Medserv reports a positive first half of 2019

Medserv’s Interim Financial Statements show a positive performance for the first half of the year and allow management to reaffirm their expectations for the full financial year, that of an FAS forecast for FY19 sales of €64.2m and adjusted EBITDA of €14.1m.

The Company reported a gross profit of €3.8m, more than treble that reported inH118 and a margin of 12.6% compared to 6,4% in H118. The Group’s adjusted earnings before interest, tax, depreciation and amortisation increased 81% to €6.2m.

The Directors of the Company expect the performance achieved in the first six months of the year to improve in the second half of the year as it continues to service existing and potential new contracts.

“Our team continues to focus on growth opportunities across the globe. The ILSS segment serviced out of Malta in respect of the Libyan market, Egypt, Cyprus and Suriname, between them now service most of the offshore oil and gas projects in these respective countries. The OCTG segment is also performing well with improvements seen in Iraq and additional prospects in the pipeline” said Karl Bartolo, Group CEO.

Quoting the Edison Investment research report just published, Medserv: Strong Year in Progress, “Medserv has turned a corner in terms of scale and financial performance, which allows a lower risk attribution to the group’s prospects. As such, we have reduced our cost of equity to 10% from 11% previously, which reduces our calculated WACC to 7.9% from 8.1%. As a result, our DCF valuation increases to €1.42 per share from €1.33 previously

Existing prospects in Cyprus, Egypt and elsewhere support our FY20 estimates and should be augmented by several major new projects that could be captured in the coming months for both the ILSS and OCTG divisions. Medserv’s international expansion with an increasing number of IOCs is spreading the risk, and for the time being we expect the company to deliver progressively improving profitability and cash flows.” The full report may be obtained on the Company’s website.

In the announcement, the Company also makes reference to the prospective sale by the Company’s major shareholders. The due diligence process is still ongoing and the Company will provide further information to the market once binding bids from bona fide offerors have been received.