MedservRegis plc - Interim Report
On 29 November 2021, MedservRegis plc issued an Interim Report providing information about its financial performance in Q3 2021. Revenues amounted to €11.2 million of which €7.4 million (or 66%) were generated from the provision of Integrated Logistics Support Services (“ILSS”) whilst most of the remaining income (amounting to €3.7 million) emanated from the Oil Country Tubular Goods (“OCTG”) segment. Moreover, EBITDA in the period under review amounted to €1.6 million which translated into an EBITDA margin of 14.2%. The largest contributor to EBITDA was the Oman division where MedservRegis has two OCTG bases – one located in Sohar and another one in Duqm.
The Interim Financial Statements published on 30 August 2021 explained that MedservRegis generated an EBITDA of €2.89 million in H1 2021 when including the contributions of both the former Medserv Group and Regis Holdings Limited but excluding a one-time impairment allowance of €1.33 million. As a result, the combined MedservRegis Group generated an aggregate adjusted EBITDA of €4.5 million during the nine-month period from January 2021 to September 2021 which translates into an adjusted EBITDA margin of 15%.
In its statement, MedservRegis explained that as global energy consumption is expected to exceed the level recorded in 2019, coupled with the stability in the price of oil during the past six months and the surge in the price of natural gas, International Energy Companies are projected to foster additional investments that could translate into significant commercial opportunities for the company. In fact, as it already has contracts and resources in place, MedservRegis is well placed to benefit from the rebound in exploration and production activities in all markets where it operates. The start of new contracts in Egypt is expected to have a positive impact on results. A mega development project for the installation of production platforms in offshore Libya is on track to commence mid-2022 subject to the return of stability in the region. Meanwhile, drilling in Cyprus resumed in Q4 2021 and the order book for the Middle East (namely South Iraq, United Arab Emirates and Oman) remains strong for 2022.
During the second half of 2021, MedservRegis signed a strategic alliance agreement with DP World Paramaribo Suriname with a view to recommencing operations in Latin America. This region (together with Guyana and Trinidad & Tobago) is one of the key growth drivers for MedservRegis in the future. Furthermore, the Company continued to secure work and expects to be awarded new contracts going forward. On other hand, although the operations in Mozambique produced the best cash contribution since the start of the year, momentum is expected to slow down as a consequence of a Force Majeure Event declared earlier in the year by a major International Energy Company operating in the northern province of Cabo Delgado.
In conclusion, MedservRegis noted that the integration between the former Medserv Group and Regis Holdings Limited is resulting in synergies in operations as well as cross-selling opportunities within the core competencies of the combined Group. Furthermore, MedservRegis is evaluating options and is in discussions to reduce its debt and/or reduce the costs of maintaining such debt. Looking ahead, the company’s strategy remains that of delivering sustainable growth and returning to profitability on the back of a significantly improved financial position.