H1 LFL +2.0%, outlook in-line: this compares with LFL of +3.5% for the first 4 months, but the implied slower May and June is more a function of the comparatives (which arguably flattered Q1, particularly in the UK) than underlying trading – trading conditions have been broadly similar across the first 6 months. As per earlier in the year, Continental Europe continues to see better growth than the UK, and commercial is stronger than residential. The outlook statement is in-line and we make no change to forecasts. H1 UK LFL +1.8%: this compares with +3.1% for the first 4 months; Q2 was ‘marginally positive’. Commercial and residential are both in positive territory, but the modest mix shift to commercial has continued (which is factored into our forecasts, i.e. we assume mix reduces the gross margin slightly this year). H1 Continental Europe LFL +3.2%: the region has continued to benefit from actions taken over the last year and a half, particularly in France. Ipswich & cost efficiency measures on track: Ipswich is on track, with a continued expectation that it should be operational in mid-2020; the fleet utilisation trial in South Wales has been a success and is a likely precursor to other group-wide initiatives. IFRS 16: as for the wider sector, IFRS 16 will feature at the interims and is likely to reduce PBT modestly – this is a non-cash item with no impact on the dividend. Valuation & recommendation: Headlam continues to make steady progress against the backdrop of soggy end markets. The valuation arguably prices in ‘Brexit uncertainty’ (FY19e PE 11.6x & EV/EBITDA 7.5x are some 10-15% below 5-year averages) – and certainly appears not to be factoring in the potential for any recovery. A dividend yield in excess of >5% (and underpinned by net cash on the balance sheet) is an added attraction. BUY.