Headlam Group PLC Pre-Close Trading Update (9514Z)
January 16 2020 - 1:00AM
UK Regulatory
TIDMHEAD
RNS Number : 9514Z
Headlam Group PLC
16 January 2020
16 January 2020
Headlam Group plc
('Headlam' or the 'Company')
Pre-Close Trading Update
Headlam Group plc (LSE: HEAD), Europe's leading floorcoverings
distributor, today announces a trading update in respect of the 12
months ended 31 December 2019 ahead of announcing its final results
on Thursday, 5 March 2020.
Trading during 2019 largely tracked the Company's internal
expectations and it is anticipated that the final results for the
year will be marginally ahead of market expectations(1) with a
final ordinary dividend proposed in-line with the Board's
previously stated intention to maintain the full year dividend with
that of 2018 despite a lower underlying(2) profit before tax
performance in 2019.
Total revenue increased on both an absolute and like-for-like(3)
basis, with growth in Continental Europe outperforming that of the
UK which was marginally positive on a like-for-like(3) basis.
Although the residential sector performed much more strongly than
the commercial sector in Continental Europe, due to the UK
performance there was a continuation of the gradual shift in
overall business mix towards the commercial sector, which has
proven to be the more resilient UK revenue stream in the generally
restrained markets evident throughout 2018 and 2019.
Mindful of the recent market backdrop, the Company's internal
expectations for 2020 have been prepared on a prudent basis whilst
also incorporating a planned substantial level of investment to
support future growth and improved operational and financial
performance.
The 2020 capital investment will be primarily focused on the
Company's new regional distribution centre currently being
constructed in Ipswich and in support of the Company's overall
operational efficiency programme, with the ongoing implementation
and roll-out of constituent projects leading to an increasingly
positive impact on financial performance. The timing and investment
in the Ipswich distribution centre remains on-track, with
operational completion expected for Easter 2020 at a total cost of
GBP26 million, of which the final tranche of approximately GBP10
million will be incurred in 2020.
After factoring in this investment, the early-stage
contributions achieved through the operational efficiency programme
and year-on-year inflationary cost pressures alongside the
Company's prudent approach, it is currently anticipated that the
2020 financial performance will show a modest improvement compared
with 2019. In-line with the Company's continued commitment to a
progressive dividend policy, it is the Board's intention to reflect
any increase in statutory basic EPS for 2020 in the 2020 full year
dividend.
(1)Company-compiled consensus market expectations for 2019
revenue and underlying(2) profit before tax are GBP705.5 million
and GBP39.3 million respectively (mean), with the expectation for
underlying(2) profit before tax given prior to the adjustments due
to the adoption of IFRS 16 'Leases' accounting standard which came
into effect on 1 January 2019. The Company currently anticipates,
subject to completion of the 2019 audit, that underlying(2) profit
before tax will be impacted by a reduction of GBP0.8 million due to
the adoption of IFRS 16 and that 2020 underlying(2) profit before
tax will be impacted similarly.
(2)Underlying is before non-underlying items which includes
amortisation of acquired intangibles, acquisition related costs,
contingent consideration movements, non-recurring pension costs in
relation to guaranteed minimum pension ('GMP') equalisation and
non-recurring costs relating to senior personnel changes.
(3)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.
Enquiries:
Headlam Group plc Tel: 01675 433 000
Steve Wilson, Chief Executive Email: 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 Tel: 020 7886 2500
Broker)
Erik Anderson / Dominic Morley
/ Ailsa Macmaster
Buchanan (Financial PR and IR) Tel: 020 7466 5000
Mark Court / Toto Berger
Notes for Editors:
Operating for 28 years and employing over 2,600 people, Headlam
is Europe's leading floorcoverings distributor.
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
66 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
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END
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