Nichols ordered to pay £8m damages over Pakistan deal

VIMTO maker Nichols has been ordered to pay damages of £8m, plus costs of up to £1.5m, to a Pakistan-based business partner.

The case was brought by Gul Bottlers which was claiming for loss of profit on a contract it signed in 2011 to produce and distribute Vimto in Pakistan.

In a stock market statement the Newton-le-Willows-based firm said it disagreed with the scale of the award and was now in talks with its advisers over a potential appeal.

In its accounts published in March, Nichols said it expected an exceptional cost of £2m in relation to the claim.

It said: “At that time, the provision was based on Nichols’ external expert advisor’s evaluation of the claim and was considered sufficient to cover the potential loss of profits award.”

It added: “Whilst this is an extremely disappointing outcome, there is no impact on future underlying trading expectations and the payment of this award in no way affects the group’s ability to continue with its strategy to invest in its brands and future growth plans. The group continues to be highly cash generative with a strong balance sheet.”

Nichols said trading for the first six months of the year continued to be good and it is confident of delivering full-year results in line with management expectations.