How the Board engages with stakeholders

The Board considers that its key stakeholders are associates, customers, investors, suppliers and the community. In compliance with the Code, we set out, on pages 24 and 25 of the Strategic report, our principal stakeholders and how and why we engage with them, as well as responses to that engagement. Under section 172 of the UK Companies Act 2006, boards have a duty to promote the success of their company for the benefit of their members while having due regard of the likely consequences of any decision in the long term, for the interests of associates, the success of their relationships with suppliers and customers, the impact of their operations on the community and environment and maintaining a reputation for high standards of business conduct. The Company is Jersey incorporated and, therefore, is not required to comply with this legislation. However, the Board recognizes that effective engagement with stakeholders at Board level and throughout the business is essential to enable us to promote the long-term success of the Group for the benefit of all stakeholders. As a result, stakeholder considerations are integral to Board discussions and decisions. Our section 172 statement is set out on page 24.

How does the Board hear the stakeholder voice?

Stakeholder Associates

Our associates are our most important asset and having the best associates in our industry is a key part of Ferguson’s culture. The Board has direct engagement with associates during site visits and these enable the Board to meet a range of associates. We also have a dedicated Employee Engagement Director, Alan Murray, who hosts meetings with our associates during the year to further understand their thoughts and opinions. Alan provides feedback from these discussions to the Board on a regular basis which provides the Board with additional insight of the views and concerns of associates in their discussions and decision-making. Further information regarding interaction with associates is given on pages 24 and 25.

Customers

The Board engages with customers whenever possible during site visits. Details of the customer visit during the Board’s US visit in January 2020 can be found on page 65. The Board receives information about customers in Board reports and presentations and during strategy updates. See pages 24 and 25 for further information on interaction with customers.

Investors

The Board engages with investors in a variety of ways. The Group Chief Executive and the Group Chief Financial Officer meet regularly with the Company’s institutional investors to provide updates on the Group’s strategy and its results. The Chairman makes himself available to meet with investors and during the year he, together with the Group Chief Executive and Group Chief Financial Officer, conducted an extensive consultation with institutional investors on potential listing structures. The Chair of the Remuneration Committee leads consultations with major investors when the Company’s Remuneration Policy is under review. Further details can be found on page 82. All Directors attended the 2019 AGM and spoke with investors informally before and after the meeting and answered investor questions during the AGM. For further information regarding interaction with investors please see pages 24 and 25. Suppliers We engage with our suppliers through our specialist teams and business leaders. The Board receives material updates from management on the Group’s supply chain. See pages 24 and 25 for further information on interaction with suppliers. Community Community engagement takes place locally through our operating businesses. The Board also received a detailed report from the Director of Sustainability during the year on the many projects that the Company has undertaken. For further information on interaction with the community and environment please see pages 24 and 25. Below are examples of how the Board has had regard to the interests of its key stakeholders when making certain decisions during 2019/20.

Listing structure Enhanced communication

In April 2020 the Board approved a proposal to seek shareholder The Board considered that during the uncertain times caused approval for an additional listing of ordinary shares in the USA. by COVID-19 our shareholders, our associates and other key

Prior to this decision being made, in-depth consultations were held stakeholders would benefit from understanding more about the with major shareholders regarding two potential listing structures actions that were being taken and the ongoing performance of for the Company, during which we explained the options under the Group. Consequently, in addition to the Company’s scheduled consideration and allowed shareholders to ask questions and program of announcements, the Board approved for public release comment on the options. Feedback from the consultation was additional Trading Updates on April 15, 2020 and July 24, 2020. reviewed by the Board and the impact on investors, associates and other stakeholders was considered.

Taking into account the feedback received, the Board considered it would be in the best interests of stakeholders to seek an additional listing in the USA. The Board therefore decided to seek shareholder approval to enable an additional listing of ordinary shares in the USA as the first step in a two step process, given the long-term natural listing in the USA. Further details of the proposed changes to the listing structure can be found on page 6.

2020 AGM

The 2020 AGM will be held on December 3, 2020. Please consult the 2020 Notice of AGM and www.fergusonplc.com for details regarding the 2020 AGM.