NORWALL GROUP INC. REPORTS RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2010

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

SOURCE NORWALL GROUP INC.

For further information: For further information: (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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NORWALL GROUP INC.

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