Medserv plc issued their financial statements for the year ended 2019 and their interim report for the first half of 2020.
The Company has reported strong results for 2019 with an 90% increase in revenues over the previous year and EBITDA growth of 74%, from €7.3 million to €12.7 million. All operating facilities within the Company registered improved earnings in year 2019. The Company have had to revise its forecast for 2020 downwards due to the COVID-19 pandemic and its expected impact on the global economy. Notwithstanding, Medserv’s Directors report a cautiously optimistic outlook with a strong pipeline of confirmed projects expected to resume in second quarter of next year, paving the way for the Company to return to the pre-COVID-19 trading levels.
The COVID-19 pandemic coupled with both the collapse in price and demand for oil, as well as geo-political events, resulted in international oil companies (IOCs) cutting back on capital expenditure and demanding discounts, and all offshore drilling has been suspended, mainly due to the inability of the IOCs to provide a safe working environment, and consequent to travel bans and closure of ports imposed by Governments.
Whilst these events have mainly impacted the Company’s Integrated Logistics Support Services (ILSS) segment, the Company reports that all their facilities remain operating uninterruptedly and continue servicing clients. The Company also report that earnings from their supply chain management of Oil Country Tubular Goods (OCTG) segment which is driven by onshore drilling activity in the Middle East, has had minimal impact from the pandemic and oil price decrease. National Oil Companies of this region did not suspend any onshore drilling and continue to confirm their commitment to approved projects as well as to increase their production capabilities.
The Company still enjoys a strong business pipeline across its core markets, being North Africa, Eastern Mediterranean and the Middle East. Once travel bans are lifted these long-term energy projects, which Medserv is already contracted to service, will resume. Additionally, the Company is awaiting adjudication of several tenders including ILSS services to an IOC operating offshore Egypt and Supply Chain Management for OCTG contracts in the United Arab Emirates.
Despite the drilling campaign in Suriname terminating at the end of 2019, the Company is committed to maintain its presence in the region. The large finds in Guyana, Trinidad and Tobago, as well as future activity planned in Suriname makes this region an exciting area for exploration in the oil and gas industry. Africa will be the next growing market for energy and Medserv has the experience and reach to enable the Company to tap into this market.
In his CEO statement, Karl Bartolo says that the Company expects 2020 to be a challenging year as it battles through the economic impact of COVID-19, but measures have been put in place to conserve liquidity and place our Group in a position to meet its financial obligations and to continue to service its clients in these challenging times. “Both I and the Group look at the future with cautious confidence as the experience we have shared with all our stakeholders over the last forty-five years of activity have time and again demonstrated that the industry and our Group are both resilient and well equipped to overcome the current slowdown and resume growth in 2021.”