Integrated Diagnostics Holdings plc (IDHC) Earnings Call Transcript & Summary

Hello, everyone. This is Ahmed Moataz from of EFG Hermes, and welcome to IDH's 2023 Results Conference Call. I'm pleased to be joined with Dr. Hend El Sherbini, Chief Executive Officer; Sherif El Zeiny, Chief Financial Officer; and Tarek Yehia, Director of Investor Relations. The company, as usual, will start with a brief presentation, and then we'll open the floor for Q&A. Tarek, please go ahead.

Thank you, Ahmed. Good afternoon, ladies and gentlemen, and thank you for joining our analyst call for our full year results. My name is Tarek Yehia and I'm Investor Relations Director at IDH. Joining me on our call today, Dr. Hend, our Chief Executive Officer; and Mr. Sherif El Zeiny, IDH Chief Financial Officer. Dr. Hend will begin today's call by giving you a brief introduction of the key development of the year and our outlook for 2024. I will then present to you our operational results and major financial development. Following my discussion, I will hand the mic to Mr. Sherif to give you a more detailed rundown of our financial performance. As always, we will end the call by opening up the floor for any questions. I will hand the call now to Hend to start.

Thank you, Tarek, and good afternoon, ladies and gentlemen. I'm Dr. Hend El Sherbini, IDH's Chief Executive Officer. I will take a few minutes to discuss with you the key highlights of the year. After that, I will briefly outline our outlook for 2024. I'm proud to report to you a strong set of results for 2023. Throughout the year, we navigated significant challenges across 3 of our markets, including several devaluations, inflation and political challenges. In navigating these issues, we have continued to prove IDH's resilient business model, growing our underlying business despite the hurdles. During the year, we booked EGP 4.1 billion in revenues across all our markets, a robust increase of 42% compared to the conventional revenue reported in 2022. This growth was driven both by higher test volumes, which stood at over 36 million tests during the year and higher average revenue per conventional test as we continue to implement strategic price increases in response to inflation across several of our geographies. Even when including contributions from COVID-19 testing in the comparable year 2022, we still performed impressively recording double-digit top line growth in 2022. Looking at our individual geographies. Our largest market, Egypt continued to represent the lion's share of revenues for the group and remained crucial in driving our consolidated growth. In Egypt, we successfully expanded both our pathology and our geology offerings, reaching a broader patient base and conducting more tests across the country. Here, I want to note that Al-Borg Scan our joint venture continued performing strongly, recording revenue growth of over 80% as we cement our position as a quality provider of radiology service in the fragmented Egyptian market. In fact, during 2023, we rolled out an additional branch of Al-Borg Scan. The venture now fully operates 7 branches across Greater Cairo. In Jordan, while pricing is heavily regulated, we rely on increasing test volumes to boost revenue growth. During the year, we expanded the number of tests provided in the country by 8%, boosting revenues in the country. Meanwhile, in Nigeria inflation affected our patients purchasing powers, leading to inevitable decrease in this volume. Despite the decline, we recorded expanded revenues in the country, mainly on the back of higher average revenue per test by implementing price increase to combat inflation. Looking ahead into 2024, our outlook and priorities remain unchanged. In Egypt, we continue pushing test volumes on the back of our expanded branch network and growing service offering. On the other hand, we maintain our strategy of implementing strategic price increases to increase our average revenue per test while prioritizing patient retention. On the profitability front in Egypt, we aim to continue leveraging our strong relationships with suppliers to negotiate favorable terms for our supplies, curbing as much as possible the effects of inflation on our cost base. In Jordan, we'll continue pushing test volume growth in line with our pre-pandemic averages. We aim to achieve double-digit revenue expansion in local currency terms on the back of our increased testing. Turning to Nigeria, we are in the process of optimizing our test mix provided to our patients. Additionally, we continue navigating the challenging economic environment posed in the country, implementing necessary price hikes to maintain profitability and increase our average revenue per test. Overall, we anticipate consolidated revenue growth of around 30% during 2024. On the profitability front, we anticipate Saudi Arabia to weigh down on the consolidated EBITDA margin as operations in the country begin their ramp up. Excluding Saudi Arabian results, however, we expect our EBITDA margin to remain around the 30% mark. Turning to our newest market, I'm proud to announce that between January and March of 2024, we successfully completed the rollout of our first 2 branches in Saudi Arabia. As previously discussed, the Saudi Arabia market represents an exciting opportunity for IDH. The Kingdom is characterized by attractive demographics, a fast-growing economy and a fragmented diagnostic market. This opens the door for IDH to access thousands of new patients in the coming years. We are confident that Saudi Arabia will come to represent a key market in the company's operation once it's fully ramped up. Finally, we look forward to 2024, and sustainability continues to play a pivotal role in our operations. As we expand our footprint across our geographies and as our patient base steadily grows, we remain committed both to developing our sustainability frameworks and adhering to global ESG best practices. In line with our commitment, we released our second ever sustainability report in January 2024, maintaining transparency in our sustainability initiatives during the year. Some of our key achievements included the implementation of a sustainable waste policy and monitoring system across our branches, reducing the waste generated by the company during the year and benefiting nearly 100,000 people through our social investments among several others. I'll now hand the mic back to Tarek to give you an overview of our results for the period before handing the floor to Sherif to give a detailed breakdown of our financials. Thank you.

Thank you, Dr. Hend. During 2023, we performed just over 36 million tests, up 17% from conventional tests performed in 2022. At the same time, we continue implementing strategic price hikes in response to inflation pressure in Egypt and Nigeria, resulting in 22% year-on-year increase in our average revenue per conventional test, reaching EGP 114 during the year. Combined this figure boosted our conventional top line by 42% compared to the previous year, reaching EGP 4.1 billion. Meanwhile, when including contribution from COVID-19 testing in 2022, we still managed to record double-digit revenue growth at 14%. Moving on to our patient. We served a total of 8.5 million patients across our markets in 2023. This figure is 2% below the one we recorded in 2022, which had been boosted significantly by COVID-19 testing. In parallel, I'm delighted to announce that one of the most important operation metrics average per patient maintained a growth trend during -- recorded during the last quarter, reaching the highest figure ever recorded by IDH in a single year at 4.2 tests. These impressive results directly reflect the success of our loyalty program, which we introduced in 2021 to boost patient retention. Additionally, this growth also reflects the effectiveness of our strategic price increases, which we implemented in both Egypt and Nigeria. Despite increasing our prices to combat inflation in the countries, we have ensured that these increases remain below both inflation and average market increases, encouraging more testing by our patients. Finally, on the profitability level, despite recording both gross profit and EBITDA level growth, our gross profit, EBITDA and net margins declined compared to 2022. This reflects both the continued inflation pressure in our large markets, Egypt as well as several nonrecurring expense recorded during the year, which we will discuss in further detail later in the call. Our strong results throughout the year came despite the significant economic and political headwinds faced across several of our established markets, including our home market Egypt, following a series of devaluation of the Egyptian pound in 2022 and early 2023, inflation characterized the economy throughout the year with risks remaining above 30% since February and until the end of December. These economic hurdles continue to place significant pressure on IDH cost base, especially and specifically on its USD-linked expenses. In Nigeria, we experienced similar trends with multiple devaluation of the Nigerian Naira starting in June 2023 and well into 2024, resulting in the devaluation of the currency from USD 462 in May 2023 to $1,192 in January 2024. Naturally, this resulted in resilient inflation in the country with rates consistently climbed to a peak of 29 at the end of the year. Before moving on, I would like to highlight the positive development in our home market since start of 2024. On the 6th of March 2024, the Egyptian Central Bank implemented a long-awaited devaluation of the Egyptian pound, with rates settling at around USD 49.5 at the end of the day compared to 30.85% at the end of 2023. This devaluation served to close the large gap between official and parallel market rates. Following the devaluation, the government announced an extended loan package with the IMF in addition to announcement of initiatives to ease over USD 6 billion through the sale of government-owned businesses. These developments are anticipated to cover Egypt short-term financing needs for the coming 3 to 4 years as well as attract greater foreign investment into the country. As a result, inflation is anticipated to slow down over the course of the coming years with government targeting an annual rate of around 15%. Throughout 2023, we maintained our strong operational ramp-up, which continued to support our financial success through the year. In 2023, we opened a total of 49 branches across our markets with our total branch network standing at 601 branches at the end of the year. This new rollout also included an additional Al-Borg Scan branch, our fast-growing radiology venture in Egypt. Al-Borg Scan now operates 7 branches across the greater Cairo area and continue to boost impressive results as it expands its operations. Our house call service also maintained its growth trend, contributing 16% to Egyptian revenues during the year and sitting comfortably above pre-pandemic averages. Turning to our individual market. We recorded a 40% year-on-year increase in conventional revenue during the year, with the country's top line reaching EGP 3.4 billion. Conventional growth was driven both by higher test volumes, which stood at 33.4 million tests, representing an 18% increase as well as average revenue per conventional test, which also grew 18%, reaching EGP 102. In Jordan, conventional revenues booked an 8% year-on-year growth coming at 15 million Jordanian dinars, Jordanian growth was entirely driven by an 8% year-on-year increase in test volumes. Meanwhile, in Nigeria, we booked a 15% rise in revenues, which booked almost 2 billion Naira. Growth in the country was a result of a 32% increase in average revenue per test in local currency terms. Finally, in Sudan, as of 2024, our operations remained heavily affected by ongoing conflict. As a result, 17 of our branches are shut down with only one remaining operation branch in Port Sudan. As always, we continue to closely monitor the situation, prioritizing the health and safety of our staff and patients. Shifting quickly to our profitability. We recorded a gross profit of EGP 1.5 billion in 2023, along with a gross profit margin of 37%. This stood 4 points below the margin of 41%, which we recorded in 2022. The decrease in our gross profit margin was mainly a result of higher raw material costs, higher than usual salary increases for our employees, as well as increase in depreciation and amortization cost to support the launch of additional branches across our network. On the EBITDA level, we ended the year with an adjusted EBITDA of nearly EGP 1.2 billion, up 2% from the figure we booked in 2022. Meanwhile, our EBITDA margin stood at 29%, down from 33%, 1 year prior and in line with previously communicated guidance. Lower EBITDA profitability reflects both decline in gross profitability and higher SG&A expenses, which we will discuss in further detail later in the presentation. Finally, our net profit came in at EGP 486 million and yielding a margin of 11%. Lower interest income, higher interest expense and several one-off items weighed down our net profit during the year. Continued inflation pressure across our markets continue to weigh down on our profitability on a full year basis. Raw material prices as a share of revenue grew to 22% in 2023, with total wages and salary increased to 25% as a share of revenue to compensate our employees for higher prices and boost retention. Despite this growth, however, we remain confident in further margin normalization heading into the new year, specifically with the most recent positive development in the Egyptian economy. With that, I would like to yield the floor to Mr. Sherif who will give you an in-depth overview to our financials.

Thank you very much, Dr. Hend and Tarek, and good afternoon, ladies and gentlemen. This is Sherif El Zeiny Vice President and Chief Financial Officer. I want to start my presentation to you today by covering the main points from Dr. Hend and Tarek's overviews and then dwell further into our cost and profitability during the year. Let me first begin by quickly going over the main highlights of the period, which are during the year we booked an impressive 42% year-on-year conventional revenue growth, driven by both a 17% increase in test volumes and 22% increase in average revenue per conventional post -- test. Our strong top line results were boosted by our performance during the second half of the year. We were able to successfully capitalize on the growth momentum seen starting in May to book a solid second half following anticipated seasonal slowdowns in the first half of 2023. Our growth during the year was also reflected in our consolidated top line with revenues increased 13% year-on-year when including COVID 19-related revenues in the base year. Our strategic price increases and strong market positioning are continuing to yield positive results with us being able to book our highest-ever number of tests per patient during 2023. Considering our profitability, strong inflationary pressure and economic slowdowns in several of our markets continue to weigh down on profitability, specifically during the first half of the year. However, there have been several positive economic developments in our largest market, Egypt, and we are expecting a continued normalization of margins heading into 2024. Finally, our largest market Egypt continued posting specifically strong results, attracting more patients, performing more tests and boosting consolidated results. Growth in Egypt can be attributed to 2 major factors. Al-Borg Scan, our fast-growing radiology venture, which has sustained its growth trend and expanded in Cairo and our house call service, which contributes 16% to the country's revenues and sits above prepandemic average. Before driving further into the cost analysis, I wanted to take a moment to highlight the major nonrecurring expenses, which impacted profitably throughout the year. There were 4 major one-off expenses, which impacted both EBITDA and net profitability during 2023. Mainly, we reported nearly EGP 18 million in pre-operating expenses in Saudi Arabia in the run-up to the launch of 2 branches in Riyadh. Second, we booked an EGP 5 million nonrecurring expense in Sudan to adjust for unfortunate political situation in the country, which has resulted in the closure of all but one of our branches in Sudan. Third, we recorded an expense of EGP 12 million in contributions to the Egyptian government vocational training fund. This expense covered the past 5 years period. And finally, we booked an EGP 18 million impairment expenses in goodwill and fixed assets in Nigeria to adjust for rising diesel prices, inflation and economic downturns in the country, which are anticipated to continue into 2024. After deducting these expenses, we reported an adjusted EBITDA of almost EGP 1.2 billion with a margin of 29%. According for this expense as well expenses as well, we would have booked an adjusted net profit of EGP 521 million with a net profit margin of 13%. Finally, to hedge against foreign currency risk, we reached an agreement with General Electric, one of our main radiology equipment suppliers for an early repayment of our contractual obligation of USD 5.7 million. Half of this payment was funded internally, while the other half was funded using a bridge loan facility amounting to EGP 55 million. This facility was also fully repaid during the first half of the year. Here, I would like to shift over to our EBITDA profitability during the year. During 2023, we booked an adjusted EBITDA of EGP 1.2 billion, increasing 2% from the figure booked in 2022. In parallel, our adjusted EBITDA stood at 29%, down from 33% in the previous year. This slide shows the expenses leading from our revenues down to our EBITDA for both 2022 and 2023. I will now give you a quick overview of these expenses and the main ones which led to declined EBITDA profitability. Raw material costs, the second largest contributor to our cost of sales during the year recorded EGP 914 million constituting 22% of our revenues. In 2022, raw materials only made up 20% of IDH revenues. This increase in raw material costs during the year reflects both the increase in conventional tests, kit prices, which grew as a result of inflation in Egypt as well as the expiry of COVID-19 related test kits. During 2023, we recorded a one-off expense of EGP 17.4 million due to the expiry of COVID test kits, increasing raw material costs tangibly. Second, total wages and salaries was also a key factor in declining EBITDA profitability, during 2023 total wages and salaries stood at just over EGP 1 billion, approximately 1/4 of our revenues for the year. This is a significant increase given the total salaries only amounted to EGP 811 million and constituted 22% of revenues in the previous years. This increase was primarily due to higher than usual salary increase, which we have previously discussed. In addition to higher translation effects of salaries denominated in Jordanian Dinar due to the devaluation of the Egyptian pound. Finally, U.S. dollar-denominated salaries for expat staff in Nigeria and the addition of a Board member at the beginning of 2023, also boosted salary expenses compared to 2022. Finally, higher U.S. dollar-denominated and U.S. dollar-linked expenses following the devaluation of the Egyptian pound also resulted in an expansion of our cost base. This includes expenses like auditors fees, consulting fees, board fees and London Stock Exchange fees. Moving in to our net profitability during 2023, we booked a bottom line of EGP 468 million, decreasing 11% from 2022. Meanwhile, our net profit margin stood at 12%, declined 4 percentage points year-on-year. Declining net profitability for the year reflects lower EBITDA margins, several nonrecurring expense, which we discussed earlier in the presentation as well as higher depreciation and amortization expense to support the rollout of new branches. In fact, during 2023, we booked total depreciation and amortization costs of EGP 401 million, up 26% year-on-year. Here, it is important to highlight that we reported a Forex gain of EGP 88 million arising from intercompany transactions between our Egyptian subsidiaries and the holding companies in Jersey and Cayman. Finally, to quickly discuss our balance sheet, capital expenditures during 2023 amounted to EGP 308 million, representing 7.5% of total revenues. When excluding the effect of translation and outlays for the expansion of Al-Borg Scan, capital expenditures stood at 4.9% of revenues and was mainly due to the renovation of our existing branch network and new branch additions. Finally, our cash balance at the end of 2023 reached EGP 835 million, up from EGP 816 million at the end of 2022. Before yielding the floor to your questions, I would like to ask go over the guidance that Dr. Hend previously mentioned. Based on the significant growth momentum we have been seeing in both Egypt and Jordan and the recent positive developments recorded in the Egyptian economy, we anticipate year-on-year top line growth of approximately 30% in 2024. On the profitability front, we anticipate a sustained normalization of our margins in the new year with our guidance for the full year EBITDA margin at around 30% when excluding Saudi operations. Thank you very much for your attention throughout this presentation. I now invite you to share any questions you may have. Thank you very much.

[Operator Instructions] We'll take questions from the line of [indiscernible].

Two questions, please, on the devaluation. What was your cost base in 2023 in terms of the FX rate versus the U.S. dollar? And how much of adjustments would you have to make in pricing in 2024 to achieve your margin guidance? So that's the first question, please.

We put the budget in 2023, the U.S. dollar on EGP 33. This was the budget, this is what we put in 2023. And we -- this is your first question, right?

Yes. But I guess the budget was EGP 33. In reality, was it also EGP 33 or did you have to source from the black market and things like that.

We don't have to source dollars Ali, because we don't pay anything in dollars. So we pay our suppliers in Egyptian pounds. So we don't have to source dollars from the black market. However, we have to put -- the budget has to be put with a certain assumption. So we put the assumption that the rate was EGP 33. In terms of price increase we budgeted a blended price increase of around 30%, 30-plus actually this year.

We'll take the next question is from the line of [indiscernible].

I'd love to hear your budgeting for price increases, but we're seeing some pressure from the government on -- specifically in the FMCG sector for companies to reduce prices in light of the inflation that people are experiencing. I'm wondering if you're anticipating any pressure from the government on pricing? That would be my first question. And the second question is when we think about the business historically and the type of margins you had historically. Is there any -- do you think there's anything structural that would prevent you from getting back to those margins over the medium term?

Thank you. So for the first question, when you look at the price per test here in Egypt, we're talking about an average revenue per test of EGP 141, which is extremely low. Extremely low when you compare it to anywhere else in the region or in the world for that matter and also compared to any something -- anything that you buy in Egypt. So it is low. We're still looking at a very low price. So I don't think services like the diagnostic services that we're providing with the cap accreditation since 2010, would be at a lesser price than what we're giving right now. So I don't think the government would interfere with anything that we're doing in terms of pricing. We've been raising prices way below inflation this year. As you can see, we have several rounds of devaluation and inflation. So it makes sense that we will target around 30-plus price increase. The second part that you were asking, yes, we are trying to regain our margins despite everything that is happening in our geographies, despite the devaluation, despite the high inflation. So we're trying to get there. It's not going to happen in 1 year, but it's definitely -- we're heading to return to our margins in the medium term, right?

Thank you very much, Janis, please, you're up next. Unmute yourself and go ahead.

I guess just to harp on margins for a moment there. This business used to produce margins as high as -- GP margins as high as 55. I assume that's probably too high. But can we get back to the high 40s, mid-40s, when you say margin repair, just how far back to, I guess, normal level, what would be a normalized level? And maybe how long does that journey then take? Is it this year? Is it 2 or 3 years out?

You're right. We were up in the 50s at one point. I don't think we can get to that in 1 year. We're aiming this year to get to the 40 level on the GP margin and then take it gradually from there.

And then maybe just on dividends. I know last year, we -- you cut in because of the dollar issues, but 2023?

Yes, the problem still is the sourcing of dollars in Egypt. So they -- we were not able to source dollars in order to give dividends, and this is why we had a board resolution not to give dividends this year. However, as you know, it has been our strategy since we IPO'd in 2015 is to give any extra cash to give it back to shareholders as dividends. However, we are waiting until this becomes feasible in Egypt to source dollars and give back dividends.

The dollars are not available in the banks. So you cannot -- even if you want to repatriate or make dividends, it's not available dollars in the banks.

Even now?

Even now. They are giving priority to the food, to the power, to products, not to dividends.

So there are a couple of questions in the chat, some of which have already been answered, but I'll read them out in case you have something additional you want to add. So Gina has actually 6 questions in the chart. The first one is what is the reason for quarter-on-quarter decline in the gross margins and your expectation for 2024? The second is the reason for the 30% decline in walk-in patients. I'll bundle them together. So if you can take those 2, and then I'll move on after you answer.

About the question for the decrease in margin Q-on-Q. The decrease in margin, I mentioned to the one-off items recorded in Q4, which we already recorded in Q4, EGP 30 million one-off, as example, of Nigeria and the vacation of trading the provision. Item already mentioned in the presentation. All these things recorded in Q4. So the margin in Q4 decreased compared to Q2.

There was another part of the question where you're asking about the decrease in walk-ins. And we have seen a shift from the corporate to walk-ins. And this has been influenced mainly by the high inflation that we're seeing in the country. So this has pushed people from the walk-in part. From the walk-in into the corporate we're seeing increase in corporate and decrease in walk-ins.

Thank you very much. The next 2 set of questions is what were the number of patients in the radiology segment? And what's the gross margin in this segment is generating at the moment? And another one is the gross margin for Nigeria and breakeven time line.

So in 2023, we had 161,000 patients in Al-Borg Scan. And then you asked about gross profit or you asked about margins?

The gross margin in radiology.

Gross profit margin in Al-Borg Scan in 2023, one second please.

That's fine. If you'd like, we can keep going with the questions, and then you guys can get back to -- good.

Go ahead.

Another question is on the revenue expectations and breakeven time line for Saudi.

So Saudi, we've put a 5-year business plan for Saudi and we have this breakeven put at 2026.

We already opened 2 branches this year, and the rest are coming in the next 2, 3 years. So it's developing based on our results and what's going on.

Thank you very much. [indiscernible] is asking, could you comment on the drivers of the relatively muted conventional test volumes growth in Jordan? And this is specifically during the fourth quarter of '23.

Ahmed, can you repeat this again, please?

Sure. So he's asking for Jordan in the fourth quarter of '23, growth trends and test volumes were relatively muted, so if you can shed any reasons towards that.

Yes. So we're seeing also an impact on Jordan due to the war in Gaza, which started in October 2023 last October. So this has affected definitely the number of tests and the number of patients in Bio lab in Jordan.

Another question is on Saudi. If you can provide any granular info on how the 2 branches that you've opened so far have been performing in terms of ramp-up, patient traffic, et cetera, or utilization.

We just started in Saudi Arabia this year. So we opened the first branch in Jan. The second branch was opened a month ago. So we're just starting there. We're getting patients in, we're getting cash, but it's still too early for us to give you an update on these 2 branches.

Okay. A question is from Marina from CI Capital. Could you please explain why the revenue per test declined 6% Q-on-Q.

Yes, we can see a drop in the revenue per test Q-on-Q, you're right, because there is a shift between the corporate and the walk-in. So the same reason that I mentioned why we're seeing a drop in the walk-in, so there is a shift between the walk-in and the corporate. And of course, the price per test or the revenue per test in the corporate is much less than in the walk-in.

Thank you very much. Another question is on working capital. Floris, saying I see receivables are up a lot, but payables are down. What are the reasons? And how should we think about this going forward? A separate question as well, the effective tax rate was around 36%, this looks relatively high, what is long-term normal rate?

So looking at the receivables, yes, you're right, it's gone up, and this is also because of the environment in Egypt, the high inflation that we're seeing, problems that are being -- all the companies and the corporates are facing a lot of problems in terms of the high inflation, sourcing dollars. That's why we've seen a lot of problems collecting our money, but now we put a new strategy, trying to decrease the DSO and get back to the 90 days that we used to have. So this is a work in process. In terms of payables, we're trying to also give our suppliers their money as soon as possible in order to get supply. So now in Egypt, we are facing a lot of problems getting the kits because first of all, there was no availability of dollars. So the suppliers were facing a lot of problems getting the kits from abroad. So they were prioritizing, of course, people who gave them the money as soon as possible. So we tried to do that. And we also tried to build inventory in order to not to face any problem and get shortage. And also we're not -- we did not know how much would dollar -- how much the inflation -- the devaluation is going to happen, the amount of devaluation, we wanted to have an inventory to safeguard our operations.

[Operator Instructions] Mayer from all Africa has 3 questions. The first one, you're guiding for broadly flat EBITDA margin of 30% in 2024, excluding Saudi. What is the guidance including Saudi Arabia? And what is the margin? why is the margin progress slow relative to what you used to do historically.

So we're aiming at 30% EBITDA margin and this is -- given the situation, Egypt is still very turbulent, so we still don't know how much is going to be -- the dollar -- we budgeted the dollar at 45. We are not sure how it's going to end this year. So we're being cautious and this is why we put -- we anticipate to have an EBITDA margin of around 30%. We aim to do better, but this is a conservative way of looking at things given that nothing is very clear yet and nothing is independent yet, especially in terms of the dollar and how the currency is going to react in the next few months. And also, if you look at the series of devaluation and inflation that we've seen since last year, I think it makes sense that we are keeping our EBITDA margin at 30%. This is actually quite an achievement, given that all our test kits are imported and nothing has been manufactured here in Egypt.

His second question. And actually, this question is also asked by a couple of other investors is if you can just give us a brief on your Saudi plans, just an overview of how much CapEx, the number of planned branches that you may have and also 2 or 3 other investors who are asking, will it be a hub-and spoke model with a large mega lab? Or will it be any different than what you already have.

So we'll get to -- we can e-mail this information. We've got all the information needed, and we'll e-mail it to you.

So there's a follow-up on one of the earlier questions on the effective tax rate. What's the normal because it was 36% in 2023? What's the normal rate or long-term normally that you would typically expect?

So the normal tax rate is 35.

Sorry, let me scroll quickly through the questions. One other question from Peru is you've mentioned you're increasing prices in Egypt below peers. What is the reason for that?

No, I didn't mention that we are raising below peers. We are not raising below peers. I said we are going to raise the prices around 30% this year, below inflation, but not below peers.

Ali is asking have we signed deals with insurance companies like Bupa and Pioneer in Saudi and is the insurance channel where you expect most patients to come within Saudi Arabia.

So they are working on getting the insurance, but the main -- now the main focus is on the walk-in with these 2 branches. One of them has been opened in the mall, Nakheel Mall in Riyadh and the other one also in Riyadh. We are focusing on the walk-ins, but we are also aiming at signing with the main insurance.

Thank you. Another question is on the price increases. The 30% that you've mentioned, have they been implemented already or not. And a follow-up on that is if they have, which was prior to the weakness that happened in the EGP, would you consider another price increase later towards the end of the year?

We already implemented the price increase by the start of the year, and we are monitoring the inflation. So as we've done that before when we've seen other -- if there's another round of inflation, then we are able to also raise the prices again. But so far, we've implemented this price increase in the beginning of the year.

Thank you very much. I don't think we have further questions. So a final round up to everyone. If you have any final questions, please either send them through the chat or you can use the raise the hand function. So Gina from HSBC has a follow-up again. What is the volume growth expectation in 2024?

So we're looking at -- we are budgeting at 13% debt increase this year.

Thanks a lot. A follow-up on the price increase. Is the 30% price increase or walk-in and contracts or corporates or it's different between one segment to another.

It's a blended price increase.

All right. Two final questions in the chat. First one is, do you expect your ability to generate positive free cash flows would be deterred by the investments and CapEx required either for the Al-Borg Scan or the new Saudi operations. That's one. The second is you've mentioned before, the smaller peers are struggling and that you're taking some of the business in the sense that you're processing some tests, et cetera, has this changed or same tends continue?

Yes. So no, we don't think that -- I mean, we can share the cash flow expectation for this year. But no, we are not expecting to use all this cash in the Saudi and Al-Borg Scan. The second part of the question is about the smaller labs, yes, we're still seeing the smaller labs suffering because it's very difficult, as I said, to get kits in the market now in Egypt, the prices are quite high. And so we're seeing an increase in our B2B business. The B2B part of it is -- are the small labs that are sending the test was to be done in IDH. So this -- we are seeing an increase in this area as well.

Great. Thank you very much. We haven't received any further questions. So I'll pass it back to you for any remarks you may have.

There was one question also, Saudi Arabia, so we are ready if you can e-mail Tarek and will give you all the information about the CapEx and the plan for Saudi Arabia in terms of the branches, the CapEx and the money needed there. And other than that, thank you very much for attending today and for participating. Thank you.

Thank you very much.

Thank you very much to everyone. This concludes today's earnings call. Have a good rest of the day.