Worthington Group plc to Expand Global Legal Claims Business with Acquisition of £43m Legal Claim

Worthington is delighted to announce the expansion of its global claims business following agreement in principle to acquire a substantial claim estimated to be in the region of £43million. The litigation claim by two European companies centres on a claim for loss and breach of contract by a Chinese client in respect of a contract to develop a series of University campuses in China. Under the terms of the agreement, the legal title of the land and buildings concerned in the project passes to the claimants upon default by the Chinese counterparty. The claimants seek either cash settlement of the amount due under the contract, or sale of the land and buildings to recover their losses.

The Company believes that, as a London Stock Exchange main market company, it is well placed to use its Sterling listed paper to acquire substantial international investments on attractive terms. Worthington believes that the legal claims market is ideally suited to Worthington's stated intention to utilise its paper to acquire international investments on terms that are substantially value enhancing for Worthington's shareholders, whilst also spreading and managing risk.

Worthington is particularly attracted to the legal claims market because there are essentially only three outcomes: Win, lose or settle - which is in contrast to most business propositions where outcomes can be affected by many more factors which are outside the control of management.

Worthington's model is to charge the claimant a fee for assessing the merits of the claim. This fee provides a gross profit for Worthington after deduction of fees payable to specialist legal counsel. Counsel is employed to establish whether the claim has value, whether the claimant's statement of case is an accurate reflection of the facts as far as can be ascertained, and whether those facts, once assessed, would give rise to a claim having, in most cases, a greater than 60% chance of success. A key additional factor is whether the defendant is able to pay any successful award. The willingness of the claimant to pay such assessment fees is an indication to Worthington of the confidence the claimant has in its own case.

In the event that Worthington's senior counsel provides such an assessment, then Worthington will pay to the claimant an initial part payment in relation to the value of the claim, as assessed by Worthington's leading counsel, plus a deferred payment based on success. In this way, the claimant can immediately turn part of the claim into cash or main market London listed paper. This contrasts with traditional litigation funders who tend to fund the legal action but do not pay the claimant anything in advance of a successful outcome. Worthington believes that providing the claimant with some immediate consideration will be attractive to claimants worldwide; indeed, as stated above, the £43 million case centres around a claim for loss and breach of contract in respect of a significant property transaction in China. This underpins Worthington's confidence that demand for this product will be substantial internationally.

In relation to claims both in the United Kingdom and Worldwide, Worthington will typically only be interested in claims:

· With a value exceeding £5 million

· Where fees paid to verify the claims delivers at least a 50% gross profit margin to Worthington

· Where the probability of success is at least 60%

By rapidly expanding its portfolio of United Kingdom and international claims, Worthington expects to reduce the risk associated with any one claim whilst also increasing profits substantially over the coming years.

The principal terms of the claim are as follows:

The claimants will pay Worthington a fee of £125,000 to employ specialist counsel. Counsel will assess whether the claimants' statement of case, after verification, would indeed give rise to a claim in law for at least £43m. He will also provide an opinion as to the percentage probability of a successful claim.

In the event that this expert opinion establishes that the chance of success exceeds 60%, at a claim value of £43m, Worthington will issue to the claimants one million new Worthington ordinary shares.

The contracts concerned give rise to potential claims in different jurisdictions; therefore, a further payment of £1.5 million will be paid to the claimants by Worthington upon an English court finding in favour of the claimants. This £1.5 million may be settled, at Worthington's option, in cash or new Worthington ordinary shares, issued at the closing market price at the date that such judgement is given, subject to a minimum price of 50p per Worthington share.

Upon the entry of judgement, or order, by a court or form of arbitration in China, acceptable to Worthington, ratifying the judgement of the English court, a further payment of £3 million will be payable to the claimants. As before, this may be settled, at Worthington's option, in cash or Worthington shares at the closing market price at the date of such judgement, subject to a minimum market price of £1 per Worthington share.

Subject to successful enforcement of the judgement, such that Worthington receives no less than £43 million in cash and/or real property, Worthington shall pay to the claimants a further £5 million payable, at Worthington's option, in either cash or new Worthington shares at the closing market price prevailing at the date of receipt of the £43m subject to a minimum market price of £1.25 per Worthington share. In the event that Worthington receives less than £43 million, the £5 million payment to the claimants shall be reduced pro rata.

In the event that Worthington were to elect to pay the claimants in ordinary shares, and the claimants were to hold more than 9.9% of Worthington's enlarged share capital, Worthington may require the claimants to receive convertible loan notes instead. Such loan notes would be convertible into Worthington ordinary shares only to the extent that, immediately following any conversion, the claimants would hold less than 10% of Worthington's enlarged issued ordinary share capital.

Further details of this claim, including its structure, will be announced upon receipt of senior counsel's opinion on the claim's value and percentage likelihood of success.

Commenting on the expansion of Worthington's global claims business, Doug Ware CEO stated "I believe that the legal claims market represents an excellent growth opportunity for Worthington and that Worthington's innovative payment method should see substantial interest from claimants worldwide. The ability of Worthington to issue increasingly liquid stock to claimants, in advance of final judgement and settlement, is expected to make Worthington an attractive partner for claimants seeking to recover some of their losses much quicker than through traditional litigation funders. We also expect to soon be able to make an announcement in relation to our plans to drive liquidity in Worthington shares, this is so that claimants can be confident that Worthington shares will be increasingly actively traded".

About Worthington Group Plc ("Worthington")

Worthington (Stock Exchange LSE: WRN) is a British investment company that this year celebrates its 60th anniversary as a London Stock Exchange main market listed company. The company has four areas of investment focus: property, litigation claims, new economy and emerging markets. The Company believes that exceptional shareholder returns can be achieved by utilising its main market Sterling paper to acquire investments in these sectors worldwide.

Note:

Forward looking statements contained in this announcement, including descriptions of Worthington's litigation portfolio, legal claims (current and potential), strategy and plans, as well as expectations for future revenue and earnings, reflect Worthington's current views and assumptions with respect to future events and are subject to certain risks and uncertainties. There are many factors that may cause actual results achieved by Worthington to differ materially from expectations for future results. Such factors include risks related to litigation in general and the legal process, uncertainties related to the results of Worthington legal cases, including risks of delays or of failure of claims, macro-economic factors, domestic and international political risks, acts of God, environment and other risks, reputational risks, currency fluctuations and changes in contractual terms, legislation and administrative practices, as well as competition risk and other unforeseen factors. If one or more of such risks or factors of uncertainty were to materialise, or should one or more of the statements provided prove to be incorrect, actual developments and results may differ materially from the forward-looking statements contained in this announcement.

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