Headlam Group Plc · LSE:HEAD
Headlam — FY2024 Earnings Presentation
31 slides from Headlam's earnings presentation, March 2025
Slide 1: 2024 Full Year Results
2024 FULL YEAR RESULTS The leading, most trusted March 2025 experts in flooring 1
Slide 2: Chris Payne, Chief Executive; Adam Phillips, Chief Financial Officer
Chris Payne Adam Phillips Chief Executive Chief Financial Officer 2
Slide 3: Introduction
INTRODUCTION Continued Controlling the Challenging Transformation growth from controllables and market plan progressing strategic balance sheet conditions weigh well initiatives strengthened on performance 3
Slide 4: 2024 Financial Performance
2024 FINANCIAL PERFORMANCE 4
Slide 5: Flooring Market
FLOORING MARKET 2024 was the third consecutive year of volume decline in the flooring market Market indicators Consumer confidence Consumer spending on home improvements Housing transactions 0 -5 Barclays year-on-year spend data (2 year stack) 30% -10 - -2% 20% -15 -4% 10% -20 -6% -8% -6% - -25 -30
Slide 6: Revenue
REVENUE Continued growth in strategic growth initiatives offset by decline in Regional Distribution and Continental Europe 2024 2023 Year-on-year ● Decline in Regional Distribution principally driven by £m £m % weak residential market Regional Distribution 315.5 375.4 (16.0)% ● Continued growth in s
Slide 7: Income Statement
INCOME STATEMENT Continued market decline, cost inflation and lack of price inflation results in a loss for the year 2024 % of 2023 % of £m revenue £m revenue ● Group revenue -9.7%; UK revenue 8.9% and Revenue 593.1 100.0% 656.5 100.0% Continental Europe -14.9% Cost of sales (415.5) (70.1)% (448.7)
Slide 8: Non-Underlying Items
NON-UNDERLYING ITEMS A net P&L expense of £7.2m, but a net cash inflow of £48.5m due to property sale proceeds 2024 2024 2024 2023 ● Asset impairments of £4.7m relating to network optimisation Cash Non-cash Total Total initiatives along with the write-down of inventory and £m £m £m £m receivables re
Slide 9: Cash Flow
CASH FLOW Good operating cash generation; net cash position at the end of the year 2024 2023 £m £m ● Good operating cash generation with Underlying Operating Cash Flow of Underlying EBITDA (5.4) 36.7 £27.6m Change in inventories 17.6 10.0 Change in receivables 3.7 2.7 ● Inventories lower by £17.6m (
Slide 10: Movement in Net Debt
MOVEMENT IN NET DEBT Net Cash at December 2024, reflecting working capital management and property disposal proceeds (1) Reduction in Net Debt: cash inflow Increase in Net Debt (1) Includes £10.8m of VAT timing benefit from VAT collected on property disposals in December and paid over to HMRC in Jan
Slide 11: Property Disposals
PROPERTY DISPOSALS Five properties sold in the year at an average 68% premium to book value P r em iu m to ● Total cash proceeds, net of agent fees, of Tr an saction Tr an saction Disposal P r em iu m to pr eviou s £61.3m m on th type pr oceeds ( 2 ) book valu e m ar ket valu ation ( 3 ) £m % % ● Av
Slide 12: Balance Sheet
BALANCE SHEET Strong balance sheet underpinned by property portfolio and working capital December December 2024 2023 £m £m Property, plant and equipment 91.7 127.6 £10.9m (1) net cash at the end of 2024 Intangibles 17.6 19.4 Inventories 102.8 131.5 Trade and other receivables 111.0 117.1 £72m Cash 1
Slide 13: Update on Strategy and Transformation Plan
UPDATE ON STRATEGY AND TRANSFORMATION PLAN 13
Slide 14: Significant Long-Term Market Opportunity
SIGNIFICANT LONG-TERM MARKET OPPORTUNITY Headlam operates in a market worth £2.5 to 3 billion in the UK and there are large sections of the market in which Headlam is underweight, providing opportunity for significant growth (1) £2.5 - 3.0bn UK market Two-thirds residential, one-third commercial Onl
Slide 15: Strategy Acceleration
STRATEGY ACCELERATION We are accelerating our existing strategy with a transformation plan to simplify the business Existing strategy + Transformation plan 1 Simplify our customer offer 2 Simplify our network 3 Simplify how we operate 15
Slide 16: Transformation Plan Progress
TRANSFORMATION PLAN PROGRESS ✓ Consolidated 32 trading businesses into 1 national business All customers transitioned successfully to new customer ✓ accounts New sales leadership structure and creation of separate, ✓ dedicated residential and commercial flooring sales teams ✓ Launched “order anywher
Slide 17: Transformation Plan Progress
TRANSFORMATION PLAN PROGRESS Headlam’s UK network as of December 2024 Optimisation of North West England: Stockport DC closed and ✓ sold; replaced with cross-dock in Irlam ✓ Consolidation of Scotland DC’s; one site closed ✓ Optimisation of South East England: Ipswich DC and Enfield cross-dock closed
Slide 18: Transformation Plan Progress
TRANSFORMATION PLAN PROGRESS South-East England network optimisation already completed Before After Benefits Better location for our customers Ipswich cross-dock Ipswich DC More efficient footprint Rayleigh DC 125k sq ft rather than 210k sq ft Rochester Rochester Slightly lower operating cost cross-
Slide 19: Transformation Plan Progress
TRANSFORMATION PLAN PROGRESS ✓ Centralisation of supporting functions completed in Q1 2025 Simpler ✓ Unified product file customer Simpler network offer ✓ Re-tender of contracts for non-stock expenditure Removal of range duplication 2025 focus Leveraging scale; consolidated buying and ranging activi
Slide 20: Transformation Plan Benefits
TRANSFORMATION PLAN BENEFITS We have upgraded our targets to £25m of profit improvement and £90m+ of one-off cash benefits Original guidance in September 2024 Latest targets ● Net of reinvestment in enhancing our customer proposition Annual profit £15m+ £25m improvement ● Principally comprises cost
Slide 21: Transformation Plan Benefits
TRANSFORMATION PLAN BENEFITS These benefits are targeted to be delivered as set out in the phasing below 2024 2025 2026 2027 Cumulative annual profit - £10m £15m+ £25m benefit (1) Cumulative gross one-off cash £57m £80m+ £90m+ £90m+ benefit (2) Cumulative one- £9m £19m £25m £30m off cash costs (3) N
Slide 22: Outlook & Summary
OUTLOOK & SUMMARY 22
Slide 23: Short-Term Outlook
SHORT-TERM OUTLOOK Market has remained weak into 2025 but expected to improve Current trading: 6% ● So far in 2025, consumer spending on home improvements has remained negative despite weak comparatives revenue decline in ● Group revenue for January and February was 6% below the previous year Januar
Slide 24: Long-Term Outlook
LONG-TERM OUTLOOK There is a material profit opportunity from the combination of the existing strategy, the transformation plan and market recovery + + Existing strategic Transformation initiatives to Market recovery plan broaden the base 24
Slide 25: Summary
SUMMARY Continued Controlling the Challenging Transformation growth from controllables and market plan progressing strategic balance sheet conditions weigh well initiatives strengthened on performance 25
Slide 26: Q&A
Q&A Chris Payne Chief Executive Adam Phillips Chief Financial Officer 26
Slide 27: Appendix
APPENDIX 27
Slide 28: About Us
ABOUT US Long heritage; strong and broadening foundations Over 30 years of operating excellence Nationwide network and operations • Knowledgeable and long • Next day delivery from extensive serving colleagues distribution network • Servicing a large and diverse • Growing number of trade counter trad
Slide 29: Technical Guidance
TECHNICAL GUIDANCE Capex ● £6-7m in 2025. This compares to £10.6m in 2024 and £18.2m in 2023 ERP development costs ● c.£5m in 2025, following £2.6m of costs in 2024. In 2025 we move into the design and build phase of the project Tax rate ● 2025 tax credit of circa 20% Interest costs ● In 2024, inter
Slide 30: Underlying Profit/(Loss) Before Tax
UNDERLYING PROFIT/(LOSS) BEFORE TAX Market decline and cost inflation, combined with a lack of price inflation, were the key factors ● UK volume decline, reflecting weak residential market, contributed to £19m reduction in profit ● Gross margin movement had a £7m profit impact, principally due to cl
Slide 31: Investment Case
INVESTMENT CASE Long heritage; strong and broadening foundations • Next day delivery from extensive distribution network 1 Market leader with unrivalled scale and convenience • • • Growing number of trade counter collection sites Ability to service all sizes of customers Broadest and largest product