MedservRegis plc - Full-Year Results

On 29 May 2020, Medserv plc published the results for the financial year ended 31 December 2019.

Performance Overview

During 2019, Medserv plc generated €68.7 million in revenues compared to €36.2 million in the 2018 financial year. The substantial increase reflects the much higher business within the ‘Integrated Logistics Support Services’ (“ILSS”) segment on the back of the significant contract in Suriname which came to an end prematurely in December 2019. In fact, revenues from the ILSS segment more than doubled to €52.2 million compared to €21.5 million in the 2018 financial year. Meanwhile, the ‘Oil Country Tubular Goods’ (“OCTG”) segment also registered growth as revenues climbed by nearly 13% to €16.1 million compared to €14.2 million in the previous comparable period.

Other income generated by Medserv contracted to €1.38 million compared to just over €2 in the 2018 financial year largely reflecting the non-recurrence of gains on lease modifications (which amounted to €0.36 million in 2018) as well as much lower reversal of provisions.

On the expenditure side, operating costs surged by 68% to nearly €67 million (FY2018: €39.8 million) reflecting the increase in turnover and business activity throughout the year, as well as one-off charges related to the impairment of €2.6 million on the value of Medserv’s investment in Egypt and the due diligence costs related to the process of potential acquisition by a strategic investor. On the other hand, additional expenses contracted to just €0.04 million compared to €1.87 million in 2018 as no impairment losses on property, plant and equipment were accounted for during 2019 compared to a charge of €1.6 million in 2018.

Overall, Medserv posted an operating profit of €3.09 million compared to an operating loss of €3.46 million in 2018. Furthermore, when excluding depreciation, EBITDA surged to an all-time high of €12.7 million (2018: €7.32 million) which, however, is 10% lower than the previously estimate figure of €14.1 million as provided in the Financial Analysis Summary dated 22 May 2019.

Net finance costs for the year amounted to €5.64 million compared to €5.4 million in 2018. Accordingly, Medserv posted a pre-tax loss of €2.55 million compared to a pre-tax loss of €8.83 million in the 2018 financial year. After taking into account a tax charge of €0.81 million and a loss of €0.41 million attributable to minority interests (relating to the part of the Group’s business that is owned by third parties), Medserv posted a net loss of €2.92 million compared to a net loss of €9.04 million in the previous comparable period.

The Statement of Financial Position shows total assets eased by 1.3% to €154.7 million as the drop of €7 million in non-current assets (namely property, plant and equipment; intangible assets and goodwill; right-of-use assets; and deferred tax assets) outweighed the higher amount in current assets (namely inventories; trade and other receivables; and contract assets). The company’s cash balance increased marginally by 2.3% to €5.74 million.

Total liabilities increased by 14.2% to €18.5 million reflecting higher balances of trade and other payables (+€2.79 million) as well as bank borrowings (+€0.74 million). As a result, net assets contracted by around 24% to just over €14 million (or €14.8 million when excluding non-controlling interests).


In their commentary, the Directors of Medserv explained that the company had a strong start to 2020. However, the ‘COVID-19’ pandemic, which also resulted in the creation of significant uncertainties in the oil and gas industry, necessitated Medserv to take quick and tough decisions. These were aimed at conserving liquidity, postponing capital expenditure and placing the company in a position to meet its financial obligations whilst also continuing to service its clients in extremely challenging times.

As international oil companies are cutting back on capital expenditure, and customers demanding discounts, Medserv’s budgeted earnings for the 2020 financial year were impacted particularly in the ILSS segment. On the other hand, the earnings from the OCTG segment which is driven by onshore drilling activity in the Middle East had a minimal impact from the ‘COVID-19’ pandemic and oil price decrease. Furthermore, Middle East national oil companies did not suspend any onshore drilling and continue to confirm their commitment to approved projects as well as to increase their production capabilities.

Overall, Medserv is expecting 2020 to be a challenging year as offshore exploratory drilling and development in the company’s operating markets are projected to resume in Q2 2021 which would thus lead to the EBITDA in 2021 to return to the same level as 2019. In this respect, Medserv noted that it still enjoys a strong business pipeline across its core markets, being North Africa, Eastern Mediterranean and the Middle East. Moreover, once travel bans are lifted, these long-term energy projects for which Medserv is already contracted to service will resume as their cost of commercialising is low, apart from being located close to the market or are needed for national consumption.

The business that Medserv has in the pipeline will also allow the company to implement its financial plan to establish a sustainable long-term capital structure (including reducing indebtedness) and position itself for long-term growth. Additionally, Medserv is awaiting adjudication of several tenders including ILSS services to an international oil company operating offshore Egypt and Supply Chain Management for OCTG contracts in the United Arab Emirates. Beyond existing markets, Medserv has also plans to penetrate new geographies in Africa.

Meanwhile, with respect to the sourcing of a strategic investor, the two major shareholders will continue to seek a new investor that will be ready to support the continued global growth of Medserv.


Medserv plc – Annual Report & Financial Statements for the year ended 31 December 2019.