Headlam : Final Results 2021 Presentation

RESULTS PRESENTATION

Final results for the year ended 31 December 2021

Europe's leading floorcoverings distributor

AGENDA

Chris Payne

Chief Executive

and Chief Financial Officer

• About Us
• Financial Overview
• Strategy and Operations
• 2021 Financial Performance
• Surplus Capital Return
• ESG Strategy
• Post Period End and Current Trading

2

ABOUT US

Europe's leading floorcoverings distributor

Market Leading

• 30 years operating
• 24,830 trade customer accounts
• Most comprehensive service offering
• 39,000 SKUs

Nationwide Operations

• 66 businesses
• 21 distribution hubs and centres
• 53 trade counters
• Dedicated sales teams

Strong Foundation

• Financial strength
• Track record, including governance and returns
• Business change strategy delivering

Growth Opportunities

• Targeting increased share of £3bn UK market
• On track for 7.5% operating margin target

3

2021 FINANCIAL HIGHLIGHTS

Operated effectively throughout despite COVID-19 and industry issues

• Revenue +15.4% at £667.2m, a strong rebound from 2020 which was materially impacted by COVID-19 related closures of operations in H1 20 (2020: £578.1m)
• Gross margin increased to a record 33.0% (2020: 30.8%) owing to the inflationary environment and other factors including business change strategy
• Underlying operating margin improved to 5.6% (2020: 3.0%), on track to reach stated 7.5% target during 2023 through increasing realisation of benefits
• Underlying profit before tax of £35.8m (2020: £15.4m)
• Average net funds (excluding lease liabilities) of £38.3m, strong recovery from 2020 net debt position caused by COVID-19 (2020: £8.6m average net debt)
• Net funds position (including lease liabilities) at 31 Dec 2021 of £17.7m (1 Jan 2021: £8.3m)
• Proposed final ordinary dividend of 8.6p in line with the Capital Allocation Parameters, giving total dividend payout in respect of 2021 of 16.4p
• In addition, a surplus capital return totaling £30 million (see page 25)

*Continental Europe: France and the Netherlands

All financial results represent continuing operations only, and exclude the contribution from the Swiss business Belcolor in the year, and the comparator year(s), following its disposal in May 2021

Underlying is before non-underlying items, which includes i) amortisation of acquired intangible assets, ii) impairment of goodwill and intangible assets, iii) property disposal profit, iv) business restructuring costs, and v) impairment of property, plant and equipment and inventory (following a fire)

Revenue

Residential sector	68.5%
Commercial sector	31.5%

UK	87.8%
Continental Europe*	12.2%
	4

FINANCIAL TRACK RECORD

Strong recovery from impact of COVID-19

Revenue

Statutory basic (loss)/earnings per share

Underlying operating profit

£667.2m	719.2
578.1	667.2
+15.4%
(2020: £578.1m)
	2019	2020	2021

23.5p

+213.5%

(2020: (20.7)p)

£37.3m

+114.4%

(2020: £17.4m)

Statutory operating profit £29.1m (2020: £(12.2)m loss)

42.2

37.3

17.4

2019 2020 2021

Total dividend
16.4p
25.0
(2020: 0.0p)
		16.4
		00.0
	2019	2020	2021

Underlying profit before tax

£35.8m	39.5
	35.8
+132.5%
(2020: £15.4m)		15.4
	2019	2020	2021

Average net funds/(debt)

£38.3m

38.3

+545.3%(Net

funds)

(2020: £(8.6)m net debt)

(3.3) (8.6)

2019 2020 2021

All financial results represent continuing operations only, and exclude the contribution from the Swiss business Belcolor in the year, and the comparator year(s), following its disposal in May 2021

Underlying is before non-underlying items, which includes i) amortisation of acquired intangible assets, ii) impairment of goodwill and intangible assets, iii) property disposal profit, iv) business restructuring costs, and v) impairment of property, plant and equipment and inventory (following a fire)

Average net funds / (debt) is calculated by aggregating the net funds / (debt) position, excluding the impact of IFRS 16 'Leases', for each business day and dividing by the total number
of business days	5