Medserv plc - Interim Results Review

Medserv plc published its interim results to 30 June 2008 following a Board of Directors’ meeting held on 25 August. Similar to last year, no interim dividend was declared.

The key highlights are:
• Turnover of €5.9 million (June 07: €1.2 million);
• EBITDA climbs to €0.9 million;
• Pre-tax profit of €0.68 million.

Medserv’s turnover during the first half of 2008 amounted to €5.9 million, substantially higher than the revenue generated in the first six months of 2007.  The Directors explained that this surge in turnover results from the commencement of the long awaited activity in the Mediterranean region. Last year, Medserv had reported that the delays in the commencement of oil and exploration activities offshore Libya resulted from the shortage of available exploration rigs as well as a scarcity of steel and other equipment. During the first half of the year the Medserv Group, through its Malta base, provided services to operators in Egypt, Tunisia and Congo apart from the traditional source of business in Libya. The strong increase in the revenue from the Malta base is partly attributable to the new business generated in Egypt and Tunisia. The segmental results reveal that the Misurata base, in which Medserv holds a 60% shareholding, accounted for 23% of total Group revenue in the first half of the year with the balance generated from the base located in the Malta Freeport. At the Misurata base four major oil companies are being serviced. It was also revealed in the Half-Year Report that apart from warehousing and storage services, mud tanks were installed while bulk plants are being constructed and scheduled for completion at the end of September 2008.

Moreover, the Directors stated in the 2008 Half-Year Report that since the end of June, Medserv has been providing services to a rig from its Malta base while a further two rigs are expected to be serviced prior to commencing drilling operations offshore Libya next year.

The gross profit climbed to €1.8 million during the period under review, up from only €0.2 million in the first half of 2007 leading to an improved gross profit margin of 30.4% (June 2007: 20.1%). In the first six months of 2006, Medserv had generated a gross profit of €1.1 million with a margin of 33.9%. Administrative and distribution expenses increased by 44% to €1.05 million resulting in an operating profit of €0.75 million.

The charge for depreciation during the first half of the year amounted to €177,429. Medserv generated total earnings before interest, tax, depreciation and amortisation of €0.9 million with an EBITDA margin of 15.7%. In the first half of 2007 Medserv had generated a loss but in 2006, EBITDA had amounted to €0.66 million with a margin of 19.8%.

After accounting for net interest expenses of €0.07 million, the Medserv Group’s pre-tax profit during the first half of 2008 amounted to €0.68 million compared to a loss of €0.53 million in the comparative period last year. Medserv’s income statement was also positively impacted by deferred tax income of €0.2 million and after deducting the profit attributable to minority interests (representing the 40% shareholding in Misurata), Medserv generated a profit of €0.78 million during the six months to June 2008.

Total assets as at 30 June 2008 amounted to €12.6 million with shareholders’ funds of €6.9 million. Medserv’s net debt decreased to €1.96 million from €2.3 million registered at the start of this year. The Group’s gearing ratio stands at 28.32%.

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