Admission to AIM

Worthington Nicholls Group plc
12 June 2006

RNS release



12 June 2006



               Worthington Nicholls Group plc - Admission to AIM
  Raises £7.5 million for acquisitions and further organic expansion and £12.5
                        million for replacement capital



Worthington Nicholls Group plc ('Worthington Nicholls' or 'the Group'), the UK's
largest independent installer of air conditioning, heating, ventilation and
chilled water systems, has successfully raised £20 million (before expenses), in
aggregate, from institutional investors and VCTs ahead of its admission to AIM.
Trading in the shares is expected to commence on AIM on 12 June 2006, under the
ticker symbol WNG.  The Group is advised by Corporate Synergy Plc, its Nominated
Adviser and Broker.



On admission, Worthington Nicholls Group plc will have in issue 65,000,000
Ordinary Shares, issued at a placing price of 50 pence per share.  On market
debut, the Group will be capitalised at £32.5 million.



Of the funds raised, £7.5 million is in expansion capital, and £12.5 million is
replacement capital to allow for a partial exit of the Group's founder, Peter
Worthington.



The expansion funds will be used to provide working capital for continued
organic expansion of the business and to fund acquisitions in both the UK and
European markets, in order to meet the demands of its growing customer base for
sole supplier contracts across European operations.





Mark Worthington, Chief Executive of Worthington Nicholls, said:



'We are delighted to have successfully raised the money we need to fund our
rapid expansion.   During a difficult and volatile period in the equity markets
our fundraising remained oversubscribed. We will now aim to repay investors
belief in the Company and it's employees by delivering on our current strategy.
With much more stringent environmental legislation and a preference by major
hotels and retail clients to deal with a single supplier, we are very optimistic
about expanding our operations and providing an unrivalled level of service.'



Placing statistics


Placing price per Ordinary Share                                                                      50 pence
Number of New Ordinary Shares being issued pursuant to the Placing                                  15,000,000
Number of Ordinary Shares in issue immediately following the Placing                                65,000,000
Market Capitalisation following the Placing at the Placing Price                                   £32,500,000
New Ordinary Shares as a proportion of the Enlarged Share Capital                                       23.08%
Estimated net proceeds of the Placing receivable by the Group                                       £6,570,000



Enquiries:



Worthington Nicholls                                               0870 609 1829
Mark Worthington, Chief Executive
David Levis, Corporate Director


Gresham PR Ltd                                                     020 7404 9000
Neil Boom
Tanya Feness

Corporate Synergy                                                  020 7448 4400
Brian Stockbridge / Romil Patel



Information on Worthington Nicholls can be accessed via the Group's website:
http://www.worthington-nicholls.co.uk/



Background information



About Worthington Nicholls Group plc



The Group operates as principal contractor for delivery of end to end solutions
in the air conditioning market, from initial survey through design and
specification to installation and ongoing maintenance. The UK market for new air
conditioning capital equipment was approximately £650 million per annum in 2005.
This figure does not include installation, design and ongoing maintenance costs
which the Directors estimate to be approximately a further £650 million in 2006.
The Group currently operates throughout the UK and in Ireland and its aim is to
become the pre-eminent support services supplier in the heating, ventilating and
air conditioning sector in Europe. The business of the Group has been trading
for over 33 years and has seen its revenue grow from approximately £4m to £13m
in the last five years.



The Group's customers include a range of blue-chip companies operating in a
number of different market sectors including hotel and leisure, retail,
restaurants, manufacturing and technology industries.



The Group provides support services through its three trading divisions:



• project management, design and installation;



• maintenance; and



• ventilation hygiene.



A description of the business undertaken by the Group's trading divisions is
given below.



Project management, design and installation



The Group has the capability to manage large scale air conditioning and
ventilation projects from commission to completion. It offers a full service
from survey and design to specification and installation. Large scale projects
often require the involvement of a number of sub-contracted professional teams
including architects, main contractors, engineers and quantity surveyors. The
Group has experience in managing such teams and all other aspects of the project
to seek to ensure that the costs stipulated during the tender process do not
materially exceed budget. The costs of each project are fixed prior to
commencement including sub-contractor fees and materials. This approach is
favoured by many customers as it offers budgetary certainty and has led to the
Group winning a substantial amount of repeat business, from amongst others
Holiday Inn, MacDonald Hotels and Arcadia.



Installation and commissioning are key areas of the Group's operations which
accounted for 66 per cent. of the Group's total revenue for the six months ended
31 March 2006. The Group has approved installer status for a number of the major
manufacturers of air conditioning equipment, including Daikin.



Daikin, the Group's main supplier of air conditioning units, is the largest
supplier and manufacturer of air conditioning equipment in the UK with an
approximate 20 per cent. market share. Daikin has a global annual turnover of
over £3 billion and a research and development budget of over £100 million per
year. The Directors consider Daikin to be the market leader in the development
and release of new generation air conditioning equipment.



WNL was awarded ''dealer of the year'' in 2002, 2003 and 2004 by Daikin for
achieving the highest sales in the UK of its air conditioning equipment.



The Group also operates a 'just in time' inventory procurement system with
Daikin, reducing the need to hold capital equipment stock. This allows the Group
to manage its working capital more efficiently without having to make
significant up front payments.



The Directors believe that in addition to providing the latest equipment and
competitive tendering on project costs, the Group adopts innovative installation
methods based around its in-house capabilities, tailored to the needs of the
individual customer. On hotel retro-fit projects each room is on average out of
use for 5 days, as opposed to an average period of 18 days prior to the Group's
change in operating model. This provides a measurable benefit to the customer
who is able to calculate the additional cost savings resulting from hotel rooms
being unavailable for a shorter period of time.



Owing to significant changes in EU legislation, which are described in the
subsection entitled EU Legislation below, the Directors consider that the market
for the Group's services will continue to expand as customers replace older air
conditioning units with more environmentally friendly and cost efficient
systems. The Group currently operates throughout the UK and in Ireland, but the
Directors intend to expand its operations throughout Europe over the coming
years.



Maintenance



Once a new piece of air conditioning equipment has been installed it requires
regular servicing to comply with, and retain, the manufacturer's warranty
provided on all equipment installed by the Group.



Servicing and maintenance of equipment are also required to ensure that
customers operate within and comply with an EU directive laid down to provide
safe and clean environments. The Group provides post installation service and
maintenance packages designed to meet these needs.



The Group's status as an approved installer has enabled it to negotiate with a
number of suppliers an additional two year manufacturer's warranty over and
above the more usual three year warranty. The customer can only rely upon this
extended warranty if it is supported by a five year maintenance contract. This
helps to provide the Group with stable maintenance income over this period.
Currently, the Group has over 300 customer sites in the UK and Ireland, where it
provides maintenance on air conditioning and mechanical and electrical
equipment.



The maintenance operations of the Group accounted for 20 per cent. of the
Group's total revenue for the six months ended 31 March 2006. The Directors
believe that the maintenance division forms a core part of the Group's
operations as it provides a stable and visible revenue stream to build upon.



Ventilation hygiene



Since 2003, the Group has undertaken duct cleaning of grease extract systems
within commercial kitchens and dry air air conditioning supply duct work.



The ventilation hygiene division has grown significantly since 2003 and now has
in excess of 130 customers including McDonalds, BHS, Little Chef, Burger King,
and Marriot Hotels, with more than 7,500 customer sites on which it carries out
just under 50,000 service visits per annum.



The Directors believe that to date demand for the Group's ventilation hygiene
services has been driven by customers' increased awareness of the fire hazard
associated with the accumulation of grease deposits in kitchen ventilation ducts
and insurance companies requiring owners/occupiers of non-domestic premises to
regularly maintain and clean ventilation ducts as a condition of insurance
cover.



Impending legislation due to be enacted later this year for all non-domestic
premises in England and Wales will, the Directors believe, require businesses to
clean kitchen grease extraction systems regularly to prevent fires. The
Directors consider that this legislative change will drive further growth in the
Group's Ventilation Hygiene Services division.



In order to take advantage of these opportunities the Group is currently
negotiating the exclusive UK rights to an automated duct cleaning system, which
would decrease the Group's requirement for labour, whilst increasing margins and
revenue visibility. The Group is currently trialling this system on a number of
customer sites.





KEY STRENGTHS



The Directors believe that the business of the Group has the following key
strengths:



• a 33 year operating track record;



• the ability, profitably, to support a range of customers from multi-billion
pound corporations to small independent retailers;



• good visibility of future earnings due to its ability to support customers
with post-installation maintenance services;



• significant gross profit margin (29 per cent. for the six months to 31 March
2006), achieved by providing management of project sites and ongoing full
service and maintenance packages at the end of a project;



• the ability to negotiate favourable terms with suppliers through economies of
scale which in turn, can be passed on to customers which is helpful to the
Group's success during the tendering process;



• regular cash flows generated from a customer base of over 7,500 client sites;
and



• Directors and key employees with substantial industry-specific experience.





STRATEGY



Organic Growth



The Group's market is currently subject to several compelling drivers of growth
as highlighted above in this document. The Directors believe that the Group can
continue to exploit the large potential market available and will utilise the
funds to be received pursuant to the placing funds  in order to do this.



Geographical growth



As the Group has grown, it has focused its efforts on readily accessible
markets, such as mainland Britain. The Group has, however, recently been invited
to tender both in the Republic of Ireland and mainland Europe. The Directors
consider that these geographical markets offer significant growth opportunities
for future years and that neither market should present significant additional
challenges because of the availability and mobility of the required labour force
and materials.



Acquisitions



The Group is regularly in discussions with competitors and is seeking
appropriate acquisition targets which would increase the Group's turnover and
profit and would provide access to an enlarged  customer base. The Directors
believe such acquisitions would further enhance the Group's principal contractor
business model.





DIRECTORS



Peter Worthington, aged 69, Non Executive Chairman



Peter Worthington founded the business in 1973 as a sole trader. Previously he
worked as a hotel   engineer for Intercontinental Hotel Corporation working on
projects in Europe, Africa and South America where he became director of
engineering for all I.H.C. hotels in Latin America. Prior to this he served in
the army. He initially served in a six year apprenticeship in mechanical
engineering after leaving school in 1952.



Mark Worthington, aged 40, Chief Executive Officer



Mark joined the business in September 1985 as an apprentice engineer spending
nine years in the field. He progressed through the organisation to service
manager and then general manager of the  Seasonmaster division in September
1997. In April 1999 the division was acquired by McLeod Russel Holdings Plc with
Mark spending 4 years as managing director reporting to the main board. He
returned to Worthington Nicholls Limited in April 2003 as group chief executive
officer and was instrumental in implementing the change in the business model
taking the Group from its role as an air conditioning sub contractor to that of
a support services principal contractor.



David Levis, aged 41, Corporate Director



David Levis previously worked as finance and commercial director for Surface
Transforms plc. He was responsible for all corporate activity including funding,
shareholder relations, public relations and  leading the company through its
successful flotations and fundraising, first on OFEX, then on AIM. Previously he
worked in the corporate finance department of KPMG in Manchester for four and a
half years, running business analysis and research for the northern region and
advising clients on mergers, acquisitions and corporate funding. David also
worked in corporate finance at BDO Stoy Hayward, Manchester, advising on mergers
and acquisitions. Prior to this, he established Ravenflow Limited, an aerospace
design consultancy that he ran for three years working on the design of UK, US
and European aircraft, after leaving British Aerospace plc where he worked for
seven years in aerospace design. David is currently a director and shareholder
in Noah North West Limited, a property developer operating in the affordable
housing sector.



Finance Director - The Board have identified the need for a Finance Director and
plan to interview suitably qualified candidates in the very near term.



Alastair Stoddart, aged 63, Non Executive Deputy Chairman



Alastair Stoddart is renowned in the City as an entrepreneur. As part owner of
Cearns & Brown Limited he helped grow the company from revenues of £4m to £200m
and sold the business in 2000 for £24m. Alastair was also chairman of Lindley
Catering Limited which was also sold in July 2005. He is currently chairman of
Wetherby Building Systems Limited.



Stephen Mulligan, aged 55, Non Executive Director



Stephen Mulligan's career spans over three decades of international hotel
operations at practically every level of the industry, having managed a number
of key properties in London as well as Intercontinental hotels in Dusseldorf,
Hanover and Vienna. Prior to this he spent over six years in the Middle East
where he was involved the opening of Intercontinental hotels in Dubai, Muscat
and Bahrain. He is experienced in managing hotels through pre-opening,
turnaround, refurbishment and re-branding. Until March 2004 Stephen was director
of operations for Intercontinental Hotels' and three Intercontinental branded
hotels in London, containing a total of some 1,200 rooms in the 5 star sector.
Previously he was based in the Frankfurt corporate office of Intercontinental
Hotels Group as area vice president of operations in northern Europe and
responsible for a portfolio of 27 hotels including Intercontinental, Crowne
Plaza, Holiday Inn and Express by Holiday Inn.


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