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."