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FINAL RESULTS PRESENTATION YEAR ENDED 31 DECEMBER 2017 MARCH 2018 COMP ANY OVERVIEW Europes largest distributor of floorcoverings : Dist ribut ion channel bet ween suppliers and cust omers of floorcoverings Linking t oget her


  1. FINAL RESULTS PRESENTATION YEAR ENDED 31 DECEMBER 2017 MARCH 2018

  2. COMP ANY OVERVIEW • Europe’s largest distributor of floorcoverings :  Dist ribut ion channel bet ween suppliers and cust omers of floorcoverings  Linking t oget her a global manufact uring supply base and t he most ext ensive cust omer base across t he UK and Cont inent al Europe • Suppliers:  Global manufact uring supply base (16 primary count ries)  Mult iple product cat egories (c 22,000 product unit s)  Unparalleled rout e t o market for t heir product s  Allowing focus on economic manufact uring wit hout having t o replicat e cost ly dist ribut ion channel • Customers: Most ext ensive cust omer base across t he UK and Cont inent al Europe (71,257 act ive cust omer account s * )   Resident ial and commercial sect ors (principally independent ret ailers and flooring cont ract ors)  Broadest product offering  Providing excellent cust omer service and next day delivery • Grown significantly over 25 years via organic growth and acquisition, to comprise 63 businesses :  59 UK and 4 Cont inent al Europe (France, S wit zerland and t he Net herlands) Each operat e under own t rade brand and ut ilise individual sales t eam t o increase market penet rat ion   Relat ionship-driven and regionalised market place  S upport ed by and benefit from significant cent ralised and financial resources * Prior t o t he Dersimo acquisit ion 1

  3. MARKET-LEADING CORE BUSINESS & BUSINESS MODEL • Extensive network and dense geographical footprint:  67 million cubic feet of warehouse capacit y  64 t rade count ers / showrooms / specificat ion cent res Mult iple businesses and t ouch-point s  • Market-leading core business characterised by :  High volume of small value orders int o bot h resident ial and commercial sect ors  Revenue split c 68% resident ial and 32% commercial  Core product range largely wit hin low t o middle-end in t erms of price point s  5.5 million orders processed in 2017 £133 average order value in 2017   Predominat ely refurbishment / replacement one room at a t ime • A degree of resilience and robustness against market backdrop:  More affordable purchase t han ot her RMI expendit ure  Not reliant on consumer credit or key seasonal discount sales periods  Demand t ending t o be inelast ic t o price increases due t o relat ive infrequency of purchase • Strategy to focus on profitability and supplement market-leading core business through acquisition: Diversify and broaden overall posit ion in t he floorcoverings market   Complement ary acquisit ions  Expand int o different market segment s or more niche areas 2

  4. INVESTMENT CASE SIGNIFICANT BARRIERS TO ENTRY CREA TED THROUGH YEARS OF INVESTMENT AND DEVELOPMENT OF OPERA TIONAL EXPERTISE 1. MARKET LEADER 2. RELATIONSHIPS 3. CURRENCY EXPOSURES 4. DEGREE OF RESILIENCE 5. DISTRIBUTION NETWORK Market-leading position, Management of transactional Resilient core business Depth and breadth of Extensive distribution significant scale, and supplier and customer currency risk characterised by high network with value longevity of operations relationships volume small value orders underpinned by a largely freehold asset portfolio • Buy in sterling from the • More affordable purchase maj ority of suppliers so • Nearest competitors • Typically, suppliers’ currently <1/ 6 th of size in than other RMI expenditure • Significant time and supplier manages the largest UK customer, resources to replicate currency risk terms of revenue with purchasing economies • £133 average order value in of scale • Dense geographical • Supplier price increases 2017 • Significant barriers to footprint underpinning passed along chain and not entry • Supporting the growth and • Not reliant on consumer customer service absorbed by the business development of all credit proposition participants, particularly • Negative aspects of currency independent retailers and • Freehold portfolio enables deflation avoided by product flooring contractors flexible response to change re-engineering 6. OPERATIONAL GEARING 7. FOCUS ON MARGIN 8. STRONG FINANCIALS 9. DIVIDEND 10. GROWTH Operational gearing from Focus on margin Strong cash flow and Progressive dividend policy Growing and broadening increasing revenue and enhancement and balance sheet overall position in the leveraging of the business efficiencies to increase • Ordinary dividend payments industry model level of profitability • Net funds of £35.3 million correlated to the increase in as at 31 December 2017 basic EPS, with total • Growing market-leading • 19.1% underlying drop- • A number of efficiency ordinary dividend payment of core business • Cash from operations of through rate initiatives underway and 24.8 pence in respect of 2017 • Supplementary growth £54.5 million in 2017 as a % of incremental to be implemented • Additional policy of returning and increased industry revenue in 2017 • Strong operating cash • Gross and operating surplus cash to shareholders penetration through generation at 109.8% of • Combination of increased margin improvements of via special dividends when acquisition underlying EBITDA in 2017 gross margin and a more 50 and 30 basis points circumstances permit efficient overhead base respectively in 2017 creating improved operating margin 3

  5. 2017 FINANCIAL HIGHLIGHTS • Total revenue increased 2.0% to £707.8 million (2016: £693.6 million):  Despite weaker markets for the maj ority of H2 2017 • Like-for-like revenue * growth in the UK and Continental Europe of 0.5% and 4.2% respectively (2016: UK 4.2% ; Continental Europe 3.1% ):  Represented a positive performance against a strong 2016 comparator • Gross margin improvement of 50 basis points to 31.1% (2016: 30.6% ):  Achieved through a concerted focus on margin enhancement initiatives • Underlying** profit before tax increased by 7.5% to £43.1 million (2016: £40.1 million) • Profit before tax increased by 6.7% to £40.7 million (2016: £38.2 million) • Basic earnings per share increased by 6.3% to 39.1 pence (2016: 36.8 pence) • Total ordinary dividend in respect of 2017 increased by 10.0% to 24.80 pence (2016: 22.55 pence) • S trong operating cash generation at 109.8% of underlying** EBITDA (2016: 94.2% ) *Like-for-like revenue is calculat ed based on const ant currency from act ivit ies and businesses t hat made a full cont ribut ion in bot h t he 2017 and 2016 periods and is adj ust ed for any variances in working days **Before non-underlying it ems being int angibles amort isat ion relat ing t o businesses acquired, acquisit ions fees and non-recurring cost s relat ing t o personnel changes 4

  6. FINANCIAL TRACK RECORD (5 YEARS) XX.X XXX.X XX.X 635.2 41.1 40.1 654.1 36.8 35.6 635.2 31.5 30.3 XX.X 38.7 33.8 30.3 28.6 * Before non-underlying it ems being int angibles amort isat ion relat ing t o businesses acquired, acquisit ions fees and non-recurring cost s relat ing t o personnel changes 5

  7. 2017 OPERATIONAL HIGHLIGHTS • Considerable new expertise added to the Board, S enior Management Team and at managerial level, both in UK and Continental Europe:  Tony Judge & Chris Payne, Executive Directors appointed to the Board  Health & S afety, HR, Communications, Company S ecretary and Legal Counsel appointments  New Managing Director appointed at LMS , the Company’s French business, Pascal Pinard with 30 years’ industry experience • 3 acquisitions completed during the year, most notably Domus which meaningfully diversifies and broadens the Company’s overall position in the market:  Mitchell Carpets - Poole  McMillan Flooring – Edinburgh and Glasgow Total consideration * £31.9 million  Domus - London and S urrey • Efficiency actions and initiatives implemented, with a more unitised approach across the Company’s businesses:  Gross margin improvement of 50 basis points  Elimination of inconsistent pricing practices  S everal trials underway for 2018 *Ant icipat ed 6

  8. 2017 UK DAILY SALES * *Calculat ed on a like-for-like revenue basis, being based on act ivit ies and businesses t hat made a full cont ribut ion in all t he periods and adj ust ed for any variances in working days 7

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