REG - Headlam Group PLC - Half Year Results
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RNS Number : 4164Z Headlam Group PLC 16 September 2025
16 September 2025
Headlam Group plc
('Headlam', the 'Company', the 'Group')
Half Year Results
Headlam Group plc (LSE: HEAD), the UK's leading floorcoverings distributor,
today announces its results in respect of the first six months of the year to
30 June 2025 (the 'Period').
2025 2024
Revenue £244.7m £256.4m
EBITDA £(6.7)m £(2.8)m
Underlying(1) Operating Loss £(17.2)m £(12.4)m
Underlying(1) Loss Before Tax £(19.9)m £(15.6)m
Underlying(1) Basic Loss Per Share (19.0)p (15.1)p
Underlying(1) Operating Cash Flow £(18.7)m £18.3m
Net Debt(2) £24.0m £28.3m
Statutory results
Operating Loss £(29.1)m £(16.5)m
Loss Before Tax £(31.8)m £(19.7)m
Basic Loss Per Share (31.7)p (18.0)p
All numbers above represent continuing operations. See footnote 3
H1 results reflect continued challenging market conditions
· Revenue declined 3.8% year-on-year on a same-day basis
· Gross margin slightly up year-on-year at 30.8% (H1 2024: 30.4%)
· Operating costs well controlled, with early benefits from the
transformation plan more than offsetting inflationary pressures including
national minimum wage and the increase in NI contributions
· Underlying Loss Before Tax of £19.9m reflecting the cumulative
decline in the flooring market
Strong balance sheet; working capital well-controlled
· Stock levels are £12m lower than the same period last year
although higher than December 2024. The H1 increase reflects targeted
investments to improve stock availability and support revenue recovery. Our
recently centralised buying processes are expected to reduce stock levels in
the second half of the year
· Net Debt of £24m at the end of the Period compared to £28m a
year ago
· £47.5m of cash and undrawn facilities at the end of the Period;
£21m cash receipts from property sale since the Period end, reducing Net Debt
further
· Strong asset backing: at the end of the Period the Group owned
property valued in 2023 at £94m; recent disposals have been at an average 23%
premium to these valuations
Good progress on implementation of transformation plan; upgraded benefits
· In September 2024 the Group announced a transformation plan to
simplify its customer offer, network and operations
· The objectives of this plan are to: improve profitability,
increase market share and release cash through more efficient working capital
management and the disposal of non-core property
· The market conditions have been weaker, and for longer, than
previously expected. Accordingly, during the Period the Group selected Alvarez
& Marsal to assist the Group in accelerating and increasing the scale of
benefits from the transformation plan initiatives, with an initial focus on
helping implement a revised supplier sourcing strategy and centralised buying
function
· Good progress has been made so far, including the following
developments during 2025:
· Commencement of the rollout of innovative new display stands,
supporting our independent retailer customers
· Network optimisation in the South East with the opening of a new
distribution centre in Rayleigh and the closure of the Ipswich site
· Consolidation of operations in the Midlands, with Nottingham
transferred into other sites
· The launch of fully centralised buying processes in June
· The commencement of the supplier sourcing strategy, including
harmonisation of ranges
· Preparation for sale of the Group's businesses in France and
Netherlands
· As a result of the preparatory work performed to date, and the
additional initiatives identified, we upgrade the annual profit improvement
expected from the transformation plan from the previous guidance of £25m to
at least £35m; the majority of this cumulative profit benefit is expected to
have been delivered by the end of 2026. In 2025, we anticipate at least £10m
profit benefit from the transformation plan.
Current trading and outlook
· The lead indicators for the market continue to point to a return
to growth over the medium term, but the timing of market recovery continues to
be uncertain and volatile, and market data indicates a slight deterioration in
market conditions in the last three months
· The Group's year-on-year revenue for July was similar to June,
with the two months close to flat year-on-year with August slightly weaker
· As we move into Q4, the market shifts into the peak residential
trading period and the Group annualises relatively softer comparatives;
accordingly, we anticipate a continuation of the improving revenue trajectory
observed during the first half
· The transformation plan is progressing well, with benefits
starting to take effect in H1 2025 and accelerating through H2 2025 and 2026
· The long-term outlook for Headlam remains positive, reflecting
the combination of:
· Continued implementation of the existing strategy, including the
maturity of the Trade Counter business, with the investment phase now complete
· The transformation plan
· Market improvement, recognising that the market has declined more
than 25% in volume terms in recent years
Commenting, Chris Payne, Chief Executive, said:
"We have made good progress on the transformation plan so far, significantly
simplifying the Group and its infrastructure and processes. The benefits have
started to be realised towards the end of the first half and will accelerate
through the second half of the year. Whilst the lead indicators for consumer
spending on home improvements are more positive, the flooring market has
continued to decline, and the timing of recovery remains uncertain. Against
this backdrop we have identified additional benefits from the transformation
plan, to offset the market weakness as we continue to drive the Group back to
profit. As we unlock cash and costs from our business, we continue to invest
in the proposition across all our customer groups in order to grow market
share and strengthen our position as the UK's leading floor coverings
distributor."
Presentations
The Group will be hosting a live-streamed presentation with Q&A for
analysts at 9.00am UK time. To register interest in attending, please
email: headlamgroup@headlam.com (mailto:headlamgroup@headlam.com)
The Group will also be hosting an Investor Meet presentation and Q&A for
investors today at 12.00pm UK time. The presentation is open to all existing
and potential shareholders. Investors can attend by clicking on this
link: www.investormeetcompany.com/headlam-group-plc/register-investor
(http://www.investormeetcompany.com/headlam-group-plc/register-investor)
A video of the presentation, as well as the presentation slides, will be made
available on the Group's website (www.headlam.com (http://www.headlam.com/) )
following the conclusion of the investor presentation.
Footnotes
1. To supplement IFRS reporting, we also present our results on an
underlying basis to show the performance of the business before non-underlying
items. These items are detailed in note 3 and principally comprise:
amortisation of acquired intangibles; impairment of intangibles, property,
plant and equipment and right-of-use assets; profit on sale of property, plant
and equipment; business restructuring and change-related costs; and ERP
development costs. These underlying measures, along with other alternative
financial measures including debt and cash flow metrics, form the Group's
Alternative Performance Measures (APMs) that are used internally by management
as key measures to assess performance. Further explanation in relation to
these measures can be found in the glossary of APMs at the end of this
announcement.
2. The comparative for Net Debt is 30 June 2024. All other comparative
measures are for the six months to 30 June 2024.
3. All income statement and cash flow numbers presented above are for
continuing operations unless otherwise stated. The Continental European
businesses are presented as discontinued operations
4. All year-on-year revenue figures are presented on a same working day
basis. There has been one less working day in the UK in the Period compared to
2024.
Enquiries
Headlam Group plc Tel: 01675 433 000
Chris Payne, Chief Executive Email: headlamgroup@headlam.com (mailto:headlamgroup@headlam.com)
Adam Phillips, Chief Financial Officer
Panmure Liberum Limited (Corporate Broker) Tel: 020 3100 2000
Tom Scrivens / Atholl Tweedie
Peel Hunt LLP (Corporate Broker) Tel: 020 7418 8900
George Sellar / Finn Nugent
Notes to Editors
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 spanning independent and multiple
retailers, small and large contractors, and housebuilders. It provides its
customers with a market leading service through the largest product range,
in-depth knowledge, ecommerce and marketing support, and nationwide next day
delivery service. To maximise customer reach and sales opportunity, Headlam
operates businesses, trade brands and product brands across the UK and
Continental Europe (France and the Netherlands), which are supported by the
group's network, central resources and processes.
Chief Executive's Review
Introduction and market update
The Group's financial performance in the first half of 2025 continued to
reflect the ongoing challenging trading environment. The flooring market
declined further during the first half of the year, alongside consumer
spending on the broader home improvements category. Cumulatively the flooring
market has declined more than 25% in recent years.
Despite the weak market backdrop, we saw an improvement during the first half,
albeit with revenues remaining in decline. Group revenue declined 6.6% in
January, improving to a 0.6% decline in June.
The transformation plan announced last year is progressing well, thanks to
huge efforts from colleagues across the Group. Several initiatives have been
implemented already and the benefits from the programme are expected to
accelerate from H2 2025 onwards. Through a combination of increased confidence
over the scale of benefits from existing initiatives, plus the identification
of new initiatives, we have upgraded the overall profit benefits expected from
£25 million to £35 million.
Financial and operational performance in H1 2025
Group revenue was down 3.8% year-on-year (on a same working day basis) at
£244.7 million (H1 2024: £256.4 million); UK revenue declined by 3.8% and
Continental Europe declined by 3.9%. We continued to grow revenues in our
Trade Counters and Larger Customers channels, partially offsetting the impact
on our core business of market weakness in the UK, France and Netherlands.
During the Period we invested in our Regional Distribution business, including
a substantial rollout of display stands to our independent retailer customers,
to position the business well as market conditions improve. We have also
continued to selectively launch new ranges, maintaining a fresh portfolio of
products.
We have now completed our rollout investments in the Trade Counters business
which, after some optimisation in the second half, will result in around 80
sites operational at the end of the year. Our Trade Counter business now moves
from rollout to maturation phase; so from 2026 onwards, growth in Trade
Counter revenue will drop through to profit at a greater rate, leveraging the
fixed cost already in place.
Gross margin was slightly up in the Period, despite competitive pricing
activity in the market, and operating costs were well controlled. Inflationary
pressures on costs, including the 6.7% increase in the National Minimum Wage
and the increase in employer's National Insurance Contributions, were more
than offset by cost savings and efficiencies. The net operating cost increase
of £2.2 million (2.4%) in the first half reflected the final rollout
investments in the Trade Counter business.
The Underlying Loss Before Tax of £19.9 million (H1 2024: £15.6 million)
for the first half principally reflects the cumulative market decline over
recent years. We are addressing the impact of this on the Group's
profitability through the transformation plan, which is targeted to deliver at
least £35 million of profit improvement upon completion. We continue to
assess opportunities to increase the overall benefits further.
Net Debt reduced slightly to £24.0 million at 30(th) June 2025 compared to
£28.3 million at 30(th) June 2024. The Group had £47.5 million of cash and
undrawn facilities available at the end of the Period and, subsequent to the
Period end, has received £21.1 million of cash proceeds (excluding VAT) from
the disposal of property.
Full detail of the Group's financial performance is given in the Chief
Financial Officer's Review.
Progress on transformation plan
We launched the transformation plan in the second half of 2024 with the
objective to simplify our customer offer, simplify our network and simplify
our operations; improving profitability, increasing market share and releasing
capital from more efficient working capital management and the disposal of
non-core property.
There are three parts:
1. Simplify our customer offer
2. Simplify our network
3. Simplify our operations
1. Simplify our customer offer
A year ago we launched a single go-to-market proposition, under our Mercado
brand, consolidating 32 trading businesses. Earlier this year we also
consolidated six different own product brand businesses into one Sales Team.
These changes have now been successfully implemented and embedded, simplifying
our offer to our customers and providing them with the broadest range of
flooring through a unified product list.
In March we commenced the rollout of a major refresh of display stands, the
Group's first significant investment of this type for several years. This
rollout continues throughout the remainder of 2025. The customer feedback to
date has been very strong and there are encouraging early indications of
revenue growth with customers receiving new stands, which we continue to track
closely
Late last year we launched our "order anywhere, collect anywhere" customer
proposition. This enables independent retailers, fitters, contractors and
housebuilders to place an order anywhere in our network or across any of our
channels for collection from any of our trade counters, as well as the option
of next day delivery. This provides unrivalled convenience in the UK
distribution market. As well as attracting new customers, an increasing number
of existing customers are utilising this convenience and flexibility.
2. Simplify our network
In the UK, Headlam operates from a network of distribution centres and
transport cross-docks 1 (#_ftn1) , out of which around 300 delivery vans
provide next-day service to customers across the country. The configuration of
this network developed through Headlam's acquisitions of regional flooring
distribution businesses in the 1990s and 2000s. In recent years we have made
good progress in optimising and integrating elements of this network by
creating regional hubs and by consolidating transport operations. As part of
the transformation plan we are accelerating this activity.
We have made significant progress so far:
· Optimising our operations in North West England by transferring
stock out of our Stockport distribution centre and opening up a cross-dock
facility nearby.
· Consolidating our distribution centres in Scotland, combining two
sites near Glasgow.
· Opening a new distribution centre in Rayleigh (Essex) and a new
cross-dock facility in Ipswich to enable us to better serve our customers in
the South East of England. As a consequence of this, our Ipswich distribution
centre and Enfield cross-dock facility have become surplus to requirements and
closed.
· Optimising our operations in the Midlands, resulting in the
Nottingham distribution centre becoming surplus to requirements and currently
marketed for sale.
We have also commenced the conversion of our Bridgend distribution centre into
a cross-dock, creating efficiencies in costs and working capital, without any
reduction in customer service levels in the surrounding area.
The above changes result in an improved network for customer service at lower
operating cost, whilst also generating significant cash proceeds. Headlam
currently has 1.3 million square foot of warehouse capacity in its
distribution centres. This is a reduction of 14% compared to the 1.5 million
square foot of warehouse capacity at the end of H1 2024; this removes legacy
duplication in the network and provides a more efficient footprint, whilst
also being capable of supporting revenue growth over the medium term.
We will continue to review, and provide updates on, our network as we
continually look to enhance customer service and improve operational
efficiency.
3. Simplify our operations
The opportunities of this element of the transformation plan comprise two
parts:
1) operating cost reductions through optimisation of processes, as a
result of simplifying our trading structure and network; and,
2) gross margin improvements through an integrated supplier sourcing
strategy and centralised buying function.
During the Period we selected Alvarez & Marsal, business transformation
experts, to identify and implement the above opportunities. The initial focus
has been the development, in conjunction with our internal teams, of a
supplier sourcing strategy that harnesses the scale and coordination of an
integrated Headlam business. This includes tendering volumes, relocating
supply chains and rationalising ranges. In June we also launched a centralised
buying process, which will be fully rolled out across the UK Distribution
business during H2.
Good progress has been made to date, with material benefits to gross margin
identified already; these will take effect from H2 2025 onwards. Furthermore,
the centralised buying process is beginning to drive an improvement in stock
turn, which is expected to reduce stock holding requirements by the end of the
year.
We have also made the decision to sell our businesses in Continental Europe,
which represented 12% of the Group's revenues in 2024, in order to further
simplify the Group and focus on the UK. There are a number of interested
buyers and we will look to complete a sale in the coming months, subject to
acceptable terms being agreed upon.
Objectives and targets for the transformation plan
The objectives and targets are set out below, along with an update on
progress. We have upgraded the profit improvement targeted from the
transformation plan, reflecting greater benefits now expected from existing
initiatives plus the identification of new initiatives.
Objective Target Progress
Market share gains Market share increase on completion of the transformation plan The initiatives underpinning this objective have commenced
Unlock capital to reduce debt and to fund the transformation At least £90 million of one-off cash inflow On track, with £57 million achieved in H2 2024. Further property disposal
opportunities and ongoing working capital optimisation
Structurally improve profitability At least £35 million of ongoing annual profit benefit (upgraded from previous Initiatives identified and on track. At least £10 million of the £35 million
guidance of £25 million) is targeted to be delivered in 2025 and a cumulative £35 million by the end
of 2026
The one-off cash costs of implementing the transformation programme are
anticipated to be c.£35 million.
The targeted profit benefit from the transformation plan is in respect of the
transformation plan in isolation and does not include other factors impacting
on profit and cash, such as: the impact of the existing strategic initiatives
(including the maturation of the Trade Counter business and growth in Larger
Customers), cost inflation, or market decline/growth. The Board will continue
to identify and implement opportunities to increase the profit benefits
further.
Current trading and outlook
Looking ahead, the lead indicators continue to be positive for a return to
growth in the flooring market; housing transactions have been in growth and
household incomes have been increasing. The flooring market appears to have
been more greatly impacted than other home improvement sectors, with a
cumulative decline of at least 25% over recent years. With such a pronounced
decline in the market, there is expected to be an element of deferral by
consumers, benefitting the market in the medium term. However, consumer
confidence remains fragile and this brings uncertainty to the timing of market
improvement.
The UK data on consumer spending on home improvements shows some deterioration
in the last three months compared to earlier in the year. Despite this, the
Group's UK revenue was broadly flat year-on-year across June and July. August,
which is a key trading period for the commercial side of the market (with
residential typically quieter), was slightly weaker. As we move into Q4 we
enter the peak trading period for the residential element of the market and
annualise a period of relatively softer comparatives; reflecting a
particularly weak market in Q4 last year at the same time as the Group was
undertaking a major consolidation of its trading businesses and sales teams.
Accordingly, over the final months of the year we anticipate a continuation of
the improving revenue trajectory observed during the first half.
The transformation plan is progressing well, with benefits starting to take
effect and accelerating through H2 2025.
The Board believes that the long-term outlook for Headlam remains positive,
reflecting the combination of:
· Continued implementation of the existing strategy, including the
maturity of the Trade Counter business, recognising that the investment phase
is now complete
· The benefits from the transformation plan, once fully implemented
· Market improvement, recognising that the market is now materially
lower than in 2019 in volume terms
We are confident that our strategy, accelerated by the transformation plan,
will deliver sustainable improvement in our financial performance and maintain
our position as the UK's number one flooring distributor, whilst also
positioning the business to be at the forefront of market recovery and future
growth opportunities as we remain focussed on delivering value to our
shareholders and wider stakeholders.
The Board thanks all the Group's colleagues for their continued hard work
during the challenging period for the flooring market.
Chris Payne
Chief Executive
16 September 2025
Chief Financial Officer's Review
Summary income statement
Re-presented 2 (#_ftn2)
Underlying(( 3 (#_ftn3) )) result Non-Underlying Items Total Underlying(2) result Non-Underlying Items Total
H1 2025
H1 2025
H1 2025
H1 2024
H1 2024
H1 2024
£m
£m
£m
£m
£m
£m
Revenue 244.7 - 244.7 256.4 - 256.4
Cost of sales (169.4) - (169.4) (178.5) - (178.5)
Gross profit 75.3 - 75.3 77.9 - 77.9
Operating costs (92.5) (11.9) (104.4) (90.3) (4.1) (94.4)
Operating loss (17.2) (11.9) (29.1) (12.4) (4.1) (16.5)
Net finance costs (2.7) - (2.7) (3.2) - (3.2)
Loss before tax (19.9) (11.9) (31.8) (15.6) (4.1) (19.7)
Tax 4.7 1.7 6.4 3.5 1.8 5.3
Loss from continuing operations (15.2) (10.2) (25.4) (12.1) (2.3) (14.4)
Loss from discontinued operations (2.1) (9.3) (11.4) (1.7) (0.1) (1.8)
Loss for the period (17.3) (19.5) (36.8) (13.8) (2.4) (16.2)
Revenue
Total revenue in the Period decreased by 3.8% on a same working day basis to
£244.7 million (H1 2024: £256.4 million). This excludes revenue in
Continental Europe which has been presented as a discontinued operation(2).
UK
In the UK, we have three main sales channels: Regional Distribution, Trade
Counters and Larger Customers. Following the simplification of the Group,
integration of sales teams, and the launch of customer initiatives such as
"order anywhere, collect anywhere", there is increased crossover of revenues
between these sales channels, particularly Regional Distribution and Trade
Counters; accordingly, we show UK revenue in total rather than split into
channels.
We continued to grow revenue in the Trade Counters and Larger Customers
channels; this was offset by revenue decline in Regional Distribution.
We have now completed the rollout phase of the Trade Counters business, with
the investments to date performing in line with business case. This business
now moves to maturation phase, with revenue growth dropping through to profit
at a greater rate, reflecting that the fixed cost will already be in place.
Revenue from Larger Customers continued to grow, despite the loss of Homebase
as a customer (which generated £6.8 million revenue in full year 2024),
reflecting increased share of business of existing customers, combined with
the annualisation of customers won in H2 2024.
Continental Europe
Revenue declined 3.9% in Continental Europe; the net of growth in the
Netherlands, reflecting new distribution agreements for exclusive supply of
certain branded ranges, and decline in France due to ongoing market weakness.
The revenue performance improved during the Period.
Gross Margin
Gross margin in the Period was 30.8% (H1 2024: 30.4%). This reflected the net
of lower stock clearance activity in the current year, partially offset by the
impact of mix.
Costs
Operating costs increased by 2.4% to £92.5 million (H1 2024: £90.3 million).
Cost inflation has remained elevated, albeit to a lower extent than previous
years, driven by the 6.7% increase in the national minimum wage and the
increase in employer's National Insurance contributions. These inflationary
headwinds were more than offset by cost savings and efficiencies from the
transformation plan, albeit total operating costs increased as a result of the
final stage of the rollout of new sites in our Trade Counters business which
added over £3 million of additional operating costs.
Underlying Profit/Loss
Underlying Loss Before Tax of £19.9 million compared to a loss of £15.6
million in H1 2024. The table below breaks down the year-on-year movement:
Underlying Loss Before Tax
£m
H1 2024 (15.6)
Revenue (3.5)
Trade Counter investment (2.0)
Cost inflation (2.3)
Mitigating actions 3.0
Interest costs 0.5
H1 2025 (19.9)
The decline in revenue contributed to a £3.5m reduction in profit
year-on-year.
Trade Counter investments contributed to a £2.0 million reduction in profit,
reflecting the net of additional operating costs partially offset by the
incremental revenue from new sites. As expected, and as previously guided, in
the early years of the Trade Counter investment programme the profit
contribution to the Group from this business is reduced due to the operating
losses on newly invested trade counters. The Trade Counter business was profit
dilutive to the Group in 2023 and 2024, and will be in 2025; becoming profit
accretive from 2026 onwards.
Cost inflation was a £2.3 million headwind reflecting the factors explained
above. This was more than offset by mitigating actions, through the
implementation of the transformation plan, which provided £3.0 million of
benefit. These benefits are targeted to accelerate through the second half.
Net interest costs of £2.7 million (H1 2024: £3.2 million) were £0.5
million lower year-on-year, partly reflecting lower average borrowings, which
more than offset the interest component of the incremental lease cost of trade
counter units and distribution centres.
Reflecting the factors set out above, the Underlying Loss Before Tax was
£19.9 million in the Period (H1 2024: £15.6 million).
Non-Underlying Items
Non-underlying items before tax in the Period, relating to continuing
operations, totalled a £11.9 million expense (H1 2024: £4.1m expense) as set
out in the table below. The net cash impact of these non-underlying items in
H1 2025 was a £8.2 million cash outflow.
H1 2025 Cash H1 2025 Non-cash H1 2025 Total H1 2024 Total
£m £m £m £m
Amortisation of intangibles - (0.5) (0.5) (0.6)
Impairment of assets - (3.2) (3.2) (0.9)
Business restructuring and change-related costs (5.8) - (5.8) (4.9)
Profit on sale of property - - - 3.2
ERP system development (2.4) - (2.4) (0.9)
Non-underlying income/(expense) before tax (8.2) (3.7) (11.9) (4.1)
Consistent with previous periods, the amortisation of acquired intangibles
arising upon consolidation were categorised as non-underlying and amounted to
£0.5 million (H1 2024: £0.6 million).
Impairment of assets was a £3.2 million non-cash expense in H1 and related to
the impairment of goodwill associated with Melrose cash generating unit.
Business restructuring and change-related costs are in respect of the
transformation plan. The cash items principally comprised severance costs and
advisory costs.
The cost of developing the new ERP system is expensed rather than capitalised
due to it being a cloud-based solution and, as previously guided, the
development cost is being treated as a non-underlying expense, of which £2.4
million was incurred in the Period (H1 2024: £0.9 million).
EPS and Dividend
Total basic loss per share on an underlying basis was a loss of 21.6 pence per
share (H1 2024: a loss of 17.2 pence per share), reflecting the factors set
out above.
No interim ordinary dividend has been declared in respect of the current or
prior Period. While we have opted not to declare a dividend, our long-term
commitment remains focused on delivering shareholder value. The Board will
continue to review how the business is performing, taking into account the
market conditions and the implementation of the transformation plan, in
assessing when it may be appropriate to reinstate dividend payments.
Tax
The Group's consolidated underlying effective tax rate for the Period was
23.6% (H1 2024: 22.4%), which reflects the expected effective tax rate for the
full year. This is slightly lower than the standard rate of corporation tax in
the UK primarily due to disallowable expenses.
Cash Flow and Net Debt
2025 2024
£m £m
Underlying operating loss (17.2) (12.4)
Depreciation and other non-cash items 10.5 9.6
EBITDA (6.7) (2.8)
Change in inventories (13.4) 6.6
Change in receivables (11.1) 12.0
Change in payables 12.2 2.1
Other 0.3 0.4
Underlying Operating Cash Flow (18.7) 18.3
Interest and Tax 2.9 (2.5)
Lease payments (7.6) (6.5)
Capital expenditure (2.9) (6.8)
Property disposal - 7.4
Other non-underlying items (8.2) (2.5)
Dividends - (4.8)
Discontinued operations (0.5) (1.2)
Net cash flow before movement in borrowings (35.0) 1.4
Movement in borrowings 49.0 -
Net cash flows 14.0 1.4
Underlying Operating Cash Flow in the Period was an outflow of £18.7 million
compared to an inflow of £18.3 million in H1 2024. This was principally
driven by the £11.3 million working capital outflow reflecting the £10.8
million payment of VAT in January on the property sales in December 2024,
combined with a£12.8 million investment in inventory in the first half,
supporting the revenue recovery trajectory during the Period. Inventories
continue to be well-controlled and at the end of the Period were £11.7
million lower than at the end of H1 2024. In June the centralised buying
function and processes was launched in the UK Distribution business and this
is expected to bring significant efficiencies, resulting in improved stock
turn over the coming months.
A net £2.9 million cash was received in the Period (H1 2024: £2.5 million
outflow) in respect of interest and tax, reflecting a refund of corporation
tax payments on account made in 2024.
Lease payments were a £7.6 million cash outflow (H1 2024: £6.5 million); the
increase reflects the additional trade counter and distribution centre leases.
Capital expenditure was £2.9 million (H1 2024: £6.8 million) and included
£2.2 million for fitting out new or refurbished trade counters.
There was an £8.2 million outflow in respect of non-underlying items,
comprising £5.8 million business restructuring and change-related costs, and
£2.4 million ERP system development costs.
No dividends were paid in the Period; in the previous year, £4.8 million was
paid in respect of the final ordinary dividend for 2023.
Net Debt excluding lease liabilities was £24.0 million at the end of the
Period, a decrease of £4.3 million from 30 June 2024 and an increase of
£34.9 million from 31 December 2024. The movement since 31 December 2024
principally reflects the VAT timing impact from the property sales in December
2024 (with £10.8 million VAT collected in December and paid to HM Revenue
& Customs in January 2025) and the investment in inventories.
At the end of the Period, the Group had total banking facilities available of
£72.5 million (30 June 2024: £100.5 million), of which £61.0 million (30
June 2024: £81.5 million) were committed. The committed facility comprises a
revolving credit facility with three lenders that expires in October 2027. The
size of the revolving credit facility was reduced earlier this year from
£81.5 million to £61.0 million due to the reduction in average borrowing
during the Period compared to the prior year.
In 2024 the Group agreed a new covenant package with its banks. The
pre-existing covenants of leverage and interest cover were replaced with a
monthly minimum liquidity test and a quarterly minimum EBITDA test. These
covenants have been met throughout the Period.
The Group had £47.5 million of cash and undrawn facilities at 30 June 2025
(30 June 2024: £72.2 million) and, subsequent to the Period end, has received
cash proceeds of £21.1 million (excluding VAT) in respect of a property
disposal. The Nottingham distribution centre is surplus to requirements,
following the optimisation and consolidation of operations in the Midlands,
and is currently being marketed for sale. The Group continues to have strong
asset backing; as at 30 June 2025, the Group owned property with a market
valuation of £93.9 million and also had inventory and receivables of £105.0
million and £114.0 million respectively.
Going Concern
The Directors have reviewed the going concern assessment and have concluded
that the Group has adequate resources to continue in operation during the next
12 months and that it is appropriate for the going concern basis to be adopted
in preparing this Interim Report and Financial Statements.
Principal Risks and Uncertainties
The Group is exposed to a number of principal risks which may affect its
performance, business model, solvency or liquidity. The Group has a
well-established framework for reviewing and assessing these risks on a
regular basis; and has put in place appropriate processes, procedures and
actions to mitigate against them. The principal risks and uncertainties that
may affect the Group were last reported on within the 2024 Annual Report and
Accounts (on pages 66 to 67). The principal risks remain broadly unchanged
since last reported.
Adam Phillips
Chief Financial Officer
16 September 2025
Directors' Responsibility Statement
We confirm that, to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting';
(b) the interim report includes a fair review of the information required by
DTR 4.2.7R (indication of important events during the Period and description
of principal risks and uncertainties for the remaining six months of the
year); and
(c) the interim report includes a fair review of the information required by
DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
Alternative Performance Measures
The Group uses Alternative Performance Measures ('APMs') to assess its
financial, operational and social performance towards the achievement of its
strategy. Such measures may either exclude amounts that are included in, or
include amounts that are excluded from, the most directly comparable statutory
measure (where one exists), calculated and presented in accordance with IFRS.
Such exclusions or inclusions give, in the Group's opinion, more normalised
performance measures and the Group believes that these APMs are also used by
investors, analysts and other interested parties in their analysis.
The APMs have limitations and may not be comparable to other similarly titled
measures used by other companies. They should not be viewed in isolation, but
as supplementary information.
An explanation of each APM is provided on pages 204 to 205 of the 2024 Annual
Report and Accounts.
A reconciliation of the adjustments made to the Income Statement to derive
underlying profit measures is shown at the end of this Interim Report.
Underlying items are calculated before charges associated with the acquisition
of businesses and other items which by virtue of their nature, size or/and
expected frequency require adjustment to show the performance of the group in
a consistent manner which is comparable year on year. These underlying
measures are relevant to investors and other stakeholders, as supplementary
information, to fully understand the underlying performance of the business. A
limitation of underlying profit measures is that they exclude the recurring
amortisation of intangible assets acquired in business combinations but do not
similarly exclude the related revenue.
Condensed Consolidated Income Statement
For the six months ended 30 June 2025
Re-presented(1)
Underlying Non-underlying Six months ended Underlying Non-underlying Underlying Non-underlying Year ended
(Note 3) 30 June (Note 3) Six months ended (Note 3) 31 December
30 June
Note 2025 2025 2025 2024 2024 2024 2024 2024 2024
Continuing operations £m £m £m £m £m £m £m £m £m
Revenue 2 244.7 - 244.7 256.4 - 256.4 525.7 - 525.7
Cost of sales (169.4) - (169.4) (178.5) - (178.5) (369.7) (10.6) (380.3)
Gross profit 75.3 - 75.3 77.9 - 77.9 156.0 (10.6) 145.4
Distribution costs (62.4) (1.1) (63.5) (60.6) - (60.6) (119.5) (4.4) (123.9)
Administrative expenses (30.3) (10.8) (41.1) (29.4) (4.1) (33.5) (59.8) (11.2) (71.0)
Net impairment gains/(losses) on trade receivables 0.2 - 0.2 (0.3) - (0.3) (1.6) (1.3) (2.9)
Other operating income - - - - - - - 21.1 21.1
Operating loss 2 (17.2) (11.9) (29.1) (12.4) (4.1) (16.5) (24.9) (6.4) (31.3)
Finance income 4 0.4 - 0.4 - - - 0.1 - 0.1
Finance expenses 4 (3.1) - (3.1) (3.2) - (3.2) (6.9) - (6.9)
Net finance costs (2.7) - (2.7) (3.2) - (3.2) (6.8) - (6.8)
Loss before tax (19.9) (11.9) (31.8) (15.6) (4.1) (19.7) (31.7) (6.4) (38.1)
Taxation 5 4.7 1.7 6.4 3.5 1.8 5.3 6.8 10.2 17.0
(Loss)/profit from continuing operations 2 (15.2) (10.2) (25.4) (12.1) (2.3) (14.4) (24.9) 3.8 (21.1)
Loss from discontinued operation 8 (2.1) (9.3) (11.4) (1.7) (0.1) (1.8) (3.2) (0.7) (3.9)
(Loss)/profit for the period attributable to the equity shareholders (17.3) (19.5) (36.8) (13.8) (2.4) (16.2) (28.1) 3.1 (25.0)
Loss per share from continuing operations
Basic 6 (19.0)p (31.7)p (15.1)p (18.0)p (31.0)p (26.3)p
Diluted 6 (19.0)p (31.7)p (15.1)p (18.0)p (31.0)p (26.3)p
Loss per share from discontinued operations
Basic 6 (2.6)p (14.2)p (2.1)p (2.2)p (4.0)p (4.9)p
Diluted 6 (2.6)p (14.2)p (2.1)p (2.2)p (4.0)p (4.9)p
Total loss per share
Basic 6 (21.6)p (45.9)p (17.2)p (20.2)p (35.0)p (31.2)p
Diluted 6 (21.6)p (45.9)p (17.2)p (20.2)p (35.0)p (31.2)p
Ordinary dividend per share
Interim dividend proposed for the financial period 7 - - -
Final dividend declared for the financial period 7 - - -
(1) The results for the year ended 31 December 2024 and six months ended 30
June 2024 have been re-presented to refer the presentation of the Continental
European businesses as discontinued (see note 8 for further information).
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2025
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2025 2024 2024
£m £m £m
Loss for the period attributable to the equity
shareholders (36.8) (16.2) (25.0)
Other comprehensive income/(expense):
Items that will never be reclassified to profit or loss
Remeasurement of defined benefit plans - 0.5 (0.5)
Related tax - (0.1) 0.1
- 0.4 (0.4)
Items that are or may be reclassified to profit or loss
Exchange differences arising on translation of overseas operations 0.1 (0.1) (0.2)
0.1 (0.1) (0.2)
Other comprehensive income/(expense) for the period 0.1 0.3 (0.6)
Total comprehensive expense attributable to the equity shareholders for the
period
(36.7) (15.9) (25.6)
Total comprehensive income attributable to the equity
shareholders for the period arising from:
Continuing operations (25.4) (14.0) (21.5)
Discontinued operations (11.3) (1.9) (4.1)
(36.7) (15.9) (25.6)
Condensed Consolidated Statement of Financial Position
At 30 June 2025
At At At
30 June 30 June 31 December 2024
2025 2024 £m
£m £m
Assets
Non-current assets
Property, plant and equipment 72.9 125.3 86.9
Right-of-use assets 47.2 40.2 55.1
Intangible assets 13.4 18.7 17.6
Deferred tax assets 9.7 - 3.9
143.2 184.2 163.5
Current assets
Inventories 105.0 124.9 102.8
Trade and other receivables 114.0 104.3 111.0
Income tax receivable - 3.2 3.6
Cash and cash equivalents 23.2 22.6 12.0
Assets classified as held for sale 36.6 - 4.8
278.8 255.0 234.2
Total assets 422.0 439.2 397.7
Liabilities
Current liabilities
Bank overdrafts - (0.9) (1.1)
Other interest-bearing loans and borrowings (49.0) (50.0) -
Lease liabilities (11.8) (11.6) (13.8)
Trade and other payables (142.8) (134.5) (139.2)
Income tax payable (0.4) - -
Liabilities relating to assets held for sale (17.1) - -
(221.1) (197.0) (154.1)
Non-current liabilities
Lease liabilities (41.8) (30.7) (47.4)
Provisions (2.7) (2.6) (3.1)
Deferred tax liabilities - (8.0) -
Employee benefits (1.8) (0.8) (2.1)
(46.3) (42.1) (52.6)
Total liabilities (267.4) (239.1) (206.7)
Net assets 154.6 200.1 191.0
Equity attributable to equity holders of the parent
Share capital 4.3 4.3 4.3
Share premium 53.5 53.5 53.5
Other reserves (15.3) (15.6) (15.5)
Retained earnings 112.1 157.9 148.7
Total equity 154.6 200.1 191.0
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2025
Capital
Share Share redemption Special Translation Treasury Retained Total
capital premium reserve reserve reserve reserve earnings equity
£m £m £m £m £m £m £m £m
Balance at 1 January 2025 4.3 53.5 0.1 1.5 1.7 (18.8) 148.7 191.0
Loss for the period attributable to the equity shareholders
- - - - - - (36.8) (36.8)
Other comprehensive income - - - - 0.1 - - 0.1
Total comprehensive income / (expense) for the period
- - - - 0.1 - (36.8) (36.7)
Transactions with equity shareholders, recorded directly in equity
Share based payments - - - - - - 0.3 0.3
Share options exercised by employees - - - - - 0.1 (0.1) -
Total contributions by and distributions to equity shareholders
- - - - - 0.1 0.2 0.3
Balance at 30 June 2025 4.3 53.5 0.1 1.5 1.8 (18.7) 112.1 154.6
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024
Capital
Share Share redemption Special Translation Treasury Retained Total
capital premium reserve reserve reserve reserve earnings equity
£m £m £m £m £m £m £m £m
Balance at 1 January 2024 4.3 53.5 0.1 1.5 1.9 (19.0) 178.1 220.4
Loss for the period attributable to the equity shareholders
- - - - - - (16.2) (16.2)
Other comprehensive (expense)/income - - - - (0.1) - 0.4 0.3
Total comprehensive expense for the period
- - - - (0.1) - (15.8) (15.9)
Transactions with equity shareholders, recorded directly in equity
Share based payments - - - - - - 0.4 0.4
Dividends to equity holders - - - - - - (4.8) (4.8)
Total contributions by and distributions to equity shareholders
- - - - - - (4.4) (4.4)
Balance at 30 June 2024 4.3 53.5 0.1 1.5 1.8 (19.0) 157.9 200.1
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Capital
Share Share redemption Special Translation Treasury Retained Total
capital premium reserve Reserve reserve reserve earnings equity
£m £m £m £m £m £m £m £m
Balance at 1 January 2024 4.3 53.5 0.1 1.5 1.9 (19.0) 178.1 220.4
Loss for the period attributable to the equity shareholders
- - - - - - (25.0) (25.0)
Other comprehensive expense - - - - (0.2) - (0.4) (0.6)
Total comprehensive expense for the year
- - - - (0.2) - (25.4) (25.6)
Transactions with equity shareholders, recorded directly in equity
Share-based payments - - - - - - 1.0 1.0
Share options exercised by employees - - - - - 0.2 (0.2) -
Dividends to equity holders - - - - - - (4.8) (4.8)
Total contributions by and distributions to equity shareholders
- - - - - 0.2 (4.0) (3.8)
Balance at 31 December 2024 4.3 53.5 0.1 1.5 1.7 (18.8) 148.7 191.0
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2025 Year ended
Six months ended Six months ended 31 December
30 June 30 June 2024
2025 2024 £m
£m £m
Cash flows from operating activities
Loss before tax for the period
Continuing operations (31.8) (19.7) (38.1)
Discontinued operations (10.9) (0.9) (3.4)
(42.7) (20.6) (41.5)
Adjustments for:
Depreciation and impairment of property, plant and equipment, amortisation and
impairment of intangible assets
7.7 5.6 11.0
Depreciation, impairment and termination of right of use assets 7.5 6.6 14.1
Finance income (0.4) - (0.1)
Finance expense 3.3 3.3 7.1
Profit on sale of property, plant and equipment - (3.2) (21.1)
Impairment of disposal group classified as held for sale 9.2 - -
Share-based payments 0.3 0.4 1.0
Operating cash flows before changes in working capital and other payables
(15.1) (7.9) (29.5)
Change in inventories (12.8) 6.5 28.2
Change in trade and other receivables (13.2) 12.4 5.4
Change in trade and other payables 14.7 4.5 10.7
Cash generated from operations (26.4) 15.5 14.8
Interest paid (3.2) (3.4) (7.2)
Interest received 0.4 - 0.1
Tax received/(paid) 4.0 (0.1) (0.1)
Net cash flow from operating activities (25.2) 12.0 7.6
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 7.4 61.3
Acquisition of property, plant and equipment (2.9) (6.9) (10.5)
Acquisition of intangible assets (0.1) - (0.1)
Net cash flow from investing activities (3.0) 0.5 50.7
Cash flows from financing activities
Proceeds from borrowings 57.0 18.0 40.0
Repayment of borrowings (8.0) (18.0) (90.0)
Principal elements of lease payments (6.8) (6.3) (12.9)
Dividends paid - (4.8) (4.8)
Net cash flow from financing activities 42.2 (11.1) (67.7)
Net increase in cash and cash equivalents 14.0 1.4 (9.4)
Cash and cash equivalents at 1 January 10.9 20.4 20.4
Effect of exchange rate fluctuations on cash held 0.1 (0.1) (0.1)
Cash and cash equivalents at end of period 25.0 21.7 10.9
Cash and cash equivalents on Statement of Financial Position 23.2 22.6 12.0
Overdraft on Statement of Financial Position - (0.9) (1.1)
Cash and cash equivalents classified as held for sale 2.4 - -
Overdraft classified as held for sale (0.6) - -
Cash and cash equivalents at end of period 25.0 21.7 10.9
Notes to the Condensed Consolidated Interim Financial Statements
1 BASIS OF REPORTING
Reporting entity
Headlam Group plc, the 'company', is a company incorporated in the UK. The
Condensed Consolidated Interim Financial Statements consolidate those of the
company and its subsidiaries which together are referred to as the 'Group' as
at and for the six months ended 30 June 2025.
The Consolidated Financial Statements of the Group as at and for the year
ended 31 December 2024 are available upon request from the company's
registered office or the website.
The comparative figures for the financial year ended 31 December 2024 are not
the Group's statutory accounts for that financial year. Those accounts have
been reported on by the Group's auditor and delivered to the registrar of
companies. The report of the auditor was (i) unqualified, (ii) did not include
a reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report, and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
These Condensed Consolidated Interim Financial Statements have not been
audited or reviewed by the auditor pursuant to the Auditing Practices Board's
Guidance on Financial Information.
Statement of compliance
These Condensed Consolidated Interim Financial Statements have been prepared
and approved by the directors in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the UK's Financial Conduct Authority and UK
adopted International Accounting Standard IAS 34, Interim Financial
Reporting.
They do not include all of the information required for full annual financial
statements and should be read in conjunction with the Consolidated Financial
Statements of the Group as at and for the year ended 31 December 2024, which
were prepared in accordance with UK-adopted International Accounting
Standards.
These Condensed Consolidated Interim Financial Statements were approved by the
Board of Directors on 16 September 2025.
Significant accounting policies
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the condensed set of financial statements has been prepared
applying the accounting policies and presentation that were applied in the
preparation of the Group's published Consolidated Financial Statements for the
year ended 31 December 2024.
Impacts of standards and interpretations in issue but not yet effective
There are no new standards, amendments to existing standards, or
interpretations that are not yet effective that would be expected to have a
material impact on the Group.
Going concern
The Group's performance, position, and business activities, together with the
factors likely to affect its future development, are described in the Chief
Executive's Statement and Financial Review.
The Group meets its day-to-day working capital requirements through its
banking facilities. As at 30 June 2025 the Group had a committed sterling
facility agreement for £61.0 million, with maturity in October 2027. The
Group also has short-term uncommitted facilities of £7.5 million and €4.6
million.
The Group has agreed with its lenders to have alternative covenant
arrangements in place whilst the transformation plan is implemented. The
pre-existing covenants of leverage and interest cover have been disapplied
since June 2024 and will also not apply for the 31 December 2025 and 30 June
2026 tests. Instead, a monthly minimum liquidity test (based on committed
facilities) and a quarterly minimum EBITDA test apply. The Group has complied
with these tests.
The Directors have reviewed current performance and latest forecasts, along
with borrowing facilities and expenditure commitments. The Board has also
reviewed the Group's resilience to the principal risks and uncertainties by
considering forecasts through a downside scenario, which involve modelling
market volumes continuing to decline. The testing indicated that the Group
would be able to operate within its current facilities and meet its current
financial covenants, for the next 12 months. For these reasons, the going
concern basis has been adopted in preparing the financial statements.
Judgements and estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these Condensed Consolidated Interim Financial Statements, the
significant judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty were the same as those that
applied to the Consolidated Financial Statements as at and for the year ended
31 December 2024 with the exception of the following estimate:
Disposal group held for sale
The European subsidiaries have been classified as a disposal group held for
sale as at 30 June 2025. The disposal group is measured at the lower of its
fair value less costs to sell and net book value. The fair value less costs to
sell has been estimated with reference to the latest offer price from the
preferred bidder, using recent property valuations. This has resulted in an
impairment of the disposal group of £9.2 million.
Risks and uncertainties
The risk factors which could cause the Group's results to differ materially
from expected results are set out in detail in the 2024 Annual Report and
Accounts.
2 SEGMENT REPORTING
As at 30 June 2025, the Group had four operating segments in the UK which are
continuing operations. Each segment represents an individual operation, and
each operation is wholly aligned to the sales, marketing, supply and
distribution of floorcovering products. The operating results of each
operation are regularly reviewed by the Chief Operating Decision Maker, which
is deemed to be the Chief Executive. Discrete financial information is
available for each segment and used by the Chief Executive to assess
performance and decide on resource allocation.
The operating segments have been aggregated to the extent that they have
similar economic characteristics. The key economic indicators considered by
management in assessing whether operating segments have similar economic
characteristics are the products supplied, the type and class of customer,
method of sale and distribution and the regulatory environment in which they
operate. As each operating segment within continuing operations in the UK is a
trading operation wholly aligned to the sales, marketing, supply and
distribution of floorcovering products, management considers all segments have
similar economic characteristics. Accordingly, the Group presents one
reportable segment, being UK.
In prior years the Continental Europe segment was presented as a separate
reportable segment, as it operated in a different regulatory environment. At
30 June 2025, the Continental Europe segment has been identified as a disposal
group held for sale. Information about this discontinued segment is provided
in note 8.
Continuing operations
UK Total
30 June 30 June 31 December 2024
2025 2024 £m
£m £m
Revenue
External revenue 244.7 256.4 525.7
Underlying cost of sales (169.4) (178.5) (369.7)
Underlying gross profit 75.3 77.9 156.0
Reportable segment underlying operating loss (13.8) (8.4) (17.2)
Reportable segment assets 307.6 333.8 278.3
Reportable segment liabilities 249.9 (213.0) (190.5)
During the periods shown above there have been no inter-segment revenues for
the reportable segments (2024: £nil).
Reconciliations of reportable segment profit, assets and liabilities and other
material items:
30 June 30 June 31 December
2025 2024 2024
£m £m £m
Loss for the period
Total underlying loss for reportable segments (13.8) (8.4) (17.2)
Non-underlying items (11.9) (4.1) (6.4)
Unallocated expense (3.4) (4.0) (7.7)
Operating loss (29.1) (16.5) (31.3)
Finance income 0.4 - 0.1
Finance expense (3.1) (3.2) (6.9)
Loss before taxation (31.8) (19.7) (38.1)
Taxation 6.4 5.3 17.0
Loss for the period from continuing operations (25.4) (14.4) (21.1)
Loss from discontinued operations (11.4) (1.8) (3.9)
Total loss for the period (36.8) (16.2) (25.0)
30 June 30 June 31 December
2025 2024 2024
£m £m £m
Assets
Total assets for reportable segments 307.6 333.8 278.3
Unallocated assets:
Intangible assets 0.1 0.1 0.1
Income tax receivable - 3.2 3.6
Deferred tax assets 9.7 - 3.9
Cash and cash equivalents 83.4 68.2 82.3
Assets allocated to discontinued operations 21.2 33.9 29.5
Total assets 422.0 439.2 397.7
Liabilities
Total liabilities for reportable segments (249.9) (213.0) (190.5)
Unallocated liabilities:
Deferred tax liabilities - (8.0) -
Income tax payable (0.4) - -
Liabilities allocated to discontinued operations (17.1) (18.1) (16.2)
Total liabilities (267.4) (239.1) (206.7)
Reportable Segment Total Unallocated Consolidated Total
Continuing operations
Other material items 30 June 2025 £m £m £m
Acquisition of property, plant and equipment 2.8 - 2.8
Depreciation of property, plant and equipment 3.7 - 3.7
Depreciation and termination of right of use assets 6.7 - 6.7
Impairment of intangibles 3.2 - 3.2
Non-underlying items (excluding impairment) 7.3 1.4 8.7
Other material items 30 June 2024
Acquisition of property, plant and equipment 6.8 - 6.8
Depreciation of property, plant and equipment 4.1 - 4.1
Depreciation and termination of right of use assets 5.5 - 5.5
Impairment of property, plant and equipment 0.6 - 0.6
Impairment of right of use assets 0.3 - 0.3
Non-underlying items (excluding impairment) 3.2 - 3.2
Other material items 31 December 2024
Acquisition of property, plant and equipment 10.4 - 10.4
Depreciation of property, plant and equipment 8.0 - 8.0
Depreciation and termination of right of use assets 12.0 - 12.0
Impairment of property, plant and equipment 0.7 - 0.7
Impairment of right of use assets 0.3 - 0.3
Non-underlying items (excluding impairment) 4.6 0.8 5.4
The Chief Executive, the Board and the executive team have access to
information that provides details on revenue by principal product group for
the two reportable segments, as set out in the following table:
UK Total
30 June 30 June 2024 31 December
2025 £m 2024
£m £m
Revenue
Residential 154.4 161.3 332.7
Commercial 90.3 95.1 193.0
244.7 256.4 525.7
3 NON-UNDERLYING ITEMS
Non-underlying items relate to the following:
Six months Six months
ended ended Year ended
30 June 30 June 31 December 2024
2025 2024 £m
£m £m
Continuing operations:
Amortisation of acquired intangibles (0.5) (0.6) (1.2)
Impairment of property, plant and equipment, intangible assets and right of (3.2) (0.9) (1.1)
use assets
Impairment of inventories and receivables - - (2.9)
Profit on sale of property, plant and equipment - 3.2 21.1
Business restructuring and change-related costs (5.8) (4.9) (19.7)
Cloud based ERP system development costs (2.4) (0.9) (2.6)
(11.9) (4.1) (6.4)
Taxation on non-underlying items 1.7 1.8 10.2
(10.2) (2.3) 3.8
Discontinued operation:
Amortisation of acquired intangibles (0.1) (0.1) (0.1)
Business restructuring and change-related costs (0.1) - -
Impairment of property, plant and equipment, intangible assets and right of - - (0.7)
use assets
Impairment on classification of disposal group as held for sale (9.2) - -
(9.4) (0.1) (0.8)
Taxation on non-underlying items 0.1 - 0.1
(9.3) (0.1) (0.7)
Total (loss)/profit on non-underlying items (19.5) (2.4) 3.1
Amortisation of acquired intangibles is a non-cash item relating to the
amortisation of intangibles acquired as part of business combinations.
Impairment of property, plant and equipment, intangible assets and right of
use assets relates to £3.2m impairment of goodwill allocated to the Melrose
cash generating unit following an impairment review. Impairment charges are
non-cash items.
Business restructuring and change-related costs relate to the transformation
plan, including severance costs and advisory fees. These are all cash in
nature.
Cloud-based ERP system development costs relate to the development costs to
replace the current ERP system with a cloud-based software-as-a-service
arrangement and are all cash in nature.
Impairment costs on classification of disposal group as held for sale are all
non cash in nature.
4 FINANCE INCOME AND EXPENSE
Six months Six months
ended ended Year ended
30 June 30 June 31 December 2024
2025 2024 £m
£m £m
Interest income:
Bank and other interest 0.4 - 0.1
Finance income 0.4 - 0.1
Interest expense:
Bank loans, overdrafts and other financial expenses (1.5) (2.2) (4.5)
Interest on lease liability (1.6) (1.0) (2.3)
Net interest on defined benefit plan obligation - - (0.1)
Finance expenses (3.1) (3.2) (6.9)
5 TAXATION
The Group's consolidated underlying effective tax rate ('ETR') for the interim
period is 23.6%. This is lower than the standard rate of corporation tax in
the UK predominantly due to non-deductible items decreasing instead of
increasing the ETR due to the accounting loss produced in the period.
The UK headline corporation tax rate for the six months ended 30 June 2025 was
25.0% (six months ended 30 June 2024: 25.0%; 12 months ended 31 December 2024:
25.0%). The deferred tax balance in respect of UK entities has been calculated
at 25.0% (30 June 2024: 25.0%; 31 December 2024: 25.0%) following the
enactment in 2021 of the increase in the UK tax rate from 1 April 2023.
The Group is within the scope of the OECD Pillar Two model rules. The Pillar
Two legislation was enacted on 11 July 2023. The Group will take advantage of
temporary 'safe harbour' provisions available in the initial years. The Group
does not expect the Pillar Two legislation to have any material impact on the
full year results.
6 LOSS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months Six months
ended ended Year ended
30 June 30 June 31 December 2024
2025 2024 £m
£m £m
Loss from continuing operations
Loss for basic and diluted earnings per share (25.4) (14.4) (21.1)
Loss for underlying basic and underlying diluted earnings per share (15.2) (12.1) (24.9)
Loss from discontinued operations
Loss for basic and diluted earnings per share (11.4) (1.8) (3.9)
Loss for underlying basic and underlying diluted earnings per share (2.1) (1.7) (3.2)
Total loss
Loss for basic and diluted earnings per share (36.8) (16.2) (25.0)
Loss for underlying basic and underlying diluted earnings per share (17.3) (13.8) (28.1)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2025 2024 2024
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings
per share
80,257,093 80,192,223 80,204,515
Effect of diluted potential ordinary shares:
Weighted average number of ordinary shares at period end 80,257,093 80,192,223 80,204,515
Dilutive effect of share options - - -
Weighted average number of ordinary shares for the purposes of diluted
earnings per share
80,257,093 80,192,223 80,204,515
Continuing operations loss per share
Basic (31.7)p (18.0)p (26.3)p
Diluted (31.7)p (18.0)p (26.3)p
Underlying basic (19.0)p (15.1)p (31.0)p
Underlying diluted (19.0)p (15.1)p (31.0)p
Discontinued operations loss per share
Basic (14.2)p (2.2)p (4.9)p
Diluted (14.2)p (2.2)p (4.9)p
Underlying basic (2.6)p (2.1)p (4.0)p
Underlying diluted (2.6)p (2.1)p (4.0)p
Total loss per share
Basic (45.9)p (20.2)p (31.2)p
Diluted (45.9)p (20.2)p (31.2)p
Underlying basic (21.6)p (17.2)p (35.0)p
Underlying diluted (21.6)p (17.2)p (35.0)p
7 DIVIDENDS
Six months ended Six months ended
30 June 30 June Year ended
2025 2024 31 December 2024
£m £m £m
Final dividend for 2023 of 6.0p paid 7 June 2024 - 4.8 4.8
- 4.8 4.8
The Board of Directors have not proposed an interim dividend for 2025, this is
discussed further in the Chief Financial Officer's Review above.
8 DISCONTINUED OPERATIONS
As at 30 June 2025 the subsidiaries in Continental Europe have been classified
as a disposal group held for sale. The European subsidiaries have been
actively marketed for sale as a package and offers have been received from
several interested parties. The sale of these subsidiaries is expected to take
place over the coming months.
As a result of the classification to a disposal group held for sale, the Group
has recognised an impairment loss of £9.2 million within non-underlying
expenses for discontinued operations, to write-down the disposal group to its
fair value less costs to sell.
The financial performance of the discontinued operation can be seen below:
Underlying Non-underlying Six months ended Underlying Non-underlying Underlying Non-underlying Year ended
30 June Six months ended 31 December
30 June
2025 2025 2025 2024 2024 2024 2024 2024 2024
Discontinued operations £m £m £m £m £m £m £m £m £m
Revenue 34.4 - 34.4 36.1 - 36.1 67.4 - 67.4
Expenses (35.9) (0.2) (36.1) (36.9) (0.1) (37.0) (70.0) (0.8) (70.8)
Loss on measurement to fair value less costs to sell - (9.2) (9.2) - - - - - -
Loss before taxation (1.5) (9.4) (10.9) (0.8) (0.1) (0.9) (2.6) (0.8) (3.4)
Taxation (0.6) 0.1 (0.5) (0.9) - (0.9) (0.6) 0.1 (0.5)
Loss of after taxation (2.1) (9.3) (11.4) (1.7) (0.1) (1.8) (3.2) (0.7) (3.9)
Exchange differences on translation 0.1 (0.1) (0.2)
Other comprehensive loss from discontinued operation (11.3) (1.9) (4.1)
The following assets and liabilities were classified as held for sale in
relation to the discontinued operation as at 30(th) June 2025:
Fair value of assets and liabilities of disposal group classified as held for
sale:
At
30 June
2025
£m
Assets
Deferred tax assets 0.1
Inventories 8.2
Trade and other receivables 10.5
Cash and cash equivalents 2.4
Total assets 21.2
Liabilities
Bank overdrafts (0.6)
Lease liabilities (3.6)
Trade and other payables (12.4)
Employee benefits (0.5)
Total liabilities (17.1)
Cash flows from discontinued operation:
Six months Six months
ended ended Year ended
30 June 30 June 31 December 2024
2025 2024 £m
£m £m
Net cash flow from operating activities 0.4 (0.3) 0.3
Net cash flow from investing activities (0.1) (0.1) (0.1)
Net cash flow from financing activities (0.8) (0.8) (1.5)
Net decrease in cash generated by discontinued operation (0.5) (1.2) (1.3)
9 ASSETS HELD FOR SALE
At 30 June At 30 June At 31 December 2024
2025 2024 £m
£m £m
Non-current assets held for sale 15.4 - 4.8
Total assets of disposal group held for sale (note 8) 21.2 - -
Assets classified as held for sale 36.6 - 4.8
As part of the acceleration of strategy announced in September 2024, certain
UK non-core property is expected to be sold in 2025. The non-current assets
held for sale are presented within total reportable segments assets of the UK.
10 FINANCIAL INSTRUMENTS
All financial assets and liabilities for the Group are recognised at amortised
cost.
Fair values
The carrying amounts shown in the Statement of Financial Position for
financial instruments were not materially different to their fair value.
Trade receivables, trade payables and cash and cash equivalents
Fair values are assumed to approximate to cost due to the short-term maturity
of the instrument.
Borrowings, other financial assets and other financial liabilities
Where available, market values have been used to determine fair values. Where
market values are not available, fair values have been estimated by
discounting expected future cash flows using prevailing interest rate curves.
Amounts denominated in foreign currencies are valued at the exchange rate
prevailing at the Statement of Financial Position date.
11 RELATED PARTIES
The Group has a related party relationship with its subsidiaries and with its
key management. There have been no changes to the nature of related party
transactions entered into since the last annual report.
12 CONTINGENT LIABILITY
One of the Company's subsidiaries, MCD Group Limited, is being prosecuted by a
local authority for two alleged health and safety offences relating to an
accident at one of the Group's sites, previously disclosed in our 2022 Annual
Report. The initial court hearing will be held on 24 September 2025. The
outcome of the matter is uncertain, pending the hearing, and it is not
practicable to estimate any associated financial effect. It is likely that any
reimbursement will be limited to insurance cover for legal costs.
13 POST BALANCE SHEET EVENTS
Management have given due consideration to any events occurring in the period
from the reporting date to the date these Condensed Consolidated Interim
Financial Statements were authorised for issue and have concluded that there
are no material adjusting or non-adjusting events to be disclosed in these
financial statements except;
On 21 July 2025 the Group completed the sale and leaseback of its Tamworth
distribution centre. The sale proceeds of £21.75 million (excluding VAT)
represent a premium of 153% to the book value of £8.6 million and 143% to the
last market valuation of £15.2 million. The profit generated from the sale of
this property will be recognised as non-underlying income. The Tamworth
distribution centre remains a core part of the Group's distribution network
and is integral to the Group's growth plans over the coming years.
Accordingly, the Group has entered into a 10-year leaseback, with the
opportunity to extend further. This sale and leaseback transaction further
optimises the Group's mix of owned and leased distribution centres. The cost
of the leaseback is equivalent to the Group's cost of debt, meaning that this
transaction is broadly neutral to the Group's Underlying Profit Before Tax.
£21.1 million of the sales proceeds (excluding VAT) have been received in
cash following simultaneous exchange and completion, with the remaining £0.7
million retained by the buyer pending the Group's completion of pre-agreed
repairs and maintenance on the property.
Adjusted Results Reconciliation
30 June 2025
Total Results Amortisation of intangibles Impairment of PPE, right of use assets and intangible assets Business restructuring and change-related costs Cloud based ERP system development Impairment of Asset Held for sale Adjusted Results (underlying)
Continuing operations £m £m £m £m £m £m £m
Revenue 244.7 - - - - - 244.7
Cost of sales (169.4) - - - - - (169.4)
Gross profit 75.3 - - - - - 75.3
Distribution costs (63.5) - - 1.1 - - (62.4)
Administrative expenses (41.1) 0.5 3.2 4.7 2.4 - (30.3)
Net impairment gains 0.2 - - - - - 0.2
Operating (loss)/profit (29.1) 0.5 3.2 5.8 2.4 - (17.2)
Finance income 0.4 - - - - - 0.4
Finance expenses (3.1) - - - - - (3.1)
Net finance costs (2.7) - - - - - (2.7)
(Loss)/profit before tax (31.8) 0.5 3.2 5.8 2.4 - (19.9)
Taxation 6.4 (0.1) - (1.0) (0.6) - 4.7
(Loss)/profit for the year from continuing operations (25.4) 0.4 3.2 4.8 1.8 - (15.2)
(Loss)/profit for the year from discontinued operations (11.4) - - 0.1 - 9.2 (2.1)
(Loss)/profit for the year attributable to the equity shareholders (36.8) 0.4 3.2 1.8 (17.3)
4.9 9.2
(Loss)/earnings per share from continuing operations
Basic (31.7)p 0.5p 4.0p 6.0p 2.2p - (19.0)p
Diluted (31.7)p 0.5p 4.0p 6.0p 2.2p - (19.0)p
(Loss)/earnings per share from discontinued operations
Basic (14.2)p - - 0.1p - 11.5p (2.6)p
Diluted (14.2)p - - 0.1p - 11.5p (2.6)p
Adjusted Results Reconciliation
30 June 2024
Total Results Amortisation of intangibles Impairment of PPE and right of use assets Profit on sale of property, plant and equipment Business restructuring and change-related costs Cloud based ERP system development Adjusted Results (underlying)
Continuing operations £m £m £m £m £m £m £m
Revenue 256.4 - - - - - 256.4
Cost of sales (178.5) - - - - - (178.5)
Gross profit 77.9 - - - - - 77.9
Distribution costs (60.6) - - - - - (60.6)
Administrative expenses (33.5) 0.6 0.9 (3.2) 4.9 0.9 (29.4)
Net impairment losses (0.3) - - - - - (0.3)
Operating (loss)/profit (16.5) 0.6 0.9 (3.2) 4.9 0.9 (12.4)
Finance income - - - - - - -
Finance expenses (3.2) - - - - - (3.2)
Net finance costs (3.2) - - - - - (3.2)
(Loss)/profit before tax (19.7) 0.6 0.9 (3.2) 4.9 0.9 (15.6)
Taxation 5.3 (0.2) (0.2) - (1.2) (0.2) 3.5
(Loss)/profit for the year from continuing operations (14.4) 0.4 0.7 3.7 (12.1)
(3.2) 0.7
(Loss)/profit for the year from discontinued operations (1.8) 0.1 - - - - (1.7)
(Loss)/profit for the year attributable to the equity shareholders (16.2) 0.5 0.7 (3.2) 3.7 0.7 (13.8)
(Loss)/earnings per share from continuing operations
Basic (18.0)p 0.5p 0.9p (4.0)p 4.6p 0.9p (15.1)p
Diluted (18.0)p 0.5p 0.9p (4.0)p 4.6p 0.9p (15.1)p
(Loss)/earnings per share from discontinued operations
Basic (2.2)p 0.1p - - - - (2.1)p
Diluted (2.2)p 0.1p - - - - (2.1)p
Adjusted Results Reconciliation
31 December 2024
Total Results Amortisation of acquired intangibles Impairment Cloud-based ERP system development costs Impairment of Inventories and receivables Profit on sale of property, plant and equipment Business re-structuring Adjusted Results (under-lying)
of property, and
plant and change related
equipment, costs
intangible
assets and
right of use
assets
Continuing operations £m £m £m £m £m £m £m £m
Revenue 525.7 - - - - - - 525.7
Cost of sales (380.3) - - - 1.6 - 9.0 (369.7)
Gross profit 145.4 - - - 1.6 - 9.0 156.0
Distribution costs (123.9) - - - - - 4.4 (119.5)
Administrative expenses (71.0) 1.2 1.1 2.6 - - 6.3 (59.8)
Net impairment (losses)/gains on trade receivables (2.9) - - - 1.3 - - (1.6)
Other operating income 21.1 - - - - (21.1) - -
Operating (loss)/profit (31.3) 1.2 1.1 2.6 2.9 (21.1) 19.7 (24.9)
Finance income 0.1 - - - - - - 0.1
Finance expenses (6.9) - - - - - - (6.9)
Net finance costs (6.8) - - - - - - (6.8)
(Loss)/profit before tax (38.1) 1.2 1.1 2.6 2.9 (21.1) 19.7 (31.7)
Taxation 17.0 (0.4) (0.2) (0.6) (0.7) (3.5) (4.8) 6.8
(Loss)/profit for the year from continuing operations (21.1) 0.8 0.9 2.0 2.2 (24.6) 14.9 (24.9)
(Loss)/profit for the year from discontinued operations (3.9) 0.1 0.6 - - - - (3.2)
(Loss)/profit for the year attributable to the equity shareholders (25.0) 0.9 1.5 2.0 2.2 (24.6) 14.9 (28.1)
(Loss)/earnings per share from continuing operations
Basic (26.3)p 1.0p 1.1p 2.5p 2.7p (30.6)p 18.6p (31.0)p
Diluted (26.3)p 1.0p 1.1p 2.5p 2.7p (30.6)p 18.6p (31.0)p
(Loss)/earnings per share from discontinued operations
Basic (4.9)p 0.1p 0.8p - - - - (4.0)p
Diluted (4.9)p 0.1p 0.8p - - - - (4.0)p
-Ends-
1 (#_ftnref1) Transport cross-docks are non-stock-holding locations that are
used to transfer product from overnight trunker deliveries onto local delivery
vans, ready for delivery the following day to customers in the surrounding
area
2 (#_ftnref2) The results for the six months ended 30 June 2024 have been
re-presented to refer the presentation of the Continental European businesses
as discontinued (see note 8 for further information).
3 (#_ftnref3) To supplement IFRS reporting, we also present our results on
an underlying basis to show the performance of the business before
Non-Underlying Items. These items are detailed in note 3 and principally
comprise: amortisation of acquired intangibles; impairment of assets; business
restructuring and change-related costs; and ERP system development.
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