MedservRegis plc - Interim Report

On 27 November 2020, Medserv plc issued an Interim Report providing information about its financial performance during the nine-month period ended 30 September 2020. In this respect, revenues and EBITDA were substantially lower and amounted to €24.8 million (Q1-Q3 2019: €49.1 million) and €4.1 million (Q1-Q3 2019: €9.3 million) respectively reflecting: (i) the non-recurrence of the income from the major contract in Suriname registered in 2019; (ii) the negative impact of COVID-19; and (iii) the suspension of most of the offshore drilling activity in Q2 2020. Nonetheless, the EBITDA recorded during the period under review is in line with budgets and covers the company’s finance costs. Moreover, Medserv expressed its confidence that the results for the full year will be in line with the forecasts as provided in the Financial Analysis Summary published on 15 July 2020.

Medserv also provided an update on its trading operations. In this respect, the company explained that it managed to preserve its liquidity through immediate action taken with a view of reducing costs and also tapping several government measures in response to COVID-19. The latter included a €5 million financing granted under the COVID-19 Guarantee Scheme offered by the Malta Development Bank.

All operating companies, other than the UAE business unit, are registering positive EBITDA in 2020. The securing of the new business in Abu Dhabi will allow the operation in the UAE to generate positive EBITDA by Q2 2021. Moreover, Medserv noted that it has significant growth potential in all operating markets whilst the business pipeline stemming from existing long-term contracts is substantial. The mega development project for the installation of production platforms offshore Libya is on track to commence in late 2021. Drilling in Cyprus is expected to resume in H2 2021 and will continue through to 2022. The order book in the Middle East is also forecasted to strengthen in Q2 2021 to reach pre-COVID-19 levels.

Meanwhile, the large finds in Guyana, Trinidad and Tobago, as well as the recent discoveries and future planned activity in Suriname makes this region an exciting growth area for the oil and gas industry. Medserv confirmed that it signed a Memorandum of Understanding with Kuldipsingh Port Facility N.V. which will allow the company to effectively participate in the upcoming business in this region. Kuldipsingh is the private port operator from which Medserv carried out the logistical support for the Staatsolie Nearshore Drilling project in Suriname in 2019. Elsewhere, Medserv continued to secure work in H2 2020 as it participated in new tenders in Egypt and two new African markets which are at an advanced stage of being adjudicated.

Commenting on the outlook, Medserv is projecting that offshore drilling will resume in around mid-2021, thus paving the way for the company to return to pre-COVID-19 trading levels. This is substantiated by the strong business pipeline resulting from the existing and recently announced long-term contracts and is expected to materialise into further active projects. The company also continues to adopt a dual strategy, that of securing sustainable growth through its pipeline and of strengthening its balance sheet. In fact, Medserv is actively pursuing a number of options to secure this outcome.