MedservRegis Plc

Annual / Quarterly Financial Statement • Mar 23, 2015

Medserv p.l.c. Malta Freeport The Port of Marsaxlokk, Birzebbugia BBG 3011, Malta Tel: (00356) 2220 2000 Fax: (0035) 2220 2328 Email: investors@medservenergy.com

COMPANY ANNOUNCEMENT

Medserv plc

Approval of financial statements

Date of Announcement: 23 March 2015 Reference: 113/2015

The following is a Company Announcement issued by Medserv p.l.c., the "Company", in compliance with Listing Rules 5.16.4, 5.16.20 and 5.54.

QUOTE

The Board of Directors of the Company has today approved the audited consolidated financial statements for the financial year ended 31 December 2014. The Board resolved that these audited consolidated financial statements be submitted for the approval of the Shareholders at the forthcoming Annual General Meeting scheduled for Thursday, 28 May 2015. Shareholders on the Company"s Register at the Central Securities Depository of the Malta Stock Exchange as at close of business on 28 April 2015 will receive notice of the Annual General Meeting together with a copy of the Annual Report and Financial Statements. A preliminary statement of annual results is being attached herewith in terms of the Listing Rules. The Audited Financial Statements will be available for viewing on the Company"s website at www.medservenergy.com as from 28 March 2015.

The Board of Directors is proposing that the Annual General Meeting approves the payment of a net dividend of €1,400,000, representing a net dividend per ordinary share of €0.056, to be paid to all shareholders on the register of members as at close of business on the 28 May 2015 payable by not later than the 23 June 2015.

UNQUOTE

Signed:

________________________

Louis de Gabriele Company Secretary

Medserv p.l.c.

Preliminary Statement of Group Annual Results

For the Year Ended 31 December 2014

Consolidated statement of financial position

	31.12.2014 €	31.12.2013 Restated €	01.01.2013 Restated €
Assets Property, plant and equipment Prepaid operating lease Deferred tax assets	23,341,986 34,899,006 4,062,971 ---------------	8,330,709 35,674,539 4,577,440 ---------------	5,064,529 36,450,072 4,315,046 ----------------
Total non-current assets	62,303,963 ---------------	48,582,688 ---------------	45,829,647 ----------------
Inventories Prepaid operating lease Trade and other receivables Cash at bank and in hand	- 775,533 16,641,205 1,115,693 ---------------	- 775,533 3,868,246 5,682,988 ---------------	73,671 775,533 3,259,268 530,729 ----------------
Total current assets	18,532,431	10,326,767	4,639,201
Total assets	--------------- 80,836,394 ========	--------------- 58,909,455 ========	---------------- 50,468,848 ========
Equity Share capital Reserves Retained earnings	2,500,000 4,352,864 2,362,960 ---------------	2,500,000 4,606,761 772,443 ---------------	2,329,370 4,318,333 957,979 ----------------
Total equity attributable to equity-holders of the Company	9,215,824	7,879,204	7,605,682
Non-controlling interest	257,096	277,819	345,167
Total equity	--------------- 9,472,920 ========	--------------- 8,157,023 ========	--------------- 7,950,849 ========
Liabilities Deferred income Loans and borrowings Provisions Deferred tax liabilities	34,899,006 21,137,818 29,581 47,004	35,674,539 12,552,853 37,083 -	36,450,072 943,214 36,952 -
Total non-current liabilities	--------------- 56,113,409 ---------------	--------------- 48,264,475 ---------------	---------------- 37,430,238 ----------------
Current tax payable Deferred income Loans and borrowings Trade and other payables	141,952 775,533 4,880,499 9,452,081 ---------------	- 775,533 - 1,712,424 ---------------	24,620 775,533 2,261,296 2,026,312 ----------------
Total current liabilities	15,250,065	2,487,957	5,087,761
Total liabilities	--------------- 71,363,474	--------------- 50,752,432	---------------- 42,517,999
Total equity and liabilities	--------------- 80,836,394 ========	--------------- 58,909,455 ========	---------------- 50,468,848 ========

This report has been extracted from the audited financial statements of the Group which were approved by the Board of Directors on 23 March 2015.

Medserv p.l.c. Preliminary Statement of Group Annual Results For the Year Ended 31 December 2014 Consolidated statement of comprehensive income

	2014	2013
	€	€
Revenue 32,382,597 Cost of sales (24,854,968)		6,899,315 (4,946,609)
---------------- Gross profit 7,527,629 ----------------		--------------- 1,952,706 ---------------
Other income 242,984 (3,647,703) Administrative expenses Other expenses	(1,809)	40,210 (1,589,094) (4,537)
---------------- Results from operating activities 4,121,101		--------------- 399,285
Finance income Finance costs (1,079,457) ----------------	2,371	13,990 (281,336) ---------------
Net finance costs (1,077,086)		(267,346)
---------------- Profit before income tax 3,044,015		--------------- 131,939
Tax (expense)/ income (858,118)		262,394
---------------- Profit for the year 2,185,897		--------------- 394,333
======= Profit attributable to: Owners of the Company 1,936,620 Non-controlling interest 249,277		======= 387,278 7,055
---------------- Profit for the year 2,185,897 ========		------------- 394,333 =======
Total Comprehensive income for the year 2,185,897		394,333
======= Earnings per share =======	7c7	======= 1c5 =======

Medserv p.l.c.

Preliminary Statement of Group Annual Results

For the Year Ended 31 December 2014

Consolidated statement of changes in equity

			__________
	Share capital	Legal reserve	Statutory reserve	Retained earnings	Total	Non-controlling interest	Total equity
	€	€	€	€	€	€	€
Balance at 1 January 2013	2,329,370	60,000	4,258,333	957,979	7,605,682	345,167	7,950,849
Total comprehensive income for the year Profit for the year	-	-	-	387,278	387,278	7,055	394,333
Contributions by and distributions to owners Acquisition and disposal of
non-controlling interest	-	-	-	(113,756)	(113,756)	15,597	(98,159)
Capitalisation of earnings Dividends paid to equity holders Transfer from retained earnings	170,630 - -	- - -	- - 288,428	(170,630) - (288,428)	- - -	- (90,000) -	- (90,000) -
Balance at 31 December 2013	-------------- 2,500,000 ========	----------- 60,000 ======	-------------- 4,546,761 ========	-------------- 772,443 =======	-------------- 7,879,204 ========	------------ 277,819 =======	-------------- 8,157,023 ========
Balance at 1 January 2014	2,500,000	60,000	4,546,761	772,443	7,879,204	277,819	8,157,023
Total comprehensive income for the year
Profit for the year	-	-	-	1,936,620	1,936,620	249,277	2,185,897
Contributions by and distributions to owners
Dividends paid to equity holders Transfer to retained earnings	- -	- -	- (253,897)	(600,000) 253,897	(600,000) -	(270,000) -	(870,000) -
Balance at 31 December 2014	-------------- 2,500,000	------------ 60,000	-------------- 4,292,864	-------------- 2,362,960	-------------- 9,215,824	------------- 257,096	-------------- 9,472,920 ========
	========	=======	========	=======	=======	=======

Attributable to equity holders of the Company

Consolidated statement of				cash flows
---------------------------	--	--	--	------------

	2014 €	2013
Cash flows from operating activities		€
Profit for the year Adjustments for:	2,185,897	394,333
Depreciation	1,661,765	503,117
Tax expense/(income)	858,118	(262,394)
Bad debts written off	-	8,574
Reversal of impairment loss on trade receivables	(8,230)	(9,763)
Provision for exchange fluctuations	(1,288)	4,537
Provision for discounted future gratuity payments	(7,503)	132
Gain on sale of property, plant and equipment	(10,200)	-
Interest payable	1,079,457	281,336
Interest receivable	(2,371)	(13,990)
	------------------- 5,755,645	--------------- 905,882
Change in inventories	-	73,671
Change in trade and other receivables	(14,447,267)	(502,011)
Change in trade and other payables	6,056,024	(830,409)
Change in related party balances	(1,808)	38,272
Change in shareholders' balances	(4,246)	2,707
Change in directors' balances	- -------------------	(3,692) ---------------
Cash absorbed by operating activities	(2,641,652)	(315,580)
Interest paid	(25,572)	(111,899)
Interest received	2,372	1,315
Tax paid	(143,881)	(24,620)
Net cash used in operating activities	------------------- (2,808,733) -------------------	--------------- (450,784) ---------------
Cash flows from investing activities
Investment in subsidiaries	-	(38,000)
Acquisition of property, plant and equipment	(13,431,154)	(3,499,338)
Receipts from disposal of assets	10,200 -------------------	- -----------------
Net cash used in investing activities	(13,420,954) -------------------	(3,537,338) -----------------
Cash flow from financing activities
Loan advanced by bank	1,267,673	2,172,909
Repayments of bank loans	(65,255)	(3,569,259)
Interest paid on bank loans	(3,147)	(60,865)
Interest paid to related parties	(34,372)	-
Issue of shares	-	240
Issue of notes	7,105,000	13,000,000
Issue costs Interest paid on notes	(190,693) (836,981)	(556,508) -
Advances by non-controlling interest	1,300,000	-
Dividends paid to non-controlling interest	(90,000)	(60,043)
Dividends paid to owners of the Company	(595,092)	-
Net cash from financing activities	------------------- 7,857,133	----------------- 10,926,474
Net (decrease)/increase in cash and cash equivalents	------------------- (8,372,554)	----------------- 6,938,352
Cash and cash equivalents at 1 January	5,644,488	(1,316,101)
Effect of exchange rate fluctuations on cash held	1,957	22,237
Release of cash pledged as guarantee	38,500	-
Cash and cash equivalents at 31 December	------------------- (2,687,609)	---------------- 5,644,488
	===========	=========

Medserv p.l.c. Preliminary Statement of Group Results and State of Affairs For the Year Ended 31 December 2013

Review of group operations

Introduction

This Statement is published pursuant to the Malta Financial Services Authority Listing Rules Chapter 5 and Article 4(2)(b) of the Prevention of Financial Markets Abuse (Disclosure and Notification) Regulations, 2005.

The financial information has been extracted from Medserv p.l.c."s Annual Report and Consolidated Financial Statements for the year ended 31 December 2014 as approved by the Board of Directors on 23 March 2015, which have been audited by KPMG. These financial statements will be laid before the members at the Annual General Meeting to be held on 28 May 2015.

The Group"s financial statements have been prepared and presented in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of the Maltese Companies Act, 1995.

Review of performance

Revenue for year 2014 amounted to €32.4 million (2013: €6.9 million). This represents an increase of €25.5 million compared to 2013. The significant rate of growth is attributable to the commencement of oil major drilling contracts awarded during the year. Revenue included €8 million relating to low margin business which had a lesser beneficial effect on profit margins.

The Group"s operating profit before depreciation amounted to €5,782,866 (2013: €902,402). After charging depreciation amounting to €1,661,765 (2013: €503,117) and net finance costs amounting to €1,077,086 (2013: €267,346), the Group registered a profit before tax of €3,044,015 (2013: €131,939). Profit after accounting for taxation amounted to €2,185,897(2013: €394,333).

The Group completed the construction of its base at the port of Larnaca and started providing support services to ENI Cyprus, as scheduled, on 1 June 2014.

The contracts referred to above led to both the Malta and Cyprus bases working at full capacity throughout the second half of the year.

During 2014, Medserv p.l.c. issued another tranche of bonds amounting to €7 million carrying a coupon of 6% per annum to supplement the first tranche of €13 million issued in 2013. The total funds raised amounting to €20 million have enabled the Group to complete its investment programme. In the year under review this included the completion of a new 8,000 square metre warehouse which is now fully utilized. In addition, an investment of €3.5 million was made in specialised containers, most of which are now on hire to clients in Malta and Cyprus. Further expansion and investment took place at the Hal Far site which now extends to 43,000 square metres, the vast majority of which is already fully utilised and earning storage fees from clients. This has resulted in the Malta base having a total foot print of 98,000 square metres.

The solar farm suspended on the roofs of the Medserv base has been completed and went on line in July 2014. This is expected to yield an average of 2 MWp of electricity annually over the next twenty years.

State of affairs

Group total assets at reporting date stood at €80,836,394 (restated 2013: €58,909,455). The group"s short term liquidity position as at 31 December 2014 was 1.2:1 (restated 2013: 4.2:1). The current assets as at 31 December 2013 included cash and cash equivalents raised by the note issue that awaited their investment. During the reporting year, Medserv p.l.c. issued tranche two of notes amounting to €7,105,000 the purpose of which was to finance the capital projects completed during the year.

During 2014, the Group changed its accounting policy on the recognition and measurement of an emphyteutical grant over industrial property forming part of the Malta Freeport at the Port of Marsaxlokk. Until 31 December 2013, the Group had been recognising the property rights conferred by virtue of the said grant as an operating lease and measuring these rights at a nominal amount in accordance with International Financial Reporting Standards (IFRS). On 31 December 2014, the Group elected to recognise the property rights and the grant at fair value, also in accordance with IFRS. As a result, deferred income and an equivalent non-monetary asset (referred to as "prepaid operating lease") were initially recognised at fair value and subsequently recognised in profit or loss on a systematic basis over the useful life of the asset using the income approach. The fair value of the non-monetary asset and related deferred income were determined with reference to the valuation of the underlying property rights by an independent professional valuer as at 31 December 2012.

The Group applied the change in accounting policy retrospectively and restated the comparative periods to recognise the fair value of the property rights as at grant date.

The following table summarises the impact on the Group"s financial statements.

Statement of Financial Position

As at 1 January 2013		Impact of change in accounting policy
	As previously reported	Adjustments	As restated
	€	€	€
Prepaid operating lease	-	36,450,072	36,450,072
Total non-current assets	9,379,575	36,450,072	45,829,647
Prepaid operating lease	-	775,533	775,533
Total current assets	3,863,668	775,533	4,639,201
Total assets	13,243,243 =========	37,225,605 =========	50,468,848 =========
Deferred income	-	36,450,072	36,450,072
Total non-current liabilities	980,166	36,450,072	37,430,238
Deferred income	-	775,533	775,533
Total current liabilities	4,312,228	775,533	5,087,761
Total liabilities	5,292,394	37,225,605	42,517,999
Total equity and liabilities	13,243,243 =========	37,225,605 =========	50,468,848 =========

As at 31 December 2013 Impact of change in accounting policy

	As previously reported	Adjustments	As restated
	€	€	€
Prepaid operating lease	-	35,674,539	35,674,539
Total non-current assets	12,908,149	35,674,539	48,582,688
Prepaid operating lease	-	775,533	775,533
Total current assets	9,551,234	775,533	10,326,767
Total assets	22,459,383	36,450,072	58,909,455
	==========	=========	=========
Deferred income	-	35,674,539	35,674,539
Total non-current liabilities	12,589,936	35,674,539	48,264,475
Deferred income	-	775,533	775,533
Total current liabilities	1,712,424	775,533	2,487,957
Total liabilities	14,302,360	36,450,072	50,752,432
Total equity and liabilities	22,459,383	36,450,072	58,909,455
	==========	=========	=========

Outlook

Libya remains an important market for the Group, which has continued with its efforts to diversify into other geographical areas. Initial success has been achieved by the award of a shore-based contract in Cyprus that started generating revenues from June 2014. This has a duration of thirty-six months and to date has met our best expectations. Continuing efforts are being made to further expand our operations and a dedicated management team has been appointed to specifically oversee this process, with the objective of future growth.

After balance sheet date, the maintenance contract referred to in previous company announcements has finally been awarded to the Group. This is in respect of the maintenance of an offshore platform and has a value of approximately €4 million due to commence in the 2nd quarter of 2015 with an expected duration of ten months.

All of the investments made during the last two years, including those financed by the bond issue, will enable the Group to better meet the increasing demands of our clients both as to physical facilities offered and services provided. The Group is continuing to invest in human resources, to employ new experienced staff from outside the Group, and to upgrade the standard and qualifications of its existing employees who are vital to the continued success of the Group.

The forthcoming year 2015 promises to be an extremely busy one as a number of projects long in the planning have commenced.

Dr Louis De Gabriele LL.M (Lond) LL.D. Company Secretary

Port of Marsaxlokk Birzebbugia Tel: (+356) 22202000

23 March 2015