22 Sep 2009 07:00
NATURE GROUP PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2009
Chairman's Statement
Results
As indicated in my July chairman's statement, the current year will see a significant uplift in our annual revenues due to the first time 100% consolidation of our Gibraltar operations (now named Nature Port Reception Facilities Ltd ("NPRF") and previously a 50% owned joint venture) from the beginning of 2009. I am particularly pleased to report a year on year 34% organic growth in that company's revenues rising from £1 million in the first half of 2008 to £1.34 million for the six months to 30th June 2009, with operating profits 60% higher.
Attributable turnover of the Group including our Norway operations reached £2.7 million, and significantly our joint venture, SAR Treatment AS, in the Tananger Norsea base near Stavanger, achieved over £1 million gross revenues for the period, contributing £0.44 million as joint venture turnover to Group figures, demonstrating a considerable turnaround from 2008. Our principal subsidiary in Norway, Nature Technology Solution AS ("NTS AS"), contributed £0.67 million and our rig operations subsidiary Northern Treatment AS ("NT AS") £0.25 million in these six months.
With all Nature Group subsidiaries generating operating profits after depreciation in this period, it is gratifying that the Group earned unaudited net profits for the first six months of £628,000 before tax and £574,000 after tax, exceeding those for the whole of 2008, as recently reflected in our annual report.
At the 'bottom line' our basic earnings per share increased from 0.78p to 1.48p for the 6 months, a factor that the market has partially reflected, with our share price increasing from 10p to 20p this year.
Operations
Port Reception Facilities
Whilst waste reception operations in both Gibraltar Port and Tananger Norsea Base have achieved significant organic growth in the first six months, the anticipated expansion to new ports and new markets adjacent to Gibraltar is involving lengthier discussions and review processes than we expected. A memorandum of intent for a future Joint Venture in Portugal has been signed, but this will require some months of in-depth review as to the commercial feasibility of future operations there. However, initial collection of ship sullage from an additional port location close to Gibraltar (utilizing the newly acquired Humber Mist, referred to in the annual report) should commence later this year, supplementing the current transshipment of wastewaters from the port of Gran Canaria in the Canary Islands.
Offshore Rig Treatment Services
Northern Treatment, our dedicated offshore rig unit service company, has not yet, with only one operating unit, reached the scale of business necessary to move into net profit after a substantial charge for depreciation, although contributing positive cash flow in these six months. During the second half this division is likely to incur an increased loss due to the rig on which the unit had been deployed unexpectedly halting offshore drilling, and being taken to shore facilities for refurbishment. Despite this and justified by continuing operational success and increasing commercial interest being shown in this technology, the Directors in NTS AS and NT AS have agreed in principle to commit to the capital expenditure for a second offshore treatment unit, to be partly loan funded in Norway, in order to achieve the operational capability to move into profit for 2010 and onwards.
Nature Norway Oil Industry Operations
NTS AS, our holding company in Norway for NT AS and our joint venture in SART AS, and the core of our waste water technology services in Norway, continues to be profitable, and the team will shortly be commissioning on site the unit delivered earlier this year to Kazakhstan for an onshore treatment facility managed by Halliburton.
The Directors in NTS AS have retained advisers to undertake a strategic review of our Norwegian activities and how best they might be developed, particularly since the development of these businesses into strong entities serving the oil and gas industries may require strong industry partners. We shall be digesting the advice received over the coming months with the interests of Nature shareholders being the governing factor in any actions taken.
Prospects
Despite the delivery of the Kazakhstan contract in the first half and the reduced revenues from Northern Treatment referred to above, we expect these adverse factors to be counter balanced by continued buoyancy in revenues from the Gibraltar and Tananger operations, with the result that attributable Group turnover for the full year should exceed £5 million. This would translate into a substantial increase in Group net earnings for the year ending 31st December 2009, particularly at the pre-depreciation level. However, at this stage your Directors believe it prudent not to make a formal profit forecast for the full year.
Commencement of Dividend Policy
As indicated earlier in the year, due particularly to the strong cash generation of the Group's port operations, your Directors consider that a dividend policy should be initiated. Accordingly, if our revenues and earnings for 2009 continue to maintain the first half trend, it will be intended to propose a dividend in the region of 0.5p per share to be paid next year from our 2009 net earnings. Future levels of dividend will naturally be determined in the light of free cash flow within the Group and the returns that can be made internally from capital expenditure on new and existing projects.
Conclusion
The Group has a significant number of discussions in progress on the further development of our oil waste activities, and we will hope to report further on certain of these opportunities in the near future. Our core businesses, subject to the difficulties of penetrating the market and growing the scale of our offshore rig business, are in good shape and underpin our future growth, driven in part by the continuing demand for the application of enhanced international environmental standards. Having nurtured these core businesses through the years since our foundation ten years ago and the integration of Nature Technology Solution AS in 2002, it is satisfying to myself and the Board, in the current economic climate, to be able to report on the achievement of a solid earnings base derived from the waste reception and environmental businesses we have built, and to present a positive view of the future.
Richard Eldridge 21 September 2009
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS TO 30 JUNE 2009
| Unaudited Six months to 30/06/2009 £ | Unaudited Six months to 30/06/2008 £ | Audited Year to 31/12/2008 £ | |
| REVENUES | |||
| Continuing operations | 2,263,219 | 633,077 | 1,715,736 |
| Joint ventures | 442,280 | 787,795 | 1,663,350 |
| 2,705,499 | 1,420,872 | 3,379,086 | |
| OPERATING COSTS | |||
| Continuing operations | (848,373) | (324,044) | (958,814) |
| Joint ventures | (335,397) | (441,452) | (909,852) |
| OPERATING PROFIT | 1,521,729 | 655,376 | 1,510,420 |
| Interest receivable | 499 | 1,558 | 13,294 |
| Administrative costs | (599,670) | (322,237) | (649,049) |
| Bank interest and charges | (10,573) | (7,859) | (22,288) |
| Profit on ordinary activities before depreciation | 911,985 | 326,838 | 852,377 |
| Depreciation and goodwill amortisation | (283,541) | (132,955) | (339,773) |
| Profit on ordinary activities before taxation | 628,444 | 193,883 | 512,604 |
| Taxation on profit on ordinary activities | (54,264) | - | (58,258) |
| Profit for the financial period | 574,180 | 193,883 | 454,346 |
| Basic profit per share (pence) | 1.477 | 0.780 | 1.754 |
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2009
| Unaudited As at 30/06/09 £ | Unaudited As at 30/06/08 £ | Audited As at 31/12/08 £ | |
| ASSETS | |||
| Non current assets | |||
| Plant and equipment | 4,011,847 | 708,408 | 3,413,366 |
| Intangible assets | 527,744 | 234,137 | 561,294 |
| Investments | 216,269 | 2,121,852 | 163,798 |
| Deferred tax asset | 40,339 | 58,939 | 31,366 |
| Total non current assets | 4,796,199 | 3,123,336 | 4,169,824 |
| Current assets | |||
| Inventory | 98,359 | 0 | 91,684 |
| Trade and other receivables | 908,417 | 506,255 | 872,545 |
| Cash and cash equivalents | 647,941 | 3,167 | 614,807 |
| Total current assets | 1,654,717 | 509,422 | 1,579,036 |
| TOTAL ASSETS | 6,450,916 | 3,632,758 | 5,748,860 |
| LIABILITIES: | |||
| Current liabilities | (622,996) | (283,434) | (838,342) |
| Non-current liabilities | |||
| Long term loans | (560,060) | (240,807) | (216,838) |
| NET ASSETS | 5,267,860 | 3,108,517 | 4,693,680 |
| EQUITY | |||
| Called up share capital | 77,720 | 46,859 | 77,720 |
| Share premium | 3,233,799 | 1,998,570 | 3,233,799 |
| Capital Reserve | 2,925,520 | 2,864,130 | 2,925,520 |
| Profit and loss account | (969,179) | (1,803,822) | (1,543,359) |
| Total equity attributable to equity shareholders | 5,267,860 | 3,105,737 | 4,693,680 |
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS TO 30 JUNE 2009
| Unaudited half year to 30/06/09 £ | Unaudited half year to 30/06/08 £ | Audited year to 31/12/08 £ | |
| Reconciliation of operating profit to net cash flow from operating activities: | |||
| Operating profit | 574,180 | 193,883 | 512,604 |
| Depreciation | 283,541 | 132,955 | 139,639 |
| (Increase) in inventory | (6,675) | 0 | (91,684) |
| (Increase)/Decrease in debtors | (44,845) | (200,475) | (566,765) |
| (Decrease)/increase in creditors | 131,876 | (26,148) | 485,456 |
| Net cash from operating activities | 938,077 | 100,215 | 479,250 |
| Investing activities: | |||
| Increase in investments | (52,471) | (167,299) | 0 |
| Acquisition of intangible fixed assets | 0 | 0 | (14,492) |
| Acquisition of fixed assets | (852,472) | (198,124) | (166,741) |
| Financing activities: | |||
| Cash consideration from issuance of shares | 0 | 0 | 48,415 |
| net of issuance costs | |||
| Increase/(Decrease) in cash balances | 33,134 | (265,208) | 346,432 |
| Movement in cash balances: | |||
| Balance at bank 1st January 2009 | 614,807 | 268,375 | 268,375 |
| Net cash inflow/(outflow) | 33,134 | (265,208) | 346,432 |
| Balance at 30th June 2009 | 647,941 | 3,167 | 614,807 |
Notes to the financial information
1. The calculation of profit per share has been based on the profit for the period and the average 38,860,155 Ordinary Shares in issue throughout the period.
2. These unaudited results have been prepared on the basis of the accounting policies adopted in the accounts to 31 December 2008.
3. The interim report to 30 June 2009 was approved by the directors on 21st September 2009. The report will be posted to shareholders and will be available to the public, free of charge, from the offices of Astaire Securities Plc, 30 Old Broad Street, London EC2N 1HT
For further information please visit www.investnature.com or contact:
| Nature Group PLC | |
| Richard Eldridge, Chairman | Tel: 018 4153 3611 |
| Nominated Adviser & Broker | |
| Astaire Securities Plc | |
| Luke Cairns / Sebastian Wykeham | Tel: 020 7448 4400 |