DIVIDEND TIMETABLE

2021

Ordinary Shares marked ex-entitlement to the Dividend

October 28

Record date for entitlement to the Dividend

October 29 (8:00pm ET)

Latest time and date to submit pound sterling elections for the Dividend

November 12

Pound sterling Dividend value announced

November 22

Payment of the Dividend to shareholders

December 10

ANNUAL GENERAL MEETING TIMETABLE

2021

Record date for DTC beneficial owners to be eligible to vote

November 18

Latest time and date for receipt of Proxy Forms (DI holders)

November 29 (12:30pm UK time)

Record date for Depositary Interest holders to be eligible to vote

November 29 (6:00pm UK time)

Latest time and date for receipt of Proxy Forms (registered shareholders)

November 30 (12:30pm UK time)

Record date for registered shareholders to attend and vote at the AGM

November 30 (6:30pm ET)

Annual General Meeting

December 2 (12:30pm UK time)

A. New competitors and technology

Inherent risk level: High
Trend: No change

Definition and impact

Wholesale and distribution businesses in other industry sectors have been disrupted by the arrival of new competitors with lower-cost non-value added transactional business models or new technologies to aggregate demand away from incumbents.

Competitor consolidation could cause the industries in which we operate to become more competitive based on business models, technology or strategy.

The Board is attuned to both the risks and opportunities presented by these changes and is actively engaged as the Group takes action to respond.

Changes during the year

Ferguson Ventures continued to extend its network in the start-up community, increasing early visibility to new competitors and potential disruption. Partnerships and investments were made in a range of technologies and companies to improve our customers' business processes. We also continue to invest in industry-focused venture capital funds.

In addition, Ferguson continues delivery of its omnichannel strategy to meet constantly changing customer demands and emerging digital needs as the rate of customer adoption of e-commerce tools continues to increase.

Mitigation

The Group develops and invests in new business models, including e-commerce, to respond to changing customer and consumer needs. This will allow the Group to accelerate the time to market for new revenue streams and gain insight on new disruptive technologies and trends.

The Group remains vigilant to the threats and opportunities in this space. Competitor consolidation and development of new business models in our marketplace is closely evaluated.

Inherent risk level: High
Trend: No change

Definition and impact

This risk relates to the Group's exposure to short-term macroeconomic conditions and market cycles in our sector (i.e. deflation / inflation, periodic market downturns).

Some of the factors driving market changes are beyond the Group's control and are difficult to forecast.

Further information on the market trends can be found on pages 22, 23, 38, 39 and 46.

The Group is closely monitoring for general market change impacts in the short and medium term that may result from changes in customer behavior, product availability constraints and supply disruption caused by the COVID-19 pandemic, and for current geo-political risks.

Changes during the year

This risk is unchanged during the year notwithstanding certain unique dynamics driven by the COVID-19 operating environment and reopening of the US economy as the market experienced reduced product availability, supply chain disruption and price increases resulting from longer-term impacts of the COVID-19 pandemic.

The Group has maintained a strong balance sheet throughout the year and other measures have been taken to manage the cost base in line with forecast growth.

The Group has again tested its financial forecasts, including cash flow projections, against the impact of a severe market downturn, see pages 53 and 54.

We have also maintained higher inventory during the year utilizing our strong balance sheet to protect our customers and provide higher availability.

Mitigation

The Group cannot control market conditions but believes it has effective measures in place to respond to changes.

Ferguson continues to reinforce existing measures in place, including:

- the evolution of our business model;

- cost control, pricing and gross margin management initiatives, including a focus on customer service and productivity improvement;

- resource allocation processes; and

- capital expenditure controls and procedures.

The Group is monitoring for any business disruption due to a resurgence of COVID-19 and remains prepared to implement appropriate mitigation strategies.

Inherent risk level: High

Trend: No change

Definition and impact

The Group's ability to maintain attractive profit margins can be affected by a range of factors, including some that are beyond the Group's control. These include levels of demand and competition in our markets, the arrival of new competitors with new business models, the flexibility of the Group's cost base, changes in the cost and availability of commodities or goods purchased, inflationary pressures, product mix, customer or supplier consolidation or manufacturers shipping directly to customers.

There is a risk that the Group may not identify or respond effectively to changes in these factors. If it fails to do so, the amount of profit generated by the Group could be significantly reduced.

Changes during the year

Pressure on margins is unchanged during the year notwithstanding certain unique dynamics driven by the COVID-19 operating environment and reopening of the US economy. Product price inflation and cost increases arising from supply and transportation challenges were more than offset by strong market growth, an ability to pass through price inflation and cost controls.

While we have benefited from price inflation in the short term we continue to monitor for signs of moderation or deflation, which would present risk that we may not be able to totally mitigate.

In response, the Group has continued to manage its cost base in line with changes in expected growth rates. Customer Group performance, including margins achieved, were monitored on a monthly basis throughout the year.

Ongoing gross margin was 60 basis points ahead of last year with growth driven principally by strong demand and our ability to manage price inflation.

Mitigation

The Group's strategy for tackling this issue remains unchanged. This includes: continuous improvements in customer service, product availability and inventory management; strict pricing controls managed with proper data and insight; and effective maintenance and management of vendor rebate programs. Revenues from e-commerce, own brand, and other growth sectors continue to increase. The Group has made acquisitions to drive further growth and expanded capabilities in 2020/21 - refer to pages 18, 160 and 161 for more information on acquisitions during the year.

The performance of each customer group is closely monitored, and corrective action taken when appropriate.

Resource allocation processes invest capital in those businesses capable of generating the best returns.

Inherent risk level: High

Trend: Higher

Definition and impact

The Group has a clearly defined global technology strategy and roadmap. Technology systems and data are fundamental to the future growth and success of the Group. IT risks are categorized as strategic and operational.

Strategic risks are threats that could prevent execution of the IT strategic plan such as inadequate leadership, poor allocation/management of resources and/or poor execution of the organizational change of management necessary to adopt and apply new business processes.

Operational risks include business disruption resulting from system failures, fraud, criminal activity, or potential cybersecurity incidents. This includes security threats and/or failures in the ability of the organization to operate, recover and restore operations after such disruptions. While cybersecurity incidents encountered to date have resulted in minimal impact, notwithstanding increased reliance on hybrid and distributed work arrangements for many of our associates that have the flexibility to work remotely or in the office, this risk continues to persist and evolve.

Changes during the year

Under the leadership of the Chief Information Officer, the Group has continued to make progress in implementing the technology strategy and roadmap, including progressing significant upgrades to its enterprise-wide resource planning systems and other enterprise-wide IT resources. IT strategic risks are higher due to the breadth of the roadmap and are being closely monitored as we implement the global technology strategy and roadmap (see page 31). Those risks include the potential for schedule delays, cost overruns, functionality deferrals and change management disruptions to business operations.

Operational risk to IT also remains high, particularly as it relates to system failures, fraud, criminal activity, or potential cybersecurity incidents.

IT General Controls continue to be independently tested by Internal Audit and findings are reported to the Audit Committee. In addition, a team was established to provide an independent review on the status and risk to delivery of the strategic roadmap.

Briefings on the status of the Group's IT strategic plan, and its implementation have been regularly provided to the Board, the Audit Committee and the Executive Committee throughout the year.

Regular Board, Audit Committee and Executive Committee updates on the status and execution of operational IT functions, including, but not limited to cybersecurity, are in place and delivered regularly throughout the year.

Mitigation

Business leadership continues to execute a comprehensive change management program designed to transition current business practices and norms to adopt new business capabilities.

Business Technology and Omnichannel Centers of Excellence are in place to drive organizational discipline around the prioritization of business projects to foster alignment with Ferguson's strategic framework.

Management continues to execute an annually refined roadmap of investments in process, resource and technical defense necessary to continuously address and strengthen enterprise defenses against emerging cybersecurity threats; extending such enhancements to the overall control environment to all critical Group systems (see page 81).

Group-level compliance processes and insurance coverage, including data protection and cybersecurity liability, are in place.

Disaster recovery systems, secondary data centers, cloud redundancy and resiliency platforms, resources and processes have been implemented to support the recovery of business critical systems in the event of a major disaster or cybersecurity event. Testing of critical infrastructure and application systems is in place and has been consistently executed across the Group.

Inherent risk level: Medium

Trend: No change

Definition and impact

The nature of Ferguson's operations can expose its associates, contractors, customers, suppliers and other individuals to health and safety risks.

Certain products that we sell could pose health and safety risks.

Health and safety incidents can lead to loss of life or severe injuries.

The Group continues to take prudent steps to mitigate the risk and reduce any potential impact to health and safety.

Changes during the year

The Group's strategic plan remains focused on the following: elimination and control of risks causing injuries and incidents; improving our safety culture; continuous education for our associates on safety, health and environmental risks and best practices. We took appropriate steps to monitor and mitigate the potential impact of the COVID-19 pandemic on our associates and customers.

The hiring and deploying of health and safety professionals in the field provides businesses with technical resources to more effectively mitigate risk. Our efforts in these areas continue to improve the overall performance of the Group - see page 48 for more information.

Mitigation

Safety is a core value driver in everything we do. Our leaders have specific roles to play and are required to actively engage with our associates in creating a healthier and safer workplace. Our performance is reported and discussed at both the Executive Committee and Board meetings.

The Group maintains a health and safety policy, with detailed minimum standards, and standard operating procedures which sets out requirements for all businesses. We have strengthened our training programs that include vehicle and driver safety to reinforce our commitment to continual improvement. Branches are audited against these standards and businesses continue to implement fundamental changes to transform our culture. For more detail see page 48.

We continue to implement protocols to protect the health and safety of our associates and customers related to the COVID-19 pandemic and have introduced an incentive program to encourage the vaccination of our associates.

Inherent risk level: Medium

Trend: Higher

Definition and impact

The Group's operations are affected by various statutes, regulations and standards in the countries and markets in which it operates. The amount of such regulation and the penalties can vary.

While the Group is not engaged in a highly regulated industry, it is subject to the laws governing businesses generally, including laws relating to competition, product safety, privacy and data protection of user data, labor and employment practices, accounting and tax standards, international trade, fraud, bribery and corruption, land usage, the environment, health and safety, transportation and other matters.

Violations of certain laws and regulations may result in significant fines and penalties and damage to the Group's reputation.

Changes during the year

As a result of the recent registration of the Group's shares in the United States, we are subject to additional reporting requirements of the Securities Exchange Act of 1934 (as amended), the Sarbanes-Oxley Act of 2002, the listing requirements of the New York Stock Exchange, and other applicable securities rules and regulations.

Following the adoption of the California Consumer Privacy Act ("CCPA"), the procedures and controls implemented by the relevant businesses within the Group to comply with the CCPA were reviewed and improvement measures put in place. As additional privacy laws are enacted we continue to implement procedures and controls across the business to comply with all applicable laws.

Mitigation

The Group monitors the law across its markets to minimize the effects of changes and maintain compliance with all applicable laws.

The Group aligns Company-wide policies and procedures with its key compliance requirements and monitors their implementation.

Mandatory training on the Group's Code of Conduct was deployed to all associates during the year. The Code of Conduct sets out the Group's values and commitment to strict compliance with the various laws and regulations that apply wherever the Group operates. Briefings and awareness training on key compliance topics and requirements, trade compliance and anti-bribery / anti-corruption were also undertaken.

Further information on the Group's ethics and compliance program can be found on pages 29 and 51.

Definition and impact

As the Group develops new business models and new ways of working, it needs to develop suitable skillsets within the organization.

Furthermore, as the Group continues to execute a number of strategic change programs including corporate migration, it is important that existing skillsets and talent are retained and that associates remain engaged through recognition, training, and communication.

Failure to do so could delay the execution of strategic change programs, result in a loss of "corporate memory" and reduce the Group's supply of future leaders.

Changes during the year

There has been no material change in the level of associate turnover during the year, however, due to the tight labor market time to backfill positions could be extended.

Bill Brundage was appointed as Chief Financial Officer in November 2020 and Victoria Morrissey was appointed as Chief Marketing Officer in May 2021.

Talent management procedures were reviewed, our global engagement survey was relaunched, and an inclusion and diversity framework was launched during the year (see pages 28 and 29 for further information).

Associate meetings with our Employee Engagement Director of the Board were held and feedback was reported back to the Board.

Mitigation

All of the Group's businesses have established performance management and succession planning procedures.

Reward packages for associates are designed to be market competitive and to attract and retain the best talent.

A robust individual development planning process for high-potential successors from the talent review process is aligned with our organizational strategy.

The Group continues to invest in associate development, engagement, and inclusion and diversity programs.

Key management personnel compensation (including Directors)

2021 $m

2020

$m

Salaries, bonuses and other short-term employee benefits

16

16

Post-employment benefits

2

1

Share-based payments

18

8

Total compensation

36

25

Geoff Drabble, Chairman

Kevin Murphy, Group Chief Executive

Bill Brundage, Group Chief Financial Officer

Alan Murray, Senior Independent Director and Non Executive Director

Kelly Baker, Non Executive Director

Tessa Bamford, Non Executive Director

Cathy Halligan, Non Executive Director

Brian May, Non Executive Director

Tom Schmitt, Non Executive Director

Nadia Shouraboura, Non Executive Director

Jacky Simmonds, Non Executive Director

Suzanne Wood, Non Executive Director