Headlam Regulatory News (HEAD)

27 January 2022

Headlam Group plc

('Headlam' or the 'Company')

Pre-Close Trading Update

Profit slightly ahead of expectations, with strong cash generation

Headlam Group plc (LSE: HEAD), Europe's leading floorcoverings distributor, is pleased to provide a Pre-Close Trading Update in respect of the year ended 31 December 2021, and ahead of announcing final results on 9 March 2022.

In line with the November 2021 Trading Update, the Company anticipates announcing 2021 revenue¹ of £667.2 million (2020: £578.1 million) with underlying² profit before tax expected to be slightly ahead of market expectations³. Both the UK and Continental Europe performed well, up 16.5% and 15.1% respectively against 2020 on a like-for-like4 revenue basis.

Actions taken under the business change programme helped to improve operating efficiency and operating margin during the year, with strong cash generation. Closing net funds was in excess of £53 million, with this being comfortably above the Company's current capital requirements, which includes increased investment to drive revenue growth and optimise operating performance. Given this, the Company's ongoing strong cash generation profile, and having reference to previously published Capital Allocation Priorities, the Company is considering a potential surplus return, the mechanism and quantum of which are expected to be announced within the final results in March 2022 alongside the proposed 2021 final ordinary dividend.

Early trading in 2022 has been encouraging, and the Company has continued to be able to largely mitigate the persisting industry wide supply issues and associated inflationary pressures.

Outside of trading, the Company has this month completed the refinancing and extension of its banking facilities to October 2026 at a minimum, providing a flexible capital structure, and is in the latter stages of the independent search process for the appointment of the Chief Executive.

¹All financials given represent continuing operations only, and exclude the contribution from the Swiss business Belcolor AG in 2021, and the comparator years, following its disposal in May 2021.

²Underlying is before non-underlying items, which includes amongst other items i) amortisation of acquired intangible assets, ii) impairment of goodwill and intangible assets, iii) property disposal profit, and iv) business restructuring and non-recurring people costs.

³Company compiled consensus market expectations for 2021 revenue, underlying profit before tax, 2021 total ordinary dividend and net funds at year-end are £680.7 million, £35.0 million, 14.4 pence and £51.3 million respectively (on a mean and post IFRS 16 adoption basis, where appropriate).

4Like-for-like revenue is calculated based on constant currency from activities and businesses that made a full contribution in both the 2021 and 2020 periods and is adjusted for any variances in working days.

Company Presentation

The Company will be presenting live via the Investor Meet Company platform on 1 February 2022 at 2:00pm GMT (www.investormeetcompany.com). The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00am the day before the meeting or at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet HEADLAM GROUP PLC via:

https://www.investormeetcompany.com/headlam-group-plc/register-investor

Investors who already follow HEADLAM GROUP PLC on the Investor Meet Company platform will automatically be invited.

 Enquiries:

Notes for Editors:

Operating for 30 years, Headlam is Europe's leading floorcoverings distributor, providing the channel between suppliers and trade customers of floorcoverings.

Headlam works with suppliers across the globe manufacturing a diverse range of floorcovering products, and provides them with a cost efficient and effective route to market for their products into the highly fragmented trade customer base.

To maximise customer reach, Headlam operates 66 businesses across the UK and Continental Europe (France and the Netherlands). Each business operates under its own trade brand and utilises individual sales teams while being supported by the group's distribution network, central teams and resources.

The Company's extensive customer base covers both the residential and commercial sectors, with principal customer groups being independent retailers and smaller flooring contractors alongside other customer segments such as larger (multiple) retailers, housebuilders, specifiers, and larger contractors (including local government / authorities).

Headlam provides customers with a market leading service through:

· the broadest product offering;

· unrivalled product knowledge;

· tailored service propositions and solutions;

· sales team and marketing support;

· ecommerce support and digital applications;

· nationwide delivery; and

· trade counter and collection service.

www.headlam.com