MedservRegis plc - Interim Report

Following the delay in the publication of its 2021 financial statements, on 29 April 2022 MedservRegis plc published a set of unaudited financial information for the 2021 financial year and Q1 2022.

2021 Performance

Revenues amounted to €29.9 million compared to €32.4 million in the previous comparable period which did not include the contribution from Regis. The drop was due to the lower level of business generated by the ‘Oil Country Tubular Goods’ (OCTG) segment which, in 2021, generated revenues of €8.2 million compared to €15.4 million in 2020. On the other hand, the other main revenue generator of the Group – namely ‘Integrated Logistics Support Services’ (ILSS) – achieved a turnover of €20.2 million (when including a 6-month contribution from Regis) compared to €16.6 million in 2020.

In view of the contraction in revenues, EBITDA dropped by nearly 32% to €3.8 million whilst the EBITDA margin eased to 13% compared to 17.2% in 2020.

With respect to the financial position as at the end of 2021, MedservRegis had total assets of €166.3 million (31 December 2020: €121.8 million) whilst total liabilities amounted to €101.7 million (31 December 2020: €117.5 million). In view of the significant increase in total assets and the drop in total liabilities, total equity expanded to €64.6 million compared to €4.29 million as at the end of 2020. MedservRegis also noted that it had €10.7 million in cash and cash equivalents as at the end of 2021 whilst the amount of current assets was 2.7 times its current liabilities. Moreover, in view of the reduction in net debt to €42.6 million (when excluding lease liabilities), coupled with the considerable increase in the equity position, the net debt to equity ratio dropped to 0.66 times compared to 12.2 times as at the end of 2020.

Q1 2022 Performance

MedservRegis also provided financial information about its performance in the first three months of the current financial year ending 31 December 2022. Revenues surged by over 30% to €12.3 million compared to €9.3 million in Q1 2021 (when also including the contribution from Regis) reflecting growth across all regions (especially Middle East) except for Libya and Mozambique. Moreover, turnover registered by ILSS increased by 30.8% to €6.8 million (Q1 2021: €5.2 million) whilst the OCTG segment recorded a growth in revenues of 25.7% to €4.4 million (Q1 2021: €3.5 million).

In view of the notable increase in business, EBITDA increased fourfold to €2 million compared to €0.5 million in the first three months of 2021. Moreover, the EBITDA margin improved to 16% compared to 5% in Q1 2021.

Trading Update

Commenting on current business trends and the outlook for the future, MedservRegis explained that improved business across the Group’s shore bases is being experienced as a number of offshore gas drilling projects are resuming. In fact, exploratory drilling programmes have commenced in Cyprus in Q1 2022 and are scheduled to continue throughout 2022. In Egypt, MedservRegis continues to service two major International Energy Companies (IECs) and is also targeting to participate in upcoming tenders in the Eastern Mediterranean region for both ILSS and OCTG. On the other hand, activity in the shore base in Malta servicing the Libyan offshore market remains slow as drilling projects are not scheduled to resume until Q1 2023. In the interim period, the Maltese operations are securing other port services. Meanwhile, the business in Mozambique also remains slow, however, activity related to the LNG project of TotalEnergies is expected to resume towards the end of 2022.

MedservRegis added that the majority of upcoming projects in the Eastern Mediterranean region and Libya are all gas driven developments. These projects have increased in prominence as Europe and the US search for alternative source of gas following a change in their energy policy due to the Ukraine crises.

Elsewhere, the business pipeline continues to improve as new tenders are released. In Q1 2022, MedservRegis submitted two tenders to an IEC for the provision of shore base logistics in the Caribbean Island of Trinidad as well as Mauritania (West Africa) for which the Group is still waiting for an outcome. MedservRegis is also expecting to be invited to participate in similar tenders by another IEC in two other jurisdictions, namely Oman and Morocco.

The OCTG business in the Middle East is continuing to gather momentum. The order book for the Group’s machine shop services is improving as is the demand for storage and handling of OCTG. The Abu Dhabi contract continues to increase in scope with revenues expected to reach €1.43 million for the 2022 financial year compared to €0.82 million in 2021. Likewise, business in Oman is continuing to grow and drilling activity in expected to ramp up considerably reflecting the more favourable dynamics of the sector in general. In the meantime, the performance of the business unit in Iraq has remained stable and at similar levels as registered in 2021.

As MedservRegis is utilising its OCTG know-how and expertise in Africa, encouraging developments are also taking shape in Uganda. On 1 February 2022, Uganda, Tanzania, TotalEnergies and China National Offshore Oil Corporation reached a final investment decision agreement to kick start the Lake Albert development project. The project encompasses the Tilenga and Kingfisher upstream oil projects in Uganda as well as the construction of a 1,443 km-long pipeline between the two countries. In this context, MedservRegis acquired a 24,000 sqm site on which it is setting up its own facilities within a short distance of the central processing facility of this project.

Meanwhile, in Q1 2022 the Group discontinued its shipping business unit that was part of Regis prior to the merger with Medserv plc and also disposed of two related vessels. Moreover, MedservRegis was successful in being onboarded by its bankers following the change in its shareholding structure in June 2021, thus paving the way for the initiation of its debt restructuring plan.

In conclusion, MedservRegis noted that given the upsurge in the demand for gas, coupled with the change in Europe’s energy policy as well as the increase in energy prices, the Group is experiencing an upturn in invitations to tender and requests for proposals across most of its operating entities. The Group’s target for 2022 remains to return to pre-pandemic trading levels and register a profit in the short to medium term.

Suspension of Listing and Trading

Following the delay in the publication of the 2021 financial statements, the MFSA suspended the listing and trading of the shares and bonds of MedservRegis plc. The suspension is valid until 13 May 2022 or until MedservRegis publishes its 2021 financial statements.