A YEAR OF
RESILIENT
BUSINESS
Contents
04 Strategic Report
06 Who We Are
10 Highlights of 2020
14 Covid-19 Response Protocols
18 Chairman’s Message
20 Chief Executive’s Report
28 Our Markets
40 Our Brands
44 Our Services
48 Competitive Strengths & Growth Strategy
52 Principle Risks, Uncertainties & their Mitigation
62 Performance
64 Financial & Operational Review
74 Corporate Social Responsibility
76 Corporate Governance
78 Board of Directors
80 Corporate Governance Report
88 Audit Committee Report
92 Remuneration Committee Report
94 Directors’ Report
100 Financial Statements
102 Independent Auditor’s Report
108 Consolidated Financial Statements
113 Notes to the Consolidated Financial Statements
2020
Annual Report
A YEAR OF
RESILIENT
BUSINESS
A Leading Consumer Healthcare Company in the
Middle East and Africa
4
STRATEGIC
REPORT
IDH demonstrated once more
its ability to adjust to changing
market dynamics and deliver
strong financial and operational
results despite the challenges
19%
Revenue growth versus 2019
21%
Net profit growth versus 2019
6
Strategic Report // Who We Are
Who We Are
+40
years track record at the
subsidiary levels
7
key brands with
strong awareness in
underserved
4
countries across
the Middle East
and Africa
EGP/BN
2.7
in revenue in 2020,
+19% vs 2019
LSE
listed since May
2015
481
operational branches as
at 31 December 2020
Integrated Diagnostics Holdings (“IDH,” the
“Group,” or the “Company”) is a leading consumer
healthcare company in the Middle East and Africa
with operations in Egypt, Jordan, Sudan and Nige-
ria. With a 40-year track record, IDH is a trusted
provider of high-quality pathology and radiology
services with internationally recognised accredi-
tations. Today, the Group offers a wide suite ser-
vices encompassing over 2,000 diagnostic tests.
As at 31 December 2020, IDH operated a network
of 481 branches across its geographic footprint,
deploying a CAPEX-light Hub, Spoke and Spike
business model to fuel its continued expansion.
The Group also offers data-driven healthcare
services through its latest subsidiary “Wayak”.
Launched in 2019, the new venture sees the Group
leverage a database of over 13 million patients
with the aim of generating growth opportunities
in the healthcare management space.
Alongside the Group’s continuous investment
in organic growth, IDH also pursues strategic
acquisition opportunities in new markets where
it can leverage its business model to capitalise
on similar healthcare and consumer trends.
IDH is a Jersey-registered entity with a Standard
Listing on the Main Market of the London Stock
Exchange since May 2015.
Our Brands
IDH’s core brands include Al Borg, Al Borg Scan, Al Mokhtabar and Wayak in Egypt, Biolab in Jordan, Ultralab and Al
Mokhtabar Sudan in Sudan, and Echo-Lab in Nigeria.
2020 Annual Report 7
Our Services
Through IDH’s brands, the Group offers over 2,000 internationally accredited pathology tests ranging
from basic blood glucose tests for diabetes to advanced molecular testing for genetic disorders. Addi-
tionally, IDH offers the full suite of radiology services through Al Borg Scan in Egypt and Echo-Lab in
Nigeria. In Egypt, IDH leverages advanced data systems to provide patients with highly tailored health-
care management services through its subsidairy, Wayak.
Immunology
Microbiology
Haematology
Endocrinology
Clinical Chemistry
Molecular Biology
Cytogenetics
Histopathology
Radiology
Our Markets
IDH has a footprint spanning four countries in the Middle East and Africa, including Egypt, Sudan, Jor-
dan, and Nigeria. The generally under-penetrated and underserved nature of these markets’ diagnostic
services industry provide significant structural growth drivers for the Group.
Egypt
Jordan
Nigeria
Sudan
Annual Report 2020Integrated Diagnostics Holdings 8
Strategic Report // Who We Are
Our Patients
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 con-
tract segment, a lab-to-lab service.
IDH’s walk-in clients, also referred to as
“self-payers”, represented 46% of the Group’s
revenues in 2020, and include individuals who
pay out of pocket in advance of tests being
completed.
IDH’s contract clients, who in 2020 represented
54% of the Group’s revenues, include institutions
such as unions, syndicates, private and public
insurance companies, banks and corporations
who enter into one-year renewable contracts at
agreed rates per-test and on a per-client basis.
An Asset-Light Business Model
IDH’s asset-light business model provides the
Group with a platform to grow in a capital
efficient manner and is comprised of two stra-
tegic components. The first is the IDH’s easily
scalable “Hub, Spoke and Spike” network of
branch laboratories. The second is key supplier
relationships that supports rapid expansion
and alleviates the Company from having to pur-
chase expansive medical diagnostic equipment.
Hub, Spoke and Spike
The Group’s CAP-accredited Mega Lab serves
as the ‘Hub’ and is equipped with state-of-the-
art equipment. This provides the tools and
the capacity required to process all tests and
services for samples collected by the B-Labs
(Spokes) and C-Labs (Spikes). The Group utilises
2020 Annual Report 9
MEGA LAB
its B-Labs to process routine test and leverages
their capacity to manage traffic to the Group’s
Mega Lab when needed. On the other hand,
C-Labs or Spikes function primarily as collec-
tion centres and most importantly increase the
Group’s geographic reach to clients nationwide.
This “plug and play” business model forms the
operational backbone of the Group and pro-
vides it with significant leverage in extracting
advantageous revenue and cost synergies.
Supplier Relationships
IDH’s unique business model strengthens the
Company’s position in its relationship with its
suppliers. As one of the MENA region’s largest
provider for diagnostic services, the Group
has substantial bargaining power that allows
it to negotiate favourable contract terms with
medical equipment and test kit suppliers. The
Group’s contracts with its key suppliers of medi-
cal testing kits also 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.
As test volumes continue to increase, IDH’s eas-
ily covers these minimum annual payments due
to its sheer business size, while the high volume
of kit consumption supports its pricing power,
reducing the cost per test while simultaneously
incurring no initial capital outlay for the pur-
chase of medical diagnostic equipment.
Annual Report 2020Integrated Diagnostics Holdings 10
Strategic Report // Highlights of 2020
Highlights of 2020
Overall, our large operational scale, wide
geographic reach, and prompt response
to the difficulties posed by Covid-19
proved vital in 2020
Financial Highlights
Revenues
Gross Profit
recorded EGP 2,656 million in 2020, up 19%
year-on-year. Strong growth for the year was
a direct result of IDH’s ability to swiftly adapt
its service offering to changing dynamics by
offering PCR and Covid-19-related1 testing in
Egypt and Jordan and ramping up its house calls
services in both countries.
recorded EGP 1,343 million in 2020, up 24% year-
on-year and with an associated margin of 51%
versus 49% in 2019. Improved gross profitability
was supported by strong top-line growth.
Operating Profit
EBITDA2
grew by 25% year-on-year to EGP 986 million in
2020 with an associated margin of 37% versus
36% in 2019. Strong operating profit growth
comes despite IDH booking EGP 42 million in
provisions to account for expected credit losses
in accordance with IFRS 9.
surpassed the EGP 1 billion mark to record EGP
1,171 million for 2020, up 24% against the EGP
945 million figure recorded in 2019. EBITDA
margin increased to 44% in 2020 from 42% in
the previous year supported by improved gross
profitability for the year.
1 Covid-19-related tests include Polymerase Chain Reaction (PCR) and antibody testing as well as a bundle of inflammatory and clotting markers
such as Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), among others.
2 EBITDA is calculated as operating profit plus depreciation and amortization.
2020 Annual Report 11
Net Profit
Recommended Final Dividend
increased 21% year-on-year to EGP 609 million in
2020, with a net profit margin of 23% unchanged
versus 2019. Bottom-line profitability was sup-
ported by solid revenue growth for the year com-
bined with higher interest income in 2020.
of US$ 0.049 per share, equivalent to US$ 29.1
million in total.
Earnings Per Share3
stood at EGP 0.99 in 2020 compared to EGP 0.85
in 2019
3 Based on 600 million shares.
Annual Report 2020Integrated Diagnostics Holdings 12
Strategic Report // Highlights of 2020
Operational Highlights
Egypt
Radiology
strong demand for PCR and Covid-
19-related testing and the company’s
house call services supported a 14%
year-on-year increase in revenue for 2020.
increase in Al Borg Scan operations
with growing contribution to revenue
and EBITDA and a third branch set
to commence operations in 2021.
Jordan
Nigeria
Biolab was at the forefront of CPR
testing for Covid-19 from the very start,
supporting an impressive increase in
the geography’s top-line for the year.
increased brand awareness and
demand for Echo-Lab’s high-quality
services drove strong top-line growth
despite Covid-19-related difficulties.
481
27.1
operational branches in 2020,
up from 452 in 2019.
million tests performed across
the Group in 2020.
7.1
EGP 98
million patients served in across the
Group in 2020.
average revenue per test,
up 34% year-on-year.
Revenue by Geography
% of total revenue in 2019
% of total revenue in 2020
■ Egypt
■ Jordan
■ Sudan
Nigeria
85%
12%
2%
1%
■ Egypt
■ Jordan
■ Sudan
Nigeria
82%
15%
1%
1%
2020 Annual Report 13
Results Summary
Financial
EGP mn
Revenues*
Cost of Sales
Gross Profit
Gross Profit Margin
Operating Profit
EBITDA4
EBITDA Margin
Net Profit
Net Profit Margin
Cash Balance
2020
2019
Change
2,656
2,226
(1,314)
(1,143)
1,343
1,084
51%
49%
986
791
1,171
945
44%
42%
609
505
23%
23%
877
631
19%
15%
24%
1.9 pts
25%
24%
1.6 pts
21%
0.3 pts
39%
* Excluding the 100 Million Healthy Lives Campaign from 2019 figures, consolidated revenues would have increased 22% year-on-year. The 100
Million Healthy Lives campaign ran from November 2018 through June 2019. In the six months to 30 June 2019 IDH served 224 thousand patients
under the campaign’s umbrella and performed 2.4 million tests. Total campaign-related revenue in 2019 reached EGP 47 million.
4 EBITDA is calculated as operating profit plus depreciation and amortization.
Operational
Branches
Patients ('000)
Revenue per Patient (EGP)
Tests ('000)
Revenue per Test (EGP)
Test per Patient
Revenue by Type
2019
Change
2020
481
7,113
373
452
7,481
298
27,073
30,471
98
3.8
73
4.1
29
-5%
25%
-11%
34%
-7%
% of total revenue in 2019**
■ Walk in
■ Contract
44%
56%
% of total revenue in 2020
■ Walk in
■ Contract
46%
54%
** In 2020, management revisited the definition of contract customers who have contractual agreements and are granted discounts above 20%, hence
all cash paying customers with discounts equal or below 20% were reclassified as walk-in. Reclassification adjustments include the transfer of 720
thousand tests in 2019 and associated revenue of EGP 79 million from the contract segment to walk-ins. The upper mentioned reclassification allows
better representation of both segments.
Annual Report 2020Integrated Diagnostics Holdings 14
Strategic Report // Covid-19 Response Protocols
Covid-19 Response
Protocols
From the very start of the Covid-19 pandemic,
IDH has implemented detailed internal proto-
cols to protect the safety of its staff and patients
and safeguard its operations. Under the over-
sight of a dedicated team, these protocols have
been regularly assessed and refined to ensure
that they best reflect the evolving situation
across the Company’s countries of operation.
Across IDH’s headquarter offices and branch
network, these protocols continue to be scrupu-
lously adhered to allowing the Group to safely
carry on providing its world-class services.
IDH’s response to the spread of Covid-19 is
focused on two fronts: Staff and patient safety
and business continuity.
Staff and Patient Safety
Appropriate Protective Equipment
All of IDH use appropriate protective equipment when interacting with patients,
including those suspected of having Covid-19 or any other infectious disease. IDH
maintains a robust stock of protective equipment to ward against supply-chain risk.
Procedures for Interacting with Patients
All of IDH’s frontline staff are trained on procedures for interacting with patients
suspected of carrying Covid-19 or any other communicable disease. Managers
regularly review these procedures with their teams and a refresher has been dis-
seminated to all employees. These procedures include steps that are taken to (a)
protect IDH’s staff and (b) protect other patients presenting at the Group’s clinics
for testing.
Referring Patients Suspected of Carrying Covid-19
Branch office staff have a strict protocol for referring patients they suspect may
carry Covid-19 to the nearest state lab for testing.
2020 Annual Report 15
From the very start of the
Covid-19 pandemic, IDH has
implemented detailed internal
protocols to protect the safety
of its staff and patients and
safeguard its operations
Regular Communication
All staff members are subject to regular messages reminding them that they may
not report to work if they have symptoms of a Covid-19 infection.
Cleaning and Disinfection
Across all branches and HQ office, the Group has increased the frequency of clean-
ing and disinfection and all facilities are regularly decontaminated.
Gate processing
Gate processing at branches and HQ office for employees and visitors with fever-
screening devices, barring entry for anyone recording a temperature above 37.2°C.
Annual Report 2020Integrated Diagnostics Holdings 16
Strategic Report // Covid-19 Response Protocols
Business Continuity
Equipment Stock
Since the start of the crisis, IDH has worked diligently to secure additional testing kit
stock to ensure the Company was well prepared in case of unexpected supply chain
disruptions.
Diversifying Suppliers
As part of its contingency planning exercise, the Company’s supply chain profes-
sionals qualified additional potential suppliers. This qualification process includes
testing by medical professionals at IDH’s Mega Lab and by the Company’s quality
assurance team.
Covid-19 Testing and House Call Services
The Group is currently offering Covid-19 testing, including PCR testing for Covid-19,
in both Egypt and Jordan. In parallel, the Group also strengthened its house call
services in both countries to mitigate the impacts of restrictive measures while
ensuring all patients had access to the Group’s services despite ongoing challenges.
Smart Working
The Company transitioned to a work from home arrangement for many head-
office functions while holding the majority of meetings virtually through video or
audio conferencing.
Clear and Regular Communication
The Company regularly communicates its business continuity protocols to all
employees with all staff well-prepared to navigate potential challenging times
ahead.
Review of Internal Processes
Regular review of IDH’s disaster recovery and business continuity policies to
ensure that the Group is well prepared for any eventuality.
2020 Annual Report 17
Annual Report 2020Integrated Diagnostics Holdings 18
Strategic Report // Chairman’s Message
Chairman’s Message
Dear Shareholders,
I am pleased to report that against a backdrop
of a very challenging year with the global
Covid-19 pandemic, your Company has proven
very resilient and rose to the challenge with an
impressive set of results.
We were able to leverage our well-established
business model and track record to facilitate
new revenue generating opportunities. We
remained committed to our social responsi-
bilities in providing high-quality healthcare to
the countries where IDH have extended our
footprint.
In 2020, we recorded a 19% growth in revenue.
We were able to provide much-needed PCR and
other testing facilities in both Egypt and Jordan,
while expanding our house call services.
Egypt continues to experience a more stable
economic and political environment, coupled
with an efficient exchange rate regime and a
commitment by the Government to promote
proactive healthcare services.
We also were delighted with the solid perfor-
mance in Jordan, where we delivered almost
60% growth in regional revenue. In Nigeria, we
continue to make progress in restructuring the
business, which has resulted in a very encour-
aging improvement in performance. In Sudan,
A clear focus of the Group
is on proactive healthcare,
one which allows us to cater
to the changing needs of
patients through constant
innovation and service
offering adaptability,
enabling us to provide
affordable healthcare
services to as many
individuals as possible
2020 Annual Report 19
the business remains stable amidst a significant
political transition. We continue to look at
opportunities to expand our global footprint,
both organically and by acquisition in both the
Middle East and Africa.
We are committed to maintaining sound fiscal
management and closed the year with a strong
balance sheet and an efficient capital structure.
In Egypt, the business has benefitted greatly
by relocating to the IDH new headquarters in
Smart Village on the West side of Cairo.
IDH is dedicated to its ESG responsibilities
across all our jurisdictions. A clear focus of the
Group is on proactive healthcare, one which
allows us to cater to the changing needs of
patients through constant
innovation and
service offering adaptability, enabling us to pro-
vide affordable healthcare services to as many
individuals as possible. This comes parallel to
our continued focus on business sustainability
to ensure we continue growing in a responsible
and risk-free manner.
Management continues to regularly update and
monitor IDH’s risk matrix and ensure regular
checks and balances, providing contingency
Business Continuity Processes. We value our
loyal and hard-working workforce and con-
stantly review their KPIs.
Your Company is vigilant in strengthening our
IT infrastructure to both provide the highest
levels of cyber security, as well as ensuring
data privacy.
We also remain committed to achieving our
dual listing on the Egyptian Stock Exchange,
complementary to our existing presence on the
London Stock Exchange. We are confident that a
larger participation from local institutional and
retail investors will provide better liquidity and
increase our local visibility in Egypt, where the
Company generates the majority of business.
I am grateful to the continued dedication and
hard work of both our management team and
workforce. We are well-positioned to maintain
our consistent strong growth track record and
trajectory. Finally, I am most grateful for the
loyalty and support of all our shareholders.
Lord St John of Bletso
Chairman
Annual Report 2020Integrated Diagnostics Holdings 20
Strategic Report // Chief Executive’s Report
Chief Executive’s
Report
In the midst of an unprecedent healthcare and
economic crisis, IDH demonstrated once more
its ability to adjust to changing market dynam-
ics and deliver strong financial and operational
results despite the challenges. Throughout 2020,
the outbreak of Covid-19 and the imposition
of restrictive measures aimed at curbing the
spread of the virus posed significant operational
difficulties across our footprint, including the
temporary closure of certain branches and the
reduction of working hours. While this presented
the most challenging obstacle in 2020, the year
also brought a number of other transitory dif-
ficulties including riots in Nigeria and a political
transition and severe inflationary environment
in Sudan. Nevertheless, we were able to leverage
the strength of IDH’s flexible business model,
the defensive nature of our industry, and the
effectiveness of our proactive Covid-19 response
strategy to deliver a commendable performance
and a strong 19% growth in revenue for 2020.
As a leading provider of healthcare services in
the countries where we operate, our number one
priority and responsibility throughout the crisis
was to protect our people and patients while sup-
porting local health authorities in their efforts to
curb the pandemic. With the onset of Covid-19,
we were quick to rollout comprehensive health,
safety, and business continuity protocols to
safeguard our people and our operations. Our
efforts ranged from providing regular training
and communication to staff on the correct pro-
tocols for handling suspected Covid-19-positive
patients, to providing the necessary protective
equipment and special assistance to our staff
As a leading provider of
healthcare services in the
countries where we operate,
our number one priority and
responsibility throughout
the crisis was to protect our
people and patients while
supporting local health
authorities in their efforts to
curb the pandemic
2020 Annual Report 21
and their families in case of Covid-19-suspected
cases. On the business continuity front, we care-
fully monitored and managed our cash flow and
placed contingencies for possible changes in our
cash conversion cycle while taking the necessary
precautions to shield our business from potential
supply chain disruptions. A full breakdown of our
Covid-19 response is available on page 14.
Parallel to mitigating the immediate health and
operational risks, a key driver of our success in
2020 was IDH’s ability to swiftly adjust its service
offering and delivery to adapt to shifting patient
needs and market dynamics. In both Egypt
and Jordan, IDH began offering PCR testing for
Covid-19 and other Covid-19-related tests, while
simultaneously ramping up its house call services
in both countries to ensure that patients unable
or unwilling to visit our branches in person con-
tinued to have access to our services. Our Covid-
19-adapted service offering recorded strong and
growing patient demand as the year progressed,
and helped us largely offset lower volumes follow-
ing the closure of branches and the restriction of
people’s mobility earlier in the year. Overall, we
conducted some 400 thousand PCR tests across
both geographies and were able to serve over 800
thousand patients through our house call service,
growing its revenue by more than twofold. As
such, Covid-19-related testing and our house call
services contributed to 24% and 20% (2019: 9%) of
consolidated revenue for 2020, respectively.
I am pleased to report that parallel to IDH’s suc-
cess capturing the surge in demand for Covid-
19-related tests in Egypt and Jordan, we were also
able to continue growing our non-Covid-19 busi-
ness while pushing forward with our long-term
strategic directives. In Nigeria, despite the tem-
porary branch closures, we effectively capitalised
on Echo-Lab’s increasing brand awareness and
service demand to deliver robust growth in both
patients served and tests performed. In Sudan,
management’s continued ability to raise prices in
step with inflation saw the Group successfully off-
set lower volumes on account of branch closures
throughout the year. Finally, Al Borg Scan inau-
gurated its second branch during the year and
continues to deliver significant revenue growth
with robust profitability.
Overall, our large operational scale, wide geo-
graphic reach, and prompt response to the
difficulties posed by Covid-19 proved vital in sup-
porting the remarkable financial and operational
results delivered in 2020. Over the past twelve
months, IDH recorded impressive top- and
bottom-line growth, with expanding margins
across the board, and closed 2020 on a more
solid footing with a resumption of its historical
growth trajectory.
Strong Growth and Operational
Performance
IDH’s ability to adapt its service offering to the
changing dynamics and capture a growing share
of demand for Covid-19-related services as the
year progressed, supported a 19% year-on-year
rise in revenues to EGP 2.7 billion for 2020. Top-
line growth for the year was partly supported
by the generally higher-priced Covid-19-related
tests combined with our annual price hikes rolled
Annual Report 2020Integrated Diagnostics Holdings 22
Strategic Report // Chief Executive’s Report
out at the beginning of each year. This more than
offset an 11% year-on-year decline in total tests
performed, which were weighed down by lower
volumes earlier in the year following the imposi-
tion of Covid-19-related measures across IDH’s
footprint. It is worth noting that while Covid-19
related business made a notable contribution
to growth during the year, in the fourth quarter
2020 non-Covid-19 test volumes were on par
with the same period in 2019, indicating a strong
recovery of our traditional business with the eas-
ing of restrictions. This is even more pronounced
with patient traffic through our branches which
increased by c.23% year-on-year during the
fourth quarter.
Our growth in 2020 was also driven by IDH’s
continued investment in expanding its branch
network. Despite the challenging operational
environment, we inaugurated 30 new branches
in our home market of Egypt and one new
branch in Jordan, while closing down two under-
performing branches in Nigeria and Sudan. This
saw IDH’s total operational branches across our
four geographies reach 481 as at year-end 2020,
up from 452 a year prior. Moreover, our Mega
Lab continues to be the sole CAP-accredited
facility in Egypt.
Regionally, in Egypt top-line growth was partly
supported by our Covid-19-adapted service
offering as well as a general normalisation of
patient volumes as Covid-19-related restrictions
were eased in the second half of the year. Since
the very start of the crisis, IDH offered patients
promotional packages for a series of Covid-
19-indicative tests, including a bundle of inflam-
matory and clotting markers. Starting the second
half of the year, the Group began administering
PCR testing and was able to complement the
government’s efforts in fighting the pandemic as
the second wave peaked. Additionally, thanks to
our strong brand equity and position as the only
CAP-accredited diagnostics service provider in
Egypt, the Group was selected by Pure-Health
UAE to be the first lab to conduct PCR testing to
screen passengers travelling from Egypt. Overall,
PCR testing and Covid-19-related packages con-
tributed a combined to 21% of Egypt’s top-line
for the year. As the year progressed, we were able
to reduce the price of both PCR and Covid-19-re-
lated tests making them more widely accessible.
We also extended special deals and discounts
for doctors and the wider medical community
to protect the country’s frontline workers. I am
also pleased to report that IDH was able to ramp
up its house call service in Egypt, conducting up
to 4,500 visits per day, in turn growing its con-
tribution to Egypt’s revenue from 10% in 2019 to
22% in 2020. Capitalizing on this success, IDH is
studying further ways to make the service more
efficient and convenient to its growing patient
base. Egypt’s revenues were further buoyed by
contributions from Al-Borg Scan, IDH radiology
venture, which recorded a 76% year-on-year
growth in revenue supported by the inaugura-
tion of the venture’s second branch in February
2020. Finally, at Wayak, our Egypt-based subsid-
iary investing in data mining and artificial intel-
ligence which launched in 2019, the company
continues to ramp up its operations with orders
for medications completed in 2020 reaching 72
thousand orders compared to just 21 thousand
orders completed last year. Wayak not only
enables IDH to better serve our patients through
tailored services which complement our tradi-
tional diagnostics offering, but also represents a
strategic platform from which to further expand
our digital presence and offering, and remain at
the forefront of a changing healthcare industry.
Our Jordanian operations were the standout
performer in 2020, as a 59% year-on-year growth
in revenue for the year drove a nearly four
2020 Annual Report 23
percentage-point expansion in the country’s
contribution to consolidated revenues to 15%.
Growth was largely volume driven despite the
temporary closure of most of our branches ear-
lier in the year, owing to our Covid-19-adapted
service offering. Biolab has been at the forefront
of PCR testing in Jordan from the very start, with
the company being amongst the first two pri-
vate labs allowed to perform PCR testing in the
country. Throughout the year, Biolab continued
to record strong demand for PCR testing with
the service contributing to just under half of the
country’s top-line for 2020. Jordan’s top-line was
further bolstered by the company’s ramped up
house call services which in 2020 made up 12%
of the country’s revenues, up from 4% in 2019.
In Sudan, on top of Covid-19-related restrictions
the country continued to witness a significant
political transition which unfolded in 2019.
Nonetheless, despite lower volumes on account
of branch closures in the second quarter of
the year, we delivered a 28% year-on-year rise
in revenues in local currency terms, driven by
higher pricing as management kept in step with
the hyperinflationary environment following a
currency devaluation and the Sudanese govern-
ment’s decision to cut fuel subsidies. In EGP
terms, revenue growth was 2% year-on-year
reflecting an average SDG/EGP exchange rate of
0.29 in 2020 versus 0.36 in 2019.
Strong consolidated revenue growth coupled
with a continued focus on driving operational
efficiencies and keeping a tight rein on costs saw
us deliver margins enhancements at all levels of
profitability. Through strict cost discipline, we
successfully maintained a stable raw material
costs to sales ratio at 18% for the year. In paral-
lel, IDH’s direct salaries and wages as a percent
of sales declined from 17% in 2019 to 15% in
2020, largely driven by lower salaries in Nigeria
following the restructuring of the business. As
such, gross profit for the year increased 24% ver-
sus 2019, with a two-percentage point expansion
in its associated margin to 51%.
At the EBITDA level, we surpassed the EGP 1 bil-
lion mark for the first time, with EBITDA record-
ing a 24% year-on-year rise to EGP 1.2 billion for
2020 with an associated margin of 44% versus
42% last year.
Strong revenue growth for the year combined
with the Group’s cost management efforts and
higher interest income for the year saw IDH
recorded a 21% year-on-year increase in net
profit to EGP 609 million in 2020, with a stable
net profit margin of 23%.
Growth in Nigeria
In Nigeria, despite the Covid-19-related disrup-
tions faced earlier in the year, and an escala-
tion of social unrest during the final quarter
of 2020, we reported a 20% year-on-year rise
in revenues, a particularly remarkable feat in
light of Echo-Lab not offering Covid-19-related
testing. In local currency terms, growth is even
more pronounced with revenues up 38% year-
on-year in 2020. Top-line growth came on the
back of a 20% rise in both patients served and
tests performed for the year, as we capitalized
on the increased brand awareness and demand
for Echo-Lab’s services.
Echo-Lab’s strengthened position and growing
reputation in the local market is a direct effect
of the successful value-building strategy we have
been implementing since we took over opera-
tions back in 2018. The strategy aims to revamp
the subsidiary’s service offering and branch
network while simultaneously streamlining
its operations. In the past two years, we have
completed the renovation of eight of Echo-Lab’s
Annual Report 2020Integrated Diagnostics Holdings 24
Strategic Report // Chief Executive’s Report
12 operating branches. We have also installed
new radiology equipment, including magnetic
resonance imaging (MRI) and computed tomog-
raphy scan (CT). In parallel, we continue to
optimise Echo-Lab’s service mix by placing addi-
tional focus on pushing radiology and pathology
services. Finally, we have also completed an
internal restructuring exercise that aided in
reducing redundancies by centralizing shared
functions and streamlining processes, including
staff downsizing which has seen us drive down
Echo-Lab’s total salary expenses in 2020 by 18%
versus 2019. Overall, our efforts are continuing to
support improvements in profitability, with the
operation’s EBITDA losses narrowing to EGP 7
million in 2020 from EGP 30 million in 2019, and
we expect the operation to turn EBITDA positive
in the coming year.
Expanding Al Borg Scan
At Al Borg Scan, the Group’s first full-fledged
radiology venture, we are continuing to deliver
on our ramp up strategy. Supported by the launch
of a second branch in February in 2020, Al Borg
Scan reported a 69% and 88% year-on-year rise
in tests performed and patients served, respec-
tively, during the year. Robust volume growth
saw revenues surge 76% year-on-year to EGP 25
million. Strong top-line growth reflected on Al
Borg Scan’s EBITDA which increased to EGP 4.8
million in 2020 from EGP 1.8 million last year.
Looking ahead, we are expecting to continue
widening the venture’s patient base with the
launch of a third branch in April 2021. The new
facility will be located in another strategic neigh-
bourhood of the Greater Cairo area and will
play an important role in further strengthening
the venture’s brand equity. We are also in the
process of completing the necessary modules
to obtain ACR (American College of Radiology)
accreditation for Al Borg Scan’s branches, a
process we expect to conclude by next year and
which would make Al Borg Scan the only pro-
vider in Egypt to boast the accreditation.
Our Commitment to our Stakeholders
At IDH, our primary mission is to ensure that
everyone across our communities has access to
high quality, affordable healthcare and diagnos-
tic services, providing them with the tools they
need to take charge of their health. To achieve
this, we are continuing to make service acces-
sibility a priority by continuously rolling out
new branches in underserved neighbourhoods
while ramping up our digital offering to ensure
that we provide access to as many patients as
possible. In parallel, we are also working closely
with governments and local health authorities
to raise awareness of chronic diseases and the
steps all individuals can take to live healthier
lives. In both Egypt and Jordan, we worked
side-by-side with health authorities in 2020
to combat the spread of Covid-19, carrying
out more than 2.1 million PCR and Covid-
19-related tests. We also have a longstand-
ing track record of being at the forefront of
government-organised awareness campaigns,
including most recently the c. 2.4 million tests
we completed for the 100 Million Healthy Lives
campaign in Egypt. Launched in November
2018, the campaign was part of Egypt’s efforts
to eradicate Hepatitis C across the country
through the testing of asymptomatic people.
Similarly, we are currently working to obtain
the necessary certifications to take part in the
Egyptian government’s Universal Healthcare
Insurance (UHI) system which is being rolled
out across the entire country. The new UHI
framework aims to provide insurance coverage
to all Egyptians citizens over the next decade
while supporting a general improvement of the
2020 Annual Report 25
sector from reducing waiting times to improv-
ing the quality of services and medical facilities.
In line with our ambitions to safeguard scal-
able growth without compromising any of our
commitment to the value propositions that are
most critical to our various stakeholders, our
management team devoted an increased focus
on strengthening our environmental, social and
governance (ESG) monitoring and compliance
frameworks. Since late 2019 and throughout
2020, we have taken diligent steps to constantly
improve all aspects of our operations. While I am
proud of our efforts thus far, given the complex
nature of the operational and business practices
required in the health sector, IDH finds a growing
need to establish a more assertive road map that
draws clear guidelines and methods to monitor,
evaluate, and improve its interconnected ESG
practices. To guide us through this process, we
have acquired the expertise and services of a
top-tier ESG consultant who has worked with us
to assess our ESG performance, create IDH’s first
ESG policy, establish key indicators to monitor and
quantify progress, and strengthen our reporting
frameworks. This will allow us to better quantify
the positive impacts that IDH has on our patients,
employees and wider community, establish the
required measures to prevent or mitigate future
impacts, and further improve wherever possible.
To oversee all aspects of our business, since our
listing on the London Stock Exchange, we have
been governed by a world-class Board of Direc-
tors made of up majority independent, non-
executive directors and backed up by a robust
and constantly enhanced policy framework. Our
Board’s guidance throughout 2020 proved invalu-
able as we adapted to navigate the unexpected
challenges and prepared for a new chapter of
growth in a post-Covid-19 world.
Dividend Policy and Proposed Dividend
In view of the strong cash-generative nature of our
business and its asset-light strategy, our dividend
policy is to return to shareholders the maximum
amount of excess cash after taking careful account
of the cash needed to support operations, capital
expenditure plans, organic expansion opportuni-
ties and potential acquisitions.
IDH is pleased to recommend a final dividend of
US$ 0.049 per share, or US$ 29.1 million in aggre-
gate, to shareholders in respect of the financial
year ended 31 December 2020. This represents
an increase of 4% compared to a final dividend
of US$ 28 million in aggregate in the previous
financial year.
2021 Outlook
While the Covid-19 crisis and the related opera-
tional difficulties are far from over, 2021 offers
multiple reasons to be optimistic. First and
foremost, the strong fundamentals underpin-
ning the future growth of the healthcare industry
across our countries of operation remain intact.
Moreover, we have witnessed the start of the vac-
cination campaign in both Egypt and Jordan in
the first quarter of the 2021.
Over the past twelve months, we have set the
foundations for further growth by penetrating
new patient segments, expanding our branch
network, and enhancing our service roster and
delivery capabilities. In Egypt and Jordan, our
Covid-19-adjusted service offering saw us tap
into new patient groups with whom we aim
to build long-term relationships well beyond
the Covid-19 crisis. In parallel, our expansion
efforts will be further supported by the roll out
of an additional 30 to 35 branches across our
home market of Egypt, including a third Al Borg
Scan branch to capitalize on rising demand
Annual Report 2020Integrated Diagnostics Holdings 26
Strategic Report // Chief Executive’s Report
We are heading into 2021
with a consistent, clearly
defined strategy that
will continue to unlock
significant growth potential
for years to come
for our radiology offering. We are also actively
assessing new services to add to our roster, to
provide patients access to more tests at a single
centre and allow doctors to make accurate
diagnostics more efficiently. In particular, we
are looking to invest in enhancing our genetic
testing capabilities to capitalise on the growing
demand for these tests.
In Sudan, while social unrest, high inflation and
a weak SDG continue to pose challenges for the
Group, we hope that once the sanctions are offi-
cially lifted this will open up important growth
opportunities for our operations in the coming
years. With the country now open to interna-
tional suppliers; the Group should be able to
directly import test kits and in turn improve its
operational efficiency and profitability.
Finally, we are working to continuously improve
our operations in Nigeria and to turn EBITDA
positive in the coming year as we complete Echo-
Lab’s turnaround strategy and continue leverag-
ing the growing brand awareness and demand.
Nigeria represents a market with significant
growth potential for IDH and I am confident
that the steps taken since entering the market in
2018 see us well-positioned to capitalise on such
opportunities in the coming years.
2020 has once again demonstrated our ability
to adapt and overcome even the most difficult
challenges supported by the adaptability of our
business model, the strength of our brands,
and the solidity of our financial position. We
are heading into 2021 with a consistent, clearly
defined strategy that will continue to unlock
2020 Annual Report 27
significant growth potential for years to come.
Accordingly, we are again targeting double-
digit revenue growth in 2021 and an EBITDA
margin of c. 40%.
change. I look forward to working with every
single one of you to deliver yet another year of
strong growth and value creation.
Dr. Hend El-Sherbini
Chief Executive Officer
We are also particularly excited about bring-
ing home IDH’s shares for trading on the EGX,
one of the region’s leading exchanges and a key
entry point for MENA equity and debt capital
markets. The dual listing offers Egypt-based
investors, who are sometimes unable to access
shares in London, an opportunity to capitalise
on our Company’s strong growth prospects.
I would like to conclude by extending a heart-
felt thank you to all our staff for the incredible
dedication and adaptability they have shown
throughout this year full of uncertainty and
Annual Report 2020Integrated Diagnostics Holdings 28
Strategic Report // Our Markets
Our Markets
Key Market Dynamics
The mechanics of the healthcare markets in which
IDH operates are significantly different from those
in many Western healthcare sectors. As opposed
to the more institutionalised markets, in the
emerging markets where the Group operates,
publicly funded and private healthcare systems
exist in parallel. This means that patients have
substantially more freedom to make healthcare
decisions. General practitioners (also referred to
as family medicine practitioners or primary care
specialists) are rare in these emerging markets
and are, accordingly, not the gatekeepers through
which patients access primary or specialist care.
In emerging markets, a patient may seek medi-
cal care either through a hospital outpatient
clinic or emergency room, attending a polyclinic
or directly seeking the services of a specialist
physician. Although physicians ordering diag-
nostic testing may recommend that the patient
complete these tests at a specific service pro-
vider, patients enjoy a high degree of freedom in
choosing the service provider they attend based
on perceived quality and pricing or on insurance
or contract arrangements. Walk-in patients (also
referred to as “self-payers”) pay out of pocket in
advance of the tests being completed.
Patients 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 abil-
ity to deliver test results to patients on the same
day electronically as well as via a mobile app.
IDH accordingly engages in sales and marketing
activities that separately target:
• Physicians: through direct sales visits
individual practitioners, periodic
to
gatherings for physicians within a spe-
ciality, promotional giveaways as well
as discount cards 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;
• Contract Patients: through direct out-
reach to insurers and employers.
481
4
Operational Branches, +29
versus 2019
countries of Operation
2020 Annual Report Annual Report 2020
Integrated Diagnostics Holdings
29
Barriers to
Market Entry
Accreditation
of Facilities
Relationship
with Key
Stakeholders
Attracting contract
clients requires
accredited, high-quality
testing capabilities.
Brand Equity and
Reputation
Market Reach
Building a scalable
platform requires
strong relationship with
stakeholders such as
physicians, patients and
hospitals
Patients are loyal to
leading brands with a
strong track record
Fragmented market
necessitates a wide
geographic presence to allow
for broad customer reach.
Covid-19 Across IDH’s Markets
Following the outbreak of Covid-19, governments across all four of IDH’s countries of
operation instituted strict restrictive measures to curb the spread of the virus. These
included, curfews, the shuttering of non-essential business, travel bans and restrictions
on public gatherings (country-specific measures can be found on pages 30 to 39). While
these measures were necessary to protect the health and safety of citizens, they posed
severe operational disruptions across IDH’s geographies including complete branch clo-
sures for several weeks during the months of April and May.
Restrictive measures were progressively eased starting in June 2020, with IDH able to
reopen its entire branch network during the third quarter and return to normal operating
hours across all territories by late July 2020. To help local authorities contain possible new
waves of infections, IDH offers PCR testing for Covid-19 in both Egypt and Jordan.
30
Strategic Report // Our Markets
Egypt
The Egyptian diagnostic market can be 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). Most labs in Egypt
are concentrated in big cities, with substantial
room to increase accessibility across the coun-
try’s 27 governorates for greater coverage of the
population. The corporate market is emerging as
a driver for diagnostic services, as more compa-
nies offer healthcare coverage to their employees.
Growth in the Egyptian diagnostics industry is
supported by the robust market fundamentals
including:
• A large and growing population of over 100 mil-
lion, making Egypt the most populous country
in the Middle East North Africa (“MENA”)
region; in terms of demographics, it hosts a
significant proportion of elderly people.
• An increasing prevalence of diseases includ-
ing communicable and non-communicable
diseases, tropical diseases, and lifestyle dis-
eases such as diabetes.
• A growing government role to increase aware-
ness on the importance of diagnostic testing
in preventative healthcare, supporting the
growth in laboratory diagnostics as a tool in
clinical practice.
IDH is in a strong competitive position in the
Egyptian diagnostic industry, having created
formidable barriers to entry with its 40-year
track record, trusted brands, scalable business
model and network of 429 branch labs at year-
end 2020. 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.
Covid-19 Impact and Response
The Egyptian government’s response to the ini-
tial Covid-19 outbreak in the country included
a series of restrictive measures couple of an
extensive economic relief plan to help citizens
and businesses during the crisis. While all of
IDH’s labs remained operational throughout
the year, they operated at reduced working
hours causing a decline in volumes during the
months of April, May and June. Restrictions
were relaxed in the second half of the year with
all branches returning to normal working hours
and patient volumes recording a steady recov-
ery. Egypt officially kicked off its vaccination
campaign in the final week of January 2021.
To mitigate the impacts of restrictive measures
on IDH’s business, management promptly
rolled out a series of initiatives aimed at sup-
porting volumes whilst ensuring that the
Egyptian people continued to have access to
IDH’s services in full safety and compliance
with government directives. These included the
ramp up of IDH’s house calls service offered at
no extra charge to its patients and the roll out of
Covid-19 indicative testing. The Group’s house
call service
immediately registered strong
patient demand, as reflected by the growing
contribution to Egypt’s revenue from this ser-
vice, which increased to 22% in 2020 from 11%
in 2019. IDH’s Covid-19 indicative test offering
includes PCR and antibody testing as well as a
bundle of inflammatory and clotting markers,
2020 Annual Report 31
Cairo, Egypt
and in 2020 contributed to 21% of the country’s
total revenues.
Operational Highlights
In Egypt revenues increased 14% year-on-year
to EGP 2,173 million for 2020, with the country
contributing to 82% of consolidated revenues
for the year. Revenue growth in 2020 was sup-
ported by IDH’s house call service and Covid-
19-related test offering both of which recorded
growing demand from patients as the year pro-
gressed. Top-line growth for the year was fully
price-driven with volumes adversely impacted
by restrictions imposed during the first wave
of Covid-19 in the second quarter of the year.
Egypt’s revenues were further supported by
contributions from Al-Borg Scan, IDH radiology
venture, which generated revenue of EGP 25
million in 2020, up 76% year-on-year. Through-
out the year, Al Borg Scan’s two branches served
36 thousand patients, up 88% year-on-year, and
performed nearly 46 thousand tests during the
year, up 69% versus 2019.
12% year-on-year, respectively. When excluding
volumes related to the 100 Million Healthy Lives
campaign in 2019, the decline in patients served
and test performed for 2020 narrows to 5% and
4% year-on-year, respectively. Nationwide cur-
fews and lockdowns during the second quarter
of 2020 had contributed to lower patient and
test volumes for the year. However, the impact
of Covid-19-related restrictions was partially
mitigated through the increased penetration of
IDH’s house call service.
EBITDA was EGP 1,041 million in 2020, up
a robust 19% year-on-year. EBITDA margin
increased to 48% in 2020 from 46% in 2019.
The EBITDA increase was supported by the
country’s strong top-line growth in the second
half of the year which offset a doubtful accounts
provision of EGP 35 million (EGP 27 million in
1H2020 and EGP 8 million in 2H2020) related to
expected credit losses in accordance with IFRS
9, and the impact of Covid-19 on Egypt’s opera-
tions earlier in the year.
IDH served 6.3 million patients in Egypt and
performed 24.4 million tests, down by 8% and
On the operational side, despite the Covid-
19-related difficulties, IDH pressed on with its
Annual Report 2020Integrated Diagnostics Holdings 32
Strategic Report // Our Markets
IDH is in a strong competitive
position in the Egyptian
diagnostic industry, having
created formidable barriers
to entry with its 40-year
track record, trusted brands,
scalable business model and
network of 429 branch labs
branch rollout plan adding 30 new branches
across the country throughout 2020. In Febru-
ary, the Group successfully launched a second
Al-Borg Scan branch in Cairo and throughout
the year continued to work towards the rollout
of a third branch which is expected to take
place in 2021. In parallel, the Company began
completing the necessary modules to obtain
ACR (American College of Radiology) accredita-
tion for Al Borg Scan’s branches. Earlier in the
year, thanks to IDH’s strong brand equity and its
position as the only CAP-accredited diagnostics
service provider in Egypt, the Group had been
selected by Pure-Health UAE to be the first lab
to conduct PCR testing to screen passengers
travelling from Egypt. The Group’s contractual
agreement with Pure Health contributed EGP
62 million to Egypt’s revenues for the year (5%
of Egypt’s contract segment revenues), with
PCR tests for Covid-19 performed as part of the
agreement making up 35% of total PCR tests
performed during the year.
Wayak, IDH’s Egypt-based subsidiary investing
in data mining and artificial intelligence which
launched in 2019, recorded revenues of EGP
2.2 million in 2020 versus EGP 632 thousand in
2019. However, the company recorded a negative
EBITDA as it’s still in the early development stage.
Egypt
Key Highlights
429
Branches as at year-end 2020,
+30 versus 2019
2,173 EGP/MN
Revenues in 2020, up
14% y-o-y
81.8%
Contribution to consolidated
revenues in 2020
2020 Annual Report 33
Annual Report 2020Integrated Diagnostics Holdings 34
Strategic Report // Our Markets
Jordan
Jordan has one of the most modern health care
infrastructures in the Middle East, with services
highly concentrated in Amman and c. 70% of Jor-
danians having medical insurance. Over the years,
the strong fundamentals of the Jordanian market
have allowed IDH to deliver consistent growth
despite strict price regulation on medical labo-
ratories with a set price list that has not changed
since its issuance by the Jordanian Ministry of
Health in 2008. Biolab has thus focused on driving
volume growth in the market, deploying strategies
to expand its services portfolio and packages that
encourage increased testing per patient.
Unlike Al Borg and Al Mokhtabar in Egypt,
Biolab does not operate a Hub, Spoke and Spike
business model. Whilst Biolab’s 20 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, endocrinol-
ogy, 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.
During 2020, Biolab followed through with its
agreement with Georgia Healthcare Group PLC
(GHG) to establish a Mega Laboratory (Mega
Lab) in the Georgian capital of Tbilisi. The 7,500
square meter, multi-disciplinary Mega Lab is
the largest of its kind in Georgia. In exchange
for providing information technology and man-
agement services, Biolab holds an 8.025% equity
stake in the Mega Lab project and receives
annual IT support services fees for a period of 10
years and annual management service fees for a
period of two years. Due to the Covid-19 pan-
demic and related restrictions on international
fights – affecting planned audit visits, logistics
and external quality control – an agreement has
been reached with GHG to postpone the imple-
mentation of the management agreement and
its scheduled payments to 2021.
On the technology front, the Mega Lab is integrat-
ing with GHG’s network, with 49 locations having
completed the technology transfer, including the
installation of the lab’s Laboratory Information
Managements Systems (LIMS), out of a total of 76
locations or a 65% completion rate. Initially serv-
ing GHG’s network, that is expected to utilize one-
third of the facility’s capacity, the Mega Lab plans
to develop a B2B network of healthcare providers
outside the Group to reach full utilization.
Covid-19 Impact and Response
To curb the spread of the Covid-19 virus, the
Jordanian government ordered the closure of
all educational institutions, governmental and
private entities and introduced a curfew. From
the end of March to the last week of April, out
of Biolab’s 19 branches, only two were allowed
to remain open, one to conduct Covid-19 tests
and the other located in Abdel Hadi hospital.
Biolab’s branches were allowed to return to
normal working hours in early June. During
the fourth quarter, the government imposed
a series of new Covid-19-related restrictions.
However, these did not have material impacts
on Biolab’s operations. In early January 2021, the
government began the gradual easing of these
measures following a decline in new infections
across the country.
Biolab has been at the forefront of PCR testing
for Covid-19 since the very start of the crisis,
with the company recording strong demand for
the service throughout the entire year. In 2020,
PCR testing for Covid-19 contributed to 46% of
2020 Annual Report 35
Amman, Jordan
total revenues from IDH’s Jordanian operations.
In parallel, Biolab also worked to strengthen
and expand its house call services. This not
only allows the company to provide its services
to people unable or unwilling to visit physical
branches but will also help the company mitigate
the impacts of possible new restrictive measures.
Operational Highlights
In Jordan, revenue for 2020 increased 59% year-
on-year to EGP 409 million, with the country’s
contribution to consolidated revenue increas-
ing to 15% in 2020 from 12% in 2019. In JOD
terms, revenue increased 69% year-on-year in
2020 supported by robust demand for PCR test-
ing for Covid-19 which drove a 77% year-on-year
and 9% year-on-year rise in patients served and
tests performed, respectively. In 2020, PCR test-
ing for Covid-19 made up 46% of the country’s
top-line and contributed to 13% of total tests
performed during the year.
IDH’s Jordanian operations recorded a 44% year-
on-year rise in EBITDA to EGP 130 million in
2020 on the back of strong revenue growth for the
year. In local currency terms, EBITDA grew 53%
year-on-year in 2020. EBITDA margin recorded
32% in 2020 versus 35% in the previous year.
Jordan
Key Highlights
20
Branches as at year-end 2020
409 EGP/MN
Revenues in 2020, up 59%
y-o-y
15.4%
Contribution to consolidated
revenues in 2020
Annual Report 2020Integrated Diagnostics Holdings 36
Strategic Report // Our Markets
Nigeria
in Nigeria commenced
IDH’s operations
in
February 2018 following its acquisition of Eagle
Eye Echo-Scan Limited (“Echo-Scan”) through
a strategic alliance with Man Capital LLC (“Man
Capital”), the London-based investment arm of
the Mansour Group. IDH and Man Capital estab-
lished Dynasty Holding Group (“Dynasty”), which
is 51% owned and controlled by IDH and 49%
by Man Capital. In turn, Dynasty partnered with
the International Finance Corporation (“IFC”)
and invested in Echo-Scan (since rebranded as
Echo-Lab) to capture the opportunity present in
the country’s large medical diagnostics industry,
valued at c. US$ 140 million in 2017 and projected
to reach US$ 1 billion by 20251 . Whilst also highly
fragmented, the Nigeria diagnostics industry can
be broadly divided into three groups. The largest
is independent standalone labs (chains and single
labs), followed by public and private hospitals.
Since acquisition, the Group rolled out an integra-
tion and value-building plan for the expansion of
Echo-Lab’s branch network, renovating existing
branches, procuring
state-of-the-art equip-
ment and growing the lab’s service offerings and
enhancing its quality standards. The process
of integrating Echo-Lab entails realigning its
existing labs into IDH’s “Hub, Spoke and Spike”
business model to form B-labs (“Spokes” capable
of processing routine tests) in Nigeria’s three
major cities of Abuja, Lagos and Benin; and C-labs
(“Spikes” functioning as collection and basic test
centres) in less populated areas.
Covid-19 Impact and Response
In late March, the Nigerian government intro-
duced extensive restrictive measures including
1Source: Boston Consulting Group
complete lockdowns in Abuja and Lagos. Branches
across the country were allowed to continue oper-
ating at reduced work hours. Starting in early May,
the government began the progressive easing of
restrictive measures with all branches returning
to normal work hours by early June.
Following a wave of protests and civil unrest, a
24-hour curfew was imposed in the Lagos, Edo
and Delta states from October 19 until October
23 in response to protests. This caused the closure
of all four Lagos branches as well as the Benin
branch and Asaba Main branch. All branches
have since returned to normal operational hours.
Operational Highlights
Revenue from Nigeria recorded EGP 36 million
in 2020, up 20% year-on-year. In local currency
terms, revenues were up 38% year-on-year in
2020 on the back of a 20% year-on-year increase
in both patients served and tests performed for
the year. The strong rise in volumes comes as
IDH continues to capitalise on the increased
brand awareness and demand for its services
in Nigeria, and despite the Covid-19-related
disruptions faced earlier in the year. As part of
the Group’s efforts to restructure the business
in Nigeria, Echo-Lab hired Dr. Alok Bhatia, an
industry veteran, as CEO in February 2021.
EBITDA losses narrowed significantly to EGP 7
million in 2020 from the negative EGP 30 million
recorded in 2019. Decreased losses were due to
strong revenue growth for the year and lower
salaries following the restructuring that took
place during the second half of 2019.
2020 Annual Report 37
Lagos, Nigeria
Nigeria
Key Highlights
12
Branches as at year-end 2020
36 EGP/MN
Revenues in 2020, up 20%
y-o-y
1.4%
Contribution to consolidated
revenues in 2020
Since acquisition, the Group
rolled out an integration
and value-building plan for
the expansion of Echo-Lab’s
branch network, renovating
existing branches, procuring
state-of-the-art equipment
and growing the lab’s service
offerings and enhancing its
quality standards
Annual Report 2020Integrated Diagnostics Holdings 38
Strategic Report // Our Markets
Sudan
Sudan’s economic backdrop continued to be
affected by the social conflict and civil unrest
which has endured since the 2011 secession
of South Sudan, and subsequent loss of c.75%
of oil production. These events have hindered
the country’s economic growth, deprived it
of its major foreign currency sources which
culminated in a severe currency devaluation
in 2018 with the Sudanese Pound lose c.85%
of its value. During 2019, economic hardships
and political unrest led to month-long protests
early in the year and the removal of long-time
president Omar Al-Bashir in April 2019. This
was followed by the signing of a power-sharing
agreement signed between the military and an
opposition coalition in July 2019 which brought
about a fragile stability. Despite this, in 2020
Sudan continued to face social unrest as protest-
ers demanded faster reforms and the delivery of
promises made in 2019 as part of the country’s
transitional period. As of year-end 2020, the situ-
ation remains volatile and a return to civil unrest
combined with a weak Sudanese Dollar (SDG)
could adversely affect IDH’s business.
In December 2020 the US government officially
removed Sudan from its States Sponsors of
Terrorism list. The change in the country’s
designation is expected to allow Sudan to have
access to international funds and investment,
including the International Monetary Fund, pav-
ing the way for the country’s economic growth.
The lifting of sanctions also opens up important
growth opportunities for IDH’s operations in
the coming years. With the country now open to
international suppliers; the Group will be able to
directly import test kits and in turn improve its
operational efficiency and profitability.
IDH operates under two brand names in Sudan,
Ultralab and Al Mokhtabar Sudan. Al Borg
acquired a majority interest in Ultralab in 2011,
whilst Al Mokhtabar Sudan had been established
in 2010 prior to the Group’s acquisition of Al
Mokhtabar in Egypt.
Covid-19 Impact and Response
The initial response of the Sudanese govern-
ment included the closure of schools, religious
institutes and polyclinics as well as a national
night-time curfew. Stricter measures, including a
complete lockdown in Khartoum, were imposed
in April and May which led to the closure of
several of the Group’s branches and the reduc-
tion of work hours for branches which remained
operational. In parallel, in July 2020 Sudan's
government announced it would devalue its cur-
rency and cut fuel subsidies due to a huge budget
deficit and an economic crisis aggravated by the
coronavirus pandemic. Restrictive measures
were progressively eased during the third quar-
ter of 2020, will all 21 of the Group’s branches
allowed to reopen normally in late July.
Operational Highlights
The Group’s Sudanese operations recorded a 2%
year-on-year increase in revenue to EGP 38 mil-
lion in 2020, impacted by the SDG devaluation. In
SDG terms, revenue reported a 28% year-on-year
rise for the year due to higher pricing as manage-
ment kept in step with inflationary pressures.
This helped offset a decline in volumes following
2020 Annual Report 39
Khartoum, Sudan
imposition of Covid-19-related restric-
the
tive measures and the closure of the Group’s
branches earlier in the year.
Sudan recorded an EBITDA of EGP 6 million in
2020, down 18% year-on-year with an EBITDA
margin of 16% compared to 20% last year.
EBITDA for the year was impacted by the SDG
devaluation. In SDG terms, EBITDA was up 2%
year-on-year to SDG 21 million in 2020 as higher
pricing offset branch closures earlier in the year.
With the country now open
to international suppliers;
the Group will be able to
directly import test kits and in
turn improve its operational
efficiency and profitability
Sudan
Key Highlights
20
Branches as at year-end 2020
38 EGP/MN
Revenues in 2020, up 2% y-o-y
1.4%
Contribution to consolidated
revenues in 2020
Annual Report 2020Integrated Diagnostics Holdings 40
Strategic Report // Our Brands
Our Brands
IDH’s core brands include Al Mokhtabar, Al Borg and Al Borg Scan in Egypt, Biolab in
Jordan, Ultralab and Al Mokhtabar Sudan in Sudan, and Echo-Lab in Nigeria. In 2019, IDH
launched Wayak, an Egypt-based subsidiary which utilizes data analytics to capitalise on
IDH’s patient database.
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 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 analy-
ses in the areas of immunology, haematology/coagulation, clinical
chemistry, parasitology, microbiology/infectious diseases, toxicol-
ogy, cytology, surgical pathology, flowcytometry, molecular biology
and cytogenetics. As of 31 December 2020, Al Mokhtabar operated a
network of 230 branches across Egypt and has served over 3.6 million
patients who received 14 million tests.
Al Mokhtabar Key Highlights
230
Operational Branches as at 31
December 2020
3.6mn
Patients Served in 2020
13.9mn
Tests Performed in 2020
Al Borg Laboratories – Egypt
Founded in 1991, Al Borg Laboratories is the first medical labora-
tory company in the Middle East to implement an efficient Hub,
Spoke and Spike business model. This has seen it quickly grow to
become the largest privately owned laboratory group in the region
offering an extensive list of more than 2,000 tests, covering the
whole spectrum of conventional and non-conventional medical-
testing. Al Borg caters to outpatient walk-in customers as well as
contract, insurance and lab-to-lab customers.
Al Borg Laboratories Key
Highlights
196
Operational Branches as at 31
December 2020
2.6mn
Patients Served in 2020
10.5mn
Tests Performed in 2020
2020 Annual Report 41
IDH’s core brands include Al Borg, Al Borg Scan, Al Mokhtabar
and Wayak in Egypt, Biolab in Jordan, Ultralab and Al
Mokhtabar Sudan in Sudan, and Echo-Lab in Nigeria
Al Borg Scan – Egypt
IDH established Al Borg Scan in 2018 to capitalise on the growth
opportunities presented by Egypt’s high-value radiology space.
Offering a full range of radiology services, Al Borg Scan leverages
Al Borg’s brand equity and its large customer base to consolidate
its position as the Egyptian market’s premium provider of medi-
cal imaging. The company currently operates two state-of-the art
facilities in Egypt and is actively working towards the rollout of its
third branch. Al Borg Scan draws on the latest technology to offer
the highest quality in MRI, CT, ultrasound, x-ray, mammogram
and cath lab services. Led by some of the Egypt’s most capable and
recognized radiologists, Al Borg Scan is a key component of IDH’s
strategy to build a national brand in Egypt.
Al Borg Scan Key Highlights
2
Operational Branches as at 31
December 2020
36k
Patients Served in 2020
46K
Tests Performed in 2020
Wayak – Egypt
Wayak was launched in 2019 to invest in data mining and artificial intelligence plat-
forms and capitalise on IDH’s patient database to capture new growth opportunities
in the healthcare management space. With a database covering more than 13 million
patients, of which 10% suffer from chronic diseases, Wayak will allow IDH to build
electronic medical records of patients and better cater to their needs with innovative
patient healthcare profiles, home-delivery of medications, diagnostics testing remind-
ers, referrals to service providers under the IDH network with discounted prices as
well as follow-up services.
Annual Report 2020Integrated Diagnostics Holdings 42
Strategic Report // Our Brands
Biolab – Jordan
Biolab was established in 2001 as IDH looked to create a com-
pany to lead Jordan’s private medical laboratory space. Using
state-of-the-art medical technology and a nationwide network of
19 branches, Biolab offers a suite of over 1,000 diagnostic tests
to a customer base including patients, physicians, hospitals and
referring clinical laboratories. Biolab 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 receiving CAP accreditation in 2018.
Biolab Key Highlights
20
Operational Branches as at 31
December 2020
550K
Patients Served in 2020
2.0mn
Tests Performed in 2020
Echo-Lab – Nigeria
IDH acquired Nigerian medical diagnostics firm Echo-Lab (previ-
ously Echo-Scan) in 2018 as part of the Group’s wider geographic
expansion strategy. Through the acquisition IDH broadened its
exposure to fragmented and underpenetrated Nigerian market,
where it can leverage advantageous market conditions similar to
those prevailing in its other geographies. Echo-Lab offers a com-
prehensive suite of pathology and radiology diagnostic testing,
consolidating different test categories under the same roof.
Echo-Lab Key Highlights
12
Operational Branches as at 31
December 2020
131K
Patients Served in 2020
215K
Tests Performed in 2020
2020 Annual Report 43
UltraLab – Sudan
Ultralab was founded in 2008 and has quickly grown into Sudan’s
largest and most respected laboratory chain. Ultralab operated
12 laboratories at year-end 2020, including 9 independent labs
and 3 hospital / clinical centre-based labs. The company enjoys
broad geographic exposure in Sudan, with Khartoum, Om Dor-
man and Port Sudan.
UltraLab Key Highlights
12
Operational Branches as at 31
December 2020
109K
Patients Served in 2020
338K
Tests Performed in 2020
Al Mokhtabar Sudan – Sudan
Al Mokhtabar Sudan was established in 2010 prior to IDH’s acqui-
sition of Al Mokhtabar in Egypt. The company offers a comparable
suite of diagnostic services as that provided by UltraLab. Both of
IDH’s Sudanese subsidiaries adhere to the Group’s proven Hub,
Spoke and Spike model, mirroring the approach employed by Al
Borg and Al Mokhtabar in Egypt.
Al Mokhtabar Sudan-Lab Key
Highlights
8
Operational Branches as at 31
December 2020
22K
Patients Served in 2020
71K
Tests Performed in 2020
Annual Report 2020Integrated Diagnostics Holdings 44
Strategic Report // Our Services
Our Services
Through IDH’s brands, the Group offers over 2,000 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. IDH also leverages its patient database and
wide geographic reach to build electronic medical records and offer its patients tailored
services – home-delivery of medications, diagnostics testing reminders and referrals to
service providers – under its subsidiary Wayak.
Pathology
IDH’s comprehensive pathology product portfolio covers immunology, haematology, endocri-
nology, clinical chemistry, molecular biology, cytogenetics, histopathology and microbiology.
Immunology
Microbiology
Haematology
Endocrinology
Clinical Chemistry
Molecular Biology
Cytogenetics
Histopathology
Radiology
Radiology
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 tomogra-
phy (CT), ultrasound, x-ray, mammograms and
cath lab facilities.
Healthcare Management Services
Wayak was launched in 2019 to capitalize on the
Group’s patient database and capture new growth
opportunities in the healthcare management
space and offer targeted services to its customers.
With a database covering more than 13 million
patients, of which c.10% suffer from chronic
diseases, the Egypt-based subsidiary invests
in data mining and artificial intelligence plat-
forms to build electronic medical records of
patients and better cater to their needs with
new value propositions. These include build-
ing patient healthcare profiles, home-delivery
of medications, diagnostics testing reminders,
referrals to service providers under IDH’s net-
work with discounted prices as well as follow-
up services, amongst others.
2020 Annual Report 45
Annual Report 2020Integrated Diagnostics Holdings 46
Strategic Report // Our Services
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.
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 URS Certification (accredited internationally by the United Kingdom Accredita-
tion 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 stan-
dards include both management and technical requirements. The Company’s ISO
9001:2008 accreditations for both Al Mokhtabar and Al Borg passed accreditation
reviews in December 2020 and is valid for three years.
College of American Pathologists (CAP)
Unlike ISO accreditation, CAP certification is awarded to individual labs, rather than
the Group’s operations as a whole and is widely considered the leader in laboratory
quality assurance globally. The Group’s central Mega Lab in Cairo, which was inau-
gurated in 2015 replacing two smaller, independent “A-labs” one of which was also
CAP certified, received its CAP certification in February 2018 and is renewable every
two years. This sees IDH currently operate the only laboratory in Egypt to receive this
distinguished certification, which is scheduled for renewal in October 2021.
2020 Annual Report 47
Quality Assurance
IDH’s quality assurance programme ensures that all internal diagnostic processes,
lab testing procedures and results analyses are accurate. The quality assurance pro-
gram 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 conformity 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 labo-
ratories. To help develop the skills of employees, IDH has a dedicated training facil-
ity in Cairo with four training laboratories. In 2020, the training team was composed
of one manager, one medical consultant, two supervisors, one administrator and six
full-time training specialists. The centre provides training to around 630 employees
per month, including doctors, chemists, receptionists, branch and area managers,
sales personnel and administrators. The training curriculum is determined based on
performance KPIs, internal audit reports, management reviews, competency assess-
ment 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.
Annual Report 2020Integrated Diagnostics Holdings 48
Strategic Report // Competitive Strengths & Growth Strategy
Competitive Strengths &
Growth Strategy
IDH’s established market position and flexible business model coupled with its scalable
platform and experienced management provide the necessary tools and resilience to
deliver on the Group’s ambitious long-term growth strategy while weathering short-term
challenges across its markets.
Competitive Strengths
Exposure to resilient markets
with favourable dynamics
Strong market position
with over three decades of
industry experience
The Group operates in markets characterised by
strong structural growth drivers, with generally
under-penetrated and underserved diagnostic
services markets. The counter-cyclical nature
of the diagnostic and healthcare industries has
allowed the Group to remain resilient in the
face of economic and political headwinds in the
regions where it operates. This is best exempli-
fied by IDH’s consistent double-digit revenue
growth in recent years and, more recently, by its
ability to deliver exceptional top- and bottom-
line growth despite the unprecedented difficul-
ties faced in 2020.
Across its markets of operation, IDH enjoys high
barriers to entry (as detailed in Our Markets on
page 28). This provides significant advantages
for players with an establish market position.
With close to four decades of industry experi-
ence, IDH’s subsidiaries have built a strong
brand equity and reputation, in turn earning
the trust and loyalty of its patients. Additionally,
IDH’s internationally accredited facilities are
essential to attracting contract clients, while
its scalable business model and relationships
with key stakeholders extend its reach in a frag-
mented market.
2020 Annual Report 49
Scalable asset-light
business model
Strong balance sheet and
cash generation capacity
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 footprint. The Group’s cen-
tralised Mega Lab with modern, high-capacity
equipment and significant throughput allows
IDH to roll-out asset-light, plug and play C
labs for sample collection and simple testing.
Safety and testing procedures are continuously
enhanced as more tests are performed using the
advanced diagnostic tools and state-of-the-art
technology installed at IDH’s Mega Lab.
The Group’s asset-light model, which translates
into minimal borrowing and significant strate-
gic flexibility, enables IDH to maintain a strong
financial position with an unlevered balance
sheet. Meanwhile, core profitability remains
consistently strong, with the Group delivering
EBITDA margins in excess of 40% and main-
taining healthy cash balances irrespective of
the challenging operating conditions faced
throughout the years.
Experienced and
entrepreneurial management
The Group has a highly experienced management
team with several decades of healthcare experi-
ence. Furthermore, IDH’s world-class Board of
Directors brings a wealth of healthcare, MENA
region and investment experience to the table.
27.1mn
Tests performed in 2020
Annual Report 2020Integrated Diagnostics Holdings 50
Strategic Report // Competitive Strengths & Growth Strategy
Long Term Growth Strategy
IDH leverages its competitive strengthens to
capture substantial opportunities and deliver on
a four-pillar growth strategy focused on 1) the
continued expansion of its customer base; (2) the
expansion of its service portfolio to increase tests
per patient; (3) the penetration of new geographic
markets through selective, value-accretive acqui-
sitions; and (4) the introduction of new medical
services by leveraging the Group’s network and
reputable brand position.
Expand Customer Reach
Increase Tests per Patient
The Group’s state-of-the-art Mega Lab expands
its ability to perform higher volumes and more
complex tests not offered in other labs, thus
broadening its portfolio. Meanwhile, IDH also
bundles testing services into discounted health
packages offered to existing customers, further
driving volume growth and revenue per patient.
The Group is also actively engaged in advertis-
ing campaigns to raise awareness of particular
diseases and the importance of being tested, as
well as to educate people on lifestyle diseases,
such as diabetes and high cholesterol, and the
need to undergo frequent testing. Such efforts
have successfully driven volume growth in IDH,
bolstering average test and revenue per patient.
IDH is constantly looking for opportunities
to increase accessibility for patients as it
seeks to capitalise on the favourable market
dynamics and take full advantage of the strong
demand for private healthcare services across
its geographic footprint. IDH’s scalable, low
is well-
capital-intensive business model
suited to support the Group’s efforts on this
front as it allows for the quick and efficient
rollout of new labs and geographic expansion
in the Middle East and Africa. Furthermore,
the Group offers an array of complementary
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. IDH’s house call services
have become increasingly popular in 2020
in light of the ongoing Covid-19 pandemic,
representing 20% of consolidated revenues in
the year compared to around 9% in 2019 as the
Company ramped up the service to perform
circa 4,500 house visits per day in Egypt.
2020 Annual Report 51
30
7.1mn
New branches in 2020
Patients served in 2020
Geographic Expansion
IDH is constantly on the lookout for new acqui-
sition opportunities, focusing on highly frag-
mented and underpenetrated markets in the
Middle East and Africa. The Group’s business
model is well-suited to capitalise on healthcare
and consumer trends prevalent in these regions.
Leveraging the strength of its balance sheet,
IDH delivers on this strategic objective through
value-accretive acquisitions, including that of
Echo-Lab of Nigeria in 2018.
Diversify into New Medical
Services
As the medical testing market in Egypt evolves
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 opportunities in adjacent
markets. To this end, the Group marked its
expansion into the high-value radiology segment
in October 2018 through Al Borg Scan. This was
soon followed by the launch of the Company’s
Egypt-based subsidiary Wayak. The new venture
aims invest in artificial intelligence and data
mining to provide tailored healthcare manage-
ment services to its patients, increasing loyalty
and retention rates.
Annual Report 2020Integrated Diagnostics Holdings 52
Strategic Report // Principle Risk, Uncertainties & Their Mitigation
Principle Risk, Uncertainties
& Their Mitigation
As in any corporation, IDH has exposure to risks
and uncertainties that may adversely affect its
performance. 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:
2020 Annual Report 53
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.
Sudan is currently undergoing a significant political transition
which began in 2019 when severe political unrest and protests led
the military to remove long-time president Omar Al-Bashir. Fol-
lowing his removal, the military signed power-sharing agreement
with an opposition coalition in July 2019, with the aim of eventu-
ally transferring power to a civilian government, nonetheless, the
country continued to witness protest throughout 2020 as citizens
demanded faster reform. The situation remains volatile and a return
to civil unrest could adversely affect IDH’s business.
See mitigants for “Country/regional risk — Economic,” below.
While nationwide protests do affect patient and test volumes at
IDH, the diagnostic industry is relatively immune given the inelas-
tic demand for healthcare services. Additionally, IDH has been
successful in offsetting the effect of lower volumes due to protest
with higher pricing, and in both 2019 and 2020 the geography
recorded year-on-year revenue growth in EGP terms.
The current power-sharing agreement and subsequent formation
of a sovereign council composed of civilian and military repre-
sentatives will see the country through a three-year transitional
period after which elections are to be held.
In December 2020, US removed Sudan from its States Sponsors of
Terrorism list. The change in the country’s designation is expected
to allow Sudan to have access to international funds and invest-
ment, including the International Monetary Fund, paving the way
for the country’s economic growth.
Nigeria is facing security challenges on several fronts, including
re-emerging ethnic tensions and resurgent attacks by Islamist
militants in the northeast. Against the backdrop of a sluggish
economy and the slow implementation of reforms, mounting
discontent could translate into further social unrest.
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.
Tensions spiked in October 2020 as thousands of people took to
the streets to protest against police brutality in the country. The
government responded by dissolving the special division known
as SARS (Special Anti-Robbery Squad). In late 2020 and early
2021, protests have decreased significantly across the country.
Annual Report 2020Integrated Diagnostics Holdings 54
Strategic Report // Principle Risk, Uncertainties & Their Mitigation
Specific Risk
Mitigation
Country/regional risk — Economic
The Group is subject to the economic conditions of Egypt specifi-
cally and, to a lesser extent, those of the wider MENA region. Egypt
accounted for c. 82% of our revenues in 2020 (2019: 85%).
High inflation in Egypt: According to the Central Bank of Egypt,
headline inflation recorded 5.4% in December 2020, continuing a
declining trend from 7.1% in December 2019, 21.6% in January 2018
and a record high of c.35% in July 2017 following the November 2016
devaluation of the Egyptian Pound and subsequent energy subsidy
cuts. Meanwhile core inflation that strips out volatile items came in
at 3.8% in December 2020, compared to 2.4% in December 2019 and
8.3% in December 2018.
High Inflation in Sudan: Following substantial currency devalua-
tion in Sudan during 2018 the currency lost 85% of its value. In 2019,
the Sudanese Pound’s official rate versus the US Dollar remained
relatively stable at 45.11 as 31 December according to the Central
Bank of Sudan. However, in July 2020 the Sudanese government
announced it would devalue its currency and cut fuel subsidies due
to a huge budget deficit and an economic crisis aggravated by the
coronavirus pandemic.
The currency reached an official rate against the US Dollar of 55.25
in early March 2020 (140 on the parallel market). This saw annual
inflation continue to rise, hitting a new record peak of 212.3% in
September of 2020 according to Trading Economics.
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 central bank has yet to allow the naira to float freely.
This is largely not subject to mitigation. In both political/security
and economic risk, management 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 and in 2020.
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
sustainable path to growth and fiscal consolidation. According to
Egypt’s Ministry of Planning and Administrative Reform, as of the
fiscal year ended June 2020 Egypt recorded GDP growth of 3.6%,
while the budget deficit as a percentage of GDP had declined to 7.8
compared to 8.4% in the fiscal year ended June 2019.
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 political situa-
tion in Sudan and has implemented several price increases to keep
instep with inflationary pressures. IDH is also working to limit
expatriate salaries and foreign currency needs by increasing depen-
dence on local hires.
In Nigeria, until currency exchange policy is clarified and there is
greater visibility regarding profit repatriation, IDH expects to rein-
vest early profits into its Nigerian business. Dividend payments are
not expected to be repatriated in the first four years of operation.
IDH will capitalise on its regional agreements with suppliers to
procure kits at competitive prices.
2020 Annual Report 55
Specific Risk
Mitigation
COVID-19
The ongoing Covid-19 pandemic presents business
continuity risks to IDH including, but not limited to,
supply-chain disruptions, government enforced quaran-
tines and their effect IDH business operations and risk of
infection among IDH employees. Government-imposed
curfews and lockdowns have also negatively impacted
the Group’s operations leading to the full closure or to
the decrease of working hours for branches across the
Group’s geographies. While as at 31 December 2020 all
of IDH’s branches were operating normally, new restric-
tions could be imposed in the coming months in light of
potential resurgences of Covid-19-positive cases across
IDH’s countries of operation.
IDH is in continual dialogue with key suppliers to gauge
the risk associated with a shortage of materials and is yet
to identify a weakness. The Group is ready to build inven-
tory of key test kits as necessary, should supply disrup-
tions begin to emerge. All of IDH staff use appropriate
protective equipment when interacting with patients,
including those suspected of having covid-19 or any
other infectious disease. IDH is currently administering
PCR testing for Covid-19 in Egypt and Jordan.
All of the Group’s employees are subject to regular com-
munications reminding them that they may not report
to work if they have symptoms of a Covid-19 infection.
To limit risk for headquarter staff, IDH has identified
several head-office functions that can be performed
from home and has implemented a shift policy to avoid
overcrowding in its main offices.
In parallel, the Group is regularly reviewing its disaster
recovery and business continuity policies to ensure that
it is well prepared for any eventuality.
investment,
Covid-19 global economic impact: Nationwide lock-
downs and social distancing measures enacted across
the world beginning April 2020 have led to lower con-
sumption,
industrial production, retail
sales, purchasing managers’ indices for the manufactur-
ing and service sectors, and higher unemployment rates.
According to the International Monetary Fund (IMF), the
Covid-19 pandemic drove a 3.5% contraction in global
growth, which could continue in 2021 if the pandemic is
not effectively contained.
The development and regulatory approval of several
vaccine approvals in late 2020 and early 2021 has raised
hopes of a turnaround in the pandemic, with the IMF
now projecting the global economy to grow by 5.5%
in 2021 and 4.2% in 2022. According to the IMG, the
strength of the recovery is projected to vary significantly
across countries, depending on access to medical inter-
ventions, effectiveness of policy support, exposure to
cross-country spillovers, and structural characteristics
entering the crisis.
Annual Report 2020Integrated Diagnostics Holdings 56
Strategic Report // Principle Risk, Uncertainties & Their Mitigation
Specific Risk
Mitigation
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.
Only 12% of IDH’s cost of supplies (c.2% of revenues) are
payable in US dollars, minimising the Group’s exposure
to foreign exchange (FX) scarcity and in part, the volatil-
ity of the Egyptian pound.
In 2020, IDH recorded a net foreign exchange loss/gain of
EGP 12.6 million, largely stable compared to a net foreign
exchange loss of EGP 15.5 million in 2019.
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 2020 at mid-
market CBE rate of 15.73 per US$1 against an opening
rate of EGP 15.04.
Throughout 2020, the Central Bank of Egypt (CBE)
implemented interest rate cuts for a total of 400 bps.
This, however, did not have significant adverse impacts
on the EGP-USD exchange rate especially following the
US Federal Reserve decision to cut its benchmark rate to
zero in response to the Covid-19-related economic crisis.
The Egyptian pound was valued at 15.73 to US$ 1.00 as of
3 February 2021.
Banking regulation risk: A priority list and allocation
mechanism imposed by the CBE was in effect through-
out 2016 to prioritise essential imports. This mechanism
was in place in response to an active parallel market for
foreign exchange.
Following a decline in foreign reserves in early 2020,
the CBE’s foreign currency reserves have continued to
climb steadily to reach US$ 40 billion in December 2020.
In light of the sustained recovery, the return of capital
controls previously implemented following the pound’s
devaluation is unlikely.
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 because of
economic and other factors.
Inflation of Sudan has risen to one of the highest levels
in the world and the country slipped into hyperinflation.
Over the past two years, management was able to raise
prices in Sudan with more than 100% in a trial to miti-
gate the hyperinflation.
2020 Annual Report 57
Specific Risk
Mitigation
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 2020.
IDH’s supplier risk is concentrated amongst three key
suppliers — Siemens, Roche and BM (Sysmex)— who
provide it with kits representing 52% of the total value of
total raw materials in 2020 (2019: 45%).
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 mate-
rial costs increases at a rate slower than inflation. It is
worth highlighting that IDH’s supplier relations were not
impacted by COVID-19.
Total raw materials costs as a percentage of sales were
18.4% in 2020 compared with 18.3% in 2019.
Remittance of dividend regulations and
repatriation of profit risk
The Group’s ability to remit dividends abroad may be
adversely affected by the imposition of remittance
restrictions where, under Egyptian law, companies must
obtain government clearance to transfer dividends over-
seas 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 oper-
ations 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. More
recently, in December 2020 the US removed Sudan from
its States Sponsors of Terrorism list.
Annual Report 2020Integrated Diagnostics Holdings 58
Strategic Report // Principle Risk, Uncertainties & Their Mitigation
Specific Risk
Mitigation
Legal and regulatory risk to the business
The Group’s business is subject to, and affected by,
extensive, stringent and frequently changing laws and
regulations, 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 anti-
trust 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
diagnostic 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 strat-
egy and discuss issues of concern to the Group as a whole.
Risk from contract clients
Contract clients including private insurers, unions and
corporations, account for c. 54% of the Group’s revenue in
2020. Should IDH’s relationship with these clients dete-
riorate, for example if the Group were unable to negoti-
ate and retain similar fee arrangements or should these
clients be unable to make payments to the Group, IDH’s
business could be materially and adversely affected.
IDH diligently works to maintain sound relationships
with contract clients. All changes to pricing and con-
tracts are arrived at through discussion rather than blan-
ket 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.
Excluding the Pure-Health agreement, which generated
EGP 62 million in revenue during 2020, no single client
contract accounts for more than 1% of total revenues or
1.4% of contract revenues.
2020 Annual Report 59
Specific Risk
Mitigation
Pricing pressure in a competitive, regulated
environment
The Group faces pricing pressure from various third-party
payers, including national health insurance, syndicates,
other governmental bodies, that could materially and
adversely affect its revenue. Pricing may be restrained in
cases by recommended or mandatory fees set by govern-
ment ministries and other authorities.
This risk may be more pronounced in the context of
headline monthly inflation in Egypt, which as of Decem-
ber 2020 stood at 5.4% as per the Central Bank of Egypt.
This is an external risk for which there exist few mitigants.
In the event there is escalation of price competition
between market players, the Group sees its wide national
footprint as a mitigant; c. 54% 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 sub-
ject to price controls.
Carrying value of goodwill and other intangible
assets
A decline in financial performance could lead to an
impairment risk over the carrying value of IDH’s good-
will 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.
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 headroom
between the recoverable amount (based on value in use)
and the carrying value of each of the identified Cash Gen-
erating Units and no impairment is deemed to be required.
For more detail see note (11) of the Financial Statements.
Annual Report 2020Integrated Diagnostics Holdings 60
Strategic Report // Principle Risk, Uncertainties & Their Mitigation
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 damage
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 contin-
ued and uninterrupted performance of its systems.
Business Interruption: across its geographies, the reim-
position of restrictive measures related to Covid-19
(including curfews and lockdowns) could impact the
working hours of branches and in extreme cases could
lead to their temporary closure.
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 Egypt and Jordan, to mitigate the impact of potential
branch closures on operations, the Group has been
ramping up its house call services. Moreover, the Group’s
important role in conducting PCR testing for Covid-19
in both Egypt and Jordan makes it unlikely that branches
would be closed even if new restrictive measures were
introduced.
2020 Annual Report 61
Specific Risk
Mitigation
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 management
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 laboratory 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 internationally
accreditations for high-quality standards. The failure to
renew these certifications, including the College of Ameri-
can Pathologists (CAP) accreditation for the Mega Lab or
the International Organization for Standards (IOS) for
other facilities, would call into question the Group’s qual-
ity standards and competitive differentiators.
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 recruit-
ment and training program. We furthermore 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
opposed 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 October 2017, IDH’s central Mega Lab in Cairo was
accredited by CAP which is subject to renewal every two
years. The accreditation was renewed in October 2019
with the next renewal date in October 2021. The Company
also renewed its ISO certifications in 2019, with the next
renewal due in three years. In Jordan, Biolab has received
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 accredi-
tation are supported by ongoing QA, training and internal
audit procedures.
Cybersecurity risk
The company controls a vast amount of confidential data
for its patients’ records; to this end, there is a cyberse-
curity risk emerged as for both data confidentiality and
data security.
The company has stringent control over its security and
regularly does stress tests over its IT infrastructure and
is currently commissioning an independent leading
international service provider to perform independent
stress tests and to diagnose its IT infrastructure controls,
in order to ensure the confidentiality of all data.
Annual Report 2020Integrated Diagnostics Holdings 62
PERFORMANCE
IDH delivered a strong
financial performance in 2020
despite operational challenges
in its markets
51%
Gross profit margin in 2020
44%
EBITDA margin in 2020
64
Performance // Financial and Operational Review
Financial and
Operational Review
Key Performance Indicators*
EGP mn
Revenues
Gross Profit
Gross Profit Margin
EBITDA**
EBITDA Margin
Net Profit
Net Profit Margin
1Q2020
2Q2020
3Q2020
4Q2020
FY2020
FY2019
change
500
243
49%
203
41%
102
21%
450
203
45%
164
36%
72
16%
720
384
53%
343
48%
201
28%
986
513
52%
460
47%
234
24%
2,656
2,226
1,343
1,084
51%
1,171
44%
609
23%
49%
945
42%
505
23%
19%
24%
1.9 pts
24%
1.6 pts
21%
0.3 pts
* Quarterly figures are unaudited
** EBITDA is calculated as operating profit plus depreciation and amortization.
i. Revenue and Cost Analysis
Revenue
IDH reported revenue of EGP 2,656 million in
2020, up 19% year-on-year (22% when excluding
the campaign). The robust performance in 2020
was supported by IDH’s ability to adapt its service
offering to the changing dynamics by ramping
up its house call services in Egypt and capturing
the rising demand for Covid-19-related1 testing
in Egypt and Jordan. Covid-19-related testing
contributed 24% of consolidated revenue for
the year. Top-line growth for the year was price
driven as a 34% year-on-year increase in average
price per test more than offset an 11% year-on-
year decline in total tests performed.
On a quarterly basis, IDH’s operations during
the first half of 2020 were weighed down by
varying degrees of lockdowns and other mobil-
ity restrictions imposed by governments across
its footprint to limit the spread of the Covid-19
virus. This impacted patient volumes across all
of IDH’s markets in the months of March, April
and May. As such, the Company’s top line in the
first and second quarter of the year was down 8%
year-on-year and 13% year-on-year, respectively.
As restrictions were progressively lifted in the
second half of 2020, the Company witnessed a
gradual normalisation of traffic at its branches,
further supported by its Covid-19-adapted ser-
vice offering. This saw IDH record impressive
year-on-year revenue growth of 23% and 71% in
3Q 2020 and 4Q 2020, respectively.
Revenue Analysis: Contribution by
Patient Segment
Contract Segment
At the Group’s contract segment, revenue increased
15% year-on-year in 2020 with the segment’s
1 Covid-19-related tests include Polymerase Chain Reaction (PCR) and antibody testing as well as a bundle of inflammatory and clotting markers
such as Complete Blood Picture, Erythrocyte Sedimentation Rate (ESR), D-Dimer, Ferritin and C-reactive Protein (CRP), among others.
2020 Annual Report 65
contribution to consolidated revenues standing
at 54% for the year. Revenue growth at the seg-
ment was price driven as a 31% year-on-year rise
in average revenue per test more than offset a 12%
year-on-year decline in tests performed. Lower test
volumes for the year were due to Covid-19-related
restrictions imposed across the Group’s countries
of operations earlier in the year, combined with
the expected normalisation in contract volumes
following the end of the 100 Million Healthy Lives
campaign in Egypt. The campaign had contributed
224 thousand patients and 2.4 million tests to the
contract segment during 2019. It is important to
note that, PCR testing contributed to 14% of con-
tract revenues in 2020.
Walk-in Segment
Revenue from IDH’s walk-in segment recorded a
robust 25% year-on-year expansion in 2020, contrib-
uting to 46% of consolidated revenues for the year.
In 2020, average revenue per test at the walk-in seg-
ment increased 36% year-on-year, while tests per-
formed decreased by 8% versus 2019, weighed down
by Covid-19-related restrictions. Walk-in revenue
was supported by IDH’s PCR test offering, which in
2020 contributed to 18% of the segment’s revenues.
Key Performance Indicators
IDH
‘000
Walk-in Segment
Contract Segment**
Total
FY20
FY19*
Change
FY20
FY19*
Change
FY20
FY19*
Change
Revenue (EGP ‘000)
1,222
974
25%
1,434
1,252
15%
2,656
2,226
19%
% of Revenue
46%
44%
54%
56%
Patients ('000)
2,288
2,332
-2%
4,825
5,149
-6%
7,113
7,481
-5%
% of Patients
32%
31%
68%
69%
Revenue per Patient (EGP)
534
418
28%
297
243
22%
373
298
25%
Tests ('000)
7,052
7,638
-8%
20,021
22,833
-12%
27,073
30,471
-11%
% of Tests
26%
25%
74%
75%
Revenue per Test (EGP)
Test per Patient
173
3.1
128
3.3
36%
-6%
72
4.1
55
4.4
31%
-6%
98
3.8
73
4.1
34%
-7%
* In 2020, management revisited the definition of contract customers who have contractual agreements and are granted discounts above 20%, hence
all cash paying customers with discounts equal or below 20% were reclassified as walk-in. Reclassification adjustments include the transfer of
720 thousand tests in 2019 and associated revenue of EGP 79 million from the contract segment to walk-ins. The upper mentioned reclassification
allows better representation of both segments.
** Please note that contract segment includes contributions made by the 100 Million Healthy Lives campaign in Egypt, which in 2019 had contrib-
uted 224 thousand patients and 2.4 million tests to the contract segment.
^ 2019 and 2020 figures include Wayak’s results.
Annual Report 2020Integrated Diagnostics Holdings 66
Performance // Financial and Operational Review
Revenue Analysis: Contribution by
Geography
Egypt
In Egypt revenues increased 14% year-on-year
(17% excluding the campaign) to EGP 2,173
million for 2020, with the country contributing
to 82% of consolidated revenues for the year.
Revenue growth for the year was supported by
IDH’s ramped-up house call service and Covid-
19-related test offering both of which recorded
growing demand from patients as the year pro-
gressed. As such, house call services contributed
to 22% of Egypt’s 2020 revenue compared to just
11% in the previous year. Covid-19-related test-
ing contributed to around 21% of Egypt’s 2020
revenues, with PCR testing for Covid-19 alone
making up 11% of the country’s top-line.
Egypt’s revenues were further supported by con-
tributions from Al-Borg Scan which generated
revenue of EGP 25 million in 2020, up 76% year-
on-year. Throughout the year, Al Borg Scan’s two
branches served 36 thousand patients, up 88%
year-on-year, and performed nearly 46 thousand
tests during the year, up 69% versus 2019.
IDH served 6.3 million patients in Egypt and
performed 24.4 million tests, down by 8% and
12% year-on-year, respectively. When excluding
volumes related to the 100 Million Healthy Lives
campaign in 2019, the decline in patients served
and test performed for 2020 narrows to 5% and
4% year-on-year, respectively. Nationwide cur-
fews and lockdowns during the second quarter
of 2020 had contributed to lower patient and
test volumes for the year. However, the impact
of Covid-19-related restrictions was partially
mitigated through the increased penetration of
IDH’s house call service.
Earlier in the year, thanks to IDH’s strong brand
equity and its position as the only CAP-accred-
ited diagnostics service provider in Egypt, the
Group had been selected by Pure-Health UAE to
be the first lab to conduct PCR testing to screen
passengers travelling from Egypt. The Group’s
contractual agreement with Pure Health contrib-
uted EGP 62 million to Egypt’s revenues for the
year (5% of Egypt’s contract segment revenues),
with PCR tests for Covid-19 performed as part of
the agreement making up 35% of total PCR tests
performed during the year.
Jordan
In Jordan, revenue for 2020 increased 59% year-
on-year to EGP 409 million. Subsequently, the
country’s contribution to consolidated revenue
increase to reach 15.4% in 2020 from 11.5% in
2019. In JOD terms, revenue increased 69% year-
on-year in 2020 supported by robust demand
for PCR testing for Covid-19 which drove a 77%
year-on-year and 9% year-on-year rise in patients
served and tests performed, respectively. In 2020,
PCR testing for Covid-19 made up 46% of the
country’s top-line and contributed to 13% of total
tests performed during the year. Jordan’s top-line
was further bolstered by the company’s ramped
up house call services, which in 2020 contributed
to 12% of the country’s top-line versus the 4%
contribution made in 2019.
Nigeria
At the Group’s Nigerian subsidiary, revenue
recorded EGP 36 million in 2020, up 20% from
EGP 30 million in 2019. In local currency terms,
revenues were up 38% year-on-year in 2020 on
the back of a 20% year-on-year expansion in
both patients served and tests performed for the
year. The strong rise in volumes comes as IDH
continues to capitalise on the increased brand
awareness and demand for its services in Nigeria
despite the Covid-19-related disruptions faced
earlier in the year and an escalation of social
2020 Annual Report 67
unrest during the final quarter of the year. These
included a complete lockdown and limited traf-
fic as people adhered to shelter-in-place orders.
Sudan
The Group’s Sudanese operations recorded a 2%
year-on-year increase in revenue to EGP 38 million
in 2020, impacted by the SDG devaluation, where
the average SDG/EGP rate in 2020 was 0.29 versus
0.36 in 2019. In SDG terms, revenue reported a 28%
year-on-year rise in 2020 due to higher pricing as
management kept in step with the hyperinflation-
ary environment. This helped offset a decline in vol-
umes following the imposition of Covid-19-related
restrictive measures and the closure of the Group’s
branches earlier in the year.
Revenue Contribution by Country
Egypt Revenue (EGP mn)
Egypt Contribution
Jordan Revenue (EGP mn)
Jordan Revenue ( JOD mn)
Jordan Contribution
Nigeria Revenue (EGP mn)
Nigeria Revenue (NGN mn)
Nigeria Contribution
Sudan Revenue (EGP mn)
Sudan Revenue (SDG mn)
Sudan Contribution
Patients Served and Tests Performed by Country
Egypt Patients Served (mn)
Egypt Tests Performed (mn)
Jordan Patients Served (k)
Jordan Tests Performed (mn)
Nigeria Patients Served (k)
Nigeria Tests Performed (k)
Sudan Patients Served (k)
Sudan Tests Performed (k)
Total Patients Served (mn)
Total Tests Performed (mn)
2020
2,173.4
81.8%
409.1
18.5
15.4%
36.1
897.7
1.4%
37.7
129.5
1.4%
2020
6.3
24.4
550
2.0
131
215
130
409
7.1
27.1
2019
1,902.8
85.5%
256.7
10.9
11.5%
30.1
649.9
1.4%
36.9
101.5
1.7%
2019
6.9
27.9
311
1.8
109
179
180
597
7.5
30.5
Change
14%
59%
69%
20%
38%
2%
28%
Change
-8%
-12%
77%
9%
20%
20%
-28%
-31%
-5%
-11%
Annual Report 2020Integrated Diagnostics Holdings 68
Performance // Financial and Operational Review
Branches by Country
Egypt
Jordan
Nigeria
Sudan
Total Branches
31 December 2020
31 December 2019
Change
429
20
12
20
481
399
19
13
21
452
30
1
-1
-1
29
Cost of Goods Sold
IDH’s cost of goods sold increased 15% year-on-year to EGP 1,314 million in 2020. Strong top-line
growth supported a 24% year-on-year expansion in gross profit to EGP 1,343 million in 2020, with
an associated margin of 51% versus 49% in 2019.
COGS Breakdown as a Percentage of Revenue
Raw Materials
Wages & Salaries
Depreciation & Amortisation
Other Expenses
Total
2020
18.4%
14.7%
6.1%
10.3%
49.5%
2019
18.3%
17.2%
6.0%
9.8%
51.3%
Raw material costs, which include cost of special-
ized analysis at other laboratories, reached EGP
488 million in 2020, making up the largest share
of total consolidated COGS during the year at
37.1% (18.4% as a share of consolidated revenues).
The 20% year-on-year increase in raw material
costs is in part attributable to a significant rise in
raw material costs recorded at IDH’s Jordanian
operations during 4Q 2020 which weighed on
consolidated margins in the final quarter of 2020
compared to the previous quarter. The increase
came following higher positivity rates which
require retesting before announcing to the Jorda-
nian Ministry of Health, which caused an increase
in Jordan’s raw material as a share of revenue from
26% in 3Q 2020 to 46% in 4Q 2020.
It is worth highlighting that in Egypt, PCR and
Covid-19-related tests have largely the same
contribution margin as conventional tests.
However, in Jordan, due to the Ministry of Health
guidelines, PCR tests have a lower contribution
margin. With regards to the Group’s house call
services, tests performed through this channel
in both Egypt and Jordan have largely the same
contribution margin as conventional tests per-
formed at the Group’s labs.
Direct salaries and wages made up the second
largest share of total COGS for the year at 29.7%,
having increased just 2% year-on-year to reach
EGP 390 million in 2020. The largely stable fig-
ure was due to higher direct salaries and wages
in Jordan and Sudan being largely offset by
lower salaries in Nigeria following the restruc-
turing that took place during the second half
of 2019. In 2020, the curfew periods led IDH to
book lower bonuses, incentives, and overtime
2020 Annual Report 69
payments, whereas in 2019 the Group recorded
EGP 27 million in profit shares over and above
of the required 10% (profit share in 2019 was
13% while profit share 2020 was 10%). Given
the marginal year-on-year increase in direct
salaries and wages for 2020, and the significant
top-line growth for the year, as a percentage of
revenues, salaries and wages declined to 14.7%
in 2020 versus 17.2% in 2019.
Direct depreciation and amortisation was up
22% year-on-year in 2020 to EGP 163 million,
largely due to the addition of new equip-
ment at Al Borg-Scan and Nigeria, as well as
the incremental amortisation of additional
branches (IFRS 16 right-of-use assets). Direct
depreciation and amortization as a percentage
of revenues increased only marginally to 6.1% in
2020 from 6.0% in 2019.
EBITDA
increased 24%
IDH’s consolidated EBITDA
year-on-year to EGP 1,171 million in 2020, with
an associated margin of 44% versus 42% in 2019.
EBITDA growth was supported by strong gross
profitability which offset higher selling, general
and administrative (SG&A) outlays for 2020 and a
doubtful accounts provision of EGP 42 million to
account for expected credit losses in accordance
with IFRS 9 booked in the year compared to EGP 8
million in 2019. It is worth noting that the major-
ity of said provision were booked during the first
half of 2020 (EGP 28 million) while the second half
Regional EBITDA in Local Currency
of the year provisions declined to EGP 14 million
as the Group reassessed its recoverability rate.
In Egypt, EBITDA recorded EGP 1,041 million in
2020, up a robust 19% year-on-year. EBITDA mar-
gin increased to 48% in 2020 from 46% in 2019. The
EBITDA expansion was supported by the country’s
strong top-line growth in the second half of the year
which offset an EGP 35 million doubtful accounts
provision established in Egypt and the impact of
Covid-19 on Egypt’s operations earlier in the year.
IDH’s Jordanian operations recorded a 44% year-
on-year rise in EBITDA to EGP 130 million in
2020 on the back of strong revenue growth for the
year. In local currency terms, EBITDA grew 53%
year-on-year in 2020. EBITDA margin recorded
32% in 2020 versus 35% in the previous year.
In Nigeria, EBITDA losses narrowed significantly
to EGP 7 million in 2020 from the negative EGP
30 million recorded in 2019. Decreased losses
were due to a 20% year-on-year rise in revenues
(38% in NGN terms) and an 18% year-on-year
decrease in salary expenses during the year.
Finally, Sudan’s EBITDA recorded EGP 6 million
in 2020, down 18% year-on-year with an EBITDA
margin of 16% compared to 20% last year. EBITDA
for the year was weighed down by the SDG devalu-
ation. In SDG terms, EBITDA came in relatively
flat for the year at SDG 21 million as higher pricing
offset branch closures earlier in the year.
Mn
Egypt
Jordan
Nigeria
Sudan
EGP
JOD
NGN
SDG
2020
1,041
5.9
(170)
21
2019
Change
877
3.8
(642)
21
19%
53%
74%
2%
Annual Report 2020Integrated Diagnostics Holdings 70
Performance // Financial and Operational Review
Interest Income / Expense
IDH recorded interest income of EGP 53 million
in 2020, up 22% year-on-year. Interest income
increased due to higher cash balances as the
Group postponed to September 2020 the distri-
bution of USD 28 million (EGP 451 million) in
dividends in relation to 2019 profits.
Interest expense recorded EGP 72 million in
2020 versus EGP 65 million in 2019. The increase
in interest expenses is due to higher interest on
lease liabilities related to IFRS 16. following
the addition of new branches. This offset the
decrease in interest expenses on borrowings
which benefitted from the lower interest rate
environment following a cumulative 400 basis
point cut in interest rates by the Central Bank
of Egypt since the start of 2020.
Interest Expense Breakdown
EGP Mn
Interest on Lease Liabilities (IFRS 16)
Interest Expenses on Borrowings*
Interest Expenses on Leases
Total Interest Expense
2020
51.4
16.1
4.1
71.5
2019
35.1
20.0
9.5
64.6
Change
46%
-20%
-57%
11%
* Related to medium-terms loans for the Al Borg Scan expansion (EGP 6.1 million) and the Group’s new headquarters in Cairo’s Smart Village (EGP
6.3 million), in addition to EGP 3.7 million in bank charges. (interest expense hasn’t been capitalized)
Foreign Exchange
IDH recorded a net foreign exchange loss of
EGP 13 million in 2020 compared to EGP 16
million in 2019. The figure is primarily related
to FX losses on the back of the SDG devaluation
versus the EGP.
Taxation
Tax expenses recorded for the year were EGP
360 million compared to EGP 254 million in
2019. The effective tax rate stood at 37% in
2020 versus 33% in 2019. There is no tax pay-
able for IDH’s two companies at the holding
Tax Expense Breakdown
EGP Mn
Egypt
Jordan
Nigeria
Sudan
Total Tax Expenses
Effective Tax Rate
level, while tax was paid on profits generated
by operating subsidiaries.
The increase in IDH’s effective tax rate to 37%
compared to 33% in 2019 is attributable to
the decision by the Egyptian Government in
September 2020 to increase the Withholding
Tax on profit distribution from 5% for owner-
ship exceeding 25% to 10% (irrespective of the
ownership stake). It should be highlighted that
previously IDH used to incur a 5% WHT as its
ownership in the subsidiaries exceeded 25%.
2020
340.2
19.5
(0.8)
0.8
360
37%
2019
244.8
10.8
(2.4)
0.4
254
33%
Change
39%
80%
-66%
90%
42%
3.7 pts
2020 Annual Report 71
Net Profit
IDH’s consolidated net profit was EGP 609 mil-
lion in 2020, up 21% year-on-year supported by
strong revenue growth for the year combined with
the Group’s cost management efforts and higher
interest income for the year. Net profit margin
stood at 23% in 2020 up unchanged from 2019.
ii. Balance Sheet Analysis
Assets
Property, Plant and Equipment
IDH held gross property, plant and equipment
(PPE) of EGP 1,261 million as of year-end 2020,
up from the EGP 1,140 million as of 31 December
2019. CAPEX outlays represented around 5% of
consolidated revenues in 2020.
During 2020, the average CAPEX of a new C
branch (collection points) in Egypt ranged from
EGP 750 thousand to EGP 1.2 million.
Accounts Receivable and Provisions
As at 31 December 2020, accounts receivables’
Days on Hand (DOH) reached 144 days com-
pared to 129 days at year-end 2019. Accounts
receivables’ DOH is calculated based on credit
revenues amounting to EGP 827 million in 2020.
The increase is mainly related to the PCR testing
for Covid-19 balance (as part of the agreement
with Pure Health), which represented around
10% of total receivables in 2020 at EGP 34 mil-
lion. On gross receivables, DoH in 2020 were 171
days compared to 149 days in 2019.
Provision for doubtful accounts established dur-
ing 2020 amounted to EGP 42 million compared
to only EGP 8 million in 2019. The increase is
EGP thousand
Cash
mainly related to the expected credit losses in
accordance with IFRS 9 of government/semi-
government entities in Egypt. It should be noted
that the provisions established in Egypt repre-
sented around 90% of consolidated provisions
established during the year.
Inventory
As at 31 December 2020, the Group’s inventory
balance reached EGP 100 million, up from EGP
84 million as at year-end 2019. Days Inventory
Outstanding (DIO) decreased to 72 days as at
year-end 2020 from 82 days as at 31 December
2019. The decline is largely attributable to a
decrease in Jordan’s DIO due to the high PCR
testing for Covid-19 turnover.
Cash and Net Debt/Cash
IDH’s cash balances increased to EGP 877
million as at 31 December 2020 compared to
EGP 631 million as at 31 December 2019. The
increase comes despite the distribution of EGP
451 million in dividends for 2019 paid in Sep-
tember 2020. It should be noted that cash bal-
ances include cash on hand, current accounts,
time deposits and treasury bills.
2020
2019
876,755
630,509
Interest Bearing Debt (“Medium Term Loans”)
96,455
111,752
Lease Liabilities Property
389,920
269,401
Lease Liabilities Equipment
69,122
68,671
Net Cash Balance
321,258
180,932
Annual Report 2020Integrated Diagnostics Holdings 72
Performance // Financial and Operational Review
Net cash balance1 amounted to EGP 321 million
as at year-end 2020, an increase of 78% compared
to EGP 181 million as at 31 December 2019.
Biolab’s put option liability increased following
the subsidiary’s EBITDA year-on-year growth of
44% in EGP terms.
As at year-end 2020, the Group had two out-
standing loan balances:
• An EGP 38.6 million facility from Commercial
International Bank (CIB) used to finance
IDH’s headquarters in Cairo and will be fully
repaid in 2022;
• An EGP 54.3 million loan from Ahly United
Bank (AUB) used to finance the first two
branches of IDH’s new radiology venture in
Egypt. The total facility amounts to a total of
EGP 130.5 million, from which EGP 54.3 mil-
lion was used to finance the radiology venture.
The loan will be fully repaid in 2026;
• The interest rate on both loans is 1% above the
Central Bank of Egypt’s borrowing corridor
rate (currently at 9.25%).
Liabilities
Accounts Payable
As at 31 December 2020, accounts payable bal-
ance stood at EGP 178 million up from EGP 145
million as at year-end 2019. The Group’s days
payable outstanding (DPO) is 127 days com-
pared to 141 days as at 31 December 2019, with
the decrease mainly related to PCR testing kit
suppliers who are paid within a period of 15 days.
Put Option
The put option “short-term” liability is related to
the option granted to Dr. Amid; Biolab CEO, to
sell his stake (40%) to IDH. The put option is in
the money and exercisable since 2016 and is cal-
culated as 7 times LTM EBITDA minus net debt.
The put option “long-term” liability is related to
the option granted to the International Finance
Corporation from Dynasty – shareholders in
Echo Lab – and it is exercisable in 2024.
iii. Cash Flow Analysis
Net cash flow from operating activities recorded
EGP 926 million in 2020 compared to EGP 697
million in 2019, demonstrating the company’s
strong cash generation ability despite the chal-
lenging operating environment.
iv. Dividend
The Board of Directors is recommending a final
dividend of US$ 0.049 per share, or US$ 29.1 mil-
lion in aggregate, to shareholders in respect of
the financial year ended 31 December 2020. This
represents an increase of 4% compared to a final
dividend of US$ 28 million in aggregate in the
previous financial year.
The Board of Directors
is recommending a final
dividend of US$ 0.049 per
share, or US$ 29.1 million in
aggregate, to shareholders in
respect of the financial year
ended 31 December 2020
1 Net cash is calculated as cash and cash equivalent balances less interest-bearing debt (medium term loans) and finance lease.
2020 Annual Report
73
Annual Report 2020Integrated Diagnostics Holdings 74
Performance // Corporate Social Responsibility
Corporate Social
Responsibility
IDH views corporate
responsibility initiatives
as an extension of its
core purpose, with the
aim of improving the
communities in which it
does business
Founded on the principle of providing quality
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 Foundation for Training
and Skill Development, which in 2020 amounted
to EGP 6.5 million compared with EGP 5.3 million
in 2019. 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.
2020 Annual Report 75
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 communi-
ties 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
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 Egyptian
people during natural disasters
• Ramadan Iftar ( feast) meals to underprivi-
leged Egyptians during the holy month of
Ramadan
• Providing food for families in need of such
• Free medical tests to underprivileged Egyp-
assistance
tian children
• Coverage of running costs for the ICU at
Cairo’s public-sector Kasr El Aini Hospital
• Sponsorship of medical convoys to the city of
Fayoum
Annual Report 2020Integrated Diagnostics Holdings 76
CORPORATE
GOVERNANCE
Striving for best industry
practices in governance to build
a profitable and sustainable
business as well as safeguarding
shareholder interests
78
Corporate Governance // Board of Directors
Board of Directors
IDH’s Board of Directors is comprised of four independent members, one non-executive
member and one executive director, all of whom offer significant experience in the
healthcare market, MENA region and investment activities.
Lord St John of Blesto
Prof. Dr. Hend El Sherbini
Hussein Choucri
(Age 63)
(Age 52)
(Age 70)
Independent Non-Executive
Chairman
Group Chief Executive
Officer
process.
Dr. El Sherbini is a professor of
clinical pathology at the Fac-
ulty of Medicine, Cairo Univer-
sity and currently sits on the
board of American Society of
Clinical Pathology (Egypt) and
consults on the international
certification
She
received her MBBCh, Masters
in Clinical and Chemical
pathology, PhD in Immunol-
ogy from Cairo University, and
MBA from London Business
School. Dr. El Sherbini served
as CEO of Al Mokhtabar since
2004, until becoming CEO of
the Group in 2012.
Lord St John has been a member
of the House of Lords of the U.K.
Parliament since 1978. He serves
on the boards of several listed
and unlisted companies includ-
ing Yellow Cake plc, Smithson
Investment Trust plc, Strand
Hanson Ltd, Tyvak Orbital Net-
works Ltd, KNeoWorld UK Ltd,
Geobear, Falcon Group, Empati,
and African Business Solutions
Limited. He also holds advisory
roles with BetWay Limited,
ECO Capacity Exchange, and
Wet Holdings (Global) Limited.
Lord St John has an interest in
the charitable sector and serves
as a trustee to several charities
focused on wildlife conservation,
poverty reduction, education and
healthcare. 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.
Independent Non-Executive
Director and Chairman of the
Remuneration Committee
Mr. Choucri
is Chairman
and Managing Director of
HC Securities & Investment,
which he established in May
1996. He currently sits on the
boards of EDITA Food Indus-
tries S.A.E and SODIC (Sixth
of October Development &
Investment Company), as well
as the Egyptian British Busi-
ness 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 Director at Mor-
gan Stanley from 1993-2007.
He received his Management
Diploma from the American
University in Cairo in 1978.
2020 Annual Report 79
James Patrick Nolan
Dan Olsson
Richard Henry Phillips
(Age 61)
(Age 55)
(Age 56)
Independent Non-Executive
Director
Mr. Olsson has long and exten-
sive international experience in
the diagnostic and healthcare
services sector, where he has
served in a range of executive
positions. Among others as head
of diagnostics in the pan-Euro-
pean healthcare group Capio,
CEO of Unilabs, a pan-European
diagnostic provider, CEO of
Helsa, a Swedish healthcare
group as well as CEO of Team
Olivia Group, a Nordic care
services group. Mr. Olsson has
worked in the healthcare sector
since 1999. Mr. Olsson studied
economics at the University of
Lund in Sweden.
Non-Executive Director
is a
founding
Mr. Phillips
partner of Actis LLP, the
emerging markets private
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 is
the Head of Private Equity for
Actis and is a member of the
Actis Investment Committee.
Mr. Phillips is a director on
the board of a number of com-
panies
including Emerging
Markets Knowledge Holdings
(Mauritius) Limited, Les Labo-
ratories Medis SA, and others.
Mr. Phillips holds a degree in
Economics from the Univer-
sity of Exeter.
Independent 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 & Acquisi-
tions, and has also served as
Head of Mergers & Acquisi-
tions at Veon Inc., a major
mobile telecoms operator in
Emerging Markets. During his
time at Philips, he led a series
of acquisitions in diagnostic
imaging, 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 graduated from Oxford
University in Law in 1983 and
is a qualified barrister in Eng-
land and Wales. He also holds
an MBA from INSEAD.
Annual Report 2020Integrated Diagnostics Holdings 80
Corporate Governance // Corporate Governance Report
Corporate Governance
Report
Your Board of Directors (“the Board”) is respon-
sible for providing strong leadership and effec-
tive decision making, safeguarding in the process
the interests of all shareholders of Integrated
Diagnostics Holdings. Under my chairmanship,
the Board has maintained an unwavering com-
mitment to provide 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 2018 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.
We strongly believe that the gradual adoption of
best industry practices in governance will assist
us in building a profitable and sustainable busi-
ness as well as safeguarding shareholder interests.
We are compliant with Financial Conduct
Authority Disclosure Guidance and Transpar-
ency 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 Committees.
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 implementing
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
2020 and have invested significant time discuss-
ing and evaluating the Group’s strategy and pros-
pects for future growth, the outcome of which is
presented in our statement of strategy on page
50. We are confident that we have in place the
right strategy and the right management 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 experi-
ence in Europe, the Middle East and Africa. We
2020 Annual Report
81
6
Board meetings in 2020
have relevant commercial and technical experi-
ence to help direct the Group as it delivers on
its strategy in a very technical field and across
rapidly changing geographies.
Your Board in 2020 and their biographies are set
out on pages 78 and 79 of this Annual Report and
are summarised in the following table.
Board of Directors of Integrated Diagnostics Holdings Plc
Name
Position (Date of Appointment)
Lord St John of Bletso
Independent Non-Executive Chairman (12 January 2015)
Prof. Dr. Hend El Sherbini
Group Chief Executive Officer (23 December 2014)
Hussein Choucri
James Patrick Nolan
Dan Olsson
Independent Non-Executive Director (12 January 2015)
Independent Non-Executive Director (8 April 2015)
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 Execu-
tive. This segregation of roles was agreed at the
Board meeting held 12 January 2015. The Board
continues to believe that this segregation 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 running of the business.
In this, she is supported by a senior management
team. The Group Chief Executive and I have a good
working relationship and discuss matters of Group
strategy and performance on a regular basis.
We also work together to ensure that Board meet-
ings cover relevant matters, including a quarterly
review of financial and operational performance
(including key performance indicators), and in
partnership with the Group Secretary ensure
that all Directors:
• are kept advised of key developments;
• receive accurate, timely and clear information
upon which to call in the execution of their
duties; and
• actively participate in the decision-making
process.
Agendas for meetings of the Board are reviewed
and agreed in advance to ensure each Board
meeting is efficiently run, allowing all Direc-
tors to openly and constructively challenge the
Annual Report 2020Integrated Diagnostics Holdings 82
Corporate Governance // Corporate Governance Report
proposals made by the Group’s senior manage-
ment. 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:
• approving annually a strategic plan and objec-
tives 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;
• approving the Group’s annual report and ac-
counts and half-yearly financial statements
and/or any change in the accounting prin-
ciples 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;
• any member of the IDH group declaring or
paying any dividend or distribution;
• approving the issue of all circulars, prospec-
tuses, listing particulars and general meeting
notices to shareholders of the Group;
Board Meetings During 2020
Your Board of Directors held six meetings in 2020:
• 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 pre-
vention of bribery and other areas considered
by the Board to be material;
• undertaking an annual review of the effective-
ness 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 controls and risk
management;
• carrying out a robust assessment of the prin-
cipal risks facing the Group, including those
that threaten its business, future performance,
solvency or liquidity and to report on such as-
sessment in the Group’s annual report; and
• reviewing the Group’s overall corporate gov-
ernance arrangements and approving any
changes thereto.
Apart from these Reserved matters, the Board
delegates specific items to its principal commit-
tees, namely the committees on Audit, Remu-
neration and Nomination. Each Committee is
authorised to seek any information it requires
from senior management.
Below are brief recaps on each of these commit-
tees. Reports from the Chairmen of the Audit and
Remuneration Committees appear starting pages
88 and 92 of this Annual Report, respectively.
Name
25 March 2020
27 April 2020
1 June 2020
1 September 2020
18 November 2020
30 November 2020
Position (Date of Appointment)
London (majority of attendees attended by teleconference)
London (majority of attendees attended by teleconference)
London (majority of attendees attended by teleconference)
London (majority of attendees attended by teleconference)
London (majority of attendees attended by teleconference)
London (majority of attendees attended by teleconference)
2020 Annual Report 83
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 previous
meeting of the Board.
All meetings of the Board and its Committees are
minuted by the Group Secretary or a designated
alternate. Any concerns raised by Directors are
clearly recorded in the minutes of each meet-
ing. I review Board minutes in my capacity as
Chairman before these minutes are circulated to
all Directors in attendance and then tabled for
approval at the next meeting, at which time any
necessary amendments are made.
Details of our Directors’ attendance at Board and
Committee meetings are shown in the table on page
84. In the event that any Director is unable to attend
a meeting of the Board or Committee of which they
are a member, he or she receives the necessary
papers, including agendas, meeting outcomes and
any documents presented for review or informa-
tion. 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 meet-
ings 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 industry 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 2020, senior
management delivered regular reports to the Board
ahead of regularly scheduled Board meetings.
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 composition
of the Board. It is also responsible for reviewing
succession plans for the Directors, including
the Chairman and Chief Executive and other
senior management.
Your Board aims to work
towards implementing
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
I note in this instance that all members of the Nomination Committee are Non-Executive Directors
Name
Position
Lord St John of Bletso
Chairman of the Committee
Hussein Choucri
Dan Olsson
Committee Member
Committee Member
Annual Report 2020Integrated Diagnostics Holdings 84
Corporate Governance // Corporate Governance Report
Overview of the Remuneration
Committee
The Remuneration Committee recommends
the Group’s policy on executive remuneration
determines the levels of remuneration for
Executive Directors and the Chairman and
other senior management and prepares an
annual remuneration report.
The full report of the Remuneration Committee for 2020 appears starting on page 92 of this Annual Report.
Name
Position
Hussein Choucri
James Patrick Nolan
Dan Olsson
Chairman of the Committee
Committee Member
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 auditors; advising on the appointment of
external auditors; and reviewing the effectiveness
of the internal audit, internal controls, whistle-
blowing 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 Independent
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 2020 appears starting on page 88 of this Annual Report.
Name
Position
James Patrick Nolan
Chairman of the Committee
Hussein Choucri
Dan Olsson
Committee Member
Committee Member
Table of Director Attendance at 2020 Meetings
Name
Board
Audit
Remuneration
Nomination
Number of Meetings
Directors:
Lord St John of Bletso
Prof. Dr. Hend El Sherbini
Hussein Choucri
James Patrick Nolan
Dan Olsson
Richard Henry Phillips
6
6
6
6
6
6
6
4
-
-
3
4
4
-
1
-
-
1
1
1
-
0
-
-
-
-
-
-
2020 Annual Report 85
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 forward. The Company’s
risk matrix, outlined on pages 52-61, is suffi-
ciently 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 mitiga-
tion will be a theme to which your Board returns
repeatedly in 2021, as we did in 2020.
The Board has ultimate responsibility for the
Group’s internal controls; however, they have del-
egated 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 share-
holders. The Audit Committee 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 irregu-
larities. The Audit Committee reports back to the
Board with their findings and recommendations.
The Board has accordingly established that the
Group has in place internal controls to manage
risk including:
• 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 mitigate
those risks.
The Group’s principal risks and uncertainties and
mitigation for them are set out on pages 52-61 of
this Annual Report.
Your Board has furthermore put in place a con-
trol framework at the Group level that applies to
all subsidiaries, including:
• Board approval of the overall Group budget
and strategic plans;
• a clear organisational structure delineating
lines of responsibility, authorities and report-
ing 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 as-
pects 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 reporting
including weekly flash reports to manage-
ment, monthly reporting to management
and an annual budget process involving both
senior management and the Board; the Board
received reports on a quarterly basis in 2020.
• as part of the reporting process in 2020, manage-
ment 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 Exec-
utive and by senior management and remedial
action is taken where appropriate.
Investor Relations
Engagement with shareholders continues to be
a key function at both the senior management
and the Board level. Our investor relations
function held numerous meetings with current
and potential investors during the course of the
year. Management met with investors at several
investor conferences during 2020, including
three in-person conferences prior to Covid-19
in Egypt, Morocco and South Arica as well as
four virtual conferences; and handled queries,
whether delivered verbally or in writing, from
more than 100 investors.
Annual Report 2020Integrated Diagnostics Holdings 86
Corporate Governance // Corporate Governance Report
2020 Annual Report
We will continue throughout
2021 to grow our investor
relations program to ensure
that our shareholders
and stakeholders remain
informed of the Group’s
strategy and ongoing
financial and business
performance
We published both half- and full-year results and
further released trading updates on performance
at the three- and nine-month periods. We intend
to continue publishing trading updates at the first-
and third-quarter marks in 2021, while simultane-
ously meeting the minimum regulatory disclosure
as required of a UK Standard listed entity.
The Board communicates with shareholders
through public announcements disseminated
via the London Stock Exchange, analyst brief-
ings, 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 struc-
tured information on the Group along with addi-
tional shareholder tools and a richer interface.
IDH also retained the services of outside con-
sultants to help enhance its 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
relations advisors Inktank Communications.
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
2021 to grow our investor relations program to
ensure that our shareholders 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 December.
Where possible we follow corporate governance
best practice 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 sixth Annual General Meeting as a
listed company will be held at IDH’s headquar-
ters, Building B216-F7, Smart Village, Giza, Egypt
on 23 June 2021.
Annual Report 2020
Integrated Diagnostics Holdings
87
Due to the ongoing restrictions and safety
concerns as a result of the Covid-19 pandemic,
the AGM will be run as a closed meeting with
Shareholders unable to attend the meeting in
person. The Board remains keen to encourage
engagement with Shareholders. To that end, the
Directors would like to invite questions from
Shareholders in advance of and during the AGM.
Should Shareholders wish to submit questions to
the Board prior to the deadline for proxy voting
they can do so, and these will be responded to
on an individual basis. In addition, the Board will
offer shareholders the opportunity to dial into
the AGM, at which time they can also submit
questions to the Board.
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 Exchange
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 2018 UK Cor-
porate Governance Code. Nevertheless, 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 docu-
mentary evidence of the Group’s performance
and policies for 2020. The Audit Committee has
confirmed to us that the financial statements
as contained in the 2020 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
17 May 2021
88
Corporate Governance // Audit Committee Report
Audit Committee
Report
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
internal controls, as well as for ensuring that
audit processes are robust.
At the date of this report, the Audit Committee
comprises three Non-Executive Directors, all of
whom are considered independent. In addition
to myself, the members are Dan Olsson and
Hussein Choucri.
2020 marked my sixth year as Chairman of the
Audit Committee, having been appointed to
that role owing to my relevant financial expe-
rience 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 Phil-
ips. I hold an MBA from INSEAD and studied
law at university. The other members of the
Committee have a broad range of appropri-
ate skills and experience covering financial
and healthcare industry matters and their
biographies are summarised on pages 78 and
79. I am very grateful for their valuable con-
tributions and am happy that we work well
together as a team.
During 2020, the Audit Committee convened
four times. We provided governance of exter-
nal financial reporting, risk management and
2020 Annual Report 89
internal controls and reported our findings
and recommendations to the Board. Outside
of scheduled committee meetings, the Audit
Committee also communicated throughout
2020 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 2020, they attended meetings in
whole or in part, by phone. The Vice-President
Finance 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, the
Acting Chief Internal Audit Director and the
Group Secretary.
There are also private meetings between the Audit
Committee and the external auditor outside the
half-year and year end timetable at which senior
management is not present. The Committee will
continue with the practice of meeting in private
with the external auditor in the future.
FRC Audit Quality Review
The FRC is the UK’s independent regula-
tor responsible 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 enti-
ties performed by firms registered 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. The Group’s
previous accounts have not been subject to a
review in the period.
Roles and Duties 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;
• 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 audi-
tors and reviewing the effectiveness of the in-
ternal 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.
Annual Report 2020Integrated Diagnostics Holdings 90
Corporate Governance // Audit Committee Report
Audit Committee Meetings During 2020
During 2020 the Audit Committee had four
scheduled meetings. At each scheduled meet-
ing, the Committee considers the matters out-
lined above under the subheading “Roles and
Duties of the Audit Committee.”
Meeting Dates
19 March 2020
24 April 2020
25 August 2020
7 December 2020
Significant Issues
The Committee considered several significant
accounting issues, matters and judgements in rela-
tion to the Group’s financial statements and dis-
closures for the year ended 31 December 2020. 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 account-
ing judgement and disclosure. The information
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 appropriate-
ness of key disclosures made, together with compli-
ance with the applicable accounting standards. The
significant issue arising and a description of how it
was addressed is shown in the following table:
External Auditor Independence
KPMG has acted as the Group’s external auditor
since appointment in July 2015, with Mr. David
Neale serving as audit partner on behalf of KPMG
since August 2017.The Auditors’ independence
was considered by the Committee during the
year and following careful consideration, it was
agreed that the Auditors remained independent.
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 2020,
Issue
How it is being addressed
IDH adopted IFRS 16 for annual reporting periods begin-
The Group purchased IFRS 16 software from SAP on
ning on 1 January 2019. IFRS 16 introduces a single lessee
which all leases related to IFRS 16 are recorded and thus
accounting model and requires a lessee to recognize assets
minimizing human error. The software became operational
and liabilities for all leases with a term of more than 12
in the second half of 2020.
months unless the underlying asset is of low value. A lessee
is required to recognize a right-of-use asset representing
its right to use the underlying leased asset and a lease
liability representing its obligation to make lease payments.
Giving that IDH has more than 500 contracts, and that
the calculation is currently conducted manually on excel
sheets, there were a number of manual errors in the lease
calculations resulting from human error on entering
contractual information.
2020 Annual Report 91
on 6 May 2021 that is their opinion that the
financial statements as at 31 December 2020
provide a true and fair view of the financial
performance of the Group and recommend
that it be adopted by the Board and recom-
mended to shareholders for approval at the
forthcoming Annual General Meeting.
James Nolan
Chairman, Audit Committee
17 May 2021
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 2020 of EGP 12,552,000
(audit fee for the Group financial statements
for the year ended 31 December 2019: EGP
14,211,000). This non-audit work was related
to the review of the half year financial state-
ments and tax services.
External Auditor
KPMG LLP have indicated to the board that
they had planned not to seek reappointment
for the 2021 audit. On behalf of the Board, I
would like to thank KPMG for the service they
have provided to the Group during their ten-
ure. In accordance with the recommendation
of the Audit Committee, the Board proposes
the appointment of PricewaterhouseCoopers
LLP (“PwC”) as the Company’s external audi-
tor and a resolution in this regard is contained
in the Notice of AGM.
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
determine that, taken as a whole, the Annual
Report
is balanced, understandable and
provides the information necessary for share-
holders to assess the Group’s position and per-
formance, business model and strategy. It is
the Audit Committee’s role to assist the Board
in discharging its responsibilities with regards
to financial 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
Annual Report 2020Integrated Diagnostics Holdings 92
Corporate Governance // Remuneration Committee Report
Remuneration
Committee Report
Hussein Choucri
Chairman, Remuneration Committee
In this report from the Remuneration Com-
mittee, 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 2020. 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 2020 appears below.
Chairman: Lord St John of Bletso is entitled to
receive an annual salary of US$ 75,000. He is
entitled to the reimbursement of reasonable
expenses; independent Non-Executive Direc-
tors: Hussein Choucri, James Patrick Nolan
and Dan Olsson have been engaged by the
Group as Independent Non-Executive Direc-
tors under letters of appointment. Hussein
Choucri and Dan Olsson are each entitled to
an annual fee of US$ 55,000, while James Pat-
rick Nolan is entitled to an annual fee of US$
60,000. The Independent Non-Executive Direc-
tors 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 appointment. 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.
ESOP
IDH’s employee stock ownership plan (ESOP)
Policy was adopted by the IDH Board on 1 June
2020 following recommendation by the Remu-
neration Committee. The Remuneration Com-
mittee contributed to the development of the
ESOP Policy and approved the ESOP structure.
2020 Annual Report 93
The objectives of the ESOP Policy are:
• Retention - to retain key executives who have
contributed significantly to the growth plans
of the Company;
• Compensation - to align management incen-
tive and shareholder value; and
• Culture - to build a culture of meritocracy and
reward good performance and commitment.
The ESOP will vest over five years and participants
in the plan will be limited to employees nominated
by the CEO based on their performance rating.
Remuneration of Directors in 20201
Figures in EGP2
Base Salary /
Base Salary /
Annual Bonus
Annual Bonus
Total 2020
Total 2019
fees 2020
fees 2019
2020^
2019^
Executive Director
Dr. Hend El Sherbini3
Non-Executive Director
Lord St John of Bletso
Hussein Choucri
James Patrick Nolan
Dan Olsson
USD
540,000
USD
540,000
EGP
450,000
EGP
450,000
USD 540,00
EGP450,000
USD 540,00
EGP450,000
USD
75,000
USD
55,000
USD
60,000
USD
55,000
USD
75,000
USD
55,000
USD
60,000
USD
55,000
-
-
-
-
-
-
-
-
-
-
USD 75,000
USD 75,000
USD 55,000
USD 55,000
USD 60,000
USD 60,000
USD 55,000
USD 55,000
-
-
Richard Henry Phillips4
-
-
Hussein Choucri
Chairman, Remuneration Committee
17 May 2021
1 There are no taxable benefits, corporate pensions or long-term incentive plans for the Company’s directors.
2 Average USD:EGP exchange rate was 16.68 in 2019 and 15.71 in 2020.
3 Dr. Hend El Sherbini receives part of her annual bonus in the form of an annual award amounting to EGP 450,000.
4 Mr. Philips is the board representative of a major shareholder, Actis, and is therefore not remunerated.
^BOD members are not eligible for profit share distributions.
Annual Report 2020Integrated Diagnostics Holdings 94
Corporate Governance // Directors’ Report
Directors’ Report
The statements and reviews on pages 4 to 61
comprise the Strategic Report, which contains
certain information that is incorporated into
this Directors’ Report by reference, including
indications as to the Group’s likely future busi-
ness developments.
Directors
The Directors who held office at 31 December
2020 and up to the date of this report are set out
on pages 78 and 79 along with their biographies.
The remuneration of the Directors (including
their respective shareholdings in the Group,
where applicable) is set out in the Remuneration
Report on page 92.
Directors’ and Officers’ Liability Insurance and
Indemnification of Directors
Subject to the conditions set out in the Compa-
nies (Jersey) Law 1991 (as amended), the Group
has arranged appropriate Directors’ and Officers’
liability insurance to indemnify the Directors
against liability in respect of proceedings brought
by third parties. Such provisions 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 com-
ponent of the Strategic Review included in this
Annual Report beginning on page 44.
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
Chairman’s Message (page 18), Chief Executive’s
Report (pages 20 to 27), Strategic Report (begin-
ning page 4) and particularly the Performance
section (beginning on page 62). Financial state-
ments for 2020 appear in the Audited Financial
Statements (starting on page 100).
Results and Dividends
The Group’s Results for 2020 are set out in the
Audited Financial Statements starting on page 100.
The Board of Directors is pleased to recommend
a final dividend of US$ 0.049 per share, or US$
29.1 million in aggregate, to shareholders in
respect of the financial year ended 31 December
2020. This represents an increase of 4% compared
to a final dividend of US$ 28 million in aggregate
in the previous financial year.
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 52 to 61 of this
Annual Report.
Share Capital
The Group has 600,000,000 ordinary shares each
with a nominal value of US$ 0.25. There are no
other shares in issue, other than ordinary shares.
Substantial Share Holdings
As at 21 March 2021, 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:
2020 Annual Report 95
Shareholder
Hena Holdings Ltd.
Actis IDH B.V.
HSBC Global Asset Mgmt (UK)
Fidelity Mgmt & Research
T. Rowe Price
E Oppenheimer & Son
Number of Voting Rights
% of Voting Rights
152,982,356
126,000,000
42,224,558
26,450,612
24,741,404
20,215,360
25.50
21.00
7.04
4.41
4.12
3.37
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 Executive
Officer Dr. Hend El-Sherbini and her mother, Dr.
Moamena Kamel jointly hold the shares held by
Henna holdings which include the described
voting rights.
Committees of the Board
The Board has established Audit, Nomination
and Remuneration Committees. Details of these
Committees, including membership and their
activities during 2020, are contained in the Cor-
porate Governance section of this Annual Report
and in the Remuneration and Audit Reports.
Corporate Responsibility
The Group’s report on Corporate Responsibility
is set out on page 74.
Articles of Association
The Company’s Articles of Association set out
the rights of shareholders including voting
rights, distribution rights, attendance at general
meetings, powers of Directors, proceedings 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 resolution
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.
Corporate Governance
The Group’s report on Corporate Governance is
on pages 76 to 99.
Agreements Related to Change of
Control of the Group
No such agreements exist.
Annual Report 2020Integrated Diagnostics Holdings 96
Corporate Governance // Directors’ Report
Conflicts of Interest
During the year, no Director held any ben-
eficial 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 transac-
tion with the Group, they are required to notify
the Board as soon as reasonably practicable.
Political Donations
The Group made no political donations in 2020
(2019: 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 instru-
ments risk management objectives 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 Gov-
ernance section. Her biographical information
appears on page 78 of this Annual Report, and
her compensation is reported in the Remunera-
tion Committee Report on page 92. IDH has ser-
vice 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 4,754 employees as at 31 December
2020 (2019: 5,440) employed in Egypt, Jordan,
Sudan and Nigeria.
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.
Going Concern
As part of the going concern assessment to
assess the resilience of the Group’s financial
position and liquidity, management has con-
sidered several scenarios and a reasonable, but
plausible severe downside test to the period
from the annual account’s approval to May 2022.
The severe downside scenario has anticipated
the same lowest volume that occurred in April
and May 2020 for Q2 and Q3 2021. This lowest
level occurred due to the disruption caused by
the pandemic at the very beginning where the
adaptability of people was significantly low, and
also this is the period in which the government
had taken the strictest restrictions for business
and movement of people. This volume represents
a 40% reduction than the average normal rate in
which the company used to achieve before the
pandemic. Additionally, Q4 2021 assumes the
same trading levels as January 2021 (which does
not factor in seasonality, as average monthly
revenue in Q4 tends to be around 20% higher
than January of the same year) and is more than
40% lower than Q4 2020. Revenue for January
and February 2022 was also assumed to be in
line with January 2021, while March 2022 was
assumed at a 20% increase from February 2022
due to seasonality, and finally April 2022 factored
2020 Annual Report 97
in a reduction in volumes during Ramadan.
The scenario has assumed that there is no fixed
cost reduction; no reduction in the forecasted
capital expenditure, while it has assumed the
postponement of dividend payments. That said
scenario did not affect the Group’s ability to meet
its financial obligation nor the financial cov-
enants. The sever downside scenarios showed
that the Group’s current financial position and
cash balance, generated from its operational
activities, will alleviate any potential downside
risk; moreover, it presents that the group has
sufficient cash within this downside scenario
to repay debts and to continue to operate as a
going concern without the need to refinance the
debt or raise future equity. Consequently, the
Directors are confident that the Group will have
sufficient funds to continue to meet its liabilities
as they fall due for at least 12 months from the
date of approval of the financial statements and
therefore have prepared the financial statements
on a going concern basis.
The Group’s business activities, together with the
factors likely to affect its future development, per-
formance and position, are set out in the Strategic
Review on pages 4 to 61. The financial position of
the Group, its cash flows, liquidity position and
borrowing facilities are described in the financial
statements and notes thereon on pages 113 to 158.
Statement of Directors’
Responsibilities
The directors are responsible for preparing the
financial statements in accordance with appli-
cable law and International Financial Report-
ing Standards as adopted by the EU (“IFRS as
adopted by the EU”). Company law requires the
directors to prepare Group financial statements
for each financial year which give a true and fair
view of the state of affairs of the Group and of
the profit or loss of the Group for that year.
In preparing those financial statements, the
directors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are rea-
sonable, relevant and reliable;
• state whether applicable accounting stan-
dards have been followed, subject to any
material departures disclosed and explained
in the financial statements;
• assess the Group’s ability to continue as a go-
ing concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting un-
less they either intend to liquidate the Group
or to cease operations, or have no realistic
alternative but to do so.
The directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of
the Company and to enable them to ensure that
the financial statements comply with the Com-
panies (Jersey) Law 1991. They are 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
general responsibility for taking such steps as are
reasonably open to them to safeguard the assets
of the Group and the Company and to prevent
and detect fraud and other irregularities.
The directors are responsible for the mainte-
nance and integrity of the corporate and financial
information included on the company’s website.
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;
Annual Report 2020Integrated Diagnostics Holdings 98
Corporate Governance // Directors’ Report
• The consolidated financial statements have
been prepared in accordance with Internation-
al Financial Reporting Standards as adopted
by the EU, including International Accounting
Standards; and Interpretations adopted by the
International Accounting Standards Board
give a true and fair view of the assets, liabili-
ties, financial position and profit or loss of the
Group and the undertakings included in the
consolidation taken as a whole; and
• The sections of this Report, including the
Strategic Report, Performance Review and
Principal Risks and Uncertainties, which
constitute the management report, include
a fair review of the development and perfor-
mance 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.
We consider the annual report and accounts,
taken as a whole, is fair, balanced and understand-
able and provides the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy.
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 2021 AGM will be held at the Headquarters
of IDH Integrated Diagnostics Holdings, Build-
ing B216-F7, Smart Village, Giza, Egypt on 23
June 2021.
Due to the ongoing restrictions and safety concerns
as a result of the COVID-19 pandemic, the AGM
will be run as a closed meeting with Shareholders
unable to attend the meeting in person. The Board
remains keen to encourage engagement with
Shareholders. To that end, the Directors would like
to invite questions from Shareholders in advance of
and during the AGM. Should Shareholders wish to
submit questions to the Board prior to the deadline
for proxy voting they can do so, and these will be
responded to on an individual basis. In addition,
the Board will offer shareholders the opportunity
to dial into the AGM, at which time they can also
submit questions to the Board.
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 Exchange
announcement and full details will be published
on the Group’s website shortly after the AGM.
Auditor
KPMG LLP have indicated to the board that they
had planned not to seek reappointment for the
2021 audit. PricewaterhouseCoopers LLP have
confirmed their willingness to act as the Com-
pany’s external auditor and a separate resolu-
tion will be proposed at the forthcoming AGM
concerning their appointment and to authorise
the Board to agree their remuneration.
By order of the Board
Dr. Hend El Sherbini
Executive Director
17 May 2021
2020 Annual Report 99
Annual Report 2020Integrated Diagnostics Holdings 100
CONSOLIDATED
FINANCIAL
STATEMENTS
102
Independent
auditor’s report
to the members of Integrated Diagnostics Holdings plc
1. Our opinion is unmodified
We have audited the consolidated financial statements
of Integrated Diagnostics Holdings plc (“the Company”)
for the year ended 31 December 2020 which comprise
the Consolidated Statement of Financial Position,
Consolidated
Consolidated
Statement
Income,
Consolidated Statement of Cash Flows, Consolidated
Statement of Changes in Equity and the related notes,
including the accounting policies in note 2.
Statement,
Comprehensive
Income
Other
of
We were first appointed as auditor by the directors on 14
July 2015. The period of total uninterrupted engagement
is for the 5 financial years ended 31 December 2020. We
have fulfilled our ethical responsibilities under, and we
remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard
as applied to listed public interest entities. No non‐audit
services prohibited by that standard were provided.
In our opinion the consolidated financial statements:
Overview
— give a true and fair view,
in accordance with
International
Standards as
Financial Reporting
adopted by the EU, of the state of the Group’s affairs
as at 31 December 2020 and of the Group’s profit for
the year then ended;
— have been properly prepared in accordance with the
requirements of Companies (Jersey) Law 1991;
Basis for opinion
in
our
conducted
accordance with
audit
We
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities are described
below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report
to the audit committee.
Materiality:
group financial
statements as a whole
EGP32.5m (2019:EGP32m)
3.4% (2019: 4.2%) of group profit
before tax
Coverage
100% (2019: 99%) of the total
profits and losses that made up
group profit before tax
Key audit matters
vs 2019
New risk
IFRS 16 lease accounting
– data capture and
system implementation
103
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial 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. We summarise below the key audit matter in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public interest entities, our results from those procedures. This matter was
addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a
separate opinion on this matter.
IFRS 16 lease accounting – Data
capture and system implementation
Right of use assets 355EGP million;
(2019: EGP265m)
Lease liabilities EGP 390m; (2019:
EGP269m)
Refer to page 90 (Audit Committee
Report), page 124 (accounting policy)
and page 154 (financial disclosures)
The risk
Our response
Data Capture and system implementation
Our procedures included:
The Group transitioned its largest two
components from manually maintained
schedules to a lease software system during
the year.
included in the system to previously audited
manually maintained schedules and confirmed
the key data elements for all leases were
transitioned correctly.
— Data comparisons: Reconciled the leases
The transition requires a migration of data
for a large portfolio of leases, which is a
manual process with the potential for error
in data capture.
There is also a large number of lease
renewals within the portfolio which require
capture.
— Reconciled all leases included in the system to
the revenue generating branches held by the
Group.
— Methodology implementation: Assessed
whether the methodology of the lease software
calculation is in line with the requirements of
the accounting standard
— Reperformance: Reperformed the calculation
for all new leases and lease renewals by
inspecting the relevant contracts and ensuring
the contractual terms had been appropriately
captured and recorded in the system.
Our results
— The results of our procedures were satisfactory.
We continue to perform procedures over Going Concern. However, taking into consideration the performance of the company in the year,
we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in our
report this year. The application of IFRS 16 lease accounting identified previously was specific to the year of adoption.
104
3. Our application of materiality and an overview of
the scope of our audit
Group profit before tax
EGP969m (2019: EGP758m)
Group materiality
EGP32.5m (2019: EGP32m)
Materiality for the group financial statements as a
whole was set at EGP32.5m (2019: EGP32m),
determined with reference to a benchmark of group
profit before tax , of which it represents 3.4% (2019:
4.2%).
In line with our audit methodology, our procedures
on individual account balances and disclosures were
performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the
risk that individually immaterial misstatements in
individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 65% (2019: 75%)
of materiality for the financial statements as a whole,
which equates to EGP21.125m (2019: EGP24m) for
the group. We applied this percentage in our
determination of performance materiality based on
the level of identified misstatements during the prior
period.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding EGP1.625m (2019: EGP1.6m), in addition
to other identified misstatements that warranted
reporting on qualitative grounds.
Of the group’s 14 (2019: 15) reporting components,
we subjected 5 (2019: 5) to full scope audits for
group purposes and 9 (2019: 5) to specified risk‐
focused audit procedures over cash. The latter were
not individually financially significant enough to
require a full scope audit for group purposes, but did
present specific individual risks that needed to be
addressed.
The components within the scope of our work
accounted for the post‐consolidated percentages
illustrated opposite.
The Group team instructed 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 the
component materialities, which ranged from
EGP11.375 to EGP22.75m (2019: EGP6.4m to
EGP22.4m), having regard to the mix of size and risk
profile of the Group across the components. The
work on 4 of the 14 components (2019: 5 of the 15
components) was performed by component auditors
and the rest, including the audit of the parent
company, was performed by the Group team.
The Group team did not visit component locations
due to travel restrictions as a result of the COVID‐19
pandemic. Video and telephone conference
meetings were held with component auditors in
Egypt and Jordan instead. At these meetings, the
risks, strategy and 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 (2019: visited
locations in Egypt).
EGP32.5m
Whole financial
statements materiality (2019:
EGP32m)
EGP21.125m
Whole financial
statements performance
materiality (2019: EGP24m)
EGP22.75m
Range of materiality at 5
components (EGP11.375m –
EGP22.75m)
(2019: EGP6.4m to 22.4m)
EGP1.625m
Misstatements reported to the
audit committee (2019: 1.6m)
PBT
Group materiality
Post‐consolidated Group
revenue
Post consolidated Group
profit before tax
6
6
100%
(2019 99%)
93
94
3
3
100%
(2019 100%)
97
97
Post‐consolidated Group
total assets
5
5
100%
(2019 100%)
95
95
Key:
Full scope for group audit purposes 2020
Specified risk‐focused audit procedures 2020
Full scope for group audit purposes 2019
Specified risk‐focused audit procedures 2019
Residual components
105
4. Going concern
5. Fraud and breaches of laws and regulations – ability to detect
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group and 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 their 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”).
its industry, and the
We used our knowledge of the Group,
general economic environment to identify the inherent risks to
its business model and analysed how those risks might affect the
Group’s and Company’s financial resources or ability to continue
operations over the going concern period. The risk that we
considered most likely to adversely affect the Group’s and
Company’s available financial resources and metrics relevant to
debt covenants over this period is the demand for the Group’s
services being adversely impacted by extended periods of curfew
or lockdown in the geographies in which the Group operates.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
comparing severe, but plausible downside scenarios that could
arise from these risks individually and collectively against the
level of available financial resources and covenants indicated by
the Group’s financial forecasts.
We assessed the completeness of the going concern disclosure
Our conclusions based on this work:
— we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is
appropriate;
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
— Enquiring of directors, the audit committee, internal audit
and inspection of policy documentation as to the Group’s
high‐level policies and procedures to prevent and detect
fraud and the Group’s channel for “whistleblowing”, as well
as whether they have knowledge of any actual, suspected or
alleged fraud.
— Reading Board minutes.
— Considering performance targets for management.
— Using our own forensic specialists to assist us in identifying
fraud risks based on discussions of the circumstances of the
Group.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
This included communication from the group to full scope
component audit teams of relevant fraud risks identified at the
Group level and request to full scope component audit teams to
report to the Group audit team any instances of fraud that could give
rise to a material misstatement at group.
As required by auditing standards, and taking into account possible
pressures to meet profit targets and our overall knowledge of the
control environment, we perform procedures to address the risk of
management override of controls and the risk of fraudulent revenue
recognition, in particular the risk that contract revenue is incorrectly
recognised and the risk that Group and component management
may be in a position to make inappropriate accounting entries.
— we have not identified, and concur with the directors’
We did not identify any additional fraud risks.
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may
cast significant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period; and
— we found the going concern disclosure in note 2 to be
acceptable
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 above conclusions are not a guarantee that
the Group or the Company will continue in operation.
We performed procedures including:
— Identifying journal entries to test for all full scope
components based on risk criteria and comparing the
identified entries to supporting documentation. These
included journal entries posted to revenue where the
corresponding entry was posted to an unexpected account.
106
5. Fraud and breaches of laws and regulations – ability to detect
(cont.)
Identifying and responding to risks of material misstatement due
to non‐compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience, and through
discussion with the directors and other management (as required
by auditing standards), and from inspection of the Group’s
regulatory and legal correspondence and discussed with the
directors and other management the policies and procedures
regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved
gaining an understanding of the control environment including
complying with regulatory
the
requirements.
entity’s procedures
for
team and remained alert
We communicated identified laws and regulations throughout
our
to any indications of non‐
compliance throughout the audit. This included communication
from the group to full‐scope component audit teams of relevant
laws and regulations identified at the Group level, and a request
for full scope component auditors to report to the group team
any instances of non‐compliance with laws and regulations that
could give rise to a material misstatement at group.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation as set out by Companies (Jersey) Law 1991 and
taxation legislation and we assessed the extent of compliance
with these laws and regulations as part of our procedures on the
related financial statement items.
to many other
the Group is subject
laws and
Secondly,
regulations where the consequences of non‐compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation or the loss of the Group’s license to operate. We
identified the following areas as those most likely to have such
an effect: health and safety, anti‐bribery, employment law,
certain aspects of company legislation and laws relating to the
provision of healthcare services recognising the regulated nature
of the Group’s activities and its legal form. Auditing standards
limit the required audit procedures to identify non‐compliance
with these laws and regulations to enquiry of the directors and
other management and inspection of regulatory and legal
correspondence,
if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
We discussed with the audit committee matters related to actual
or suspected breaches of
for which
disclosure is not necessary, and considered any implications for
our audit.
regulations,
laws or
Context of the ability of the audit to detect fraud or breaches of
law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non‐
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non‐detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non‐compliance or fraud and cannot be expected to detect non‐
compliance with all laws and regulations.
6. We have nothing to report on the other information in the
Annual Report
the other
The directors are responsible for
information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, 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
the information therein is materially misstated or
work,
inconsistent with the financial
statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies (Jersey) Law 1991.
7. 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
— 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.
107
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 97,
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 and parent Company’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 the parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
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.
9. The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Article 113A of the Companies (Jersey) 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 (Senior Statutory Auditor)
for and on behalf of KPMG LLP
Chartered Accountants and Recognised Auditor
15 Canada Square
London
E14 5GL
18 May 2021
108
Consolidated Statement of Financial Position
As at 31 December 2020
Notes
2020
2019
000’EGP
000’EGP
Assets
Non-current assets
Property, plant and equipment
Intangible assets and goodwill
Right-Of-Use Asset
Other investments
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 financial obligations
Total non-current liabilities
Current liabilities
Trade and other payables
Short-term financial obligations
Loans and borrowings
Current tax liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
10
11, 12
26
13
15
16
18
19
17
20
20
20
20
20
20
6
8
22
25
26
23
24
25
793,013
1,659,755
354,688
9,604
2,817,060
100,115
383,480
-
276,625
600,130
1,360,350
4,177,410
1,072,500
1,027,706
(314,310)
49,218
(314,057)
145,617
603,317
2,269,991
156,383
2,426,374
240,333
3,408
67,617
430,315
741,673
383,623
342,784
25,416
257,540
1,009,363
1,751,036
4,177,410
785,546
1,660,836
264,763
6,391
2,717,536
84,339
322,805
247
221,617
408,892
1,037,900
3,755,436
1,072,500
1,027,706
(314,310)
46,330
(229,164)
155,823
456,661
2,215,546
144,710
2,360,256
174,000
5,273
81,305
306,384
566,962
320,083
260,853
25,416
221,866
828,218
1,395,180
3,755,436
The accompanying notes on pages 113- 158 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 17 May 2021 by:
Dr. Hend El Sherbini
Chief Executive Officer
Hussein Choucri
Independent Non-Executive Director
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 Consolidated Income Statement
For the Year Ended 31 December 2020
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
Notes
3
16
7.2
7.2
7.2
8
9
109
2020
000’EGP
2,656,264
(1,313,688)
1,342,576
2019
000’EGP
2,226,495
(1,142,681)
1,083,814
(107,216)
(221,874)
(42,131)
14,191
985,546
(84,107)
67,643
(16,464)
969,082
(359,600)
609,482
594,015
15,467
609,482
-
0.99
(115,764)
(189,465)
(8,647)
20,902
790,840
(80,105)
47,409
(32,696)
758,144
(253,609)
504,535
510,931
(6,396)
504,535
-
3.41
The accompanying notes on pages 113- 158 form an integral part of these consolidated financial statements.
Integrated Diagnostics HoldingsAnnual Report 2020 110
Consolidated Statement of Other
Comprehensive Income
For the Year Ended 31 December 2020
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
2020
2019
000’EGP
000’EGP
609,482
504,535
(20,292)
(20,292)
589,190
583,809
5,381
589,190
(59,402)
(59,402)
445,133
471,991
(26,858)
445,133
The accompanying notes on pages 113- 158 form an integral part of these consolidated financial statements.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 Consolidated Statement of Cash Flows
For the Year Ended 31 December 2020
111
Cash flows from operating activities
Profit or loss for the year
Adjustments for:
Depreciation of property, plant and equipment ('PPE')
Amortisation of intangible assets
Unrealised foreign exchange gains and losses
Interest Income
Interest Expense
Gain/(Loss) on sale of PPE
Impairment in trade and other receivables
Reversal of impairment in trade and other receivables
Equity settled share-based payment receipt
ROU Asset/Lease Termination
Hyperinflation
Cash (used in)/generated from operating activities
Income taxes paid
Change in Provisions
Change in Inventories
Change in Trade and other receivables
Change in Trade and other payables
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of PPE
Interest received
Acquisition of PPE
Acquisition of intangible assets
Decrease in restricted cash
Change in other investment "acquisition"
Change in other investment "sale"
Net cash from investing activities
Cash flows from financing activities
Proceeds from loans and borrowings
Repayment of loans and borrowings
Payment of finance lease liabilities
Dividends paid
Interest paid
Injection of cash by non-controlling interest
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 31/12/2019
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 31/12/2020
Notes
2020
2019
000’EGP
000’EGP
969,082
758,144
10
11
7.2
7.2
7.2
16
22
18
17
179,435
5,926
12,580
(53,120)
71,527
(98)
42,131
-
(3,213)
(609)
(14,523)
1,209,118
(220,875)
(1,866)
(17,121)
(140,563)
53,821
882,515
5,316
51,187
(118,372)
(7,638)
247
(112,115)
57,106
(124,268)
11,727
(25,416)
(42,745)
(450,737)
(73,736)
17,372
(563,536)
194,711
408,892
(3,473)
600,130
146,617
6,862
15,517
(43,576)
60,997
(926)
8,647
(1,155)
(6,391)
-
(3,833)
940,902
(184,856)
(9,314)
4,933
(78,167)
23,700
697,198
3,555
48,086
(213,310)
(4,688)
11,718
(282,781)
301,069
(136,351)
5,283
(25,416)
(64,451)
(450,502)
(63,192)
49,540
(548,738)
12,109
412,607
(15,824)
408,892
The accompanying notes on pages 113- 158 form an integral part of these consolidated financial statements.
Integrated Diagnostics HoldingsAnnual Report 2020 112
y
t
i
u
q
E
n
i
s
e
g
n
a
h
C
f
o
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
0
2
0
2
r
e
b
m
e
c
e
D
1
3
d
e
d
n
E
r
a
e
Y
e
h
t
r
o
F
-
-
-
)
4
1
8
4
(
,
)
3
9
8
4
8
(
,
2
7
3
7
1
,
-
)
8
9
1
2
(
,
2
7
3
7
1
,
-
-
-
)
6
1
6
2
(
,
)
3
9
8
4
8
(
,
)
7
3
7
0
5
4
(
,
)
2
8
8
8
(
,
)
5
5
8
1
4
4
(
,
-
-
-
)
6
1
6
2
(
,
)
8
8
8
2
(
,
)
5
5
8
1
4
4
(
,
)
2
7
0
,
3
2
5
(
2
9
2
,
6
)
4
6
3
,
9
2
5
(
)
9
5
3
,
7
4
4
(
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
3
9
8
4
8
(
,
-
-
-
-
-
-
-
-
8
8
8
2
,
)
3
9
8
,
4
8
(
8
8
8
,
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
l
a
t
o
T
y
t
i
u
q
E
2
8
4
9
0
6
,
)
2
9
2
0
2
(
,
0
9
1
,
9
8
5
6
5
2
,
0
6
3
,
2
0
1
7
,
4
4
1
7
6
4
5
1
,
)
6
8
0
0
1
(
,
1
8
3
,
5
,
5
1
0
4
9
5
)
6
0
2
0
1
(
,
9
0
8
,
3
8
5
6
4
5
,
5
1
2
,
2
1
6
6
,
6
5
4
,
5
1
0
4
9
5
-
5
1
0
,
4
9
5
-
)
6
0
2
0
1
(
,
)
6
0
2
,
0
1
(
-
n
o
N
l
a
t
o
T
e
t
u
b
i
r
t
t
a
s
r
e
n
w
o
e
h
t
s
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
C
o
t
d
e
h
t
f
o
y
n
a
p
m
o
C
i
d
e
n
a
t
e
R
i
s
g
n
n
r
a
e
l
n
o
i
t
a
s
n
a
r
T
n
o
i
t
p
o
t
u
P
l
a
g
e
L
e
v
r
e
s
e
r
e
v
r
e
s
e
r
*
e
v
r
e
s
e
r
l
a
t
i
p
a
C
e
v
r
e
s
e
r
e
r
a
h
S
i
m
u
m
e
r
p
e
r
a
h
S
l
a
t
i
p
a
C
3
2
8
,
5
5
1
)
4
6
1
,
9
2
2
(
0
3
3
,
6
4
)
0
1
3
,
4
1
3
(
6
0
7
,
7
2
0
,
1
0
0
5
,
2
7
0
,
1
4
7
3
,
6
2
4
,
2
3
8
3
,
6
5
1
1
9
9
,
9
6
2
,
2
7
1
3
,
3
0
6
7
1
6
,
5
4
1
)
7
5
0
,
4
1
3
8
1
2
,
9
4
)
0
1
3
,
4
1
3
(
6
0
7
,
7
2
0
,
1
0
0
5
,
2
7
0
,
1
)
2
0
5
0
5
4
(
,
)
6
8
3
8
(
,
)
6
1
1
2
4
4
(
,
-
0
4
5
9
4
,
)
4
6
6
(
)
9
8
8
3
8
(
,
)
5
1
5
,
5
8
4
(
-
0
4
5
9
4
,
-
)
5
7
1
(
9
7
9
,
0
4
-
-
)
9
8
4
(
)
9
8
8
3
8
(
,
)
4
9
4
,
6
2
5
(
)
1
7
3
8
(
,
)
6
1
1
2
4
4
(
,
-
-
)
9
8
4
(
)
6
7
9
,
0
5
4
(
-
-
-
-
-
-
5
3
5
4
0
5
,
)
2
0
4
9
5
(
,
3
3
1
,
5
4
4
7
3
6
,
0
0
4
,
2
)
6
9
3
6
(
,
8
8
5
,
0
3
1
)
2
6
4
0
2
(
,
)
8
5
8
,
6
2
(
,
1
3
9
0
1
5
)
0
4
9
8
3
(
,
1
9
9
,
1
7
4
9
4
0
,
0
7
2
,
2
6
0
7
,
6
9
3
,
1
3
9
0
1
5
-
1
3
9
,
0
1
5
-
)
0
4
9
8
3
(
,
)
0
4
9
,
8
3
(
-
-
-
-
-
-
-
)
9
8
8
3
8
(
,
)
9
8
8
,
3
8
(
-
-
-
-
1
7
3
8
,
-
-
-
1
7
3
,
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
6
7
,
4
9
1
)
5
7
2
,
5
4
1
(
9
5
9
,
7
3
)
0
1
3
,
4
1
3
6
0
7
,
7
2
0
,
1
0
0
5
,
2
7
0
,
1
6
5
2
,
0
6
3
,
2
0
1
7
,
4
4
1
6
4
5
,
5
1
2
,
2
1
6
6
,
6
5
4
3
2
8
,
5
5
1
)
4
6
1
,
9
2
2
(
0
3
3
,
6
4
)
0
1
3
,
4
1
3
(
6
0
7
,
7
2
0
,
1
0
0
5
,
2
7
0
,
1
d
o
i
r
e
p
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
y
n
a
p
m
o
C
e
h
t
f
o
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
s
n
o
i
t
u
b
i
r
t
s
i
d
d
n
a
s
n
o
i
t
u
b
i
r
t
n
o
C
r
a
e
y
e
h
t
n
i
y
t
i
l
i
b
a
i
l
n
o
i
t
p
o
t
u
p
n
i
t
n
e
m
e
v
o
M
n
i
n
o
i
t
c
e
j
n
i
h
s
a
c
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
r
a
e
y
e
h
t
g
n
i
r
u
d
s
e
i
r
a
i
d
i
s
b
u
s
d
e
t
a
d
i
l
o
s
n
o
c
n
o
i
t
a
fl
n
i
r
e
p
y
h
f
o
t
c
a
p
m
i
r
o
f
t
n
e
m
e
t
a
t
s
e
R
m
o
r
f
g
n
i
t
l
u
s
e
r
s
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
*
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
m
r
o
f
e
v
r
e
s
e
r
l
a
g
e
L
s
d
n
e
d
i
v
i
D
s
n
o
i
t
u
b
i
r
t
s
i
d
d
n
a
s
n
o
i
t
u
b
i
r
t
n
o
c
l
a
t
o
T
s
t
s
e
r
e
t
n
i
p
i
h
s
r
e
n
w
o
n
i
e
g
n
a
h
C
0
2
0
2
r
e
b
m
e
c
e
D
1
3
t
A
r
a
e
y
e
h
t
g
n
i
r
u
d
s
e
i
r
a
i
d
i
s
b
u
s
d
o
i
r
e
p
e
h
t
r
o
f
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
y
n
a
p
m
o
C
e
h
t
f
o
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
s
n
o
i
t
u
b
i
r
t
s
i
d
d
n
a
s
n
o
i
t
u
b
i
r
t
n
o
C
r
a
e
y
e
h
t
n
i
y
t
i
l
i
b
a
i
l
n
o
i
t
p
o
t
u
p
n
i
t
n
e
m
e
v
o
M
s
n
o
i
t
u
b
i
r
t
s
i
d
d
n
a
s
n
o
i
t
u
b
i
r
t
n
o
c
l
a
t
o
T
r
a
e
y
e
h
t
g
n
i
r
u
d
s
e
i
r
a
i
d
i
s
b
u
s
d
e
t
a
d
i
l
o
s
n
o
c
n
o
i
t
a
fl
n
i
r
e
p
y
h
f
o
t
c
a
p
m
i
r
o
f
t
n
e
m
e
t
a
t
s
e
R
m
o
r
f
g
n
i
t
l
u
s
e
r
s
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
*
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
m
r
o
f
e
v
r
e
s
e
r
l
a
g
e
L
s
t
s
e
r
e
t
n
i
p
i
h
s
r
e
n
w
o
n
i
e
g
n
a
h
C
9
1
0
2
r
e
b
m
e
c
e
D
1
3
t
A
s
d
n
e
d
i
v
i
D
9
1
0
2
y
r
a
u
n
a
J
1
t
a
s
A
d
o
i
r
e
p
e
h
t
r
o
f
t
fi
o
r
P
0
2
0
2
y
r
a
u
n
a
J
1
t
a
s
A
d
o
i
r
e
p
e
h
t
r
o
f
t
fi
o
r
P
’
0
0
0
P
G
E
o
t
e
l
b
a
t
u
b
i
r
t
s
i
d
t
o
n
s
i
e
v
r
e
s
e
r
s
i
Th
.
l
a
t
i
p
a
c
d
e
u
s
s
i
’
s
y
r
a
i
d
i
s
b
u
s
h
c
a
e
f
o
%
0
5
s
t
n
e
s
e
r
p
e
r
s
i
h
t
t
a
h
t
e
m
i
t
h
c
u
s
l
i
t
n
u
e
v
r
e
s
e
r
l
a
g
e
l
a
o
t
n
i
t
fi
o
r
p
t
e
n
l
a
u
n
n
a
s
t
i
f
o
%
5
t
s
a
e
l
t
a
e
d
i
s
a
t
e
s
t
s
u
m
y
r
a
i
d
i
s
b
u
s
h
c
a
e
w
a
L
n
a
i
t
p
y
g
E
r
e
d
n
U
*
.
y
n
a
p
m
o
C
e
h
t
f
o
s
r
e
n
w
o
e
h
t
Financial Statements • Consolidated Financial StatementsAnnual Report 2020
113
Notes to the Condensed Consolidated
Financial Statements
For the Year Ended 31 December 2020
(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 2020 were authorised for issue in accordance with a resolution of the direc-
tors on 17 May 2021. 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
Companies 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
concentrated 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 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 state-
ments 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 oper-
ates (‘the functional currency’). The Group’s consolidated financial statements are presented in Egyptian Pounds,
being the reporting 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
As part of the going concern assessment to assess the resilience of the Group’s financial position and liquidity, man-
agement has considered several scenarios and a reasonable, but plausible severe downside test to the period from
the annual account’s approval to May 2022. The severe downside scenario has anticipated the same lowest volume
that occurred in April and May 2020 for Q2 and Q3 2021. This lowest level occurred due to the disruption caused by
the pandemic at the very beginning where the adaptability of people was significantly low, and also this is the period
in which the government had taken the strictest restrictions for business and movement of people. This volume
represents a 40% reduction than the average normal rate in which the company used to achieve before the pandemic.
Additionally, Q4 2021 assumes the same trading levels as January 2021 (which does not factor in seasonality, as
Integrated Diagnostics HoldingsAnnual Report 2020 114
average monthly revenue in Q4 tends to be around 20% higher than January of the same year) and is more than
40% lower than Q4 2020. Revenue for January and February 2022 was also assumed to be in line with January 2021,
while March 2022 was assumed at a 20% increase from February 2022 due to seasonality, and finally April 2022
factored in a reduction in volumes during Ramadan. The scenario has assumed that there is no fixed cost reduction;
no reduction in the forecasted capital expenditure, while it has assumed the postponement of dividend payments.
That said scenario did not affect the Group’s ability to meet its financial obligation nor the financial covenants. The
sever downside scenarios showed that the Group’s current financial position and cash balance, generated from its
operational activities, will alleviate any potential downside risk; moreover, it presents that the group has sufficient
cash within this downside scenario to repay debts and to continue to operate as a going concern without the need
to refinance the debt or raise future equity. Consequently, the Directors are confident that the Group will have suf-
ficient funds to continue to meet its liabilities as they fall due for at least 12 months from the date of approval of the
financial statements and therefore have prepared the financial statements on a going concern basis.
Basis of consolidation
2.1.
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31
December 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from its involve-
ment with the investee and has the ability to affect those returns through its power over the investee.
Subsidiaries
i.
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.
Change in subsidiary ownership and loss of control
ii.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. 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.
Transactions eliminated on consolidation
iii.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transac-
tions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated
against the investment 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
The accounting policies set out below have been consistently applied to all the years presented in these consolidated
financial statements.
The accounting policies applied by the Group in these condensed consolidated financial statements are consis-
tent with those applied in the audited consolidated financial statements published as at and for the year ended 31
December 2019.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 115
Business combinations and goodwill
a)
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 accor-
dance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Any con-
tingent 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 liabilities 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 on an annual basis, goodwill acquired in a business combina-
tion 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.
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 determining 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.
Fair value measurement
b)
The Group measures financial instruments such as non-derivative financial instruments and contingent consider-
ation 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
determines 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 estimated by discounting the future contracted cash flows at the current market interest rate that is available to
the Group for similar transactions.
Integrated Diagnostics HoldingsAnnual Report 2020 116
Revenue recognition
c)
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.
2.
Identification of the Contracts: written contracts are signed between IDH and customers. The contracts stipulate
the duration, price per test and credit period.
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.
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.
The performance obligations are the diagnostics tests within the pathology and radiology services. The performance
obligation is achieved when the customer receives their test results, and so are recognised at point in time.
5. That there are no other revenue streams other than those whose performance obligation occurs at a point in time.
3.
4.
Income Taxes
d)
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.
Current tax
i.
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.
Deferred tax
ii.
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
carrying 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.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 117
Foreign currency
e)
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 cur-
rency are translated using the exchange rates at the date when the fair value is determined. On consolidation, the
assets and liabilities of foreign operations are translated into Egyptian Pounds at the rate of exchange 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.
Hyperinflationary Economies
f)
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 report-
ing in Hyperinflationary Economies, the financial statements of those subsidiaries were restated by applying the
consumer price index at closing rates in December 2020 6,746 (2019 December, 2,321) before they were included in
the consolidation financial statements. The comparative information as the financial information as the financial
information of SAMA Medical Laboratories Co. and AL-Mokhtabar Sudanese Egyptian Co whose functional currency
is hyperinflationary is translated into a different presentation currency (EGP), this is done in accordance with IAS
21 as follows. If the presentation currency is not hyperinflationary, then comparative amounts are not restated for
changes in either the general price level in the functional currency (i.e. as otherwise required by IAS 29) or the
exchange rate between the functional and presentation currencies. As such, the comparative amounts remain those
amounts reported as current for the previous reporting period. 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 differences arising, if any, are
recognized on income statement within the finance cost and accumulated in equity (attributed to non-controlling
interests as appropriate). The gain or loss on the net monetary position is recognised in profit or loss.
Property, plant and equipment
g)
All property and equipment are stated at historical cost less accumulated depreciation. Historical cost includes
expenditure 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 carry-
ing 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 lease arrangements are depreciated
under a unit of production method as this most closely reflects the consumption of benefits from the equipment.
Integrated Diagnostics HoldingsAnnual Report 2020 118
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.
Intangible assets
h)
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, intan-
gible 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 expen-
diture 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 amortisation 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 indi-
vidually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine
whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is
made on a prospective basis.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 119
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
acquired 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 40 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 addition, 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.
Financial instruments – initial recognition and subsequent measurement
J)
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.
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 appro-
priate. 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 any material financial assets classified as financial assets at fair value through the profit or
loss at 31 December 2020 and 31 December 2019.
Integrated Diagnostics HoldingsAnnual Report 2020 120
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
arrangement, 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.
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 Groups view of economic conditions over the expected lives of the receivables.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 121
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.
Put option Echo-Scan included in long-term financial obligations are carried at fair value (note 26).
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, put option (Bio lab) and
loans and borrowings including 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.
Offsetting of financial instruments
iii.
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.
Impairment of non-financial assets
k)
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 11
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indica-
tion 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 dis-
count 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 transac-
tions 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.
Integrated Diagnostics HoldingsAnnual Report 2020 122
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.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indica-
tion 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
impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recover-
able 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 impair-
ment 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
appropriate, 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 77,727K (31 December 2019: EGP 36,012K)
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 123
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.
Cash and short-term deposits
m)
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.
Provisions
n)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable 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 example, 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.
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.
Pensions and other post-employment benefits
o)
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.
Segment reporting
p)
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 per-
formance of the operating segments, has been identified as the steering committee that makes strategic decisions.
The preparation of the Group’s consolidated financial statements in conformity with adopted IFRSs requires man-
agement to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses,
assets and liabilities.
Integrated Diagnostics HoldingsAnnual Report 2020
124
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
application of the Group’s lease accounting policy and the reported amounts of assets, liabilities, and expenses.
Information about judgment, estimate and assumptions relating to leases are set out in note 27.
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 state-
ments 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.
Impairment 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. Significant judgements are used to estimate the growth in the volume of patients and applied in
computing the recoverable amount of the different Echo Scan CGUs. The sensitivity of estimates used to calculate
the value in use of each CGU are discussed in note12.
Leases as lessee (IFRS 16)
q)
At the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or con-
tains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration.
As a lessee
The Group allocates the consideration in the contract to each lease component on the basis of its relative stand-
alone price and the aggregate stand-alone price of the non-lease components.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 125
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less
any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the
lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the
right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same
basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commence-
ment date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
•
•
fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group is reasonably certain to exercise,
lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option,
and
penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
•
•
•
•
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate, there is a change in the Group’s estimate of
the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether
it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of
the right-of-use asset, to the extent that the right-of-use asset is reduced to nil, with any further adjustment required
from the remeasurement being recorded in profit or loss.
Integrated Diagnostics HoldingsAnnual Report 2020 126
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
Egypt region
31-Dec-20
31-Dec-19
2,173,411
1,902,788
For the year ended
Egypt region
31-Dec-20
31-Dec-19
557,743
499,745
Revenue by geographic location
Sudan
region
37,695
36,927
Jordan
region
409,069
256,700
Nigeria
region
36,089
30,080
Net profit and loss by geographic location
Sudan
region
7,529
3,684
Jordan
region
71,043
44,162
Nigeria
region
(26,833)
(43,056)
Total
2,656,264
2,226,495
Total
609,482
504,535
Walk-in
contract
Walk-in
contract
Revenue by categories
2020
2019
EGP’000
EGP’000
1,119,953
1,536,311
2,656,264
895,335
1,331,160
2,226,495
Revenues by categories
(restated)
2020
2019
EGP’000
EGP’000
1,221,926
1,434,338
2,656,264
974,036
1,252,459
2,226,495
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 127
In 2020, management revisited the definition of contract customers who have contractual agreements and are
granted discounts above 20%, hence all cash paying customers with discounts equal or below 20% were reclassified
as walk-in”. Before 2019, the contract client’s definition included all patients who were granted discounts from the
regular prices, irrespective of any contractual agreement. Therefore, management revisited the definition and the
criteria so that contract clients only include patients who have contractual agreements with IDH. The operating
segment profit measure reported to the CODM is EBITDA, as follows:
Pathology
Radiology
Revenue by type
Net profit by type
2020
EGP’000
2,595,173
61,092
2019
EGP’000
2,182,208
44,287
2,656,264
2,226,495
2020
2019
EGP’000
EGP’000
645,307
(35,826)
609,482
556,929
(52,395)
504,534
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
2020
EGP’000
985,546
179,046
5,926
1,170,518
2019
EGP’000
790,840
146,617
6,862
944,319
The non- current assets reported to CODM is in accordance with IFRS are as follows:
For the year ended
Egypt region
31-Dec-20
31-Dec-19
2,415,220
2,334,043
Non-current assets by geographic location
Sudan
region
24,132
17,518
Jordan
region
263,767
237,155
Nigeria
region
113,941
128,820
Total
2,817,060
2,717,536
Capital management
4.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a s 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 sharehold-
ers, 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.
Integrated Diagnostics HoldingsAnnual Report 2020 128
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 obliga-
tions) 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 debt
Total Equity
Net debt to equity ratio
2020
1,507,295
(600,130)
907,165
2019
1,215,907
(408,892)
807,015
2,426,374
2,360,256
37.4%
34.2%
No changes were made in the objectives, policies or processes for managing capital during the years ended 31
December 2020 and 2019.
Group information
5.
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”)
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
WAYAK Pharma
% equity interest
Principal activities
Country of
Incorporation
2020
Medical diagnostics service
Egypt
99.30%
Medical diagnostics service
Medical diagnostics service
Medical diagnostics service
Holding company of SAMA
Medical diagnostics service
Egypt
Egypt
Jordan
Egypt
Egypt
99.90%
55.00%
60.00%
100.00%
99.60%
Medical diagnostics service
Sudan
80.00%
Medical diagnostics service
Sudan
65.00%
2019
99.30%
99.90%
55.00%
60.00%
100.00%
99.60%
80.00%
65.00%
Intermediary holding
company
Intermediary holding
company
Intermediary holding
company
Medical diagnostics service
Medical services
Caymans Island
100.00%
100.00%
England and Wales
51.00%
51.00%
Mauritius
76.50%
Nigeria
Egypt
100.00%
99.99%
76.50%
100.00%
99.99%
Full details of the Group historical acquisitions can be found in the prospectus for the initial public offering by the
Company dated 6 May 2015 and available at www.idhcorp.com.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 Non-Controlling interest
6.
Non-Controlling Interest is measured at the proportionate share basis.
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
laboratory “
Al Borg Laboratory Company
Country of incorporation
Egypt
Jordan
Sudan
Egypt
Dynasty Group Holdings Limited
England and Wales
2020
45.0%
40.0%
20.0%
0.7%
49%
129
2019
45.0%
40.0%
20.0%
0.7%
49%
Eagle Eye
Mauritius
23.53%
23.53%
Integrated Diagnostics HoldingsAnnual Report 2020 130
.
s
n
o
i
t
a
n
m
i
i
l
e
y
n
a
p
m
o
c
-
r
e
t
n
i
e
r
o
f
e
b
s
t
n
u
o
m
a
n
o
d
e
s
a
b
s
i
n
o
i
t
a
m
r
o
f
n
i
s
i
Th
w
o
.
l
e
b
d
e
d
i
v
o
r
p
s
i
s
e
i
r
a
i
d
i
s
b
u
s
e
s
e
h
t
f
o
n
o
i
t
a
m
r
o
f
n
i
l
a
i
c
n
a
n
fi
d
e
s
i
r
a
m
m
u
s
e
Th
l
a
t
o
T
p
u
o
r
G
y
t
s
a
n
y
D
h
t
i
w
s
e
i
r
a
d
s
b
u
s
i
i
I
C
N
l
a
i
r
e
t
a
m
m
i
r
e
h
t
O
g
r
o
b
A
l
y
n
a
p
m
o
C
y
r
o
t
a
r
o
b
a
L
’
0
0
0
P
G
E
’
0
0
0
P
G
E
’
0
0
0
P
G
E
’
0
0
0
P
G
E
,
0
4
1
1
9
0
3
,
6
0
0
4
3
7
,
)
0
2
4
7
1
(
,
6
8
5
,
6
1
7
8
6
4
5
1
,
)
6
8
0
,
0
1
(
,
2
4
9
1
1
2
1
,
,
3
9
1
0
8
6
1
,
)
7
7
4
4
0
5
(
,
)
1
2
8
0
5
8
(
,
7
3
8
,
6
3
5
,
1
3
8
3
,
6
5
1
9
9
0
2
2
1
,
)
7
4
8
5
2
(
,
)
9
1
9
4
3
(
,
)
1
6
2
6
(
,
2
7
0
,
5
5
9
8
0
6
3
,
)
2
3
8
6
2
(
,
)
9
8
7
5
1
(
,
)
1
2
6
,
2
4
(
)
2
9
9
5
1
(
,
)
1
6
2
,
9
(
1
4
9
3
1
1
,
5
1
6
3
4
,
)
1
2
6
3
2
(
,
)
1
2
1
4
2
(
,
4
1
8
,
9
0
1
3
2
0
,
5
4
7
3
9
0
9
8
,
)
1
7
1
4
8
1
(
,
)
6
4
7
1
1
5
(
,
)
1
6
2
6
(
,
9
5
7
,
8
8
1
,
7
3
2
1
3
7
1
,
0
6
0
1
,
8
1
3
4
5
4
,
8
7
3
,
5
5
4
9
9
5
2
,
3
6
2
5
2
7
6
5
5
,
,
3
9
3
0
4
0
1
,
)
3
8
9
6
1
2
(
,
)
3
5
8
2
6
4
(
,
2
8
2
,
7
1
9
4
2
3
,
0
4
)
9
1
1
3
4
(
,
)
6
8
7
3
6
(
,
5
0
6
3
1
1
,
-
0
0
7
,
6
-
-
3
2
9
1
1
9
,
9
8
8
8
3
2
,
1
9
6
1
,
9
8
8
,
8
3
2
3
0
3
7
5
3
,
5
9
8
6
3
4
,
)
7
9
5
9
9
1
(
,
)
5
2
6
4
5
2
(
,
6
7
9
,
9
3
3
5
0
4
,
2
-
4
8
8
8
9
4
,
)
6
3
4
7
2
1
(
,
)
6
7
7
8
1
3
(
,
9
6
0
9
0
4
,
3
4
0
1
7
,
)
1
9
6
2
(
,
2
5
3
,
8
6
9
1
7
8
2
,
)
8
8
0
,
1
(
7
3
2
3
8
1
,
5
8
1
5
5
1
,
)
9
4
2
4
6
(
,
)
7
1
5
4
0
1
(
,
6
5
6
,
9
6
1
2
8
5
,
8
6
-
3
7
0
3
1
3
,
8
9
8
2
3
,
)
6
5
6
1
7
2
(
,
)
n
a
d
r
o
J
e
t
i
m
e
h
s
a
H
(
f
o
m
o
d
g
n
K
i
’
0
0
0
P
G
E
p
u
o
r
G
b
a
r
A
l
A
n
u
o
y
i
r
a
b
h
k
a
M
l
A
’
0
0
0
P
G
E
-
2
2
8
2
,
)
2
1
4
3
(
,
)
2
1
4
,
3
(
)
9
4
5
1
(
,
-
6
3
7
5
0
1
4
,
)
7
2
(
)
5
0
7
4
(
,
9
0
1
9
4
9
9
0
2
2
1
,
)
7
4
8
5
2
(
,
)
9
1
9
4
3
(
,
)
1
6
2
6
(
,
2
7
0
,
5
5
r
e
t
n
e
C
c
i
t
e
n
e
G
l
i
a
c
d
e
M
:
0
2
0
2
r
o
f
s
s
o
l
r
o
t
fi
o
r
p
f
o
t
n
e
m
e
t
a
t
s
d
e
s
i
r
a
m
m
u
S
o
t
d
e
t
a
c
o
l
l
a
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
d
e
t
a
c
o
l
l
a
t
fi
o
r
P
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
n
o
i
t
i
s
o
p
l
a
i
c
n
a
n
fi
f
o
t
n
e
m
e
t
a
t
s
d
e
s
i
r
a
m
m
u
S
:
0
2
0
2
r
e
b
m
e
c
e
D
1
3
t
a
s
a
e
u
n
e
v
e
R
t
fi
o
r
P
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
e
l
b
a
t
u
b
i
r
t
t
a
s
t
e
s
s
a
t
e
N
t
s
e
r
e
t
n
i
r
a
e
y
r
o
f
n
o
i
t
a
m
r
o
f
n
i
w
o
fl
h
s
a
c
d
e
s
i
r
a
m
m
u
S
:
0
2
0
2
r
e
b
m
e
c
e
D
1
3
d
e
d
n
e
h
s
a
c
d
n
a
h
s
a
c
n
i
)
e
s
a
e
r
c
e
d
(
/
e
s
a
e
r
c
n
i
t
e
N
s
t
n
e
l
a
v
i
u
q
e
I
C
N
o
t
d
n
e
d
i
v
i
D
g
n
i
t
a
r
e
p
O
g
n
i
t
s
e
v
n
I
g
n
i
c
n
a
n
F
i
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
c
-
n
o
N
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
s
t
e
s
s
a
t
n
e
r
r
u
C
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
C
s
t
e
s
s
a
t
e
N
2
7
6
,
2
5
5
1
3
,
4
7
Financial Statements • Consolidated Financial StatementsAnnual Report 2020
131
)
7
5
9
5
1
2
(
,
)
3
3
2
9
6
3
(
,
6
7
1
,
1
5
8
,
1
8
0
7
,
4
4
1
7
7
5
6
,
,
3
6
9
6
1
7
)
5
2
5
7
6
(
,
)
9
7
0
1
8
6
(
,
)
4
6
0
,
5
2
(
,
2
0
5
3
0
3
1
,
,
4
6
8
2
3
1
1
,
7
8
8
0
2
7
,
)
4
1
1
2
3
(
,
3
7
7
,
8
8
6
)
6
9
3
6
(
,
)
2
6
4
,
0
2
(
,
0
4
5
4
7
6
2
,
2
1
7
0
3
,
)
4
2
6
7
4
(
,
)
6
2
5
0
2
(
,
)
0
5
1
,
8
6
(
)
0
9
0
6
2
(
,
)
5
9
7
,
5
1
(
-
7
7
6
0
6
1
,
2
7
5
6
2
,
)
6
5
1
7
2
(
,
3
9
0
,
0
6
1
4
4
4
,
8
7
-
)
0
0
5
(
5
6
8
4
3
,
)
9
6
5
6
6
(
,
,
6
6
1
2
0
5
1
,
7
1
2
4
4
0
9
1
,
9
5
5
1
5
4
9
4
7
,
1
5
4
2
6
3
1
2
5
,
7
9
4
5
9
7
,
)
6
5
5
4
9
(
,
)
9
3
9
0
7
1
(
,
4
6
3
,
1
5
0
,
1
9
2
8
-
3
7
1
3
4
4
,
)
0
3
7
3
5
(
,
)
0
6
2
9
2
4
(
,
-
-
4
3
3
7
7
8
,
3
3
8
3
7
2
,
8
4
2
2
,
3
3
8
,
3
7
2
6
4
5
0
8
2
,
1
4
2
7
9
3
,
)
3
9
1
9
6
(
,
)
6
8
1
3
2
1
(
,
8
0
4
,
5
8
4
6
3
4
,
3
-
4
1
4
9
2
2
,
9
6
3
8
6
,
)
3
8
1
0
6
2
(
,
)
4
0
2
,
2
3
(
)
7
1
8
,
9
3
(
0
0
6
,
7
3
l
a
t
o
T
p
u
o
r
G
y
t
s
a
n
y
D
h
t
i
w
s
e
i
r
a
d
s
b
u
s
i
i
I
C
N
l
a
i
r
e
t
a
m
m
i
r
e
h
t
O
g
r
o
b
A
l
y
n
a
p
m
o
C
y
r
o
t
a
r
o
b
a
L
’
0
0
0
P
G
E
’
0
0
0
P
G
E
’
0
0
0
P
G
E
’
0
0
0
P
G
E
0
0
7
6
5
2
,
4
0
5
3
4
,
)
8
7
7
1
1
(
,
6
2
7
,
1
3
2
0
4
7
1
,
)
1
1
7
,
4
(
1
9
4
9
6
1
,
2
9
8
7
7
,
)
8
0
2
2
5
(
,
)
7
4
3
6
4
(
,
8
2
8
,
8
4
1
1
3
5
,
9
5
6
6
5
4
4
,
)
5
9
5
5
1
(
,
)
1
0
5
6
2
(
,
7
7
5
6
,
7
4
0
,
9
-
8
2
6
7
,
)
5
8
3
(
)
5
8
3
(
)
3
7
1
(
-
-
8
8
7
0
0
3
6
,
)
5
0
6
1
(
,
3
8
4
,
5
8
6
4
,
2
-
-
-
0
1
3
0
1
3
)
n
a
d
r
o
J
e
t
i
m
e
h
s
a
H
(
f
o
m
o
d
g
n
K
i
’
0
0
0
P
G
E
p
u
o
r
G
b
a
r
A
l
A
n
u
o
y
i
r
a
b
h
k
a
M
l
A
’
0
0
0
P
G
E
r
e
t
n
e
C
c
i
t
e
n
e
G
l
i
a
c
d
e
M
:
9
1
0
2
r
o
f
s
s
o
l
r
o
t
fi
o
r
p
f
o
t
n
e
m
e
t
a
t
s
d
e
s
i
r
a
m
m
u
S
o
t
d
e
t
a
c
o
l
l
a
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
d
e
t
a
c
o
l
l
a
t
fi
o
r
P
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
l
a
t
o
T
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
n
o
i
t
i
s
o
p
l
a
i
c
n
a
n
fi
f
o
t
n
e
m
e
t
a
t
s
d
e
s
i
r
a
m
m
u
S
:
9
1
0
2
r
e
b
m
e
c
e
D
1
3
t
a
s
a
e
u
n
e
v
e
R
t
fi
o
r
P
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
e
l
b
a
t
u
b
i
r
t
t
a
s
t
e
s
s
a
t
e
N
t
s
e
r
e
t
n
i
r
a
e
y
r
o
f
n
o
i
t
a
m
r
o
f
n
i
w
o
fl
h
s
a
c
d
e
s
i
r
a
m
m
u
S
:
9
1
0
2
r
e
b
m
e
c
e
D
1
3
d
e
d
n
e
h
s
a
c
d
n
a
h
s
a
c
n
i
)
e
s
a
e
r
c
e
d
(
/
e
s
a
e
r
c
n
i
t
e
N
s
t
n
e
l
a
v
i
u
q
e
I
C
N
o
t
d
n
e
d
i
v
i
D
g
n
i
t
a
r
e
p
O
g
n
i
t
s
e
v
n
I
g
n
i
c
n
a
n
F
i
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
c
-
n
o
N
s
t
e
s
s
a
t
n
e
r
r
u
c
-
n
o
N
s
t
e
s
s
a
t
n
e
r
r
u
C
s
e
i
t
i
l
i
b
a
i
l
t
n
e
r
r
u
C
s
t
e
s
s
a
t
e
N
Integrated Diagnostics HoldingsAnnual Report 2020
132
Expenses and other income
7.
Included in profit and loss are the following:
Impairment on trade and other receivables
(Credit)/Charge for increase in provisions
Professional and advisory fees
Amortisation
Depreciation
Total
2020
2019
EGP’000
EGP’000
42,131
(1,865)
16,408
5,926
179,046
241,646
8,647
3,521
9,499
6,862
146,617
175,146
7.1. 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
7.2. 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 cost
2020
2019
EGP’000
EGP’000
8,544
4,008
55
8,512
2,992
164
12,607
11,668
2020
2019
EGP’000
EGP’000
(67,851)
(12,580)
(3,676)
(84,107)
(60,997)
(15,517)
(3,591)
(80,105)
2020
2019
EGP’000
EGP’000
53,120
14,523
67,643
43,576
3,833
47,409
(16,464)
(32,696)
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 133
Employee numbers and costs
7.3.
The average number of persons employed by the Group (including directors) during the year and the aggregate pay-
roll costs of these persons, analysed by category, were as follows:
2020
2019
Medical Administration
Total
Medical Administration
Total
Average number of
employees
4,813
798
5,611
4,168
1,272
5,440
Wages and salaries
Social security costs
Contributions to defined
contribution plan
Total
2020
EGP’000
Medical Administration
363,397
19,736
6,888
127,655
5,269
1,473
2019
EGP’000
Total
491,052
25,005
8,361
Medical Administration
357,308
20,082
5,700
109,932
4,647
1,399
Total
467,240
24,729
7,099
390,021
134,397
524,418
383,090
115,978
499,068
Details of Directors’ and Key Management remuneration and share incentives are disclosed in the Remuneration
Report and note 28.
8.
a)
Income tax
Amounts recognised in profit or loss
Current year tax
WHT suffered
Current tax
DT on undistributed reserves
DT on reversal of temporary differences
Total Deferred tax
Tax expense recognized in profit or loss
2020
EGP’000
(268,796)
(24,470)
(293,266)
(67,124)
790
(66,334)
(359,600)
2019
EGP’000
(220,390)
(27,581)
(247,971)
(5,241)
(397)
(5,638)
(253,609)
Reconciliation of effective tax rate
b)
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% (2019: 22.5%) tax rate. The reconciliation of effective income tax rate has been performed using this rate.
In accordance with the Egyptian Law No. 991 of 2005, the employees’ profit share are deducted from the retained
earnings of the company and are approved by the general association meeting.
Integrated Diagnostics HoldingsAnnual Report 2020 134
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 6.8m in income tax expense.
Profit before tax
Profit before tax multiplied by rate of corporation tax in Egypt of 22.5% (2019: 22.5%)
Effect of tax rate in Jersey of 0% (2019: 0%)
Effect of tax rates in Jordan, Sudan and Nigeria of 21%, 30% and 30% respectively (2019:
21%, 15% and 30%)
Tax effect of:
Change in unrecognized deferred tax assets
Deferred tax arising on undistributed dividend
Non-deductible expenses for tax purposes - employee profit share
Current year losses for which no deferred tax asset was recognized
Non-deductible expenses for tax purposes - other
Tax expense recognised in profit or loss
2020
2019
EGP’000
EGP’000
969,083
218,044
12,839
(3,330)
8,947
91,593
18,223
11,507
1,778
758,143
170,582
12,901
(3,705)
2,018
32,822
22,430
12,025
4,536
359,600
253,609
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
2020
Assets
EGP’000
-
-
-
1,360
1,360
-
Liabilities
EGP’000
(18,334)
(106,702)
(116,657)
-
(241,693)
(240,333)
2019
Assets
EGP’000
-
-
-
1,360
1,360
-
Liabilities
EGP’000
(17,460)
(108,365)
(49,534)
-
(175,359)
(174,000)
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 135
The difference between net deferred tax balances recorded on the income statement is as follows:
2020
Property, plant and equipment
Intangible assets
Undistributed dividend from group subsidiaries
Provisions and finance lease liabilities
2019
Property, plant and equipment
Intangible assets
Undistributed dividend from group subsidiaries
Provisions and finance lease liabilities
Deferred
tax
recognized
in profit or
loss
(874)
1,663
(91,593)
-
Net Balance
1 January
(17,460)
(108,365)
(49,534)
1,360
WHT tax
paid
24,469
Net
Balance 31
December
(18,334)
(106,702)
(116,658)
1,360
(173,999)
(90,804)
24,469
(240,334)
Deferred
tax
recognised
in profit or
loss
3,102
(2,240)
(32,822)
(1,259)
(33,219)
Net balance
at 1 January
(20,562)
(106,125)
(44,293)
2,619
(168,361)
WHT tax
paid
27,581
Net
balance 31
December
(17,460)
(108,365)
(49,534)
1,360
27,581
(173,999)
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 2020 for the
country the liabilities and assets has arisen. The enacted tax rate in Egypt is 22.5% (2019: 22.5%), Jordan 21% (2019:
21%), Sudan 30% (2019: 30%) and Nigeria 30% (2019: 30%).
* Undistributed reserves from group subsidiaries
The Group’s dividend policy is to distribute any excess cash after taking into consideration all business cash require-
ments 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. On September 30, 2020, the Egyptian government issued a law
to increase the tax rate on non-distributed dividends to 10%. 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
2020
2019
EGP’000
EGP’000
58,558
24,122
22,319
-
-
11,659
116,658
22,524
12,343
8,987
434
44
5,202
49,534
Integrated Diagnostics HoldingsAnnual Report 2020 136
Unrecognized deferred tax assets
The following items make up unrecognised deferred tax assets. The local tax law does not permit deductions for
provisions against income tax until the provision becomes realised. No deferred tax asset has been recognised on tax
losses for both Eco Scan Nigeria and Wayak Egypt due to the uncertainty of the available future taxable profit, which
the Group can use the benefits therefrom.”
Impairment of trade receivables (Note 16)
Impairment of other receivables (Note 16)
Provision for legal claims (Note 22)
Tax losses*
Unrecognized deferred tax asset
2020
Gross
Amount
EGP’000
77,727
8,509
3,134
107,341
196,711
49,844
2020
Tax Effect
EGP’000
17,489
1,915
705
29,736
49,844
2019
Gross
Amount
EGP’000
36,012
8,516
5,082
57,633
107,243
28,452
* The company has carried forward tax losses on which no deferred tax asset is recognised as follow:
Company
Country
Dynasty Group Holdings Limited
England and Wales
Eagle Eye
Echo-Scan
WAYAK Pharma
Medical Genetic Center
Mauritius
Nigeria
Egypt
Egypt
2020
Gross
Amount
EGP’000
12,371
1,222
81,450
8,503
3,795
107,341
2019
Tax Effect
EGP’000
8,103
1,916
1,143
17,290
28,452
2020
Tax Effect
EGP’000
2,350
183
24,435
1,913
854
29,736
Earnings per share (EPS)
9.
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.
2020
2019
EGP’000
EGP’000
594,015
600,000
0.99
510,931
600,000
0.85
* At the Extraordinary General Meeting of the Company held on 23 December 2020, it was resolved that the Company’s existing issued ordinary share
capital of 150,000,000 ordinary shares of US$1.00 each (the “Existing Ordinary Shares”) will be sub-divided into 600,000,000 ordinary shares of US$0.25
each (the “New Ordinary Shares”) (the “Sub-Division”). The Sub-Division was successfully completed with effect from 24 December 2020.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020
l
a
t
o
T
9
6
8
2
,
7
0
0
3
7
9
,
,
1
4
4
0
1
2
-
)
2
4
1
9
(
,
)
7
8
6
5
4
(
,
8
8
4
,
1
3
1
,
1
8
2
6
8
,
1
8
6
2
3
1
,
)
4
2
6
6
(
,
)
6
6
7
3
1
(
,
8
2
2
7
6
2
,
2
0
9
8
9
,
)
4
1
5
6
(
,
)
4
7
6
3
1
(
,
2
4
9
,
5
4
3
,
2
3
6
8
1
1
)
7
0
4
1
(
,
)
3
7
7
3
(
,
4
9
3
,
9
5
4
3
1
0
,
3
9
7
6
4
5
,
5
8
7
-
-
-
-
-
9
9
0
4
,
-
-
-
9
9
0
,
4
4
2
3
1
,
-
-
-
-
-
-
-
-
-
7
0
4
,
2
5
2
,
1
3
2
4
,
5
-
-
8
3
7
5
5
,
7
4
7
5
4
1
,
1
1
0
5
,
4
2
9
,
9
1
)
6
9
6
4
(
,
)
5
6
8
6
7
1
(
,
-
)
8
3
9
(
)
9
8
7
2
(
,
8
0
2
,
1
2
-
-
-
-
-
-
-
-
-
3
2
4
,
5
9
9
0
,
4
8
0
2
,
1
2
4
2
9
,
9
1
*
*
t
n
u
o
c
c
a
n
o
t
n
e
m
y
a
P
&
g
n
d
i
l
i
u
B
l
d
o
h
e
s
a
e
L
s
t
n
e
m
e
v
o
r
p
m
i
n
i
n
o
i
t
c
u
r
t
s
n
o
c
,
s
e
r
u
t
x
F
i
&
s
g
n
i
t
t
i
f
l
d
o
h
e
s
a
e
L
,
l
i
a
c
d
e
M
&
c
i
r
t
c
e
e
l
m
e
t
s
y
s
n
o
i
t
a
m
r
o
f
n
i
-
6
0
5
5
5
,
6
5
7
4
1
,
-
)
3
6
7
2
(
,
)
8
9
5
5
(
,
0
6
5
4
,
1
6
4
,
6
6
3
0
7
8
,
)
2
2
5
(
)
1
8
3
1
(
,
1
6
2
,
3
7
0
4
1
5
,
4
3
7
1
2
,
)
8
3
2
2
(
,
)
6
6
5
3
(
,
0
7
0
,
1
2
4
5
1
6
,
1
8
8
)
6
7
8
(
9
2
2
,
7
2
2
3
0
,
6
4
1
9
3
,
5
4
l
s
e
c
h
e
v
i
-
1
6
9
2
4
,
8
7
4
5
8
1
,
-
)
2
1
7
1
(
,
)
7
7
5
9
(
,
1
3
1
8
,
3
7
4
2
3
,
1
8
2
,
5
2
2
)
8
3
6
(
)
3
4
6
2
(
,
3
7
4
,
4
5
2
3
0
8
0
8
,
2
5
0
8
2
,
)
2
5
3
1
(
,
)
5
9
3
2
(
,
7
6
9
3
3
,
8
0
1
,
5
0
1
7
8
)
0
5
6
(
2
1
5
,
8
3
1
1
6
9
,
5
1
1
3
7
1
,
0
2
1
9
6
8
2
,
8
3
2
2
9
,
3
1
6
7
6
3
,
)
7
6
6
4
(
,
)
7
4
5
1
2
(
,
4
6
8
6
4
,
0
7
3
,
3
8
4
8
2
6
8
,
5
1
6
4
8
,
)
5
7
6
2
(
,
)
1
4
2
8
(
,
7
9
6
,
5
6
5
9
4
3
2
3
1
,
4
5
0
8
5
,
)
4
2
9
2
(
,
)
3
3
4
7
(
,
6
4
0
,
0
8
1
4
5
4
0
7
,
)
0
8
3
2
(
,
)
1
9
1
2
(
,
9
2
9
,
5
4
2
8
6
7
,
9
1
3
4
2
3
,
3
0
3
s
t
n
e
m
e
v
o
r
p
m
i
t
n
e
m
p
u
q
e
i
&
d
n
a
L
s
g
n
d
i
l
i
u
B
-
-
9
4
6
3
6
6
8
1
2
,
-
-
5
5
5
)
9
6
2
4
(
,
0
1
3
7
1
1
,
3
5
3
,
2
3
3
)
3
6
5
(
5
4
3
,
2
3
3
-
6
5
6
7
,
2
4
3
2
3
,
)
0
8
2
(
8
1
7
,
9
3
7
5
0
8
,
5
)
6
5
(
4
2
7
,
7
4
1
2
6
,
4
8
2
5
3
6
,
2
9
2
n
o
i
t
a
n
i
b
m
o
c
s
s
e
n
i
s
u
b
n
i
d
e
r
i
u
q
c
A
n
o
i
t
a
u
l
a
v
r
o
t
s
o
C
9
1
0
2
y
r
a
u
n
a
J
1
t
A
n
o
i
t
a
fl
n
i
r
e
p
y
h
*
s
n
o
i
t
i
d
d
A
i
s
e
c
n
e
r
e
ff
d
e
g
n
a
h
c
x
E
s
l
a
s
o
p
s
i
D
s
r
e
f
s
n
a
r
T
9
1
0
2
r
e
b
m
e
c
e
D
1
3
t
A
0
2
0
2
r
e
b
m
e
c
e
D
1
3
t
A
i
s
e
c
n
e
r
e
ff
d
e
g
n
a
h
c
x
E
n
o
i
t
a
fl
n
i
r
e
p
y
h
s
n
o
i
t
i
d
d
A
s
l
a
s
o
p
s
i
D
t
n
e
m
r
i
a
p
m
i
d
n
a
n
o
i
t
a
i
c
e
r
p
e
D
r
a
e
y
e
h
t
r
o
f
e
g
r
a
h
c
n
o
i
t
a
i
c
e
r
p
e
D
9
1
0
2
y
r
a
u
n
a
J
1
t
A
9
1
0
2
r
e
b
m
e
c
e
D
1
3
t
A
i
s
e
c
n
e
r
e
ff
d
e
g
n
a
h
c
x
E
s
l
a
s
o
p
s
i
D
r
a
e
y
e
h
t
r
o
f
e
g
r
a
h
c
n
o
i
t
a
i
c
e
r
p
e
D
0
2
0
2
r
e
b
m
e
c
e
D
1
3
t
A
i
s
e
c
n
e
r
e
ff
d
e
g
n
a
h
c
x
E
s
l
a
s
o
p
s
i
D
e
u
l
a
v
k
o
o
b
t
e
N
0
2
0
2
-
2
1
-
1
3
t
A
9
1
0
2
-
2
1
-
1
3
t
A
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
l
,
y
t
r
e
p
o
r
P
.
0
1
137
t
n
e
m
p
i
u
q
e
l
l
a
e
s
u
a
c
e
b
s
t
s
o
c
g
n
i
w
o
r
r
o
b
d
e
s
i
l
a
t
i
p
a
c
y
n
a
d
e
d
u
l
c
n
I
t
o
n
t
n
u
o
m
a
s
i
Th
.
0
2
0
2
y
r
a
u
r
b
e
F
n
i
d
e
n
e
p
o
)
a
r
b
u
o
h
S
(
h
c
n
a
r
b
w
e
n
n
a
c
S
g
r
o
b
l
A
f
o
t
n
e
m
p
i
u
q
e
l
a
c
i
d
e
m
e
h
t
o
t
d
e
t
a
l
e
r
.
m
3
0
1
P
G
E
e
d
u
l
c
n
i
s
n
o
i
t
i
d
d
A
*
.
e
l
u
d
e
h
c
s
t
n
e
m
y
a
p
a
a
i
v
ff
o
g
n
i
y
a
p
e
r
a
d
n
a
4
2
0
2
-
3
2
0
2
s
r
a
e
y
n
i
n
w
o
d
n
a
e
v
i
e
c
e
r
l
l
i
w
H
D
I
t
a
h
t
s
e
h
c
n
a
r
b
o
t
t
c
e
p
s
e
r
h
t
i
w
a
s
a
e
d
a
m
s
t
n
e
m
y
a
p
o
t
s
e
t
a
l
e
r
s
i
h
t
t
n
u
o
c
c
a
n
o
t
n
e
m
y
a
P
*
*
.
e
s
u
o
t
y
d
a
e
r
Integrated Diagnostics HoldingsAnnual Report 2020
138
Leased equipment
The Group leases medical and electric equipment under lease arrangements. This equipment is supplied to service
the Group’s new state-of-the-art Mega Lab.
11.
Intangible assets
Cost
At 1 January 2019
Additions
Effect of movements in exchange rates
At 31 December 2019
Additions (note 6)
Effect of movements in exchange rates
At 31 December 2020
Amortisation and impairment
At 1 January 2019
Amortisation
Effect of movements in exchange rates
At 31 December 2019
Amortisation
Effect of movements in exchange rates
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Goodwill
Brand Name
EGP’000
EGP’000
Software
EGP’000
1,270,996
-
(6,910)
1,264,086
-
(2,278)
1,261,808
1,849
-
-
1,849
-
-
1,849
386,757
-
(2,343)
384,414
-
(492)
383,922
-
-
-
-
-
-
-
1,259,959
1,262,237
383,922
384,414
55,170
4,688
(300)
59,558
7,639
(40)
67,157
38,611
6,862
(100)
45,373
5,926
(16)
51,283
15,874
14,185
Total
EGP’000
1,712,923
4,688
(9,553)
1,708,058
7,639
(2,810)
1,712,887
40,460
6,862
(100)
47,222
5,926
(16)
53,132
1,659,755
1,660,836
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 12. 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:
139
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
Goodwill
Balance at 31 December
2020
EGP’000
2019
EGP’000
1,755
1,755
46,174
20,165
66,339
2,703
372
3,075
497,275
142,066
639,341
699,102
221,319
920,421
1,755
1,755
47,096
20,567
67,663
3,353
462
3,815
497,275
142,066
639,341
699,102
221,319
920,421
12,950
12,950
1,643,881
13,656
13,656
1,646,651
The Group performed its annual impairment test in October 2020. Nothing occurred between the impairment test
and the balance sheet date that would require the assumptions in the models to be updated. The Group consid-
ers the relationship between its market capitalisation and its book value, among other factors, when reviewing for
indicators of impairment.
Integrated Diagnostics HoldingsAnnual Report 2020 140
Assumptions used in value in use calculations and sensitivity to changes in assumptions
IDH instructed Alpha Capital an independent financial advisor, to prepare an independent impairment assessment
of the Group’s CGUs. The assessment was carried out based on business plans provided by IDH.
These plans have been prepared based on criteria set out below:
Ultra Lab
Bio Lab
Year 2020
Al-
Mokhtabar
Al-Borg
Echo-Scan
Average annual patient growth rate
from 2021 -2025
Average annual price per test
growth rate from 2021 -2025
Annual revenue growth rate from
2021 -2025
Average gross margin from 2021
-2025
Terminal value growth rate from 1
January 2026
Discount rate
8%
2%
11%
36.5%
1%
34.5%
6%
0%
6%
46.4%
2%
18.6%
5%
7%
12%
55%
3%
5%
7.5%
13%
49%
3%
20.3%
20.3%
25%
9.5%
54%
53%
2%
20%
Average annual patient growth rate
from 2020 -2024
Average annual price per test
growth rate from 2020 -2024
Annual revenue growth rate from
2020 -2024
Average gross margin from 2020
-2024
Terminal value growth rate from 1
January 2025
Discount rate
Ultra Lab
Bio Lab
Year 2019
Al-
Mokhtabar
Al-Borg
Echo-Scan
8%
4%
14%
36%
2%
5%
0%
5%
40%
2%
4%
8%
12%
52%
3%
4%
9%
13%
47%
3%
25%
13%
51%
46%
2%
27.20%
14.70%
16.60%
16.20%
22.20%
During year 2020, The management has conducted business plan projection with the help of an independent
advisor (Alpha Capital), using the assumptions above to be able to calculate the net present value of the asset
in use and determine the recoverable amount. The projected cash flows from 2021- 2025 have been based on
detailed forecasts prepared by management for each CGU and a terminal value thereafter. Management have used
experience and historic trends achieved 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.
Given the economic implication following Covid-19 pandemic, management opted to be conservative in the assumptions
which are reflected in a low average annual price increase and a higher discount rate. Starting H2 2020 patients returned
to the Labs to conduct their routine tests. Factoring out PCR tests from H2 volume, routine tests are almost at par vs. same
period last year, hence, Management estimated the volume to be recovered to pre COVID level starting 2022 Echo Scan is
expected to recover starting 2021 driven by the increase of both brand awareness and the demand of its services in Nigeria.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 141
As a sensitivity analysis, Management considered a change in the discount rates of 5% increase to reflect additional
risk that could reasonably be foreseen in the marketplaces in which the Group operates. This has not result to an
impairment under any of the CGUs.
For Goodwill allocated to Echo Scan CGU, management further considered a reduction in the projected annual
growth in patient volume to a compound average growth rate of 12%. Under these circumstances, the group would
have recognised an impairment charge of EGP 19.5m. EGP 13.0m of this impairment charge would have been allo-
cated to goodwill. A fair value assessment would be made over the property plant and equipment in order to consider
if the additional EGP 6.5m of impairment is required over these assets.
This recoverable amount is then compared to the carrying value of the asset as recorded in the books and records of
IDH plc. The WACC has been used considering 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.
13.
Other investees
Equity investment*
Balance at 31 December
2020
2019
EGP’000
EGP’000
9,604
9,604
6,391
6,391
*Biolab has signed an agreement with EVEX Medical Corporation to establish the biggest laboratory among the West Asia countries located in Tbilisi.
Biolab received consideration in the form of equity for its management services rendered to EVEX Medical corporation. This 4000-square-meters diag-
nostic medical laboratory will connect more than 40 hospitals, and diagnostic centres that are part of EVEX group, utilizing the advanced technological
systems that Biolab created in Jordan. EVEX Medical Corporation is the largest chain of hospitals in Georgia, currently represented with 78 clinics in
6 regions of Georgia.
The agreement is based on two elements:
1.
2.
Implementation of the technological platforms and biolab LIMS at Evex labs.
Taking the Mega Lab through the journey of Joint Commission International accreditation (JCI), within two years
from the expected launch date of the central laboratory.
Integrated Diagnostics HoldingsAnnual Report 2020 142
14. Financial assets and financial liabilities
The fair values of all financial assets and financial liabilities by class shown in the balance sheet are as follows:
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
Lease liabilities
Loans and borrowings
Total other financial liabilities
Total financial instruments
2020
EGP’000
600,130
276,625
364,117
1,240,872
2020
EGP’000
380,201
314,057
459,043
96,455
1,249,756
(8,884)
2019
EGP’00
408,892
221,617
289,833
920,342
2019
EGP’00
315,054
229,164
338,073
111,750
994,041
(73,699)
The fair values measurements for all the Group companies have been categorized as Level 2, except Echo-Scan which
has been categorized as level 3, it is fair value can’t be determined by using readily observable measures.
Echo-Scan put option (note 26) has been categorized as Level 3 as the fair value of the option is based on un-
observable inputs using the best information available in the current circumstances, including the company’s own
projection and taking into account all the market assumptions that are reasonably available.
Financial instruments risk management objectives and policies
The Group’s principal financial liabilities are trade and other payables, put option liability and finance lease liabili-
ties. 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 2020 and 2019. 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.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 143
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
assumptions 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 2020 and 2019.
Interest rate risk
-
The Group is trying to minimize its interest rate exposure, especially in Egypt region, characterized by decreasing
interest rate environment. 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
Lease liabilities (note 27)
Variable-rate instruments
Loans and borrowings (note 25)
2020
2019
EGP’000
EGP’000
459,043
338,073
93,033
106,721
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 930K. 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,
primarily 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 mini-
mize 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 denominated in a currency that is not the entity’s functional currency.
Integrated Diagnostics HoldingsAnnual Report 2020 144
At year end, major financial assets / (liabilities) denominated in foreign currencies were as follows (the amounts
presented are shown in the foreign currencies in thousands):
Assets
Liabilities
31-Dec-20
Cash
and cash
equivalents
Other
assets
Total
assets
Put option
Finance
lease
Trade
payables
Total
liability
Net
exposure
US
Dollars
Euros
GBP
JOD
SDG
NGN
US
Dollars
Euros
GBP
JOD
SDG
5,232
328
5,560
8
4
3,488
8,527
-
-
2,813
9,521
8
4
6,301
18,048
(4,326)
(1,859)
(6,185)
(72)
(9)
(3,195)
(22,387)
(72)
(9)
(19,405)
(45,850)
(625)
(64)
(5)
(13,104)
(27,802)
(12,794)
-
(3,416)
(23,463)
212,249
223,448
435,697
(771,189)
(359,641)
(353,546)
(1,484,376)
(1,048,679)
Assets
Liabilities
31-Dec-19
Cash
and cash
equivalents
Other
assets
Total
assets
Put option
Finance
lease
Trade
payables
Total
liability
Net
exposure
(4,049)
(1,330)
(5,379)
(1,267)
3,715
397
4,112
9
4
986
13,608
-
-
2,224
10,150
9
4
3,210
23,758
(8,850)
-
(3,252)
(15,559)
-
-
-
-
-
-
-
-
-
-
The following is the exchange rates applied:
US Dollars
Euros
GBP
JOD
SAR
SDG
NGN
US Dollars
Euros
GBP
JOD
SAR
SDG
NGN
(14)
-
(1,894)
(20,253)
(14)
-
(13,996)
(35,812)
(5)
4
(10,786)
(12,054)
Average rate for the year
ended
31-Dec-20
15.71
17.85
20.25
22.13
4.21
0.29
0.04
31-Dec-19
16.68
18.68
21.35
23.49
4.47
0.36
0.05
Spot rate for the year ended
31-Dec-20
15.66
19.23
21.38
22.06
4.18
0.28
0.04
31-Dec-19
15.98
17.94
21.09
22.50
4.26
0.35
0.04
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 145
At 31 December 2020, if the Egyptian Pounds had weakened / strengthened by 10% against the US Dollar with all other
variables held constant, pre-tax profit for the year would have increased / decreased by EGP (27m) (2019: EGP (1.2m)),
mainly as a result of foreign exchange gains/losses on translation of US dollar-denominated financial assets and liabilities.
At 31 December 2020, 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
17m (2019: EGP 37m), mainly as a result of foreign exchange gains/losses on translation of JOD - denominated
financial assets and liabilities.
At 31 December 2020, if the Egyptian Pounds had weakened / strengthened by 25% against the Sudanese Pound with
all other variables held constant, pre-tax profit for the year would have been increased / decreased by EGP
(1.2m) (2019: EGP 2.6m), mainly as a result of foreign exchange gains/losses on translation of SDG -denominated
financial assets and liabilities.
At 31 December 2020, 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 4m (2019: 8m),
mainly as a result of foreign exchange gains/losses on translation of SDG -denominated financial assets and liabilities.
- 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 a financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and if arises principally from under the Groups receivables. 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
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers the factors that may influence the credit risk of its customer base, including the default
risk associated with the industry and country or region in which customers operate. Details of concentration of
revenue are included in the operating segment note (see Note 3).
Integrated Diagnostics HoldingsAnnual Report 2020 146
The risk management committee has established a credit policy under which each new customer is analyzed individu-
ally for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered and credit
limit is set for each customer. The Group’s review includes external ratings, if available, financial statements, industry
information and in some cases bank references. Receivable limits are established for each customer and reviewed
quarterly. Any receivable balance exceeding the set limit requires approval from the risk management committee. In
response to the COVID-19 pandemic, the risk management committee has also been performing more frequent reviews
of sales limits for customers in regions and industries that are severely impacted. Outstanding customer receivables are
regularly monitored and the average general credit terms given to contract customers are 45 - 60 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.
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 man-
agement. 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 dis-
closed 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 undis-
counted payments:
Year ended 31 December 2020
Lease liabilities
Put option liability
Loans and borrowings
Trade and other payables
Year ended 31 December 2019
Lease liabilities
Put option liability
Loans and borrowings
Trade and other payables
1 year or
less
126,999
282,267
33,977
380,201
823,444
1 year or
less
117,712
199,141
38,580
315,054
670,487
1 to 5 years
more than 5
years
463,646
31,790
70,001
-
131,605
-
11,252
-
Total
722,250
314,057
115,230
380,201
565,437
142,857
1,531,738
1 to 5 years
more than 5
years
368,832
-
85,726
-
87,558
41,732
23,834
-
Total
574,102
240,873
148,140
315,054
454,558
153,124
1,278,169
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 147
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 opera-
tional needs. Such forecasting takes into consideration the group’s compliance with internal financial position ratio
targets and, if applicable 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.
15.
Inventories
Chemicals and operating supplies
2020
2019
EGP’000
EGP’000
100,115
100,115
84,339
84,339
During 2020, EGP 466,679k (2019: EGP 391,574k) was recognised as an expense for inventories, this was recognised
in cost of sales. The major balance of the raw material is represented in the Kits; slow-moving items of those Kits
are immaterial. The shelf life of the kits ranges between 3-6 months and high proportion of the kits are used before
expiry date. Noting that day’s inventory outstanding stands as 72 days at 31 Dec 2020
16.
Trade and other receivables
Trade receivables
Prepaid expenses
Receivables due from related parties
Other receivables
Accrued revenue
2020
EGP’000
325,770
19,363
2,910
34,431
1,006
2019
EGP’000
260,746
32,972
6,191
21,969
927
383,480
322,805
For terms and conditions relating to related party receivables, refer to Note 28.
As at 31 December 2020, the expected credit loss related to trade and other receivables was EGP 86,237k (2019: EGP
44,528k). 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
No debts have met the group’s definition of default
2020
2019
EGP’000
EGP’000
44,528
42,131
(3,629)
(837)
4,044
86,237
37,811
8,647
(493)
(1,155)
(282)
44,528
Integrated Diagnostics HoldingsAnnual Report 2020 148
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 judge-
ment. 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.
3.
Each sector was divided according to customers aging
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.
General economic conditions
4.
Based on the expected credit loss assessment, additional provision was calculated for each period, yielding an addi-
tional Expected Credit Losses (ECL) for IDH Group amounting to EGP 42 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.
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 4,035K. 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 con-
tract assets from individual customers as at:
31-Dec-20
Current (not past due)
1–30 days past due
31–60 days past due
61–90 days past due
91–120 days past due
121–150 days past due
More than 150 days past due
31-Dec-19
Current (not past due)
1–30 days past due
31–60 days past due
61–90 days past due
91–120 days past due
121–150 days past due
More than 150 days past due
Weighted
average loss
rate
EGP’000
0.00%
5.06%
6.18%
13.61%
18.85%
36.38%
89.98%
Weighted
average loss
rate
EGP’000
0.06%
0.15%
0.24%
8.14%
11.09%
12.97%
41.17%
Gross
carrying
amount
EGP’000
187,705
63,771
46,097
17,322
9,816
6,436
72,350
Gross
carrying
amount
EGP’000
89,066
55,915
38,601
16,544
9,594
8,716
78,308
Loss
allowance
EGP’000
-
(3,228)
(2,847)
(2,358)
(1,850)
(2,341)
(65,103)
Loss
allowance
EGP’000
(56)
(81)
(94)
(1,347)
(1,064)
(1,131)
(32,239)
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 149
As at 31 December, the ageing analysis of trade receivables is as follows:
Total
< 30 days
30-60 days
61-90 days
> 90 days
2020
2019
325,770
260,746
248,248
144,856
43,250
38,508
14,964
15,197
19,308
62,185
17. Cash and cash equivalent
Cash at banks and on hand
Treasury bills
Short-term deposits
2020
253,225
184,525
162,380
600,130
2019
93,471
194,302
121,119
408,892
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 require-
ments of the Group, and earn interest at the respective short-term deposit weighted average rate 7% and Treasury
bills 10% per annum.
18. Restricted cash
Restricted cash
19.
Other investments
Fixed term deposits
Treasury bills
2020
2019
EGP’000
EGP’000
-
-
247
247
2020
2019
EGP’000
EGP’000
-
276,625
276,625
-
221,617
221,617
The maturity date of the fixed term deposit and treasury bills is between 9–12 months and the effective interest rate
on the treasury bills is 10% (2019: 16.65%).
Integrated Diagnostics HoldingsAnnual Report 2020 150
20. Share capital and reserves
The Company’s ordinary share capital is $150,000,000 equivalent to EGP 1,072,500,000.
All shares are authorised and fully paid and have a par value of 2020 $0.25 (2019: $1).
In issue at beginning of the year
In issue at the end of the year
Ordinary
shares
Ordinary
shares
31-Dec-20
31-Dec-19
150,000,000
150,000,000
600,000,000*
150,000,000
* At the Extraordinary General Meeting of the Company held on 23 December 2020, it was resolved that the Company’s existing issued ordinary share
capital of 150,000,000 ordinary shares of US$1.00 each (the “Existing Ordinary Shares”) will be sub-divided into 600,000,000 ordinary shares of US$0.25
each (the “New Ordinary Shares”) (the “Sub-Division”). The Sub-Division was successfully completed with effect from 24 December 2020.
Capital reserve
The capital reserve was created when the Group’s previous parent company, Integrated Diagnostics Holdings
LLC – IDH (Caymans) arranged its own acquisition by Integrated Diagnostics Holdings PLC, a new legal parent.
The balances arising represent the difference between the value of the equity structure of the previous and new
parent companies.
Legal reserves
Legal reserve was formed based on the legal requirements of the Egyptian law governing the Egyptian subsidiaries.
According to the Egyptian subsidiaries’ article of association 5% (at least) of the annual net profit is set aside to from
a legal reserve. The transfer to legal reserve ceases once this reserve reaches 50% of the entity’s issued capital. If the
reserve falls below the defined level, then the entity is required to resume forming it by setting aside 5% of the annual
net profits until it reaches 50% of the issued share capital.
Put option reserve
Through acquisitions made within the Group, put option arrangements have been entered into to purchase the
remaining equity interests in subsidiaries from the vendors at a subsequent date. At acquisition date an initial
put option liability is recognised and a corresponding entry recognised within the put option reserve. After initial
recognition the accounting policy for put options is to recognise all changes in the carrying value of the liability
within put option reserve. When the put option is exercised by the vendors the amount recognised within the
reserve will be reversed.
Translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
21. Distributions made and proposed
Cash dividends on ordinary shares declared and paid:
US$ 0.19 per qualifying ordinary share (2019: US$ 0.18)
After the balance sheet date, the following dividends were proposed by the directors (the
dividends have not been provided for):
2020
2019
EGP’000
EGP’000
441,855
441,855
455,831
442,116
442,116
466,968
US$ 0.0.049 per share (2019: $0.19) per share
455,831
466,968
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 22. Provision
At 1 January 2020
Provision made during the year
Provision used during the year
Provision reversed during the year
At 31 December 2020
Current
Non- Current
At 1 January 2019
Provision made during the year
Provision used during the year
Provision reversed during the year
At 31 December 2019
Current
Non- Current
151
Total
EGP’000
5,273
3,194
(5,040)
(20)
3,407
-
3,407
Total
EGP’000
14,842
3,521
(1,267)
(11,823)
5,273
Provision
for legal
claims
EGP’000
5,082
3,194
(5,040)
(20)
3,216
-
3,216
Provision
for legal
claims
EGP’000
2,828
3,521
(1,267)
5,082
5,082
5,273
Egyptian
Government
Training
Fund for
employees
EGP’000
191
-
-
-
191
-
191
Egyptian
Government
Training
Fund for
employees
EGP’000
12,014
-
-
(11,823)
191
191
Legal claims provision
The amount comprises the gross provision in respect of legal claims brought against the Group. Management’s opin-
ion, 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 2020.
23. Trade and other payables
Trade payables
Accrued expenses
Other payables
Accrued interest
2020
2019
EGP’000
EGP’000
178,042
151,201
50,959
3,421
383,623
145,195
129,357
40,502
5,029
320,083
Integrated Diagnostics HoldingsAnnual Report 2020 152
24. Short-term financial obligations
Put option liability
Lease liabilities
2020
2019
EGP’000
EGP’000
282,267
60,517
342,784
199,141
61,712
260,853
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 arrange-
ments 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 calculated at seven times EBITDA of the last 12 months – Net Debt and 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 2020
25. Loan and borrowings
1.
The financial leverage shall not exceed the following percentages
Year
%
2017
2018
2019
2020
2021
2022
2.33
1.71
2.31
1.95
1.64
1.47
“Financial leverage”: total liabilities divided by net equity
The debt service ratios (DSR) shall not be less than 1.
2.
“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 50m 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.
Financial Statements • Consolidated Financial StatementsAnnual Report 2020
153
A)
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 2020 only EGP 54.4m 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:
The financial leverage shall not exceed 0.7 throughout the period of the loan
1.
“Financial leverage”: total bank debt divided by net equity
The debt service ratios (DSR) shall not be less than 1.35 starting 2020
2.
“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.
The terms and conditions of outstanding loans are as follows:
Currency
Nominal interest rate
Maturity
31 Dec 20
31 Dec 19
CIB - BANK
AUB - BANK
EGP
EGP
CBE corridor rate*+1%
CBE corridor rate*+1%
Apr-22
Apr-26
Amount held as:
Current liability
Non- current liability
38,654
54,379
93,033
25,416
67,617
93,033
64,070
42,651
106,721
25,416
81,305
106,721
*As at 31 December 2020 corridor rate 9.25% (2019: 13.25%)
Contingent liabilities
As required by article 134 of the labour law on Vocational Guidance and Training issued by the Egyptian Government
in 2003, Al Borg Laboratory Company and Al Mokhtabar Company for Medical Labs are required to conform to the
requirements set out by that law to provide 1% of net profits each year into a training fund. Integrated Diagnostics
Holdings plc have taken legal advice and considered market practice in Egypt relating to this and more specifically
whether the vocational training courses undertaken by Al Borg Laboratory Company and Al Mokhtabar Company
for Medical Labs suggest that obligations have been satisfied through training programmes undertaken in-house by
those entities. Since the issue of the law on Vocational Guidance and Training, Al Borg Laboratory Company and Al
Mokhtabar Company for Medical Labs have not been requested by the government to pay or have voluntarily paid
any amounts into the external training fund. Should a claim be brought against Al Borg Laboratory Company and
Al Mokhtabar Company for Medical Labs, an amount of between EGP 19.5m to EGP 41.4m could become payable,
however this is not considered probable.
Integrated Diagnostics HoldingsAnnual Report 2020
154
Accounting policies
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable 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. Provisions are discounted using a current pre-tax
rate if the time value of money is significant.
Contingent liabilities are possible obligations that arise from past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
26. Long-term financial obligations
Lease liabilities building (see note 27)
Lease liabilities Medical equipment (see note 27)
Put option liability*
2020
2019
EGP’000
EGP’000
355,856
42,669
31,790
430,315
232,075
44,287
30,022
306,384
*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).
According to the International Private Equity and Venture Capital Valuation Guidelines, there are multiple ways to
calculate the put option including Discounted Cash Flow, Multiples, Net assets. Multiple valuation was applied and
EGP 32 million was calculated as the valuation as at 31 December 2020 (2019; EGP 30.0m). In line with IAS 32 the
entity has recognised a liability for the present value of the exercise price of the option price. The ramp-up of Echo-
Scan operations driven by the new radiology equipment installed during Q4 2019 in Lago and the following years
yielding a Compounded Annual Growth Rate of 39% from 2020 to 2025.
27. Leases as lessee (IFRS 16)
The Group leases property and equipment. Property leases include branches, warehouse, parking and administra-
tion buildings. The leases typically run for average period from 5-10 years, with an option to renew the lease after
that date. Lease payments are renegotiated with renovation after the end of the lease term to reflect market rentals.
For certain leases, the Group is restricted from entering into any sub-lease arrangements. The property leases were
entered into as combined leases of land and buildings and were previously, classified as operating leases under IAS
17. The Group has elected not to apply Low-value assets’ exemption.
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. 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. 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 depreci-
ated 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$. These contracts leases were previ-
ously identified as finance leases under IAS 17, with the assets held within property planet and equipment (see note 10).
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 Information about leases for which the Group is lessee is presented below.
a)
Right-of-use assets
2019
Balance at 1 January
Addition for the year
Depreciation charge for the year
Terminated Contracts
Balance at 31 December
155
Buildings
2020
EGP’000
264,763
152,030
(60,803)
(1,302)
354,688
Buildings
2019
EGP’000
213,870
98,609
(47,716)
264,763
Leases liabilities
b)
Future minimum lease payments under leases and hire purchase contracts, together with the present value of the net
minimum lease payments are, as follows:
*Lease liability – laboratory equipment
*Lease liabilities building
Lease liability – other
*The lease liabilities for the laboratory equipment and building are payable as follows:
At 31 December 2020
Less than one year
Between one and five years
More than 5 years
At 31 December 2019
Less than one year
Between one and five years
More than 5 years
2020
EGP’000
69,123
389,920
-
459,043
2019
EGP’000
67,690
269,401
982
338,073
Minimum
lease
payments
2020
Interest
Principal
2020
2020
EGP’000
EGP’000
EGP’000
126,999
463,646
131,605
722,250
Minimum
lease
payments
2019
66,481
176,312
20,414
263,207
60,518
287,334
111,191
459,043
Interest
Principal
2019
2019
EGP’000
EGP’000
EGP’000
106,436
381,378
87,972
575,786
45,706
169,803
23,186
238,695
60,730
211,575
64,786
337,091
Integrated Diagnostics HoldingsAnnual Report 2020 156
c)
Amounts recognised in profit or loss
Interest on lease liabilities
Expenses related to short-term lease
2020
2019
EGP’000
EGP’000
58,864
13,771
41,491
4,154
28. Related party transactions disclosures
The significant transactions with related parties, their nature volumes and balance during the period 31 December
2020 and 2019 are as follows:
Rental income
Medical Test analysis
Entity owned by Company’s CEO
588
793
Related Party
Nature of transaction Nature of relationship
Life Scan (S.A.E)*
Expenses paid on behalf Affiliate**
International Fertility (IVF)**
Expenses paid on behalf Affiliate***
Provide service
Provide service
Entity owned by Company’s
board member
Entity owned by Company’s CEO
Put option liability
Bio. Lab C.E.O and shareholder
Put option liability
Echo-Scan shareholder
H.C Security
Life Health Care
Dr. Amid Abd Elnour^
International Finance corpora-
tion (IFC)
Integrated Treatment for
Kidney Diseases (S.A.E)
Total
Related Party
Nature of transaction Nature of relationship
Life Scan (S.A.E)*
Expenses paid on behalf Affiliate*
International Fertility (IVF)**
Expenses paid on behalf Affiliate**
H.C Security
Life Health Care
Dr. Amid Abd Elnour^
International Finance corpora-
tion (IFC)
Integrated Treatment for
Kidney Diseases (S.A.E)
Provide service
Provide service
Entity owned by Company’s
board member
Entity owned by Company’s CEO
Put option liability
Bio. Lab C.E.O and shareholder
Put option liability
Echo-Scan shareholder
Rental income
Medical Test analysis
Entity owned by Company’s CEO
Total
31-Dec-20
Transaction
amount of
the year
Amount due
from
EGP’000
EGP’000
6
(3,449)
(412)
(11,058)
(83,126)
(1,757)
350
1,767
(76)
(363)
(282,267)
(31,790)
(311,586)
31-Dec-19
Transaction
amount of
the year
Amount due
from
EGP’000
EGP’000
14
(584)
(268)
(6,774)
(67,470)
(16,431)
344
377
344
5,216
(78)
(3)
(199,141)
(30,033)
631
(223,064)
* 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).
*** Chief Executive Officer Dr. Hend El-Sherbini and her mother, Dr. Moamena Kamel jointly hold the 25.5% of shares held by Hena Holdings which
include the described voting rights on Page 95. Hena Holdings is a related party and received dividends of USD 7,151,925 in year 2020 and USD
6,731,223 received in year 2019.
^ Dr. Amid Abd Elnour receives EGP 5,277,376 in relation to Office Rent (in addition to his salary).
Financial Statements • Consolidated Financial StatementsAnnual Report 2020
157
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 transac-
tions. 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 2020, the Group has not recorded any impairment of receivables relating to amounts owed by related
parties (2019: 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.
IDH opts to pay 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 2020 EGP 6,510K (2019: EGP 5,259K) 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
2020
2019
EGP’000
EGP’000
51,556
51,556
43,088
43,088
Integrated Diagnostics HoldingsAnnual Report 2020 158
29. Reconciliation of movements of liabilities to cash flows arising from
financing activities
EGP’000
Balance at 1 January 2020
Proceeds from loans and borrowings
Repayment of borrowings
Payment of leases liabilities
Interest paid
Total changes from financing cash flows
New leases signed in the period
Terminated contracts during the year
Interest expense
Total liability-related other changes
Balance at 31 December 2020
EGP’000
Balance at 1 January 2019
Proceeds from loans and borrowings
Repayment of borrowings
Payment of leases liabilities
Interest paid
Total changes from financing cash flows
Capitalised borrowing costs
Implementation of IFRS 16
New leases signed in the period
Interest expense
Total Liability – related other changes
Balance as at 31 December 2019
Other
loans and
borrowings
111,750
11,727
(25,416)
-
(14,160)
(27,849)
12,553
12,553
96,455
Other
loans and
borrowings
133,039
5,283
(25,416)
-
(21,165)
(41,298)
-
-
-
20,009
20,009
111,750
Lease
liabilities
338,073
-
-
(42,745)
(59,576)
(102,231)
166,339
(1,911)
58,864
223,291
459,043
Lease
liabilities
90,581
-
(64,451)
(42,027)
(106,478)
-
213,870
98,609
41,491
353,970
338,073
Financial Statements • Consolidated Financial StatementsAnnual Report 2020 IDHCORP.COM