REG - Headlam Group PLC - Trading Update

HeadlamAnnouncement

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RNS Number : 9902E  Headlam Group PLC  20 May 2026

20 May 2026

Headlam Group plc

('Headlam', the 'Company', the 'Group')

Trading Update

 

Headlam (LSE: HEAD), the UK's leading floor coverings distributor, provides
the following trading update for the four months ended 30 April 2026 (the
"Period").

Trading and transformation plan progress

As previously anticipated, the Group has continued to experience challenging
trading throughout the Period and revenue for the Group's continuing
operations was 21% lower Year on Year. This decline in overall market share is
in part a reflection of the planned reduction in certain sales activity as the
business implements its new core customer strategy to refocus on independent
retailers and flooring contractors, coupled with the continuation of difficult
end market conditions. As a result, the Group continues to incur significant
underlying operating losses.

Under the leadership of the new management team who have now been in place for
eight weeks, certain operational improvements have already been implemented.
 In addition, the Group has put through a price increase in May and targeted
surcharges reflecting recent higher raw material input prices, which are being
passed onto customers. The company will continue to monitor any further impact
from macroeconomic and geopolitical issues and act accordingly. The team
remains focused on delivering further significant operational and commercial
improvements and will report on progress in more detail with our interim
report.

Balance sheet

As referenced in the Company's full year results announcement in March, we are
pleased to report the very recent disposal¹ of one of the three surplus
properties highlighted, with further disposals of the remaining two properties
due to complete imminently. Together these will result in c. £15.3m of net
disposal proceeds which will be used to invest in working capital and improve
liquidity. Following these disposals, the Group is also evaluating the
potential sale and leaseback of our Coleshill property, which would provide
significant additional liquidity. These property transactions form part of a
wider range of options being considered to strengthen the balance sheet during
2026.

The Group's net debt at the end of the Period was £(40.3)m compared to
£(31.4)m at the 2025 year-end, reflecting the impact of ongoing operating
losses and one-off transformation costs, offset in part by lower working
capital in the Period.

Board composition

At the AGM today, two new Non-Executive Directors join the Board, Nick Kelsall
and Wilf Walsh. Both have considerable experience, building upon that of the
new Chief Executive and interim Chief Financial Officer who joined in March
2026.

As such, the Board, having engaged widely with shareholders, continues to
believe it has the right skills and experience to provide leadership and
stability for the Group. The Board recommendation remains to reject the
resolutions contained with the Requisition Notice to be voted on 2 June.

 

 

Rob Barclay, CEO, commented:

"It has been a busy couple of months since joining. The Board remains of the
view that, while there is lots to do on multiple fronts, there is a pathway to
return to profitability during 2027.  To deliver this we need to act with
speed and decisiveness, and this is the focus of my team."

 

Enquiries

 Headlam Group plc                                Tel: 01675 433 000
 Rob Barclay, Chief Executive Officer             Email: headlamgroup@headlam.com (mailto:headlamgroup@headlam.com)

 Richard Jones, Interim Chief Financial Officer

 Panmure Liberum Limited (Corporate Broker)
 Tom Scrivens / Atholl Tweedie                    Tel: 020 3100 2000

 Houston (PR advisers)                            Tel: +44 (0)20 4529 0549

 Kate Hoare / Charlie Barker                      Or: +44 (0) 7733 032695

 Headlam@houston.co.uk

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as amended. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain. The person responsible for arranging the release of
this announcement on behalf of the Company is Richard Jones, Interim Chief
Financial Officer.

 

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, 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 19 May 2026, the Group completed the sale of its Rochdale distribution
centre to EELVF V UK B1 Limited for £8.0million 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 EELVF V UK B1 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 with the new buyer until 1
January 2028 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 EELVF V UK B1 Limited carried out a customary due diligence and
disclosure process to minimise the liability under these provisions. (iii)
The short lease back 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 - On completion the Group has de-recognised the
£4.81million book value of the Rochdale property from its balance sheet and
recognised the receipt of £8.0million (excluding VAT) less costs associated
with the transaction, plus a further £1.6 million of cash collected in
respect of VAT to be paid over to HM Revenue & Customs in the next
quarterly VAT payment. Upon Completion, 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 31(st) December
2026.  The profit on disposal 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 Rochdale property being leased back. These
amounts will be calculated prior to finalising, and subsequently disclosed
within, the Group's results for the year ended 31(st) 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 of £4.81million. A profit on sale will be generated, which
will be recognised as non-underlying income.  As such, the Board considers
the consideration for the property is fair as far as the shareholders of the
Group are concerned.

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