Pre-Close Trading Update

24 July 2019

Headlam Group plc

('Headlam' or the 'Company')

Pre-Close Trading Update

Headlam Group plc (LSE: HEAD), Europe's leading distributor of floorcoverings, announces a trading update for the six months ended 30 June 2019 (the 'Period') and ahead of announcing its interim results for that period on Wednesday, 28 August 2019.

Total revenue increased by 3.3% in the Period, with both the residential and commercial sectors in the UK and Continental Europe all contributing positively to this performance. There was a continuing gradual shift in the business mix towards the commercial sector highlighting its overall stronger performance relative to that of the residential sector, with the residential and commercial sectors up 2.0% and 5.7% respectively.

On a like-for-like* basis, revenue increased by 1.8% and 3.2% in the UK and Continental Europe respectively against the same period in the prior year, resulting in an overall like-for-like* revenue increase of 2.0% in the Period. The UK's positive like-for-like* performance was principally driven by a stronger Q1 compared with the weaker prior year comparatives, with Q2 being marginally positive. The Board is maintaining its overall expectations for the full year, ahead of the traditionally stronger second half of the year.

The Company continues to make progress in evaluating various constituents of its operational efficiency programme. Of those being progressed, the trial in South Wales targeting more effective delivery fleet utilisation has been successfully completed resulting in an increased number of order drops per vehicle with a reduction in the number of commercial vehicles needing to service the local area. Additionally, the sod-cutting ceremony for the new 190,000 square feet regional distribution centre in Ipswich, which will support customers throughout the South East of England is taking place this week, marking the start of the construction phase of the project.

The interim results will be prepared in accordance with the new IFRS 16 'Leases' accounting standard effective for financial periods beginning on or after 1 January 2019. The expected impact on the Company's financial statements was previously outlined in the 2018 Annual Report and Accounts, and is currently estimated by the Company at a slight reduction in profit before tax for the six month Period. There will be no overall impact on the Company's cash and cash equivalents. As previously stated, the Company currently intends to maintain its full year 2019 dividend in-line with that of 2018, including accounting for the impact from the adoption of IFRS 16.

*Like-for-like revenue is calculated based on constant currency from activities and businesses that made a full contribution in both the 2019 and 2018 periods and is adjusted for any variances in working days.

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Notes for Editors:

Operating for 26 years and employing over 2,600 people, Headlam is Europe's leading distributor of floorcoverings.

Headlam provides the distribution channel between suppliers and trade customers of floorcoverings. Working in partnership with suppliers from 22 countries manufacturing a diverse range of floorcovering products and ancillary accessories, Headlam provides an unparalleled route to market for their products across the UK and certain Continental European territories.

The utilisation of an outsourced distribution channel enables manufacturers to focus on their core activities, incur reduced costs associated with distribution, and benefit from localised sales, marketing and distribution expertise that provides a more effective and greater route to market for their products.

To maximize customer and market penetration, Headlam comprises 65 individual businesses in the UK and Continental Europe (France, the Netherlands and Switzerland) each operating under their own unique trade brand and utilising individual sales teams.

Headlam's extensive customer base, operating within both the residential and commercial sectors and comprising principally independent retailers and flooring contractors, receives the broadest product offering supported by next day delivery as well as additional marketing and other support.

Headlam's offering is enabled through its unrivalled operating expertise, long-established supplier and customer relationships, and comprehensive distribution network. Following years of considerable investment, Headlam's distribution network currently comprises four national distribution hubs, 19 regional distribution centres and a supporting network of smaller warehouse premises, trade counters, showrooms and specification centres.

In 2018, Headlam worked with 199 suppliers and fulfilled over 5.3 million customer orders.

www.headlam.com