On 26 August 2022, MedservRegis plc published its interim financial statements covering the six-month period ended 30 June 2022. It is important to highlight that these financial results are not comparable with those reported for H1 2021 as the Income Statement and the Cash Flow Statement covering the six-month period ended 30 June 2021 represented a continuation of Regis’ performance only. On the other hand, the Income Statement and the Cash Flow Statement for H1 2022 includes all the operating activities of MedservRegis plc.
In the first half of 2022, revenues amounted to €26.1 million reflecting the income of €15.7 million generated from the provision of ‘Integrated Logistics Support Services’ (“ILSS”) as well as the contribution of €10.1 million from the Group’s ‘Oil Country Tubular Goods’ (“OCTG”) arm.
On the expenditure side, total operating costs (net of other income) amounted to €25.8 million, thus leading to a marginal operating profit of €0.31 million. Excluding depreciation and amortisation charges of €4.46 million, EBITDA amounted to €4.77 million whilst the EBITDA margin stood at 18.3%.
After accounting for net finance costs of €0.92 million and tax charges of €0.06 million, MedservRegis reported a net loss of €0.66 million.
The Statement of Financial Position as at 30 June 2022, when compared to the corresponding figures as at the end of 2021, shows that total assets increased by 1.4% to €152.9 million as the higher levels of trade receivables and cash offset the drops in the amounts of PPE, intangible assets, and investments. Similarly, total liabilities increased by 1.9% to €89.6 million largely reflecting the higher level of trade payables. Loans and borrowings increased by 1% to €58.4 million whilst the value of lease liabilities contracted by 3.9% to €13.9 million. As a result, total debt stayed at €72.3 million which translates into a gearing ratio of 53.3% when taking into account the Group’s equity base of €63.3 million.
In their commentary, the Directors explained that 2022 started with the continuation of the COVID-19 crisis and the subsequent restrictions and difficulties associated with the pandemic only started to ease off at the end of Q1. In parallel, the Group’s performance was dented by the continuation of the force majeure imposed by TotalEnergies in Pemba, Mozambique. Likewise, Libya continues to see very low levels of activity due to the unresolved political situation in the country which has caused further delays in the start of mega offshore energy projects. Lastly, the global economy also had to deal with the war in Ukraine and the significant negative social, economic, and political implications associated with this event.
Despite the challenging macroeconomic environment, MedservRegis noted that there are still opportunities for the Group to grow into the medium to long term. The war between Russia and Ukraine has seen a spike in the oil and gas price globally, and with the onset of winter in the northern hemisphere approaching, there is certainly an expected upward trend for gas supplies to be sourced from other regions due to the sanctioning of Russian supplies.
The Group’s operations in the Mediterranean basin (which includes Libya, Malta, Cyprus, and Egypt) have, apart from Libya/Malta, been successful in supporting new drilling operations as well as securing extensions to contracts which were approaching the end of existing period. The Malta operations did a notable performance in securing non-oil and gas work with revenues from this commercial work outweighing the traditional oil and gas activity. The Group remains confident that offshore drilling or ancillary projects will resume in Libya by early 2023 resulting in a resurgence in activity at the Malta facility.
Following a number of drilling campaigns in Cyprus and Egypt earlier this year, MedservRegis is foreseeing further growth in the Eastern Mediterranean basin with a number of drilling projects being considered by various International Energy Companies (“IECs”). The Group is well positioned to secure further contracts, given its track record to date.
The Middle East business continues to be a significant contributor to the Group. Following record revenue in the first half of the year, the Middle East Tubular Services (“METS”) operations are anticipated to continue to show growth particularly in the UAE and Iraq machine shop facilities. Incoming volumes of OCTG at the Group’s facilities in Oman are significantly above the level achieved in previous years and it is anticipated that a record volume will be achieved by the end of 2022 with even higher volumes anticipated into 2023 and 2024.
Regrettably, the major tender submitted to an IEC in Trinidad earlier in the year was not awarded and, due to timing constraints, the IEC elected to extend the contract with its existing shore base contractor. Despite this setback, MedservRegis continues with its resolve to seek a way into seeking further opportunities and long terms contracts in the region of Suriname, Guyana, and Trinidad & Tobago.
The operations in Mozambique and Uganda are expected to remain subdued for the rest of 2022. However, Mozambique is seen as a country poised for growth considering the size of gas projects in the pipeline. This business unit has now begun to show signs of improvement following the insurgent attacks which took place in 2021. Uganda also has slowly started to see the commencement of the development of the Tilenga Project and, after a number of years of losses, it is anticipated that an improvement in revenue and profitability will be achieved by year end and continue into 2023 and 2024.
The policy of Group consolidation and rationalisation which was initiated at the beginning of 2022 has begun to show results and management are committed to continue this strategy whilst not overlooking opportunities that will arise with improvement in the market and increase of the oil and gas prices being experienced. To this end, MedservRegis has submitted tenders for new drilling campaigns offshore Egypt, Cyprus and Morocco to IECs with awards expected by end of 2022.
MedservRegis concluded that it is confident that it will meet the forecasts as provided in the recently published Financial Analysis Summary, and that it remains committed to achieve revenue growth and return the business to a profit.