Nature Group Regulatory News (NGR)

This announcement replaces that issued at 7.00am this morning. The words 'Despite slowdown in International shipping activity in second half overall group trading' have been added to the second bullet point in the summary and the word 'and' has been deleted from the same bullet point. The full amended text appears below.

Nature Group PLC

("Nature Group" or the "Group")

Trading Update - Replacement

The Board of Nature Group, the AIM quoted provider of port reception facilities and waste treatment solutions for the oil and maritime and service industries provides the following update for the year ended 31 December 2011.

Summary

Underlying trading in the second half, excluding the Group's Gibraltar operations, was in line with performance for the first half, however the reported profit before tax will be adversely affected by the on-going dispute regarding the insurance claim relating to the accident at our Gibraltar plant.

We have been advised by our insurers that cover has been denied in relation to our claim for property damage and business interruption. The Company believes the denial of cover is not merited and our legal team will appeal against this decision. The Company has claimed for aggregate insurance cover of approximately £2.5m which included claim for damage to property of approximately £750,000 and a claim for loss of business and inventory for the period ended 31 December 2011 of approximately £1.7m.

Whilst the timing and ultimate level of any insurance receipts remain uncertain and unlikely to be resolved before our final results for 2011 are announced, should the denial of coverage be upheld in full the Group's results will be adversely affected by this amount and would result in an expected profit before tax of approximately £1.5m for the year ended 31 December 2011. This is calculated after including a provision for repairs to the Gibraltar plant of £750,000 and also includes one off costs for the acquisition of ISD and our new barge Crystalwater.

The Group's current cash reserves are sufficient to deal with the repairs, our programmed investments and the continuation of the group dividend policy.

Whilst this news is disappointing we would like to stress that this is an exceptional situation.

Below we provide details of our operating divisions, all of which remain encouraging for the future growth of the business.

Market Background

As we highlighted in our interim report the current Global economic uncertainty, particularly in Europe, has led to a fall in International trade and therefore reduced shipping movements which has inevitably led to a reduction in the collection and treatment of waste in our PRF's across all regions.

However, we are pleased to report that the Nature Oil and Gas Division remains unaffected by Global shipping activity and is performing better than management anticipated, and will offset some of the shortfall in the PRF business.

Nature Port Reception Facilities (NPRF)

Trading in this Division has suffered from the suspension of our reception and treatment facilities in Gibraltar, although we are pleased to report that our International expansion plans are moving ahead strongly.

Negotiations have been maintained with the Gibraltar Government with a view to restarting limited operations. Prudently the Government are reviewing our operating procedures pending the return to full scale operations of storage and treatment. There is a legislative requirement for all EU ports to provide port reception facilities and we have already carried out extensive repairs using our local plant operatives to minimise any future delays in bringing the plant back on stream. Subject to the Government review we hope to be able to reinstate limited operations in the second quarter of this year. Since the accident we have continued to service our customers by maintaining our collection services and sub-contracting treatment to third parties.

To maintain our commitment to growth in SW Europe and enhancing our customer services, we have acquired, using our existing cash resources, an additional vessel named "Crystalwater", a Lloyds classified second hand chemical tanker (IMO 2) with a cargo capacity of 2,500 tonnes. We are pleased to report that since the addition of Crystalwater in December 2011 waste volumes have returned to the same level as before the incident.

Expansion plans also continue elsewhere in Europe and we anticipate that our Rotterdam operation will be expanded to other ports in the Netherlands during 2012 to provide incremental volumes. This is in addition to reviewing opportunities to establish operation in a number of key global hubs in 2012 where some are already in an advanced stage.

Whilst the final outcome for Nature PRF for the year ended 31 December 2011 is dependent on the final outcome of the Gibraltar insurance claim, the outlook remains positive for 2012 and the longer term, where new locations would contribute to substantial revenue growth.

Nature Oil and Gas

We are especially pleased to report that this Division is exceeding internal forecasts with several contracts in the Norwegian offshore oil and gas sector being serviced in the second half of 2011 with an expectation that these will continue in 2012. Nature's 40% investment in SART, the treatment plant on Norway that services the off-shore oil industry, slowed in the second half after achieving strong first half results but the full year results are expected to meet management expectations . Currently SART are increasing process capacity to meet an anticipated volume growth in demand for water treatment in 2012 and beyond.

In others parts of the world we are in discussion with several interested clients for the use of our compact treatment unit (CTU) technology, primarily for offshore oil and gas contracts in a number of countries including Brazil, West Africa and Asia. This has encouraged us to build two more CTUs which we expect to be operational in the second quarter of 2012. As demand grows we will add further CTUs to our portfolio of offshore assets.

As evidence of this our CTU for the Brazilian contract has been delivered and will commence active operations at the beginning of 2012. The client for this contract has already ordered an additional oil recycling unit which we expect to deliver in February 2012. This is further evidence that our treatment units are achieving technical leadership in the offshore market.

We are looking at opportunities to establish a shore based joint venture to serve our oil clients on the UK sector of the continental shelf in Europe.

Central Management and Organisations

In order to cope with the increasing management requirement of our growth we are strengthening our management team. I am pleased to announce the appointment of Arjan Donatz as Chief Business Support Officer. Arjan was formerly employed by Det Norske Veritas where he was a Business Leader for the process industry and lead standards and accreditation auditor for the oil and gas industry and brings in a wealth of experience in environmental management and procedures. In addition the Group are looking to strengthen their technical capability with the appointment of a senior technical manager.

In summary, whilst 2011 has presented us with unexpected challenges, in particular the current cessation of our operations in Gibraltar and subsequent insurance claim, there is a significant amount of work being done to lay the foundations for future growth. Management believe that the operational team and expertise, coupled with existing contracts and a strong pipeline of new business, ensures that we have laid down the foundations to look to the future with confidence.

- ends -

Contact Details: