Trading Statement

Walker Greenbank PLC 21 December 2000 Walker Greenbank PLC Update on trading and takeover discussions In our interim results announcement of 17 October 2000, the company warned that slowing sales growth would put pressure on our businesses in the second half of the financial year. Since then the Board believes that sales in the UK and in Continental Europe have been further adversely affected by factors including fuel shortages, transport disruption and the weather. Further, US customer activity in November was unusually slow. As a result of these factors, the Board expects operating losses, before exceptional operating items, to be approximately £1.9 million for the year ending 31 January 2001. These exceptional operating items, which are likely to be approximately £2.3 million in the current year, include the already reported effects of the consolidation of the company's wallcoverings manufacturing operations in Loughborough and the problems associated with the Group's new IT platform together with restructuring costs to address the recent poor trading performance. In 1996, the company entered into an agreement with a communications conglomerate to supply the group with data transmission services over its wide area network in the UK and Europe. The company has recently received a claim under this contract relating to services purportedly supplied in 1998 amounting in all to some £1.8 million. The Board refutes the claim and intends to defend it vigorously. We also reported in October that we had received an approach that might lead to an offer for the company. The Board has now received an indicative proposal which is subject to pre-conditions and which may or may not lead to an offer being made for Walker Greenbank. A further announcement will be made to shareholders in due course. Enquiries: Aidan Connolly Chief Executive Walker Greenbank PLC Tel: 01442 234666 John Rudofsky Helsen Communications Tel: 020 8481 7681 / 07767 823676 Richard Barlow Richard Fetterman KPMG Corporate Finance Tel: 020 7311 1000 The directors of Walker Greenbank PLC accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors (having taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information. KPMG Corporate Finance, a division of KPMG which is authorised by the Institute of Chartered Accountants in England and Wales to carry on investment business, is acting exclusively for Walker Greenbank PLC as financial adviser. KPMG Corporate Finance is not acting for any other person (including any recipient of this document) and KPMG Corporate Finance will not be responsible to any person other than Walker Greenbank PLC for providing the protections afforded to clients of KPMG Corporate Finance or for providing advice in relation to the contents of this press release or any matter referred to herein. This announcement does not constitute an offer or an invitation to purchase any securities. Appendix I: Loss forecast 1 On the bases and assumptions set out below, the Directors of Walker Greenbank expect operating losses, before exceptional operating items, to be approximately £1.9 million for the year ending 31 January 2001. These exceptional operating items are likely to be approximately £2.3 million in the current year. a) Accounting policies The loss forecast was prepared on the basis of the accounting policies adopted by the Walker Greenbank Group for the preparation of its annual published accounts, as set out in the audited accounts for the year ended 31 January 2000. b) Assumptions There will be no material change in the present management or control of the Walker Greenbank Group. There will be no material change in legislation or regulatory requirements impacting the Walker Greenbank Group's operations or its accounting policies. There will not be any material change in the rates or bases of taxation, both direct or indirect, affecting the Walker Greenbank Group from those currently prevailing. There will not be any changes in the general trading and economic conditions in the UK which would materially affect the Walker Greenbank Group's business. There will be no major disruption to the business of the Walker Greenbank Group or its key suppliers by reason of industrial disputes, business failures or natural disasters. There will be no significant movement in exchange rates relative to Sterling. 2 Letters (a) Letter from PricewaterhouseCoopers: PricewaterhouseCoopers 10 Bricket Road St Albans AL1 3JX Telephone +44 (0) 1727 844155 Facsimile +44 (0) 1727 845039 PRIVATE AND CONFIDENTIAL The Directors Walker Greenbank PLC 4 Brunel Court Cornerhall Hemel Hempstead HP3 9XX KPMG Corporate Finance 8 Salisbury Square London EC4Y 8BB 21 December 2000 Dear Sirs We have reviewed the basis of compilation and the accounting policies for the loss forecast of Walker Greenbank plc ('the Company') and its subsidiary undertakings (together 'the Group') for the year ending 31 January 2001 as set out on in the Company's public announcement dated 21 December 2000. We conducted our work in accordance with the Statements of Investment Circular Reporting Standards issued by the Auditing Practices Board. The loss forecast, for which the directors of the Company are solely responsible, includes the results shown by unaudited management accounts for the three months ended 31 October 2000 and a forecast for the three months ending 31 January 2001. In our opinion the loss forecast has been properly compiled on the basis stated and the basis of accounting is consistent with the accounting policies of the Company. Our work in connection with the loss forecast has been undertaken solely for the purpose of reporting to the directors of the Company and KPMG Corporate Finance. We accept no responsibility to any offeror or its shareholders or any other person in respect of, arising out of or in connection with that work. Yours faithfully PricewaterhouseCoopers PricewaterhouseCoopers is the successor partnership to the UK firms of Price Waterhouse and Coopers & Lybrand. The principal place of business of PricewaterhouseCoopers and its associate partnerships, and of Coopers & Lybrand, is 1 Embankment Place, London WC2N 6RH. The principal place of business of Price Waterhouse is Southwark Towers, 32 London Bridge Street, London SE1 9SY. Lists of the partners' names are available for inspection at those places. All partners in the associate partnerships are authorised to conduct business as agents of, and all contracts for services to clients are with, PricewaterhouseCoopers. PricewaterhouseCoopers is authorised by the Institute of Chartered Accountants in England and Wales to carry on investment business. (b) Letter from KPMG Corporate Finance KPMG Corporate Finance PO Box 695 Tel +44 (0) 20 7311 1000 8 Salisbury Square Fax +44 (0) 20 7311 8252 London EC4Y 8BB Telex 8811541 KPMGLO G United Kingdom DX 38050 Blackfriars Private & confidential The Directors Walker Greenbank PLC 4 Brunel Court Cornerhall Hemel Hempstead Hertfordshire HP3 9XX 21 December 2000 Dear Sirs Walker Greenbank PLC We refer to the loss forecast ( 'the Loss Forecast') of Walker Greenbank PLC (the 'Company') and its subsidiary and associated undertakings (the 'Group') for the year to 31 January 2001 set out in an announcement of Walker Greenbank PLC dated 21 December 2000. We have discussed the Loss Forecast, together with the basis and assumptions upon which the Loss Forecast has been made, with the Directors of the Company. We have also discussed with PricewaterhouseCoopers the work they have done in respect of the Loss Forecast as set out in their letter dated 21 December 2000. On the basis of the foregoing, we consider that the Loss Forecast, for which you as Directors are solely responsible, has been made after due and careful enquiry. Yours faithfully for KPMG Corporate Finance Michael Higgins Richard Barlow Partner Director (((( KPMG, a partnership KPMG Corporate England and business established under English Finance is a Wales to carry is 8 law, is a member of KPMG division of on investment Salisbury International, a Swiss KPMG which is business. Square, association authorised by London the Institute EC4Y 8BB of where a Chartered The principal list of Accountants in place of partners' names is open to inspection Appendix II: Interim results Walker Greenbank PLC Unaudited Consolidated Profit and Loss Account For the six months ended 31 July 2000 6 months to 31 July 2000 before exceptional operating items £000 Exceptional operating items 6 months 6 months Year to 31 to 31 to £000 July July 2000 1999 31 note Jan £000 £000 2000 £000 Turnover Continuing 25,929 - 25,929 25,265 49,937 operations Acquisitions 5,874 - 5,874 - - 1 31,803 - 31,803 25,265 49,937 Group operating (loss)/profit Continuing 2 (338) (1,027) (1,365) 908 1,719 operations Acquisitions 324 - 324 - - (14) (1,027) (1,041) 908 1,719 Share of associated undertaking's - - - (65) (56) operating loss Operating (14) (1,027) (1,041) 843 1,663 (loss)/profit Profit on sale - - - - 1,036 of property Fundamental restructuring of overseas 3 - - - (1,084) (2,533) operations Amounts written - - - - (450) off investments Loss on (14) (1,027) (1,041) (241) (284) ordinary activities before interest Net interest (22) - (22) 398 670 (payable)/ receivable (Loss)/profit on ordinary activities (36) (1,027) (1,063) 157 386 before taxation Taxation 4 269 - 269 (81) (247) (Loss)/profit 233 (1,027) (794) 76 139 after taxation Dividends - - - - (1,123) Retained (loss) 233 (1,027) (794) 76 (984) /profit for the period Earnings per share - Basic and 6 (1.41)p 0.13p 0.25p diluted Dividend per 5 - - 2.00p ordinary share Walker Greenbank PLC Unaudited Consolidated Balance Sheet As at 31 July 2000 As at 31 As at 31 As at 31 July 2000 July 1999 Jan 2000 £000 £000 £000 Note Fixed assets Goodwill 7 1,139 198 169 Tangible assets 25,206 12,547 15,381 Walker Greenbank PLC shares 1,573 2,023 1,573 27,918 14,768 17,123 Current assets Stocks 16,627 13,307 12,605 Debtors 20,524 12,198 14,351 Cash at bank and in hand 8 1,836 15,958 12,818 38,987 41,463 39,774 Creditors: amounts falling due within (23,517) (11,608) (12,872) one year Net current assets 15,470 29,855 26,902 Total assets less current liabilities 43,388 44,623 44,025 Creditors: amounts falling due after (1,434) (1,033) (799) more than one year Provisions for liabilities and charges (258) (243) (784) Net assets 41,696 43,347 42,442 Capital and reserves Share capital 590 590 590 Share premium account 457 457 457 Profit and loss account (84) 948 662 Other reserves 40,733 41,352 40,733 Shareholders' funds 41,696 43,347 42,442 Walker Greenbank PLC Unaudited Group Cash Flow Statement For the six months ended 31 July 2000 6 months to 31 6 months to Year to July 2000 £000 31 July 1999 31 Jan £000 2000 £000 Note Net cash (outflow)/inflow from (2,188) 235 1,517 operating activities Returns on investment and servicing of finance Net interest received 22 302 749 Interest element of finance (60) (35) (66) lease payments Dividend income (Employee Share - - 57 Option Plan) (38) 267 740 Taxation 106 (96) (658) Capital expenditure Purchase of tangible fixed (5,193) (1,803) (6,283) assets Proceeds from disposal of - - 2,104 property Proceeds from disposal of - 56 73 tangible fixed assets (5,193) (1,747) (4,106) Acquisitions, disposals and fundamental restructuring Acquisitions 9 (10,459) - (302) Fundamental restructuring costs (325) - (454) Loan guarantee payment on liquidation of associated undertaking - - (118) (10,784) - (874) Equity dividends paid (1,180) (1,180) (1,180) Cash outflow before use of (19,277) (2,521) (4,561) liquid resources and financing Management of liquid resources Bills of exchange receivable - 47 343 Financing Proceeds from finance leases 1,400 - - Principal repayments of finance (322) (105) (214) lease obligations Repayment of borrowings (15) (262) (1,495) 1,063 (367) (1,709) Decrease in cash and cash 8 (18,214) (2,841) (5,927) equivalents Walker Greenbank PLC Notes to the Accounts 1 SEGMENTAL ANALYSIS Turnover Continuing operations Turnover Turnover Turnover Acquisitions Group 6 months to Group 31 July 2000 6 months to 6 months to 6 months to 31 July 31 July 31 July 1999 2000 2000 (a) Classes of £000 £000 £000 £000 Business Fabrics 10,815 5,874 16,689 10,783 Wallcoverings 14,246 - 14,246 13,647 Others 868 - 868 835 25,929 5,874 31,803 25,265 (b) Geographical Segments - by destination United Kingdom 15,365 5,859 21,224 14,467 Continental Europe 6,219 - 6,219 6,547 North America 3,787 15 3,802 3,429 Rest of the World 558 - 558 822 25,929 5,874 31,803 25,265 2 EXCEPTIONAL OPERATING ITEMS The exceptional cost of £1,027,000 comprises £678,000 of removal and integration costs incurred with respect to the new manufacturing plant at Loughborough and £349,000 of additional operational costs incurred as a result of problems with the group's new I.T. platform. 3 FUNDAMENTAL RESTRUCTURING In the six months to 31 July 1999 a cost of £1,084,000 was incurred representing the estimated cost of closing part of the group's overseas operations. This amount includes £570,000 of goodwill previously written off direct to reserves. This exceptional cost had the effect of reducing the group's tax charge by £278,000. 4 TAXATION In the six months ended 31 July 2000 the group received tax refunds in the UK following the successful resolution of some outstanding tax issues from prior years. Tax was charged in the overseas operations at an effective rate equivalent to the corporation tax rate ruling in these countries. In the prior year the tax charge represents a rate of 29% calculated on the full year after adjusting for exceptional items. 5 DIVIDENDS The directors do not recommend the payment of an interim dividend in the period (1999: £nil). 6 EARNINGS PER SHARE The basic earnings per share and diluted earnings per share are based on a loss after taxation of £794,000 (1999: profit of £76,000) and 56,457,016 ordinary shares (1999: 56,457,016), being the weighted average number of the shares in issue during the period. The basic earnings per share and diluted earnings per share for the year ended 31 January 2000 were based on earnings of £139,000 and the weighted average of 56,457,016 ordinary shares in issue during the year. 7 GOODWILL £000 Cost At 1 February 2000 210 Goodwill on acquisitions (note 9) 1,003 At 31 July 2000 1,213 Amortisation At 1 February 2000 41 Amortisation for the period 33 At 31 July 2000 74 Net book amount at 31 July 2000 1,139 Net book amount at 1 February 2000 169 8 ANALYSIS OF NET DEBT 1 February Other Exchange 31July 2000 non-cash movement 2000 changes £000 £000 £000 Cash £000 flow £000 Cash at bank and in 12,818 (11,013) - 31 1,836 hand Overdrafts - (7,201) - - (7,201) 12,818 (18,214) - 31 (5,365) Debt due within 1 (28) 15 (15) (2) (30) year Debt due after 1 year (59) - 15 (5) (49) Finance leases (936) (1,078) - - (2,014) (1,023) (1,063) - (7) (2,093) Current asset - - - - - investments 11,795 (19,277) - 24 (7,458) 9 ACQUISTION OF STANDFAST DYERS AND PRINTERS AND WEAVESTYLE Book value Fair value Provisional fair adjustment value £000 £000 £000 Assets acquired comprised: Tangible fixed assets 6,499 - 6,499 Current assets 6,363 - 6,363 Creditors: due within one (3,006) (83) (3,089) year Creditors: due after more (15) - (15) than one year 9,841 (83) 9,758 Goodwill 1,003 Cash cost of acquisition 10,761 On 31 March 2000 the group completed its purchase of the trade and certain of the assets and liabilities of two businesses trading as Standfast Dyers and Printers and Weavestyle. 10 POST BALANCE SHEET EVENT On 29 September 2000 the trade and certain of the assets of the businesses trading as Cole & Son and John Perry were sold for £3 million, of which £2.8 million has been paid in cash. 11 PREPARATION OF INTERIM FINANCIAL INFORMATION The interim financial statements have been prepared on a basis consistent with the accounting policies disclosed in the Annual Report and Accounts for the year ended 31 January 2000. The consolidated results for the year ended 31 January 2000 have been extracted from the financial statement for that year and do not constitute full statutory accounts for the group. The group accounts for the year ended 31 January 2000 received an unqualified audit report and did not include a statement under section 237 (2) or (3) of the Companies Act 1985 and have been filed with the Registrar of Companies. 12 INTERIM FINANCIAL STATEMENTS Further copies of this interim statement are available from the registered office of Walker Greenbank PLC at 4 Brunel Court, Cornerhall, Hemel Hempstead, Hertfordshire HP3 9XX.

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