MedservRegis plc - Updated Financial Analysis Summary
On 15 July 2020, Medserv plc published an updated Financial Analysis Summary (“FAS”) providing an overview of the 2019 financial results, a comparison of the 2019 actual results with the forecasts published in the previous FAS dated 22 May 2019, as well as the forecasts for the current financial year ending 31 December 2020.
FY2020 is expected to be characterised by a slowdown in activity within the oil and gas sector. Demand for energy slowed down following the various lockdowns across the globe, while the restriction on the movement of people was detrimental in Medserv’s ability to continue with operations. In fact, contracted works in Cyprus which were meant to commence in April 2020 were delayed by a year, whilst projects offshore Libya that were contracted to operate from the Malta base have been postponed to June 2021.
The main highlights of the 2020 financial performance of the Group are:
- Revenues are expected to decline by 60.6% to €27.1 million, with METS being the main contributor for FY2020 with €14.3 million of total forecasted revenues.
- EBITDA is expected to amount to €5.5 million which translates into a contraction of 57% over FY2019, although representing a better margin to revenue of 20.3% (FY2019: 18.5%) as the Group continues to rationalise on costs at the various bases.
- Depreciation (€7.65 million) and amortisation (€1.79 million) are expected to overshadow EBITDA levels as Medserv is expected to post an operating loss of €3.97 million compared to the operating profit of €3.08 million recorded in the 2019 financial year.
- After taking into account net finance costs of €5.72 million and a tax charge of €0.11 million, the loss for the 2020 financial year is projected at €9.79 million compared to a loss of €3.36 million recorded in 2019.
Meanwhile, the forecasted Statement of Financial Position as at 31 December 2020 shows that Medserv is expecting to close the year with total borrowings of €86.2 million and a net debt position of €81.3 million. These are lower than the corresponding figures as at the end of 2019 which showed that Medserv had total borrowings of €90.6 million and net debt of €84.9 million. However, despite the anticipated decrease in indebtedness, due to the forecasted weaker performance in FY2020, the projected net debt to EBITDA multiple is expected to worsen to 14.8 times compared to 6.7 times in 2019.