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Key Performance Indicators

Ongoing organic revenue growth

Definition

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

Performance

Organic revenue declined  0.1 per cent in 2019/20. Organic growth in the first half was offset by the impact of the COVID-19 pandemic in the second half. 

Ongoing gross margin

Definition

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

Performance

Gross margin was in line with 2018/19 principally as a result of good pricing discipline despite the COVID-19 pandemic in the latter part of the year, which resulted in an adverse mix effect given the temporaty closure of our brick and mortar showrooms.

Ongoing trading margin

Definition

The ratio of ongoing trading profit to ongoing revenue.

Performance

The trading margin rose to 8.0 per cent. Trading margin expansion was due to improvements in operating cost efficiencies

Operating cash flow

Definition

Cash generated from operations before interest and tax.

Performance

Cash flow from operations was $2.3 billion in the year. This improvement was a combination of a strong performance in the US business for 2019/20 and the positive impact of IFRS 16. Cash flow from operations on a pre-IFRS 16 basis was $1,904 million. Continued good cash flow is a key part of the Group’s strategy in order to fund investment in organic expansion, ordinary dividends and bolt-on M&A, with surplus capital returned to shareholders.

Own brand percentage of revenue

Definition

The proportion of ongoing revenue from own brand products to total ongoing revenue.

Performance

The percentage of own brand revenue increased by 0.4 per cent in 2019/20 to 8.7 per cent with both the US and Canada businesses growing the proportion of own brand revenue.

Return on gross capital employed

Definition

The ratio of trading profit to the average yearend aggregate of shareholders’ equity, net debt including lease liabilities and cumulative goodwill and other acquired intangible assets written off. This is for continuing and discontinued operations.

Performance

Return on gross capital employed was 23.9 per cent in 2019/20. On a pre-IFRS 16 basis the return on gross capital employed was 24.9 per cent with the reduction due to a flat return but with a higher average capital employed during the year.

Associate engagement

Definition

In 2018/19 we launched a new Group-wide associate engagement survey ensuring we understand the drivers impacting engagement, retention and advocacy. The survey offers global and country specific benchmarks allowing us greater insight into how we compare externally. The survey focuses on four engagement questions on advocacy, pride, satisfaction and commitment. Associates must agree with all four questions to be recognized as “engaged”.


Performance

The initial survey result in 2018/19 across the Group was 51 per cent. This sets a high bar as “engaged associates” must agree with all four engagement questions. This demanding score now acts as a baseline for performance moving forward but we unfortunately had to defer the 2019/20 engagement survey due to COVID-19. We will disclose the results of the next engagement survey in the Annual Report.

Customer service

Definition

There is a good correlation between high customer service scores and better financial results. The net promoter score is a measure of customer service. The survey asks: “How likely is it that you would recommend Ferguson to a friend or colleague?” and customers respond with scores between zero (bad) and 10 (exceptional). We look at the four quarter average of the customers who scored nine or more, less those customers scoring six or less.

Performance

The process of tracking and reporting customer service differs by region, therefore an example is given for the USA. The average net promoter score remains an excellent score and is best-in-class in our industry and is among the highest levels achieved in any industry.

The methodology was changed in 2019 to align to industry best practice while also collating a broader number of responses. As such, scores prior to 2019 are not comparable.

Group recordable injury rate

Definition

Total number of injuries per 200,000 worker hours. This is in line with globally recognized standards (including the US Department of Labor’s Occupational Safety and Health Administration regulations). The injury number is based on associates receiving medical treatment beyond first aid that requires them to leave the workplace.

Performance

The Group recordable injury rate improved by 35 per cent compared to the previous year. This is primarily as a result of our continued focus on health and safety, a robust associate engagement program, senior leadership commitment and deployment of safety professionals in the field to focus on areas such as material handling and training.