MedservRegis — Reverse takeover transforms prospects

MedservRegis (MSE: MDS)

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Last close As at 07/02/2023

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Market capitalisation

35m

Research: Industrials

MedservRegis — Reverse takeover transforms prospects

The reverse takeover by Regis Holdings in June 2021 strengthens the balance sheet and leaves MedservRegis well positioned to pursue growth opportunities around the globe in both existing and new markets. As global oil markets progressively recover from the effects of the pandemic and the related unprecedented declines in demand, MedservRegis is ideally situated to participate in many of the largest energy projects scheduled over the next five years. The recomposed management team is focused on returning the group to profitability, facilitating the resumption of dividends, as well as refinancing the company to lower debt costs.

Andy Chambers

Written by

Andy Chambers

Director, Industrials

Industrials

MedservRegis

Reverse takeover transforms prospects

H121 results and
restoring estimates

Industrial support services

21 October 2021

Price

€0.70

Market cap

€71m

Adjusted net debt (€m) at 30 June 2021
excluding leases (€18.1m)

45.5

Shares in issue

101.6m

Free float

19.1%

Code

MDS

Primary exchange

Malta SE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.1)

(7.3)

39.0

Rel (local)

(4.2)

(7.7)

24.2

52-week high/low

€0.83

€0.48

Business description

MedservRegis is a Malta-based provider of integrated offshore logistics and services and OCTG services in support of drilling operations in the Mediterranean, MENA and South America. Following the reverse takeover by Regus the footprint extends to sub-Saharan Africa.

Next events

Q3 update

November 2021

FY21

April 2022

Analyst

Andy Chambers

+44 (0)20 3681 2525

MedservRegis is a research client of Edison Investment Research Limited

The reverse takeover by Regis Holdings in June 2021 strengthens the balance sheet and leaves MedservRegis well positioned to pursue growth opportunities around the globe in both existing and new markets. As global oil markets progressively recover from the effects of the pandemic and the related unprecedented declines in demand, MedservRegis is ideally situated to participate in many of the largest energy projects scheduled over the next five years. The recomposed management team is focused on returning the group to profitability, facilitating the resumption of dividends, as well as refinancing the company to lower debt costs.

Year end

Revenue (€m)

PBT*
(€m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/19

68.7

1.1

1.2

0.0

58.3

N/A

12/20

32.4

(4.5)

(7.1)

0.0

N/A

N/A

12/21e

44.5

(1.2)

(1.9)

0.0

N/A

N/A

12/22e

64.1

4.4

3.4

1.0

20.6

1.4

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. FY19 and FY20 numbers are based on historical Medserv accounts, FY21e is based on reverse takeover accounting.

Seeking to expand the services offering

Medserv and Regis shared a common strategic aim of seeking to expand their businesses internationally to reduce the dependence on key customers and markets. While the focus for Medserv has been on servicing oil and gas customers, the broader historical range of activities at Regis adds new end markets for the group to offer integrated logistics services and broadens the customer base. The complementary geographical fit also enables a broader service offering to existing customers including OCTG tube supply chain management from METS.

Ideally positioned as markets recover

Although 2020 and 2021 have proved extraordinarily challenging in oil & gas markets, the recovery in pricing is encouraging the major oil companies to start revisiting their drilling programmes and future investment projects. Some of the largest energy projects scheduled for the coming five years are in the Middle East, Sub-Saharan Africa, Mediterranean rim countries and Guyana/Suriname basin. All of these are existing or target markets for MedservRegis for both Integrated Logistics and Support Services (ILSS) and OCTG tube handling. The strengthened balance sheet provides the ability to pursue these tenders. MedservRegis’s experience in operating in challenging geopolitical environments has enhanced its reputation as a valued supply partner to an increasing number of major customers.

Valuation: Conservative capped DCF approach

With energy markets recovering from the turmoil seen in early 2020, earnings and valuations of the sector are heavily distorted including those for MedservRegis. As usual we apply a capped DCF approach to assess fair value, which we believe is a reasonable and conservative methodology. We use the forecast FY21 adjusted net debt and discount five years of cash flow estimates before applying a 0% terminal growth rate. The resultant value of €0.78/share is a modest premium to the current share price, which would increase to €0.99 assuming a 1% reduction in WACC.

Investment summary

Integrated logistics and services primarily for oil & gas markets

MedservRegis is the combination of Medserv plc based in Malta with Regis Holdings Ltd of Mauritius via a reverse takeover that was completed on 25 June 2021. The company is a leading player in the provision of logistical and support services from shore bases for the oil and gas industry in the Mediterranean, the Middle East, Sub-Saharan Africa and South America. It provides a variety of logistics and support services to international energy companies (IECs), national oil companies (NOCs) and engineering contractors operating offshore in the Mediterranean region as well as onshore in the Middle East and Africa. The combined group also serves non-oil and gas customers of Regis in mining and other heavy industries. The group’s headquarters are in Malta and its shares are listed on the Malta Stock Exchange.

Extends the geographic footprint, offering and customer base

The reverse takeover adds Regis’s operations in South Africa, Uganda, Mozambique and Angola to Medserv’s portfolio of shore bases in Malta, Cyprus and Egypt and its Oil Country Tubular Goods (OCTG) operations in Oman, Iraq and the UAE. Both Regis and Medserv’s strategies had been seeking to grow internationally, extending their customer bases. The addition of further non-oil and gas customers should offer the potential to add new growth streams. As well as operations, Regis adds financial strength bringing €14.4m of liquid assets onto the balance sheet, which should help to facilitate pursuit of a number of opportunities that are presenting themselves. While oil prices and demand have been volatile in recent years, the current level is in a sweet spot for developing new fields with relatively low extraction costs, including areas where MedservRegis typically operates.

The restructured management team sees the new major shareholders from Regis, Dave O’ Connor and Olivier Bernard, assuming the principal executive roles of CEO and joint deputy CEO respectively, with Anthony Diacono retaining his executive chairman role. Karl Bartolo, who was Medserv CEO prior to the deal, is now also deputy CEO responsible for operations and business development. The team provides a wealth of experience across all of the business units.

Financials: Market recovery and growth should drive valuation

While the statutory FY21 income statement is distorted by the reverse takeover accounting, FY22 is representative of the group as a whole and should benefit from an anticipated recovery in many of the company’s markets. Importantly the deal stabilises the balance sheet, lifting equity to €73m, as well as augmenting liquidity that should assist with the pursuit of the growth opportunities that exist. In addition, it should strengthen the position with respect to refinancing group debt and seeking to lower future financing costs. All of this is subject to the pandemic effects continuing to dissipate and the usual geopolitical risks for MedservRegis. The ability to operate in such markets is a clear positive when it comes to customer relationships but carries a level of uncertainty.

Valuation: Potential upside as growth strategy is executed

We expect the shares to be trading on just over 20x FY22e EPS with further recovery and growth to follow. Our capped DCF returns a fair value of €0.78 per share, but we feel the company has the ability to outperform our expectations given the depressed starting point. In addition, future finance costs may be reduced with a 1% lower WACC increasing the value to €0.99. Alternatively, assuming a terminal growth rate of 1% rather than the zero we normally apply would increase the value to €0.91 per share. MedservRegis also appears to be strategically well positioned in what is likely to be a consolidating oil services market.

Company description: A leading oilfield logistics supplier

MedservRegis is the combination of Medserv based in Malta with Regis Holdings of Mauritius via a reverse takeover that was completed on 25 June 2021. MedservRegis shares are listed on the Malta Stock Exchange. The company is a leading player in the provision of logistical and support services from shore bases for the oil and gas industry in the Mediterranean, the Middle East, Sub-Saharan Africa and South America. It provides a variety of logistics and support services to international oil companies (IOCs), national oil companies (NOCs) and contractors operating offshore in the Mediterranean region as well as onshore in the Middle East and Africa.

The top-level group structure of MedservRegis is shown below:

Exhibit 1: MedservRegis top level group structure

Source: MedservRegis

MedservRegis is the holding company for the combined group, with the principal top level holding subsidiaries covering Medserv’s operations in Europe, the Middle East, Africa and the Americas including the METS group of companies under Medserv M.E., and the newly introduced Regis Holdings companies covering its logistical services and support operations in Sub-Saharan Africa.

Medserv

Established in 1974, Medserv is one of the leading providers of integrated logistical services to the global oil and gas industry. Prior to the reverse takeover it operated through two operating segments. The ILSS (integrated logistics and support services) segment has been the historical core of the group. The OCTG (oil country tubular goods) segment was introduced to the group by the €39m strategic acquisition of METS (Middle East Tubular Services) in 2015, which diversified the group’s services offering and extended the geographic footprint in line with its strategy.

ILSS segment extending its reach

The ILSS segment operates shore bases in support of customers that mainly consist of international oil companies (IOCs) and national oil companies (NOCs). The bases offer an integrated services offering including:

Shore-based integrated logistics services in support of offshore oil and gas drilling and production operations.

Rig and vessel stops, logistics services for mobilising/demobilising rigs and other vessels supporting oil and gas drilling operations.

Offshore maintenance providing engineering support services to rigs and platforms operating offshore Libya and Egypt. Services offered include welding and fabrication, inspection, procurement, project management and personnel, dredging, painting and OCTG maintenance and storage.

Other services such as fuel bunkering, provision of welding and diving gases, and environmental services (drilling waste management).

ILSS’s historical focus has been on the Mediterranean, centred on its Maltese operations based in the Malta Freeport in the Port of Marsaxlokk, primarily servicing the offshore Libya oilfields. It has seen significant expansion in its eastern Mediterranean business in recent years due to sizeable offshore discoveries in Egypt and Cyprus. This has strengthened its Cyprus base, which has been operating since 2014, and also led to the establishment of operations in Egypt in 2018 to support the development of the offshore Zohr gas field. Having failed to establish a presence in Trinidad, in Q418 Medserv won a shore base management contract worth over €30m in Suriname, which was executed in 2019, and established Medserv’s presence in the region, which includes the rapidly developing Guyana oilfields.

OCTG segment expanding with lower volatility

The supply chain management services that form the OCTG segment are essentially the METS business in the Middle East, notably in the UAE, Oman and Iraq. As well as stockholding operations, which account for the bulk of revenues, it also provides machining services including repair, rethreading, inspection and rig ready/rig return services. Since acquisition it has been expanding existing operations, notably through the 10-year supply chain management agreement with Sumitomo in Oman signed in 2017, which saw it move the focus of its operations to a new, larger facility at Duqm. In addition, it has successfully developed new international opportunities such as Abu Dhabi and continues to seek further contracts to extend into new markets. It also started to extend operations through cross selling opportunities into the ILSS base network.

Regis Holdings

Regis Holdings was a holding company incorporated in Mauritius in 2014 and is the parent of the Regis Group. Regis Group has subsidiaries operating in integrated logistics and other services from shore bases in Sub-Saharan Africa, with interests in South Africa, Mozambique and Uganda. The current structure of the Regis Group follows a restructuring of its activities as a precondition to the deal, which involved exiting several businesses and delisting from the Mauritius Stock Exchange.

Exhibit 2: Regis Holdings structure (excluding associates)

Source: MedservRegis

The group offers integrated logistics services, capital equipment, consulting engineering services, steel structures, procurement management and personnel solutions to its customers in the oil, gas, mining and other heavy industries. The Regis Group business units are being incorporated following the restructuring within the reverse takeover and are described below.

Exhibit 3: Composition of the Regis Group at the point of completion

Subsidiary

Description

Regis Management Services Ltd

Provides manpower equipment and parts to the SONILS marine logistics base in the Port of Luanda, Angola

Regis Mozambique LDA

Operates a fully fledged logistics facility in Pemba, Mozambique

Regis Uganda Ltd

An early investment providing services to customers supporting the proposed development of the Ugandan oil and gas sector

Regis Export Trading International (Pty) Ltd

RETI is a procurement entity sourcing products in the South African market for export to clients in Africa

Thomson & Van Eck Ltd

Civil and industrial engineering design sub-group providing services for small projects in site infrastructure and agricultural works

Regis Shipping Ltd

Owns and operates two vessels: a bulk vessel (MV Baltic Trader) and a landing craft (MV Regis Kaskazi). The Baltic Trader is to be sold in H221

Associated companies (shareholding %)

AV Holdings (49%)

70% owned subsidiary Skyway Aviation Mozambique is licensed to operate domestic flights in Mozambique

Subsidiary

Regis Management Services Ltd

Regis Mozambique LDA

Regis Uganda Ltd

Regis Export Trading International (Pty) Ltd

Thomson & Van Eck Ltd

Regis Shipping Ltd

Associated companies (shareholding %)

AV Holdings (49%)

Description

Provides manpower equipment and parts to the SONILS marine logistics base in the Port of Luanda, Angola

Operates a fully fledged logistics facility in Pemba, Mozambique

An early investment providing services to customers supporting the proposed development of the Ugandan oil and gas sector

RETI is a procurement entity sourcing products in the South African market for export to clients in Africa

Civil and industrial engineering design sub-group providing services for small projects in site infrastructure and agricultural works

Owns and operates two vessels: a bulk vessel (MV Baltic Trader) and a landing craft (MV Regis Kaskazi). The Baltic Trader is to be sold in H221

70% owned subsidiary Skyway Aviation Mozambique is licensed to operate domestic flights in Mozambique

Source: MedservRegis reports

In Angola, Regis Management Services has provided manpower, equipment and parts for clients operating at the Sonangol Integrated Logistics Services (SONILS) marine logistics base in the Port of Luanda since 2007. With an area of 200 hectares and a 2km quayside, the SONILS base is the largest oil service centre in Africa. Its customer base has significant overlap with that of Medserv and includes ENI, BP, ExxonMobil, Total, Schlumberger and Baker Hughes.

Regis Mozambique’s 50,000m2 logistics service centre in Pemba, Mozambique, is well located to serve the major discoveries of natural gas and graphite made in the Cabo Delgado province in the north of the country in recent years. An insurgency in the region has disrupted activity in the current year, with Total and other clients suspending operations at least temporarily, although Pemba is some distance from the affected territory (c 400km) and does lease equipment to third parties.

Regis Uganda is an investment seeking to capitalise on opportunities in the Uganda oil and gas market. In particular, the construction of a proposed 1,445km crude oil pipeline from the Albertine region to the port of Tanga on the coast of Tanzania is regarded as a major opportunity. It has imported initial equipment facilitating the establishment of a logistic service centre to provide services to oil and gas customers, technical service providers and general heavy industry, all of which should benefit from the investment being made.

Historically, the associated companies listed, including the ongoing AV Holdings, have made minimal contributions to the profits of the Regis Group.

The beneficial owners of Regis Holdings were its CEO Dave O’Connor and the COO Olivier Bernard through DOCOB Ltd, an investment vehicle incorporated in Mauritius.

Terms of the deal

The reverse takeover was effected by a share for share exchange that resulted in the issue to DOCOB of 47.89m new shares in Medserv at a value of €32.5m in exchange for its holding of the entire share capital of Regis Holdings Ltd. The transaction essentially purchases operating assets in Sub-Saharan Africa and €14.4m of cash and other liquid assets.

The newly issued shares represent 47.1% of the enlarged capital of MedservRegis, the new name for the combined entity. Under separate agreements with Medserv’s two major shareholders (the beneficial owners being Mr Diacono and Mr Duncan), the Regis vendors also acquired an aggregate 2.92m existing shares at €0.68 per share in MedservRegis on 1 July 2021, further consolidating DOCOB’s position as the major shareholder of MedservRegis with 49.99% of the issued capital. The free float reduced to 19.1% following completion.

A three-year call option has been agreed by DOCOB with both the major Medserv shareholders to acquire further holdings at a discounted price, which if exercised would initiate a mandatory bid.

Rationale and financial implications

The deal appears to be a strategic positive for both parties. Regis Holdings has been seeking to develop its interests internationally. In recent years, Medserv successfully expanded its shore bases to include Egypt and the management contract in Suriname, as well as adding new IOC customers such as Total, BP and Exxon. However, it had seen a substantial contraction of its equity base due to the volatility of the upstream oil and gas markets in recent years compounded by the COVID-19 pandemic, which might have threatened its investment in additional opportunities. The enlarged group appears much better positioned to pursue incremental business, with Regis adding not just its operations to the group but also contributing around €14.4m to overall group liquidity. In addition, it introduces new end market customers to the group for the first time, including mining companies and heavy engineering contractors.

Financially the transaction strengthens the group balance sheet with combined gross assets of around €171m at H121 including cash and cash equivalents of €17m and gross liabilities of €98m including €23m of lease liabilities.

Management

The new management structure of the enlarged group reflects the reverse takeover. Following completion, David (‘Dave’) O’Connor was appointed group CEO, continuing the role he held at Regis Holdings prior to the deal. Olivier Bernard, who was previously the chief operating officer of the Regis Group, has been appointed deputy CEO (finance, administration, investment and trade). Karl Bartolo, latterly the CEO of Medserv, is appointed deputy CEO (business) with overall responsibility as head of business and company operations.

Anthony Diacono continues in his role as executive chairman for the expanded group and retains a significant stake in MedservRegis. The other major shareholder, Anthony Duncan, who had been a director of Medserv since inception in 2001 and of Medserv Operations Ltd since 1987, resigned from the board following completion of the deal, as did Etienne Borg Cardona and Kevin Rapinett. Dr Laragh Cassar retains the role of company secretary and non-executive director of the enlarged group, with Joseph Tabona also continuing as a non-executive director.

Keith Norman Grunow was also co-opted to the board as of completion and was appointed to the audit committee as an independent non-executive director. He is a retired businessperson and strategic investor who was previously independent chairman of Regis Holdings.

Under the terms of the deal, the board capacity was increased from seven to eight directors, although at present it comprises seven people: Mr Diacono, Mr O’Connor, Mr Bernard and Mr Bartolo as executive directors, and Dr Cassar, Mr Tabona and Mr Grunow as non-executive directors. A further director is expected to be co-opted to the board in the near future, with the appointment valid until the next AGM.

Strategy

The company developed its strategy to include the servicing of upstream onshore oil production and exploration in the Middle East ‘easy oil’ markets (known oil locations on-shore) in order to mitigate some of the cyclicality and the uneven nature of the ILSS business. Due to lower extraction costs these operations tend to be rather less affected by changes in the oil price, although the pandemic added an unexpected level of operational disruption.

A further element of strategic evolution is to add servicing of non-oil customers through the base network, which Regis has already implemented to a degree.

The strategic objectives remain:

To become the leading operator providing a network of integrated logistics support and service bases for the onshore and offshore oil and gas industry operating in Mediterranean rim countries.

To be the leading provider of supply chain management for OCTG by adopting a ‘mill to rig’ concept.

To provide specialised services utilising equipment developed by international companies for environmental projects within the oil and gas industry.

To become an established provider of engineering and technical services to the oil and gas industry.

To maximise shareholder value. The company is likely to seek growth opportunities to consolidate its position in the oilfield services market, but we note that in our view it represents an attractively positioned group with exposure in developing energy markets.

COVID-19 response

As usual during times of adverse market conditions, Medserv management responded swiftly to the challenges presented by the global pandemic. The objective was to preserve liquidity and maintain a positive EBITDA, both of which were achieved. Management immediately acted to adjust the cost base through lower operating costs and remained proactive as the market developed through 2020. It also benefited from government support initiatives.

Current oil and gas market overview

The oil and gas market was severely affected by the global pandemic in 2020 as demand fell by a record amount, with sectors such as transportation seeing activity fall at unprecedented rates. While recovery in demand is occurring as lockdowns are lifted and activity levels increase, it is not expected to return to 2019 levels until 2023, with continued uncertainty in global demand related to the ongoing effects of the COVID-19 pandemic.

Exhibit 4: Brent crude oil price, $/barrel

Source: Refinitiv

Unsurprisingly given the adverse market dynamics, the oil majors once again curtailed their investment in upstream E&P activities. The price of crude oil has recovered progressively to around $82/barrel from the lows of last year’s crash in April 2020, when the Brent crude oil price bottomed out at c $16/barrel, and is now approaching its highest level since 2014. In addition, natural gas demand and prices have also recovered strongly. As a result, many of MedservRegis’s IOC customers are beginning to schedule the resumption of their onshore and offshore drilling programmes.

We perceive the sweet spot for MedservRegis operations to be in the range of around $40–80/barrel, when most of its customers operations become economic, unlike regions with higher extraction costs. The areas where MedservRegis operates tend to have some of the lowest extraction costs, with more resilient levels of operating expenditures. In addition, Medserv has worked with its customers to obtain cost efficiencies. This has enabled it to establish its position as a trusted services partner for the IOCs and helps to mitigate pricing pressure.

The transition to a greener, more carbon neutral energy market appears to have gathered pace during the pandemic and could have an impact on demand for hydrocarbons in the future. Much will depend on the philosophies of governments and on the neutral hydrocarbon policies of the oil majors. While the transition to renewables continues to gather pace, it is widely expected that the natural gas share of fuel supply is likely to be maintained for some time at 23–25% as it is cleaner than other dirtier carbon-based fuels such as coal.

Opportunities for the enlarged group

While the global economic outlook and the oil and gas markets remain uncertain largely as a result of the continued effects of the pandemic, there have been several positive developments for MedservRegis over the last 18 months. In addition, with the progressive recovery in demand and in oil and gas product prices from the low points in April 2020, the potential exploration and development of both new and incremental production by customers in the group’s operating regions are progressing positively. As ever with MedservRegis, geopolitical turmoil in those regions can add a further layer of potential operational disruption to what are often lumpy and long-term contracts, with the Mozambique insurgency being the latest major issue.

Major FY20 contract awards

Medserv signed three major long-term contracts in FY20 that should help to underpin recovery and growth in the next two years.

On 9 October 2020 Eni North Africa (EniNa) awarded Medserv Malta a three-year contract to provide logistics marine base and associated services at Malta Freeport for its oil and gas operations offshore Libya from 1 January 2021. There is an option to extend for a further year and the contract effectively represents a renewal of the longstanding relationship between the groups.

On 14 October 2020 METS announced a key, long-term contract in Abu Dhabi by Tenaris Global Services, a global OCTG pipe supplier. The contract forms an integral part of the supply chain for the provision of OCTG vendor managed inventory (VMI) services to Abu Dhabi National Oil Company (ADNOC) initially for a three-year period with two potential one-year extensions. It commenced on 1 October 2020. The award represents new market penetration for the OCTG segment and followed a long period of active discussions seeking to offer supply chain management services into ADNOC as part of its outsourcing of tube handling operations. METS is to provide tube handling, equipment, as well as yard & inspection services from a new Tenaris Global Services facility in Abu Dhabi Industrial City. It also again highlights the more consistent nature of OCTG service contracts.

On 20 October 2020 a three-year framework agreement was announced for OMV, an Austrian oil and gas company, for the provision of international freight forwarding services. The agreement, which has potential to be extended for a further two years, is to provide transportation services using the Malta base for equipment in support of OMV’s onshore operations in Libya.

In addition, the ILSS contract with ENI Egypt for its offshore operations was extended until the end of FY21 and with activity picking up in the Zohr field we would expect further continued engagement by the customer.

Additional successes seen in H121

The company has continued to secure new business in H121.

An agreement was announced with ExxonMobil on 12 January to extend the provision of ILSS from the shore base in Limassol, Cyprus, for a further two years to support evaluation of its offshore concession in Block 10.

Later in January, the Egypt base secured BP as a new customer in the region, to provide materials and warehouse management services for its drilling and gas production projects in the country. In late May this was followed by a second contract award, the largest secured by MedservRegis in Egypt. The contract is for the integrated facilities management of the West Nile Delta site in Idku. The three-year contract has an option to extend by a year and commenced in June 2021. It should lead to an improved performance from Medserv Egypt in H221 without significant additional capital commitment.

In April the company announced an agreement with an existing oil major customer in support of its development projects at the Bahr Essalam gas fields offshore Libya. The one-year contract with an option to extend for a further three years should see the Malta base handling a considerable volume of OCTG and equipment.

Potential incremental growth targets for MedservRegis

In addition to the recovery and growth of existing operations and cross selling of services as the businesses are integrated, there are number of additional new regions where opportunities are being targeted by the enlarged group.

These include Libya, Angola, Senegal, Mauritania and Guyana.

ILSS segment

For the existing business in ILSS a resumption of drilling activity in Cyprus and Egypt in the eastern Mediterranean together with the new BP contracts should lead to stronger performance through 2023.

We also expect the Malta base to become increasingly busy with the new contracts offshore Libya supported by increasing onshore activity in Libya as evidenced by the OMV contract. A 33-well offshore drilling programme is planned from Q322 supported from Malta. The company is also increasing the number of non-oil and gas logistics projects handled by the Malta base.

Although it has no presence in Angola, it is a country where Regis has longstanding relationships in ILSS supplying numerous IECs and oilfield services companies including the SONILS Oil Service Centre. Opportunities exist as the pace of activity picks up further following the initial recovery from the global pandemic effects, which saw activity fall sharply. As Angola, Africa’s second largest producer after Nigeria, is thought to be facing depleting reserves, it is expected that investment in well development and E&P will also be required to maintain production levels in the future, all of which should play nicely into the extended MedservRegis portfolio of services.

In Uganda, MedservRegis is well positioned to participate in two large-scale and related energy projects that are seen as critical for the country’s economic prospects. The main project is the construction of the $3.5bn East African Crude Oil Pipeline (EACOP) project, which will run 1,444km from the oilfields in Uganda to the Port of Tanga in Tanzania. It is expected to be the longest heated oil pipeline in the world and is scheduled for commissioning in 2025. Although it is environmentally sensitive, we feel the priority for the government is such that the timetable will be adhered to and the first major contract awards were being made in April by the IECs involved, TotalEnergies of France and CNOOC of China in developing the oilfields, which may require an overall investment of $10bn.

MedservRegis and METS have also been in discussion with TotalEnergies and Vallourec for the last couple of years regarding the provision of lifting and handling equipment, as well as OCTG machine shop and other tube services for the production facilities in the Albertine Rift. We expect Uganda to become an important market for the enlarged group, enhanced by additional cross-selling opportunities.

While the Suriname facilities management contract was completed in 2019, the establishment of the group in the region is leading to additional potential. The group is in exclusive talks to establish a shore base facility in Suriname and has been invited by an international energy customer to tender in Guyana as part of a consortium to build and operate another shore-based facility. These could provide additional revenue streams towards the middle of the decade as well as further raising the profile of the group in the region.

In Mozambique the declaration of force majeure by TotalEnergies in June is expected to prove temporary, with recent security agreements suggesting that a resumption in activity for the main customer is possible by H222, although near-term activity will be depressed. Activity servicing other customers from the base continues.

OCTG segment

As well as the opportunity in Uganda in support of the proposed pipeline, management expects to see an upturn from supply chain logistics activity in its Middle Eastern markets, notably Abu Dhabi and Oman where volume growth is expected to be greatest.

As the group expands to more territories, there is an opportunity for METS to participate in integrated offerings to customers and significantly increased cross-selling opportunities.

Financials

As is evident in the H121 report for the group, the treatment of the deal from an accounting perspective as a reverse takeover provides little comparability with what has been reported by Medserv. The reverse takeover accounting means that historical numbers presented are those of Regis Holdings Ltd with the Medserv financial performance effectively being treated as an acquisition with assumed consolidation from 25 June 2021 with some reclassification of net assets.

As presented the reported figures do not bear direct comparison to the previous annual Medserv plc accounts for FY20 and before, nor to our estimates. As the previously available financial statements show the historical performance of the Regis Group before it was heavily restructured at the time of the deal, direct comparison is also difficult. Clearly from FY22, when both businesses are fully consolidated, the combined performance will become more pertinent.

In addition, the annually required Financial Analysis Summary (FAS) of 28 June 2021 is also presented using acquisition accounting assumptions for Medserv of Regis. Thus it is also unlikely to be useful for a direct comparison in FY21 unless restated. The FAS is produced annually for Medserv by its stockbrokers Rizzo Farrugia, in line with Malta Stock Exchange requirements to meet the company’s responsibilities regarding the €20m 6% Bonds 2020/23 note programme issued by the company in 2013. Two forecasts are released in line with the requirements: one for the issuer (Medserv plc) and one for the guarantor of the notes (MOL). MedservRegis is still required to present an FAS in FY22.

In this note we aim to provide what we can to add comparability and a view of the operational continuity of the Medserv operations so its former free float shareholders can have a clearer picture of the business development for the ongoing Medserv activities and the combined MedservRegis group in the future.

We recognise that this approach is not aligned with the actual accounting procedures and may lead to some discrepancies due to estimation, but FY22 should be a more recognisable estimation for the new group.

We present historical numbers for FY20 and FY19 as those of Medserv plc on both the front-page summary table and the financial summary table on page 17. Our FY21 estimated numbers in those tables are an estimation on the FAS basis for accounting (12 months of Medserv and 6 months of Regis) and FY22 is the actual estimate for MedservRegis.

We also present our best estimate for FY21 of the key figures under the reverse takeover accounting method that will see H221 performance of the former Medserv and Regis Group businesses consolidated with the H121 MedservRegis performance reported in the 30 August 2021 statement.

Medserv FY20 results

The FY20 report was released on 30 April 2021 subsequent to the initial announcement of the share for share exchange; we include a brief summary of Medserv’s performance for completeness. Clearly the performance was heavily affected by the pandemic as well as the disruption in the global oil and gas markets. While conditions started to stabilise in H220, an improvement in contract activity is expected to commence later in 2021. In addition, the management contract in Suriname was executed almost entirely in FY19, contributing €30.5m of lower-margin revenues to ILSS, with a residual of just €0.2m booked in FY20.

Excluding Suriname, group revenues fell by 18% to €32.2m. All of the Suriname revenue was booked in the ILSS segment, which saw revenues fall 25% to €16.33m.

The ILSS operations in Malta and Cyprus were significantly affected by travel restrictions and closures of ports imposed by governments, compounding the deferral of exploration projects by some customers until H221 in response to the adverse market conditions. Key highlights of the results are

Medserv’s Malta operations saw revenues fall by €3.4m to €10.5m including a slightly higher contribution from the photovoltaic (PV) farm.

Medserv Cyprus’ activity levels were depressed by the pandemic constraints and remained low as a decision was awaited from the main IEC customers, ENI and Total, with respect to the recommencement of drilling programme.

Medserv Egypt revenues were more stable dropping by €0.2m to €3.3m.

Overall, the ILSS segment contributed just €0.3m to adjusted EBITDA, down sharply from €8.7m in FY19. €2.3m of the decline was attributable to Suriname.

OCTG also felt the impact of the adverse market conditions, but revenues were far more stable falling just over 4% with the adjusted EBITDA contribution increasing to €4.8m.

The company achieved a broadly cash neutral performance with gross debt of €59.8m (FY19: €60.1m) and gross cash of €7.1m (FY19: €5.5m). After a reassessment of the fair values of the right of use assets in Malta, the carrying value of the lease liabilities fell from €30.5m to €18.4m.

Exhibit 5: Medserv plc financial highlights FY20

Year to December (€m)

FY19

FY20

Variance

ILSS

52.20

16.56

-68.3%

OCTGbular Goods (METS)

16.05

15.35

-4.4%

Photovoltaic farm

0.48

0.50

4.2%

Group revenues

68.73

32.41

-52.8%

ILSS

8.66

0.25

-97.1%

Oil Country Tubular Goods (METS)

3.57

4.78

33.8%

Photovoltaic farm

0.49

0.53

8.3%

Group EBITDA

12.72

5.57

-56.2%

Net income/(loss)

(3.30)

(8.80)

166.7%

Adjusted net debt (excluding lease liabilities)

54.6

52.7

-3.5%

Source: Company reports,

Current trading and outlook

Reported H121 results

MedservRegis reported H121 results on 30 August 2021. The report adopts reverse takeover accounting and reflects the trading performance of the Regis Holding Ltd group for the period. As the transaction completed close to the period end on 25 June 2021 and H121 results are unaudited, the report did not include the performance of the former Medserv plc business for the five days in H121, which we assume will be consolidated in the FY21 income statement.

A summary of the reported H121 performance is shown below.

Exhibit 6: MedservRegis reported H121 results summary

Six months to June (€m)

H120

H121

% change

Revenue

6.3

6.0

-5%

Gross profit*

4.4

2.2

-50%

EBITDA**

1.3

(0.1)

N/M

Depreciation

(1.3)

(0.3)

-79%

PPE impairment loss

(0.2)

Results from operating activity

(2.6)

(0.5)

-80%

Net finance income

0.0

1.3

N/M

(Loss)/profit before tax

(2.5)

0.8

N/M

Tax expense

(0.3)

(0.1)

-73%

Net (loss)/income continuing operations

(2.8)

0.7

Net (loss)/income discontinued operations

(0.4)

1.1

Net (loss)/income group

(3.2)

1.9

Source: MedservRegis reports. Note: *Before depreciation; **net of €1.3m impairment loss on trade receivables.

Encouragingly the balance sheet metrics compare favourably to the H121 forecast made for the consolidated operations in the Shareholder Circular of 21 June 2021 and reflect the financial position of the combined group. Adjusted net debt excluding leases for the combined group stood at €45.5m at H121, which compared to €52.5m at FY20 and €52.2m at H120.

Exhibit 7: H121 balance sheet summary as reported versus forecast of 21 June 2021

At 30 June 2021 (€m)

Forecast

Reported

Non-current assets

131.50

139.61

Current assets

38.51

31.37

Total Assets

170.02

170.98

Equity

71.74

72.50

Non-current liabilities

85.92

85.32

Current liabilities

12.36

13.15

Liabilities

98.28

98.47

Total Equity and liabilities

170.02

170.98

Adjusted net debt (excluding leases)

45.5

Lease liabilities

18.1

Source: MedservRegis reports

Medserv operations’ H121 performance

Included in the H121 report for MedservRegis was a brief summary of income statement metrics for the former Medserv operations. prospectus?

Exhibit 8: Former Medserv plc operations H121 financials

Six months to June (€m)

H120

H121

Change

ILSS

9.55

5.41

-43.4%

Oil Country Tubular Goods (OCTG)

8.70

7.04

-19.0%

Photovoltaic farm

0.26

0.25

-3.8%

Group revenues

18.51

12.70

-31.4%

ILSS

0.77

-0.62

n.m.

Oil Country Tubular Goods (OCTG)

2.07

1.99

-3.9%

Photovoltaic farm

0.25

0.25

0.0%

Group EBITDA

3.09

1.62

-47.6%

Net income/(loss)

(3.82)

(4.54)

18.8%

Source: Company reports

As can be seen the continued impact of the COVID-19 pandemic and the oil market crisis in 2020 led to a sharp reduction in revenues for both the ILSS and OCTG segments in H121 compared to H120. However, sequentially the numbers represent a modest improvement over H220. In our view this is slightly unusual insofar as the OCTG segment is normally more reflective of production in the easy oil markets of the Middle East in which it operates, rather than the more volatile upstream oil & gas investment cycle that influences the performance of ILSS.

By region Malta remained the largest contributor to revenues with €3.0m followed by the OCTG operations in Oman (€2.6m), ILSS in Egypt (€1.5m), OCTG in the UAE (€1.5m) and Iraq (€1.1m) with Cyprus contributing €1.0m to ILSS and Suriname running at a small revenue of €0.1m.

In terms of EBITDA, Oman (€1.7m), Iraq (€0.2m), Egypt (€0.2m) and Malta (€0.1m) all made positive contributions, with Cyprus (loss €0.1m), Suriname (loss €0.1m) and the UAE (loss €0.5m) making losses.

Encouragingly the overall group EBITDA performance remained positive with a resilient performance in OCTG mitigating the unsurprising return to loss in ILSS given the lower levels of activity.

After depreciation and amortisation D&A, finance cost and taxation, the net loss for the Medserv group (pre combination) increased by 19% to €4.54m.

Forecasts for FY21 and FY22

On 28 June 2021 Medserv plc provided a forecast for FY21 in the annual FAS, which was consistent with the forecasts made in the Shareholder Circular issued on 20 May 2021 for the deal, which also included income statement forecasts for FY22 for the combined MedservRegis.

The main elements of the Issuer overall group forecast for Medserv are shown in the table below.

Exhibit 9: Key figures from June 2021 issuer forecast (FY21 Medserv, H221 Regis)

Year end 31 December (€m)

2020

2021e

Change

Sales

42.20

44.60

4.2%

Gross profit

11.23

17.12

(0.6%)

Gross margin

35.5%

33.8%

(4.6%)

EBITDA

5.57

10.69

12.9%

Operating profit

(5.55)

0.10

(4.6%)

Loss before tax

(9.55)

(4.02)

(26.1%)

Net loss

(8.80)

(4.17)

11.2%

Adjusted net debt

52.5

44.3

66.5%

Source: Medserv, Rizzo Farrugia

Our estimates for FY21 and FY22 are shown in the financial summary table in Exhibit 13. While we expect the FY22 figures to be on a normal consolidated basis, as previously stated the FY21 forecast income statement reflects the deal as if it has been a straightforward acquisition by Medserv of Regis.

On that basis we estimate group revenue should grow 37.4% in FY21, largely driven by the initial six months’ contribution of €6.0m from consolidating Regis Group’s operations in Sub-Saharan African for the first time in H221. We estimate the FY22 contribution from Regis to be €18.0m although there are risks to that as uncertainty persists in Mozambique and Uganda could also face delays.

Exhibit 10: MedservRegis revenue development*

Source: Company reports, Edison Investment Research estimates. Note: *Excludes PV farm revenues of €0.5m pa.

We expect the ongoing businesses of the ILSS segment of Medserv to increase sales by 23% in FY21 to €21.0m and by 43% in FY22 to €30.0m as the oil markets recover and new contracts servicing the Libyan, Egyptian and Cypriot oil markets increase volumes. Although there may be some opportunities to generate additional business in the Suriname/Guyana region, we have made no allowance for these in our forecasts.

We expect the OCTG segment to grow more modestly as volumes increase in Abu Dhabi and Oman. Our estimates are for 1% growth in FY22 and 4% in FY22.

Reported basis FY21 estimates

Clearly the above estimates will not correspond with the income statement numbers in the MedservRegis statutory report for FY21, which will be accounted for under reverse takeover procedures although the balance sheet should be representative of the combined group at the period end. As Regis Holdings has been heavily restructured prior to the deal, the previously reported historical financial performance of Regis Holdings does not provide a clear basis for modelling the reverse takeover income statement.

However, by disaggregating and reconstructing the income statement to include a full year of Regis Group activities and H221 estimates for the former Medserv activities, we can provide some estimates for top level highlights for the full year. We have assumed in this that the Regis businesses repeat their H121 performances in H222, although given the situation in Mozambique this may be optimistic.

Our resulting estimates for reported MedservRegis FY21 income statement are shown below:

Exhibit 11: Estimates for reported MedservRegis FY21 income statement

(€m)

Regis FY21e

Medserv H221e

MedservRegis FY21e

ILSS

10.00

17.14

27.13

Oil Country Tubular Goods (METS)

0.00

8.48

8.48

Trading

2.05

0.00

2.05

Photovoltaic farm

0.00

0.25

0.25

Group revenues

12.05

25.87

37.92

Group EBITDA

(0.11)

9.13

9.02

0perating profit

(1.01)

2.37

1.36

PBT

1.59

(1.25)

0.34

Net income/(loss)

1.41

(0.34)

1.08

Source: Company reports, Edison Investment Research estimates

Sensitivities

Macro issues: clear exposure to the oil and gas markets provides a macro challenge. While not exposed to more depressed segments of the market such as North American fracking, the influence on major customers is a risk in terms of investment programmes, exploration and pricing pressure on suppliers. The company strategy has been to moderate the concentration of risk on large oil and gas market contracts by diversifying into new end markets such as OCTG with more resilient revenue streams and Regis introduces further new areas of activity to the group.

Geopolitical risk: with the exception of its lower-risk domicile, MedservRegis operates primarily in countries that are at higher economic and financial risk. As well as political instability, business prospects can also be affected by other factors outside the company’s control including environmental concerns. As it operates offshore and deals with NOCs, IECs and multinational contractors, the risk is somewhat mitigated but far from eliminated.

Customer dependence: a historically strong relationship supplying subsidiaries of ENI, an Italian oil giant, was extended by the addition of Sumitomo as a second major customer by METS. In recent years the customer base been augmented by the addition of several new long-term relationships with oil majors such as ExxonMobil, Total and BP. Nevertheless, the MedservRegis business model remains skewed in revenue terms to a relatively limited number of major customers operating in oil and gas markets although Regis helps to further diversify end market exposures.

Financial risk: the relatively high levels of gross and adjusted net debt mean that balance sheet metrics remain stretched, and the maturing of the outstanding bonds requires addressing in the relatively near future. The strengthened balance sheet should enable management to explore alternative finance sources that might help to lower future debt costs and cash outflows.

Technical issues: MedservRegis is quoted in Malta and still has a small free float after the reverse takeover. We would expect the new major shareholders to continue to seek to maintain the listing on the Malta Stock Exchange for the time being, although it is not clear what might happen in the future and how minority shareholders would be treated in the future, but the statement that management is seeking to be able to resume dividend payments is encouraging for the longer term.

Regulatory issues: while regulatory issues appear to be limited, the company does benefit from its Freeport presence in different territories, which could be affected by governmental or policy changes. However, its core Malta lease contract appears to be secure.

Valuation

As normal we have used a capped discounted cash flow (DCF) approach as our primary methodology to value MedservRegis, although we have made one adjustment. We have used the FAS forecast FY21 year-end net debt (€44.3m) and lease positions (€15.8m) as the starting point and discounted cash flow for five years thereafter before assuming zero terminal value growth. Our calculated weighted average cost of capital (WACC) for the group is around 7.9%, given the high debt levels despite still assuming a relatively high cost of equity (10%) to reflect the country risk and the historical volatility of cash flows.

The calculated value at present is €0.78 per share, although if growth opportunities are secured and the company successfully refinances, then the value could increase significantly. A sensitivity table for our DCF with respect to WACC and terminal growth rates is shown below.

Exhibit 12: Sensitivity analysis (€/share)

WACC

6.0%

7.0%

7.9%

8.0%

9.0%

10.0%

Terminal growth rate

0%

1.23

0.96

0.78

0.76

0.60

0.47

1%

1.50

1.15

0.91

0.89

0.70

0.55

2%

1.91

1.41

1.09

1.07

0.82

0.64

3%

2.59

1.79

1.35

1.31

0.99

0.76

Source: Edison Investment Research

If a refinancing is achieved that significantly reduces debt costs, it could have a significant positive effect on the DCF value. A 1% reduction from our calculated WACC would increase the value to €0.99 per share.

Following the pandemic and the disruption in energy markets, it is expected that there may be a significant round of consolidation in the energy services sector. While MedservRegis may well respond to opportunities to strengthen its market positions, it also currently appears to represent an attractive presence in the ILSS and OCTG sectors for those seeking to consolidate their own positions or indeed extend into these segments.

Exhibit 13: Financial summary

€m

2019

2020

2021e

2022e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

68.7

32.4

44.5

64.1

Cost of Sales

(49.8)

(21.2)

(27.2)

(39.0)

Gross Profit

19.0

11.2

17.3

25.2

EBITDA (Edison defined)

 

 

11.5

3.6

9.6

16.6

Operating Profit (before amort. and except.)

 

 

4.6

(2.4)

1.9

7.4

Intangible Amortisation

0.0

0.0

0.0

0.0

Exceptionals

(3.6)

(5.0)

(2.9)

(2.0)

Other

1.0

2.0

1.0

1.0

Operating Profit

3.1

(5.6)

0.1

5.9

Net Interest

(5.6)

(4.0)

(4.2)

(3.5)

Profit Before Tax (norm)

 

 

1.1

(4.5)

(1.2)

4.4

Profit Before Tax (FRS 3)

 

 

(2.6)

(9.6)

(4.1)

2.4

Tax

(0.8)

0.8

(0.2)

(0.8)

Profit After Tax (norm)

0.3

(4.3)

(1.4)

3.5

Profit After Tax (FRS 3)

(3.4)

(8.8)

(4.3)

1.6

Average Number of Shares Outstanding (m)

53.7

53.7

77.7

101.6

EPS - normalised (c)

 

 

1.2

(7.1)

(1.9)

3.4

EPS - normalised and fully diluted (c)

 

 

1.2

(7.1)

(1.9)

3.4

EPS - (IFRS) (c)

 

 

(5.5)

(15.5)

(5.6)

1.4

Dividend per share (c)

0.0

0.0

0.0

1.0

Gross Margin (%)

27.6

34.7

38.9

39.2

EBITDA Margin (%)

16.7

11.2

21.6

25.9

Operating Margin (before GW and except.) (%)

6.7

-7.4

4.2

11.5

BALANCE SHEET

Fixed Assets

 

 

119.1

99.8

101.6

93.3

Intangible Assets

11.8

9.8

11.1

9.6

Tangible Assets

31.5

27.7

32.3

29.4

Right of use asset

75.8

62.2

58.2

54.3

Investments

0.0

0.0

0.0

0.0

Current Assets

 

 

31.4

22.0

43.7

56.7

Stocks

1.4

1.1

1.5

2.3

Debtors

15.4

7.9

16.5

17.3

Cash

5.7

7.3

11.3

21.3

Other

8.8

5.8

14.5

15.8

Current Liabilities

 

 

(17.1)

(9.7)

(6.1)

(8.6)

Creditors

(9.9)

(5.3)

(6.1)

(8.6)

Short term borrowings

(7.3)

(4.4)

0.0

0.0

Long Term Liabilities

 

 

(88.7)

(89.4)

(59.7)

(61.3)

Long term borrowings

(52.8)

(55.3)

(56.1)

(57.7)

Lease liabilities

(30.5)

(18.4)

(16.4)

(16.4)

Other long-term liabilities

(5.3)

(15.7)

12.8

12.8

Net Assets

 

 

44.6

22.7

79.5

80.0

CASH FLOW

Operating Cash Flow

 

 

5.4

5.3

8.5

15.7

Net Interest

(3.5)

(2.1)

(3.1)

(3.0)

Tax

(0.8)

0.3

(0.2)

(0.8)

Capex

(1.5)

(1.7)

(2.3)

(3.3)

Acquisitions/disposals

0.0

0.0

(32.6)

0.0

Financing

(0.3)

0.1

37.3

0.0

Dividends

0.0

0.0

0.0

0.0

Net Cash Flow

(0.6)

1.8

7.6

8.5

Opening net debt/(cash)

 

 

53.7

54.3

52.5

44.9

HP finance leases initiated

0.0

0.0

0.0

0.0

Other

(0.0)

(0.0)

0.0

0.0

Closing net debt/(cash)

 

 

54.3

52.5

44.9

36.4

Source: Company reports, Edison Investment Research estimates. Note: FY19 and FY20 numbers are based on historic Medserv accounts, FY21 is based on reverse takeover accounting.

Contact details

Revenue by geography

Malta Freeport
Port of Marsaxlokk
Birzebbugia. BBG 3011
Malta,
+356 2220 2000
www.medservenergy.com

Contact details

Malta Freeport
Port of Marsaxlokk
Birzebbugia. BBG 3011
Malta,
+356 2220 2000
www.medservenergy.com

Revenue by geography

Management team

Executive chairman: Anthony Diacono

Group CEO: Dave O’Connor

A director of Medserv plc since inception in 2001 and of Medserv Operations Ltd since 1997, Mr Diacono was appointed chairman in 2012. His long career in services and manufacturing encompasses experience gained both in Malta and overseas. Well-known in the Maltese business community, he is also active with the Constituted Business Organisation in Malta and was president of the Malta Federation of Industry between 1992 and 1993. and was formerly chairman of the Malta Development Corporation. He is also chairman of Commbank Europe.

Dave O’Connor is the founder and chief executive officer of Regis Holdings. Before that, he gained experience in the civil engineering trade, specialising in explosives and air compressors. Later he moved to the steel trade and became involved with export sales to all southern African countries. He capitalised on that experience to launch Regis Trading International in 1992. From this trading platform, supplying non-governmental organisations and the oil industry, he went on to create Regis Holdings Ltd.

Deputy CEO (finance, administrator, investment & trade): Olivier Bernard

Deputy CEO (business): Karl Bartolo

Mr Bernard was the COO of the Regis Group. In the past he worked for SONILS (Sonangol Group), where from 2000 until 2016 he was a key member of the team developing the biggest onshore support base in sub-Saharan Africa, based in Luanda, Angola; BJ Services (Baker) in the UK; and Schlumberger in various locations in Africa and Europe. As deputy CEO, Mr Bernard is responsible for heading the finance, HR, IT and administration of the group.

Mr Bartolo joined Medserv in 2008 and served as a director on the board of several Medserv Group companies before being becoming group CFO and subsequently CEO from 2017 up until the Regis deal. He previously completed his internship with KPMG and fulfilled the role of financial controller of Alf Mizzi Group. He is a certified public accountant. In his role as deputy CEO, Mr Bartolo has overall responsibility as head of business and company operations.

Management team

Executive chairman: Anthony Diacono

A director of Medserv plc since inception in 2001 and of Medserv Operations Ltd since 1997, Mr Diacono was appointed chairman in 2012. His long career in services and manufacturing encompasses experience gained both in Malta and overseas. Well-known in the Maltese business community, he is also active with the Constituted Business Organisation in Malta and was president of the Malta Federation of Industry between 1992 and 1993. and was formerly chairman of the Malta Development Corporation. He is also chairman of Commbank Europe.

Group CEO: Dave O’Connor

Dave O’Connor is the founder and chief executive officer of Regis Holdings. Before that, he gained experience in the civil engineering trade, specialising in explosives and air compressors. Later he moved to the steel trade and became involved with export sales to all southern African countries. He capitalised on that experience to launch Regis Trading International in 1992. From this trading platform, supplying non-governmental organisations and the oil industry, he went on to create Regis Holdings Ltd.

Deputy CEO (finance, administrator, investment & trade): Olivier Bernard

Mr Bernard was the COO of the Regis Group. In the past he worked for SONILS (Sonangol Group), where from 2000 until 2016 he was a key member of the team developing the biggest onshore support base in sub-Saharan Africa, based in Luanda, Angola; BJ Services (Baker) in the UK; and Schlumberger in various locations in Africa and Europe. As deputy CEO, Mr Bernard is responsible for heading the finance, HR, IT and administration of the group.

Deputy CEO (business): Karl Bartolo

Mr Bartolo joined Medserv in 2008 and served as a director on the board of several Medserv Group companies before being becoming group CFO and subsequently CEO from 2017 up until the Regis deal. He previously completed his internship with KPMG and fulfilled the role of financial controller of Alf Mizzi Group. He is a certified public accountant. In his role as deputy CEO, Mr Bartolo has overall responsibility as head of business and company operations.

Principal shareholders

(%)

Docob

49.99

Anthony Duncan

16.72

Anthony Diacono

14.21


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United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by MedservRegis and prepared and issued by Edison, in consideration of a fee payable by MedservRegis. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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