But an upbeat statement about current trading pushed the shares 6.5p higher to 65.5p - still well below the 100p peak they were trading at a year ago.
Profits fell 6 per cent to pounds 9m after a reorganisation charge of pounds 1.2m. The principal costs related to the centralisation of the consumer division's warehousing and distribution operations in addition to the centralisation of the customer services department. This resulted in the closure of five regional branches at the Muraspec commercial wallpaper subsidiary which distributes and sells wallpaper to offices and hospitals.
Though operating profits, stripping out acquisitions, rose from pounds 9.3m to pounds 10m, the figure was held back by poor performance in a number of areas, mostly in the final quarter of the year. Sales advanced by pounds 3m to pounds 99m.
The British operations of Muraspec suffered from a combination of poor demand and aggressive purchasing from customers. This had a knock-on effect on Brymor, the group's commercial wallpaper manufacturer, which sells 60 per cent of its output to Muraspec.
In northern Europe, the distribution businesses had a tough year with sales down 13 per cent due to poor demand in difficult economies.
But Walker Greenbank's consumer businesses did better as the UK housing market picked up.
Commenting on the outlook after what he described as a year of transition, chairman Charles Wightman said: "Our extensive capital investment programme and the re-structuring of our cost base have positioned us well to take advantage of market which are showing signs of improvement.
"This year I expect our financial performance to rebound as our strategy of investing for the long term begins to bear fruit."
He said the group's commercial business would benefit from the continuing recovery in the UK housing market while North American and the Far East also offered growth opportunities.
The dividend was unchanged at 3.7p.