Integrated Diagnostics Holdings Plc

1H 2023 Results

Thursday, 31 August 2023

Integrated Diagnostics Holdings Plc delivers robust 40% year-on-year conventional revenue growth in 1H 2023

(Cairo and London) - Integrated Diagnostics Holdings ("IDH," "the Group," or "the Company"), a leading provider of diagnostic services with operations in Egypt, Jordan, Nigeria, Sudan, and soon launching in Saudi Arabia, announced today its reviewed financial statements for the six-month period ended 30 June 2023, booking revenues of EGP 1,872 million, down 4% from the figure recorded during the same period of 2022 when Covid-19-related testing¹ had significantly boosted results. Excluding² the contributions made by IDH's Covid-19-related offering in 1H 2022, the Company's conventional³ business recorded robust year-on-year growth of 40%, continuing to showcase the underlying health of IDH's business.

The strong performance delivered by the Company's conventional segment was driven by 24% and 13% year-on-year increases in average revenue per conventional test and conventional test volumes, respectively. IDH posted a net profit of EGP 211 million in 1H 2023, down 52% year-on-year due to significant contributions from Covid-19-related testing (31% of 1H 2022 revenues) in the same period of the previous year.

On a quarterly basis, IDH recorded total revenues of EGP 957 million in Q2 2023, expanding 24% year-on-year and 5% quarter-on-quarter. Similarly, the Company reported a solid 37% year-on-year conventional revenue expansion in Q2 2023. Net profit for the quarter stood at EGP 43 million, 66% below last year's figure.

Financial Results (IFRS)⁴

EGP mn	1H 2022	1H 2023	Change
Revenues	1,954	1,872	-4%
Conventional Revenues	1,339	1,872	40%
Covid-19-related Revenues	615	-	-
Cost of Sales	(1,122)	(1,214)	8%
Gross Profit	832	658	-21%
Gross Profit Margin	43%	35%	-7 pts
Operating Profit	562	265	-53%
EBITDA5	709	462	-35%
EBITDA Margin	36%	25%	-12 pts
Net Profit	439	211	-52%
Net Profit Margin	22%	11%	-11 pts
Cash Balance	816	666	-18%

Note (1): Throughout the document, percentage changes between reporting periods are calculated using the exact value (as per the Consolidated Financials) and not the corresponding rounded figure.

Key Operational Indicators⁶

	1H 2022	1H 2023	Change
Branches	538	588	50
Patients ('000)	4,541	3,917	-14%
Revenue per Patient (EGP)	430	478	11%
Tests ('000)	16,004	16,465	3%
Conventional Tests ('000)	14,547	16,465	13%
Covid-19-related Tests ('000)	1,458	-	-
Revenue per Test	122	114	-7%
Revenue per Conventional Test (EGP)	92	114	24%
Revenue per Covid-19-related Test (EGP)	422	-	-
Test per Patient	3.5	4.2	19%

 

¹Covid-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.

²Starting Q1 2023, IDH has opted to stop reporting on its Covid-19-related revenues and test volumes due to their material insignificance to the consolidated figures and to Egypt's and Jordan's country-level results for the quarter. In the comparable period of last year (1H 2022) IDH had recorded EGP 615 million in Covid-19-related revenues and had performed 1.4 million Covid-19-related tests.

³Conventional (non-Covid) tests include all of the Group's test offering with the exception of its Covid-19-related test offering outlined above.

⁴Important notice: In the Company's earnings releases covering the five quarters starting from Q4 2021 and ending Q4 2022, management had opted to present Alternative Performance Measures (APM) alongside IFRS-compliant figures as outlined on page 2 of the Company's FY 2022 Earnings Release. Starting in Q1 2023, due to the material insignificance of Covid-19-related revenues on consolidated results, the Company will only report IFRS-compliant figures. It is worth noting that revenues for the comparable period (Q1 2022), include concession fees amounting to EGP 63 million paid by Biolab as part of its agreement with QAIA and Aqaba Port.

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

⁶Key operational indicators are calculated based on revenues for the periods of EGP 1,872 million and EGP 1,954 million for 1H 2023 and 1H 2022, respectively.

Important notice: In the Company's earnings releases covering the five quarters starting from Q4 2021 and ending Q4 2022, management had opted to present Alternative Performance Measures (APM) alongside IFRS-compliant figures as outlined on page 2 of the Company's FY 2022 Earnings Release. Starting in Q1 2023, due to the material insignificance of Covid-19-related revenues on consolidated results, the Company will only report IFRS-compliant figures. It is worth noting that revenues for the comparable period (1H 2022) include concession fees amounting to EGP 63 million paid by Biolab as part of its agreement with QAIA and Aqaba Port.

Introduction

 

i.    Financial Highlights

·    Conventional⁷ revenue booked EGP 1,872 million in the first half of 2023, a year-on-year increase of 40%. Conventional revenue growth was dual driven as conventional test volumes and average revenue per conventional test increased 13% and 24%, respectively, with the translation effect from a weaker EGP contributing just 8% to growth for the period. On a quarterly basis, IDH posted conventional revenues of EGP 957 million during Q2 2023, a 37% year-on-year expansion driven by a 14% rise in test volumes and a 20% increase in average revenue per test.

·    Total revenues stood at EGP 1,872 million during 1H 2023, a 4% year-on-year decline from 1H 2022's high base when Covid-19-related⁸ testing had made a significant EGP 615 million contribution⁹ to the total revenue figure. On a three-month basis, the Company recorded total revenues of EGP 957 million, representing a 24% year-on-year increase. It is important to note that the Company recorded its strongest monthly revenue figures in the months of May and June (when controlling for the Eid-related slowdown) signalling an acceleration which it expects to carry into the second half of the year.

·    Gross Profit during 1H 2023 recorded EGP 658 million, a 21% year-on-year decrease versus the comparable period when gross profitability had been boosted by IDH's Covid-19-related test offering. Gross profit margin (GPM) recorded 35% in 1H 2023 versus 43% in 1H 2022. Lower gross profitability in the first half of the year primarily reflected an increase in direct salaries and wages resulting from new staff hires and higher than usual salary increases for existing staff to compensate for increased inflation rates as well as higher depreciation related to the roll out of new branches. On a quarterly basis, gross profit booked EGP 333 million, increasing 11% year-on-year. GPM recorded 35% in Q2 2023, down from the 39% recorded in Q2 2022 and unchanged compared to the figure reported in Q1 2023.

·    EBITDA¹⁰ came in at EGP 462 million during 1H 2023, declining 35% year-on-year yielding an associated margin of 25%. Declining EBITDA profitability for the period was mainly driven by the aforementioned decreased gross profitability coupled with increased SG&A outlays including higher salary, auditing, and consulting expenses, with the latter two reflecting the impact of a weaker EGP, being USD-based. On a three-month basis, EBITDA remained relatively stable at EGP 234 million in Q2 2023, with an associated margin of 24%.

·    Net Profit for the six-month period ended 30 June 2023 stood at EGP 211 million, down 52% year-on-year and with a net profit margin (NPM) of 11%. On a quarterly basis, net profit booked EGP 43 million in Q2 2023, 66% below the figure reported in Q2 2022. It is important to note that IDH's net profit for 1H 2023 and Q2 2023 included a non-recurring expense of EGP 12 million related to contributions owed to the Egyptian government vocational training fund for the previous five-year period.

·    In light of the ongoing uncertainty and lack of foreign currency availability in Egypt, the Company will not be distributing a dividend to shareholders in respect of the financial year ended 31 December 2022. The Company remains committed to its long-term dividend policy that sees it return to shareholders the maximum amount of excess cash after taking careful account of the cash needed to support operations and expansions.

 

⁷Conventional (non-Covid) tests include IDH's full service offering excluding the Covid-19 related tests outlined below.

⁸Covid-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.

⁹Covid-19-related revenue in 1H 2022 includes EGP 63 million in concession fees paid by Biolab to Queen Alia International Airport and Aqaba Port as part of its revenue sharing agreement.

¹⁰EBITDA is calculated as operating profit plus depreciation and amortization.

 

 

ii.  Operational Highlights

·    IDH's branch network stood at 588 branches as of 30 June 2023, increasing by 50 branches compared to the same time last year. During Q2 2023, IDH inaugurated 12 additional branches, 11 in its home market of Egypt and one in Jordan.

·    Conventional test volumes recorded 16.5 million tests in 1H 2023, increasing 13% year-on-year. Total test volumes increased 3% year-on-year versus last year's 16.0 million tests which had included 1.4 million Covid-19-related tests.

·    Average revenue per conventional test reached EGP 114 during 1H 2023, a 24% year-on-year increase (out of which translation effect accounted for 8%). Consolidated average revenue per test decreased 7% year-on-year to EGP 114 from EGP 122 in 1H 2022 when the figure was boosted by contributions from the Group's Covid-19-related offering.

·    Total patients served by the Company during 1H 2023 came in at 3.9 million, down 14% from 1H 2022's high base. Meanwhile, following a post-pandemic normalisation, average test per patient increased to 4.2 tests in 1H 2023 from 3.5 tests in 1H 2022. This stands well above IDH's historical average of 3.9 tests per patient.

·    In Egypt (80.9% of total revenues) conventional business climbed 33% year-on-year to record revenues of EGP 1,514 million during 1H 2023. Conventional revenues were driven by a 14% year-on-year increase in test volumes, which stood at 15.1 million tests, as well as a 16% year-on-year rise in average revenue per test to EGP 100. Meanwhile, consolidated revenues in Egypt remained largely unchanged, recording EGP 1,514 million for the six-month period.

·    In Jordan (15.5% of total revenues), Biolab continued its impressive growth trend at its conventional business, posting year-on-year revenue growth in JOD terms of 9% primarily supported by an 8% rise in conventional tests performed versus last year. In EGP terms, conventional revenue grew 88% year-on-year to reach EGP 290 million in 1H 2023, mainly reflecting the translation effect resulting from a weakening EGP. Total revenues in EGP terms declined 25% year-on-year versus 1H 2022 when Biolab's top-line had been boosted by a large contribution from Covid-19-related testing.

·    In Nigeria (3.1% of total revenues), Echo-Lab continued to witness sustained growth in line with recent trends, as revenue in NGN terms expanded 19% year-on-year (EGP revenue growth was 73%).

·    In Sudan (0.5% of total revenues), IDH's subsidiaries recorded a 3% year-on-year revenue decline in EGP terms and 32% drop in SDG terms reflecting the temporary closure of 16 out of 18 branches starting in April following the start of the ongoing conflict in the country. As of 30 June 2023, IDH only had two operational branches in Sudan, in Madani and Port Sudan.

 

iii. Management Commentary

Commenting on the Group's performance, IDH Chief Executive Officer Dr. Hend El-Sherbini said: "I am delighted to report that IDH continued to build on a strong start to the year to deliver yet another set of impressive operational and financial results at our conventional business supported by solid performances across our Egyptian, Jordanian and Nigerian subsidiaries. The robust 40% year-on-year growth in conventional revenues for the six-month period came despite a difficult macroeconomic environment faced across our markets of operation as accelerating inflation, rising interest rates and weakening local currencies continued to impact our patients' purchasing power and our cost base. In parallel, during the second quarter of the year, patient volumes were affected by the expected slowdown associated with the holy month of Ramadan and Eid vacations which weighed on traffic in April and the last week of June. Despite this, in the first six months of 2023 we performed 13% more conventional tests than in the comparable period of 2022, supported by an expanded branch network and an enhanced service offering. In parallel, we also recorded a 24% year-on-year rise in average revenue per conventional test reflecting the annual price hikes introduced at the start of 2023. On this front, it is important to highlight that our price increases since the start of the year have lagged behind inflation, a strategic decision taken to help patients during the ongoing difficult times and build long-term loyalty in the process. It is also worth mentioning that total revenues for the first half of 2023 declined just 4% year-on-year, a remarkable result when considering the large contribution made by our Covid-19-related test offering during the first part of last year.

Looking at our markets in more detail, in both Egypt and Jordan we continued to observe growing demand for our conventional service offering with test volumes expanding 14% and 8% versus 1H 2022, respectively. Combined with rising average revenue per test, this translated in a robust 33% year-on-year conventional revenue expansion in Egypt and a 9% year-on-year conventional revenue growth in JOD terms in Jordan. Results like these continue to showcase both countries' underlying growth potential and further validate the effectiveness of our post-pandemic growth strategies. We were particularly happy to note that across both markets during the months of May and June (once adjusted for the Eid-related slowdown) we recorded the highest monthly revenue figures since the start of 2023. The accelerating growth, which we observed continue into July and August, displays the resilience of demand for our service offering despite the continued inflationary pressures impacting our patients and leaves us in a strong position heading into the second half of the year. During the six-month period, we continued to expand our branch network rolling out 31 new branches in Egypt and 4 new branches in Jordan, further cementing our leadership position in each market. In line with recent trends, we recorded robust contributions to revenue in Egypt made by our house call service, which remains well-above its average pre-pandemic contribution. In Egypt, we also remained committed to ramping up our radiology business, which in the first half of the year reported a 78% year-on-year increase in revenues and nearly doubled its contribution to the country's top-line. Meanwhile, in Nigeria, Echo-Lab recorded strong revenue growth in both local currency and EGP terms, supported by both its radiology and pathology offerings. Finally, as expected, results in Sudan were significantly impacted by the ongoing conflict which has seen 16 of our 18 branches temporarily shut down starting in April. Our team has put in place robust mitigation strategies to protect our people and operations, and regularly updates our response protocols to reflect the evolving conditions on the ground.

Further down the income statement, we reported lower margins at all levels of profitability primarily reflecting a post-Covid-19 normalisation and rising salary and wage expenses as we rolled out higher than usual annual increases to protect our staff against rising inflation as part of our talent retention strategy. Meanwhile, we continued to record only moderate increases in raw material outlays during the period, as we successfully leveraged our robust supplier relationships to secure favourable test-kit prices. Despite our cost base continuing to reflect the impacts of rising inflation and a weakening EGP, in the coming months we see them progressively normalising heading into 2024.

With two thirds of 2023 now behind us, I am confident that we remain well placed to deliver on our operational and financial targets for the year. In the coming months, we are particularly looking forward to launching operations in Saudi Arabia in December, while also making progress on our strategic priorities and value-creation strategies across existing markets. Considering our strong first half results, the solid strategies in place, and the positive momentum enjoyed by our Egyptian and Jordian subsidiaries, we reaffirm our guidance of full-year conventional revenue (excluding Covid-19-related contributions) year-on-year growth of around 30% for FY 2023."

- End -

Analyst and Investor Call Details

An analyst and investor call will be hosted at 1pm (UK) | 3pm (Egypt) on Monday, 4 September 2023. You can register for the call by clicking on this link.

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

About Integrated Diagnostics Holdings (IDH)

IDH is a leading diagnostics services provider in the Middle East and Africa offering a broad range of pathology and radiology tests to patients in Egypt, Jordan, Nigeria and Sudan. 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 552 branches as of 31 December 2022, IDH served over 8.7 million patients and performs more than 32.7 million tests in 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 six-month period ended 30 June 2023 have been prepared solely to provide additional information to shareholders to assess the group's performance in relation to its operations and growth potential. These results should not be relied upon by any other party or for any other reason. This communication contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, and can be identified by the use of such words and phrases as "according to estimates", "aims", "anticipates", "assumes", "believes", "could", "estimates", "expects", "forecasts", "intends", "is of the opinion", "may", "plans", "potential", "predicts", "projects", "should", "to the knowledge of", "will", "would" or, in each case their negatives or other similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding business and management, future growth or profitability and general economic and regulatory conditions and other matters affecting the Group.

 

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

 

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

Important notice: In the Company's earnings releases covering the five quarters starting from Q4 2021 and ending Q4 2022, management had opted to present Alternative Performance Measures (APM) alongside IFRS-compliant figures as outlined on page 2 of the Company's FY 2022 Earnings Release. Starting in Q1 2023, due to the material insignificance of Covid-19-related revenues on consolidated results, the Company will only report IFRS-compliant figures. It is worth noting that revenues for the comparable period (1H 2022) include concession fees amounting to EGP 63 million paid by Biolab as part of its agreement with QAIA and Aqaba Port.

Group Operational & Financial Review

 

i.    Revenue and Cost Analysis

 

Consolidated Revenue IDH maintained its impressive performance during the first six months of 2023, with revenues and volumes progressively picking up as the year progressed to record their strongest monthly figures in May and June (once adjusting for the Eid-related slowdown). During 1H 2023, conventional revenues expanded 40% year-on-year to record EGP 1,872 million. Conventional revenue growth for the period was driven by a 13% rise in test volumes and a 24% increase in average revenue per test (translation effect only contributed 8% to growth for the period). On a quarterly basis, IDH's conventional revenues grew 37% year-on-year to EGP 957 million in Q2 2023 driven by increases in test volumes and average revenue per test. Meanwhile, IDH's total revenues reached EGP 1,872 million in 1H 2023, down 4% year-on-year as Covid-19-related testing had impacted total results of 1H 2022. On a three-month basis, IDH recorded total revenues of EGP 957 million, a 24% year-on-year increase from EGP 774 million one year prior.

Revenue Analysis

	Q1 2022	Q1 2023	Q2 2022	Q2 2023	%	1H 2022	1H 2023	%
Total revenue (EGP mn)	1,180	915	774	957	24%	1,954	1,872	-4%
Conventional revenue (EGP mn)	640	915	699	957	37%	1,339	1,872	40%
Covid-19-related revenue (EGP mn)	540	-	75	-	-	615	-	-
Contribution to Consolidated Results
Conventional revenue	54%	100%	90%	100%		69%	100%
Covid-19-related revenue	46%	-	10%	-		31%	-

Test Volume Analysis

Total tests (mn)	8.4	8.0	7.6	8.5	12%	16.0	16.5	3%
Conventional tests performed (mn)	7.1	8.0	7.4	8.5	13%	14.5	16.5	13%
Total Covid-19-related tests performed (mn)	1.3	-	0.2	-	-	1.5	-	-
Contribution to Consolidated Results
Conventional tests performed	85%	100%	97%	100%		91%	100%
Total Covid-19-related tests performed	15%	-	3%	-		9%	-

Revenue per Test Analysis

Total revenue per test (EGP)	140	114	102	113	11%	122	114	-7%
Conventional revenue per test (EGP)	90	114	94	113	20%	92	114	24%
Covid-19-related revenue per test (EGP)	431	-	454	-		422	-	-

 

Revenue Analysis: Contribution by Patient Segment   Contract Segment (64% of Group revenue) The Company's contract segment booked conventional revenues of EGP 1,193 million during 1H 2023, a 44% year-on-year increase from the EGP 827 million recorded one year prior. Conventional revenues at IDH's contract segment were driven by increases in test volumes and average revenue per conventional test, which increased 18% and 22% year-on-year (of which 4% was related to the translation effect), respectively. During the period, IDH recorded a notable increase in total tests per patient at the segment, which reached a record 4.4 tests in 1H 2023 from 4.0 last year. Higher tests per patient were supported both by a post-Covid-19 patient mix normalisation coupled with the success of a new loyalty programme introduced at the end of FY 2021.   Walk-in Segment (36% of Group revenue) Meanwhile, IDH's walk-in segment reported conventional revenue growth of 33% year-on-year during 1H 2023, booking revenues of EGP 679 million. While test volumes remained relatively stable compared to the same period of the previous year, declining 4% year-on-year, revenue growth was entirely driven by increases in average revenue per conventional test, which expanded 38% year-on-year to EGP 226 during 1H 2023 (of which 14% was related to the translation effect) from EGP 163 one year prior. Similar to trends witnessed at the contract segment, total walk-in tests per patient reached their highest value on record at 3.6 tests up impressively from the 2.5 tests per patient recorded in 1H 2022.

Detailed Segment Performance Breakdown

	Walk-in Segment			Contract Segment			Total
	1H22	1H23	Change	1H22	1H23	Change	1H22	1H23	Change
Revenue (EGP mn)	857	679	-21%	1,097	1,193	8%	1,954	1,872	-4%
Conventional Results (EGP mn)	512	679	33%	827	1,193	44%	1,339	1,872	40%
Total Covid-19-related revenue (EGP mn)	345	-	-	270	-	-	615	-	-
Patients ('000)	1,513	833	-45%	3,027	3,084	2%	4,541	3,917	-14%
% of Patients	33%	21%		67%	79%
Revenue per Patient (EGP)	565	815	44%	363	387	7%	430	478	11%
Tests ('000)	3,849	3,008	-22%	12,155	13,457	11%	16,004	16,465	3%
% of Tests	24%	18%		76%	82%
Conventional tests ('000)	3,135	3,008	-4%	11,412	13,457	18%	14,547	16,465	13%
Total Covid-19-related tests ('000)	714	-	-	744	-	-	1,458	-	-
Revenue per Test (EGP)	222	226	2%	90	89	-2%	122	114	-7%
Conventional Revenue per Test (EGP)	163	226	39%	72	89	23%	92	114	24%
Test per Patient	2.5	3.6	42%	4.0	4.4	9%	3.5	4.2	19%

 

Revenue Analysis: Contribution by Geography   Egypt (80.9% of Group revenue) IDH's conventional business in Egypt continued delivering notable growth, progressively picking up throughout the first six months of the year and recording the strongest monthly revenue figures for the year in May and June (once adjusting for the Eid-related slowdown). Revenues have remained strong during July and August and the Company expects the trend to continue heading further into the second half of the year.   More specifically, the Company recorded conventional revenue growth of 33% year-on-year in 1H 2023, supported by simultaneous expansions in test volumes and average revenue per conventional test, which grew 14% and 16% year-on-year, respectively. Total revenues from IDH's Egyptian operations remained relatively unchanged, declining just 1% year-on-year to EGP 1,514 million in 1H 2023.   On a quarterly basis, IDH recorded conventional revenues of EGP 783 million in Q2 2023, up a solid 32% year-on-year and 7% quarter-on-quarter. Total revenues also expanded by 21% year-on-year as the impact of Covid-19-related testing on the comparable three-month period of 2022 significantly declined starting April.   Al-Borg Scan IDH's fast-growing radiology venture maintained its growth trend throughout the second quarter of 2023, recording revenues of EGP 63 million in 1H 2023, a 78% year-on-year increase. Revenue expansion was primarily driven by increased average revenue per test, which grew 44% year-on-year to EGP 807, and increased test volumes, which climbed 23% year-on-year to 78 thousand tests during the six-month period. Al-Borg Scan has also continued increasing its contribution to Egypt's top-line figure, constituting 4% of Egypt revenues during the first six months of 2023 versus only 2% in the same period of the previous year. To capitalize on the growing demand for Al-Borg Scan's offering, IDH has, over the last two years, launched four new branches taking the total to six as at 30 June 2023. In the coming months, IDH plans to add an additional seventh branch to its radiology venture in Egypt.   House Calls Throughout the first six months of the year, IDH's house call service in Egypt continued to make a remarkable contribution of 16% to total revenues in the country. This continues to be well-above the service's pre-pandemic contribution, further showcasing the segment's growth potential, and the success of IDH's investment strategy which has seen it significantly boost the service's capabilities since 2020.   Wayak During the six-month period ending 30 June 2023, Wayak recorded 83 thousand orders, a 29% year-on-year increase compared to 64 thousand in the same six-month period of the previous year. Meanwhile, the venture's EBITDA losses continued to narrow to record EGP 746 thousand compared to EBITDA losses of EGP 1.7 million booked in the six-month period ending 30 June 2022. It is also worth noting that Wayak's EBITDA turned positive for the months of May and June, a trend which IDH will look to maintain heading into the second half of the year.

 

Detailed Egypt Performance Breakdown

Revenue Analysis

EGP mn	Q1 2022	Q1 2023	Q2 2022	Q2 2023	%	1H 2022	1H 2023	%
Total Revenue	879	731	645	783	21%	1,524	1,514	-1%
Conventional Revenue	549	731	591	783	32%	1,140	1,514	33%
Pathology Revenue	532	703	573	748	31%	1,105	1,451	31%
Radiology Revenue	17	28	19	35	89%	35	63	78%
Total Covid-19-related Revenue	330	-	53	-		384	-
Contribution to Consolidated Results
Conventional revenue	62%	100%	92%	100%		75%	100%
Pathology Revenue	61%	96%	89%	96%		73%	96%
Radiology Revenue	1.9%	3.8%	2.9%	4.5%		2.3%	4.2%
Total Covid-19-related revenue	38%	-	8%	-		25%	-

Test Volume Analysis

Total tests (mn)	7.3	7.3	6.9	7.8	13%	14.2	15.1	6%
Conventional tests performed (mn)	6.5	7.3	6.7	7.8	16%	13.2	15.1	14%
Total Covid-19-related tests performed (mn)	0.8	-	0.1	-		0.9	-
Contribution to Consolidated Results
Conventional tests performed	89%	100%	98%	100%		94%	100%
Total Covid-19-related tests performed	11%	-	2%	-		6%	-

 

Jordan (15.5% of Group revenue) Similar to trends seen in Egypt, IDH witnessed a steady rise in revenues throughout the first half of 2023, with Biolab recording its highest monthly revenue figures for the year in May and June (adjusting for the Eid-vacation slowdown). Overall, in 1H 2023, Biolab recorded conventional year-on-year revenue growth of 9% in JOD terms, supported by a solid 8% year-on-year rise in conventional tests performed. In EGP terms, conventional revenues posted an 88% year-on-year rise, in part boosted by the translation effect which saw average revenue per conventional test in EGP terms rise by 74% versus 1H 2022.   On a quarterly basis, Biolab recorded year-on-year conventional revenue growth of 6% in JOD terms supported by a 4% year-on-year rise in conventional test volumes for the quarter. In EGP terms, year-on-year conventional revenue growth in Q2 2023 stood at 73% on the back of a significant rise in average revenue per test following the devaluations of the EGP.

Detailed Jordan Performance Breakdown

Revenue Analysis

EGP mn	Q1 2022	Q1 2023	Q2 2022	Q2 2023	%	1H 2022	1H 2023	%
Total Revenue	280	144	106	146	38%	386	290	-25%
Conventional Results	70	144	84	146	73%	155	290	88%
Total Covid-19-related Revenues (PCR and Antibody)	210	-	21	-		232	-
Contribution to Consolidated Results
Conventional Results	25%	100%	79%	100%		40%	100%
Total Covid-19-related Revenue (PCR and Antibody)	75%	-	20%	-		60%	-

Test Volume Analysis

Total tests (k)	991	582	603	598	-1%	1,594	1,180	-26%
Conventional tests performed (k)	519	582	572	598	4%	1,091	1,180	8%
Total Covid-19-related tests performed (k)	472	-	30	-		502	-
Contribution to Consolidated Results
Conventional tests performed	52%	100%	95%	100%		68%	100%
Total Covid-19-related tests performed	48%	-	5%	-		32%	-

 

Nigeria (3.1% of revenue) IDH's Nigerian subsidiary, Echo-Lab, recorded robust revenue growth of 19% year-on-year in NGN terms, booking revenues of NGN 937 million during the six-month period. In EGP terms, the Company booked revenues of EGP 58 million, increasing 73% year-on-year from the EGP 33 million booked during the same period of the previous year. Revenue growth for the year was driven by a 71% increase in average revenue per test in EGP terms and 18% in NGN terms. Test volumes, on the other hand, increased a marginal 1% year-on-year to 136 thousand tests in 1H 2023.   Sudan (0.5% of revenue) IDH's Sudanese operations recorded revenues of SDG 197 million, down 32% year-on-year in 1H 2023. In EGP terms, revenue declined 3% year-on-year to reach EGP 10 million from EGP 10.5 million one year prior. The decline in revenues during 1H 2023 was primarily a result of the halting of operations in 16 of 18 branches in April of this year as a result of the ongoing conflict in the country. The Company continues to monitor the situation closely and will update the market should the situation evolve.

 

Revenue Contribution by Country

	Q1 2022	Q1 2023	Q2 2022	Q2 2023	%	1H 2022	1H 2023	Change
Egypt Revenue (EGP mn)	879	731	645	783	21%	1,524	1,514	-1%
Conventional (EGP mn)	549	731	591	783	32%	1,140	1,514	33%
Pathology Revenue	532	703	573	748	31%	1,105	1,451	31%
Radiology Revenue	17	28	19	35	89%	35	63	78%
Covid-19-related (EGP mn)	330	-	53	-		384	-
Egypt Contribution to IDH Revenue	74.5%	79.9%	83.2%	81.8%		78.0%	80.1%
Jordan Revenue (EGP mn)	280	144	106	146	38%	386	290	-25%
Conventional (EGP mn)	70	144	84	146	73%	155	290	88%
Covid-19-related (EGP mn)	210	-	21	-		232	-
Jordan Revenues (JOD mn)	12.5	3.4	4.0	3.4	-16%	16.5	6.8	-59%
Conventional (JOD mn)	3.0	3.4	3.2	3.4	6%	6.2	6.8	9%
Jordan Revenue Contribution to IDH Revenue	23.7%	15.7%	13.7%	15.2%		19.8%	15.5%
Nigeria Revenue (EGP mn)	15	31	19	27	44%	33	58	73%
Nigeria Revenue (NGN mn)	371	468	416	469	13%	787	937	19%
Nigeria Contribution to IDH Revenue	1.3%	3.4%	2.5%	2.8%		1.7%	3.1%
Sudan Revenue (EGP mn)	5.7	8.8	4.8	1.4	-71%	10.5	10.2	-3%
Sudan Revenue (SDG mn)	152	169	137	27	-80%	289	197	-32%
Sudan Contribution to IDH Revenue	0.5%	1.0%	0.6%	0.1%		0.5%	0.5%

 

Average Exchange Rate

	1H 2022	1H 2023	Change
USD/EGP	17.6	30.7	74.4%
JOD/EGP	24.7	42.8	73.4%
NGN/EGP	0.04	0.06	26.2%
SDG/EGP	0.04	0.05	42.0%

 

Patients Served and Tests Performed by Country

	1H 2022	1H 2023	Change
Egypt Patients Served (mn)	3.8	3.7	-3%
Egypt Tests Performed (mn)	14.2	15.1	6.5%
Conventional tests (mn)	13.2	15.1	14%
Covid-19-related tests (mn)	1.0	-	-
Jordan Patients Served (k)	670	183	-73%
Jordan Tests Performed (k)	1,594	1,180	-26%
Conventional tests (k)	1,091	1,180	8%
Covid-19-related tests (k)	502	-	-
Nigeria Patients Served (k)	70	69	-2%
Nigeria Tests Performed (k)	135	136	1%
Sudan Patients Served (k)	46	14	-69%
Sudan Tests Performed (k)	84	40	-52%
Total Patients Served (mn)	4.5	3.9	-14%
Total Tests Performed (mn)	16.0	16.5	3%

 

Branches by Country

	30 June 2022	30 June 2023	Change
Egypt	488	531	43
Jordan	21	27	6
Nigeria	12	12	-
Sudan	17	18	1
Total Branches	538	588	50

 

-Cost of Sales Cost of sales increased 8% year-on-year in the first six months of 2023, to record EGP 1,214 million. As a percentage of revenues, cost of sales increased seven percentage points year-on-year in the six-month period ended 30 June 2023, to reach 64.9%. The year-on-year increase reflected primarily higher salaries and wages, as well as partially increased raw material expenses and higher direct depreciation booked in 1H 2023.   Cost of Sales Breakdown as a Percentage of Revenue 1H 2022 1H 2023 Raw Materials 20.3% 21.5% Conventional raw material costs as % of conventional revenues 16.4% 21.5% Covid-19-related raw material costs as % of Covid-19-related revenues 29.6% - Wages & Salaries 16.8% 20.4% Depreciation & Amortisation 6.7% 9.4% Other Expenses 13.6% 13.5% Total 57.4% 64.9%   Raw material costs (33% of consolidated cost of sales) was the largest contributor to cost of sales during the period. Raw material costs recorded EGP 402 million during 1H 2023, and amounted to 21% of total Group revenues. During the period, the Company booked a rise in the average cost for conventional test kits on the back of a weaker EGP and rising inflation across its markets of operation. This saw conventional raw material costs as a share of revenues reach 21.5% in 1H 2023, up five percentage points year-on-year. It is important to note that the significant increase in the cost of conventional test kits as a share of revenue is attributable to a delay in the delivery of free test kits from IDH's main suppliers during Q2 2023 as part of special arrangements to support the Company during the ongoing turbulent times. The delivery of free test kits is expected to normalise in the third quarter of the year.   Wages and salaries including employee share of profits (32% share of consolidated cost of sales) was the second largest contributor to cost of sales during 1H 2023, amounting to EGP 383 million in 1H 2023. During the period, wages and salaries as a percentage of revenues stood at 20.4%, increasing from 16.8% in the same period of the previous year. The year-on-year increase in direct wages and salaries is attributable to new staff hires across IDH's newly launch branches, coupled with higher than usual compensation increases for existing staff to compensate for increased inflationary pressures in IDH's home market of Egypt. Meanwhile, the year-on-year rise in NGN terms of Nigeria's salary and wage expenses reflects an increase in USD-denominated compensation of Echo-Lab's expat personnel on the back of a weaker Naira and rising inflation.   Direct Wages and Salaries by Region 1H 2022 1H 2023 Egypt (EGP mn) 260 287 Jordan (EGP mn) 60 78 Jordan (JOD mn) 2 2 Nigeria (EGP mn) 8 16 Nigeria (NGN mn) 186 272 Sudan (EGP mn) 2 2 Sudan (SDG mn) 51 48   Direct depreciation and amortization costs (15% of consolidated cost of sales) increased 34% year-on-year in 1H 2023 to EGP 176 million compared to EGP 132 million one year prior. Increases in depreciation and amortization expenses were primarily due to the expansion of Al-Borg Scan's branches as well as the rollout of additional branches throughout the Company's wider network. More specifically, depreciation booked by Al-Borg Scan's branches contributed 28% of total direct depreciation in 1H 2023.   Other expenses (21% of consolidated cost of sales) during the first half of 2023 recorded EGP 253 million, down 5% year-on-year from the EGP 266 million recorded in 1H 2022. It is important to note that other expenses booked in 1H 2022 had included EGP 63 million paid in concession fees as part of Biolab's agreement with Queen Alia International Airport and Aqaba Port to provide Covid-19-related testing during January and February of last year. Excluding these concession fees, other expenses increased by 25% year-on-year during 1H 2023, mainly on the back of increases recorded in Egypt and Nigeria. The increase in Egypt primarily reflects a change in the treatment of revenue-sharing hospital contracts starting in Q2 2023, which saw revenue-sharing expenses in 1H 2023 rise by 330% year-on-year, contributing to nearly half of other expenses growth for the period. In Nigeria, higher gasoline prices and general inflation were the main contributors to the increase in other expenses for the period.   Gross Profit The Company booked gross profit of EGP 658 million in 1H 2023, down 21% year-on-year from the high base of EGP 832 million posted during 1H 2022. Meanwhile, IDH's gross profit margin came in at 35% compared to 43% in 1H 2022. Lower gross profitability during the period reflected both the above-mentioned increase in direct salaries and wages and depreciation, as well as an expected normalization of margins following the decline in Covid-19-related testing.   On a quarterly basis, IDH booked gross profit of EGP 333 million, up 11% year-on-year from EGP 300 million in Q2 2022 when contributions from the Company's Covid-19-related offering had already begun to decline. IDH recorded a GPM of 35% in Q2 2023, down four percentage points year-on-year, as gross profitability was impacted by rising inflation and a weaker EGP. Meanwhile, IDH's GPM remained relatively stable compared to Q1 2023.   Selling, General and Administrative Expenses IDH's SG&A outlays during 1H 2023 amounted to EGP 367 million, up 43% year-on-year. As a percentage of revenues, SG&A outlays stood at 20% in 1H 2023 versus 13% in 1H 2022. Increased SG&A expenses were mainly driven by: ·    Increases in wages and salaries, which expanded by 53% year-on-year to EGP 141 million during 1H 2023 primarily due to higher-than-usual annual adjustments to employee compensation packages to support them during the ongoing challenging period. Increased wages and salaries also partially reflected an increase in USD-denominated directors' compensation and the addition of a board member in March 2022 (who received compensation starting March 2022). Wages and salaries as a share of revenue increased to 8% in 1H 2023 from 5% in 1H 2022. ·    Increases in other expenses, which grew 59% year-on-year to EGP 153 million in 1H 2023 due to the increase of USD-denominated expenses (including USD-denominated auditor fees) for the holding company. ·    One-off legal consultancy expenses related to the termination of the Pakistan deal in the first quarter of 2023.       Selling, General and Administrative Expenses 1H 2022 1H 2023 Change Wages & Salaries         92 141 53% Accounting Fees 18 38 111% Professional Services Fees 18 32 78% Market - Advertisement expenses 54 52 -4% Other Expenses           53 70 32% Depreciation & Amortisation 15 20 32% Travelling and transportation expenses 7 14 100% Total         257 367 43%   EBITDA IDH posted EBITDA11 of EGP 462 million in 1H 2023, down 35% year-on-year from the figure reported in 1H 2022 when Covid-19-related testing has significantly boosted results. The Company's EBITDA margin was 25% during the six-month period, declining 12 points year-on-year on the back of lower gross profitability as well as the 46% year-on-year increase in SG&A outlays discussed above. It is worth highlighting that when controlling for non-recurring items, such as a loss on expired Covid-19 kit inventory (EGP 12 million), one-off legal reports (EGP 3 million), legal fees related to the termination of the Pakistan agreement (EGP 8 million), IDH would have recorded an EBITDA of EGP 483 million and yielded an associated margin of 26%.   On a quarterly basis, the Company booked EBITDA of EGP 234 million in Q2 2023, a 3% year-on-year decrease and with an associated margin of 24%.   11EBITDA is calculated as operating profit plus depreciation and amortization. It is important to note that while in absolute terms the EBITDA figure is identical when using IFRS or APM, its margin differs between the two sets of performance indicators only for the comparable period of 2022. Margins for Q1 2023 are identical across both IFRS and APM.   EBITDA by Country In Egypt, IDH's operations recorded an EBITDA of EGP 407 million in 1H 2023, down 35% from the figure recorded in 1H 2022 which had included a notable contribution from Covid-19-related testing. EBITDA margin recorded 27% in 1H 2023 versus 41% in the same period of the previous year. Lower EBITDA profitability reflects a post-pandemic normalisation in gross profits which declined 20% year-on-year coupled with a 40% year-on-year increase in SG&A expenses.   Biolab, IDH's Jordanian subsidiary, recorded EBITDA in local currency terms of JOD 1.6 million, declining 60% year-on-year from 1H 2022 when Covid-19-related testing had significantly contributed to results. Biolab recorded an EBITDA margin of 24% compared to 29% in the same period of last year in local currency terms. In EGP terms, EBITDA declined 25% year-on-year to EGP 69 million. EBITDA profitability declined during 1H 2023 due to a 26% year-on-year decrease in gross profit and 48% year-on-year increase in SG&A outlays during the period. It is worth highlighting that SG&A expense increases partially reflect the translation effect from the devaluation of the Egyptian Pound over the past year. In JOD terms, SG&A expenses increased just 44% versus last year.   In Nigeria, IDH recorded an EBITDA loss of NGN 233 million in 1H 2023, widening from NGN 80 million during the same period of last year. In EGP terms, EBITDA losses widened to EGP 15 million in 1H 2023 from EGP 3.3 million in the same six-month period of 2022. The widening in EBITDA losses for the period was primarily driven by lower gross profitability in Nigeria. The rise in Echo-Lab's cost of sales has been driven by higher gasoline and electricity prices and have continued to weigh down on gross profitability since the start of the year.   In Sudan, IDH recorded EBITDA of SDG 24 million, well above the EBITDA figure of SDG 4 million recorded in the same six months of 2022. In EGP terms, Sudan's operations generated an EBITDA of EGP 1.2 million, up from EGP 0.1 million in 1H 2022. Improved EBITDA profitability comes despite the notable operational difficulties faced by IDH's Sudanese operations. More specifically, 16 of IDH's 18 branches in the country have been temporarily shut down since April due to the ongoing conflict.   Regional EBITDA in Local Currency Mn 1H 2022 1H 2023 Change Egypt EBITDA EGP 622 407 -35% Margin   41% 27%   Jordan JOD 4.0 1.6 -60% Margin     29% 24%     Nigeria NGN -80 -233 192% Margin   -10% -25%   Sudan SDG 4 24.1 494% Margin   1% 12%     Interest Income / Expense IDH's interest income during 1H 2023 stood at EGP 30 million, decreasing 60% year-on-year from the EGP 75 million booked during the same six-month period of last year. Lower interest income during the period was mainly due to the Company's lower cash balances as a result of record cash dividends distributed during last year.   Interest expense12 amounted to EGP 76 million during 1H 2023, up 18% year-on-year from EGP 64 million during 1H 3033. Increased interest expenses were mainly driven by: ·    Increased interest on lease liabilities related to IFRS 16 due to the rollout of new branches. ·    Higher interest expenses following the CBE decision to increase rates by 1,000 bps since March 2022. It is important to note that IDH's interest bearing debt balance decreased to EGP 108 million as at 30 June 2023, from EGP 117 million at year-end 2022. During the six-month period, as part of IDH's strategy to reduce foreign currency risk the Company agreed with General Electric (GE) for the early repayment of its contractual obligation of USD 5.7 million. To finance the settlement, IDH utilized a bridge loan facility, with half the amount being funded internally, while the other half (amounting to EGP 55 million) was provided through a bridge loan by Ahly United Bank- Egypt (AUBE). Interest expenses related to the AUBE facility recorded EGP 12 million in 1H 2023. The bridge loan was fully settled in Q2 2023.   Interest Expense Breakdown EGP mn 1H 2022 1H 2023 Change Interest on Lease Liabilities (IFRS 16) 34.9 45.2 29% Interest Expenses on Leases 9.3 13.7 47% Interest Expenses on Borrowings13 5.2 11.6 123% Bank Charges 8.8 5.3 -39% Loan-related Expenses on IFC facility14 5.9 - - Total Interest Expense 64.1 75.9 18%   12Interest expenses on medium-term loans include EGP 12.0 related to the Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's facility with the Commercial International Bank (CIB) was fully repaid as of 5 April 2022. 13Interest expenses on medium-term loans include EGP 12.0 related to the Group's facility with Ahli United Bank Egypt (AUBE). Meanwhile, the Group's facility with the Commercial International Bank (CIB) was fully repaid as of 5 April 2022. 14Loan-related expenses on IFC facility represents commitment fees on the facility granted by IFC and Mashreq with a total value of USD 60 million. The facility was cancelled in May 2023.   Foreign Exchange The Company recorded a foreign exchange gain of EGP 102 million during the six-month period, a 47% year-on-year increase partially reflecting intercompany balances revaluation.   Taxation Tax expenses, which include income and deferred tax, amounted to EGP 98 million during 1H 2023, a 53% year-on-year decrease. The Company's effective tax rate came in at 32%, unchanged versus the same six-month period of the previous year. It is important to highlight that there is no tax payable for IDH's two holding-level companies. Meanwhile, tax was paid on profits resulting from the Group's operating subsidiaries (Egypt 27.5%, Jordan 36.6%, Nigeria 0.2%, Sudan 11.4%).   Taxation Breakdown by Region EGP Mn 1H 2022 1H 2023 Change Egypt 196.0 91.1 -53% Jordan 14.6 6.6 -55% Nigeria -0.2 -0.1 -63% Sudan 0.1 0.5 350% Total Tax Expenses 210.5 98.1 -53%   Net Profit IDH's net profit in 1H 2023 came in at EGP 211 million, down 52% year-on-year. Meanwhile, the Company's net profit margin recorded 11%, down 11 percentage points from 22% in the same six-month period last year. On a three-month basis, the Company posted net profit of EGP 43 million, down 66% year-on-year. IDH's bottom-line on both a year-to-date and quarterly basis was impacted by a non-recurring expense of EGP 12 million related to contributions owed to the Egyptian government vocational training fund for the previous five-year period. Controlling for this, IDH would have booked a net profit of EGP 223 million in 1H 2023 and EGP 55 million in Q2 2023.   The EGP 12 million non-recurring expense is in accordance with article 134 of labour law on Vocational Guidance and Training issued by the Egyptian Government in 2003. In accordance with the law, IDH's Egyptian operations are required to provide 1% of net profits each year into a training fund. Integrated Diagnostics Holdings plc has taken legal advice and considered market practices in Egypt relating to the law, and more specifically whether vocational training courses undertaken by the Company's Egyptian subsidiaries suggest that obligations have been satisfied by in-house training programmes provided by those entities. Since the issue of the law, IDH's Egyptian subsidiaries have not been requested by the government to pay, nor have they voluntarily paid, any amounts into the external training fund.

 

 

ii.  Balance Sheet Analysis

Assets Property, Plant and Equipment The Company recorded gross property, plant and equipment (PPE) of EGP 2,411 million as at 30 June 2023, increasing from EGP 2,208 million at year-end 2022. The rise in CAPEX as a share of revenues during 1H 2023 was driven mainly by the addition of new branches to IDH's network (contributing 9% of revenues), while the rest is attributable to the translation effect related to Jordan, Sudan, and Nigeria (contributing 2% of revenues).   Total CAPEX Addition Breakdown - 1H 2023 EGP mn % of Revenue Leasehold Improvements/new branches 154.9 8.3% Al-Borg Scan Expansion 14.1 0.8% Total CAPEX Additions Excluding Translation 169.5 9.1% Translation Effect 34.3 1.8% Total CAPEX Additions 203.4 10.9%   Accounts Receivable and Provisions Accounts receivable as at 30 June 2023 stood at EGP 532 million, increasing 35% year-to-date from EGP 395 million. IDH's receivables' Days on Hand (DoH) came in at 136 days, increasing from 124 days as at 31 December 2022.   Provisions for doubtful accounts recorded EGP 23 million in 1H 2023, up from EGP 16 million in the same period of the previous year. Increased provisions and receivable balance during the six-month period are mainly attributable to slower collection rates as a result of sustained economic downturns in IDH's geographies and, mainly, in the Company's home market of Egypt.   Inventory IDH's inventory balance as of the end of the first six months of 2023 recorded EGP 361 million, increasing from EGP 265 million as of the end of 2022. Meanwhile, Days Inventory Outstanding (DIO) came in at 148 days, up from 127 days on a year-to-date basis. Increases in DIO were mainly driven by management strategy to accumulate inventory as a hedge against inflation over the past year.   Cash and Net Debt/Cash Cash balances stood at EGP 666 million as of 30 June 2023, declining from EGP 816 million as of year-end 2022. The decline in cash balances is primarily related to the aforementioned decision for the early repayment of IDH's contractual obligation of USD 5.7 million (equivalent to EGP 110 million) to reduce exposure to foreign currency risk using internal resources as well as a bridge loan facility provided by AUBE, where the latter was also fully settled in Q2 2023.   EGP million 31 Dec 2022 30 Jun 2023 T-Bills               296 238 Time Deposits                  123 95 Current Accounts               378 313 Cash on Hand                 18 21 Total           816 666   IDH's net debt15 balance came in at EGP 482 million as of the end of 1H 2023, increasing 29% year-to-date from EGP 374 million as of year-end 2022.   15The net cash/(debt) balance is calculated as cash and cash equivalent balances including financial assets at amortised cost, less interest-bearing debt (medium term loans), finance lease and Right-of-use liabilities.   EGP million 31 Dec 2022 30 Jun 2023 31 Dec 2021 Cash and Financial Assets at Amortised Cost16 816 666 2,350 Lease Liabilities Property (727) (777) 106 Total Financial Liabilities (Short-term and Long-term) (335) (249) Interest Bearing Debt ("Medium Term Loans") (127) (122) Net Cash/(debt) Balance  (374)  (482)            1,483 Note: Interest Bearing Debt includes accrued interest for each period.   Lease liabilities and financial obligations on property came in at EGP 777 million as at 31 June 2023, up from EGP 727 million as at year-end 2022. Higher lease liabilities were driven by the launch of 50 new branches across IDH's branch network in the twelve months to 30 June 2023.   Meanwhile, financial obligations related to equipment recorded EGP 249 million as at the end of 1H 2023, down from EGP 335 million as at the end of 2022. Declining financial obligations related to equipment is a result of the early repayment of IDH's obligations with General Electric (GE) as part of the Company's efforts to hedge against foreign currency risk. Half of the settlement was financed internally by the Company, while the other half was financed through a bridge loan facility from AUBE.   Finally, interest bearing debt17 recorded EGP 108 million, down from EGP 117 million as at year-end 2022. The decrease is mainly attributable to the repayment of EGP 8.5 million in accordance with Al-Borg Scan's medium term loan repayment schedule.   Liabilities Accounts Payable18 Accounts payable stood at EGP 377 million as at the end of 1H 2023, increasing from EGP 270 million six months earlier. In parallel, IDH's Days Payable Outstanding (DPO) came in at 153 days, up from 151 days as at year-end 2022.   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 Biolab's LTM EBITDA minus net debt. Biolab's put option liability decreased following the significant decline in the venture's EBITDA for the period.   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).   16As outlined in Note 18 of IDH's Consolidated Financial Statements, some term deposits and treasury bills cannot be accessed for over 3 months and are therefore not treated as cash. Term deposits which cannot be accessed for over 3 months stood at EGP 113 million in Q1 2023, versus EGP 123 million as at year-end 2022. Meanwhile, treasury bills not accessible for over 3 months stood at EGP 342 million in Q1 2023, up from EGP 296 million in FY 2022. 17IDH's interest bearing debt as at 31 March 2023 included EGP 172 million to its facility with Ahli United Bank Egypt (AUBE) (outstanding loan balances are excluding accrued interest for the period). It is worth noting that in order to finance the early repayment settlement with General Electric, the Company utilized a bridge loan facility of EGP 55 million. The facility was withdrawn in Q1 2023 and settled in Q2 2023. 18Accounts payable is calculated based on average payables at the end of each period.

-End-