Final Results - Part 2

Headlam Group PLC
27 March 2001

PART 2

Consolidated profit and loss account
for the year ended 31 December 2000
                         
                                    2000                              1999
                                    £000                              £000
Turnover                                                   
Continuing operations            405,905                           365,787
Acquisitions                      26,185                                 -
                                  ------                            ------    
                                 432,090                           365,787
Discontinued operations           16,556                            21,091
                                  ------                            ------    
                                 448,646                           386,878
Cost of sales                   (309,117)                         (271,030)
                                  ------                            ------    
Gross profit                     139,529                           115,848
Net operating expenses          (176,593)                          (84,028)
                                  ------                            ------    
Operating (loss)/profit                                    
Continuing operations            (34,202)                          33,889
  Acquisitions                       994                                -
                                  ------                            ------    
                                 (33,208)                          33,889
Discontinued operations           (3,856)                          (2,069)
                                  ------                            ------    
Operating profit before  
goodwill amortisation
and asset impairment              29,516                           34,259
Goodwill amortisation    
(including goodwill
impairment of £60.0 million)     (60,757)                          (2,439)
Asset impairment                  (5,823)                               -
                                  ------                            ------    
                                 (37,064)                          31,820
Loss on closure of                
discontinued operation            (1,454)                               -
Loss on sale of properties          
in continuing operations            (604)                               -
                                  ------                            ------    
                                 (39,122)                          31,820
Net interest  payable    
and other similar items           (4,914)                          (3,096)
                                  ------                            ------   
(Loss)/profit on ordinary        
activities before taxation       (44,036)                          28,724
Taxation on (loss)/profit of      
ordinary activities               (3,696)                          (9,494)
                                  ------                            ------    
                      
                                                           
(Loss)/profit for the    
financial year                   (47,732)                         19,230
Dividends paid and proposed      
on equity and non-equity shares   (8,650)                         (8,461)
                                  ------                          ------    
Retained (loss)/profit           
for the financial year           (56,382)                         10,769
                                  ======                          ======      
                  
                                                           
Earnings/(loss) per share                                        

Basic                                                                         
Before goodwill amortisation       15.6p                           27.5p
                                  ======                          ======      
                  
After goodwill amortisation       (57.0p)                          24.4p
                                  ======                          ======
Diluted                                                                       
Before goodwill amortisation       15.6p                           27.2p
                                  ======                          ======
After goodwill amortisation       (57.0p)                          24.1p
                                  ======                          ======
                                                           
Consolidated balance sheet
 31 December 2000
                                    2000                            1999
                                    £000                            £000
                                                            
Fixed assets                                                
Intangible assets                 14,422                          69,787
Tangible assets                   54,856                          49,822
Investments                          466                             466
                                  ------                          ------      
                                  69,744                         120,075
                                  ------                          ------      
Current assets                                              
Stocks                            82,115                          81,784
Debtors                           79,075                          86,230
Investments                            -                              28
Cash at bank and in hand           7,216                          10,871
                                  ------                          ------      
                                 168,406                         178,913
                                                            
Creditors: amounts falling      
due within one year             (135,384)                       (148,095)
                                  ------                          ------      
Net current assets                33,022                          30,818
                                  ------                          ------      
Total assets less        
current liabilities              102,766                         150,893
                                  ------                          ------      
                    
Creditors: amounts falling       
due after more than one year    (38,219)                        (30,993)
                                                            
Provisions for           
liabilities and charges            (667)                           (451)
                                  ------                          ------      
Net assets                       63,880                         119,449
                                  ======                          ======      
                   
Capital and reserves                                        
Called up share capital           4,235                          4,220
Share premium account            48,303                         47,838
Revaluation reserve               3,606                          3,866
Special reserve                       -                         49,654
Profit and loss account           7,736                         13,871
                                 ------                          ------       
Shareholders' funds                                         
Equity                           63,830                        119,399
Non-equity                           50                             50
                                 ------                          ------       
                                 63,880                        119,449
                                 ======                          ======       
                   
Consolidated cash flow statement
for the year ended 31 December 2000
                                  
                                  2000                            1999
                                  £000                            £000
                                                            
Net cash inflow from     
operating activities            32,309                          32,000
                                                            
Returns on investments   
and servicing of finance       (4,652)                          (3,056)
                                                            
Taxation                       (9,184)                          (7,700)
                                                            
Capital expenditure and  
financial investment             (847)                          (9,978)
                                                            
Acquisitions                   (8,389)                         (22,605)
                                                            
Equity dividends paid          (8,323)                          (4,381)
                                ------                          ------        
Cash inflow/(outflow)    
before financing                  914                          (15,720)
Financing                      (4,411)                           3,046
                                ------                          ------        
Decrease in cash in year       (3,497)                         (12,674)
                                ======                          ======        
                     
Reconciliation of net cash flow to movements in net debt


                                 2000                            1999
                                 £000                            £000
                                                            
Decrease in cash in year      (3,497)                         (12,674)
Cash outflow/ (inflow) from               
reduction/(increase) in debt   4,891                          (14,836)
                               ------                          ------        
Change in debt resulting 
from cash flows                1,394                         (27,510)
Debt acquired with 
subsidiaries                  (3,080)                         (2,513)
New finance leases 
and similar hire       
purchase contracts            (2,996)                         (1,770)
Translation difference          (634)                            583
                               ------                          ------        
Movement in net debt 
in the year                   (5,316)                        (31,210)
Net debt at 1 January        (33,631)                         (2,421)
                               ------                          ------         
Net debt at 31 December      (38,947)                        (33,631)
                               ======                          ======         
                     
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2000

                                 2000                            1999
                                 £000                            £000
(Loss)/profit for the 
financial year               (47,732)                          19,230
Currency translation 
differences on foreign           
currency net investments         167                             (87)
                               ------                          ------         
Total recognised gains 
and losses for                
the financial year           (47,565)                         19,143
                               ======                          ======         
                         
Note of consolidated historical cost profits and losses
for the year ended 31 December 2000


                                2000                           1999
                                £000                           £000
                                                           
Reported (loss)/profit on   
ordinary activities before
taxation                    (44,036)                         28,724
Difference between an                                      
historical cost depreciation             
charge and the actual 
depreciation charge 
calculated on the
revalued amount                260                               58
                             ------                          ------          
Historical cost             
(loss)/profit on ordinary
activities before taxation (43,776)                          28,782
                             ======                          ======           
                     
                                                           
Historical cost (loss)/            
profit for the year 
retained after taxation 
and dividends              (56,122)                         10,827
                            ======                          ======            
                      
                                                           

Reconciliation of movements in consolidated shareholders' funds
for the year ended 31 December 2000


                              2000                           1999
                              £000                           £000
                                                           
(Loss)/profit for the 
financial year            (47,732)                         19,230
Dividends                                                  
 Equity shares             (8,647)                         (8,332)
 Non-equity shares             (3)                           (129)
                           ------                          ------             
                   
Retained (loss)/profit 
for the financial year    (56,382)                         10,769
Equity share capital 
issued                        480                          51,044
Cost of share issues            -                            (330)
Shares issued from 
Qualifying Employee 
Share Trust                   166                               -
Currency translation 
differences on foreign   
currency net investments      167                             (87)
                           ------                          ------             
Net (reduction)/addition 
to shareholders' funds    (55,569)                         61,396

Shareholders' funds 
at 1 January              119,449                          58,053
                          ------                           ------             
                     
                                                           
Shareholders' funds at 
31 December                63,880                         119,449
                           ======                          ======             
                    
Segmental analysis

Turnover
                                                      
                             2000                            1999
                             £000                            £000
By activity                      
                                                      
Floorcoverings            331,794                         300,752             
Continuing activities      26,185                               -             
                           ------                          ------
Acquisitions              357,979                         300,752             
        
                                             
Windowcoverings                                       
Continuing activities      74,111                          65,035
Discontinued operations    16,556                          21,091
                           ------                          ------
                           90,667                          86,126
                           ------                          ------             
                          448,646                         386,878
                           ------                          ------             
              
                                                      
Operating (loss)/profit   
                             2000                            1999
                             £000                            £000
By activity
                                                      
Floorcoverings                                        
Continuing activities      27,163                          26,905
Acquisitions                1,277                               -
Less: goodwill 
amortisation                 (787)                           (370)
                            ------                          ------            
                           27,653                          26,535
                                                      
                                                      
Windowcoverings                                       
Continuing activities       2,913                           7,108
Less: goodwill 
impairment                (59,970)                         (2,069)
Less: asset 
impairment                 (2,633)                              -
                           ------                          ------
                          (59,690)                          5,039
                                                      
Discontinued operations      (666)                          1,188
Less: asset impairment     (3,190)                              -
                           ------                          ------             
       
                           (3,856)                          1,188
                           ------                          ------             
              
                          (63,546)                          6,227
                                                      
Central operations         (1,171)                           (942)
                           ------                          ------             
                          (37,064)                         31,820
                           ------                          ------             
              
                                                      



Earnings per share

The calculation of earnings per share is based on the average number of
ordinary shares  in issue during the year of 83,614,426 (1999: 78,436,955).
The  weighted average  number  of  ordinary  shares used for the diluted 
earnings  per share calculation is 83,709,152  (1999: 79,360,933).

Reconciliation  of  group  operating  (loss)/profit  to  net  cash  inflow 
from operating activities

                              2000                            1999
                              £000                            £000
                                                              
Operating(loss)/profit     (37,064)                         31,820
Exceptional items           (2,058)                              -
Depreciation of 
tangible fixed assets        5,319                           3,937
Depreciation of intangible 
fixed assets                    64                               -
Fixed asset investment 
writedown                       28                               -
Goodwill amortisation       60,757                           2,439
Asset impairment             5,823                               -
Loss/(profit) on sale 
of tangible fixed assets       854                             (91)
Movement in stocks             323                          (5,231)
Movement in debtors          4,804                          (7,308)
Movement in creditors       (6,541)                          6,434
                            ------                          ------            
                        
                                                              
Net cash inflow from 
operating activities        32,309                          32,000
                            ======                          ======
                                                              
Gross cash flows
                              2000                            1999
                              £000                            £000
                                                              
Returns on investments 
and servicing of finance
Bank interest receivable        78                              44
Bank and loan interest      (4,452)                         (2,793)
Interest payable on 
finance leases 
and similar hire      
purchase contracts            (275)                           (178)
Dividends on 
non-equity shares               (3)                           (129)
                             ------                          ------           
                            (4,652)                         (3,056)
                             ======                          ======           
                      
                                                              
Capital expenditure and 
financial investment
Purchase of tangible 
fixed assets                (5,687)                        (10,545)
Sale of tangible 
fixed assets                 4,840                           1,033
Purchase of investments          -                            (466)
                             ------                          ------           
                              (847)                         (9,978)
                             ======                          ======           
                      
Financing                                                     
Issue of ordinary 
share capital                  480                             661
Expenses paid in connection 
with share issues                -                            (330)

Repayment of 
amounts borrowed            (8,254)                         (2,869)
New loans                    5,202                          19,563
Redemption of 
preference shares                -                         (12,121)
Capital element of 
finance leases  
and similar hire purchase
contract payments           (1,839)                         (1,858)
                            ------                          ------            
                            (4,411)                          3,046
                            ======                          ======            
                       
                                                              


Analysis of changes in net debt

          At 1 Jan   Cashflows     Acquired    Other   Translation  At 31 Dec
              2000                           Changes   differences       2000
              £000        £000         £000     £000          £000       £000
                                                                         
Cash at bank 
and in hand 10,871     (4,119)          551        -           (87)    7,216

Bank 
overdraft    (793)         71            -         -            (7)     (729)
            ------      ------       ------    ------         ------    ------
             10,078     (4,048)         551        -           (94)    6,487
Debt due 
within  
one year    (11,677)     8,254       (1,484)    (749)          (65)   (5,721)
Debt due 
after   
one year    (28,094)    (5,202)      (1,551)     749          (475)  (34,573) 
                                                          
Finance leases                                                           
and similar  
hire purchase                                          
contracts   (3,938)       1,839         (45)  (2,996)            -    (5,140)
            ------      ------       ------    ------        ------    ------ 
          (33,631)         843      (2,529)   (2,996)         (634)  (38,947) 
            ======      ======       ======    ======        ======    ======
                                                                         
The  financial information set out in the financial statements and  notes 
above does  not  constitute the company's statutory accounts for the  years 
ended 31 December  2000 or 1999.  The financial information for 1999 is
derived from the statutory  accounts  for  1999 which have been delivered  to 
the  registrar of companies.   The auditors have reported on the 1999
accounts; their  report  was unqualified and did not contain a statement under
section 237 (2) or (3) of  the Companies  Act 1985.  The statutory accounts
for 2000 will be finalised  on the basis  of  the  financial  information 
presented  by  the  directors  in this preliminary  announcement and will be
delivered to the  registrar  of  companies following the company's annual
general meeting.

The  financial statements for the year ended 31 December 2000 will be posted 
to shareholders shortly.