Annual Report and Accounts
for the year ended 2025
Headlam Group PLC
Company number: 00460129
Headlam is the UK’s leading
floor covering distributor,
operating for over 30 years.
The Group works with suppliers across the globe
manufacturing the broadest range of products, and gives
them a highly effective route to market, selling their products
into the large and diverse customer base in the UK.
Headlam provides its customers with a market-leading service
through the largest product range, in-depth knowledge,
ecommerce and marketing support, and nationwide delivery
service. Headlam offers unrivalled convenience, through
nationwide delivery plus multiple collection points. These
collection points offer the ability for independent retailers
and contractors with limited storage space to collect their
product and take it directly to their customer’s location for
fitting. Headlam also has a growing number of take-back
schemes at its collection points, enabling customers bring
back the used and unwanted flooring that has been lifted
out of their customer’s premises.
The key features of Headlam’s
proposition include:
• Product availability and prompt delivery
• Customer service and strong relationships with fast
response to queries
• Reliable quality
• New product launches and promotions
• Point-of-sale materials to showcase options to
end-consumer
• Digital ordering and stock checking
• Ability to check stock and order out of hours
33
Years operating
c.2,200
People (2025 average)
£499m
Revenue (2025)
OUR BUSINESS AT A GLANCE
Headlam Group PLC Annual Report & Accounts 2025
01
Headlam Group PLC Annual Report & Accounts 2025
Overview
Financial Highlights
Contents
Overview
Our Business at a Glance IFC
Interim Executive Chair’s Review 02
Strategic Report
Market Overview 08
Our Business Model 10
Strategy 12
Key Performance Indicators (‘KPIs’) 14
Stakeholder Engagement 18
Financial Review 22
Sustainability Report 26
Environmental 28
Social 32
Governance 36
Task Force on Climate-Related
Financial Disclosures (‘TCFD’) 38
Streamlined Energy and Carbon
Reporting (‘SECR’) 43
Risk Management 46
Principal Risks 49
Viability Statement 51
Non-Financial and Sustainability
Information Statement 53
Governance
Compliance Statement 56
Chair’s Introduction 58
Board of Directors 60
How the Board Embeds Culture 62
Board Leadership and Company
Purpose 64
Division of Responsibilities 72
Composition, Succession and
Evaluation 77
Audit Committee Report 78
Nomination Committee Report 86
Directors’ Remuneration Report 92
Directors’ Report
118
Statement of Directors’ Responsibilities
123
Financial Statements
Independent Auditors’ Report 126
Consolidated Income Statement 134
Consolidated Statement of
Comprehensive Income 135
Statements of Financial Position 136
Statement of Changes in Equity
– Group 137
Statement of Changes in Equity
– Company 138
Cash Flow Statements 139
Notes to the Financial Statements 140
Alternative Performance Measures 189
Financial Record 193
Additional Information 195
Revenue
Statutory basic
(loss)/earnings per share
£498.7m (5.1)% (102.0)p (226.9)%
(2024: £525.7m) (2024: (31.2)p)
202520242023
£498.7m
£525.7m
£577.3m
202520242023
(102.0)p
(31.2)p
9.6p
Underlying operating (loss)/profit Underlying (loss)/profit before tax
£(33.4)m (34.1)% £(39.5)m (24.6)%
(2024: £(24.9)m) (2024: £(31.7)m)
202520242023
£(33.4)m
£(24.9)m
£15.9m
202520242023
£(39.5)m
£(31.7)m
£11.0m
Net cash/(debt) Statutory (loss)/profit before tax
£(31.4)m (388.1)% £(69.6)m (82.7)%
(2024: £10.9m) (2024: £(38.1)m)
202520242023
£(31.4)m
£10.9m
£(29.6)m
202520242023
£(69.6)m
£(38.1)m
£7.2m
02
“ Our new core customer
strategy, combined with
the ongoing benefits
of our transformation
programme, provides a clear
road map to profitability
in 2027 and beyond.”
Introduction and market update
Headlam is the largest flooring distributor in the UK, with
unrivalled scale and well-established national reach. Our
network of distribution centres provide an excellent service
to independent retailers and contractors, with customers
enjoying access to the broadest product range, including our
own exclusive brands.
Over the course of the year performance was impacted by
a trading environment that has remained challenging. To
compensate, we launched a revised transformation plan
designed to considerably reduce losses in 2026 and return the
Group to profitability in 2027, even if market conditions remain
subdued.
To complement the transformation programme, we have
initiated a new ‘core customer’ focused strategy which
enables significant additional network and infrastructure cost
savings as the Group consolidates its operations on serving
independent retailers and contractors.
These measures, combined with the Group’s market position,
provides a platform for a return to sustainable profitable
growth. Despite the timing of a market recovery remaining
uncertain, we enter 2026 with a clear plan to create
meaningful value over the medium term.
Financial performance 2025
Revenue declined 4.6% in 2025 on a same working day basis,
reflecting both persistently challenging market conditions
and the deliberate decision, taken in November 2025, to exit
low-margin revenue that was diluting profitability. Revenue
from larger customers grew in the year overall but declined
in the last few weeks, largely reflecting the revised strategy,
published in November, to reduce low-margin revenue.
Gross margin of 29.5% was broadly flat year-on-year.
Operating costs of £180.7 million were also flat year-on-year
with cost inflation and trade counter investments offset by
benefits from the transformation plan. The underlying loss
before tax increased from £31.7 million to £39.5 million.
The Group had Net Debt of £31.4 million at the end of the
year and owned property in the UK valued at £75.3 million. In
January 2026 the Group agreed a new borrowing facility for
three years (with the option to extend).
The financial performance is set out in more detail in the
Financial Review.
Transformation plan progress in 2025
Despite the market environment, the application of the
transformation plan launched in 2024 has ensured good
operational progress over the year.
Key highlights include:
• Network optimisation in the South East, including the
opening of a new distribution centre in Rayleigh and the
closure of the Ipswich site. The review of our South East
network continues as we optimise our footprint to match
our revised customer base
• Rollout of innovative new display stands, supporting our
independent retailer customers. Strong feedback from
independent retailer customers
Stephen Bird
Interim Executive Chair
INTERIM EXECUTIVE CHAIR’S REVIEW
Headlam Group PLC Annual Report & Accounts 2025
03
Overview
• Consolidation of operations in the Midlands, with
Nottingham transferred into other sites
• Launch of fully centralised buying and supply chain,
already yielding significant benefits in stock levels and
stock turn. From early October 2025 to February 2026,
stock levels in the UK reduced by c.£30 million with further
opportunity
• Preparation for sale of the Group’s businesses in France
and Netherlands
Headlam’s 2026 – 2028
‘core customer’ strategy
The medium-term objective for Headlam is to be a profitable,
cash generative business positioned for sustainable growth.
From a profit perspective, this translates to our expectations
that our transformation plan will create a return to
profitability in 2027 and then a return to historic midsingle-
digit operating profit margin levels thereafter from the
annualised positive benefit of these initiatives.
To fund the strategy and build balance sheet resilience, cash
is expected to be generated from property disposals and
working capital optimisation. We therefore expect to have
significantly reduced Net Debt by the end of 2027 with further
improvement thereafter.
The new strategy, specifically focused on profit generation,
alters the preceding narrative which was focused on revenue
growth. In seeking to fill excess capacity with increased
volumes from larger customers and through trade counter
expansion, we moved away from our core independent
retailers and contractors, the customers on which the strength
of this business depends. Those customers were increasingly of
the view that the Group was competing against them rather
than supporting them. As a result, we lost share.
The larger customer business that we won, whilst providing
positive contribution to the fixed cost base, required us to
maintain a higher level of infrastructure than would have
otherwise been the case and therefore hindered the ability
to implement significant reductions in the fixed cost base.
Furthermore, although the Group secured additional low-
margin revenue, we lost more profitable residential revenue
from our core customer base.
Our core customer strategy refocuses the business on
independent retailers and contractors whilst adjusting the
cost base of the business accordingly. We firmly believe
that this will be to the benefit of all stakeholders and create
shareholder value.
The strategy has the following core components:
1. Reduce low-margin revenue - refocus on independent
retailers and contractors, whilst eliminating low-margin
revenue that ties up fixed costs
2. Reduce costs - as low-margin business is exited, we will
take out the variable costs associated with it, as well as
reducing structural, fixed costs that previously had to be
maintained in order to service that low-margin business
3. Enhance customer service –we are already rapidly
improving customer service to our independent retailer
and contractor customer base. Our measure of delivery
success is substantially improved year-on-year for
the first two months of this year. This is starting to be
recognised in feedback from customers.
4. Simplify ranges and consolidate supply base – put simply,
we have had too many ranges and too many suppliers,
with volumes spread too thinly across the supply base.
There is opportunity to reduce range duplication, whilst
maintaining a broad product offering, and also to
consolidate our supply base to strengthen relationships
with key strategic sourcing partners
5. Optimise cash – a smaller business means less cash
needs to be tied up in working capital and there are also
opportunities to dispose of surplus assets
Taking each in turn:
1. Reduce low-margin revenue
We will refocus and grow with independent retailers and
contractors, whist eliminating low-margin revenue elsewhere.
The focus on fixing or exiting insufficiently profitable business
falls into four categories.
A. Reduction in low-margin large customer business
The Group will ensure that all resources are fully utilised
to serve profitable revenue. As a result, large low margin
customers that serve to increase utilisation of existing
capacity, but contribute little to profits and require us to
maintain a higher fixed cost base, are no longer desirable.
B. Exit Continental European business
The sale of our businesses in France and the Netherlands
continues to progress. By focusing solely on the UK, losses
are reduced and focus increased on our core customers.
Collectively, those businesses made an underlying loss before
tax of £3.7 million in 2025, and are presented as a discontinued
operation.
C. Category mix
Within our product categories, there is a wide range of gross
margin. Certain products, particularly in the contract element
of the market, can be at relatively low gross margin and, when
central costs are fully allocated, the profit contribution is
marginal.
By focusing on the more profitable categories and actively
deprioritising low gross margin categories, our fixed costs
and infrastructure requirements, such as distribution centres
and vehicles, naturally reduce, benefiting overall Group
profitability albeit at the expense of revenue.
In addition, we are proactively re-energising our higher-
margin consumer brands which are highly valued by
independents enabling them to generate strong margins and
compete against national chains.
04
D. Trade counters
As at the end of 2025 we had 80 trade counters. However, a
collection of our trade counters, notably those in the South
East, are exposed to relatively high rent costs which reduces
the viability of a collection point rather than servicing those
areas with delivery only. Given higher costs, and a product
range typically focused on lower gross margin categories, the
plan is to reduce our trade counter network whilst migrating
some profitable category sales to adjacent trade counters or
switching this revenue from ‘collection sales’ to ‘delivered sales’.
This initiative significantly reduces fixed costs and whilst revenue
also reduces, this is skewed to the lower margin categories.
Furthermore, we have already repositioned the role and
organisational structure of the trade counters. Specifically:
Previously they were a separate business unit with their own
management team. We have now moved the management
of the trade counters into our Mercado independent retailer
and contractor sales team. Our trade counter sites have now
been turned into collection points.
We have reclarified our approach to which customers we will
trade with; specifically, that we will only service customers in
the flooring trade. Previously, the trade counter business, whilst
only ever servicing trade customers, did sell a small amount to
adjacent non-flooring trades. These non-flooring accounts
were closed in February 2026.
• Furthermore, we are repositioning the ranges available
in the trade counter sites, in order to provide our
independent retailer and contract customers with access
to certain ranges that are not available to smaller trade
customers of our trade counter collection points.
In total, the above initiatives are anticipated to cumulatively
reduce revenue whilst significantly increasing the gross and
operating margins of the business when associated costs are
removed.
2. Reduce costs
In line with a substantial reduction in unprofitable revenue
there is the opportunity to reduce both direct and indirect
costs significantly. Direct overheads include warehouse,
transport, energy, rent and rates.
As part of the core customer strategy our network footprint
will be significantly reduced. In June 2024, prior to embarking
on the transformation programme, we had 1.5 million
square foot of warehousing space in our distribution centres
(excluding cross-dock facilities). This has been reduced to
1.3 million to date and will reduce further.
3. Substantially enhance customer
service to our independent and
contractor customer base
Headlam has taken immense pride in its service levels over
the years, but in the last year these have not met our high
standards. Deliveries have not been consistent enough and
availability of some ranges has not been strong enough. The
root cause of much of these issues is from a fragmented,
decentralised business model that has taken time to
centralise. This has meant that we have not had stock in
the right places and have had to internally move too much
product around our network, putting pressure on costs and
on-time delivery, as well as stock availability.
In recent weeks we have made strong progress in addressing
delivery consistency. Our measure of delivery success is
substantially improved year-on-year for the first two months
of this year. This is starting to be recognised in feedback from
customers.
We are addressing stock availability through better inventory
management and our newly centralised buying function.
4. Simplify our range and
consolidate our supply base
In late 2024, we launched a single go-to-market proposition,
under our Mercado brand, consolidating 32 trading
businesses. Earlier this year we also consolidated six different
own product brand businesses into the Mercado sales team.
We are also reducing SKUs to focus on the products that
matter most to our core customers. We have already reduced
our ‘live’ product range from 27k to 16k SKUs with further
reduction potential as we focus on profitable category mix.
As the UK’s largest purchaser of flooring, we have the chance
to create long-term, mutually beneficial supplier partnerships
as we consolidate our purchases. Supplier benefits secured
in 2025 will take effect and fully annualise in 2026 with good
visibility on further opportunities for increased collaboration
benefiting 2026 and 2027.
In addition, there are opportunities to optimise our approach
to pricing and discounting. Having consolidated 32 trading
businesses, with 32 price lists and different approaches
to discounting, there is now an opportunity to implement
consistency and optimisation, which we expect to yield gross
margin benefits.
5. Optimise cash
The core customer strategy and transformation plan requires
cash to cover the trading losses until the Group becomes
sustainably cash-generative and to fund the cost of
transformation. The Group has a clear and well progressed
plan in place to generate cash inflows through the disposal
of assets, albeit these are not solely in our control, and a
reduction in working capital requirements. The cash inflows
from these are intended to more than cover the cash
requirements, leaving the Group with significantly reduced
Net Debt at the end of 2027.
The Group has several options for realising cash from property
assets, including: outright sale, sale and leaseback, or through
utilising the assets for further borrowings. There are currently
three properties on the market for disposal and more will
become available for sale over the next 18 months. Any further
transactions, if realised, would accelerate our reduction in Net
Debt and further increase the Group’s liquidity.
Since implementing fully centralised buying we have already
significantly reduced stock levels and improved stock turn. In
2023 the stock turn was 3.2x, improving to 3.5x in 2024 and 3.8x
in 2025, with recent run rate above 4x. Over the medium term
we expect to sustain a stock turn of at least 5.0x, which will
generate further significant cash benefits whilst still providing
the Group with substantially higher levels of stock than its
competitors in the UK.
INTERIM EXECUTIVE CHAIR’S REVIEW CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
05
Overview
Progress to date
Since the initiation of the core customer strategy in November
2025, and reflecting our determination to proceed at pace,
we have achieved the following:
• Over £10 million of annualised payroll savings achieved by
end of December 2025
• Increased pricing with a low margin large customer, which
is expected to cease to be a customer in the coming
months which reduces pressure on the network, improving
service levels to independent retailers and enabling us to
reduce fixed costs
• Service delivery substantially improved year-on-year for
the first two months of 2026
• Agreement of a new borrowing facility
Reflecting the amount, and pace, of change in the business,
we have decided to pause the implementation of the new
ERP. The development work performed to date has been
“mothballed” in readiness for the project recommencing at
the appropriate time.
Highly valued colleagues
Across the UK, France and the Netherlands Headlam Group
PLC employed an average c.2,200 people in 2025. To maximise
the success of the core customer strategy, it is essential that our
colleagues recognise their importance and the weight placed
on continually striving to make Headlam a great place to work.
We recognise that implementing significant change can be
unsettling for colleagues and a number of colleagues did
leave the Group prior to the end of 2025 as part of collective
consultation processes. I would like to thank those colleagues
for their hard work over the years and throughout the
consultation processes, and I wish them all the best for the
future. I also wish to recognise the colleagues who remain with
the Group and who continue to work hard to implement the
changes to the business.
Stephen Bird
Interim Executive Chair
25 March 2026
Outlook
• The new core customer strategy will see a material
planned reduction in revenue over 2026 and 2027.
• Once fully implemented, and, assuming a stable
market, this is expected to result in a smaller base
revenue on continuing operations but with a
significant enhancement to quality of earnings
through enhanced gross margin.
• With cost saving initiatives also on track, overall
future net operating margins expected to return to
mid-single digit once the transformation plan fully
executed.
• Property disposal programme and a reduction in
working capital expected to materially reduce Net
Debt by the end of 2026 with further improvement
anticipated in 2027.
• In the near term, trading conditions remain
challenging: consumer spending on home
improvements continues to decline and the conflict
in the Middle East, whilst hard to predict, has
already created cost pressures for the wider UK
flooring industry with significant price increases in
polypropylene and fuel.
• Over the medium term, with a clear and granular
transformation strategy now in place and beginning
to have a positive impact despite continuing
challenging trading conditions, the Board believes
that the outlook for Headlam is positive reflecting
the benefits of its market leading position, inherent
strengths and renewed focus on core independent
retailers and contractors.
• The Board therefore continues to have confidence in
a return to profitability in 2027 as previously guided.
06
STRATEGIC
REPORT
Market Overview
08
Our Business Model
10
Strategy
11
Key Performance Indicators (‘KPIs’)
14
Stakeholder Engagement
18
Financial Review
22
Sustainability Report
26
Environmental
28
Social
32
Governance
36
Task Force on Climate-Related Financial Disclosures
(‘TCFD’)
38
Streamlined Energy and Carbon Reporting (‘SECR’)
43
Risk Management
46
Principal Risks
49
Viability Statement
51
Non-Financial and Sustainability
Information Statement
53
Strategic Report
07
Headlam Group PLC Annual Report & Accounts 2025
The flooring market in the UK is worth
around £2.5 billion at distributor selling
prices and has experienced an exceptionally
challenging period over the past few years.
Approximately two-thirds of the UK market is residential,
making it heavily dependent on consumer spending on home
improvements. As a high-value, discretionary purchase,
flooring has been one of the weakest areas of consumer
expenditure, experiencing a significant decline. This partly
reflects the impact of the cost-of-living crisis on disposable
incomes, a sharp reduction in housing transactions (down
20% in 2023 and a further 8% in Q1 2024, before improving
thereafter), and subdued consumer confidence. As a result,
market volumes have declined consistently over the past four
years.
This market decline has resulted in a number of large retailers,
contractors and distributors ceasing to be viable over the last
few years, most notably Carpetright and Homebase in 2024.
Conversely, the independent retailer and contractor market
has proved to be relatively resilient.
There are varying estimates of the scale of decline in volume
in the flooring market in recent years. Using external data
points we estimate it to be around 25%. In our view, some of this
could be a permanent reduction and we should not expect it
to come back, at least not in the short to medium term. This
‘structural’ element relates to replacement cycles, with flooring
products lasting longer and a gradual change in the mix from
soft flooring to hard flooring, which can be more durable.
However, an element of the decline in recent years is expected
to be cyclical and reflects consumers holding back on spending
decisions. This points to a positive outlook for demand for
flooring in the coming years, albeit the timing is uncertain.
A notable feature of the flooring market from 2023 through
to 2025 has been the absence of manufacturer-led price
increases. Historically, manufacturers typically implemented
annual inflationary price rises, which flowed through the
supply chain to distributors and retailers, and were ultimately
passed on to consumers. Whilst such price inflation was
neutral to margin percentages, it increased absolute gross
profit for distributors, helping to offset rising overhead
costs. However, due to exceptionally weak market volumes,
price increases in 2023, 2024 and 2025 have been minimal
as manufacturers compete for volume to maintain factory
utilisation. We are starting to see signs of a return to more
normal levels of price inflation in the sector in 2026, albeit this
remains uncertain.
The long-term outlook for the flooring market is positive,
supported by a degree of cyclical recovery plus population
growth and more stable macroeconomic conditions. As the
clear market leader in the UK, supported by over 30 years
of industry expertise, a large customer base, long-standing
supplier relationships and the most extensive delivery and
collection network nationwide, Headlam is well positioned to
capture long-term opportunities.
“ The flooring market has
experienced an exceptionally
challenging period over
the past four years, but the
long-term outlook is positive.”
Stephen Bird
Interim Executive Chair
08
MARKET OVERVIEW
Market Indicators
0
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Feb-25
Jan-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
Overall index Major purchase index
-5
-10
-15
-25
-20
-30
-40
-35
Consumer confidence in major purchases has
remained negative but improving
Housing transactions declined 20% in 2023,
growing thereafter
Consumer spending on home improvements
has continued to decline
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
50%
25%
10%
5%
20%
0%
-5%
-10%
-15%
-20%
-25%
-30%
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Jul-24
Aug-24
Sep-24
Oct-24
Nov-24
Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-26
Jan-26
0%
-5%
-10%
-15%
-20%
Sources:
• UK market size: estimates by LEK, Northwest Strategy Associates, MTW Research.
• Consumer confidence: NIQ GfK.
• Housing transactions: www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-
or-above.
• Consumer spending on home improvements: www.barclayscorporate.com/insights/industry-expertise/uk-consumer-spending-report.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
09
We create value by
leveraging our key
relationships, supply chain
expertise, and innovative
approach to deliver
products that are both
sustainable and fit for
purpose.
Our people
Attracting and retaining the best
people to provide the highest
levels of customer service, and
working together to deliver
success.
Our culture
A shared group of values, including
to ensure a business of integrity
with robust controls and ethical
conduct.
Our expertise
Ensuring we retain and build upon
our market leading expertise
through ongoing investment in
people and the business.
Our sustainable mindset
Ensuring the long-term success
of the business through a focus
on a sustainable business model
and working closely with all
stakeholders.
Our relationships
Actively engaging with all stakeholders, including people,
customers and suppliers, to support each other and deliver
success together.
Working closely with our suppliers across the globe to launch innovative and
successful products into the marketplace, sharing data and ensuring an
efficient and ethical supply chain.
What differentiates us
Our customer-led
approach
Broadest product
offering; nationwide
delivery and collection;
industry-leading App;
improved B2B website.
Our comprehensive
The broadest offering
encompassing a
portfolio of own brands
as well as leading
third-party brands, with
opportunity for future
growth by leveraging
our scale and reach.
Our material handling
and processing
capabilities
Largest inventory
holding amongst peers.
Able to process a high
volume of orders for fast
delivery.
Our extensive
distribution network
The largest delivery
and collection network
in the UK.
Our product
knowledge and
ranging
Unrivalled product
knowledge and
expertise. Able to
provide valuable
insight to both
customers and
suppliers.
Our disciplined
capital allocation
strategy
Balancing investment
with shareholder
returns.
What we rely on
Supporting our suppliers
What differentiates us
10
OUR BUSINESS MODEL
Purchasing
Sourcing and purchasing leading,
innovative and exclusive products
from a wide range of suppliers/
manufacturers from across
the globe.
Customer service
Providing our customer base with
the widest range of products
and comprehensive service
propositions tailored to their
specific needs.
Solutions
Offering an array of solutions
across the value chain, including
stockholding and storage
solutions, product insight and
knowledge, curated exclusive
ranges, and sales support.
Delivery & Collection
Providing a truly nationwide
delivery service, along with the
convenience of c.80 collection
points.
We work alongside our suppliers to launch innovative and successful
products into the marketplace, sharing data and ensuring an efficient
and ethical supply chain.
Providing access to a broad range of flooring products, through strong
supplier relationships, underpinned by nationwide distribution, specialist sales
expertise and digital tools that help customers operate efficiently.
Our Colleagues
Providing an inclusive and
collaborative working environment
where people are supported, and
can develop and succeed.
Our Customers
Helping our customers grow their
businesses through an outstanding
service, and giving them
competitive advantages.
Our Suppliers
Providing a highly effective and
efficient route to market for their
products and access to a large and
fragmented customer base.
Our Shareholders
A focus on ensuring the long-term
success of the businesses, and
improving financial performance
to ensure increasing shareholder
returns.
Our Communities
and the Environment
Supporting local communities
through employment and
engagement activities, and
reducing our impact on the
environment through our
sustainability strategy.
The value we create
Our customer-led
approach
Broadest product
offering; nationwide
delivery and collection;
industry-leading App;
improved B2B website.
Our comprehensive
The broadest offering
encompassing a
portfolio of own brands
as well as leading
third-party brands, with
opportunity for future
growth by leveraging
our scale and reach.
Our material handling
and processing
capabilities
Largest inventory
holding amongst peers.
Able to process a high
volume of orders for fast
delivery.
Our extensive
distribution network
The largest delivery
and collection network
in the UK.
Our product
knowledge and
ranging
Unrivalled product
knowledge and
expertise. Able to
provide valuable
insight to both
customers and
suppliers.
Our disciplined
capital allocation
strategy
Balancing investment
with shareholder
returns.
What we do The value we create
What differentiates us
Supporting our customers
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
11
“ Our revised strategy
refocuses the business
on independent
retailers and
contractors whilst right
sizing the business.
We firmly believe
that this will be to
the benefit of all
stakeholders and
create shareholder
value.”
The medium-term objective for Headlam is to be
a profitable, cash generative business positioned
for sustainable growth.
From a profit perspective, this translates to the Group substantially
reducing operating losses in 2026, before low single-digit operating
profit margin in 2027. As cost initiatives implemented in 2027 annualise,
we expect to generate a mid single-digit operating profit margin in
2028. Significantly increased profit generation is the fundamental
driver of the strategy, with a detailed plan in place to achieve it.
To fund the strategy and build balance sheet resilience, cash will be
generated from property disposals and working capital optimisation.
We expect to have little to no net debt by the end of 2027.
The new strategy, specifically focused on profit generation, alters the
preceding narrative which was focused on revenue growth. Although
market conditions over the past three years in particular have been
challenging, the Group’s pursuit of growth to fulfil this objective,
although sound in theory, has proven counter-productive.
An attempt to fill the excess capacity in our network and fully
utilise the Group’s infrastructure with increased volumes from larger
customers and through the trade counter expansion, alienated our
core independent retailers and contractors. These highly valued
customers, on which the strength of the business depends, were
increasingly of the view that the Group was competing against them
rather than providing support and a high quality of service. As a result,
we lost share.
The larger customer business that we won, whilst providing positive
contribution to the fixed cost base, required us to maintain a higher
level of infrastructure than if we did not have that business and
therefore hindered the ability to implement significant reductions
in the fixed cost base. Furthermore, although the Group secured
additional low-margin revenue, we lost more profitable residential
revenue from our core customer base.
Our revised strategy refocuses the business on independent retailers
and contractors whilst right sizing the business. We firmly believe that
this will be to the benefit of all stakeholders and create shareholder
value.
The enhanced transformation plan itself has the following core
components:
1. Reduce low-margin revenue - refocus on independent retailers
and contractors, whilst eliminating low-margin revenue that ties
up fixed costs
2. Reduce costs - as low-margin business is exited, we will take out
the variable costs associated with it, as well as reducing structural,
fixed costs that previously had to be maintained in order to
service that low-margin business
3. Enhance customer service – our service levels have been below
our high standards over the last year and we are already rapidly
improving customer service to our independent retailer and
contractor customer base
4. Simplify ranges and consolidate supply base – put simply, we’ve
had too many range and too many suppliers, with volumes
spread too thinly across the supply base. There is opportunity to
reduce range duplication, whilst maintaining a broad product
offering, and also to consolidate our supply base to strengthen
relationships with key strategic sourcing partners
5. Optimise cash – a smaller business means less cash needs to be
tied up in working capital and there are also opportunities to
dispose of surplus assets
12
OUR STRATEGY
Medium-term
objective
Strategic
focus
Key
initiatives
Behaviours
Reduce
low-margin
revenue
Simplify
ranges and
consolidate
supply base
Optimise
cash
Reduce
costs
Enhance
customer
service
Simplicity
Ownership
CareCommitment
Teamwork
A profitable, cash generative business
positioned for sustainable growth
Refocusing on independent
retailers and contractors, whilst
right-sizing the business
1
4 5
2 3
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
13
202520242023
(4.6)
(10.2)
(2.8)
202520242023
29.5
29.7
31.7
202520242023
36.2
34.4
29.2
CBA
Financial KPIs
Like-for-like
1
revenue growth (%)
APM
Underlying gross
profit margin (%)
Underlying
2
operating
cost ratio (%)
APM
Measurement
Year-on-year revenue growth,
expressed as a percentage and
adjusted to normalise currency
and for consistent working days,
for businesses making a full year’s
contribution.
Why it’s important and relevant
Allows a consistent measure of
year-on-year performance.
Initiatives and actions
for improvement
Organic revenue growth is a key
strategic objective with specific
projects to support its delivery.
Link to Strategy
1
3
Measurement
Measured as a percentage of
revenue.
Why it’s important and relevant
Shows the effectiveness of gross
profit generation from revenue.
Initiatives and actions
for improvement
Ongoing pricing discipline, and
product ranging.
Link to Strategy
1
4
Measurement
Measured as a percentage of
revenue.
Why it’s important and relevant
Shows how effective the
Company is at converting gross
profit into operating profit.
Underlying² is used to show
the underlying performance
of the business without non-
underlying items.
Initiatives and actions
for improvement
Focus on operating efficiencies
including simplifying our network
and our operations under the
Transformation Plan.
Link to Strategy
1
2
The Board believes these Key Performance Indicators (‘KPIs’) provide a comprehensive and relevant list of measurements
with which to assess the Group’s financial, operational, and social performance towards the achievement of its strategy.
Commentary on the Group’s use of Alternative Performance Measures (‘APMs’) alongside International Financial Reporting
Standards (‘IFRS’) Measures is given within the Financial Review on pages 22 to 25, and below.
1
Like-for-like revenue is calculated based on constant currency from activities and businesses that made a full contribution in both the 2025 and the comparator
year(s), and is adjusted for any variances in working days.
2
To supplement IFRS reporting, we also present our results on an underlying basis to show the performance of the business before Non-Underlying Items. These items
are detailed in note 3 and principally comprise: amortisation of acquired intangibles and other acquisition-related costs; impairment of assets; business restructuring
and change-related costs; profit on sale of property, plant and equipment; ERP system development; and insurance proceeds. These underlying measures, along with
other alternative financial measures including debt and cash flow metrics, form the Group’s Alternative Performance Measures (‘APMs’) that are used internally by
management as key measures to assess performance. Further explanation in relation to these measures can be found in the glossary of APMs.
14
KEY PERFORMANCE INDICATORS
202520242023
(6.7)
(4.7)
2.5
202520242023
(102.0)
(31.2)
9.6
202520242023
(25.4)
(13.2)
7.6
D E F
Underlying
2
operating
profit /(loss) margin (%)
APM
Statutory basic earnings/(loss)
per share (‘EPS’) (p)
Underlying return on capital
employed (‘ROCE’) (%)
APM
Measurement
Measured as a percentage of
revenue.
Why it’s important and relevant
Shows the effectiveness of
sustainable operating profit
generation from revenue.
Underlying² is used to show
the underlying performance
of the business prior to non-
underlying items.
Initiatives and actions
for improvement
Existing strategy of maximising
sales, complemented by the
Transformation Plan to simplify our
customer offer, together with the
operating efficiencies described
in KPI 3.
Link to Strategy
1
2 4
Measurement
Profit after tax divided by average
basic weighted number of shares.
Why it’s important and relevant
Shows the level of profit per share
attributable to shareholders.
Initiatives and actions
for improvement
In line with statutory profit
performance.
Link to Strategy
1
2 4
Measurement
Measured as underlying²
operating profit as a percentage
capital employed.
Why it’s important and relevant
Demonstrates the relative level
of underlying profit generated by
the capital employed. Underlying²
is used to show the underlying
performance of the business
without non-underlying items.
Initiatives and actions
for improvement
Focus on efficient use of capital.
May be offset in the short term
by a period of upfront investment
and maturity, e.g. trade counter
roll-out.
Link to Strategy
5
For more information on our
strategy see pages 12 to 13
Key to strategic links
1
Reduce low-
margin revenue
2
Reduce
costs
5
Optimise
cash
3
Enhance
customer service
4
Simplify ranges and
consolidate supply base
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
15
202520242023
3.8
3.5
3.2
202520242023
84
81
86
202520242023
14
17
25
HG
I
Non-Financial KPIs
Inventory turn Employee retention (%) Reportable incidents
(‘RIDDOR Reports’)
Measurement
Annual ratio measured by
comparing underlying cost of
goods sold during the financial
period with the average annual
inventory level (using averaged
data points at 1 January, 30 June
and 31 December).
Why it’s important and relevant
A higher inventory turn is an
indicator of efficient revenue
generation, and more effective
utilisation of distribution centre
capacity.
Initiatives and actions
for improvement
Centralised buying and stock
control team, maintaining a
unified national product file.
Link to Strategy
5
Measurement
Retention measures the ability
to retain employees in the
current year compared with
previous years. It is measured
as a percentage of employees
retained in the Company between
1 January and 31 December.
*The figures have been restated
to exclude the impact of
redundancies.
Why it’s important and relevant
Shows the effectiveness of
colleague engagement initiatives.
Initiatives and actions
for improvement
Focus on people and culture,
including investing in people
through training and review of
rewards and benefits.
Link to Strategy
2 3
Measurement
Reporting of Injuries, Diseases
and Dangerous Occurrences
Regulations 2013 (‘RIDDORs’).
These regulations require
employers, the self-employed
and those in control of premises
to report specified workplace
incidents.
Why it’s important and relevant
By measuring reportable injuries,
it is possible to identify any
deficiencies in the Company’s
processes, allowing continuous
improvement in health and safety
standards.
Initiatives and actions
for improvement
Change in the National Safety
Team structure to deliver effective
support to the Group.
Link to Strategy
2 3
Key to strategic links
1
Reduce low-
margin revenue
2
Reduce
costs
5
Optimise
cash
3
Enhance
customer service
4
Simplify ranges and
consolidate supply base
16
KEY PERFORMANCE INDICATORS CONTINUED
202520242023
13
1414
202520242023
51
43
47
J K
Deliveries per
commercial vehicle
UK Scope 1 and 2 emission
reduction (%)
Measurement
Average deliveries per commercial
vehicle per day in area following
Transport Integration (delivery
consolidation) project. Prior to the
project, in 2019 it was 12.
Why it’s important and relevant
The Transport Integration
project results in more deliveries
per commercial vehicle, which
reduces the Company’s impact
on the environment through
a reduced number of vehicles
needed to serve local areas.
Initiatives and actions
for improvement
Transformation Plan simplifying
our network.
Link to Strategy
2
Measurement
Percentage reduction in UK Scope
1 and 2 emissions (tCO
2
e) against
a baseline year set at 2019 on a
location basis.
Why it’s important and relevant
Need to meet the reduction
pathway required to achieve
the interim target of a 46%
reduction by 2030, and reduce
the Company’s contribution to
climate change.
Initiatives and actions
for improvement
Actively engaged in transition
planning, with the main
decarbonisation actions currently
being pursued detailed in the
Sustainability Report on page 26.
Link to Strategy
1
2 3
For more information on our
strategy see pages 12 to 13
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
17
Acting in the interests of stakeholders is vital in delivering our purpose
The Board has responsibility for managing the business to promote its success, and having regard to how its
decisions and events impact its stakeholders, engaging with and supporting them appropriately.
Our Colleagues Our Customers Our Suppliers Our Shareholders
Relationship to Headlam
Colleagues are at the heart of our business, and are
our greatest asset. There are approximately 2,200
colleagues within the Headlam group within a variety of
departments, including warehousing, transport, sales, and
administration.
How we support
We continue to focus on making Headlam a great place
to work, and ensure colleagues share in the Group’s long-
term success.
How we engage
The CEO/Executive Chair, CFO, Executive Team, and
non-executive members of the Board all have frequent
interaction with colleagues, including site visits and both
formal and informal meetings and forums (inclusive of the
Employee Forum).
Effect on decision making, outcome, and benefits to
stakeholders
We launched a transformation plan in September 2024,
which we updated in November 2025, with the target
of returning the business to profitability in 2027. This has
had a significant impact on some of our colleagues. A
number of colleagues have left the business through
2024 and 2025, which we recognise has been difficult
and unsettling. We have carefully communicated and
engaged with our colleagues throughout.
We have made further investments in a strong health and
safety culture.
We conducted our third colleague engagement survey,
providing valuable insight into what is working well and
what can be done to better engage our colleagues.
Took the decision to again tier our cost-of-living increases
to ensure lowest-paid colleagues got the greatest
increase.
Relationship to Headlam
Imperative to our success and the growth of the
Company.
We have an extensive customer base across the
fragmented flooring market, with a renewed focus in
particular on independent retailers and contractors.
How we support
We provide our customers with a market-leading service
through the largest product range, in-depth knowledge
ecommerce and marketing support, and nationwide fast
delivery service.
We help our customers grow their businesses through
providing them with competitive advantages.
How we engage
Frequent interaction through sales representatives,
dedicated service teams, and communications channels.
Customer surveys, and feedback mechanisms. Focus
groups, including on new product launches.
Effect on decision making, outcome, and benefits to
stakeholders
As announced in November 2025 we made the decision
to refocus on the independent retailer and contractor
market. The trade counter network has been repositioned
to be collection points for our core customers, providing
unrivalled convenience.
Considerable investment and progress in optimising the
network to increase the level of service to all customers.
Relationship to Headlam
Key to ensuring we can supply the best product at a
competitive price in a timely manner to customers/end-
consumers.
We work with suppliers across the globe manufacturing
the broadest range of products, and give them a
highly effective route to market into the fragmented
customer base.
How we support
Helping and supporting manufacturers with selling their
products into our large and diverse trade customer base.
How we engage
Frequent visits to suppliers’ sites and premises. Annual
Supplier Conference held to share our insights and
strategy with them, and how we can more effectively
work together.
Sharing of sales data, and insight into customer and end-
consumer buying.
Effect on decision making, outcome, and benefits to
stakeholders
During the previous year we launched a transformation
plan to simplify the business and its processes. This makes
Headlam easier to do business with, which is beneficial for
our suppliers.
During 2025 we centralised the buying function, resulting
in central coordination of ranges and buying decisions.
This has been accompanied by a supplier sourcing
strategy to reduce the number of suppliers and give
more volume to a smaller number of suppliers, to bring
efficiencies to the suppliers and to Headlam.
Continued to work closely on sharing data, and ensuring
an efficient and ethical supply chain.
Relationship to Headlam
The owners of the Company. It is important that the
Board is aware of and solicits their views, and then
evaluates these views in relation to the strategic and
corporate objectives of the Company.
Key joint focus on the long-term success and
sustainability of the Company.
How we support
Focus on delivering a long-term sustainable business that
operates with the highest level of governance.
How we engage
Frequent regulatory announcements with appropriate
levels of disclosure.
In-person presentations and meetings, including offering
meetings at the Company’s sites. Use of webinars and
recordings to allow all shareholders to hear and view
materials.
Solicitation and consideration of feedback, including on
strategy and its oversight.
Effect on decision making, outcome, and benefits to
stakeholders
The views of stakeholders, including shareholders were
considered as we shaped and implemented both our
existing strategic priorities and the transformation plan.
Efficiency and mitigating actions to help support
margins and better align costs with the weak market
backdrop. Ongoing scrutiny of operational performance,
efficiencies, and the cost base.
The Board carefully considered the impact on
shareholders of a cessation in the dividend whilst the
transformation plan is executed.
18
STAKEHOLDER ENGAGEMENT
Our Colleagues Our Customers Our Suppliers Our Shareholders
Relationship to Headlam
Colleagues are at the heart of our business, and are
our greatest asset. There are approximately 2,200
colleagues within the Headlam group within a variety of
departments, including warehousing, transport, sales, and
administration.
How we support
We continue to focus on making Headlam a great place
to work, and ensure colleagues share in the Group’s long-
term success.
How we engage
The CEO/Executive Chair, CFO, Executive Team, and
non-executive members of the Board all have frequent
interaction with colleagues, including site visits and both
formal and informal meetings and forums (inclusive of the
Employee Forum).
Effect on decision making, outcome, and benefits to
stakeholders
We launched a transformation plan in September 2024,
which we updated in November 2025, with the target
of returning the business to profitability in 2027. This has
had a significant impact on some of our colleagues. A
number of colleagues have left the business through
2024 and 2025, which we recognise has been difficult
and unsettling. We have carefully communicated and
engaged with our colleagues throughout.
We have made further investments in a strong health and
safety culture.
We conducted our third colleague engagement survey,
providing valuable insight into what is working well and
what can be done to better engage our colleagues.
Took the decision to again tier our cost-of-living increases
to ensure lowest-paid colleagues got the greatest
increase.
Relationship to Headlam
Imperative to our success and the growth of the
Company.
We have an extensive customer base across the
fragmented flooring market, with a renewed focus in
particular on independent retailers and contractors.
How we support
We provide our customers with a market-leading service
through the largest product range, in-depth knowledge
ecommerce and marketing support, and nationwide fast
delivery service.
We help our customers grow their businesses through
providing them with competitive advantages.
How we engage
Frequent interaction through sales representatives,
dedicated service teams, and communications channels.
Customer surveys, and feedback mechanisms. Focus
groups, including on new product launches.
Effect on decision making, outcome, and benefits to
stakeholders
As announced in November 2025 we made the decision
to refocus on the independent retailer and contractor
market. The trade counter network has been repositioned
to be collection points for our core customers, providing
unrivalled convenience.
Considerable investment and progress in optimising the
network to increase the level of service to all customers.
Relationship to Headlam
Key to ensuring we can supply the best product at a
competitive price in a timely manner to customers/end-
consumers.
We work with suppliers across the globe manufacturing
the broadest range of products, and give them a
highly effective route to market into the fragmented
customer base.
How we support
Helping and supporting manufacturers with selling their
products into our large and diverse trade customer base.
How we engage
Frequent visits to suppliers’ sites and premises. Annual
Supplier Conference held to share our insights and
strategy with them, and how we can more effectively
work together.
Sharing of sales data, and insight into customer and end-
consumer buying.
Effect on decision making, outcome, and benefits to
stakeholders
During the previous year we launched a transformation
plan to simplify the business and its processes. This makes
Headlam easier to do business with, which is beneficial for
our suppliers.
During 2025 we centralised the buying function, resulting
in central coordination of ranges and buying decisions.
This has been accompanied by a supplier sourcing
strategy to reduce the number of suppliers and give
more volume to a smaller number of suppliers, to bring
efficiencies to the suppliers and to Headlam.
Continued to work closely on sharing data, and ensuring
an efficient and ethical supply chain.
Relationship to Headlam
The owners of the Company. It is important that the
Board is aware of and solicits their views, and then
evaluates these views in relation to the strategic and
corporate objectives of the Company.
Key joint focus on the long-term success and
sustainability of the Company.
How we support
Focus on delivering a long-term sustainable business that
operates with the highest level of governance.
How we engage
Frequent regulatory announcements with appropriate
levels of disclosure.
In-person presentations and meetings, including offering
meetings at the Company’s sites. Use of webinars and
recordings to allow all shareholders to hear and view
materials.
Solicitation and consideration of feedback, including on
strategy and its oversight.
Effect on decision making, outcome, and benefits to
stakeholders
The views of stakeholders, including shareholders were
considered as we shaped and implemented both our
existing strategic priorities and the transformation plan.
Efficiency and mitigating actions to help support
margins and better align costs with the weak market
backdrop. Ongoing scrutiny of operational performance,
efficiencies, and the cost base.
The Board carefully considered the impact on
shareholders of a cessation in the dividend whilst the
transformation plan is executed.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
19
Acting in the interests of stakeholders is vital in delivering our purpose
The Board has responsibility for managing the business to promote its success, and having regard to how its
decisions and events impact its stakeholders, engaging with and supporting them appropriately.
Our Communities and the Environment
Relationship to Headlam
Key to supporting the success of the Company’s regional
and national businesses.
We actively recruit people from local communities,
so very important to the ongoing success of the
Company by attracting great people.
Minimising environmental impact is critical to managing
climate change, and the knock-on impact on communities.
How we support
Supporting communities through employment and
engagement activities, and also by reducing our impact
on the environment through out sustainability strategy.
How we engage
Engagement with colleagues to ensure aware of local
causes and events.
Actively advertise job vacancies through word of mouth
and locally.
Locally focused Communities Programme, which gives
colleagues the opportunity to both volunteer and donate
to projects and charities in their local community.
Effect on decision making, outcome and
benefits to stakeholders
Through engaging with our communities and other
stakeholders we identified a need for developing new
trained fitters; we subsequently implemented fitter
training programme, supported by our suppliers and also
by our customers, who will employ our trainees at the end
of their training programme.
The Directors of the Company are required by
Section 172 of the Companies Act 2006 to act in a
way that promotes the success of the Company for
the benefit of stakeholders as a whole and in doing
so, they must also have regard to wider expectations
of responsible business behaviour, specifically:
• the likely consequences of any decision in the
long term;
• the interests of the Company’s people;
• the need to foster the Company’s business
relationships with suppliers, customers and others;
• the impact of the Company’s operations on the
community and the environment;
• the desirability of the Company maintaining
a reputation for high standards of business
conduct; and
• the need to act fairly between members of the
Company.
The Board understands the importance of
engagement with its key stakeholders as only in this
way can it truly understand their needs and concerns
to support its decision making, and the likely impact
of those decisions on each stakeholder group. The
Company uses a variety of methods to engage, both
formally and informally, believing that much can be
gained from personal interaction.
The Board acknowledges that situations may arise
where stakeholder groups have conflicting priorities of
achieving its strategic objectives and the long-term
sustainable success of the business.
Following consideration of the information contained
within Stakeholders and Engagement, and all
other activities and undertakings detailed in this
Annual Report, the Board considers it has fulfilled
its duty in respect of Section 172, both individually
and collectively, and that it has acted in the way it
considers would be most likely to promote the success
of the Company for the benefit of its members as a
whole (having regard to the stakeholders and matters
set out in s172(1) (a) to (f) of the Act) in the decisions
taken during the year ended 31 December 2025.
Stephen Bird,
Interim Executive Chair
Signed on behalf of the Board 25 March 2026
Our s.172 statement
20
STAKEHOLDER ENGAGEMENT CONTINUED
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
21
Summary income statement
Underlying
2
result
2025
£m
Non-
Underlying
Items
2025
£m
Total
2025
£m
Re-presented
Underlying
2
result
2024
£m
Non-
Underlying
Items
2024
£m
Total
2024
£m
Revenue 498.7 – 498.7 525.7 – 525.7
Cost of sales (351.4) (3.6) (355.0) (369.7) (10.6) (380.3)
Gross profit 147.3 (3.6) 143.7 156.0 (10.6) 145.4
Operating costs (180.7) (26.5) (207.2) (180.9) 4.2 (176.7)
Operating loss (33.4) (30.1) (63.5) (24.9) (6.4) (31.3)
Net finance costs (6.1) – (6.1) (6.8) – (6.8)
Loss before tax (39.5) (30.1) (69.6) (31.7) (6.4) (38.1)
Tax 4.1 0.7 4.8 6.8 10.2 17.0
Loss from continuing operations (35.4) (29.4) (64.8) (24.9) 3.8 (21.1)
Loss from discontinued operations (4.4) (12.7) (17.1) (3.2) (0.7) (3.9)
Loss for the period (39.8) (42.1) (81.9) (28.1) 3.1 (25.0)
Revenue
Total revenue in the Period decreased by 4.6% on a same
working day basis to £498.7 million (2024: £525.7 million). This
excludes revenue in Continental Europe which has been
presented as a discontinued operation
1
.
UK
In the UK, we previously reported revenues through three main
sales channels: Regional Distribution, Trade Counters and
Larger Customers. Over the last 18 months, the simplification
of the Group, integration of sales teams, and the launch
of customer initiatives such as ‘order anywhere, collect
anywhere’, increased the crossover of revenues between
these sales channels, particularly Regional Distribution and
Trade Counters. This has been further accelerated through
the consolidation of the previously separate Trade Counters
business into the main sales organisation. These trade counter
sites now operate as collection points under the control of
our Regional Sales Managers for independent retailers and
contractors. Accordingly, we show UK revenue in total rather
than split into channels.
Overall revenue in the second half of the year was similar, on a
year-on-year basis, to the first half, but this actually reflected
a lower rate of decline in revenue from independent retailers
and contractors offset by lower growth in revenue from larger
customers.
Continental Europe
Revenue declined 0.8% in Continental Europe; the net
of growth in the Netherlands, reflecting new distribution
agreements for exclusive supply of certain branded ranges,
and decline in France due to ongoing market weakness. The
revenue performance in France improved in the second half
compared to the first six months, albeit remained in decline.
Gross Margin
Gross margin in the year was 29.5%, broadly unchanged
from the 29.7% achieved in the previous year. This reflected
the adverse impact of customer mix (with growth in lower-
margin larger customer sales) offset by early benefits from the
integrated supplier sourcing strategy and centralised buying
function.
Costs
Underlying operating costs of £180.7 million (2024:
£180.9 million) were flat year on year. Cost inflation has
remained elevated, albeit to a lower extent than previous
years, driven by the 6.7% increase in the national minimum
wage and the increase in employer’s National Insurance
contributions. In addition, the final stage of the roll out of
new trade counter collection points added c. £4.8 million
of additional operating costs. The cost inflation and trade
counter investment costs were all offset by benefits from the
transformation plan. These benefits accelerate in 2026 and,
at the same time, we expect cost inflation to be lower and
will also no longer have additional trade counter investment
costs, following the cessation of that rollout programme.
1
The results for the year ended 31 December 2024 have been re-presented to refer the presentation of the Continental European businesses as discontinued
(see note 25 for further information).
2
To supplement IFRS reporting, we also present our results on an underlying basis to show the performance of the business before Non-Underlying Items.
These items are detailed in note 3 and principally comprise: amortisation of acquired intangibles, impairment of assets, business restructuring and change-
related costs, profit on sale of property, ERP system development, and provision relating to legal claim.
22
FINANCIAL REVIEW
Underlying Profit/Loss
Underlying loss before tax of £39.5 million compared to a loss of £31.7 million in 2024. The table below breaks down the year-on-
year movement:
Underlying Loss
Before Tax
£m
2024 (31.7)
Revenue (7.7)
Trade Counter investment (2.3)
Cost inflation (4.7)
Mitigating actions 6.2
Interest costs 0.7
2025 (39.5)
The decline in revenue contributed to a £7.7 million reduction in profit year-on-year.
The roll out of new trade counter collection points contributed to a £2.3 million reduction in profit, reflecting the net of additional
operating costs partially offset by the incremental revenue from new sites.
Cost inflation was a £4.7 million headwind reflecting the factors explained above. This cost inflation impact was lower than the
previous two years (2024: £7.6 million; 2023: £10.2 million) reflecting an easing in inflationary pressure. Mitigating actions, through
the implementation of the transformation plan, provided £6.2 million of benefit in the year through cost saving initiatives.
Net interest costs of £6.1 million (2024: £6.8 million) were slightly lower year-on-year, partly reflecting lower average borrowings,
offset by the interest component of the incremental lease cost of trade counter collection points and distribution centres.
Non-Underlying Items
Non-underlying items before tax in the year, relating to continuing operations, totalled a £30.1 million expense (2024: £6.4 million
expense) as set out in the table below. The net cash impact of these non-underlying items in 2025 was a £4.2 million cash
outflow.
2025
Cash
£m
2025
Non-cash
£m
2025
Total
£m
2024
Total
£m
Amortisation of intangibles – (1.1) (1.1) (1.2)
Impairment of assets – (4.8) (4.8) (4.0)
Business restructuring and change-related costs (19.8) (3.4) (23.2) (19.7)
Profit on sale of property 21.2 (15.0) 6.2 21.1
ERP system development (5.6) – (5.6) (2.6)
Provision relating to legal claim – (1.6) (1.6) –
Non-underlying income/(expense) before tax (4.2) (25.9) (30.1) (6.4)
Consistent with previous periods, the amortisation of acquired intangibles arising upon consolidation were categorised as non-
underlying and amounted to £1.1 million (2024: £1.2 million).
Impairment of assets was a £4.8 million (2024: £4.0 million) non-cash expense and relates to the impairment of goodwill and
other intangible assets associated with Melrose cash generating unit.
Business restructuring and change-related costs are in respect of the transformation plan. The cash items principally comprised
severance, recruitment, retention and other people-related costs; the one-off cost of investment in new point-of-sale materials
to accompany the Mercado consolidation; and advisory costs. The non-cash expense of £3.4 million principally relates to stock
provisions, reflecting the write-down of legacy stock holdings in preparation for network optimisation initiatives and the range
rationalisation activities undertaken following the centralisation of the buying function.
The cost of developing the new ERP system is expensed rather than capitalised due to it being a cloud-based solution and, as
previously guided, the development cost is being treated as a non-underlying expense, of which £5.6 million was incurred in the
year (2024: £2.6 million). At the end of the year, the decision was taken to temporarily pause the ERP replacement programme
whilst the business focuses on the transformation plan.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
23
A £1.6m provision has been recorded in respect of a health
and safety offence relating to an accident at one of the
Group’s sites in 2022.
EPS and Dividend
Total basic loss per share on an underlying basis was a loss
of 44.1 pence per share (2024: a loss of 31.0 pence per share),
reflecting the factors set out above.
No interim or final ordinary dividend has been declared in
respect of the current or prior year. Whilst we have opted not
to declare a dividend, our long-term commitment remains
focused on delivering shareholder value. The Board will
continue to review how the business is performing, taking
into account the market conditions and the implementation
of the transformation plan, in assessing when it may be
appropriate to reinstate dividend payments.
Tax
The Group’s consolidated underlying effective tax rate for
continuing operation for the Period was 10.4% (2024: 21.5%).
This is lower than the standard rate of corporation tax in the
UK primarily due to the partial recognition of a deferred tax
assets relating to losses.
Cash Flow and Net Debt
2025
£m
2024
£m
Underlying operating loss (33.4) (24.9)
Depreciation and amortisation 20.9 19.9
EBITDA (12.5) (5.0)
Change in inventories 10.6 16.8
Change in receivables 16.9 2.0
Change in payables (34.3) 12.2
Other 0.7 1.0
Underlying Operating
Cash Flow (18.6) 27.0
Interest and Tax 1.4 (4.7)
Lease payments (15.8) (13.7)
Capital expenditure (4.4) (10.5)
Non-underlying items (4.2) 48.5
Dividends – (4.8)
Discontinued operations (0.8) (1.2)
Net cash flow before
movement in borrowings (42.4) 40.6
Movement in borrowings 59.0 (50.0)
Net cash flows 16.6 (9.4)
Underlying Operating Cash Flow in the year was an outflow
of £18.6 million compared to an inflow of £27.0 million in 2024.
The outflow in 2025 included a £10.8 million payment of VAT
in January, that had been collected on the property sales in
December 2024. Excluding this timing item, the Underlying
Operating Cash Flow in the year was an outflow of £7.8 million
(and the prior year would have been an inflow of £16.2 million),
which comprised of an EBITDA loss of £12.5 million, partially
offset by working capital and other inflows (after adjusting for
the £10.8 million VAT timing) of £4.7 million.
Inventories continue to be well-controlled and, in the latter
few months of the year and the first two months of 2026,
reduced significantly following the implementation of the
centralised buying and supply chain processes. The reduction
in inventory towards the end of the year was initially principally
offset within working capital by a reduction in payables; the
efficiencies in inventory levels turn into cash benefit as the
working capital cycles through and hence is more of a 2026
cash benefit. Inventories have continued to decline following
the year-end. Inventory turn improved from a year-round
average of 3.2x in 2023 to 3.5x in 2024 and again to 3.8x in
2025. In the last few months it has averaged over 4x. There
remains further opportunity here; we target at least 5.0x (and
this would remain below other flooring distributors).
Over the last two years the Group has averaged a net positive
working capital balance of over £70 million; this means that
the Group has had £70 million of cash tied up in funding
its working capital. As the Group streamlines its focus and
actively reduces low margin revenue, it will require (all else
equal) less working capital to be invested in the business.
This, combined with the further opportunity for inventory
efficiency, means that we anticipate a substantial working
capital inflow over 2026 and 2027.
A net £1.4 million cash was received in the year (2024:
£4.7 million outflow) in respect of interest and tax, reflecting a
refund of corporation tax payments on account made in 2024.
Lease payments were a £15.8 million cash outflow (2024:
£13.7 million); the increase reflects the additional trade
counter and distribution centre leases. Capital expenditure
was £4.4 million (2024: £10.5 million) and included £1.8 million
for fitting out new or refurbished trade counters.
There was a £4.2 million outflow (2024: £48.5 million inflow)
in respect of non-underlying items, comprising £19.8 million
business restructuring and change-related costs, and
£5.6 million ERP system development costs, partially offset by
£21.2 million proceeds from property disposal.
24
FINANCIAL REVIEW CONTINUED
Net Debt excluding lease liabilities was £31.4 million at the
end of the year. This compares to Net Cash of £10.9 million at
31 December 2024. The prior year Net Cash position included
a temporary timing difference on property VAT; £10.8 million
of VAT was collected on property sales in December 2024 and
paid over to HMRC in January 2025. Excluding this, the prior
year position was Net Cash of £0.1 million. The movement
since this normalised Net Cash position of £0.1 million to the
Net Debt of £31.4 million at the end of 2025 principally reflects
the EBITDA loss of £12.5 million, lease payments of £15.8 million,
capital expenditure of £4.4 million and non-underlying items
of £4.2 million.
At the end of the year, the Group had total banking facilities
available of £72.5 million (31 December 2024: £100.4 million),
of which £61.0 million (31 December 2024: £81.5 million) was
committed. The committed facility comprised a revolving
credit facility (‘RCF’) with three lenders that was due to expire
in October 2027. In January 2026 this facility was replaced with
an asset-based lending facility (‘ABL’) of up to £85.0 million.
This also replaced a £7.5 million uncommitted overdraft.
The available amount of the ABL depends on the amount
of relevant assets (property, receivables and inventory)
against which the Group can borrow and is also subject to a
requirement to hold a minimum amount of headroom on the
facility, by way of a liquidity headroom covenant.
The RCF was subject to covenants on liquidity headroom and
quarterly EBITDA. All such covenants were met during the
year. The ABL also has covenants on liquidity headroom and
quarterly EBITDA, as well as operational covenants such as
inventory days and debtor days.
The Group continues to have strong asset backing; as at
31 December 2025, the Group owned UK property with a market
valuation of £75 million. Three of those properties are currently
under offer, with sale processes expected to complete in the
coming months. We anticipate further properties will become
surplus to requirements over the next 18 months.
Principal risks and uncertainties
The Group is exposed to a number of principal risks which
may affect its business model, future performance, solvency
or liquidity. The group has a well-established framework for
reviewing and assessing these risks on a regular basis; and has
put in place appropriate processes, procedures and actions
to mitigate them. However, no system of control or series of
mitigations can completely eliminate all risks. The principal
risks and uncertainties that may affect the group were last
reported on within the 2024 Annual Report and Accounts
and have been considered and updated for the 2025 Annual
Report and Accounts.
No new principal risks have been identified. The risk ratings of
a number of the principal risks have been amended slightly;
however, the scope of the principal risks remain broadly
unchanged since last reported.
Adam Phillips
Chief Financial Officer
25 March 2026
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
25
Sustainable by design
As we execute our refocused strategy, ESG remains a
fundamental enabler of long-term value creation and
resilience across our business. It is embedded in our
operating model and will become a key differentiator of
our proposition for customers over the medium term.
A clear demonstration of this approach is the successful
take-back trial completed at our Northampton
site. The trial has delivered actionable insight into
expected material volumes, operating economics,
and the most effective partnership model with our
waste management provider. Importantly, it has also
confirmed the commercial and service value this
offering creates for our customers.
In 2025, we extended the trial and we are now
evaluating what a full scale nationwide take-back
scheme across our Trade Counter network would
look like.
This initiative supports our strategic priorities by
strengthening customer loyalty, enhancing sustainability
credentials, and creating a scalable platform that
improves recycling accessibility for our most valued
independent customers.
We have also partnered with a number of key suppliers
to launch our Trainee Flooring Fitter programme. This
six-month training programme addresses structural skills
shortages within the industry, supports long-term sector
sustainability, and reinforces our differentiated value
proposition to independent customers. As our refocused
strategy prioritises share growth in this segment,
developing industry capability will remain a strategic
priority.
As outlined in this report, we have delivered further
progress across our ESG agenda during the year. This
includes deeper engagement with our supply base
through our annual supplier conference, enhancements
to waste management processes, a 10% decrease in
colleague engagement, strengthened development
pathways, and continued improvements to our
governance and control framework. We believe these
outcomes reflect disciplined execution and confirm that
ESG is fully integrated into our refocused strategy that
will return the business to profitability and ensure that
our independent flooring retailers and contractors are
at the heart of our business.
Environmental
E
Priorities
a. Product design
b. Service design
c. Building design
Why we have chosen them
a. To deliver our long-term circularity ambition, we are acting
now to engineer products with increased recycled content
and improved end-of-life recyclability, reducing future
regulatory risk and supporting sustainable margin delivery.
b. Scaling a national take-back scheme strengthens our
customer proposition, drives loyalty among independent
customers, and provides a practical pathway to increased
material recovery and waste reduction.
c. As we reduce our footprint, we will embed energy efficiency
and low-carbon design standards from the outset into
any new or relocated sites, supporting cost efficiency and
disciplined carbon reduction.
Progress made
a. Strengthened supplier collaboration through joint product
development plans, whilst actively contributing via Carpets
Recycling UK to the development of an industry-wide
Sustainability Pledge - supporting innovation, resilience, and
improved ESG standards across the value chain.
b. Successfully extended a take-back trial across four Trade
Counters, validating operational feasibility, customer
demand, and the potential to scale this capability across the
network.
c. Embedded environmental considerations into site
development, with facilities planners fully integrated
into the process to address waste management, energy
efficiency, biodiversity, and broader environmental
performance from the design stage.
Outlook
a. Upskill the central buying team, under the leadership of
the Chief Buying Officer, continue to embed sustainability
into product development decisions and accelerate the
delivery of more sustainable, commercially viable ranges.
b. Evaluate the trial of the Take Back scheme, building on
proven success to test scalability, operational consistency,
and customer adoption ahead of wider roll out.
c. Partner with operations and property teams to develop a
standardised building blueprint, optimising sustainability
performance across energy efficiency, carbon reduction,
and whole-life cost as the estate expands.
26
SUSTAINABILITY AT HEADLAM
Social
S
Priorities
a. Engagement plans to create the right environment to
attract and retain the best colleagues.
b. We want to attract and retain colleagues with the right
skills, behaviours and expertise. We truly believe that
engaged and motivated colleagues provide the best
service and apply their knowledge and expertise to their
fullest.
Progress made
a. We have launched a new set of behaviours to support the
success of our colleagues and Headlam overall to better
navigate the changes in the market and those we have
internally. There will be a culture programme launched
through leaders in the Leadership population during 2026.
b. We are continually reviewing our benefits to remain
competitive and an attractive place to work.
Governance
G
Priorities
a. Buying process review (supplier and product selection).
b. Systems and reporting requirements.
Why we have chosen them
a. Fully centralised UK Distribution buying and supply chain
teams now enable consistent, group-wide processes
and improved governance. The establishment of Scope 3
emissions targets provides a clear framework for focused
planning, supplier engagement, and measurable progress.
b. The ERP implementation programme, whilst temporarily
paused, creates an opportunity to rationalise systems and
embed improved ESG data capture and reporting across
the business, strengthening decision-making, transparency,
and long-term control.
Progress made
a. ESG standards and assurance requirements are embedded
within the new product introduction process for own-
brand products, ensuring sustainability considerations are
integrated at the point of design. Scope 3 emissions targets
have been formally set and agreed, providing a clear
framework for delivery and accountability.
b. The ESG Director has actively contributed to ERP
requirements workshops, ensuring ESG data, controls,
and reporting needs are incorporated into system design,
supporting future compliance, transparency, and decision
making.
Outlook
a. Defined Scope 3 action plans in 2025, providing a
structured pathway to delivery, whilst continuing to
educate buying and supply teams on responsible sourcing
best practice to support measurable emissions reduction
across the value chain.
b. Review and enhancement of ESG data and reporting
capabilities to deliver a harmonised ESG dashboard and
clearly define requirements for integration into the new
ERP programme, strengthening transparency, consistency,
and management oversight.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
27
Environmental
E
We remain committed to protecting the planet and have
set a clear ambition to achieve net zero emissions by 2040.
Our strategy is focused on designing products that can be
renewed, repurposed, and readily recycled, enabling greater
reuse within the products we supply.
In parallel, we are building a more
circular supply chain and taking
greater responsibility for the recovery
of materials placed onto the market.
This approach supports regulatory
readiness, improves resource efficiency,
and underpins sustainable long-term
value creation.
Reducing our
Carbon Emissions
Throughout 2025, we will continue
to deliver against our carbon
reduction roadmap and advance
the implementation of our Scope
3 strategy. The Company follows a
‘true’ Net Zero approach, prioritising
real decarbonisation with offsetting
applied only to residual emissions
of approximately 10%. Our targets
are science based, with Scope 1 and
2 aligned to Scope 3 timelines, and
measured against consistent baselines
- Scope 1 and 2 versus 2019, and Scope
3 versus 2023.
Key focus areas for 2025 included
sustainable product development,
improving efficiencies in our
non-commercial fleet, and promoting
energy-conscious behaviours across
our workforce, ensuring measurable
progress toward our long-term Net
Zero ambitions.
Transport Efficiencies
In 2023, we implemented Webfleet, a
vehicle telematics system, to enhance
driver safety, operational efficiency,
and fuel performance. In 2025 we have
achieved a further 39% reduction in
heavy braking events.
Energy Intensity
In 2024, we completed solar panel
installations across 12 distribution
centres, which continue to contribute
towards each site’s energy needs.
We remain committed to investing in
renewable solutions and identifying
further opportunities to improve energy
efficiency and cost performance.
Key achievements
in 2025
• Aligned and formally set
Scope 1, 2 and 3 emissions
targets, with a clear ambition
to achieve net zero by 2040,
providing a consistent and
accountable decarbonisation
pathway.
• Delivered a 51% reduction
in Scope 1 and 2 emissions
against a 2019 baseline,
demonstrating tangible
progress and disciplined
execution.
• Implemented comprehensive
waste monitoring and
reporting across all major
distribution centres,
strengthening data quality,
oversight, and operational
control.
• Extended our recycling centres
service in our trade counter
collection points, enhancing
the customer proposition
whilst supporting circularity
ambitions.
• Gave our first ESG Initiative of
the year award to one of our
key strategic suppliers at our
annual supplier conference.
• Established partnerships with
waste management providers
and recyclers to ensure end-
of-life materials are recovered
and regenerated, reducing
landfill dependency and
supporting resource efficiency.
• Maintained ISO 14001
certification across our
national distribution centres,
reinforcing environmental
management standards and
external assurance.
28
SUSTAINABILITY AT HEADLAM CONTINUED
Net Zero Emissions Timeline
Key Achievements and Targets
2023
• Solar panels installed across 11 sites.
• ISO 14001 environmental certification at key sites.
• Over 85% of UK non-commercial fleet electric/low emission.
• Good Energy and Recycling Behaviours workshops held at 11
largest sites.
• Continued trial of low emission commercial vehicles.
• Transport integration completed.
2024
• Final solar panel installation, taking the total to 12 sites.
• Telematics used to improve driver behaviour and reduce emissions.
• Reviewed waste management across UK distribution sites.
• Scope 3 strategy and targets developed.
• Continued trial of low emission commercial fleet vehicles.
• Trial of Trade Counter take-back and recycling scheme in
Northampton.
• Launched EV salary sacrifice scheme.
2025
• Assessment of the take-back recycling scheme trial.
• Scope 3 targets implemented.
• Carbon workshops commenced with buying team;
further planned throughout 2025.
2030
• Interim target: 46% reduction against 2019 baseline (Scope 1 & 2).
• Roll-out of low carbon commercial vehicles.
• Potential heating electrification to reduce gas consumption.
2032
• Interim target of 42% reduction of Scope 3 emissions against
2023 baseline
2040
• Net Zero emissions target (Scope 1, 2 and 3).
UK and Continental Europe
Scope 1 and 2 emissions
2025 Full Year Data
94%
6%
Scope 1: 94% (13.0ktCO
2
e)
Scope 2: 6% (0.9ktCO
2
e)
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
29
Sustainable
by design
Sales
Takeback/
Recovery
Distribution
Material
Processing
Manufacturing
Recycled
material
Environmental
E
Scope 3 Emissions
2025 Full Year Data
Purchased goods
80.5% (628,655 tCO
2
e)
Capital goods
0.6% (4,616 tCO
2
e)
Fuel-related
0.4% (3,427 tCO
2
e)
Upstream transportation
0.4% (3,398tCO
2
e)
Waste generated
0.1% (958 tCO
2
e)
Business travel
0.1% (336 tCO
2
e)
Employee commuting
0.3% (2,179 tCO
2
e)
End of life treatment
15.8% (123,835 tCO
2
e)
Total Scope 1, 2 and 3
Emissions: 815,119 tCO
2
e
2025 Full Year Data
Scope 1
1.7% (12,967 tCO
2
e)
Scope 2 (location-based)
0.1% (947 tCO
2
e)
Scope 3
98.2% (767,404 tCO
2
e)
In 2025, we continued to evaluate sustainability across the full
product lifecycle through our Sustainable by Design programme.
We have invested in take-back
trials, providing end-of-life product
management and ensuring recovered
materials are returned to raw material
form for reuse through partnerships with
recyclers and manufacturers.
Our Florprotec brand continues to
offer a collection service for end-of-life
products, with materials reintegrated
into new products. Additionally, we
collaborate with leading UK and
European manufacturers to design
broadloom and vinyl ranges that are
easily recyclable, reducing reliance on
specialist recyclers and improving the
quality of recycled materials.
Take-back Scheme
The take-back and recycling
trial, launched in May 2024 at the
Northampton Trade Counter, continued
through 2025. Customers can return
post-consumer and post-industrial
flooring, underlay, vinyl, LVT, laminate,
packaging, and general waste. The
service remains free during the trial,
encouraging adoption and providing
valuable insights to support potential
national roll out.
Sustainable product development
30
SUSTAINABILITY AT HEADLAM CONTINUED
Partnerships
• Biffa: collects, sorts, and recycles
flooring by material type.
• Recofloor: facilitates vinyl and LVT
collection on behalf of Polyfloor
and Altro.
Water
We are a low water-use business,
primarily for cleaning vehicles, and
continue to minimise usage wherever
possible.
Waste
In 2026, we aim to maintain or improve
our operational waste diversion from
landfill, with waste recycled from UK
Distribution Centres. Recycling bins are
provided at all major centres, and stock
repurposing continues through Melrose
Interiors. Packaging is recovered
wherever possible and recycled when
reuse is not feasible, supporting
both sustainability and operational
efficiency.
Raw Materials
We prioritise renewable materials
wherever possible, particularly within
our flagship Crucial Trading brand. All
timber is sourced from verified, legal
suppliers with fully traceable supply
chains via Track Record Global. Where
non-renewable materials are used,
recycled content is incorporated
wherever feasible, and products are
designed for end-of-life recyclability,
supporting circularity and sustainable
value creation.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
31
Making Headlam a great place to work with a
positive impact on communities.
Our Colleagues
Across the UK, France, and the
Netherlands, Headlam Group PLC
employed approximately 2,200 people
on average in 2025. Colleagues remain
at the heart of our business and are our
greatest asset. We continually focus
on making Headlam a great place to
work and ensure colleagues share in the
Group’s long-term success.
Whether colleagues work in warehouses,
transport, sales and trade counters,
support offices, or corporate functions,
a range of working arrangements
are available to attract and retain
colleagues who live our values:
We avoid
overcomplication by
keeping things simple
We create a trusted
environment where
people are empowered
to act and can learn
and improve
We uphold high standards
and confidently challenge
wrong behaviours
We create an inclusive
environment where
people celebrate
success together
We ensure that every
individual feels valued,
supported and safe
And always, do the right thing
The behaviours underpin and
demonstrate our commitment to
integrity. Our Colleague Code of
Ethics, The Headlam Way, covers
topics including safety, behaviours
towards each other, conflicts of interest,
sustainability, bribery and corruption,
fair competition, confidentiality, and
more. It complements our Speak
Up policy, enabling colleagues to
confidentially raise concerns directly
to the Audit Committee Chair. All new
colleagues familiarise themselves with
these policies during online induction,
and updates are communicated
through monthly leadership calls and
manager briefings.
In the UK, Headlam employs salaried
colleagues exclusively, with no zero-hour
contracts. Colleagues are entitled to
employment benefits from day one,
including company sick pay and the
right to request flexible working. Just
over 5% of colleagues currently have
flexible working arrangements. In 2025,
most colleagues remain permanent,
with temporary workers averaging
approximately 6% of the workforce,
primarily in operation to manage peaks,
cover long-term absences, or support
business change.
We continue to showcase career
opportunities through internal
communications, highlighting
colleagues who have progressed
through the business. This, coupled with
colleagues’ commitment to supporting
customers and each other, contributes
to Headlam’s strong tenure.
Social
S
Key achievements
in 2025
• Colleague Engagement
dropped by 10ptts, however
2025 has been a significant
year of changes and only
remains 11ptts behind the
industry benchmark.
• Reduction in RIDDORs by 29%
year on year.
• Safety culture training roll out
continues.
• Gender pay gap reduced year
on year.
• Strategic approach to
community support continued
in Leeds through the Trainee
Fitter programme, helping
bridge the skills gap in
the industry and improve
employability in the area.
32
SUSTAINABILITY AT HEADLAM CONTINUED
Length of Service
0-3 mths
1.75%
5+ yrs
47.27%
2-5 yrs
23.39%
4 mths-2 yrs
27.59%
Our long-serving colleagues, with their in-depth knowledge
of customers, services, products, processes, and systems,
remain a foundation of our success. We focus on retention
through Reward, Learning and Development and Colleague
Engagement. Uncontrolled labour turnover, along with
attendance and engagement, are key People KPIs, with
actions implemented throughout 2025 to improve all three.
We also target recruitment to diversify skills and experience,
bringing in expertise from other industries, talent banking
core skills, and working with recruitment partners to provide
candidates with clear insights into opportunities at Headlam.
Improving attraction and selection methods remains a priority
in 2026.
Keeping Each Other Safe
and Well, Every Day
2025 was a very productive year for the National Safety
Team. Over a period of nine months a new Safety Platform
was delivered to 98 sites in the group. This was met with
overwhelming success with over 35,000 inspections
completed on the new system. This has seen a significant
increase in engagement with all employees using the platform
and allowed the National Safety Team to focus on any
concerns identified through the analytical reports generated
once the platform was populated.
We have now significant increase in reporting Near Misses and
reduced LTIs by over 50% throughout the Network.
We have maintained our ISO 45001 accreditation after
external audits of 6 sites.
The RIDDOR incident frequency rate per 1,000,000
hours worked was 3.98 in 2025, compared to the HSE
recommendation of 3.77.
Type of RIDDOR
Incident 2024 2025
Slip, trips, and fall 2 4
Struck by moving vehicle 3 2
Contact with machinery 2 0
Hit by moving/falling,
flying object
1 0
Handling, lifting,
carrying 4 3
Fall from height 3 2
Other 2 3
Total 17 14
Supporting Colleagues Through Change
There continued to be several changes across the business in
2025 as part of the acceleration of our plans to turnaround
Headlam.
In 2025 our cost challenges remained and from opportunities
identified, we re-established a better year end position on
headcount and 130 colleagues left the business through
redundancy. Our continued review of footprint, efficiency
and effectiveness will result in ongoing re-design to create a
stable position for reset and growth.
We have adopted a way of working that includes a Top 30
cohort of Leaders to manage change and challenge what we
do here at Headlam.
Colleague Engagement
We conducted our first colleague engagement survey in 2023.
We maintained the engagement score in 2024 and in 2025 it
reduced 10ppts, reflecting the intense change occurring in the
business.
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Headlam Group PLC Annual Report & Accounts 2025
33
Learning and Development
Our learning management system, Eloomi provides colleagues
with access to over 600 elearning modules, the ability to book
on to face-to-face training, the creation of playlists, reporting
capability and a user-friendly way to develop bespoke
elearning content. Since launching the platform over 1,300
colleagues have used it to access learning,
We also started to deliver our new leadership programme,
Lead the Way, consisting of two levels of leadership
development delivered face to face. Feedback from
managers was positive across all modules and in our
engagement survey 89% of our managers said that they know
what is expected of them to manage their direct reports
well, which was an improvement of 3ppts year on year. More
importantly we saw a strong score of 86% on the leadership
question ‘My Manager and I have a good working relationship’.
Managers and leaders continued to benefit from Health &
Safety training throughout the year with DSS+ delivering Felt
Leadership training for our senior leaders which covers the
importance of creating a Safety culture, and See it, Say it
training for our management teams.
We invested in training for our sales teams by providing our
Area Sales Managers (‘ASMs’) with Driving Sales Growth
training, a programme designed to help them to hone their
selling skills. Our Regional Sales Managers attended Delivering
Sales Performance to help their ASMs embed their training,
provide guidance on field observation and feedback and
to support their coaching skills for 121s, appraisals and team
meetings.
As part of the acceleration of our strategy through the
implementation of our sales transformation and network
rationalisation we provided impacted leaders with training to
help them to lead through the change process. This not only
explored their potential reactions to change but also how
their teams may react and the support they can provide to
help colleagues to adapt.
To complement our existing Driver, Warehouse and Supervisor
and Manager apprenticeships we successfully launched our
first bespoke Headlam apprenticeship for our Trade Counter
teams, Sales through Service, a level 2 Customer Service
Apprenticeship. This provides our Trade Counter Assistants
with an opportunity to further develop their skills to support
their career development ambitions. To help bring careers at
Headlam to life for all our colleagues we have commenced
a series of articles on our internal communication channel,
myHub, highlighting career stories of a selection of colleagues
as well as ‘Day In The Life Of’ articles.
Reward
In 2025, we implemented the Real Living Wage increase to
£12.60 for all colleagues, reinforcing our commitment to fair
and competitive pay across the business. This ensure that all
roles within the organisation meet or exceed the updated Real
Living Wage benchmark, supporting our objective to remain
an employer of choice within the industry.
Building on the benchmarking process introduced in 2024, we
applied a robust pay review methodology during the January
2025 cycle to ensure equal pay across all roles. This process
ensured that no colleague fell below 20% of the median pay
for their specific job role, supporting pay consistency, reducing
risk of pay inequity, and aligning with our principles of fairness
and transparency.
Additionally, we introduced a holiday purchase scheme in
2025, providing colleagues with greater flexibility in managing
their work-life balance. Engagement with the scheme was
strong, with 272 colleagues participating in its first year.
Together, these initiatives demonstrate our ongoing focus on
delivering a fair, transparent, and competitive reward offering
that supports our retention and engagement objectives,
whilst aligning with our values and people strategy.
Diversity, Equity, and Inclusion
We know that diversity brings fresh ideas, different ways of
thinking and better represents the huge array of customers
we support and so we remain committed to attracting and
retaining a diverse workforce by creating an inclusive place
to work.
Diversity in gender
Women represent 26.4% of Headlam’s overall workforce,
an increase of 2.4% from last year. During 2025, 33% of the
Executive Committee were female, and women make up
27.3% of our management population, within an industry
that is overwhelmingly male dominated. We continue to take
proactive steps to improve gender diversity by working closely
with out recruitment agencies to ensure balanced longlists,
encouraging women to apply for internal opportunities, and
supporting their development by providing access to learning
and progression pathways. We also actively showcase the
successful careers that women can and do have within
Headlam.
Through these initiatives, we aim to continue growing the
number of women across all levels of the business. For further
information on the actions, we have taken and continue to
take to support gender diversity, please refer to our Gender
Pay Gap Report. This reports a Headlam UK mean gender
pay gap of -7.5% and a median gender pay gap of -9.2%,
available on our corporate website.
Social
S
34
SUSTAINABILITY AT HEADLAM CONTINUED
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Headlam Group PLC Annual Report & Accounts 2025
35
Governance
G
Commitment to ESG and
Workplace Excellence
Annual targets were set to drive continuous improvement,
and governance was embedded across our ways of working,
including reporting, standard meetings, and leadership
oversight.
Colleagues were supported to understand expectations
through:
• The Colleague Code of Ethics, workplace policies, and
standard operating procedures
• Monthly leadership briefings, management
communications, team meetings, and toolbox talks
• Objective-setting and check-ins to review progress
Formal oversight included:
• Board meetings
• Executive Performance Reviews
• Commercial Performance Reviews
• Audit and ESG Committee meetings
ESG Committee
The ESG Committee provides oversight of Headlam’s ESG
strategy and is chaired by the CEO. Members include a Non-
Executive Director, the Chief People Officer, the Chief Buying
Officer, and senior leaders.
In 2025, the Committee met three times, reviewing:
• Health & Safety, decarbonisation, and waste
management
• Take-back scheme and sustainable product development
• Ethical sourcing audits and raw material traceability
• Fleet innovation, colleague inclusion, engagement, and
wellbeing
• Policy updates, regulatory horizon scanning, and
packaging
Executive Accountability
• ESG targets are incorporated into Annual Bonus Schemes
and the Performance Share Plan for Executive Directors
and Executive Team members.
• Progress is reported through the ESG Committee and
reviewed at monthly Executive Performance Review
meetings and Commercial Review Progress meetings.
Responsible Sourcing
Headlam maintains a robust responsible sourcing programme:
Supplier onboarding requires:
• Completion of a due diligence assessment
• Agreement to our Supplier Code of Conduct and
Sustainability Charter
• Any risks related to human rights, health & safety,
environment, or business ethics must be addressed before
awarding contracts.
• SEDEX membership ensures Headlam brand suppliers
undergo independent audits every two years using the
SMETA format.
• In 2026, we aim to strengthen circular supply chains,
increase material recovery, and implement innovative
environmental solutions.
• Timber sourcing remains critical:
– Domus continues FSC certification
– All suppliers must provide certified timber, ensuring no
deforestation or degradation
Quality and Supplier Management
• All Headlam-branded products must comply with UK and
EU regulations and meet agreed quality standards.
• Customer feedback is continually reviewed, and any
supplier or product that falls below the Acceptable Quality
Limits (‘AQL’) triggers an immediate quality review with
corrective action.
Operations
• Focus in 2025 was on delivering orders on time, in full, and
damage-free.
• Improvements were implemented in collaboration with the
customer support team, based on customer feedback.
Speak Up (Whistleblowing)
Headlam provides confidential mechanisms for colleagues
to raise concerns if Code of Ethics policies are not being
followed:
• Channels: Speak Up email or third-party confidential
reporting service
• Investigations are overseen by the Chief People Officer,
Company Secretary, Director of Group Finance, Head of
Internal Audit, and the Audit Chair
• Outcomes are reported to the Board
36
SUSTAINABILITY AT HEADLAM CONTINUED
Improved Colleague Support
Key improvements implemented in 2025:
• Embed usage of our new learning management system
(Eloomi)
• The launch of the Safety Culture system
Policies and Processes
The following ESG and People policies were updated in 2025
and are available on the corporate website:
• Attendance at work
Project and Programme Governance
In 2025 we had two major programmes running at the same
time:
• Transformation plan, to return the business to profit.
• ERP system implementation.
At the end of the year the decision was taken to pause the ERP
project in order to prioritise the transformation plan.
Both programmes had ESG oversight through:
• Steering committee membership by the Chief People and
Sustainability Officer
• ESG Director engagement through workshops and weekly
updates
• Opportunities to advance ESG initiatives via new buildings,
processes, reporting, and supplier/customer collaboration
Stakeholder Engagement
• Continued industry engagement through Carpets
Recycling UK, suppliers, and industry bodies
• Supplier conference (September 2025) showcased Take-
Back trial progress and recyclable product sourcing
• Regular supplier meetings to discuss product innovation
and Take-back initiatives
• Colleague engagement through:
– Employee Forums, ASM forums, and Quality
Improvement Forums
– Sharing best practices in Health & Safety,
engagement, and quality improvements
• Customer surveys indicated:
– Increased perception of Headlam as environmentally
responsible
– Top enquiries related to recycled materials, sustainable
products, and recyclability
• Shareholder reporting: Progress on sustainability is
included in the Annual Report and Accounts and
monitored by ESG rating agencies
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
37
The table below and continuing on pages 39 to 42 details the Group’s responses consistent with the TCFD recommendations
and pillars.
The Group has considered and taken into account the TCFD all-sector guidance and supplemental guidance for financial and
non-financial companies and believes it to be consistent with them.
This TCFD disclosure forms part of the Group’s overall Sustainability Report on pages 26 to 36. It should be read as part of the
full report which includes the Group’s key decarbonisation actions to reach Net Zero and reduce its contribution to climate
change, together with KPIs and targets to measure progress.
Governance Disclosure
The Board’s oversight of
climate-related risks and
opportunities
The Board has primary oversight and ultimate responsibility for ESG strategy and
performance, which includes the approach and actions in relation to climate-related
issues. ESG is considered regularly as part of the Board programme of business, with
ESG policy and strategy considered in depth on an annual basis. An Executive ESG
Committee assists the Board with the more detailed aspects of its ESG agenda and holds
management to account on the implementation of the ESG strategy approved by the
Board. The Committee’s terms of reference are publicly available on the Group’s website.
Whilst ultimate responsibility for risk governance sits with the Board, the Audit Committee
assists in risk oversight (as described within Risk Management on page 46. The Group’s
most material ESG issues are included in the Group’s Risk Register. During 2025, these
material issues were reported to the Audit Committee by the Executive Risk Committee
(detailed below) and discussed at each of their quarterly meetings, with management’s
approach to mitigating risk and capturing opportunity challenged appropriately.
Management’s role in
assessing and managing
climate-related risks and
opportunities
As above, the Group has an Executive ESG Committee, which, as part of its remit, focuses
on decarbonisation actions and reducing the Group’s contribution to climate change.
The ESG Committee reviews and tracks the outputs from major decarbonisation projects,
which may both mitigate climate risk and capture opportunities.
The Group also has an established Executive Risk Committee, which meets quarterly and
comprises the Chief Financial Officer, members of the Executive Team, senior managers
and heads of department (including from operations and finance). Its role is to review
identified risks, including the likelihood and potential impact of each risk, establishing and
monitoring the effectiveness of mitigating and opportunistic actions, and considering
emerging risk. The Group’s most material ESG issues per the Materiality Assessment Map
published on the Group’s website are included in the Group’s Risk Register, which forms the
basis for Committee discussions. Materiality for climate-related risks and opportunities
is assessed with reference to that used for mainstream reporting but also considers the
key risks being assessed by management to inform current and future strategy along with
internal feedback.
The organisation’s processes
for identifying and assessing
climate-related risks
The Group’s risk governance and management processes are detailed within Risk
Management on page 46 of the Annual Report and Accounts. Its preparation includes
a quantitative assessment of ESG risks, inclusive of climate-related, on the composite
bases of likelihood and potential impact of ‘raw’ risk. Risks considered include Transition
Risks, such as market, policy and legal (both existing and emerging), technology, and
reputation, and Physical Risks (both acute and chronic). This process has allowed the
Group to both identify climate-related risks and opportunities and determine their
relative significance to the business.
38
TASK FORCE ON CLIMATERELATED
FINANCIAL DISCLOSURES ‘TCFD’
Governance Disclosure
How processes for identifying,
assessing and managing
climate-related risks
are integrated into the
organisation’s overall risk
management
Climate-related risks are considered as part of the ESG Strategy and ‘Environmental’
Principal Risk and, therefore, integrated into the Group’s overall risk management process.
Additionally, through preparation of the Group’s annually reviewed and publicly disclosed
Environmental Policy and TCFD disclosure, the Group gives full consideration and
commentary on climate-related factors.
The climate-related risks and
opportunities the organisation
has identified over the short,
medium and long term
The impact of climate-related
risks and opportunities on the
organisation’s business(es),
strategy and financial
planning
The organisation’s processes
for managing climate-related
risks
The Group has identified its climate-related risks and opportunities, and assessed
strategy resilience, through quantitative scenario analysis. The range of possible risks
and opportunities were analysed under two future climate forecasts. Both Physical and
Transition Risks were considered, modelled around the widely recognised Representative
Concentration Pathways (‘RCPs’) and Shared Socio-economic Pathways (‘SSPs’). The
scenarios chosen were: global warming of 2ºC (RCP 3.4), considered the most likely
scenario; and global warming of 4ºC (RCP 8.5), considered a resilience scenario. Time
horizons have been chosen that best reflect the Group’s business plan, strategy, and
various financial accounting policies. The total time horizon considered is up to 2050,
split into short term (three years, 2026–2028), medium term (2029–2035) and long term
(2036–2050). The assumptions used in the scenario analysis, with reference to Extended
Producer Responsibility impact and the transition to a more sustainable fleet, are also
discussed in note 10 to the Financial Statements.
Factors Middle of the road Fossil-fuelled growth
RCP 3.4 8.5
SSP 2 5
Temperature rise 2ºC 4ºC
Likelihood High Moderate
Societal response Proactive, Disorderly Reactive
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
39
The quantitative assessment below considered the likelihood and estimated financial impact of each climate-related risk.
Average potential financial impact on
annual profit £m
Category Risk Key assumptions
Short term
(2026–2028)
Medium term
(2029–2035)
Long term
(2036–2050) Strategic response and resilience
Scenario 1 (Transition): Average global temperatures rising by 2ºC above pre-industrial levels by 2100
Policy and
Legal:
Financial
impact of
potential new
legislation/
regulation
(including
product
legislation)
Risk: Increased operating
costs through Extended
Producer Responsibility
(‘EPR’) for bulky
The EPR (bulky waste) legislation is assumed to come into effect in 2028-2029,
which essentially introduces an extra tax on the sale of residential floorcoverings
for companies considered to be manufacturer or first point of contact in the UK for
imported items. The rates used in the scenario modelling are best estimates, before
the legislation is enacted.
The scenario modelling assumes that the take-back scheme, currently in an
extended trial, is rolled out across the network and that the materials collected are
then transferred to recycling centres.
It is assumed that the take-back tonnages are at least the same level as the
materials sold by the Group which would attract the EPR fees. The net EPR fees are
therefore expected to be £nil.
It is assumed that the transport costs incurred in transferring the materials to the
recycling centres will be broadly offset by revenues generated from both the take-
back centres and recycling centres.
– –
– Collaborate with suppliers on new sustainable product launches.
Roll-out the take-back scheme to avoid materials entering into the waste
stream to offset EPR fees.
It is likely that any residual costs arising (either from take-back tonnages
not fully offsetting EPR fees or recycling revenues not offsetting transport
costs) could be passed on to customers, reducing the potential financial
impact to an immaterial amount.
Market:
Transitioning
to more
sustainable
business and
operating
practices
Risk: Increased costs of
operating a sustainable
fleet with low-carbon
technologies
The technology for zero-emission heavy goods vehicles (‘HGVs’) continues to be
developed. The total cost of ownership for a short-range zero-emission HGV fleet is
becoming more comparable to that of a diesel HGV fleet.
The Group is monitoring the developments in the powertrain and energy storage
technologies, which are leading to improvements in the range of zero-emission
HGVs.
There is a degree of uncertainty in the cost estimates for a zero-emission long-
range HGV fleet (as operated by the Group), including the investment required in
charging infrastructure.
It has been assumed, for this scenario modelling, that the cost of operating a zero-
emission HGV fleet is in line with that of operating a diesel fleet.
There is a large global market for HGVs, providing a commercial incentive for
companies to develop a viable, cost-effective zero-emission solution for long range
HGVs.
– – – Ongoing trials of zero-emission commercial vehicles.
Scenario 2 (Physical): Average global temperatures rising by 4ºC above pre-industrial levels by 2100
Acute: Asset
damage
Risk: Business interruption
and loss of revenue following
damage to distribution
network as a result of
extreme weather event;
consequential impairment
of assets and increased
insurance premiums
A weather event, likely to be a flooding event, is assumed to occur in the long term.
Only a small number of the geographically dispersed sites are considered to have
a high risk of flooding. There are no sites, which if affected, would give rise to a
material profit impact.
– – – The Group’s assets are not expected to be exposed to high physical
climate-related risk due to the geographies in which it operates.
Operations are disaggregated with business continuity plans in place if
specific sites are affected by isolated events.
Chronic
and Acute:
Supply chain
disruption
Risk: Potential raw material
shortages and knock-
on impact on product
availability from supply
chain disruption leading to
loss of revenue
The scenario modelling assumes there is no loss of revenue from this risk due to the
comprehensive inventory and homogeneous products held and sold by the Group.
– – – Market-leading position and strategic partnerships with suppliers should
enable the Group to preserve levels of availability.
Comprehensive inventory levels maintained at any one time providing
strong availability, also helped by the Group’s strategy to increase its
focus on holding and selling fast-moving lines.
40
TASK FORCE ON CLIMATERELATED
FINANCIAL DISCLOSURES
‘TCFD’ CONTINUED
The quantitative assessment below considered the likelihood and estimated financial impact of each climate-related risk.
Average potential financial impact on
annual profit £m
Category Risk Key assumptions
Short term
(2026–2028)
Medium term
(2029–2035)
Long term
(2036–2050) Strategic response and resilience
Scenario 1 (Transition): Average global temperatures rising by 2ºC above pre-industrial levels by 2100
Policy and
Legal:
Financial
impact of
potential new
legislation/
regulation
(including
product
legislation)
Risk: Increased operating
costs through Extended
Producer Responsibility
(‘EPR’) for bulky
The EPR (bulky waste) legislation is assumed to come into effect in 2028-2029,
which essentially introduces an extra tax on the sale of residential floorcoverings
for companies considered to be manufacturer or first point of contact in the UK for
imported items. The rates used in the scenario modelling are best estimates, before
the legislation is enacted.
The scenario modelling assumes that the take-back scheme, currently in an
extended trial, is rolled out across the network and that the materials collected are
then transferred to recycling centres.
It is assumed that the take-back tonnages are at least the same level as the
materials sold by the Group which would attract the EPR fees. The net EPR fees are
therefore expected to be £nil.
It is assumed that the transport costs incurred in transferring the materials to the
recycling centres will be broadly offset by revenues generated from both the take-
back centres and recycling centres.
– –
– Collaborate with suppliers on new sustainable product launches.
Roll-out the take-back scheme to avoid materials entering into the waste
stream to offset EPR fees.
It is likely that any residual costs arising (either from take-back tonnages
not fully offsetting EPR fees or recycling revenues not offsetting transport
costs) could be passed on to customers, reducing the potential financial
impact to an immaterial amount.
Market:
Transitioning
to more
sustainable
business and
operating
practices
Risk: Increased costs of
operating a sustainable
fleet with low-carbon
technologies
The technology for zero-emission heavy goods vehicles (‘HGVs’) continues to be
developed. The total cost of ownership for a short-range zero-emission HGV fleet is
becoming more comparable to that of a diesel HGV fleet.
The Group is monitoring the developments in the powertrain and energy storage
technologies, which are leading to improvements in the range of zero-emission
HGVs.
There is a degree of uncertainty in the cost estimates for a zero-emission long-
range HGV fleet (as operated by the Group), including the investment required in
charging infrastructure.
It has been assumed, for this scenario modelling, that the cost of operating a zero-
emission HGV fleet is in line with that of operating a diesel fleet.
There is a large global market for HGVs, providing a commercial incentive for
companies to develop a viable, cost-effective zero-emission solution for long range
HGVs.
– – – Ongoing trials of zero-emission commercial vehicles.
Scenario 2 (Physical): Average global temperatures rising by 4ºC above pre-industrial levels by 2100
Acute: Asset
damage
Risk: Business interruption
and loss of revenue following
damage to distribution
network as a result of
extreme weather event;
consequential impairment
of assets and increased
insurance premiums
A weather event, likely to be a flooding event, is assumed to occur in the long term.
Only a small number of the geographically dispersed sites are considered to have
a high risk of flooding. There are no sites, which if affected, would give rise to a
material profit impact.
– – – The Group’s assets are not expected to be exposed to high physical
climate-related risk due to the geographies in which it operates.
Operations are disaggregated with business continuity plans in place if
specific sites are affected by isolated events.
Chronic
and Acute:
Supply chain
disruption
Risk: Potential raw material
shortages and knock-
on impact on product
availability from supply
chain disruption leading to
loss of revenue
The scenario modelling assumes there is no loss of revenue from this risk due to the
comprehensive inventory and homogeneous products held and sold by the Group.
– – – Market-leading position and strategic partnerships with suppliers should
enable the Group to preserve levels of availability.
Comprehensive inventory levels maintained at any one time providing
strong availability, also helped by the Group’s strategy to increase its
focus on holding and selling fast-moving lines.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
41
Strategy and
Risk Management Disclosure
Resilience of the
organisation’s
strategy, taking
into consideration
different climate-
related scenarios
The analysis suggests that none of the risks identified above would have a material profit impact
to the Group in the transition scenario. This is on the basis that the take-back scheme offsets any
EPR fees and that any residual costs can be passed on to customers. As noted, there is a high
degree of uncertainty around the cost of transitioning to a zero emission HGV fleet.
In the physical scenario, the analysis suggests that there would not be a significant impact on the
business.
There are a number of strategic responses that the Group could and is already taking against
these risks, as noted above. When taking into account the judged severity of the potential risks,
time horizons and mitigating actions, the Group is currently considered to remain a resilient
business in both scenarios modelled above. Overall, the business model is deemed fit for purpose.
Metrics and Targets Disclosure
Metrics used by the
organisation to assess
climate-related risks
and opportunities
The Group uses the below KPIs and targets to both assess the risks and opportunities as well as its
progress in relation to its overall ESG Strategy.
KPI
• Energy usage (per SECR disclosure)
• Scope 1, 2 and 3 emissions (year on year)
• Achieving reduction pathway required for Scope 1, 2 and 3 emissions to achieve interim target
• Number of sustainable own brand product launches
• ESG rating agency scores
• Physical asset damaged related insurance claims/premiums
Target
• Interim emissions target (Scope 1, 2 and 3)
• Net Zero emissions target (Scope 1, 2 and 3)
An intensity metric is additionally given within the Group’s SECR Disclosure on page 44.
An ESG metric has been introduced into Executive Director and Executive Team
performance-related variable remuneration.
Link to Risks
9
Link to KPIs
J
K
Scope 1, Scope 2 and
Scope 3 greenhouse
(‘GHG’) emissions,
and the related risks
The Group’s Scope 1, 2 and 3 emissions are summarised on pages 43 to 45 of the Sustainability
Report.
Targets used by
the organisation to
manage climate-
related risks and
opportunities and
performance against
targets
The Group’s Scope 1, 2 and 3 targets are aligned and set to be net zero by 2040.
The Group has an interim Scope 1 and 2 target for a 46% reduction against the 2019 baseline by 2030.
The Group also has an interim Scope 3 target for a 42% reduction against the 2023 baseline by 2032.
42
TASK FORCE ON CLIMATERELATED
FINANCIAL DISCLOSURES
‘TCFD’ CONTINUED
This SECR disclosure forms part of the Company’s overall
Sustainability Report on pages 26 to 36, and should be read as
part of the full report.
This disclosure along with the full report summarises the
Company’s energy usage, associated emissions, energy
efficiency actions being undertaken and energy performance
under the government policy Streamlined Energy and Carbon
Reporting (‘SECR’), as implemented by the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.
This disclosure also summarises the methodologies utilised for
all calculations related to the elements reported under Energy
and Carbon, and includes intensity metrics. With the energy
efficiency actions detailed in the full report, this disclosure fully
complies with the reporting regulations under the new SECR
legislation.
This disclosure, and full supporting documentation, has been
prepared by Inspired Energy PLC in conjunction with members
of Headlam’s Executive Team for Headlam Group PLC by
means of interpreting the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018 as they apply to information supplied by
Headlam Group PLC and its energy suppliers.
The following figures demonstrate year-on-year changes
in consumption and resulting emissions for Headlam Group
PLC for 2025 and 2024. Headlam Group PLC has chosen to
disclose its consumption and emissions data for its global
operations, in addition to mandatory UK consumption and
emissions data.
Definitions of the Scopes used in this disclosure:
• Scope 1 consumption and emissions include direct
combustion of natural gas, and fuels utilised for
transportation, for example, company vehicle fleets.
• Scope 2 consumption and emissions cover indirect
emissions related to the consumption of purchased
electricity in day-to-day business operations, and
electricity consumed in vehicles such as EVs and PHEVs.
• Scope 3 consumption and emissions cover emissions
resulting from sources not directly owned by Headlam
Group PLC, which relates to grey fleet business travel
undertaken in employee-owned vehicles only.
Consumption (kWh) and Greenhouse Gas emissions (tCO
2
e) Totals
The following tables show the consumption and associated emissions for financial years ending December 2025 and December
2024 for all operations.
UK Totals
The total Energy Consumption (kWh) figures for reportable UK-based energy supplies are outlined below:
Utility and Scope
2025
Consumption
kWh
2024
Consumption
kWh
Grid-Supplied Electricity (Scope 2) 4,503,458 5,330,844
Gaseous and other fuels (Scope 1) 3,565,851 4,270,355
Transportation (Scope 1) 46,737,273 56,919,467
Transportation (Scope 2) 116,234 126,675
Transportation (Scope 3) 341,486 343,438
Total 55,264,302 66,990,779
The total emission (tCO
2
e) figures for reportable UK-based energy supplies are outlined below.
Utility and Scope
2025
Consumption
tCO
2
e
2024
Consumption
tCO
2
e
Grid-Supplied Electricity (Scope 2) 797.11 1,103.75
Gaseous and other fuels (Scope 1) 652.41 781.05
Transportation (Scope 1) 11,384.07 13,470.67
Transportation (Scope 2) 20.57 26.23
Transportation (Scope 3) 76.00 76.55
Total 12,930.16 15,458.25
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
43
STREAMLINED ENERGY AND
CARBON REPORTING ‘SECR’
UK Intensity Metric
An intensity metric of tCO
2
e per £m has been applied for our annual total emissions. The methodology of the intensity metric
calculations is detailed in the appendix, and the results of this analysis are as follows:
Intensity Metric
2025
Intensity
Metric
2024
Intensity
Metric
tCO
2
e/£m UK Revenue 25.93 29.41
Continental European Totals
Headlam Group PLC have sites that they are responsible for in France and in the Netherlands. The consumption and emission
figures for these are shown below:
France totals
Utility and Scope
2025
Consumption
kWh
2025
Consumption
tCO
2
e
Grid-Supplied Electricity (Scope 2) 434,508 30.65
Gaseous and other fuels (Scope 1) 505,082 92.41
Transportation (Scope 1) 1,913,431 435.05
Total 2,853,021 558.11
Netherlands totals
Utility and Scope
2025
Consumption
kWh
2025
Consumption
tCO
2
e
Grid-Supplied Electricity (Scope 2) 272,578 84.23
Gaseous and other fuels (Scope 1) 302,565 55.60
Transportation (Scope 2) 84,240 14.91
Transportation (Scope 1) 1,459,098 348.05
Total 2,118,481 502.79
UK and European totals
Utility and Scope
2025
Consumption
kWh
2025
Consumption
tCO
2
e
Grid-Supplied Electricity (Scope 2) 5,210,544 912.00
Gaseous and other fuels (Scope 1) 4,373,498 800.41
Transportation (Scope 1) 50,109,802 12,167.17
Transportation (Scope 2) 200,474 35.48
Transportation (Scope 3) 341,486 76.00
Total 60,235,804 13,991.06
44
STREAMLINED ENERGY AND
CARBON REPORTING ‘SECR’
CONTINUED
UK and European Intensity Metric
An intensity metric of tCO
2
e per £m has been applied for our annual total emissions. The methodology of the intensity metric
calculations is detailed in the appendix, and the results of this analysis are as follows:
Intensity Metric
2025
Intensity
Metric
tCO
2
e/£m Group Revenue 24.74
Headlam is committed to year-on-year improvements in its
operational energy efficiency. A register of energy efficiency
measures has been compiled, with a view to implementing
these measures in the next five years.
Optimisation of Distribution Network
Headlam consolidated its operations into single sites from
multiple sites, streamlining the overall operational footprint.
This resulted in a reduction in unnecessary energy wastage
from a wider network of sites.
Good Energy Behaviour Training
In 2025, Headlam conducted company-wide training on
best practices to reduce energy consumption and the use
of energy efficiency measures. The training aimed to guide
employees in their day-to-day activities to be more conscious
of energy being consumed and mitigate some of this excess.
Measures to be Addressed in 2026
Company Car Fleet Electrification
Headlam continues to gradually phase out fossil-fuel vehicles
as it transitions to a fully electric fleet.
Staff Awareness and Behaviour Changes
Headlam will continue to raise staff awareness through
company-wide training on best practices to reduce energy
consumption, this ensures employees understand the
company’s sustainability objectives and follow guidance in
their day-to-day activities, thereby reducing unnecessary
energy use.
Energy Efficiency Upgrades
Headlam will assess the feasibility of implementing further
energy efficiency measures to optimise energy use and
reduce emissions.
Year-on-year changes
Gas and electricity emissions have reduced due to site
closures and implementation of energy efficiency measures.
Transport emissions have decreased by 15.42% compared
to 2024, primarily due to reduced fuel consumption in both
company cars and the commercial fleet.
The total intensity metric has decreased by 11.72% compared
to 2024 driven by a significant reduction in total emission
across all categories.
Total Group Revenue (£m) £565.6m
Total UK Revenue (£m) £498.7m
Total Continental Europe Revenue (£m) £66.9m
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
45
Overview
The table on pages 49 to 50 summarises the Principal Risks (in
no particular order), which the Board considers could have
a material impact on the Group’s reputation, operations or
financial performance. No new Principal Risks have been
identified.
The risk heat map on page 48 shows the Board’s assessment
of the level of risk for each of these Principal Risks as of the
date of this Annual Report and Accounts. The assessment
of the level of risk is first conducted by the Executive Risk
Committee and then reviewed and approved, following any
changes, by the Board.
Risk governance
Risk is encountered as part of the ordinary course of business
as well as through the implementation of the Group’s strategy
and transformation plan.
The Board has overall responsibility for the stewardship of
risk management and for ensuring that the Group exercises
an appropriate level of risk management to support the
achievement of its strategy. The Principal Risks faced by the
Group could have a material adverse effect on its business,
financial performance, or reputation, either alone or in
combination, so the management of such risks through
appropriate review, monitoring and control is important to
the Group’s long-term sustainable success. Changes to the
trading environment can also affect the likelihood and impact
of risks and may give rise to new risks.
The Board is supported in its risk management responsibilities
and in reviewing the effectiveness of the risk management
framework by the Audit Committee and the Executive Risk
Committee.
Risk appetite
The Board has considered the amount and type of risk
that the Group is willing to pursue or retain.
The Executive Risk Committee conducted an exercise to
determine risk appetite for each principal risk across a
fifteen-point scale, ranging from 1 (very risk averse) to 15
(very high risk appetite). The outcome of this was then
presented to, and discussed with, and challenged by, the
Audit Committee, and subsequently ratified by the Board.
The Executive Risk Committee is advised by an external
risk management specialist and meets quarterly to assess
the Group’s internal risk register, the adequacy of and
any changes in controls, and to undertake continuous
identification of emerging risks. The work of the Executive Risk
Committee is considered by the Audit Committee at each
of its four scheduled meetings during a year, and informs
the Audit Committee’s risk management discussions. The
Board carries out an assessment of the Group’s Principal Risks
and Uncertainties and identifies any emerging risks, at least
annually.
The Audit Committee, on behalf of the Board, also monitors
the Group’s system of risk management and internal control,
and conducts a review of its effectiveness at least once
a year, as well as overseeing the internal and third-party
assurance relating to the Principal Risks.
46
RISK MANAGEMENT
Risk monitoring structure
Board
The Board has overall responsibility for the Group's system of risk management and internal control.
Committees Risk Identification Risk Management
Independent assurance
Audit
Committee
Nomination
Committee
Remuneration
Committee
Assesses strategic risks
identified by management
capable of threatening
the business model, future
performance, solvency or
liquidity in the context of
the Company’s strategy
and the interests of
stakeholders and market
context.
Overall responsibility for corporate
governance, internal control and
risk management and for setting
risk appetite taking into account the
expectations of stakeholders and
feedback received from engagement
activities.
Audit Committee receives updates from
Executive Risk Committee on key risks
and assesses adequacy of controls and
risk classification and identification
processes.
Other Committees consider risk
management as it relates to their role
and priorities.
Executive Risk Committee Assesses risks and
mitigating controls using a
specified scoring system,
based on likelihood and
impact, and reports into
the Audit Committee.
Reviews operation and design of internal
controls to ensure risks remain within
appetite.
Senior Leadership Team
Group functions
Business management
Use knowledge of best
practice, business and
the market in which we
operate to assess changes
in key risks.
Applies local knowledge
to identify and assess
operational risk.
Responsible for ensuring that risk
management is embedded within the
business and appropriate actions are
taken to manage risk.
Applies local knowledge to identify and
assess operational risk.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
47
Key
1
Market (economy and competition)
2
Market (strategy)
3
IT (systems and infrastructure)
4
IT (cyber security)
5
People
6
Health and Safety
7
Supply chain
8
Legislation, regulation and reporting
9
Environmental and decarbonisation
10
Change and decision making
High
Impact
Low
HighLikelihood
Risk heat map
Emerging risks
Identification and review of emerging risks are integrated
into our risk review process. Emerging risks are risks that
are rapidly evolving, or arriving at pace, for which the
impact and likelihood have not yet been fully understood
and for which the appropriate mitigations have not yet
been fully identified.
We continue to monitor the uncertain macroeconomic
and geopolitical environment to assess impacts on
customers, suppliers and colleagues. Currently we monitor
this through the lens of our existing principal risks, but
with a view to separating out any elements if it were
considered to be a principal risk of its own.
There are no emerging risks assessed as being of
significance to disclose currently.
Our principal risks
The Group has identified ten principal risks. There have been
no additions or deletions to these principal risks during the
year. However, a number of changes have been made to the
risk ratings, taking into account the events of the year (both
macro and micro) and any specific relevant circumstances
for the Group, along with the mitigating actions and controls.
These changes are summarised below:
Increased risk:
• Risk 3 – IT (systems and infrastructure): During the year
we made the decision to pause the ERP replacement
project, in order to focus on the transformation plan. The
increasing age of the legacy system and the complexity
of maintaining ongoing developments on this system,
as well as adapting it to meet the requirements of the
transformation plan, increases the risk profile. There are
additional mitigating controls that we are implementing in
order to improve the resilience of the legacy system, which
soften the increase in inherent risk.
• Risk 4 – IT (Cyber security): We have increased the
likelihood of the risk, reflecting the increase in cyber attack
activity more generally and also directed at the Group
specifically. The impact has reduced slightly, reflecting the
progress made on improving controls and contingency
plans.
• Risk 5 – People: This risk has increased, both in terms of
likelihood and impact, reflecting the scale of change that
the business is undergoing through the transformation
plan, and also reflecting on the changes at board level.
Movement on heat map but similar overall risk profile:
• Risk 7 – Supply chain: Following discussion in the
Executive Risk Committee, which was then ratified by the
Audit Committee, the risk likelihood has been reduced
and impact increased. This change was not driven by
any specific factors within Headlam Group; it reflects an
updated view of the risk profile more generally.
48
RISK MANAGEMENT CONTINUED
Risk and description Mitigating actions Link to
Strategy
Risk change
1
Market (economy and competition)
Failure to sustain revenue
and profit performance
as a result of economic
backdrop, market
demand, service levels or
competitive dynamics
The Group closely monitors market activity on a daily basis at both an
individual business and Group level. This visibility allows the Group to take
prompt action in response, including enhanced sales activity, operational
efficiency, managing inventory levels, and cash management.
The Group maintains customer engagement and feedback activities to
gain insight into customer preferences to ensure its service proposition and
offering remains competitive.
In response to prolonged market weakness the Group has launched
a transformation plan designed to improve profitability and reduce
borrowings. Importantly, the transformation plan is intended to return the
Group to profitability without requiring improvement in market conditions
1
2
3
4
2
Market (strategy)
Failure to develop and
deliver on profit and
cash improvement
opportunities
The description of this risk has been amended from ‘Failure to develop and
deliver on revenue growth opportunities’ to ‘Failure to develop and deliver
on profit and cash improvement opportunities’. This reflects the revision to
the areas of strategic focus as announced in November 2025. The Group’s
strategic focus is on returning the Group to profitability through a number of
key initiatives.
The Board has direct oversight of the Group’s strategy, and its effective
implementation, with the performance of each key initiative monitored
against clear targets and objectives.
1
2
3
4
5
3
IT (systems and infrastructure)
Failure to develop and
maintain IT systems and
infrastructure that is
resilient, scalable, and
able to support the
strategy
During the year we made the decision to pause the ERP replacement
project, in order to focus on the transformation plan. There are additional
mitigations that we are implementing in order to improve the resilience of
the legacy system, given that we will be operating this system for a longer
period than previously expected. These mitigating actions include people
and hardware.
2
3
5
4
IT (cyber security)
Failure to develop and
maintain adequate or
effective security and
cyber controls
Targeted use of specialist external advice and support.
Regular employee cyber engagement programme.
In 2025 we have implemented new technology and processes including
a new vulnerability tool, a new ‘Manage, Detect and Response’ tool and
tighter conditional access control.
5
People
Failure to recruit and
retain the right people
with relevant skills, values
and behaviours
The Board continues to focus on making the Group a great place to work,
and ensure colleagues share in the Group’s long-term success.
For details on the developments in 2025, see pages 32 to 34.
2
3
Key
Increased
Unchanged
Decreased
Key to strategic links
1
Reduce low-
margin revenue
2
Reduce
costs
5
Optimise
cash
3
Enhance
customer service
4
Simplify ranges and
consolidate supply base
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
49
PRINCIPAL RISKS
Risk and description Mitigating actions Link to
Strategy
Risk change
6
Health and safety
Failure to provide a safe
place to work for our
people
Health and safety is a standing agenda item at all Board Meetings. The
Group has a dedicated in-house health and safety team, with a dedicated
Group Health & Safety Director.
The Group also engages external support, and is focused on having a strong
and embedded health and safety culture across the group. During the year
the Group rolled out Safety Culture, a new reporting and analysis platform.
7
Supply chain
Failure to maintain a
supply chain that provides
innovative, competitively
priced, environmentally
sound and legally
compliant products on a
reliable and ethical basis
Increased engagement with suppliers to help mitigate against any supply
chain risk. Including on: Sustainability Charter; Ethical Code of Conduct; and
Self-Assessment Questionnaire (delivered by a third-party leading social
audit business).
Working closely with certain suppliers to launch new competitive and
sustainable ranges.
We engage with suppliers regularly and hold an annual supplier conference.
4
8
Legislation, regulation and reporting
Failure to operate with high
standards of governance
supported by a sound
system of internal control
that ensures compliance
with laws and regulations,
including disclosure and
reporting requirements
The Group manages its obligations through a framework of policies and
procedures and, where appropriate, engages the services of specialist third-
party advisers.
The Group has an online compliance training portal with courses related
to Anti-Bribery, Modern Slavery and Human Trafficking, Cyber security and
Social Media Awareness being rolled out to appropriate staff members.
The Group has a Code of Conduct, setting out clear standards and
expectations for all employees (also see Supplier Ethical Code of Conduct
above).
9
Environmental and decarbonisation
Failure to reduce
environmental impact,
including failure to deliver
GHG reductions in line with
Net Zero commitments
and contribution to
climate change
The Group continues to develop and progress its overall ESG Strategy. For
full details on environmental-related actions, see the Sustainability Report
on pages 26 to 36, which includes the Group’s TCFD disclosure. This disclosure
details the climate-related risks the Group has identified, and how it is
specifically assessing and addressing them.
4
10
Change and decision making
Failure to successfully
drive the cultural and
operating model changes
necessary to deliver the
strategy
The Group’s strategy and strategic objectives continue to be embedded
through regular group-wide communications and engagement. Senior
Leadership meetings are held regularly to discuss overall progress and focus
on specific elements of the strategy.
The Board has direct oversight of strategy and its progress. The Board is
mindful of the impact of the market conditions on the financial performance,
resulting in a strategic focus on returning the business to profitability.
1
2
3
4
5
Key
Increased
Unchanged
Decreased
Key to strategic links
1
Reduce low-
margin revenue
2
Reduce
costs
5
Optimise
cash
3
Enhance
customer service
4
Simplify ranges and
consolidate supply base
50
PRINCIPAL RISKS CONTINUED
Background
The UK Corporate Governance Code 2024 requires the
Board to assess the risks to the sustainability of the business
model and delivery of strategy and whether these have
been considered and addressed. This statement sets out, in
overview, that assessment.
Consistent with previous years, a period of three years, to
31 December 2028, was chosen for the purpose of the viability
assessment. This period best aligns with the Group’s strategy.
It also aligns with the Group’s recently agreed new borrowing
facility, which expires just after 31 December 2028 (albeit the
Group has the option to extend).
The assumptions used in this longer-term viability assessment
are consistent with the assumptions used in the Directors’
assessment of going concern.
Sensitivity analysis
Reporting on the Group’s and Company’s viability and
assessing going concern requires the Board to consider those
principal risks that could impair the solvency and liquidity of
the Group and Company. In order to determine those risks, the
Board considered the Group-wide principal risks as set out in
the Risk Management and Principal Risks sections on pages
46 to 50.
In light of the Group’s competitive position, corporate
governance controls, mitigating actions and factors within
its control, it is the Board’s opinion that it is unlikely that
any of the individual risks other than market (economy and
competition) could compromise the Group’s viability in the
assessment period.
The identified principal risks include environmental
and decarbonisation risk. It is the Board’s opinion that
environmental risks are unlikely to compromise the Group’s
viability over the assessment period, including transition risks,
which are considered the most likely to occur. In particular,
any new potential legislation, regarding extended producer
responsibility for bulky household waste items, is unlikely to
significantly impact the Group’s viability after factoring in
the planned mitigating actions concerning the take-back
scheme.
In respect of ultimately transitioning to a sustainable fleet, it
has been assumed that such costs are broadly comparable
to those of operating a diesel fleet. There is a degree of
uncertainty in the cost estimates for a zero emission HGV
fleet. However, the assumption is on the basis that there
is a large global market for HGVs, providing commercial
incentives for companies to develop a viable, cost-effective
zero-emission solution for long-range HGVs. Climate-change
risks are discussed further in the TCFD quantitative analysis on
pages 38 to 43, including consideration of the impact of the
risks over time horizons longer than this assessment period.
In respect of market (economy and competition) risk, the key
risks relate to sustained periods of macroeconomic downturn
that create reduced consumer and business confidence and
the impact of competitive dynamics, which could result in a
significant reduction in demand for the Group’s products.
Market backdrop
There has been no recovery in the flooring market in
2025, which is estimated to be around 25% smaller than
it was in 2019. Whilst the lead indicators for the flooring
and home improvements markets continue to point to
improvement in the medium term, these indicators remain
volatile and sensitive to macroeconomic and geopolitical
factors. Furthermore, whilst demand in the flooring market
has reduced significantly in recent years, the amount of
distribution capacity in the market has increased, which has
further impacted revenue.
In setting the downside scenario to be modelled, the Board
recognises that, as the Group exited 2025, the market in which
the Group operates had already declined by a cumulative
around 25% over recent years. The downside scenario includes
an estimate of the further additional severe-but-plausible
decline in revenue that could occur.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
51
VIABILITY STATEMENT
Transformation plan
The viability assessment is set in the context of the Group’s
previously announced transformation plan to return the
Group to profit. This transformation plan is expected to be
net cash generative, resulting in lower Net Debt at the end
of 2026 and 2027 than at the end of 2025. The cash inflow
from the transformation plan represents the net impact
of a) cash inflows from property disposals, b) cash inflows
from a reduction in working capital, offset somewhat by; c)
the cash outflow impact of the losses in the business until
it returns to profit, and d) the cash costs of executing the
transformation plan.
Banking facilities
As at 31 December 2025, the Group had a net debt position
excluding lease liabilities of £31.4 million and had total
banking facilities available of £72.3 million (31 December 2024:
£99.3 million), of which £61.0 million (31 December 2024:
£81.5 million) was committed. The committed facility
comprised a revolving credit facility (‘RCF’) with three lenders
that was due to expire in October 2027. The Group also had
a £7.5 million uncommitted overdraft. In January 2026, the
RCF and the uncommitted overdraft were replaced by an
asset-based lending facility (‘ABL’) of up to £85.0 million
with two lenders. The available amount of the ABL depends
on the amount of relevant assets (property, receivables
and inventory) against which the Group can borrow. It is
also subject to a requirement to hold a minimum amount
of headroom on the facility, by way of liquidity headroom
covenants together with a quarterly EBITDA covenant and
operational covenants including inventory stock turn and
debtor days. The quarterly EBITDA covenant applies until
31 December 2027 after which it is superseded by a fixed
charge cover covenant.
Asset backing
As at 31 December 2025, the Group owned freehold and
long leasehold property in the UK valued at c.£75 million. Of
this, property valued at c.£54 million is included in the ABL.
The remaining properties (valued at c.£21 million) are outside
the ABL and unencumbered; three of these properties,
representing the significant majority of the value, are currently
on the market for sale, are under offer, and are expected
to complete in the next few months. Furthermore, the
Group anticipates further properties will become surplus to
requirements over the next 18 months as part of the Group’s
transformation plan. The Group has included the cash
proceeds from planned property disposals in the cash flow
projections used for the viability assessment.
Over the last two years the Group has averaged a net
positive working capital balance of over £70 million; this
means that the Group has had over £70 million of cash tied
up in funding its working capital. As the Group implements its
transformation plan it expects to be able to release working
capital and manage the re-shaped business with a lower
overall working capital requirement. This, combined with
further opportunity for inventory efficiency, means that the
Group anticipates a significant double-digit £million working
capital inflow over 2026 and 2027, which has been included in
the viability assessment.
Downside Scenario
This scenario is modelled on the basis that consumer
confidence for major purchases is depressed throughout 2026,
leading to market volumes continuing to decline. This decline
is applied in addition to the actions already assumed to be
taken by the Group to reduce low margin revenue and to
reduce fixed costs.
Market conditions are then assumed to recover over 2027
such that 2028 conditions are broadly similar to 2025 albeit
volumes remaining heavily depressed compared to 2019
levels. This compares to the base case which assumes a lesser
level of decline in 2026.
In the base case and downside scenario, the Group would
continue to operate within its banking facilities. In making
this assessment, the Group has assumed it can achieve the
cash inflows included in its projections, including the sale of
properties. These property disposals are not wholly in the
Group’s control, but the Group has a strong track record
of successfully completing such transactions over the last
two years.
Should a more severe scenario occur, for example a multi-
year macroeconomic downturn, the Group has a number of
mitigating actions available to it including: further working
capital optimisation; increasing the amount of borrowing
capacity in the ABL through meeting certain operational
KPIs; additional cost mitigations; additional property sales;
the sale and leaseback of properties; utilising unencumbered
properties for additional borrowing capacity; and faster
conversion of rebates into cash. However, the Group notes
that not all of these mitigating actions would be in the control
of the Group and/or are not contractually agreed at the time
of making the viability assessment.
Viability statement
Based on the results of the analysis, the Board has a
reasonable expectation that the Group will continue in
operation and be able to meet its liabilities as they fall due
over the three-year period of assessment.
52
VIABILITY STATEMENT CONTINUED
The table below sets out where stakeholders can find information in the Strategic Report (that relates to non-financial matters
detailed under Section 414CA and 414CB of the UK Companies Act 2006), and the Strategic Report taken together with the table
below, comprises the Company’s Non-Financial Information Statement.
Reporting
Requirement Relevant policies Additional Information
Matters
Environmental
matters
ESG Policy
Supplier Code of Conduct
Sustainability Report – pages 26 to 36.
SECR Disclosure – pages 43 to 45.
Corporate Governance Report – pages 55 to
124.
People Code of Ethics Stakeholder Engagement and Section 172
Statement – pages 18 to 20.
Sustainability Report – pages 26 to 36.
Corporate Governance Report – pages 55 to
124.
Social matters Equal Opportunities and Diversity Policy
Flexible Working Policy
Stakeholder Engagement and Section 172
Statement – pages 18 to 20.
Sustainability Report – pages 26 to 36.
Corporate Governance Report – pages 55 to
124.
Respect for Human
Rights
Health and Safety Policy
Modern Slavery Statement
Health and Safety – pages 33.
Modern Slavery – page 121.
Other Statutory Disclosures – pages 118 to 122.
Anti-Corruption and
Anti-Bribery matters
Anti-Corruption and Bribery Policy
Speak Up Policy
Expenses Policy
Corporate Governance Report – pages 55 to
123.
Audit Committee Report – pages 78 to 85.
Other Statutory Disclosures – pages 118 to 123.
Information disclosed in support of the matters
Business model Business Model – pages 10 to 11.
Principal risks,
impact and
mitigation
Risk Management, and Principal Risks and
Uncertainties – pages 46 to 50.
Non-financial
key performance
indicators
Key Performance Indicators – pages 14 to 17.
Sustainability Report – pages 26 to 36.
This Strategic Report was approved by the Board on 25 March 2026 and signed on its behalf by
Stephen Bird
Interim Executive Chair
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
53
NONFINANCIAL AND SUSTAINABILITY
INFORMATION STATEMENT
5454
GOVERNANCE
Compliance Statement 56
Chair’s Introduction 58
Board of Directors 60
How the Board Embeds Culture 62
Board Leadership and Company Purpose 64
Division of Responsibilities 72
Composition, Succession and Evaluation 77
Audit Committee Report 78
Nomination Committee Report 86
Directors’ Remuneration Report 92
Directors’ Report 118
Statement of Directors’ Responsibilities 123
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
55
Governance
Headlam Group PLC Annual Report & Accounts 2025
55
It is the Board’s view that, throughout the financial year ended 31 December 2025, and as at
the date of this report, the Company complied with the relevant principles and provisions
set out in the UK Corporate Governance Code 2024 (the ‘Code’) with the exception from
3 October 2025 of the requirement that the roles of Chair and Chief Executive should not be
performed by the same person following Chris Payne stepping down from the Board when
Stephen Bird was appointed Interim Executive Chair whilst a search for successor
was undertaken.
This report complies with Rule 7 of the Disclosure Rules and Transparency Rules of the Financial Conduct Authority, with the
information required to be disclosed by sub-section 2.6 of Rule 7 being shown on pages 140 to 196. The Company has also
complied with the relevant requirements of the Disclosure Guidance and Transparency Rules, the Listing Rules, Directors’
Remuneration Reporting regulations and narrative reporting requirements.
The Corporate Governance section of this Annual Report and Accounts explains how the Code principles have been applied.
The 2024 UK Corporate Governance Code is available at www.frc.org.uk.
Composition, succession
and evaluation
Formal, rigorous and transparent
procedures are in place to support
Board appointments, led by the
Nomination Committee, which
considers the importance of diversity
in decision-making.
The Nomination Committee regularly
reviews composition of the Board and
Committees to ensure appropriate
combination of skills, experience
and knowledge and to plan for the
progressive refreshing of the Board.
Annual evaluation of the Board’s
composition, diversity and
effectiveness.
Nomination Committee report –
pages 86 to 90
Appointments to the Board –
page 86
Board Diversity Policy – page 87
Board composition – pages
88 to 90
Board evaluation – page 77
Board leadership
and Company purpose
The Board is responsible for:
• Promoting the long-term
sustainable success of the
Company and establishing the
Company’s purpose, values and
strategy (ensuring that its culture is
aligned).
• Ensuring the necessary resources
are in place to meet objectives
and measure performance against
them within a framework of
effective controls.
• Engaging with stakeholders to
inform decisions and ensuring that
workforce policies and practices
are consistent with the Company’s
values and support long-term
success.
Board of Directors – pages
60 to 61
Leadership and purpose – pages
64 to 68
Board activities during the year
– pages 64, 65, 74 and 75
Considering stakeholders in
decision making – pages 18 and 19
Division of
responsibilities
The Chair leads the Board and
is responsible for its overall
effectiveness in driving the Company.
There is clear division of responsibilities
between the leadership of the Board
and the executive leadership of the
business.
The Non-Executive Directors
dedicate sufficient time to meet their
responsibilities and provide constructive
challenge, strategic guidance, specialist
advice and hold management to
account.
Board policies and processes are
in place to ensure that the Board
functions effectively.
Board roles – page 71
Division of responsibilities – pages
70 to 76
Nomination Committee report –
pages 86 to 90
Dealing with Directors’ conflicts of
interest – page 73
Implementation of the Principles of the Code
5656
COMPLIANCE STATEMENT
Audit, risk and
internal control
The Board has established formal
and transparent policies and
procedures to ensure the integrity
of the independence of the Group’s
external audit, and to satisfy itself of
the integrity of the Group’s financial
statements and to confirm that
they represent a fair, balanced and
understandable assessment of the
Company’s position and prospects.
Procedures have been established
to manage risk, oversee the internal
control framework and determine the
nature and extent of the principal risks
the Company is willing to take in order
to achieve its long-term strategic
objectives.
Audit Committee report –
pages 78 to 85
Fair, balanced and
understandable statement –
page 85
Risk management and principal
risks – pages 46 to 52
Remuneration
The Board, through its Remuneration
Committee, determines Director and
senior management remuneration
policies and practices and ensures
they align to the Company’s purpose,
values, and promote the successful
delivery of the Company’s long-term
strategy.
Each element of performance-related
pay allows for the independent exercise
of judgement and discretion when
authorising remuneration outcomes.
Controls have been implemented to
ensure that no Director is involved in
deciding their own remuneration.
Remuneration Overview –
page 94
Directors’ Remuneration Policy –
pages 95 to 105
Directors’ Annual Report on
Remuneration – pages 106 to 117
Strategic Report
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Governance
Headlam Group PLC Annual Report & Accounts 2025
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Governance
“ The Board has overseen
a number of required
changes to the Company’s
strategy and executive
management team to
drive forward its revised
strategy and to accelerate
its transformation
programme.”
On behalf of the Board, I am pleased to
present the Governance report for the
financial year ended 31 December 2025.
This report sets out our approach to effective governance,
outlines the areas of focus for the Board and the key activities
undertaken. My role and that of the Board has been to guide
the business and the executive management to refocus the
Group on the profitable independent retailer and contractor
customer base through our revised strategy and ensure
it is supported by the right people. The last financial year
has been an important period and we have accelerated
the implementation of our transformation programme
and our revised strategy to create a structurally stronger,
more profitable business from which we can be rescale with
confidence.
Stephen Bird
Interim Executive Chair
Board changes and succession planning
Following Keith’s decision to step down from the Board, the
Nomination Committee and the Board implemented the
Chair succession plan, and after a successful handover I
became Chair on 27 February 2025. Jemima, Chair of the
Remuneration Committee, was also appointed our Senior
Independent Director at the same time. The composition of
the Board and its Committees was also reviewed, to ensure
that these remain appropriate with the right mix of expertise
and experience to support the Company in its strategic goals.
Chair and CEO succession
and Board composition
Sharper focus on our core customer strategy refocused
on independent retails and contractors required some
interim changes in 2025 where I stepped into the role
of Interim Executive Chair following Keith Edelman
stepping down as Chair in February (as part of the Chair
succession plan) and Chris Payne stepping down as
Chief Executive Officer in October. This enabled the
Board together with a strengthened interim executive
management team to oversee a further acceleration of
the execution of its transformation programme.
Following an extensive search, I’m very pleased on
behalf of the Board to welcome Rob Barclay as
our Chief Executive Officer Designate who will
become Chief Executive Officer and join the Board
on 27 April 2026 after a short handover (when I will
revert to Non-Executive Chair), and Richard Jones who
joined the Group as Interim CFO on 12th March 2026
and will replace Adam Phillips, CFO, on the Board on
26th March 2026. The Board would like to thank Adam
for all of his hard work and wish him well in his new role.
5858
CHAIR’S INTRODUCTION
Strategy and culture
The Board has made progress in many key areas throughout
the year, including the review of the Group’s strategy, and
governance and oversight of the transformation programme.
Karen Hubbard continues in her role of Non-Executive Director
responsible for employee engagement and she continues to
provide regular reports to the Board. This role and reporting,
together with other activity on how the Board monitors
the culture of the Group (see pages 62 and 63), creates an
appropriate cultural dashboard and continues to enhance
the quality of the information the Board receives from our
employees.
We held a further supplier conference in the year, which was
attended by our key suppliers and we held a sales conference
in September attended by our sales force colleagues. Our
supplier code of conduct and colleague code of conduct
continue to be in place.
Our on-going engagement work with all our stakeholders
helps shape how the Board takes their views into
consideration to support our decision-making and ensure
the culture of the business is developing in line with our stated
purpose and values. Information of our engagement with
stakeholders can be found on pages 18 to 20 and throughout
this Governance report.
This commitment to guiding and promoting a healthy culture
is underpinned by a significant ongoing work programme to
develop a strong safety culture. Please see page 33 for further
details.
Please see pages 62 and 63 on how the Board monitors
culture so that the Board continues to understand the
changes and trends within the business, which deepens our
ongoing relationships with all our stakeholders.
Environmental, social and
governance (‘ESG’) responsibilities
Our ESG strategy and work to deliver this has continued
throughout 2025 as a key work stream and embedded into
the business through the established ESG Committee which
is attended by Non-Executive Director Karen Hubbard. ESG
updates have been given to our stakeholders and Karen
Hubbard formally reports back to the Board on the ESG
Committee progress. The highlights from the year and our
progress in key areas are outlined in our Sustainability Report
on page 26.
We have made great strides forward during the course of the
year and as a Board we are focused on delivering tangible
progress in the year ahead.
Diversity
The Board recognises that diversity both on the Board and in
the wider organisation leads to healthy debate, which in turn
leads to better decisions and helps support the Company.
The Board reviews its diversity policy annually and it was a key
consideration when the Board considered who was going to
appointed as the Senior Independent Director in my place. In
making our appointments we have aimed to cultivate a broad
spectrum of attributes and characteristics in the Boardroom
and we continue to keep the position under review as we
move forward in all our succession planning activity. Diversity
across the organisation is summarised on page 34 and further
information on Board diversity can be found in the report of
the Nomination Committee on pages 78 to 85.
Board evaluation
An externally facilitated evaluation was carried out towards
the end of the year, and the results were pleasing and
confirmed that the Board and Committees are working well.
More information on the Board evaluation can be found on
page 77.
Our colleagues
It has been a busy year overseeing the of our revised strategy,
the transformation programme and the recruitment of a
number of highly skilled colleagues at all levels of the business
to drive us forward.
The Board recognises the significant contributions from all
our colleagues throughout the year and thanks them for their
hard work and dedication.
Stephen Bird
Interim Executive Chair
25 March 2026
Strategic Report
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Governance
Headlam Group PLC Annual Report & Accounts 2025
59
The whole Board has oversight of the Company’s sustainability agenda and ESG Strategy, which incorporates
areas of focus including workforce engagement, health and safety, IT resilience, and DEI. Additional oversight
and individual accountability for specific focus areas is given through Board and Executive Team membership
of the ESG Committee, the Risk Committee, and the formal Employee Forum.
Stephen Bird
Interim Executive Chair
Jemima Bird
Senior Independent Director
Adam Phillips
Chief Financial Officer
Karen Hubbard
Independent Non-Executive Director
Robin Williams
Independent Non-Executive Director
Alison Hughes
General Counsel & Company Secretary
A
N
R A
N
R
D
Ri
A
E
F
N
R
A
N
R
D
E
Ri
Stephen was appointed our Non-
Executive Chair on 27 February 2025,
(previously he was Senior Independent
Director from 2022) and then appointed
as Interim Executive Chair on
3 October 2025. Stephen’s last executive
role was Group Chief Executive of
Videndum plc (formerly The Vitec
Group plc), the international provider of
premium branded hardware products
and software solutions to the growing
content creation market, having
held the position since 2009. He was
previously Senior Independent Director
of Dialight plc, the global leader in
sustainable LED lighting for industrial
applications, stepping down in 2021
after nearly nine years on the Board.
Stephen has extensive executive
experience developing successful,
customer-led growth strategies to help
businesses grow and adapt to changing
markets. Prior to joining Videndum
plc, Stephen was Divisional Managing
Director of Weir Oil & Gas, and held
senior roles at Danaher Corporation,
Black & Decker, and Technicolor Group.
He is a member of the English National
Ballet’s Finance and General Purposes
Committee.
Jemima was appointed our
Senior Independent Director on
27 February 2025 and is also our Chair
of the Remuneration Committee.
Jemima has over 20 years’ retail
experience working with many of the
UK’s leading high-street brands, and has
held numerous executive commercial,
marketing and operations positions. She
is currently a Non-Executive Director
and the Chair of the Remuneration
Committees at both Pinewood
Technologies Group plc and Creightons
plc and was previously a Non-Executive
Director at Carpetright plc, (a leading
floorcoverings and beds provider,
until it was taken private in 2020) and
previously the Senior Independent
Director and Chair of the Remuneration
Committee at the Revel Collective plc.
Previously, Jemima was the Senior
Trustee for the Football Foundation, the
UK’s largest sports charity.
Adam joined the Company as Chief
Financial Officer in March 2023.
He was previously Group Financial
Controller at Mobico Group plc, the
FTSE 250 multinational transport
provider. Prior to this Adam was at
Halfords Group plc, in a number of roles,
including Corporate Finance Director
and Group Strategy Director.
Adam is a qualified Chartered
Accountant having trained with
KPMG and is a Fellow of the Institute
of Chartered Accountants in England
and Wales. Adam is Chair of the Risk
Committee.
Karen was appointed a Non-Executive
Director in 2022. Karen has over 25
years’ experience in retail, at both
executive and Director levels across
various industries and markets. She
was previously Chief Executive Officer
of Card Factory plc, the UK’s leading
specialist retailer of greeting cards,
gifts, wrap and bags, where she
diversified their income from a UK
high-street business to a multi-channel,
international, wholesale and franchised
operation. Karen has also served as
Chief Operating Officer at B&M, on the
ASDA Stores Executive Board as Director
for Property, Multi-Channel and Format
Development, in addition to working for
BP Oil’s retail divisions.
Karen currently serves as Non-Executive
Chair in privately backed businesses
Custom Materials Limited and Fun
Brands Group. In addition, she is a Non-
Executive Director and Chair of ESG of
St Austell Brewery.
Karen is a member of the ESG
Committee and the Employee Forum,
and the Independent Director who has
oversight of workforce engagement.
Robin was appointed a Non-Executive
Director and Chair of the Audit
Committee in 2022. Robin has over 30
years’ experience with listed companies,
including as founder CEO and Executive
Director with FTSE 250 companies
within the packaging and the building
materials industries. He is currently Non-
Executive Chairman of Keystone Law
Group plc and of Churchill China plc and
was previously a Non-Executive Director
of The Manufacturing Technology
Centre Ltd.
Robin is a qualified Chartered Accountant
and brings experience of chairing audit
committees as well as insights from a
wide range of sectors as an Executive and
Non-Executive Board member of public
and private companies.
Alison was appointed in December
2023 and has over 20 years’ experience
across several business sectors,
including retail and hospitality and
extensive experience in corporate and
commercial legal matters, corporate
governance and compliance matters.
Previously she was the Director of
Group Legal & Company Secretariat
at Mitchells & Butlers plc, a FTSE 250
company within the hospitality industry.
Prior to that she worked at Boots
plc, and trained and qualified as a
solicitor with Wragge & Co LLP (now
Gowling WLG).
Alison is a qualified solicitor with over
20 years’ post qualification experience.
She is a member of the Disclosure
Committee, ESG Committee and the
Risk Committee.
6060
BOARD OF DIRECTORS
Committee Membership key
A
Audit Committee
F
Employee Forum
Ri
Risk Committee
D
Disclosure Committee
N
Nomination Committee Committee Chair
E
ESG Committee
R
Remuneration Committee
Stephen Bird
Interim Executive Chair
Jemima Bird
Senior Independent Director
Adam Phillips
Chief Financial Officer
Karen Hubbard
Independent Non-Executive Director
Robin Williams
Independent Non-Executive Director
Alison Hughes
General Counsel & Company Secretary
A
N
R
A
N
R
D
Ri
A
E
F
N
R
A
N
R D
E
Ri
Stephen was appointed our Non-
Executive Chair on 27 February 2025,
(previously he was Senior Independent
Director from 2022) and then appointed
as Interim Executive Chair on
3 October 2025. Stephen’s last executive
role was Group Chief Executive of
Videndum plc (formerly The Vitec
Group plc), the international provider of
premium branded hardware products
and software solutions to the growing
content creation market, having
held the position since 2009. He was
previously Senior Independent Director
of Dialight plc, the global leader in
sustainable LED lighting for industrial
applications, stepping down in 2021
after nearly nine years on the Board.
Stephen has extensive executive
experience developing successful,
customer-led growth strategies to help
businesses grow and adapt to changing
markets. Prior to joining Videndum
plc, Stephen was Divisional Managing
Director of Weir Oil & Gas, and held
senior roles at Danaher Corporation,
Black & Decker, and Technicolor Group.
He is a member of the English National
Ballet’s Finance and General Purposes
Committee.
Jemima was appointed our
Senior Independent Director on
27 February 2025 and is also our Chair
of the Remuneration Committee.
Jemima has over 20 years’ retail
experience working with many of the
UK’s leading high-street brands, and has
held numerous executive commercial,
marketing and operations positions. She
is currently a Non-Executive Director
and the Chair of the Remuneration
Committees at both Pinewood
Technologies Group plc and Creightons
plc and was previously a Non-Executive
Director at Carpetright plc, (a leading
floorcoverings and beds provider,
until it was taken private in 2020) and
previously the Senior Independent
Director and Chair of the Remuneration
Committee at the Revel Collective plc.
Previously, Jemima was the Senior
Trustee for the Football Foundation, the
UK’s largest sports charity.
Adam joined the Company as Chief
Financial Officer in March 2023.
He was previously Group Financial
Controller at Mobico Group plc, the
FTSE 250 multinational transport
provider. Prior to this Adam was at
Halfords Group plc, in a number of roles,
including Corporate Finance Director
and Group Strategy Director.
Adam is a qualified Chartered
Accountant having trained with
KPMG and is a Fellow of the Institute
of Chartered Accountants in England
and Wales. Adam is Chair of the Risk
Committee.
Karen was appointed a Non-Executive
Director in 2022. Karen has over 25
years’ experience in retail, at both
executive and Director levels across
various industries and markets. She
was previously Chief Executive Officer
of Card Factory plc, the UK’s leading
specialist retailer of greeting cards,
gifts, wrap and bags, where she
diversified their income from a UK
high-street business to a multi-channel,
international, wholesale and franchised
operation. Karen has also served as
Chief Operating Officer at B&M, on the
ASDA Stores Executive Board as Director
for Property, Multi-Channel and Format
Development, in addition to working for
BP Oil’s retail divisions.
Karen currently serves as Non-Executive
Chair in privately backed businesses
Custom Materials Limited and Fun
Brands Group. In addition, she is a Non-
Executive Director and Chair of ESG of
St Austell Brewery.
Karen is a member of the ESG
Committee and the Employee Forum,
and the Independent Director who has
oversight of workforce engagement.
Robin was appointed a Non-Executive
Director and Chair of the Audit
Committee in 2022. Robin has over 30
years’ experience with listed companies,
including as founder CEO and Executive
Director with FTSE 250 companies
within the packaging and the building
materials industries. He is currently Non-
Executive Chairman of Keystone Law
Group plc and of Churchill China plc and
was previously a Non-Executive Director
of The Manufacturing Technology
Centre Ltd.
Robin is a qualified Chartered Accountant
and brings experience of chairing audit
committees as well as insights from a
wide range of sectors as an Executive and
Non-Executive Board member of public
and private companies.
Alison was appointed in December
2023 and has over 20 years’ experience
across several business sectors,
including retail and hospitality and
extensive experience in corporate and
commercial legal matters, corporate
governance and compliance matters.
Previously she was the Director of
Group Legal & Company Secretariat
at Mitchells & Butlers plc, a FTSE 250
company within the hospitality industry.
Prior to that she worked at Boots
plc, and trained and qualified as a
solicitor with Wragge & Co LLP (now
Gowling WLG).
Alison is a qualified solicitor with over
20 years’ post qualification experience.
She is a member of the Disclosure
Committee, ESG Committee and the
Risk Committee.
Strategic Report
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61
Governance
Headlam Group PLC Annual Report & Accounts 2025
61
The Board regularly reviews a number of measures throughout the year to monitor the culture of the
Company and how it is embedded through the values of the Company summarised below, please also
see pages 32 to 34 on culture and colleague engagement:
Care: We ensure that every individual feels respected, listened to and safe
• Review of health and safety (‘H&S’) metrics and information included in the regular Board H&S
reports.
• Review and approval of the Company’s H&S policy.
• Presentations by the Company’s Group H&S Director alongside visits to the site to see H&S measures
and processes in practice.
• Review of the feedback and scoring from the Company’s annual ‘Have your Say’ employee survey
which includes specific feedback from employees on their perspective and rating of safety of
physical work environments, employee behaviours in respect of health and safety and wellbeing
all scores for these this year were improved from the prior year and where there was an applicable
industry benchmark scores were higher than the industry benchmark.
• Review and approval of the Company’s whistleblowing policy, the ‘Speak Up’ Policy and its
processes.
• Oversight and visibility of whistleblowing cases during the year and the whistleblowing procedures
in place mean any cases, (including those that may relate to H&S) are immediately visible to the
Audit Chair (who is the designated Board Director with oversight of the Company’s review and
investigation process for all whistleblowing cases).
• Board Directors regularly take the opportunity to seek colleagues’ feedback on a number of issues
when they are out in the businesses during the year.
• Employees have access to training to be able to do their best work, and develop and progress their
careers.
• Employees have access to various wellbeing facilities.
• The Company regularly celebrates and recognises employees when they do a great job.
• Listening forums such as Employee Forums where employees have the opportunity to raise their
questions, ideas and questions whilst having the opportunity to discuss these directly with Executive
Committee members and Board Directors.
Teamwork: We create an inclusive environment where people celebrate success together
• Review of the updates from the Company on its diversity and inclusion plans, including changes to
recruitment processes and other inclusion initiatives.
• Review of regular updates on colleague turnover through the regular Chief People Officer reports
across all areas and departments of the Company, and which also includes commentary relating to
any particular trends for the Board to consider and if required investigate further.
• Review of the annual colleague engagement survey, (which includes colleagues’ feedback, for
example on the Company’s work environment and if everyone feels included, regardless of gender,
background, ethnicity, sexual orientation, age etc, feedback on line managers ability to manage
changes which affect their teams, ability to be themselves at work).
• Review of the annual Gender Pay Gap report.
• Review of reports from each of the Employee Forums by Karen Hubbard (who is the designated
Non-Executive Director for workplace engagement).
• Board Directors have, and regularly take, the opportunity to seek colleagues feedback on a number
of issues when they are out in the businesses during the year.
• The Board and throughout the Company there are regular celebrations and events to recognise
employees and teams when they are doing a great job.
• Listening forums such as Employee Forums where employees have the opportunity to raise their
feedback on success as well as areas for improvement whilst having the opportunity to discuss
these directly with Executive Committee members and Board Directors.
6262
HOW THE BOARD EMBEDS CULTURE
Commitment: We uphold high standards and confidently challenge wrong behaviours
• Board reviews business performance measures and metrics regularly through the various regular
reports from the Executive Committee members, (including in the context of the market and the
Company’s competitors).
• Review of the annual colleague engagement survey, which includes on colleagues’ feedback on
whether they are satisfied with the communications they receive about local sites and departments
in order to do their jobs effectively..
• Board reviews our customers’ feedback through the customer survey and reports on the same to
the Board.
• Board reviews and receives specific reporting and presentations on major business change
programmes such as the Company’s transformation programme, along with external advisers, to
have the opportunity to directly ask questions of specialist advisers and subject matter experts.
Ownership: We create a trusted environment where people are empowered to act and can learn and improve
• The strength of leadership is measured as part of the colleague engagement survey which includes
feedback on colleague motivation, line management, colleague recognition, line manager
communication and ability to raise issues, all of which this year showed an improvement compared
to the prior year.
• The Chief People Officer regular reports include reporting on metrics such absence, which give an
indication of the strength of leadership amongst other metrics.
• The visibility that the Board has of whistleblowing cases also means that any cases related to
leadership or colleague behaviour would be immediately visible to the Audit Chair.
• Review of reports from each of the Employee Forums through Karen Hubbard, who is the
designated Non-Executive Director for workplace engagement.
• Board Directors regularly take the opportunity to seek colleagues’ feedback on a number of issues
when they are out in the businesses during the year.
• Oversight of succession planning for the Board, Executive Committee and senior leaders.
Simplicity: We avoid over complication by keeping things simple
• Board and Company has overseen revised reporting on business performance measures and
metrics this year adopting a flexible approach and required format of reporting from Executive
Committee members to keep things simple and enable executive management to focus on key
initiatives to drive better performance.
• Review of the annual colleague engagement survey to understand how are colleagues are feeling
about things and how we can communicate better in order for them to do their jobs effectively.
• Board reviews our customers’ feedback through the customer survey and reports on the same to
the Board.
• Sharper focus on a revised Company strategy has enabled the Executive Committee members to
focus on key messages and simple actions to drive better business performance.
• As appropriate, Board continues to review and receive specific reporting and presentations on
major business change programmes such as the Company’s transformation programme, along with
external advisers, to have the opportunity to directly ask questions of specialist advisers and subject
matter experts.
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Governance
Headlam Group PLC Annual Report & Accounts 2025
63
Board activity in 2025
The Board maintains a comprehensive schedule of meetings
and a forward agenda to ensure its time is used most
effectively and efficiently. However, there is flexibility in
this programme, which is important to permit key items to
be added to any agenda, so that the Board can focus on
evolving and important matters at the most appropriate time.
This was specifically illustrated this year by the Board having
regular dedicated Board meetings and calls this year on the
acceleration of the Company’s transformation programme
and of its revisited strategy, with subsequent updates on the
transformation programme for the Board at all of its meetings
and calls thereafter.
Board agendas are structured carefully to facilitate
discussions and allocate appropriate time to all relevant
matters, and the agendas are agreed in advance by the
Interim Executive Chair, (along with the General Counsel &
Company Secretary).
A typical Board meeting will comprise the following elements:
• Reports from the Chairs of each of the Board Committees
on the proceedings of those meetings, including the key
discussion points and particular matters to bring to the
Board’s attention.
• Following every Employee Forum and ESG Committee,
a report on the topics discussed is presented by Karen
Hubbard to add further context at the Board meeting.
• Performance reports from the Executive Committee,
including: reports from the Chief Executive, Chief Finance
Officer, Chief People Officer, Sales Director and Chief
Transformation Officer.
• Deep dive reports into areas of particular strategic
importance, opportunities and risks, to evaluate
progress, provide insight and, where necessary, decide on
appropriate action.
• Legal and governance updates, including: Quarterly
Reports from the General Counsel & Company Secretary,
approval of delegated financial authorities across the
Group; approvals of various policies (such as ‘Speak Up’
Policy, Health & Safety Policy, Approval of the Anti-Slavery
and Human Trafficking Statement).
• Time is set aside at various meetings for the Chair to hold
an Independent Non-Executive Director only meeting,
(where it is considered appropriate, to provide the
opportunity for discussion on key matters without the
Executive Directors and management present).
• All of the Board also meet over dinner on a number of
occasions before certain Board meetings, also joined by
members of the Executive Committee, to enable Board
members and Executive Committee members to build a
rapport with each other and a relationship on a personal
level, share external views and consider issues impacting
the Group, resulting in better Board dynamics and
decision making.
Health &
Safety policy
Board reviews
and approves the
Company’s Health &
Safety policy
Review ERP Project Nexus
Board consider and approve
the pause to the ERP
replacement programme whilst
the business continues to focus
on key transformation activity
Strategy Day
Board receives
updates from our key
areas of the business
and its strategy for
each area
Transformation Programme
update
Board receives update of the
Company’s transformation
programme
March
August
September
December
6464
BOARD LEADERSHIP AND COMPANY PURPOSE
Strategy Day
Board receives update from
key areas of the business and
its strategy for each area
Independent Retail
Board receives update
from Independent Retailer
Leadership team and reviews
the sale and leaseback
proposal for its Tamworth site
Rayleigh site visit
Board visits its new warehouse site in
Rayleigh for a site visit shortly after
it became operational and receives
updates on its network strategy and
hears from its contracts leadership team
Buying &
supply chain
Board receives
update from the
Chief Buying Officer
Transformation
Programme
Board receives update
on its accelerated
transformation programme
and strategy review
Update on strategy
Board reviews the latest
feedback on its revised
strategy and progress
on accelerated
transformation actions
April May
July
October
November
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65
Our Board is ultimately responsible for the strategy, management,
performance and long-term sustainable success of the Group.
It is the principal decision-making forum for the Group,
providing entrepreneurial leadership, both directly and
through its Committees and by delegating authority to the
Executive Team.
This responsibility includes: setting the Company’s purpose,
values and strategy; reviewing and promoting the desired
organisational culture; ensuring the necessary resources are
available to meet agreed objectives; and ensuring that all of
these elements are aligned. The Company’s business model
and strategy is detailed on pages 7 to 17.
Through the strong governance framework that it has in
place, the Board is able to deliver on its strategy of providing
strong sustainable financial and operational performance.
The Board is also accountable for ensuring that in carrying
out its duties the Group’s legal and regulatory obligations
are being met; and for ensuring that it operates within
appropriately established risk parameters.
Culture and colleagues
The Board is responsible for monitoring and assessing culture.
The Board does not have a single way to assess culture,
instead it draws on multiple sources to understand the way
colleagues feel about the Company. This is done through
formal and informal methods, through the outputs from the
Employee Forums and the reports of the Executive Team to
the Board. Please also see pages 62 and 63.
Colleagues are encouraged to incorporate the values and
behaviours into work every day to deliver our objectives,
together.
Karen Hubbard is the Independent Non-Executive Director
accountable for representing the voice of our colleagues in
Board meetings. Please see page 69 for feedback from Karen
on 2025 Employee Forums.
Work continues to enhance communication to ensure that
staff across the business, especially those more remotely
situated and any new colleagues are briefed on relevant
Company news, so they do not feel isolated. The Group-
wide intranet continues to be developed as a place for
colleagues to access all communication and information
about benefits and personal and financial wellbeing. In
addition to this, the following improvements have been during
the year; the sales conference was held off-site, the ongoing
leadership development programme, as well as the employee
engagement survey and specific senior leadership team
meetings to discuss the revised strategy and how everyone
can contribute to this.
The ‘Speak Up’ Policy (which continues to include an externally
managed helpline) which was launched in 2022 continued
to be in place during the year and this, together with a
well-established grievance policy, provides a mechanism
for colleagues to raise matters of concern more formally.
In addition, the Headlam Code of Ethics continues to be
issued to all new employees and is part of the new induction
programme. As well as reviewing People KPIs at the Board
and the outputs from the listening channels, the Board has
continued to influence and monitor Group culture in a number
of additional ways summarised below but please also see
pages 62 and 63 on how the Board assesses how its culture is
embedded in the Group:
• Increasing the focus on the health, safety and working
practices of our colleagues and reviewing key health
and safety performance indicators, please see page 33.
• Reviewing and revising remuneration structures for
senior management.
• Reviewing the progress of the implementation of the
People Strategy.
• Regular meetings with management and inviting
presentations at the Board and Committee meetings
from relevant managers and colleagues.
• Assessing other cultural indicators such as the attitude
to risk, the implementation and compliance with
Group-wide policies such as Anti-Corruption and
Bribery, Fraud and Money Laundering.
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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
Board Engagement with Stakeholders
Information on our stakeholder engagement and Section 172 Statement of the Strategic report on pages 18 to 20.
By understanding the interests and needs of all our stakeholders, the Board can take these views into account in Boardroom
discussions and decisions. The relevance of each stakeholder group may change depending on the issue under discussion.
The Board continued to develop its methods of engagement during the year and this work will be continued during 2025.
Our Colleagues
Board members engage with a wide variety of colleagues. Karen Hubbard is our
dedicated Employee Non-Executive Director and attends various Employee Forums.
See pages 32 to 34 for employee engagement
Our Customers
The Board receives customer insights through Board reports and strategy
presentations and from the Group Marketing Director and other members of the senior
management team.
Our Suppliers
Supplier relationships provide valuable insights through engagement with operations
teams and through the Interim Executive Chair and Chief Buying Officer.
See page 19 for supplier engagement
Our Shareholders
There is regular dialogue with our shareholders, especially following the revised strategy
announced on 11 November 2025.
See page 19 for shareholder engagement
Our Communities
and the Environment
It is important that we operate safely and sustainably and that we review the impact of
our operations on local communities and on the environment. The Board receives regular
updates on these activities.
Karen Hubbard is our dedicated ESG Non-Executive Director and attends the ESG Committee.
Further information can be found in our Sustainability Report on pages 26 to 45
Strategic Report
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67
Governance
Headlam Group PLC Annual Report & Accounts 2025
67
Examples of how the Board considered the interests of its key stakeholders
when making decisions.
Project Nexus – ERP
Replacement Programme
During the year the Board made the
decision to pause the ERP replacement
programme. This was taken after
considering the competing priorities
for colleague time and attention
between the ERP programme and the
transformation plan. The Board also
recognised that the transformation plan
could have an impact on the design of
the new ERP. This could cause rework
of the ERP if the two programmes were
running concurrently; hence it was felt
appropriate to mitigate such a risk in
order to conserve resources.
Debt Refinancing
In January 2026 the Group announced
the completion of a refinancing of
its borrowing facilities. The decision
to launch the refinancing process
was taken by the Board during 2025
and then the final facility agreement
was approved in January 2026. In
commencing the refinancing in 2025
the Board reflected on the fact that the
prevailing facility was not due to expire
until October 2027, but that it was in
the interests of multiple stakeholders
to secure new financing well ahead of
that in order to provide reassurance
that the Group had access to borrowing
facilities throughout the period of
the transformation plan and beyond.
Furthermore, the prevailing facility had
required discussions with the lenders
every six months on covenants, which
was time-consuming and incurred fees.
Transformation programme
In response to challenging market conditions, with consumer spending on
home improvements in significant decline combined with heavy cost inflation
in recent years, the Board made the decision to launch a transformation
programme in 2024.
The objective of this was to make Headlam a more effective organisation and simplify the
Group’s offer to its customers, whilst also driving through efficiencies in working capital and asset
ownership in order to fund the changes needed. The Board continually review the progress of
the transformation plan and the wider strategic initiatives. The prevailing strategy had been to
offset cyclical market decline, and the impact of new entrants, with growth with larger customers
and through trade counter expansion in order to broaden the customer base. Whilst this strategy
had achieved growth in those newer customer groups, it had come at the expense of the core
customer group of independent retailers and contractors. Accordingly, and as a product of its
continual review of the performance of the business, the Board decided, in the second half of
2025, to make a change in leadership of the Group and to embark on a change in the strategic
direction. This change involves a more significant right-sizing of the business towards current
market volumes, rather than assuming a material cyclical recovery, as well as a refocus on the
independent retailers and contractors.
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BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED
Q
Describe the Employee Forum
and your role as designated
Non-Executive Director,
workforce engagement and
how it adds value to the Group?
Q
What have been your
highlights this year?
A
The Employee Forum is one of the ways we engage
with our colleagues. It provides the opportunity for
colleagues to meet with myself and senior members
of management on a regular basis, helping them
to stay connected to the strategy and direction of
the Company. It also provides the opportunity for
us to listen directly to what colleagues have to say
and hear about matters the Board is reviewing and
considering.
I also actively spend time with colleagues, without
management present, to give colleagues the
opportunity to provide feedback directly to
the Board.
As the nominated Non-Executive Director for
workplace engagement, I then provide this
feedback directly to the Board which helps us
all gain a better understanding of day-to-day
operations and insight into the implementation
of the transformation plans, and how that
impacts our colleagues. It also helps ensure the
Board understands how the Company’s culture is
embedded.
I continue to liaise with the Interim Chief People
Officer and support the Group in how it can
better communicate and engage with colleagues.
In addition, as a member of the Remuneration
Committee my insight is also very helpful in the
context of Executive pay.
A
I have once again been especially impressed by
the willingness of the forum members to raise issues
and confidently challenge business processes and
provide constructive insights.
Good progress has also been made this year in
getting communication to all levels, functions
and sites. I’ve been pleased to hear about
the improvements in the level and cascade of
communications across the Company, especially as
the Company implements its transformation plans.
I’ve also been pleased to see a good representation
at the Employee Forums of a workforce that is
diverse in terms of functions and also geographically
spread. I’m looking forward to seeing continued
improvements in 2026 as the format of the
Employee Forum is reviewed by senior management
and it continues to evolve as a successful way to
engage with our colleagues.
Karen Hubbard
Non-Executive Director nominated to
represent the employee voice at the Board
“ Pleased to hear directly
from our colleagues about
the continued improvement
in communications and
engagement this year.”
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
69
Governance
Headlam Group PLC Annual Report & Accounts 2025
69
Q&A WITH KAREN HUBBARD
Board balance
As at 31 December 2025 the Board consisted of the Interim
Executive Chair, the Chief Financial Officer, the Senior
Independent Director and two further Non-Executive
Directors.
As such, at least half the Board, (excluding the Interim
Executive Chair and the Chief Financial Officer), were Non-
Executive Directors in accordance with the Code during
the year.
The Board undertook a review of the size and balance of
the Board and confirmed that it was appropriate to meet
the business and operational objectives. Further information
on the changes to the Board in 2025 can be found in the
Nomination Committee report on page 86.
Decisions are made by the Board following detailed
consideration of the items under review and no one
individual or small group of individuals dominate the
Board’s decision-making.
The Board operates within a corporate governance
framework designed to support the achievement of
long-term sustainable success. The Board has overall
responsibility for setting the Group’s strategy and setting
objectives for the business, taking into account the risk
appetite of the business. The Board has a formal schedule
of matters reserved for its approval and then delegates
responsibilities to its committees and management. The list of
the key matters considered by the Board in 2025 can be found
on page 75.
The schedule of matters reserved for the Board has
been reviewed and is available from the Governance
section of the Company’s website, www.headlam.com.
It includes matters relating to strategy and management,
structure and capital, financial reporting and controls,
risk management and internal controls, contracts, Board
membership and delegation of authority, acquisitions and
risk management. An overview of the main duties, roles
and responsibilities of the Board are also available on the
Company’s website.
The Statement of the Responsibilities of the Chair, Chief
Executive and Senior Independent Director has been
reviewed and is also available on the Company’s website.
Board at a Glance
Gender representation
as at 31 December 2025
Board Independence
as at 31 December 2025
Board Director tenure
as at 31 December 2025
3
2
Interim Executive Chair 1
Executive Directors 1
Independent Non-Executive
Directors (including the
Senior Independent Director)
3
Adam Phillips
Jemima Bird
Robin Williams
Karen Hubbard
Stephen Bird
7.4
4.4
3.5
3.3
3.3
2.9
Male
Female
7070
DIVISION OF RESPONSIBILITIES
Non-Executive Chair (pre 3 October 2025)
The Non-Executive Chair leads the Board and sets the
cultural tone from the top. He ensures high standards
of corporate governance are maintained. He is
responsible, with the Board, for understanding the
views of all key stakeholders and ensuring they are
considered in all decision-making. He ensures that all
Directors are able to participate in discussions and
constructive challenge and to promote effective
communication between the Executive and Non-
Executive Directors. The Non-Executive Chair led the
annual Board effectiveness review and ensures any
new Directors have a tailored induction.
General Counsel & Company Secretary
The General Counsel & Company Secretary is secretary to the Board and its Committees. The role is to support the
Chair and Chief Executive in fulfilling their duties particularly in relation to induction, training and Board effectiveness
evaluations. In addition, she supports the Non-Executive Directors and provides updates to the Board and advice on
corporate governance and compliance matters.
Chief Executive
The Chief Executive leads the Group and ensures the
delivery of its commercial objectives, whilst ensuring
that operational policies and practices are driving the
appropriate behaviour in line with the desired culture.
He proposes and develops the Group’s strategy in
consultation with the Executive Team, the Chair and
the Board and leads the communication programme
with all key stakeholders including employees. They are
responsible for overseeing Group health and safety
and diversity initiatives and ensuring the Board has all
the information it requires.
Senior Independent Director
In addition to their role as a Non-Executive Director,
They act as a sounding board for the Chair and
acts as an intermediary for other Directors when
necessary. They are available to shareholders where
communication through the Chair or Executive
Directors may not seem appropriate and to provide
additional support in resolving significant issues. They
are also responsible for leading the effectiveness
evaluation of the Chair and discussions regarding
the term of appointment and fees of the Chair. From
3 October Jemima Bird as Senior Independent Director
also supported the Interim Executive Chair and in doing
so carried out some elements of the Non-Executive
Chair role.
Chief Financial Officer
The Chief Financial Officer is responsible for bringing the
commercial and financial perspective to the Boardroom.
He is responsible for managing the Group’s finance
function and ensuring that the appropriate financial
support and processes are in place to support the
implementation of the Group’s strategy. He oversees
and supports the relationship with the investment
community and shareholders. He chairs the Executive
Risk Committee which oversees the Group’s risk profile
and risk management process. From 3 October, the Chief
Financial Officer carried out some elements of the Chief
Executive role to support the Interim Executive Chair.
Independent Non-Executive Directors
The role of the Independent Non-Executive Director
is to provide strategic and specialist guidance with
effective and constructive challenge. They critically
assess the strategy and scrutinise the performance of
management in meeting agreed goals and objectives
within the risk and control framework set by the Board.
They ensure all stakeholders are considered in the
decision-making process. They have a prime role in
succession planning and setting appropriate levels of
remuneration for the Executive Directors and senior
management team.
Board and Committee Structure as at 31 December 2025
Interim Executive Chair (from 3 October 2025)
After Chris Payne stepped down on 3 October 2025,
Stephen Bird assumed the role of Interim Executive Chair
whilst a search for Chris’ successor was undertaken.
Stephen fulfilled elements of the Chief Executive roles.
However, the Board naturally increased the governance
oversight and frequency of Board meetings and calls
to collate feedback and oversight over the Executive
Committee and the Company’s performance, including
presentations and information validated by external
advisers to the Board to maintain an independent
overview as and where appropriate.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
71
Governance
Headlam Group PLC Annual Report & Accounts 2025
71
Committee attendance
Membership of the Board and its Committees and attendance at meetings held during the year ended 31 December 2025.
Board
Nomination
Committee
Audit
Committee
Remuneration
Committee
Keith Edelman 1/15 1/4 – –
Chris Payne 12/15 – – 2/4
Stephen Bird 14/15 3/4 4/4 3/4
Jemima Bird 15/15 4/4 4/4 4/4
Karen Hubbard 15/15 4/4 4/4 4/4
Robin Williams 15/15 4/4 4/4 4/4
Adam Phillips 15/15 – – –
The numbers in the table above confirm how many meetings each Director attended and the total each was eligible to attend during the year.
Nomination
Committee
To monitor the
size, diversity and
composition of the Board
and its Committees
and ensure a formal,
rigorous and transparent
procedure for the
appointment of new
Directors and to plan for
succession. To take an
active role in monitoring
the Company’s diversity
strategy and approach
and monitoring its
effectiveness.
See page 86 to
read more
Audit
Committee
To assist the Board in
fulfilling its obligations
relating to the Group’s
financial reporting
practices, internal control
and risk management
framework, and its
external audit and other
assurance processes.
See page 78 to
read more
Executive Risk
Committee
Meets quarterly
to evaluate and
propose policies and
processes to current
and emerging risks.
Remuneration
Committee
To determine and agree
the remuneration policy
for Executive Directors
and Executive Team, and
to monitor and report
on it. To review wider
workforce remuneration
and related policies
in accordance with
the Code.
See page 92 to
read more
Disclosure
Committee
Meets as required
to assist the Board
in discharging its
responsibilities in
relation to the control of
inside information and
obligations under the
Market Abuse Regulation.
Group Board
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DIVISION OF RESPONSIBILITIES CONTINUED
ESG
Committee
The Committee generally
meets quarterly to
further develop the
Sustainability Strategy
and to monitor progress
towards achieving the
agreed commitments.
However, due to business
need the Committee
met twice in 2025 but still
seeks to embed good
sustainability practices
across the Group and is
attended by a group of
leaders from across the
business.
For more
information
on the
Sustainability
strategy see
page 26
Employee
Forum
The Employee Forum
seeks to allow colleagues
to express and discuss
their views on any
issue, and provides
an opportunity for
them to influence and
develop a more inclusive
working environment.
The Employee Forum
meets quarterly.
There are additional
check in meetings
between the formal
meetings attended
by Employee Forum
representatives only.
For more
information on
Employee Forum
see page 69
Group
Executive
Team
The Executive Team
meets every month to
develop and monitor
strategy, operational
plans and procedures
and to ensure financial
performance against the
budget is monitored. The
Executive Committee
assesses and controls
risk and prioritises and
allocated resources
to deliver the strategy.
Group health and safety
is now monitored during
each Executive Team
monthly meeting.
See page 10
onwards and 33
Board roles and responsibilities
All Directors share collective responsibility for the activities
of the Board; the long-term success of the business and its
impact on stakeholders and the wider society. The Board
roles are constructed to ensure a clear distinction between
leadership of the Board and the executive leadership of the
business. Specific Board roles are outlined in the table on
page 71.
Board Committees and delegation
Various operational matters and decisions have been
delegated to Board or management committees.
The Company has long-established Audit, Disclosure,
Nomination and Remuneration Committees which, oversee
and debate important issues of policy and assist the Board in
attending to its responsibilities.
Terms of reference for the Audit, Nomination and
Remuneration Committees have been reviewed during the
year and are available on the Governance section of the
Company’s website.
The Executive Directors are responsible for the detailed
implementation of the strategic decisions of the Board. The
Non-Executive Directors are responsible for evaluating and
challenging management’s proposals and their mix of skills
and experience bring a broader perspective to the Board’s
dialogue and decision-making process.
Independence
The Company recognises the importance of its
Non-Executive Directors remaining independent of executive
management in character and judgement, in order for them
to effectively support and challenge management. The
Board considered the independence of the Non-Executive
Directors and, taking into account the Board’s review of the
Conflicts of Interests register, consider that three remain
independent in character and judgement and free from any
business or other relationship that could materially interfere
with the exercise of independent and objective judgement.
None of the circumstances outlined in the Code that may
impair, or could appear to impair, independence apply in
the case of any Non-Executive Director. Stephen Bird was
considered independent upon appointment to the Board and
upon appointment as Non-Executive Chair. Jemima Bird was
considered independent upon her appointment to the Board
and upon her appointment as Senior Independent Director on
27 February 2025 and throughout 2025 and continues to be
considered as independent notwithstanding the additional
support which Jemima has provided the Company since
3 October 2025 to support the Interim Executive Chair whilst
searches for successors for certain management roles were
undertaken.
The Board considered Jemima independent because the
additional time commitment was exceptional in nature and
temporary, the remuneration (i.e. a fixed fee which was not
performance or share price linked) should be considered
to be an increase in her Director’s fee, rather than as
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
73
Governance
Headlam Group PLC Annual Report & Accounts 2025
73
Group Chief Executive
additional remuneration, the payment of additional fees is
consistent with the current Directors’ Remuneration Policy
and the amounts paid are not outside of market norms if
converted to a per day rate and Jemima remained a Non-
Executive Director (i.e. she has not become a employee of
the Company). The Board has met more frequently to have
more oversight and receives third-party presentations and
data to maintain an independent evaluation of matters being
presented by management.
The Senior Independent Director is available to shareholders
if they have concerns which are not resolved through the
normal channels of the Chair, Chief Executive or Chief
Financial Officer, or for which such contact is inappropriate.
The Non-Executive Chair and Non-Executive Directors do not
participate in any bonus, share option or pension scheme of
the Company, nor are they subject to minimum shareholding
requirements. They are initially appointed for a three-year
term and, subject to review and re-election by shareholders,
can serve up to a maximum of three such terms.
In line with the Code, all Board members seeking re-election
stand for re-election by shareholders annually at the AGM,
(neither Keith Edelman who left in 2025 or Adam Phillips who
leaves shortly in 2026 will stand for re-election).
Board activity in 2025
Board meetings provide the forum for the debate, review and
challenge of strategic, operational and governance matters,
please also see pages 64, 65 and 75.
The Board had 15 meetings during the year to discuss the
latest operating and financial information, key strategic
items, additional deep dives into specific items and other
topics requiring discussion or decision. The agenda has strong
links to the strategic objectives of the Group and is set via a
collaborative process between the Interim Executive Chair
and the General Counsel & Company Secretary. Sufficient
time is allocated to each item to ensure effective discussion.
Standing agenda items include updates from the Interim
Executive Chair, Chief Financial Officer, and Interim Chief
People Officer on trading matters, health and safety, people
and financial reports. The annual Board work programme
ensures that the view of all stakeholders, including employees,
suppliers, customers and shareholders are taken into
consideration. This ensures that the Directors discharge their
duties including those under section 172(1) of the Companies
Act 2006. Further detail on stakeholders can be found on
pages 18 to 20.
Board papers are issued where possible, five working days
prior to each meeting to allow adequate consideration of
the matters to be discussed. The Board’s meeting agenda is
structured to ensure sufficient time is given to each item under
consideration.
For further information on strategy see page 12
The Board receives an update from the General Counsel &
Company Secretary on a quarterly basis including updates
on matters of corporate governance. Matters requiring
attention between these quarterly updates are shared at
the next meeting, or between meetings as required. The
Board performs deep dives into areas of importance such
as sales, buying, ecommerce and digital, and conducts post
implementation reviews of key capital projects.
7474
DIVISION OF RESPONSIBILITIES CONTINUED
Strategy and management
• Review of Group strategy and
priorities
• Review of organisation
structure to deliver the
strategy and the resources
required
• Consideration of the
operational strategy to
deliver the strategic goals
• Deep dives into strategic
areas, including ERP
replacement programme
• Sale and leaseback of the
Tamworth distribution centre
• Oversight of the strategy
refresh announced in
November 2025
• Considered the impact
of Company culture on
initiatives and projects
See page 12 to read more
on Strategy
Internal controls and
risk management
• Consideration of the
effectiveness of the internal
audit function
• Completed an assessment
of the Company’s emerging
and principal risks and risk
appetite
• Monitored health and
safety performance and
implementation of continual
improvements to procedures
• Monitored the ongoing
implementation of
recommendations arising out
of IT security
• Received a presentation
from the appointed Health &
Safety Director
See page 46 on risk
management
Financial and
performance reporting
• Review of the trading
performance and the
approval of the Company’s
annual and half-year results
• Approval of the Company’s
dividend policy
• Reviewed the Company’s
capital allocation priorities
• Reviewed and approved the
Company’s 2025 and 2026
budget, forecasts and key
performance targets
• Long-term viability
statement, and time frame
over which it should be
considered
• Approved the UK Tax strategy
See page 51 for long-term
viability statement
ESG and stakeholder
engagement
• Interacted with shareholders
and the wider investment
community
• Reviewed investor relations
programme and feedback
provided by the Company’s
investors, stockbrokers and
financial PR agency plus
reports on investor roadshows
• Received progress updates on
ESG Committee activity
• Received feedback from the
Supplier Conference
See page 26 for
Sustainability report
People
• Approval of the appointment
of Stephen Bird (as Interim
Executive Chair with effect
from 3 October)
• Executive Committee
succession planning
• Consideration of health
and safety
• Consideration of Group
diversity
• Gender pay gap reporting
• Modern slavery reporting
• Employee share grants and
long service awards
See pages 32 to 35, 62, 63
and 88 on culture,
colleague engagement and
diversity
Governance and culture
• Participated in and reviewed
the results of an externally
facilitated Board and
Committee evaluation
• Approved the terms of
reference of each Board
Committee
• Reviewed and approved the
Board’s principal policies
• Reviewed the Company’s
Register of Conflicts
• Approved the Company’s
Anti-Corruption and Bribery
policy, procedures on gifts
and hospitality, Fraud and
Anti-Money Laundering policy
and Speak Up policy
• Received and considered
reports on compliance
with financial, regulatory,
corporate responsibility and
environmental commitments
Key highlights of the Board discussions during the year under review are outlined.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
75
Governance
Headlam Group PLC Annual Report & Accounts 2025
75
Outside the Boardroom
Throughout the year the Board undertook
site visits across the business.
In April they visited the Rayleigh distribution centre which
included a tour of the site as well as presentations from site
management on the performance and opportunities for
the business (including health and safety performance). The
Board also meets and speaks with a variety of employees
during these visits.
In addition the Directors undertook further site and customer
visits, which allowed an additional opportunity to discuss
areas relevant to the customers and the Board and meet a
variety of customer managers and employees.
The Interim Executive Chair is kept up to date about emerging
issues through regular interaction with the Chief Financial
Officer and other members of the Executive Committee.
All this activity allows the development of a deeper
understanding of the Company and to ask questions about
any specific areas of interest. This improves the constructive
challenge at Board meetings.
The Chair and Non-Executive Directors schedule meetings
without the Executive Management present to allow
an opportunity to discuss the operation of the Board
and any areas for consideration are fed back to the
Executive Directors.
The Senior Independent Director also held a meeting of
the Non-Executive Directors without management or the
Chair present.
Risk management
The Board has overall responsibility for Group’s system of
risk management and internal control and for reviewing its
effectiveness and is supported in this regard by the Audit
Committee and the Executive Risk Committee.
Emerging risks are considered by the Board at least annually.
Further information on the Company’s approach to risk
management is available in the Strategic report on page 7
and in the Audit Committee report on page 78.
A description of the risks identified, together with details of
how they are managed or mitigated, is set out on pages 46
to 50.
The Audit Committee, on behalf of the Board, monitors the
Company’s system of risk management and internal control
with papers from the Executive Risk Committee at each of its
meetings, and conducts a review of its effectiveness at least
once a year.
Board induction and training
The process for identifying and evaluating new candidates
for Board positions has been delegated to the Nomination
Committee under its terms of reference. Once a preferred
candidate has been identified they are recommended to the
Board for appointment. Further information on this process is
outlined below.
Induction
Upon joining, each new Director receives a tailored induction
programme relevant to their experience, expertise and
committee membership. Particular emphasis is placed on the
new Director visiting several operating locations and businesses
and meeting the associated senior managers and colleagues to
aid with deep understanding of the Group’s business operations
and the day-to-day challenges facing the business. The Director
is also able to accompany a salesperson and a driver for a day
to help develop an all-round understanding of the roles and the
challenges faced at all levels of the organisation.
An induction programme will typically include briefings
on strategy and other matters, site visits, and one-to-one
meetings with senior colleagues, including other Directors and
each member of the Executive Team, in addition to advisers
such as the Company’s stockbrokers and auditor. Briefings
are included on health and safety, investor and workforce
engagement, culture, governance and risk.
Meetings will also be scheduled with each Committee Chair
and relevant advisers.
A comprehensive information pack is provided which includes
(but is not limited to):
• Background information about the Group and current
strategy documents;
• Board and Committee minutes and meeting procedures;
• Group policies;
• Matters reserved for the Board and Committee terms
of reference;
• Financial budgets;
• Shareholder and other stakeholder feedback;
• Customer insights; and
• Relevant industry and financial reports.
Training and development
All Directors are considered to be suitably qualified, trained
and experienced so as to be able to participate fully in the
work of the Board. To assist with the independent conduct of
their function and, if required, in connection with their duties,
a process is in place for the Non-Executive Directors to obtain
professional advice at the Company’s expense.
The Directors keep their knowledge and skills up to date
and have the opportunity to discuss areas for development
with the Chair. Virtual seminars and on-line courses run by
professional bodies on various commercial, operational and
regulatory matters were attended by the Directors as part of
their ongoing development .
As required, professional advisers are invited to the Board
meetings to provide in-depth updates and the Board also
receives updates on environmental, employee and governance
issues as appropriate. The General Counsel & Company
Secretary provides regular updates on regulatory matters.
Presentations at the Board during 2025 have covered ESG
updates, cybersecurity, investor views, customer insight,
and market remuneration and policy trends. In addition,
the General Counsel & Company Secretary provides regular
updates on developments in Corporate Governance.
The Non-Executive Directors further enhance their
understanding and knowledge of the business and culture
by spending time with the Executive Directors, the Executive
Team, other senior management and colleagues.
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DIVISION OF RESPONSIBILITIES CONTINUED
Board evaluation
Progress during 2025 versus actions identified as part of the prior year’s Board evaluation (2024)
Customer
Continued Board engagement
with Executive team Meetings
Actions
identified in
2024
To ensure that the Board
continued to understand the
Company’s different customer
segments it was agreed that
each of the Board members
would contact and/or visit
different customer types to gain
further insight.
To ensure the continued
dialogue and engagement
between Executive team
members and individual
Board members outside of the
Boardroom to get the benefit of
the Board Directors’ experiences
and input into the Company’s
strategy and its implementation.
It was agreed that the Board
would continue with a recent
practice of each Non-Executive
Director providing direct
feedback at the end of each
meeting for the benefit of the
Executive Directors to share with
the Executive team members.
Progress
made in 2025
The Board completed this and
met with different customers
during the year.
The Board continued to engage
with the Executive team on
an individual and collective
basis to further understand the
challenges the Company faces
which enabled the Board to take
urgent action to accelerate the
transformation programme and
revise its strategy.
The Board has embedded this
feedback approach at each
meeting which has worked well
to capture consistent points for
Executive team members.
2025 Board evaluation
The Code recommends that there should be a formal and
rigorous annual evaluation of the performance of the Board
and its Committees and that this process is externally
facilitated at least every three years. The Board undertook
an externally facilitated self-evaluation in 2025 with Telos
Partners.
The evaluation noted the positive performance of the Board
in several areas and highlighted areas, which would benefit
from further improvement.
The Board discussed the report and agreed actions to take
forward based on the suggestions in the report.
Performance review of the Chair
(and Interim Executive Chair) during
the financial year
The Senior Independent Director (Jemima Bird), following
results of the Board evaluation and consultation with other
Directors, provided feedback to Stephen Bird as the Chair
and Interim Executive Chair on his own performance. The
review noted that the Chair had strengthened relationships
between the Board and the Management Team, with a more
collaborative leadership and approach, allowing full member
participation in meetings. In addition, given the Company’s
performance a directive-led approach with the Management
Team was deemed appropriate and would receive periodic
reviews as business context evolves. Please see the Nomination
Committee report on pages 78 to 85 on how it ensured that
the Company continues to have the most effective Board
composition and combination of skills to support the delivery of
the acceleration of the Company’s strategy.
Individual Director performance
reviews during the financial year
As part of the annual effectiveness review of the Directors,
the Chair provided feedback to each Director on their own
performance and discussed training and development
opportunities.
Following the results of the evaluation and the relevant
performance reviews described in this section, the Board
confirms that all Directors, including the current Chair
of the Board, continue to be effective and demonstrate
commitment to the role, including dedicating sufficient time
to attend all necessary meetings and to carry out all other
duties required of them.
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COMPOSITION, SUCCESSION
AND EVALUATION
Statement from the Chair
of the Audit Committee
On behalf of the Board, I am
pleased to present the Audit
Committee’s report for the
year ended 31 December
2025.
This report outlines the Audit
Committee’s ongoing role in providing
robust challenge and oversight of the
Group’s financial reporting, internal
controls, and risk management.
The macroeconomic and industry
headwinds commented upon last year
have persisted through the year, which
has created externally driven challenges.
These have been compounded
by certain adverse unintended
consequences of the strategy that the
Group had been pursuing and which
was revised during the year. The Audit
Committee has continued to monitor
closely for the potential impact of these
challenges on the Group.
Membership and
meetings
The Audit Committee comprises
Stephen Bird, Jemima Bird, Karen
Hubbard and myself. All members are
independent Non-Executive Directors,
except for a period of time, when
Stephen Bird and Jemima Bird took on
executive duties following the departure
of the CEO in October 2025, bringing
a broad range of relevant experience
that enables effective challenge
and thorough analysis of the matters
considered. Further details of the
Committee members’ experience can
be found in the Directors’ biographies
on pages 60 and 61. Information on
the remuneration of Audit Committee
members is set out in the Report on
Directors’ Remuneration on page 106.
The Audit Committee met four times
during the year in scheduled meetings
aligned to the annual programme of
business and the financial reporting cycle.
Meetings are held shortly before Board
meetings to facilitate effective and timely
reporting, with the Chair of the Audit
Committee providing a verbal update to
the Board following each meeting.
The Chief Executive/Executive
Chair, Chief Financial Officer, and
representatives of the external auditor
attend Audit Committee meetings at
the invitation of the Committee Chair.
The Director of Group Finance, the Head
of Internal Audit, and other members
of senior management attend as
appropriate. During the year, the Audit
Committee also held meetings with the
external auditor without management
present and, separately, with the Head
of Internal Audit. In addition, I meet
regularly with the Lead Audit Partner
outside the formal meeting schedule
and maintain ongoing contact with the
Chief Financial Officer and the Head of
Internal Audit.
The Company Secretary acts as
Secretary to the Audit Committee.
In addition to formal meetings,
Audit Committee members met with
members of the operational and
finance teams, as well as other senior
management, during the year.
Main role and key
responsibilities
The Audit Committee is appointed by
the Board and operates under written
terms of reference (available in the
investors section at www.headlam.com).
At the start of the year the Audit
Committee agreed its priority areas of
focus for 2025. These are set out in the
table below along with a summary of
the progress the Audit Committee has
made on these priorities.
“ The Audit Committee has continued to
closely monitor the impact of market
conditions, and the transformation plan,
on the Group’s significant accounting
matters and key judgements.”
Robin Williams
Chair of the Audit Committee
Key responsibilities:
• Monitoring the integrity of the
Group’s financial statements
and results announcements
and any other published
financial information and
significant financial reporting
issues and judgements, as well
as other required disclosures.
• Reviewing the adequacy and
effectiveness of the Group’s
internal controls and risk
management systems.
• Approving the activities,
reviewing the findings and
assessing the effectiveness
of the Group’s internal audit
function.
• Recommending the external
auditor appointment;
assessing audit quality and
effectiveness; assessing
independence, objectivity
and approving fees; and
monitoring non-audit services.
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AUDIT COMMITTEE REPORT
Key areas of focus Progress made
Preparation for
compliance with the UK
Corporate Governance
Code reform including
readiness for the required
Director’s Declaration in
respect of the year ended
31 December 2026
Preparations for compliance progressed well
during the year. A dry run of the controls and areas
underpinning the Declaration was performed in
2025.
Whilst the key remediation focus is on material
controls, attention is also given to key controls
which form part of our internal control
environment assessment.
Continued oversight
and challenge of the
impact of the Group’s
transformation plan
on financial reporting
and on significant
judgements and
estimates
The impact of the transformation plan has been
assessed as part of the half year process on
significant judgements and estimates, including
bad debt and stock provisioning as well as going
concern.
Oversight of financial
control implications of
the new ERP
The Finance team have been heavily involved in
shaping the design of the new system, including
the incorporation of the required controls. The new
system is defined in a master document called
‘Day In The Life’.
The Board carefully discussed the considerations as
to whether or not to pause the implementation of
the new ERP system, ultimately deciding to pause
it. Prior to that decision the project team had been
building towards doing walk throughs of each
of the key processes for the Executive team and
certain members of the Audit Committee.
Assessing impact of
macroeconomic and
trading environment
on the Group’s
accounting judgements
and estimates (e.g.
impairment, going
concern, etc.)
The macroeconomic impact and trading
environment has also been considered in the
half year process on significant judgements and
estimates, notably in the 3 year plan roll forward
and going concern assessment.
Consideration of
emerging risks, including
through a facilitated
workshop
The Risk Committee undertook a facilitated
workshop in 2024 and this was envisaged to be
repeated in 2025, with the Audit Committee.
However, given other business priorities in light of
business performance, this will be covered by the
Audit Committee during 2026. Consideration of
emerging risks has, nonetheless, continued during
the year.
How the Committee
spent its time
Financial Reporting 30%
External Audit 30%
Internal Controls and Risk 25%
Governance 15%
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79
Activities of the Audit Committee during the year
The key activities of the Audit Committee in discharging its principal areas of responsibility are outlined below
External Audit
• Approved the external audit plan, scope, materiality,
and the audit fee.
• Reviewed audit findings, including private meetings
with the external Auditor, and assessed auditor
independence and effectiveness.
• Oversight of the audit tender process concluding in
the recommendation to reappoint PwC.
Governance
• Reviewed and approved the Audit Committee’s
terms of reference, annual programme of work and
key governance policies.
• Considered matters relating to modern slavery and
human trafficking and received updates on relevant
corporate governance developments.
Going concern and viability reporting
• Reviewed financial modelling supporting the going
concern assessment.
• Considered the viability assessment and scenario
analysis underpinning the long-term viability
statement.
Financial reporting
• Reviewed the interim and annual financial
statements, including significant accounting
judgements, estimates and risk disclosures.
• Considered the effectiveness of processes to ensure
the Annual Report and Accounts are fair, balanced
and understandable.
• Assessed the impact of macroeconomic and
trading conditions, and the transformation plan,
on accounting judgements, disclosures and
liquidity, and reviewed the going concern basis of
preparation.
• Considered the external Auditor’s findings and
management’s responses, and approved the Audit
Committee Report for inclusion in the Annual Report
and Accounts.
Internal controls and Risk
• Approved the internal audit charter and plan and
reviewed reports on the effectiveness of internal
controls and risk management.
• Supported the Board in its review of principal and
emerging risks and related disclosures.
• Oversight of the preparation for compliance with the
Director’s Declaration in respect of the year ended
31 December 2026.
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AUDIT COMMITTEE REPORT CONTINUED
Significant financial reporting issues and areas of estimate and judgement
The Audit Committee received and discussed reports and recommendations from management and the Auditor setting out the
significant issues and areas of judgement and estimation.
Significant issues and areas of
estimate and judgement How they were addressed
Supplier arrangements
The Group has a significant number
of rebate agreements with suppliers.
These agreements can contain multiple
terms or tiered arrangements based on
the volume of goods purchased. The
majority of these rebates are paid to the
Group after the year-end, meaning that
there is typically a significant rebate
receivable at the year-end balance
sheet date.
Management explained to the Audit Committee the process of calculating the
amounts expected to be received and confirming these balances with suppliers
and discussed the assumptions made in the calculations. The Audit Committee
challenged the assumptions used by management and reviewed the level of cash
receipts and credit notes received after the year-end.
The work of the external auditor in relation to supplier rebates was discussed by
the Audit Committee.
Based on this, the Audit Committee was satisfied that the amounts recognised
have been appropriately scrutinised and that the assumptions upon which the
calculation was based are sufficiently robust.
Non-underlying items
The Group accounting policy for
non-underlying items states that
performance measures will be
presented which exclude items which
are associated with the acquisition of
businesses and other items which by
virtue of their nature, size and expected
frequency, warrant separate additional
disclosure in the financial statements
in order to fully understand the
underlying performance of the Group.
Management must exercise judgement
in deciding whether items should be
treated as non-underlying by reference
to this policy.
The Audit Committee considered the presentation of non-underlying items in
accordance with the Group accounting policy. This year the non-underlying items
included income of £6.2 million in respect of the profit on disposal of properties,
and expenses of £36.3 million comprising: £1.1 million of amortisation of intangibles
and other acquisition-related expenses, £4.8 million impairment of assets, £23.2
million business restructuring and change-related costs, £5.6 million ERP system
development, and £1.6 million provision relating to legal claim.
The Audit Committee received reports from management and the Auditor,
outlining the judgements applied including consideration of materiality. The Audit
Committee also considered whether the Annual Report and Accounts was fair,
balanced and understandable and challenged management’s designation of
items as non-underlying. The Audit Committee concluded that the disclosure of
non-underlying items was sufficient and appropriate for the user of the accounts
to understand the nature of the items and reason for their treatment as non-
underlying.
Carrying value of
non-current assets and
recoverability of investments in
subsidiaries
The Group had £7.6 million of goodwill
allocated on its balance sheet at 31
December 2025, resulting from past
acquisitions, along with intangible
assets, property, plant and equipment
and right-of-use assets. Furthermore,
the Company’s investments in
subsidiaries are £12.6 million. The
assessment of the recoverable amount
of these assets are estimated based on
future cashflows and any impairment
has the potential to be material.
Management performed the annual impairment review of goodwill, along with
impairment reviews for other groups of assets at both June 2025 and December
2025 where indicators of impairment were identified. The key assumptions used
in an impairment review are the level of revenue growth, gross margin and the
discount rate.
Management concluded that an impairment of £4.8 million was necessary during
2025, in respect of the Melrose cash generating unit, as described in note 10.
Management also assessed the recoverability of the Company’s investment in
its subsidiaries and an impairment of £83.8 million was recorded. This was driven
by an increase in debt in HFD Limited and the reduced value in use of cash flow
projections as a result of the Group’s transformation plan, which, whilst providing
a clear line of sight to return to profitability, is based on a smaller business and
hence the absolute profit in the long term projections has changed compared to
previous impairment assessments.
The Audit Committee considered the impairment reviews carried out by
management and discussed the basis of the key assumptions and the sensitivities
performed. The Audit Committee also considered the external auditors’ findings
and discussed this matter with the external auditors. Based on this the Audit
Committee was satisfied that the approach taken by management was robust
and that the assumptions made were reasonable.
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Significant issues and areas of
estimate and judgement How they were addressed
Recoverability of deferred tax
assets
A net deferred tax asset of £8.2m has
been recognised in respect of tax losses
Over the last two years the Group’s deferred tax assets in respect of tax losses
have increased. In determining whether it is appropriate to recognise deferred tax
assets management is required to consider whether there are sufficient deferred
tax liabilities against which to offset these deferred tax assets and, where this is
not the case, to satisfy itself that there are sufficient taxable profits projected in
order to utilise these losses in an appropriate timeframe.
Management has assessed future trading forecasts and has concluded that the
deferred tax assets recognised will be recoverable using estimated future taxable
income over a five year period to 2030 based on approved business plans for the
Group up to 2029 with 2030 assumed to be in line with 2029. The directors have
not deemed it appropriate to estimate future taxable income past 2030 given
the unreliability of using estimating data past this point. The losses can be carried
forward indefinitely and have no expiry date.
The Committee considered management’s assessment and its projections, after
which the Committee concurred with management’s view that it was appropriate
to recognise the deferred tax assets
Provision for legal claim
The Group has recognised a provision of
£1.6m in respect of a health and safety
offence in 2022
The legal claims provision relates to one of the Company’s subsidiaries, MCD
Group Limited, which is being prosecuted by a local authority for a health and
safety offence relating to an accident at one of the Group’s sites, previously
disclosed in our 2022 Annual Report. MCD Group Limited has pleaded guilty to the
offence and awaits sentencing.
There is significant uncertainty in estimating the level of fine that may be
imposed. The Committee considered management’s assessment, as well as
external input, including with reference to sentencing guidelines. The Committee
concurred with the provision of £1.6 million recognised, being the best estimate at
the current time.
Going Concern
In determining the appropriate basis of
preparation of the financial statements
the Directors are required to consider
whether the Group can continue in
operational existence for a period no
shorter than 12 months from the date of
approval of the financial statements
The Audit Committee assessed management’s going concern analysis, which
included forecasts of a base case scenario and a severe but plausible downside
scenario, and covenant compliance and liquidity headroom in those scenarios.
Particular attention was given to assumptions relating to revenue, transformation
plan initiatives, cash inflows from property disposals and working capital
optimisation, and the availability of committed borrowing facilities.
The Audit Committee challenged these assumptions and reviewed the mitigating
actions available, including those that are in the Group’s control and those
that are not. The Audit Committee noted that the Group was compliant with
covenants in both the base case and the downside scenarios. Having considered
the analysis and the disclosures proposed in the financial statements, the Audit
Committee concluded that it is appropriate to prepare the financial statements
on a going concern basis. The Audit Committee also noted that, whilst the
transformation plan is anticipated to result in a reduction in Net Debt, there
are cash inflows in the projections (specifically, property disposals) that are not
wholly within the Group’s control. Accordingly, the Committee concurred that
those particular circumstances represent a material uncertainty which has been
disclosed in the financial statements.
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AUDIT COMMITTEE REPORT CONTINUED
Internal audit
The Group has a Head of Internal Audit, who provides regular
reports to the Audit Committee at each meeting. During the
year, the function delivered the approved internal audit plan,
which was developed with reference to the Group’s principal
risks.
The Audit Committee also receives assurance from a range
of other sources, including internal control reviews carried
out by the Group finance team and additional management
reporting. This includes a consolidated overview of assurance
activities across the Group, together with internal self-
certification reports covering compliance with regulatory
requirements and Group policies.
The internal audit function will continue to develop in line with
the Group’s strategy, focusing on assessing the effectiveness
of risk management processes, policies, procedures, systems
and key controls. Management considers recommendations
arising from internal audit reviews, with progress against
agreed actions monitored by Internal Audit and reported to
the Audit Committee on an ongoing basis.
The Audit Committee remains satisfied with the independence
and effectiveness of the internal audit function. The Head
of Internal Audit reports directly to the Chair of the Audit
Committee, with an administrative reporting line to the Chief
Executive, and holds no other operational responsibilities, in
accordance with the Institute of Internal Auditors’ Code of
Practice.
Private sessions between the Audit Committee and the Head
of Internal Audit are held twice annually, with additional
meetings between the Head of Internal Audit and the
Committee Chair taking place at least quarterly.
External auditor
Non-audit services
The Audit Committee has reviewed its policy for the provision
of non-audit services (‘Non-Audit Policy’) within the last 12
months. Under the Non-Audit Policy and in line with FRC’s
Ethical Standard, non-audit fees paid to the external auditor
should not exceed 70% of the average audit fee for the
preceding three periods.
During the year, no non-audit services were provided by the
Auditor and therefore no fees were paid to the Auditor for
non-audit services. The general policy is that the external
auditor must not carry out any non-audit services. The Group’s
statutory auditor will only be engaged to carry out non-
audit services in exceptional circumstances or where there
is a regulatory request and any such engagement would
be approved by the Audit Committee. This is to ensure the
independence of the external auditor is safeguarded.
Independence and objectivity
The Audit Committee annually reviews the appointment of
the external auditor and considers their independence and
objectivity.
PwC was initially appointed as Auditor in 2016 following a full
tender exercise. Gill Hinks took over as lead audit partner for
Headlam Group plc following the conclusion of the 2019 audit
and, as she had served as lead audit partner for five years
prior to this year’s audit commencing, the Audit Committee
considered, in conjunction with the external auditors,
appropriate lead audit partner arrangements in accordance
with current professional standards. Laura Hill became lead
audit partner for the year ended 31 December 2025.
The Audit Committee considered the conduct of the external
auditor and the level of challenge displayed during the course
of the year-end audit, in particular the depth of discussions
and the challenge to the Group’s approach to its significant
judgements.
The external auditor has processes in place to ensure that
independence is maintained and has written to the Audit
Committee confirming that, in their opinion, they remain
independent within the meaning of the relevant regulations
on this matter and their own professional standards and
that no conflict of interest exists that would affect their
professional judgement.
Taking into account the external auditor’s confirmation, its
own deliberations and feedback from management, the
Audit Committee agreed that the external auditor remained
independent from management and able to display an
independent view on the position of the business.
Effectiveness of external audit
An effectiveness review is performed after the conclusion of
each year’s audit. Feedback was obtained from members of
the Audit Committee, regular attendees and members of the
finance team. The review covers several themes including the
calibre of the external auditor, the team and relationship with
the business and the independence and objectivity displayed.
The progress achieved against the agreed audit plan and
the competence with which the auditor handled the key
accounting and audit judgements were also considered.
Following the review, the Audit Committee concluded that the
external auditor, PwC LLP, remained independent and that
the external audit process remained effective.
Audit tender
PwC will, for the year ending 31 December 2026, have been the
Group’s Auditor for ten years. Accordingly the Group conducted
a competitive tender process for the Group’s external audit, in
line with regulatory requirements and to ensure continued audit
quality, independence and value for money.
Two members of the Audit Committee formed a tender
subcommittee which also included the Chief Financial Officer
and Director of Group Finance. This tender subcommittee
oversaw the tender process, which included the preparation
of a detailed request for proposal and management
presentations. A number of leading audit firms were invited
to participate in the tender, including the incumbent auditor.
The Committee was satisfied that the process was fair,
competitive and appropriately robust.
Management supported the process by coordinating
information requests and providing factual input; however,
the final evaluation and recommendation were made solely
by the Audit Committee, following input from the tender
subcommittee.
Following the conclusion of the tender, the Audit Committee
recommended the reappointment of PwC as the Company’s
external auditor, subject to shareholder approval at the AGM.
The Audit Committee’s recommendation, that a resolution to
reappoint PwC LLP be proposed at the AGM, was accepted
and endorsed by the Board. In accordance with regulatory
requirements, the next audit tender will be conducted no later
than 2036.
The Audit Committee concluded that the tender process was
thorough and effective and that the recommended auditor
is well placed to deliver a high-quality, independent audit of
the Group.
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FRC review of 2024 financial statements
The FRC conducts a review programme of companies’ annual
reports and accounts. During 2025 the FRC conducted such a
routine review of the Company’s 2024 accounts and enquired
into specific areas of the Company’s reporting.
As a result of this FRC review, the Company has changed its
accounting policy for cash and cash equivalents in order to
provide reliable and more relevant information in the financial
statements.
The Group accounting policy when there is a cash pooling
arrangement in place, covered by one single bank contract,
relating to a single currency and subsidiaries operating in
the same country, is that cash and cash equivalents and
overdrafts are considered to be a single unit of account and
they are reported on an aggregated basis.
The Company is now deemed to be the primary participant in
the pooling arrangement and the amount recorded as cash
and cash equivalents in the Company’s financial statements
is the net cash balance on the pooling arrangement rather
than its memo account balance, with the difference recorded
as an intercompany balance. This change in accounting
policy has resulted in the restatement of the Company’s
cash and cash equivalents at 31 December 2024 period from
£82.3 million to £7.5 million with corresponding adjustments to
trade and other receivables from £28.7 million to £128.6 million
and trade and other payables from £49.2 million to
£74.3 million. The brought forward cash and cash equivalents
balance as at 1 January 2024 has been restated from
£63.2 million to £15.1 million.
There is no change to the Group’s cash and cash equivalents
in the consolidated financial statements.
It is noted that there are inherent limitations to the FRC review
of the 2024 annual report and accounts and that it does not
provide assurance that the annual report and accounts are
correct in all material aspects. The FRC role is not to verify
the information provided to it, but to consider compliance
with reporting requirements. The FRC accepts no liability
for reliance on them by the Company or any third party,
including, but not limited to, investors and shareholders.
Misstatements
Management reported to the Audit Committee that they
were not aware of any material misstatements or immaterial
misstatements made intentionally to achieve a particular
presentation. The external auditor reported to the Audit
Committee the misstatements that had been found in the
course of the audit work and no material amounts remained
unadjusted.
Information security and cyber risk
The Audit Committee, with its membership consisting of only
Non-Executive Directors, oversees the Group’s approach to
information security and cyber risk management as part
of its review of the risk management and internal control
framework and its oversight of the work of the Executive Risk
Committee.
The Company has a clear approach to identifying and
mitigating information security risk. Information security and
cyber risks are mitigated through processes and procedures
employed by the Group; training provided to all colleagues
with email access and annual cyber awareness training; and
independent assurance and annual penetration testing.
A small subsidiary of the Company was subjected to a
cyber attack during the year, which successfully infiltrated
and disabled the standalone ERP system of the subsidiary.
However, through swift action to isolate and disconnect the
affected system and launch an alternative version of the ERP
system, populated with backup data, there was very minimal
disruption with little to no lost revenue as a result. We did not
identify any loss of data from this attack.
Risk management and
internal control effectiveness review
The Board has ultimate responsibility for the effective
management of risk throughout the Group, including
determining its risk appetite and identifying key strategic and
emerging risks. The role of the Audit Committee is to monitor,
on behalf of the Board, the Group’s financial and non-
financial risk and internal control management systems and
assess their effectiveness.
In supporting the Board in its assessment of the effectiveness
of risk management and internal control process, the
Audit Committee relies on a number of different sources of
assurance: at each meeting, the Audit Committee reviews the
minutes of and considers assurance provided by the Executive
Risk Committee as part of its assessment of the effectiveness
of the risk management framework; reports provided by
management and the Executive Risk Committee; and the
assurance provided by third parties in specific risk areas.
The Audit Committee also receives reports from the external
auditor on matters identified during the course of its statutory
audit work. The Audit Committee takes into account the
resources within the finance team including the structure of
the team, and the qualifications, experience and competence
of the people within it, in forming its view.
The Group’s control framework is intended to manage rather
than eliminate the risk of failure to achieve business objectives.
Such a framework can only provide reasonable and not
absolute assurance against material misstatement or loss.
The control framework is evolving in line with the strategic
objectives and has been enhanced by the implementation of a
set of minimum controls standards, with a rolling programme of
testing to ensure that all of the minimum control standards are
designed and operating effectively.
Health and safety risks are managed by the Executive Risk
Committee but performance is monitored directly by the
Board at each of its scheduled meetings.
An overview of the risk management framework and the
principal risks and uncertainties it identifies, is set out on
pages 46 to 50.
The Audit Committee was satisfied that the reporting
disclosures in respect of internal controls and risk management
are a fair representation of the Group’s position.
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AUDIT COMMITTEE REPORT CONTINUED
Fair, balanced and understandable
At the request of the Board, the Audit Committee reviewed
the Group’s Annual Report and Accounts and considered
if when taken as a whole, it was fair, balanced and
understandable, and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy, as required by the
Code Provision 25.
The key themes are considered early in the process and this
process involved a wide range of individuals including the
Interim Executive Chair, Chief Financial Officer, Company
Secretary, Finance Team, Interim Chief People Officer and
senior managers of the businesses.
The Audit Committee followed robust procedures to make
this assessment. These included reviewing the early stages of
drafting and any feedback was then incorporated into the
subsequent drafts. Each Director also had the opportunity
to review and feedback on a full copy of the report which
provides additional oversight. The Audit Committee also
had oversight of the overall process and also the results of
the evaluations of the remuneration committee report and
the governance section as well as private sessions with the
external auditor.
In addition, the Audit Committee considered and challenged
the going concern assumptions and the management’s areas
of significant judgements as part of the year end process as
did the external auditor.
The Audit Committee considered the content and if it was
balanced with both negative and positive factors being
presented and that it represented the events throughout the
year. The balance and consistency between narrative and
financial reporting was reviewed.
It was recommended to the Board that the 2025 Annual Report
and Accounts did reflect a fair, balanced and understandable
assessment of the Company’s position and prospects and
contained sufficient information for shareholders to assess the
Company’s position, performance, business model and strategy.
Speak Up policy
The Group’s ‘Speak Up’ Policy enables employees to
confidentially raise concerns regarding potential improprieties
in financial reporting or other matters. All employees receive
the Policy at induction and through ongoing training and
communications throughout the year.
Concerns can be raised via clearly defined internal channels
or anonymously through an independent external provider.
The ‘Speak Up’ Committee - comprising the Interim Chief
People Officer, General Counsel & Company Secretary,
Director of Group Finance, and Head of Internal Audit -
oversees the process, with all incidents reported to the Chair
of the Audit Committee. Investigations are conducted in line
with the Policy, with outcomes communicated to the Board as
appropriate.
The Group maintains a zero-tolerance approach to
bribery. During the year, the Audit Committee reviewed the
Anti-Corruption and Bribery, and Fraud and Anti-Money
Laundering Policies and recommended their approval to the
Board. Further details are available on page 75.
Committee effectiveness review
The effectiveness of the Audit Committee was evaluated as
part of the Board evaluation. Further details of this can be
found on page 77. The review found that the Audit Committee
is operating effectively and that its role and remit remain
appropriate for the current needs of the business.
Summary
The Audit Committee has concluded, as a result of its work
during the year, that it has acted in accordance with its terms
of reference and fulfilled its responsibilities.
The Audit Committee remains committed to maintaining
an open and constructive dialogue on relevant audit
matters with shareholders. If you should have any
questions on any aspect of this report, please do email
headlamgroup@headlam.com and I will also be available at
the AGM to answer any questions about the work of the Audit
Committee.
This Audit Committee report forms part of the Corporate
Governance Report and is signed on behalf of the Audit
Committee by:
Robin Williams
Chair of the Audit Committee
25 March 2026
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Statement from the
Chair of the Nomination
Committee
On behalf of the Board, I
am pleased to present the
Nomination Committee
report for the year ended
31 December 2025.
Succession planning
Following a succession Chair transition
between Keith and myself, I took over
as Chair of the Board and Chair of the
Nomination Committee with effect
from 27 February 2025.
The Nomination Committee then also
considered the balance of skills and
experience on the Board to support the
delivery of the key strategic aims and
revised strategy of the Company.
As a result, Jemima Bird, our Chair
of the Remuneration Committee
was appointed as the Senior
Independent Director with effect from
27 February 2025. Full details of all the
Board can be found in their biographies
on pages 60 and 61.
Executive Directors
The focus later in 2025 was to consider
the composition of the Board and
the senior management team in light
of the Company’s performance and
needs going forwards, with careful
planning to support the Company
through accelerating its transformation
programme and revised strategy.
Following Chris Payne’s stepping down
as Chief Executive Officer on 3 October,
I became Interim Executive Chair whilst
a search for a successor for Chief
Executive Officer took place.
Following a successful search using
search agency Warren Partners, I’m very
pleased to welcome Rob Barclay as
our Chief Executive Officer Designate
who joined on 9 March 2026 and will
assume the Chief Executive Officer role
on 27 April 2026 after a short handover
and I will revert back my role as Non-
Executive Chair.
I’m very pleased to welcome Rob
Barclay as our Chief Executive
Officer Designate who will become
Chief Executive Officer and join the
Board on 27 April 2026 after a short
handover (when I will revert to Non-
Executive Chair), and Richard Jones
who joined the Group as Interim CFO
on 12th March 2026 and will replace
Adam Phillips, CFO, on the Board on
26th March 2026.
Board composition
The Nomination Committee will
continue to monitor the composition of
the Board, its Committees and senior
management on an ongoing basis to
ensure they remain appropriate and
effective and have the right balance
of skills, knowledge, experience and
diversity to deliver the Company’s
strategy now and in the future.
“ The Committee is committed to
ensuring that the Board and the senior
management team have the right skills,
experience, knowledge and background
to deliver the revised strategy.”
Stephen Bird
Chair of the Nomination Committee
Key responsibilities:
• Monitoring the structure, size
and composition of the Board,
its Committees and the senior
management on an ongoing
basis to ensure they remain
appropriate and effective
and have the right balance of
skills, knowledge, experience
and diversity to deliver the
Company’s strategy now and
in the future.
• Making recommendations
to the Board of any changes
required and leads the process
regarding appointments
to the Board, including the
role as Chair and Senior
Independent Director.
• Succession planning for the
Board (including Chair and
Committee Chairs) and senior
management and making
recommendations to the
Board.
• Considering the diversity of
the Board and the talent
pipeline.
Full details of responsibilities
delegated to the Nomination
Committee by the Board in the
written terms of reference which
are available on the Company’s
website.
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NOMINATION COMMITTEE REPORT
The Nomination Committee also
annually considers the tenure of the
Board and when considering succession
planning for the Board, consideration is
given to skills, experience and diversity
to ensure that there is the appropriate
mix to continue to lead the Company
and deliver long-term success of the
Company for all of our stakeholders.
Strengthening the Senior
Management Team
The Nomination Committee focused
on the search and recruitment of a
replacement Chief Executive Officer
during 2025 whilst also ensuring the
right people with the right skills were in
place within the senior management
team to deliver the revised strategy and
ensure performance management was
strengthened throughout the business.
An interim review was undertaken
of the senior management team,
to ensure the accelerated delivery
of the transformation programme
and revised strategy in challenging
market conditions with added
expertise in buying and supply chain
transformation and sales to drive our
sales force performance. We also
supplemented the senior management
team with interim support with further
expertise across HR, Operations and
Transformation.
Board diversity
Board diversity and the advantages
it can make to decision making are
acknowledged by the Board. Diversity
is considered for every appointment,
which are made on merit against
objective criteria. Recruitment agencies
are instructed to present a diverse list of
candidates for all roles.
Any appointments are made to ensure
the correct and complementary skills
are on the Board, and provide the level
of experience required to deliver the
strategy for our stakeholders. The Board
diversity policy is considered every year
by the Board, which was last reviewed
in July 2025 and can be found on the
Company’s website.
The key statement of the Board
diversity policy is that the Company
is committed to developing a diverse
workforce and equal opportunities for
all and that the Board recognises the
valuable contribution that diversity
including gender, ethnicity and personal
strengths can bring to the Board.
The Board diversity policy also
commits to maintaining the current
gender balance of the Board, and the
Nomination Committee continues to
be committed to increasing gender
and ethnic diversity at Board level
and will seek to achieve this when the
opportunity arises and appropriate
candidates are identified.
Notwithstanding this, all Board
appointments will be made on merit
and against objective criteria and the
Nomination Committee will monitor
progress against the Board diversity
policy.
In terms of Board gender diversity,
as at 31 December 2025, there were
five Board members, two of which
were female (40%) and three were
male (60%).
One of our female Board Directors,
Jemima Bird is our Senior Independent
Director. Whilst the Board has 40%
female Board Directors, it recognises
that it does not have a Director from
an ethnic minority background, which
means it does not comply with all of the
diversity and inclusion targets set out in
the Listing Rules. However, the Board is
committed to increasing diversity when
the opportunity arises and appropriate
candidates are identified.
The Board has reviewed its size,
structure and composition during
the year, (and more recently on
4 March 2026), and concluded that
its remains suitable to meet the
Company’s needs and to promote the
desired culture, (please also see the
results of the 2025 Board Evaluation on
page 77).
It remains the policy that all
appointments to the Board and
Executive team should be made
on merit and against objective
criteria, whilst addressing diversity
considerations of the Board. The
Board’s diversity objective is to have a
broad range of age, gender, ethnicity,
approach, skills, experience and
educational/professional backgrounds
represented at Board level and in
senior management positions, and the
Nomination Committee will continue
to review what steps and recruitment
processes are appropriate for achieving
diversity.
The information required by the
Listing Rule for companies to report
information and disclose the gender
and ethnic background representation
on their boards and executive
management on a comply or explain
basis is included below.
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Data concerning gender and ethnicity representation is collected directly from all the individual Board and Executive team
members as part of their onboarding process, or in the case of the Non-Executive Directors, through a Diversity and Inclusion
Monitoring Form (the ‘Form’) which was issued for completion asking individuals to disclose their gender and ethnicity using the
options included on the Form, which align with the detail in the left-hand columns of the tables below and therefore includes the
option to not specify an answer.
Gender representation as at 31 December 2025
Board Executive Committee
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
Executive
management
Percentage
of Executive
management
Men 3 60% 2 5 55%
Women 2 40% 1 4 45%
Not specified/prefer not to say – – – – –
Ethnicity representation as at 31 December 2025
Board Executive Committee
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)
Number in
Executive
management
Percentage
of Executive
management
White British or other White
(including minority-white groups)
5 100% 2 9 100%
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British – – – – –
Black/African/Caribbean/
Black British
– – – – –
Other ethnic group, including Arab – – – – –
Not specified/prefer not to say – – – – –
Group-wide diversity
The Company has continued to implement its inclusion and wellbeing strategy, which includes actions to improve the diversity,
equity and inclusion of our workforce, please see further details on page 34.
Colleague engagement
Karen Hubbard is appointed as the designated Non-Executive Director for workforce engagement. Further information on the
establishment of the Employee Forum and how the employee voice is heard in the Boardroom can be found on page 69.
Effectiveness of the Nomination Committee
The effectiveness of the Nomination Committee was evaluated as part of the 2025 Board and Committees evaluation, which
was undertaken externally this year by an external third-party consultant, Telos Partners. The report highlighted that the Board
and its Committees continue to function well. The findings were discussed and it was agreed that the Nomination Committee
remained effective.
Directors – retirement, election and re-election
Individuals seeking election and re-election at the 2026 AGM is set out in the AGM Notice of Meeting.
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NOMINATION COMMITTEE REPORT CONTINUED
Each Director has been subject to a performance evaluation
and the Nomination Committee has conducted its own
annual review of the appropriateness of the Directors’ skills
and experience; their time commitment to the Company;
and their contribution to the Board during the year. As part of
this review, each Director has confirmed that they continue
to allocate sufficient time to discharge their responsibilities
effectively, and the Nomination Committee evaluates their
ability to do so, taking into consideration other external
commitments, in addition to their individual performance
throughout the year and their skills and experience set against
the agreed strategy.
Following this review the Nomination Committee, and
subsequently the Board has concluded that each Director
continues to make an effective and valuable contribution and
demonstrates commitment to their role. It is recommended
that shareholders approve the resolutions to be proposed to the
forthcoming AGM relating to the election and/or re-election of
each Director (as applicable).
A year of progress
Despite the challenges throughout the year, we have made
good progress with our revised strategy and accelerating our
transformation programme . The Nomination Committee
always has the long-term success of the business for all
stakeholders in mind.
Membership and attendance
at 2025 meetings
During the year, I acted as Chair of the Nomination
Committee, and it comprises a majority of Independent
Non-Executive Directors as required by the Code, their
biographies are set out on pages 60 and 61. Appointments
to the Nomination Committee are made by the Board. The
Nomination Committee considers the composition of the
Board and its committees on an annual basis.
The Nomination Committee met on four occasions in order
to fulfil its responsibilities delegated to it by the Board.
Attendance is shown in the table below.
Only members of the Nomination Committee are entitled to
be present at meetings. However, other Directors (including
the Chief Executive Officer), members of the Executive
team and advisers may be invited to attend Nomination
Committee meetings at the discretion of the Chair. The
General Counsel & Company Secretary performs the role of
Secretary to the Nomination Committee.
No Director is involved in any decisions regarding their
own continuation in office, re-appointment or re-election,
including the Chair and this operated where in relation
to my appointment as Interim Executive Chair, our Senior
Independent Director chaired the Nomination Committee
which discussed this.
Name No. of meetings attended
Stephen Bird 3/4
Jemima Bird 4/4
Karen Hubbard 4/4
Robin Williams 4/4
As referred to above, there was one Nomination
Committee meeting held to discuss specifics relating to my
appointment as Interim Executive Chair and given this, it
was not appropriate that I attended this meeting and so my
attendance record in the table above reflects this.
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Appointment and re-appointment
of Directors
The Nomination Committee has procedures in place for a
formal, rigorous and transparent process leading to Board
appointments, ensuring that appointments to the Board
are made on merit, against objective criteria and promote
diversity of gender, social and ethnic backgrounds. This has
been shown by the decision to appoint Jemima Bird as our
Senior Independent Director last year.
The Chair and the other Non-Executive Directors are
appointed for an initial period of three-years, which, with
the approval of the Nomination Committee and the Board,
would normally be extended for a further three years term.
All appointments are subject to annual election by the
shareholders.
The letters of appointment of all Non-Executive Directors
(alongside the service contracts for the Executive Directors)
are available for inspection at the Company’s registered
office during normal office hours. Copies are also made
available at each of the Company’s Annual General Meetings
for 15 minutes prior to the meeting and throughout.
Time commitments
The letters of appointment clearly set out the time
commitment expected from each Non-Executive Director
and this is reviewed annually by the Committee to ensure it
remains appropriate. Each Non-Executive Director confirms
at the time of their appointment, and each year thereafter,
with careful consideration to their external appointments,
that they can continue to dedicate sufficient time to the
Group’s business.
All Directors have demonstrated strong time commitment to
their roles during the year.
The Nomination Committee confirms that it is fully satisfied
that each Director dedicates the appropriate amount of time
to their roles on the Board and the Nomination Committee.
Board size, structure and composition
The composition and performance of the Board and its
Committees was considered by the Nomination Committee
as part of its annual assessment and it was concluded
that the Board and each Committee continue to function
effectively. The Nomination Committee concluded that the
composition of the Board is compliant with the provisions
of the Code, is appropriate to meet the business and
operational objectives, and is sufficient to bring a balanced
and experienced view to the decision-making process.
Activities of the Nomination Committee
The Nomination Committee agrees an annual workplan and, in
addition to matters relating specifically to its terms of reference,
agendas incorporate matters arising and topical items upon
which the Nomination Committee has chosen to focus.
The key activities of the Nomination Committee during the
year in discharging its principal areas of responsibility are
shown as follows:
Skills assessment and succession
• Reviewed the skills and experience required by the Board
in the context of wider business needs and culture, long-
term strategic objectives and stakeholder feedback.
• Reviewed the skills and experience of Non-Executive
Directors to fully support the achievement of the Group’s
strategic objectives.
• Supported the recruitment of key interim Executive team
and management positions.
• Implemented the Chair and CEO succession plans.
Governance
• Reviewed the structure, size and composition of the Board
and its Committees.
• Reviewed and updated the terms of reference of the
Committee and its annual plan.
• Reviewed the time commitment required of Non-
Executive Directors and evaluated whether enough time
had been committed to fulfil their duties.
• Recommended the re-election of all Directors due to retire
at the AGM
• Reviewed the role descriptions of the Chair, Chief
Executive and Senior Independent Director positions
• Considered and re-approved the policy on approving
external appointments.
• Reviewed and approved the Board diversity policy.
Evaluation
• Reviewed the results of the Board effectiveness in relation
to the Board, its Committees and their own performance.
• Considered the composition, size and diversity of
the Board.
Reporting
• Considered and recommended to the Board the
Nomination Committee report for inclusion in the Annual
Report and Accounts
This report and the information on pages 56 to 123 forms part
of the Corporate Governance report and is signed on behalf
of the Nomination Committee by:
Stephen Bird
Chair of the Nomination Committee
25 March 2026
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NOMINATION COMMITTEE REPORT CONTINUED
Strategic Report
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Headlam Group PLC Annual Report & Accounts 2025
Annual statement
On behalf of the Board,
I am pleased to present
the Directors’ Remuneration
Report for 2025.
The report includes this Annual
Statement, a new Directors’
Remuneration Policy (‘Policy’) given
that the current Policy expires in
2026, and the Annual Report on
Remuneration for the financial year
ended 31 December 2025. The Directors’
Remuneration Report (excluding the
Policy) will be subject to an advisory
shareholder vote at the AGM on
20 May 2026 and the Policy will be
subject to a binding shareholder vote
at the same meeting. This new Policy,
subject to the approval of shareholders,
will last for three years from the date
of approval or until another policy is
approved at a general meeting in the
interim.
Business performance and
incentive out-turn for 2025
As set out in the Chair’s statement on
page 2, 2025 proved to be a difficult
year for the industry as a whole,
and for many businesses exposed
to consumer discretionary spend.
Financial performance reflected both
a persistently challenging market and
the deliberate decision to exit low-
margin revenue as the Group refocused
on its core customer base. Despite this
backdrop, the Company made good
progress with the acceleration of its
strategy to optimise and simplify the
business through its transformation
plan.
No annual bonus was payable in
respect of 2025 as a result of the
threshold profit target (70% of the
bonus) not being met. While progress
was made against a number of the
non-financial targets (30% of the
bonus), the Committee determined
that it was not appropriate to award an
annual bonus in light of the Company’s
financial performance and broader
stakeholder experience.
In respect of the 2023 PSP award due
to vest in April 2026, the Committee
determined that EPS and TSR
performance was below threshold. As
such, and as noted in the discretion
section below, the Committee agreed
to lapse the 2023 PSP awards regardless
of performance against the ESG
targets. Further details of the 2023 PSP
award are set out on page 110.
Noting the above, the Policy is
considered to have operated as
intended and as detailed below, no
changes are considered necessary.
Proposed New Policy
The three-year term of our current
shareholder-approved Directors’
Remuneration Policy expires in 2026 and,
as a result, we are seeking approval for
a new Policy at the 2026 AGM. Following
a detailed review of the Policy towards
the end of 2025, the Committee
determined that it continued to remain
fit for purpose and, as such, no changes
are proposed in respect of the Policy
that was last approved by shareholders
at the 2023 AGM.
Board Changes
Chris Payne stepped down as Chief
Executive Officer and Executive Director
on 3 October 2025 and Stephen Bird
assumed the role of interim Executive
Chair on the same date. Rob Barclay
joined the Company as Designate Chief
Executive Officer on 9 March 2026 and
will assume full responsibility as Chief
Executive Officer on 27 April 2026 when
Stephen Bird will revert to his role as Non-
Executive Chair. Richard Jones joined the
Group as Interim Chief Financial Officer
on 12 March 2026 and joins the Board
on 26 March 2026 following an orderly
handover from Adam Phillips.
“ Careful consideration in exercising
our discretion has been vital this year,
allowing us to strike the right balance for
our stakeholders during what has been
a challenging period for the Company.”
Jemima Bird
Chair of the Remuneration Committee
Key responsibilities:
• Designing the framework
and policy for Executive
Directors’ remuneration and
determining remuneration
packages for the Executive
Directors, Chair and senior
managers.
• Establishing remuneration
schemes that promote
long-term shareholdings
by Executive Directors and
that support alignment with
shareholders’ interests, both
in employment, and post
cessation.
• Reviewing workforce
remuneration and related
policies.
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DIRECTORS’ REMUNERATION REPORT
Discretion
The Remuneration Committee is conscious of its role in
ensuring that remuneration is appropriate when considering
the performance of the business and the individual Directors.
As detailed above, whilst the Remuneration Committee
recognises the significant work carried out by the management
team in respect of delivering the Company’s transformation
programme, the Remuneration Committee determined that no
bonus should be payable to the Executive Directors in respect
of the year ended 31 December 2025. In addition, noting that
EPS and relative TSR performance was below threshold, the
Committee determined that the 2023 PSP should lapse in full,
regardless of performance against the ESG targets. Finally, the
Remuneration Committee exercised negative discretion post
year end to lapse that Chris Payne’s 2024 DBP share awards
given his departure.
Remuneration for 2026
Base salary
No salary increases were awarded from 1 January 2026.
As such, current salary levels are as follows:
Director
1 January
2026*
1 January
2025*
Interim
Executive Chair
1
Stephen Bird £500,000 £500,000
Chief Executive
Officer
2
Rob Barclay £435,000 –
Chief Financial
Officer
3
Adam Phillips £331,500 £331,500
*Or appointment date where later.
1
Upon appointment as Interim Executive Chair on 3 October 2025, Stephen
Bird’s Non-Executive Chair fee was increased from £150,000 to £500,000. This
additional fee, which reflects his significantly enhanced role, will be payable
until Stephen Bird return to his role of Non-Executive Chair on 27 April 2026.
2
The new Chief Executive will receive a base salary £435,000 from appointment,
significantly lower than the £494,190 paid to the previous incumbent.
3
In addition to his base salary, Adam Phillips will continue to receive a £10,000 per
month acting up allowance which commenced on 3 October 2025 which will
cease upon the appointment of the new Chief Executive. The allowance, which
does not receive the benefit of pension provision. reflects Adam’s significant
additional roles and responsibilities in respect of supporting the Interim
Executive Chair.
4
The Interim Chief Financial Officer, who joined the Group on 12 March 2026, initially
on a below Board role will receive a base salary of £300,000 from appointment.
Pension
Pension contributions will continue to be capped at 8% of
salary for Executive Directors which is comparable to the
majority of employees. The Interim Executive Chair does not
receive a pension contribution.
Annual bonus
The maximum annual bonus opportunity for 2026 will remain at
125% of base salary with a minimum of one-third of any award
deferred into shares for two years. The payment of any annual
bonus awards, which will be pro-rated for new joiners, will be
based on both financial (majority weighting) and key strategic
and ESG-related objectives (minority weighting). Full disclosure
of the targets, which are considered to be commercially
sensitive, will be provided in the 2026 Annual Report and
Accounts. Neither the departing Chief Financial Officer or
Interim Executive Chair will be eligible for a 2026 annual bonus.
The bonus potential for the new Chief Executive Officer will be
pro-rated to reflect the partial year served.
PSP
It is the Committee’s intention to grant PSP awards up to 150%
of salary to Executive Directors in 2026, albeit neither the
departing Chief Financial Officer or Interim Executive Chair
are eligible to receive awards. Vesting will be subject to EPS
targets for the majority of the award and relative TSR targets
for a minority of the award.
Shareholder alignment
The combination of a post-vesting holding period
requirement under the PSP, the deferral into shares under
the annual bonus scheme and the shareholding guidelines
will continue to provide alignment between the interests
of Executive Directors, the shareholders and delivery of the
strategy. Awards will continue to be subject to a two-year
holding period following the date of vesting.
Non-Executive Directors’ fees for 2026
No increases were awarded in respect of the Non-Executive
Director base fees (£50,000), the Senior Independent Non-
Executive Director fee (£10,000) or the additional fees in respect
of Chairing the Audit Committee, Remuneration Committee
and Employee Forum and ESG committee (£7,500 each.)
However, reflecting her significant additional time commitment
following the departures of the Chief Executive and Chief
Customer Officer, Jemima Bird received an additional fee of
£48,000 between 3 October 2025 and 31 December 2025. This
reflects significant additional time commitment in excess of
her Non-Executive Director and SID roles to assist the Interim
Executive Chair in respect of delivering the transformation plan
to return the Group to profitability. This included a review of
the strategy, meetings with one customer to renegotiate key
contractual relationships, a number of shareholder meetings
and specific oversight for the Customer, Marketing, and People
teams. The additional support provided, capped at £8,000 per
month, will cease at the point that the new Chief Executive
is appointed and this additional time commitment is not
considered to have impaired Jemima Bird’s independence. and
Jemima was considered independent on appointment and
throughout 2025 and 2026.
Shareholder views and voting outcomes
Headlam is committed to maintaining good communications
with shareholders. It considers the AGM to be an opportunity to
communicate with shareholders, giving them the opportunity
to raise any issues or concerns they may have. In addition, the
Committee seeks to engage directly with major shareholders
and the main representative bodies, should any material change
be proposed to the Policy. The Committee was pleased to
receive over 99% votes in favour of the Directors’ Remuneration
Report (excluding the Policy) at the 2025 AGM and we hope we
will again receive your support at the forthcoming AGM.
Conclusion
We remain committed to a responsible approach to
executive pay, as I trust this Directors’ Remuneration Report
demonstrates. That said, I would be happy to meet or speak
with shareholders if there are any questions or feedback on
our approach to executive remuneration.
Jemima Bird
Chair of the Remuneration Committee
25 March 2026
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At a glance remuneration overview
Executive Remuneration for the year ending 31 December 2026
Fixed
Remuneration
Salary Workforce Aligned Pension Benefits
(c.30% of total reward assuming maximum performance)
Variable
Remuneration
Annual Bonus Performance Share Plan
Link to Strategy
Performance measures support Group
strategy to:
– increase profitability for shareholders
– deliver key strategic and ESG-related priorities
Performance measures support Group strategy to
deliver:
– higher returns to shareholders
– increased earnings
Potential
(Maximum 125% of Salary)
1/3rd deferred into shares under the Deferred Bonus
Plan
(Maximum 150% Salary)
Two-year post-vesting holding period
Dividend equivalents accrue to extent awards vest
FY2025 Performance Metrics
Underlying Profit Before Tax - majority (to support
profitability of the business)
Key strategic and ESG-related objectives - minority
(to support business growth and ESG objectives)
Underlying Basic Earnings Per Share (EPS) - majority (to
support the growth of earnings)
Relative Total Shareholder Return (TSR) - minority
(to align the interests of Directors with those of
shareholders)
Shareholder
alignment
In Employment Post Employment
200% of salary Lower of shareholding at cessation of employment and
200% of salary to be held for two years post cessation
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DIRECTORS’ REMUNERATION REPORT CONTINUED
Directors’ Remuneration Policy
This part of the Directors’ Remuneration Report sets out the Directors’ Remuneration Policy for the Company.
The three-year term of our current shareholder-approved Directors’ Remuneration Policy expires in 2026 and, as a result, we are
seeking approval for a new Policy at the 2026 AGM. The Policy in this report will therefore be put to a binding shareholder vote
at the AGM on 20 May 2026 and will take formal effect from that date, subject to shareholder approval. The Policy will formally
apply for three years beginning on the date of approval unless a new Policy is presented to shareholders in the interim. Following
approval all payments to Directors will be consistent with the approved Policy.
Considerations when determining the remuneration policy
The overarching objective of the remuneration policy is to promote the long-term success of the Group. In seeking to achieve
this objective the policy has been designed based on the following key principles:
• to operate remuneration arrangements which are simple and transparent, and which help to build and maintain a
sustainable performance culture;
• to appropriately align executive reward with the Group’s strategic objectives and with the best interests of shareholders and
other key stakeholders;
• to promote appropriately the long-term success of the Group, and to not pay more than is necessary in doing so; and
• to have a competitive mix of base salary and short and long-term incentives, with an appropriate proportion of the
package determined by the rigorous application of stretching targets linked to the Group’s performance.
Consideration of employment conditions elsewhere in the Group
In setting remuneration for the Executive Directors, the Remuneration Committee takes note of the overall approach to reward
for employees in the Group. Salary increases will ordinarily be (in percentage of salary terms) no higher than those of the wider
workforce. The Company operates an Employee Forum at which aspects of remuneration across the Group (including Executive
Director remuneration) is discussed. In addition, the Chair of the Remuneration Committee receives feedback on remuneration
matters directly from the designated workforce engagement Non-Executive Director and the Group People Director updates
the Remuneration Committee periodically on remuneration arrangements and employment conditions across the Group.
Shareholder views
The Remuneration Committee is committed to an ongoing dialogue with shareholders and welcomes feedback on Executive
and Non-Executive Directors’ remuneration. The Remuneration Committee will seek to engage directly with larger shareholders
and their representative bodies should any material changes be made to the Policy. The Remuneration Committee also
considers shareholder feedback received in relation to the remuneration-related resolutions each year following the AGM.
This, plus any additional feedback received from time to time, is then considered as part of the Committee’s annual review of
remuneration policy and its implementation.
Changes to the remuneration policy approved at the 2023 AGM
Shareholders approved our current Remuneration Policy at the 2023 AGM with over 90% of votes cast in favour. Following a
review of the Policy, the Committee determined that it remained fit for purpose and, as such, no changes have been proposed in
respect of the Policy that was approved by shareholders at the 2023 AGM.
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Summary Policy table for Executive Directors
Component
Purpose and link
to strategy Operation Maximum opportunity Performance measures
Base salary To provide a
competitive base
salary for the market
in which the Group
operates to attract
and retain Executives
of a suitable calibre.
Salaries are usually reviewed annually, with any increases typically effective 1 January.
Salaries are typically set after considering:
• pay and conditions elsewhere in the Group;
• overall Group performance;
• individual performance and experience;
• progression within the role; and
• competitive salary levels in companies of a broadly similar size and complexity
and market forces.
Whilst there is no maximum salary, increases will normally be in line with
the typical range of salary increases awarded (in percentage of salary
terms) to the wider workforce.
Larger salary increases may be awarded to take account of individual
circumstances, such as:
• where an Executive Director has been promoted or has had a
change in scope or responsibility;
• where the Remuneration Committee has set the salary of a new
hire at a discount to the market level initially, a series of planned
increases can be implemented over the following few years to bring
the salary to the appropriate market position, subject to individual
performance;
• where there has been a change in market practice; or
• where there has been a significant change in the scale of the role or
the size and/or complexity of the business.
Increases may be implemented over such time period as the
Remuneration Committee deems appropriate.
Although there are no formal performance
conditions, any increase in base salary is only
implemented after careful consideration of
individual contribution and performance and
having due regard to the factors set out in the
Operation column of this table.
Benefits To provide broadly
market competitive
benefits as part of the
total remuneration
package.
Executive Directors receive benefits in line with market practice, and these
include life assurance, private medical insurance, company car or car allowance
and, where relevant, relocation expenses. Executive Directors are also provided
with the opportunity to join any HMRC approved all-employee share plan
arrangements on the same basis as other employees.
Executive Directors will be eligible for any other benefits which are introduced
for the wider workforce on broadly similar terms and other benefits might
be provided from time to time based on individual circumstances and if the
Committee decides payment of such benefits is appropriate.
Any reasonable business-related expenses can be reimbursed (and any tax
thereon met if determined to be a taxable benefit).
Whilst the Remuneration Committee has not set an absolute maximum
on the level of benefits Executive Directors may receive, the value of
benefits is set at a level that the Remuneration Committee considers
appropriate against the market and provides a sufficient level of
benefits based on individual circumstances.
Not applicable.
Retirement
benefits
To provide employees
with long-term
savings to allow for
retirement planning.
The Group may offer participation in a defined contribution pension plan or may
permit Executive Directors to take a cash supplement in lieu of pension up to the
same value.
Workforce aligned (currently 8% of base salary). Not applicable.
Annual bonus Rewards performance
against targets which
support the strategic
direction of the
Group. Bonus deferral
provides a retention
element through
share ownership and
direct alignment with
shareholders’ interests.
Awards are based on performance typically measured over one year.
Pay-out levels are determined by the Remuneration Committee after the year
end based on performance against pre-set targets.
Executive Directors will defer at least one-third of any bonus award into shares,
typically for a two-year period. The Committee may decide to pay the whole of
the bonus earned in cash where the amount to be deferred would, in the opinion
of the Remuneration Committee, be so small as to make deferral administratively
burdensome. Deferred shares will typically take the form of nil-cost share options
but may be structured as an alternative form of share award.
Deferred bonus awards may be granted on the basis that the participant shall
be entitled to an additional benefit (in cash or shares) in respect of dividends
paid over the deferral period, calculated on such basis as the Committee shall
determine.
The vesting of the deferred shares is not subject to the satisfaction of any
additional performance conditions.
The annual bonus plan includes provisions which enable the Remuneration
Committee (in respect of both the cash and the deferred elements of bonuses)
to recover or withhold value in the event of certain defined circumstances.
125% of base salary. Targets are set annually with measures linked to
the Group’s strategy and aligned with key financial,
strategic and/or individual targets.
The majority, if not all, of the annual bonus will
be assessed against key financial performance
metrics of the business and any balance will be
based on non-financial strategic, ESG-related
and/or personal objectives.
A graduated scale of targets is set for each
measure, with up to 10% of each element payable
for achieving the relevant threshold performance
level and 100% of maximum potential for achieving
stretch performance.
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Summary Policy table for Executive Directors
Component
Purpose and link
to strategy Operation Maximum opportunity Performance measures
Base salary To provide a
competitive base
salary for the market
in which the Group
operates to attract
and retain Executives
of a suitable calibre.
Salaries are usually reviewed annually, with any increases typically effective 1 January.
Salaries are typically set after considering:
• pay and conditions elsewhere in the Group;
• overall Group performance;
• individual performance and experience;
• progression within the role; and
• competitive salary levels in companies of a broadly similar size and complexity
and market forces.
Whilst there is no maximum salary, increases will normally be in line with
the typical range of salary increases awarded (in percentage of salary
terms) to the wider workforce.
Larger salary increases may be awarded to take account of individual
circumstances, such as:
• where an Executive Director has been promoted or has had a
change in scope or responsibility;
• where the Remuneration Committee has set the salary of a new
hire at a discount to the market level initially, a series of planned
increases can be implemented over the following few years to bring
the salary to the appropriate market position, subject to individual
performance;
• where there has been a change in market practice; or
• where there has been a significant change in the scale of the role or
the size and/or complexity of the business.
Increases may be implemented over such time period as the
Remuneration Committee deems appropriate.
Although there are no formal performance
conditions, any increase in base salary is only
implemented after careful consideration of
individual contribution and performance and
having due regard to the factors set out in the
Operation column of this table.
Benefits To provide broadly
market competitive
benefits as part of the
total remuneration
package.
Executive Directors receive benefits in line with market practice, and these
include life assurance, private medical insurance, company car or car allowance
and, where relevant, relocation expenses. Executive Directors are also provided
with the opportunity to join any HMRC approved all-employee share plan
arrangements on the same basis as other employees.
Executive Directors will be eligible for any other benefits which are introduced
for the wider workforce on broadly similar terms and other benefits might
be provided from time to time based on individual circumstances and if the
Committee decides payment of such benefits is appropriate.
Any reasonable business-related expenses can be reimbursed (and any tax
thereon met if determined to be a taxable benefit).
Whilst the Remuneration Committee has not set an absolute maximum
on the level of benefits Executive Directors may receive, the value of
benefits is set at a level that the Remuneration Committee considers
appropriate against the market and provides a sufficient level of
benefits based on individual circumstances.
Not applicable.
Retirement
benefits
To provide employees
with long-term
savings to allow for
retirement planning.
The Group may offer participation in a defined contribution pension plan or may
permit Executive Directors to take a cash supplement in lieu of pension up to the
same value.
Workforce aligned (currently 8% of base salary). Not applicable.
Annual bonus Rewards performance
against targets which
support the strategic
direction of the
Group. Bonus deferral
provides a retention
element through
share ownership and
direct alignment with
shareholders’ interests.
Awards are based on performance typically measured over one year.
Pay-out levels are determined by the Remuneration Committee after the year
end based on performance against pre-set targets.
Executive Directors will defer at least one-third of any bonus award into shares,
typically for a two-year period. The Committee may decide to pay the whole of
the bonus earned in cash where the amount to be deferred would, in the opinion
of the Remuneration Committee, be so small as to make deferral administratively
burdensome. Deferred shares will typically take the form of nil-cost share options
but may be structured as an alternative form of share award.
Deferred bonus awards may be granted on the basis that the participant shall
be entitled to an additional benefit (in cash or shares) in respect of dividends
paid over the deferral period, calculated on such basis as the Committee shall
determine.
The vesting of the deferred shares is not subject to the satisfaction of any
additional performance conditions.
The annual bonus plan includes provisions which enable the Remuneration
Committee (in respect of both the cash and the deferred elements of bonuses)
to recover or withhold value in the event of certain defined circumstances.
125% of base salary. Targets are set annually with measures linked to
the Group’s strategy and aligned with key financial,
strategic and/or individual targets.
The majority, if not all, of the annual bonus will
be assessed against key financial performance
metrics of the business and any balance will be
based on non-financial strategic, ESG-related
and/or personal objectives.
A graduated scale of targets is set for each
measure, with up to 10% of each element payable
for achieving the relevant threshold performance
level and 100% of maximum potential for achieving
stretch performance.
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Component
Purpose and link to
strategy Operation Maximum opportunity Performance measures
Performance
Share Plan
(‘PSP’)
To incentivise
Executive Directors,
and to deliver
genuine long-term
performance-related
pay, with a clear line
of sight for Executives
and direct alignment
with shareholders’
interests.
Awards will be in the form of nil-cost share options, conditional shares or other
such form as has the same economic effect.
Awards will be granted with vesting dependent on the achievement of
performance conditions set by the Remuneration Committee, with performance
normally measured over at least a three-year performance period.
The Remuneration Committee retains discretion to adjust vesting levels in
exceptional circumstances, including but not limited to regard of the overall
performance of the Company or the grantee’s personal performance.
Awards will usually be subject to a two-year holding period following the end of
the performance period, and shares will typically not be released to participants
until the end of any such holding period.
Awards under the PSP may be granted on the basis that the participant shall be
entitled to an additional benefit (normally in shares) in respect of dividends paid
over the holding period. This amount shall be calculated on such basis as the
Remuneration Committee determines.
The PSP includes provisions which enable the Remuneration Committee to
recover or withhold value in the event of certain defined circumstances.
150% of salary. PSP performance measures may include, and are
not limited to, relative TSR, EPS, strategic measures
and ESG-related objectives.
A maximum of 25% of any element vests for
achieving the threshold performance target and
100% for maximum performance.
Performance metrics and weightings are reviewed
annually and may be varied for future award cycles
as appropriate to reflect the prevailing strategic
priorities of the Group at that time.
Shareholding
guidelines
To further align the
Executive Directors’
long-term interests
with those of
shareholders.
In employment:
Until the guideline has been reached Executive Directors are required to retain all
of the net number of vested shares from the PSP and DBP. Vested shares which
are subject to a holding period under the PSP and shares which are subject to
DBP awards will count towards the limit (on a net of assumed tax basis).
Post employment:
Executive Directors will normally be required to hold shares at a level equal to the
lower of their shareholding at cessation of employment and 200% of salary for
two years post cessation in respect of any share awards granted after the 2021
AGM and excluding own shares purchased.
200% of salary. Not applicable.
Non-Executive Directors (including the Non-Executive Chair role)
Annual Fee To attract individuals
with appropriate
knowledge and
experience.
Fees are normally reviewed annually taking into account factors such as the time
commitment and contribution of the role and market levels in companies of
comparable size and complexity.
The Chair is paid an all-inclusive fee for all Board responsibilities.
Fees for the other Non-Executive Directors may include a basic fee and
additional fees for further responsibilities (for example, chairing of Board
committees or holding the office of Senior Independent Director).
In exceptional circumstances, if there is a temporary yet material increase in the
time commitments for Non-Executive Directors, the Board may pay extra fees on
a pro rata basis to recognise the additional workload.
Neither the Chair nor the Non-Executive Directors participate in any
of the Group’s performance related schemes (i.e. annual bonus or
incentive arrangements). Nor do they receive any pension or private
medical insurance or taxable benefits, other than the potential to
receive gifts at the end of a long-standing term of appointment.
Non-Executive Directors may be eligible to receive benefits such as the
use of secretarial support, travel costs or other benefits that may be
appropriate and the Company repays any reasonable expenses that a
Non-Executive Director incurs in carrying out their duties as a Director,
including any tax liabilities thereon, if appropriate.
Not applicable.
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DIRECTORS’ REMUNERATION REPORT CONTINUED
Component
Purpose and link to
strategy Operation Maximum opportunity Performance measures
Performance
Share Plan
(‘PSP’)
To incentivise
Executive Directors,
and to deliver
genuine long-term
performance-related
pay, with a clear line
of sight for Executives
and direct alignment
with shareholders’
interests.
Awards will be in the form of nil-cost share options, conditional shares or other
such form as has the same economic effect.
Awards will be granted with vesting dependent on the achievement of
performance conditions set by the Remuneration Committee, with performance
normally measured over at least a three-year performance period.
The Remuneration Committee retains discretion to adjust vesting levels in
exceptional circumstances, including but not limited to regard of the overall
performance of the Company or the grantee’s personal performance.
Awards will usually be subject to a two-year holding period following the end of
the performance period, and shares will typically not be released to participants
until the end of any such holding period.
Awards under the PSP may be granted on the basis that the participant shall be
entitled to an additional benefit (normally in shares) in respect of dividends paid
over the holding period. This amount shall be calculated on such basis as the
Remuneration Committee determines.
The PSP includes provisions which enable the Remuneration Committee to
recover or withhold value in the event of certain defined circumstances.
150% of salary. PSP performance measures may include, and are
not limited to, relative TSR, EPS, strategic measures
and ESG-related objectives.
A maximum of 25% of any element vests for
achieving the threshold performance target and
100% for maximum performance.
Performance metrics and weightings are reviewed
annually and may be varied for future award cycles
as appropriate to reflect the prevailing strategic
priorities of the Group at that time.
Shareholding
guidelines
To further align the
Executive Directors’
long-term interests
with those of
shareholders.
In employment:
Until the guideline has been reached Executive Directors are required to retain all
of the net number of vested shares from the PSP and DBP. Vested shares which
are subject to a holding period under the PSP and shares which are subject to
DBP awards will count towards the limit (on a net of assumed tax basis).
Post employment:
Executive Directors will normally be required to hold shares at a level equal to the
lower of their shareholding at cessation of employment and 200% of salary for
two years post cessation in respect of any share awards granted after the 2021
AGM and excluding own shares purchased.
200% of salary. Not applicable.
Non-Executive Directors (including the Non-Executive Chair role)
Annual Fee To attract individuals
with appropriate
knowledge and
experience.
Fees are normally reviewed annually taking into account factors such as the time
commitment and contribution of the role and market levels in companies of
comparable size and complexity.
The Chair is paid an all-inclusive fee for all Board responsibilities.
Fees for the other Non-Executive Directors may include a basic fee and
additional fees for further responsibilities (for example, chairing of Board
committees or holding the office of Senior Independent Director).
In exceptional circumstances, if there is a temporary yet material increase in the
time commitments for Non-Executive Directors, the Board may pay extra fees on
a pro rata basis to recognise the additional workload.
Neither the Chair nor the Non-Executive Directors participate in any
of the Group’s performance related schemes (i.e. annual bonus or
incentive arrangements). Nor do they receive any pension or private
medical insurance or taxable benefits, other than the potential to
receive gifts at the end of a long-standing term of appointment.
Non-Executive Directors may be eligible to receive benefits such as the
use of secretarial support, travel costs or other benefits that may be
appropriate and the Company repays any reasonable expenses that a
Non-Executive Director incurs in carrying out their duties as a Director,
including any tax liabilities thereon, if appropriate.
Not applicable.
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Explanation of performance
measures chosen
Performance measures for the annual bonus are selected
annually to align with the KPIs and prevailing strategic
imperatives of the Group, and the interests of shareholders
and other stakeholders. Financial measures (e.g. underlying
profit before tax) will be used for a majority of the bonus with
any remainder based on key strategic, ESG-related and/
or personal objectives designed to ensure that Executive
Directors are incentivised to deliver across a range of
objectives. ‘Target’ performance is typically set in line with the
business plan for the year, with threshold to stretch targets
set around this based on a sliding scale which takes account
of relevant commercial factors. Only modest rewards are
available for delivering threshold performance levels, with
rewards at stretch requiring material outperformance of
the business plan. Details of the specific measures used
for the annual bonus are set out in the annual report on
remuneration.
Performance measures for the PSP are selected in order to
provide a robust and transparent basis on which to measure
the Group’s performance, to demonstrably link remuneration
outcomes to delivery of the business strategy over the longer
term, and to provide strong alignment between senior
management and shareholders. In achievement of these
aims, PSP awards granted in 2025 will be based on underlying
basic Earnings Per Share (‘EPS’), relative Total Shareholder
Return (‘TSR’) and ESG-related metrics. EPS is currently a
critical KPI for the Group, supporting a focus on profitability
and growth; TSR is aligned with the Group’s focus on creating
value for our shareholders; and ESG-related objectives are
being built in to reflect the increasing importance of this
aspect of the Group’s overall strategy. However, the policy
provides for Remuneration Committee discretion to alter the
PSP measures and weightings to ensure they can continue to
facilitate an appropriate measurement of performance over
the life of the policy, taking account of any evolution in the
Group’s strategic ambitions.
When setting performance targets for the bonus and PSP, the
Remuneration Committee will take into account a number
of different reference points, which may include the Group’s
business plans and strategy, external forecasts and the wider
economic environment.
The Remuneration Committee retains discretion to amend
the bonus pay-out and to reduce the PSP vesting level if any
formulaic outcome is not reflective of the Remuneration
Committee’s assessment of overall business performance over
the relevant performance period.
Malus and clawback
The following provisions apply:
• Prior to the payment of an annual bonus or vesting of a
DBP or PSP award, the Remuneration Committee may
operate ‘malus’ (or ‘withholding’) to cancel the award.
• For up to two years following the payment of an annual
bonus award, the Remuneration Committee may operate
‘clawback’ (or ‘recovery’) to require the repayment of
any cash amount paid or may cancel any deferred
bonus award.
• For up to two years after the vesting of a PSP award, the
Remuneration Committee may operate clawback to
cancel the award during the holding period (or require
repayment of the award if it has been released prior to the
end of the holding period); reduce future vesting under the
Company’s share plans; or reduce the number of shares
already vested but unexercised.
The circumstances in which malus and clawback may be
operated are as follows:
• the Company materially misstated its financial results
(excluding any changes resulting from a change in
accounting standards);
• the Executive’s conduct being such that it would entitle
(or, where the Employment has terminated prior to the
date on which the Board becomes aware of such act or
omission, would have entitled) the Group to terminate the
Employment summarily;
• a material error having occurred in determining whether
any corporate or personal performance conditions
relating to the bonus or PSP award have been met (or any
other material error having occurred in calculating the
sum that was awarded as a bonus or the size of the PSP
award);
• circumstances which in the opinion of the Board would
have (or would have if made public) a sufficiently
significant impact on the reputation of the Company
or Group;
• the Company becomes insolvent or otherwise suffers a
corporate failure and the Board determines that such
circumstances arose from events occurring (in whole or
substantial part) during any period in which the relevant
individual was a participant; or
• such other exceptional circumstances which, in the
Remuneration Committee’s absolute discretion, justify
such reimbursement being imposed.
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DIRECTORS’ REMUNERATION REPORT CONTINUED
Discretion retained by the Committee in
operation of the incentive plans
The Remuneration Committee will operate the Company’s
incentive plans according to their respective rules and
consistent with normal market practice, the Listing Rules
and HMRC rules where relevant, including flexibility in a
number of regards. These include making awards and setting
performance criteria each year, dealing with leavers, and
adjustments to awards and performance criteria following
acquisitions, disposals, special dividends, changes in share
capital and to take account of the impact of other merger
and acquisition activity, and to settle awards in cash. The
Remuneration Committee also retains discretion within the
policy to adjust the targets, set different measures and/
or alter weightings for the annual bonus plan and PSP, pay
dividend equivalents on vested shares up to the date those
shares can first reasonably be exercised and, in exceptional
circumstances, under the rules of the long-term incentive
plans to adjust performance conditions to ensure that the
awards fulfil their original purposes (for example, if an external
benchmark or measure is no longer available).
All assessments of performance are ultimately subject to
the Remuneration Committee’s judgement. Any discretion
exercised, and the rationale, will be disclosed in the Annual
Remuneration Report.
Differences in pay policy for
Executive Directors compared to
employees more generally
The Remuneration Policy applied to the Executive Directors
is similar to the policy for the wider senior management
team in that a significant element of remuneration is
dependent on Group performance and the key principles of
the remuneration philosophy are applied consistently across
the Group below this level, taking into account seniority and
market practice. Key features include:
• we aim to provide market competitive levels of
remuneration across the workforce in order to recruit and
retain high calibre employees at all levels;
• we have aligned pension contributions for Executive
Directors with the workforce;
• all UK employees have the opportunity to participate
in an HMRC-approved employee share scheme
arrangement; and
• employees at selected levels participate in an annual
bonus arrangement.
At senior levels, remuneration is increasingly long term, and ‘at
risk’ with an increased emphasis on performance-related pay
and share-based remuneration.
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Illustrations of application of remuneration policy
The chart below sets out for the incoming Chief Executive an illustration of the application for 2026 of the proposed
Remuneration Policy set out above. Data has not been presented for the Chief Financial Officer given that he has resigned from
the role and noting that the incoming Interim Financial Officer will initially join the Group on 12 March 2026 below the Board.
The chart shows the split of remuneration between fixed pay and annual bonus and PSP on the basis of minimum remuneration,
remuneration receivable for performance in line with the Group’s expectations, maximum remuneration (not allowing for any
share price appreciation) and maximum remuneration (assuming 50% share price growth).
Minimum
On-target Maximum
£'000
Chief Executive
Maximum with
share price growth
Share price growth
PSP
Annual bonus
Fixed pay
£0
£500
£1,000
£1,500
£2,000
£2,500
100% 52% 29% 24%
30%
32% 27%
18%
39%
33%
16%
In illustrating the potential reward, the following assumptions have been made.
Fixed pay Annual bonus PSP
Minimum performance
Fixed
elements of
remuneration
only – base
salary (being
the salary at
the date of
joining if later),
an estimated
value for
benefits and
cash in lieu of
pension of 8%
of salary
No annual bonus
reward.
No vesting.
On-target
(performance in line
with expectations)
50% of maximum
awarded
(equivalent
to 62.5% of
salary) for
achieving target
performance.
25% of maximum award vesting (equivalent to 37.5% of
salary) for achieving target performance.
Maximum performance
125% of salary
awarded for
achieving
maximum
performance.
100% of maximum award vesting (equivalent to 150% of
salary) for achieving maximum performance.
Maximum performance
plus 50% share price
growth
100% of maximum award vesting (equivalent to 150%
of salary) for achieving maximum performance plus
hypothetical share price growth of 50%.
Notes to the scenarios methodology:
• Annual bonus includes amounts deferred into shares.
• PSP is measured at face value, i.e. no assumption for dividends or share price growth (other than in the fourth scenario).
• Any potential amounts relating to all-employee share schemes have been excluded.
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DIRECTORS’ REMUNERATION REPORT CONTINUED
Recruitment remuneration
The policy aims to facilitate the appointment of individuals
of sufficient calibre to lead the business, to execute the
Group’s strategy effectively and to promote the long-term
success of the Group for the benefit of shareholders and other
stakeholders. When appointing a new Executive Director, the
Remuneration Committee seeks to ensure that arrangements
are in the best interests of the Group and not to pay more
than is appropriate.
The Remuneration Committee will take into consideration
a number of relevant factors, which may include the calibre
and experience of the individual, the candidate’s existing
remuneration package, and the specific circumstances of the
individual, including the jurisdiction from which the candidate
was recruited.
When hiring a new Executive Director, the Remuneration
Committee will typically align the remuneration package with
the above Policy. The Remuneration Committee may include
other elements of pay which it considers are appropriate;
however, this discretion is capped and is subject to the
principles and the limits referred to below.
• Base salary will be set at a level appropriate to the role
and the experience of the Executive Director being
appointed and the circumstances of the appointment.
This may include agreement on setting the salary at below
the market rate with a series of future staged increases
planned in order to bring the salary up to a market level,
in line with progression in the role, increased experience
and/or responsibilities, and subject to satisfactory
performance, where it is considered appropriate.
• Retirement benefits will be workforce aligned and other
benefits will be provided in line with the above policy.
• If the Executive Director will be required to relocate in
order to take up the position, it is the Group’s policy to
allow reasonable relocation, travel and subsistence
payments. Any such payments will be at the discretion of
the Remuneration Committee.
• The Remuneration Committee will not offer non-
performance related incentive payments (for example a
‘guaranteed sign-on bonus’).
• If an Executive Director is recruited at a time in the year
when it would be inappropriate to provide a bonus or
long-term incentive award for that year as there would
not be sufficient time to assess performance, subject
to the limit on variable remuneration set out below, the
quantum in respect of the months employed during the
year may be transferred to the subsequent year so that
reward is provided on a fair and appropriate basis.
• The Remuneration Committee may also alter the
performance measures, performance period, vesting
period, deferral period and holding period of the annual
bonus or PSP, if the Remuneration Committee determines
that the circumstances of the recruitment merit such
alteration. The rationale will be clearly explained in the
following Directors’ Remuneration Report.
• The maximum level of variable remuneration which may
be granted (excluding ‘buyout’ awards as referred to
below) is 275% of salary.
• The Remuneration Committee may make additional
payments or awards in respect of hiring an employee to
‘buyout’ remuneration arrangements forfeited on leaving
a previous employer. In doing so, the Committee will take
account of relevant factors including any performance
conditions attached to the forfeited arrangements
and the time over which they would have vested. The
Remuneration Committee will generally seek to structure
buyout awards or payments on a like-for-like basis to
the remuneration arrangements forfeited. Any such
payments or awards are limited to the expected value of
the forfeited awards. Where considered appropriate, such
buyout awards will be liable to forfeiture or ‘malus’ and/or
‘clawback’ on early departure.
• Any share awards referred to in this section, including
any buyout awards, will be granted as far as possible
under the Group’s existing share plans. If necessary, and
subject to the limits referred to above, awards in relation
to a recruitment may be granted outside of these plans
as permitted under the Listing Rules which allow for the
grant of awards to facilitate, in unusual circumstances, the
recruitment of an Executive Director.
• Where a position is filled internally, any ongoing
remuneration obligations or outstanding variable pay
elements shall be allowed to continue according to the
original terms.
• Fees payable to a newly appointed Chair or Non-
Executive Director will be in line with the fee policy in place
at the time of appointment.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
103
Governance
Headlam Group PLC Annual Report & Accounts 2025
103
Service contracts and letters of appointment
Executive Directors’ service contracts are on a rolling basis and may be terminated on up to 12 months’ notice by the Group or by
the Executive.
All Non-Executive Directors have letters of appointment providing for fixed-term agreements with the Group which may be
terminated by the giving of three months’ notice by either party (Chair six months’ notice). The agreements last for an initial
period of three years and may then be extended for two additional periods of three years, subject to re-election by shareholders
at the relevant AGM.
Copies of Executive Directors’ service contracts and Non-Executive Directors’ letters of appointment are available for inspection
at the Company’s registered office during normal hours of business.
Payments for loss of office
The principles on which the determination of payments for loss of office will be approached are set out below:
Component Policy
Payment in lieu
of notice
If notice is served by either party, the Executive Director can continue to receive base salary, benefits and
pension for the duration of their notice period, during which time the business may require the individual to
continue to fulfil their current duties or may assign a period of garden leave.
The Group has discretion to make a payment in lieu of notice. Such a payment would include base
salary and, at the election of the Remuneration Committee, compensation for benefits and pension
contributions (if applicable) for the unexpired period of notice.
Annual bonus This will be at the discretion of the Remuneration Committee on an individual basis and the decision as
to whether or not to award an annual bonus award in full or in part will be dependent on a number of
factors, including the circumstances of the individual’s departure (i.e. normal good leaver provisions) and
their contribution to the business during the annual bonus period in question. Any annual bonus award
amounts paid in respect of a good leaver will normally be prorated for time in service during the annual
bonus period and will, subject to performance, be paid at the usual time (although the Remuneration
Committee retains discretion to pay the annual bonus award earlier in appropriate circumstances) and
normally subject to deferral policy. Any bonus earned for the year of departure and, if relevant, for the prior
year may be paid wholly in cash at the discretion of the Remuneration Committee.
Deferred
bonus awards
The extent to which any unvested deferred bonus award will vest will be determined in accordance with
the rules of the Deferred Bonus Plan (‘DBP’).
If a participant ceases employment for any reason (other than summary dismissal, in which case his award
will lapse), his award will ordinarily continue until the normal vesting date. The Remuneration Committee
retains discretion to release awards when the participant leaves.
Awards (in the form of nil cost options) which have vested and been released but remain unexercised at
the date of cessation may be exercised, for such period as the Remuneration Committee determines, if a
participant leaves for any reason (other than summary dismissal).
PSP The extent to which any unvested award will vest will be determined in accordance with the rules of the
PSP.
Unvested awards will normally lapse on cessation of employment. However, if a participant leaves due
to death, ill health, injury, disability, the sale of his employer or any other reason at the discretion of the
Remuneration Committee, the Remuneration Committee shall determine whether the award will be
released at cessation or on the normal release date or at some other time (such as following the end
of the performance period). In any case, the extent of vesting will be determined by the Remuneration
Committee taking into account the extent to which the performance condition is satisfied and, unless the
Remuneration Committee determines otherwise, the period of time elapsed from the date of grant to the
date of cessation relative to the performance period. Awards may then be exercised during such period as
the Remuneration Committee determines.
If a participant leaves for any reason (other than summary dismissal) after an award has vested but
before it has been released (i.e. during a ‘holding period’), his award will ordinarily continue until the
normal release date when it will be released to the extent it vested. The Remuneration Committee retains
discretion to release awards when the participant leaves.
Awards (in the form of nil cost options) which have vested and been released but remain unexercised at
the date of cessation may be exercised, for such period as the Remuneration Committee determines, if a
participant leaves for any reason (other than summary dismissal).
104104
DIRECTORS’ REMUNERATION REPORT CONTINUED
Component Policy
Change of
control
The extent to which unvested awards under the DBP and PSP will vest will be determined in accordance
with the rules of the relevant plan.
Awards under the DBP will vest in full in the event of a takeover, merger or other relevant corporate event.
Unvested awards under the PSP will vest early on a takeover, merger or other relevant corporate event. The
Committee will determine the level of vesting taking into account the extent to which the performance
condition is satisfied and, unless the Committee determines otherwise, the period of time elapsed from
the date of grant to the date of the relevant corporate event relative to the performance period.
Awards under the PSP which have vested but not been released (i.e. awards which are subject to a holding
period) will be released, to the extent vested.
Mitigation If an Executive Director’s employment is terminated, any compensation payment will be calculated in
accordance with normal legal principles including the application of mitigation to the extent appropriate
to the circumstances of the termination. Payments will be made in instalments and reduced to the extent
employment is taken up elsewhere.
Other
payments
Payments may be made either in the event of a loss of office or a change of control under any of the
Group’s HMRC-favoured all-employee share plans in line with the associated plan rules. There is no
discretionary treatment for leavers or on a change of control under these schemes.
In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement
and legal fees and other benefits that may be considered appropriate taking into account the
circumstances of the termination.
The Remuneration Committee reserves the right to make additional exit payments where such payments
are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of
such an obligation) or by way of settlement or compromise of any claim arising in connection with the
termination of a Director’s office or employment.
Where a buy-out award is made under the Listing Rules then the leaver provisions would be determined at the time of
the award.
Where the Remuneration Committee retains discretion, it will be used to provide flexibility in certain situations, taking into
account the particular circumstances of the Director’s departure and performance.
There is no entitlement to any compensation in the event of Non-Executive Directors’ fixed-term agreements not being renewed
or the agreement terminating earlier.
Existing contractual arrangements and historical awards
The Remuneration Committee retains discretion to make any remuneration payment or payment for loss of office outside the
policy in this report (including exercising any discretions available to it in connection with any such payment):
• where the terms of the payment were agreed before the policy came into effect (including the satisfaction of options
granted under the CIP), provided in the case of any payment whose terms were agreed after the previous Directors’
Remuneration Policy was approved and before the policy in this report became effective, the remuneration payment or
payment for loss of office was permitted under that former policy;
• where the terms of the payment were agreed at a time when the relevant individual was not a Director of the Group and, in
the opinion of the Remuneration Committee, the payment was not in consideration of the individual becoming a Director of
the Group.
External appointments
The Board believes that experiences of other companies’ practices and challenges is valuable both for the personal
development of its Executive Directors and for the Group. Any external appointments are subject to Board approval (which
would not be given if the proposed appointment would lead to a material conflict of interest). Fees received by Executive
Directors in respect of external non-executive appointments are retained by the individual Director. Details of such
appointments are included in the Annual Report on Remuneration.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
105
Governance
Headlam Group PLC Annual Report & Accounts 2025
105
Annual report on remuneration
Certain information provided in this part of the Directors’ Remuneration Report is subject to audit. This is annotated as audited.
Any information not annotated as audited is unaudited.
Single total figure of remuneration for each Director
The table below reports the total remuneration receivable in respect of qualifying services by each of the Executive Directors for
the years 2025 and 2024.
Directors’ remuneration as a single figure (audited)
Executive Directors
Base
salary/
fees
£000
Non-
salary
benefits
6
£000
Pension
related
benefits
7
£000
Total
fixed
£000
Annual
performance
bonus
£000
Share-
based
incentive
schemes
9
£000
Total
variable
£000
Total
£000
Stephen Bird
1
2025 87.5 1.8 – 89.3 – – – 89.3
2024 – – – – – – – –
Adam Phillips
2
2025 360.6 3.7 16.5 380.8 – – – 380.8
2024 325 1.6 16.2 342.8 – – – 342.8
Non-Executive Directors
Stephen Bird
1
2025 135.7 2.3 – 138 – – – 138
2024 60 0.9 – 60.9 – – – 60.9
Karen Hubbard 2025 57 2.7 – 59.7 – – – 59.7
2024 57 3 – 60 – – – 60
Robin Williams 2025 57 0.6 – 57.6 – – – 57.6
2024 57 0.4 – 57.4 – – – 57.4
Jemima Bird
3
2025 113.9 1.7 – 115.6 – – – 115.6
2024 57 0.9 – 57.9 – – – 57.9
Former Directors
Chris Payne
4
2025 376 7.7 30 413.7 – – – 413.7
2024 484.5 9.2 38.7 532.4 – – – 532.4
Keith Edelman
5
2025 59 4.5 – 63.5 – – – 63.5
2024 150 2.5 – 152.5 – – – 152.5
Total 2025 1,246.7 25 46.5 1317.2 – – – 1,317.2
2024 1,190.5 18.5 54.9 1,263.9 – – – 1,263.9
1
Stephen Bird was appointed Interim Executive Chair and with effect from 3 October 2025 receives a fee of £500,000 per annum for performing this enhanced interim
role and the figures in the table reflect the relevant pro-rata amounts for the remainder of the year ended 31 December 2025. This additional fee, which reflects his
significantly enhanced role, will be payable until the new Chief Executive is appointed. Prior to 3 October 2025, Stephen Bird received fees as Non-Executive Chair.
2
In addition to his base salary, Adam Phillips received a £10,000 per month acting up allowance which commenced on 3 October 2025 and will cease upon the
appointment of the new Chief Executive. The allowance, which does not receive the benefit of pension provision reflects Adam’s significant additional roles and
responsibilities in respect of supporting the Interim Executive Chair.
3
As detailed in the Annual Statement, Jemima Bird received an additional fee of £48,000 between 3 October 2025 and 31 December 2025 to reflect significant additional
support provided to the Company following the departures of the Chief Executive and Chief Commercial Officer.
4
Chris Payne stepped down as Chief Executive and an Executive Director on 3 October 2025.
5
Keith Edelman stepped down as Chair on 28 February 2025 and continued to be paid for a further three months thereafter.
6
Non-salary benefits for Executive Directors include the provision of a company car or car allowance, private medical insurance and other benefits deemed to be an
employment benefit such as some fuel costs. Non-salary benefits for Non-Executive Directors relates to taxable expenses.
7
The amount of employer contribution to a scheme or paid as cash in lieu of retirement benefits based on a fixed percentage of base salary. Chris Payne received
pension contributions from the Company equivalent to 8% of his base salary (£7,599 as pension, (£22,472 as a salary supplement, totalling £30,072) which aligns with the
contribution level (i) received by a significant proportion of our employees and (ii) available to all new joiners under the Headlam Master Trust Pension Scheme. Adam
Philips received pension contributions from the Company equivalent to 5% of his base salary.
8
Details of the annual bonus targets are set out on the following page.
9
Details of the 2023 PSP awards and performance condition assessment is set out in the 2023 PSP award section.
106106
DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual performance bonus in respect of financial year 2025 (audited)
For 2025, the former Chief Executive and Chief Financial Officer had a maximum annual bonus opportunity equal to 125% of
base salary, with 50% of maximum payable for a target level of performance. The bonus was assessed against the Company’s
underlying profit before tax (‘PBT’) (70% of bonus opportunity) and against the achievement of a number of key strategic and
ESG-related objectives (30% of bonus opportunity) as shown in the tables below:
Performance metric Weighting Threshold Target Maximum Actual
Bonus
earned
(% max)
EBITDA 70% £5.6m £6.2m £7.4m Below threshold 0%
Non-Financial 30% See table below 0%
The following non-financial strategic objectives were designed to focus on the achievement of certain key elements of
Company strategy.
Objective Target Maximum
Potential
Bonus
(% of bonus
opportunity)
Key Accounts Growth Target Revenue growth Target Revenue growth plus c10% 5%
Trade Counters Growth Target Revenue growth Target Revenue growth plus c10% 5%
Regional Distribution Market Share Hold market share Grow market share 5%
Buying Set increase in group rebates Set additional buying benefits 5%
Fusion implementation (customer
satisfaction)
NPS maintained NPS growth of at least 1ppt 5%
ESG (colleague engagement) Maintained Growth of at least 1ppt 5%
Total 30%
Noting that the threshold EBITDA target was not met, and notwithstanding any progress against the non-financial targets
above (which were not ultimately assessed in detail) the Remuneration Committee agreed to apply negative discretion to
reduce the 2025 bonus to nil.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
107
Governance
Headlam Group PLC Annual Report & Accounts 2025
107
2023 PSP due to vest in 2026 (audited)
Awards granted under the PSP in 29 June 2023 are based on an underlying Basic Earnings Per Share (‘EPS’) performance
condition (70% of the award), a relative Total Shareholder Return (‘TSR’) performance condition (20% of the award) and an ESG
performance condition (10% of award). The performance targets are shown in the table below:
Performance Target % vesting
Underlying
Basic EPS
growth
(70% of award)
TSR v FTSE
SmallCap
(excluding ITs)
(20% of award)
tCO
2
e%
reduction
(10% of award)
Below Threshold – Less than 32.5p Below median Less than 22%
Threshold 25 32.5p Median 22%
Maximum 100 38.5p Upper quartile 25%
Actual Performance <32.5p Below median n/a
Vesting 0% 0% 0%
Noting that EPS and relative TSR performance was below threshold, the Committee determined that the 2023 PSP awards
should lapse regardless of performance against the ESG targets.
Director Shares granted Shares vesting
Value of shares
vesting
Chris Payne 277,669 0 £0
Share awards granted during the financial period (audited)
PSP awards
PSP awards were granted to the Executive Directors on 17 April 2025 as follows (audited)
Number
of nil-cost
options over
which award
granted
Value of
Award % of salary
% of award
vesting at
threshold
Date of
grant Performance period
Chris Payne 741,285 £741,285 150% 25% 17 April 2025 3 years ending 31.12.2027
Adam Phillips 497,250 £497,250 150% 25% 17 April 2025 3 years ending 31.12.2027
The share price used to determine the number of shares under the PSP was 100 pence, being the share price determined by the
Remuneration Committee. This was significantly above the prevailing share price at the date of grant (82.6 pence). A higher
share price was selected, which effectively reduced award levels by c.83%, to recognise the year on year fall in share price and
aid share usage/dilution management.
108108
DIRECTORS’ REMUNERATION REPORT CONTINUED
The Awards are subject to an underlying Basic Earnings Per Share (‘EPS’) performance condition (70% of the award), a relative
Total Shareholder Return (‘TSR’) performance condition (20% of the award) and an ESG performance condition (10% of award).
The performance targets are shown in the table below:
Performance Target % vesting
Underlying
Basic EPS
for 2026
(70% of
award)
TSR v FTSE
SmallCap
(excluding ITs)
(20% of
award)
tCO
2
e%
reduction
(10% of
award)
Below Threshold – Less than 0p Below median Less than 25%
Threshold 25 >0p Median 25%
Maximum 100 ≥13.1p Upper quartile 29%
The vesting of the awards is additionally subject to a financial underpin whereby the extent of vesting may be adjusted to reflect
the overall financial performance of the Company over the three-year performance period. The Remuneration Committee
also has full discretion to ensure that the final outcome is warranted based on the performance of the Company in the light of
all relevant factors and to ensure there have been no windfall gains. Any awards vesting are additionally subject to a two-year
holding period following the date of vesting.
DBP awards (audited)
No DBP awards were granted to Executive Directors during the year ended 31 December 2025.
Payment for loss of office (audited)
Keith Edelman stepped down from the Board on 28 February 2025. He continued to be paid for three months thereafter in
respect of his notice period.
Chris Payne stepped down as an Executive Director on 3 October 2025. In respect of his leaving arrangements, he will continue
to receive his salary, pension and benefit provision up to 16 May 2026. Chris received salary, pension and benefits of £118,176,
£9,456 and £2,503 between stepping down from the Board and 31 December 2025. There will be no entitlement to an annual
bonus for 2025 or 2026 and all of his existing PSP and DBP awards will lapse.
As announced on 5 February 2026, Adam Phillips resigned and is expected to leave the Group after an orderly handover has
been completed. Adam will not be entitled to any bonus for 2025 or 2026 and his outstanding PSPs will lapse. He will retain his
2024 DBP awards (29,583 shares under award plus 975 shares in respect of dividend equivalents), which will continue to vest at
the normal vesting date. No legal fees were incurred.
Payments made to past Directors (audited)
No payments were made for past directors to be reported for the year under review.
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
109
Governance
Headlam Group PLC Annual Report & Accounts 2025
109
Executive Directors’ share awards outstanding (audited)
Scheme
Number of shares
/options as at
1 January 2025
Shares/options
granted
Shares/options
lapsed
Shares/options
exercised
Number of
shares/options at
31 December 2025
Date of grant
Share price at
grant (pence)
Exercise Price
(pence)
Market price on
exercise date
(pence)
Vesting date
Expiry date
Chris Payne
PSP - 741,285 – – 741,285 17 April 2025 100 Nil - April 2028 April 2035
PSP 395,402 – – – 395,402 18 March 2024 183.80 Nil – March 2027
1
March 2034
DBP 64,608⁴ – – – 64,608 18 March 2024 183.80 Nil – March 2026 March 2034
PSP 277,669 – – – 277,669 29 June 2023 257 Nil – June 2026
1
June 2033
DBP 22,563 – – 24,748
2
– 13 April 2023 301 Nil – April 2025 April 2033
PSP 111,548 – 111,548 – – 8 April 2022 381 Nil – April 2025
1
April 2032
SAYE 12,513 – – – 12,513 16 Oct 2024 143.42 114.74 – Nov 2027 April 2028
Adam Phillips
PSP 497,250 – – 497,250 17 April 2025 100 Nil - April 2028 April 2035
PSP 265,233 – – – 265,233 18 March 2024 183.80 Nil – March 2027
1
March 2034
DBP 29,583 – – – 29,583 18 March 2024 183.80 Nil – March 2026 March 2034
PSP 127,143 – – – 127,143 29 June 2023 257 Nil – June 2026
1
June 2033
SAYE 6,272 – – – 6,272 16 Oct 2024 143.42 114.74 – Nov 2027 May 2028
1
Award vests on date shown but is subject to a further two-year holding period during which time the option may not be exercised.
2
Chris Payne exercised his 2023 nil-cost option to acquire 24,748 shares on 1 May 2025 which reflects the addition of dividend equivalents in Shares, calculated on a
reinvestment basis.
3
SAYE awards are granted with an exercise price at a 20% discount to the market value of the shares at the time the invitation is made, as permitted under HMRC
regulations.
4
Further to the payments for loss of office disclosure on page 109, all of Chris Payne’s shares/options as at 31 December 2025 lapsed on 16 March 2026. Similarly, in respect
of Adam Phillips all awards (except for his 2024 DBP share awards which vested on 18 March 2026) will lapse on his departure from the Group later in 2026.
110110
DIRECTORS’ REMUNERATION REPORT CONTINUED
Statement of Directors’ shareholding and share interests (audited)
The interests of Directors and their connected persons in the Company’s ordinary shares as at 31 December 2025 were as set
out below. There have been no changes to those interests between 31 December 2025 and the date of signing of these financial
statements and reports.
Owned
Shares at 31
December
2025
1
PSP
Deferred
Bonus
Vested
but not
exercised SAYE
Shares under
Shareholding
Guidelines
2
Guidelines
achieved
3
(%)
Chris Payne⁴ 103,366 1,525,904 64,608 0 12,513 103,366 7%
Adam Phillips⁴ 2,168 889,626 29,583 0 6,272 15,679 1%
Keith Edelman 37,415 N/A N/A N/A N/A N/A N/A
Jemima Bird 19,794 N/A N/A N/A N/A N/A N/A
Stephen Bird 55,000 N/A N/A N/A N/A N/A N/A
Karen Hubbard 12,008 N/A N/A N/A N/A N/A N/A
Robin Williams 23,000 N/A N/A N/A N/A N/A N/A
1
Date of leaving in respect of Keith Edelman.
2
PSP awards are subject to performance conditions and continued service. Deferred Bonus shares are subject to continued service only.
3
This includes all owned shares plus, on a net of tax basis: (i) vested scheme interests; and (ii) deferred bonus awards which vest based on continued service only, as
permitted under the Company’s share ownership policy.
4
Please refer to footnote 4 of the Executive Directors’ share awards outstanding table on page 110 in respect of the treatment of Chris Payne and Adam Phillips’
outstanding share awards.
TSR graph
The graph below shows the value at 31 December 2025 of £100 invested in the Company on 1 January 2016 compared to the
value of £100 invested in the FTSE SmallCap Index, making the assumption that dividends are reinvested to purchase additional
equity. The SmallCap has been chosen given that the Company is a constituent of this index and has been over the period
presented.
31 Dec 1631 Dec 15 31 Dec 17 31 Dec 18 31 Dec 19 31 Dec 20 31 Dec 21 31 Dec 22 31 Dec 23 31 Dec 24 31 Dec 25
Headlam Group plc FTSE SmallCap Index
250
200
150
100
50
0
Total Shareholder Return (restated to 100)
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
111
Governance
Headlam Group PLC Annual Report & Accounts 2025
111
Chief Executive remuneration table
The table below sets out the remuneration of the Chief Executive for the last ten financial year periods.
Period
Chief
Executive
single figure
of total
remuneration
(£000)
Annual
bonus (% of
maximum
opportunity)
Long-term
incentive
vesting (%
of maximum
opportunity)
2025 Chris Payne 414
1
– –
2024 Chris Payne 532 – –
2023 Chris Payne 644 20 –
2022 Chris Payne 674 38 –
2021 Chris Payne 205
2
100 –
2021 Steve Wilson 864
3
100 –
2020 Steve Wilson 514 – –
2019 Steve Wilson 798 45.5 5.7
2018 Steve Wilson 588 – 53.5
2017 Steve Wilson 1,069 65.8 97.5
2016 Steve Wilson 1,067
4
76.8 98.6
2016 Tony Brewer 737
5
N/A 88.9
1
Reflects remuneration received by Chris Payne up until the 3 October 2025 when he stepped down as Chief Executive and an Executive Director.
2
The remuneration shown is on a pro-rated basis for the period Chris Payne was Interim Chief Executive from 7 October 2021 to 31 December 2021 only.
3
Steve Wilson stepped down as Chief Executive and a Director on 6 October 2021. The 2021 figures reflect his remuneration earned from the start of 2021 until the date of
his resignation as a Director. This remuneration is for a part year and does not include a termination payment.
4
The remuneration shown is for the full year and incorporates his remuneration as Group Finance Director from 1 January 2016 until 14 September 2016 when he became
Chief Executive.
5
Tony Brewer stepped down as Chief Executive and a Director on 14 September 2016. The 2016 figures reflect his remuneration earned from the start of 2016 until the date
of his resignation as a Director. This remuneration is for a part year and does not include a termination payment.
112112
DIRECTORS’ REMUNERATION REPORT CONTINUED
Percentage change in remuneration of Directors compared with other employees
The table below shows the percentage increase/(decrease) in each Executive and Non-Executive Directors’ remuneration
compared with the Company’s employees as a whole between the financial periods 2020, 2021, 2022, 2023, 2024 and 2025.
2025 2024 2023 2022 2021
Director
Salary and fees
(% change)
All taxable benefits
(% change)
Annual Bonuses
2
(% change)
Salary and fees
(% change)
All taxable benefits
(% change)
Annual Bonuses
2
(% change)
Salary and fees
(% change)
All taxable benefits
(% change)
Annual Bonuses
2
(% change)
Salary and fees
(% change)
All taxable benefits
(% change)
Annual Bonuses
2
(% change)
Salary and fees
(% change)
All taxable benefits
(% change)
Annual Bonuses
2
(% change)
Executive Directors
Stephen Bird N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Adam Phillips
8
11 127 0 41.9 60 -100 N/A N/A N/A N/A N/A N/A N/A N/A N/A
Non-Executive Directors
Stephen Bird
3
126 156 0 0 0 N/A 15 -73 N/A 282 N/A N/A N/A N/A N/A
Jemima Bird
6 9
98 89 N/A 0 0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Karen Hubbard
6
0 -10 N/A 0 0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Robin Williams
6
0 50 N/A 0 0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Former Directors
Chris Payne N/A N/A N/A 2 -23.3 -100 14 -37 -42 25 27 (55) – (10) 100
Keith Edelman
5
N/A N/A N/A 0 0 N/A 27 -72 N/A 95 N/A N/A – N/A N/A
Philip Lawrence N/A N/A N/A N/A N/A N/A N/A N/A N/A (60) N/A N/A – N/A N/A
Amanda Aldridge
7
N/A N/A N/A N/A N/A N/A N/A N/A N/A 12 N/A N/A – N/A N/A
Simon King
3
N/A N/A N/A N/A N/A N/A N/A N/A N/A 120 N/A N/A N/A N/A N/A
Steve Wilson
4
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (23) (24) 100
Alison Littley
4
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (75) N/A N/A
All employees
1
8 6 0 12 8 0 7 -3 -100 3 (6) (74) – 5 100
1
Reflects the average percentage change in salary, benefits and bonus for all employees who were employed in 2024 and 2025.
2
This reflects annual bonus paid in respect of the financial year as per the single figure table.
3
Stephen Bird has been included twice in the above table in respect of his Non-Executive Chair role and his Interim Executive Chair role..
4
Alison Littley and Steve Wilson left the Board on 31 March 2021 and 6 October 2021 respectively and their pro-rated salary is reflected in the percentage change shown.
5
Keith Edelman stepped down from the Board 28 February 2025.
6
Jemima Bird and Robin Williams joined the Board on 11 October 2022 and Karen Hubbard joined the Board on 1 September 2022..
7
Philip Lawrence stepped down from the Board on 19 May 2022 and Amanda Aldridge stepped down from the Board on 11 October 2022.
8
Adam Phillips joined the Board on 20 March 2023.
9
Includes fees paid to Jemima Bird associated with significant additional time commitment.
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Governance
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113
Relative importance of spend on pay
The table below shows the overall expenditure on dividends and on pay as a whole across the Company along with the
percentage change between each
2025
£000
2024
£000 % change
Dividends
1
Nil Nil –
Pay 103,057 105,530 -2.3%
1
Includes dividends paid during the financial year.
CEO pay ratio
The data shows how the Chief Executive’s single figure remuneration for 2025 (as taken from the single figure remuneration
table) compares to equivalent single figure remuneration for the year ended 31 December 2025 for full-time equivalent UK
employees as at 31 December 2025, on a Group basis, ranked at the 25th, 50th and 75th percentile.
Period Method
25th
percentile
ratio
Median (50th
percentile)
ratio
75th
percentile
ratio
2025 Option A 15.5:1 13.6:1 9.84:1
2024 Option A 21.5:1 18.3:1 13.5:1
2023 Option A 27.3:1 22.7:1 16.6:1
2022 Option A 29.2:1 24.0:1 16.9:1
2021
1
Option A 51.1:1 38.9:1 26.5:1
2020 Option A 25.8:1 20.7:1 14.4:1
2019 Option A 39.3:1 31.8:1 22.7:1
1
The remuneration for comparison for 2021 reflects the total remuneration included in the single total figure of remuneration table paid to Steve Wilson and Chris Payne
in relation to the period that each were undertaking the role of Chief Executive. Pension payments have been omitted from the CEO pay ratio calculation for the period
that Steve Wilson was Chief Executive to maintain consistency as he did not receive a pension payment. Pension payments have been included for the period in which
Chris Payne was Chief Executive to align with his pay package.
Option A was selected given that this method of calculation was considered to be the most efficient and robust approach in
respect of gathering the required data and was consistent with reporting for previous years.
The salary and total pay and benefits for the UK employees at the relevant percentiles, and upon which the pay ratios have
been calculated, are as follows:
Year Percentile Salary (£)
Total pay and
benefits (£)
2025 25th percentile 26,559 26,559
Median 30,436 30,436
75th percentile 40,545 42,049
The CEO pay ratios for 2025 are significantly lower than those for 2024. This is primarily due to the CEO single figure only including
nine months of the year due to the CEO standing down in October. However, the single figure has continued to reduce year on
year which reflects the zero annual bonus award for 2025. Even so, excluding the reduced quantity of months the median CEO
pay ratio is still representative of the UK employee base and not inconsistent with the Company’s pay, reward and progression
policies. The median pay ratio has shown a steady upward trend over the past four years, increasing by 2% from 2021 to 2022,
1% from 2022 to 2023, 3% from 2023 to 2024 and would be 4.5% from 2024 to 2025 if comparable to a full 12 months of CEO pay.
Whilst the fluctuation in growth rates suggests some variability, the overall trajectory indicates a continued rise. This reflects
adjustments in compensation structures, changes in workforce composition, and broader economic factors influencing pay
distribution.
114114
DIRECTORS’ REMUNERATION REPORT CONTINUED
Executive Directors’ service contracts
Chris Payne was appointed on 13 September 2017 and the date of his current service contract was 8 March 2022.
Chris Payne stepped down as an Executive Director on 3 October 2025.
Adam Phillips was appointed as Chief Financial Officer on 20 March 2023 (and was appointed as a Board Director with effect
from 25 May 2023), and the date of his current service contract is 14 November 2022.
Stephen Bird was appointed Interim Executive Chair on 3 October 2025 and the date of his current terms of appointment is
7 October 2025.
Rob Barclay joined the Board as Designate Chief Executive Officer on 9 March 2026 and will assume the role of Chief Executive
Officer on 27 April 2026. The date of his service contract is 3 February 2026.
The service contracts for Chris Payne, Adam Phillips and Rob Barclay contain a 12-month notice period.
Non-Executive Directors’ letters of appointment
Details of the current Non-Executive Directors’ appointment dates are set out below:
Non-Executive Director Date of appointment Expiry of current term
Keith Edelman 1 October 2018 n/a
Jemima Bird 10 October 2022 10 October 2028
Stephen Bird 13 September 2021 12 September 2027
Karen Hubbard 1 September 2022 31 August 2028
Robin Williams 10 October 2022 10 October 2028
Statement of implementation of remuneration policy in 2026
Details of how the Company will operate the Remuneration Policy in 2026 are set out in the Annual Statement.
Remuneration Committee activity
The Board approved the terms of reference, delegating certain responsibilities to the Remuneration Committee, most recently
on 15 December 2025. The terms of reference are reviewed periodically and are available on the Company’s website within the
Governance section at www.headlam.com. The Remuneration Committee comprises the Chairman and each of the other Non-
Executive Directors. Attendance at scheduled meetings of the Committee during the year was as follows:
Members
Meetings
attended
Eligible to
attend
Jemima Bird 4 4
Stephen Bird 3 4
1
Karen Hubbard 4 4
Robin Williams 4 4
Members additionally correspond on urgent matters between formal Remuneration Committee meetings. Other Directors
may attend Remuneration Committee meetings by invitation, including the Chief Executive and Chief Financial Officer where
appropriate. The Remuneration Committee also receives assistance from the Interim Chief People Officer, the General Counsel
& Company Secretary and from independent external advisers, FIT Remuneration Consultants LLP. The General Counsel &
Company Secretary acts as Secretary to the Remuneration Committee.
No one attending a Remuneration Committee meeting may participate in discussions relating to their own terms and
conditions of service or remuneration.
1
Stephen Bird did not attend one meeting where discussions were about remuneration changes relating to his change in role as it was not appropriate for him to attend.
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Headlam Group PLC Annual Report & Accounts 2025
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Governance
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Main role and key responsibilities
The Remuneration Committee’s main responsibilities include:
• designing the framework and policy for Executive Directors’ remuneration and determining remuneration packages for
the Executive Directors, Chair and Senior Management, including the Company Secretary, to promote the achievement of
the Group’s strategy and long-term sustainable success. When setting executive remuneration, take into account the link
between Executive Director and senior manager remuneration and that provided to the wider workforce;
• establishing remuneration schemes that promote long-term shareholding by Executive Directors and that support
alignment with Shareholders’ interests, both in post and post cessation;
• approving the design and operation of the Company’s short-term and long-term incentive arrangements. This includes
agreeing the targets that are applied to awards made to Executive Directors and the Senior Management Team;
• oversight of the administration of share plans as required;
• reviewing workforce remuneration and related policies; and
• determining the policy for and scope of pension arrangements for Executive Directors and Senior Management.
Remuneration Committee activities
The key matters discussed at the meetings of the Remuneration Committee in 2025 were as follows:
Remuneration
• considered the Company’s culture, wider workforce remuneration arrangements, and Company-wide annual bonus
schemes and considered these when setting pay strategy for Executive Directors and Senior Management;
• reviewed wider workforce remuneration arrangements, and annual bonus scheme and considered in conjunction with pay
strategy for Executive Directors and Senior Management;
• considered pay awards for Executive Directors and Senior Management;
• considered Annual Bonus payments;
• reviewed and confirmed that no vesting would occur for the 2022 PSP;
• approved the Annual Bonus payments for 2024;
• approved the 2025 PSP Award and targets;
• considered remuneration for Executive Directors, Senior Management and the Interim Executive Chair; using market data
where appropriate;
• considered Executive Director leaver arrangements;
• reviewed the Directors Remuneration Policy ahead of its renewal at the 2026 AGM; and
• considered actual remuneration (in respect of the year ended 31 December 2024) and expected remuneration (for the year
ending 31 December 2025) and concluded that actual/expected executive pay outcomes were appropriate in light of: (i)
Company performance (fixed pay only); (ii) market norms; and (iii) the approach to pay across the workforce (noting CEO
Pay Ratio and Gender Pay Gap data).
Governance
• received feedback from the Employee Forum on matters relating to remuneration;
• reviewed recommendations made by the voting agencies in their AGM reports;
• reviewed its own terms of reference; and
• approved its annual workplan.
Reporting
• approved the Remuneration Report (including CEO pay ratio and Gender Pay Gap disclosure).
Effectiveness
• reviewed the Committee’s effectiveness; and
• reviewed the performance of its independent advisor FIT Remuneration and determined that they should remain in office.
116116
DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration Committee effectiveness
The effectiveness of the Remuneration Committee was evaluated as part of the Board performance evaluation process.
The review found that the Remuneration Committee is operating effectively.
Advisers
FIT Remuneration Consultants LLP (FIT) has served as independent adviser to the Remuneration Committee throughout the
year under review. FIT was appointed by the Committee in 2019 following a competitive tender process. FIT also provided
additional related advice to the Company in relation to drafting this report, share plan operation and Non-Executive Director
fee benchmarking. FIT’s fees in respect of advice provided during the year ended 31 December 2025 were £27,028 (excluding
VAT) and were charged on a time and disbursements basis. FIT is a member of the Remuneration Consultants Group and as such
voluntarily operates under its Code of Conduct in relation to executive remuneration in the UK. The Remuneration Committee
reviewed the performance of the FIT and was satisfied that all advice received was of good quality, objective and independent.
Statement of shareholders’ votes
The following table sets out the results of the binding vote on the Directors’ Remuneration Policy at the 2023 AGM and the vote
on the 2024 Directors’ Remuneration Report at the 2025 AGM.
% of votes
cast
For
% of votes
cast
Against
Number of
Shares
Withheld
2023 Remuneration Policy 90.72 9.28 1,903,961
2024 Annual Report on Remuneration 99.74 0.26 1,161,285
This report has been approved by the Board of Directors and signed on its behalf by Jemima Bird, Chair of the
Remuneration Committee.
Jemima Bird
Chair of the Remuneration Committee
25 March 2026
Strategic Report
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Governance
Headlam Group PLC Annual Report & Accounts 2025
117
The Directors present their report, together with the audited
financial statements for the Group, for the year ended
31 December 2025. This report contains additional information
which the Directors are required by law and regulation to
include within the Annual Report and Accounts. In conjunction
with the information from the Chair’s Statement on page 2 to
the Statement of Directors’ Responsibilities on page 123, this
section constitutes the Directors’ Report in accordance with
the Companies Act 2006 and the Management Report as
required by DTR 4.1.5 R(2).
Principal activities
The principal activities of the Group are the sales, marketing,
supply and distribution of floorcoverings and certain other
ancillary products in the UK and certain Continental Europe
territories. The principal activity of the Company is that of a
holding company and its subsidiaries are listed on page 188.
Further details of the Group’s activities and future plans are
set out in the Strategic Report on pages 7 to 53.
Headlam Group plc is a company incorporated and domiciled
in the UK, company number 00460129. The address of the
registered office is Gorsey Lane, Coleshill, Birmingham B46 1JU.
Strategic report and future
developments
The Group is required by the Companies Act 2006 to include
a Strategic Report in this document. The information that
fulfils the requirements of the Strategic Report, and which
is incorporated in this report by reference, can be found
on pages 7 to 53. The Strategic Report includes certain
disclosures required to be contained in the Directors’ Report
as follows: the viability statement (page 51), approach to
diversity (pages 34, 87 and 88), workforce engagement (pages
32 to 34 and 69), an indication of likely future developments
(page 2 onwards, Strategic Report), and the approach to risk
management (pages 46 to 50).
Directors
The following were Directors of the Company during the
period ended 31 December 2025 and at the date of this report
unless otherwise stated:
• Keith Edelman (27 February 2025)
• Chris Payne (until 3 October 2025)
• Adam Phillips
• Stephen Bird
• Jemima Bird
• Karen Hubbard
• Robin Williams
Corporate governance statement
The corporate governance statement as required by the
Financial Conduct Authority’s Disclosure and Transparency
Rules (DTR) 7.2.1 is set out on pages 56 and 57 and is
incorporated into this report by reference.
Acquisitions
There have been no acquisitions during the year.
Property disposals
During the year, as part of the Company’s transformation
programme, it sold and leaseback its Tamworth property for
a total of £21.7 million (excluding VAT) which was a significant
transaction under the Listing Rules. Please also see page
2 for more information of the Company’s transformation
programme.
Financial results and ordinary dividends
The results for the year and financial position at
31 December 2025 are shown in the Consolidated Income
Statement on page 134 and Statements of Financial Position
on page 136.
No interim dividend was paid in 2025 per ordinary share (2024:
Nil) to shareholders and the Directors propose no final dividend
is paid per ordinary share (2024: Nil) in respect of the financial
year ended 31 December 2025 which means the total dividend
for FY25 will be nil p per ordinary share.
Going Concern
The Directors concluded that it remains appropriate to
prepare the financial statements on a going concern basis.
In doing so, it is recognised that, whilst the transformation
plan, which is underway, is expected to be net cash positive,
there are elements of the cash inflows that are not wholly
within the Group’s or the Directors’ control. Whilst the Directors
are confident that the plan, or sufficient mitigating actions,
can be executed, in the event that both a) property sales are
delayed and b) sufficient mitigating options are unable to be
implemented, the Group would need to seek amendments to
its liquidity covenants in the ABL which, given previous strong
support from its prior lender group, the Directors believe
would be achievable as required. Given that neither such
completion of property transactions nor further mitigations
are wholly within the Group’s control this, in the Directors’
view, is considered to constitute the existence of a material
uncertainty, as disclosed in note 1 to the financial statements.
Share capital
As at 31 December 2025, the issued share capital of the
Company comprised a single class of ordinary shares of 5p
each (‘Ordinary Shares’).
The Company’s Ordinary Shares are listed on the Main Market
of the London Stock Exchange. No new Ordinary Shares were
issued during the year. The Company’s total issued share
capital therefore remains 85,639,209 Ordinary Shares as at
31 December 2025.
The balance of shares in treasury stock as at
31 December 2025 was 4,767,467 Ordinary Shares (5.6% of the
Company’s total issued share capital).
Details of the Company’s share capital are set out in note
23 to the financial statements, which should be treated as
forming part of this report. Subject to the provisions of the
Articles of Association and the Companies Act 2006, shares
may be issued with such rights or restrictions as the Company
may by ordinary resolution determine or, if the Company has
not so determined, as the Directors may decide. There are,
however, no restrictions on the transfer of securities in the
Company, except that certain restrictions may from time to
time be imposed by law or regulation, for example, insider
trading laws, and pursuant to the Listing Rules of the Financial
Conduct Authority (the ‘Listing Rules’), and the UK Market
Abuse Regulation, whereby certain employees require the
approval of the Company to deal in the Company’s shares.
118118
DIRECTORS’ REPORT
On a show of hands at a general meeting of the Company
every holder of ordinary shares present in person and entitled
to vote shall have one vote, and on a poll every member
present in person or by proxy and entitled to vote shall have
one vote for every ordinary share held. The Notice of AGM
specifies deadlines for exercising voting rights and appointing
a proxy or proxies to vote in relation to resolutions to be
passed at the AGM. All proxy votes are counted and the
numbers for, against or withheld in relation to each resolution
are announced at the AGM and published on the Company’s
website by the next business day after the meeting. The
holders of ordinary shares are entitled to receive the Annual
Report and Accounts, to attend and speak at general
meetings of the Company, to appoint proxies and to exercise
voting rights. The Company is not aware of any agreements
between holders of securities that may result in restrictions
on voting rights. Further shareholder information is available
in the Notice of AGM which contains explanations as to the
resolutions proposed.
Subject to certain limits, at the AGM on 23 May 2025, the
Directors were granted general authority to allot shares in
the Company together with an authority to allot shares in
the Company in connection with a rights issue and in respect
of cash without first offering them to existing shareholders.
The Directors will be seeking to renew these authorities to
allot unissued shares and to disapply statutory pre-emption
rights at the forthcoming AGM. Full details are set out in the
Notice of AGM which is contained in a separate circular to
shareholders.
In line with usual practice, the Directors will also seek to renew
the authority to purchase shares under the at the forthcoming
AGM. The Company intends to exercise this authority: (i) to
purchase and hold shares in treasury to fulfil the Company’s
future obligations under its employee share schemes; and/
or (ii) after following its capital allocation priorities and
considering market conditions and the share price prevailing
at the time, where the Board believes that the purchase
and subsequent cancellation of shares would be in the best
interest of shareholders generally. A full explanation and
details are set out in the Notice of AGM sent in a separate
circular to shareholders and which is also available on the
Company’s website, www.headlam.com
Directors
Biographies of Directors currently serving on the Board are set out on pages 60 and 61.
Changes to the Board in 2025 are set out on page 86. Details of the Directors’ service agreements are set out below:
Director
Date of appointment
Date of original letter
of appointment/
service agreement
Effective date of
current letter of
appointment/service
agreement
Next due for
election/re-election
Executive Director
Chris Payne 13 September 2017 N/A 8 March 2022 N/A
Adam Phillips 20 March 2023 14 November 2022 N/A
Non-Executive Director
Stephen Bird (Chair from
27 Feb 2025 and Interim
Executive Chair from
3 October 2025) 13 September 2021 10 August 2021 13 September 2024 20 May 2026
Jemima Bird 11 October 2022 10 October 2022 10 October 2022 20 May 2026
Karen Hubbard 1 September 2022 1 September 2022 1 September 2022 20 May 2026
Robin Williams 10 October 2022 10 October 2022 10 October 2022 20 May 2026
Remaining service agreement term for Non-Executive Directors as at 31 December 2025 (in whole months)
• Stephen Bird – 20 months
• Jemima Bird – 33 months
• Karen Hubbard – 32 months
• Robin Williams – 33 months
As Keith Edelman stepped down from the Board on 27 February 2025 there is no remaining service agreement term for him.
The Directors shall be not less than three and not more than eight in number, although the Company may by ordinary resolution
vary these numbers. Directors may be appointed by the ordinary resolution of the shareholders or by the Board. A Director
appointed by the Board holds office only until the next AGM of the Company after their appointment, at which they are then
eligible to stand for election. The AGM Notice of Meeting will set out the Board Directors who are standing for re-election and in
addition, Rob Barclay and Richard Jones will be standing for election as Directors at the 2026 AGM.
As noted elsewhere in this report, all Directors are subject to annual election by shareholders at the AGM in line with the
provisions of the UK Corporate Governance Code.
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Related party transactions
The Board and certain members of Senior Management are
related parties within the definition of IAS 24 (Revised) ‘Related
Party Disclosures’ (‘IAS 24’) and the Board are related parties
within the definition of Chapter 8 of the UK Listing Rules. There
is no difference between transactions with key personnel of
the Company and transactions with key personnel of the
Group. During the year, the Group did not enter into any
transaction which, for the purposes of IAS 24, is considered to
be a ‘related party transaction’. No related party transactions
that require disclosure have been entered into during the year
under review. See page 105 for information on the Board’s
conflict of interest process.
Directors’ powers
Subject to the Company’s Articles of Association, the
Companies Act 2006 and any directions given by the
Company by special resolution, the business of the Company
will be managed by the Board which may exercise all
the powers of the Company, whether relating to the
management of the business of the Company or otherwise.
The matters reserved for the Board are detailed in a specific
schedule, which is reviewed annually and is available on the
Company’s website, www.headlam.com.
Change of control
The Group has entered into certain agreements that may
take effect, alter or terminate upon a change of control of the
Company following a successful takeover bid. The significant
agreements in this respect are the Group’s asset backed
banking facility and certain of its employee share schemes.
The Group’s asset backed lending facilities include a provision
such that, in the event of a change of control, the lender may
cancel all or any part of the facility and/or declare that all
amounts outstanding under the facility are immediately due
and payable by the Group. Outstanding options granted
under the SAYE scheme may be exercised within a period of six
months from a change of control of the Company following a
takeover taking place.
Rights under employees’ share schemes
As at 31 December 2025, JTC Trust Company (CI) Limited,
as trustee of the Headlam Group Employee Trust Company
Limited (‘Trust’) held 589,077 shares, approximately 0.7% of
the issued share capital of the Company (excluding treasury
shares) for the purpose of satisfying options and awards
under the various employee share schemes operated by the
Company. JTC Trust Company (CI) Limited waives dividends
due on all but 0.01p per share of their total holding.
Details of employee share schemes are set out in note 22
to the Financial Statements. Details of long-term incentive
schemes for the Directors are shown in the Remuneration
Report starting on page 92.
Securities carrying special rights
There are no requirements for prior approval of any transfers
and no person holds securities in the Company carrying
special rights with regard to control of the Company.
Substantial interests in voting rights
Notifications of the following voting interests in the
Company’s ordinary share capital had been received by the
Company (in accordance with Chapter 5 of the DTR), with the
information received from the discloser stated to be correct
at the time of disclosure.
As at and up to 31 December 2025, the persons set out in the
table below have notified the Company, pursuant to DTR 5.1,
of their interests in the voting rights in the Company’s issued
share capital.
Ordinary shares of 5p each
Number of
shares
1
% of total
voting
rights
2
Perpetual Limited 9,007,692 11.14%
Heronbridge Investment
Management LLP 4,034,568 4.99%
First Seagull 4,214,257 5.21%
1
Represents the number of voting rights last notified to the Company by the
respective shareholder in accordance with DTR 5.1.
2
Based on the Total Voting Rights in the Company as at 31 December 2025.
Since 31 December 2025, there have been the following
notifications since 31 December 2025 to 24 March 2026:
Ordinary shares of 5p each
Number of
shares
1
% of total
voting
rights
2
FIL Limited 3,004,791 3.71%
First Seagull AS 7,502,588 9.28%
Lombard Odier Asset
Management (Europe) Limited 3,654,603 4.52%
IG Markets Limited 2,359,365 2.91%
1
Represents the number of voting rights last notified to the Company by the
respective shareholder in accordance with DTR 5.1.
2
Based on the Total Voting Rights in the Company as at 31 December 2025.
Directors’ interests and indemnity
arrangements
During the year, no Director held any material interest in
any contract of significance with the Company or any of
its subsidiary undertakings, other than service agreements
between each Executive Director and the Company. In
addition, the Company has purchased and maintained
throughout the year and up to the date of approval of the
financial statements, Directors’ and Officers’ liability insurance
in respect of itself and its Directors. The Directors also have the
benefit of the indemnity provision contained in the Company’s
Articles of Association. This provision extends to include the
Directors of Headlam Group Pension Trustees Limited, a
corporate trustee of the Scheme, in respect of liabilities that
may attach to them in their capacity as Directors of that
corporate trustee. These provisions were in force throughout
the year and are currently in force. Details of Directors
remuneration, service agreements, and interests in the shares
of the Company are set out in the Directors’ Remuneration
Report.
120120
DIRECTORS’ REPORT
Anti-corruption and bribery
It is the Company’s policy to conduct all business in an honest
and ethical manner. The Company takes a zero-tolerance
approach to bribery and corruption and is committed to
acting professionally, fairly and with integrity in all business
dealings and relationships. The policy is detailed on the
Company’s website, www.headlam.com
Modern Slavery Act
The Board fully supports the aims of the Modern Slavery Act
and the Company has a zero-tolerance approach to slavery
and human trafficking. The Company issues a supplier Code
of Conduct which our suppliers are expected to engage
and adhere to. Headlam works with all suppliers to ensure
compliance. However, if any supplier is found to be involved
in any form of Modern Slavery or unethical behaviour, the
Company will look to suspend or cease trading with that
supplier.
Full information can be found in the Company’s Modern
Slavery Statement which is published annually on the
Company’s website and which details the actions undertaken
to prevent slavery and human trafficking in both the
Company’s organisation and its supply chain.
Human rights
We have policies and processes in place to ensure that we
act in accordance with our cultural values which encompass
areas such as equal opportunities, diversity, inclusion and
respect, anti-corruption and bribery, whistleblowing and
fraud. We do not believe this to be a material issue in our
business.
Employment policies
The Group is an equal opportunities employer and we
are committed to the elimination of unlawful and unfair
discrimination and the fair and equal treatment of all
colleagues and applicants during the recruitment and
selection process, training and career development. We have
a zero-tolerance approach to matters of discrimination,
harassment and bullying across the business. Polices are in
place for reporting and dealing with such matters.
This commitment applies regardless of anyone’s physical
ability, sexual orientation or gender identity, pregnancy and
maternity, race, religious beliefs, age, nationality or ethnic
origin. Our Company policies ensure this is reflected in the
culture of the business and include an Inclusion and Respect
at Work policy. Full consideration is given to employment
applications from people with diverse backgrounds, including
disabilities whenever suitable vacancies exist. If a colleague
becomes disabled efforts are made to ensure their continued
employment within the company with appropriate training as
required.
Further details on diversity are included in the
Nomination Committee Report on page 86.
Colleague engagement
We are committed to keeping our colleagues informed and
communicating with them on matters of importance relating
to our company performance and their employment. We
also recognise that communication should be two-way
and we actively encourage feedback and involvement
from our colleagues, either through formal channels such
as our Employee Forum (page 69), our engagement survey,
or more informal methods such as the dedicated internal
communications email address or MyHub portal. Further
information on colleague engagement can be found on
pages 32, 33 and 69.
A summary of how Directors have engaged with employees
and had regard to employee interests and the effect of that
regard on the principal decisions taken by the Company
during the financial year is provided on pages 18, 68, 74 and 75.
Sharesave and long service awards
During the year, the Company invited all eligible employees to
participate in:
a. its HMRC approved Sharesave Scheme, (this Scheme
allows eligible employees to save up to £500 per month in
one or a combination of Sharesave Schemes in order to
further align their interests with the performance of the
Group); and
b. its long service award scheme which awards colleagues
after certain milestones of service with a monetary gift
and, for longer serving employees, an award of ordinary
shares in the Company to be granted bi-annually
under the scheme using service milestones and as at
31 December 2025, a total of 12,100 ordinary shares of 5
pence each were awarded in 2025 to eligible employees
at nil cost under the scheme
Management long-term incentive plan
During the year, to allow eligible employees to further align
their interests with the performance of the Group, the
Company granted a number of Open Market Value share
options to eligible employees being:
a. senior leadership teams (a total of 2,010,639 Open Market
Value Options over ordinary shares of 5 pence each
were awarded in 2025 to a select group of senior leaders
approved by the Remuneration Committee and typically
granted once per year; and
b. the Company’s sales force, they were awarded Open
Market Value Options as a one-off exercise (a total of
81,381 Open Market Value Options over ordinary shares of
5 pence each were awarded to eligible employees within
this group approved by the Remuneration Committee).
Strategic Report
Headlam Group PLC Annual Report & Accounts 2025
121
Governance
Headlam Group PLC Annual Report & Accounts 2025
121
Stakeholder engagement
The Directors understand the need to develop good
business relationships with its suppliers, customers and other
stakeholders and the success with which this is achieved is
paramount to business success. Further information on the
Company’s approach to engagement with its stakeholders
and how this feeds through into the decision-making process
can be found on pages 18 to 20.
Directors’ and auditor’s responsibilities
A statement by the Directors on their responsibilities in respect
of the Annual Report and Accounts is given on page 123 and
a statement by the Auditor on their responsibilities is given on
page 126.
Political donations and expenditure
The Company’s policy is not to make any donations for
political purposes in the UK or to donate to political parties
or incur political expenditure outside of the UK. Accordingly,
neither the Company nor its subsidiaries made any political
donations or incurred political expenditure in the financial
period under review (2024: £nil).
Charitable donations
Charitable giving is undertaken through both monetary and
product donations to good local causes. Monetary donations
made during the year in support of charitable causes
nationally, and those of interest to employees amounted to
£23,029 (2024: £63,518).
Amendments to the Articles of
Association
The Company’s Articles of Association may only be amended
by a special resolution at a general meeting of shareholders.
The Company’s Articles of Association were last amended at
the general meeting held on 21 May 2021 with the updated
articles being filed with the Registrar of Companies.
Financial instruments
The disclosures required in relation to the use of financial
instruments by the Group together with details of our treasury
policy and management are set out in note 23 to the financial
statements.
External auditor
PricewaterhouseCoopers LLP have indicated their willingness
to continue as Auditor and their reappointment has been
approved by the Audit Committee. Resolutions to reappoint
them and to authorise the Directors to determine their
remuneration will be proposed at the 2026 AGM.
AGM
This year’s AGM will be held at the Company’s head office in
Coleshill on Wednesday 20 May 2026 at 10.00am. The notice
convening this meeting is in a separate document to this
Annual Report and Accounts along with the explanatory
notes regarding the resolutions that will be proposed at the
meeting. A copy of the Notice of Meeting will be available on
the Company’s website: www.headlam.com
Other disclosures
Certain information that is required to be included in the
Directors’ Report can be found elsewhere in this document as
referred to below, each of which is incorporated by reference
into the Directors’ Report:
• Information on greenhouse gas emissions can be found on
page 43.
• Information on energy consumption can be found on
page 43.
• Information on energy efficiency can be found on
page 28.
• For the purposes of Listing Rule (LR) 9.8.6R(8) the
information on climate-related financial disclosures
consistent with the TCFD recommendation and the TCFD
recommended disclosure can be found on pages 38 to 42.
• Further details of the actions which the Group is taking to
reduce emissions can also be found in the Sustainability
Report starting on page 28.
• An indication of likely future developments in the Group’s
business can be found throughout the Strategic Report,
starting on page 12.
• The long-term viability statement can be found on
page 51.
• Our approach to risk management can be found on
pages 46 to 48.
• Information for shareholders can be found on the
Company’s website.
• A list of the Company’s overseas subsidiaries is on
page 188.
This report was approved by the Board and signed on its
behalf by:
Alison Hughes
General Counsel & Company Secretary
25 March 2026
Company registration number: 00460129
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DIRECTORS’ REPORT CONTINUED
Listing Rule (LR)
6.6.1R information section
(1) Capitalised interest Not applicable
(2)
Publication of unaudited
financial information Not applicable
(3)
Details of long-term
incentive schemes
established specifically to
recruit or retain a Director Pages 92 to 117
(4) (5)
Waiver of emoluments
by a Director Not applicable
(6) (7)
Allotments of equity
securities for cash Not applicable
(8)
Participation in a placing of
equity securities Not applicable
(9) Contracts of significance Not applicable
(10) (13)
Controlling shareholder
disclosure Not applicable
(11) (12) Dividend waiver Page 179
The Directors are responsible for preparing the Annual Report
and Accounts and the financial statements in accordance
with applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group and the Company
financial statements in accordance with UK-adopted
international accounting standards.
Under company law, Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
Company and of the profit or loss of the Group for that
period. In preparing the financial statements, the directors are
required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
financial statements;
• make judgments and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for safeguarding the assets of
the Group and Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group’s and Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in
the Annual Report and Accounts confirm that, to the best of
their knowledge:
• the Group and Company financial statements, which
have been prepared in accordance with UK-adopted
international accounting standards, give a true and fair
view of the assets, liabilities and financial position of the
Group and Company, and of the loss of the Group; and
• the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Group and Company, together with a
description of the principal risks and uncertainties that
it faces.
In the case of each Director in office at the date the Directors’
report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Group’s and Company’s auditors
are unaware; and
• they have taken all the steps that they ought to have
taken as a Director in order to make themselves aware
of any relevant audit information and to establish that
the Group’s and Company’s auditors are aware of that
information.
Stephen Bird
Director
25 March 2026
Strategic Report
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123
Governance
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123
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
124124
FINANCIAL
STATEMENTS
Independent Auditors’ Report
126
Consolidated Income Statement
134
Consolidated Statement of
Comprehensive Income
135
Statements of Financial Position
136
Statement of Changes in Equity – Group
137
Statement of Changes in Equity – Company
138
Cash Flow Statements
139
Notes to the Financial Statements
140
Alternative Performance Measures
189
Financial Record
193
Additional Information
195
125125
Financial Statements
Headlam Group PLC Annual Report & Accounts 2025
125
Financial Statements
Report on the audit of the financial statements
Opinion
In our opinion, Headlam Group Plc’s group financial statements and company financial statements (the “financial statements”):
• give a true and fair view of the state of the group’s and of the company’s affairs as at 31 December 2025 and of the group’s
loss and the group’s and company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards as applied in accordance
with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which
comprise:
• the Statements of Financial Position as at 31 December 2025;
• the Consolidated Income Statement for the year then ended;
• the Consolidated Statement of Comprehensive Income for the year then ended;
• the Statement of Changes in Equity – Group for the year then ended;
• the Statement of Changes in Equity – Company for the year then ended;
• the Cash Flow Statements for the year then ended; and
• the notes to the financial statements, comprising material accounting policy information and other explanatory
information.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
We have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Material uncertainty related to going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure
made in note 1 to the financial statements concerning the group’s and the company’s ability to continue as a going concern.
The Directors have performed their going concern assessment for the period to the end of March 2027 which includes the
planned sale of certain properties. In the event that these sales are delayed; and that sufficient mitigating actions are unable
to be implemented, the Group and Company would need to seek amendments to the liquidity covenants contained within their
banking facilities. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the
existence of a material uncertainty which may cast significant doubt about the group’s and the company’s ability to continue as
a going concern. The financial statements do not include the adjustments that would result if the group and the company were
unable to continue as a going concern.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern
basis of accounting included:
• Confirming the loans and borrowings balance outstanding as at 31 December 2025.
• Obtaining the new asset backed lending (“ABL”) facility agreement entered into in January 2026 and confirming that the
key aspects of the agreement being borrowing limits, financial covenants and operational covenants were appropriately
considered within managements going concern assessment.
• Assisted by our business viability experts, we evaluated management’s detailed cash flow forecasts, liquidity headroom and
covenant headroom under both base case and downside scenarios.
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INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HEADLAM GROUP PLC
• Testing the cash flows were consistent with board approved forecasts. We also obtained corroborating evidence for the
margin improvements and cost savings associated with managements transformation plan.
• We have assessed management’s downside scenarios to determine whether these reflect a severe and plausible
deterioration of the group’s performance and cash generation during the going concern period.
• Performed sensitivity analysis to determine what level of further revenue and margin decline would be required to result in a
breach of the group’s banking covenants and assessed whether such declines were considered plausible.
• In respect of the proposed property disposals we have assessed management’s ability to complete the transactions in the
timeframes and for the values included in the forecasts including consideration of the group’s track record of executing
similar recent transactions, the results of recent marketing activities related to the properties and offers received from
interested parties.
• Assessing potential mitigating actions available to management including the extent they could be used to avoid a breach
of banking covenants and whether they are dependant on factors which are outside of the control of management.
• Assessing the adequacy of disclosures included in note 1 of the notes to the financial statements.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, other than the material
uncertainty identified in note 1 to the financial statements, we have nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting, or in respect of the directors’ identification in the financial statements of any other material
uncertainties to the group’s and the company’s ability to continue to do so over a period of at least twelve months from the
date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Our audit approach
Overview
Audit scope
• The group financial statements are a consolidation of a number of reporting components, comprising the group’s operating
businesses, centralised functions and non-trading entities.
• We performed full scope audits on the financial information of one component due to it’s size and risk characteristics.
• In addition, we targeted significant balances in other components. This was identified as property, plant and equipment,
notes payable, interest expense, other creditors and provisions across two components. We also performed centralised
testing over balances and transactions such as intangible assets, cash and cash equivalents, leases, taxes, equity and the
consolidation.
• All work was performed by the group team and no reliance was placed upon the work of component auditors.
• Our audit of the company Financial Statements included substantive procedures over all material balances and
transactions.
• Finally, we performed analytical procedures on non-significant components for group reporting purposes.
Key audit matters
• Material uncertainty related to going concern
• Recoverability of Supplier arrangements (group)
• Recoverability of investments in subsidiary undertakings (company)
Materiality
• Overall group materiality: £2,447,000 (2024: £1,710,000) based on 0.5% of Revenue (2024 basis: 5% of underlying loss
before tax).
• Overall company materiality: £2,539,000 (2024: £1,624,000) based on 1% of total assets.
• Performance materiality: £1,835,000 (2024: £1,282,000) (group) and £1,904,000 (2024: £1,218,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
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Financial Statements
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to going concern, described in the Material uncertainty related to going concern section above, we determined
the matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all risks
identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Recoverability of Supplier arrangements (group)
Refer to the Audit Committee Report and the use
of estimates and judgements in note 1(b) to the
financial statements. The group has a significant
number of rebate agreements with suppliers with
the majority being co-terminous with the financial
year end, meaning there are significant amounts
of rebates receivable subject to recovery at the
year end.
We tested a sample of rebate receivable balances based on risk and size.
For those tested we agreed post year end settlements to evidence of cash
receipt or credit notes received, to provide evidence over the recoverability
of the balances. For any amounts not yet settled we assessed the
recoverability through consideration of any evidence to suggest the
counterparty was not able to pay the amounts due and the timing of
payments received in previous years.
We also performed lookback procedures over management’s historical
recovery rates which showed an average recovery rate of 98%.
Recoverability of investments in subsidiary
undertakings (company)
Refer to the Audit Committee Report and note 11
to the financial statements. Annually, the Directors
consider whether any events or circumstances have
occurred that could indicate that the company’s
carrying amount of investments may not be
recoverable. There was an indicator of impairment
present for HFD Limited given the net assets of
the subsidiary was below the carrying value of the
investment. Furthermore, the market capitalisation
of the group has decreased significantly during
the year, implying a valuation of the underlying
subsidiaries below the carrying value. Management
have assessed the recoverable amount, being the
higher of value in use and fair value, to determine
whether an impairment is required. This resulted in
the investment in HFD Limited being impaired by
£83.8m to nil.
We evaluated management’s assessment of impairment triggers across
all investments. Where an impairment trigger was identified, management
used a value in use model to determine the recoverable amount. We
obtained this model and tested its integrity and accuracy.
We agreed the revenue and cash flows used as the basis of the model
back to board approved forecasts and verified consistency of 2026 and
2027 with the underlying cash flow forecasts used for going concern. For
2028 onwards we reviewed corroborative and contradictory evidence
available for growth rates by performing independent research for market
and wider economic forecasts.
We reviewed gross margins and confirmed they were consistent with the
margin improvements and cost savings associated with managements
transformation plan.
We reviewed adjustments made to the underlying cash flows to reflect
amounts capable of being extracted as dividends by the parent company,
for example settlement of intercompany balances.
We engaged valuation experts to benchmark the discount rate and
terminal growth rate calculated by management.
We considered sensitivity of the conclusion to reasonably possible changes
in key assumptions.
We considered 2026 actual results to date against management’s forecasts.
We reviewed the associated disclosures within the financial statements.
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INDEPENDENT AUDITORS’ REPORT CONTINUED
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How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
The Group operates as a supplier and distributor of floorcovering products. The Group financial statements are a consolidation
of a number of reporting companies, comprising the group’s operating businesses, centralised functions and non-trading group
companies.
In establishing the overall approach to the group audit, we identified one UK reporting component which, in our view, required
an audit of their complete financial information both due to its size and risk characteristics. This reporting component was
audited by the group engagement team.
In addition, we targeted significant balances in other components. This was identified as property, plant and equipment, notes
payable, interest expense, other creditors and provisions across two components. We also performed centralised testing over
balances and transactions such as intangible assets, cash and cash equivalents, leases, taxes, equity and the consolidation.
The work on the full scope component, significant balance testing, together with additional procedures performed at the Group
level, including analytical procedures and specific testing of the consolidation, gave us the evidence we needed for our opinion
on the Group financial statements as a whole.
Our audit of the company Financial Statements was undertaken by the group audit team and included substantive procedures
over all material balances and transactions.
The impact of climate risk on our audit
As part of our audit, we made enquiries of management to understand their process to assess the extent of the potential impact
of climate change risks on the Group and its financial statements. Management’s assessment has considered the climate-
related risks disclosed in the Annual Report including the Group’s transition to its net zero emissions targets by 2040 (Scope 1,
2 & 3), and potential exposure to changing consumer preferences and potential new legislation. In particular, management
considered the extent to which:
– The group may incur costs in the transition to net zero, for example, replacements to renewable energy, buildings and
vehicles;
– The group may be exposed to government imposed end-of-life disposal taxes on bulky waste (extended producer
responsibility); and
– The group may be exposed to changing consumer preferences towards more sustainable flooring products.
As disclosed within notes 1 and 10 of the financial statements, management considers that the impact of climate change does
not give rise to a material financial statement impact based on the assumption that the increased cost of sustainable products
is passed onto consumers as consumer preferences shift towards more sustainable products in the medium term.
In response, we used our understanding of the Group to evaluate management’s assessment; in particular, we considered
how climate change risks, both physical and transitional, would impact the assumptions made in the forecasts prepared by
management used in their impairment analyses and in their going concern and viability assessments. We concluded that
climate change risks do not materially impact the Group’s financial statements. We also read the disclosures made in relation
to climate change in the other information within the Annual Report, and considered their consistency with the financial
statements and our knowledge from the audit.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
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Financial Statements
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £2,447,000 (2024: £1,710,000). £2,539,000 (2024: £1,624,000).
How we
determined it
Based on 0.5% of Revenue (2024 basis: 5% of underlying loss
before tax)
Based on 1% of total assets
Rationale for
benchmark
applied
Revenue is considered an appropriate benchmark as it
reflects a more accurate and consistent representation of
the scale of the Group’s trading activities as management
execute the restructuring of the business. Revenue also
represents one of the Group’s key KPIs and is a benchmark
which is regularly reported by industry peers. An underlying
loss benchmark was used in the prior year.
The Company's primary activity is to act
as an investment holding entity for the
Group’s trading subsidiaries. Therefore
total assets is seen as the primary
measure of the Company’s activities.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between £2,000,000 and £2,324,000.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2024: 75%) of overall materiality, amounting to £1,835,000
(2024: £1,282,000) for the group financial statements and £1,904,000 (2024: £1,218,000) for the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £244,000
(group audit) (2024: £85,000) and £253,000 (company audit) (2024: £81,000) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors’ report for the year ended 31 December 2025 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
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INDEPENDENT AUDITORS’ REPORT CONTINUED
TO THE MEMBERS OF HEADLAM GROUP PLC
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that
part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement
as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement, included within the Governance section is materially consistent with the financial statements and our
knowledge obtained during the audit, and, except for the matters reported in the section headed ‘Material uncertainty related
to going concern’, we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers
and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group and company was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and understanding of the group and
company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during
the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the group’s and company’s position, performance, business
model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
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Financial Statements
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to employment regulation, health and safety legislation and the Listing Rules, and we considered the
extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006 and tax regulations. We
evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal risks were related to posting of inappropriate journal entries and
management bias in accounting estimates. Audit procedures performed by the engagement team included:
• Reviewing board minutes and making inquiries of management, those charged with governance, internal audit and general
counsel regarding any known or suspected instances of fraud or non-compliance with laws and regulations.
• Regarding a specific legal claim for which the Group has made provision for in the financial statements, we reviewed
correspondence with external legal counsel, court filings made by the Group and considered publically available guidance in
evaluating the provision recorded in the financial statements.
• Challenging assumptions and judgements made by management in their significant accounting estimates and
judgements; and
• Testing of journals posted to revenue and non-underlying items that have unusual account combinations, including
immaterial journals below our usual threshold for testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we
will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
132132
INDEPENDENT AUDITORS’ REPORT CONTINUED
TO THE MEMBERS OF HEADLAM GROUP PLC
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
We were first appointed by the company for the financial year ended 31 December 2016. Our uninterrupted engagement covers
ten financial years.
Other matter
The company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these
financial statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R – 4.1.18R
and filed on the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no assurance
over whether the structured digital format annual financial report has been prepared in accordance with those requirements.
Laura Hill (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
25 March 2026
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Financial Statements
Re-presented
1
Note
Underlying
2025
£M
Non-
underlying
(note 3)
2025
£M
Total
2025
£M
Underlying
2024
£M
Non-
underlying
(note 3)
2024
£M
Total
2024
£M
Revenue 2 498.7 – 498.7 525.7 – 525.7
Cost of sales 2 (351.4 ) (3.6 ) (355.0 ) (369.7 ) (10.6 ) (380.3 )
Gross profit 2 147.3 (3.6 ) 143.7 156.0 (10.6 ) 145.4
Distribution costs (121.2 ) (10.0 ) (131.2 ) (119.8 ) (4.4 ) (124.2 )
Administrative expenses (58.9 ) (22.7 ) (81.6 ) (59.8 ) (11.2 ) (71.0 )
Net impairment losses on trade
receivables (0.6 ) – (0.6 ) (1.3 ) (1.3 ) (2.6 )
Other operating income – 6.2 6.2 – 21.1 21.1
Operating loss 2 (33.4 ) (30.1 ) (63.5 ) (24.9 ) (6.4 ) (31.3 )
Finance income 6 0.6 – 0.6 0.1 – 0.1
Finance expenses 6 (6.7 ) – (6.7 ) (6.9 ) – (6.9 )
Net finance costs (6.1 ) – (6.1 ) (6.8 ) – (6.8 )
Loss before tax 3 (39.5 ) (30.1 ) (69.6 ) (31.7 ) (6.4 ) (38.1 )
Taxation 7 4.1 0.7 4.8 6.8 10.2 17.0
Loss from continuing
operations 2 (35.4 ) (29.4 ) (64.8 ) (24.9 ) 3.8 (21.1 )
Loss from discontinued
operations 25 (4.4 ) (12.7 ) (17.1 ) (3.2 ) (0.7 ) (3.9 )
Loss for the year attributable
to the equity shareholders (39.8 ) (42.1 ) (81.9 ) (28.1 ) 3.1 (25.0 )
Loss per share from
continuing operations
Basic 8 (44.1 )p (80.7 )p (31.0 )p (26.3 )p
Diluted 8 (44.1 )p (80.7 )p (31.0 )p (26.3 )p
Total loss per share
Basic 8 (49.6 )p (102.0 )p (35.0 )p (31.2 )p
Diluted 8 (49.6 )p (102.0 )p (35.0 )p (31.2 )p
1
The results for the year ended 31 December 2024 have been re-presented to reflect the presentation of the Continental European businesses as discontinued (see note
25 for further information).
134134
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2025
Note
2025
£M
2024
£M
Loss for the year attributable to the equity shareholders (81.9 ) (25.0 )
Other comprehensive income/(expense)
Items that will never be reclassified to profit or loss
Remeasurement of defined benefit plans 21 0.1 (0.5 )
Related tax – 0.1
Items that are or may be reclassified to profit or loss
Exchange differences arising on translation of overseas operations 0.1 (0.2 )
Other comprehensive income/(expense) for the year 0.2 (0.6 )
Total comprehensive expense attributable to the equity shareholders for the year (81.7 ) (25.6 )
Total comprehensive expense attributable to the equity shareholders for the year
arises from:
Continuing operations (64.7 ) (21.5 )
Discontinued operations 25 (17.0 ) (4.1 )
(81.7 ) (25.6 )
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Financial Statements
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
Group Company
Note
2025
£M
2024
£M
2025
£M
Restated
1
2024
£M
Restated
1
1 January
2024
£M
Assets
Non-current assets
Property, plant and equipment 9 68.8 86.9 1.8 2.2 3.2
Investment properties 9 – – 33.7 46.1 87.7
Right of use assets 18 53.6 55.1 6.4 3.2 0.8
Intangible assets 10 11.3 17.6 0.1 0.1 0.1
Deferred tax assets 12 8.2 3.9 – – –
Trade and other receivables 14 – – 105.2 107.8 74.6
Investments in subsidiary undertakings 11 – – 12.6 102.4 101.7
Current assets
Inventories 13 77.4 102.8 – – –
Trade and other receivables 14 86.6 111.0 60.5 20.8 19.4
Income tax receivable – 3.6 – 0.6 1.5
Cash and cash equivalents 15 26.1 12.0 25.5 7.5 15.1
Assets classified as held for sale 16 22.7 4.8 8.1 4.8 –
Total assets 354.7 397.7 253.9 295.5 304.1
Liabilities
Current liabilities
Bank overdrafts 17 – (1.1 ) – – –
Other interest-bearing loans and borrowings 17 (59.0 ) – (59.0) – (50.0)
Lease liabilities 18 (12.6 ) (13.8 ) (2.7) (1.8) (0.1)
Trade and other payables 19 (97.2 ) (139.2 ) (66.2) (74.3) (61.9)
Income tax payable (0.4 ) – (2.7) – (1.1)
Provisions 20 (1.6 ) – – – –
Liabilities relating to assets held for sale 25 (14.7 ) – – – –
(185.5 ) (154.1 ) (130.6) (76.1) (113.1)
Non-current liabilities
Lease liabilities 18 (54.1 ) (47.4 ) (12.1) (4.6) (0.8)
Provisions 20 (3.3 ) (3.1 ) (0.1) – –
Deferred tax liabilities 12 – – (2.6) (3.9) (7.7)
Employee benefits 21 (1.8 ) (2.1 ) (1.8) (1.5) (1.2)
(59.2 ) (52.6 ) (16.6) (10.0) (9.7)
Total liabilities (244.7 ) (206.7 ) (147.2) (86.1) (122.8)
Net assets 110.0 191.0 106.7 209.4 181.3
Equity attributable to equity holders of the parent
Share capital 23 4.3 4.3 4.3 4.3 4.3
Share premium 53.5 53.5 53.5 53.5 53.5
Other reserves 23 (15.3 ) (15.5 ) 3.5 3.4 3.2
Retained earnings 67.5 148.7 45.4 148.2 120.3
Total equity 110.0 191.0 106.7 209.4 181.3
The notes on pages 140 to 188 are an integral part of these consolidated financial statements.
The Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income
statement, however the loss for the year attributable to the equity shareholders is £103.4 million (profit in 2024: £32.3 million).
The financial statements on pages 134 to 194 were approved by the Board of Directors on 25 March 2026 and were signed on its
behalf by
Adam Phillips
Director
Company Number: 00460129
1
See note 1 for details regarding the restatement.
136136
STATEMENTS OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2025
Note
Share
capital
£M
Share
premium
£M
Capital
redemption
reserve
£M
Special
reserve
£M
Translation
reserve
£M
Treasury
reserve
£M
Retained
earnings
£M
Total
equity
£M
Balance at 1 January 2024 4.3 53.5 0.1 1.5 1.9 (19.0 ) 178.1 220.4
Loss for the year
attributable to the equity
shareholders – – – – – – (25.0 ) (25.0 )
Other comprehensive
expense – – – – (0.2 ) – (0.4 ) (0.6 )
Total comprehensive
expense for the year – – – – (0.2 ) – (25.4 ) (25.6 )
Transactions with equity
shareholders, recorded
directly in equity
Share-based payments 22 – – – – – – 1.0 1.0
Share options exercised by
employees – – – – – 0.2 (0.2 ) –
Dividends to equity holders 23 – – – – – – (4.8 ) (4.8 )
Total contributions by
and distributions to equity
shareholders – – – – – 0.2 (4.0 ) (3.8 )
Balance at
31 December 2024 4.3 53.5 0.1 1.5 1.7 (18.8 ) 148.7 191.0
Balance at 1 January 2025 4.3 53.5 0.1 1.5 1.7 (18.8 ) 148.7 191.0
Loss for the year
attributable to the equity
shareholders – – – – – – (81.9 ) (81.9 )
Other
comprehensive income – – – – 0.1 – 0.1 0.2
Total comprehensive
income/(expense) for
the year – – – – 0.1 – (81.8 ) (81.7 )
Transactions with equity
shareholders, recorded
directly in equity
Share-based payments 22 – – – – – – 0.7 0.7
Share options exercised by
employees – – – – – 0.1 (0.1 ) –
Total contributions by
and distributions to equity
shareholders – – – – – 0.1 0.6 0.7
Balance at
31 December 2025 4.3 53.5 0.1 1.5 1.8 (18.7 ) 67.5 110.0
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Financial Statements
STATEMENT OF CHANGES IN
EQUITY – GROUP
FOR THE YEAR ENDED 31 DECEMBER 2025
Note
Share
capital
£M
Share
premium
£M
Capital
redemption
reserve
£M
Special
reserve
£M
Treasury
reserve
£M
Retained
earnings
£M
Total
equity
£M
Balance at 1 January 2024 4.3 53.5 0.1 22.1 (19.0) 120.3 181.3
Profit for the year attributable
to the equity shareholders – – – – – 32.3 32.3
Other comprehensive
expense – – – – – (0.4) (0.4)
Total comprehensive
income for the year – – – – – 31.9 31.9
Transactions with equity
shareholders, recorded
directly in equity
Share-based payments 22 – – – – – 1.0 1.0
Share options exercised by
employees – – – – 0.2 (0.2) –
Dividends to equity holders 23 – – – – – (4.8) (4.8)
Total contributions by
and distributions to equity
shareholders – – – – 0.2 (4.0) (3.8)
Balance at 31 December 2024 4.3 53.5 0.1 22.1 (18.8) 148.2 209.4
Balance at 1 January 2025 4.3 53.5 0.1 22.1 (18.8) 148.2 209.4
Loss for the year attributable
to the equity shareholders – – – – – (103.4) (103.4)
Other comprehensive
expense – – – – – – –
Total comprehensive
expense for the year – – – – – (103.4) (103.4)
Transactions with equity
shareholders, recorded
directly in equity
Share-based payments 22 – – – – – 0.7 0.7
Share options exercised by
employees – – – – 0.1 (0.1) –
Total contributions by
and distributions to equity
shareholders – – – – 0.1 0.6 0.7
Balance at 31 December 2025 4.3 53.5 0.1 22.1 (18.7) 45.4 106.7
138138
STATEMENT OF CHANGES IN EQUITY COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2025
Group Company
Note
2025
£M
2024
£M
2025
£M
Restated
1
2024
£M
Cash flows from operating activities
Continuing operations (69.6 ) (38.1 ) (101.9) 31.6
Discontinued operations (16.5 ) (3.4 ) – –
(Loss)/profit before tax for the year (86.1 ) (41.5 ) (101.9) 31.6
Adjustments for:
Depreciation and impairment of property, plant and
equipment, amortisation and impairment of intangible assets 13.9 11.0 0.9 1.8
Depreciation, impairment and termination of right of use
assets 14.9 14.1 1.1 0.1
Finance income 6 (0.6 ) (0.1 ) (10.5) (12.4)
Finance expense 6.9 7.1 3.9 4.6
Profit on sale of property, plant and equipment 3 (6.2 ) (21.1 ) (6.2) (21.4)
Impairment of disposal group classified as held for sale 25 12.6 – 6.4 –
Impairment of investments 11 – – 83.8 –
Impairment of intercompany receivables – – 22.2 –
Share-based payments 22 0.7 1.0 0.3 0.3
Operating cash flows before changes in working capital
and other payables (43.9 ) (29.5 ) – 4.6
Change in inventories 16.2 28.2 – –
Change in trade and other receivables 15.0 5.4 (49.5) (27.6)
Change in trade and other payables (30.1 ) 10.7 (20.4) 4.8
Cash (used in)/generated from the operations (42.8 ) 14.8 (69.9) (18.2)
Interest paid (7.0 ) (7.2 ) (3.7) (4.7)
Interest received 0.6 0.1 9.9 9.7
Tax received/(paid) 4.0 (0.1 ) 3.6 –
Net cash flow from operating activities (45.2 ) 7.6 (60.1) (13.2)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 21.2 61.3 21.2 61.3
Acquisition of property, plant and equipment (4.4 ) (10.5 ) – (0.8)
Acquisition of intangible assets 10 (0.2 ) (0.1 ) – –
Net cash flow from investing activities 16.6 50.7 21.2 60.5
Cash flows from financing activities
Proceeds from borrowings 93.0 40.0 93.0 40.0
Repayment of borrowings (34.0 ) (90.0 ) (34.0) (90.0)
Principal elements of lease payments (13.8 ) (12.9 ) (2.1) (0.1)
Dividends paid 23 – (4.8 ) – (4.8)
Net cash flow from financing activities 45.2 (67.7 ) 56.9 (54.9)
Net increase/(decrease) in cash and cash equivalents 16.6 (9.4 ) 18.0 (7.6)
Cash and cash equivalents at 1 January 10.9 20.4 7.5 15.1
Effect of exchange rate fluctuations on cash held 0.1 (0.1 ) – –
Cash and cash equivalents at 31 December 15 27.6 10.9 25.5 7.5
1
See note 1 for details regarding the restatement.
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Financial Statements
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
1 Presentation of the Financial Statements and Accounting Policies
Reporting entity
140140
NOTES TO THE FINANCIAL STATEMENTS
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Financial Statements
1 Presentation of the Financial Statements and Accounting Policies continued
142142
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
1 Presentation of the Financial Statements and Accounting Policies continued
144144
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Goodwill and other intangible assets
Goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill arises on the acquisition of
subsidiaries and represents the excess of the fair value of the consideration of the business combination over the fair value
of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired. Transaction costs associated with
acquisitions and movements in contingent consideration are recognised in the Consolidated Income Statement.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not
amortised but tested annually for impairment, or more frequently when there is an indicator that the unit may be impaired.
In respect of acquisitions prior to 1 January 2004, goodwill is included on the basis of its deemed cost, which represents the
amount recorded under UK GAAP which was broadly comparable save that only separable intangibles were recognised and
goodwill was amortised. This is in accordance with IFRS 1.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment
losses. Intangible assets recognised as a result of a business combination are stated at fair value at the date of acquisition less
cumulative amortisation and impairment losses. Other intangible assets are amortised from the date they are available for use.
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Financial Statements
Amortisation
Amortisation is charged to the income statement and is split over the estimated useful lives of each separately identifiable
intangible asset unless such lives are indefinite. Amortisation occurs on brand names, order book, non-compete agreements,
customer relationships, supply agreements and software development and is charged to administrative expenses in the income
statement. The estimated useful lives are assessed to be:
Order book – 1–36 months
Customer relationships – 5–10 years
Brand names – 10–15 years
Non-compete agreements – 1–3 years
Supply agreements – 1–5 years
Software development – 5–10 years
1 Presentation of the Financial Statements and Accounting Policies continued
146146
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
An impairment loss is recognised for any initial or subsequent write-down of the asset or disposal group to fair value less costs
Calculation of recoverable amount
The recoverable amount of assets, with the exception of the Group’s receivables, is the greater of their fair value less costs of
disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
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Financial Statements
Reversals of impairment
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist
and there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
The Company and the Group operate both defined benefit and defined contribution plans. The assets of the defined benefit
plans are held in independent trustee-administered funds. The pension cost is assessed in accordance with the advice of a
qualified actuary.
Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as
incurred.
Defined benefit plans
The Group’s net obligation in respect of defined benefit pension plans is calculated by estimating the amount of future benefit
that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine
its present value, and the fair value of any plan assets is deducted. The liability discount rate is the yield at the Statement of
Financial Position date using AA rated corporate bonds that have maturity dates approximating to the terms of the Group’s
obligations. The calculation is performed by a qualified actuary using the projected unit credit method.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is
recognised as an expense in the income statement immediately.
To the extent that any benefits vest immediately, the expense is recognised directly in the income statement.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair
value of plan assets. The cost is included in finance expenses in the income statement.
All actuarial gains and losses that arise in calculating the Group’s obligation in respect of a scheme are recognised immediately
in reserves and reported in the statement of comprehensive income.
Where the calculation results in a benefit to the Group, the asset recognised is limited to the present value of any future refunds
from the plan or reductions in future contributions to the plan. The Company does not have an unconditional right to a refund,
or reduction in future contribution, under IFRIC 14. Consequently, any surplus balance sheet position is restricted in recognition of
the asset ceiling.
The Group operates a UK defined benefit pension plan. There is no contractual agreement or stated Group policy for allocating
the net defined benefit liability between the participating subsidiaries and as such the full deficit is recognised by the Company,
which is the sponsoring employer.
The participating subsidiary companies have recognised a cost equal to contributions payable for the period as advised by a
professionally qualified actuary.
During the prior year the Group completed a buy-in arrangement in respect of the UK defined benefit pension plan. The buy-in
arrangement secures an insurance asset that matches the remaining net obligation.
1 Presentation of the Financial Statements and Accounting Policies continued
148148
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Own shares held by Employee Benefit Trust
Transactions of the Group sponsored Employee Benefit Trust are included in the Group financial statements. In particular, the
Trust’s purchases of shares in the Company are debited directly to equity.
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Financial Statements
Short-term and low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term
leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a
straight-line basis over the lease term.
1 Presentation of the Financial Statements and Accounting Policies continued
150150
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Non-underlying items
In order to illustrate the underlying trading performance of the Group, presentation has been made of performance measures
excluding those items which it is considered would distort the comparability of the Group’s results. These non-underlying items
are defined as those items that are associated with the acquisition of businesses or other items which by virtue of their nature,
size and expected frequency require adjustment to show the performance of the Group in a consistent manner which is
comparable year-on-year, see note 3. The principal items classed as non-underlying are described in the basis of preparation in
this note.
See pages 189 to 190 for details on alternative performance measures and pages 191 to 192 for adjusted results.
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Financial Statements
152152
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
154154
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
156156
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
158158
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
9 Property, plant and equipment continued
160160
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
10 Intangible assets continued
162162
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
164164
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
12 Deferred tax assets and liabilities continued
166166
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Financial Statements
17 Other interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s and Company’s interest-bearing loans and
borrowings.
At 31 December 2025, the Group had a committed sterling revolving credit facility agreement with Barclays Bank PLC, The
Bank of Ireland and Credit Industriel Et Commercial (London Branch) for £61.0 million and also had short term uncommitted
facilities of £7.5 million in the UK and €4.6 million facility in Continental Europe. In January 2026 the Group refinanced its revolving
credit facility and £7.5 million uncommitted facility into an £85.0 million asset-based lending facility, leveraging its inventory,
receivables and properties. The new facility matures in January 2029, with two extension options, each for an additional year.
Facilities
31 December
2025
£M
31 December
2024
£M
Sterling RCF 61.0 81.5
Sterling uncommitted facilities UK 7.5 15.0
Euro uncommitted facilities Continental Europe 4.0 3.9
72.5 100.4
For more information about the Group’s and Company’s exposure to interest rate and foreign currency risk, see note 24.
Group Company
2025
£M
2024
£M
2025
£M
2024
£M
Current liabilities
Bank overdraft – 1.1 – –
Interest-bearing loan 59.0 – 59.0 –
59.0 1.1 59.0 –
The Group has undrawn borrowing facilities at 31 December 2025, which amounted to £12.0 million (2024: £99.3 million). The
facility conditions for drawdown had been met during the period. There is a cross guarantee in place between the Company
and its UK, French and Dutch subsidiaries.
168168
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
The undrawn borrowing facilities are as follows:
Interest rate
%
2025
£M
Interest rate
%
2024
£M
UK 6.0 9.5 7.0 96.5
Netherlands 5.2 1.2 6.0 0.9
France 4.3 1.3 4.2 1.9
12.0 99.3
The undrawn borrowing facilities consisted of £2.0 million committed and £10.0 million uncommitted facilities (2024: £81.5 million
committed and £17.8 million uncommitted).
All the borrowing facilities above bear interest at floating rates.
Changes in net cash/(debt)
At 1
January
2025
£M
Non-cash
items
£M
Cash flows
£M
Foreign
exchange
movements
£M
Transfer
to held
for sale
£M
At 1
December
2025
£M
Cash at bank and in hand 12.0 – 15.6 0.1 (1.6) 26.1
Bank overdraft (1.1) – 1.0 – 0.1 –
Debt due within one year – – (59.0) – – (59.0)
Lease liabilities (61.2) (25.7) 17.4 (0.2) 3.0 (66.7)
Liabilities from financing activities (62.3) (25.7) (40.6) (0.2) 3.1 (125.7)
Net cash/(debt) 10.9 – (42.4) 0.1 (1.5) (32.9)
Net debt including lease liabilities (50.3) (25.7) (25.0) (0.1) 1.5 (99.6)
At
1 January
2024
£M
Non-cash
items
£M
Cash flows
£M
Foreign
exchange
movements
£M
At
1 December
2024
£M
Cash at bank and in hand 21.1 – (9.0) (0.1) 12.0
Bank overdraft (0.7) – (0.4) – (1.1)
Debt due within one year (50.0) – 50.0 – –
Lease liabilities (43.4) (33.4) 15.4 0.2 (61.2)
Liabilities from financing activities (94.1) (33.4) 65.0 0.2 (62.3)
Net (debt)/cash (29.6) – 40.6 (0.1) 10.9
Net debt including lease liabilities (73.0) (33.4) 56.0 0.1 (50.3)
Non-cash items relate to lease additions, modifications and interest.
Headlam Group PLC Annual Report & Accounts 2025
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169
Financial Statements
170170
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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Headlam Group PLC Annual Report & Accounts 2025
171
Financial Statements
172172
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
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Headlam Group PLC Annual Report & Accounts 2025
173
Financial Statements
21 Employee benefits continued
174174
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
175
Headlam Group PLC Annual Report & Accounts 2025
175
Financial Statements
21 Employee benefits continued
176176
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
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Headlam Group PLC Annual Report & Accounts 2025
177
Financial Statements
22 Share-based payments continued
178178
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 Capital and reserves
Share capital
Ordinary Shares
2025 2024
Number of shares
Authorised
In issue at 1 January and 31 December 107,840,000 107,840,000
Fully paid
In issue at 1 January and 31 December 85,639,209 85,639,209
2025
£M
2024
£M
Allotted, called up and fully paid
Ordinary shares of 5p each 4.3 4.3
Shares classified in shareholders’ funds 4.3 4.3
At 31 December 2025, the Company held 5,356,544 shares (2024: 5,393,392) in relation to treasury stock and shares held in trust
for satisfying options and awards under employee share schemes. These shares have been disclosed in the treasury reserve.
Dividends are not payable on these shares and they are excluded from the calculation of earnings per share. The shares held
in treasury and trust represented 6.3% (2024: 6.3%) of the issued share capital as at 31 December 2025 with a nominal value of
£0.3 million (2024: £0.3 million).
Ordinary Shares
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Headlam Group PLC Annual Report & Accounts 2025
179
Headlam Group PLC Annual Report & Accounts 2025
179
Financial Statements
180180
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
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Headlam Group PLC Annual Report & Accounts 2025
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Financial Statements
24 Financial instruments continued
182182
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
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Headlam Group PLC Annual Report & Accounts 2025
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Financial Statements
24 Financial instruments continued
184184
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
185
Headlam Group PLC Annual Report & Accounts 2025
185
Financial Statements
25 Discontinued operations continued
186186
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Headlam Group PLC Annual Report & Accounts 2025
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Headlam Group PLC Annual Report & Accounts 2025
187
Financial Statements
28 Group subsidiaries
Company Holding Type Place of incorporation
HFD Limited Direct Trading UK*
MCD Group Limited Direct Trading UK*
CECO (Flooring) Limited Indirect Trading UK*****
Domus Tiles Limited Indirect Trading UK*
Headlam BV Indirect Trading The Netherlands**
Dersimo BV Indirect Trading The Netherlands****
LMS SA Indirect Trading France***
Melrose Interiors Limited Indirect Trading UK*
Modern Style Rugs Limited Indirect Trading UK*
Birch Close Trading Limited Indirect Holding Company UK*
Headlam (European) Limited Direct Holding Company UK*
Betu Holdings Limited Indirect Holding Company UK*****
Headlam Holdings BV Direct Holding Company The Netherlands**
Headlam SAS Indirect Holding Company France***
Domus Group of Companies Limited Direct Holding Company UK*
Tileco (2012) Bidco Limited (dissolved 28 February 2025) Indirect Holding Company UK*******
Tileco Group (2007) Limited (dissolved 28 February 2025) Indirect Holding Company UK*******
Tileco Group Limited (dissolved 28 February 2025) Indirect Holding Company UK*******
Yourfloors Limited Direct Dormant UK*
Crossforge Limited Indirect Dormant UK*
Headlam Group Employee Trust Company Limited Direct Dormant UK*
Headlam Group Pension Trustees Limited Direct Dormant UK*
Headlam Ireland Limited Indirect Dormant Ireland******
Tileco Limited (dissolved 28 February 2025 ) Indirect Dormant UK*******
Surface Tiles Limited (dissolved 28 February 2025) Indirect Dormant UK*******
Gorsey Twenty One Limited Indirect Dormant UK*
Gorsey Twenty Two Limited (in liquidation) Indirect Dormant UK*******
Gorsey Twenty Three Limited (in liquidation) Indirect Dormant UK*******
The ordinary share capital of all of these subsidiaries are wholly owned. The principal activities of the trading companies are
wholly aligned to the sales, marketing, supply and distribution of floorcoverings and certain other ancillary products.
* Registered address for UK subsidiaries: Gorsey Lane, Coleshill, Birmingham, B46 1JU, UK.
** Registered address for these Dutch subsidiaries: Bettinkhorst 4, 7207 BP Zutphen, the Netherlands.
*** Registered address for French subsidiaries: 9-11 Rue de la Litte, 92390, Villeneuve-la-Garenne, France.
**** Registered address for this Dutch subsidiary: Noordzee 12, 3144 DB, Maassluis, the Netherlands.
***** Registered address for these UK subsidiaries: Unit 5 Carryduff Business Park, Comber Road, Carryduff, Belfast, County Down, BT8 8AN, UK.
****** Registered address for Irish subsidiary: 3rd Floor Kilmore House, Park Lane, Spencer Dock, Dublin 1, Ireland.
******* Registered address for these UK subsidiaries: 8th Floor Temple Point 1, Temple Row, Birmingham, B2 5LG, UK.
Domus Tiles Limited (company number: 00812533) is exempt from the requirement of the Companies Act 2006 relating to the
audit of accounts under section 479A of the Companies Act 2006.
188188
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Glossary of Alternative
Performance Measures
Closest equivalent
statutory measure Definition and purpose
Underlying gross profit Gross profit Calculated as gross profit before non-underlying items
Underlying operating costs Administrative
expenses
Calculated as administrative expenses, distribution costs,
net impairment losses on trade receivables, net of any
other operating income and before non-underlying items.
Underlying operating profit Operating profit Calculated as operating profit before non-
underlying items
Underlying operating profit margin None Calculated as underlying operating profit divided by
revenue. This measure is used to assess how effective
the Group is at converting revenue into underlying
operating profit
Underlying profit before tax Profit before tax Calculated as profit before tax before non-underlying
items. Underlying profit before tax is used in the
determination of Executive Directors’ annual bonuses
Underlying profit after tax Profit after tax Calculated as profit after tax before non-underlying items
Underlying basic earnings
per share
Basic earnings
per share
Calculated as basic earnings per share before non-
underlying items
Underlying diluted earnings
per share
Diluted earnings
per share
Calculated as diluted earnings per share before non-
underlying items
Non-underlying items None Items which by virtue of their nature, size and expected
frequency require adjustment to show the performance
of the Group in a consistent manner which is comparable
year-on-year. These comprise: amortisation of acquired
intangibles; impairment of assets; business restructuring
and change-related costs; profit on sale of property, plant
and equipment; ERP system development; and insurance
proceeds
EBIT None Calculated as underlying operating profit or loss adjusted
to exclude the impact of IFRS 16 and share-based
payments
EBITDA None Calculated as underlying operating profit or loss excluding
the impact of depreciation and amortisation
Covenant EBITDA None Calculated as underlying operating profit or loss adjusted
to exclude the impact of IFRS 16 and share-based
payments and excluding the impact of depreciation and
amortisation
Underlying operating cash flow None Calculated as shown in the table in the Financial Review.
This metric is used to assess underlying cash generation
Net debt including lease liabilities None Calculated as cash and cash equivalents less other
interest-bearing loans and borrowings and less lease
liabilities
Headlam Group PLC Annual Report & Accounts 2025
189
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189
Financial Statements
ALTERNATIVE PERFORMANCE MEASURES
‘APM
s’
Glossary of Alternative
Performance Measures
Closest equivalent
statutory measure Definition and purpose
Net debt/cash None Calculated as cash and cash equivalents less other
interest-bearing loans and borrowings
This is provided for use by investors, who used this metric
before the adoption of IFRS16 and continue to do so
Like for like revenue growth None Calculated as year-on-year revenue growth, expressed as
a percentage and adjusted to normalise currency and for
consistent working days, for businesses making a full year’s
contribution. This allows a consistent measure of year-on-
year performance
Underlying operating costs ratio None Calculated as underlying operating costs divided by
revenue. This measure shows how effective the Group is at
converting gross profit into underlying operating profit
Return on capital employed None Calculated as underlying operating profit measured as
a percentage of average capital employed, being total
equity less non-current other interest-bearing loans and
borrowings less cash and cash equivalents
This demonstrates the relative level of profit generated by
the capital employed
Adjusted effective tax rate
excluding non-underlying items
None Calculated as tax credit excluding non-underlying items
divided by underlying profit before tax
Cash conversion None Calculated as underlying operating cash flow divided
by underlying operating profit or loss and expressed as a
percentage
This cash conversion measure demonstrates the success
of the Group in converting profit to cash, which underpins
the quality of earnings and reflects the effectiveness of
working capital management
190190
ALTERNATIVE PERFORMANCE MEASURES
‘APM
s’ CONTINUED
Total
Results
£M
Amortisation
of acquired
intangibles
and other
acquisition-
related costs
£M
Impairment
of property,
plant and
equipment,
intangible
assets and
right of use
assets
£M
Cloud-based
ERP system
development
costs
£M
Provision
for legal
claims
£M
Profit on
sale of
property,
plant and
equipment
£M
Business re-
structuring
and change-
related costs
£M
Impairment
of disposal
group held
for sale
£M
Adjusted
Results
(under-
lying)
£M
Revenue 498.7 – – – – – – – 498.7
Cost of sales (355.0) – – – – – 3.6 – (351.4)
Gross profit 143.7 – – – – – 3.6 – 147.3
Distribution costs (131.2) – – – – – 10.0 – (121.2)
Administrative expenses (81.6) 1.1 4.8 5.6 1.6 – 9.6 – (58.9)
Net impairment losses on
trade receivables (0.6) – – – – – – – (0.6)
Other operating income 6.2 – – – – (6.2) – – –
Operating (loss)/profit (63.5) 1.1 4.8 5.6 1.6 (6.2) 23.2 – (33.4)
Finance income 0.6 – – – – – – – 0.6
Finance expenses (6.7) – – – – – – – (6.7)
Net finance costs (6.1) – – – – – – – (6.1)
(Loss)/profit before tax (69.6) 1.1 4.8 5.6 1.6 (6.2) 23.2 – (39.5)
Taxation 4.8 (0.3) (0.4) – – – – – 4.1
Loss for the year from
continuing operations (64.8) 0.8 4.4 5.6 1.6 (6.2) 23.2 – (35.4)
Loss for the year from
discontinued operations (17.1) 0.1 – – – – 0.1 12.5 (4.4)
(Loss)/profit for the year
attributable to the equity
shareholders (81.9) 0.9 4.4 5.6 1.6 (6.2) 23.3 12.5 (39.8)
Total (loss)/earnings
per share
Basic (102.0)p 1.1p 5.5p 7.0p 2.0 (7.7)p 29.0p 15.5p (49.6)p
Diluted (102.0)p 1.1p 5.5p 7.0p 2.0 (7.7)p 29.0p 15.5p (49.6)p
Headlam Group PLC Annual Report & Accounts 2025
191
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191
Financial Statements
ADJUSTED RESULTS RECONCILIATION
FOR THE YEAR ENDED 31 DECEMBER 2025
Total
Results
£M
Amortisation
of acquired
intangibles
and other
acquisition-
related costs
£M
Impairment
of property,
plant and
equipment,
intangible
assets and
right of use
assets
£M
Cloud-based
ERP system
development
costs
£M
Impairment
of
inventories
and
receivables
£M
Profit on
sale of
property,
plant and
equipment
£M
Business re-
structuring
and change-
related costs
£M
Adjusted
Results
(under-
lying)
£M
Revenue 525.7 – – – – – – 525.7
Cost of sales (380.3) – – – 1.6 – 9.0 (369.7)
Gross profit 145.4 – – – 1.6 – 9.0 156.0
Distribution costs (124.2) – – – – – 4.4 (119.8)
Administrative expenses (71.0) 1.2 1.1 2.6 – – 6.3 (59.8)
Net impairment losses on
trade receivables (2.6) – – – 1.3 – – (1.3)
Other operating income 21.1 – – – – (21.1) – –
Operating (loss)/profit (31.3) 1.2 1.1 2.6 2.9 (21.1) 19.7 (24.9)
Finance income 0.1 – – – – – – 0.1
Finance expenses (6.9) – – – – – – (6.9)
Net finance costs (6.8) – – – – – – (6.8)
(Loss)/profit before tax (38.1) 1.2 1.1 2.6 2.9 (21.1) 19.7 (31.7)
Taxation 17.0 (0.4) (0.2) (0.6) (0.7) (3.5) (4.8) 6.8
(Loss)/profit from
continuing operations (21.1) 0.8 0.9 2.0 2.2 (24.6) 14.9 (24.9)
Loss from discontinued
operations (3.9) 0.1 0.6 – – – – (3.2)
(Loss)/profit for the year
attributable to the equity
shareholders (25.0) 0.9 1.5 2.0 2.2 (24.6) 14.9 (28.1)
(Loss)/earnings per
share from continuing
operations
Basic (26.3)p 1.0p 1.1p 2.5p 2.7p (30.6)p 18.6p (31.0)p
Diluted (26.3)p 1.0p 1.1p 2.5p 2.7p (30.6)p 18.6p (31.0)p
(Loss)/earnings per
share from discontinued
operations
Basic (4.9)p 0.1p 0.8p – – – – (4.0)p
Diluted (4.9)p 0.1p 0.8p – – – – (4.0)p
Total (loss)/earnings
per share
Basic (31.2)p 1.1p 1.9p 2.5p 2.7p (30.6)p 18.6p (35.0)p
Diluted (31.2)p 1.1p 1.9p 2.5p 2.7p (30.6)p 18.6p (35.0)p
192192
ADJUSTED RESULTS RECONCILIATION CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2024
2025
£M
Re-presented
2024
£M
2023
£M
2022
£M
2021
£M
Trading results (Continuing operations)
Revenue 498.7 525.7 656.5 663.6 667.2
Underlying gross profit 147.3 156.0 207.8 219.5 220.5
Overheads (180.7) (180.9) (191.7) (180.3) (183.2)
Underlying (loss)/profit before net financing costs (33.4) (24.9) 16.1 39.2 37.3
Net financing costs (6.1) (6.8) (5.1) (2.1) (1.5)
Underlying (loss)/profit on ordinary activities
before tax (39.5) (31.7) 11.0 37.1 35.8
Taxation 4.1 6.8 (2.2) (7.4) (9.2)
Underlying (loss)/profit on ordinary activities after
taxation – continued operations (35.4) (24.9) 8.8 29.7 26.6
Underlying (loss)/profit on ordinary activities after
taxation – discontinued operations (4.4) (3.2) – – 0.1
(Loss)/profit for the year attributable to the equity
shareholders (39.8) (28.1) 7.1 41.8 27.6
Shareholder value
(Loss)/earnings per share for profit from continuing
operations (80.7)p (26.3)p 9.6p 40.1p 23.5p
Underlying (loss)/earnings per share for profit from
continuing operations (44.1)p (31.0)p 11.0p 35.5p 31.5p
(Loss)/earnings per share for (loss)/profit from
discontinued operations (21.3)p (4.9)p – – 5.3p
Paid interim and final dividend per share – 6.0p 15.2p 14.8p 5.8p
Paid special dividend per share – – – 17.7p –
Proposed special dividend per share – – – – 17.7p
Proposed dividend per share – – 6.0p 11.2p 8.6p
Declared dividend per share – – – – –
The results for 2021–2023 within the financial record have not been re-presented to reflect the discontinued activity that
occurred in 2025, they remain the historical results reported for the Group.
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193
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193
Financial Statements
FINANCIAL RECORD
2025
£M
Restated
2024
£M
2023
£M
2022
£M
2021
£M
Net assets
Non-current assets
Property, plant and equipment 68.8 86.9 127.6 119.9 113.3
Right of use assets 53.6 55.1 41.6 36.7 35.0
Intangible assets 11.3 17.6 19.4 17.8 18.1
Deferred tax assets 8.2 3.9 0.9 – –
141.9 163.5 189.5 174.4 166.4
Current assets
Inventories 77.4 102.8 131.5 139.8 130.9
Trade and other receivables 86.6 111.0 117.1 119.1 114.0
Income tax receivable – 3.6 3.1 – –
Cash and cash equivalents 26.1 12.0 21.1 2.1 61.2
Assets classified as held for sale 22.7 4.8 – – –
212.8 234.2 272.8 261.0 306.1
Total assets 354.7 397.7 462.3 435.4 472.5
Current liabilities
Bank overdraft – (1.1) (0.7) – –
Other interest-bearing loans and borrowings (59.0) – (50.0) (0.3) (0.6)
Lease liabilities (12.6) (13.8) (11.9) (11.4) (10.5)
Trade and other payables (97.2) (139.2) (129.1) (153.2) (178.0)
Employee benefits – – (1.1) (1.0) (1.0)
Income tax payable (0.4) – – (1.9) (1.0)
Provisions (1.6) – – – –
Liabilities relating to assets held for sale (14.7) – – – –
(185.5) (154.1) (192.8) (167.8) (191.1)
Non-current liabilities
Other interest-bearing loans and borrowings – – – – (6.9)
Lease liabilities (54.1) (47.4) (31.5) (26.3) (25.5)
Provisions (3.3) (3.1) (2.6) (1.7) (2.7)
Deferred tax liabilities – – (13.2) (12.1) (10.3)
Employee benefits (1.8) (2.1) (1.8) (2.7) (3.9)
(59.2) (52.6) (49.1) (42.8) (49.3)
Total liabilities (244.7) (206.7) (241.9) (210.6) (240.4)
Net assets 110.0 191.0 220.4 224.8 232.1
194194
FINANCIAL RECORD CONTINUED
The production of this report supports the work of the
Woodland Trust, the UK’s leading woodland conservation
charity. Each tree planted will grow into a vital carbon stor
e,
helping to reduce environmental impact as well as cr
eating
natural havens for wildlife and people.
ADVISERS
Auditors
PricewaterhouseCoopers LLP
One Chamberlain Square
Birmingham
B3 3AX
Taxation advisers
Deloitte LLP
Four Brindleyplace
Birmingham
B1 2HZ
Solicitors
Pinsent Masons LLP
55 Colmore Row
Birmingham
B3 2FG
Principal bankers
Barclays Bank PLC
PO Box 3333
One Snowhill
Snow Hill
Queensway
Birmingham B3 2WN
Wells Fargo Capital Finance Limited
8th Floor
33 King William Street
London
EC4R 9AT
Stockbroker
Panmure Liberum
Level 12 Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Registrar
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds
LS1 4DL
ADDITIONAL INFORMATION
HEADLAM GROUP PLC
Gorsey Lane
Coleshill
Birmingham
B46 1JU
UK
T: 01675 433 000
E: headlamgroup@headlam.com
S N: B46 1JU
Company number: 00460129
Visit us online at:
headlam.com