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MedservRegis Plc
Report Publication Announcement • May 30, 2020
2071_rns_2020-05-29_3dd671d8-326e-4b47-8ada-605a59a07680.pdf
Report Publication Announcement
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COMPANY ANNOUNCEMENT
MEDSERV P.L.C. (THE "COMPANY")
Delay - Guarantor Financial Statements
| Date of Announcement | 29 May 2020 |
|---|---|
| Reference | 208/2020 |
| Listing Rule | LR 5.61 |
QUOTE
The Company regrets to inform the market that due to the disruptions caused by the COVID19 pandemic, it has not been possible for the auditors to complete the audit of the annual financial statements for the year ended 31 December 2019 of Medserv Operations Limited (guarantor of the Medserv €20million 2023 6% Secured Notes). The auditors have confirmed to the Company that the audit is expected to be completed by Wednesday the 2nd June 2020, at which stage the Company will publish the said financial statements (by way of announcement as well as through the Company's website). The Company has notified the Listing Authority of this delay.
In the interim, a preliminary statement of annual results (based on unaudited results) has been prepared and is attached to this announcement. The said annual results have been agreed with the auditors and the Company expects the audit opinion to be unqualified.
UNQUOTE
Laragh Cassar Company Secretary
Statement of Financial Position As at 31 December 2019
| 2019 | 2018 | |
|---|---|---|
| Note € |
€ | |
| ASSETS | ||
| Property, plant and equipment | 16,255,614 | 16,746,784 |
| Right-of-use assets | 57,103,468 | 58,508,515 |
| Deferred tax assets | 8,237,694 | 8,581,508 |
| Total non-current assets | 81,596,776 | 83,836,807 |
| Trade and other receivables | 8,014,938 | 14,637,100 |
| Contract assets | 541,917 | 24,360 |
| Cash at bank and in hand | 82,805 | 107,548 |
| Total current assets | 8,639,660 | 14,769,008 |
| Total assets | 90,236,436 | 98,605,815 |
| EQUITY | ||
| Share capital | 232,940 | 232,940 |
| Parent company loan | 13,074,410 | 13,074,410 |
| Revaluation reserve | 10,504,573 | 10,763,556 |
| Statutory reserve | 8,338,508 | 8,338,508 |
| Retained earnings/(accumulated losses) | 850,747 | (594,939) |
| Total equity | 33,001,178 | 31,814,475 |
| LIABILITIES | ||
| Deferred income | 31,021,341 | 31,796,873 |
| Deferred tax liability | 5,656,337 | 5,795,761 |
| Lease liabilities | 10,043,290 | 9,977,390 |
| Amounts due to parent company | 2,076,541 | 8,049,933 |
| Loans and borrowings | 234,955 | 548,989 |
| Provision | 32,587 | 32,961 |
| Total non-current liabilities | 49,065,051 | 56,201,907 |
| Deferred income | 775,533 | 875,533 |
| Loans and borrowings | 314,040 | 735,141 |
| Trade and other payables | 3,355,754 | 6,566,319 |
| Bank overdraft | 3,708,591 | 2,412,440 |
| Provision | 16,289 | - |
| Total current liabilities | 8,170,207 | 10,589,433 |
| Total liabilities | 57,235,258 | 66,791,340 |
Statement of Profit or Loss and Other Comprehensive Income
| 2019 | 2018 | ||
|---|---|---|---|
| Note | € | € | |
| Revenue | 13,768,304 | 13,671,902 | |
| Cost of sales | (11,290,479) | (12,277,291) | |
| Gross profit | 2,477,825 | 1,394,611 | |
| Other income | 940,805 | 878,318 | |
| Administrative expenses | (2,100,146) | (1,455,312) | |
| Reversal of/(impairment) loss on financial assets | 1,232,284 | (82,204) | |
| Results from operating activities | 2,550,768 | 735,413 | |
| Finance income | - | 73 | |
| Finance costs | (1,159,704) | (1,179,909) | |
| Net finance costs | (1,159,704) | (1,179,836) | |
| Profit/(loss) before income tax | 1,391,064 | (444,423) | |
| Tax expense | (204,361) | (786,279) | |
| Profit/(loss) for the year | 1,186,703 | (1,230,702) | |
| Total comprehensive income/(loss) for the year | 1,186,703 | (1,230,702) | |
| Earnings per share | |||
| Basic earnings per share | 11.87c | 12.31c |
Statement of Changes in Equity As at 31 December 2019
| Retained | ||||||
|---|---|---|---|---|---|---|
| Share Capital |
Parent company loan |
Revaluation reserve |
Statutory reserve |
earnings/ (accumulate d losses) |
Total equity |
|
| € | € | € | € | € | € | |
| Balance at 1 January 2018 | 232,940 | 13,074,410 | 11,022,539 | 9,297,326 | 732,466 | 34,359,681 |
| Adjustment on initial application of IFRS 9, net of tax |
- | - | - | - | (1,314,504) | (1,314,504) |
| Transfer | - | - | (258,983) | (958,818) | 1,217,801 | - |
| Total comprehensive income | ||||||
| Loss | - | - | - | - | (1,230,702) | (1,230,702) |
| Balance at 31 December 2018 | 232,940 | 13,074,410 | 10,763,556 | 8,338,508 | (594,939) | 31,814,475 |
| Balance at 1 January 2019 | 232,940 | 13,074,410 | 10,763,556 | 8,338,508 | (594,939) | 31,814,475 |
| Transfer | - | - | (258,983) | - | 258,983 | - |
| Total comprehensive income | ||||||
| Profit | - | - | - | - | 1,186,703 | 1,186,703 |
| Balance at 31 December 2019 | 232,940 | 13,074,410 | 10,504,573 | 8,338,508 | 850,747 | 33,001,178 |
Medserv Operations Limited Preliminary Statement of Annual Results For the Year Ended 31 December 2019
Statement of Cash Flows
| 2019 | 2018 | ||
|---|---|---|---|
| Note | € | € | |
| Cash flows from operating activities | |||
| Profit/(loss) for the year | 1,186,703 | (1,230,702) | |
| Adjustments for: | |||
| Depreciation | 2,505,937 | 2,897,593 | |
| Reversal of deferred income | (875,532) | (775,533) | |
| Provision for discounted future gratuity | |||
| payments | 15,915 | 1,716 | |
| Gain on disposal of property, plant and | |||
| equipment | 8,670 | - | |
| Impairment loss on trade and other receivables | 69,452 | 100,932 | |
| Reversal of impairment on amounts owed by | |||
| fellow subsidiaries | (1,301,736) | (27,073) | |
| Exchange differences | (1,448) | (1,569) | |
| Net finance costs | 1,159,705 | 1,179,836 | |
| Deferred tax expense | 204,391 | 786,279 | |
| 2,972,057 | 2,931,479 | ||
| Changes in: | |||
| Trade and other receivables Contract assets |
259,153 (517,557) |
(233,747) 44,730 |
|
| Trade and other payables | 389,766 | 512,824 | |
| Related party balances | (1,976,984) | (2,576,167) | |
| Cash generated from operating activities | 1,126,435 | 679,119 | |
| Interest paid | (169,030) | (85,016) | |
| Net cash generated from operating activities | 957,405 | 594,103 | |
| Cash flows from investing activities | |||
| Acquisition of property, plant and equipment | (618,390) | (196,336) | |
| Net cash used in investing activities | (618,390) | (196,336) | |
| Cash used in investing activities Cash flows from financing activities |
(618,390) | (196,336) | |
| Repayment of bank loans | (735,135) | (1,119,382) | |
| Interest paid on bank loans | (36,523) | (58,974) | |
| Interest paid on funds advanced by parent | (387,435) | (458,130) | |
| Payment of lease liabilities | (500,816) | (491,543) | |
| Net cash used in financing activities | (1,659,909) | (2,128,029) | |
| Net decrease in cash and cash equivalents | (1,320,894) | (1,730,262) | |
| Cash and cash equivalents at 1 January | (2,304,892) | (574,630) | |
| Cash and cash equivalents at 31 December | (3,625,786) | (2,304,892) |
Medserv Operations Limited Preliminary Statement of Annual Results For the Year Ended 31 December 2019
Review of Operations
Introduction
The financial information has been extracted from Medserv Operations Ltd unaudited annual financial statements for the year ended 31 December 2019, as approved by the Board of Directors on 29 May 2020. The annual results have been agreed with the Company's auditors. The Company expects the audit opinion to be unqualified and expects to publish the audited financial statements on the 2nd June 2020.
Review of performance
The Company's total revenue for the year amounted to €13,768,304 (2018: €13,671,902), representing an increase of 1% (2018: 23%) over the previous year. The Company has maintained the same volume of business as last year with a slight improvement in its margins following the recovery in the market in the previous year. As a result, the Company's operating profit during the year amounted to €2,550,768 (2018: profit of €735,413). This improvement is mainly attributable to the reversal of the impairment losses amounting to €1,232,284 recognised in previous years on the amounts receivable from fellow subsidiaries as they were assigned to the parent company during the year and netted off against the amounts payable to the parent company.
The Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA) of the Company amounted to €5,056,705 (2018: €3,633,006). After recognising depreciation amounting to €2,505,937 (2018: €2,897,593) and net finance costs amounting to €1,159,704 (2018: €1,179,836), the Company registered a profit before tax of €1,391,064 (2018: loss before tax of €444,423). After accounting for taxation, the profit for the year amounted to €1,186,703 (2018: loss for the year of €1,230,702).
Financial key performance indicators
| 2019 | 2018 | |
|---|---|---|
| € 000 | € 000 | |
| Revenue | 13,768 | 13,672 |
| Profit / (loss) for the year | 1,187 | (1,231) |
| EBITDA | 5,057 | 3,633 |
| Working capital | 469 | 4,180 |
| Cash and cash equivalents | (3,626) | (2,305) |
| EBITDA margin in % | 36.73% | 26.57% |
| EBITDA-to-Interest Coverage Ratio | 4.36 | 3.08 |
| Net debt (excl. parent company loans) to EBITDA | 0.11 | 0.35 |
| Net debt (excl. parent company loans) to Equity ratio | 0.02 | 0.04 |
State of affairs
As at 31 December 2019, the Company reported a net asset position amounting to €33,001,178 (2018: €31,814,475) and a positive working capital of €469,453 (2018: €4,179,575).
Medserv Operations Limited Preliminary Statement of Annual Results For the Year Ended 31 December 2019
Outlook
The Company's strategy remains in line with prior years and is aimed to improve earnings while at the same time ensuring that the Company operates in a cost-effective manner across its product service lines. The Company has continued its investment in its management systems and equipment during the year.
Since the start of 2020, the COVID-19 epidemic has been impacting the hydrocarbon demand, causing oil prices to fall significantly. In addition, the decision by Organization of the Petroleum Exporting Countries (OPEC) and Russia to stop their cooperation on the markets over proposed oil-production cuts caused crude oil prices to fall sharply as the global industry continued to face an unprecedent oversupply and uncertainty in the demand.
Despite the operational challenges presented by COVID-19, the Company has remained substantially operational and continues to service its clients. The global pandemic coupled with the macro-economic uncertainty in the industry has caused the offshore drilling exploratory projects to be postponed rather than cancelled, including those projects involving services offered by the Company. The scale and duration of these developments remain uncertain; however, this is expected to negatively impact the Company's earnings and cash flows until the situation returns to normal.
The Company's objective is to preserve its liquidity and ensure that it continues to register positive EBITDA.
The Company has immediately taken action to adapt its cost base through lower operating costs and delaying capital expenditure and expects to benefit from the Maltese government initiatives in relation to the COVID-19 outbreak. The Board shall continue to adopt a proactive approach to the current environment to maintain the continued viability of the Company.
Upon due consideration of the Company's performance and statement of financial position, capital adequacy and solvency, and the impact of a number of mitigating factors, the directors confirm the Company's ability to continue operating as a going concern for the foreseeable future.