Consolidated Statement of Financial Position
For the year ended 31 December 2021
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
2021
MedservRegis p.l.c.
Directors’ and other Statutory Reports
Page
Chairman’s Statementi
CEO’s Statementii
Statement on Corporate Social Responsibilityiv
Directors’ Report vi
Statement of the Directors pursuant to Capital Markets Rule 5.68 xiii
Directors’ Statement of Compliance with the Code of Principles
of Good Corporate Governance xiv
Remuneration Statement and Report xxv
MedservRegis p.l.c.
Chairman’s Statement
For the Year Ended 31 December 2021
i
This is the first end of year statement I have the honour to make for the newly formed Group of Companies, MedservRegis Plc. The coming together of two likeminded groups of companies in June of 2021 has created a financially and operationally stronger organization as well as giving the new group a global reach not available in the past to facilitate growth.
On the back of the crippling pandemic and its disastrous effect on the global economy the shareholders and directors of both Regis and Medserv acted to ensure they protect their investment and market position. This action created a strong Group able to meet the expected upturn in business. As anticipated the economic activity in the second half of 2021 was stronger than the first six months of the same year, and this growth is expected to accelerate during 2022.
The integration process of the two Groups is ongoing and should deliver not only a more cost-effective operation but also enhance the service product offered to our client base across the Globe. This process has brought about some significant changes at board of directors and senior management level. The new board of directors of MedservRegis is made up of a mix of individuals with a long track record serving both companies as well as the addition of new blood to help implement change. It would be amiss of me not to take this opportunity to thank all outgoing directors of both Regis and Medserv for their stellar service over the years.
The changes put in place at executive management levels are also designed to reflect the change in ownership as well as to meet the demands of the global markets MedservRegis is competing in. David O’Connor has assumed the responsibility as Group CEO assisted by two deputy CEOs, Karl Bartolo and Olivier Bernard. All senior management has been retained and the few members of management that were due to retire have not been replaced as their duties were absorbed by the integration process.
Our industry and indeed our Group is conscious of our responsibility towards reaching a carbon neutral economy. MedservRegis invested directly in solar farm activity and is introducing other measures to reduce our carbon footprint. Our main clients, the Oil and Gas Majors, are investing heavily in alternative and renewable energy. MedservRegis has already secured business supporting new investment made by International Energy Companies in renewable energy projects. The transition from fossil fuel to alternate fuels is an ongoing process that needs both time and paradoxically the very same fossil fuel to make this change happen. MedservRegis is well positioned to support this transition and beyond.
I am confident that the global economy is on an upward trajectory and the changes at MedservRegis have made it possible for my board and I to see our group returning to profitability and deliver value to our shareholders. This is possible not only due to the strategic developments implemented by the Directors but also due to the professionalism and dedication shown by the Group’s management and staff in the four corners of the world.
Anthony S. Diacono
Chairman
16 June 2022
MedservRegis p.l.c.
CEO’s Statement
For the Year Ended 31 December 2021
ii
“Joining Forces and Transforming into a Global Player “
With the ongoing Covid pandemic, 2021 continued to be a year of tough challenges. This, together with the insurgency in northern Mozambique which forced the suspension of all works at the Total LNG facility, added pressure to business operations. Notwithstanding these challenges, business has stabilised from the downturns of 2019 and 2020 and is registering signs of growth.
Management successfully completed the share for share transaction with Mauritius based Regis Holdings Ltd at the end of June 2021. The listed entity, now known as MedservRegis plc., has an expanded base of operations in Sub-Sahara Africa most notably Mozambique, Uganda and Angola.
The economic environment in 2021 remained slow and uncertain as a result of the continued suspension of projects due to the pandemic, the fragmented political situation in Libya resulting in the postponement of the start of new drilling activity and most notably the force-majeure announced by Total Energies at their LNG facility situated in northern Mozambique. On the positive side our Egypt operations were awarded two substantial projects which commenced mid-year. This is expected to improve operations and contribute significantly to the Group’s results and we expect Egypt to register improved revenues and profits over the next three years. Our operations in the Middle East continue to generate profits with further expected growth for 2022 and 2023 as a result of an increase in the number of onshore wells being drilled.
The Group’s total revenues for year 2021 amounted to €29.9 million. Earnings, before interest, tax, depreciation and amortisation (EBITDA) amounted to €5.3 million. A detailed analysis of the Company’s financial performance for the reporting year can be found in the Directors’ report.
One of the prime objectives of the Company this year was to conclude the share for share transaction with Regis Holdings Ltd and to commence with the integration of business units into one management mindset. Following the successful conclusion of the share for share transaction, the Regis business infused significant cash reserves into the Group, which has significantly strengthened the combined financial structure of the Company. On the back of this strengthened financial position the Group, together with its strong business pipeline, is now in a better position to approach the financial markets and restructure its debt.
The Group today is represented on four continents, present in twelve countries and operating twelve bases, transforming the Company into a global player. The Group is adapting to the market changes as integration of supply chain management and the increase of resource sharing is the driver to remain sustainable and continue to be of value to our international energy clients. With the increase in the energy prices, we are experiencing a surge in invitations to tenders and requests for proposals across all our operating entities. The driver for this growth is the significant economic development of the countries in which MedservRegis operates in today. Of particular importance for the Company will be the Uganda business unit which is expected to achieve double digit growth in 2022 following the Final Investment Decision (FID) taken by the project's joint venture partners and Uganda National Oil Company for Uganda's Lake Albert development project in February 2022.
MedservRegis p.l.c.
CEO’s Statement (continued)
For the Year Ended 31 December 2021
iii
Our strategic targets for 2022 are for the Company to return to pre-Covid19 growth levels and to register profits for shareholders and at the same time, continue to instil across all operating jurisdictions a work culture consistent to the shareholders’ values: being health, safety, security, environment and integrity.
In closing, we thank our customers for their business, our shareholders for their support and our loyal and hardworking team for their invaluable contribution in these trying times.
David S. O’Connor
CEO
16 June 2022
MedservRegis p.l.c.
Statement of Corporate Social Responsibility
For the Year Ended 31 December 2021
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.
COVID-19 response
MedservRegis renewed its focus on doing what was necessary, and more importantly what was right. Throughout the life-altering pandemic, it prioritised the safety and well-being of its employees and their families, customers, and partners. At the onset of the COVID-19 pandemic, the Company quickly developed robust health and safety protocols and aligned with the government directives and public health authorities’ guidance. At various MedservRegis bases, the Company offered reimbursement for COVID-19 testing for team members, including free rapid testing. The measured and methodical response to the pandemic, provided a good ground to the Company to safely bring employees back to the workplace.
Corporate governance
Maintaining integrity, ethical responsibility and reputation is a top priority at MedservRegis, 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 strives for continual improvement of the environmental management system and 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 has engaged in a variety of philanthropic efforts to improve the local communities. The Company supports several global charitable organisations and have participated in volunteer opportunities related to environmental stewardship, reducing global hunger, promoting education and supporting equality.
In August 2021, Medserv (Cyprus) Ltd supported the wildfire victims in Greece by contributing and collecting money, food, medicine and other supplies to hundreds of homeless families, following the extensive destruction caused by the large-scale fires in Greece. Other donations were made towards voluntary, non-profit, charitable organisations who offer services and programs to cancer patients and their families including the Association of Cancer Patients and Friends (PASYKAF) in Cyprus and the Action for Breast Cancer Foundation in Malta.
MedservRegis p.l.c.
Statement on Corporate Social Responsibility (continued)
For the Year Ended 31 December 2021
v
During 2021, the promotion towards community development and contribution towards poverty alleviation was also present across the MedservRegis group. To mention a few, several non-profit organisations in Mauritius, including Ti Rayons Soleil, Livina Foundation and I61 Foundation, were supported and allocated Corporate Social Responsibility funding to uplift those oppressed of poverty and social injustice.
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 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 held responsible or good for the business, but is required.
MedservRegis p.l.c.
Statement of the Directors pursuant to Capital Markets Rule 5.68
vi
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 2021.
Board of directors
Anthony S. Diacono
Carmelo (a.k.a. Karl) Bartolo
Joseph Zammit Tabona
Laragh Cassar
David S. O’Connor (appointed on 25 June 2021)
Olivier N. Bernard (appointed on 25 June 2021)
Keith N. Grunow (appointed on 25 June 2021)
Monica De Oliveira Vilabril (appointed on 25 October 2021)
Anthony J. Duncan (resigned on 25 June 2021)
Etienne Borg Cardona (resigned on 25 June 2021)
Kevin Rapinett (resigned on 25 June 2021)
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, South Africa and 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.
Reverse acquisition
On 25 June 2021, Medserv p.l.c. completed a share for share exchange with Regis Holdings Ltd (Regis) that resulted in Regis controlling the Medserv plc group of companies. Following the transaction, the combined group changed its name to MedservRegis p.l.c. (hereafter the ‘Company’). From a legal and taxation perspective, the Company is considered the acquiring entity. However for accounting purposes the transaction has been accounted for as a reverse acquisition in the consolidated financial statements, where Regis is the accounting acquirer, and the Company is the legal acquirer. As a result, these financial statements represent a continuation of Regis’ financial statements except for the capital structure.
As a result of the reverse acquisition:
a)the Consolidated Statement of Financial Position as at 31 December 2021 represents the consolidated financial position of the combined Medserv and Regis group of companies; whereas
b)the Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 includes the financial results of the continued operations of Regis group of companies for the entire year and financial results of the formerly Medserv group of companies from 1 July 2021 until year-ended 31 December 2021.
MedservRegis p.l.c.
Statement of the Directors pursuant to Capital Markets Rule 5.68
vii
The comparative information of the Group presented in these financial statements is the last annual consolidated financial statements of Regis as at and for the year ended 31 December 2020, re-presented and restated due to a discontinued operation and other restatements, see notes 8 and 41, respectively.
This acquisition brings together the complementary strengths of both Medserv and Regis group of companies and allows the Group to successfully respond to the fundamental changes taking place in the energy market. The global reach of the Company now spans across four continents, comprising a presence in twelve countries and operations out of twelve bases. This is expected to strengthen the Company’s market position and broaden its geographic footprint in strategic locations around the Mediterranean region (Libya, Malta, Cyprus & Egypt), in the Middle East (UAE, Oman and Iraq), Sub-Saharan Africa (Mozambique, Uganda, Angola and South Africa) and South America (Suriname). The board of directors of the Company is confident that the synergies created by this transaction will strengthen the Company’s financial position and improve its capability of delivering value to all stakeholders.
Review of business development
During year 2021 the global economy continued to be impacted by the COVID-19 pandemic outbreak. The pandemic resulted in most of the offshore drilling and mining activities being suspended from the second quarter of 2020 to fourth quarter of 2021, due to the inability to provide a safe working environment. The economic shocks caused by the pandemic, the conflict in North Mozambique and political instability in Libya impacted the Company’s business during year 2021.
During the year 2021 the COVID-19 vaccine started being rolled out, allowing for nations to begin to emerge from national lockdowns. This started to provide improved economic stability in the second half of the year and oil and gas projects to resume. The Company’s business activities improved steadily, albeit slowly, resulting in securing two new contracts with new clients being BP Egypt and Dubai Petroleum.
The EBITDA performance of MedservRegis improved in the second half of the year compared to the previous six months even after taking into consideration the financial performance of the formerly Medserv p.l.c Group during the first six months ended 30 June 2021, prior to the reverse acquisition accounting. This is underpinned by the contract award in Egypt and the upturn in supply chain logistics activity in the Middle East in the second half of the year.
During the year under review, the largest contributor to EBITDA remains the Oman division. MedservRegis started implementing its integration plan following the share for share exchange with Regis. This resulted in a number of cross-selling opportunities within the core competencies of the Company. Furthermore, the Company is in discussions to restructure its debt. The Company’s strategy remains that of sustainable growth and returning to profitability. The transaction with Regis has significantly improved both the net cash and equity to debt position of the Company.
Business Model
The Company’s objectives are that of sustainable growth and registering profits. The strategy being adopted by the Company