Headlam Completes Sale And Leaseback Of Distribution Centre

• Continued implementation of the transformation plan with the sale and leaseback of the Tamworth distribution centre

Headlam (LSE: HEAD), the UK's leading floorcoverings distributor, provides an update on its previously announced transformation plan, with the sale and leaseback of the Group's Tamworth distribution centre.

The sale proceeds of £21.75 million (excluding VAT¹) represent a premium of 153% to the book value of £8.6 million and 43% to the last market valuation² of £15.2 million. The profit³ generated from the sale of this property will be recognised as non-underlying income.

The Tamworth distribution centre remains a core part of the Group's distribution network and is integral to the Group's growth plans over the coming years. Accordingly, the Group has entered into a 10-year leaseback, with the opportunity to extend further. This sale and leaseback transaction further optimises the Group's mix of owned and leased distribution centres. The cost of the leaseback is equivalent to the Group's cost of debt, meaning that this transaction is broadly neutral to the Group's Underlying Profit Before Tax.

£21.1 million of the sales proceeds (excluding VAT) have been received in cash following simultaneous exchange and completion, with the remaining £0.7 million retained by the buyer pending the Group's completion of pre-agreed repairs and maintenance on the property. The sales proceeds will initially be used to reduce the Group's drawdown on its revolving credit facility, providing further liquidity headroom whilst the Group implements its transformation plan.

This sale constitutes a significant transaction under the Listing Rules; accordingly, further details are contained in the appendix to this announcement.

The Group intends to provide a scheduled pre-close trading update tomorrow. 

Footnotes

1.   VAT of £4.35m has been collected on this sale and will be paid over to HM Revenue & Customs

2.   As at the market valuation undertaken in January 2023

3.   The calculation of the profit on sale is subject to IFRS 16 accounting requirements regarding sale and leasebacks and will be finalised ahead of the Group reporting its results for the year ended 31 December 2025

Source : Headlam plc

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