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Annual
Report
20
18
Proven Experience
A Leading Consumer Healthcare
Company in the Middle East and Africa
A long track record for quality and
safety has earned the Group a trusted
reputation, as well as internationally
recognised accreditations
CONTENTS
01
Introduction
4
IDH at a Glance .............................................................................................................................................6
Highlights of 2018 .........................................................................................................................................8
Chairman’s Note ......................................................................................................................................... 12
02
Strategic Report
14
Chief Executive’s Review ........................................................................................................................ 16
Our Markets ................................................................................................................................................. 20
Our Business Model.................................................................................................................................. 30
Our Services & Brands ............................................................................................................................ 34
Competitive Strengths & Growth Strategy .................................................................................40
Principle Risks, Uncertainties & their Mitigation .......................................................................44
03
Performance Review
50
Financial & Operational Review ........................................................................................................ 52
Corporate Social Responsibility ........................................................................................................ 62
04
Corporate Governance
64
Board of Directors ..................................................................................................................................... 66
Corporate Governance Report .......................................................................................................... 68
Audit Committee Report ........................................................................................................................76
Remuneration Committee Report ....................................................................................................80
Directors’ Report ........................................................................................................................................ 82
05
Financial Statements
86
Independent Auditor’s Report ............................................................................................................ 88
Consolidated Financial Statements ................................................................................................ 94
Notes to the Consolidated Financial Statements .................................................................... 99
Introduction
With a track record of over four decades, IDH
has established a reputation as a trusted and
quality provider of over 1,400 diagnostic tests
with internationally recognised accreditations
Introduction
IDH at a Glance
Integrated Diagnostics Holdings (“IDH,” the
“Group,” or the “Company”) is a leading con-
sumer healthcare company in the Middle East
and Africa with operations in Egypt, Jordan,
Sudan and Nigeria. With a track record of
over four decades, the Group has established
a reputation as a trusted and quality provider
of over 1,400 diagnostic tests with internation-
ally recognised accreditations. IDH operated
423 branches across its geographic footprint
as of 31 December 2018, deploying a CAPEX-
light Hub, Spoke and Spike business model
to fuel its continued expansion. The Group’s
organic growth strategy goes hand-in-hand
with its pursuit of strategic acquisition op-
portunities in new regional markets where its
model is well-suited to capitalise on similar
healthcare and consumer trends. In early
2018, IDH expanded its geographic footprint
with its acquisition of Echo-Lab in Nigeria
(previously Echo-Scan), and later in the year
marked its expansion into the high-value
radiology segment with the inauguration of
its first full-fledged radiology branch, Al Borg
Scan, in Egypt. IDH has been a Jersey-regis-
tered entity with a Standard Listing on the
Main Market of the London Stock Exchange
since May 2015.
+40 YEARS
track record at the subsidiary levels
4
countries across the Middle East & Africa
6
key brands with strong awareness
in underserved markets
432
operational branch labs as at 31
December 2018
LSE
listed since May 2015
1.9EGP
BN
in revenue in 2018, up 27% on 2017
6
ANNUAL REPORT | 2018
Egypt
Nigeria
In early 2018, IDH expanded
its geographic footprint to
Nigeria, and later in the year
marked its expansion into
the high-value radiology
segment
Jordan
Sudan
Our Brands
IDH’s core brands include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, Biolab in Jordan,
Ultralab and Al Mokhtabar Sudan in Sudan, and Echo-Lab in Nigeria.
Our Services
Through IDH’s brands, the Group offers over
1,400 internationally accredited pathology
tests ranging from basic blood glucose tests
for diabetes to advanced molecular testing
for genetic disorders. Additionally, IDH offers
the full suite of radiology services through Al
Borg Scan in Egypt and Echo-Lab in Nigeria.
Immunology
Microbiology
Haematology
Endocrinology
Clinical Chemistry
Molecular Biology
Cytogenetics
Histopathology
Radiology
2018 |
ANNUAL REPORT
7
Introduction
Highlights of 2018
Financial Highlights
IDH delivered a strong financial performance in 2018 with a 27% growth in
revenues and 29% in net profit despite operating in a challenging environment
Revenues
Gross Profit
recorded EGP 1.9 billion in 2018 or 27%
higher than 2017 driven by improved
pricing and test mix as well as higher
patient and test volumes. Additionally,
while inflationary pressures in Egypt have
relatively subsided, they continued to
support the passing of price increases to
consumers during the year.
increased 30% to EGP 948 million with
gross profit margin expanding one per-
centage points to 49%. Improved profit-
ability is due to increased contribution
from the higher-margin walk-in segment
alongside cost reduction initiatives.
Operating Profit
EBITDA*
recorded a 27% increase to EGP 685 million
in 2018, with growth outpacing increased
SG&A expenses including higher salaries,
marketing spend and pre-operating ex-
penses related to Al-Borg Scan.
was EGP 762 million for the year, up 27%
over the EGP 602 million in 2017. EBITDA
margin recorded 40% in 2018, remaining
stable despite downward pressure by the
devaluation in Sudan and a negative con-
tribution from Nigeria.
Net Interest Income
Net Profit
of EGP 44 million in 2018 compared to
EGP 38 recorded last year as the Group
earned higher rates on its accumulated
deposits and treasury bills balances.
recorded EGP 497 million in 2018, up
29% versus last year due to strong top-
line growth, improved gross margin and
higher interest income.
Earnings Per Share
Recommended Final Dividend
of EGP 3.35 compared to EGP 2.49 in 2017
of US$ 0.176 per share, equivalent to US$
26.4 million in total, compared with US$
0.16 per share, equivalent to US$ 24 mil-
lion in total in 2017
* Consolidated EBITDA is calculated as operating profit plus depreciation and amortisation. Consolidated EBITDA includes negative contribu-
tions from its newly launched Nigerian operation which is still in the value-building phase
8
ANNUAL REPORT | 2018
2018 |
ANNUAL REPORT
9
Introduction
Operational Highlights
2018 was a milestone year for IDH during which the Group delivered on several
of its strategic and operational targets.
CAP*
Nigeria
accreditation awarded to IDH’s Mega Lab.
expansion through US$ 5.7 million acquisition
of Echo-Lab (previously Echo-Scan) through a
strategic alliance with Man Capital LLP.
Radiology
Biolab
venture with the inauguration of IDH’s first full-
fledged radiology branch in Egypt, Al-Borg Scan.
agreement with Georgia Healthcare Group to
establish a Mega Lab in the Georgian capital
of Tbilisi, poised to be the largest facility of its
kind in the region.
40
28.8
new branches added in 2018, bringing the
Group’s network to 423 branches across its
footprint.
million tests performed across the Group in
2018 compared to 25.7 million last year.
7.0
New Headquarters
million patients served across the Group in
2018 compared to 6.4 million last year.
acquired and refurbished with the Group ex-
pected to relocate by the second quarter of 2019.
Results Summary
Indicator
Operational
Numbers of Tests
Number of Patients
Number of Branches
Tests per Patient
Financial
Revenues
Per Patient
Per Test
Per Lab
Cost of Sales
Gross Profit
Gross Profit Margin
Operating Profit
EBITDA
EBITDA Margin
Net Profit
Net Profit Margin
Earnings Per Share
* College of American Pathologists
Units
2018
2017
Change
mn
mn
#
#
EGP mn
EGP
EGP
EGP mn
EGP mn
EGP mn
%
EGP mn
EGP mn
%
EGP mn
%
EGP
28.8
7.0
423
4.1
25.7
6.4
383
4.0
1,921
1,514
273
67
4.5
973
948
49
685
762
40
497
26
3.35
238
59
4.0
785
730
48
540
602
40
384
25
2.49
12%
11%
10%
1%
27%
15%
13%
11%
24%
30%
1 pts
27%
27%
-
29%
1 pts
34%
10
ANNUAL REPORT | 2018
Operational Highlights
Revenue by Geography
% of total revenue
in 2017
% of total revenue
in 2018
■ Egypt
■ Jordan
Sudan
83%
14%
3%
■ Egypt
■ Jordan
■ Sudan
Nigeria
84%
13%
2%
2%
Revenue by Type
% of total revenue
in 2017
% of total revenue
in 2018
■ Walk in
■ Contract
39%
61%
■ Walk in
■ Contract
41%
59%
2018 |
ANNUAL REPORT
11
Introduction
A Note from Our
Chairman
We have expanded our product offering
with the opening of our first state-of-the-art
radiology unit and are considering other
value-added revenue streams.
We continue to actively consider expanding our
footprint in other geographical markets. With
our recent acquisition in Nigeria, we are looking
to replicate our business model and offering to
meet the growing needs in the country.
We have seen continued strong growth in
demand of our services, both in Jordan and
Sudan, however, our Sudanese business has
unfortunately been adversely impacted by
the devaluation of the currency.
In line with the advances in innovation and
medical technology, we continue to invest
and expand our laboratories to incorporate
the most up to date infrastructure. This
enhances our ability to provide consistent,
high-quality results matched by good value
to our patients.
I am pleased to present an extremely en-
couraging Annual Report. Against the back-
drop of greater currency stability, a growing
economy and political stability in Egypt,
our largest market, your Company’s perfor-
mance this year has been most impressive.
IDH has again achieved 27% growth in rev-
enues and delivered consistent results, whilst
maintaining a conservative policy on gearing.
We are delighted to be moving to our new
headquarters in Smart Village on the West
side of Cairo, which will bring together all
divisions of the IDH family.
We remain committed to enhancing our
management capabilities, ensuring
the
highest
levels of corporate governance,
transparency and accountability.
12
ANNUAL REPORT | 2018
We are also constantly considering expand-
ing our service offering to ensure sustain-
able growth and profitability. To this end
we are seeking to expand our marketing
strategy and visibility.
We remain committed to maintaining our
existing dividend policy.
At a time of global political and economic
uncertainty, we believe that your Com-
pany is well-hedged and well-positioned
to maintain solid, consistent growth and
profitability in a healthcare sector in which
prevention is better than cure.
Lord St John of Bletso
Chairman
27%
revenue growth in 2018 to EGP 1.9 bn
497EGP
MN
in net profit in 2018, a 29% growth
2018 |
ANNUAL REPORT
13
Strategic
Report
IDH closed 2018 having delivered
on several strategic goals, including
strengthening its core pathology
business, regional expansion,
diversification into radiology and
delivering strong financial results and
value for shareholders
Strategic Report
Chief Executive’s Review
Jordan, Sudan and Nigeria, and a comprehen-
sive suite of pathology and radiology diagnos-
tic services, saw us deliver 27% growth in rev-
enues in 2018. In US dollar terms, our Group
today is in just as a robust financial shape as it
was prior to the late 2016 float of the Egyptian
pound. Since our IPO in 2015 on the London
Stock Exchange, Group revenue has recorded
a compounded annual growth rate (CAGR)
of 24%, while our bottom-line grew at an
impressive 47% CAGR. This is a testament to
our proven business model and to the talented
team of professionals that continue to deliver
growth across all of our markets.
Strong Organic Growth and Financial
Performance
IDH’s revenue growth was dual-driven in
2018 by a combination of better pricing and
test mix, as well as higher patient and test
volumes. We closed the year with revenues of
EGP 1.9 billion, up 27% year-on-year. Fully 16
percentage points of this growth were driven
by pricing – in part supported by the prevailing
inflationary environment – and 12 percentage
points were the result of higher volumes. One
percentage point was lost to the translation of
our Sudanese pound revenues in Sudan into
Egyptian pounds, the currency of our financial
statements, on the back of significant devalu-
ation in Sudan. In local-currency terms, our
Sudanese operation grew 43%.
On a segmental basis, we maintained a strong
focus on tactical marketing campaigns that
primarily targeted walk-in patients. This
helped increase patient volumes in this
high-margin segment (+17%) and in turn sup-
ported our Group’s profitability. Nationwide
campaigns to increase healthcare awareness
such as Egypt’s late-year 100 Million Health
Lives campaign, helped deliver higher con-
tract patient volumes (+8%) and a balanced
IDH’s performance in 2018 demonstrates the
Group’s ability to deliver sustained, double-
digit growth with strong margins. This was
true at the height of economic reforms and
uncertainty in 2017 — during which we deliv-
ered growth in excess of currency devaluation
in our primary market of Egypt — and is true
today as our strategic initiatives have ushered
in a period of strong organic growth with sig-
nificant upside potential.
IDH closed 2018 having delivered on several
strategic goals. We strengthened and grew our
core pathology business; expanded regionally
with our acquisition of Echo-Scan in Nigeria;
diversified into the radiology market in Egypt
with the launch of Al Borg Scan; and, most im-
portantly, executed these growth strategies in
a manner that yielded strong financial results
and created value for our shareholders.
Our position as a leading consumer healthcare
company with a footprint now spanning Egypt,
16
ANNUAL REPORT | 2018
contribution to growth between IDH’s two
primary segments. In 2018, our walk-in seg-
ment contributed 46% to total consolidated
growth (2017: 39%), while the contract seg-
ment made a 54% contribution (2017: 61%).
Strong organic revenue growth in 2018 was
underlined by a continued expansion of our
geographic footprint with 40 new branches
added during the year, bringing our network to
423 laboratories or 10% higher than the previ-
ous year. We added 10 new branches in Nigeria
through a strategic acquisition; 31 new loca-
tions in Egypt; and one new branch in Jordan,
where we’re seeing an encouraging growth
momentum. Our expansion drive is made
possible in large part through IDH’s state-of-
the-art Mega Lab, which in February 2018 was
awarded accreditation from the College of
American Pathologists (CAP), becoming the
only CAP-accredited facility in Egypt.
In parallel with our revenue growth, manage-
ment focused on operational efficiency and
cost-reduction initiatives throughout the year.
By leveraging IDH’s key supplier relationships
and its strong bargaining power, our cost of
sales rose at a rate slower than revenue growth
in 2018. This is particularly evident in our aver-
age raw material cost per test, which increased
only 2% in 2018, despite the prevailing double-
digit inflation. The result was stronger gross
and bottom-line profitability. Gross profit was
up 30% year-on-year to EGP 948 million in
2018, while our gross profit margin expanded
one percentage point to 49%.
We also posted EBITDA growth of 27% in 2018
to EGP 762 million, with the EBITDA margin
stable at 40%. This result includes the negative
EBITDA contribution from operations in Nige-
ria — still in the value-building phase — and
pre-operating expenses related to the launch
of Al Borg Scan in Egypt. Excluding the nega-
tive impact from Nigeria, our EBITDA margin
would have stood at 42% in 2018, ahead of
management’s previously stated guidance of a
41% margin at established operations in Egypt,
Jordan and Sudan. Our bottom-line for the
year was up 29% to EGP 497 million in 2018,
and with a net profit margin of 26% versus 25%
in the previous year.
Our performance in 2018 and our ability to
maintain our growth momentum is a direct
consequence of our strong brands, reputation
for quality and patient loyalty. All of this has
allowed us to deliver growing patient volumes
year after year, while simultaneously passing
on price increases in step with inflationary
pressures. Our success in fast-growing con-
sumer markets is also supported by our asset-
light business and ability to rapidly expand
our reach in a fragmented diagnostic industry.
IDH’s Hub, Spoke and Spike platform awards us
significant cost advantages in a business that
is fundamentally about COGS and economies
of scale, with the result being strong margins
that we can protect whilst at the same time
upholding our high quality standards.
Nigeria Expansion
Seeking value-accretive acquisitions in African
and Middle Eastern markets has always been
a key pillar of our growth strategy. The large,
fragmented and underpenetrated diagnostic
services market in Nigeria made the country a
compelling target with similar characteristics
of the Egyptian market a generation ago where
we have shown exceptional growth.
Since the acquisition of Echo-Scan in Febru-
ary 2018, we have kept true to our commit-
ment with our strategic alliance partners
— Man Capital LLC and the International
Finance Corporation — to invest significant
2018 |
ANNUAL REPORT
17
Strategic Report
capital over the next four years to expand
Echo-Scan’s diagnostics network, service of-
ferings and quality standards.
In the year just ended, we rolled out our value-
building program, including the refurbishment
of existing branches; expansion of the operation’s
national reach with new branches; and the roll-
out of Group quality standards and procedures.
We have built IT infrastructure that fully connects
and controls all branches, including deployment
of our Laboratory Information Systems (LIS). We
are also in the process of deploying our System
Application and Product (SAP) platform. This
is in parallel with a network-wide equipment
upgrade and a rebranding of the company to
Echo-Lab to reflect the operation’s new image
and value proposition.
Our people will be key to our success in Nige-
ria, as they have been in all our markets. We are
focused on training and development and are
recruiting new talent and leadership that can
deliver on our growth strategy. I am pleased to
report that we are hiring a strong local man-
agement team, including our newly engaged
Chief Operations Officer.
All of the senior management team in Ni-
geria have spent time in Egypt, where they
have received training on IDH’s policies and
procedures. Moreover, senior headquarters
staff from across all disciplines are in Nigeria
every 4-6 weeks to ensure a smooth and effi-
cient integration process. The team is already
delivering on-the-ground results including the
signing of new accretive supplier relationships
akin to those in our established markets.
cludes both pathology and radiology services
under one roof. IDH’s expansion into the frag-
mented radiology market is powered by our
brand equity, geographic reach and the strong
relationship with our millions of customers
and physicians who trust us to be part of
diagnostic and treatment plans.
Total CAPEX earmarked for the expansion is
approximately EGP 186 million, 70% of which
is debt financed through an eight-year facility
from the Ahli United Bank of Egypt. The facility is
ring-fenced to Al Borg with no guarantees from,
or recourse on, IDH or any of its subsidiaries.
The balance of the investment is to be financed
from the operating cash flows of Al Borg. So far,
we have deployed approximately EGP 55 million
in investments to our first branch in the Cairo
district of Mohandessin. Al Borg Scan launched
with a comprehensive offering that covers the
full-suite of radiology diagnostics services, in-
cluding magnetic resonance imaging (MRI) and
computed tomography (CT).
Our high-quality offering is delivered by state-
of-the-art technology supplied by global brand
names, including Siemens, Hitachi and GE
Healthcare, and a highly trained staff of radiolo-
gists, technicians and front office personnel.
And just as our Mega Lab on the pathology side
of the house is CAP-certified, Al Borg Scan is
working to accredit its first facility through the
International Organisation for Standardisa-
tion (ISO). Our end goal is to build on Al Borg’s
brand equity, delivering the premium, safe and
market-leading service that our customers
have come to expect.
Launch of Al Borg Scan
I am also pleased to report that the Group’s
first full-fledged radiology branch in Egypt
began operations in October 2018 under the
Al Borg Scan brand. Our decision to diversify
into this adjacent, high-value segment of our
industry is a natural consequence of our strat-
egy and aims to capitalise on a growing and
under-served market.
Proposed Dividend and Dividend
Policy
IDH is pleased to recommend a final dividend of
US$ 0.176 per share, or US$ 26.4 million in aggre-
gate, to shareholders in respect of the financial
year ended 31 December 2018. This represents
an increase of 10% compared to a final dividend
of US$ 0.16 per share, or US$ 24 million in ag-
gregate in the previous financial year.
Third-party research providers indicate that
more than 75% of customers surveyed prefer
to receive a consolidated offering that in-
In view of the strong cash-generative nature
of our business and its asset-light strategy,
our dividend policy is to return to sharehold-
18
ANNUAL REPORT | 2018
ers the maximum amount of excess cash after
taking careful account of the cash needed
to support operations, capital expenditure
plans, organic expansion opportunities and
potential acquisitions.
2019 Outlook and Guidance
I remain confident about the prospects and
potential of the healthcare industry in the
countries we operate in which are underpinned
by key fundamentals and structural growth
drivers. Large and rapidly growing populations,
a high prevalence of lifestyle-related medical
conditions, a growing health awareness and a
fragmented service offering are all characteris-
tics in our emerging markets and ones that IDH
is ideally positioned to capitalise on.
In our home market of Egypt, which represented
84% of our revenues in 2018, difficult but neces-
sary economic reforms are bearing fruit on the
macro level. Key indicators show a strengthen-
ing economy with an improving fiscal position:
Egypt’s economy grew 5.3% in FY2018, while the
budget deficit as a percentage of GDP is start-
ing to narrow. Critically, inflation is also on the
downtrend, falling from a high of more than 30%
in 2017 to 12% in December 2018. The Central
Bank of Egypt is now forecasting inflation falling
below 10% this year.
We expect these developments to give the
Government of Egypt more leeway in the real-
location of resources to strengthen the social
safety net. As the country phases out energy
subsidies, 2019 marks the first in the multi-year
rollout of a new national health insurance pro-
gram funded by a levy of 0.25% on the revenues
of all companies doing business in Egypt. This
will further support the state’s constitutionally
mandated minimum spending on healthcare.
We are already seeing on-the-ground initiatives
such as the state-sponsored 100 Million Healthy
Lives campaign. Launched in November 2018,
the campaign aims to eradicate Hepatitis C in
Egypt through testing of asymptomatic people.
I am very pleased that IDH’s subsidiaries in
Egypt are active participants in this program.
In an under-served market with a relatively low
test per patient ratio, government initiatives
like this will increase awareness and directly
benefit our business as people become more
proactive and adopt a preventative approach to
healthcare with regular testing.
We are also particularly excited about our
newest market in Nigeria and we are confident
in our ability to capture the opportunity of-
fered by Africa’s most populous country. We
believe we are in a unique position to replicate
our success in Egypt by applying our extensive
knowledge and experience to unlock the same
potential in Nigeria. IDH will continue pushing
forward its value-building program in 2019,
expanding our reach and growing patient and
test volumes while building a reputation for
quality and a market-leading brand name. Our
target is for Nigeria to begin delivering accre-
tive value to the Group within 2019.
Meanwhile, our expansion into the high-value
radiology segment in Egypt is a milestone on
par with our expansion into Nigeria. We will
add new branches this year and beyond and
grow our service portfolio to build a conve-
nient one-stop-shop for our customers. Our
existing pathology business is a key volume
driver and is already delivering new patients
to our radiology business, and we expect that
having both services under one roof will also
drive growth in our pathology test volumes.
The strength of our brands, our scalable
asset-light business model and our strong sup-
plier relationships have allowed us to deliver
exceptional value even under the challenging
operating environment that characterised
the last three years. We are heading into 2019
with a consistent, clearly-defined strategy that
will continue to unlock significant growth po-
tential for years to come. Accordingly, we are
again targeting annual revenue growth of more
than 20% and an EBITDA margin of c. 40% at
our established businesses.
I look forward to reporting to you on the next
chapter of our growth story as one of the lead-
ing consumer healthcare companies in the
Middle East and Africa.
Dr. Hend El-Sherbini
Chief Executive Officer
2018 |
ANNUAL REPORT
19
Strategic Report
Our Markets
Healthcare Systems Characteristics
The mechanics of the healthcare markets in
which IDH operates are markedly different
from those in many Western healthcare sec-
tors. Publicly funded and private healthcare
systems exist in parallel, and in the private
market served by the Group, patients have sub-
stantially more freedom to make healthcare
decisions than their counterparts do in more
institutionalised markets.
General practitioners (also referred to as family
medicine practitioners or primary care special-
ists) are rare in these emerging markets and
are, accordingly, not the gatekeepers through
which patients access primary or specialist
care. Patients seeking treatment may elect to
obtain initial care by attending a hospital out-
patient clinic or emergency room; attending a
polyclinic or directly seeking the services of a
specialist physician. The patient’s choice may
be influenced by whether or not the patient
has employer-provided health insurance or a
corporate arrangement with a specific provider.
Physicians ordering diagnostic procedures
to be completed outside a hospital setting
may recommend that the patient complete
these tests at a specific service provider,
but patients enjoy a high degree of freedom
in choosing the service provider they attend
based on perceived quality and pricing or
on insurance or corporate arrangements.
Walk-in patients (also referred to as “self-
payers”) pay out of pocket in advance of the
tests being completed.
Patients then typically obtain test results in
person (often with an accompanying report
from a pathologist, geneticist, radiologist or
other specialist) and return with the results
to the physician who requested the tests in
the first instance. It is noteworthy that IDH
has the ability to deliver test results to pa-
tients on the same day electronically as well
as via a mobile app.
IDH accordingly engages in sales and market-
ing activities that separately target:
• Physicians: through direct sales visits to
individual practitioners, periodic gatherings
for physicians within a speciality, promo-
tional giveaways as well as discount cards
20
ANNUAL REPORT | 2018
for physicians and their families, incentive-
based physician loyalty programs and the
organisation or sponsorship of conferences;
• Walk-in Patients: through social media
channels, mass-market and targeted health
awareness campaigns, outdoor advertising,
television, radio and online advertising; and;
• Corporate Patients: through direct out-
reach to insurers and employers.
Our patients have substantially
more freedom to make healthcare
decisions than their counterparts do
in more institutionalised markets
Barriers to Market Entry
Accreditation of Facilities
Attracting contract clients requires
accredited, high-quality testing capabilities.
Brand Equity and Reputation
Patients are loyal to leading brands with a
strong track record.
Market Reach
A fragmented market necessitates a wide
geographic presence to allow for broad
customer reach.
Relationship with Key Stakeholders
Building a scalable platform requires
strong relationship with stakeholders
such as physicians, patients and hospitals.
2018 |
ANNUAL REPORT
21
Strategic Report
Egypt - Our Home Market
The Egyptian diagnostics industry can be broadly divided into public
and private sector infrastructure, with the latter including both labs
attached to private hospitals and independent standalone labs (chains
and single labs). According to the Boston Consulting Group (BCG),
IDH is the largest fully-integrated private sector diagnostics service
provider, with more than 50% share by revenue of the private chain
market in Egypt.
Whilst the counter-cyclical nature of the healthcare system in Egypt
has been challenged by ongoing difficult macroeconomic conditions,
powerful structural growth drivers continue to support future growth in
diagnostic services:
• With the country’s population crossing the 100 million mark in 2017,
Egypt is the most populous country in the Middle East North Africa
(“MENA”) region; in terms of demographics, it hosts a significant
proportion of elderly people.
• The population is marked by a high disease burden, with high preva-
lence of both communicable and non-communicable diseases, tropi-
cal diseases and lifestyle diseases, such as diabetes.
• There is a rising prevalence of diseases commanding high test volumes,
indicating an expanding need gap compared with more developed
markets.
• There is ample opportunity to increase the usage of laboratory di-
agnostics as a tool in clinical practice, the awareness of which will
be raised with higher penetration of health insurance and improved
cognisance of preventive healthcare.
• Most labs in Egypt are concentrated in big cities; there is still substantial
room to increase accessibility to lab services by adding branches in all
of the country’s 29 governorates for greater coverage of the population.
• The corporate market is emerging as a driver for diagnostic services,
as more companies offer healthcare coverage to their employees.
IDH is in a strong competitive position in the Egyptian diagnostic in-
dustry, having created formidable barriers to entry with its 40-year track
record, trusted brands, scalable business model and network of 423
branch labs at year-end 2018. This has been achieved by:
• IDH’s accreditations, which underscore the high-quality and safety of
its testing capabilities, are key to attracting patients. In February 2018,
the Group’s central Mega Lab in Cairo earned the distinguished certi-
fication of The College of American Pathologists (CAP). The Mega Lab,
inaugurated in 2015, replaced two smaller, independent “A labs” that
were also CAP certified.
1,613 EGP
MN
Revenues in FY2018, up 29% y-o-y
84%
Contribution to consolidated
revenues in FY2018
22
ANNUAL REPORT | 2018
• IDH’s long-established brands have trusted
reputations that have engendered strong
patient loyalty.
• With a wide geographic presence, IDH is
well positioned to cater to the fragmented
nature of the regional market.
• IDH has a strong relationship with key
stakeholders such as physicians, patients
and hospitals.
Revenues in Egypt recorded the fastest rev-
enue growth in FY2018 at 29% year-on-year to
EGP 1,613 million or 84% of the Group’s total
revenue. Revenue growth was driven by higher
volumes as well as better pricing – aided by
continued inflationary pressures in the country
– and improved test mix. IDH served a total of
6.5 million patients in Egypt in FY2018, up 10%
year-on-year, with walk-in patient volumes re-
cording strong growth of 16% while volumes in
the contract business recorded a 12% increase.
Total tests performed increased 13% to 26.4
million during the year. Operations in Egypt
contributed 97% of the Group’s EBITDA, with
an expansion in associated EBITDA margin by
two percentage points to 46% in FY2018.
IDH is in a strong competitive
position in the Egyptian diagnostic
industry, having created formidable
barriers to entry with its 40-year
track record
2018 |
ANNUAL REPORT
23
Strategic Report
Jordan
243EGP
MN
Revenues in FY2018, up 11% y-o-y
13%
Contribution to consolidated
revenues in FY2018
24
ANNUAL REPORT | 2018
Jordan has one of the most modern health care infrastructures in the
Middle East. Whilst medical services remain highly concentrated
in Amman, c. 70% of Jordanians have medical insurance. Notably,
medical laboratories must abide by the price list that was issued by
the Jordanian Ministry of Health in 2008, which has not since changed.
Consequently, Biolab’s strategy is to expand its range of check-up
packages offered, thereby increasing the number of tests per patient.
In 2018, Biolab performed c. 1.7 million tests for c. 277,000 patients,
generating 6.0 average tests-per-patient, compared with 6.2 in 2017.
Unlike Al Borg and Al Mokhtabar in Egypt, Biolab does not operate
a Hub, Spoke and Spike business model. Whilst Biolab’s 19 central
labs perform many of the +1,000 pathology tests offered, four that are
considered specialty labs perform particular types of tests, including
but not limited to, haematology, endocrinology, immunochemistry,
parasitology, oncology, transfusion medicine, molecular genetics and
antenatal diagnostics and gene sequencing. Furthermore, Biolab does
not share purchasing, supply and logistics, IT, marketing or sales func-
tions with its Egyptian parent company.
In 2018, Biolab entered into an agreement with Georgia Healthcare
Group PLC (GHG) to establish a Mega Laboratory (Mega Lab) in the
Georgian capital of Tbilisi. The 7,500 square metre, multi-disciplinary
Mega Lab will be the largest of its kind in Georgia and the Caucasus
region and will be equipped with state-of-the-art technology covering
the full suite of clinical and pathology tests.
Georgia Healthcare Group PLC is a UK incorporated holding company
of the largest healthcare services provider in the fast-growing, predom-
inantly privately-owned, Georgian healthcare services market. GHG
operates a vertically integrated network of 37 hospitals and 16 district
polyclinics and is the single largest market participant, accounting for
25% of total hospital bed capacity in Georgia. The Mega Lab will ini-
tially serve GHG’s network utilizing one-third of the facility’s capacity,
with plans to develop a B2B network of healthcare providers outside
the Group to reach full utilization.
In 2018, operations in Jordan recorded rev-
enues of EGP 243 million, up 11% year-on-
year and contributing c.13% to the Group’s
total revenues. The subsidiary delivered
good operational growth, with total number
of patients served up 14% to 277,000, and
number of tests performed up 11% to 1.6 mil-
lion. Jordan’s EBITDA was EGP 52 million in
FY2018, 7% of Group’s consolidated EBITDA,
while EBITDA’s margin improved to 21%
compared to 19% in FY2017. At 2017 year
end, there were 19 branch labs in Jordan, 6%
more than a year earlier.
In 2018, Biolab entered into an
agreement with Georgia Healthcare
Group PLC to establish a Mega
Laboratory (Mega Lab) in the
Georgian capital of Tbilisi
2018 |
ANNUAL REPORT
25
Strategic Report
Sudan
35EGP
MN
Revenues in FY2018, down 23% y-o-y
2%
Contribution to consolidated
revenues in FY2018
26
ANNUAL REPORT | 2018
IDH operates under two brand names in Sudan, Ultralab and Al Mokh-
tabar Sudan. Al Borg acquired a majority interest in Ultralabs in 2011,
whilst Al Mokhtabar Sudan had been established in 2010 prior to the
Group’s acquisition of Al Mokhtabar in Egypt. While Al Mokhtabar
Sudan operates independently, Ultralab shares purchasing, supply and
logistics and IT functions with the Company’s Egyptian operations.
Sudan has endured social conflict, civil war and, with the 2011 seces-
sion of South Sudan, the loss of c. 75% of the oil production that had
underpinned the country’s economic growth since 1999 and had been
its main source of foreign currency.
Throughout 2018, the Sudanese pound lost almost 85% of its value
since the government’s first devaluation in January 2018. This has led
to spiralling inflation and eroded purchasing power, in turn affect-
ing businesses across the country. While the defensive nature of the
healthcare industry allowed the Group’s operations to deliver on-the-
ground growth in 2018, gains made in SDG were lost to currency trans-
lation on the Group’s consolidated financial statements. Nonetheless,
the Group maintains a positive outlook for its operations in Sudan,
especially with longstanding economic sanctions having been lifted in
October 2017 and ending the country’s economic isolation.
Operations in Sudan generated growth in SDG terms of 44% in FY2018,
however, with the average SDG:EGP exchange rate declining to 0.57
in FY2018 versus 1.04 in FY2017, top-line gains declined 23% y-o-y in
EGP terms to EGP 35 million. Currency devaluation also led to a nega-
tive 7% EBITDA margin in FY2018 versus a positive 31% in FY2017.
The decrease was primarily driven by higher salaries paid in US$ to
expatriates. IDH is working to limit expatriate salaries by increasing
dependence on local hires and has already transferred several employ-
ees back to Egypt. At year-end 2018, there were 23 branch labs in Su-
dan, down from 25 in FY2017 as the Group shutdown non-performing
branches.
Sudan’s on-the-ground
operational growth
was lost to currency
translation due to the
devaluation of the
Sudanese pound
2018 |
ANNUAL REPORT
27
Strategic Report
Nigeria – The Group’s Newest and Largest Market
by Population
30EGP
MN
Revenues in FY2018
2%
Contribution to consolidated
revenues in FY2018
IDH expanded its geographic platform to four countries with an invest-
ment in Nigeria’s promising healthcare industry. The Group closed on
a transaction in February 2018 in which it formed a strategic alliance
with Man Capital LLC (Man Capital), the London-based investment
arm of the Mansour Group, called Dynasty Holding Group (Dynasty),
which is 51% owned and controlled by IDH. In turn, Dynasty partnered
with the International Finance Corporation (IFC) and invested in
Eagle Eye Echo-Scan Limited (Echo-Scan), a medical diagnostics busi-
ness based in Nigeria. The Group has since rebranded the company to
Echo-Lab. As of 31 December 2018, IDH, Man Capital and IFC owned
37.5%, 36.0% and 18.7%, respectively in Echo-Lab.
Through Eco-Lab, the Group aims to capitalize on the country’s large
medical diagnostics industry, valued at c. US$ 140 million in 2017 and
projected to reach US$ 1 billion by 2025* . Whilst also highly fragment-
ed, the industry can be broadly divided into three groups. The largest is
independent standalone labs (chains and single labs), representing c.
45% of the market. This should be considered in the context of the fact
that there are only five key multi-unit players with different brand posi-
tioning and varied service offerings that, on a combined basis, account
for just c. 7% of total test volumes and c. 20% of the diagnostic market’s
value due to their ability to perform advanced tests. The other two
groups include public hospitals with 35% of the market and private
hospitals that make up the remaining 20%.
Since the transaction closed in February 2018, the Group has rolled
out an integration and value-building plan that will see it deploy
c.US$ 25 million over the next four years. Key aspects of the program
include expanding Echo-Scan’s diagnostics network, service offerings
and quality standards. The process of integrating Echo-Lab entails
realigning its existing labs into IDH’s “Hub, Spoke and Spike” business
model to form three B-labs (“Spokes” capable of processing routine
tests) in Nigeria’s three major cities of Abuja, Lagos and Benin; and
12 C-labs (“Spikes” functioning as collection and basic test centres) in
less populated areas.
28
ANNUAL REPORT | 2018
* Source: Boston Consulting Group
In 2018, the Group began refurbishing exist-
ing branches and is expanding the operation’s
national reach with new branches, targeting
to build a network of 50-plus labs ,including
conventional B-labs, enhanced B-labs (offer-
ing the most sophisticated radiology tests)
and C-labs, within four years. IDH has also
built out an IT infrastructure that fully con-
nects and controls all branches, including
deployment of its Laboratory Information
Systems (LIS) and is progressing toward de-
ploying its System Application and Product
(SAP) platform. Most importantly, IDH con-
tinues to indoctrinate its quality standards
and procedures as it aims to equate the Echo-
Lab name with quality and safety, embodying
the same core values that have earned the Al
Borg and Al Mokhtabar brands strong loyalty
in Egypt over the years.
IDH is targeting to build a
network of 50-plus branches
to serve Nigeria’s fast-growing
diagnostics market
2018 |
ANNUAL REPORT
29
Strategic Report
Our Business Model
IDH operates a scalable Hub, Spoke and
Spike business model that allows for network
expansion in a capital-efficient manner and
delivers operational efficiency. The Group’s
CAP-accredited Mega Lab functions as its
Hub and is equipped with state-of-the-art
equipment, advanced diagnostic tools and
sufficient capacity to process all tests and
services for samples collected by the B-Labs
(Spokes) and C-Labs (Spikes) across four
countries. IDH utilises its B-Labs to process
routine tests and leverages their capacity to
manage traffic to the Group’s Mega Lab when
needed. Meanwhile, C-Labs or Spikes func-
tion primarily as collection centres and most
importantly increase the Group’s geographic
reach to clients nationwide.
IDH’s “plug and play” business model forms
the operational backbone of the Group
and provides it with significant leverage in
extracting favourable revenue and cost syner-
gies. Through its Mega Lab, IDH is able to offer
highest-quality services and esoteric testing
to the resource-poor populations it serves,
in-turn extending a “one-stop” solution and
value-package offerings to its patients. Ad-
ditionally, the Group’s recent expansion into
the high-value, adjacent radiology segment
in 2018 allows it to provide a comprehensive
suite of diagnostic testing under one roof.
With a patient preference for a consolidated
services offerings featuring both pathology
and radiology, efficient referral pathways be-
tween both segments and IDH’s continued
network expansion, the Group is able to
deliver consistent improvement in its key
test-per-patient financial metric.
MEGA LAB
30
ANNUAL REPORT | 2018
Mega Lab
(Hub)
B-Labs
(Spokes)
C-Labs
(Spikes)
• B-labs serve as IDH’s spokes that
work to reduce traffic to Mega
Lab by processing routine tests
on-site including chemistry, para-
sitology and haematology.
• They are higher in capacity and
larger in size than the C-labs.
• At 2018 year end, there were 7 B-
labs in Egypt and four in Jordan.
• C-labs are collection centres that
allow for expansion of reach.
• They conduct basic tests includ-
ing urine, stool, semen, ESR and
pregnancy tests.
• At 2018 year end, there were 396
operational C-lab branches.
• Mega Lab, the largest automated
lab in Egypt, serves as IDH’s diag-
nostic hub, equipped with the lat-
est technology and providing a full
suite of diagnostic tests.
• The majority of equipment is pro-
vided at no upfront cash cost in re-
turn for IDH agreeing to purchase
minimum volumes of kits from
equipment suppliers.
• Specialty tests from IDH subsid-
iaries are shipped to the Mega Lab
in Egypt, and results are retrieved
electronically.
• Significant cost
synergies are
realised on kits, logistics and qual-
ity control; after the introduction
of Mega Lab in 2015, the Group’s
contribution margin witnessed
improvement on higher volumes.
2018 |
ANNUAL REPORT
31
Strategic Report
Integrated Diagnostics Holdings
Suppliers
Our Suppliers
The operational strength awarded to IDH by its
business model is also illustrated by its supplier
relationships. The Group’s position as the largest
provider of diagnostics services in the MENA
region provides it with significant bargaining
power, and has allowed it to successfully negoti-
ate favourable contracts terms with its medical
equipment and test kits suppliers.
The Group’s contracts with its key suppliers
of medical testing kits include the provision
of the equipment to analyse the laboratory
test results. These agreements have minimum
annual commitment payments
to cover
the medical diagnostic equipment, kits and
chemicals to be used for testing and ongoing
maintenance and support services. Thanks to
its increasing test volumes, the Group’s busi-
ness size easily covers these minimum annual
commitment payments, while its high volume
of kit consumption supports its pricing power,
thereby reducing the cost per test while at the
same time incurring no initial capital outlay
for the purchase of medical diagnostic equip-
ment. The supply of the medical diagnostics
equipment through these arrangements has
been judged to be finance lease in nature, and
the number of kits purchased is determined by
a combination of historical consumption pat-
terns and future growth plans.
IDH does not rely on any single supplier of test
kits or any other medical supply purchases in
the Mega Lab so as to avoid backorders and any
ensuing interruptions to operations. The Com-
pany’s main suppliers of kits are Roche, Siemens
and BM (Sysmex), who collectively represented
42% of total raw materials in 2018 compared
with 47% in 2017, excluding the cost of tests
conducted abroad.
As a significant portion of its purchases are
either payable or effectively priced in foreign
currency, IDH is exposed to foreign exchange
risk in purchasing supplies (see “Specific
Risk/Mitigation” table on page 44). Siemens
accounted for 15% of total raw materials and
is the main supplier that the Group pays in
US dollars. While other suppliers provide the
Company with imported products, they are
paid in Egyptian pounds. It is worth noting,
thanks to its long-standing relationships with
its suppliers, IDH has negotiated an agreement
with its main suppliers that saw prices remain
stable throughout 2018.
32
ANNUAL REPORT | 2018
The Group’s position as the
largest provider of diagnostics
services in the MENA region
provides it with significant
bargaining power
2018 |
ANNUAL REPORT
33
Strategic Report
Our Services & Brands
Through IDH’s brands, the Group offers over
1,400 internationally accredited pathology tests
ranging from basic blood glucose tests for dia-
betes to advanced molecular testing for genetic
disorders. Additionally, IDH offers the full suite
of radiology services through Al Borg Scan in
Egypt and Echo-Lab in Nigeria, including but not
limited to, magnetic resonance imaging (MRI),
computed tomography (CT), ultrasound, x-ray,
mammograms and cath lab facilities.
IDH’s comprehensive pathology product
portfolio covers immunology, radiology, hae-
matology, endocrinology, clinical chemistry,
molecular biology, cytogenetics, histopathol-
ogy and microbiology.
Immunology
Microbiology
Haematology
Endocrinology
Clinical Chemistry
Molecular Biology
Cytogenetics
Histopathology
Radiology
Al Mokhtabar – Egypt
Al Mokhtabar has been operating for almost 40 years with its roots dat-
ing back to 1979 when Dr. Moamena Kamel, Professor of Immunology
at the Faculty of Medicine, Cairo University, founded her first lab “MK
Lab”. MK Lab was later merged with Al Mokhtabar in 2004 and has since
built a reputation as a quality care provider with a portfolio of over 1,200
clinical analyses in the areas of immunology, hematology/coagulation,
clinical chemistry, parasitology, microbiology/infectious diseases, toxi-
cology, cytology, surgical pathology, flowcytometry, molecular biology
and cytogenetics. As of 31 December 2018, Al Mokhtabar operated a
network of 203 branches across Egypt and has served over 3.6 million
patients who received 14 million tests.
203
branches across Egypt
3.6 mn
patients in 2018
14.0 mn
tests in 2018
34
ANNUAL REPORT | 2018
Al Borg Laboratories – Egypt
Founded in 1991, Al Borg Laboratories is the first medical laboratory
company in the Middle East to implement an efficient Hub, Spoke and
Spike business model, allowing it to quickly become the largest privately
owned laboratory group in the region. Al Borg offers an extensive list of
more than 2,000 tests, covering the whole spectrum of conventional and
non-conventional medical-testing. Through a network of 116 branches,
Al Borg serves more than 2.5 million clients and handles more than 11
million tests each year, catering to outpatient walk-in customers as well
as corporate, insurance and lab-to-lab customers.
116
branches across Egypt
2.5 mn
patients in 2018
11.0 mn
tests in 2018
UltraLab – Sudan
Established in 2008, Ultralab has quickly managed to penetrate the
Sudanese market and grow to become the largest and most respected
laboratory chain in the country. Ultralab currently operates 15 labo-
ratories, including five independent labs and three hospital/clinical
centre-based labs, covering the regions of Khartoum, Om Dorman and
Port Sudan. Ultralab served a total of 140 thousand patients in 2018 and
performed 539 thousand tests.
15
branches in Sudan
140 K
patients in 2018
539 K
tests in 2018
Al Mokhtabar Sudan – Sudan
Al Mokhtabar Sudan was established in 2010, prior to IDH’s acquisition of
Al Mokhtabar and offers a similar service to UltraLab, with both subsid-
iaries organising their operations using the same Hub, Spoke and Spike
model in Sudan as Al Borg and Al Mokhtabar in Egypt. Al Mokhtabar
Sudan operated a network of 8 branches as of 31 December 2018 through
which it served 25 thousand patients and performed 72 thousand tests.
8
branches in Sudan
25 K
patients in 2018
72 K
tests in 2018
2018 |
ANNUAL REPORT
35
Strategic Report
36
ANNUAL REPORT | 2018
Biolab – Jordan
Biolab was established in 2001 with the vision of becoming the leading
private medical laboratory group in Jordan, offering patients, physi-
cians, hospitals and referring clinical laboratories high-end services
using state-of-the-art medical technology. Through its network of 19
branches, Biolab offers over 1,000 tests and is accredited by the Jorda-
nian Ministry of Health (MOH), with two branches accredited with ISO
15189 and Joint Commission International (JCI) and one branch becom-
ing CAP-accredited in 2018. In 2018, Biolab served over 277 thousand
patients and performed more than 1.6 million tests.
19
branches across Jordan
277 K
patients in 2018
1.6 mn
tests in 2018
Echo-Lab – Nigeria
Echo-Lab (previously Echo-Scan) is a medical diagnostics business in
Nigeria, offering a comprehensive suite of pathology and radiology di-
agnostic testing under one roof. IDH acquired Echo-Lab in 2018 as part
of the Group’s strategy to expand into highly-fragmented and underpen-
etrated markets in the Middle East and Africa, where its business model
is well-suited to capitalise on similar healthcare and consumer trends.
Echo-Lab operated a network of 10 branches as of 31 December 2018,
serving 102 thousand patients and performing 130 thousand tests.
10
branches across
Nigeria
102 K
patients in 2018
130 K
tests in 2018
Al Borg Scan – Egypt
In 2018, IDH expanded into the high-value, adjacent radiology seg-
ment in Egypt through the launch of Al Borg Scan, inaugurating its
first branch in Cairo in October 2018. Al Borg Scan offers a full range of
radiology services including, but not limited to, MRI, CT, ultrasound,
x-ray, mammograms and cath lab facilities. Al Borg Scan draws on Al
Borg’s brand equity to position itself as a premium service provider of-
fering the full range of imaging services using the latest technology. Al
Borg Scan leverages the strong relationship between the Al Borg brand
and its millions of customers while capitalizing on favourable key
market dynamics. The business is led by a group of the nation’s most
prominent radiologists with a track record at Egypt’s leading hospitals
and radiology centres. Al Borg Scan is part and parcel of IDH’s strategy
to build a national brand in Egypt.
423
Branch network as of
year-end 2018
28.8MN
Test administered in 2018
7.0MN
Patients served in 2018
2018 |
ANNUAL REPORT
37
Strategic Report
Internationally-Accredited Test Portfolio
Across its brand portfolio, IDH maintains international-quality accreditations with a stringent
internal audit process to ensure best-in-class service.
International Organisation for Standardisation (ISO)
ISO accreditation requires an initial inspection of laboratory practices,
calibration and medical analysis by an accreditation body. For Al Mokhtabar
and for Al Borg, it was United Registrar Systems (URS) Certification
(accredited internationally by the United Kingdom Accreditation Service);
and for Biolab, it was the Jordanian Accreditation System (JAS). The
inspection involves the clinical chemistry area, the virology unit, the
haematology unit and the general laboratory management practice.
The accreditation’s standards include both management and technical
requirements. The Company’s ISO 9001:2008 accreditations for both Al
Mokhtabar and Al Borg passed year end accreditation reviews in 2018 and
will next be renewed in 2019.
College of American Pathologists (CAP)
Unlike ISO accreditation, CAP certification is awarded to individual
labs, rather than the Group’s operations as a whole. In February 2018,
IDH’s central Mega Lab in Cairo earned certification from the College
of American Pathologists (CAP). The Group’s Mega Lab, inaugurated
in 2015, replaced two smaller, independent “A-labs”, one of which was
also CAP certified.
IDH operates the only laboratory in Egypt to receive this distinguished
certification. The College of American Pathologists, widely considered
the leader in laboratory quality assurance globally, upholds standards
that track four aspects of laboratory operations:
• Directors and Personnel: The laboratory must be staffed with a suf-
ficient number of personnel and the lines of authority should be well
defined so that the directors can properly fulfil their responsibilities.
• Physical Resources: There must be sufficient resources, including
physical space, testing instruments, reagents, information processing
and communication systems, ventilation, storage and waste disposal
facilities and public utilities. Furthermore, there must be sufficient
safeguards against hazardous conditions to ensure patient safety.
• Quality Management: The laboratory must have policies and pro-
cedures in place to ensure quality testing and patient safety. These
should include the validation of test systems, analytic quality con-
trol, and quality management of pre- and post-analytic processes,
proficiency testing, human resource management, information
management, ongoing quality improvement and appropriate
communication procedures.
• Administrative Requirements: The laboratory must maintain appro-
priate records and adhere to CAP certification requirements and cer-
tain other policies, and will be subject to on-site inspections, interim
inspections and interim self-assessments.
The CAP certification remains subject to renewal every two years.
38
ANNUAL REPORT | 2018
Quality Assurance
IDH’s quality assurance programme ensures that all internal diagnostic
processes, lab testing procedures and results analyses are accurate. The
quality assurance program ensures that all the standards of the CAP
and ISO accreditations are met by inspecting hardware and equipment,
ensuring compliance with procedure manuals, inspecting the accuracy
of results and administering competency assessments for employees.
The internal audit team also maintains a specific audit checklist for the
basic and routine tests conducted in the Group’s C-labs, including con-
formity of process; testing the competency of employees through oral,
observational, practical and written tests; and conducting managerial
audits to assess the labs’ management and administrative efficiency.
Employee Training
The Group views education as an essential means of ensuring quality
across its laboratories. To help develop the skills of employees, IDH has
a dedicated training facility in Cairo with four training laboratories. In
2018, the training team was composed of one director, one administra-
tor, one consultants and eight full-time specialists. The centre provides
training to around 300 employees per month, including doctors, chem-
ists, receptionists, branch and area managers, sales personnel and
administrators. The training curriculum is determined based on perfor-
mance KPIs, internal audit reports, management reviews, competency
assessment reports and analysis of customer feedback and complaints.
IDH’s employee training is structured along four modules: new employee
training, competency-based, need-based and practical re-training.
IDH operates the only
laboratory in Egypt to
receive the distinguished
CAP certification
2018 |
ANNUAL REPORT
39
Strategic Report
Competitive Strengths &
Growth Strategy
IDH’s strong market position along with its scalable platform and
experienced management provide for the necessary tools to deliver
on its ambitious growth strategy
Competitive Strengths
Exposure to resilient markets with favourable dynamics
IDH operates in markets underpinned by strong structural growth
drivers with under-penetrated and underserved diagnostic services
demand. The diagnostic and healthcare industry are also counter-
cyclical in nature, allowing the Group to remain resilient in the face of
economic and political headwinds in the regions where it operates as
demonstrated by consisted double-digit revenue growth in recent years.
Strong market position with over three decades of industry experience
The diagnostic industry in markets where IDH operates is characterized
by having high barriers to entry (as detailed in Our Markets on page
20), thus favouring players with an established market position and a
strong track record. IDH’s over 40 years of industry experience across
its subsidiaries has allowed it to build a strong brand equity and reputa-
tion, in turn earning the trust and loyalty of its patients. Additionally, its
internationally-accredited facilities are essential to attracting contract
clients, while its scalable business model and relationships with key
stakeholders extend its reach in a fragmented market.
Scalable asset-light business model
IDH’s Hub, Spoke and Spike business model provides the Group with
an efficient low-capital intensive platform for organic expansion over
a wide geographic area. The Group’s centralised Mega Lab with mod-
ern, high-capacity equipment and significant throughput allows IDH
to roll-out asset-light, plug and play C labs for sample collection and
simple testing throughout its markets. This scalable business model also
enhances the consistency of safety and testing procedures as more tests
are conducted through its centralised Mega Lab, leveraging its state-of-
the-art technology and advanced diagnostic tools.
40
ANNUAL REPORT | 2018
+40 YEARS
Industry experience across IDH’s subsidiaries
Strong balance sheet and cash generation capacity
IDH maintains a strong financial position with an unlevered balance sheet
thanks in part to its asset-light business model which translates into minimal
borrowing and significant strategic flexibility. Meanwhile, strong operational
and financial performance and a track record of profitable growth, even
during adverse macro-economic and political conditions, saw the Group
deliver an EBITDA margin of over 40% and maintain healthy cash balances.
Experienced and entrepreneurial management
The Group has a highly experienced management team with decades
of experience in the healthcare sector. Furthermore, IDH’s world-class
Board of Directors brings years of healthcare, MENA region and invest-
ment experience to the table.
IDH’s Hub, Spoke and Spike business
model provides the Group with an efficient
low-capital intensive platform for organic
expansion over a wide geographic area
2018 |
ANNUAL REPORT
41
Strategic Report
Growth Strategy
IDH leverages its competitive strengthens to
capture substantial opportunities and deliver
on a four-pillar growth strategy, namely 1) con-
tinue to expand customer reach; (2) increase
tests per patient by expanding the Group’s ser-
vices portfolio; (3) expand into new geographic
markets through selective, value-accretive
acquisitions; and (4) introduce new medical
services by leveraging the Group’s network and
reputable brand position.
Strategic Goal
Competitive
Strength
Expand Customer
Reach
IDH is continuously working to increase accessibility for patients
and expand its customer base and seeks to capitalise on the fa-
vourable market dynamics and take full advantage of the strong
demand for private healthcare services across its geographic
platform. The Group leverages its scalable, low capital-intensive
business model to deliver on this goal by quickly and efficiently
opening new labs and expanding geographically in the Middle
East and Africa. Furthermore, the Group offers an array of add-
on services, such as house calls, e-services and results delivery,
which make its regular service offerings easier to use for both
existing and prospective patients.
Exposure to Resilient
Markets
Scalable asset-light
business model
The Group’s state-of-the-art Mega Lab expands its ability to
perform more complex tests not offered in other labs, and
thus broadening its portfolio of specialised and advanced
tests which will help to drive testing volumes. IDH is also
focused on bundling testing services into health packages to
offer to its existing customers at discounted rates as a way to
Increase Tests per
increase tests, thus revenues per patient. IDH is also actively
Patient
engaged in advertising campaigns to raise awareness of par-
ticular diseases and the importance of being tested, as well
as to educate people with lifestyle diseases, such as diabetes
and high cholesterol, to undergo frequent testing. These
efforts have been successful in driving volumes of the higher-
margin walk-in segment during 2018 and helped improved
the Group’s average revenues per patient.
Scalable Asset-Light
Business Model
Strong Market Position &
Brand Equity
42
ANNUAL REPORT | 2018
The Group adopts a four-pillar
growth strategy
Strategic Goal
Competitive
Strength
Geographic
Expansion
IDH is looking to expand in highly-fragmented and under-
penetrated markets in the Middle East and Africa, where
its business model is well-suited to capitalise on similar
healthcare and consumer trends. The Group delivers on this
Scalable Asset-Light
strategic goal by leveraging the strength of its balance sheet
and financial position to pursue value-accreting acquisitions.
Business Model
Most recently the Group was pleased to have closed on an
Strong Balance Sheet &
investment in Nigeria in January 2018 that saw it acquire
Cash Generation Capacity
Echo-Lab, a key player providing quality medical diagnostic
services across 10 state-of-the-art diagnostic centres in the
country’s underserved private healthcare sector.
As the medical testing market in Egypt is evolving from a
single doctor-oriented model to a branded chain model,
IDH recognises the opportunity to offer services that are not
currently being provided by any private healthcare provider
on a large scale. The Group believes that its brand equity,
experience and patient following ideally position it to pursue
Diversify into New
opportunities in adjacent markets. To that end, the Group
Medical Services
inaugurated its first full-fledged radiology branch in Egypt
in October 2018 under the Al Borg Scan brand, marking its
venture into the high-value radiology segment. Manage-
ment’s expectation is that the pathology business will deliver
new patients to the radiology business and that having both
services under one roof will also drive growth in our pathol-
ogy test volumes.
Exposure to Resilient
Markets
Strong Market Position &
Brand Equity
Experienced and entrepreneurial management team that can deliver on
the Group’s strategy
2018 |
ANNUAL REPORT
43
Strategic Report
Principle Risk, Uncertainties
& Their Mitigation
its performance.
As in any corporation, IDH has exposure to
risks and uncertainties that may adversely
affect
IDH Chairman
Lord St John of Bletso has emphasised that
ownership of the risk matrix is sufficiently
important to the Group’s long-term success
that it must be equally shared by the Board
and senior management.
While no system can mitigate every risk — and
some risks, as at the country level, are largely
without potential mitigants — the Group has
in place processes, procedures and baseline
assumptions that provide mitigation. The
Board and senior management agree that the
principal risks and uncertainties facing the
Group include:
Ownership of the risk
matrix is sufficiently
important to the Group’s
long-term success
Specific Risk
Mitigation
Country risk — Political & Security
Egypt and the wider MENA region, where the Group
operates, have experienced political volatility and there
remains a risk of occasional civil disorder.
Nigeria is facing security challenges on several fronts,
including re-emerging ethnic tensions and resurgent at-
tacks by Islamist militants in the northeast. Against the
backdrop of a sluggish economy and the slow implemen-
tation of reforms, mounting discontent could translate
into further social unrest.
See mitigants for “Country/regional risk — Economic” on
page 45.
Echo-Lab’s laboratories are located primarily in Lagos,
Abuja and Benin, far from the current unrest occurring
in the northeastern part of Nigeria.
Regarding other operating risks, including but not limited
to legal and compliance risks, IDH will apply the same
rigorous standards to evaluating all aspects of its business
processes in Nigeria as it has implemented in all of the
emerging markets in which it operates.
44
ANNUAL REPORT | 2018
Specific Risk
Mitigation
Country/regional risk — Economic
The Group is subject to the economic conditions of
Egypt, specifically and, to a lesser extent, those of the
wider MENA region. Egypt accounted for c. 84% of our
revenues in 2018 (2017: 83%).
High inflation in Egypt: According to the Central Bank of
Egypt, headline inflation recorded 11.97% in December
2018, a considerable decline from the January 2018 rate
of 21.6%. This marks a continued easing from the record
high of c.35% in July 2017 following the November 2016
devaluation of the Egyptian Pound and subsequent en-
ergy subsidy cuts. Meanwhile, core inflation that strips
out volatile items dropped to 8.3% in December 2018
from 19.7% in December 2017.
High Inflation in Sudan: Three rounds of currency de-
valuation in Sudan saw the Sudanese Pound lose 85% of
its value during 2018 to an official rate of 47.5 pounds to
the US dollar in December 2018 as per the Central Bank
of Sudan. This has caused inflation to spiral reaching
record highs of over 70% at the close of 2018 according
to Trading Economics. IDH has been adversely affected
as one-the-ground revenue growth is lost to currency
translation on the Group’s financial statements, in addi-
tion to increase salaries of Sudan-based expatriates who
are compensated in US dollars.
Nigeria: Capital controls could make profit repatriation
difficult in the short term.
Nigeria: Depreciation of the naira would make imported
products and raw materials more expensive and would
reduce Nigeria’s contribution to consolidated Company
revenues. Whilst capital controls have helped the official
exchange converge with the black-market rate, the cen-
tral bank has yet to allow the naira to float freely.
As with country risk, this is largely not subject to mitiga-
tion. In both political/security and economic risk, man-
agement notes that IDH operates in a defensive industry
and that the business continued to grow year-on-year
through two revolutions, as well as under extremely dif-
ficult operating conditions in 2016.
High inflation is one consequence of Egypt’s policy-
restructuring cycle. The structural change underway in
government spending and general repricing of goods and
services represents a reversal of 50 years of comprehensive
government support. Whilst it will take time, the reform
program is designed to put the country on a more sustain-
able path to growth and fiscal consolidation. According to
Egypt’s Ministry of Planning and Administrative Reform,
as of the fiscal year ended June 2018, Egypt recorded GDP
growth of 5.3%, while the budget deficit as a percentage of
GDP had declined to 9.8% compared to 10.9% in the fiscal
year ended June 2017.
The Group’s contemplated acquisitions outside of Egypt
would also mitigate the Egypt-specific country risk over time.
The Group is closely monitoring the economic and politi-
cal situation in Sudan and has implemented several price
increases to keep instep with inflationary pressures. IDH
is also working to limit expatriate salaries and foreign cur-
rency needs by increasing dependence on local hires.
In Nigeria, until currency exchange policy is clarified and
there is greater visibility regarding profit repatriation,
IDH expects to reinvest early profits into its Nigerian
business. Dividend payments are not expected to be re-
patriated in the first four years of operation.
IDH will capitalise on its regional agreements with sup-
pliers to procure kits at competitive prices.
2018 |
ANNUAL REPORT
45
Strategic Report
Specific Risk
Foreign currency and banking regulation risk
Foreign currency risk: The Group is exposed to foreign
currency risk on the cost side of the business. The major-
ity of supplies it acquires are paid in Egyptian pounds
(EGP), but given they are imported, their price will vary
with the rate of exchange between the EGP and foreign
currencies. In addition, a portion of supplies are priced
and paid in foreign currencies.
The CBE moved to a fully floating foreign exchange regime
on 3 November 2016, since which time the value of the
Egyptian pound against the US dollar has been set by the
interbank market. After losing more than 50% of its value in
2016, the Egyptian pound closed 2018 at mid-market CBE
rate of 17.91 per US$1 against an opening rate of EGP 17.72.
The Egyptian pound was valued at 17.91 to US$ 1.00 as of
16 January 2019.
While the Egyptian Pound has performed relatively well com-
pared to other emerging market currencies, increased capital
flight amid a wider emerging market sell-off in 2018 saw
Egyptian treasury bonds drop by c. US$ 8 billion, according to
a note issued by Capital Economics. This has added pressure
on the country’s banking system to sell foreign assets to meet
demand for hard currency. The note presents two possible
scenarios in 2019, namely allowing the Egyptian pound to
weaken against the dollar or direct intervention by the CBE
using its reserves to support the currency.
Banking regulation risk: A priority list and allocation mecha-
nism imposed by the CBE was in effect throughout 2016 to
prioritise essential imports. This mechanism was in place in
response to an active parallel market for foreign exchange.
Whilst foreign exchange is increasingly available fol-
lowing the November 2016 float of the Egyptian pound
and prices set by the interbank mechanism, IDH faces
the risk of variability in the exchange rate as a result of
economic and other factors.
Supplier risk
IDH faces the risk of suppliers re-opening negotiations
in the face of cost pressure owing to the prevailing infla-
tionary environment and/or a possible, albeit limited,
devaluation risk in 2019.
IDH’s supplier risk is concentrated amongst three key
suppliers — Siemens, Roche and BM (Sysmex) — who
provide it with kits representing 42% of the total value of
total raw materials in 2018 (2017: 47%).
46
ANNUAL REPORT | 2018
Mitigation
Only 15% of IDH’s cost of supplies (c. 3% of revenues) are
payable in US dollars, minimising the Group’s exposure to
foreign exchange (FX) scarcity and in part, the volatility of
the Egyptian pound.
In 2018, IDH recorded a net foreign exchange loss/gain of
EGP 16 million, compared with a net foreign exchange loss of
EGP 20 million in 2017.
Capital Economics notes that a move to weaken the Egyptian
pound wouldn’t be a massive shock to the currency thanks
to previous austerity measures and the fact that it is not cur-
rently overvalued. The consultancy estimates that a limited
devaluation could see the currency trade at c. 19.0 to the US$
by the end of 2019 and c. 20.0 by 2020.
Foreign currency continued to be available in the market
throughout 2018 whether from the banks or exchange com-
panies; and the with CBE foreign currency reserves reaching
record-highs in 2018 to close the year at US$ 45 billion, the
return of capital controls previously implemented following
the pound’s devaluation is unlikely.
IDH has strong, longstanding relationships with its sup-
pliers, to whom it is a significant regional client. Due
to the volumes of kits the Company purchases, IDH is
able to negotiate favourable pricing and maintain raw
material costs increases at a rate slower than inflation.
In 2018, average raw material cost per test increased only
2% versus the prevailing double-digit inflation.
Total raw materials costs as a percentage of sales were
19% in 2018 compared with 21% in 2017.
Specific Risk
Mitigation
Remittance of dividend regulations and
repatriation of profit risk
The Group’s ability to remit dividends abroad may be ad-
versely affected by the imposition of remittance restric-
tions where, under Egyptian law, companies must obtain
government clearance to transfer dividends overseas and
are subject to higher taxation on payment of dividends.
As a foreign investor in Egypt, IDH does not have issues
with the repatriation of dividends, but is exposed to risk
in the form of cost of foreign exchange in the markets in
which the Group operates, particularly Egypt and Sudan.
As a provider of medical diagnostic services, IDH’s op-
erations in Sudan are not subject to sanctions. Notably, in
October 2017 the US lifted a host of sanctions imposed 20
years ago that included a comprehensive trade embargo,
a freeze on government assets and tight restrictions on
financial institutions dealing with the country.
Legal and regulatory risk to the business
The Group’s business is subject to, and affected by, exten-
sive, stringent and frequently changing laws and regula-
tions, as well as frequently changing enforcement regimes,
in each of the countries in which it operates. Moreover,
as a significant player in the Egyptian private clinical
laboratory market, the Group is subject to antitrust and
competition-related restrictions, as well as the possibility
of investigation by the Egyptian Competition Authority.
The Group’s general counsel and the quality assurance
team work together to keep IDH abreast of, and in com-
pliance with, both legislative and regulatory changes.
On the antitrust front, the private laboratory segment
(of which IDH is a part) accounts for a small proportion
of the total market, which consists of small private labs,
private chain labs and large governmental and quasi-
governmental institutions.
Quality control risks
Failure to establish and comply with appropriate quality
standards when performing testing and diagnostics ser-
vices could result in litigation and liability for the Group
and could materially and adversely affect its reputation
and results of operations. This is particularly key as the
Group depends heavily on maintaining good relation-
ships with healthcare professionals who prescribe and
recommend the Group’s services.
The Group’s quality assurance (QA) function ensures
compliance with best practices across all medical di-
agnostic functions. All laboratory staff participate in
ongoing professional education with quality assurance
emphasised at each juncture.
The head of quality assurance for the Group is a member
of the senior management team at the IDH level, which
meets weekly to review recent developments, plan strate-
gy and discuss issues of concern to the Group as a whole.
2018 |
ANNUAL REPORT
47
Strategic Report
Specific Risk
Risk from contract clients
Contract clients, including private insurers, unions and
corporations, account for c. 59% of the Group’s revenue.
Should IDH’s relationship with these clients deteriorate,
for example if the Group was unable to negotiate and re-
tain similar fee arrangements or should these clients be
unable to make payments to the Group, IDH’s business
could be materially and adversely affected.
Pricing pressure in a competitive, regulated
environment
The Group faces pricing pressure from various third-
party payers that could materially and adversely affect
its revenue. Pricing may be restrained in cases by recom-
mended or mandatory fees set by government ministries
and other authorities.
This risk may be more pronounced in the context of head-
line monthly inflation in Egypt, which, as of December
2018, stood at 11.97% as per the Central Bank of Egypt.
Carrying value of goodwill and other intangible assets
A decline in financial performance could lead to an im-
pairment risk over the carrying value of IDH’s goodwill
and other intangible assets. Goodwill and intangible
assets have arisen from historic acquisitions made by the
Group and include the brand names used in the business.
48
ANNUAL REPORT | 2018
Mitigation
IDH diligently works to maintain sound relationships with
contract clients. All changes to pricing and contracts are ar-
rived at through discussion rather than blanket imposition
by IDH. Relations are further enhanced by regular visits to
contract clients by the Group’s sales staff.
IDH’s attractiveness to contract clients is enhanced by the
extent of its national network.
No single client contract currently accounts for more than
1% of total revenues or 1.4% of Corporate revenues.
Adoption of IFRS 9 during the year led management to take
provisions of EGP 9.6 million in 2018 for doubtful accounts
(2017: EGP 5.6 million). See note 22 to the accompanying
Financial Statements for more information.
This is an external risk for which there exist few mitigants.
In the event there is escalation of price competition be-
tween market players, the Group sees its wide national
footprint as a mitigant; c. 59% of our revenue is gener-
ated by servicing contract clients (private insurer, unions
and corporations) who prefer IDH’s national network to
patchworks of local players.
IDH has a limited ability to influence changes to manda-
tory pricing policies imposed by government agencies,
as is the case in Jordan, where basic tests that account
for the majority of IDH’s business in that nation are
subject to price controls.
IDH carries out an annual impairment test on goodwill
and other intangible assets in line with IAS 36.
The results of the annual impairment test show head-
room between the recoverable amount (based on value
in use) and the carrying value of each of the identified
Cash Generating Units and no impairment is deemed to
be required.
For more detail see note (13) of the Financial Statements.
IDH has a limited ability to influence changes to manda-
tory pricing policies imposed by government agencies, as
is the case in Jordan, where basic tests that account for
the majority of IDH’s business in that nation are subject
to price controls.
Specific Risk
Mitigation
Business continuity risks
Management concentration risk: IDH is dependent on
the unique skills and experience of a talented manage-
ment team. The loss of the services of key members of
that team could materially and adversely affect the Com-
pany’s operations and business.
Business interruption: IT systems are used extensively
in virtually all aspects of the Group’s business and across
each of its lines of business, including test and exam
results reporting, billing, customer service, logistics and
management of medical data. Similarly, business inter-
ruption at one of the Group’s larger laboratory facilities
could result in significant losses and reputational dam-
age to the Group’s business as a result of external factors
such as natural disasters, fire, riots or extended power
failures. The Group’s operations therefore depend on the
continued and uninterrupted performance of its systems.
Loss of talent
IDH depends on the skills, knowledge, experience and
expertise of its senior managers to run its business and
implement its strategies. The Group’s senior manage-
ment has an average of 15 years of industry experience
and the majority are medical doctors. Furthermore,
IDH is reliant on its ability to recruit and retain labo-
ratory professionals. Loss of senior managers could
materially and adversely affect the Group’s results of
operations and business.
In Nigeria, IDH will face a more limited talent pool of
healthcare workers due to a weak education system and
the tendency for trained professionals to move abroad.
Loss of certifications and accreditations
Many of IDH’s facilities have received international ac-
creditations for high-quality standards. The failure to re-
new these certifications, including the College of Ameri-
can Pathologists (CAP) accreditation for the Mega Lab
and the International Organization for Standards (IOS)
for other facilities, would call into question the Group’s
quality standards and competitive differentiators
IDH understands the need to support its future growth
plans by strengthening its human capital and engaging
in appropriate succession planning. The Company is
committed to expanding the senior management team,
led by its CEO, Dr. Hend El Sherbini, to include the talent
needed for a larger footprint. The Group has constituted
an Executive Committee led by Dr. El Sherbini and com-
posed of heads of departments. The Executive Commit-
tee meets every second week.
The Group has in place a full disaster recovery plan, with
procedures and provisions for spares, redundant power
systems and the use of mobile data systems as alterna-
tives to landlines, among multiple other factors. IDH
tests its disaster recovery plans on a regular basis.
In addition to competitive compensation packages,
the Group also ensures it has access to a broad pool of
trained laboratory professionals through its own in-
house recruitment and training program. Furthermore,
we have in place a program to monitor the performance
of graduates of the training program.
Egypt is a net exporter of trained healthcare profession-
als as there is surplus staff in the market. IDH’s efforts
are accordingly focused on retention of qualified staff as
oppose to recruitment of new personnel.
In Nigeria, IDH intends to offer a strong value proposition
for staff that includes opportunity for both compensation
and training. The Group will seek to bring in expatriates
to fill key leadership roles whilst local teams are being
trained and developed.
In February 2018, IDH’s central Mega Lab in Cairo re-
ceived CAP certification. The CAP certification will there-
after be subject to renewal every two years. The Company
also renewed its ISO certifications in 2018, with the next
renewal due in 2019. In Jordan, Biolab has received the
Joint Commission International (JCI) accreditation, as
well as ISO 150189, HCAC and CAP certifications in 2018.
Branches in Sudan and Nigeria are not accredited.
IDH’s ability to keep current its certifications and ac-
creditation are supported by ongoing QA, training and
internal audit procedures
2018 |
ANNUAL REPORT
49
Performance
Review
IDH delivered a strong financial
performance in FY2018, despite
operational challenges in its
markets
Performance
Review
Performance Review
Financial and
Operational Review
Results
(EGP million)
Revenues
Cost of Sales
Gross Profit
Gross Profit Margin
Operating Profit
EBITDA*
EBITDA Margin
Net Profit
Net Profit Margin
FY2018
FY2017
change
1,921
1,514
973
948
49%
685
762
40%
497
26%
785
730
48%
540
602
40%
384
25%
27%
24%
30%
1 pts
27%
27%
-
29%
1 pts
IDH delivered a strong financial performance in
FY2018 with revenues increasing 27% year-on-
year and net profit climbing 27%, despite opera-
tional challenges in its markets. Revenue growth
came as a result of improved pricing and test
mix as well as higher patient and test volumes
during the year. IDH was particularly successful
in passing-on price increases following a period
of high inflation and eroded consumer spend-
ing, with improved pricing and mix accounting
for c. 60% of total growth in FY2018. Meanwhile,
the company’s tactical marketing campaigns
throughout the year were successful in driving
volume growth across both the contract and
walk-in segments. Volumes were also supported
by the state-sponsored 100 million Healthy
Lives awareness campaign in Egypt launched in
November 2018 and contributed 7% of total con-
solidated tests (2.0 million test). Overall, higher
volumes accounted for c. 40% of revenue growth
in FY2018.
Revenue growth in FY2018 was also largely organic
compared to growth in FY2017, at which time IDH
had benefitted from foreign currency translations
of its results in Jordan and Sudan. In contrast, cur-
rency translation contributed negatively to FY2018
growth as the Sudanese pound was devalued by c.
85% during the year, leading to local-currency rev-
enue gains in Sudan being lost to currency transla-
tion in IDH’s consolidated financials.
Revenue Growth Drivers
Volume
Price & Mix
Foreign Currency Translation
Total
FY2017
change
12%
16%
(1%)
27%
8%
14%
7%
29%
* EBITDA is calculated as operating profit plus depreciation and amortisation.
52
ANNUAL REPORT | 2018
of Echo-Lab (previously Echo-Scan) via capital
increase with a total value of US$ 5.7 million
through a strategic alliance with Man Capital LLP.
2018 also marked the Group’s venture into the ad-
jacent radiology market in Egypt with the fourth
quarter inauguration of its first full-fledged radi-
ology branch under the Al-Borg Scan brand. The
branch offers a comprehensive suite of radiology
services, including MRI and CT Scan and kicks off
the Group’s expansion drive in the segment which
will see it open a further three branches during
2019. Finally, the Group’s Jordan-based subsidiary
Biolab has entered into an agreement with Geor-
gia Healthcare Group to establish a Mega Lab in
the Georgian capital of Tbilisi, poised to be the
largest facility of its kind in the region. The agree-
ment serves as testament to IDH’s know-how and
technical experience as the operators of the sole
JCI-accredited Mega Labs in Egypt and Jordan.
Meanwhile, IDH continued to expand its geographic
footprint in FY2018, adding 40 new branches during
the year to reach a total 423 branches, up more than
10% compared to year-end 2017. Branch additions
included 10 in Nigeria through acquisition, IDH’s
newest market, 31 in Egypt and one new branch
in Jordan while Sudan saw the closure of two non-
performing branches. The Group’s expansion drive
is supported by its state-of-the-art Mega Lab which
allows IDH to deploy its Hub, Spoke and Spike busi-
ness model in Egypt to roll out capital-efficient “C”
labs more rapidly.
In parallel to driving top-line growth, manage-
ment was also successful in improving profitabil-
ity by increasingly targeting the higher-margin
walk-in segment while at the same time pushing
through increased operational efficiency and
cost-reduction initiatives. This is clearly reflected
in IDH’s gross profit which increased 30% year-on-
year to EGP 948 million in FY2018, yielding a one
percentage-point expansion in gross profit mar-
gin to 49%. The Group also recorded a strong 27%
year-on-year increase in EBITDA to EGP 762 mil-
lion in FY2018, with EBITDA margin remaining
stable at 40% despite a negative contribution of c.
EGP 25 million from IDH’s newly acquired opera-
tion in Nigeria which is still in the value-building
phase. Excluding Nigeria, Group EBITDA margin
would record 41%, ahead of management’s previ-
ously stated guidance of a targeted 40% EBITDA
margin from its established operations in Egypt,
Jordan and Sudan for FY2018. The Groups’ strong
improved profitability and
revenue growth,
higher interest income allowed it to deliver a 29%
year-on-year increase in net profit to EGP 497
million in FY2018, with a one percentage-point
expansion in net profit margin to 26%.
On the operational front, 2018 was a milestone
year for the Group during which IDH delivered on
several of its strategic and operational targets. In
February 2018, the Group’s state-of-the-art Mega
Lab in Egypt was awarded accreditation from the
College of American Pathologists (CAP), widely
considered the leader in laboratory quality as-
surance globally. Early 2018 also witnessed IDH’s
expansion into Nigeria through the acquisition
Branches by Country
31 December 2018
31 December 2017
Change
Egypt
Jordan
Sudan
Nigeria
Total Branches
371
19
23
10
423
340
18
25
-
383
9%
6%
(8%)
NA
10.4%
2018 |
ANNUAL REPORT
53
Performance Review
Our Customers
IDH serves two principal types of clients:
contract (corporate) and walk-in (individuals).
Within each of these categories, the Group
also offers a house call service, and within the
contract segment, a lab-to-lab service.
Contract Clients
IDH’s contract clients include institutions
such as unions, private insurance companies
and corporations who enter into one-year re-
newable contracts at agreed rates per-test and
on a per-client basis. In FY2018, contract cli-
ents represented 59% of IDH’s total revenues,
with 5.1 million patients served under these
contracts (+8%) and over 22.2 million tests
performed (+12%), with no single contract cli-
ent accounting for more than 1% of revenues.
Walk-in Clients
Walk-in clients contributed 41% to the Group’s
total revenues in FY2018, up from 39% in the
same period last year. Management’s efforts to
drive volume growth from the segment saw it
record a 17% increase in total number of walk-in
patients served to 2.0 million in FY2018, while
total tests performed were up 11% to 6.6 million.
The ratio of contract to walk-in patients dur-
ing FY2018 was 72:28 compared with 74:26 in
FY2017, reflecting IDH’s sustained marketing
effort to target walk-in patients. That said, we
expect the ratio to remain skewed in favour of
contract patients; this is in step with the gen-
eral market-wide shift in patient mix in recent
years and is a natural outgrowth of market
dynamics in Egypt, as companies are extend-
ing additional benefits to their staffs. The
trend has been encouraged by continued high
inflation, which is eroding consumer spending
power and thus putting incremental pressure
on corporations to provide either health insur-
ance or corporate plans.
Key Performance Indicators
FY2018
FY2017
Change
Walk-In
Contract
Total
Walk-In
Contract
Total
Walk-In
Contract
Total
Revenue (EGP ‘000)
779,969
1,141,483 1,921,452
591,463
922,794
1,514,257
32%
24%
27%
% of Revenue
41
59
100
39
61
100
Patients ('000)
1,970
5,078
7,048
1,682
4,685
6,367
17%
8%
11%
% of Patients
Revenue per Patient
(EGP)
28
396
72
225
100
273
26
352
74
197
100
238
Tests ('000)*
6,560
22,206
28,766
5,918
19,746
25,664
% of Tests
Revenue per Test
(EGP)
Test per Patient
23
119
3.3
77
51
4.4
100
67
4.1
23
100
3.5
77
47
4.2
100
59
4.0
13%
11%
19%
-5%
14%
12%
10%
4%
15%
12%
13%
1%
* During the year, IDH reclassified 249 thousand tests from contract to walk-ins with a total value of EGP 31.4 million. Without the reclassification, walk-in tests would have recorded
a 7% y-on-y growth in FY2018 while contracts test would be 14% higher than last year.
54
ANNUAL REPORT | 2018
Revenue Analysis: Contribution by
Patient Segment
IDH’s consolidated revenues recorded EGP
1,921 million in FY2018, up 27% year-on-year
with growth being driven by both the contract
and walk-in segments. In FY2018, the contract
segment contributed 59% of total revenues and
54% to total revenue growth, while the walk-in
segment contributed a 41% share of revenue and
a made a 46% contribution to revenue growth.
The Group served a total of 7.0 million patients
across both segments in FY2018, up 11% year-on-
year, while total tests performed increased 12%
year-on-year to 28.8 million. Parallel to volume
growth, selective price increases and better
sales mix also made important contributions to
revenue growth. This is clearly reflected in IDH’s
two key revenue metrics of average revenue per
patient (up 15% in FY2018) and average revenue
per test (up 13%).
The contract segment recorded a 24% year-
on-year increase in revenues in FY2018 to EGP
1,141 million, supported by an overall mar-
ket shift toward corporate health insurance
coverage, especially in IDH’s home market of
Egypt. Total number of contract patients was
up 8% y-o-y, while contract tests recorded a
12% y-o-y increase in FY2018. Better pricing
contributed strongly to the contract seg-
ment’s growth during the year, which saw it
record a 14% increase in average revenue per
contract patient and a 10% increase in aver-
age revenue per contract test. It is also worth
noting that the segment’s volume growth ac-
celerated during the fourth quarter of 2018
on the back of the 100 million Healthy Lives
campaign. The state-sponsored campaign
was launched by the Egyptian President with
the goal of eliminating Hepatitis C in Egypt
by the end of 2019. The campaign kicked off
in November 2018 and is expected to run
through to May 2019, and has contributed c.
2% of consolidated revenues and 7% of total
tests in FY2018.
IDH’s walk-in segment delivered a faster
year-on-year revenue growth rate at 32% in
In FY2018, the contract
segment contributed 59%
of total revenues and 54%
to total revenue growth,
while the walk-in segment
contributed a 41% share
of revenue and a made
a 46% contribution to
revenue growth
FY2018 to EGP 780 million. Segment growth
was almost equally driven by improved pric-
ing and a continued turnaround in walk-in
patient trends. The Group’s efforts to target the
segment with tactical marketing campaigns –
including attractive features such as discounts
on chronic disease tests and partnerships with
banks for affordable payment programs – saw
total number of walk-in patients increase 17%
year-on-year in FY2018, while total tests were
up 11%. Meanwhile, the Group was also suc-
cessful in passing-on price increases to con-
sumers who have increasingly adapted to new
price levels following the late 2016 devaluation
of the Egyptian pound. This is clearly reflected
in Egypt’s average revenue per walk-in patient
recording a 19% increase and average revenue
per walk-in test increasing 16% in FY2018.
Revenue Analysis: Contribution by
Geography
On a geographic basis, Egypt contributed 84%
of total revenues in FY2018 (FY2017: 83%),
followed by Jordan at 13% (FY2017: 14%) and
Sudan and Nigeria each contributing 2% to
total revenues (Sudan FY2017: 3%).
2018 |
ANNUAL REPORT
55
Performance Review
Revenues by Country
(EGP million)
FY2018
contribution
FY2017
contribution
change
Egypt
Walk-In
Contract
Jordan
Walk-In
Contract
Sudan
Walk-In
Contract
Nigeria
Walk-In
Contract
Total
Walk-In
Contract
1,613
587
1,027
243
140
103
35
25
10
30
27
3
1,921
780
1,141
84%
36%
64%
13%
58%
42%
2%
72%
28%
2%
91%
9%
100%
41%
59%
1,250
435
816
218
126
92
46
31
14
-
-
-
1,514
591
923
83%
35%
65%
14%
58%
42%
3%
68%
32%
-
-
-
100%
39%
61%
29%
35%
26%
11%
11%
11%
(23%)
(18%)
(32%)
-
-
-
27%
32%
24%
IDH’s home market of Egypt recorded the
fastest revenue growth in FY2018 at 29%
year-on-year to EGP 1,613 million. Strong
growth coupled with the geography’s largest
share of total revenue saw operations in Egypt
contribute 89% to the Group’s total revenue
growth for the year. IDH served a total of 6.5
million patients in Egypt, up 10% year-on-year.
Whilst total tests performed increased 13%
to 26.4 million during the year. On a segment
basis, walk-in patient volumes recorded strong
growth of 16% in FY2018, while volumes in the
contract business recorded a 12% increase.
To drive both the acquisition of new patients
and expanded test volumes, the Group offered
discounted prices for selected tests related to
certain diseases, launched tactical advertis-
ing campaigns to raise awareness of chronic
diseases and implemented a new customer
relationship management (CRM) program that
reached out to patients with marketing mes-
sages via SMS. Additionally, volumes in Egypt
were supported by the launch of the state-
sponsored 100 million Healthy Lives campaign
in the fourth quarter of the year.
Revenues from the Group’s operations in Jordan
were up 11% year-on-year to EGP 243 million
in FY2018, contributing c. 6% to the Group’s
consolidated revenue growth. Despite the
economic challenges in Jordan, the Group’s
subsidiary, Biolab, delivered a strong opera-
tional performance with the number of patients
served up 14% to 277,000, and the number of
tests performed up 11% to 1.6 million.
In Sudan, the Group delivered on-the-ground
revenue growth in SDG terms of 44% in FY2018,
however, the devaluation of Sudanese pound
by c. 85% during the year saw top-line gains
muted when translated into EGP on the Group’s
consolidated financial statements. The average
SDG:EGP exchange rate was 0.57 in FY2018
versus 1.04 in FY2017, leading to a 23% year-on-
year decline in revenues in EGP terms to EGP 35
million and a negative 3% contribution to total
growth in absolute terms.
56
ANNUAL REPORT | 2018
Nigeria, IDH’s newest market, recorded rev-
enues of EGP 30 million in FY2018 and made a
c. 7% contribution to total consolidated growth.
Nigeria’s value-adding phase is progressing,
with existing branches being refurbished and
renovated, new branches being launched, and
new state-of-the-art pathology and radiology
equipment being procured.
Contribution to Growth by Country
Egypt
Jordan
Sudan
Nigeria
Total
FY2017 Revenue
Egypt
Jordan
Sudan
Nigeria
FY2018 Revenue
FY2018
FY2017
24%
2%
(1%)
2%
27%
19%
9%
1%
-
29%
EGP mn
contribution
1,514
363
25
(10)
30
1,921
24%
2%
(1%)
2%
27%
Cost of Sales
IDH’s cost of sales recorded EGP 973 million
in FY2018, up 24% year-on-year or three per-
centage points slower than the 27% growth
in revenues, thanks to increased operational
efficiency and several cost-reduction initia-
tives. Consequently, the Group delivered a 30%
year-on-year increase in gross profit to EGP
948 million in FY2018, with a one percentage-
point expansion in gross profit margin to
49%. Gross margin expansion is also more
pronounced in IDH’s home market of Egypt,
where cost-reduction efforts have seen gross
profit margins expand significantly from 51.7%
in FY2017 to 54.1% in FY2018.
COGS Breakdown as a Percentage of Revenue
Raw Materials
Wages & Salaries
Depreciation
Other Expenses
Total
FY2018
FY2017
19.3%
16.3%
3.7%
11.3%
50.6%
21.4%
15.7%
3.7%
11.0%
51.8%
2018 |
ANNUAL REPORT
57
Performance Review
Management’s cost-reduction efforts are
clearly reflected on the Group’s raw material
costs – the largest contributor to COGS at
38% – which increased only 14% year-on-year
to EGP 370 million in FY2018, including the
cost of tests sent abroad. This translates to an
average raw material cost per test of EGP 12.9
in FY2018, up only 2% versus FY2017, despite
the prevailing double-digit inflation. It is also
worth noting that management’s efforts in
improving patient and test mix and negotiat-
ing more favourable raw material prices have
led to an overall decline in raw material costs
as a percentage of sales to 19% in FY2018 from
21% in FY2017.
Constituting the second-largest share of
COGS, direct salaries and wages increased
32% year-on-year to EGP 313 million in
FY2018, however, as a percentage of sales
remained stable at 16%. The year-on-year
increase was driven by the staffing of new
branches, higher incentive compensation tied
to strong revenue growth and the consolida-
tion of IDH’s new Nigerian operation.
Other expenses, including branch utilities and
rent, recorded EGP 218 million in FY2018 or
31% higher than the previous year. Growth in
the expense item was driven by the utilities
price hikes passed in July 2017, the increases in
branches’ rental contracts in early 2018 along
with the increase in the number of branches,
as well as fuel and energy price hikes in July
2018. It is worth noting, however, that utilities
and rent costs, as a percentage of revenue,
remained stable at 11% in FY2018.
EBITDA
The Group recorded a consolidated EBITDA of
EGP 762 million in FY2018, up 27% compared to
the EGP 602 million recorded in the previous year.
EBITDA margin was stable at 40%, despite the in-
clusion of a negative EBITDA of c. EGP 25 million
from IDH’s new Nigerian operations – currently
in the value-building phase. Group EBITDA was
also weighed down by the devaluation of the Su-
danese pound which offset the country’s top-line
gains. Excluding the Nigerian operation, EBITDA
growth would have recorded 31% year-on-year
with a margin of 41%.
IDH’s operations in Egypt contributed the lion’s
share of FY2018 EBITDA at 97%, up from 91%
in FY2017 due to strong business in the market,
a stable contribution from Jordan, and negative
contributions from Sudan and Nigeria during
the year. Egypt’s EBITDA margin also expanded
by two percentage points to 46% in FY2018 on
the back of lower raw material costs and favour-
able operating leverage on strong revenues.
EBITDA from Jordan’s Biolab contributed 7% to
consolidated EBITDA (EGP 52 million) with the
EBITDA margin improving to 21% compared
to 19% in FY2017. Meanwhile, currency devalu-
ation in Sudan saw operations there record a
negative 7% EBITDA margin in FY2018 versus
a positive 31% in FY2017. The decrease was pri-
marily driven by higher salaries paid in US$ to
expatriates, and lower patient volumes. IDH is
working to limit expatriate salaries by increas-
ing dependence on local hires and has already
transferred several employees back to Egypt
which should help limit the negative effect on
Sudan’s EBITDA margin.
EBITDA Contribution by Country
(EGP million)
FY2018
contribution
FY2017
contribution
change
Egypt
Jordan
Sudan
Nigeria
Total
738
52
(3)
(25)
762
96%
7%
-
(3%)
100%
547
41
14
-
602
91%
7%
2%
-
100%
35%
25%
NA
NA
27%
58
ANNUAL REPORT | 2018
Interest Income / Expense
Prudent cash management saw the Group maxi-
mise return on its accumulated time deposits
and treasury bills balances, with interest income
up 16% to EGP 59 million in FY2018 compared to
EGP 51 million in the previous year.
Interest Expense Breakdown
Interest expense, which is primarily related
to the Company’s finance lease contracts,
increased 17% or EGP 2.2 million to reach EGP
15.3 million for FY2018.
FY2018
9.5
3.5
2.4
15.4
The Group’s dividend policy is to distribute any
excess cash after taking into consideration all
business cash requirements and potential ac-
quisition considerations. As a result, a deferred
tax liability is recognised for the 5% tax on
dividends for the future expected distribution
payable by Egyptian entities under Egyptian
tax legislation. Deferred tax expense in FY2018
was EGP 24 million versus an expense of EGP
57 million in FY2017. It should be noted that
in 2017, IDH conducted a revaluation of the
goodwill related to Sudan and Jordan, yielding
a deferred tax amounting to EGP 19 million.
Net Profit
IDH recorded a net profit of EGP 497 million
in FY2018, up 29% compared to the EGP 384
million posted in FY2017, and with a one
percentage-point expansion in net profit
margin to 26%. The improvement in bottom-
line profitability was driven by strong rev-
enue growth, an increase in EBITDA, and
higher net interest income.
(EGP million)
Finance Lease
Bank Charges
Al Borg Scan MTL
Total
Foreign Exchange
IDH recorded a net foreign exchange loss of
EGP 16 million in FY2018 compared to EGP
20 million in FY2017. The figure is primar-
ily a result of the devaluation of the Sudanese
pound and FX transactions related to dividend
distributions and salary expenditures.
Taxation
IDH recorded a tax expense of EGP 196 million
for FY2018 compared to EGP 118 million for
FY2017, with an effective tax rate of 27% versus
21% in the previous year. The increase in effec-
tive tax rate is mainly due to the following:
• Integrated Medical Analysis Company
(IMA) had accumulated tax losses generat-
ed from 2016 (related to FX losses following
the devaluation of the EGP) and that were
fully settled during 2017 (EGP 18 million of
tax difference between 2017 and 2018);
• The Egyptian Government imposed a new
tax of 0.25% on total income (revenues and
credit income) starting July 2018 in relation
to the new Healthcare Act, which increased
the tax on the Group by EGP 2.9 million.
There is no tax payable for IDH’s two com-
panies at the holding level. Tax was paid on
profits generated by operating companies in
Egypt and Jordan.
2018 |
ANNUAL REPORT
59
Performance Review
EBITDA to Net Profit Calculation
(EGP million)
FY2018 EBITDA
Depreciation
Interest Income
Net Monetary Position
FX Losses
Interest Expense
Tax
FY2018 Net Income
FY2018
762
(77)
59
4
(16)
(15)
(220)
497
Balance Sheet
On the assets side of the balance sheet, IDH
held gross property, plant and equipment
(PPE) of EGP 983 million as of 31 December
2018, up from EGP 685 million at 31 December
2017. The increase is due to the consolidation
of Echo-Scan’s fixed assets amounting to EGP
43 million, CAPEX outlays of EGP 86 million
related to the Group’s new corporate head-
quarters as well as EGP 50 million related
to new branches and EGP 48 million related
to the renovations of existing branches. Ad-
ditionally, CAPEX outlays of EGP 55 million
were related to the Al Borg Scan (radiology)
expansion during 2018.
Accounts receivable recorded EGP 220 million
as of 31 December 2018 compared to EGP 140
million at year-end 2017. Accounts receivable
days-on-hand (DOH) increased to 138 days on
account of EGP 36.7 million in receivables re-
lated the 100 Million Healthy Lives Campaign.
Factoring out this amount, DOH would have
remained stable at 123 days.
The Group’s “days inventory outstanding”
remained stable at 82 days.
IDH’s cash balances decreased to EGP 664
million as of 31 December 2018 from EGP 708
million as of 31 December 2017 due to a divi-
dends payment amounting to US$ 24 million
paid out in June 2018.
On the liabilities side, accounts payable
stood at EGP 158 million at 31 December
2018 versus EGP 126 million at year end 2017.
The Group’s days payable outstanding (DPO)
slightly decreased to 145 days from 148 days
at 31 December 2017.
Dividend
Proposed dividends for ordinary shares are
subject to the approval of the Annual General
Meeting and are not recognised as a liability
as of 31 December 2018. The Board of Direc-
tors has recommended that a final dividend
of US$ 26.4 million, or US$ 0.176 per share,
should be paid to shareholders who appear
on the register as of 17 May 2019, with an ex-
dividend date of 16 May 2019. The payment
date for the dividend will be 7 June 2019.
60
ANNUAL REPORT | 2018
497 EGP
MN
in net profit in 2018, up 29% on 2017
26.4 US$
MN
Recommended final dividend for 2018
2018 |
ANNUAL REPORT
61
Performance Review
Corporate Social
Responsibility
Founded on the principle of providing qual-
ity medical assistance and services to better
the lives of individuals and the community
at large, IDH views corporate responsibility
initiatives as an extension of its core purpose,
with the aim of improving the communities in
which it does business.
IDH commits up to 1% of the net after-tax
profit of the subsidiaries Al Borg and Al
Mokhtabar to the Moamena Kamel Founda-
tion for Training and Skill Development,
which, in 2018, amounted to EGP 5.0 million
compared with EGP 3.9 million in 2017. The
Foundation was established in 2006 by Dr.
Moamena Kamel, a Professor of Pathology at
Cairo University, founder of IDH subsidiary
Al-Mokhtabar Labs, and mother of the CEO,
Dr. Hend El Sherbini.
The Foundation allocates sums received
from IDH to organisations and groups in
need of assistance, with a particular focus on
making a difference in the lives of residents
of Cairo’s Al Duweiqa community along with
several other villages across Egypt. The
Foundation deploys an integrated program
and vision for the communities it helps that
include economic, social and healthcare
development initiatives.
The Foundation’s primary services include:
• Free healthcare clinics
• Loans for entrepreneurial women
• Educational services for the children of Al
Duweiqa community
• Providing food for families in need of such
assistance
• Coverage of running costs for the ICU at
Cairo’s public-sector Kasr El Aini Hospital
• IDH has also been expanding the reach of
its Corporate Responsibility initiatives in
recent years to include:
• Additional services to Kasr El Aini Hospital
that include providing medical supplies to the
ICU and other units, monthly incentives for
nurses in the ICU, and 12-20 hospital beds
• Financial and in-kind support to El Manial
Hospital
• Financial and in-kind support to the Egyp-
tian people during natural disasters
• Ramadan Iftar ( feast) meals to underprivi-
leged Egyptians during the holy month of
Ramadan
• Free medical tests to underprivileged Egyp-
tian children
• Sponsorship of medical convoys to the city
of Fayoum
62
ANNUAL REPORT | 2018
2018 |
ANNUAL REPORT
63
Corporate
Governance
IDH aims to work towards
implementing best practices in
corporate governance, calling on
both the expertise of its Board of
Directors as well as that of outside
parties, including legal counsel and
global professional services firms
Corporate
Governance
Corporate Governance
Board of Directors
The majority of members of IDH’s Board of Directors are independent and offer significant
experience in the healthcare market, MENA region and investment activities.
Lord St John of Blesto (Age 61)
Independent Non-Executive Chairman
Prof. Dr. Hend El Sherbini (Age 50)
Group Chief Executive Officer
Hussein Choucri (Age 68)
Independent Non-Executive Director and
Dr. El Sherbini is a professor of clinical
pathology at the Faculty of Medicine,
Cairo University and currently sits on
the board of American Society of Clini-
cal Pathology (Egypt) and consults on
the international certification process.
She received her MBBCh, Masters in
Clinical and Chemical pathology, PhD
in Immunology from Cairo Univer-
sity, and MBA from London Business
School. Dr. El Sherbini served as CEO
of Al Mokhtabar since 2004, until be-
coming CEO of the Group in 2012.
Chairman of the Remuneration Committee
Mr. Choucri is Chairman and Manag-
ing Director of HC Securities & Invest-
ment, which he established in May
1996. He currently sits on the boards
of EDITA Food Industries S.A.E and
SODIC (Sixth of October Development
& Investment Company), as well as the
Egyptian British Business Council and
the Egyptian Greek Business Council.
Mr. Choucri served as a Managing
Director of Morgan Stanley from 1987
to 1993 and served as Advisory Direc-
tor at Morgan Stanley from 1993-2007.
He received his Management Diploma
from the American University in Cairo
in 1978.
Lord St John has been a member of the
House of Lords of the U.K. Parliament
since 1978 and is currently Deputy
Chairman of Strand Hanson Ltd.,
Non-Executive Chairman of Global
Resources Investment Trust, a mem-
ber of the Advisory Board of Silicon
Valley Bank, Non-Executive Director
of Albion Ventures LLP, Chairman of
the Governing Board of Certification
International and holds advisory roles
International, Alliance
with Milio
Media Group USA, Sapinda and ABN
Corporation. Lord St John received a
BA and a BSocSc in Psychology from
Cape Town University, a BProc in Law
from the University of South Africa
and an LLM from the London School
of Economics.
66
ANNUAL REPORT | 2018
James Patrick Nolan (Age 59)
Independent Non-Executive Director
Dan Olsson (Age 53)
Independent Non-Executive Director
Richard Henry Phillips (Age 54)
Non-Executive Director
and Chairman of the Audit Committee
Mr. Nolan is an Independent Director.
He recently joined Intertrust as Head of
Strategy and Mergers & Acquisitions.
Prior to that, he spent 15 years with
Royal Philips NV, latterly as Head of
Mergers & Acquisitions, and has also
served as Head of Mergers & Acquisi-
tions at Veon Inc., a major mobile tele-
coms operator in Emerging Markets.
During his time at Philips, he led a
series of acquisitions in diagnostic im-
aging, an area in which Philips is now a
global leader. He has extensive quoted-
company board experience, having
served on the boards of M*Modal Inc.,
Navteq Inc and SHL Telemedicine Ltd.
Mr. Nolan holds an MA in law from
Oxford University and is a qualified
barrister in England and Wales. He also
holds an MBA from INSEAD.
Mr. Olsson is CEO of the Team Ol-
ivia Group AB, a Swedish healthcare
group. He has long and extensive
international experience in the diag-
nostic sector, where he has served in
a range of executive positions, inlud-
ing CEO of Unilabs Group in Geneva,
Switzerland from 2007 to 2009 and has
worked in the healthcare sector since
1999. Mr. Olsson studied economics at
the University of Lund in Sweden.
Mr. Phillips is a founding partner of
Actis LLP, the emerging markets pri-
vate equity group. As Actis LLP is one
of the Company’s major shareholders,
Mr. Phillips is not considered by the
Board as being independent. He was
previously responsible for the invest-
ment activity of Actis in North Africa
and is currently responsible for Asia.
He is a member of the Actis Investment
Committee. Mr. Phillips is a director on
the board of a number of companies,
including Emerging Markets Knowl-
edge Holdings (Mauritius) Limited, Les
Laboratoires Medis SA, and others. Mr.
Phillips holds a degree in Economics
from the University of Exeter.
2018 |
ANNUAL REPORT
67
Corporate Governance
Corporate Governance
Report
Your Board of Directors (the Board) is responsi-
ble for providing strong leadership and effective
decision making, safeguarding the interests of
all shareholders of Integrated Diagnostics Hold-
ings in the process. Under my chairmanship,
the Board has maintained an unwavering com-
mitment to providing oversight and guidance to
senior management as the Group continues to
execute its regional growth strategy.
IDH has a standard listing on the London Stock
Exchange and is thus not required to comply
with the requirements of the 2016 UK Corporate
Governance Code (the Code) as issued by the
Financial Reporting Council, nor does IDH vol-
untarily comply with the Code. That said, it is the
view of your Board that we continue our path of
improving our corporate governance structure to
adhere to best practices. We strongly believe that
the gradual adoption of best industry practices in
governance will assist us in building a profitable
and sustainable business, as well as safeguarding
shareholder interests.
We are compliant with Financial Conduct
Authority Disclosure and Transparency Rules
(DTR) subchapters 7.1 and 7.2, which set out
certain mandatory disclosures: 7.1 concerns
audit committees and bodies carrying out
equivalent functions; 7.2 concerns corporate
governance standards that are included in the
Directors Report or, in this case, as part of the
Strategic Review (DTR 7.2.1).
To that end, we have an Audit Committee as
well as Remuneration and Nomination Com-
mittees. The Board may establish additional
committees as appropriate going forward. This
Annual Report includes reports from both the
Audit and Remuneration Committees.
Your Board aims to work towards implement-
ing best practices in corporate governance,
calling on both the expertise of individual
Directors as well as that of outside parties,
including legal counsel and global professional
services firms.
Functioning of the Board
We met six times as a Board during the course
of 2018 and has invested significant time dis-
cussing and evaluating the Group’s strategy
and prospects for future growth, the outcome
of which is presented in our statement of strat-
egy on page 40. We are confident that we have
in place the right strategy and the right man-
agement team to deliver shareholder returns
going forward.
Composition of the Board
Under its Articles of Association, the Group
must have a minimum of two Directors. While
there is no maximum number of Directors, the
Board presently includes six Board members
and has no intention at present of appointing
additional members. Notably, Directors have no
share qualification, meaning they do not need to
be shareholders of the Group in order to serve.
I am pleased to report that we have four Inde-
pendent Non-Executive Directors. Together,
the Directors offer IDH a world standard mix
of expertise in areas including strategy, finance
and medical diagnostics — as well as diverse
experience in Europe, the Middle East and
Africa. We have relevant commercial and tech-
nical experience to help direct the Group as it
delivers on its strategy in a very technical field
and across rapidly changing geographies.
Your Board in 2018 and their biographies are set
out on pages 66 and 67 of this Annual Report
and are summarised in the following table.
68
ANNUAL REPORT | 2018
Board of Directors of Integrated Diagnostic Holdings Plc
Name
Position (Date of appointment)
Lord St John of Blesto
Independent Non-Executive Chairman (12 January 2015)
Prof. Dr. Hend El Sherbini
Group Chief Executive Officer ( 23 December 2014)
Hussein Choucri
Independent Non-Executive Director ( 12 January 2015)
James Patrick Nolan
Independent Non-Executive Director (8 April 2015)
Dan Olsson
Independent Non-Executive Director (12 January 2015)
Richard Henry Phillips
Non-Executive Director (23 December 2014)
Leadership
We continue to operate on the basis of a clear
division of responsibilities between the role
of the Chairman and that of the Group Chief
Executive. This segregation of roles was agreed
at the Board meeting held 12 January 2015. The
Board continues to believe that this segrega-
tion of roles remains appropriate, taking into
account the size and structure of the Group.
As Chairman, I ensure the Board is effective
in the execution of all aspects of its role. The
Group Chief Executive Officer, meanwhile, is
responsible for managing the day-to-day run-
ning of the business. In this, she is supported by
a senior management team. The Group Chief
Executive and I have a good working relation-
ship and discuss matters of Group strategy and
performance on a regular basis.
We also work together to ensure that Board
meetings cover relevant matters, including a
quarterly review of financial and operational
(including key performance
performance
indicators), and in partnership with the Group
secretary ensure that all Directors:
• are kept advised of key developments;
• receive accurate, timely and clear informa-
tion upon which to call in the execution of
their duties; and
• actively participate in the decision-mak-
ing process.
Agendas for meetings of the Board are re-
viewed and agreed in advance to ensure each
Board meeting is efficiently run, allowing
all Directors to openly and constructively
challenge the proposals made by the Group’s
senior management. I am pleased to report
that throughout the year, each Director has
properly exercised those powers with which
they have been vested by the Group’s Articles
of Association and relevant laws.
The Board operates under a Schedule of
Matters Reserved, the details of which are
unchanged since our last Annual Report.
Matters reserved to the Board means any
decision that may affect the overall direction,
supervision and management of the Group,
including, but not limited to:
2018 |
ANNUAL REPORT
69
Corporate Governance
• approving annually a strategic plan and ob-
jectives for the following year for the Group;
• approving any decision to cease to operate
all or any material part of the Group’s busi-
ness or to enter into any new business or
geographic areas;
• monitoring the delivery of the Group’s strat-
egy, objectives, business plan and budget;
• adopting or amending the Group’s business
•
plan or annual budget;
incurring any capital expenditure in respect
of any item or project of more than EGP 5
million that is not within the annual budget
already approved by the Board;
• entering into any contract, liability or com-
mitment that: (i) could involve a liability
for expenditure in excess of EGP 25 million
that is not within the annual budget already
approved by the Board or (ii) is outside the
ordinary course of business of the Group,
unless a contract involves costs within the
annual budget and business plan already
approved by the Board and satisfies such
authorisation criteria as the Group may
approve from time to time as part of the
procedures for the Group;
• making any material acquisition or disposal
(including any grant of any material licence) of
or relating to any intellectual property rights;
• decisions relating to the conduct (including
the settlement) of any legal proceedings to
which any member of the Group’s group is
a party where there is a potential liability or
claim of more than EGP 100,000;
• approving the Group’s annual report and
accounts and half-yearly financial state-
ments and/or any change in the accounting
principles or tax policies of any member of
the IDH group and/or any change in the end
of the financial year of any member of the
IDH group except as contemplated by the
business plan or annual budget, as required
by law or to comply with a new accounting
standard;
• adopting (or varying) IDH’s group mate-
rial policies in respect of employees’
remuneration, employment terms and/or
pension schemes;
• any member of the IDH group declaring or
paying any dividend or distribution;
• delegating any of the Group’s powers to a
committee of the Board, including setting
the quorum for a meeting of any such com-
mittee or approving its, or any changes to
its, terms of reference;
• approving the issue of all circulars, prospec-
tuses, listing particulars and general meet-
ing notices to shareholders of the Group;
• ensuring the Group has effective systems
of internal control and risk management in
place by (i) approving the Group’s risk appe-
tite statements and (ii) approving policies
and procedures for the detection of fraud,
the prevention of bribery and other areas
considered by the Board to be material;
• undertaking an annual review of the effec-
tiveness of the Group’s risk management
and internal control and reporting on that
review in the Group’s annual report. The
review should cover all controls, including
financial, operational and compliance con-
trols and risk management;
• carrying out a robust assessment of the
principal risks facing the Group, includ-
ing those that threaten its business, future
performance, solvency or liquidity and to
report on such assessment in the Group’s
annual report; and
• reviewing the Group’s overall corporate
governance arrangements and approving
any changes thereto.
Apart from these Reserved matters, the Board
delegates specific items to its principal com-
mittees, namely the committees on Audit,
Remuneration and Nomination. Each Com-
mittee is authorised to seek any information it
requires from senior management.
Below are brief recaps on each of these com-
mittees. Reports from the Chairmen of the
Audit and Remuneration Committees appear
starting pages 76 and 80 of this Annual Report,
respectively.
Board Activities During 2018
Your Board of Directors held six meetings in
2018: four in London and two via conference call.
The following standing items are considered at
each meeting:
• Determines that notice was given and that a
quorum for the meeting has been obtained;
• Hears declarations of interest and considers
any conflicts of interest that may arise;
• Establishes the purpose of the meeting; and
• Reviews and approves minutes of the previ-
ous meeting of the Board.
70
ANNUAL REPORT | 2018
Meeting Dates
Meeting Highlights
• 20 March 2018
• 14 May 2018
•
12 June 2018
(via conference call)
• 15 August 2018
• 20 November 2018
• 19 December 2018
(via conference call)
Issues discussed during Board meetings included, but were
not limited to, quarterly, half-year and annual results; Audit
Committee reports; Remuneration Committee reports;
updates on new headquarters in Egypt; Biolab (Jordan); Ni-
gerian business operations; radiology operations; Sudanese
business operations; key economic indicators per region;
potential investment opportunities and budget matters
Details of our Directors’ attendance at Board
and Committee meetings are shown in the table
on page 73. In the event that any Director is
u able to attend a meeting of the Board or Co
mi tee of which they are a member, he or she r
ceives the necessary papers, including agendas,
meeting outcomes and any documents pr
sented for review or information. Furthermore,
I endeavour to discuss with them in advance of
the meeting to obtain their views and decisions
on the proposals to be considered.
Effectiveness
Having spent considerable time in both formal
meetings and in learning about the skills of our
Directors one-on-one — and drawing on my
past experience as a Director — I am confident
that the Board has the skills, talent and indus-
try knowledge it needs to effectively deliver the
Group’s agreed strategy.
It is my considered judgement that the Board
receives from senior management sufficiently
detailed budgets, forecasts, strategy proposals,
reviews of the Group’s financial position and
operating performance, and annual and half
yearly reports to ensure that it may be effective.
This enables us to effectively ask questions of
senior management and to hold discussions
on the Group’s strategy and performance. In
2018, senior management delivered regular
reports to the Board ahead of regularly sched-
uled Board meetings.
All meetings of the Board and its Commit-
tees are minuted by the Group Secretary or a
designated alternate. Any concerns raised by
Directors are clearly recorded in the minutes
of each meeting. I review Board minutes
in my capacity as Chairman before these
minutes are circulated to all Directors in at-
tendance and then tabled for approval at the
next meeting, at which time any necessary
amendments are made.
The Group has obtained customary directors’
and officers’ indemnity insurance covering the
Chairman and the Non-Executive Directors.
Overview of the Nomination Committee
The Nomination Committee assists the Board
in reviewing the structure, size and composi-
tion of the Board. It is also responsible for
reviewing succession plans for the Directors,
including the Chairman and Chief Executive
and other senior management.
I note in this instance that all members of the
Nomination Committee are Non-Executive Di-
rectors. Hussein Choucri is deemed to be our
Non-Executive Director with relevant financial
experience in compliance with the DTR.
Name
Position
Lord St John of Blesto
Chairman of the Committee
Hussein Choucri
Committee Member
Dan Olsson
Committee Member
2018 |
ANNUAL REPORT
71
Corporate Governance
Overview of the Remuneration
Committee
The Remuneration Committee recom-
mends the Group’s policy on executive
remuneration determines the levels of re-
muneration for Executive Directors and the
Chairman and other senior management
and prepares an annual remuneration
report for approval by the Shareholders at
the Annual General Meeting.
The full report of the Remuneration Commit-
tee for 2018 appears starting on page 80 of this
Annual Report.
Name
Position
Hussein Choucri
Chairman of the Committee
James Patrick Nolan
Committee Member
Dan Olsson
Committee Member
Overview of the Audit Committee
The Audit Committee’s role is to assist the
Board with the discharge of its responsibilities
in relation to financial reporting, including:
reviewing the Group’s annual and half-year
financial statements and accounting policies
and internal and external audits and controls;
reviewing and monitoring the independence
and scope of the annual audit and the extent of
the non-audit work undertaken by external au-
ditors; advising on the appointment of external
auditors; and reviewing the effectiveness of the
internal audit, internal controls, whistleblow-
ing and fraud systems in place within the
Group. The Audit Committee will meet not less
than three times a year.
The Audit Committee comprises three Inde-
pendent Non-Executive Directors who hold
the necessary competence in accounting and/
or auditing, recent financial experience and
have competence relevant to the sector in
which the Group is operating.
The full report of the Audit Committee for 2018 appears starting on page 76 of this Annual Report.
Name
Position
James Patrick Nolan
Chairman of the Committee
Hussein Choucri
Committee Member
Dan Olsson
Committee Member
72
ANNUAL REPORT | 2018
Table of Director Attendance at 2018 Meetings
Board
Audit
Remuneration
Nomination
Number of Meetings
Directors:
Lord St John of Blesto
Prof. Dr. Hend El Sherbini
Hussein Choucri
James Patrick Nolan
Dan Olsson
Richard Henry Phillips
6
5
6
6
5
6
6
3
-
-
3
3
3
-
2
-
-
2
2
2
-
0
-
-
-
-
-
-
Internal Control and Risk
Management
Given the business and geographies in which
the Group operates, I believe, as Chairman,
that risk mitigation will be key not just to
the creation and preservation of shareholder
value, but in the Group’s growth going for-
ward. The Company’s risk matrix, outlined on
pages 44-49, is sufficiently vital that it must be
owned equally by the management team and
members of the Board.
Our view as a Board is that the Group must be
proactive on risk in order to meet shareholder
expectations, and I have advised that I expect
the IDH management team to be ahead of the
curve in this area. You may expect risk and
its mitigation will be a theme to which your
Board returns repeatedly in 2019, as we did in
2018.
The Board has ultimate responsibility for the
Group’s internal controls; however, they have
delegated oversight of the Group’s system of
internal controls to the Audit Committee so
as to safeguard the assets of the Group and
the interests of shareholders. The Audit Com-
mittee thus reviews the effectiveness of the
Group’s internal controls on an ongoing basis
to ensure the keeping of proper accounting
records, safeguarding the assets of the Group
and detecting fraud and other irregularities.
The Audit Committee reports back to the
Board with their findings and recommenda-
tions.
The Board has accordingly established that the
Group has in place internal controls to man-
age risk including:
• an Internal Auditor was appointed in May
2016;
• the identification and management of risk
at the level of operating departments by the
heads of those departments; and
• regular Board level discussion of the major
business risks of the Group, together with
measures being taken to contain and miti-
gate those risks.
The Group’s principal risks and uncertainties
and mitigation for them are set out on pages
44-49 of this Annual Report.
2018 |
ANNUAL REPORT
73
Corporate Governance
Your Board has, furthermore, put in place a
control framework at the Group level that ap-
plies to all subsidiaries, including:
• Board approval of the overall Group budget
and strategic plans;
• a clear organisational structure delineat-
ing lines of responsibility, authorities and
reporting requirements;
• defined expenditure authorisation levels;
• a regular process for operational reviews at
the senior management level on a weekly,
monthly and quarterly basis covering all
aspects of the business;
• a strategic planning process that defines the
key steps senior management must take to
deliver on the Group’s long term strategy;
• a comprehensive system of financial re-
porting, including weekly flash reports to
management, monthly reporting to man-
agement and an annual budget process
involving both senior management and
the Board; the Board received reports on a
quarterly basis in 2018;
• as part of the reporting process in 2018,
management reviewed monthly and year-
to-date actual results against prior year,
against budget and against forecast; these
reports were circulated to the Board; any
significant changes and adverse variances
are reviewed by the Group Chief Executive
and by senior management and remedial
action is taken where appropriate.
We published both half- and full-year results
and further released trading updates on per-
formance at the three- and nine-month peri-
ods. We intend to continue publishing trading
updates at the first- and third-quarter marks
in 2019, while simultaneously meeting the
minimum regulatory disclosure as required of
a UK Standard listed entity.
The Board communicates with sharehold-
ers through public announcements dis-
seminated via the London Stock Exchange,
analyst briefings, roadshows and press
interviews. Copies of public announcements
and financial results are published on the
Group’s website, along with a number of
other investor relations tools. It is worth
highlighting that the Group launched new
corporate and investor relations websites
in 2018, offering more comprehensive and
better structured information on the Group
along with additional shareholder tools and
a richer interface.
IDH also retained the services of public relations
outfit Hudson Sandler in London to advise the
company, increase media traction and widen
our audience as well as organize results meetings
to better communicate IDH’s on-the-ground
performance. Hudson Sandler are working in
partnership with IDH’s Cairo-based investor rela-
tions advisors Inktank Communications.
An internal audit plan for 2019 was prepared
and agreed with the Audit Committee.
Investor Relations
Engagement with shareholders continues to be
a key function at both the senior management
and the Board level. Our investor relations func-
tion held numerous meetings with current and
potential investors during the course of the year.
Management met investors at several investor
conferences in New York, London, Dubai and
Cape Town; welcomed potential and current
investors to meetings in Cairo; and handled
queries, whether delivered verbally or in writ-
ing, from more than 100 investors.
The Board receives regular updates from the
senior management team on the views of
major shareholders and on milestones in the
investor relations program. We will continue,
throughout 2019, to grow our investor rela-
tions program to ensure that our sharehold-
ers and stakeholders remain informed of the
Group’s strategy and ongoing financial and
business performance.
Annual Reporting and Annual
General Meeting of Shareholders
We typically publish our Annual Report in
March in respect of the prior year ended 31 De-
cember. We voluntarily comply with the Code’s
74
ANNUAL REPORT | 2018
Engagement with
shareholders continues to
be a key function at both
the senior management
and the Board level
requirement to send a Notice of Meeting of an
Annual General Meeting (AGM) and related
papers to shareholders at least 20 working
days prior to the meeting.
The Group’s fourth Annual General Meeting as a
listed company will be held in Cairo on 14 May
2019. Shareholders are encouraged to attend the
AGM and to ask questions about the business, its
financial performance and its strategy. All Board
members are scheduled to attend the upcoming
AGM. Details of the AGM are included in the
Notice of Meeting that accompanies this Annual
Report and which is available on our website.
At the AGM, all of the Group’s Directors will
retire and submit themselves for re-election.
The outcome of the voting at the AGM will
be announced by way of a London Stock Ex-
change announcement and full details will
be published on the Group’s website shortly
after the AGM.
Limitations of this Report
As I noted earlier, the Group is not bound to
adhere to the requirements of the 2016 UK
Code of Corporate Governance. Neverthe-
less, we have endeavoured to ensure that this
Annual Report is, as a whole, fair, balanced
and understandable.
In formulating this Annual Report, we have
called on the Group Chief Executive and
her senior management staff to provide us
with clear documentary evidence of the
Group’s performance and policies for 2018.
The Audit Committee has confirmed to us
that the financial statements as contained
in the 2018 Annual Report are true and fair
and that the work of the external auditor has
been accurate and effective.
Lord St John of Bletso
Chairman
21 March 2019
2018 |
ANNUAL REPORT
75
Corporate Governance
Audit Committee Report
the Committee have a broad range of appropri-
ate skills and experience covering financial and
healthcare industry matters and their biogra-
phies are summarised on pages 66 and 67. I am
very grateful for their valuable contributions and
am happy that we work well together as a team.
During 2018, the Audit Committee convened
three times, once in March and twice in August.
We provided governance of external financial re-
porting, risk management and internal controls
and reported our findings and recommendations
to the Board. Outside of scheduled committee
meetings, the Audit Committee also communi-
cated throughout 2018 on an as-needed basis
with the Group Chief Financial Officer and with
KPMG, as our external auditors.
The audit partner and audit manager from
the Group’s external auditor, KPMG, are
invited to attend meetings of the Committee
on a regular basis. During 2018, they attended
meetings in whole or in part, both in person
and by telephone. The Vice-President of Fi-
nance and Strategy, who is not a member of
the executive board, attends our meetings by
invitation, and other members of the senior
management team attend as required; these
include the Director of Investor Relations and
the Group Secretary.
There are also private meetings between the Au-
dit Committee and the external auditor outside
the half-year and year end timetable at which
senior management is not present. The Commit-
tee will continue with the practice of meeting in
private with the external auditor in the future.
At our Board Meeting in August 2016, the Au-
dit Committee approved the Internal Audit
Activity Charter as well as the appointment
of Mr. Ashraf Hallaba as Internal Auditor
reporting to the Audit Committee. The role
reports functionally to the Audit Committee
and administratively to the Chief Executive
Officer. Since inception, the Internal Auditor
has been building a team, writing a manual
on operations, reviewing process of key func-
James Nolan
Chairman, Audit Committee
The Audit Committee is responsible for over-
seeing IDH’s internal financial reporting and
ensuring the integrity of the Group’s financial
statements. The Committee is also responsible
for reviewing and monitoring the effectiveness of
the Group’s risk management processes and in-
ternal controls, as well as for ensuring that audit
processes are robust.
At the date of this report, the Audit Committee is
comprised of three Non-Executive Directors, all
of whom are considered independent. In addi-
tion to myself, the members are Dan Olsson and
Hussein Choucri.
2019 marks my fourth year as Chairman of the
Audit Committee, having been appointed to that
role owing to my relevant financial experience as
required by the Code. I have served on the audit
committees of three publicly quoted companies
in the past. I have held the positions of Global
Head of Mergers & Acquisitions both at Veon and
at Royal Philips. I hold an MBA from INSEAD and
studied law at university. The other members of
76
ANNUAL REPORT | 2018
tions within the company and discussing
the same with the company’s management.
The Internal Auditor delivered his compre-
hensive risk register on 19 November 2017,
as well as his progress report in setting up
and establishing his department. Progress
continues to be made toward adequate staff-
ing and of the department and the Board
periodically assess and reviews the Internal
Audit function.
• reviewing the Group’s accounting policies,
internal and external audits and controls;
• reviewing and monitoring the scope of the
annual audit and the extent of the non-audit
work undertaken by external auditors; and
• advising on the appointment of external
auditors and reviewing the effectiveness
of the internal audit, internal controls,
whistleblowing and fraud systems in place
within the Group.
During its scheduled meetings, the Committee
also considers the following matters:
• confirm compliance with Directors’ duties
and consider any new conflicts of interest;
• review minutes of previous meetings;
• review actions from previous meetings; and
• review progress against current year
objectives.
Audit Committee Activities During 2018
During 2018, the Audit Committee had three
scheduled meetings, one in March and two in
August. At each scheduled meeting, the Com-
mittee considers the matters outlined above
under the subheading “Roles and Duties of
the Audit Committee.”
FRC Audit Quality Review
The FRC is the UK’s independent regulator re-
sponsible for promoting high-quality corporate
governance and reporting to foster investment.
The FRC’s responsibilities include independent
monitoring of audits of listed and certain other
public interest entities performed by firms regis-
tered to conduct audits in the UK by a Recognised
Supervisory Body ( further details are set out on
the FRC’s website). This monitoring is performed
by the FRC’s Audit Quality Review (‘AQR’) team.
The reviews of individual audit engagements
are intended to contribute to safeguarding and
promoting improvement in the overall quality of
auditing in the UK.
Roles and Duties of the Audit
Committee
The Audit Committee’s role is to assist the Board
with the discharge of its responsibilities in rela-
tion to financial reporting, including:
• reviewing the Group’s annual and half-year
financial statements;
Meeting Dates
Meeting Highlights
• 19 March 2018
• 2 August 2018
• 15 August 2018
Issues discussed during the Audit Committee meetings in-
cluded, but were not limited to, internal audit report; inter-
nal audit function employee update; KPMG’s presentation
on audit findings and forthcoming regulations; non-audit
services; confirmation of auditor’s independence; proposed
dividend; consideration of auditor’s re-appointment; half-
year report and auditor’s report.
2018 |
ANNUAL REPORT
77
Corporate Governance
Significant Issues
The Committee considered several significant
accounting issues, matters and judgements
in relation to the Group’s financial state-
ments and disclosures for the year ended 31
December 2018. As part of the half-year and
full-year
reporting process, management
communicates key accounting issues to the
Committee, and the external auditor is asked
to comment on the key significant areas of
accounting judgement and disclosure. The in-
formation presented is used by the Committee
to critically review and assess the key policies
and judgements that have been applied, the
consistency of policy application from year to
year and the appropriateness of key disclo-
sures made, together with compliance with the
applicable accounting standards.
The significant issue arising and a descrip-
tion of how it was addressed is shown in the
following table:
Issue
How it is being addressed
Impairment of Intangible Assets The carrying value of goodwill is subject to annual impair-
ment testing undertaken by management, who apply a
series of assumptions concerning future revenue and cash
flows and appropriate discount rates for Cash Generating
Units (CGU). Management presented the outcome of the
impairment review to the Audit Committee, highlighting
the level of headroom. The external auditor also commented
on this. The Committee critically reviewed management’s
assessment of the outlook and carrying value of these in-
tangible assets and their disclosure in the Group’s financial
statements. The Committee concurred with management’s
conclusion that the carrying value of goodwill attributed
to each CGU was fully supported, and no impairment is
required at 31 December 2018.
External Auditor
KPMG has acted as the Group’s external audi-
tor since appointment in July 2015, with Mr.
David Neale serving as audit partner on behalf
of KPMG since August 2017.The Auditors’ in-
dependence was considered by the Committee
during the year and following careful consider-
ation, it was agreed that the Auditors remained
independent. We aim to comply with the re-
quirement to rotate the audit partner every five
years, and thus the term of appointment of our
audit partner is expected to end in 2022.
In acknowledgment of the Competition and
Markets Authority’s proposal that companies
must put their statutory audit engagement out
to tender at least every ten years, it is possible
that we will tender the audit process in 2025, or
earlier if KPMG’s performance falls short of the
Audit Committee’s expectations.
Provision of Non-Audit Services
IDH may, on occasion, retain the external audi-
tor for non-audit services on matters including
accounting advice in relation to acquisitions
and divestments, corporate governance and
risk management advice, among other services.
The Audit Committee reviewed the work com-
pleted by the external auditor, as well as the
provision of non-audit services to ensure that
the auditor maintained its independence. The
Audit Committee confirms that during 2018,
EGP 55,000 was paid to KPMG in respect of non-
audit work compared to the audit fee for the
Group financial statements for the year ended
31 December 2018 of EGP 8,872,000 (audit fee
for the Group financial statements for the year
ended 31 December 2017: EGP 7,052,000. This
non-audit work was related to the review of the
half-year financial statements.
78
ANNUAL REPORT | 2018
Recommendation
Ultimately, it is the Board’s responsibility to
review and approve the Group’s full-year and
half-year financial statements, as well as to de-
termine that, taken as a whole, the Annual Re-
port is balanced, understandable and provides
the information necessary for shareholders to
assess the Group’s position and performance,
business model and strategy. It is the Audit
Committee’s role to assist the Board in dis-
charging its responsibilities with regards to fi-
nancial reporting, external and internal audits
and controls. Following a review of the process
around the annual audit and the content of
the financial statements, the Audit Committee
advised the Board at its meeting on 21 March
2019 that it was their opinion that the financial
statements as of 31 December 2018 provide a
true and fair view of the financial performance
of the Group and recommend that it should be
adopted by the Board and recommended to
shareholders for approval at the forthcoming
Annual General Meeting.
The Audit Committee has recommended to
the Board that the Auditors be put forward for
re-election at the forthcoming Annual General
Meeting. The Committee arrived at this recom-
mendation after having: met with the Audit
partner and Audit team; reviewed the quality
of the Auditors’ reports and the quality of the
work undertaken in respect of the half-yearly
and Annual Report; considered the Audit
fees of both Audit and Non-Audit work; and
reviewed the Auditors’ independence.
James Nolan
Chairman, Audit Committee
21 March 2019
2018 |
ANNUAL REPORT
79
Corporate Governance
Remuneration Committee
Report
In this report from the Remuneration Committee,
I outline on behalf of my colleagues and myself
the basis on which Directors and select members
of senior management will be remunerated for
their service in 2018.
A detailed discussion of the basis on which the
aforementioned (as well as one key member of
senior management) were remunerated for their
service in 2018 appears below and is summarised
in tabular form on page 81.
Chairman: Lord St John of Bletso is entitled
to receive an annual salary of US$ 75,000. He
is entitled to the reimbursement of reason-
able expenses.
Independent Non-Executive Directors: Hus-
sein Choucri, James Patrick Nolan and Dan
Olsson have been engaged by the Group as In-
dependent Non-Executive Directors under let-
ters of appointment. Hussein Choucri and Dan
Olsson are each entitled to an annual fee of US$
55,000, while James Patrick Nolan is entitled to
an annual fee of US$ 60,000. The Independent
Non-Executive Directors are all entitled to the
reimbursement of reasonable expenses.
Non-Executive Directors: Richard Henry
Phillips has been engaged by the Group as a
Non-Executive Director under letter of ap-
pointment. He will not be entitled to receive
any fee from the Group for this role. The
Non-Executive Directors are all entitled to the
reimbursement of reasonable expenses
Hussein Choucri
Chairman, Remuneration Committee
80
ANNUAL REPORT | 2018
Remuneration Committee Activities During 2018
Meeting Dates
Meeting Highlights
• 26 November 2018
• 26 February 2019
(scheduled for 2018)
Issues discussed during the Remuneration Committee meetings in-
cluded, but were not limited to, approval of Group’s human resources
budget; salary survey results; performance appraisal results for company
executives; compensation for all layers of the organization and total re-
muneration for company executives.
Remuneration of Directors in 20181
Base
Salary /
fees 2018
Base
Salary /
fees 2017
Annual
Bonus
2018
Annual
Bonus
2017
Total 2018 Total 2017
Executive Director
Dr. Hend El Sherbini2
7,942,500
3,973,500
450,000
450,000
8,392,500
4,423,500
Non-Executive Directors
Lord St John of Blesto
1,323,563
1,325,938
Hussein Choucri
974,279
883,958
James Patrick Nolan
1,062,850
883,958
Dan Olsson
974,279
883,958
Richard Henry Phillips3
-
-
-
-
-
-
-
1 There are no taxable benefits, corporate pensions or long-term incentive plans for the Company’s directors.
2 Dr. Hend El Sherbini receives part of her annual bonus in the form of an annual award amounting to EGP 450,000.
3 Mr. Philips is the board representative of a major shareholder, Actis, and is therefore not remunerated.
-
-
-
-
-
1,323,563
1,325,938
974,279
883,958
1,062,850
883,958
974,279
883,958
-
-
Hussein Choucri
Chairman, Remuneration Committee
21 March 2019
2018 |
ANNUAL REPORT
81
Corporate Governance
Directors’ Report
The statements and reviews on pages 14
to 49 comprise the Strategic Report, which
contains certain information that is incorpo-
rated into this Directors’ Report by reference,
including indications as to the Group’s likely
future business developments.
Chairman’s Note (page 12), Chief Executive’s
Review (pages16 to 19), Strategic Report (begin-
ning page 14) and particularly the Performance
section (beginning on page 50). Financial state-
ments for 2018 appear in the Audited Financial
Statements (starting on page 86).
Directors
The Directors who held office at 31 December
2018 and up to the date of this report are set out
on pages 66 and 67 along with their photographs
and biographies. The remuneration of the Direc-
tors (including their respective shareholdings
in the Group, where applicable) is set out in the
Remuneration Report on page 81.
Directors’ and Officers’ Liability Insurance and
Indemnification of Directors
Subject to the conditions set out in the Com-
panies (Jersey) Law 1991 (as amended), the
Group has arranged appropriate Directors’
and Officers’ liability insurance to indemnify
the Directors against liability in respect of pro-
ceedings brought by third parties. Such provi-
sions remain in force at the date of this report.
Principal Activities
The Group’s principal activity is the provision
of medical diagnostics services. An overview
of the Group’s principal activities is an integral
component of the Strategic Review included in
this Annual Report beginning on page 34.
Results and Dividends
The Group’s Results for 2018 are set out in the Au-
dited Financial Statements starting on page 86.
The Board of Directors has recommended that
a dividend of US$ 26.4 equivalent to US$ 0.176
per share (2017: US$ 0.16) should be paid to
shareholders who appear on the register as at
17 May 2019, with an ex-dividend date of 16
May 2019. The payment date for the dividend
is 7 June 2019.
Principal Risks and Uncertainties
The principal risks and uncertainties that
may affect IDH’s business, as well as their
potential mitigants, are outlined on pages 44
to 49 of this Annual Report.
Share Capital
The Group has 150,000,000 ordinary shares
each with a nominal value of US$ 1.00. There
are no other shares in issue, other than or-
dinary shares. Note 20 to the consolidated
financial statements on page 132 summarises
the rights of the ordinary shares as well as the
number issued during 2018.
Business Review and Future
Developments
A review of the development and performance
of the Group’s business forms an integral part
of this Annual Report in sections including the
Substantial Share Holdings
As of 1 March 2019, the Company ascertained
from its own analysis that the following held
interests of 3% or more of the voting rights of
its issued share capital:
Shareholder
Number of Voting Rights
% of Voting Rights
Hena Holdings Ltd.
Actis IDH B.V.
HSBC Global Asset Mgmt
(UK)
T. Rowe Price
FIAM LLC
38,245,589
31,500,000
12,887,084
7,670,533
7,340,589
25.50
21.00
8.59
5.11
4.89
82
ANNUAL REPORT | 2018
The Directors certify that there are no issued
securities that carry special rights with regard
to control of the Company. There are similarly
no restrictions on voting rights. Chief Execu-
tive Officer Dr. Hend El-Sherbini jointly holds
voting rights to shares held by Hena Holdings
Ltd. with her mother, Dr. Moamena Kamel.
Committees of the Board
The Board has established Audit, Nomina-
tions and Remuneration Committees. Details
of these Committees, including membership
and their activities during 2018, are contained
in the Corporate Governance section of this
Annual Report and in the Remuneration and
Audit Reports.
Corporate Responsibility
The Group’s report on Corporate Social Re-
sponsibility is set out on page 62.
Corporate Governance
The Group’s report on Corporate Governance
is on pages 64 to 85.
Articles of Association
The Company’s Articles of Association set out
the rights of shareholders including voting
rights, distribution rights, attendance at gen-
eral meetings, powers of Directors, proceed-
ings of Directors as well as borrowing limits
and other governance controls. A copy of the
Articles of Association can be requested from
the Group Company Secretary.
The Articles of Association may be amended
by members of the Company via special resolu-
tion at a General Meeting of the Company.
Rules on the Appointment and
Replacement of Directors
Rules on the appointment and replacement of
Directors are set out in the Group’s Articles of
Association, a copy of which may be requested
from the Group Company Secretary.
Agreements Related to Change of
Control of the Group
No such agreements exist.
Conflicts of Interest
During the year, no Director held any beneficial
interest in any contract significant to the Group’s
business, other than a contract of employment.
The Company has procedures set out in the
Articles of Association for managing conflicts of
interest. Should a Director become aware that
they, or their connected parties, have an interest
in an existing or proposed transaction with the
Group, they are required to notify the Board as
soon as reasonably practicable.
Political Donations
The Group made no political donations in
2018 (2017: nil).
Financial Instruments
The Group’s principal financial instruments
comprise cash balances, balances with related
parties, trade receivables and payables and
other payables and receivables that arise in
the normal course of business. The Group’s
financial instruments risk management objec-
tives and policies are set out in Note 2 to the
Financial Statements.
Employees
The Group has one (1) Executive Director,
namely Group Chief Executive Dr. Hend El
Sherbini, as identified in the Corporate Gover-
nance section. Her biographical information ap-
pears on page 66 of this Annual Report, and her
compensation is reported in the Remuneration
Committee Report on page 81. IDH has service
agreements with the Group Chief Executive
and with the Group Chief Financial Officer, Mr.
Omar Bedewy, who is not a Company Director.
Dr. Hend El Sherbini leads the Company’s Exec-
utive Committee, which also includes all heads
of departments and meets every second week to
review and discuss performance, priorities and
upcoming events in light of the Group’s strategic
plan. In view of the Company’s regional growth
plans, IDH is committed to building out its
senior management team in preparation for a
larger footprint. The Group and its subsidiaries
had total of 4,942 employees as of 31 December
2018 (2017: 4,669) employed in Egypt, Jordan,
Sudan and Nigeria.
2018 |
ANNUAL REPORT
83
Corporate Governance
Creditor Payment Policy
Individual subsidiaries of the Group are respon-
sible for agreeing on the terms and conditions
under which business transactions with their
suppliers are conducted. It is the Group’s policy
that payments to suppliers are made in accor-
dance with all relevant terms and conditions.
Post-Balance Sheet Events
During 2018, Dynasty along with the IFC injected
US$ 5.6 million in Echo-Scan and in 2019, an ad-
ditional capital injection amounting to US$ 4.9
million will take place to continue the proposed
roll-out plan. In February 2019, IDH injected US$
1.02 million, representing its contribution in the
first capital increase during the year.
Going Concern
Having made enquiries, the Directors have a
reasonable expectation that the Group has ad-
equate resources to meet its liabilities as they
fall due for at least 12 months from the date
of approval of these consolidated financial
statements. Thus, they continue to adopt the
going concern basis in preparing the financial
information. The Group’s business activities,
together with the factors likely to affect its fu-
ture development, performance and position,
are set out in the Strategic Review on pages 14
to 49. The financial position of the Group, its
cash flows, liquidity position and borrowing
facilities are described in the financial state-
ments and notes thereon on pages 86 to 139.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the
annual report and the financial statements in ac-
cordance with International Financial Reporting
Standards as adopted by the EU (IFRS as adopted
by the EU), interpretations from the International
Financial Reporting Interpretations Committee
(IFRIC) and Companies (Jersey) Law 1991 (as
amended). Jersey Law requires the Directors to
prepare financial statements for each financial
year, which give a true and fair view of the state
of affairs of the Group and of the assets, liabilities,
financial position and profit or loss of the Group
for that year.
In preparing the financial statements, the Di-
rectors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable, relevant and reliable;
• ensure that the financial statements comply
with IFRS as adopted by the EU;
• assess the Group’s ability to continue as a
going concern, disclosing, as applicable,
matters related to going concern; and
• prepare the financial statements on the
going concern basis, unless it is inap-
propriate to presume that the Group will
continue in business.
The Directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Group and to enable them to ensure that the fi-
nancial statements comply with Companies (Jer-
sey) Law 1991. The Directors are also responsible
for such internal control as they determine is
necessary to enable the preparation of financial
statements that are free from material misstate-
ment, whether due to fraud or error, and have
84
ANNUAL REPORT | 2018
general responsibility for taking such steps as are
reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and
other irregularities.
The Directors of the Group confirm that to the
best of their knowledge that:
• The Group is in compliance with the Jersey
code in relation to all applicable corporate
law and tax filing requirements;
• The consolidated financial statements have
been prepared in accordance with Interna-
tional Financial Reporting Standards, includ-
ing International Accounting Standards; and
Interpretations adopted by the International
Accounting Standards Board give a true and
fair view of the assets, liabilities, financial po-
sition and profit or loss of the Company and
the undertakings included in the consolida-
tion taken as a whole; and
• The sections of this Report, including the
Chairman’s Statement, Strategic Report,
Performance Review and Principal Risks and
Uncertainties, which constitute the manage-
ment report, include a fair review of the devel-
opment and performance of the business and
the position of the issuer and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal
risks and uncertainties that they face.
Disclosure of Information to the
Auditor
So far as each person who was a Director at
the date of approving this report is aware,
there is no relevant audit information, being
information needed by the auditor in connec-
tion with preparing its report, of which the
auditor is unaware. Having made enquiries
of fellow Directors and the Group’s auditors,
each Director has taken all the steps that he/
she is obliged to take as a Director in order
to have made himself/herself aware of any
relevant audit information and to establish
that the auditor is aware of that information.
Annual General Meeting (AGM)
The 2019 AGM will be held at the IDH’s head-
quarters in Smart Village, on 14 May 2019,
Cairo, Egypt.
The Chairman of the Board and of each of the
Board’s Committees, as well as all company
Directors will be in attendance at the AGM to
answer questions from shareholders.
During the AGM, all of the Group’s Directors will
retire and submit themselves for re-election.
Auditor
KPMG LLP has expressed its willingness to con-
tinue in office as auditor and separate resolu-
tions will be proposed at the forthcoming AGM
concerning their reappointment and to autho-
rise the Board to agree their remuneration.
By order of the Board.
Dr. Hend El Sherbini
Executive Director
21 March 2019
2018 |
ANNUAL REPORT
85
Financial
Statements
Financial
Statements
Overview
Materiality:
EGP29m (2017:EGP25m)
group financial
statements as a
whole
4.5% (2017: 4.5%) of Group Profit
before tax
Coverage
99% (2017:99%) of group profit
before tax
Risks of material misstatement
Recurring risks
Recoverabil-
ity of goodwill and
indefinite life brand
intangible assets
◀▶
Financial Statements
Independent
Auditor’s Report
Our opinion is unmodified
1.
We have audited the financial statements of Integrated Di-
agnostics Holdings plc (“the Company”) for the year ended
31 December 2018 which comprise the Consolidated State-
ment of Financial Position, Consolidated Income State-
ment, Consolidated Statement of Profit or Loss and Other
Comprehensive Income, the Consolidated Statement of
Changes in Equity and the Consolidated Statement of Cash
Flows and the related notes, including the accounting poli-
cies in note 2.
In our opinion the financial statements:
• give a true and fair view, in accordance with Interna-
tional Financial Reporting Standards as adopted by
the European Union, of the state of the Group’s affairs
as at 31 December 2018 and of the Group’s profit for
the year then ended; and
• have been properly prepared in accordance with the
Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with Interna-
tional Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities are described below.
We have fulfilled our ethical responsibilities under, and
are independent of the Company in accordance with, UK
ethical requirements including FRC Ethical Standard as
applied to listed entities. We believe that the audit evi-
dence we have obtained is a sufficient and appropriate
basis for our opinion.
88
ANNUAL REPORT | 2018
Financial Statements
Key audit matters: our assessment of risks of material
2.
misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the finan-
cial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matters were as follows (unchanged from 2017):
Recoverability of goodwill and
indefinite life brand intangible assets
(Goodwill: EGP 1,269million; 2017:
EGP1,259million; brand: EGP 387mil-
lion; 2017: EGP 387million)
Refer to page 76 (Audit Committee
Report), page 107 (accounting policy)
and page 123 ( financial disclosures).
The risk
Our response
Forecast-based valuation
Each of the CGU’s operate within
a market subject to high degrees
of competition, price inflation and
cost rises which provide market
challenges.
Recoverability of the goodwill and
brand names intangible asset is
subject to estimation in terms of
the assumptions used and inherent
uncertainty involved in forecasting
the future cash flows that are used
in the Group’s discounted cash flow
models, in particular in respect
of revenue growth (i.e. patient
numbers and price) and discount
rate.
The effect of these matters is that,
as part of our risk assessment
for audit planning purposes, we
determined that the value in use of
goodwill and indefinite life brand
intangible assets have a high degree
of estimation uncertainty, with a
potential range of reasonable out-
comes greater than our materiality
for the financial statements as a
whole. In conducting our final audit
work, we reassessed the degree of
estimation uncertainty to be less
than that materiality.
Our procedures included:
• Historical comparison: assessing
the reasonableness of the Group’s
forecasting by comparing actual
performance for the year against
forecasts for the same period in the
prior year model;
• Benchmarking assumptions: evalu-
ating the Group‘s assumptions in-
cluded within the discounted cash
flow forecasts by comparing key
inputs such as projected revenue
growth and discount rates to inter-
nally and externally derived data;
• Sector expertise: using our own
valuation specialist to assist us in
evaluating the assumptions and
methodology used in calculating
the discount rate;
• Sensitivity analysis: performing
sensitivity analysis on the assump-
tions noted above; and
• Assessing transparency: assessing
whether the group's disclosures
about the sensitivity of the outcome
of the impairment assessment to
changes in key assumptions reflect-
ed the risks inherent in the carrying
amount of goodwill and indefinite
life brand intangible assets.
2018 |
ANNUAL REPORT
89
3. Our application of materiality and an overview of the scope of
our audit
Materiality for the group financial statements as a whole was set at EGP29m (2017: EGP 25m), determined with reference
to a benchmark of group profit before tax, of which it represents 4% (2017: 4.5%).
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding EGP1.45m
(2017: EGP1.2m), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the group’s 13 (2017: 11) reporting components, we subjected 6 (2017: 6) to full scope audits for group reporting purposes
and 5 (2017: 3) to specified risk-focused audit procedures over cash and cash equivalents. The latter were not individually
financially significant enough to require full scope audit for group reporting purposes, but did present specific individual
risk that needed to be addressed. For the residual 2 components (2017: 2), we performed analysis at an aggregated group
level to re-examine our assessment that there were no significant risks of material misstatement within these.
The components within the scope of our work accounted for the percentages illustrated opposite.
The Group team instructed the component auditors as to the significant areas to be covered, including the relevant risks
detailed above and the information to be reported back. The Group team approved component materialities which ranged
from EGP3.2m to EGP10.4m (2017: EGP2.2m to EGP 8m), having regard to the mix of size and risk profile of the Group
across the components. The work on 7 of the 11 components (2017: 7 of the 9 components) was performed by component
auditors and the rest was performed by the Group team.
The Group team visited 5 (2017: 6) components, all based in the same location, in Egypt, including to assess the audit risk
and strategy. Telephone conference meetings were also held with these component auditors and with the component
auditor in Jordan component that was not physically visited. At these visits and meetings, the findings reported to the
Group team were discussed in more detail, and any further work required by the Group team was then performed by the
component auditor.
4. We have nothing to report on going concern
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is
realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going
concern period”).
Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material
uncertainty related to going concern, to make reference to that in this audit report. However, as we cannot predict all future
events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were
reasonable at the time they were made, the absence of reference to a material uncertainty in this auditor's report is not a
guarantee that the Company will continue in operation.
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Company’s business model, includ-
ing the impact of a disorderly Brexit, and analysed how those risks might affect the Company’s financial resources or
ability to continue operations over the going concern period. We evaluated those risks and concluded that they were not
significant enough to require us to perform additional audit procedures.
Based on this work, we are required to report to you if we have concluded that the use of the going concern basis of ac-
counting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of
that basis for a period of at least a year from the date of approval of the financial statements.
We have nothing to report in these respects, and we did not identify going concern as a key audit matter.
90
ANNUAL REPORT | 2018
Financial Statements
Group profit before tax
Group Materiality
EGP 717 m
(2017: EGP559m)
■ Group PBT
■ Group materiality
Group
revenue
3.4
3.1
99%
(2017: 99%)
96.7
96.1
Group net
assets
0.6
0.1
100%
(2017: 100%)
98.8
99.1
EGP29m
(2017: EGP25m)
EGP 29m
Whole financial statements
materiality (2017: EGP25m)
EGP 10.4m
Range of materiality at 6
components EGP3.2m to
EGP 10,4m (2017: EGP2.2m
to EGP8m
EGP1.45m
Misstatements reported to
the audit committee (2017:
EGP1.2m)
Group profit
before tax
0.3
0
99%
(2017: 100%)
97.5
99.3
■ Full scope for group audit purposes 2018
■ Specified risk-focused audit procedures 2018
■ Full scope for group audit purposes 2017
■ Specified risk-focused audit procedures 2017
■ Residual components
2018 |
ANNUAL REPORT
91
5. We have nothing to report on the other information in the
Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial state-
ments. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express
an audit opinion or any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based
solely on that work we have not identified material misstatements in the other information.
6. We have nothing to report on the other matters on which we
are required to report by exception
Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion
• proper accounting records have not been kept by the Company, or
• proper returns adequate for our audit have not been received from branches not visited by us; or
the Company’s accounts are not in agreement with the accounting records and returns; or
•
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 84, the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error;
assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
using the going concern basis of accounting unless they either intend to liquidate the Group or to cease operations, or have
no realistic alternative but to do so.
92
ANNUAL REPORT | 2018
Financial Statements
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from mate-
rial misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of our audit work and to whom we owe our
8.
responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies (Jer-
sey) Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those matters we
are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.
David Neale
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square London
E14 5GL
21 March 2019
2018 |
ANNUAL REPORT
93
Consolidated Statement of Financial
Position
As at 31 December 2018
Notes
31 December
2018
31 December
2017
EGP’000
EGP’000
Assets
Non-current assets
Property, plant and equipment
Intangible assets and goodwill
Total non-current assets
Current assets
Inventories
Trade and other receivables
Restricted cash
Other investments
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium reserve
Capital reserves
Legal reserve
Put option reserve
Translation reserve
Retained earnings
Equity attributable to the owners of the Company
Non-controlling interests
Total equity
Non-current liabilities
Deferred tax liabilities
Other provisions
Loans and borrowings
Long-term Put option liability
Long-term financial obligations
Total non-current liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Current tax liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
11
12
15
16
18
19
17
20
20
20
20
20
20
7
9
22
25
24
27
23
25
705,779
1,672,463
2,378,242
91,079
299,991
11,965
239,905
412,607
1,055,547
3,433,789
1,072,500
1,027,706
(314,310)
37,959
(145,275)
194,764
396,706
2,270,050
130,588
2,400,638
168,361
14,842
101,439
13,604
65,587
363,833
444,032
25,416
199,870
669,318
1,033,151
3,433,789
473,786
1,658,252
2,132,038
69,935
202,255
13,226
9,149
685,211
979,776
3,111,814
1,072,500
1,027,706
(314,310)
33,383
(93,256)
203,709
315,856
2,245,588
68,502
2,314,090
158,712
14,699
38,425
-
100,478
312,314
333,432
14,575
137,403
485,410
797,724
3,111,814
The accompanying notes on pages 99 - 139 form an integral part of these consolidated financial statements.
These consolidated financial statements were approved and authorised for issue by the Board of Directors and signed on their behalf on 21 March 2019 by:
Dr. Hend El Sherbini
Chief Executive Officer
Hussein Choucri
Independent Non-Executive Director
94
ANNUAL REPORT | 2018
Financial Statements
Consolidated Income Statement
For the year ended 31 December 2018
Notes
31 December
2018
31 December
2017
Revenue
Cost of sales
Gross profit
Marketing and advertising expenses
Administrative expenses
Impairment loss on trade and other receivable
Other Income
Operating profit
Finance costs
Finance income
Net finance cost
Profit before tax
Income tax expense
Profit for the year
Profit attributed to:
Owners of the Company
Non-controlling interests
Earnings per share (expressed in EGP)
Basic and Diluted
3
17
8
8.2
9
7
10
EGP’000
1,921,452
(973,073)
948,379
(94,887)
(160,055)
(9,635)
1,141
684,943
(31,015)
63,430
32,415
717,358
(220,444)
496,914
502,092
(5,178)
496,914
EGP’000
1,514,257
(784,701)
729,556
(59,843)
(126,517)
(5,561)
2,736
540,371
(33,005)
51,064
18,059
558,430
(174,701)
383,729
374,023
9,706
383,729
3.35
2.49
The accompanying notes on pages 99 - 139 form an integral part of these consolidated financial statements.
2018 |
ANNUAL REPORT
95
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 31 December 2018
Net profit
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss:
Currency translation differences on foreign currency subsidiaries
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Owners of the Company
Non-controlling interests
31 December
2018
31 December
2017
EGP’000
EGP’000
496,914
383,729
(2,566)
(2,566)
494,348
493,146
1,202
494,348
(5,577)
(5,577)
378,152
370,012
8,140
378,152
The accompanying notes on pages 99 - 139 form an integral part of these consolidated financial statements.
96
ANNUAL REPORT | 2018
Financial Statements
Consolidated Statement of Cash Flows
for the year ended 31 December 2018
Cash flows from operating activities
Profit for the year before tax
Adjustments for:
Depreciation
Amortization
(Gain)/Loss on disposal of property, plant and equipment
Impairment in trade and other receivables
Reversal of impairment in trade and other receivables
Interest expense
Interest income
Loss of foreign exchange
Change in:
Change to Provisions
Change to Inventories
Change to Trade and other receivables
Change to Trade and other payables
Cash generated from operating activities
Income tax paid
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of Property, plant and equipment
Proceeds from sale of property and equipment
Change in restricted cash
Change in other investment
Acquisition of subsidiary
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Interest paid
Inflow from a non-controlling interest
Dividends paid
Payments for finance lease
Net cash flows used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalent at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalent at the end of the year
Note
31 December
2018
31 December
2017
EGP’000
EGP’000
717,358
558,430
11
12
8
16
8.2
8.2
8.2
22
18
19
6
18
70,989
6,398
(138)
9,635
(1,056)
11,855
(59,305)
15,706
771,442
143
(21,144)
(118,042)
64,446
696,845
(140,537)
556,308
71,412
(331,550)
3,500
1,261
(230,756)
20,519
(465,614)
94,369
(20,514)
(8,647)
38,684
(434,953)
(27,668)
(358,729)
(268,035)
685,211
(4,569)
412,607
57,148
4,774
77
5,561
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10,391
(51,064)
19,940
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2,497
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(43,575)
(29,652)
514,846
(111,771)
403,075
36,660
(157,349)
343
27
86,426
-
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53,000
-
(10,096)
-
(376,744)
(36,984)
(370,824)
(1,642)
683,721
3,132
685,211
The accompanying notes on pages 99 - 139 form an integral part of these consolidated financial statements.
2018 |
ANNUAL REPORT
97
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98
ANNUAL REPORT | 2018
Financial Statements
Notes to the Condensed Consolidated
Interim Financial Statements –
For the Year Ended 31 December 2018
(In the notes all amounts are shown in Egyptian Pounds “EGP’000” unless otherwise stated)
Corporate information
1.
The consolidated financial statements of Integrated Diagnostics Holdings plc and its subsidiaries (collectively, the Group)
for the year ended 31 December 2018 were authorised for issue in accordance with a resolution of the directors on 21 March
2019. Integrated Diagnostics Holdings plc “IDH” or “the company” has been established according to the provisions of the
Companies (Jersey) law 1991 under No. 117257.
IDH’s purpose is not restricted and the Group has full authority to do any activity as long as it is not banned by the Compa-
nies law unless amended from time to time or depending on the Companies (Jersey) law.
The Group’s financial year starts on 1 January and ends on 31 December each year. The Group’s main activity is concen-
trated in the field of medical diagnostics.
Basis of preparation
2.
Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union (adopted IFRS) issued by the International Accounting
Standards Board (IASB) and the Jersey Law 1991 an amendment to which means separate company financial statements
are not required.
Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except where adopted IFRS mandates
that fair value accounting is required.
Functional and presentation currency
Each of the Group’s entities is using the currency of the primary economic environment in which the entity operates (‘the
functional currency’). The Group’s consolidated financial statements are presented in Egyptian Pounds, being the report-
ing currency of the main Egyptian trading subsidiaries within the Group and the primary economic environment in which
the Group operates. For each entity, the Group determines the functional currency and items included in the financial
statements of each entity are measured using that functional currency. The Group uses the direct method of consolidation
and on disposal of a foreign operation; the gain or loss that is reclassified to profit or loss reflects the amount that arises
from using this method.
Going concern
These consolidated financial statements have been prepared on the going concern basis. At 31 December 2018, the Group
had net assets amounting to EGP 2,400,638. The Group is profitable and cash generative and the Directors have considered
the Group’s cash forecasts for a period of 12 months from the signing of the balance sheet. The Directors have a reasonable
expectation that the Group has adequate resources to meet its liabilities as they fall due for at least 12 months from the
date of approval of these condensed consolidated annual financial statements. Thus, they continue to adopt the going
concern basis in preparing the financial information.
2018 |
ANNUAL REPORT
99
2.1. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 Decem-
ber 2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee.
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.
The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that control
ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even
if doing so causes the non-controlling interests to have a deficit balance.
ii. Change in subsidiary ownership and loss of control
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transac-
tions. Where the group loses control of a subsidiary, the assets and liabilities are derecognised along with any related NCI
and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the
former subsidiary is measured at fair value when control is lost.
iii. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the invest-
ment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
2.2. Significant accounting policies
Except for the changes below, the accounting policies set out below have been consistently applied to all the years pre-
sented in these consolidated financial statements.
The Group has adopted the following new standards, including any inconsequential amendments to other standards, with
a date of initial application of 1 January 2018.
IFRIC 22 Foreign Currency Transactions and Advance Consideration.
IFRS 15 Revenue from Contract with Customers.
IFRS 9 Financial Instruments.
• Annual Improvements to IFRS Standards 2014-2016 Cycle. [Describe effect of adoption
•
•
•
• Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2).
• Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4).
This new standard had a non-material impact on these consolidated financial statements.
Changes in significant accounting policies
A. IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised,
replacing IAS 18 Revenue. The Group has adopted IFRS 15 with the effect of initially applying this standard recognised at
the date of initial application (i.e. 1 January 2018). Accordingly, the information presented for 2017 has not been restated –
i.e. it is presented, as previously reported, under IAS 18.
The Group considers the current basis of revenue recognition to remain appropriate as the only performance obligation,
being completion of a test, reflects the current policy. Therefore, the Group considers that the initial application IFRS 15
has no significant change or impact on the Group’s accounting policies applied on its consolidated financial statements.
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B. IFRS 9 Financial Instruments
The Group do not consider the adoption of IFRS 9 to have a significant effect on the classification and measurement of
financial assets and financial liabilities or hedge accounting. The Group have, however, assessed the impact that the initial
application of IFRS 9 will have in relation to the impairment of financial assets.
The financial impact of this assessment is the recognition of an additional impairment charge (net of tax) of EGP 1.2m in
the period for the expected credit loss of trade receivables in excess of the Group’s existing provisioning policy. The Group
do not deem the impact of transition as at 1 January 2018 to be significant therefore have not retrospectively adjusted
opening equity balances.
The following table shows the original measurement categories under IAS 39 and the new measurement categories under
IFRS 9 for each class of the Company’s financial assets and financial liabilities as at 1 January 2018.
The following table shows the original measurement categories under IAS 39 and the new measurement categories under IFRS 9
Net trade and other receivable balance at 31 December per IAS 39
Adjustment in initial application of IFRS 9
2018
EGP'000
221,577
(1,181)
2017
EGP'000
139,885
-
Net trade and other receivable balance at 31 December per IFRS 9 (note 17)
220,396
139,885
a) Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any
non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-
controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interests) and any previous interest held over the net identifiable assets acquired and li-
abilities assumed.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures
used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the
fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing which it is done one an annual basis, goodwill acquired in a business combination
is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
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Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed
of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when deter-
mining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of
the disposed operation and the portion of the cash-generating unit retained.
b) Fair value measurement
The Group measures financial instruments such as non-derivative financial instruments and contingent consideration
assumed in a business combination, at fair value at each balance sheet date.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair value
is categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group deter-
mines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.
The fair value less any estimated credit adjustments for financial assets and liabilities with maturity dates less than one
year is assumed to approximate their carrying value. The fair value of financial liabilities for disclosure purposes is esti-
mated by discounting the future contracted cash flows at the current market interest rate that is available to the Group for
similar transactions.
c) Revenue recognition
Revenue represents the value of medical diagnostic services rendered in the year, and is stated net of discounts. The Group
has two types of customers: Walk-in patients and patients served under contract. For patients under contract, rates are
agreed in advance on a per-test, client-by-client basis.
The following steps are considered for patients served under contracts:
1. Identification of the Contracts: written contracts are signed between IDH and customers. The contracts stipulate the
duration, price per test, credit period.
2. Transaction price: Services provided by the Group are distinct in the contract, as the contract stipulates the series of
tests’ names/types to be conducted along with its distinct prices.
3. Allocation of price to performance obligations: Stand-alone selling price per test is stipulated in the contract. In case
of discounts, it is allocated proportionally to all of tests prices in the contract.
4. The revenue is recognised based on performance obligations that occur at a point in time.
5. That there are no other revenue streams other than those whose performance obligation occurs at a point in time.
d) Leases
i. Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease.
At inception or on reassessment of an arrangement that contains a lease, the Group separates out payments and other con-
sideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair
values. If the Group concludes for a finance lease that it is impractical to separate the payments reliably, then an asset and a
liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as
payments are made and an imputed finance cost on the liability is recognised using the Group’s incremental borrowing rate.
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ii. Leased assets
Assets held by the Group under leases that transfer to the Group substantially all of the risks and rewards of ownership
are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value
and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in
accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating
leases and are not recognised in the Group's statement of financial position.
iii. Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum
lease payments made under finance leases are apportioned between the finance expense and the reduction of the out-
standing liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic
rate of interest on the remaining balance of the liability.
e) Income Taxes
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
i. Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
ii. Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carry-
ing amounts in the consolidated financial statements.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income
tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any
unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can
be utilised. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the
reporting date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax
liability is settled.
f) Foreign currency
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency
spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of exchange at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value is determined.
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On consolidation, the assets and liabilities of foreign operations are translated into Egyptian Pounds at the rate of ex-
change prevailing at the reporting date and their statements of profit or loss are translated at average rate (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the rate on the dates of the transactions). The exchange differences arising on
translation for consolidation are recognised in other comprehensive income and accumulated in the translation reserve or
NCI as the case may be. On disposal of a foreign operation, the component of other comprehensive income relating to that
particular foreign operation is recognised in profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of
assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at
the spot rate of exchange at the reporting date.
g) Hyperinflationary Economies
The financial statements of “SAMA Medical Laboratories Co. and AL-Mokhtabar Sudanese Egyptian Co.” report their
financial statements in the currency of a hyperinflationary economy. In accordance with IAS 29 financial reporting in Hy-
perinflationary Economies, the financial statements of those subsidiaries were restated by applying a general price index
at closing rates before they were included in the consolidation financial statements.
The comparative information has not been restated, the gain or loss on the net monetary position related to price changes
in prior periods has been recognised directly in equity.
When the functional currency of a foreign operation is the currency of a hyperinflationary economy, all assets, liabilities,
equity items, income and expenses are translated using an official exchange rate prevailing at the end of each reporting
period. Exchange difference e arising, if any, are recognized on other comprehensive income and accumulated in equity
(attributed to non-c0ontrolling interests as appropriate)
h) Property, plant and equipment
All property and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expendi-
ture that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can
be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are
charged to the consolidated statement of income during the financial period in which they are incurred.
Land is not depreciated.
Laboratory Equipment held to perform the ‘Hub spoke’ at the Mega Lab and provided under finance lease arrangements are
depreciated under a unit of production method as this most closely reflects the consumption of benefits from the equipment.
Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their
residual value over their estimated useful lives, as follows:
Buildings
Medical, electric and information systems equipment
Leasehold improvements
Fixtures, fittings & vehicles
50 years
4-10 years
4-5 years
4-16 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the
carrying amount and are recognised within ‘Other (losses)/gains – net’ in the consolidated statement of income.
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Financial Statements
Intangible assets
i)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated impairment losses.
Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure
is reflected in profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there
is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amor-
tisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category
that is consistent with the function of the intangible assets. The Group amortises intangible assets with finite lives using
the straight-line method over the following periods:
IT development and software 4-5 years
•
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefi-
nite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over interest
in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the
non-controlling interest in the acquire.
Goodwill is stated at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill ac-
quired in a business combination is allocated to each of the cash-generating units (CGUs), or groups of CGUs, that is
expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. The
impairment assessment is done one an annual basis.
Brand
Brand names acquired in a business combination are recognised at fair value at the acquisition date and have an indefinite
useful life.
The Group brand names are considered to have indefinite useful life as the Egyptian brands have been established in the
market for more than 30 years and the health care industry is very stable and continues to grow.
The Brands are not expected to become obsolete and can expand into different countries and adjacent businesses, in addi-
tion, there is a sufficient ongoing marketing efforts to support the brands and this level of marketing effort is economically
reasonable and maintainable for the foreseeable future.
j) Financial instruments – initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.
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i. Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, as appropriate.
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through
profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial
assets that require delivery of assets within a time frame established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in three categories:
• Financial assets at fair value through profit or loss
• Fair value through other comprehensive income
• Amortised cost
The Group did not hold financial assets classified as financial assets at fair value through the profit or loss at 31 December
2018 and 31 December 2017.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Group’s consolidated statement of financial position) when:
• The rights to receive cash flows from the asset have expired
Or
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a)
the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass- through arrange-
ment, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred
nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues
to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an
associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the origi-
nal carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.
Impairment of financial assets
Further disclosures relating to impairment of financial assets are also provided in the following notes:
• Disclosures for significant estimates and assumptions
• Financial assets
• Trade receivables
Note 2.3
Note 14
Note 16
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise
a very large number of small balances.
Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive
stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on credit
risk characteristics, age of customer relationship.
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Financial Statements
Loss rates are based on actual credit loss experience over the past three years. These rates are multiplied by scalar factors
to reflect differences between economic conditions during the period over which the historical data has been collected,
current conditions and the Group’s view of economic conditions over the expected lives of the receivables.
ii. Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
All of the Group’s financial liabilities are classified as financial liabilities carried at amortised cost using the effective interest
method. The Group does not use derivative financial instruments or hedge account for any transactions. Unless otherwise
indicated, the carrying amounts of the Group’s financial liabilities are a reasonable approximation of their fair values.
The Group’s financial liabilities include trade and other payables, finance lease liabilities and loans and borrowings includ-
ing bank overdrafts.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in
the statement of profit or loss.
iii. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities simultaneously.
k) Impairment of non-financial assets
Further disclosures relating to impairment of non-financial assets are also provided in the following notes:
• Disclosures for significant assumptions and estimates
• Goodwill and intangible assets with indefinite lives
Note 2.3
Note 13
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The
recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair
value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an
appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for
publicly traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for
each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover
a period of five years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the statement of profit or loss in expense categories consistent with
the function of the impaired asset, except for properties previously revalued with the revaluation taken to other comprehensive
income (“OCI”). For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation.
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For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication
that previously recognised impairment losses no longer exist or have decreased.
If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impair-
ment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount
since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not
exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss
unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually as at 31 October and when circumstances indicate that the carrying value may
be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which
the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is
recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets with indefinite useful lives are tested for impairment annually as at 31 October at the CGU level, as ap-
propriate, and when circumstances indicate that the carrying value may be impaired.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of
disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are largely independent cash inflows (CGU). Prior impairments of non-financial assets (other than goodwill) are reviewed
for possible reversal at each reporting date.
Impairment of trade and notes receivables
The requirement for impairment of trade receivables is made through monitoring the debts aging and reviewing customer’s
credit position and their ability to make payment as they fall due. An impairment is recorded against receivables for the
irrecoverable amount estimated by management. At the year end, the provision for impairment of trade receivables was
EGP 29,295K (31 December 2017: EGP 21,784K)
Inventories
l)
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. Net
realisable value is the estimated selling price in the ordinary course of business, less estimated selling and distribution expenses.
m) Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term
deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management.
n) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is prob-
able that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for exam-
ple, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost.
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Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as a finance cost.
o) Pensions and other post-employment benefits
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The
Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to
pay all employees the benefits relating to employee service in the current and prior periods. Obligations for contributions
to defined contribution pension plans are recognized as an expense in the income statement in the periods during which
services are rendered by employees.
p) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker who is responsible for allocating resources and assessing performance
of the operating segments, has been identified as the steering committee that makes strategic decisions.
q) New and amended standards and interpretations not yet adopted
The Group has not early adopted any other standard, interpretation or amendments that have been issued but not yet
effective for the year ended 31 December 2018.
None of these are expected to have a material effect on these consolidated financial statements of the Group, except for the
following which could change the classification and measurements of financial assets.
IFRS 16 Leases
•
IFRS 16 – Leases: the standard is effective for accounting periods beginning on or after 1 January 2019 and will be adopted
by the Group on 1 January 2019. The Directors are assessing the likely impact on the reported results and financial position
of the Group. The existing obligations under operating lease agreements at 31 December 2018 are EGP 441m (see note 27),
which primarily relate to buildings. We are using the modified retrospective approach for transition on 1 January 2019 and
we are taking advantage of the exemption on transition relating to low value assets.
We have not yet concluded on the value of the expected adjustment to the balance sheet for leases capitalised and the
corresponding lease liability. Similarly, the expected impact on the income statement for the year ending 31 December
2019 has not been concluded.
The preparation of the Group’s consolidated financial statements in conformity with adopted IFRSs requires management to
make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods.
Other disclosures relating to the Group’s exposure to risks and uncertainties includes:
• Capital management
• Financial instruments risk management and policies
• Sensitivity analyses disclosures
Note 4
Notes 14
Notes 14
Judgments
In preparing these consolidated financial statements, management have made a material judgment, that affect the ap-
plication of the Group’s lease accounting policy and the reported amounts of assets, liabilities, and expenses. Information
about judgment, estimate and assumptions relating to finance leases are set out in note 27.
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Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are described below.
The Group based its assumptions and estimates on parameters available when the consolidated financial statements
were prepared. Existing circumstances and assumptions about future developments, however, may change due to market
changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions
when they occur.
Impairment of intangible assets
The Group tests annually whether goodwill and other intangibles with indefinite lives have suffered any impairment. Im-
pairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs of disposal and its value in use.
The recoverable amounts of cash generating units have been determined based on value in use. The value in use calculation
is based on a discounted cash flow (“DCF”) model.
The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group
is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being
tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future
cash-inflows and the growth rate used for extrapolation purposes.
Segment information
3.
The Group has four operating segments based on geographical location rather than two operating segments based on
service provided, as the Group’s Chief Operating Decision Maker (CODM) reviews the internal management reports and
KPIs of each geography.
The Group operates in four geographic areas, Egypt, Sudan, Jordan and Nigeria. The revenue split between the four regions
is set out below.
For the year
ended
31-Dec-18
31-Dec-17
For the year
ended
31-Dec-18
31-Dec-17
Pathology
Radiology
Revenue by geographic location
Egypt region
Sudan region
Jordan region
Nigeria region
Total
1,613,484
1,250,584
35,347
45,687
242,489
217,986
30,132
-
1,921,452
1,514,257
Net profit by geographic location
Egypt region
Sudan region
Jordan region
Nigeria region
505,769
361,428
(6,241)
(228)
26,193
22,530
(28,807)
-
Total
496,914
383,729
Revenue by type
Net profit by type
2018
EGP'000
1,889,418
32,034
1,921,452
2017
EGP'000
1,514,257
-
1,514,257
2018
EGP'000
524,248
(27,334)
496,914
2017
EGP'000
383,729
-
383,729
110
ANNUAL REPORT | 2018
Financial Statements
The operating segment profit measure reported to the CODM is EBITDA, as follows:
Profit from operations
Property, plant and equipment depreciation
Amortization of Intangible assets
EBITDA
2018
EGP'000
684,943
70,989
6,398
762,330
2017
EGP'000
540,371
57,148
4,774
602,293
The operating segment assets and liabilities measure reported to the CODM is in accordance with IFRS as shown in the
Group’s Consolidated Statement of Financial Position.
Capital management
4.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The repatriation of a declared dividend from Egyptian group entities are subject to regulation by Egyptian authorities. The
outcome of an Ordinary General Meeting of Shareholders declaring a dividend is first certified by the General Authority for
Investment and Free Zones (GAFI).
Approval is subsequently transmitted to Misr for Central Clearing, Depository and Registry (MCDR) to distribute dividends to
all shareholders, regardless of their domicile, following notification of shareholders via publication in one national newspapers.
The Group monitors capital on the basis of the net debt to equity ratio. This ratio is calculated as net debt divided by total
equity. Net debt is calculated as total liabilities (being total current liabilities plus long-term financial obligations) less cash
and cash equivalents.
As a provider of medical diagnostic services, IDH’s operations in Sudan are not subject to sanctions.
Total liabilities
Less: cash and short-term deposits (Note 17)
Net (cash)/debt
Total Equity
Net debt to equity ratio
2018
EGP’000
849,948
(412,607)
437,341
2,400,638
18.2%
2017
EGP’000
624,313
(685,211)
(60,898)
2,314,090
-2.6%
No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December
2018 and 2017.
2018 |
ANNUAL REPORT
111
5.
Group information
Information about subsidiaries
The consolidated financial statements of the Group include:
Al Borg Laboratory Company (“Al-Borg”)
Al Mokhtabar Company for Medical Labs (“Al
Mokhtabar”)
Molecular Diagnostic Center*
Medical Genetic Center
Al Makhbariyoun Al Arab Group (Hashemite
Kingdom of Jordan)
Golden Care for Medical Services
Integrated Medical Analysis Company (S.A.E)
SAMA Medical Laboratories Co. ("Ultralab
medical laboratory ")
AL-Mokhtabar Sudanese Egyptian Co.
Integrated Diagnostics Holdings Limited
Dynasty Group Holdings Limited
Eagle Eye**
Echo-Scan (note 6)
Principal activities
Country of
Incorporation
% equity interest
2017
2018
Medical diagnostics
service
Medical diagnostics
service
Medical diagnostics
service
Medical diagnostics
service
Medical diagnostics
service
Holding company of
SAMA
Medical diagnostics
service
Medical diagnostics
service
Medical diagnostics
service
Intermediary holding
company
Intermediary holding
company
Intermediary holding
company
Medical diagnostics
service
Egypt
99.30%
99.30%
Egypt
99.90%
99.90%
Egypt
99.90%
99.90%
Egypt
55.00%
55.00%
Jordan
60.00%
60.00%
Egypt
100.00%
100.00%
Egypt
99.60%
99.60%
Sudan
80.00%
80.00%
Sudan
65.00%
65.00%
Caymans Island
100.00%
100.00%
England and
Wales
51%.0
51%.0
Mauritius
73.59%
Nigeria
99.99%
-
-
* “Molecular Diagnostic Center” is no longer treated as a subsidiary with effect from 5 May 2016 following the start of liquidation proceedings as control
has been passed to the liquidator [ Abd EL Wahab Kamal] under Egyptian Law.
Full details of the Group historical acquisitions can be found in the prospectus for the initial public offering by the Com-
pany dated 6 May 2015 and available at www.idhcorp.com.
Acquisition of subsidiaries
6.
On 15 January 2018, Dynasty Group Holdings Limited (“Dynasty”) acquired 73.59% of Eagle Eye Company (“Eagle Eye”), a
holding company which holds 99.99% of Echo-Scan Services Limited (“Echo-Scan”), through a capital increase amounting
to 80m EGP. An additional 67,216 shares were issued, bringing to the total number of shares to 73,071. Dynasty acquired
53,773 shares, entitling them to a beneficial ownership of 73.59% and obtaining control of Eagle-Eye. IDH Cayman owns
51% of Dynasty. The remaining 49% is owned by Man Health (Cayman) LLP.
Dynasty has partnered with the International Finance Corporation (“IFC”), a member of the World Bank Group, to invest
in Echo-Scan, a medical diagnostics business based in Nigeria. Dynasty and the IFC will invest USD 20 million and USD 5
million respectively to expand Echo-Scan’s nationwide service offering, footprint, and quality standards. Over the coming
year, Echo-Scan will refurbish and upgrade existing locations as well as significantly augment its number of branches.
112
ANNUAL REPORT | 2018
Financial Statements
In the period from acquisition to 31 December 2018, Eagle-Eye and its subsidiary contributed revenue of EGP 30m
and loss of EGP 28.8m to the Group’s results. Due to the scale of Nigerian operations, management do not estimate
there to be a significant impact on consolidated revenue and consolidated profit for the period if the acquisition had
occurred on 1 January 2018.
The Company assigned Diya Fatimilehin & Co. as an independent appraisal firm to conduct the evaluation of the exist-
ing tangible assets at the date of the acquisition. Diya Fatimilehin & Co. used the Depreciated Replacement cost with
recourse to Market. Comparison. Depreciated Replacement cost reflects adjustments for physical deterioration as well as
functional and economic obsolescence.
Fincorp has been assigned to conduct the PPA exercise. Based on the report issued by Fincorp along with Diya Fatimilehin
& Co assets revaluation report, EGP 79.5m was transferred
• Net assets of EGP 9m; and
• Goodwill of EGP 15m.
No amounts were allocated to intangibles due to:
• Echo-Scan branches was relatively and not strategically located.
• Echo-Scan had Low number of corporate patients (less than 5%).
• Echo-Scan did not possess an adequate database capturing the customers’ names, addresses, medical history
Acquisition-related costs
The Group incurred acquisition-related cost of EGP 4m relating to external legal fees and due diligence costs. These costs
have been included in ‘administrative expenses’ in the condensed consolidated statement of profit and loss.
The following is a statement of assets and liabilities of the acquired company (Eagle Eye – Echo Scan) and the fair value as
at the date of acquisition.
Tangible fixed assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax
Net assets acquired
Book value
Movement
EGP'000
EGP'000
18,368
2,240
20,519
(49,049)
-
(7,922)
24,335
-
-
-
(7,301)
17,034
Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Consideration transferred*
Non-controlling interest
Provisional fair value of identifiable net assets
Goodwill
* proceeds of share issue have remained within the group.
Value
EGP'000
42,703
2,240
20,519
(49,049)
(7,301)
9,112
31-Dec-18
EGP'000
-
24,189
(9,112)
15,077
2018 |
ANNUAL REPORT
113
7.
Non-Controlling Interest is measured at the proportionate share basis.
Non-Controlling interest
Financial information of subsidiaries that have material non-controlling interests is provided below:
Proportion of equity interest held by non-controlling interests:
Medical Genetic Center
Al Makhbariyoun Al Arab Group (Hashemite Kingdom of
Jordan)
SAMA Medical Laboratories Co. " Ultra lab medical labora-
tory "
Al Borg Laboratory Company
Dynasty Group Holdings Limited
Eagle Eye
Country of
incorporation
Egypt
Jordan
Sudan
Egypt
England and
Wales
Mauritius
2018
45.0%
40.0%
20.0%
0.7%
49%
26.4%
2017
45.0%
40.0%
20.0%
0.7%
49%
-
114
ANNUAL REPORT | 2018
Financial Statements
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2018 |
ANNUAL REPORT
115
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116
ANNUAL REPORT | 2018
Financial Statements
8.
Included in profit and loss are the following:
Expenses and other income
Impairment on trade and other receivables
Charge for increase in provisions
Operating lease payments (buildings)
Professional and advisory fees
Amortisation
Depreciation
Total
2018
EGP’000
9,635
793
67,197
31,938
6,398
70,989
186,950
2017
EGP’000
5,561
3,536
51,478
22,945
4,774
57,148
145,442
8.1. Auditor’s remuneration
The group paid or accrued the following amounts to its auditor and its associates in respect of the audit of the financial
statements and for other services provided to the group
Fees payable to the Company’s auditor for the audit of the Group’s annual
financial statements
The audit of the Company’s subsidiaries pursuant to legislation
Tax compliance and advisory services
8.2. Net finance costs
Interest expense
Net foreign exchange loss
Bank Charges
Total finance costs
Interest income
Gain on hyperinflationary net monetary position
Total finance income
Net finance income /(cost)
2018
EGP’000
2017
EGP’000
6,344
2,528
55
8,927
2018
EGP’000
(11,855)
(15,706)
(3,454)
(31,015)
2018
EGP’000
59,305
4,125
63,430
32,415
5,459
1,593
608
7,660
2017
EGP’000
(10,391)
(19,940)
(2,674)
(33,005)
2017
EGP’000
51,064
-
51,064
18,059
2018 |
ANNUAL REPORT
117
8.3. Employee numbers and costs
The average number of persons employed by the Group (including directors) during the year and the aggregate payroll
costs of these persons, analysed by category, were as follows:
Average number of
employees
2018
2017
Medical Administration
Total
Medical Administration
Total
3,672
1,270
4,942
4,226
443
4,669
Wages and salaries
Social security costs
Contributions to defined
contribution plan
Total
2018
EGP'000
2017
EGP'000
Medical Administration
Total
Medical Administration
290,508
17,958
4,974
98,162
4,157
1,334
388,670
22,115
6,308
219,493
15,537
3,168
73,604
4,091
Total
293,097
19,628
479
3,647
313,440
103,653
417,093
238,198
78,174
316,372
Details of Directors’ and Key Management remuneration and share incentives are disclosed in the Remuneration
Report and note 28.
9.
Income tax
a) Amounts recognised in profit or loss
Current tax:
Current year
Deferred tax:
Deferred tax arising on change in tax legislation relating to undistributed reserves
in subsidiaries
Relating to origination and reversal of temporary differences
Total Deferred tax income / expenses
2018
EGP’000
2017
EGP’000
(196,477)
(117,844)
(28,348)
4,381
(23,967)
(19,808)
(37,049)
(56,857)
Tax expense recognised in profit or loss
(220,444)
(174,701)
b) Reconciliation of effective tax rate
The Company is treated as a tax resident of Jersey for the purpose of Jersey tax laws and is subject to a tax rate of 0%. The
Company tax domicile in the UK. As a holding company for the IDH group, the Board concluded that the UK represents
the most effective and efficient jurisdiction from which to manage the Company. The current income tax charge for the
Group represents tax charges on profits arising in Egypt, Jordan and Sudan. The significant profits arising within the Group
subject to corporate income tax are generated from the Egyptian operations and subject to 22.5% (2017: 22.5%) tax rate.
The reconciliation of effective income tax rate has been performed using this rate.
118
ANNUAL REPORT | 2018
Financial Statements
In July 2018, the Egyptian Government imposed a new tax related to health care of 0.25% on total income. As result the
Group has recorded an additional EGP 3m in income tax expense.
Profit before tax
Profit before tax multiplied by rate of corporation tax in Egypt of 22.5% (2017: 22.5%)
Effect of tax rate in Jersey of 0% (2017: 0%)
Effect of tax rates in Jordan, Sudan and Nigeria of 20%, 15% and 30% respectively
(2017: 20% and 15%)
Tax effect of:
Change in unrecognized deferred tax assets
Deferred tax arising on undistributed reserves
Non-deductible expenses for tax purposes - employee profit share
Non-deductible expenses for tax purposes - other
Tax expense recognised in profit or loss
Deferred tax
Deferred tax relates to the following:
Property, plant and equipment
Intangible assets
Undistributed reserves from group
subsidiaries*
Provisions and finance lease liabilities
Total deferred tax assets - liability
2018
Assets
EGP’000
2,619
2,619
-
Liabilities
EGP’000
(20,562)
(106,125)
(44,293)
(170,980)
(168,361)
2018
EGP’000
717,358
161,405
9,466
(1,154)
1,823
28,348
14,314
6,242
220,444
2017
Assets
EGP’000
-
-
-
2,630
2,630
2017
EGP’000
558,430
125,647
9,558
(609)
703
19,808
10,240
9,354
174,701
Liabilities
EGP’000
(17,159)
(106,651)
(37,532)
-
(161,342)
(158,712)
All movements in the deferred tax asset/liability in the year have been recognised in the profit or loss account.
Deferred tax liabilities and assets have been calculated based on the enacted tax rate at 31 December 2018 for the country
the liabilities and assets has arisen. The enacted tax rate in Egypt is 22.5% (2017: 22.5%), Jordan 20% (2017: 20%), Sudan 15%
(2017: 15%) and Nigeria 30%.
* Undistributed reserves from group subsidiaries
2018 |
ANNUAL REPORT
119
The Group’s dividend policy is to distribute any excess cash after taking into consideration all business cash requirements and
potential acquisition considerations. The expectation is to distribute profits held within subsidiaries of the Group in the near
foreseeable future. During 2015 the Egyptian Government imposed a tax on dividends at a rate of 5% of dividends distributed
from Egyptian entities. As a result a deferred tax liability has been recorded for the future tax expected to be incurred from
undistributed reserves held within the Group which will be taxed under the new legislation imposed and were as follows:
Al Mokhtabar Company for Medical Labs
Alborg Laboratory Company
Integrated Medical Analysis Company
Molecular Diagnostic Center
Medical Genetics Center
Al Makhbariyoun Al Arab Group
2018
EGP’000
2017
EGP’000
19,694
12,216
7,997
383
58
3,945
44,293
13,517
17,507
2,582
317
47
3,562
37,532
Unrecognized deferred tax assets
The following deferred tax assets were not recognized due to the uncertainty that those items will have a future tax benefit:
Impairment of trade receivables (Note 16)
Impairment of other receivables (Note 16)
Provision for legal claims (Note 22)
Unrecognized deferred tax asset
2018
EGP'000
29,295
8,516
2,828
40,639
9,144
2017
EGP'000
21,784
8,069
2,685
32,538
7,321
Earnings per share (EPS)
10.
Basic EPS is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year. There are no dilutive effects from ordinary share
and no adjustment required to weighted-average numbers of ordinary shares.
The following table reflects the income and share data used in the basic and diluted EPS computation:
Profit attributable to ordinary equity holders of the parent for basic earnings
Weighted average number of ordinary shares for basic and dilutive EPS
Basic and dilutive earnings per share (expressed in EGP)
There is no dilutive effect from equity.
2018
EGP’000
502,092
150,000
3.35
2017
EGP’000
374,023
150,000
2.49
120
ANNUAL REPORT | 2018
Financial Statements
11.
Property, plant and equipment
Medical,
electric &
information
system
equipment
Land &
Buildings
Leasehold
improvements
Fixtures,
fittings &
vehicles
Building &
Leasehold
improvements
in construction
Cost or valuation
At 1 January 2017
Additions
Disposals
Exchange differences
Transfers
At 31 December 2017
Additions
Acquired in business
combination
Disposals
Exchange differences
Transfers
At 31 December 2018
173,249
27,700
-
10,825
-
211,774
-
200,577
41,275
(2,697)
(1,547)
-
237,608
106,299
6,411
31,615
-
478
-
218,663
Depreciation and impairment
At 1 January 2017
Depreciation charge
for the year
Disposals
Exchange differences
At 31 December 2017
Depreciation charge
for the year
Disposals
Exchange differences
At 31 December 2018
Net book value
At 31-12-2018
At 31 December 2017
22,165
2,857
-
-
25,022
7,310
-
10
32,342
186,321
186,752
(7,860)
(49)
-
367,613
75,298
33,446
(2,594)
(154)
105,996
34,592
(5,742)
(2,497)
132,349
235,264
131,612
118,851
17,788
(888)
(1,037)
12,637
147,351
38,732
-
(5,381)
(648)
5,424
185,478
45,009
17,278
(663)
(18)
61,606
24,784
(4,827)
(760)
80,803
104,675
85,745
40,442
5,588
(477)
(503)
-
45,050
11,714
907
(992)
(1,173)
-
55,506
15,355
3,567
(385)
(34)
18,503
4,303
(303)
(769)
21,734
33,772
26,547
Total
538,201
143,116
(4,062)
7,658
-
684,913
260,894
5,082
50,765
-
(80)
(12,637)
43,130
104,149
3,771
42,704
-
121
(5,424)
145,747
-
-
-
-
-
-
-
-
-
145,747
43,130
(14,233)
(1,271)
-
973,007
157,827
57,148
(3,642)
(206)
211,127
70,989
(10,872)
(4,016)
267,228
705,779
473,786
*Additions include EGP 72.3m improvement related to the Group’s new Headquarter purchased in April 2017. Addition also include capitalised borrowing
costs related to the improvement of the building of EGP 13.5m (2017: EGP 7.8m). Calculated using capitalisation rate of 18.75% (note 25).
Leased equipment
The Group leases medical and electric equipment under finance lease arrangements. This equipment is supplied to service
the Group’s new state-of-the-art Mega Lab. The equipment secures lease obligations, see note 27 for further details. At 31
December 2018, the net carrying amount of leased equipment was EGP 40m (Dec 2017: EGP 47m).
2018 |
ANNUAL REPORT
121
12.
Intangible assets
Cost
At 1 January 2017
Additions
Effect of movements in exchange rates
At 31 December 2017
Additions (note 6)
Effect of movements in exchange rates
At 31 December 2018
Amortisation and impairment
At 1 January 2017
Amortisation
Effect of movements in exchange rates
At 31 December 2017
Amortisation
Effect of movements in exchange rates
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
Goodwill
EGP’000
Brand Name
EGP’000
Software
EGP’000
1,257,352
4,391
(1,290)
1,260,453
15,077
(4,534)
1,270,996
1,849
-
-
1,849
-
-
1,849
388,092
-
(805)
387,287
-
(530)
386,757
-
-
-
-
-
-
-
1,269,147
1,258,604
386,757
387,287
38,201
6,386
(18)
44,569
10,582
19
55,170
27,434
4,774
-
32,208
6,398
5
38,611
16,559
12,361
Total
EGP’000
1,683,645
10,777
(2,113)
1,692,309
25,659
(5,045)
1,712,923
29,283
4,774
-
34,057
6,398
5
40,460
1,672,463
1,658,252
122
ANNUAL REPORT | 2018
Financial Statements
13. Goodwill and intangible assets with indefinite lives (note 2.2-i)
Goodwill acquired through business combinations and intangible assets with indefinite lives are allocated to the Group’s
CGUs as follows:
Medical Genetics Center
Goodwill
Al Makhbariyoun Al Arab Group (“Biolab”)
Goodwill
Brand name
Golden Care for Medical Services (“Ultralab”)
Goodwill
Brand name
Alborg Laboratory Company (“Al-Borg”)
Goodwill
Brand name
Al Mokhtabar Company for Medical Labs (“Al-Mokhtabar”)
Goodwill
Brand name
Echo-Scan (note 6)
Goodwill
Balance at 31 December
2018
EGP’000
2017
EGP’000
1,755
1,755
52,403
22,885
75,288
3,535
487
4,022
497,275
142,066
639,341
699,102
221,319
920,421
1,755
1,755
52,086
22,746
74,832
8,386
1,156
9,542
497,275
142,066
639,341
699,102
221,319
920,421
15,077
15,077
1,655,904
-
-
1,645,891
The Group performed its annual impairment test in October 2018. The Group considers the relationship between its mar-
ket capitalisation and its book value, among other factors, when reviewing for indicators of impairment.
Key assumptions used in value in use calculations and sensitivity to changes in assumptions
IDH instructed FinCorp Investment Holding (referred to hereafter as “Fincorp”) an independent financial advisor, to pre-
pare an independent impairment assessment of the Group’s CGUs. The assessment was carried out based on business
plans provided by IDH.
2018 |
ANNUAL REPORT
123
These plans have been prepared based on criteria set out below:
Average annual patient growth
rate from 2019 -2023
Average annual price per test
growth rate from 2019 -2023
Annual revenue growth rate from
2019 -2023
Average gross margin from 2019
-2023
Terminal value growth rate from
1 January 2024
Discount rate
Average annual patient growth
rate from 2018 -2022
Average annual price per test
growth rate from 2018 -2022
Annual revenue growth rate from
2018 -2022
Average gross margin from 2018
-2022
Terminal value growth rate from
1 January 2023
Discount rate
Ultra Lab
Bio Lab Al-Mokhtabar
Al-Borg
Echo-Scan
Year 2018
8%
11%
18%
16%
2%
29%
5%
5%
5%
5%
2%
15%
4%
11%
15%
16%
3%
19%
3%
11%
19%
19%
3%
19%
20%
9%
45.5%
54%
2%
22.97%
Ultra Lab
Bio Lab Al-Mokhtabar
Al-Borg
Echo-Scan
Year 2017
7%
7%
15%
41%
2%
25.8%
5%
0%
5%
36%
2%
15.4%
5%
11%
17%
52%
3%
12%
15%
48%
3.9%
19.58%
3.9%
19.58%
-
-
-
-
-
-
During year 2018, Fincorp has prepared discounted cash flow projections using the key assumptions above so as to be able
to calculate the net present value of the asset in use and determine the recoverable amount. The projected cash flows from
2019- 2023 have been based on detailed forecasts prepared by management for each CGU and a terminal value thereafter.
Management have used past experience and historic trends achieved in order to determine the key growth rate and margin
assumptions set out above. The terminal value growth rate applied is not considered to exceed the average growth rate for
the industry and geographic locations of the CGUs.
Management also considered a change in the discount rates of 1-3%, increasing those rates to reflect additional risk that
could reasonably be foreseen in the market places in which the Group operates. This did not result in an impairment under
any of these scenario.
This recoverable amount is then compared to the carrying value of the asset as recorded in the books and records of IDH
plc. The discount rate is the pre-tax rate taking into account the risks of each CGU.
These risks include country risk, currency risk as well as the beta factor relating to the CGU and how it performs relative
to the market.
The conclusions from the impairment review were that there was headroom within the forecasts and therefore no impair-
ment is required.
124
ANNUAL REPORT | 2018
Financial Statements
14.
The fair values of all financial assets and financial liabilities by class shown in the balance sheet are as follows:
Financial assets and financial liabilities
Cash and cash equivalent
Short term deposits - treasury bills
Trade and other receivables (Note 16)
Total financial assets
Trade and other payables
Put option liability
Finance lease liabilities
Loans and borrowings
Total other financial liabilities
2018
EGP'000
412,607
239,905
264,037
916,549
2018
EGP'000
281,183
145,275
90,581
133,039
650,578
2017
EGP'00
685,211
9,149
174,902
869,262
2017
EGP'00
215,176
93,256
117,714
60,763
486,909
Total financial instruments
266,471
382,353
The fair values measurements for all the Group companies has been categorized as Level 2, except Echo-Scan which has
been categorized as level 3.
Makhbariyoun Al Arab put option (note 23) has been categorized as Level 2.
Echo-Scan put option (note 24) has been categorized as Level 3.
Financial instruments risk management objectives and policies
The Group’s principal financial liabilities are trade and other payables, put option liability and finance lease liabilities. The
Group’s principal financial assets include trade and other receivables, and cash and short-term deposits that derive directly
from its operations.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s overall risk management program focuses on
the unpredictability of markets and seeks to minimize potential adverse effects on the Group’s financial performance. The
Group’s senior management oversees the management of these risks. The Board of Directors reviews and agrees policies
for managing each of these risks, which are summarised below.
The board provides written principles for overall risk management, as well as written policies covering specific areas,
such as foreign exchange risk, interest rate risk, and credit risk, use of derivative financial instruments and non-derivative
financial instruments, and investment of excess liquidity.
• Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity
price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings and deposits.
The sensitivity analyses in the following sections relate to the position as at 31 December in 2018 and 2017. The sensitivity
analyses have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt
and the proportion of financial instruments in foreign currencies are all constant.
2018 |
ANNUAL REPORT
125
The analyses exclude the impact of movements in market variables on: the carrying values of pension and other post-
retirement obligations; provisions; and the non-financial assets and liabilities of foreign operations. The following assump-
tions have been made in calculating the sensitivity analyses:
• The sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective market
risks. This is based on the financial assets and financial liabilities held at 31 December 2018 and 2017.
• The sensitivity of equity is calculated by considering the effect of any associated cash flow hedges and hedges of a net
investment in a foreign subsidiary at 31 December 2018 for the effects of the assumed changes of the underlying risk.
Interest rate risk
•
The Group adopts of ensuring that between 40 and 60% of this interest rate risk exposure is at a fixed rate. This is achieved
partially by entering into fixed-rate instrument and partly by borrowing at the floating rate.
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments as reported to the management of the group
is as follow:
Fixed-rate instruments
Finance lease liabilities (note 27)
Variable-rate instruments
Loans and borrowings (note 25)
2018
EGP’000
2017
EGP’000
90,581
117,714
126,855
53,000
The Group does not account for any fixed-rate financial liabilities at FVTPL. Therefore, a change in interest rates at the
reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable-rate instruments
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased)
profit or loss by the amounts EGP 1,269K. This analysis assumes that all other variables, remain constant.
• Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign exchange rates.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, pri-
marily with respect to the US Dollar, Sudanese Pound, the Jordanian Dinar and Nigerian Naira. Foreign exchange risk arises
from to the Group’s operating activities (when revenue or expense is denominated in a foreign currency), recognized assets
and liabilities and net investments in foreign operations. However, the management aims to minimize open positions in
foreign currencies to the extent that is necessary to conduct its activities.
Management has set up a policy to require group companies to manage their foreign exchange risk against their functional
currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denomi-
nated in a currency that is not the entity’s functional currency.
126
ANNUAL REPORT | 2018
Financial Statements
At year end, major financial assets / (liabilities) denominated in foreign currencies were as follows (the amounts presented
are shown in the foreign currencies):
Assets
Liabilities
31-Dec-18
Other
assets
Total
assets
Put
option
Finance
Trade
payables
Total
liability
Net
exposure
336
-
-
1,882
18,741
217,864
7,348
32
4
2,483
26,040
335,166
-
-
-
(5,259)
-
(234,898)
(4,559)
-
-
(141)
-
-
(2,405)
(31)
-
(1,259)
(14,754)
(230,900)
(6,964)
(31)
-
(6,659)
(14,754)
(465,798)
384
1
4
(4,176)
11,286
(130,632)
Assets
Liabilities
31-Dec-17
Other
assets
Total
assets
Put
option
Finance
Trade
payables
Total
liability
Net
exposure
149
-
-
1,816
11,722
11,854
66
4
2,032
24,548
-
-
-
(3,747)
-
(7,062)
-
-
(334)
-
(1,660)
(13)
(197)
(1,228)
(5,316)
(8,722)
(13)
(197)
(5,309)
(5,316)
3,132
53
(193)
(3,277)
19,232
Cash
and cash
equivalents
7,012
32
4
601
7,299
117,302
Cash
and cash
equivalents
11,705
66
4
216
12,826
US Dollars
Euros
GBP
JOD
SDG
NGN
US Dollars
Euros
GBP
JOD
SDG
The following is the exchange rates applied:
US Dollars
Euros
GBP
JOD
SAR
SDG
NGN
US Dollars
Euros
GBP
JOD
SAR
SDG
NGN
Average rate for the year ended
31-Dec-18
31-Dec-17
17.71
20.83
23.51
24.96
4.68
0.57
0.06
17.68
20.05
22.84
24.92
4.71
1.04
0.06
Spot rate for the year ended
31-Dec-18
31-Dec-17
17.78
20.31
22.55
25.04
4.76
0.37
0.06
17.67
21.09
23.73
24.89
4.71
0.88
0.06
2018 |
ANNUAL REPORT
127
At 31 December 2018, if the Egyptian Pounds had weakened / strengthened by 10% against the US Dollar with all other vari-
ables held constant, pre-tax profit for the year would have been increased / decreased by EGP 0.7m (2017: EGP 5.5m), mainly
as a result of foreign exchange gains/losses on translation of US dollar-denominated financial assets and liabilities. The effect
on equity would have been an increase/decrease by EGP (1m) due to the impact from translation of foreign subsidiaries.
At 31 December 2018, if the Egyptian Pounds had weakened / strengthened by 10% against the Jordanian Dinar with all
other variables held constant, pre-tax profit for the year would have been increased / decreased by EGP (10.5m) (2017:
EGP (8.2m)), mainly as a result of foreign exchange gains/losses on translation of JOD - denominated financial assets and
liabilities. The effect on equity would have been an increase/decrease by EGP 5.45m due to the impact from translation of
foreign subsidiaries.
At 31 December 2018, if the Egyptian Pounds had weakened / strengthened by 10% against the Sudanese Pound with
all other variables held constant, pre-tax profit for the year would have been increased / decreased by EGP 0.4m (2017:
EGP 1.7m, mainly as a result of foreign exchange gains/losses on translation of SDG -denominated financial assets and
liabilities. The effect on equity would have been an increase/decrease by EGP (5.30m) due to the impact from translation
of foreign subsidiaries.
At 31 December 2018, if the Egyptian Pounds had weakened / strengthened by 10% against the Nigeria Naira with all other
variables held constant, pre-tax profit for the year would have been increased / decreased by EGP (0.8m), mainly as a result
of foreign exchange gains/losses on translation of SDG -denominated financial assets and liabilities. The effect on equity
would have been an increase/decrease by EGP 7.63m due to the impact from translation of foreign subsidiaries.
• Price risk
The group does not have investments in equity securities or bonds and accordingly is not exposed to price risk related to
the change in the fair value of the investments.
• Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables)
and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions
and other financial instruments.
Credit risk is managed on a group basis, except for credit risk relating to accounts receivable balances. Each local entity is
responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery
terms and conditions are offered. Credit risk arises from cash and cash equivalents, derivative financial instruments and
deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables
and committed transactions.
For banks and financial institutions, the Group is only dealing with the banks which have a high independent rating and a
good reputation.
Trade receivables
Each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk man-
agement manages customer credit risk. Credit quality of a customer is assessed based on an individual credit limits are
defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and the average
general credit terms given to contract customers are 45 days.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large
number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation
is based on actual incurred historical data and expected future credit losses. The Group does not hold collateral as security.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets
disclosed in Note 16.
128
ANNUAL REPORT | 2018
Financial Statements
Cash and cash equivalents
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance
with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits
assigned to each counterparty. Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis,
and may be updated throughout the year subject to approval of the Group’s management. The limits are set to minimise the
concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to make payments.
The maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents disclosed in Note 17.
• Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of finance
leases and loans. The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:
Year ended 31 December 2018
1 year or less
1 to 5 years
Obligations under finance leases
Put option liability
Loans and borrowings
Trade and other payables
35,805
131,671
45,612
281,183
494,271
95,242
-
113,756
-
208,998
Year ended 31 December 2017
1 year or less
1 to 5 years
Obligations under finance leases
Put option liability
Loans and borrowings
Trade and other payables
38,275
93,256
24,699
215,176
371,406
128,726
-
55,818
-
184,544
more than 5
years
-
13,604
38,495
-
52,099
more than 5
years
-
-
-
-
Total
131,047
145,275
197,863
281,183
755,368
Total
167,001
93,256
80,517
215,176
555,950
Cash flow forecasting is performed in the operating entities of the group and aggregated by group finance. Group finance
monitors rolling forecasts of the group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
Such forecasting takes into consideration the group’s compliance with internal financial position ratio targets and, if ap-
plicable external regulatory or legal requirements – for example, currency restrictions.
The group’s management retain cash balances in order to allow repayment of obligations in due dates, without taking
into account any unusual effects which it cannot be predicted such as natural disasters. All suppliers and creditors will be
repaid over a period not less 30 days from the date of the invoice or the date of the commitment.
2018 |
ANNUAL REPORT
129
15.
Inventories
Chemicals and operating supplies
2018
EGP’000
91,079
91,079
2017
EGP’000
69,935
69,935
During 2018, EGP 353,789k (2017: EGP 306,641k) was recognised as an expense for inventories, this was recognised in cost of sales.
16.
Trade and other receivables
Trade receivables
Prepaid expenses
Receivables due from related parties
Other receivables
Accrued revenue
2018
EGP’000
220,396
35,954
6,588
31,584
5,469
299,991
2017
EGP’000
139,885
27,353
6,441
11,000
17,576
202,255
For terms and conditions relating to related party receivables, refer to Note 28.
As at 31 December 2018, trade and other receivables with an initial carrying value of EGP 37,811k (2017: EGP 29,852k) were
impaired and fully provided for. Below show the movements in the provision for impairment of trade and other receivables:
At 1 January
Charge for the year
Utilised
Unused amounts reversed
Exchange differences
At 31 December
2018
EGP'000
29,852
9,635
(240)
(1,056)
(380)
37,811
2017
EGP'000
27,222
5,561
(1,331)
(1,461)
(139)
29,852
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss
(historical customer’s collection, Customers' contracts conditions) and applying experienced credit judgement. Credit risk
grades are defined using qualitative and quantitative factors that are indicative of the risk of default.
Expected credit loss assessment is based on the following:
1. The customer list was divided into 9 sectors
2. Each sector was divided according to customers aging
3. Each sector was studied according to the historical events of each sector. According to the study conducted, the
expected default rate was derived from each of the aforementioned period.
4. General economic conditions
130
ANNUAL REPORT | 2018
Financial Statements
Based on the expected credit loss assessment, additional provision was calculated for each period, yielding an additional
Expected Credit Losses (ECL) for IDH Group amounting to EGP 1.2 million. On quarterly basis, IDH revises its forward
looking estimates and the general economic conditions to assess the expected credit loss, which will be mainly based
on current and expected inflation rates. The results of the quarterly assessment will increase/decrease the percentage
allocated to each period.
The following changes in the gross carrying amounts of trade receivables contributed to the changes in the impairment
loss allowance during 2018:
• The growth of the business with Governmental Bodies in Egypt resulted in increases in trade receivables of EGP 4
million and increases in impairment allowances in 2018 of EGP 742k.
A reasonable possible change of 100 basis points in the expected credit loss at the reporting date would have increased
(decreased) profit or loss by the amount of EGP 1,957K. This analysis assumes that all other variables remain constant.
The following table provides information about the exposure to credit risk and ECLs for trade receivables and contract
assets from individual customers as at 31 December 2018.
31-Dec-18
Current (not past due)
1–30 days past due
31–60 days past due
61–90 days past due
More than 90 days past due
Weighted
average loss
rate
EGP'000
0.16%
0.20%
1.10%
3.53%
94.17%
Gross
carrying
amount
EGP'000
108,150
41,723
27,866
12,094
39,100
Loss
allowance
EGP'000
(172)
(85)
(307)
(428)
(36,819)
As at 31 December, the ageing analysis of trade receivables is as follows:
2018
2017
Total
220,396
139,885
< 30 days
30-60 days
61-90 days
> 90 days
149,873
99,143
27,866
12,111
12,094
6,522
30,563
22,109
17.
Cash and cash equivalent
Cash at banks and on hand
Treasury bills
Short-term deposits
2018
81,721
20,475
310,411
412,607
2017
139,974
-
545,237
685,211
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits and treasury bills are
made for varying periods of between one day and three months, depending on the immediate cash requirements of the
Group, and earn interest at the respective short-term deposit average rate 13.75% per annum.
2018 |
ANNUAL REPORT
131
18. Restricted cash
Restricted cash
2018
EGP'000
11,965
11,965
2017
EGP'000
13,226
13,226
The cash balance related to “Molecular Diagnostic Center” and is not available for use by the Group because the entity
commenced deconsolidation in May 2016 and control has been transferred to the liquidator. The process of liquidation will
end next year, 2019 and once complete the total cash amount is expected to be returned to IDH.
19.
Other investments
Fixed term deposits
Treasury bills
2018
EGP'000
145,000
94,905
239,905
2017
EGP'000
9,149
-
9,149
The maturity date of the fixed term deposit and treasury bills between 9–12 months and the effective interest rate on the
deposit is 14.76% and 18.34% (2017: 14.65%).
20.
The Company’s ordinary share capital is $150,000,000 equivalent to EGP 1,072,500,000.
Share capital and reserves
All shares are authorised and fully paid and have a par value of $1.
In issue at beginning of the year
In issue at the end of the year
Ordinary
shares
31-Dec-18
150,000,000
150,000,000
Ordinary
shares
31-Dec-17
150,000,000
150,000,000
Capital reserve
The capital reserve was created when the Group’s previous parent company, Integrated Diagnostics Holdings LLC – IDH
(Caymans) arranged its own acquisition by Integrated Diagnostics Holdings PLC, a new legal parent. The balances arising
represent the difference between the value of the equity structure of the previous and new parent companies. When the
capital position of the parent company is rearranged, the capital reserve is adjusted appropriately such that the equity
balances presented in the Group accounts best reflect the underlying structure of the Group’s capital base.
Legal reserves
Legal reserve was formed based on the legal requirements of the Egyptian law governing the Egyptian subsidiaries. Ac-
cording to the Egyptian subsidiaries’ article of association 5% (at least) of the annual net profit is set aside to from a legal
reserve. The transfer to legal reserve ceases once this reserve reaches 50% of the entity’s issued capital. If the reserve falls
below the defined level, then the entity is required to resume forming it by setting aside 5% of the annual net profits until it
reaches 50% of the issued share capital.
132
ANNUAL REPORT | 2018
Financial Statements
Put option reserve
Through acquisitions made within the Group, put option arrangements have been entered into to purchase the remaining
equity interests in subsidiaries from the vendors at a subsequent date. At acquisition date an initial put option liability is
recognised and a corresponding entry recognised within the put option reserve. After initial recognition the accounting
policy for put options is to recognise all changes in the carrying value of the liability within put option reserve. When the
put option is exercised by the vendors the amount recognised within the reserve will be reversed.
Translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries, including gains or losses arising on net investment hedges.
21. Distributions made and proposed
Cash dividends on ordinary shares declared and paid:
US$ 0.16 per qualifying ordinary share (2017: US$ 0.14)
2018
EGP'000
423,560
423,560
2017
EGP'000
371,875
371,875
After the balance sheet date, the following dividends were proposed by the directors (the dividends have not been provided for):
US$ 0.176 per share (2017: $0.160) per share
469,392
424,080
The proposed 2019 dividend on ordinary shares are subject to approval at the annual general meeting and is not recognised
as a liability as at 31 December 2018.
22. Provision
At 1 January 2018
Provision made during the year
Provision used during the year
Provision reversed during the year
At 31 December 2018
Current
Non- Current
At 1 January 2017
Provision made during the year
Provision used during the year
Provision reversed during the year
At 31 December 2017
Current
Non- Current
Egyptian
Government
Training Fund
for employees
EGP’000
12,014
-
-
-
12,014
-
12,014
Egyptian
Government
Training Fund
for employees
EGP’000
10,011
2,003
-
-
12,014
-
12,014
Provision for
legal claims
EGP’000
2,685
793
(234)
(416)
2,828
-
2,828
Provision for
legal claims
EGP’000
2,191
1,533
(39)
(1,000)
2,685
-
2,685
Total
EGP’000
14,699
793
(234)
(416)
14,842
-
14,842
Total
EGP’000
12,202
3,536
(39)
(1,000)
14,699
-
14,699
2018 |
ANNUAL REPORT
133
Employees training provision
The provision for employees training fund was provided for in 2017 in accordance with the Egyptian law and regulations.
During the year, the company obtained a legal opinion regarding the training fund. The Company was advised if it adopted
a training system for its employees, there was no requirement to make additional provisions to the current amount pro-
vided for. During the year the Group spent EGP 784K on training courses for employees.
Legal claims provision
The amount comprises the gross provision in respect of legal claims brought against the Group. Management’s opinion,
after taking appropriate legal advice, is that the outcome of these legal claims will not give rise to any significant loss
beyond the amounts provided as at 31 December 2018.
23.
Trade and other payables
Trade payables
Accrued expenses
Other payables
Put option liability
Accrued interest
Finance lease liabilities
2018
EGP’000
157,891
95,497
27,795
131,671
6,184
24,994
444,032
2017
EGP’000
126,140
73,821
15,215
93,256
7,763
17,237
333,432
The accounting policy for put options after initial recognition is to recognise all changes in the carrying value of the put
liability within equity.
Through the historic acquisitions of Makhbariyoun Al Arab the Group entered into separate put option arrangements to
purchase the remaining equity interests from the vendors at a subsequent date. At acquisition a put option liability has
been recognised for the net present value for the exercise price of the option.
The options are exercisable in whole from the fifth anniversary of completion of the original purchase agreement, which fell
due in June 2016. The vendor has not exercised this right at 31 December 2018
24.
Long-term Put option liability
Put option liability
2018
EGP’000
13,604
13,604
2017
EGP’000
-
-
According to definitive agreements signed on 15 January 2018 between Dynasty Group Holdings Limited and International
Finance Corporation (IFC) related to the Eagle Eye-Echo scan transaction, IFC has the option to put it is shares to Dynasty
in year 2024. The put option price will be calculated on the basis of the fair market value determined by an independent
valuer (one of the big four accounting firms) (see note 6).
According to the International Private Equity and Venture Capital Valuation Guidelines, there are multiple ways to calcu-
late the put option including Discounted Cash Flow, Multiples, Net assets. Multiple valuation was applied and EGP 13.6
million was booked.
134
ANNUAL REPORT | 2018
Financial Statements
Loan and borrowings
25.
A)
In April 2017 AL-Mokhtabar for medical lab, one of IDH subsidiaries, was granted a medium term loan amounting
to EGP 110m from Commercial international bank “CIB Egypt” to finance the purchase of the new administrative building
for the group. As at 31 December 2018 only EGP 89m had been drawn down from the total facility available. The loan
contains the following financial covenants which if breached will mean the loan is repayable on demand:
1. The financial leverage shall not exceed the following percentages
Year
%
2017
2.33
2018
1.71
2019
1.32
2020
1.04
2021
0.85
2022
0.73
“Financial leverage”: total liabilities divided by net equity
2. The debt service ratios (DSR) shall not be less than 1.
“Debt service ratios”: cash operating profit after tax plus Depreciation for the financial year less annual mainte-
nance on machinery and equipment divided by total distributions plus accrued interest and loan instalments.
3. The current ratios shall not be less than 1.
“Current ratios”: Current assets divided current liabilities.
4. The capital expansions in AL Mokhtabar company shall not exceed EGP 35m per year, other than year 2017 which
includes in addition the value of the building financed by EGP 110m loan facility. This condition is valid throughout
the term of the loan.
The agreement includes other non-financial covenants which relate to the impact of material events on the Company and
the consequential ability to repay the loan.
B)
In July 2018, AL-Borg lab, one of IDH subsidiaries, was granted a medium term loan amounting to EGP 130.5m
from Ahli united bank “AUB Egypt” to finance the investment cost related to the expansion into the radiology segment. As
at 31 December 2018 only EGP 37m had been drawn down from the total facility available. The loan contains the following
financial covenants which if breached will mean the loan is repayable on demand:
1. The financial leverage shall not exceed 0.7 throughout the period of the loan
“Financial leverage”: total liabilities divided by net equity
2. The debt service ratios (DSR) shall not be less than 1.35 starting 2019
“Debt service ratio”: cash operating profit after tax plus depreciation for the financial year less annual maintenance
on machinery and equipment adding cash balance divided by total financial payments.
“Cash operating profit”: Operating profit after tax, interest expense, depreciation and amortization, is calculated as
follows: Net income after tax and unusual items adding Interest expense, Depreciation, Amortisation and provisions
excluding tax related provisions less interest income and Investment income and gains from extraordinary items
“Financial payments”: current portion of long term debt including finance lease payments, interest expense and
fees and dividends distributions.
3. The current ratios shall not be less than 1.
“Current ratios”: Current assets divided current liabilities.
2018 |
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135
The terms and conditions of outstanding loans are as follows:
Currency
Nominal interest rate
Maturity
31 Dec 18
31 Dec 17
EGP
EGP
CBE corridor rate*+1%
CBE corridor rate*+1%
Apr-22
Apr-26
CIB - BANK
AUB - BANK
-
Amount held as:
Current liability
Non- current
liability
*As at 31 December 2018 corridor rate 17.75% (2017: 19.75%)
26.
Long-term financial obligations
Finance lease liabilities (see note 27)
27. Commitments and contingencies
Operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
89,486
37,369
126,855
25,416
101,439
126,855
53,000
-
53,000
14,575
38,425
53,000
2018
EGP’000
65,587
65,587
2017
EGP’000
100,478
100,478
2018
EGP'000
65,781
234,270
140,927
440,978
2017
EGP'000
50,072
178,938
101,343
330,353
The Group lease certain branches for the operation of the business. During the year EGP 67,197K was recognised as an
expense in the income statement in respect of operating leases (2017: EGP 51,478K).
Finance lease
The Group has finance leases for various items of plant and machinery. Future minimum lease payments under finance
leases and hire purchase contracts, together with the present value of the net minimum lease payments are, as follows:
Finance lease liability – laboratory equipment
Finance lease liability – other
136
ANNUAL REPORT | 2018
2018
EGP’000
88,279
2,302
90,581
2017
EGP’000
114,727
2,987
117,714
Financial Statements
Finance lease liabilities for the laboratory equipment are payable as follows:
At 31 December 2018
Less than one year
Between one and five years
At 31 December 2017
Less than one year
Between one and five years
Minimum
lease
payments
2018
EGP’000
34,128
94,617
128,745
Minimum
lease
payments
2017
EGP’000
35,549
126,938
162,487
Interest
2018
EGP’000
10,810
29,656
40,466
Interest
2017
EGP’000
19,512
28,248
47,760
Principal
2018
EGP’000
23,318
64,961
88,279
Principal
2017
EGP’000
16,037
98,690
114,727
The Group entered into 2 significant agreements during the year ended 31 December 2015 to service the Group’s state-of-
the-art Mega Lab. Both agreements have minimum annual commitment payments to cover the supply of medical diagnos-
tic equipment, kits and chemicals to be used for testing and ongoing maintenance and support services over the term of
the agreement. The agreement periods are 5 and 8 years which is deemed to reflect the useful life of the equipment. If the
minimum annual commitment payments are met over the agreement period ownership of the equipment supplied will
legally transfer to the IDH. Management fully expect to be able to fulfil the minimum payments and the basis of treating
the proportion of payments relating to the supply of equipment as a finance lease.
Management have performed a fair value exercise in order to allocate payments between the different elements of the ar-
rangements and identify the implicit interest rate of the finance lease. Due to the difficulty in reliably splitting the payments
for the supply of medical equipment from the total payments made, the finance asset and liability has been recognised at
an amount equal to the fair value of the underlying equipment. This is based on the current cost price of the equipment
supplied provided by the suppliers of the agreement. The implicit interest rate of both finance leases has been estimated
to be 11.5%. The equipment is being depreciated based on units of production method as this most closely reflects the
consumption of the benefits from the equipment.
Both agreements have been judged to be US$ denominated due to the future minimum lease payments for the use of the
equipment and corresponding finance lease liability being directly connected to the US$.
Contingent liabilities
There are no contingent liabilities relating to the group’s transactions and commitment with banks.
2018 |
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137
28. Related party disclosures
The significant transactions with related parties, their nature volumes and balance during the period 31 December 2018
and 2017 are as follows:
Related Party
Life Scan (S.A.E)*
International Fertility (IVF)**
Dr. Hend Elshrbini***
Integrated Treatment for Kidney
Diseases (S.A.E)
Nature of
transaction
Nature of
relationship
Expenses paid on
behalf
Expenses paid on
behalf
Loan arrangement
Rental income
Medical Test
analysis
Affiliate**
Affiliate***
CEO**
Entity owned by
Company’s CEO
Total
Related Party
Life Scan (S.A.E)*
International Fertility (IVF)**
Dr. Hend Elshrbini***
Integrated Treatment for Kidney
Diseases (S.A.E)
Total
Nature of
transaction
Nature of
relationship
Expenses paid on
behalf
Expenses paid on
behalf
Loan arrangement
Rental income
Medical Test
analysis
Affiliate**
Affiliate***
CEO**
Entity owned by
Company’s CEO
31-Dec-18
Transaction
amount of the
year
EGP’000
Amount due
from
EGP’000
52
(200)
8,024
320
145
330
5,800
-
458
6,588
31-Dec-17
Transaction
amount of the
year
EGP’000
Amount due
from
EGP’000
1
2,240
164,483
296
33
278
6,000
-
163
6,441
* Life Scan is a company whose shareholders include Dr. Moamena Kamel ( founder of IDH subsidiary Al-Mokhtabar Labs).
** International Fertility (IVF) is a company whose shareholders include Dr. Moamena Kamel ( founder of IDH subsidiary Al-Mokhtabar Labs).
Terms and conditions of transactions with related parties
The transactions with the related parties are made on terms equivalent to those that prevail in arm’s length transactions.
Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been
no guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2018,
the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2017: nil). This
assessment is undertaken each financial year through examining the financial position of the related party and the market
in which the related party operates.
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ANNUAL REPORT | 2018
Financial Statements
IDH commits up to 1% of the net after-tax profit of the subsidiaries Al Borg and Al Mokhtabar to the Moamena Kamel
Foundation for Training and Skill Development. Established in 2006 by Dr. Moamena Kamel, a Professor of Pathology
at Cairo University and founder of IDH subsidiary Al-Mokhtabar Labs and mother to the CEO Dr. Hend El Sherbini. The
Foundation allocates this sum to organisations and groups in need of assistance. The foundation deploys an integrated
program and vision for the communities it helps that include economic, social, and healthcare development initiatives. In
2018 EGP 3,733K (2017: EGP 3,674K) was paid to the foundation by the IDH Group.
Compensation of key management personnel of the Group
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.
Short-term employee benefits
Total compensation paid to key management personnel
2018
EGP’000
36,662
36,662
2017
EGP’000
32,426
32,426
29. Reconciliation of movements of liabilities to cash flows arising
from financing activities
EGP'000
Restated balance at 1 January 2018
Proceeds from loans and borrowings
Repayment of borrowings
Payment of finance lease liabilities
Total changes from financing cash flows
Capitalised borrowing costs
Interest expense
Interest paid
Total liability-related other changes
Balance at 31 December 2018
EGP'000
Restated balance at 1 January 2017
Proceeds from loans and borrowings
Repayment of borrowings
Payment of finance lease liabilities
Total changes from financing cash flows
Capitalised borrowing costs
Interest expense
Interest paid
Total liability-related other changes
Balance at 31 December 2017
Other
loans and
borrowings
60,763
94,369
(20,514)
-
73,855
13,544
2,359
(17,482)
(1,579)
133,039
Other
loans and
borrowings
-
53,000
-
-
53,000
7,763
-
-
7,763
60,763
Finance lease
liabilities
117,714
-
-
(27,668)
(27,668)
-
9,182
(8,647)
535
90,581
Finance lease
liabilities
155,523
-
-
(36,984)
(36,984)
-
9,271
(10,096)
(825)
117,714
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A long track record for quality and
safety has earned the Group a trusted
reputation, as well as internationally
recognised accreditations
A
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Annual
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Proven Experience
A Leading Consumer Healthcare
Company in the Middle East and Africa