Headlam Regulatory News (HEAD)

29 July 2021

Headlam Group plc

('Headlam' or the 'Company')

Pre-Close Trading Update

Full year performance anticipated to be materially ahead of current market expectations

Resumption of normalised dividends

Headlam (LSE: HEAD), Europe's leading floorcoverings distributor, is pleased to provide a trading update ahead of announcing its interim results for the six months ended 30 June 2021 ('H1 2021') on 2 September 2021.

As announced in the 1 July 2021 Capital Markets Day Trading Update, H1 2021¹ revenue was in-line with H1 2019¹ and 45.2% ahead of H1 2020¹, which was significantly impacted by COVID-19 related closures. Performance improved through the period, with initial soft trading in the first two months being followed by good monthly performances. The residential sector was strong throughout, with the weak commercial sector curtailing overall performance to H1 2019 levels. However, this weakness continued to be recouped throughout the period, and in June 2021 commercial sector revenue was only 3.2% below June 2019.

July 2021 has traded in-line with July 2019 prior to the Company entering the traditionally busy summer period for refurbishment activity within the commercial sector.

Given this sustained year-to-date performance and the Company's traditional second-half revenue weighting, the Company now expects full year performance to be materially ahead of current market expectations². After factoring in prudent revenue assumptions, and performance-related employee bonus payments due to the current outperformance, it is anticipated that 2021 underlying profit before tax will be no less than £35.0 million¹,² (unless exceptional or unforeseen circumstances prevail). The Company will provide further updates as necessary as the year progresses.

Additionally, as a consequence of the trading performance above, strong balance sheet, and confidence in the prospects for the business, the Board will now expedite the resumption of normalised levels of dividend payments. A return to a full dividend payment based on earnings³ will occur at the time of the interim results when the 2021 interim dividend is declared.

¹ Performance for continuing operations only. Excludes the contribution from the Swiss business in 2021, and the comparison years, following its disposal in May 2021.

² Company-compiled consensus market expectations for 2021 revenue and underlying profit before tax (prior to any updates following this announcement) are £653.5 million and £29.0 million respectively (on a mean and post IFRS 16 adoption basis).

3The Company's published Capital Allocation Priorities can be found at headlam-ar-2020-web.pdf (page 9), and includes the targeted parameters in relation to dividend payments: 'A bi-annual ordinary dividend distribution paid out of cash with a target cover ratio of 2x earnings for the combined pay-out, and an interim and final dividend payment split of approximately 1/3 : 2/3.'

Enquiries:

This announcement contains information which, prior to its disclosure, was inside information as stipulated under Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended).

Notes for Editors:

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 customer base. Alongside long-established processing and distribution expertise, suppliers benefit from Headlam's marketing and customer servicing into the most extensive 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 Company's network and centralised resources.

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

Headlam is focused on providing customers with a market-leading service through:

· the broadest product offering;

· unrivalled product knowledge and tailored solutions;

· sales team and marketing support;

· e-commerce support;

· 'just-in-time' nationwide delivery and collection service; and

· other support including the provision of credit.

www.headlam.com