Disposal

Headlam Group PLC
21 December 2001

Headlam Group plc ('Headlam')

Disposal of Gradus Group Limited

Headlam announces that on Friday 21 December 2001 it completed the disposal of
its investment in Gradus Group Limited ('Gradus'). At the same time Headlam
has sold its freehold interest in the properties occupied and associated with
the Gradus operations.

Gradus is comprised of Gradus Limited, a company engaged in the manufacture,
marketing and distribution of contract floorcoverings and floorcovering
accessories and Decor Fabrications Limited, a company whose business is the
assembly and supply of floor lighting products. In addition there are a
further three non-trading companies.

Gradus, whose operations are based predominantly in Macclesfield, Cheshire,
and the associated properties are being purchased through a management buy out
backed by Close Brothers Private Equity Limited.

The total consideration for the disposal of the investment and the properties
amounts to £32.0 million of which £30.0 million was paid on completion with 
£2.0 million paid on deferred terms, £500,000 being payable in ten equal six
monthly instalments commencing 15 August 2002 and £1.5 million being payable
on 15 February 2007.

As at 31 December 2000 Gradus had a net asset value of £7.6 million. In the
twelve months to 31 December 2000 Gradus' turnover amounted to £35.0 million
and profit before taxation was £4.6 million.

The disposal of Gradus will enable Headlam to concentrate exclusively on its
distribution activities and whilst the transaction is earnings diluting, the
cash received on completion will eliminate Headlam's term borrowings and leave
it in a net cash positive position.

Enquiries

Headlam Group plc               01675 433000

Tony Brewer                     Chief Executive

Steve Wilson                    Finance Director

End