Headlam Regulatory News (HEAD)

1 December 2016

Headlam Group plc

("Headlam" or "the Company")

Trading Update

Headlam Group plc (LSE: HEAD), Europe's largest distributor of floorcoverings, is pleased to provide a trading update ahead of announcing its preliminary results for the year ended 31 December 2016 in March 2017.

Following the interim results announcement on 24 August 2016, the Company has continued to experience no discernible impact on trading following the EU referendum in June 2016, with only August slightly weaker than expected because of a softer commercial market in the UK. Furthermore, and as announced on 24 August 2016, the Company sought to mitigate cost inflation due to a weakening of sterling by implementing price increases for the residential floorcoverings imported from Continental Europe. The price increases which, when fully implemented, averaged 3.5% have remained in place since their introduction in August 2016 and, pleasingly, appear to have had no adverse impact on residential sector revenue. As a result of this, and due to continued volatility in foreign exchange rates, it is the Company's intention to keep these price increases in place going forward.

For the ten-month period to 31 October 2016, total revenue was up approximately 5.2% against the same period in the prior year, reflecting a continued strong performance from both the UK and Continental European businesses albeit with the Continental European businesses seeing a slight softening in performance when measured in local currency.

UK revenue, which accounted for approximately 88% of total revenue in the ten-month period, has continued to track above the 3.2% growth forecast by AMA Research Ltd for the UK market in 2016, demonstrating the Company's continued outperformance of a market which has shown, and continues to show, steady growth. UK like-for-like revenue in the second half of the year to 31 October 2016 was up approximately 4.8% (of which 0.8% relates to the price increases introduced since August) against the same period in the prior year, and is comparable with the outperformance achieved in the first half of 2016. Trading during November 2016 has maintained this trend.

The Continental European businesses achieved combined revenue growth of approximately 2.6% for the ten-month period to 31 October 2016 against the comparable prior period when measured in constant currency, which increases to approximately 13.8% when translated into sterling. Whilst representing a very marginal softening compared with the half year revenue growth of 2.8%, the result represents sustained improvement on prior periods.

Trading in the fourth quarter, traditionally Headlam's busiest trading period and characterised by a high volume of  small residential orders, is continuing well. Subject to trade continuing as anticipated during the remaining important weeks of the year, the Company expects to report preliminary results before non-recurring items* ahead of current consensus market expectations.

\* The non-recurring items predominately relate to personnel changes arising during the second half of the year.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Enquiries:

 Notes for Editors:

Headlam is Europe's largest distributor of floorcoverings having grown significantly via acquisition and organic growth since 1992. 

The Company comprises 61 wholly-owned distribution businesses, 56 in the UK and five in Continental Europe (France, Switzerland and Netherlands). Each business is integrated into and supported by the Company's platform while operating under their own trade brand which allows a much greater reach into the Company's customers. Headlam's customers are in the residential and commercial sectors and comprise principally independent retailers, and also multiple retailers and flooring contractors.

Headlam sources an extensive range of floorcoverings (including carpet, vinyl, wood and laminate) covering a wide price range sourced principally from manufacturers located across 12 countries, and Headlam's extensive network of distribution hubs, distribution centres and service centres allows for cost effective distribution and next day delivery to customers.