Nature : 02-06-2017 2016 Annual Report and Accounts

Nature Group PLC Report and accounts

for the year ended 31 December 2016

Wastewater reception and environmental treatment solutions for the shipping and oil industries

Report and accounts 2016 |

Nature Group PLC Report and accounts For the year ended 31 December 2016 Our Mission.

Nature's mission is to be the world's leading maritime and offshore waste service provider.

We have a proud tradition of collecting and treating maritime and offshore waste in a safe, environmentally sound and socially responsible manner, and we aim to keep building on that tradition, offering sustainable, innovative treatment methods and solutions to our customers worldwide.

As the world's population continues to expand, waste will remain an important part of the overall value and supply chain . Today's focus on climate change is driving an ever-increasing demand for renewable, sustainable and environmentally friendly working methods and industry standards.

At Nature Group, we put safety, sustainability and environmental protection at the core of our business strategy. Our mission is to maintain the clean, pollution-free seas required not only for regulatory compliance, but also for the overall health of our natural environment.

Clean seas. Your choice. Our mission

Contents

Directors, secretary and advisers 2

Chairman's statement 3

Executive directors' statement 6

Directors' report 11

Statement of directors' responsibilities 14

Directors' remuneration report 15

Corporate governance 16

Corporate social responsibility 20

Independent auditor's report 24

Consolidated statement of comprehensive income 26

Consolidated balance sheet 27

Consolidated statement of changes in equity 28

Consolidated cash flow statement 29

Notes to the consolidated accounts 30

Notice of an Annual General Meeting 59

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Directors, secretary and advisers‌‌

Directors

B van Straten (Non-executive Director and Chairman) J Vesseur (Chief Executive Officer)

M Smits (Chief Financial Officer)

A Drenthen (Non-Executive Director)

W McCall (Non-executive Director, until 8 December 2016)

Chairman's statement

The core of our strategy remains to build on our Maritime strength in the Rotterdam and Texas areas and on growing our Oil and Gas business. Under the current difficult market circumstances in both the Maritime and the Oil and Gas division, focussing on our existing operations is the best way to get the Company to return to profitability.

Corporate Secretary

E van der Meulen

2016 Financial Performance from Continuing Operations*

2016 Operational Performance

Registered office Ordnance House 31 Pier Road

St. Helier Jersey JE4 8PW

Nominated adviser & broker Cenkos Securities PLC London 66 Hanover Street

Edinburgh EH2 1EL

6. 7. 8. Tokenhouse Yard London EC2R 7AS United Kingdom

Registrars

Computershare Investor Services Jersey Ltd Queensway House

Hilgrove Street St. Helier Jersey JE4 9XY

Auditor

Mazars LLP Tower Bridge House St. Katharine's Way Londen E1W 1DD

United Kingdom

Website

www.ngrp.com

2016 has been another year of challenges and setbacks. Despite quite severe cost cutting and efforts to re-shape and simplify our organization, our results have been disappointing:

Revenues decreased by 26% to £11.99m (2015: £16.27m)

Underlying EBITDA (excluding incidentals) decreased to -£0.48m loss (2015: -£0.33m)

Underlying operating loss widened to -£1.62m (2015: -£1.13m)

Underlying loss before tax widened to -£1.66m (2015: -£1.21m)

Underlying earnings per share ("EPS") of -2.83p (2015: -3.17p)

Year-end cash balances of £0.38m

Maritime - Port Reception Facilities

• In Rotterdam, where we have our largest operations, we continued to perform as expected but did not see any large one-off projects as in previous years.

• In Texas, in our second full year of operations, revenue was slightly higher than in 2015. We are pleased that we could compensate a strong decline in business from offshore customers with more traditional maritime customers and see growth potential in additional services such including tank cleaning and barging, and a further positive effect when the offshore market picks up again.

• The Gibraltar entity was not sold until the beginning of 2017. As a result we continued to incur cost during 2016.

• Our Portugal operations incurred losses in 2016. Consequently the decision was taken to close down our operations in Portugal and exit the joint venture by July 2017.

  Nature Group PLC is listed on the AIM market of the London Stock Exchange with a TIDM of NGR

  (2015: £0.28m)

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  | Report and accounts 2016

  Oil and Gas

  • We had successful operations in Canada, Norway, Brazil and Tanzania in 2016.

  • Overall, business came under further pressure after the projects in Canada and Tanzania terminated in the 2nd half of the year and anticipated new projects were postponed to 2017.

  • In late December, we signed an important contract for the UK shelf with an expected mobilisation early Q1 2017. Although an important contract win that is generating healthy revenues and margins from March 2017 onwards, we were unable to replace operations during 2016 and as a consequence incurred heavy losses in the Oil and Gas division.

    Engineering

  • We closed our Engineering office in Cornwall but are continuing to deliver, on customer requests, specific engineering consultancy projects.

  • We have, on a consultancy basis, designed and delivered a Modular Emulsion Breaking System as part of our "Waste Treatment at Source" concept.

Corporate restructuring

The project of closing down and selling our operations in Gibraltar has been an extremely slow process and kept us occupied during 2016. It has certainly prevented us from moving faster in other areas and - as a result - has cost us substantially more than we had anticipated.

Additionally, the impact of the low oil price was felt strongly in our Oil and Gas division and in our Portuguese joint venture.

We have further restructured our Norwegian organisation by cutting 40% of staff to cope with the downturn in the industry in general and in Norway specifically.

All of the above has resulted in a group overhead reduction of 40%, however the full impact of these cost reductions will only be visible in 2017. Management will consider further cost cutting if necessary.

First quarter 2017

The 1st quarter of 2017 remained challenging. The start of the new Oil and Gas operations in the UK sector of the North Sea were postponed to March 2017. Furthermore, Rotterdam volumes were lower than expected and our tank cleaning activities in Texas have only recently commenced.

Outlook

Our focus for the Maritime division has not changed. We want to deliver the best port reception service available to our customers in the ARA region (Amsterdam/ Rotterdam/Antwerp) and Texas and will continue to look for growth in those regions through new product offerings, such as tank cleaning (which we started to offer in April 2017 in Texas), the collection of fixed waste (Marpol Annex V in Rotterdam) and servicing inland vessels in Rotterdam, having successfully won the tender for the next three years.

In the Oil and Gas division our focus is on "Waste Treatment at Source" with our best in class technology. With the new contracts in the UK, and our continuing presence in Brazil and Norway, we have proof that in this niche space, we deliver the best service and

are capable of treating the widest ranges of offshore liquid waste. At the same time, we will also focus on geographical expansion (Arabian Gulf, US Gulf). Even though the Oil and Gas environment remains difficult, we are optimistic that by the end of the year we will generate a profit in this division.

Despite all the above, we may see the need to further reduce overhead costs dependant on our performance in the year.

With a successful execution of these activities, combined with a further downsized organisation, we believe we will deliver an improved bottom line compared to 2016.

Berend van Straten

Chairman of the Board 31 May 2017

* Continuing Operations:

Excludes revenue and cost from discontinued operations in Gibraltar as (1) Nature Port Reception Facilities Limited

("NPRF"), which previously operated the Group's reception, treatment and storage facility for maritime waste in Gibraltar, was sold January 16th 2017, (2) excludes revenue and cost from discontinued operations of Nature Port Reception Facilities Portugal ("NPRFP") as Nature Group PLC is currently negotiating exiting the joint venture, (3) excludes revenue and cost from discontinued operations in Nature Shipping Agency Limited ("NSA") in Gibraltar (as the entity was sold on 4 March 2016), (4) excludes revenue and cost from discontinued operations at Nature Environmental Technologies Limited ("NETL") in UK for the first nine months of 2016 when Corporate Center activities ceased and all

staff was made redundant but includes the last 3 months of 2016 as the entity was revived and is now used for specific engineering services for our Joint Venture in Sohar, (5) excludes revenue and cost from discontinued operations

at Residuos Y Transportes MARPOL, S.L.U. ("RYTM") as the entity is being liquidated and excludes revenue and cost from Nature Group Trading Limited ("NGTL") in Jersey as this entity was dissolved July 12th 2016. Underlying results exclude

non-trading incidental items.

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