Headlam Group plc
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Interim Management Statement May 2012
18 May 2012
Franklin Templeton: Notification of Major Interest in Shares
25 April 2012
Corporate Social Responsibility
Health and safety
People
Environmental
Achieving sustained growth and profitability
The company is committed to managing its business in a socially responsible manner aiming to improve the management of social, environmental and economic issues within its control or influence throughout the business and its supply network.
We recognise that the proper management of corporate social responsibility (“CSR”) makes good business sense and can result in strategic, commercial and reputational benefits. The group has reviewed its CSR policy to ensure that it meets the needs of the markets and communities in which it operates. The approach aims to recognise the importance of CSR issues, to encourage and facilitate positive management behaviour whilst aligned with the group’s business strategy. It also seeks to take proper account of the morale and welfare of our employees, the satisfaction of our customers and our impact on the environment. In doing so, communication with our stakeholders, including shareholders, employees, customers, suppliers, local communities and government and non-governmental organisations, is considered to be an essential part and we aim to be open and transparent in all that we do. Communication is through a variety of channels including the AGM, Annual Report and Accounts, Interim report, Interim Management Statements and trading updates, all of which are available on our website at www.headlam.com. Significant matters relating to trading and the development of the business are disseminated to the market by way of announcements via a regulatory information service and those announcements appear as soon as practicable on our website. In addition face to face meetings are held with our major institutional shareholders to both assist them with their understanding of the announcements but also to ensure that the board is aware of their views and concerns.
Communication with employees is predominantly through our employee handbook which includes our ethics, fraud and whistle blowing policies. All of our employees are required to act ethically and responsibly in all of our business dealings with stakeholders. An updated anti bribery policy has been issued and communicated to our employees during the year following the implementation of the Bribery Act 2010. We do not permit bribery, anti-competitive or corrupt practices in any of our business dealings. We are committed to continuous improvements in all aspects of CSR, our policies, our systems, our performance and our reporting.
Social and environmental factors are considered by individual businesses within the group and at a group level, managing relationships with stakeholders and communicating with them professionally and responsibly. Our approach towards charitable donations and our support in local communities is set out in the Director’s Report. In the latter part of the year the group introduced a charitable payroll giving scheme, Pennies from Heaven, whereby the group matches the monthly contributions made by employees, inclusive of gift aid. Great Ormond Street Hospital Children’s Charity and MacMillan Cancer Support are the charities benefiting from the scheme. In addition, employees participated in a variety of fund raising activities and supported charities local to their businesses.
We have continued to make progress in our use of natural resources, waste and energy management, health and safety and staff development and welfare.
Health and safety
The group’s policy on health and safety seeks to ensure that the group’s operations are carried out at all times in compliance with the relevant health and safety guidance in the jurisdictions in which we operate. We aim to ensure the health and safety at work of employees and all persons likely to be affected, including contractors, customers, staff and members of the public where appropriate. It is at the heart of our corporate responsibility. A fundamental part of our business involves protecting our employees, contractors and visitors from injury.
The group health and safety policy, developed over a number of years, is tailored to each of our business operations and the circumstances in which they operate, amendments arising as changes in procedures and processes are considered appropriate which also result in some minor modifications to our control and inspection procedures. We are committed to developing and maintaining a positive health and safety culture in which statutory requirements are viewed as a minimum and continually strive for improvement.
The board, which endorses the health and safety policy, receives a detailed presentation on health and safety matters on an annual basis with interim updates as considered necessary. The presentation includes a detailed review on health and safety issues at each trading location, including comment on improvements recommended following inspections undertaken by our advisers. These inspections form the basis on which we determine our standards, being continually reviewed and standards raised. Additional inspections are undertaken where changes to operations have occurred or new premises occupied. These are complemented by annual inspections of racking systems carried out by independent externally appointed assessors and in the UK, risk inspections undertaken by our insurers at several of our businesses. The presentation also outlines planned health and safety initiatives intended to improve standards and comments on potential future legislative and best practice developments and challenges.
UK businesses, on not less than an annual basis, each receive a bespoke comprehensive health and safety manual for use as a source of information, guidance and training together with a set of compliance documentation which is reviewed, and updated as necessary. Each of our businesses promotes health and safety committees comprising representatives from the various business departments. These meet on a periodic basis and are co-ordinated by the health and safety manager on site. Management teams are encouraged to create a supportive culture recognising the value of employee participation.
Employee induction includes relevant health and safety information, so ensuring all employees are aware of our policies, and guidance and managers are guided and supported in risk assessment techniques. Job specific training undertaken with employees, including periodic refresher training, is supported by good practice guides which set out the important do’s and don’ts associated with many of the roles and duties undertaken by employees. Employee training packs have been reviewed during the year and their scope expanded. They include an awareness of impending changes in relevant legislation and other specialist subjects. Courses provided by external assessors complement in house forklift truck training undertaken on a one to one basis. Local management responsible for health and safety has completed the Institute of Safety and Health Managing Safely Course.
Through periodic review and consistent reporting structures, we seek to ensure that we make our employees aware of our high standards of health and safety and continue to improve health and safety systems, procedures and guidance, providing adequate resources in doing so. Our businesses maintain good relationships with health and safety and environmental health regulators with positive and prompt responses to any findings and/or observations following compliance inspections.
Whilst the current low frequency of reportable accidents reflects the success of our health and safety policies we continue to aim for lower levels. In 2011 we experienced twenty accidents that necessitated a report to the Health and Safety Executive in compliance with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995. These were predominantly in respect of slips, trips and falls, none of which resulted in serious injury. All reportable accidents are investigated and in the minority of instances where improvement is required, changes are implemented in a timely manner. There were no prosecutions for breaches of health and safety or enforcement actions in the year.
Introduced in 2010, the continuing professional competence scheme (“CPC”) requires commercial vehicle drivers to undertake five days CPC training in a five year period. In order to ensure so far as possible that our drivers comply, the group provides a day’s training in the year for each commercial vehicle driver utilising the services of an external training agency. The subject matter in 2011 included drivers working time and associated tachograph usage, defensive driving and fuel efficient techniques. CPC training in 2012 will include drivers working time, digital tachograph operation, hazard perception, vehicle conditions and defect checks, new technology and future legislation.
Management remains committed to providing a safe working environment with the appropriate working practices and training however this can only be achieved if employees equally give their commitment to a rigorous health and safety culture. This is kept at the forefront through periodic refresher training. Where appropriate, investment will be made in automated dispatch sortation equipment to reduce manual handling.
Containment and inspection regimes in higher risk areas such as fuel and lubrication stores, compressors and fork lift truck battery charging areas, are kept under review, fire risk protection having been improved, training and awareness increased and special containers sited remote from the main buildings for the storage of flammable products.
People
It is the group’s policy that all employees, irrespective of age, gender, ethnic origin, religion or disability should have access to employment opportunities. Consideration is given to applications for employment having due regard to the particular aptitudes and abilities of the applicants and to our responsibilities under the Disability Discrimination Act. Cognisant of the nature of the group’s activities, where practicable, employees who develop a disability during employment are given the opportunity to retrain for alternative employment.
The group has designed its recruitment, training and development processes in order to ensure that it has suitably skilled and qualified employees to meet the operational needs of the business, also participating in work experience placement schemes. The group is committed to developing the potential of its people offering opportunities for employees to develop and grow, periodically reviewing its succession planning processes. The majority of training is delivered through internal resources, a significant proportion of which is on a one to one basis, with assistance from external providers as and when required. Employee turnover remains low resulting in a stable employee base.
The continued success of our business relies on good relations and communications with employees and on the provision of a workplace that is safe and environmentally sound, which complies with applicable laws and regulations and so provides an environment in which people can flourish and succeed. Our employees’ wellbeing and professional development is a key element to recruiting and retaining high performing individuals. Our people seek to deliver their best for the business, which combined with a fair and responsible way of doing business, generates a common ambition to add value.
The group expects employees to respect confidential information, company time and assets and believes in open and honest communication, fair treatment and equal opportunities, supporting the fundamental principles of good governance.
It is the group’s continued practice to maintain employee participation and involvement in matters which affect their interests through formal and informal meetings, placing considerable value on the involvement of its employees. Communication between business unit management and employees is valued on matters affecting the welfare of the business, which includes regular senior management visits to operating units. Employees continue to be informed on matters affecting them and on the various factors affecting the performance of the group. One aspect is the group’s Annual Report and Accounts which provide employees with a greater awareness of the group’s performance as well as the financial and economic factors that affect it.
Eligible employees are able to benefit from the group’s performance through participation in share schemes, including a savings related share scheme. Considering it important for its employees to make provision for their retirement, the group offers opportunities for participation in retirement plans, also providing death in service benefits through a group life assurance scheme.
Environmental
The business operates distribution facilities in the UK, France, Switzerland and the Netherlands, each involved in the wholesale distribution of floorcoverings and associated products. As a wholesale distributor, we are not a significant consumer of electricity, gas or water. Our requirement for electricity is predominantly in respect of fork lift truck battery charging, the operation of specialist cutting tables used to cut lengths from full and part rolls of broadloom products, associated mechanical handling and compressed air equipment, office and warehouse lighting and office equipment. Gas is consumed predominantly in respect of office heating and very limited localised radiant heating above parts of the cutting tables located within the distribution centre.
Whilst water consumption is predominantly in respect of employee welfare and commercial vehicle washing, some of which filter and recycle wash water, we incur the majority of our water charges in respect of fixed water rates relating to rain water discharge from business locations. We seek to reduce charges by analysing invoices received in respect of water and through the installation of water meters, and make consumption savings in electricity, gas and water through the introduction on repair, renewal or installation of energy or water efficient techniques and equipment.
The actual cost of electricity, gas and water charges in 2011 amounted to 0.20% of revenue, a reduction of 0.02% on prior year. The group was required to register under the carbon reduction commitment scheme that came into effect in 2010, having electricity consumption in 2008 when data was first collected, of 5,323 MWh in respect of its half hourly metered premises, 6,000 MWh consumption being the lower limit for compliance.
The voluntary installation of automated meter reading is being considered in respect of sites with non-half hourly electricity meters, the benefit over time being in the more detailed management of consumption.
Modern energy efficient construction techniques and products are incorporated when we invest in new facilities or undertake refurbishment or repair works. During the year, when refurbishing two of our distribution facilities, we installed intelligent lighting into the warehouse which is both more efficient and movement sensitive, automatically switching off during periods of inactivity. Future projects will similarly incorporate intelligent lighting systems and where practical, renewable energy solutions. Due to the nature of our business and with our proactive approach when planning and developing new facilities, we believe that our activities generally have a low impact on the environment, with no environmental legal or compliance issues arising during the year.
The waste arising from our operations is predominantly protective plastic packaging, polythene wrapping, cardboard poles and boxes and wooden pallets. The cardboard poles in the centre of full and part rolls and cut lengths of carpet and vinyl delivered to our customers are later collected and re-used to destruction. We continue to increase the percentage that we recycle, baling plastics and cardboard and stacking unwanted pallets for dispatch to specialist re-processing agents when it is economic to do so. This has significantly reduced the amount of our waste going to landfill sites. Guidance on waste management is issued to the managers of the individual businesses to increase awareness of the need to control and reduce waste. Where possible, wrapping and packing materials are sourced from manufacturers where a high proportion of recycled materials are used. In addition to the above, we recycle and shred paper, aluminium cans, plastics and general waste.
During the year, the group became a key funding member of Carpet Recycling UK, a not for profit organisation formed with the aim of diverting carpet material from landfill through developing an end market for reprocessing and fibre recovery.
Commercial and motor vehicles are replaced respectively on a five and three yearly basis in doing so improving operational efficiencies and reducing operating costs and vehicle emissions. As a result, all of our commercial vehicles comply with Euro 4 emission standards introduced in October 2006, which reduced the levels of carbon monoxide, hydrocarbon, nitrogen oxide and particulate emissions. Those registered between October 2008 and current date are Euro 5 compliant, which further reduce levels of noxious emissions that cause harm to the environment. We periodically review our fleet requirements to ensure the optimum design to maximise capacity and improve aerodynamics.
Achieving sustained growth and profitability
Whilst seeking to achieve the group’s goal of sustained growth and profitability there are a number of areas which will assist in meeting our CSR obligations while, at the same time, attaining our financial objectives.
Representatives from our businesses visit supplier premises on a periodic basis to improve our understanding and control of our supply chain and to ensure as far as possible that adequate standards are operated. We continue to investigate the benefits from using green specification guides and modify our strategy accordingly and to work with suppliers to ensure where appropriate products are supplied from renewable sources, including recycled products, and that their manufacturing processes fairly reward employees and do not seek to exploit.
We seek to manage our operations to minimise the likelihood of adverse impact, minimising energy consumption utilising energy efficient lighting and heating. New facilities are subjected to an environmental assessment prior to construction allowing solutions to any identified environmental issues to be incorporated into the planning process. We seek to minimise energy consumption during the construction of new premises and the effects on the environment, wherever possible, subject to the operating constraints of the business, retaining and augmenting existing trees and vegetation. Existing sites are maintained in a tidy condition to minimise ecological impact.
We work with local authorities to design new facilities which not only comply with guidelines but seek to blend in with their surroundings through the careful use of quality materials, landscaping and design features, recognising that our business operations will be around for many years, thereby having an impact on future generations. We support the desire to see development take place in sustainable locations and when designing new facilities, work with transport consultants to formulate green travel plans incorporating car sharing schemes and provision for bicycles.