Medserv's (MT:MDS) diversification continues to hold it in good stead as offshore drilling programmes flex in the Mediterranean basin. New discoveries and territories could augment growth from next year as drilling activity in existing territories resumes, METS makes a full contribution and price pressures attenuate. While the Portuguese deferral adversely affects FY16, it could enhance our FY17 expectations, which remain unchanged.
Market pressures continue in H1
H116 has seen lower activity and pricing in the ongoing base support activities, partly offset by management cost reduction measures and an in line maiden four-month contribution from the recent METS acquisition. As previously disclosed and despite the macro environment, the Malta base remained busy. Activity in Cyprus was much lower following the temporary suspension of ENI (MI:ENI) Cyprus’s drilling programme and the mothballing of the facility at Larnaca in H1. Overall Medserv traded at just above break-even at the profit before tax level during the period.
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