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www.wolseley.com

Risk Management

Monitoring risk throughout the Group

The Board is accountable for the system of risk management at Ferguson. The Board, Audit Committee and Executive Committee review risks and controls in the context of the Group’s strategic plan and objectives. Throughout the year, information is provided directly from front line operations, via corporate functions and independent audits.

Risk analysis during the year

2017/18 risk and control assessments

Ferguson formally reviews its principal Group and business unit risks every six months – at the half-year and at the year-end. 

In January and July 2018, the Board provided its perspective on risks relating to the Group’s strategy for 2018/19 and beyond. The Board’s assessment was then combined with bottom-up risk reports received from business units in February and August 2018 to produce an overall risk profile and report for the Group.

This risk report, listing principal and emerging risks and how they have changed, was reviewed, amended and finalised with the Executive Committee in March and September 2018. The mitigation in place for each principal risk was then reported to and reviewed by the Audit Committee in March and September.

Throughout the year, members of the Board, Audit Committee and Executive Committee have received updates on the Group’s principal risks, as follows:

 

  Risk Updates Provided

A

New competitors

and technology

Formal update provided to the Board in January 2018. Related risks considered by the Board in January and July 2018 and by the Executive team.

B

Market conditions

Monthly performance reviews with CEO and CFO. CEO update to the Board at each Board meeting.

C

Pressure on margins

D

Information Technology 

Reports on the status of the Group’s information technology strategy and operational risks were provided to the Executive Committee and the Board and the Audit Committee throughout the year.

E

Health and safety

Performance updates were provided at every Executive Committee and Board meeting during the year.

 

F

Regulations

The status of the Group’s anti-bribery programme was reported to the Audit Committee in January 2018.

G

Talent mangement and retention

The Board, supported by the Nominations and Audit Committees, has received detailed updates throughout the year from leadership teams around the Group.

H

Macro political tax risk

Reported on tax risks and future reforms to the Audit Committee in September 2017 and March 2018.

Viability statement

Based on the outcomes of the scenarios and considering the Group’s financial position, strategic plans and principal risks, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. 

UK withdrawal from the European Union

 

The UK leaving the European Union (“EU”) continues to produce some market uncertainties including volatility in the sterling exchange rate against the US dollar. From 2018 the Group changed the presentation of its financial statements from sterling to US dollars which has greatly reduced the impact of foreign exchange rate movements, most notably sterling, on reported revenue and trading profit. Since the large majority of the Group’s profit is derived from North America, the Group does not envisage a material adverse impact from sterling vs US dollar exchange rates in the future. There is a risk that leaving the EU adversely affects domestic demand which could have a negative impact on the business. In addition, disruption in the financial markets could adversely affect the share price. The Group will continue to monitor developments.