million, up 5% compared to the same three months of last year. The Group's top-line was supported by a sustained expansion in conventional revenues, which recorded EGP 640 million in Q1 2022, standing well above the Group's pre-Covid-19 levels. Net profit recorded EGP 314 million for the three-month period, down 8% from Q1 2021, with an associated margin of 27%, well above the Group's historical averages.

Financial Results (IFRS)

EGP mn	Q1 2021	Q1 2022	Change
Revenues	1,130	1,180	5%
Cost of Sales	(491)	(649)	32%
Gross Profit	638	532	-17%
Gross Profit Margin	57%	45%	-11 pts
Operating Profit	548	396	-28%
EBITDA1	600	468	-22%
EBITDA Margin	53%	40%	-13 pts
Net Profit	342	314	-8%
Net Profit Margin	30%	27%	-4 pts
Cash Balance	1,324	2,659	101%

Note (1): Throughout the 1Q 2022 Earnings release, percentage changes between reporting periods are calculated using the exact value (as reported in the Company's Consolidated Financials) and not the corresponding rounded figure.

 

Key Operational Indicators²

	Q1 2021	Q1 2022	change
Branches	483	520	37
Patients ('000)	2,359	2,649	12%
Revenue per Patient (EGP)	479	422	-12%
Tests ('000)	8,062	8,402	4%
Conventional Tests ('000)	6,781	7,148	5%
Revenue per Test (EGP)	140	133	-5%
Revenue per Conventional Test (EGP)	88	90	2%
Test per Patient	3.4	3.2	-7%

[1] EBITDA is calculated as operating profit plus depreciation and amortization.

2 Key operational indicators are calculated based on net sales for the quarter of EGP 1,117 million. More details on the difference between net sales and total revenues is available below.

Important Notice: Treatment of Revenue Sharing Agreements and Use of Alternative Performance Measures

As part of IDH's efforts to support local authorities in Egypt and Jordan in the fight against the pandemic, Biolab (IDH's Jordanian subsidiary) secured several revenue-sharing agreements to operate testing stations, primarily dedicated to PCR testing for Covid-19, in multiple locations across the country including Queen Alia International Airport (QAIA) and Aqaba Port. More specifically, Biolab's partnership with KHIA started in August 2020, followed by the company's agreement with Aqaba Port which kicked off in May 2021, and its partnership with QAIA which commenced in August 2021. It is worth noting that the decision by Jordanian authorities on 1 March 2022 to end mandatory testing led to a sharp decline in patient traffic at Biolab's testing booths.

Under these agreements, Biolab received the full revenue (gross sales) for each test performed and pays a proportion to QAIA (38% of gross sales excluding sales tax) and Aqaba Port (36% of gross sales) as concession fees to operate in the facilities, thus effectively earning the net of these amounts (net sales) for each test supplied. Starting in Q4 2021, the treatment of these agreements has been altered in accordance with IFRS 15 paragraph B34, which considers Biolab as a Principal (and not an Agent). Subsequently, revenues generated from these agreements are reported in the Consolidated Financial Statements as gross (inclusive of concession fees) and the fees paid to QAIA and Aqaba Port are reported as a separate line item in the direct cost.

In an effort to present an accurate picture of IDH's performance for the quarter, throughout the report management utilizes net sales of EGP 1,117 million for Q1 2022 (IFRS revenues stand at EGP 1,180 million for the quarter. Net sales for the quarter are calculated as total gross revenues excluding concession fees and sales taxes paid as part of Biolab's revenue sharing agreements with Queen Alia International Airport (QAIA) and Aqaba Port.

It is important to note that aside from revenue and cost of sales, all other figures related to gross profit, operating profit, EBITDA, and net profit are identical in the APM and IFRS calculations. However, the margins related to the aforementioned items differ between the two sets of performance indicators due to the use of Net Sales in the APM calculations and the use of Revenues for the IFRS calculations.

Adjustments Breakdown

EGP mn	Q1 2022
Net Sales	1,117
QAIA and Aqaba Port Concession Fees	63
Revenues (IFRS)	1,180
Cost of Net Sales	(586)
Adjustment for QAIA and Aqaba Port Agreements	(63)
Cost of Sales (IFRS)	(649)

 

 

Adjustments by Country

EGP mn	Q1 2022 (IFRS)	Q1 2022 (APM)
Egypt	879	879
Jordan	281	217
Sudan	6	6
Nigeria	15	15
Total	1,180	1,117

 

 

Financial Results (APM)

EGP mn	Q1 2021	Q1 2022	Change
Net Sales	1,130	1,117	-1%
Cost of Net Sales	(491)	(586)	19%
Gross Profit	638	532	-17%
Gross Profit Margin on Net Sales	57%	48%	-9 pts
Operating Profit	548	396	-28%
EBITDA3	600	468	-22%
EBITDA Margin on Net Sales	53%	42%	-11 pts
Net Profit	342	314	-8%
Net Profit Margin on Net Sales	30%	28%	-2 pts
Cash Balance	1,324	2,659	101%

 

 

3 EBITDA is calculated as operating profit plus depreciation and amortization.

 

Introduction

 

i.    Financial Highlights

·    Net Sales recorded EGP 1,117 million in the first quarter of 2022, just 1% below last year's figure, a particularly noteworthy result in light of the large contribution from Covid-19-related⁴ tests included in the first three months of 2021. Net sales for the period were supported by both IDH's conventional offering, which posted solid year-on-year growth in the quarter, and the Group's Covid-19-related  offering, which continued to make a robust contribution despite recording a year-on-year contraction in revenues. More specifically, IDH recorded a robust 8% year-on-year increase in net sales generated by its conventional offering, supported by a 5% increase in conventional tests performed versus last year. As such, conventional testing made up 57% of consolidated net sales for the quarter, up from 53% this time last year. Solid growth in conventional net sales almost fully offset an 11% year-on-year decline in Covid-19-related net sales, which contracted on the back of a significant decline in the average price of Covid-19-related testing (average price of PCR tests fell 51% year-on-year in Q1 2022). Subsequently, the Group's Covid-19-related offering made up just 43% of total net sales for the three-month period, versus 47% in Q1 2021.

 

·    Gross Profit recorded EGP 532 million in Q1 2022, down 17% year-on-year. Gross Profit Margin on net sales stood at 48%, in line with the Group's pre-Covid-19 performance, but nine percentage points below the margin recorded in Q1 2021. The contraction in gross profitability partially reflects a rise in raw materials as percentage of net sales following a significant fall in the average price of Covid-19-related tests (for example, the average PCR price was down 51% year-on-year). Lower gross profitability is also attributable to a year-on-year increase in direct salaries and wages during the three-month period related to additional staff employed at Aqaba Port's Covid-19-dedicated testing booths.

·    Operating Profit recorded EGP 396 million in Q1 2022, down 28% year-on-year. operating profit margin on net sales stood at 35% for the quarter, down from the 49% recorded this time last year.

·    EBITDA⁵ recorded EGP 468 million in Q1 2022, down 22% year-on-year and with an associated margin on net sales of 42% versus 53% in Q1 2021 and unchanged versus Q4 2021. Lower margins versus last year reflects relatively lower gross profitability combined with higher SG&A outlays for the period.

·    Net Profit recorded EGP 314 million in Q1 2022, down 8% year-on-year. Net profit margin on net sales stood at 28% for the quarter, up 1% compared to the 27% margin recorded in Q4 2021, and standing well above the Group's historical averages.

·    It is worth highlighting that during the Company's annual general meeting (AGM) held in London on 7 June 2022, IDH's shareholders approved a record-breaking dividend distribution of EGP 2.17 per share, or EGP 1.3 billion (US$ 69.5 million) in aggregate, to shareholders in respect of the financial year ended 31 December 2021. The exact US dollar amount is subject to the exchange rate at the time of the upstreaming from the subsidiaries to the holding company. This represents a remarkable increase compared to a final dividend of US$ 29.1 million distributed for the previous financial year.

 

⁴Covid-19-related tests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.

⁵EBITDA is calculated as operating profit plus depreciation and amortization.

⁶Calculated on USD/EGP exchange rate of 18.70/1 as of 7 June 2022.

 

ii.  Operational Highlights

·    IDH's branch network stood at 520 branches as at 31 March 2022, up from 483 branches as of 31 March 2021.

·    Total tests performed increased 4% year-on-year to reach 8.4 million in Q1 2022. Test volume growth was driven by higher demand for both IDH's core Covid-19 (PCR, antigen, and antibody) and conventional test offering, the latter expanding 5% versus Q1 2021.

·    Average revenue per test7 recorded EGP 133 in Q1 2022, a decrease of 5% year-on-year driven by lower prices for Covid-19-related tests.

·    Total patients served increased 12% year-on-year to reach 2.6 million in Q1 2022. Average test per patient declined to 3.2 are in Q1 2022 from 3.4 in Q1 2021, as patients visiting IDH's branches and testing booths for single Covid-19-related tests remained high particularly in the month of January.

·    In Egypt, IDH recorded revenue of EGP 879 million in Q1 2022, down 4% versus Q1 2021, and contributing to 79% of IDH net sales for the quarter. The year-on-year decline came on the back of a 20% fall in Covid-19-related revenue recorded during the quarter, which declined despite a new wave of infections recorded in January 2022. The decline was partially outweighed by a solid increase in conventional revenues in Egypt, which expanded 8% year-on-year and 7% quarter-on-quarter during Q1 2022. Revenues generated by house call services in the country declined 20% year-on-year in Q1 2022, contributing to 21% of the country's top-line for the three-month period.

·    Al-Borg Scan continued its steady ramp up, recording revenues of EGP 17 million, up 89% year-on-year. Revenue growth was supported by a 94% and 88% year-on-year increase in test and patient volumes, respectively. The steady growth in volumes comes as a direct result of new branch rollouts over the last year. More specifically, IDH has opened three new branches between September 2021 and March 2022, with the total number of branches now standing at five. The Group plans to roll out two additional branches before year-end 2022.

·    Wayak recorded a near five-fold year-on-year increase in consolidated revenue in Q1 2022. Coupled with management's cost optimisation strategy, this is continuing to support a steady narrowing of the venture's consolidated EBITDA losses.

·    In Jordan, net sales reached EGP 217 million (IFRS revenues⁸ recorded EGP 281 million in Q1 2022), representing a 14% increase versus the same three months of 2021. Net sales growth for the quarter, saw the country's contribution to total consolidated net sales reach 19%, up from 17% in the same three months of last year. The expansion in net sales was supported by both Biolab's Covid-19-related and conventional offering. Revenue generated by Covid-19-related tests expanded 20% year-on-year, making up 68% of the country's net sales. The increase was largely supported by volumes generated by Biolab's multiple revenue sharing agreements to perform PCR testing for international passengers, with the company's agreement with QAIA, which started in August 2021, generating EGP 140 million in the quarter. In parallel, revenue generated by Biolab's conventional test offering increased 4% year-on-year in the first quarter of the year.

·    IDH's Nigerian operations reported year-on-year revenue growth of 19% in Q1 2022. Top-line growth was supported by a 25% year-on-year increase in average revenue per test which came on the back of a rise in demand for the generally higher-priced MRI and CT testing, highlighting the rising popularity of the venture's radiology offering.

·    In Sudan, IDH recorded a 16% year-on-year contraction in revenues as tests performed declined 25% versus the same three months of last year. In local currency terms, IDH's Sudanese operations reported a 149% year-on-year increase in revenue as management continued to successfully increase test prices in step with inflation.

 

⁷Calculated on net sales for the period.

⁸Biolab's revenues for the quarter are calculated as net sales and including concession fees paid to QAIA and Aqaba Port as part of their revenue sharing agreements.

 

iii. Management Commentary

Commenting on the Group's performance, IDH chief Executive Officer Dr. Hend El-Sherbini said: "I am happy to report that IDH witnessed a strong start to 2022, as we continued to drive steady growth in our conventional business while effectively catering to the needs of Covid-19 patients during the wave of new infections recorded in Egypt during the first part of the quarter. More specifically, during Q1 2022, IDH recorded net sales in excess of EGP 1.1 billion, largely unchanged from last year's first quarter. The remarkable performance was primarily supported by the steady growth of our conventional business, which offset a decline in Covid-19-related revenues during the period. In fact, our conventional net sales expanded a solid 8% versus last year supported by growing demand for our services, with conventional tests performed increasing 5% versus Q1 2021. We were very happy to note the 12% year-on-year increase in patients served, as our attractive and expanded offering continued to draw an increasing number of patients to the Group. Solid growth in our conventional business outweighed an 11% year-on-year decline in Covid-19-related revenues which came on the back of a large fall in the average price per Covid-19-related test versus last year coupled with a significant decline in demand during the month of March as infection rates fell sharply. Meanwhile, on the volumes front we recorded a marginal 2% year-on-year fall in Covid-19-related test performed as demand remained high across both Egypt and Jordan, in particular during January and February. It is worth noting that in Egypt, demand for Covid-19-related testing peaked in January as the country experienced a new wave of infections which later subsided as we moved further into the quarter. In Jordan, demand was driven by our testing booths across international travel terminals in Amman and Aqaba. Similar to Egypt, traffic remained high during January and February, before dropping sharply as Jordan's government ended mandatory testing on 1 March 2022.

Looking at our geographies in more detail, across both Egypt and Jordan our conventional business continued to grow steadily with net sales expanding 8% and 4% versus Q1 2021, respectively. In Egypt, this was supported by a solid 7% year-on-year rise in conventional tests performed as we continued to leverage our growing footprint and visibility, and expanded service offering to capture a leading share of demand. This enabled us to successfully offset a 20% year-on-year fall in Covid-19-related revenues which declined despite a new wave of infections recorded in January and February of this year. Meanwhile in Jordan, Covid-19-related revenues continued growing, coming in 20% above last year's figure, in part boosted by our multiple revenue-sharing agreements to perform PCR testing for international passengers. Combined with the steady growth of our conventional offering in the country, this saw Biolab report a solid 14% year-on-year increase in net sales⁹, contributing to a record 19% of consolidated net sales for the three-month period. In Nigeria, Echo-lab continued to report solid year-on-year growth, with revenues expanding 19% versus last year's first quarter. We were particularly happy to note the growing demand for Echo-lab's radiology offering, with both MRI and CT exams recording rising patient interest. Finally, in Sudan we reported a 16% contraction in revenues versus the first three months of 2021 as our results continue to be impacted by the sharp devaluation of the Sudanese Pound in February 2021. However, thanks to management's efforts to raise prices in pace with inflation, revenue in local currency terms expanded 149% year-on-year. During the quarter, in an effort to optimise our Sudanese operations further, we opted to shut down two underperforming branches taking the number of operational branches in the country to 17. It is also important to mention that despite the challenging operating environment and heightened uncertainty faced in the country, operations across all other branches are continuing without major interruptions.

We entered 2022 with a clear and ambitious strategy aimed at driving new, sustainable growth across our operations and guarantee continued value creation as we transition in a post-Covid-19 reality. At the three-month mark, I am very pleased with the progress made across all fronts in particular in our home market of Egypt and in Jordan. Across both countries, our focus is shifting towards capitalising on the post-Covid-19 rebound in conventional testing while actively working to maintain the new relationships we were able to establish during the pandemic thanks to our Covid-19-dedicated offering. To deliver on this, we have recently launched a new dedicated loyalty programme, rolled out multiple marketing campaigns, and began making more effective use of the large pool of patient data at our disposal to provide increasingly tailored services and boost cross-selling. We are also looking to leverage our popular house call service to continue driving growth across both markets. The service, which generated 18% of our total net sales for the quarter, was ramped up significantly over the past two years in response to heightened demand and continues to represent an important driver of future growth for IDH. Our house call services' convenient offering represents an increasingly attractive alternative for patients looking to access our services from the comfort of their homes. This is not only enabling us to sell more tests per patient than at our traditional branches, but has also seen us penetrate new segments of the population and develop long-term relationships with a broader patient base. At the same time, we are expanding our branch network, having rolled out an additional 20 branches in Egypt during the first three months of the year, and are continuing to take full advantage of our expanded visibility and service offering to grow our market share across both countries. It is also important to highlight the continued quarter-on-quarter improvements of our radiology venture Al-Borg Scan, which recorded a 20% quarter-on-quarter and an 89% year-on-year increase in revenues during the first three months of the year.  To capitalise on this success, we inaugurated the venture's fifth branch at the start of March 2022. We are proud to have a radiology branch network covering the entire Greater Cairo area from east to west, and plan to open at least two more branches in the coming months to broaden our reach and strengthen our branch equity further. Of course, while we are working tirelessly to deliver on our post-Covid-19 strategy, we remain fully committed to helping Egyptian and Jordanian authorities combat possible future waves in infections, continuing to provide patients with widespread access to our Covid-19-related offering going forward. Finally, we are looking forward to receiving the remaining regulatory approvals to finalise our partnership with Islamabad Diagnostic Centre (IDC) in Pakistan.

Looking ahead, we remain committed to delivering exceptional value to our patients, shareholders, and wider communities, and drive solid growth across our business. We are without a doubt faced with difficult operating conditions both globally and in our home market of Egypt. On the global front, the world economy is still coming to grips with the long-term economic spill overs of the pandemic and the impact of the ongoing Russia-Ukraine war. Meanwhile, on the home front we have been witnessing double-digit inflation and a c.18% devaluation of the Egyptian Pound versus the US Dollar. Despite this, we are confident that our proven track record in navigating similar turbulent times and the strong mitigation frameworks we have in place provide abundant protection across our operations. Thanks to our proactive inventory build-up and sourcing strategy we are facing no issues in securing raw materials and continue to hold sufficient inventories to cover three months of operations, in line with our standard operating policy. Moreover, our stock until 30 June 2022 has been secure at pre-devaluation rates and, going forward, we will continue to leverage our long-lasting relationships with test kit providers to secure additional stock at competitive prices, shielding our business from the impacts of rising inflation and the EGP devaluation.

In recent weeks, following the expected slowdown related to the holy month of Ramadan and the Eid holiday, we have witnessed a steady acceleration of patient traffic across our branch network. We expect this rapid normalisation of patient flow to support a further acceleration of growth of our conventional business, further boosting our optimism for the remainder of 2022. In light of this, we are revising our full-year guidance, with the Company now on track to deliver conventional revenue year-on-year growth of at least 18% to 20%. These revised estimates, which assume no additional contributions from our Covid-19-related offering, further highlight our confidence in the business' potential going forward.

Finally, we are also delighted to announce that during our annual general meeting held on 7 June 2022 in London, shareholders approved the distribution of a record-breaking dividend of EGP 1.3 billion in aggregate in respect of the financial year ended 31 December 2021. Our ability to reward shareholders even in the midst of such difficult times demonstrates our business' strong cash-generating abilities and our unwavering confidence in its future growth potential and in the solid fundamentals of our industry."

⁹Revenue stood at EGP 281 million, up 48% year-on-year.

Analyst and Investor Call Details

An analyst and investor call will be hosted at 2pm (UK) | 3pm (Egypt) on Wednesday, 8 June 2022. You can access the call by clicking on this link, and you may dial in using the conference call details below:

 

• Event number: 2372 285 1168

• Event password: 7qdVVHnZT46

 

For more information about the event, please contact: halaa@EFG-HERMES.com

 

About Integrated Diagnostics Holdings (IDH)

IDH is a leading consumer healthcare company in the Middle East and Africa with operations in Egypt, Jordan, Sudan and Nigeria. The Group's core brands include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab (Jordan), Ultralab and Al Mokhtabar Sudan (both in Sudan) and Echo-Lab (Nigeria). A long track record for quality and safety has earned the Company a trusted reputation, as well as internationally recognised accreditations for its portfolio of over 2,000 diagnostics tests. From its base of 520 branches as of 31 March 2022, IDH will continue to add laboratories through a Hub, Spoke and Spike business model that provides a scalable platform for efficient expansion. Beyond organic growth, the Group's expansion plans include acquisitions in new Middle Eastern, African, and East Asian markets where its model is well-suited to capitalise on similar healthcare and consumer trends and capture a significant share of fragmented markets. IDH has been a Jersey-registered entity with a Standard Listing on the Main Market of the London Stock Exchange (ticker: IDHC) since May 2015 with a secondary listing on the EGX since May 2021 (ticker: IDHC.CA).

 

Shareholder Information

LSE: IDHC.L

EGX: IDHC.CA

Bloomberg: IDHC:LN

Listed on LSE: May 2015

Listed on EGX: May 2021

Shares Outstanding: 600 million

 

Contact

Nancy Fahmy

Investor Relations Director

T: +20 (0)2 3345 5530 | M: +20 (0)12 2255 7445 | nancy.fahmy@idhcorp.com

 

Forward-Looking Statements

These results for the quarter ended 31 March 2022 have been prepared solely to provide additional information to shareholders to assess the group's performance in relation to its operations and growth potential. These results should not be relied upon by any other party or for any other reason. This communication contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, and can be identified by the use of such words and phrases as "according to estimates", "aims", "anticipates", "assumes", "believes", "could", "estimates", "expects", "forecasts", "intends", "is of the opinion", "may", "plans", "potential", "predicts", "projects", "should", "to the knowledge of", "will", "would" or, in each case their negatives or other similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding business and management, future growth or profitability and general economic and regulatory conditions and other matters affecting the Group.

 

Forward-looking statements reflect the current views of the Group's management ("Management") on future events, which are based on the assumptions of the Management and involve known and unknown risks, uncertainties and other factors that may cause the Group's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The occurrence or non-occurrence of an assumption could cause the Group's actual financial condition and results of operations to differ materially from, or fail to meet expectations expressed or implied by, such forward-looking statements.

 

The Group's business is subject to a number of risks and uncertainties that could also cause a forward-looking statement, estimate or prediction to differ materially from those expressed or implied by the forward-looking statements contained in this communication. The information, opinions and forward-looking statements contained in this communication speak only as at its date and are subject to change without notice. The Group does not undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this communication.

Group Operational & Financial Review

 

i.    Revenue/Net Sales and Cost Analysis

 

Revenue/Net Sales Consolidated Analysis IDH recorded total revenue of EGP 1,180 million in the first three months of the year, up 5% year-on-year. Consolidated net sales10 recorded EGP 1,117 million, down 1% compared to the EGP 1,130 million recorded in the same quarter of 2021. Net sales for the period were supported by both IDH's conventional offering, which posted solid year-on-year growth in the quarter, and the Group's Covid-19-related11 offering, which continued to make a robust contribution despite recording a year-on-year contraction in revenues.   During the quarter, IDH continued to deliver steady growth in conventional net sales supported by rising conventional test volumes, which are now growing in line with the Group's pre-pandemic trend. More specifically, during the quarter IDH recorded an 8% year-on-year rise in conventional net sales, with conventional test volumes performed rising 5% versus Q1 2021. Conventional net sales were also in part supported by a 2% year-on-year increase in average revenue per test, as growth at the Group's contract segment was more pronounced during the first three months of the year.   Meanwhile, owing largely to a widespread decline in the average price per Covid-19-related test, IDH's Covid-19-related net sales contracted 11% year-on-year during the quarter. In Q1 2022, the Group recorded a fall in the average price per Covid-19-related test (the average price per PCR test fell by 51% year-on-year), as prices decreased significantly in both Egypt and Jordan. On the volumes front, despite having recorded strong demand in January and February as Egypt experienced a new wave of infections, a widespread decline in demand during March saw total Covid-19-related tests performed fall 2% versus the comparable period of last year. Geographically, the decline in Covid-19-related net sales is fully attributable to lower revenues in Egypt driven by a substantial reduction in the average price per test. This more than offset the solid 20% year-on-year rise in Covid-19-related net sales reported by the Group's Jordanian operations.   House Call Service The Group's consolidated net sales were also in part supported by its house call services in Egypt and Jordan, which generated EGP 196 million in revenue in Q1 2022, representing a 24% year-on-year decrease. Geographically, in Egypt house call services generated EGP 187 million in revenue, contributing 21% to the country's revenue for the quarter compared to a 25% contribution made this time last year. Meanwhile, in Jordan house call revenue stood at EGP 9 million, making up 4% of the country's net sales for the three month period. Finally, it is worth noting that in the first quarter of 2022, average net sales per house call test stood at EGP 161, significantly above the Group's average of EGP 133.     Detailed Consolidated Performance Breakdown   Q1 2021 Q1 2022 Total net sales (EGP mn) 1,130 1,117 Total tests (mn) 8.1 8.4 Conventional test net sales (EGP mn) 594 640 Conventional tests performed (mn) 6.8 7.1 Total Covid-19-related test net sales (EGP mn) 536 477 Core Covid-19 tests (PCR, Antigen, Antibody) (EGP mn) 399 421 Core Covid-19 tests performed (k) 407 837 Other Covid-19-related tests (EGP mn) 137 56 Other Covid-19-related tests performed (k) 874 417 Contribution to Consolidated Results Conventional test net sales 53% 57% Conventional tests performed 84% 85% Total Covid-19-related tests 47% 43% Core Covid-19 tests (PCR, Antigen, Antibody) 35% 38% Core Covid-19 tests performed 5% 10% Other Covid-19-related tests 12% 5% Other Covid-19-related tests performed 11% 5%

10A reconciliation between revenue and net sales is available earlier in this announcement. 11Covid-19-related tests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.   Net Sales Analysis: Contribution by Patient Segment   Contract Segment Total revenue12 generated by IDH's contract segment recorded EGP 645 million in Q1 2022, up 8% from the same quarter last year. Meanwhile, net sales generated by the Group's contract segment expanded 7% year-on-year to record EGP 643 million in Q1 2022. The increase was supported by a 5% year-on-year rise in contract tests performed. The segment's contribution to total net sales subsequently increased to reach 58% from 53% in Q1 2021. Covid-19-related13 testing contributed 38% of contract net sales in the first three months of the year down from 44% this time last year. Controlling for contributions made by Covid-19-related tests during the year, the contract segment would record an 18% year-on-year increase in conventional test net sales supported by a 10% increase in tests performed and a 7% expansion in average net sales per test.   In Jordan, the Group's partnership with Queen Alia International Airport (QAIA),  generated net sales of EGP 140 million in the three months to 31 March 2022. As part of the agreement, Biolab carried out 293 thousand PCR tests, representing 62% of total PCR tests performed in Jordan for the quarter. At the same time, Biolab's agreements with Aqaba's King Hussein International Airport (KHIA) and Aqaba Port contributed an additional EGP 18 million to the segment. It is worth noting that Biolab's partnership with KHIA started in August 2020, followed by the company's agreement with Aqaba Port which kicked off in May 2021, and its partnership with QAIA which commenced in August 2021. It is also worth highlighting that while the testing booths recorded strong demand during January and February, following the Jordanian government's decision to end mandatory testing on 1 March 2022 traffic decline substantially.   Walk-in Segment The Group's walk-in segment recorded total revenue of EGP 535 million in the first three months of the year, up marginally year-on-year. On the other hand, walk-in net sales for the quarter declined 10% year-on-year to record EGP 474 million in Q1 2022. The decline, which came fully on the back of an 11% fall in average net sales per walk-in test (walk-in tests performed came in 1% above last year's figure),  saw the segment's contribution to total net sales for the quarter fall to 42% from 47% last year. Meanwhile, the contribution of Covid-19-related tests to the walk-in segment stood at 48% in Q1 2022, compared to 51% in Q1 2021. Excluding Covid-19-related contributions, conventional walk-in net sales recorded a 6% decrease versus the same quarter of last year, as a 10% decline in conventional walk-in tests volumes. It is important to note that despite the decline, walk-in segment test volumes remain 2% ahead of pre-Covid-19 levels.   12A reconciliation between revenue and net sales is available earlier in this announcement. 13Covid-19-related tests include both core Covid-19 tests (Polymerase Chain Reaction (PCR), Antigen, and Antibody) as well as other routine inflammatory and clotting markers including, but not limited to, Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), which the Company opted to include in the classification as "other Covid-19-related tests" due to the strong rise in demand for these tests witnessed following the outbreak of Covid-19.

Key Performance Indicators

	Walk-in Segment			Contract Segment			Total
	1Q21	1Q22	Change	1Q21	1Q22	Change	1Q21	1Q22	Change
Net sales^ (EGP mn)	529	474	-10%	600	643	7%	1,130	1,117	-1%
Total Covid-19-related net sales (EGP mn)	271	230	-15%	265	247	-7%	536	477	-11%
Patients ('000)	800	971	21%	1,559	1,678	8%	2,359	2,649	12%
% of Patients	34%	37%		66%	63%
Net sales per Patient (EGP)	661	488	-26	385	383	0%	479	422	-12%
Tests ('000)	2,124	2,144	1%	5,938	6,258	5%	8,062	8,402	4%
% of Tests	26%	26%		74%	74%
Total Covid-19-related tests ('000)	429	614	43%	852	641	-25%	1,281	1,254	-2%
Net Sales per Test (EGP)	249	221	-11%	101	103	2%	140	133	-5%
Test per Patient	2.7	2.2	-17/%	3.8	3.7	-2%	3.4	3.2	-7%
Revenue Analysis: Contribution by Geography   Egypt In Egypt, IDH reported revenue14 of EGP 879 million, down 4% from the EGP 920 million recorded this time last year. The decline came on the back of a 6% year-on-year fall in average revenue per test following a significant fall in the average price per Covid-19-related test during the period (average price per PCR test in Egypt declined 44% year-on-year). Meanwhile, net sales generated from conventional tests increased by 8% and 7% on a year-on-year and quarter-on-quarter, respectively. Growth was supported by a 7% increase in conventional test volumes compared to the same quarter last year.   Overall, IDH served 2.0 million patients in Egypt and performed 7.3 million tests in Q1 2022, both up 2% from the first three months of 2021.   14It is important to note that revenues and net sales in Egypt, Nigeria and Sudan are identical in absolute terms. A reconciliation between revenue and net sales is available earlier in this announcement.   House Call Service IDH's house call service in Egypt recorded revenue of EGP 187 million in Q1 2022, down 20% from the first three months of last year. The decline came on the back of 21% year-on-year fall in Covid-19-related revenue generated through the house call service as infection rates in the country declined significantly throughout March.   Al-Borg Scan IDH has been actively investing to ramp up its radiology venture, Al-Borg Scan. Over the past nine months, the Group has rolled out three additional branches taking the total number of branches up to five. While all three remain in their ramp up phases, IDH is recording growing contributions from each one, with all three playing a central role in driving steady growth across both volumes and revenues. More specifically, in Q1 2022 Al-Borg Scan's revenues rose 89% year-on-year to record EGP 17 million. Top-line growth came on the back of a 94% year-on-year rise in radiology tests performed (patients served was up 88% for the quarter). To build on this momentum, in the coming months IDH is planning to inaugurate two additional branches to expand its reach across Greater Cairo and capitalise on the service's increasing popularity.   Detailed Egypt Revenue Breakdown EGP mn Q1 2021 Q1 2022 Total Revenue 920 879 Conventional Revenue 507 549 Total Covid-19-related Revenue 414 330 Core Covid-19 tests (PCR, Antigen, Antibody) 277 274 Other Covid-19-related tests 137 56 Contribution to Consolidated Results Conventional tests 55% 62% Total Covid-19-related tests 45% 38% Core Covid-19 tests (PCR, Antigen, Antibody) 30% 31% Other Covid-19-related tests 15% 6%
Jordan In Jordan, IDH recorded revenue of EGP 281 million in Q1 2022, up 48% year-on-year. Meanwhile, net sales15 expanded 14% year-on-year to reach EGP 217 million in Q1 2022. Growth in net sales came on the back of a 30% year-on-year rise in tests performed which more than offset a 12% decline in net sales per test. During the quarter, Covid-19-related revenue stood at EGP 147 million, contributing to 68% of Biolab's net sales (Covid-19-related test volumes made up 48% of total tests performed). Covid-19-related net sales in Jordan was boosted by contributions of EGP 140 million from Biolab's new partnership with QAIA coupled with the EGP 18 million in net sales coming from its partnerships with KHIA and Aqaba Port. As part of these agreements, Biolab has been operating testing stations across all three locations primarily focused on PCR testing for Covid-19 to passengers arriving in Jordan. The stations which recorded strong demand in January and February have since witnessed a decline in traffic following the end of mandatory testing in the country. Meanwhile, conventional test net sales increased 4% year-on-year, despite a 4% decline in test volumes versus last year. Finally, the country's net sales continued to be supported by Biolab's house call service which generated EGP 9 million in net sales in Q1 2022, down 61% year-on-year.   15Biolab's net sales for the period are calculated as revenues excluding concession fees paid to QAIA and Aqaba Port as part of their revenue sharing agreement.   Detailed Jordan Net Sales Breakdown EGP mn Q1 2021 Q1 2022 Total Net Sales 190 217 Conventional Net Sales 68 70 Total Covid-19-related Net Sales (PCR and Antibody) 122 147 Contribution to Consolidated Results Conventional Net Sales 36% 32% Total Covid-19-related Net Sales (PCR and Antibody) 64% 68%
Nigeria Echo-Lab, the Group's Nigerian subsidiary, reported revenue growth of 19% versus the same three months of last year, with the venture's top-line recording EGP 15 million in Q1 2022. In local currency terms revenue was up 23% year-on-year on the back of a 25% increase in average revenue per test. The increase was supported by the increased number of CT and MRI exams performed during the period, both of which are relatively higher-priced services. It is important to note that during Q1 2022 management decided to shut down its operational activities in the PPP branches due to their under-performance on the profitability level. This subsequently led to a decline in the number of tests performed during the quarter compared to the same period last year. Management is planning to open two additional branches during this year, bringing the total number of operational branches 12.   Sudan In Sudan, IDH recorded revenues of EGP 6 million, down 16% from the first quarter of last year. The country's results continue to be impacted by the devaluation of the Sudanese pound in early 2021 with the average SDG/EGP rate in Q1 2022 standing at 0.04 versus 0.11 in Q1 2021. Nonetheless, management's continued success in raising prices in step with inflation throughout the year saw revenue in local currency terms grow an impressive 149% in Q1 2022.   Net Sales Contribution by Country Q1 2021 Q1 2022 Change Egypt Net Sales (EGP mn) 920 879 -4% Covid-19-related (EGP mn) 414 330 -20% Egypt Contribution 81% 79%   Jordan Net Sales (EGP mn) 190 217 14% Covid-19-related (EGP mn) 122 147 20% Jordan Revenues (EGP mn) (IFRS) 190 281 48% Jordan Net Sales (JOD mn) 8.6 9.6 12% Jordan Revenues (JOD mn) (IFRS) 8.6 12.5 45% Jordan Contribution 17% 19%   Nigeria Net Sales (EGP mn) 12 15 19% Nigeria Net Sales (NGN mn) 302 371 23% Nigeria Contribution 1.1% 1.3%   Sudan Net Sales (EGP mn) 7 6 -16% Sudan Net Sales (SDG mn) 61 152 149% Sudan Contribution 0.6% 0.5%   --- Patients Served and Tests Performed by Country Q1 2021 Q1 2022 Change Egypt Patients Served (mn) 2.0 2.0 2% Egypt Tests Performed (mn) 7.2 7.3 2% Covid-19-related tests (mn) 1.1 0.8 -26% Jordan Patients Served (k) 301 552 83% Jordan Tests Performed (k) 762 991 30% Covid-19-related tests (k) 224 472 111% Nigeria Patients Served (k) 38 33 -11% Nigeria Tests Performed (k) 65 62 -5% Sudan Patients Served (k) 19 28 47% Sudan Tests Performed (k) 62 47 -25% Total Patients Served (mn) 2.4 2.6 12% Total Tests Performed (mn) 8.1 8.4 4%   Branches by Country 31 March 2021 31 March 2022 Change Egypt 431 472 41 Jordan 20 21 1 Nigeria 12 10 -2 Sudan 20 17 -3 Total Branches 483 520 37   -Cost of Net Sales16 IDH's cost of net sales rose 19% year-on-year to record EGP 586 million in the first quarter of 2022, rising at a faster pace than the Group's revenue for the three-month period. This weighed down on the Group's gross profit which recorded EGP 532 million in Q1 2022, down 17% from last year. It is important to note that gross profit for the quarter was identical in absolute terms between IFRS and APM measures. IDH's gross profit margin17 on revenue  recorded 45% in Q1 2022 versus 57% last year. Meanwhile, IDH's gross profit margin on net sales18 recorded 48% in Q1 2022 versus 57% in Q1 2021.   Cost of Net Sales Breakdown as a Percentage of Net Sales Q1 2021 Q1 2022 Raw Materials 19.3% 22.6% Wages & Salaries 12.4% 14.9% Depreciation & Amortisation 4.1% 5.8% Other Expenses 7.7% 9.1% Total 43.5% 52.4%   Raw material costs, which include cost of specialized analysis at other laboratories, recorded EGP 253 million for the first quarter of the year, continuing to make up the largest share of total COGS at 43%. As a share of net sales, raw material costs increased to 22.6% in Q1 2022 compared to 19.3% in the previous year. This increase is primarily attributable to a substantial reduction in the average selling price of Covid-19-related tests during the quarter (PCR tests were priced 51% lower in Q1 2022 than in Q1 2021). Prices were down in both Egypt and Jordan on both a year-on-year and quarter-on-quarter basis.   Direct salaries and wages for the year rose 19% year-on-year to EGP 167 million, making the second largest share of total COGS at 28%.   Direct depreciation and amortisation increased 39% year-on-year in the first three months of the year to EGP 64 million, largely due to the incremental amortisation of new branches (IFRS 16 right-of-use assets).   Other expenses for the first quarter of 2022 increased 18% year-on-year to EGP 102 million. The increase was principally due to higher transportation costs related to IDH's house call service, increased utilities mainly due to the addition of 37 new branches throughout the year, and increased repair and maintenance outlays.   16Cost of net sales is calculated as cost of sales (IFRS) for the period excluding commission fees paid to QAIA and Aqaba Port by Biolab as part of its revenue sharing agreements with the two terminals. According to IFRS 15, cost of sales recorded EGP 649 million in Q1 2022, up 32% year-on-year. 17It is important to note that while in absolute terms the Gross Profit figure is identical when using IFRS or APM, its margin differs between the two sets of performance indicators. 18A reconciliation between revenue and net sales is available earlier in this announcement.   Selling, General and Administrative Expenses Total SG&A outlays stood at EGP 135 million in Q1 2022, representing a 50% year-on-year increase for the quarter. Higher SG&A costs came on the back of rising salaries and marketing spending, coupled with higher call center costs and higher fees for external auditing services.   Marketing and advertising expenses came in at EGP 23 million in Q1 2022, up 63% year-on-year. The increase largely reflects an overall expansion in IDH's marketing and advertisement efforts which for the last year has seen the Company launch targeted campaigns across a wide variety of channels mainly to support the ramp up of its radiology venture, Al-Borg Scan.   EBITDA IDH's EBITDA19 recorded EGP 468 million in the first three months of 2022, down 22% from the same three months a year ago. It is important to note that EBITDA for the quarter was identical in absolute terms between IFRS and APM measures. EBITDA margin on consolidated revenue recorded 40% in Q1 2022 versus 53% in the same quarter of a year ago. Meanwhile, EBITDA margin on net sales declined to 42% in Q1 2022 from 53% in Q1 2021.20 The decline in EBITDA level profitability comes primarily on the back of lower gross profitability for the three month period coupled with higher sales and marketing outlays versus last year.   In IDH's home market of Egypt, EBITDA recorded EGP 395 million in Q1 2022 EBITDA margin on net sales stood at 45% in the three-month period versus 57% this time last year.   In JOD terms, Biolab's EBITDA recorded JOD 3.3 million, down 5% year-on-year. EBITDA margin on revenue recorded 26% in Q1 2022 down from 41% this time last year. Meanwhile, EBITDA margin on net sales for the three months period recorded 34% versus 41% in Q1 2021. The decrease in Biolab's EBITDA margin (from 41% to 34%) is mainly attributable to higher expenses related to Biolab's testing booths in QAIA and Aqaba Port.   Operations in Nigeria posted an EBITDA loss of EGP 1.2 million compared to a loss of EGP 0.5 million in the same three months of last year. It is important to note that Nigeria's annual inflation rate reached c.16.8% mainly due to increased energy prices. Due to Echo-Lab's reliance on diesel-powered generators across labs, the doubling of fuel prices compared to the same period of last year weighed down on the venture's margins.   Finally, in Sudan the Company recorded an EBITDA of EGP 0.1 million in Q1 2022, down from the EGP 1.1 million in EBITDA recorded this time last year. EBITDA for the quarter continued to be impacted by the sharp SDG devaluation in February 2021. In SDG terms EBITDA declined 199% year-on-year.   Regional EBITDA in Local Currency Mn Q1 2021 Q1 2022 Change   Egypt EGP 522 395 -24%   Margin on net sales   57% 45%     Jordan JOD 3.5 3.3 -5%   Margin on net sales   41% 35%   Margin on revenues (IFRS)   41% 27%   Nigeria NGN -11 -31 181%   Margin on net sales   -4% -8%     Sudan SDG -3.84 3.81 -199%   Margin on net sales   -6% 3%       19EBITDA is calculated as operating profit plus depreciation and amortization and minus one-off fees incurred in Q1 2021 related to the Company's EGX listing completed in May 2021. 20It is important to note that while in absolute terms the Normalised EBITDA figure is identical when using IFRS or APM, its margin differs between the two sets of performance indicators.   Interest Income / Expense The Group reported interest income of EGP 45 million in Q1 2022, up 123% year-on-year on the back of higher cash balances during the quarter coupled with an optimised cash allocation between T-bills and time deposits.   Interest expense recorded EGP 33 million in the quarter, up 58% year-on-year. The increase in attributable to: ·    Higher interest on lease liabilities related to IFRS 16 following the addition of new branches in Egypt and Jordan and the renewal of medical equipment agreements with the Group's main equipment suppliers. ·    Higher bank charges reflecting an increased penetration of, and reliance on, POS machines and electronic payments in both Egypt and Jordan during the three-month period. ·    Loan-related expenses incurred by IDH during the period is largely in line with last year. That being said, interest expenses are expected to increase following the CBE decision to increase rates by 300 bps year-to-date. ·    Fees amounting to EGP 1.9 million related to the US$ 45 million facility with the International Finance Corporation (IFC) granted in May 2021. Fees include front-end fee, syndication fee, and legal advisory fees.  . Interest Expense Breakdown EGP mn Q1 2021 Q1 2022 Change Interest on Lease Liabilities (IFRS 16) 14.3 16.9 18% Interest Expenses on Borrowings21 2.7 2.5 8% Loan-related Expenses on IFC facility - 1.9 N/A Interest Expenses on Leases  1.5 4.7 224% Bank Charges 2.5 7.1 184% Total Interest Expense 21.0  33.1 58%   21Interest expenses on medium-term loans divided as EGP 0.3 million related to IDH's medium term facility with the Commercial International Bank (CIB) and EGP 2.2 million to the Group's facility with Ahli United Bank Egypt (AUBE).   Foreign Exchange IDH recorded a net foreign exchange gain of EGP 61 million in the first three months of 2022 compared to an EGP 15 million FX loss in the comparable three months of last year. The figure reflects the US Dollar balance held at the Group along with the  intercompany balances revaluation.   Taxation Tax expenses recorded EGP 157 million in the first quarter of the year versus EGP 181 million in Q1 2021. The effective tax rate stood at 33% for the three-month period ended 31 March 2022 versus 35% in Q1 2021. The lower effective tax rate largely reflects the large balance of Treasury bills held by IDH's Egyptian Subsidiaries.   Taxation Breakdown by Region EGP Mn Q1 2021 Q1 2022 Change Egypt 165.3 143.6 -13% Jordan 15.4 13.6 -12% Nigeria 0.02 (0.05) N/A Sudan (0.03) 0.05 N/A Total Tax Expenses 180.7 157.2 -13%   Net Profit IDH's consolidated net profit for the first quarter of the year stood at EGP 314 million, down 8% from the same three months of last year. It is important to note that net profit for the quarter was identical in absolute terms between IFRS and APM measures. Net profit margin on consolidated revenue recorded 27% for the quarter, versus 30% in Q1 2021. Meanwhile, net profit margin on net sales22 stood at 28% in Q1 2022, representing a two percentage point contraction from the first quarter of 2021. The decline in net profitability for the quarter comes on the back of lower EBITDA profitability for the period. Despite this, net profit margin recorded well above the Group's historical averages for the quarter.   22It is important to note that while in absolute terms the net profit figure is identical when using IFRS or APM, its margin differs between the two sets of performance indicators.

 

ii.  Balance Sheet Analysis

Assets Property, Plant and Equipment IDH held gross property, plant and equipment (PPE) of EGP 1,774 million as at 31 March 2022, up from the EGP 1,653 million as at year-end 2021. Meanwhile, CAPEX outlays excluding payments on account and accounting for the impact of hyperinflation, represented 10.9% of consolidated net sales in Q1 2022. The increase in CAPEX outlays as a share of total net sales for the quarter is in part attributable to EGP 41 million spent on new radiology branches (Capital Business Park Branch in West Cairo) during the period and EGP 56 million translation effect (mainly related to Jordan) resulting from the depreciation of the Egyptian Pound during the quarter.   Total CAPEX Breakdown EGP Mn Q1 2022 % of Net Sales Al-Borg Scan Expansion 40.5 3.6% Translation Effect 56.3 5.0% Leasehold Improvements/others 24.9 2.2% Total CAPEX Additions 121.7 10.9%   Accounts Receivable and Provisions As at 31 March 2022, accounts receivables' Days on Hand (DOH) recorded at 115 days compared to 107 days at year-end 2021. The increase  reflects the large balance related to the airlines deals in QAIA airport, characterized by a relatively higher credit period.  Accounts receivables' DOH is calculated based on credit revenues23) amounting to EGP 312 million during Q1 2022.   The receivables balance in Egypt and Jordan stood at EGP 391 million as at 31 March 2022. More specifically, in Egypt account receivables' DOH increased to 102 days as at the end of the current reporting period compared to 96 days as at year-end 2021.Accounts receivables' DOH for Egypt is calculated based on credit revenues amounting to EGP 258 million during Q1 2022. Meanwhile, in Jordan accounts receivables' DOH increased to 186 days from 154 days as at year-end 2021 largely due to agreements with various airline companies as part of QAIA and KHIA agreements. Accounts receivables' DOH for Jordan is calculated based on credit revenues amounting to EGP 47 million during the first quarter of 2022.   Provision for doubtful accounts established during the three-month period ended 31 March 2022 amounted to EGP 7 million, up from EGP 5 million in the same three months of last year   23Credit revenues relates to patients who paid for IDH's services on credit.   Inventory As at 31 March 2022, the Group's inventory balance reached EGP 255 million, up from EGP 223 million as at year-end 2021. Meanwhile, days Inventory Outstanding (DIO) increased to 87 days as at 31 March 2022 from 61 days as at year-end 2021. The increase largely reflects management's decision to accumulate inventory in a trial to overcome any disruption that might result from the global supply chain challenges.   Cash and Net Debt/Cash IDH's cash balances increased to EGP 2,659 million as at 31 March 2021 up from EGP 2,350 million as at 31 December 2021.   EGP million 31 Dec 2021 31 Mar 2022 31 Dec 2021 Time Deposits  628 1,126 628 T-Bills 1,461 1,451 1,461 Current Accounts 239 69 239 Cash on Hand 22 12 22 Total 2,350 2,659 2,350   Net cash balance24 amounted to EGP 1,724 million as at 31 March 2022 compared to EGP 1,488 million as of 31 December 2021.   EGP million 31 Dec 2021 31 Mar 2022 31 Dec 2021 Cash and Financial Assets at Amortised Cost25 2,350 2,659 2,350 Interest Bearing Debt ("Medium Term Loans")26 102 100 106 Lease Liabilities Property 532 574 532 Long-term Equipment Liabilities 229 261 229 Net Cash Balance            1,488 1,724            1,483 Note: Interest Bearing Debt includes accrued interest for each period.   Lease liabilities on property recorded EGP 574 million as at 31 March 2022, up from the EGP 532 million booked as at year-end 2021. The increase is driven by the addition of new branches throughout the first three months of the year. Meanwhile, financial obligations related to equipment recorded EGP 261 million as at the end of the current reporting period, up from EGP 229 million as of year-end 2021, largely reflecting the renewal of the Company's contracts and the addition of new equipment. Total financial obligations related to equipment in Q1 2022 includes EGP 122 million for equipment at Al-Borg Scan. The rise in interest-bearing debt is related to IDH's two medium-term facilities with Commercial International Bank (CIB) and Ahli United Bank of Egypt (AUBE). More specifically, IDH's interest-bearing debt as at 31 March 2022 is split as EGP 13.2 million related to its medium-term facility with CIB and EGP 85 million related to its facility with AUBE. It is worth noting that interest-bearing debt in both periods excludes accrued interest.   Liabilities Accounts Payable27 As at the end of March 2022, accounts payable balance recorded EGP 277 million down from EGP 311 million as of 31 December 2021. Despite this, the Group's days payable outstanding (DPO) increase to 107 days as at 31 March 2022 from 93 days as at 31 December 2021. The increase is mainly related to lower Covid-19-related kits consumption coupled with the renegotiation of  extended payment terms with the Group's test kit suppliers.   Put Option The put option current liability is related to the option granted in 2011 to Dr. Amid, Biolab's CEO, to sell his stake (40%) to IDH. The put option is in the money and exercisable since 2016 and is calculated as 7 times LTM EBITDA minus net debt. Biolab's put option liability increased following the depreciation of the Egyptian Pound by around 16% as at 31 March 2022 compared to  year-end 2021.   The put option non-current liability is related to the option granted in 2018 to the International Finance Corporation from Dynasty - shareholders in Echo Lab - and it is exercisable in 2024. The put option is calculated based on fair market value (FMV).   24The net cash balance is calculated as cash and cash equivalent balances including includes financial assets at amortised cost, less interest-bearing debt (medium term loans), finance lease and Right-of-use liabilities. 25As outlined in Note 9 of IDH's Consolidated Financial Statements, some term deposits and treasury bills cannot be accessed for over 90 days and are therefore not treated as cash. Term deposits which cannot be accessed for over 90 days stood at EGP 201 million in Q1 2022, while there were no such term deposits in the previous year. Meanwhile, treasury bills not accessible for over 90 days stood at EGP 1,230 million in Q1 2022, down from EGP 1,310 million in FY 2021. 26IDH's interest bearing debt as at 31 March 2022 is split as EGP 13 million related to its medium term facility with the Commercial International Bank (CIB) and EGP 85 million to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances are excluding accrued interest for the period). 27Accounts payable is calculated based on average payables at the end of each year.

 

iii. Cash Flow Analysis

Net cash flow from operating activities recorded EGP 309 million in Q1 2022 continuing to demonstrate IDH's strong cash generation ability. New cash flow from operating activities declined from EGP 488 million the same three months of last year.

-End-