Improved turnover registered at Medserv

The company’s directors have reported that Group’s turnover for the six-month period ended 30th June amounted to €29,863,692 compared to €18,137,739 registered in the comparative period to 30th June 2018, representing an increase in turnover of €11,725,953, equivalent to 65%.

The improvement in performance over the comparative period is mainly attributable to the Group’s Integrated Logistic Support Services segment, in particular the subsidiary in Suriname which started operating in the beginning of the year and the improved performance in Egypt. The OCTG segment has registered an overall improvement specifically in the Iraq business unit.

The Group’s adjusted earnings before interest, tax, depreciation and amortisation for the six-month period ended 30th June amounted to €6,176,653. After recognising depreciation amounting to €3,759,666 (2018: €3,402,648) and amortisation amounting to €895,534 (2018: €1,028,067), the Group registered an operating profit amounting to €1,521,453 (2018: operating loss of €1,016,418).

During the reporting period, the Group has engaged an external independent expert to review the estimated useful life of its property, plant and equipment.

After deducting the net finance costs amounting to €2,648,333 (2018: €1,657,490), the Group registered a loss before tax of €1,126,880 (2018: loss before tax of €2,673,907). Loss after accounting for taxation amounted to €982,454 (2018: €2,610,207).

During this period all business units registered positive EBITDA with the second quarter results continuing at the trading levels registered in the first quarter of the reporting year. The company remains confident that current year forecast EBITDA will be achieved.

Outlook

The company remains focused on value growth. The geographical markets in which it operates continue to roll out new oil and gas projects and demand for the company’s niche service offering is increasing both in existing and new markets.

The performance achieved in the first six months of the year is expected to improve in the second half of the year as it continues to service existing and potential new contracts. The company has strategically positioned itself both geographically and in product offering to allow minimum floor base earnings to be attained in the long-term as well as participate in upcoming new exploratory markets, the latter having variable levels of earnings.

The ILSS segment is serviced out of Malta (in respect of the Libyan market), Egypt, Cyprus and Suriname, that between them service most of the offshore oil and gas projects in these respective countries. Malta continues to provide shore base services for the development of offshore Libya projects.

Following the completion this month of the Bahr Essalam Phase Two project, the company will be acting as the logistics base for the development of the two new offshore structures in this gas field. This project, coupled with increase in drilling activity in the Mediterranean basin, has resulted in a new potential product offering being presented to the Malta facility which the company is evaluating.

The Cyprus shore base has been active in the first quarter of this year but was put in mothball in the second quarter of 2019 until the IOCs finalise their new drilling programmes. Recent gas discoveries by Eni and ExxonMobil, together with the recent award by a third IOC, are expected to increase the number of wells to be drilled in the coming two years. Drilling is forecast to resume in the fourth quarter this year and continue late into year 2020.

An increased level of activity is being seen across the Eastern Mediterranean region, with the company receiving enquiries from new IOCs for the provision of ILSS. Following the successful ongoing performance in Egypt, the company is scouting for tenders in Egypt to be rolled out by new potential IOCs within the company’s core competencies.

The company is keen to increase its participation in this significant growing energy market especially given its proven in-country track record to date. Positive earnings continue to be generated from the newly setup shore base in Suriname and the company has been successful in cross-selling OCTG services. The company is pursuing potential growth opportunities to increase both its client base in Suriname as well as increase its footprint in the region. The supply chain management of OCTG segment has continued to grow.

Oman remains the overall consistent contributor to date to the Group. The business unit in Iraq has registered significant recovery and generated positive earnings in the first six months of the year. Iraq is showing a healthy pipeline of projects which include the provision of both Supply Chain Management services and machine shop services. Further growth is expected in Iraq in year 2020.

The recent award in the United Arab Emirates by Abu Dhabi National Oil Company to three steel pipe manufacturers for the provision of significant volume of casing and tubing is expected to result in demand for the company’s services. Discussions are being held with the pipe manufacturers for awarding the Supply Chain Management of their product in the UAE to the Group. The size and value of this work is still to be confirmed.

As previously reported the company is still awaiting the Final Investment Decision to be taken by the Uganda State Authority for the Uganda pipeline project to proceed. Should the project receive the necessary approvals, the Group will be setting up a machine shop in Uganda as an exclusive supporting service provider for the construction of this pipeline.

The company makes reference to the prospective sale by the company’s major shareholders. As communicated to the market on the 20th May, the due diligence process is still ongoing. The company will provide further information to the market once the said shareholders have received binding bids from bona fide offerors and have notified the company accordingly.