REG - Headlam Group PLC - Pre-Close Trading Update

HeadlamAnnouncement

29/07/2021 07:00

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RNS Number : 8181G  Headlam Group PLC  29 July 2021

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 earnings(³) 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).

 

(3)The Company's published Capital Allocation Priorities can be found at
headlam-ar-2020-web.pdf
(https://www.headlam.com/media/1450/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:

 

 Headlam Group plc                                Tel: 01675 433 000
 Steve Wilson, Chief Executive                    Email: headlamgroup@headlam.com (mailto:headlamgroup@headlam.com)
 Chris Payne, Chief Financial Officer
 Catherine Miles, Director of Communications

 Investec Bank plc (Corporate Broker)             Tel: 020 7597 5970
 David Flin / Alex Wright

 Panmure Gordon (UK) Limited (Corporate Broker)   Tel: 020 7886 2500
 Erik Anderson / Edward Walsh / Ailsa MacMaster

 Alma PR (Financial PR)                           Tel: 020 3405 0205
 Susie Hudson / Harriet Jackson / Faye Calow      headlam@almapr.co.uk (mailto:headlam@almapr.co.uk)

 

 

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 (http://www.headlam.com)

 

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