19 January 2023

Headlam Group plc

('Headlam' or the 'Company')

Pre-Close Trading Update

Headlam (LSE: HEAD), the leading floorcoverings distributor, today provides a Pre-Close Trading Update in respect of the year ended 31 December 2022 (the 'Period') ahead of announcing final results in March 2023.

Trading Update

Revenue and underlying profit before tax for the Period are both expected to be marginally ahead of market expectations¹.

This performance reflects good progress made under the Company's strategy along with pleasing performances from the commercial sector and Continental Europe, coupled with support from product price inflation. Larger customer wins and effective execution of the early stage of the trade counter roll out helped offset weaker residential demand in the UK due to the cost of living crisis. The Company also continued to focus on efficiency measures against a backdrop of high operational cost inflation.

Outside of Trading

Since the start of the year, the Company has acquired a leading distributor of rugs and made further key appointments, both of which strengthen delivery of the revenue growth and efficiency strategy.

Melrose Interiors² based in Bradford is the largest independent supplier to the UK online rug industry, and also has operations in third-party logistics, recycling, and an in-house rug and sampling / pattern book department. Melrose brings a number of new larger customers to the group, including major high street and online retailers, a customer segment where the Company is targeting growth and will work with Melrose to scale up opportunities. Melrose also has market leading environmental credentials through its award winning [RE]lay brand of recycled rugs, and its value creating upcycling of surplus carpet from across the industry into samples and pattern books.

Toni Wood has joined the Executive Team as Chief Customer Officer, having previously been Chief Marketing and Growth Officer at ufurnish.com and prior to that Chief Commercial and Marketing Officer for DFS Furniture PLC. The new role will lead customer and digital strategy, encompassing customer communications, brand development, marketing, and ecommerce. This will broaden and modernise the Company's interface with customers, and drive improved performance of the Company's wide cross section of recognisable product brands.

The Share Buyback programme is progressing well, having materially accelerated following the Board's decision to increase the daily trading volume limits in November 2022. At current rates, the total £15.0 million programme it is expected to be complete by the end of Q1 2023.

Investor Presentation

Headlam is pleased to announce that Chris Payne, Chief Executive, will provide a live presentation relating to this Pre-Close Trading Update via the Investor Meet Company platform today (19 January 2023) at 3.30pm GMT.

Investors can sign up to Investor Meet Company for free and add to meet Headlam via:

https://www.investormeetcompany.com/headlam-group-plc/register-investor

Investors who already follow Headlam on the Investor Meet Company platform will have automatically been invited.

¹Company-compiled consensus market expectations for revenue and underlying profit before tax, on a mean basis, are available on the Company's website at www.headlam.com

²Melrose Interiors' unaudited revenue for the year ended 31 December 2022 was approximately £8 million