Interim Management Statement

RNS Number : 5043I

Headlam Group PLC

19 November 2008

Headlam Group plc ('Headlam'), Europe's leading floorcoverings distributor, announces its Interim Management Statement for the period from 1 January to date.

Revenues for the nine months to 30 September

	2008 £000	2007 £000	Change

UK	346,438	340,759	+1.7%

Continental Europe	80,570	70,359	+14.5%

Group	427,008	411,118	+3.9%

Total group revenue for the nine months increased by 3.9%. UK like for like revenues were equal to 2007 but registered a 1.7% increase overall due to contributions from the acquisitions completed during 2007. Continental Europe achieved a like for like increase of 4.1% with currency effects lifting the 2008 performance by a further 10.4% to an overall increase of 14.5%.

Following a fire, which destroyed the distribution centre in Northampton, where our Regional Multi-product distribution business Garrard Waters was located, we have now established a service centre in

Northampton with principal warehouse and logistics services provided from our distribution facility in Coleshill.

We are also proposing to implement further restructuring, the details of which have been announced to employees. The proposals involve transferring the warehouse and logistics operations of our Regional Multi-product distribution businesses Bailey Carpets, located in Keynsham near Bristol and Solmere, located in Bishop Auckland. Under the proposals, our centres located in Thatcham and Gildersome, Leeds would provide the warehouse and logistics operations for Baileys and Solmere respectively.

If these proposals are implemented, it will decrease the number of distribution centres in the UK from 22 to 19.

Outlook

The trading environment during the second half of 2008 has been significantly more challenging than the first. Revenues declined during the third quarter, with UK like for like performance down 4.5% on the same period in the previous year. For the period from 1 October to 19 November 2008, like for like revenues declined by 7.9% compared with the same period in 2007. Despite this recent contraction in group revenues, market indicators suggest the group is outperforming the floorcovering market and increasing market share.

Assuming no material deterioration in the rate of revenue loss during the remaining weeks of 2008, the board remains confident that, prior to absorbing the cost of any proposed restructuring, results for 2008 will be broadly in line with the group's revised trading objectives.