NGI Norwall Group

BRAMPTON, ON, Aug. 27 /CNW/ -- BRAMPTON, ON, Aug. 27 /CNW/ - Norwall Group Inc., one of North America's largest manufacturers and distributors of residential wallcovering, announced today its financial results for the six months ended June 30, 2010. Sales for the second quarter of 2010 were $7,235,000, down $5,848,000 or 44.7% as compared to the same period in the previous year. The loss of two major customers accounted for $2,348,000 (17.9%) of the decline and the appreciation of the Canadian dollar accounted for a further $1,506,000 (11.5%). The second quarter's net loss was $2,167,000 or $(0.30) per share as compared to the net loss of $2,518,000 or $(0.35) for the comparable period last year. The Company continues to maintain a positive working capital of $4,239,000 at the end of the quarter of 2010 as compared to $6,087,000 at year end. As a result of the continued erosion of global wallcovering markets and the appreciation of the Canadian dollar it is no longer feasible for Norwall to profitably manufacture in Canada and sell its products largely denominated in US dollars. In response, the company's Board of Directors made the decision to reposition the business and outsource its manufacturing operations. In early 2010 the Company concluded a product supply agreement, with a South Korean company and has completed the sale of its manufacturing equipment to the same supplier. Manufacturing is expected to cease in Canada by the third quarter of 2010. Norwall subsequently entered into a conditional sales agreement for the sale of its manufacturing plant located in Brampton Ontario. Norwall Group (TSXV:NGI) manufactures quality residential wallpapers and borders and distributes them to thousands of home centres, specialty stores and mass merchants in Canada and through its wholly-owned operating subsidiary, Patton Wallcoverings, in the United States. This Press Release contains forward-looking statements reflecting management's current expectations regarding future results of operations, economic performance, financial conditions, and achievements of the Company. Actual results may differ materially from those in such statements. The Company wishes to caution the reader that those important factors described elsewhere in the management's discussion and analysis of operations could affect the Company's actual results and could cause such results to materially differ from those expressed in any forward-looking statement made by, or on behalf of, the Company. NORWALL GROUP INC. Consolidated Balance Sheets (In thousands of Canadian dollars, except per share amounts) June 30, December 2010 31, 2009 $ $ (Unaudited) Assets Current assets Cash and cash equivalents 1,781 3,343 Accounts receivable 3,532 3,765 Inventories 4,113 3,902 Merchandising supplies 495 161 Prepaid expenses and other 74 135 Note receivable 1,188 - Assets held for sale - 1,997 --------------------- 11,183 13,303 Assets held for sale 6,647 6,647 Property, plant and equipment 760 1,168 Future income taxes 1,995 2,024 --------------------- 20,585 23,142 --------------------- --------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 3,579 3,274 Term debt 3,365 3,942 --------------------- 6,944 7,216 --------------------- Shareholders' Equity Share capital 33,134 33,134 Accumulated other comprehensive income (loss) (97) 21 Deficit (19,396) (17,229) --------------------- 13,641 15,926 --------------------- 20,585 23,142 --------------------- --------------------- NORWALL GROUP INC. Consolidated Statements of Operations (In thousands of Canadian dollars, except per share amounts) FOR THE THREE MONTHS ENDED SIX MONTHS ENDED --------------------- --------------------- June 30, June 30, June 30, June 30, 2010 2009 2010 2009 --------------------- --------------------- Sales 3,339 6,119 7,235 13,083 Cost of goods sold 2,591 4,397 5,594 9,320 --------------------- --------------------- Gross profit 748 1,722 1,641 3,763 Selling, general and administrative expenses 1,957 2,352 3,688 4,620 --------------------- --------------------- Loss before the undernoted (1,209) (630) (2,047) (857) Restructuring and other costs - (6) - (613) --------------------- --------------------- Loss from operations before the following items (1,209) (636) (2,047) (1,470) Foreign exchange gain (loss) 163 (680) 79 (607) Interest expense (58) (53) (116) (110) --------------------- --------------------- Loss before income taxes (1,104) (1,369) (2,084) (2,187) Income taxes (expense) recovery (2) (109) (83) (331) --------------------- --------------------- Net loss for the period (1,106) (1,478) (2,167) (2,518) --------------------- --------------------- Basic and diluted loss per common share (0.16) (0.210) (0.30) (0.35) --------------------- --------------------- --------------------- --------------------- Weighted and average number of common shares outstanding 7,135,032 7,135,032 7,135,032 7,135,032 --------------------- --------------------- --------------------- --------------------- %SEDAR: 00002584E (905) 791-2700; James J. Patton, President and Chief Executive Officer, jpatton@norwallgroup.com; Edward Diochon, Vice President of Finance, ediochon@norwallgroup.com

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