Headlam Regulatory News (HEAD)

7 December 2017

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 in respect of the ten months to 31 October 2017.

Trading for the ten month period was positive with total revenue growth of 2.7% against the comparable period in the prior year (1.7% in constant currency), and UK and Continental Europe delivering like-for-like revenue* growth of 0.7% and 4.5% respectively.

While the first half of 2017 delivered total revenue growth of 4.0%, the first four months of the second half was characterised by weaker markets as evidenced by modest revenue growth of 1.5% (0.6% in constant currency). In this four-month period, UK like-for-like revenue* decreased 1.1%, with the commercial sector declining by 2.6% and the residential sector marginally down by 0.4%. Continental Europe, however, saw more robust growth with like-for-like revenue* growth of 6.6%, and the residential sector increasing by 11.3%.

Initial indications are that trading in November 2017 in the UK showed a marginally improved performance compared with the first four months of the second half.

Notwithstanding the recent market weakness, which is anticipated to result in revenue growth for the year being marginally lower than planned, due to the concerted focus on margin enhancement and efficiencies throughout the year, the Company continues to expect to report profit before tax for the financial year ending 31 December 2017 in-line with consensus market expectations.

Going forward the Company will issue a pre-close trading update in January so that it can provide a more complete update on trading for the entire important fourth quarter.

Steve Wilson, Headlam's Chief Executive, said:

"We are pleased with our performance despite the weaker backdrop. Our performance underlines our comparative robustness due to our market position, scale and ongoing efficiency initiatives. While weaker markets could continue to subdue overall revenue growth, we believe we can continue to enhance our margins and deliver higher levels of profitability going forward."

The Company has separately today announced the acquisition of Domus Group of Companies Limited ('Domus'), the UK's leading specification consultant and supplier of hard surfaces for premium construction and refurbishment projects, for a total maximum consideration of £35.4 million.

*Like-for-like revenue is calculated based on constant currency from activities and businesses that made a full contribution in both the 2017 and 2016 periods and is adjusted for any variances in working days

Enquiries:

Notes for Editors:

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

Headlam's core business provides the distribution link between suppliers and customers of floorcoverings, providing suppliers with the greatest coverage and customer penetration for their products across the UK and Continental Europe, and customers with the broadest range of products supported by next day delivery. The acquisition of Domus, the UK's leading specification consultant, extends the Company's activities into the supply of hard surfaces for premium construction and refurbishment projects.

The Company is engaged with suppliers across 17 countries whose products cover a significant proportion of the floorcoverings market including, carpet, residential vinyl, wood, laminate, luxury vinyl tile, ceramic, underlay and commercial flooring. The Company's customers are within both the residential and commercial sectors and comprise principally independent retailers and flooring contractors.

The Company comprises 62 wholly-owned businesses in the UK and Continental Europe each operating under their own trade brand and utilising their individual sales team which achieves a greater reach into the customer base.

Each of the businesses is supported by the Company's centralised and financial resources and extensive distribution network across the UK and Continental Europe.

www.headlam.com