HEAD Headlam Group Plc

TIDMHEAD

RNS Number : 1359X

Headlam Group PLC

30 April 2021

30 April 2021

Headlam Group plc

('Headlam' or the 'Company')

Disposal of Swiss business

Headlam (LSE: HEAD), Europe's leading floorcoverings distributor , announces that it has entered into an agreement to dispose of its wholly-owned Swiss business, Belcolor AG ('Belcolor'), to the management team(1) of Belcolor ('management buyout'). As a result of the disposal, Headlam will realise approximately GBP12.0 million(2) in cash.

Belcolor is a floorcoverings distribution business based in St. Gallen, Switzerland, and represents the entirety of Headlam's Swiss operations. Headlam's Continental European operations accounted for 17.2% of total revenue in 2020, with Switzerland being the smallest reflecting the small landmass and population of the country. For the year ended 31 December 2020, Belcolor reported revenue of GBP31.1 million and profit before tax of GBP1.1 million, with fairly uninterrupted operations during 2020 in contrast to the Company's UK and French operations which were subject to stringent COVID-19 related lockdown measures.

While Belcolor is highly established and industry-leading in its country, there are limited avenues for meaningful organic or acquisitive growth. Additionally, the Swiss market varies significantly from the Company's other geographic markets in terms of supplier base and product mix, and therefore there is limited ability to leverage group synergies. The disposal will allow the Company to more effectively focus its activities and investments on its operations which offer greater opportunity. In-line with the Company's Capital Allocation Priorities published in January 2021, the proceeds of the disposal will be directed towards investment in the Company's operations to optimise performance and growth as well as expediate the attainment of the targeted net debt and dividend distribution parameters.

The management team will acquire 100% of Belcolor through a new entity, CH Floorcovering Group AG, while continuing to operate the business under the Belcolor name. Following formal completion of the disposal, anticipated on or around 17 May 2021, Headlam will have no further assets or operations in Switzerland, with its operations subsequently focused in the UK, France, and the Netherlands.

Headlam will realise approximately GBP12.0 million(2) in cash as a result of the disposal, comprising a pre-completion cash dividend of GBP11.1 million(2), and the balance payable in cash on or around formal completion. The gross assets subject to the disposal were approximately GBP18.0 million(2) as at 31 March 2021.

(1) The management team of Belcolor who will transfer with Belcolor on formal completion of the disposal and are involved in the management buyout are: Patrick Meier, Peter Jud, Robert Engel and Joel Schneider.

(2) Approximate as subject to exchange rate movements.

Enquiries:

 
 Headlam Group plc                  Tel: 01675 433 000 
  Steve Wilson, Chief Executive      Email: headlamgroup@headlam.com 
  Chris Payne, Chief Financial 
  Officer 
  Catherine Miles, Director of 
  Communications 
 Investec Bank plc (Corporate       Tel: 020 7597 5970 
  Broker) 
  David Flin / Alex Wright 
 
 Panmure Gordon (UK) Limited        Tel: 020 7886 2500 
  (Corporate Broker) 
  Erik Anderson / Dominic Morley 
  / Ailsa MacMaster 
 
   Alma PR (Financial PR)             Tel: 020 3405 0205 
   Susie Hudson / Harriet Jackson     headlam@almapr.co.uk 
   / Faye Calow 
 

Notes for Editors:

Headlam is Europe's leading floorcoverings distributor, providing the channel between suppliers and trade customers of floorcoverings.

Headlam works with suppliers across the globe manufacturing a diverse range of floorcovering products, and provides them with a cost efficient and effective route to market for their products into the highly fragmented customer base. Alongside long-established processing and distribution expertise, suppliers benefit from Headlam's marketing and customer servicing into the most extensive customer base.

To maximise customer reach, Headlam currently operates 67 businesses across the UK and Continental Europe (France, the Netherlands and Switzerland). Each business operates under its own trade brand and utilises individual sales teams while being supported by the Company's network and centralised resources.

The Company's customer base covers both the residential and commercial sectors, with the principal customer groups being independent retailers and smaller flooring contractors alongside other groups such as larger retailers, housebuilders, specifiers, and local authorities.

Headlam is focused on providing customers with a market-leading service through:

   --    the broadest product offering; 
   --    unrivalled product knowledge and tailored solutions; 
   --    sales team and marketing support; 
   --    e-commerce support; 
   --    'just-in-time' nationwide delivery and collection service; and 
   --    other support including the provision of credit. 

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April 30, 2021 02:00 ET (06:00 GMT)

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