Slide 1: Interim Results
INTERIM RESULTS Six months ended 30 June 2022 The leading floorcoverings distributor
Slide 2: The Leading Floorcoverings Distributor
THE LEADING FLOORCOVERINGS DISTRIBUTOR Delivering flooring products, expertise and solutions across the industry 2
Slide 3: Agenda
AGENDA Chris Payne Chief Executive • About Us • H1 2022 Financials • Strategy and ESG Update • Current Trading and Outlook • Summary 3
Slide 4: About Us
ABOUT US 66 Businesses All with individual identities to capture regional and national sales Supported by the group’s centralised resources and processes 21 Distribution hubs and centres Extensive nationwide network Ongoing investment in the network, including in systems, equipment and trade counter
Slide 5: H1 2022 Financials
H1 2022 FINANCIALS 5
Slide 6: H1 2022 Financial Highlights
H1 2022 FINANCIAL HIGHLIGHTS Pleasing performance given economic / inflationary environment Revenue • Total revenue £323.8m (H1 2021: £329.9m): • 5.2% uplift in Continental Europe helping to offset a 2.9% decline in the UK related to weakness in the residential sector • Gross margin temporarily lift
Slide 7: UK Distribution Daily Sales
UK DISTRIBUTION DAILY SALES* £ 2,500k 2,000k 1,500k 1,000k 500k - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2020 2021 2022 *Calculated on a like-for-like basis, being based on activities and businesses that made a full contribution in both the current and previous year, and adjusted for a
Slide 8: Income Statement
INCOME STATEMENT Income Statement H1 2022 H1 2021 Continuing Operations £M % £M % Revenue 323.8 100.0% 329.9 100.0% Cost of sales (214.8) (66.3)% (222.0) (67.3)% Gross profit 109.0 33.7% 107.9 32.7% Distribution costs (64.6) (20.0)% (61.8) (18.7)% Administrative expenses (26.5) (8.2)% (28.7) (8.7)%
Slide 9: Revenue Movement
REVENUE MOVEMENT Revenue Continuing Operations £M % £M % H1 2021 revenue: UK 287.9 87.3 Continental Europe 42.0 12.7 329.9 100.0 UK incremental items: Like-for-like (6.0) (2.1) Change in working days (2.3) (0.8) Acquisitions - - (8.3) (2.9) Continental Europe incremental items: Like-for-like 2.9 6.9
Slide 10: Underlying Operating Profit Movement
UNDERLYING OPERATING PROFIT MOVEMENT Operating Profit Underlying Non-underlying Total Continuing Operations £M £M £M H1 2021 Operating profit 17.4 (2.7) 14.7 Gross margin changes: Volume (5.6) - (5.6) Price inflation 7.6 - 7.6 Change in working days (0.6) (0.6) Other (0.3) - (0.3) Total increase 1.1
Slide 11: Non-Underlying Items
NON-UNDERLYING ITEMS Non-underlying items H1 2022 H1 2021 Continuing Operations £M £M Impairment of goodwill and intangibles - 1.2 Amortisation of intangibles 0.7 0.9 Non-underlying non-cash items 0.7 2.1 Property disposal profit - (0.9) Business restructuring costs - 1.5 Insurance proceeds (followi
Slide 12: Cash Flow Movement
CASH FLOW MOVEMENT Cash Flow H1 2022 H1 2021 £M £M Underlying EBITDA 26.6 27.2 Change in inventories (16.9) (11.5) Change in receivables (4.4) (12.0) Change in payables (21.3) 5.1 Other 0.6 0.3 Cash generated from operations (underlying) (15.4) 9.1 Interest and tax (3.2) (3.4) Disposal proceeds (inc
Slide 13: Balance Sheet
BALANCE SHEET Balance Sheet June 2022 June 2021 £M £M Property, plant and equipment 112.9 115.9 Intangibles 17.9 19.0 Inventories 148.1 120.6 Trade and other receivables 118.8 109.6 Cash 31.5 62.6 Trade and other payables (169.3) (176.9) Borrowings (25.5) (8.7) Other assets and liabilities (21.0) (1
Slide 14: UK Sterling Net Debt Daily Balances
UK STERLING NET DEBT DAILY BALANCES 14
Slide 15: Strategy and ESG Update
STRATEGY AND ESG UPDATE 15
Slide 16: Strategy
STRATEGY Driving additional revenue opportunities from a more efficient operating base • Focus on operating efficiency and cost control • Investment in the network (sites and equipment) and systems to optimise performance and support revenue growth • Modernise and digitalize to increase revenue oppo
Slide 17: Strategy: Key Revenue Growth Drivers
STRATEGY Key revenue growth drivers Significant additional revenue growth opportunities Trade Counters Multiple Retailers / Digital and Products and Roll-out Larger Customers Ecommerce Brands Accelerating roll-out of new Actively targeting the Enhanced Digital and New launches and relaunches and imp
Slide 18: Trade Counters
TRADE COUNTERS Accelerating roll-out of new and improved sites nationwide Fast growing business unit: • 53 uninvested sites in 2021 • Target of 90 fully invested sites by 2025 • Target of adding c £120m of new revenue to base of £80m • Total capex of c £18m Good progress being made: • Invested sites
Slide 19: Multiple Retailers and Larger Customers
MULTIPLE RETAILERS AND LARGER CUSTOMERS Significant revenue opportunity from a current modest position Offering a strong service proposition: • Reduces complexity and cost for customer and supplier, work closely with both • Tailored solutions • Supply chain management / stockholding and storage solu
Slide 20: Multiple Retailers and Larger Customers: Case Studies
MULTIPLE RETAILERS AND LARGER CUSTOMERS Case studies Homebase Top 10 UK housebuilder • 2 year contract signed in May 2022 • Vast majority of all new homes in UK sold with flooring • A leading home improvement retailer and garden centre, with over 150 stores • Headlam’s first national contract with a
Slide 21: Digital and Ecommerce
DIGITAL AND ECOMMERCE Increasing revenue opportunities and helping lower the cost to serve Investment being made in: • New and improved digital channels, including B2B websites and myheadlam app • Product brand awareness • Core operating system • Further systems integration, to particularly support
Slide 22: Product and Brands
PRODUCT AND BRANDS Existing brands being refreshed and relaunched to support increased sales Leveraging Headlam’s brands • Headlam offers product from less than £10 per sqm to over £150 per sqm (retail prices) • Headlam owns a number of well regarded and recognised brands, including: • Crucial Tradi
Slide 23: Everyroom
EVERYROOM Launch of new and exclusive affordable residential range • Available to all Headlam customers • Helping to secure sales at a time when end- consumers are more cost conscious • Initial feedback very positive, rolling-out range and sampling / lecterns into retailers 23
Slide 24: ESG Update and Board
ESG UPDATE AND BOARD Focus on delivery of overall strategy, and high levels of corporate governance ESG Update Board Summary of progress since FY21 ESG Report New NED Appointment • Established Executive ESG Committee • Karen Hubbard appointed from 1 Sept 2022 • Engaging in Net Zero emissions transit
Slide 25: Current Trading and Outlook
CURRENT TRADING AND OUTLOOK 25
Slide 26: Current Trading and Outlook
CURRENT TRADING AND OUTLOOK Strategy proven to have provided a countermeasure and protection against weaker market thus far • Revenue performance year to date continuing to be only marginally below the prior year period • Continuing more buoyant UK commercial sector activity and Continental Europe b
Slide 27: Summary
SUMMARY Gaining market share, and set fair for when current headwinds ease Solid base • Market leading • Strong balance sheet • Extensive network being invested in • Many opportunities Capability added to support delivery of strategy • A number of Senior Management appointments • Increasing capabili
Slide 28: Q&A
Q&A headlamgroup@headlam.com