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www.wolseley.com

Key Performance Indicators


 

Like for like revenue growth

Definition

The percentage increase or decrease in revenue year-on-year excluding the effect of currency exchange, acquisitions and disposals, trading days and branch openings and closures.

Description

Like-for-like revenue growth was 2.4 per cent in 2015/16. The reduced growth rate from 2014/15 was due to a number of headwinds including commodity deflation, industrial declines and challenging European markets.

Gross margin

Definition

The ratio of gross profit, excluding exceptional items, to revenue.

Description

Gross margin improved by 30 basis points compared to 2014/15 principally as a result of the USA and UK improving their mix of business towards higher margin channels and product categories.

Labour costs as % of gross profit

Definition

This is a measure of productivity. It is the ratio of labour costs as a percentage of gross profit, excluding exceptional items.

Description

Productivity deteriorated to 48.2 per cent, compared to 47.6 percent in 2014/15. This is because of productivity declines in the UK and Nordics due to difficult market conditions.

Trading Margin

Definition

The ratio of trading profit, excluding exceptional items, to revenue.

Description

Trading margin was consistent at last year’s record high of 6.4 per cent. The USA continued to perform well despite challenging trading conditions, with declines in the UK and Nordics.

Average cash-to-cash days

Definition

The 12-month average number of days from payment for items of inventory to receipt of cash from customers.

Description

Average cash-to-cash days were consistent year-on-year at 50 days. All regions improved at constant exchange rates but this was offset by unfavourable foreign exchange movements in the year.

Return on gross capital employed

Definition

The ratio of trading profit to the average year-end aggregate of shareholders’ funds, adjusted net debt and cumulative goodwill and other acquired intangible assets written off. This is for continuing and discontinued operations.

Description

Return on gross capital employed improved from 16.9 per cent to 17.2 per cent. This is in line with our investment case and long-term objective of generating attractive returns on capital.

Associate engagement, USA

Definition

Engaged associates deliver excellent customer service, consequently we measure employee  engagement in every region. Engagement surveys are periodically sent to associates at all  levels asking: “How satisfied are you that Ferguson is a good company to work for?”.

Description

The process of tracking and reporting engagement differs by region, therefore an example is given for the USA, the largest region in the Group. Average engagement was 87.5 per cent in 2015/16, a small decline compared to 2014/15 but it remains a very high score, well above industry averages.

Customer service USA

Definition

There is a good correlation in our business between high customer loyalty scores in a branch and better financial performance. The net promoter score is a means of measuring customer service. The survey asks: “How likely is it that you would recommend Ferguson to a friend or colleague?” and customers respond with a score between zero (bad) and ten (exceptional). We look at the 12-month average of the proportion of customers who scored nine or more, less those customers scoring six or less.

Description

The process of tracking and reporting customer service differs by region, therefore an example is given for the USA, the largest region in the Group. The average net promoter score reduced slightly in 2015/16 to 62.8. This is still an extremely good score and is among the highest levels in the industry.

Injury rate

Definition

Total number of injuries per 100,000 hours worked. The numbers are based on injuries requiring an employee to leave the workplace for medical treatment. The hours worked are calculated using full-time equivalent employee numbers and average work days by business and assume an eight-hour working day.

Description

Injuries requiring medical treatment per 100,000 hours worked improved by 2.6 per cent compared to the previous year. This was driven by ongoing efforts to identify and resolve risks and an increase in the number of spot checks performed across all regions.