TIDMNGR
RNS Number : 7404Z
Nature Group PLC
22 September 2015
Nature Group PLC
("Nature" or the "Company" or the "Group")
Unaudited Interim Results for the 6 months to 30 June 2015
Nature Group PLC (AIM:NGR), the provider of port reception
facilities and waste treatment solutions for the oil, marine and
process industries, announces its interim results for the six
months ended 30 June 2015.
Financial Highlights
-- Revenues for the period GBP9.62 million (H1 2014: GBP9.05 million)
-- Underlying pre-tax profit for the period GBP0.06 million (H1 2014: loss GBP0.72 million)
-- Underlying earnings per share for the period 0.03 pence (H1 2014: -0.85 pence)
-- Cash balance as at 30 June 2015 GBP2.44 million (H1 2014: GBP2.98 million)
Operational Highlights
-- Maritime
Significant recovery in volumes in Rotterdam.
Encouraging growth in Houston, in line with expectations.
M/V Crystalwater sold to eliminate ongoing operational
losses.
Hydrovac 12, a large double-hulled barge, acquired in Rotterdam
to support continuous service capability.
-- Oil & Gas
The continued weakness in the global oil price has strengthened
Nature's ability to offer clients cost saving operational
benefits.
Global sphere of influence continuing to grow, with units now
operating in Canada as well as Brazil and North Sea region.
After a slow start to the current financial year, the level of
activity continues to grow in Brazil.
Sale of units completed for an offshore 'hotel' rig in the North
Sea region.
Investment in new CTU / STUs continues in order to meet
anticipated growth in order pipeline.
Demonstrable ability to meet the demands of countries that set
high environmental standards.
-- Engineering
Continued support for the operational improvement program in
Houston.
Containerised modular treatment facility developed for maritime
liquid wastes to accelerate the speed of developing new port
reception facilities, such as Sohar.
Chairman of Nature, Nigel Sandy, commented:
"The first half of the year shows an encouraging improvement
over last year, however still only about break even. We are
confident that, with the actions we are undertaking, we are well
positioned for the remainder of this year and beyond. Our Oil &
Gas division is gaining traction; we have reviewed, and are
addressing proactively the issues in our Maritime division, most
notably Gibraltar. Importantly, we have taken concrete steps in
building a strong, experienced management team to deliver the
growth and returns our shareholders expect".
For further information contact:
Nature Group PLC
Nigel Sandy, Chairman Tel: +44 (0)1208 816 744
Jan Vesseur, CEO Tel: + 31 6462 878 96
Kieron Becerra, CFO Tel: + 350 200 73905
Cenkos Securities plc
Neil McDonald Tel: +44 (0)131 220 9771 / +44 (0)207
397 1953
Nick Tulloch Tel: +44 (0)131 220 9772 / +44 (0)207
397 1950
Hermes Financial PR
Chris Steele Tel: +44 (0)7979 604 687
Trevor Phillips Tel: +44 (0)7889 153 628
About Nature Group
A company with more than 25 years' experience in waste water
treatment and a unique corporate social responsibility (CSR)
strategy that enables us to provide our customers with safe and
secure services responding to the ever expanding and demanding
legislative framework.
Nature Group combines port reception services and facilities,
offshore treatment services and the latest sustainable waste
treatment technologies in a steadily growing international network.
Nature Group is traded on the AIM market, (ticker: NGR).
www.ngrp.com
Chairman's Statement
We are pleased to announce the unaudited interim results for the
six months to 30 June 2015. As we pointed out in our statement at
the time of the full year report and accounts, after a
disappointing 2014, actions were taken to reverse the adverse
results which are beginning to pay off. Whilst the first half
financial performance has shown a return to profitability this does
not reflect the very considerable work in continuing to strengthen
our core structure. New personnel, coupled with an ongoing overhaul
of our controls, reporting and business appraisals will, we
believe, lead to ongoing improvements in profitability in the
second half and beyond.
Financial Review
Revenues for the six months to 30 June 2015 were GBP9.62 million
compared with GBP9.05 million for the same six month period in
2014. The Group achieved an underlying pre-tax profit of GBP0.06
million (excluding exceptional items of GBP0.23m) compared to an
underlying pre-tax loss of GBP0.72 million in the same period in
2014 (excluding exceptional items of GBP0.29m). The underlying
profit after tax stood at GBP0.02 million (H1 2014: loss after tax
of GBP0.67 million).
Capital expenditure for the period amounted to GBP0.53 million,
covered by underlying EBITDA of GBP0.63 million. Significant
projects included the construction of 3 Sludge Treatment Units
("STU") and 1 Compact Treatment Unit ("CTU"), as well as the
purchase of trucks, new equipment and significant site improvements
in Houston. Group cash balances as at 30 June 2015 were GBP2.44
million with free cash flow as at 30 June 2015 of GBP0.66
million.
Both our Maritime and Oil & Gas divisions performed in line
with management expectations during the period. In our Oil &
Gas division, the sale of STUs and CTUs to a third party, and the
return of our operations in Brazil in Q2 have helped the results of
the division. Whilst the exact timing of the future projects and
deployment of the Company's CTUs and STUs is subject to some
variability in the current macroeconomic environment, the board
remains optimistic in the robust future for this division. Our
Maritime Division has improved as a result of increased volumes in
Rotterdam, the sale of the M/V Crystalwater in Gibraltar and
continued growth in Houston. We expect to improve on these results
going forward, with our continued investment bearing fruit in the
coming months.
Dividend
Whilst there is an improving trend in the Group's profitability,
it is too early in the year to anticipate the payment of a dividend
for 2015. However, the dividend policy remains in place, which the
Board are committed to fulfilling when circumstances allow.
Chief Executive's Statement
Operational Review
Maritime Division
Rotterdam
In the first 6 months of 2015 the Group faced an exceptional
demand for our services to collect, transport and treat
approximately 112,000m(3) of oily and chemical waste compared to
the 2014 volume of 56,000 m(3) in the comparable period. Some of
the growth comes from a number of one-off tanker contracts arriving
into port with offshore waste but also represents significant
volumes from our normal business in the region. After a relatively
lacklustre 2014 in Rotterdam, it was encouraging to see the
turnaround. However, the downside of the upsurge in demand was that
volumes exceeded our invested capacity, which resulted in the need
to hire additional barges to maintain our service commitment, which
put pressure on our profitability.
We are confident that the action we have taken to acquire the
previously-chartered Hydrovac 12, as well as the charter of a third
party barge, to supplement our existing fleet of eight barges, in
conjunction with our partners, will lead to a continued high
service level and increased profitability in Rotterdam. An on-going
review to increase our profitability in Rotterdam has already seen
a new pricing structure implemented. We continue to seek
opportunities to increase our involvement in the Amsterdam
Rotterdam Antwerp region.
Gibraltar
As previously announced, the sale of the M/V Crystalwater was
completed in the first half of the year. The vessel was initially
acquired to fulfil our service requirements of collection,
temporary storage and disposal following the accident in Gibraltar
in 2011. Whilst we were able to maintain our service, the operation
of the M/V Crystalwater came at a high price, which, with the
continuing delays in rebuilding the onshore storage was
unsustainable. We now operate a limited service using our remaining
small collection vessel for handling high flash cargoes. This means
that low flash cargoes, which represent an increased handling risk,
have to be declined. The action taken, combined with a new pricing
model, has ensured that operations are running at break even,
avoiding the losses incurred from operating the M/V Crystalwater.
We are currently revisiting our Gibraltar business plan and
investment required to re-establish the full service model of
storage and treatment that we previously operated in the
region.
Portugal
With the sale of the M/V Crystalwater, we are no longer bringing
waste collected in Gibraltar to Portugal. As a result, our business
in Portugal has been slower than in previous periods. However, we
are pleased to announce that we have received a license to collect
maritime waste in Lisbon. We are carefully considering how we plan
to implement this opportunity. Additionally, where possible, we are
bringing in waste from other locations to benefit from the ability
of our JV to recycle waste oil.
Houston
After just over twelve months, the investment in Nature
Environmental and Marine Services is progressing well. Timothy
Curl, the original founder of the business who retains a 35%
holding, has given his full support to the transition as we
implement investments into operational improvements including new
trucks and in-house treatment facilities, the impact of which will
further strengthen our profitable operation in Houston.
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September 22, 2015 02:01 ET (06:01 GMT)
Given its location on the Gulf Coast we see excellent potential
to grow the business and introduce new maritime services such as
tank cleaning. The experience in Texas has highlighted that
Nature's know-how in managing maritime waste can be successfully
exported to strategically located targets to expand our
international presence in port reception facilities.
Oil & Gas Division
The continued weakness in the global oil price, whilst seen as a
negative for the oil and gas industry, is an opportunity for us to
promote the cost saving benefits of our offshore treatment
solution. With drilling contractors looking for operational cost
savings Nature can provide an independently verified technology
with the capacity to save our clients approximately 50%-80%
compared to the alternative of onshore treatment. However, the
impact of the oil price collapse has impacted on the timing and
progress of some projects in which Nature was involved.
During the first half of 2015 we completed the sale of a CTU /
STU package to an offshore 'hotel' rig, with similar packages
currently operating on drilling platforms in Canada, Brazil and our
traditional North Sea market. Further growth is expected in Brazil,
plus a restart of our operations in Tanzania. Currently, we have a
rental fleet of six CTUs and six STUs, with a further four units
under construction, with the financing placed through Norwegian
banks on a combination of leasing and loans.
Post the period end, significant changes have been made to the
senior management team in Stavanger. Although profits for the
division are currently running in line with our plans, we believe
these changes will further accelerate the growth of our oil and gas
activities.
Engineering Division
Following the successful completion of the Ministry of Defence
contract for InterServe in 2014, the Cornwall based team has been
concentrating on developing a modular treatment plant for the
Maritime Division. These containerised plants would enable a new
port reception facility to come on stream in a phased manner,
increasing the capacity in line with the service demand.
Recognising that this Division is essentially an in-house service
to our Maritime activities, it is planned that in the future they
will report as one Division.
Business Development
Four years ago we embarked on an ambitious development programme
for both the Maritime and Oil & Gas Divisions, the underlying
objective of which remains in place today. However, the limitations
of cash and human resources means that we will now take a more
focused approach to expansion.
In the Maritime Division's pipeline we are currently active with
one specific opportunity in Oman, and after a successful start to
the Houston business, we will continue to look for strategic
businesses that provide opportunity and the foundations upon which
we might build.
In the Oil & Gas Division we want to see faster growth with
greater international exposure and ensure that our equipment and
technology becomes standard practice for offshore drilling clients,
appreciating the cost and environmental and safety benefits. We
believe that with the addition of two experienced sales executives
to our team we will further penetrate the market and deliver on the
growth we believe is achievable.
Organisation
We have already highlighted the changes at the senior management
and Board level which started with the appointment of Jan Vesseur
as CEO, replacing Andreas Drenthen, our previous CEO, who remains
as a Non-Executive Director and brings a wealth of experience in
the maritime services sector. Additionally, the board has been
further augmented and strengthened with the appointment as
Non-Executive Directors of Bill McCall, who has a strong record in
corporate affairs, and Berend van Straten, who has an in-depth
experience of oil exploration activities.
In view of these changes, Peter Snell has now decided to step
down from the Board after 14 years as a director. Peter has been
involved with Nature since its inception and has always shown a
great commitment. We thank him for his contribution in helping to
bring us where we are today.
We have commenced a project to reduce overhead costs the effects
of which we expect should be visible in the first quarter of 2016.
Part of this will be achieved by the completion of a project to
install an integrated Sage accounting system across the Group, as
well as other efficiency savings.
Outlook
We have made a satisfactory start to the year by having stemmed
the losses we sustained in 2014 and moving into positive territory.
It is disappointing that the reinstatement of our Gibraltar
operation has not proceeded more quickly. However, we do see
alternative strategies that will help us maintain a viable presence
in the region and we expect to make decisions accordingly during
the remainder of 2015.
At this point in the year we are cautiously optimistic that we
are on track to secure a profitable outcome in 2015. We will
continue to build our Oil & Gas Division with a focus on sales,
Rotterdam is back on track, Houston has made a promising start and
we have taken steps to stop operational losses in Gibraltar. We
believe we are more robust in coping with market adversities, but
in the current volatile markets it remains difficult to predict the
market reaction to sudden changes in the external environment.
However, the Board is committed to take whatever action is required
to restore shareholder value and we will continue to look
aggressively for further improvement possibilities.
The dynamics of Nature in providing waste management services,
for which we can offer a number of unique selling points to our
clients in a highly regulated environment, remains unchanged.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For the half year to 30 June
2015 Unaudited Unaudited Audited
30 June 30 June 31 December
2015 2014 2014
GBP GBP GBP
REVENUE
Continuing operations 9,615,848 9,054,269 17,693,881
Other operating income - - -
------------------ ------------------ ----------------------------
Total revenue 9,615,848 9,054,269 17,693,881
COST OF SALES
Continuing operations (6,578,748) (6,255,186) (10,951,905)
OPERATING PROFIT 3,037,100 2,799,083 6,741,976
Interest income 741 - 7,217
Other income/(expense) (102,749) 4,195 (979,934)
Share based payments (45,013) - -
Administrative costs (2,489,742) (2,953,656) (7,100,904)
Depreciation and goodwill amortisation (541,880) (794,480) (1,513,315)
Finance costs (36,544) (69,158) (129,344)
Loss before taxation (178,087) (1,014,016) (2,974,304)
Taxation on loss on ordinary
activities (83,247) 52,408 17,810
Loss after tax (261,334) (961,608) (2,956,494)
Attributed to non-controlling
interest 48,495 37,386 114,547
Total comprehensive income for
the year
attributed to owners (212,839) (924,222) (2,841,947)
================== ================== ============================
Earnings per share (EPS) (pence)
Basic earnings per share (0.268) (1.166) (3.585)
Diluted earnings per share (0.263) (1.160) (3.584)
Loss after tax, before share
based payments (167,826) (924,222) (2,841,947)
Excluding Share based payments (0.212) (1.166) (3.585)
----------------------------------------- ------------------ ------------------ ----------------------------
CONSOLIDATED BALANCE SHEET
At 30 June 2015 Unaudited Unaudited Audited
30 June 30 June 31 December
2015 2014 2014
GBP GBP GBP
Assets
Non-current assets
Plant, vessels and equipment 5,660,652 9,766,105 7,896,989
Goodwill 1,177,822 323,095 1,188,002
Other intangible assets 36,329 43,620 34,627
Investment in associated
company 250 250 250
Deferred tax assets 104,971 39,614 108,766
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