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Consolidated Statement of Financial Position
For the year ended 31 December 2022
MedservRegis p.l.c.Annual Report2023
MedservRegis p.l.c.
Annual Report
1
Contents
Page
Directors’ and Other Statutory Reports i
Financial Statements1
Independent Auditors’ Report
MedservRegis p.l.c.
Directors’ and
Other Statutory Reports
2023
MedservRegis p.l.c.
Directors’ and other Statutory Reports
Page
Chairman’s Statementi
CEO’s Statementii
Statement on Corporate Social Responsibilityiv
Directors’ Report v
Statement of the Directors pursuant to Capital Markets Rule 5.68 xvi
Statement by the Directors on non-financial information xvii
Directors’ Statement of Compliance with the Code of Principles
of Good Corporate Governance xlviii
Remuneration Statement and Report lix
MedservRegis p.l.c.
Chairman’s Statement
For the Year Ended 31 December 2023
i
This year I would like to start my annual statement by thanking all stakeholders all of whom play such a vital role in both the development and progress of our Group. Be it our esteemed clients, shareholders, bond holders, executive management and all staff members, it is the strong belief in the vision and the stronger execution of the plans put in place to deliver sustainable professional service across the globe that has characterised 2023. I have to commend my Board of Directors who participated strongly but independently with executive management to deliver the results being reviewed in the Report for 2023.
Next year our Group shall be celebrating its 50th anniversary. It is a well-known fact that to forecast the future one must also look at the past too. The resilience shown by the Group, despite the many international and natural challenges it had to face is a testament to the strong goodwill developed by our company in the industry over the years. It also validates the sound long term strategic decisions adopted.
It is unbelievable that it has only been two years since the newly formed MedservRegis was born. The results as well as the new opportunities being reviewed in our CEO’s report clearly demonstrate a successful merger of the two Groups, creating an exciting and strong future ahead of us.
The development of a company never stops. Discussions are ongoing on how best to position our Group in the broadest manner possible. Be it restructuring of the Group, management evolution, cost optimisation, investment in technology and even divestment of business units if circumstances demand. All of this to be aligned with the aim to deliver, in a constant manner, value to stakeholders.
MedservRegis p.l.c is looking forward to the future with enthusiasm and confidence. Onwards to another 50 years of activity.
Thank you.
Anthony S. Diacono
Chairman
26 April 2024
MedservRegis p.l.c.
CEO’s Statement
For the Year Ended 31 December 2023
ii
“Moving From Consolidation to Expansion “
Dear Shareholders, Employees and Stakeholders,
I am happy to share with you the promising and positive results achieved by the MedservRegis Group in the fiscal year 2023. This year marks our second full year of consolidation and integration, and I am proud to report that we have made significant strides towards solidifying our foundation and enhancing our capabilities.
Operational Expansion:
Our relentless focus on consolidation and integration has enabled us to expand our operations successfully. We now boast a robust presence in 14 different locations, allowing us to better serve our clients and meet their evolving needs. This expanded footprint, coupled with our experienced and committed team, positions us well to drive the business forward and deliver exceptional value to our stakeholders.
Navigating the Energy Transition:
As the energy transition unfolds and noting that our existing client base being the major drivers of this transition, we recognize the complexities and challenges it presents to our industry. Despite the growing consensus that this transition will take longer and be more intricate than anticipated, we remain steadfast in our commitment to support our clients through this journey. Our agility and adaptability will continue to be instrumental in addressing the challenges posed by the energy transition and positioning ourselves as a trusted partner to our clients.
Strategic Evolution:
Our strategic focus on integration, consolidation and profitability, which was launched in 2022, continues to evolve with a forward-looking outlook towards 2030. We are dedicated to elevating our margins and returns to shareholders while delivering significant long-term value. By cementing our position as a reliable, cost-effective, and safe solutions provider, we are confident in our ability to capitalise on emerging opportunities and drive sustainable growth.
Integration and Optimisation:
Central to our strategy is the optimisation of our group’s structure, internal processes, and technology infrastructure. Through our integration policy, we are streamlining operations, enhancing efficiency and maximising profitability. By upgrading our systems and technology, we are laying the groundwork for a more agile, responsive and profitable organisation poised for future success.
Looking Ahead:
As we embark on the journey ahead, I am filled with optimism about the opportunities that lie ahead for the MedservRegis Group. With a strong foundation, a dedicated team and a clear strategic direction, we are well-positioned to navigate the complexities of the evolving market landscape and emerge as a leader in our industry. Recent industry reports are reflecting a resurgence in market appetite for investing in oil and gas developments after years in the doldrums.
MedservRegis p.l.c.
CEO’s Statement (continued)
For the Year Ended 31 December 2023
iii
According to a report by Wood Mackenzie (“WoodMac”), a global provider of data and analytics for the energy transition, up to 30 major oil and gas projects with a total investment of $125 billion and potential resources of 14 billion barrels of oil equivalent are expected to be approved in 20241.
Key points from WoodMac's report, "Class of 2024: Benchmarking this year’s upstream FIDs," include:
•Final investment decisions (FIDs) worth $125 billion anticipated on major upstream projects in 2024, marking a substantial increase from previous years.
•Projections of up to 30 projects, each with resources exceeding 50 million barrels of oil equivalent, being sanctioned this year.
•Increased activity expected from national oil companies (NOCs) in the Middle East and major industry players, particularly in deepwater resources.
•Lower project break-evens and improved returns (IRRs) compared to 2023 due to higher long-term price assumptions and focus on advantaged deepwater projects. The report says that these projects require an average of $47 per barrel to generate a 15% IRR which is slightly lower than $49 per barrel required by the 2023 projects while payback periods are expected to be less than eight years from FID.
•The average emissions intensity for identified projects noted to be below the global upstream average, reflecting a commitment to meeting emission reduction goals1.
MedservRegis p.l.c.
Statement of Corporate Social Responsibility
For the Year Ended 31 December 2023
iv
As the Company grows, from the Mediterranean and the Middle East, to now spanning the African continent, MedservRegis recognises the impact of its global reach and scale. As the Company broadens its geographic footprint, it does so with increased recognition of the responsibility to its network of stakeholders including partners, regulators, employees and the broader communities in which we all live and work.
Corporate governance
Maintaining integrity, ethical responsibility and reputation is a top priority at MedservRegis p.l.c, one that is reliant on sound corporate governance. The Board of Directors sets high standards for the Company’s employees, officers and directors. In addition, it serves as the prudent fiduciary for the Company’s shareholders and is responsible for overseeing the management of the Company’s business. At MedservRegis, management ensures strict adherence to all applicable laws and practices fundamental to the business in every country it operates. As part of the Company’s risk framework, MedservRegis’ Financial Risk Committee reports quarterly to the Audit Committee and has oversight over risk management governance, risk management procedures and risk control infrastructure for the Company’s business and operations.
Environmental impact
Climate change is one of the defining issues of the time. MedservRegis p.l.c strives for continual improvement of the environmental management system to conserve water and other natural resources, eliminate toxic and hazardous materials, prevent pollution, recover, reuse, and recycle materials. It addresses climate change by reducing the carbon footprint of its operations and services. The Company will continue to invest in conservation and work to reduce environmental footprint through renewable energy of photovoltaic panels, use water efficiently and responsible handling and disposal of hazardous waste.
Philanthropy
MedservRegis p.l.c has engaged in a variety of philanthropic efforts to improve the local communities. The Group supports several global charitable organisations and has participated in volunteer opportunities related to environmental stewardship, reducing global hunger, promoting education and supporting equality.
For further information, please refer to the section “Social and Community Activities” within the “Statement by the Directors on non-financial information”.
Looking ahead
The Company’s approach to Corporate Social Responsibility is rooted in its core values and is applicable to the planet, people, and communities. MedservRegis p.l.c considers each a key stakeholder to its business and remains focused on embedding sustainability throughout the organisation and beyond. Whether it’s reducing the carbon footprint of customers, supporting the development and inclusion of the global workforce, or giving back to the communities, the Company continues to believe that long-term sustainability is not simply being held responsible or benefiting the business, but is a requirement.
MedservRegis p.l.c.
Directors’ Report
v
The directors have prepared this directors’ report for MedservRegis p.l.c. (“the Company”) in accordance with Article 177 of the Companies Act, 1995 (Chapter 386, Laws of Malta) (“the Act”) including the further provisions as set out in the Sixth Schedule to the Act together with the financial statements of the Company for the year ended 31 December 2023.
Board of directors
Anthony S. Diacono
Carmelo (a.k.a. Karl) Bartolo
Laragh Cassar
David S. O’Connor
Olivier N. Bernard
Keith Grunow
Monica De Oliveira Vilabril
Jean Pierre Lhote
Principal activities
The Group’s principal activities, through its subsidiaries, consist of providing shore base logistics and engineering services to the offshore oil and gas industry and supply chain management for Oil Country Tubular Goods (OCTG) to support the onshore oil and gas industry. It also provides equipment, procurement, and specialised services to a wide range of customers, including national and international energy companies, drilling and mining companies, as well as product and equipment manufacturers and other heavy industry-related contractors across the globe, reaching the Mediterranean countries, Middle East, South America, sub-Saharan Africa including a number of emerging markets such as Mozambique, Uganda, and Angola.
The Group operates under three trading names, namely ‘Medserv’ in the Mediterranean basin, ‘METS’ being Middle East Tubular Services in the Middle East region and ‘Regis’ in sub-Saharan market.
Review of business development
MedservRegis p.l.c.
Directors’ Report (continued)
vi
This segment continues to secure the existing business pipeline through contract renewals and tendering. Business development is expected to continue to increase for the ILSS segment as the business pipeline remains strong.
The Group’s ILSS segments in Malta/Libya, Mozambique and Caribbean region remained subdued during the reporting year. The Group continued experiencing a slowdown in activity in Mozambique due to the force majeure imposed by TotalEnergies in northern Mozambique. Likewise, Libya continues to experience very low activity due to the unresolved political situation in the country which has caused further delays in announcing expected mega offshore energy projects. The Group expects significant turnaround to be registered in the short to medium term from both Mozambique and Libya. Mega project activity in both countries are poised to resume and the Group is well positioned to secure business from these markets.
Business Model
The Company’s main objectives are focused around sustainable growth and registering profits. The strategy being adopted by the Company to achieve these objectives is a combination of securing growth opportunities in its core business, unlocking value with other key players in the supply chain as well as streamlining the business by increasing automation within its operations.
 
This operating culture is implemented through the Board of Directors’ oversight of management’s implementation of corporate strategy and financial objectives by reference to several criteria, including revenue, Adjusted EBITDA, projected earnings, country by country analysis and other anticipated criteria.
 
The Board of Directors sets the policy which then defines the requirement of the corporate management standards. Presently the Company’s corporate management system consists of fourteen key standards which are to be followed by its employees in their day-to-day operations.
The Board of Directors continues to instil a drive for growth within a business environment where our employees need to act in an exemplary manner in the following areas: health, safety, security, environment, social and governance in all their forms. It is through strict adherence to these values and to this course of action that the Company intends to build strong and sustainable growth for itself and for all its stakeholders.
Additionally, the Board sets non-financial smart objectives and targets on an annual basis to support continuous improvement of its Business Model. Progress and oversight of these non-financial smart objectives and targets is carried out through an internal audit programme and a reporting environment.
 
In order to evaluate the business management system, the Company is certified by international standards including ISO9001 Quality Management System, ISO14001 Environmental Management Systems, ISO28001 Security Management System, ISO45001 Health Safety Management System, and which are part of a surveillance audit plan by an external accredited body.
Principal risks and uncertainties
The Board considers the nature and the extent of the risk profile that is acceptable to the Board and the impact these risks pose to the Group. The most important strategic, corporate and operational risks, as well as uncertainties identified together with the actions taken by the Group to reduce these risks, are listed below:
Concentration risk: The Group’s business is heavily dependent on relatively few customers both in the shore base logistics and OCTG. The Group’s objective continues to be to increase client spread within the oil and gas industry. The strategic development team is continuously working to secure business with new International Energy Companies (IECs) and in new countries. The acquisition of METS by Medserv in 2016 and the share for share exchange transaction with Regis in 2021 were both significant measures taken to reduce client concentration risk.
MedservRegis p.l.c.
Directors’ Report (continued)
vii
The Company is also marketing its services to various energy industries and using its key assets to service non-oil and gas business in order to reduce its concentration on the oil and gas industry.
  
Political risk: The Group’s results may be significantly impacted positively or negatively as a result of political decisions. Regulatory and environmental decisions, as well as political instability can delay, disrupt or cancel projects. The fiscal and economic conditions in Libya remained fragile during the year, characterised by inflation and a persistent political strife. In Iraq, the political and security situation has been improving. Mozambique continues to remain a major security risk. The Group now operates in fourteen jurisdictions, mainly in Europe, Africa and the Middle East, with the intention of increasing its operational footprint in these regions and others to continue to minimise this risk. The war in Ukraine to date had no material impact on the Company’s operational capacity, financial performance and financial position, nor has it sustained any threats of any nature on the Company’s modus operandi. The directors do not foresee any direct or indirect impact on its business arising from the war in Ukraine. Furthermore, the Group's activities have remained mostly unaffected by the ongoing conflict in the Gaza Strip and the escalating tensions in the Middle East. Recent incidents involving attacks on vessels in the Gulf of Aden have led to some delays in our supply chain. However, this has also sparked a growing interest in our Group's OCTG repair and maintenance capabilities in the region, highlighting our resilience and adaptability in challenging circumstances.
Regulatory and environmental risk: The Group operates in fourteen jurisdictions which are highly regulated, and all have their own unique compliance frameworks. Environmental risks arise from exposures to activities that may cause or are affected by environmental degradation, such as pollution. An infringement in any of these laws and regulations may have significant liabilities and tarnish the Group’s brands, being Medserv, Regis and METS.
Oil price: Oil service companies tend to have greater volatility of earnings than oil majors, given their sensitivity to the capital spending plans of oil explorers, which wax and wane with oil prices. Similar to other players in the industry, an increase in oil prices would directly benefit the Group from increased services required by oil companies in preparation of the oil exploration, development and production. On the other hand, as oil prices decline, energy production companies focus their efforts on increasing operating efficiencies, these actions apply downward pressure on the rates charged by drillers, oilfield services companies, and other suppliers such as the group entities. Accordingly, the Group’s profit margins may be tightened due to such weakened demand for the services offered and heightened industry competition to maintain market share. The Group is always striving to reduce this risk by investing in countries where cost of oil production is low, primarily in the Middle East and Africa. Also, the Group’s strategy is to increase the number of services offered.
Financial risk management: The Group has exposure to a variety of financial risks, namely credit risk, liquidity risk, market risk (including changes in foreign exchange rates, interest rates and market prices) and operational risk arising from the Group’s international operations. The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. A detailed review of the risk management policies employed by the Group is included in Note 31 to the financial statements.
Financial performance
The Group’s turnover for the year amounted to €73,926,336. The Adjusted EBITDA of the Group amounted to €17,504,355. After recognising depreciation amounting to €8,205,843, amortisation of intangible assets of €1,357,499, and net impairment loss on property, plant and equipment amounting to €78,852, the Group sustained an operating profit amounting to €7,862,161. After deducting the net finance cost amounting to €6,190,329, the
MedservRegis p.l.c.
Directors’ Report (continued)
viii
Group registered a profit before tax of €1,671,832. Profit for the year after accounting for taxation amounted to €1,294,394.
Cash generation from operations remained stable across the entire Group and during the year amounted to €12,404,366.
Adjusted EBITDA remained consistent, amounting to €8,992,633 in the first half and €8,511,722 in the second half of the year.
Revenue
The Group’s revenue was generated as follows:
Operating Segment
%
Integrated Logistics Support Services (ILSS)
62%
Oil Country Tubular Goods (OCTG)
37%
Photovoltaic income
1%
Cost of sales and administrative expenses
The cost of sales of the Group for the year amounted to €54,606,343. Cost of sales also include amortisation of intangible assets of €1,357,499, and net impairment loss on property, plant and equipment amounting to €78,852.
Other income amounting to €987,871 is mainly made up of the foreign exchange differences during the year and an increase in the fair value of the financial assets at fair value through profit or loss. In addition, during the year, the Group continued its investment in its business development with the objective of participating in new tenders as opportunities presented themselves.
The Group - Financial key performance indicators from continuing operations
Year
2023
Year
2022
€ Million
€ Million
Total turnover
73.93
66.94
- Integrated Logistics Support Services (ILSS)
46.13
42.99
- Oil Country Tubular Goods (OCTG)
27.31
23.43
- Photovoltaic Farm
0.49
0.52
Adjusted EBITDA
17.50
11.4
Profit from continuing operations
1.29
0.54
Net cash generated from operating activities
12.40
20.02
Cash and cash equivalents
13.90
18.66
Total Equity
58.05
60.36
Balance sheet total
145.17
151.73
Capital expenditure
(2.68)
(2.65)
Adjusted EBITDA margin in %
23.67%
17.03%
Net debt to Adjusted EBITDA
3.11
4.69
Debt to total Equity ratio*
1.22
1.21
EPS
0.0106
0.0057
Average number of employees for the year
771
716
*Debt to total equity ratio is the proportion of the total of loans and borrowings, lease
liabilities and bank overdraft to total equity
MedservRegis p.l.c.
Directors’ Report (continued)
ix
Financial position
The consolidated equity attributable to the owners of the Company as at 31 December 2023 amounted to €56.86 million. The equity attributable to the owners of the Company as at 31 December 2023 amounted to €20.72 million.
Dividends
 
No reserves are available for distribution as at 31 December 2023.
MedservRegis p.l.c.
Directors’ Report (continued)
x
On 6 March 2024, the Monetary Policy Committee of the Central Bank of Egypt decided in its extraordinary meeting to raise the overnight deposit and lending rates and the Central Bank’s main operation rate by 600 basis points, reaching 27.25%, 28.25%, and 27.75%, respectively. The credit and discount rates were also raised by 600 points, reaching 27.75%, and adopting a flexible exchange rate system so that the exchange rate reflects the value of the Egyptian pound against other foreign currencies through the forces of supply and demand, which led to a decline in the exchange rate of the Egyptian pound. The potential impact of the decline in the Egyptian pound exchange rate on the Group's performance remains uncertain as of the date of this report. However, management continues to monitor the situation closely.
Outlook
Four major forces are constantly reshaping the energy industry: geopolitics, economic factors, changing regulations, and new technologies. These forces can dramatically affect how much oil and gas is produced, bought, and sold. For instance, the recent decision by OPEC+ to cut production by 2.5 million barrels per day (mbpd) helped push Brent oil prices above $90 per barrel in early November 2023. Similarly, natural gas prices in the US (Henry Hub) rebounded to $3.50 per million British thermal unit (MMBtu) around the same time.
Despite ongoing challenges, the world's demand for oil has reached a record high of over 100 mbpd for the first time ever in 2023. Growth will continue in 2024, albeit with less momentum. According to the International Energy Agency (IEA), the pace of expansion is set to decelerate to 1.2 mb/d in 2024, compared with 2.3 mb/d last year. China, India and Brazil will continue to dominate gains. Interestingly, electric vehicle (EV) sales also surged globally in 2023, with one out of every seven new cars sold being an EV. This seemingly contradictory trend highlights the significant variations across different regions. These variations include factors like energy consumption patterns, infrastructure development, how widely EVs are adopted, government regulations, and economic considerations.
Based on publicly available information, the oil and gas industry is poised for a good start in 2024, thanks to its healthy finances and strong oil prices. This strong position allows companies to invest in new projects while still rewarding shareholders. For instance, upstream companies (those involved in exploration and production) are expected to maintain their 2023 investment levels of around $580 billion (which was an 11% increase from the previous year).
The other favourable factor is the continued geopolitical tensions: The ongoing war in Ukraine has highlighted the importance of energy security, potentially leading to a temporary slowdown in the shift towards renewable energy and increased reliance on oil and gas in the short term. The war also triggered a renewed scramble by International Energy Companies (IECs) for oil and gas reserves in the Mediterranean region. This surge in interest stems from Europe's urgent need to diversify its energy supplies away from dependence on Russia.
The Mediterranean's allure lies in its estimated vast gas reserves, offering a potential solution to Europe's energy crisis. The discovery of large gas fields like Leviathan in Israel and Zohr in Egypt has only bolstered this optimism. However, the path forward is not without its challenges.
Geopolitical tensions simmer between countries bordering the Mediterranean, particularly regarding exclusive economic zones (EEZs) and resource rights. Turkey's claims often clash with those of Greece and Cyprus, creating a complex political landscape that could hinder exploration efforts. Additionally, exploiting these reserves requires significant investment in pipelines and liquefaction facilities to transport the gas to European markets.
Despite the challenges, the Mediterranean is likely to witness increased exploration and development activity in the coming years. The success of this endeavour hinges on the ability to resolve geopolitical disputes, develop necessary infrastructure, and strike a delicate balance between energy security and climate change concerns. European countries are actively involved in facilitating dialogue and promoting regional cooperation to unlock the potential of the Mediterranean's gas resources. Major international companies stand ready to invest, while regional players like
MedservRegis p.l.c.
Directors’ Report (continued)
xi
Israel and Egypt see an opportunity to become energy exporters. The future of the Mediterranean energy scene promises to be a complex dance between economic necessity, geopolitics, and environmental responsibility.
The Group’s performance in year 2024 is expected to improve further. Margins should remain stable or improve further with new contractual rates being negotiated. Focus will remain in the growth of margins as opposed to the growth in revenues. The financial exposure of the group remains as high as in 2023, but management is still focusing on the reduction of these risks.
Going concern
As required by Capital Markets Rule 5.62, upon due consideration of the Group’s and Company’s performance and statement of financial position, capital adequacy and solvency, the directors remain confident about the Group’s and Company’s ability to continue operating as a going concern for the foreseeable future.
Auditors
PricewaterhouseCoopers Malta expressed their willingness to continue in office. A resolution proposing the reappointment of PricewaterhouseCoopers as auditors of the Company will be submitted at the forthcoming annual general meeting.
DISCLOSURE IN TERMS OF THE CAPITAL MARKETS RULES
MedservRegis p.l.c.
Directors’ Report (continued)
xii
The following are highlights of the rights attaching to the shares:
Dividends:
The shares carry the right to participate in any distribution of dividend declared by the Company.
Voting rights:
Each share shall be entitled to one vote at meetings of shareholders.
Pre-emption rights:
Subject to the limitations contained in the memorandum and articles of association, shareholders in the Company shall be entitled, in accordance with the provisions of the Company’s memorandum and articles of association, to be offered any new shares to be issued by the Company, a right to subscribe for such shares in proportion to their then current shareholding, before such shares are offered to the public or to any person not being a shareholder.
Capital distributions:
The shares carry the right for the holders thereof to participate in any distribution of capital made whether on a winding up or otherwise.
Transferability:
The shares are freely transferable in accordance with the rules and regulations of the Malta Stock Exchange, applicable from time to time.
Other:
The shares are not redeemable and not convertible into any other form of security.
Mandatory takeover bids:
MedservRegis p.l.c.
Directors’ Report (continued)
xiii
(b)Shareholders are granted a period of at least fourteen (14) days to nominate candidates for appointment as Directors. Such notice may be given by the publication of an advertisement in at least two (2) daily newspapers. All such nominations, including the candidate’s acceptance to be nominated as director, shall on pain of disqualification be made on the form to be prescribed by the Directors from time to time and shall reach the Office not later than fourteen (14) days after the publication of the said notice (the “Submission Date”); provided that the Submission Date shall not be less than fourteen (14) days prior to the date of the meeting appointed for such election. Nominations to be made by the Directors or any sub-committee of the Directors appointed for that purpose shall also be made by not later than the date established for the closure of nominations to shareholders.
(c)In the event that there are either less nominations than there are vacancies on the Board or if there are as many nominations made as there are vacancies on the Board, then each person so nominated shall be automatically appointed a director.
(d)In the event that there are more nominations made, then an election shall take place. After the date established as the closing date for nominations to be received by the Company for persons to be appointed directors, the directors shall draw the names of each candidate by lot and place each name in a list in the order in which they were drawn. The list shall be signed by the Chairman and the Company Secretary for verification purposes.
(e)On the notice calling the annual general meeting at which an election of directors is to take place there shall be proposed one resolution for the appointment of each candidate in the order in which the names were drawn, so that there shall be as many resolutions as there are candidates. The Directors shall further ensure that any Member may vote for each candidate by proxy.
(f)At the general meeting at which the election of directors is to take place the Chairman shall propose the name of each candidate as a separate resolution and the shareholders shall take a separate vote for each candidate (either by a show of hands or through a poll). Each shareholder shall be entitled, in the event of a poll, to use all or part only of his votes on a particular candidate.
(g)Upon a resolution being carried, the candidate proposed by virtue of that resolution shall be considered elected and appointed a Director. No further voting shall take place once enough resolutions have been passed to ensure that all vacancies on the Board have been filled, even if there are still candidates with respect to whom a resolution has not yet been called.
(h)Shareholders may vote in favour or against the resolution for the appointment of a director in any election, and a resolution shall be considered carried if it receives the assent of more than 50% of the shareholders present and voting at the meeting.
(i)Unless a shareholder demands that a vote be taken in respect of all or any one or more of the nominees, in the event that there are as many nominations as there are vacancies or less, no voting will take place and the nominees will be deemed appointed directors.
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Directors’ Report (continued)
xiv
(j)Subject to the above, any vacancy among the directors may be filled by the co-option of another person to fill such vacancy. Such co-option shall be made by the Board of Directors and shall be valid until the conclusion of the next annual general meeting.
(k)Any director may be removed, at any time, by the Member or Members by whom he was appointed. The removal may be made in the same manner as the appointment.
(l)Any director may be removed at any time by the Company in general meeting pursuant to the provisions of section 140 of the Act.
Amendment to the Memorandum and Articles of Association:
In terms of the Companies Act, Cap 386 of the laws of Malta, the Company may by extraordinary resolution at a general meeting alter or add to its memorandum or articles of association. An extraordinary resolution is one where:
(a)it has been taken at a general meeting of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principle purpose thereof has been duly given;
(b)it has been passed by a shareholder or shareholders having the right to attend and vote at the meeting holding in the aggregate not less than seventy-five per cent (75%) in nominal value of the shares issued by the Company represented and entitled to vote at the meeting and at least fifty-one per cent (51%) in nominal value of all the shares issued by the Company and entitled to vote at the meeting.
If one of the aforesaid majorities is obtained but not both, another meeting shall be duly convened within 30 days to take a fresh vote on the proposed resolution. At the second meeting the resolution may be passed by a shareholder or shareholders having the right to attend and vote at the meeting holding in the aggregate not less than 75% in nominal value of the shares issued by the Company represented and entitled to vote at the meeting. However, if more than half in nominal value of all the shares issued by the Company having the right to vote at the meeting is represented at that meeting, a simple majority in nominal value of such shares so represented shall suffice.
Board Members’ Powers:
The Directors are vested with the management of the Company, and their powers of management and administration emanate directly from the memorandum and articles of association and the law. The Directors are empowered to act on behalf of the Company and in this respect have the authority to enter into contracts, sue and be sued in representation of the Company. In terms of the memorandum and articles of association they may do all such things that are not by the memorandum and articles of association reserved for the Company in general meeting.
In particular, the Directors are authorised to issue shares in the Company with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Directors may from time to time determine, as long as such issue of Equity Securities falls within the authorised share capital of the Company. Unless the shareholders otherwise approve in a general meeting, the Company shall not in issuing and allotting new shares:
(a)allot any of them on any terms to any person unless an offer has first been made to each existing shareholder to allot to him at least on the same terms, a proportion of the new shares which is as nearly as practicable equal to the proportion in nominal value held by him of the aggregate shares in issue in the Company immediately prior to the new issue of shares; and
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Directors’ Report (continued)
xv
(b)allot any of them to any person upon the expiration of any offer made to existing shareholders in terms of a) above. Any such shares not subscribed for by the existing shareholders may be offered for subscription to the general public under the same or other conditions which however cannot be more favourable to the public than offer made under (a).
Furthermore, the Company may, subject to such restrictions, limitations and conditions contained in the Companies Act, acquire its own shares.
Pursuant to Capital Markets Rules 5.64.2, 5.64.4, 5.64.5, 5.64.7, 5.64.10 and 5.64.11 it is hereby declared that, as at 31 December 2023, none of the requirements apply to the Company.
Pursuant to Capital Market Rule 5.64.6
The MedservRegis Group is required to obtain the consent of its bankers prior to any declaration of dividends.
Pursuant to Capital Market Rule 5.70.1
There were no material contracts to which the Company, or any of its subsidiaries was a party, and in which anyone of the Company’s Directors was directly or indirectly interested.
Pursuant to Capital Market Rule 5.70.2
Company Secretary:Dr Laragh Cassar LL.D.
Registered Office of Company:Port of Marsaxlokk
Birzebbugia
BBG 3011
Malta
Company Registration Number:C28847
Telephone:(+356) 2220 2000
Approved by the Board of Directors on 26 April 2024.
MedservRegis p.l.c.
Statement of the Directors pursuant to Capital Markets Rule 5.68
xvi
To the best of the knowledge of the directors:
(i)the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
(ii)the Directors’ report includes a fair review of the performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Signed on behalf of the Board of Directors on 26 April 2024 by Anthony S. Diacono (Chairman) and David S. O’Connor (Director and CEO) as per Directors’ Declaration on ESEF Annual Report submitted in conjunction with the Annual Report 2023.
MedservRegis p.l.c.
Statement by the Directors on non-financial information
   
xvii
Non-financial disclosures in terms of the requirements of the Sixth Schedule to the Maltese Companies Act (Cap. 386)
Introduction
This report details the various actions taken by MedservRegis p.l.c. (the ‘Company’) as the parent company, and its subsidiaries (the ‘Group’) to enhance sustainability in terms of its operations and its activities related to corporate responsibility.
As described in more detail in the annual report, the Group provides onshore logistics services and engineering for Oil and Gas under ILSS and supply chain management for Oil Country Tubular Goods (OCTG).
The Group strives to integrate all aspects of sustainability into its operations, considering:
1.Environmental impacts, and the actions that can be taken to reduce them.
2.Social responsibility; and
3.Governance to oversee the implementation of practices in relation to the above.
The Group aims and strives to achieve the highest sustainability standards in the best way possible. It ensures that the resulting benefits are shared by its shareholders, clients and the community at large.
This report will delve into the ways the Group implements policies related to environmental protection, social responsibility, treatment of employees, respect for human rights, anti-corruption and bribery.
Sustainability
The Group considers value creation beyond its shareholders, capturing also its customers and the community at large, with the intention of delivering the highest standards to all stakeholders.
The Group is working to progressively enhance both its sustainability practices, and its continued awareness about the importance of such matters throughout its operations worldwide.
The concept of sustainability is firmly becoming a key part of the business, fully understood by its employees.
Governance
In order to successfully implement the designed sustainability practices across the Group and achieve the desired goals, the Group believes that strong governance processes are necessary. Appropriate governance oversight ensures that sustainability topics are fully integrated into the manner in which the Group conducts its business; as opposed to being seen as a separate matter.
The Board is responsible for determining the strategic priorities of the Group and considers sustainability issues as an integral part of the business review.
The Audit Committee assists the Board in providing focused oversight for the Group’s policies and related risks.
The Audit Committee met 6 times during 2023 with detailed minutes being kept of all proceedings and decisions taken.
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Statement by the Directors on non-financial information (continued)
   
xviii
Risk Management
The Group is committed to conducting business in a safe and responsible manner, whilst also achieving customer, stakeholder and interested party feedback and satisfaction.
To ensure this, the Group implemented its Corporate Health, Safety, Security, Environment and Quality (‘HSSEQ’) Management System which outlines the required performance standards for the systems, processes, and procedures to effectively manage and implement HSSEQ within the Group. These HSSEQ standards also establish the required performance objectives which enable the Group to achieve this commitment and to ensure that all activities are conducted consistently. The HSSEQ standards also define our risk management processes and responsible officials.
Business risk mitigation
The Group’s business model is based on the International Oil and Gas Producers Operating Management System Standards (‘IOGP’). This operating system is an industry specific Global Oil and Gas Operating System that is adopted by many industry majors and other suppliers and contractors that are part of the supply chain. Due to the nature of our services and risks associated with our operating activities, the focus is on health, safety, environmental, security and quality standards.
Throughout the various continents in which the Group operates, it provides hazardous and high-risk services such as lifting operations and movement and handling of dangerous substances. The business risk focus area is on our high-risk areas of operations and is what drives our management system standards.
The current management system is considered an integrated operating management system. This means it has many management systems within an integrated framework. These include occupational health system, environmental system, security system, quality system, competency system and all feed our ESG reporting requirements.
The management system is also implemented at each of the Group’s operating entities. This provides standardization across the entire portfolio of operations which also brings efficiencies across the whole Group. It also supports collaborative planning and the sharing of positive and negative business failures and supports continual improvement by providing results of performance across the whole Group. This allows for review of the decisions to be taken in respect of improvements and SMART objectives.
The below list provides the corporate management standards for HSSEQ within the Group.
STANDARD 1 – LEADERSHIP & COMMITMENT
STANDARD 2 – POLICY & STRATEGIC OBJECTIVES
STANDARD 3 – ORGANISATION & COMMUNICATION
STANDARD 4 – HAZARDS & EFFECTS MANAGEMENT
STANDARD 5 – PURCHASING & CONTRACTOR MANAGEMENT
STANDARD 6 – DESIGN, OPERATIONS & MAINTENANCE
STANDARD 7 – INCIDENT INVESTIGATION & REPORTING
STANDARD 8 – EMERGENCY MANAGEMENT
STANDARD 9 – OCCUPATIONAL HEALTH & SAFETY
STANDARD 10 – ENVIRONMENTAL MANAGEMENT
STANDARD 11 – SECURITY MANAGEMENT
STANDARD 12 – DOCUMENT CONTROL & LEGAL REQUIREMENTS
STANDARD 13 – CHANGE MANAGEMENT
STANDARD 14 – PERFORMANCE MONITORING ASSESSMENT & REVIEW
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Statement by the Directors on non-financial information (continued)
   
xix
The purpose of these standards is to:
-Implement the HSSEQ Policy,
-Formalise the expectations for the development and implementation of a specific and detailed HSSEQ management system,
-Provide a risk based HSSEQ framework consistent with ISO 9001, ISO 14001, ISO 45001 and IOGP HSE System Guidelines,
-Provide auditable criteria against which the HSSEQ Management System across MedservRegis can be measure,
-Drive continual improvement of the HSSEQ Management System.
Risk Management responsibilities are as follows:
Executive Officers:
-Ensure MedservRegis HSSEQ Policy is followed.
-Provide the required infrastructure and commitment for resourcing to effectively manage HSSEQ throughout the MedservRegis Group.
MedservRegis HSSEQ Executive Committee, Group HSSEQ Manager:
-Approve MedservRegis Group HSSEQ organization chart and Group level HSSEQ resourcing strategies.
-Develop and organize the MedservRegis HSSEQ Group HSSEQ Roles and Responsibilities.
-Develop and approve the RACI Chart.
-Overview of the MedservRegis HSSEQ Group Roles and Responsibilities.
MedservRegis Managers:
-Identify resource staffing strategies and requirements.
-Approve personal HSSEQ requirements.
-Approve staffing plans, organisational charts and position profiles.
-Ensure organisational charts are developed and maintained current.
-Monitor and ensure customer and interested party satisfaction.
HSSEQ Managers/Coordinators, Leaders and Specialists:
-Review and audit position profiles and changes of HSSEQ requirements.
Human Resources Department:
-Ensure that position profiles are prepared and maintained.
-Provide recruitment and qualified candidates.
-Communicating the position profiles to employees.
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Statement by the Directors on non-financial information (continued)
   
xx
Ethical Conduct
Whistleblower policy
The Group’s set of values underpins its high standards of ethical conduct. It respects human rights, embraces diversity and stands firm against corruption. The Group’s Whistleblower Policy was prepared during 2022 and has been in force and effect since Q2 2023, across all jurisdictions in which the Group operates. The Whistleblower Policy defines what is considered improper practice, procedures for employees to submit a disclosure, and other considerations including anonymity, confidentiality, protection provided by the policy and under the law. The Whistleblower Policy outlines a Whistleblowing Reporting Officer and their specific responsibilities under the Whistleblower Policy.
The primary objective of the policy is to establish procedures and protection which allows employees of the Group and members of the public to act on suspected fraud or corruption, which is also considered to comprise any instances of bribery, with potentially adverse ramifications and to achieve the legitimate business objectives of the Group for the benefit of its shareholders.
The Policy also outlines the systems that facilitate reporting of misconduct and the procedures to investigate and resolve malpractices. As a Group which values good governance, we remain committed to ensuring that staff act with utmost integrity through training and well-defined guidelines and procedures.
GDPR Policy
The Group’s GDPR policy extends the scope of EU data protection law to all foreign companies processing data of EU residents. It provides for a harmonization of the data protection regulations throughout the EU, thereby making it easier for non-European companies to comply with these regulations.
The Group considers personal data as any information relating to an individual, whether it relates to the individual’s private, professional or public life. It can be anything from a name, a home address, a photo, an email address, bank details, posts on social networking websites, medical information, or a computer’s IP address.
The Group’s GDPR policy outlines key responsibilities for individuals throughout the Group, principally lying with the data protection officer but also extending to all employees across various teams. The GDPR policy is based on key data protection principles which govern the collection, use, retention, transfer, disclosure, and destruction of personal data. The policy further comprises a GDPR compliance framework with procedures for notifying data subjects with information on the processing of their personal data, the processing of special categories of data, data retention, and data subject requests transfers between Group entities, amongst others.
The governance around data privacy is expected to be strengthened with Board reporting on data protection responsibilities, risks and issues, and the consolidation of control structures established to ensure that the Group, its employees and third parties are aware of their respective obligations under the GDPR and other data protection legislation.
The conditions for consent have been expanded in terms of GDPR. In particular, the Group needs to be able to demonstrate clearly how the individual provided consent to data processing. Mechanisms for obtaining and documenting consent are thoroughly reviewed and amended as appropriate to reflect the additional requirements of GDPR.
The information disclosure requirements have expanded considerably, and in particular, individuals need to be informed of the legal basis for processing their data, their rights as data subjects, data retention
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Statement by the Directors on non-financial information (continued)
   
xxi
periods and that they have a right to complain to The Office of the Information and Data Protection Commissioner if they believe there is a problem with the way their data is being handled. Privacy notices are reviewed and amended to reflect the additional requirements of the GDPR.
Social and Employee matters:
Employees
In 2023, the Group employed 771 (2022: 716) individuals, comprising both full-time employees ('FTE') and temporary employees ('PTE'), excluding the Board of Directors. Of these, FTEs totalled 763 (2022: 710) individuals, with PTEs amounting to 8 (2022: 6) individuals. Male staff members in 2023 amounted to 714 (2022: 661) individuals, accounting for 93% (2022: 92%) of the FTE workforce for the year.
In terms of gender representation across various positions, management roles in 2023 were occupied by 12% female employees (compared to 8.9% in 2022), while administrative and clerical positions saw 38% female representation (down from 44.8% in 2022). In operational roles (yard, drivers, security, and cleaning workers), female representation stood at 1% (increase from 0.4% in 2022), making up a total female workforce of 7.4% (8.2% in 2022).
The historically male-dominated nature of the oil and gas services industry, combined with fewer women entering relevant programs or qualifications, has resulted in a smaller female candidate pool. Additionally, remote work locations and physically demanding environments may deter female applicants, while operational positions often require long hours and time away from home, which can be less compatible with traditional caregiving responsibilities typically shouldered by women.
Among Maltese nationals employed in 2023, comprising both FTE and PTE roles and across various jurisdictions, 68 individuals were employed (consistent with 68 in 2022), with males accounting for 77% of this workforce (78% in 2022). Foreign national employees during the year numbered to 703 (648 in 2022), with males representing 94% of this demographic (94% in 2022). 
Employees – Training and competency
The Group values all of its employees’ contribution to the services provided and fully embraces and values the growth of skills, knowledge, training, and experience.
The Group’s Competency Management System consists of the following pillars:
•Recruitment Process to engage the best candidates for the role
•Detailed Job Descriptions providing the essential competencies required for the position
•Site specific training matrices identifying the competency requirements at each site
•Onboarding and Induction to the Group
•Personal development plans (annual appraisal) for each employee
•Competency Standards (on job training and assessment) for ensuring safety or process competency through various means such as skill checks are achieved.
By investing in our employees and being a firm believer in developing and promoting within, this encourages longevity of employees within the Group through job satisfaction.
This is achieved by ensuring employees are mentored, valued, rewarded with career progression, well-paid and challenged. Employee retention in the oil and gas industry will be an issue in the future as there is
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxii
already evidence of a global reduction in the amount of young people joining the industry, shifting towards the renewable energy sector instead.
This is an area where the Group will be looking to strengthen by ensuring the work environment meets expectations and remains appealing. The Group strives to remain an exemplary and leading employer by providing its employees with the right development opportunities to cultivate their abilities and enable them to grow within the Group.
Being operational in over 12 countries, employees are able to gain valuable experience by means of cross-cultural programs and job rotations in different aspects of the Group’s business. Training programs are being implemented in various departments which further enhance employees’ skills and expertise.
Equal opportunity is given to all employees through continuous staff training & development and benchmarking techniques at all levels, including operational staff, heads of department, managers, and senior personnel.
2023
2022
Average hours of training that the organisation’s employees have undertaken during the reporting period
Total no. of hours of training
6,904
7,764
Total no. of labour hours
1,561,530
1,541,954
Total no. of hours of training vs. total number of hours
0.44%
0.5%
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Statement by the Directors on non-financial information (continued)
   
xxiii
Health and Safety
 
The Group continues to improve its health and safety performance year-on-year which is measured through the Group HSSEQ reporting system. The reporting system measures data, including leading and lagging indicators, which provide analysis of trends and improvements and allow for programs to be developed for required focus areas.
 
Lagging indicators (reactive) include areas such as incidents and their types and risk severity such as vehicle incidents, quality incidents, security incidents, environmental incidents, asset damage incidents, medical treatment cases, first aid cases, lost time incidents, and fatalities.
Leading indicators (proactive) provide important information on how the Group is improving on areas of HSSEQ by reviewing performance against previous years. Leading indicators include corrective actions raised versus closed, safety observations raised, audits undertaken, leadership tours completed, near misses recorded, and HSSEQ meetings completed.
2023 Objectives & Targets were set by the Executive Management Team at the start of the year, and these are shown below.
1.Quality
1.1.Achieve CAPA management objective of 90% of actions closed by year end across the Group
1.2.Achieve ISO 9k, 14k, 45k Multisite Certification for all MedservRegis business units
2.Leadership
2.1.Increase Leadership Tours conducted across the Group over prior year
2.2.Complete Leadership Training program for all Senior and Country Managers
3.Human Factors
3.1.10% increase in safety observations across the Group when compared to prior year
4.Incidents
4.1.Reduce driving related incidents by 15% across the Group when compared to 2022
5.Document Control
5.1.Capture full year of HSSEQ data from all sites upon the new EHS System to indicate implementation
5.2.Amend group HSSEQ procedures to include EHS work instructions for the associated modules
6.Environmental
6.1.Measure 2023 paper usage against 2022 paper usage across the Group to provide starting measurement with the introduction of the online EHS system from 21st April 2022
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Statement by the Directors on non-financial information (continued)
   
xxiv
MedservRegis Data Bank HSSEQ for previous 5 years
Leading Indicators
2019
2020
2021
2022
2023*
Total
HSE Action Items Opened
513
504
872
441
2,375
4,705
HSE Action Items Closed
839
423
1,028
366
2,094
4,750
HSE Meetings
1,202
1,341
233
188
238
3,202
Leadership Tours
99
65
233
251
251
899
HSE Audit per Schedule
11
5
13
9
14
52
Safety Observations
2,421
1,119
5,676
5,200
3,295
17,711
Near Miss Incidents
23
3
4
4
12
46
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxv
This consists of procedures that are in place within each operating site to ensure at a local level environmental programs are in place to support consumption and waste reduction and good sustainability practices.
The Group also provides environmental awareness to all employees and contractors to ensure all are aware of the environmental responsibilities required to support consumption reduction strategies as well as waste reduction strategies.
MedservRegis Environmental Management Procedures are as follows:
-Environmental Management Planning.
-Pollution Waste Management.
-Environmental Implementation and Operational Requirements.
-Environmental Monitoring Requirements.
The following are the Group environmental programs implemented for 2023 and designed to contribute to lowering MedservRegis Carbon Footprint.
-2023: Reverse Osmosis Mains Fed Water Installation within Malta Operations to remove the need for the use of plastic water bottles contributing to consumption reduction.
-2023: Undertake assessment of Duqm Diesel consumption for options on how to reduce Emissions.
-2023: Undertake assessment of Duqm Waste management processes on how to reduce waste disposal emissions.
-2023: Implement waste management improvement plan at Uganda Buliisa Camp to reduce waste disposal emissions.
-2023: Replacement of Malta Client Services Department Diesel Fleet with Electric fleet to reduce emissions.
-2023: Group wide objective to reduce paper consumption across all sites with the introduction of digital processes using Smart Phones and Tablets.
The following are the environmental statistics currently being measured and monitored by the Group:
Year
Water Usage
(m3)
Spills
Ltrs
Kg
2022
11,164
230
83
2023
17,435
245
60
Water Usage relates to metered water used by all MedservRegis operational sites across the whole group.
Spills relates to the estimated loss of fluids or materials that have happened during operational activities. Each spill has an investigation completed to identify the root cause and put in place corrective actions. The number of spills that have occurred across the group can be viewed in the Lagging Indicator Data Table.
The increase in volume compared to the previous year for water usage is due to the increased activity across the group, including Uganda and the well campaign in Morocco that took place between February and December 2023. The spill volume has increased slightly compared to the previous year, but when measured against the increase in operational hours worked, this increase can be considered a reduction, reflecting the growth in operational activity.
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Statement by the Directors on non-financial information (continued)
   
xxvi
Year
Waste Data (m3*)
Landfill
Hazardous
Recycled
2022
1,971
4,245
6,388
Year
Waste Data (Tons*)
Landfill
Hazardous
Recycled
2023
1,027
18
55
Landfill, hazardous waste volumes have decreased compared to 2022 due to campaigns across the group which focus on prevention, re-using, recycling, recovery, and disposal of waste.
*Since the Group is mandated to report carbon footprint starting from 2025 for the Corporate Sustainability Reporting Directive (CSRD), a shift has been made to compile data in tons, instead of cubic meters (m3). Given that historical data was presented in cubic meters and the absence of a conversion metric from cubic meters to tons, the Group disclosed the results in two separate tables.
Year
Electricity
(kWh)
Fuel
(litres)
2022
681,200
690,603
2023
591,196
727,290
Several environmental programmes were implemented during 2023 across the group. This included areas such as replacing lights with LEDs and campaigns to turn off electrical equipment when not being used. The programs have contributed to a reduction in electricity consumption across the group. Fuel usage is up on last year due to increased operations specifically with the Morocco campaign.
Quality
MedservRegis places a lot of focus on the quality aspects of our business. To ensure the quality of our processes and services there are a number of areas within the Group that are considered the main factors for ensuring the Plan, Do, Check, Act cycle of continual improvement is a constant part of our business practices. Quality aspects are managed and implemented upon the business management system or referred to as the MedservRegis Intranet. The following are areas where quality process is managed within the Group.
The following are the 2023 results of actions raised on the system that also show the sources of actions, indicating full use of the management system.
Actions By Site
Egypt
Morocco
Malta
Cyprus
Oman
Uganda
Mozambique
UAE
Other
Total
Total
1,653
351
142
108
99
67
61
17
5
2,503
Document Management
Control of records and documents - MedservRegis has two document registers that host all controlled documents. The two registers are the corporate document register and the local document register. The corporate document register is where all corporate procedures and associated documents are available to view, download and use if required. This ensures employees are using or referring to approved documents, which is vital for ensuring process safety is adhered to. The local document register is where all country specific procedures and documents are hosted.
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Statement by the Directors on non-financial information (continued)
   
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This also allows other business units to access similar procedures that may be required and aids efficiency as it prevents document owners creating procedures from scratch.
Internal Audit Program
Annual corporate full system HSSEQ audits are carried out in each operation and results reported to the executive team during annual review meetings. The audit ensures compliance with the Group standards and creates scorecards and action plans agreed with Country Managers. These are then measured against previous year’s results to check for continual improvement and ensure corrective action is taken where there are shortfalls.
Action Management
MedservRegis Corrective and Preventive Action Management System (CAPA) is implemented in each operating site and is the local tool used for managing continual improvement. This system is where all actions resulting from areas such as audits, investigations, observation cards, meetings, leadership tours and customer feedback are captured. The system is designed to manage the action process by ensuring custodians close out actions in specified timelines and check that they have been effective, and the issue should not happen again (close the loop). This is a valuable tool to the Group as it shows commitment to ensuring quality is maintained and improved and is how the Group demonstrates continual improvement across all operating entities.
Quality Certification
MedservRegis places importance on international certification of the management system. MedservRegis achieved Multi-site ISO Certification during 2023 across all operating sites for ISO 9001 Quality, 14001 Environmental and 45001 Occupational Health & Safety. Multi-site Certification has both Advantages and Disadvantages, and these are summarised as follows:
Advantages of Multi-site Certification
Strengthen Reputation and Market Position: Presenting our certification as the “gold standard” as it is embedded across all sites within a single certificate and offers a powerful image to our business stakeholders. A multi-site certificate gives our customers confidence as it demonstrates our commitment to excellence in every area of our organization.
Improve Performance: Success is about performance at every level in our organization. A multi-site certification process assesses and reflects our company’s activity consistently at every site to ensure established processes and procedures of our management system are properly implemented and achieving the desired results, making it easier to encourage innovation and growth and decide on areas of focus for improvement.
Conserve Resources: We have invested internally on a system structure (SAI EHS and SharePoint), along with necessary maintenance and management of consistent, integrated processes and procedures within our organization. This will achieve a broad external oversight and evaluation of our system at significant cost savings from reduced audit days.
Streamline Operations: Business data used to measure the performance of multiple sites is centrally controlled and managed by us, then evaluated and reported to management. This will facilitate our efforts to: determine the effectiveness of our implemented policies and procedures, identify weaknesses in performance at site level or trends throughout our company, and determine and implement actions required to improve the effectiveness of our management system.
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Statement by the Directors on non-financial information (continued)
   
xxviii
The disadvantages of a Multi-site ISO certification
The main disadvantage for multi-site certification is that if one site fails badly it can impact on the rest of the sites and put certification at risk. This is unlikely as the purpose of the certification is to improve areas of the business that require it.
Safety awards
MedservRegis and its business operational site in Malta have won an International Safety Award from the British Safety Council in recognition of its commitment to keeping its workers and workplaces healthy and safe during the 2022 calendar year. The Group is one of 342 organizations to win a Pass in the International Safety Awards 2023.
Customer Feedback
The management system customer feedback system allows for clients receiving services from MedservRegis to provide feedback on our performance. Feedback areas include emails received, phone calls taken, and feedback forms completed. Each local operation continually reviews the feedback to check for areas of corrective action. The feedback progress is provided to the client to ensure they are happy with our outcome and feel their contribution added value to our business. Overall customer satisfaction is reviewed by the executive team during the annual review to analyse if there are any areas of improvement required and recognize positive feedback.
Management of Change 2023
MedservRegis Board approved the purchase of an online HSSEQ/training & Competency/Environmental, Social and Governance reporting tool mid-year 2022. The new system was rolled out during 2023 and was considered fully operational as of the 1st of November 2023 across all sites. This system also allows for future improvements to the Management System in areas such as Digital forms and ESG Reporting and Management.
An overview of the system:
-Efficiency savings: Reduce HSSEQ Dept time (and other contributors to the HSSEQ-MS) spent across the Group on admin and reporting duties to allow more time to focus on operational oversight such as process and human factor safety.
-Environmental Impact: Reduce carbon footprint across the Group by assisting with reduction of paper and printer usage and monitoring of Env KPI and Objectives in an easier way
-Communication: Support the integration of the three sub-Groups within the Group of Medserv, Regis and METS making sharing and communication easier as well as ensuring efficiency through standardized processes.
-Reporting: Allow for easier review of reports to identify areas for improvement and highlight areas of strength allowing efficient management of resources and expenditure.
-Manage risk: Highlight areas where employees are performing well or not performing well and allow for early intervention to mitigate bigger issues taking place and ensure recognition is provided to top performing business units.
Continual Improvement: Keep the Group competitive in our industry by moving forward with new technology, increasing our employees’ ICT skills, and ensuring corrective actions are managed to support our continual improvement objectives.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxix
Consolidated disclosures pursuant to Article 8 of the Taxonomy Regulation
Introduction
In order to achieve the targets established by the European Union of reaching net zero greenhouse gas (‘GHG’) emissions by 2050, with an interim target of reducing GHG emissions by 55%, compared to 1990 levels, by 2030, the European Commission (‘EC’) has developed a taxonomy classification system, by virtue of EU Regulation 2020/852, (‘the Taxonomy Regulation’ or ‘the EU Taxonomy’), which establishes the criteria for determining whether an economic activity qualifies as environmentally sustainable.
The EU Taxonomy establishes criteria in terms of six environmental objectives, against which entities will be able to assess whether economic activities qualify as environmentally sustainable. In order to qualify as such, an economic activity must be assessed to substantially contribute to at least one of these environmental objectives, whilst doing no significant harm (‘DNSH’) to the remaining objectives. This is achieved by reference to technical screening criteria established in delegated acts to the EU Taxonomy. The economic activity is also required to meet minimum safeguards established in the EU Taxonomy.
The six environmental objectives considered by the EU Taxonomy are the following:
 
i.Climate change mitigation;
ii.Climate change adaptation;
iii.Sustainable use and protection of water and marine resources;
iv.Transition to a circular economy;
v.Pollution prevention and control; and
vi.Protection and restoration of biodiversity and ecosystems.
The EC subsequently adopted a Delegated Act supplementing Article 8 of the Taxonomy Regulation (‘the Disclosures Delegated Act’) in 2021, which establishes the disclosure requirements of entities within the scope of the Taxonomy Regulation. At this stage, this solely comprises entities subject to an obligation to publish non-financial information pursuant to Article 19a or Article 29a of Directive 2013/34/EU (being those entities subject to the Non-Financial Reporting Directive, ‘NFRD’). The Non-Financial Reporting Directive (NFRD) will be replaced by the Corporate Sustainability Reporting Directive (CSRD), which was signed on 21 June 2022 and approved by the European Parliament in November 2022.
In the following section, the Group, as a non-financial parent undertaking, presents the share of its turnover, capital expenditure (CapEx) and operating expenditure (OpEx) for the reporting period ended 31 December 2023, which are associated with taxonomy-eligible economic activities for all six environmental objectives, and taxonomy-aligned economic activities related only to the first two environmental objectives (namely, climate change mitigation and climate change adaptation) in accordance with Article 8 of the Taxonomy Regulation. The four environmental objectives were adopted by the EC in November 2023, and therefore the Group is exempt from reporting on alignment for these new objectives for the first year. The Group will therefore continue to monitor market regulation and guidance in respect of this aspect of its Taxonomy reporting, given the imminent nature of such reporting requirements.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxx
Our Activities
Overview
Proportion of taxonomy-eligible and taxonomy-aligned economic activities in total turnover, CapEx and OpEx in FY 2023
FY 2023
Total
€000
Proportion of taxonomy-eligible (non-aligned) economic activities
Proportion of taxonomy-aligned economic activities
Proportion of taxonomy non-eligible economic activities
Turnover
73,926
2.1%
0%
97.9%
CapEx
10,895
8.0%
0%
92.0%
OpEx
2,017
60.2%
0%
39.8%
The comparative periods are as follows:
Proportion of taxonomy-eligible and taxonomy-aligned economic activities in total turnover, CapEx and OpEx in FY 2022
FY 2022
Total
€000
Proportion of taxonomy-eligible (non-aligned) economic activities
Proportion of taxonomy-aligned economic activities
Proportion of taxonomy non-eligible economic activities
Turnover
66,939
1.7%
0%
98.3%
CapEx
5,028
28.5%
0%
71.5%
OpEx
1,744
56.5%
0%
43.5%
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxi
A ‘taxonomy-aligned economic activity’ refers to a taxonomy-eligible activity which:
i.complies with the technical screening criteria as defined in the Climate Delegated Act, where such criteria comprise:
a)substantial contribution to one or more environmental objectives; and also
b)‘do no significant harm’ to any of the remaining environmental objectives;
ii.is carried out in compliance with minimum safeguards regarding human and consumer rights, anti-corruption and bribery, taxation, and fair competition.
‘Taxonomy-non-eligible economic activity’ means any economic activity that is not described in the delegated acts supplementing the Taxonomy Regulation.
Taxonomy-eligible but not aligned economic activity’ means an economic activity that is described in the delegated acts supplementing the Taxonomy Regulation but does not comply with any or all of the technical screening criteria laid down in those delegated acts.
Taxonomy-eligible and Taxonomy-aligned economic activities
The Group has examined all economic activities to determine both taxonomy eligibility and alignment in accordance with Annexes I and II of the Climate Delegated Act, and subsequently assessed taxonomy eligibility against the newly published Annexes I, II, III, and IV of the Environmental Delegated Act. The table below indicates the activities performed by the Group which have been identified as taxonomy-eligible and the environmental objective to which the activity may be associated with. Information on the extent to which the economic activities are also taxonomy-aligned is provided in the KPI templates further below.
Taxonomy-eligible activities were identified by extracting the total turnover, CapEx and OpEx required to be captured in the denominators of the respective KPIs and assessing the NACE code of the activities to which the amounts relate. The Group then assessed which of the identified NACE codes relate to activities included within the annexes to the Climate Delegated Act. In the case of the identified eligible activities, the Group then began the process of assessing them against the technical screening criteria. However, this process is still currently ongoing (no activities presently being classified as taxonomy-aligned).
Through the activities highlighted in the table below, the Group generates turnover, and may incur both CapEx and OpEx for these activities.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxii
Taxonomy-eligible economic activities
Economic activity as per Climate Delegated Act
Description
Turnover (%) *
CapEx (%) *
OpEx (%) *
Climate change mitigation
Climate change adaptation
Water
Circular Economy
Pollution prevention
Biodiversity
Activity Codes
Electricity generation using solar photovoltaic technology
The generation and sale of electricity through PV panels installed by the Group
0.7
-
1.3
🚩
🚩
CCM 4.1, CCA 4.1
Transport by motorbikes, passenger cars and light commercial vehicles
The transportation services provided by the Group through electric vehicles leased and designated as category M1.
0.0
1.1
-
🚩
🚩
CCM 6.5, CCA 6.5
Sea and Coastal freight water transport, vessels for port operations and auxiliary activities
Freight forwarding services performed by the Group
1.2
-
-
🚩
🚩
CCM 6.10, CCA 6.10
Acquisition and ownership of buildings
Rental income generated from office premises owned by the Group
0.2
-
-
🚩
🚩
CCM 7.7, CCA 7.7
*% of the total turnover, CapEx and OpEx included in the denominator of the respective KPI
Taxonomy eligibility
Economic activities classified under activity 4.1 ‘Electricity generation using solar photovoltaic technology’ relates to the generation of electricity through solar photovoltaic (‘PV’) panels which is fed into the public electrical grid. Amounts in this respect have been allocated to activity 4.1 due to the electricity generated from the panels being fed into the public electrical grid, as opposed to being used exclusively for internal consumption within the Group’s premises. Had the latter been the case, the Group would have classified such activities under 7.6 ‘Installation, maintenance and repair of renewable energy technologies.
Economic activities classified under activity 6.10 ‘Sea and Coastal freight water transport, vessels for port operations and auxiliary activities’ relates to turnover generated from freight forwarding services that the Group performs on behalf of its customers. Despite the Group not performing the freight activity itself, revenues from such an activity have been considered as taxonomy-eligible in accordance with the Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets (second Commission Notice)’, particularly FAQ 20 ‘When should an undertaking be required to report under the Disclosures Delegated Act an economic activity that has not been performed by the reporting entity itself but by a subcontractor’.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxiii
The Commission Notice states that “Reporting entities must report turnover from the activities performed by a subcontractor in accordance with the accounting treatment referred to in Section 1.1.1. of Annex I of the Disclosures Delegated Act. Therefore, the reporting entity should determine whether it recognises revenue arising from that activity as its own revenue under the principles set out in the applicable IFRS 15. Where revenue generated by a subcontractor is recognised as the revenue of the reporting entity, it must be included in the calculation of the turnover KPI”. Accordingly, the Group has included such revenue in the calculation of the turnover KPI.
Economic activities classified under activity 7.7 ‘Acquisition and ownership of buildings’ relates to turnover generated from office space that is owned by the Group and is rented out to third parties.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxiv
Taxonomy eligibility of investment activities not directly related to turnover-generating activities
Further to the activities from which the Group generates turnover, and generally incurs both CapEx and OpEx, the Group also engages in investment activities not directly related to its turnover-generating activities as highlighted below.
Individually taxonomy-eligible CapEx/OpEx and the corresponding economic activities
EconomicActivity
Description of the taxonomy-eligible purchased output or individual measure
CapEx
OpEx
Climate change mitigation
Climate change adaptation
Water
Circular Economy
Pollution prevention
Biodiversity
Activity Codes
(%)*
(%)*
Transport by motorbikes, passenger cars and light commercial vehicles
The acquisition of motor vehicles designated as category M1
1.0
15.2
🚩
🚩
 
 
 
 
CCM 6.5, CCA 6.5
Freight transport services by road
The acquisition of vehicles designated as category NI, N2 and N3
5.4
39.8
🚩
🚩
 
 
 
 
CCM 6.6, CCA 6.6
Construction of new buildings
Development of new premises by the Group
0.1
-
🚩
🚩
 
🚩
 
 
CCM 7.1, CCA 7.1, CE 3.1
Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)
Charging the battery of the leased electric vehicle through an electric charging station installed by the Group.
0.5
-
🚩
🚩
 
 
 
 
CCM 7.4, CCA 7.4
Acquisition and ownership of buildings
General repairs and maintenance of buildings utilised by the Group for its own activities
-
3.9
🚩
🚩
 
 
 
 
CCM 7.7, CCA 7.7
*% of the total CapEx and OpEx included in the denominator of the respective KPI
Included in the above are amounts that relate to the acquisition of vehicles utilised by the Group to perform its cargo handling operations, classified under activity 6.6 ‘Freight transport services by road’. Such CapEx is classified under investment activities not directly related to its turnover-generating activities given that the Group is currently considering the cargo-handling operation as taxonomy non-eligible.
However, as previously stated, should such activities be considered as taxonomy-eligible in the future, then the CapEx in this respect will be associated with turnover-generating activities of the Group.
CapEx relating to activities 6.5 ‘Transport by motorbikes, passenger cars and light commercial vehicles’ pertains to the acquisition of motor vehicles utilised in the ordinary course of business by Group employees. Furthermore, the group leased electric vehicles to provide transportation services to third parties, as well as for internal usage within the group.
CapEx relating to activities 7.1 ‘Construction of new buildings’ relates to the development of new office premises.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxv
Taxonomy alignment
Determining whether an activity meets the requirements to be classified as taxonomy-aligned requires considerable detailed information about the activity to properly assess it against the established technical screening criteria and minimum social safeguards.
The Group is currently in the process of gathering the necessary information to conclude that activities may be considered as taxonomy-aligned and verifying its accuracy. As a result of the ongoing process, the Group has not been able to substantiate the alignment of any of its activities in the current year.
Despite not being able to fully substantiate the alignment of any of its activities, the Group has identified an instance of partial alignment in the current year.
Economic activities classified as 4.1 ‘Electricity generation using solar photovoltaic technology’ have been assessed to meet the substantial contribution criteria under the climate change mitigation objective, being that the activity generates electricity using solar PV technology. However, the Group is still in the process of assessing certain elements of the DNSH criteria. In relation to climate change adaptation, the Group is yet to undertake a physical climate risk assessment on the location in which the PV panels are installed and is still to assess the durability and recyclability of the components utilised by the manufacture of the PV panels to ensure no significant harm towards the transition to a circular economy. With respect to the protection and restoration of biodiversity and ecosystems, the Group is confident that the DNSH criteria have been met, given the approvals obtained surrounding the project location.
As further progress is made in the Group’s internal assessment process, certain activities may be identified as taxonomy-aligned without the need for further capital investments.
However, as a result of no activities being considered as taxonomy-aligned in the current year, disclosure requirements surrounding the assessment of taxonomy-alignment in accordance with section 1.2.2.1 of the Disclosures Delegated Act are not deemed to be applicable to the Group.
Our KPIs and accounting policies
The key performance indicators (‘KPIs’) comprise the turnover KPI, the CapEx KPI and the OpEx KPI. In presenting the Taxonomy KPIs, the Group uses the templates provided in Annex II to the Disclosures Delegated Act. Since the KPIs need to include an assessment of taxonomy-alignment of Annex I and II for the first time for the reporting period 2023, the Group does present comparative figures on taxonomy alignment for Annex I and II. The taxonomy alignment assessment for the four new environmental objectives becomes applicable as of 1 January 2024. Moreover, since the Group itself is not performing any of the activities related to natural gas and nuclear energy (activities 4.26-4.31), the Group is only disclosing the dedicated template I and such requirement emanating from Annex XII of the Disclosures Delegated Act.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxvi
Turnover KPI template for financial year 2023
 
Proportion of turnover / Total turnover
 
Taxonomy-aligned per objective
Taxonomy-eligible per objective
CCM
0%
0.7%
CCA
0%
1.4%
WTR
0%
0%
CE
0%
0%
PPC
0%
0%
BIO
0%
0%
A screenshot of a computer Description automatically generated
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxvii
CapEx KPI template for financial year 2023
 
Proportion of CapEx / Total CapEx
 
Taxonomy-aligned per objective
Taxonomy-eligible per objective
CCM
0%
8.0%
CCA
0%
0%
WTR
0%
0%
CE
0%
0%
PPC
0%
0%
BIO
0%
0%
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
   
xxxviii
OpEx KPI template for financial year 2023
 
Proportion of OpEx / Total OpEx
 
Taxonomy-aligned per objective
Taxonomy-eligible per objective
CCM
0%
56.3%
CCA
0%
3.9%
WTR
0%
0%
CE
0%
0%
PPC
0%
0%
BIO
0%
0%
A screenshot of a computer Description automatically generated
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xxxix
EU Taxonomy templates - Annex XII
 
The following is the template to be disclosed by the Group, such requirement emanating from Annex XII of the Disclosures Delegated Act.
 
Template 1: Nuclear and fossil gas related activities
Template 1 indicates whether, or not, the Group has exposures to nuclear energy and fossil gas related activities. In the current financial year, the Group does not have any exposures which carry out nuclear energy and fossil gas related activities and that are also required to disclose templates relating to the Complementary Climate Delegated Act. The Group consequently does not disclose the remainder of the nuclear and fossil gas related templates found in Annex XII of the Disclosures Delegated Act (Templates 2 - 5).
Row
Nuclear energy related activities
 
1.
The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.
NO
2.
The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.
NO
3.
The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.
NO
Fossil gas related activities
 
4.
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.
NO
5.
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.
NO
6.
The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.
NO
 
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xl
The specification of the KPIs is determined in accordance with Annex I to the Disclosures Delegated Act. The Group adopts the methodology to determine taxonomy-alignment in accordance with the legal requirements and describes its policies in this regard as follows:
Turnover KPI
Definition
The proportion of taxonomy-aligned economic activities of the total turnover has been calculated as the part of net turnover derived from products and services associated with taxonomy-aligned economic activities (numerator) divided by the net turnover (denominator), in each case for the financial year from 1 January 2023 to 31 December 2023. Given that the Group has not identified any taxonomy-aligned economic activities, the current proportion of alignment is 0%.
The denominator of the turnover KPI is based on the consolidated net turnover in accordance with paragraph 82(a) of IAS 1. For further details on our accounting policies regarding the Group’s consolidated net turnover, refer to disclosure note 4.15 ‘Revenue’ in the Group’s consolidated financial statements included in this Annual Report.
Reconciliation
The Group’s consolidated net turnover captured in the denominator of the KPI of €73,926,336 (2022: €66,939,160) reconciles with the amount disclosed in the ‘Revenue’ financial statement line item included in the statement of profit or loss and other comprehensive income in the consolidated financial statements included in this annual report. Additionally, the amount also reconciles to the revenue disclosure note 8.
2023
Revenue reconciliation
Amount (€000)
Amount (€000)
Turnover as per KPI denominator
73,926
Turnover as per the consolidated financial statements relating to:
Integrated logistics support services
46,128
Oil country tubular goods
27,306
Photovoltaic farm
492
73,926
Disclosure note 8
Difference
-
2022
Revenue reconciliation
Amount (€000)
Amount (€000)
Turnover as per KPI denominator
66,939
Turnover as per the consolidated financial statements relating to:
Integrated logistics support services
42,990
Oil country tubular goods
23,425
Photovoltaic farm
524
66,939
Disclosure note 8
Difference
-
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xli
The following is a detailed breakdown of the turnover generated by the Group in accordance with the 3 categories of revenue disclosed in the consolidated financial statements in Note 8, amongst the different activities disclosed in the Turnover KPI.
2023
Detailed breakdown of ‘Integrated logistics support services’
Amount (€000)
Amount (€000)
Integrated logistics support services turnover as per the consolidated financial statements
46,128
Allocation of services in the turnover KPI
6.5 Transport by motorbikes, passenger cars and light commercial vehicles
16
6.10 Sea and coastal freight water transport, vessels for port operations and auxiliary
activities
907
7.7 Acquisition and ownership of buildings
117
Taxonomy non-eligible
45,088
46,128
Difference
-
2022
Detailed breakdown of ‘Integrated logistics support services’
Amount (€000)
Amount (€000)
Integrated logistics support services turnover as per the consolidated financial statements
42,990
Allocation of services in the turnover KPI
6.10 Sea and coastal freight water transport, vessels for port operations and auxiliary
activities
532
7.7 Acquisition and ownership of buildings
76
Taxonomy non-eligible
42,382
42,990
Difference
-
2023
Detailed breakdown of ‘Oil country tubular goods’
Amount (€000)
Amount (€000)
Oil country tubular goods turnover as per the consolidated financial statements
27,306
Allocation of services in the turnover KPI
Taxonomy non-eligible
27,306
27,306
Difference
2022
Detailed breakdown of ‘Oil country tubular goods’
Amount (€000)
Amount (€000)
Oil country tubular goods turnover as per the consolidated financial statements
23,425
Allocation of services in the turnover KPI
-
Taxonomy non-eligible
23,425
23,425
Difference
-
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xlii
2023
Detailed breakdown of ‘Photovoltaic farm’
Amount (€000)
Amount (€000)
Photovoltaic farm turnover as per the consolidated financial statements
492
Allocation of services in the turnover KPI
4.1 Electricity generation using solar photovoltaic technology
492
Taxonomy non-eligible
-
492
Difference
-
2022
Detailed breakdown of ‘Photovoltaic farm’
Amount (€000)
Amount (€000)
Photovoltaic farm turnover as per the consolidated financial statements
524
Allocation of services in the turnover KPI
4.1 Electricity generation using solar photovoltaic technology
524
Taxonomy non-eligible
-
524
Difference
-
CapEx KPI
Definition
The CapEx KPI is defined as taxonomy-aligned CapEx (numerator) divided by the Group’s total CapEx (denominator). Given that the Group has not identified any taxonomy-aligned economic activities, the current proportion of alignment is 0%.
Total CapEx consists of additions to tangible and intangible fixed assets during the financial year, before depreciation, amortisation, and any remeasurements, including those resulting from revaluations and impairments, as well as excluding changes in fair value. It includes acquisitions of tangible fixed assets (IAS 16), intangible fixed assets (IAS 38) and right-of-use assets (IFRS 16). Acquisitions of investment properties (IAS 40) and additions as a result of business combinations would also be captured, however, the Group had no such CapEx in the current year. For further details on our accounting policies regarding the Group’s CapEx, refer to disclosure notes 4.5 ‘Property plant and equipment’, 4.6 ‘Intangible assets and goodwill’ and 4.9 ‘Leases’, in the Group’s consolidated financial statements included within this annual report.
The Disclosures Delegated Act established three categories under which to classify CapEx:
a.CapEx related to assets or processes that are associated with Taxonomy-aligned economic activities (“category a”). In this case, the Group considers that assets and processes are associated with Taxonomy-aligned economic activities where they are essential components necessary to execute an economic activity.
The Group follows the generation of external revenues as a guiding principle to identify economic activities that are associated with CapEx under this category (a).
In the current year, the Group has identified only one eligible CapEx, which comprises the lease of three electric vehicles under this category.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xliii
b.CapEx that is part of a plan to upgrade a Taxonomy-eligible economic activity to become Taxonomy-aligned or to expand a Taxonomy-aligned economic activity (“category b”).
The Group has currently not developed such a plan, and therefore, no CapEx is considered to be eligible under this category.
c.CapEx related to the purchase of output from Taxonomy-aligned economic activities and individual measures enabling certain target activities to become low-carbon or to lead to GHG reductions (“category c”).
The Group distinguishes between the purchase of output and individual measures as follows:
•‘Purchase of output’ relates to when the Group just acquires the product or service that is mentioned in the activity description
•‘Individual measure’ refers to when the Group acquires a product through an activity that is regularly performed by the supplier, but where the Group controls the content and design of the product in detail.
Eligible CapEx under this category has been disclosed in the table named ‘Individually taxonomy-eligible CapEx/OpEx and the corresponding economic activities’ in the ‘Taxonomy eligibility of investment activities not directly related to runover generating activities’ section above. The full amount of CapEx considered under this category relates purely to ‘purchase of output’.
Purchases of output qualify as taxonomy-aligned CapEx in cases where it can be verified that the respective supplier performed a taxonomy-aligned activity to produce the output that the Group acquired. Since taxonomy-alignment also includes DNSH criteria and minimum safeguards, the Group is not able to assess the Taxonomy-alignment on its own. For the purchased output in 2023, we were not able to obtain any conclusive confirmation of taxonomy-alignment.
Given that no CapEx was incurred by the Group in the current year in relation to “category a”, which relates to turnover-generating activities, the Group considers there to be no risk of double counting in the CapEx KPI between categories “a” and “c” with the amount being allocated in full to “category c”.
Reconciliation
The Group’s total CapEx captured in the denominator of the KPI can be reconciled to the consolidated financial statements of the Group included in this annual report, by reference to the respective disclosures capturing the additions for intangible assets, right-of-use assets and property, plant and equipment.
2023
CapEx Reconciliation
Amount (€000)
Amount (€000)
CapEx as per KPI denominator
10,895
Additions as per the consolidated financial statements relating to:
Property, plant and equipment
2,680
Disclosure note 14
Intangible assets
-
Disclosure note 15
Right-of-use assets
8,215
10,895
Disclosure note 32
Difference
-
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xliv
2022
CapEx Reconciliation
Amount (€000)
Amount (€000)
CapEx as per KPI denominator
5,028
Additions as per the consolidated financial statements relating to:
Property, plant and equipment
2,647
Disclosure note 14
Intangible assets
-
Disclosure note 15
Right-of-use assets
2,381
5,028
Disclosure note 32
Difference
-
The following is a detailed breakdown of the property, plant and equipment, intangible assets and right of use assets amongst the different activities disclosed in the CapEx KPI.
2023
Detailed breakdown of property, plant and equipment additions
Amount
(€000)
Amount
(€000)
PPE additions as per the consolidated financial statements
2,680
Allocation of PPE in the CapEx KPI
6.5 Transport by motorbikes, passenger cars and light commercial vehicles
110
6.6 Freight transport services by road
584
7.1 Construction of new buildings
7
7.4 Installation, maintenance, and repair of charging stations for electric vehicles in
buildings (and parking spaces attached to buildings)
50
Taxonomy non-eligible
1,929
2,680
Difference
-
2022
Detailed breakdown of property, plant and equipment additions
Amount
(€000)
Amount
(€000)
PPE additions as per the consolidated financial statements
2,647
Allocation of PPE in the CapEx KPI
6.5 Transport by motorbikes, passenger cars and light commercial vehicles
106
6.6 Freight transport services by road
919
7.1 Construction of new buildings
406
Taxonomy non-eligible
1,216
2,647
Difference
-
2023
Detailed breakdown of right of use asset additions
Amount (€000)
Amount (€000)
Right of use asset additions as per the consolidated financial statements
8,215
Allocation of ROU in the CapEx KPI
6.5 Transport by motorbikes, passenger cars and light commercial vehicles
117
Taxonomy non-eligible
8,098
8,215
Difference
-
2022
Detailed breakdown of right of use asset additions
Amount (€000)
Amount (€000)
Right of use asset additions as per the consolidated financial statements
2,381
Allocation of ROU in the CapEx KPI
Taxonomy non-eligible
2,381
2,381
Difference
-
No detailed breakdown in relation to intangible assets is deemed necessary given that no additions occurred during the year.
MedservRegis p.l.c.
Statement by the Directors on non-financial information (continued)
xlv
OpEx KPI
Definition
The OpEx KPI is defined as taxonomy-aligned OpEx (numerator) divided by the Group’s total OpEx (denominator).
Total OpEx consists of direct non-capitalised costs that relate to building renovation measures, short-term leases as well as all forms of maintenance and repair. In general, this includes staff costs, costs for services and material costs for daily servicing and well as for regular and unplanned maintenance and repair measures.
The OpEx considered by the Group does not include expenses relating to the day-to-day operation of PPE, such as raw materials, cost of employees operating any equipment and electricity or fluids that are necessary to operate the PPE. Amortisation and depreciation are also not included in the OpEx KPI.
The Group also excludes direct costs for training and other human resources adaptation needs from the denominator and the numerator. This is because Annex I to the Disclosures Delegated Act lists these costs only for the numerator, which does not allow a mathematically meaningful calculation of the OpEx KPI.
The OpEx of the Group recognised during the financial year ended December 2023 is disclosed further in the Group’s consolidated financial statements included within this annual report in disclosure note 10 ‘Expenses by nature’.
Given that the Group has not identified any CapEx as being taxonomy-aligned, naturally, no OpEx is able to be considered as taxonomy-aligned.
Social and Community Activities
MedservRegis Plc continued to support the non-profit organizations which we have supported in the past, as well as to support new initiatives as driven and supported by the staff and management alike.
MALTA
In Malta, Medserv Operations Limited arranged a Food and Toy drive in which food and toys were donated to several different social NGOs working with vulnerable persons, such as various orphanages across the country, the Malta Food Bank, The Richmond Foundation’s KIDS programme, Fondazzjoni Sebh and others.
The annual Pink October fundraising activity for the Marigold Foundation, in support of breast cancer, was organised by the HR department with a fun event selling beautifully decorated pink muffins.
MAURITIUS
In Mauritius, Regis Holdings Ltd continued to support PAWS, an animal welfare NGO in Mauritius with two shelters and clinics who focus on sterilization, education and rehoming of dogs and cats.
Regis has a relationship with several non-profit organisations in Mauritius, including Ti Rayons Soleil, Livina Foundation, and I61 Foundation, where they support and allocate Corporate Social Responsibility funding to uplift those oppressed of poverty and social injustice. This year they assisted a local “Kool Kids” project which provided a well-ventilated area for 75 children and staff by installing an air conditioner, two air curtains, and three ventilators (fans) in an office used as a computer room and an afterschool class.
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Statement by the Directors on non-financial information (continued)
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They furthermore supported 44 of Ti Rayons Soleil under the Sun Kids Afterschool Program with assistance on flood repairs - as there was flood damage to the water damaged roof and floor damage where the Sun Kids Afterschool Program operates in containers as classrooms.
Regis Holdings also assisted with the Functional Needs Project at the Beau Bassin with equipment for the “I can Special Needs School” which assists special needs children with basic life skills, arts and crafts, mathematics, cooking, and gardening.
CYPRUS
Medserv Cyprus has been actively involved in numerous CSR events.
Medserv Cyprus has demonstrated a strong commitment to Corporate Social Responsibility (CSR) through various activities:
-International Women's Day: Celebrated with an event honoring female employees, where women were gifted pink roses and sweatshirts with "Girl Power" to inspire daily empowerment. Funds raised through breast cancer awareness initiatives were donated to Europa Donna Cyprus to support women with breast cancer.
-Limassol Marathon: Employees participated in the 5km race, even in poor weather, to raise funds for the Karaiskakio Foundation, which supports leukemia patients and runs a bone marrow donor registry.
-World Down Syndrome Day: The company joined the Lots of Socks Campaign, encouraging the celebration of uniqueness and making a donation to the Pancyprian Down Syndrome Organization to help integrate children with Down Syndrome into society.
-Easter Donation to Limassol Orphanage 'House of Child': Medserv Cyprus provided support to children during Easter with special donations, emphasizing the joy and significance of the holiday.
-World Children’s Day Donation to Limassol Orphanage 'House of Child': Significant funds were raised and used for gifts to support the children's need for love, care, and education.
-Breast Cancer Awareness Campaign: Female staff wore pink to symbolize support for breast cancer awareness, with proceeds from fundraising efforts going to Europa Donna Cyprus, which provides a range of support services to cancer patients.
-Movember Campaign: The company supported Movember Cyprus in its efforts to combat male cancer, with a focus on improving patient quality of life and promoting early diagnosis and treatment.
-Christmas Donation to Limassol Orphanage 'House of Child': Funds were raised for Christmas presents for the orphanage, emphasizing the spirit of giving and making others happy.
UGANDA, OMAN
In Uganda, the office made donations of shredded paper to Outreach Uganda for crafting paper beads reflecting their commitment to local community and socially responsible practices. And in Oman, staff celebrated their diversity during a traditional harvest festival. This festival is celebrated by many cultures, and beautiful arrangements of flowers were created by the staff, which adorned the reception followed by a traditional Oman lunch.
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Statement by the Directors on non-financial information (continued)
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OVERALL
The year 2023 was a true reflection of a strong mutual support amongst our employees. This positive spirit has strongly emerged together and is now reflected in the whole MedservRegis Group.
Approved by the Board of Directors on 26 April 2024.
MedservRegis p.l.c.
Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance
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Introduction
Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority, MedservRegis p.l.c. (the “Company”) as a company whose equity securities are listed on a regulated market, should endeavour to adopt the Code of Principles of Good Corporate Governance contained in Appendix 5.1 of the Capital Markets Rules (the “Code”). In terms of Capital Market Rule 5.94, the Company is obliged to prepare a report explaining how it has complied with the Code. For the purposes of the Capital Markets Rules, the Company is hereby reporting on the extent of its adoption of the recommended Code.
The directors all share the conviction that the practices recommended by the Code are in the best interests of the MedservRegis plc group of companies (the “Group”) and its shareholders generally and that compliance therewith is not only expected by investors but also evidences the directors’ and the Company’s commitment to a high standard of governance.
Good corporate governance is the collective responsibility of the Board of Directors of the Company (the “Board”). As demonstrated by the information set out in this statement, the Company believes that it has, save as indicated in the section entitled “Non-Compliance with the Code”, throughout the accounting period under review, applied the principles and complied with the provisions of the Code. In the Non-Compliance section, the Board indicates and explains the instances where it has departed from or where it has not applied the Code, as allowed by the Code.
Part 1: Compliance with the Code
Principle 1: The Board
The Board’s principal purpose is to provide the required leadership of the Company, to set the present and future strategy of the Company and to ensure proper oversight and accountability.
During 2023, the Board was composed of the following directors:
Name
Position
Anthony S. Diacono (Chairman)
Executive Director until 30 July 2023.
Non-Executive Director as from 31 July 2023
Carmelo (a.k.a Karl) Bartolo
Executive Director
Laragh Cassar
Non-Executive Director
David S. O’Connor
Executive Director
Olivier N. Bernard
Executive Director
Keith Grunow
Non-Executive Independent Director
Monica Vilabril
Non-Executive Independent Director
Jean Pierre Lhote
Non-Executive Independent Director
All the directors were nominated by the shareholders and appointed automatically with effect from the annual general meeting held on the 26 May 2023.
The Board is composed of persons who have the necessary characteristics and experience to render them fit and proper to direct the business of the Company.
The Board is of view that the directors have the requisite elements of honesty, competence and integrity to qualify as fit and proper persons. The presence of the executive directors on the Board is designed to ensure that the Board has direct access to the individuals having the prime responsibility for the executive management of the Company and the implementation of approved policies. Each director is provided with the information and explanations as may be required by any particular agenda item.
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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The Board delegates specific responsibilities to an Audit Committee, to a Remuneration Committee and to a Financial Risk Committee. Further details in relation to the said committees and the responsibilities of the Board are found in Principles 4 and 5 of this Statement.
The directors and Restricted Persons (as defined in the Capital Markets Rules) are informed and are aware of their obligations on dealings in securities of the Company within the established parameters of the law and the Capital Markets Rules. Each such Director and Senior Officer has been provided with the Market Abuse Procedure policy required in terms of Capital Markets Rule 5.106. During 2023, the Company provided training to the Board on the duties of directors, including those arising in terms of the Companies Act, the Civil Code, Cap 16 of the laws of Malta and the Capital Markets Rules.
Principle 2: Chairman and Chief Executive
The Chairman of the Company (which position is occupied by Anthony S. Diacono) leads the Board and sets its agenda. In addition, the Chairman ensures that the directors receive precise, timely and objective information so that they can take sound decisions and effectively monitor the performance of the Company and that effective communication with shareholders is maintained. The Chairman also encourages active engagement by all directors for discussion of complex or contentious issues. Working hand in hand with the Chairman is the Chief Executive Officer (CEO) (which position is occupied by David S. O’Connor), who leads the executive management of the Group. The CEO is assisted by two Deputy CEOs – Deputy CEO for Business and Operations occupied by Carmelo (a.k.a Karl) Bartolo and Deputy CEO for Finance, Administration, Investment and Trade, occupied by Olivier Bernard.
The CEO has the primarily task of leading the development and execution of the Company’s long-term strategy as well as providing direction and leadership toward the achievement of the Company’s philosophy, mission, strategy and its annual goals and objectives.
As set out in Part 2: Non-Compliance with the Code, Principle 2 - Code Provision 2.3, whilst considering Anthony S. Diacono as duly fulfilling the role required of Chairman in terms of the Capital Markets Rules, Anthony S. Diacono is not considered to meet the independence criteria set out in the Capital Markets Rules.
Principle 3: Composition of the Board
The Board considers that the size of the Board, whilst not being large as to be unwieldy, is appropriate, taking into account the size of the Company and its operations. The combined and varied knowledge, experience and skills of the Board members provides the balance of competences that are required, adds value to the functioning of the Board and gives direction to the Company. The competencies of the Directors ranges from industry, financial and legal expertise. Each of the directors has applied the necessary time and attention for the performance of his/her duties to the Company.
As set out above, the board is composed of a mix of executive and non-executive directors. The presence of Non-Executive Directors on the Board serves to, inter alia, constructively challenge the Executive Directors and management of the Company, and particular focus is made on strategy and the integrity of financial performance and management.
Keith Grunow (Non-Executive Director), Monica Vilabril (Non-Executive Director) and Jean Pierre Lhote (Non-Executive Director) are considered to be independent within the meaning provided by the Code. Laragh Cassar acts as the Company Secretary and legal counsel of the Company and is therefore not considered as independent.
Each presently appointed non-executive director has declared to the Board as stipulated under the Code Provision 3.4 undertaking:
a)to maintain in all circumstances his/her independence of analysis, decision and action;
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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b)not to seek or accept any unreasonable advantages that could be considered as compromising his/her independence; and
c)to clearly express his/her opposition in the event that he/she finds that a decision of the board may harm the Company.
Principle 4: The Responsibilities of the Board
The Board has the first level responsibility for executing the four basic roles of Corporate Governance, namely accountability, monitoring, strategy formulation and policy development. The four basic corporate governance principles, regulatory obligations and general ethical market practices are implemented and exercised through the internal Company policies such as its Company Code of Conduct policy, Anti-Bribery policy and Anti-Money laundering Policy. Moreover, in order to avoid implications of regulatory arbitrage when dealing with third party market participants, the Company requires reciprocity in terms of level of standards. The Board has established a clear internal and external reporting system so that it has access to accurate, relevant and timely information and ensures that management constantly monitor performance and report to its satisfaction. The Board, at least on a quarterly basis, evaluates management’s implementation of corporate strategy and financial objectives by reference to a number of criteria, including Adjusted EBITDA, revenue, projected earnings, country by country analysis and other anticipated criteria.
The Board has an active succession plan in place in respect of the responsibilities assumed by the Executive Directors for which the Chairman holds key responsibility. The Company has implemented a number of measures aimed at strengthening the Company’s management structure. In addition, the Board organises information sessions including statutory and fiduciary duties, the Company’s operations and prospects, the skills and competence of senior management, the general business environment and the board’s expectations for Directors from time to time. The Company ensures that all incoming Directors of the Company are provided with the necessary information and explanations on the corporate and regulatory aspect of their roles, individually as part of their induction (upon the on-boarding and appointment process) and collectively during Board and Audit Committee meetings wherein the legal advisor of the Company provided explanations and updates on legal and regulatory matters.
Principle 5: Board Meetings
As a matter of practice, each board meeting to be held throughout the year is scheduled well in advance of their due date and each director is provided with detailed Board papers relating to each agenda item in good time prior to the actual meetings. Board meetings concentrate mainly on strategy, operational performance and financial performance of the Company. After each Board meeting and before the next, Board minutes that faithfully record attendance, key issues and decisions are sent to the directors.
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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During 2023, the Board of Directors met eight (8) times*.
Name
Attendance during 2023
Anthony S. Diacono (Chairman)
8
Laragh Cassar
8
Carmelo (a.k.a Karl) Bartolo
8
David S. O’Connor
8
Olivier Bernard
8
Keith Grunow
8
Monica Vilabril
8
Jean Pierre Lhote
7
* four of which were in the form of written resolutions
The Board also delegates specific responsibilities to the management team of the Company, the Audit Committee, the Remuneration Committee and the Financial Risk Committee, which Committees operate under their formal terms of reference.
Audit Committee
The Board delegates certain responsibilities to the Audit Committee, the terms of reference of which, reflect the requirements stipulated in the Capital Markets Rules and under applicable law, including the roles set out in Capital Markets Rules 5.127 to 5.130. In addition, unless otherwise dealt with in any other manner prescribed by the Capital Markets Rules, the Audit Committee has the responsibility to, inter alia, monitor and scrutinise, and, if required, approve Related Party Transactions, if any, falling within the ambits of the Capital Markets Rules and to make its recommendations to the Board of any such proposed Related Party Transactions. The Audit Committee establishes internal procedures and monitors these on a regular basis. The terms of reference for the Audit Committee are designed both to strengthen this function within the Company and to widen the scope of the duties and responsibilities of this Committee. The Committee also has the authority to summon any person to assist it in the performance of its duties, including the Company’s external auditors. PWC, as external auditors of the Company, were invited to attend each of the Company’s audit committee meetings. During 2021, the internal audit function within the Company was made redundant. The Company continues to keep the matter under observance with a view to resuming internal audit functions within the Group at the earliest opportunity.
The Chairman of the Audit Committee was appointed by the Board of Directors.
During 2023, the Audit Committee met six (6) times.
Name
Attendance during 2023
Keith Grunow (Chairman)
6
Monica Vilabril
6
Laragh Cassar
4
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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The board considers Mr Keith Grunow to be independent of the Company, its management and controlling shareholder and competent in accounting and/or auditing. Such determination was based on his substantial experience in various audit, accounting and risk management roles throughout his career.
When examining the independence criteria of an Audit Committee member, the Board assesses whether an individual has any business, family or other relationships, including with any of the controlling shareholder or management of the Company which may give rise to a conflict of interest. Moreover, and in line with the Capital Markets Rules, the Board also determines whether an Audit Committee member has been an executive officer or employee of the Company, has had a significant business relationship with the Company, received any additional remuneration from the Company apart from the engaged director’s fees and whether the individual has been within the last three years an engagement partner or a member of the external audit team of the Company.
The Board is confident that the Audit Committee Members, as a whole, have competence relevant to the sector in which the Issuer is operating, which competence was garnered over the years as a result of their involvement with the MedservRegis Group.
Financial Risk Committee
The Board has set up a Financial Risk Committee with a view to manage the Group’s currency, interest rates, liquidity and foreign exchange risks and to manage the Group’s own financial investments. The Committee operates under specific terms of reference approved by the Board. The financial controllers within the MedservRegis Group are invited to attend each meeting of the Financial Risk Committee.
During 2023, the Financial Risk Committee met twice (2).
 
Name
Attendance during 2023
Olivier Bernard (Chairman)
2
Carmelo (a.k.a Karl) Bartolo
2
Silvio Camilleri
2
Salman Manjoo
2
Alessandro Roca
2
Remuneration Committee
This is considered under Principle 8.
Principle 6: Information and Professional Development
The Board appoints the Chief Executive Officer. Appointments and changes to senior management are the responsibility of the CEO and Executive Directors and are approved by the Board. The Board actively considers the professional and technical development of the Board itself, all senior management and staff members. The CEO also has systems in place to monitor management and staff morale. Management prepares detailed reviews for each Board meeting covering all aspects of the Company’s business.
On joining the Board, a new director is provided with the opportunity to consult with the executive directors and senior management of the Company in respect of the operations of the Group. Each director is made aware of the Company’s on-going obligations in terms of the Companies Act, the Capital Markets Rules and other relevant legislation.
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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Directors have access to the advice and services of the Company Secretary and to the legal counsel of the Company. The Company is also prepared to bear the expense incurred by the directors requiring independent professional advice should they judge it necessary to discharge their responsibilities as directors.
Principle 7: Evaluation of the Board’s Performance
With respect to the year under review, the Board undertook an evaluation of its own performance, the Chairman’s performance and that of its committees. The Board did not per se appoint a committee to carry out this performance evaluation but the evaluation exercise was conducted through a questionnaire, copies of which were sent to the Chairman of the Audit Committee and the results were reported to the Chairman of the Board. No material changes were made to the Company’s structures as a result of the Board evaluation.
Principle 8: Remuneration Committee
The Board has set up a Remuneration Committee commissioned with overseeing the development and implementation of the remuneration and related policies of the MedservRegis Group.
During the year under review, the Committee was composed of Keith Grunow (Chairman), Laragh Cassar and Monica Vilabril. All of the said members (other than Laragh Cassar) are considered to be independent directors. The Remuneration Committee met once (1) during FY 2023.
Principle 9: Relations with Shareholders and with the Market & Principle 10: Institutional Investors
The Board is of the view that, over the period under review, the Company has communicated effectively with the market through a number of company announcements that it published informing the market of significant events happening within the Company.
The Company also communicates with its shareholders through its Annual General Meeting (further detail is provided under the section entitled General Meetings). The Chairman arranges for all directors to attend the annual general meeting and for the Chairman of the Audit Committee and Remuneration Committee to be available to answer questions, if necessary.
Apart from the annual general meeting, the Company intends to continue with its active communication strategy in the market and shall accordingly continue to communicate with its shareholders and the market by way of the Annual Report and Financial Statements, by publishing its results on a six-monthly basis during the year and through the directors’ statements published on a six-monthly basis, and by company announcements to the market in general. During 2023, the Company also communicated to the market through brokers on one occasion. The Company recognises the importance of maintaining a dialogue with the market to ensure that its strategies and performance are well understood and disclosed to the market in a timely manner.
The Company’s website (https://medservregis.com/) also contains information about the Company and its business
which is a source of further information to the market.
In terms of the Companies Act, Cap 386 of the laws of Malta, any shareholder/s having 10% or more of the issued share capital of the Company can call a general meeting. This is also reflected in Article 34 of the Company’s Articles of Association.
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Principle 11: Conflicts of Interest
The directors are aware that their primary responsibility is always to act in the interest of the Company and its shareholders as a whole irrespective of who appointed them to the Board. Acting in the interest of the Company includes an obligation to avoid conflicts of interest. In such instances, the Company has strict policies in place which allow it to manage such conflicts, actual or potential, in the best interest of the Company. Each director’s service contract contains provisions which require the director to:
a)ensure that his/her personal interests do not conflict with the interests of the Company;
b)not carry on, directly or indirectly, business in competition with the Company;
c)not make personal gains or profits from his/her post without the consent of the Company, or from confidential information;
d)not use any property, information or opportunity of the Company for his/her own benefit or for the benefit of any third party,
e)not obtain any benefit in connection with the exercise of his/her powers, except with the consent of the Company in general meeting.
Furthermore, any director that has a conflict (actual or potential) is required to disclose and record the conflict in full and in time to the Board and is also precluded from participating in a discussion concerning matters in such conflicted matters (unless the Board finds no objection to the presence of such director). Moreover, each director must disclose his or her beneficial or non-beneficial interest in the share capital of the Company and is only permitted to deal in such shares as allowed by law. Under no circumstance is the conflicted director, permitted to vote on the matter. This requirement is reflected in Article 68.2 of the Company’s Articles of Association.
Principle 12: Corporate Social Responsibility
The Company places substantial importance on its corporate social responsibility to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large.
The Company is fully aware of its obligation to preserving the environment and continues to implement policies aimed at respecting the natural environment and to avoiding/minimising pollution. During the year, the Company’s Solar Farm generated 3,054,200 kwh and avoided 1,640,869 kg of CO2 emissions over the year.
The Company promotes open communication with its workforce, responsibility and personal development.
The Company maintains a staff development programme aimed at providing training to staff to assist their development with an aim to improve the Company’s competitiveness.
The Company’s Health, Safety, Security, Environment & Quality (HSSEQ) team as well as our HR and management teams were essential in supporting the staff and ensuring operations were carried out in strict adherence to the HSSEQ processes in place.
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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Part 2: Non-Compliance with the Code
Principle 2 - Code Provision 2.3
Whilst steps have been taken by the Company to segregate the office of Chairman and Chief Executive Officer through the appointment of a Chief Executive Officer of the Group, the Chairman of the Company is not considered to meet the independence criteria set out in the Capital Markets Rules largely due to his significant shareholding in the Company. During the year under review, Mr Diacono’s contract as executive director expired and he now occupies the position of Chairman and non-executive director. The Board considers that Anthony S. Diacono duly fulfils the role required of a Chairman in terms of the Capital Markets Rules, notwithstanding his lack of formal independence.
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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Internal Control
The Board is ultimately responsible for the Company’s system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk to achieve business objectives, and can provide only reasonable, and not absolute, assurance against normal business risks or loss. Included with the Company’s internal control system are procedures to identify, control and report major risks within a relevant timeframe. Financial reporting is prepared monthly and consolidated quarterly performance is analysed against budgets and shared with senior management and directors. The Board reviews the effectiveness of the Company’s system of internal controls. The Company strengthens this function through the Audit Committee that has initiated the process of a business risk plan, the implementation of which will be regularly monitored.
The key features of the Company’s system of internal control are as follows:
Organisation
The Company operates through the Chief Executive Officer with clear reporting lines and delegation of powers. Whilst members of the senior management of the Group are in constant contact, formal management meetings are scheduled on a monthly basis. They are attended by the Chief Executive Officer, their deputies and senior executive management and other members of staff, upon invitation.
Control environment
The Company is committed to the highest standards of business conduct and seeks to maintain these standards across all of its operations. Company policies and employee procedures are in place for the reporting and resolution of improper activities.
The Company has an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve Company objectives.
Company executives participate in periodic strategic reviews, which include consideration of long-term projections and the evaluation of business alternatives. Annual budgets and strategic plans are prepared. Performance against these plans is actively monitored and reported to the Board, at minimum on a quarterly basis.
Risk identification
Company management is responsible for the identification and evaluation of key risks applicable to their respective areas of business. The mandate of the Audit Committee and the Financial Risk Committee also includes the continuous assessment and oversight of such key risks.
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General Meetings and Shareholders’ Rights
Conduct of general meetings
It is only shareholders whose details are entered into the register of members on the record date that are entitled to participate in the general meeting and to exercise their voting rights. In terms of the Capital Markets Rules, the record date falls 30 days immediately preceding the date set for the general meeting to which it relates. The establishment of a record date and the entitlement to attend and vote at general meeting does not, however, prevent trading in the shares after the said date.
In order for business to be transacted at a general meeting, a quorum must be present. In terms of the Articles of Association, 51% of the nominal value of the issued equity securities entitled to attend and vote at the meeting constitutes a quorum. If within half an hour, a quorum is not present, the meeting shall stand adjourned to the same day the next week, at the same time and place or to such other day and at such other time and place as the directors may determine. In any event, the adjourned meeting must be held at least ten days after the final convocation is issued and no new item must be put on the agenda of such adjourned meeting. If at the adjourned meeting a quorum is not yet present within half an hour from the time appointed for the meeting, the member or members present shall constitute a quorum. Generally, the Chairman of the Board presides as Chairman at every general meeting of the Company. At the commencement of any general meeting, the Chairman may, subject to applicable law, set the procedure which shall be adopted for the proceedings of that meeting. Such procedure is binding on the members.
If the meeting consents or requires, the Chairman shall adjourn a quorate meeting to discuss the business left unattended or unfinished. If a meeting is adjourned for 30 days or more, notice of the quorate meeting must be given as in the case of an original meeting. Otherwise, it is not necessary to give any notice of an adjourned meeting or of the business to be transacted at such quorate meeting.
At any general meeting, a resolution put to a vote shall be determined and decided by a show of hands, unless a poll is demanded before or on the declaration of the result of a show of hands by:
(i)the Chairman of the meeting; or
(ii)by at least three (3) members present in person or by proxy; or
(iii)any member or members present in person or by proxy and representing not less than one tenth of the total voting power of all members having the right to vote at that meeting; or
(iv)a member or members present in person or by proxy holding equity securities conferring a right to vote at the meeting, being equity securities on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the equity securities conferring that right.
Unless a poll is so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried or carried unanimously, or by a particular majority, or lost together with an entry to that effect in the minute book, shall constitute conclusive evidence of the fact without need for further proof. If a resolution requires a particular majority in value, in order for the resolution to pass by a show of hands, there must be present at that meeting a member or members holding in the aggregate at least the required majority. A poll demanded on the election of the Chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at the discretion of the Chairman. In the case of equality of votes, whether on a show of hands or on a poll, the chairman has a second or casting vote. On a show of hands every member present in person or by proxy shall have one vote for each equity security carrying voting rights of which he is the holder, provided that all calls or other sums presently payable by him in respect of equity securities have been paid.
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Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance (continued)
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Proxy
Every member is entitled to appoint one person to act as proxy holder to attend and vote at a general meeting instead of him. The proxy holder shall enjoy the same rights to participate in the general meeting as those to which the member thus represented would be entitled. If a member is holding shares for and on behalf of third parties, such member shall be entitled to grant a proxy to each of his clients or to any third party designated by a client and the said member is entitled to cast votes attaching to some of the shares differently from the others. In the case of voting by a show of hands, a proxy who has been mandated by several members and instructed to vote by some shareholders in favour of a resolution and by others against the same resolution shall have one vote for and one vote against the resolution.
The instrument appointing a proxy must be deposited at the office or by electronic mail at the address specified in the notice convening the meeting not less than forty-eight (48) hours before the time for holding the meeting or, in the case of a poll, not less than forty-eight (48) hours before the time appointed for the taking of the poll. The same applies to the revocation of the appointment of a proxy.
A form of instrument of proxy shall be in such form as may be determined by the directors and which would allow a member appointing a proxy to indicate how he would like his proxy to vote in relation to each resolution.
Including items on the agenda
A shareholder or shareholders holding not less than 5% of the issued share capital may include items on the agenda of the general meeting and table draft resolutions for items included on the agenda of a general meeting. Such right must be exercised by the shareholder at least 46 days before the date set for the general meeting to which it relates.
Questions
Shareholders have the right to ask questions which are pertinent and related to the items on the agenda.
Electronic voting
In terms of the Articles of Association of the Company, the directors may establish systems to:
a)allow persons entitled to attend and vote at general meetings of the Company to do so by electronic means in accordance with the relevant provisions of the Capital Markets Rules; and
b)allow for votes on a resolution on a poll to be cast in advance.
Where a shareholder requests the Company to publish a full account of a poll, the Company is required to publish the information on its website not later than 15 days after the general meeting at which the result was obtained.
Further details on the conduct of a general meeting and shareholders’ rights are contained in the Memorandum and Articles of Association of the Company and in line with chapter 12 of the Capital Markets Rules.
Approved by the Board of Directors on 26 April 2024.
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Remuneration Statement and Report
lix
THIS STATEMENT AND REPORT ON THE REMUNERATION OF MEDSERVREGIS PLC’S (THE “COMPANY”) BOARD OF DIRECTORS, INCLUDING THE EXECUTIVE DIRECTORS, HAS BEEN DRAWN UP IN COMPLIANCE WITH THE REQUIREMENTS OF CHAPTER 5 AND 12 OF THE CAPITAL MARKETS RULES AND CONTAINS INFORMATION REQUIRED BY THE PROVISIONS OF APPENDIX 12.1 OF THE CAPITAL MARKETS RULES.
1.The Remuneration Committee
 
The Remuneration Committee (RemCom) is required to devise the appropriate packages needed to attract, retain and motivate directors, whether executive or not, as well as senior executives with the right qualities and skills for the proper management of the Company. The RemCom issues recommendations to the Board for its consideration.
The Committee’s terms of reference establish the composition, role and function of the Committee, the parameters of its remit as well as the basis for the processes that it is required to comply with. The Committee is a sub-committee of the Board and directly responsible and accountable to the Board. The Board reserves the right to change these terms of reference from time to time subject to the requirements of the Maltese law.
2.RemCom Membership & Meetings
The members of the Committee are appointed by the Board and comprise of the three non-executive directors with no personal financial interest other than as shareholders in the Company. One of these members shall be an independent director who chairs the Committee. The Committee may co-opt additional members as they think fit to provide specialist advice, provided that any member so co-opted must also be fully independent of management. The Committee may ask the members of senior management to attend meetings either regularly or by invitation, but the invitees have no right of attendance and no vote. The Company Secretary or their nominee acts as the Secretary of the Committee.
As at 31 December 2023, the Committee was composed of Keith Grunow (Chairman), Laragh Cassar, and Monica Vilabril. The RemCom met once (1) during 2023.
3.Remuneration Policy
The Company’s remuneration of its Board of Directors and executive management is based on the Remuneration Policy adopted and approved by shareholders at the annual general meeting of 11 June 2021. This policy may be viewed on the Company’s website at https://medservregis.com/remuneration-policy.
The Remuneration Policy is designed to ensure that the Company can attract, motivate and retain the right individuals to implement the Company’s strategy. The main parameters and rationale for any annual bonus scheme and any other non-cash benefits are the discretion of the Company with the exception of the bonus payable to the CEO and the Deputy CEO for Finance, Administration, Investment and Trading as further detailed in section 5. During 2023, there were no changes implemented to the Remuneration Policy. The Policy is applicable for a period of four years. The Company’s Remuneration Policy is in line with the policy for the remuneration paid to Directors and senior executives in the preceding financial period.
No changes to the Remuneration Policy are being proposed for the approval of the shareholders at the Company’s next Annual General Meeting. The Company has complied with the procedure for the implementation of the Remuneration Policy as set out in Chapter 12 of the Capital Markets Rules issued by the Malta Financial Services Authority.
MedservRegis p.l.c.
Remuneration Statement and Report (continued)
lx
4.Non-Executive Directors’ Remuneration
The Board believes that, in line with local practice, the fixed honorarium for non-executive directors is the principal component that compensates directors for their contribution as members of the Board. None of the non-executive directors have employment contracts with the Company and each non-executive director serves from one annual general meeting to the next, when the appointment of directors is conducted at the annual general meeting.
Accordingly, none of the non-executive directors are entitled to any compensation if they are removed from office. Such removal would require an ordinary resolution of the shareholders at a general meeting. The directors are entitled to be paid travelling and other reasonable expenses incurred by them in the performance of their duties as directors. Other than the payment for legal and company secretarial services rendered by Dr Laragh Cassar, the Company does not remunerate the non-executive directors in any other manner, nor does it provide any loans or other guarantees to them. In this regard, the non-executive directors’ remuneration are all fixed in nature and the ratio of the fixed and variable remuneration was 100%-0% in 2023 (2022: 100%-0%).
The actual directors’ fees paid to the non-executive directors during the financial year ended 31 December 2023 was €125,968 (2022: €111,722).
The table below shows the total annual remuneration applicable to the non-executive directors during the financial year ended 31 December 2023. The year-on-year percentage increase for Keith Grunow is due to the new responsibility as the new chairman of the Audit and Remuneration Committee following the resignation of Joseph Zammit Tabona. The year-on-year percentage decrease for Monica Vilabril is due to her resignation as director in Regis Holdings Limited in July 2022 for which she was earning a separate director’s fee.
Non-Executive Directors
Fixed Remuneration
Remuneration
For Committee/
Group Directorships
Total Remuneration 2023
Total Remuneration 2022
YoY Percentage Difference*
€
€
€
€
%
Joseph Zammit Tabona1
n/a
n/a
n/a
17,500
n/a
Anthony S. Diacono2
20,968
n/a
20,968
n/a
n/a
Laragh Cassar
25,000
n/a
25,000
25,000
0.0%
Keith Grunow
35,000
n/a
35,000
32,608
7.3%
Monica Vilabril
25,000
n/a
25,000
28,065
(10.9%)
Jean Pierre Lhote3
20,000
n/a
20,000
8,549
0.0%
Total
125,968
n/a
125,968
111,722
* For calculating the annual change of remuneration for a director (“YoY Percentage Difference”) whose mandate began or ended during the reported financial year, the respective remuneration has been annualised to allow a meaningful comparison.
1 Resigned on 29 July 2022
2 Expiry of his contract as executive director on 30 July 2023, becoming non-executive as from 31 July 2023
3 Appointed on 29 July 2022
MedservRegis p.l.c.
Remuneration Statement and Report (continued)
lxi
5.Senior Management
The Company has three senior executives (as per the definition in the Code of Principles of Good Corporate Governance) at year end, all of which are also appointed members of the Board.
The executive directors are:
a.David S. O’Connor (CEO),
b.Carmelo (a.k.a Karl) Bartolo (Deputy CEO for Business and Operations) and
c.Olivier Bernard (Deputy CEO for Finance, Administration, Investment and Trading),
each of whom have service contracts with the Group entitling them to a fixed salary. The CEO and the Deputy CEOs are employed on an indefinite basis. Up until 30 July 2023, Anthony S. Diacono (Chairman) was employed on a definite contract as an executive director. Thereafter, Anthony S. Diacono occupied the role of a non-executive Chairman of the Company. None of the said service contracts include provisions for termination payments and other payments linked to early termination or supplementary pensions/retirement schemes.
Fixed Remuneration – Salary
The executive directors of the Company are entitled to receive directors’ fees for the remuneration as directors and a salary for their executive role within the Group. The total directors’ fees paid to the executive directors during the year was €71,669 (2022: €80,000).
The following table shows the overall annual remuneration of executive directors of the Company and its subsidiary companies for the financial year ended 31 December 2023 (and includes comparative information for 2022, where relevant):
Executive Director
Directors’ Fee
Gross Salary
Fringe Benefits
Total Fixed
Remuneration
YoY Percentage Difference*
2023
2022
2023
2022
2023
2022
2023
2022
€
€
€
€
€
€
€
€
%
Anthony S. Diacono**
11,669
20,000
135,908
235,059
n/a
n/a
147,577
255,059
(42.1%)
David S. O’Connor
20,000
20,000
249,016
199,245
37,612
54,838
306,628
274,083
11.9%
Olivier Bernard
20,000
20,000
250,822
199,245
36,997
50,679
307,819
269,924
14.0%
Carmelo (a.k.a Karl) Bartolo
20,000
20,000
300,000
242,283
5,250
2,856
325,250
265,139
22.7%
Total
71,669
80,000
935,746
875,832
79,859
108,373
1,087,274
1,064,205
 
* For calculating the annual change of remuneration for a director (“YoY Percentage Difference”) whose mandate began or ended during the reported financial year, the respective remuneration has been annualised to allow a meaningful comparison.
** Determined up to the 30 July 2023, being the expiry of his contract as executive director.
The CEO and the Deputy CEO for Finance, Administration, Investment and Trade are entitled to a car cash allowance. They are also entitled to health insurance for themselves and their spouses and children and life insurance equivalent to four years’ basic salary.
MedservRegis p.l.c.
Remuneration Statement and Report (continued)
lxii
Variable remuneration
Any bonus payable to the Chairman is payable entirely at the discretion of the Company and based on personal and company results achieved. No bonus was paid to the Chairman during 2023. The Deputy CEO for Business and Operations is entitled to a bonus which is calculated by reference to the Company’s earnings over a specified threshold. The CEO and the Deputy CEO for Finance, Administration, Investment and Trading were entitled to a bonus equivalent to one months’ salary (mandatory in terms of the laws of Mauritius, which is the law regulating their employment).
The present variable remuneration payable by the Company does not contemplate the possibility of it being reclaimed. Moreover, share options are currently not part of the Company’s remuneration policy.
During the 2023 financial year, the following bonuses were paid to the members of the executive management:
Executive Director
Variable Remuneration
Variable Remuneration
Total Remuneration
Total Remuneration
YoY Percentage
Difference
Proportion of fixed to variable remuneration 2023
Proportion of fixed to variable remuneration 2022
2023
2022
2023
2022
€
€
€
€
%
%
%
Anthony S Diacono
NIL
NIL
147,577
255,059
(42.1%)
100 / 0
100 / 0
David O’Connor
6,807
7,032
313,435
281,115
11.5%
98 / 2
97 / 3
Olivier Bernard
6,807
7,032
314,626
276,956
13.6%
98 / 2
97 / 3
Carmelo (a.k.a Karl) Bartolo
37,500
                   NIL
362,750
265,139
36.8%
90 / 10
100 / 0
Total
51,114
14,064
1,138,388
1,078,269
 
 
 
The total remuneration package complies with the adopted remuneration policy, which has been designed to ensure that the Company can attract, motivate and retain the right individuals to contribute to the long-term performance of the Company by implementing the Company’s strategy. The performance criteria applied includes the use of the Company’s financial metrics such as revenue and Adjusted EBITDA as well as the individual’s performance against set targets.
During the year, there were no deviations from the procedure for the implementation of the remuneration policy.
The total actual directors’ fees paid to the executive and non-executive directors during the financial year ended 31 December 2023 was €197,637 (2022: €191,722), falling within the amount approved by the shareholders in general meeting in 2014, that is €450,000.
MedservRegis p.l.c.
Remuneration Statement and Report (continued)
lxiii
6.Company’s Performance
Performance Indicators:
2023
€
2022
€
2021
€
2020
€
2023 vs 2022
Change
%
2022 vs 2021
Change
%
2021 vs 2020
Change
%
Adjusted EBITDA
17,504,355
11,404,765
5,359,013
5,565,272
53.5%
112.8%
(3.7%)
Turnover
73,926,336
66,939,160
29,924,554
32,411,788
10.4%
123.7%
(7.7%)
No of Operating Countries
14
10
10
7
40%
0%
42.9%
Average remuneration on full-time equivalent basis of employee:
2023*
2022
2021
2020
2023 vs 2022
Change
%
2022 vs 2021
Change
%
2021 vs 2020
Change
%
Employees of the Group
14,559
17,949
18,343
23,065
(18.9%)
(2.2%)
(20.5%)
* The decrease in the average remuneration on full-time equivalent basis of employee over the previous year is mainly resulting due to the retirement of a senior key management personnel in 2023 as well as the devaluation of the Egyptian pound during the year which resulted in the average remuneration to reduce when converted to the reporting currency.
The year-on-year percentage difference of the directors’ remuneration is disclosed in the tables under sections 4 and 5 of this report which can allow a meaningful comparison against the Company’s performance as disclosed in the table above.
MedservRegis p.l.c.
Remuneration Statement and Report (continued)
lxiv
The Company does not have any employees. All employees are employed and remunerated by the main operating subsidiaries, including the executive and non-executive directors of the Company.
The foregoing Remuneration Report is being put forward to an advisory vote of the 2024 AGM in accordance with the requirements of the MFSA Capital Markets Rule 12.26L.
This remuneration report has been prepared by the directors and is signed by the Chairman of the RemCom, as authorised by the board.
The contents of the remuneration report have been reviewed by the external auditors to ensure that it conforms with the requirements of Appendix 12.1 to Chapter 12 of the Capital Market Rules.
Approved by the Board of Directors on 26 April 2024.
MedservRegis p.l.c.
Financial Statements
2023
MedservRegis p.l.c.
Annual Financial Report
31 December 2023
Page
Financial Statements:
Statements of Financial Position 1
Statements of Profit or Loss and Other Comprehensive Income 3
Statements of Changes in Equity 4
Statements of Cash Flows 6
Notes to the Financial Statements8
Independent Auditors’ Report
MedservRegis p.l.c.
Statements of Financial Position
As at 31 December
11
The GroupThe Company
2023202220232022
Notes€€€€
ASSETS
Property, plant and equipment1430,754,66833,334,709--
Right-of-use assets 32.1.152,349,16548,506,978--
Intangible assets and goodwill 1515,547,48416,904,983--
Investment in subsidiaries20--47,622,80347,622,803
Loans receivable from subsidiaries19--14,217,06715,585,529
Financial assets at fair value through profit or loss223,608,9482,759,727--
Total non-current assets102,260,265101,506,39761,839,87063,208,332
Inventories17533,910731,316--
Contract assets8.23,381,677183,3351,600,000-
Loans receivable from subsidiaries19--9,593,09810,446,257
Current tax assets430,936429,56317578
Trade and other receivables1822,123,78129,424,0761,961,4247,558,842
Financial asset33150,000---
Cash at bank and in hand2316,293,44419,454,68379,696170,729
Total current assets42,913,74850,222,97313,234,39318,175,906
Total assets145,174,013151,729,37075,074,26381,384,238
MedservRegis p.l.c.
Statements of Financial Position
As at 31 December
2
The GroupThe Company
2023202220232022
Notes€€€€
EQUITY
Share capital24.110,163,76410,163,76410,163,76410,163,764
Share premium24.227,778,07327,778,0739,016,27539,781,902
Reverse acquisition reserve24.4(1,394,906)(1,394,906)--
Translation reserve24.3(4,756,708)(2,821,838)--
Loss offset reserve24.2--1,536,596-
Retained earnings/(accumulated losses)25,068,13623,904,158-(28,634,512)
Equity attributable to owners of the Company56,858,35957,629,25120,716,63521,311,154
Non-controlling interest261,192,3822,727,252--
Total equity58,050,74160,356,50320,716,63521,311,154
LIABILITIES
Loans and borrowings2747,632,99448,624,66946,260,21046,768,855
Lease liabilities32.1.216,442,06712,431,270--
Deferred tax liabilities163,828,2824,627,880--
Employee benefits obligations281,368,9091,400,299--
Total non-current liabilities69,272,25267,084,11846,260,21046,768,855
Bank overdraft23, 272,396,811792,534--
Trade and other payables2910,867,02212,304,3367,703,6685,232,985
Contract liabilities8.2113,19690,267--
Current tax liabilities105,14510,829--
Loans and borrowings271,319,0539,171,917393,7508,071,244
Lease liabilities32.1.23,000,5971,876,675--
Employee benefits obligations2849,19642,191--
Total current liabilities17,851,02024,288,7498,097,41813,304,229
Total liabilities87,123,27291,372,86754,357,62860,073,084
Total equity and liabilities145,174,013151,729,37075,074,26381,384,238
The notes on pages 8 to 129 are an integral part of these financial statements.
These financial statements on pages 1 to 129 were approved by the Board of Directors and authorised for issue on 26 April 2024 and signed on its behalf by Anthony S. Diacono (Chairman) and David S. O’Connor (Chief Executive Officer) as per Directors’ declaration on ESEF Annual Report submitted in conjunction with Annual Report 2023.
MedservRegis p.l.c.
Statements of Profit or Loss and Other Comprehensive Income
For the year ended 31 December
3
The GroupThe Company
2023202220232022
Notes € € € €
Revenue873,926,33666,939,1602,000,0006,863,500
Cost of sales10(54,606,343)(55,437,915)--
Gross profit19,319,99311,501,2452,000,0006,863,500
Other income9987,8711,095,755--
Administrative expenses10(13,208,197)(13,074,676)(1,635,516)(2,509,268)
Net reversal of/(impairment) losses on financial and contract assets31.4762,494(463,092)--
Results from operating activities7,862,161(940,768)364,4844,354,232
Finance income121,010,7284,979,5091,525,6101,476,763
Finance costs12(7,201,057)(4,015,370)(2,484,563)(3,114,027)
Net finance (cost)/income(6,190,329)964,139(958,953)(1,637,264)
Profit/(loss) before income tax1,671,83223,371(594,469)2,716,968
Tax (expense)/credit13(377,438)521,505(50)(147)
Profit/(loss) from continued operations1,294,394544,876(594,519)2,716,821
Profit/(loss) for the year1,294,394544,876(594,519)2,716,821
Other comprehensive income
Items that will not be reclassified to profit or loss:
Re-measurement of post-employment benefit obligations2882,932 175,927 --
Items that may be reclassified subsequently to profit or loss:
Reclassification of foreign currency differences on liquidation of subsidiary9(396,502)(513,479)--
Net gain/(loss) on net investment hedge31.6305,269(496,651) --
Exchange differences on translating foreign operations(1,813,907)(2,172,654)--
Other comprehensive income for the year, net of tax(1,822,208)(3,006,857)--
Total comprehensive income for the year(527,814)(2,461,981)(594,519)2,716,821
Profit/(loss) attributable to:
Owners of the Company1,081,046577,383(594,519)2,716,821
Non-controlling interests 26213,348(32,507)--
Profit/(loss) for the year1,294,394544,876(594,519)2,716,821
Other comprehensive income attributable to:
Owners of the Company(1,851,938)(2,977,700)--
Non-controlling interests 2629,730(29,157)--
Other comprehensive income(1,822,208)(3,006,857)--
Total comprehensive income attributable to:
Owners of the Company(770,892)(2,400,317)(594,519)2,716,821
Non-controlling interests 26243,078(61,664)--
Total comprehensive income for the year(527,814)(2,461,981)(594,519)2,716,821
Earnings per share
Basic earnings per share250.01060.0057
Adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) 617,504,35511,404,765
MedservRegis p.l.c.
Statement of Changes in Equity – The Group
For the year ended 31 December
4
Share capital
Share premium
Translation reserve
Reverse acquisition reserves
Retained earnings
Total attributable to owners of the Company
Non-controlling interest
Total
€
€
€
€
€
€
€
€
Balance at 1 January 2022
10,163,764
27,778,073
331,789
(1,394,906)
23,150,848
60,029,568
2,788,916
62,818,484
Total comprehensive income
Loss for the year
-
-
-
-
577,383
577,383
(32,507)
544,876
Other comprehensive income
-
-
(3,153,627)
-
175,927
(2,977,700)
(29,157)
(3,006,857)
Total comprehensive income
-
-
(3,153,627)
-
753,310
(2,400,317)
(61,664)
(2,461,981)
Balance at 31 December 2022
10,163,764
27,778,073
(2,821,838)
(1,394,906)
23,904,158
57,629,251
2,727,252
60,356,503
Balance at 1 January 202310,163,76427,778,073(2,821,838)(1,394,906)23,904,158 57,629,251 2,727,25260,356,503
Total comprehensive income
Profit for the year----1,081,0461,081,046213,3481,294,394
Other comprehensive income--(1,934,870)-82,932(1,851,938)29,730(1,822,208)
Total comprehensive income--(1,934,870)-1,163,978(770,892)243,078(527,814)
Transactions with owners of the Company
Transactions with non-controlling interests------(1,777,948)(1,777,948)
Total transactions with owners of the Company------(1,777,948)(1,777,948)
Balance at 31 December 202310,163,76427,778,073(4,756,708)(1,394,906)25,068,13656,858,3591,192,38258,050,741
MedservRegis p.l.c.
Statements of Changes in Equity – The Company
For the year ended 31 December
5
Note
Share
capital
Share
premium
Retained
earnings / (accumulated losses)
Loss offset reserve
Total
equity
€
€
€
€
€
Balance at 1 January 2022
10,163,764
39,781,902
(31,351,333)
-
18,594,333
Total comprehensive income
Profit for the year
-
-
2,716,821
-
2,716,821
Total comprehensive income for the year
-
-
2,716,821
-
2,716,821
Balance at 31 December 2022
10,163,764
39,781,902
(28,634,512)
-
21,311,154
Balance at 1 January 2023
10,163,764
39,781,902
(28,634,512)
-
21,311,154
Total comprehensive income
Loss for the year
-
-
(594,519)
-
(594,519)
Total comprehensive income for the year
-
-
(594,519)
-
(594,519)
Share premium reduction
24.2
-
(30,765,627)
28,634,512
2,131,115
-
Transfers
24.2
-
-
594,519
(594,519)
-
Balance at 31 December 2023
10,163,764
9,016,275
-
1,536,596
20,716,635
The notes on pages 8 to 129 are an integral part of these financial statements.
MedservRegis p.l.c.
Statements of Cash Flows
For the year ended 31 December
6
The GroupThe Company
2023202220232022
Notes€€€€
Cash flows from operating activities 
Profit/(loss) for the year1,294,394544,876(594,519)2,716,821
Adjustments for:
Depreciation and amortisation14, 32, 159,563,3429,683,582--
Net impairment on goodwill and intangible asset15-2,146,741--
Net impairment and other write off on property, plant and equipment1478,852515,210--
Net impairment on investment in subsidiaries, joint venture and associates20--44,7631,545,615
Net movements in expected credit losses31(762,494)463,092--
Loss on disposal of property, plant and equipment929,635325,303--
(Increase)/decrease in fair value of financial assets at FVTPL22(441,326)1,105,875--
Interest income12(1,010,728)(343,864)(1,390,633)(1,476,763)
Interest expense124,192,4104,015,3702,484,5632,832,342
Dividend income8--(400,000)(6,863,500)
Loss on lease modification32-141,784--
Exchange differences and release of translation differences to profit and loss9,122,755,733(7,304,362)(134,976)281,685
Tax expense/(credit)13377,438(521,505)50147
16,077,25610,772,1029,248(963,653)
Changes in:
Inventories163,087495,496--
Trade and other receivables and contract assets126,9742,821,478(1,636,266)(17,401)
Trade and other payables and contract liabilities(3,841,749)5,832,380145,630(459,498)
Related party balances34--2,978,4401,159,064
Cash generated from/(used in) operating activities12,525,56819,921,4561,497,052(281,488)
Bank interest received12488,730343,864--
Interest on bank overdraft12(115,410)(90,944)--
Taxation (paid)/received(494,522)(158,457)(147)280
Net cash generated from/(used in) operating activities 12,404,36620,015,9191,496,905(281,208)
MedservRegis p.l.c.
Statements of Cash Flows (continued)
For the year ended 31 December
7
The GroupThe Company
2023202220232022
Notes€€€€
Cash flows from investing activities
Payments for FVTPL financial assets22(1,673,901)(843,995)--
Payments for property, plant and equipment14(2,680,468)(2,647,142)--
Advance payments for capital expenditure-(332,696)--
Net proceeds from disposal of FVTPL financial assets221,126,6821,253,152--
Capitalisation of loans to subsidiaries19,20--(44,763)(28,634)
Net proceeds from disposal of property, plant and equipment14313,2801,649,710--
Proceeds received and repayments of loans from related parties19-4,376,803--
Dividend received8---6,863,500
Loan repayments by subsidiaries--1,295,750-
Interest received --31,07049,168
Net cash (used in)/generated from investing activities
(2,914,407)3,455,8321,282,0576,884,034-
Cash flows from financing activities
Proceeds from loans and borrowings277,488,1783,600,0007,488,1783,600,000
Repayment of bonds27(7,772,019)(6,999,400)(7,772,019)(6,999,400)
Repayment of bank loans27(1,179,150)(1,625,345)-
Cash pledged as guarantee33(150,000)---
Loan payments to subsidiary27--(236,250)(78,750)
Repayment of capital portion of lease liabilities32(3,772,421)(3,720,045)--
Transactions with non-controlling interest29.3(1,295,040)---
Interest paid27,32(3,665,100)(3,887,411)(2,352,193)(2,885,505)
Net cash used in financing activities(10,345,552)(12,632,201)(2,872,284)(6,363,655)
Net (decrease)/increase in cash and cashequivalents(855,593)10,839,550(93,322)239,171
Cash and cash equivalents at beginning of year18,662,1499,107,124170,729(68,442)
Effect of exchange rate fluctuations on cash held(3,909,923)(1,284,525)2,289-
Cash and cash equivalents at end of year*2313,896,63318,662,14979,696170,729
Cash at bank and in hand2316,293,44419,454,68379,696170,729
Bank overdraft23, 27(2,396,811)(792,534)--
Cash and cash equivalents at end of year2313,896,63318,662,14979,696170,729
* Cash and cash equivalents include bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management.
The notes on pages 8 to 129 are an integral part of these financial statements.
MedservRegis p.l.c.
Notes to the Financial Statements
For the year ended 31 December 2023
8
1Reporting company
MedservRegis p.l.c. (the “Company”) is a public liability company domiciled and incorporated in Malta. The principal activity of the Company is that of a holding company (see note 20).
The consolidated financial statements of the Company as at and for the year ended 31 December 2023 comprise the Company and its subsidiaries (together referred to as ‘the Group’ and individually ‘Group entities’). The Group is primarily involved in providing shore base logistics and engineering services to the offshore oil and gas industry and supply chain management for Oil Country Tubular Goods (OCTG) to support the onshore oil and gas industry. It also provides equipment, procurement, and specialised services to a wide range of customers, including national and international energy companies, drilling and mining companies, as well as product and equipment manufacturers and other heavy industry-related contractors across the globe, reaching the Mediterranean countries, Middle East, South America, sub-Saharan Africa including a number of emerging markets such as Mozambique, Uganda, and Angola.
2.2Going concern
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
9
2Basis of preparation (continued)
2.2Going concern (continued)
The Company, which primarily acts as a treasury vehicle for the Group, generated a loss for the year amounting to €0.6 million (2022 profit: €2.7 million), had a net asset value of €20.7 million (2022: €21.3 million) and had a working capital of €5.1 million (2022: working capital of €4.9 million). The Group has €17.5 million of resources comprising cash and cash equivalents, unused credit lines and investments at FVTPL as at reporting date. The Group’s cash and cash equivalents include an amount of €4.7 million held by a subsidiary and which are subject to exchange controls on remittance outside of the jurisdiction in which it operates (note 23).
2.4Functional and presentation currency
These financial statements are presented in euro (€), which is the Company’s functional currency and the Group’s presentation currency.
3Use of judgements and estimates
In preparing these financial statements, management has made judgements and estimates that affect the application of Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis and the Group based its assumptions and estimates on parameters available at the reporting date. Existing circumstances and assumptions about future developments may change due to market changes or circumstances arising that are beyond the control of the Group. Revisions to accounting estimates are recognised prospectively.
Information about areas involving a higher degree of judgements or complexity in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements and information about assumptions and estimation uncertainties at 31 December 2023 and 2022 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes:
-Note 14 and 32 – impairment test of property, plant and equipment and right-of-use assets of the Group: key assumptions underlying recoverable amounts;
  
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
10
3Use of judgements and estimates (continued)
-Note 19 and Note 20 – impairment test of loans receivable from, and investments in, subsidiaries: key assumptions underlying recoverable amounts;
  
-Note 15 – impairment test of goodwill and intangible assets: key assumptions underlying recoverable amount;
  
-Note 16 – recognition of deferred tax assets: availability of future taxable profit against which investment tax credits can be utilised;
  
-Note 31.4 – measurement of expected credit loss (ECL) allowance for trade receivables: key assumptions in determining the loss given default and macro-economic adjustments; and
-Note 32 – determining the lease term and the discount rate: Key assumptions in determining extension option and estimating the incremental borrowing rate.
  
4Material accounting policy information
4.1Basis of consolidation
4.1.1Business combinations
The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group (see note 4.1.2). The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment (see note 4.3.3). Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.
4.1.2Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Investments in subsidiaries are shown in the statement of financial position of the Company at cost less any accumulated impairment losses. Cost includes directly attributable costs of the investment. Provisions are recorded when, in the opinion of the directors, there is an impairment in value. Where there has been an impairment in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The results of subsidiaries are reflected in the Company’s separate financial statements only to the extent of dividends receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss.
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
11
4Material accounting policy information (continued)
4.1Basis of consolidation (continued)
4.1.3Non-controlling interests (NCI)
NCI are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
4.1.4Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity.
Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
4.1.5Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates and a joint venture.
Interests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income (OCI) of equity-accounted investees, until the date on which significant influence or joint control ceases. Where the Group’s share of loss in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.
4.1.6Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
4.2Foreign currency
4.2.1Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date.
The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the reporting period.
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
12
4Material accounting policy information (continued)
4.2Foreign currency (continued)
4.2.1Foreign currency transactions (continued)
Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
Foreign currency differences are generally recognised in profit or loss. However, foreign currency differences arising from the translation of financial liabilities denominated in a foreign currency and designated as a hedge of the net investment in a foreign operation are recognised in other comprehensive income to the extent that the hedge is effective and is accumulated in the translation reserve (see note 4.4).
4.2.2Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Group’s presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to the Group’s presentation currency at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the translations).
Foreign currency differences are recognised in OCI and presented within equity in the translation reserve, except to the extent that the translation difference is allocated to NCI. However, if the operation is a non-wholly owned subsidiary, then the relevant proportion of the translation difference is allocated to non-controlling interests. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.
4.2.3Foreign currency gains and losses
Foreign currency gains and losses relating to operating activities are recognised in profit or loss and reported on a net basis within “Other income/(expenses)”. Foreign currency gains and losses relating to investing activities and financing activities are recognised in profit or loss and are reported on a net basis within “finance income” or “finance costs” respectively. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges (see note 4.2.1) or are attributable to part of the net investment in a foreign operation.
4.3Financial instruments
4.3.1 Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
13
4Material accounting policy information (continued)
4.3Financial instruments (continued)
4.3.1 Recognition and initial measurement
A financial asset (unless it is a trade receivable with an insignificant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs are directly attributable to its acquisition or issue. A trade receivable with an insignificant financing component is initially measured at the transaction price. Transaction costs of financial assets carried at FVTPL are expensed in profit and loss.
4.3.2 Classification and subsequent measurement
4.3.2.1Financial assets
On initial recognition, the Group’s financial assets are classified as measured at: amortised cost; or at Fair Value Through Profit or Loss (FVTPL).
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
Debt instruments
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
•it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
•its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin that is consistent with a basic lending arrangement.
Equity instruments
The group subsequently measures all equity investments at fair value. Dividends from such investments continue to be recognised in profit or loss as other income when the group’s right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable.
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
14
4Material accounting policy information (continued)
4.3Financial instruments (continued)
4.3.2 Classification and subsequent measurement (continued)
4.3.2.2Financial assets – Subsequent measurement and gains and losses
The Company’s financial assets comprise loans to subsidiaries, cash and cash equivalents and trade and other receivables. The Group’s financial assets comprise loans to related companies, cash and cash equivalents, trade and other receivables and investments in equity and debt instruments.
For financial assets at amortised cost, these assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by expected credit losses. Interest income, foreign exchange gains and losses and expected credit losses are recognised in profit or loss.
For financial assets at FVTPL, these are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
4.3.2.3Financial liabilities – Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. The Group’s financial liabilities which include loans, borrowings and trade and other payables, are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Where the Group designates a financial liability such as a loan in a hedging relationship for a net investment in a foreign operation, the effective portion of the exchange gains or losses are recognised in other comprehensive income (see note 4.2.3).
4.3.3Impairment
4.3.3.1Financial instruments and contract assets
The Group recognises loss allowances for Expected Credit Losses (ECLs) on financial assets at amortised cost.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following which are measured at 12-month ECLs:
•bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.
The Group measures loss allowances for trade receivables and contract assets at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 120 days past due.
The Group considers a financial asset to be in default when:
•the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realizing security (if any is held); or
•the financial asset is more than 120 days past due.
MedservRegis p.l.c.
Notes to the Financial Statements (continued)
For the year ended 31 December 2023
15
4Material accounting policy information (continued)
4.3.3Impairment (continued)
4.3.3.2 Measurement of ECLs
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses were measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expected to receive).
The mechanics of the ECL calculations applied up to 31 December 2022 are outlined below and the key elements were as follows:
-PD: The Probability of Default was an estimate of the likelihood of default over a given time horizon. A default may only have happened at a certain time over the assessed period, if the financial asset had not been previously derecognized.
-EAD: The Exposure at Default was an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest.
-LGD: The Loss Given Default was an estimate of the loss arising in the case where a default occurs at a given time. It was based on the difference between the contractual cash flows due and those that the Group was expected to receive.
In the ECL models, the Group relied on a broad range of forward-looking information as economic inputs such as annual speculative-grade corporate default rates by geographic region, inflation (average consumer prices), price index of crude oil, gross domestic product (GDP), growth rate and unemployment rate.
ECLs were discounted at the effective interest rate of the financial asset.
As from 1 January 2023, the Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period ranging from 36 to 60 months before 1 January 2023 and the corresponding historical credit losses experienced within this