Nature Group Regulatory News (NGR)

2 Jun 2008 07:00



Nature Technology Solutions Limited

Preliminary Unaudited Results for the Year ended 31st December 2007

Contract awarded for deployment of treatment unit in the North Sea

Financial Highlights 2007

Maiden Group Profit, pre-tax of £391,984 , post-tax of £312,111

Turnover up 89% to £2.25m

Operating profit up 110% to £1.12m

Earnings before interest, tax, depreciation and amortisation ('EBITDA') of £0.56m

Chairman's Statement

Results

I am delighted to report our first year of Group profits, which is a tribute to the application of our technology, enthusiasm of the team, and indeed a reward for the patience of our shareholders over the last seven years. 

Pretax profits for the Group in 2007 amounted to £391,984 (2006 - loss £104,368) from attributable revenues of £2,254,234 (2006 - £1,191,241) which is an excellent outcome for the year, and demonstrated the earnings capacity of our technologies in both Norway and Gibraltar. This translated into post tax profits of £312,111 compared to a £73,298 loss in 2006. Revenues for 2007 included two contracts, one in the north of Norway and the other in Gibraltar, which could be described as 'non-recurring', and which contributed significantly to the year's profits. However, we believe that the Group is now sufficiently well established and broadly based to win such major contracts on a regular basis.

Of the operating profit of £1.12m, Norway contributed £0.7m of which our 40% owned quayside joint venture in Tananger provided £0.18m in earnings to our Group , partly due to favorable prices and volumes in 2007, which may take some effort to repeat in 2008.

The balance of operating profit, £0.42m, was generated from our share of earnings achieved by our 50% owned Gibraltar company, Slop Oil Reception and Treatment Ltd ('SORT'), which is the port oil waste reception facility in that location, and indeed was the original foundation for the Group. The substantial improvement in both turnover and profits were also enabled by completing the re-siting and enlargement of facilities in the Port of Gibraltar which now offer over 6,000 cubic metres of storage for reception and treatment of oily wastewaters. Its reputation as a reception facility at the entrance to the Miditerranean was further enhanced by the award of the new EU IPPC waste licence and ISO 9001 accreditation. The substantial profit earned by SORT and near completion of its major capital expenditure enabled the company to pay its first dividend to the Group, a policy which is expected to continue.

Other significant developments in 2007

Purchase of 100% of Northern Treatment AS

Shareholders will be aware that over the last 3 years, we have invested in the development of a new Offshore Treatment Unit ('OTU') which was designed to treat rig and platform generated wastes offshore in the North Sea (and, if successful, worldwide). The technology was designed to treat the waste, and then discharge clean water to sea under the new and demanding standards in place, thus saving very substantial transport and disposal costs ashore and contributing to the 'greener' environment. This project was financed through our 60% owned Norwegian company, Northern Treatment AS, but in September last year we bought out our 40% partner's interest to give us full control over final development, marketing. and ongoing OTU operations in Norway.

Near sale of our Gibraltar investment

In October last year we received an unsolicited approach from a well established Greek 'slops' operator for our 50% interest in SORT, the Gibraltar joint venture. After exhaustive negotiation we agreed a price of $6m (about £3m) and, having signed a Memorandum of Understanding, commenced the sale process.. The offer capitalised the value of our Gibraltar investment at an effective amount of 0.6p per ordinary share and potentially enabled a substantial return of cash to shareholders and retention of our core Norwegian interests. In the event, we withdrew from this transaction in March and, having established a fundamental value on SORThave identified opportunities to expand our Ports operations in the region and elsewhere.

Current trading and prospects

Norway

After more than a year of discussions and negotiations we are delighted to report the contracted deployment of our OTU on a major North Sea drilling rig, operating offshore Norway.. The unit is currently being installed and will be tested to ensure that our rigorous targets for treatment of offshore wastes, and their discharge to sea as clean water, are met in the field. The contract is on a 'day rate' basis for equipment, chemicals and operating staff for an initial period of 3 months . A successful outcome to these tests will enable possible extension of this contract and acceleration of marketing to other rigs and platforms in the North Sea and elsewhere.

Whilst it will be challenging to maintain the 2007 profitability of our joint venture quayside plant in Tananger, its considerably enhanced capacity should enable increased throughput if waste volumes are available. The company, SAR Treatment AS ('SART'), paid its maiden dividend to the Group this year from 2007 profits and we believe it should be a good source of future cash flow. 

Internationally, we have been negotiating a contract for the design, build and delivery of a treatment unit to a man-made drilling island in Kazakhstan which, if awarded, would generate revenues for 2008 and onwards .

Gibraltar

Since 2007 we have further increased our reception tankage from 6,000 to approximately 7,000 tonnes and now have the facilities and approvals to accept 'low flash' wastewaters resulting from crude oil tanker washings. This has already resulted in an increase of approximately 60% in volumes for the first 5 months of 2008. Whilst certain of 2007's one-off revenues will not recur this year, SORT's budget is for gross revenues to equal or exceed those achieved last year. An additional location from which waste would be generated for SORT's reception and treatment operations is under active discussion, although will not impact profitability in the current year.

UK and Middle East

We are hopeful of establishing a joint venture facility in Aberdeen similar to our quayside plant in Norway, in order to service the UK North Sea oil industry. Also in Aberdeen we have been discussing the acquisition of a soil remediation solutions provider which, if completed, would extend our technology base into the UK and provide another environmental leg to the Group.

A recently signed joint venture with a major US Group could also introduce us to potential business in the treatment of maritime wastewaters in the Gulf region of the Middle East.

Staff

As will be evident from the growing pace of activities within all areas of the Group over the last year, staff have been continually challenged by the demands of finding treatment solutions, the design and production of complex equipment and its commissioning, and the hours involved in interfacing with clients. All have risen to the occasion and I would like to thank them for their commitment on behalf of shareholders, and hope that they are enjoying the environment they have helped to create. The current, and the next, phases of growth require additional key staff in many areas of the business and I trust that we can attract the additional talent necessary to take the next quantum leap forward.

Richard Eldridge Chairman 2nd June 2008