Modern Slavery Statement and Human Trafficking Statement

Headlam Group plc (‘Headlam’ or the ‘Company’) is committed to trading ethically, with zero tolerance for Modern Slavery (including human rights violations, child and forced labour or human trafficking in any form) in both its operations and supply chain.

This is Headlam’s modern slavery and human trafficking statement for the financial year ended 31 December 2021 and as at 9 March 2022 published in compliance with the Modern Slavery Act 2015 (the 'Act'). It sets out the steps taken by Headlam and its two wholly owned trading subsidiaries HFD Limited (‘HFD’) and MCD Group Limited (‘MCD’) to prevent human trafficking and slavery in its business and supply chain. The Modern Slavery Statement is published on Headlam’s website (www.headlam.com) and additionally on each of the websites of the various trading businesses operated by HFD and MCD. It has also been uploaded to the Government’s online registry.

Responsibility

The Chief Executive has responsibility for this statement on behalf of the Board, supported by the UK Buying Director who has day-to-day oversight of the Company’s supplier base. Local management have day-to-day responsibility for supplier relationships within each business.

Our Business

Operating for 30 years, 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 operates 66 businesses across the UK and Continental Europe (France and the Netherlands). 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;
• ecommerce support; and
• nationwide delivery and collection service.

Headlam's UK distribution network currently comprises four national distribution hubs, 19 regional distribution centres and a supporting network of smaller warehouse premises, trade counters, showrooms and specification centres.

In 2021, Headlam worked with 240 suppliers from 24 countries and fulfilled approximately 4.2 million customer orders

Our Supply Chain

In 2021, purchases from suppliers in the EU (including the UK) accounted for approximately 88% of total purchases (based on actual purchase prices from suppliers). According to the Company’s risk assessment the greatest risk of modern slavery and human trafficking arises from non-EU parts of the supply chain (‘Higher Risk Areas’) which represent 12% of total purchases during 2021.

Our Policy and Approach

The Company understands that the issue of slavery and human trafficking is a global one and that no business sector will be able to eliminate slavery or human trafficking from their supply chain without working collaboratively within its industry.

Headlam is committed to ensuring that there is no modern slavery or human trafficking in its supply chain or in any part of its business. This reflects the Company’s commitment to acting ethically and with integrity in all its business relationships and to implement and enforce effective systems and controls to minimise the possibility of slavery and human trafficking occurring within its supply chains.

The Company policy is to immediately suspend purchasing from any supplier, pending an investigation, if it believes there to be any evidence of slavery or human trafficking. The investigation will be overseen by an independent specialist and should the results prove the existence of human trafficking or modern slavery, Headlam will cease the trading relationship.

One of the Company’s main businesses (National Carpets) is registered on Sedex (Social, Ethical Data Exchange), an online platform which allows suppliers (including certain of the Company’s suppliers) to register and provide company information/audit reports which can be viewed by their customers. Sedex includes a self-assessment questionnaire which is required to be completed which includes a section on human rights, and the Company views its registered suppliers’ responses.

Actions during 2021

During 2021, Headlam has implemented a new Supplier Code of Conduct (‘Code of Conduct’) which is has been issued to 240 suppliers. This Code of Conduct outlines Headlam’s approach to various ethical standards, including: transparency of their operations; freedom of employment and association; child labour; working conditions; pay and benefits; discrimination; and anti-bribery and corruption. Each supplier is expected to engage and adhere to the Code of Conduct and Headlam will work with all suppliers to ensure adequate compliance standards. However, if any supplier is uncovered to or known to be involved in any form of Modern Slavery or unethical behaviour Headlam will look to suspend or cease trading with them.

Headlam has appointed an external specialist to assist it in these matters and in 2022 they will commence auditing the supplier base against the Company’s Code of Conduct.

The Company takes its social responsibility seriously and in addition to issuing the Code of Conduct to all suppliers, Headlam has actively engaged with its top strategic suppliers at a senior level, discussing their wider Environmental, Social and Governance responsibilities and approach.

The Company takes its responsibility to the health and safety of its colleagues and other stakeholders very seriously. The onset of COVID-19 pandemic in early 2020, and the subsequent and ongoing restrictions imposed by various governments to limit its spread, has forced the Company to limit visits to suppliers’ premises since that time. Most trade shows and other collaborative events and presentations were also cancelled including the major European Trade show. Between the various UK & EU restrictions, the Company did attend and exhibit a number of its brands at the UK flooring trade show at Harrogate where it met with a large number of its suppliers. In addition to this the Company visited a number of its Europe suppliers. The Company will seek to increase the number of on-site visits when it is safe to do so and when travel restrictions allow, this will include a number of overseas visits to existing and new potential suppliers, restrictions permitting.

Throughout this time, the Company has remained in close contact with its suppliers with regular supplier reviews and on line meetings. This includes regular briefings with strategic suppliers on Company plans and performance along with developing joint business plans. The Company has also continued to reinforce its zero-tolerance approach to modern slavery and human trafficking in line with its own values.

Employee protection & training

Our strategy for modern slavery training involves raising awareness across our business of the issues and giving confidence to our colleagues to raise concerns. Modern slavery thrives when it is hidden and therefore empowering our colleagues who work within our supply chain, manage teams or agency workers and third-party contracts is essential to eliminating it throughout the supply chain.

Ongoing support and resources are provided to the Company’s employees interacting with suppliers to better help them identify slavery or human trafficking practices. Training has previously been provided by management as part of equipping our colleagues to perform their role. During 2021 we rolled out an online Modern Slavery Awareness course to 300 employees. The course aims to raise awareness of regulatory context, potential signs of modern slavery and equip colleagues with what to do if they suspect modern slavery and how they can help prevent it across the supply chain.

Additionally, employees are protected by certain policies the Company has in place, including Anti-Corruption and Bribery, Fraud and Anti-Money Laundering and Whistleblowing and these were reviewed during 2021 to ensure they remained appropriate.

Whistleblowing

The Company’s Whistleblowing Policy sets out the formal process by which an employee may, in confidence, raise concerns about possible improprieties in financial reporting or other matters, including any concerns relating to modern slavery. Under the Whistleblowing Policy colleagues have direct access to the Chair of the Audit Committee should they feel they are unable to raise their concern with management. During 2022 we will be implementing an externally managed whistleblowing hotline, which will ensure that reports can be made anonymously either by phone or online.

2022

During 2022 there are a number of regulatory requirements that the Company will be required to implement and it will be working closely with our suppliers to do so, including new product labeling and the new government plastic tax, this will require the Company to work closely with our suppliers.

The Company will also be implementing a new product information system which will enable it to hold comprehensive product data & specification which will assist the company in supporting our customers with enhanced insight in to our product

Modern Slavery ongoing Assessment

We will, through our supply chain audit, continually assess our supply chains by repeating our tailored modern slavery and human trafficking questionnaire to cover a wider range of suppliers to confirm that their policies and processes meet our high standards.

Effectiveness of procedures

Based on our risk assessment, including the profile of our supplier base, the results of supplier audits and our own procedures, we believe the business has a low overall risk of modern slavery in both our own operations and in our immediate supply chain. However, we are committed to continually developing our procedures in this area and the implementation of the additional measures described above will provide additional assurance.

This statement was approved by the Board of Headlam Group plc on 7 March 2022 and signed on its behalf by

Chris Payne
Chief Executive