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Modern Slavery Statement

Modern Slavery Statement and Human Trafficking Statement

Introduction

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 2020 and as at 3 March 2021 published in compliance with the Modern Slavery Act 2015 (the 'Act'). It sets out the steps taken by Headlam and its two trading subsidiaries HFD Limited (‘HFD’) and MCD Group Limited (‘MCD’) to prevent human trafficking and slavery in the business and supply chain. The Modern Slavery Statement is published on Headlam Group plc’s website (www.headlam.com) and additionally on each of the websites of the various trading businesses operated by HFD and MCD.

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 29 years, Headlam is Europe's leading floorcoverings distributor.

Headlam provides the distribution channel between suppliers and trade customers of floorcoverings. Working in partnership with suppliers across the globe manufacturing a diverse range of floorcovering products and ancillary accessories, Headlam provides an unparalleled route to market for their products across the UK and certain Continental European territories.

The utilisation of an outsourced distribution channel enables manufacturers to focus on their core activities, incur reduced costs associated with distribution, and benefit from localised sales, marketing and distribution expertise that provides a more effective and greater route to market for their products.

To maximize customer and market penetration, and reflecting the regionalised nature of the marketplace, Headlam comprises 67 individual businesses in the UK and Continental Europe (France, the Netherlands and Switzerland) each operating under their own unique trade brand and utilising individual sales teams.

Headlam's extensive customer base, operating within both the residential and commercial sectors and comprising principally independent retailers and flooring contractors, receives the broadest product offering supported by next day delivery as well as additional marketing and other support.

Headlam's offering is enabled through its unrivalled operating expertise, long-established supplier and customer relationships, and comprehensive distribution network. Following years of considerable investment, Headlam's 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 2020, Headlam worked with 184 suppliers from 21 countries and fulfilled approximately 4.2 million customer orders.

Our Supply Chain

In 2020, purchases from suppliers in the EU (including the UK) accounted for approximately 88% of total purchases (based on actual purchase prices from suppliers). The supply chain audit conducted in 2019 confirmed that the greatest risk of modern slavery and human trafficking arose from non-EU parts of the supply chain (‘Higher Risk Areas’) representing the remaining 12% of total purchases. During 2020 the Company assessed the impact of Brexit on its supply chain and managed the process of the UK leaving the EU to ensure continuity across its operations.

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 our supply chain or in any part of our 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 will 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 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 2020

During 2020, Headlam has invested in a new central UK Buying Director to implement a more strategic and group level approach to buying decisions. Part of the role of the new UK Buying Director is to manage the Company’s supply base including the implementation of its approach to modern slavery and human trafficking issues.

Building on the internal audit, assessment of its supply chain risk and supplier questionnaires completed in 2019, the Company continued to focus on engaging with its suppliers from Higher Risk Areas. Following the receipt and analysis of each of the tailored modern slavery and human trafficking questionnaires, associated policies and additional information, the Company was comfortable to continue working with its existing supply base.

The Company takes its responsibility to the health and safety of its colleagues and other stakeholders very seriously. The onset of COVID-19 pandemic, and the subsequent and ongoing restrictions imposed by various governments to limit its spread, has forced the Company to cease visits to suppliers’ premises. Trade shows and other collaborative events/presentations were also cancelled. The Company confirms that on-site visits will restart when it is safe to do so and when circumstances allow. However, it has remained in close contact with its suppliers throughout this time and continued to reinforce its zero-tolerance approach to modern slavery and human trafficking in line with its own values. The Company intends to restart visits to manufacturing facilities as soon as circumstances allow, either directly or through the use of specialist third-party auditors.

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 are dealing with supply chain matters and suppliers daily 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. Additionally, during 2021, the Company is implementing an on-line training platform which will be used to deliver on-line awareness training for modern slavery and human trafficking.

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 2020 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.

2021 and beyond

Buying and Sourcing Strategy Review

As part of its Operational Improvement Programme, the Company will be undertaking a review of its buying strategy and how best to meet the needs of its customers. Once implemented it will enable Headlam to strategically align its suppliers to meet both its customer needs whilst ensuring they work within our modern slavery and human trafficking standards.

Assessment

We will perform a further risk assessment of our supply base and repeat 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.

In addition, we will review the benefits of appointing third party specialists to audit suppliers from Higher Risk Areas.

Effectiveness of procedures

Based on our risk assessment, 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 3 March 2021 and signed on its behalf by

Steve Wilson
Chief Executive