Headlam Regulatory News (HEAD)

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Operating for over 30 years, Headlam is the UK's leading floorcoverings distributor. The Group works with suppliers across the globe manufacturing the broadest range of products, and gives them a highly effective route to market, selling their products into the large and diverse trade customer base. The Group has an extensive customer base, providing them with a market leading service through the largest product range, in-depth knowledge, ecommerce and marketing support, and nationwide delivery service. To maximise customer reach and sales opportunity, Headlam operates businesses, trade brands and product brands across the UK and in the Netherlands, which are supported by the group's network, central resources and processes.

¹On 21 May 2026, the Group completed the sale of its Nottingham and Rochester properties to Carter Investment One Limited for £7.55million plus VAT, which constitutes a significant transaction under the Listing Rules. This footnote, together with the main body of the announcement, sets out the further information that is required to be disclosed. (A) Material Contracts - The sale agreement between the Group and Carter Investment One Limited is subject to standard commercial property terms and there are no conditions outstanding. At the same time, the Group also entered into a short leaseback agreement for the Rochester property with the new buyer until 19 June 2027 at a market rate rent, (the lease is contracted outside the Landlord and Tenant Act 1954 and has customary provisions dealing with removing the Group's fixtures and fittings and making good any applicable dilapidations on expiry of the lease). (B) Risks - Headlam shareholders should carefully consider, together with all other information contained in this announcement, the specific factors and risks described below. The Company considers these to be the known material risk factors relating to the significant transaction. There may be other risks of which the Board is not aware or which it believes to be immaterial which may be connected to the transaction and have a material and adverse effect on the business, financial condition, results of operations or future prospects of the Group. The risks disclosed below are those which the Company considers: (i) are material risks related to the transaction; (ii) will be material new risks to the Group as a result of the transaction; or (iii) are existing material risks for the Group which will be impacted by the transaction. The risks described below are not set out in any order of priority, assumed or otherwise: (i) The Group may incur liability under the sale contract and leaseback; (ii) The sale contract is based on standard commercial property contract terms and also includes customary provisions. Both the Group and Carter Investment One Limited carried out a customary due diligence and disclosure process to minimise the liability under these provisions. (iii) The short lease agreement is based on customary provisions and dealing with removing the Group's fixtures and fittings and making good any applicable dilapidations on expiry of the lease; (iv) The market price of shares in the Group may fluctuate on the basis of market sentiment surrounding the transaction; (v) The shares in the Group are quoted and the price which investors may realise their shares are influenced by a number of factors, some specific to the Group and its operations and some which may affect flooring distributors or publicly traded companies as a whole, or other comparable companies; (vi) The sentiments of the stock market regarding the transaction will be one such factor and this, together with other factors including actual or anticipated fluctuations in the financial performance of the Group and its competitors, market fluctuations, and legislative or regulatory changes for the flooring sector, could lead to the market price of the Group's shares going up or down. (C) Impact of the transaction on the Company's earnings, assets and liabilities - The Group has de-recognised the £1.95million book value for the Nottingham property and the £1.33million book value for the Rochester property from its balance sheet and recognised the receipt of £7.55million (excluding VAT) for both properties less costs associated with both transactions, plus a further £1.51million of cash collected in respect of VAT to be paid over to HM Revenue & Customs in the next quarterly VAT payment. The Group will use the cash proceeds for general working capital purposes, and a profit on disposal of the property will be recognised. The amount of profit on disposal is subject to the accounting requirements of IFRS16 with regard to sale and leaseback transaction and will be calculated prior to finalising, and subsequently disclosed within, the Group's results for the year ended 31st December 2026. The profit on the disposals will be classified as a non-underlying item in the Group's income statement due to its size and one-off nature. A right-of-use asset and lease liability will be recognised on the Group's balance sheet in respect of the Rochester property being leased back. These amounts will be calculated prior to finalising, and subsequently disclosed within, the Group's results for the year ended 31st December 2026. (D) Use of proceeds - The proceeds will be used for general working capital purposes. (E) Additional Disclosures - The Board of the Company unanimously voted in favour of the transaction and in its opinion the transaction is in the best interests of the Company's shareholders as a whole, as well as its colleagues, suppliers and customers. This assessment is on the basis of the transaction further strengthening the Group's financial position. There are no related party transactions or material litigation to disclose. The information required by UKLR Annex 2.2(2) and 2.2(3) is not available. As referenced above, the value of the consideration for the Company's last market property valuation for the Nottingham property is £1.95million, and for the Rochester property is £1.33million. A profit on sale will be generated, which will be recognised as non-underlying income. As such, the Board considers the consideration for the properties is fair as far as the shareholders of the Group are concerned.