On 21 March Medserv plc published its financial results with respect to the year ended 31 December 2011. During the year, the Medserv Group’s operations were impacted by the political unrest in North Africa particularly in Libya which led to the temporary closure of the Misurata base. This was the main reason for the 21.4% decline in revenue to €9.2 million (the lowest turnover level in the last four years), as the increased demand for the Group’s services in the second half of the year failed to completely offset all the lost business in the prior six months. Nonetheless, the cost saving measures implemented by the Group during the year led to improved profitability levels. In fact, costs of sales dropped by 31.3% to €6.9 million leading to a 38.2% rise in gross profit to €2.3 million which translates into an improved gross profit margin of 24.9% in 2011 from 14.2% in 2010.
Similarly, the Medserv Group managed to reduce its administrative expenses by 24.1% to €1.2 million and its other operating expenditure by 38.7% to €0.13 million which more than offset the decline in other operating income to €0.14 million (2010: €0.27 million). This resulted in a significantly improved operating profit of just under €1.1 million compared to last year’s figure of €0.13 million. Again, this was also reflected in a significant improvement in the operating profit margin from 1.1% in 2010 to 11.9% during the year under review.
After accounting for net interest expense of €86,379 (2010: €93,085) and the share of loss of the jointly-controlled entity (related to the newly set-up joint-venture in Cyprus) of €3,228, the Medserv Group reported a pre-tax profit of just over €1 million compared to the marginal pre-tax profit of €32,287 registered in the previous year. A similar noteworthy improvement was also recorded in the net profit figure (after taking into consideration the tax expense and minority interest) which climbed from €118,850 in 2010 to €761,358 in 2011.
The Directors recommended a final net dividend of €0.03 per share to all shareholders as at close of trading on 10 April 2012. Coupled with the interim dividend also of €0.03 per share paid in December 2011, the total net dividend declared with respect to the financial year ended 31 December 2011 amounts to €0.06 per share representing a payout ratio of 79%. The dividend will be put forward for approval by shareholders together with other resolutions during the upcoming Annual General Meeting scheduled to be held on 27 April.
Looking ahead, the Directors explained that Medserv has continued to consolidate its position in the Mediterranean area particularly through the setting up of the subsidiaries in Sicily and Cyprus. The Cypriot subsidiary has been allocated an area in the port of Limassol from which it will carry out its operations in support of the upcoming exploration programme in the area. Meanwhile, the Sicilian subsidiary is still awaiting the lifting of the freeze on all offshore exploration activity imposed by the Italian authorities following the BP incident in the Gulf of Mexico. This ban is expected to be lifted in the second half of 2012. These subsidiaries should benefit from the expected increase in exploration activities in the Mediterranean region for the foreseeable future. As such, the Directors of Medserv stated that they have good reason to look to the future with confidence.
Download a copy of the Medserv plc 2011 Preliminary Results