TIDMHEAD
RNS Number : 4170H
Headlam Group PLC
24 November 2022
24 November 2022
Headlam Group plc
('Headlam' or the 'Company')
Trading and ESG Update
Headlam (LSE: HEAD), the leading floorcoverings distributor,
today provides an update on trading, and Environmental, Social and
Governance ('ESG') strategy and progress.
Trading Update
Trading since the interim results announcement on 6 September
2022 has continued the themes reported at that time. Most notably,
the impact of the cost of living crisis suppressing market volumes
in the UK residential sector, with growth in the commercial sector
helping to partially offset. Continental Europe continued its
positive performance across both sectors.
As a result of progress made under the Company's growth
strategy, including new larger customer wins and the trade counter
roll out, and support from price inflation, the Company's revenue
was only marginally below the prior year period for the 10 months
to 31 October 2022. To date in November 2022, a month heavily
reliant on residential orders, the Company has seen a seasonal
uplift but this is below historic levels and this trend is expected
to continue until year end.
The Company, therefore, now expects underlying profitability for
the year to remain ahead of 2021 and to be marginally below the low
end of the range of market expectations(1). The Company's strategy
of driving new revenue to gain market share from a more efficient
operating base has helped provide a countermeasure against the
market weakness, and will continue to do so during 2023.
The Company will announce its Pre-Close Trading Update on 19
January 2023, ahead of announcing final results for the year ended
31 December 2022 in early March 2023.
ESG Update
The Company continues to meaningfully develop and progress its
overall ESG Strategy and associated actions. Below is an update on
the areas considered most salient under the 'E', 'S' and 'G'
pillars. Importantly, the Company's sustainability agenda and ESG
Strategy is focused not just on mitigating risk, addressing
regulatory matters and efficiency measures, but also on capturing
strategic opportunity and gaining competitive advantage.
Environmental
The Company has previously committed to a Net Zero emissions
target (Scope 1 and 2) by 2035 and is actively engaged in
transition planning. To strengthen and ensure progress towards this
commitment, the Company is now introducing an interim target
aligned with the Science Based Targets initiative ( ' SBTi') of a
46% reduction by 2030 against a baseline year set at 2019. The
Company will follow a 'true' Net Zero strategy aligned with best
practice, whereby it will focus on actual decarbonisation in
achieving these targets and only consider offsetting actions for
the residual 10%. Decarbonisation actions currently being pursued
by the Company include:
-- Moving the whole non-commercial fleet to electric or low
emission vehicles, with excellent progress made and already well
above the Company's initial 50% target by year end 2022;
-- Trialling and roll-out of electric commercial vehicles where
feasible (with limited feasibility currently due to technology and
cost constraints);
-- Ongoing transport integration (i.e. more efficient deliveries
profile), further FORS accreditations, and focus on driving
behaviours;
-- Energy saving opportunity surveys being completed at key
sites across the network, and the energy saving and efficiency
recommendations identified being rolled out across all sites;
-- Promotion of 'Good Energy and Recycling Behaviours' across
the group, with associated workshops; and
-- Installation of solar panels across all the Company's larger sites during 2023.
The investment in, and installation of, solar panels is
important to achieve both a near-term reduction in emissions as
well as helping offset higher energy costs as described in the
interim results. A total upfront capital investment of GBP3.2
million will be made in solar panels in 2023 helping to offset
energy costs that will be approximately GBP2.4 million higher in
2023 against 2022 due to the previously highlighted expiry of a
fixed price energy contract in October 2022.
Although the near-term focus is on reducing the Company's own
operational emissions, the Company is currently undergoing its
second exercise in measuring its value chain (Scope 3) emissions
which will be reported within the 2022 Annual Report published in
March 2023. This will assist in increasing the sustainability of
the industry as a whole, and the future transition to a circular
economy.
Although the marketplace is still on the whole relatively
undeveloped in terms of demanding sustainable products, with
sustainable products making up a low proportion of the overall
offering, the marketplace will increasingly signal a preference for
sustainable products and focus on closed-loop recycling. The
Company aims to take a lead in launching and marketing sustainable
products, capturing competitive advantage, with a particular focus
on fully recyclable ranges. Working closely with certain suppliers,
the Company is currently at the trialling and proof of concept
stage of new technology with a view to launching own branded
sustainable ranges during 2023. Launches will initially be into the
residential sector, with opportunities in the commercial sector
also being investigated for future launches.
Social
Of most pressing importance 'socially' is the current
inflationary impact on cost of living. To help address this, and
support the most vulnerable to a decline in their circumstances,
the Company is taking a tiered approach to its annual pay award.
For 2023, lower salaried employees will receive a higher percentage
increase to their salaries, with this percentage decreasing higher
up the scale. The Company will continue to ensure that everyone
receives the equivalent of the National Real Living Wage. The
Company's people costs are anticipated to be 6.9% higher in 2023
than 2022, mainly due to wage inflation through the cost of living
pay award.
The Company is focused on both financial and non-financial
support to its people and the communities in which it operates. The
Company's locally focused Community Programme launched in 2022
continues to be rolled out, and allows for funded donations to
local causes, as well as paid volunteering time and flooring
product donations. Additionally, the Company has recently formally
launched its Apprenticeship Programme, and will promote
apprenticeships across the business and enrol new colleagues who
wish to obtain qualifications. Through all the actions the Company
is pursuing, it is improving Headlam as a place to work, helping to
attract, retain and support great people.
Governance
Focus on corporate governance, and the assessment / mitigation
of risks, continues to be a priority for the Company. Supply Risk
Chain is identified as being one of the key material issues in the
last published Materiality Assessment, and to help mitigate against
this there has been increased engagement with suppliers including
on: Sustainability Charter; Ethical Code of Conduct; and
Self-Assessment Questionnaire (delivered by a third-party leading
social audit business).
The Company's current Remuneration Policy expires next year, and
the new Policy to be put to shareholder approval at the 2023 Annual
General Meeting will include an ESG related element connected to
performance related variable remuneration. Detail on targets will
be provided in the 2022 Annual Report.
Pleasingly, the Company continues to have 'low risk'
independently evaluated ESG rating scores, and was recently judged
to have the best sustainability credentials amongst its direct peer
group by a leading sustainability adviser.
Footnote
(1)Company-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
Headlam Group plc Tel: 01675 433 000
Chris Payne, Chief Executive Email: headlamgroup@headlam.com
Catherine Miles, Director of IR
and ESG
Panmure Gordon (UK) Limited (Corporate Tel: 020 7886 2500
Broker)
Erik Anderson / Atholl Tweedie
Peel Hunt LLP (Corporate Broker) Tel: 020 7418 8900
George Sellar / John Welch
Alma PR (Financial PR) Tel: 020 3405 0205
David Ison / Lily Soares Smith Email: headlam@almapr.co.uk
This announcement contains information which, prior to its
disclosure , was inside information as stipulated under Regulation
11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310
(as amended).
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END
TSTEAPFDAAPAFFA
(END) Dow Jones Newswires
November 24, 2022 02:00 ET (07:00 GMT)
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