WNG Worthington Nic

RNS Number:0499N
Worthington Nicholls Group plc
01 February 2008



For Immediate Release                                           1 February 2008





                         WORTHINGTON NICHOLLS GROUP PLC
                         (the 'Company' or the 'Group')


              Notification of Preliminary Results & Trading Update


Trading

Worthington Nicholls Group (AIM: WNG) expects to announce its audited,
preliminary results for the year ended 30 September 2007 in early March 2008.
Following the appointment of Simon Beart, William Good and Rodney Mann to the
Board on 21 November 2007, Deloitte & Touche were appointed auditors to replace
HWCA.

Since appointment, the Board has established that the Group's underlying
trading, before the write offs disclosed on 7 December 2007, was showing
material losses. The Board also noted that since the Group's profit warning on
17 August 2007, no effective management action had been taken to resolve
contractual uncertainties with customers nor any meaningful attempt made to
implement a rationalisation programme to reduce trading losses. As a result,
trading for the quarter ended 31 December 2007 continued to show material losses
with an unaudited operating loss of approximately �1m.

In the light of this poor trading, the Board closed a number of trading units
and reduced Group headcount by approximately one third during December 2007. The
Board has also imposed limits in respect of contracts to be accepted.
Additionally, the Group has withdrawn from all overseas activity and any
contract where the location, margin or complexity is regarded as commercially
unviable. The resultant closure costs, which will include redundancies, surplus
property costs, stock write downs and losses on vehicle fleet disposal are
estimated to be approximately �1m, of which �0.6m is estimated to be expended in
cash before 31 March 2008. In addition, a closure programme for several of the
Group's 14 offices has been initiated and one small loss making subsidiary has
been sold realising some �50,000.

These restructuring costs are in addition to the provisions announced on 7
December 2007 and will be accounted for in the six months ending 31 March 2008.
Audited statutory accounts will be prepared for this period and announced in
June 2008.


Cash Balances

Net cash balances, inclusive of mortgage and hire purchase debt were �8.0m at 30
January, 2008 (7 December, 2007: �8.8m). The Group currently has banking
arrangements with several clearing banks and no centrally arranged facilities.
As a result, management of the Group's cash balances and banking has to date
been inefficient. The mortgage in respect of the Group's investment property,
amounting to �1.06m has been repaid to simplify banking arrangements.


Accounting

The Group had no professionally qualified, full time accounting staff for the
two years prior to flotation in June 2006 and until January 2007.The Group had
no full monthly consolidated management accounts until April 2007, and no
meaningful contract accounting for the contracts undertaken by the primary
trading entity, Worthington Nicholls.

The timing and availability of financial information across the Group is
improving and the focus of the Board on cash generation is now well understood
throughout the business. However the implementation of an industry standard
contract accounting system and related IT solutions will take at least 12
months.

The Board has reviewed all trading units in detail and has noted poor standards
of budgeting, forecasting, contract management and cash-flow management across
the Group. Until these issues are resolved, market guidance for the Group in
respect of the year ending 31 March 2009 is not appropriate.  Profitability
targets were not met at subsidiary level in the various periods to 31 December
2007.


Legal Matters

Since August 2007, the Group has incurred costs to date of approximately
�400,000 in respect of accounting, legal and other advice.

It is not possible at this stage to quantify the legal costs that might be
incurred in respect of ongoing legal matters, but the Board expects to make a
substantial, further provision for the six month period ending 31 March 2008.


Outlook

It is the intention of the Board to reduce costs and to manage loss making units
such that the Group is operating at an underlying, break even level by the
commencement of the new accounting year in April 2008. Following a further
review of trading during the quarter ending March 2008, the Board will then
determine whether the recent rationalisations and provisions have been
sufficient to achieve this objective.

New business enquiries and market activity in the specialist hotel market remain
reasonable and the Group continues to participate in bidding for a small number
of substantial contracts. Activity in the commercial markets appears muted and
the Group has a substantial exposure to the retail sector.

Despite current challenges, the Group enjoys a strong market position, large
cash balances and should benefit from the recent cost cutting measures and the
implementation of financial controls.



FOR FURTHER INFORMATION, PLEASE CONTACT:


Worthington Nicholls Group plc:
         Simon Beart, Chief Executive               07710 444370
         William Good, Group Finance Director       01483 735700
Cenkos Securities plc:
         Nick Wells                                 020 7397 8900

         Stephen Keys
Buchanan Communications:
         Richard Darby                              020 7466 5000
         Nicola Cronk


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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