13th May 2020 12:07
(Alliance News) - Ferguson PLC said Wednesday it will continue to review its remuneration policy after a large minority of its shareholders voted against the report.
At Ferguson's November AGM, only 74.5% of shareholders voted in favour of the company's remuneration report.
The plumbing and heating products distributor said it sought to "engage" with the shareholders who voted against the report, following provisions set out under the UK Corporate Governance Code.
Ferguson noted several shareholders who identified as having voted against the resolutions did not speak to the company during an earlier consultation process.
"The company wrote directly to these shareholders representing about 12% of issued share capital setting out its position," Ferguson said.
Adding: "During this engagement Ferguson sought to clarify its position on the various components of total compensation including fixed pay, bonus and long term incentive plans. The board thanks shareholders for the feedback it has received to date and as no new concerns were raised during the engagement the board remains of the view that the remuneration policy is appropriate to reflect the size and scale of Ferguson.
"However, the board will continue to review how we apply the remuneration policy and approach, particularly in the current environment."
Shares in Ferguson were up 3.2% in London at midday on Wednesday at 6,156.00 pence each.
Earlier Wednesday, Ferguson said the "strong" momentum seen in the first half of its financial year has been restrained since by the Covid-19 outbreak.
The plumbing and heating products distributor said revenue from its ongoing operations in the US and Canada were up slightly in the third quarter but trading profit took a hit.
In the three months to April 30 - Ferguson's third-quarter - revenue was up 0.9% year on year to USD4.75 billion from USD4.71 billion, but a 7.7% rise in February and March was offset by an 11% decline in April.
In the US, Ferguson recorded 1.9% revenue growth in the third quarter but Canada suffered a 16% fall.
In the UK, revenue dropped 27% to USD417 million, while the unit made a trading loss of USD12 million.
Group trading profit in the quarter slipped 1.5% year on year to USD334 million from USD339 million. Ferguson noted it took a USD17 million hit from changing accounting standards to utilise IFRS 16, which governs lease accounting.
Ferguson is currently de-merging its UK business, Wolseley. The company said its plans remain unchanged but the timing will depend on "the stabilisation of market conditions".
Chief Executive Kevin Murphy said: "Our strong revenue momentum in February and March was adversely impacted in April as federal, state and local Covid-19 restrictions and safety measures brought about a reduction in demand. We have rapidly implemented responsible working practices to protect the health and wellbeing of our associates and with few exceptions our traditional branch network remains open."
Murphy said Ferguson has moved to protect its cost base and cash flow. Part of this has included suspending its USD500 million share buyback, pausing any merger & acquisition activity, cutting its interim dividend, and reducing capital expenditure by USD280 million to USD300 million.
At April 30, Ferguson had USD3.1 billion of available liquidity comprising readily available cash of USD1.3 billion and USD1.8 billion of undrawn facilities.
"We are confident these actions coupled with the strength of our balance sheet will serve us well in the coming months and years. As a value-added distributor Ferguson remains well-positioned to support our customers, vendors and communities during this challenging time while continuing to build our capabilities for the long-term," Murphy added.
In the nine months to April 30, revenue from ongoing operations was up 3.2% year on year to USD14.64 billion, while trading profit was 2.8% higher at USD1.13 billion.
By Paul McGowan; [email protected]
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