Headlam Regulatory News (HEAD)

16 May 2014

Interim Management Statement

Headlam Group plc ("Headlam"), Europe's leading floorcoverings distributor, announces its Interim Management Statement for the period from 1 January 2014 to 30 April 2014.

The group has enjoyed a good start to 2014 with trading during the first four months of 2014 maintaining the improving trend that was evident during the final quarter of 2013. During the period, group revenue increased by 8.9% compared with the previous year.

UK revenues increased by 11.1% with like for like performance improving by 8.9%. Comparatives are calculated by reference to a weak period in 2013 which was influenced by particularly unfavourable weather during the first two months and lacklustre markets during months three and four.

Anecdotal evidence relating to the UK floorcovering market points to a slightly more buoyant environment. Whilst the weaker comparatives are a flattering factor and the increased activity in the UK market during the first four months has been contributory, there is no doubt that the UK business has continued to grow market share during this period.

Despite the more positive trading environment, the market in the UK still remains very competitive and as a consequence, despite our continued efforts, gross margin improvement continues to be hindered. Compared with the period in 2013, gross margin has fallen by 50 basis points.

On the continent, where markets remain difficult, revenue from our Dutch and French businesses increased by 3.2% and 2.3% respectively. However, these improvements were offset by a weaker performance from our Swiss business whose revenue contracted by 3.6%, leaving the aggregate performance across the three territories, on a constant currency basis, up 0.5%.

As with the UK, the continental businesses have also seen a collective fall in gross margin during the period equating to 30 basis points.

The group's financial position during the first four months of 2014 has not changed significantly compared with the position at 31 December 2013.

Tony Brewer, Headlam's Group Chief Executive, said:

"The group's improved trading experience during the first four months has been very encouraging particularly since in the UK, momentum has continued into May.

Given the performance to date, the board are cautiously optimistic that the group's internal financial objectives for 2014 could be exceeded. The cautious sentiment is due to a demanding second half objective and a need for floorcovering markets to show continued improvement. We look forward to reporting on our progress for the first six months of the year on 22 August 2014."

End

Enquiries:

Headlam Group plc

Tony Brewer, Group Chief Executive Tel: 01675 433000

Stephen Wilson, Group Finance Director

Note

The group comments on the first four months of the year in this Interim Management Statement because of the significant influence Easter has on the trading performance. The date on which Easter falls can move between quarters from one year to the next which would otherwise introduce volatility in the like for like comparisons.