On 31 August, Medserv plc published its half-year results covering the first six months of 2012. During this period the Medserv Group generated a lower than forecasted €2.54 million in revenue representing a 35% drop from the previous comparable period. The Directors explained that the drop in revenue is due to the instability in Libya which is still recovering from the civil war. In fact, the Malta base benefited from the relocation of oil field equipment which was previously stored in the Group’s base in Libya whilst the base in the North African country, although open for business, has not yet seen any new business from oil companies renewing operations.
Cost of sales dropped by 22.5% to €2.42 million in line with the slowdown in business activity whilst administrative expenses rose by 27.4% to €0.75 million. As a result, the Medserv group reported an operating loss of €617,635 compared to the operating profit of €181,847 registered in the first six months of 2011.
Interest costs also increased by 53.4% to €62,454, reflecting the increased borrowings which now amount to over €3.2 million. The higher borrowings funded the Group’s investment in the upgrading of its existing machinery and the acquisition of new equipment worth over €1 million.
Overall, the Group’s pre-tax loss amounted to €680,089 compared to a pre-tax profit of €141,137 registered in the previous comparable period. The segmental information reveals that most of this loss is attributable to the Malta base which reported a €586,941 loss whilst the Libya base is almost in a break-even position with just a loss of €93,648.
However after accounting for a significant tax credit of €690,354 and minority interest of €22,457, Medserv’s profit for the period amounted to €32,722 compared to €112,965 during the first six months of 2011.
The balance sheet shows a 4% increase in total assets to €13.75 million following the acquisition of new equipment. Meanwhile, shareholders’ funds declined by 3.4% to €8.3 million following the €300,000 dividend paid in respect of the 2011 financial year. Compared to net debt of €2.95 million, the Group’s gearing ratio is 35.4%. The net asset value, excluding minority interest, amounts to €0.789 per share.
No interim dividend was declared by the directors.
Cyprus: A lease on a parcel of land within the port of Limassol has been signed and preparations are underway to enable the Group to provide a full service to the oil and gas industry offshore Cyprus.
Sicily: Favourable developments were also registered in this area with the lifting of Government restrictions on drilling offshore Sicily. The Group is now renewing its efforts to obtain business from oil companies likely to conduct operations in the area.
Malta: Given that oil production in Libya has now reached pre-war levels, the Group is receiving shipments of material to its Malta base in anticipation of commencement of works in offshore Libya. Moreover, through the Malta base, Medserv is carrying out repairs to subsea structures and maintenance works on platforms. Furthermore, the Directors revealed that the Group has been awarded a very substantial contract for repairs and maintenance to commence in September of this year.
In conclusion the Directors stated that the upcoming activity in the Mediterranean basin will be of great benefit to the Group and they look to the future with optimism.
Download a copy of the Medserv plc 2012 Half-Year Report