Good morning from all of us here yet again. We have Chairman, Mr. Gareth Davis and our new Senior Independent Director, Alan Murray sitting at the back. Alan, if you want to wave.

Thanks Alan. That’s it. In terms of highlights of the year, overall we made decent progress again in the last six months. Driven by very strong performance in the U.S. and better growth in the U.K. However, this was offset by continued weak markets in Continental Europe and we see no signs yet of any real recovery. At a Group level, we achieved decent like-for-like growth in our key markets. We held or gained market share and we managed to improve margins again. Our gross margins edged up by better management of pricing, sourcing, product and customer mix and by careful cost control, we delivered decent flow-through. It was great to see our U.S. business reach its best ever return on sales of 7.3% in a steadily growing market. We continue to be very disciplined in terms of cost management and have reduced our cost base in Europe to reflect the top market conditions. We continue to generate good cash flow and pay growing dividends. During the year, six more bolt-on acquisitions were completed and the pipeline looks a bit more interesting. In France, we are successfully executing the changes we announced at the half year despite very difficult market conditions. We have across the group continued to drive a better performance down to all of our business units and branches. At the same time, we continue to invest in developing more efficient and productive business models that will over the coming years deliver better leverage from our strong market share positions. With that brief summary, let me hand over to John who will take you through the financials and then I will come back and update you on our strategic progress.

Thank you, very much Ian, and good morning, everybody. 2013, we achieved good sales growth and flow-through from a decent market in the U.S., but we had to dig pretty deep, deep in the U.K. and Canada to push the business forward in generally weak conditions. In Continental Europe, we took strong actions to take out cost and to protect our margins. Overall, we grew like-for-like revenue by nearly 3% in trading profit by just under 11%. We worked really hard to maintain and just grow gross margins and we also worked really hard on productivity. Underlying gross margins were up 10 basis points. Tax charges are little higher this year, but headline EPS was still up 8%. Our focus on cash is relentless. We ended the year with net debt of just over £400 million. Two fewer trading days in the year cost us about £10 million of trading profit compared with 2012, but we gained £5 million of that back on FX movements. And the ongoing strength both of earnings and of cash flow has allowed us to grow full year dividends by 10% and we also plan to pay a special dividend this year of £300 million. Like-for-like growth in the year improved a little in the final quarter, but market conditions remained pretty mixed. U.S. growth was just shy of 8% and has been pretty consistent now for the last 2.5 years. Growth was broadly based across the regions and across our businesses and came from a combination of good market and valuable market share gains. Canada finished the year better with 3% like-for-like growth in the final quarter and the improvement in the U.K. continued. Market conditions improved a little in parts of Europe, but overall remained pretty tough throughout the Nordics, throughout France and…

Good. Thanks, John. This slide is to remind you of the six key building blocks of our strategy. We've continued to focus our resources as John outlined where we have strong strategic positions, where we can invest in and grow and now nearly 90% of our revenues in the number one or number two positions in their marketplace. We’re driving the principles of allocating resources down into the business units on a local geographic basis, for example we’ve upped our resources significantly in the U.S. and particularly in key metro areas like New York, Houston and Ohio region. We have during several results meetings given you a lot of information on how we are working to drive performance on a daily, weekly and monthly basis. So today, I really want to focus on the two topics of how we’re trying to accelerate profitable growth longer term and also how we’re investing and developing more efficient and productive business models that will give us better leverage going forward. In terms of group synergies, we’re continuing to make steady progress by making sure we do source jointly. We share costs and drive best practices, so the benefits significantly outweigh the costs of the group. And John has already covered point six, our balance sheet thinking pretty comprehensively. Turning then to the first topic on how we’re looking to drive profitable growth across the Group. We’ve used this chart several times to give you a better understanding of the full menu of profit levers we work through and execute against. Clearly, in the U.S. given the continued market growth, we will continue to invest to maintain our share gains, look to expand our gross margins and by good cost control improve productivity. In Continental Europe, we’re still very much into protecting our share…

Howard Seymour from Numis. Can I ask a question for you each please? Firstly to you Ian, you mentioned before the market in the U.S. was running at five and you outperformed it four, just to give sort of thoughts on how you see the market developing in terms of its growth and your ability to maintain performance against that please?

Yeah. I think that -- the market numbers that we were giving you were for the Blended Branches okay. We don’t think that’s two-thirds of our business. So it's a big chunk of the work. I think what we’re seeing at the moment is a good steady U.S. market growth of around about five percentage points mark and it's been steady for going back over nearly 10 sort of quarters, so there’s a really good track here, point one. Point two, in terms of what we also do as well we monitor and measure and survey our customers and ask them how did they see the market? What’s their order book looking like? And that again is being pretty steady IES sort of 4%, 5% growth over time. And thirdly, only about 10% of our business is contracted looking forward and again that looks pretty healthy at the moment and again supporting good steady growth. I think our outperformance to the market and again I mean, bluntly we’re pleased. It’s now being outperformed -- we’ve been outperforming the market for nearly three years steadily. It absolutely is driven by the same factors we talk so often in these sorts of meetings, product availability, customer service having the right people in the branches at the right time. And I think we’re finding that our e-commerce platforms in the states are better than our local competitors and that I think is beginning to give us a bit of an advantage as well. So, look at the moment, you know the market looks good and steady at about 5% and we believe we can continue to outperform it.

Great. Thank you very much. And the second question, John, just on tax, because obviously you mentioned the tax charge you are going to -- because of mix from everything you said it looked like the U.S. profits go up again as a percentage of profits this year relative to Europe. So, why would the tax charge not go up again as an increment?

Well I think our guidance overall is 28.5 to 29 and that takes into account all the mix that is under the smaller factors around the group.

Okay. Thank you.

Good morning. It’s Olivia Peters from RBC. And just two questions, please. Firstly on your dividend policy I was wondering if you would reconsider -- have you rebased your dividend it's now the second special dividend we’ve had in a row and although I understand that you want to be able to pay a dividend throughout the cycle, if a market is largely expecting a special dividend every year, then [of course] you’re not paying a special dividend that’s equivalent to cutting a dividend. So I just wondering if you would reconsider that policy?

Thank you, Olivia. Firstly, because we have a few of our fellow directors here as well today and they’ve heard that and thank you, we have considered it very carefully. When we re-based it, I came back to our priorities, the first one is funding organic growth and we said today we’re going to sort of step up into it a little bit more. The second is the sustainable ongoing dividends with a sustainable growth rate. Just on that point, I think it's very easy to take a point when you are somewhere in the cycle and none of us know where we are in the cycle so, if that science, is there a bit of judgment in it, well, there is a bit of both. And the third priority was -- is bolt-on M&A where we can add value to it, truly. I think we've stayed the course and been very disciplined on that. We’re not going to do -- we’re setting in and are trying to avoid doing any deals in which it's just poor for shareholders, but possibly we will see more of those transactions and that’s the big sort of swing factor in all of that and thereafter we said, we’re not going to stock pile cash for some rainy day. There’s no purpose to do that. So we’ve got the surplus cash back to shareholders. I don’t think it’s appropriate in setting up the way that the Board was thinking about this to think of the special dividend are they recurring every year. It will really depend on that M&A, so we've said, we’re not having M&A targets. We might have a couple 100 million a year and if we've done another sort of £150 million in the year just gone, that’s probably wouldn’t have been a special dividend. So that’s the sort of thinking and thinking behind it. So I think from our perspective the most important thing is the final bet. We’re going to sit there, stop piling cash and having an inefficient balance sheet. We will get surplus cash back to shareholders reasonably promptly, but we would like to maintain that flexibility to pursue those other priorities when the right things come up.

Okay. Thank you. And just on my next question. I mean, the U.S. and the U.K. are now growing quite nicely obviously Europe is a bit of a drag. Just on the pricing environment do you expect an improvement there this year given that those markets have returned to growth? Thank you.

No, I don’t think we will see much uptick in the pricing environment. Ever since I joined the business just over four years ago, it is being very, very competitive. I think it will remain that way. I think several factors in there, one clearly as people begin to see a bit of hope in the longer term, they are bound to get a little bit more competitive. Secondly, as new build comes back a little bit, that is all contracted out work, so it’s not emergency repairs, which sometimes does not get tendered. So the mix of business being -- will be proportionally high contracted versus non-contracted and I think thirdly, there’s no doubt in the last three, four years, we've seen the transparency of pricing via the internet everybody knows pricing now that’s well and truly there. So I don’t think there’s going to be a lot that will help the pricing environment. Clearly it's been absolutely up to us to continue to work all the various menu of profit levers that we've talked about in the past in terms of the customer mix, product mix own label. So I think we can still see ways in which we will be able to just gradually eek-up our gross margin over time, but I don’t think it's going to be coming from pricing.

Thank you very much.

Just pass the microphone behind and then we’ll come across here.

Thank you. It's Charlie Campbell from Liberum. I think couple of questions really. Just wondered if you could talk about slide 25 where you talked about the conversion from gross profit to operating profit. I think you sort of the time that 20% was moving towards a respectable level, I was just wondering what you might class a respectable level and what might be good level? Also sort of where that level is in some of the best businesses? And then also sort of second question turning to the U.S., non-residential particularly sort of my understanding is it not really seen now start to pick up recently yet. Just wondering when you might expect that cycle to start picking up and contributing to this growth rates? You can do the quarterly mantra. You know specialty subject, thanks.

So thank you Charlie. The -- well our best business is do quite a lot better than 20% first thing, saying have we got a lot to aim for. Yes our best business is we've got some businesses north of 25% conversion. And I think that is pretty good given the state of the business and the stake of our market at the moment. I think the peak or the peak for the group was between 22% and 23%. And so absolutely to end point about is getting back to former peak trading margins actually, we will have to get back to better conversion of gross profit into trading profit in order to get back to those levels. We will need I think 22%, 22.5% to get back to former peak trading margins overall. So -- and there is -- there is a strong expectation around the business that we can get back to former peak margins. It's not on everybody’s lips in Europe at the moment, but would like to get back to last year’s margin, last year’s balance sheet is first. So I hope that give you -- I hope that gives you a sense. There’s nothing here that’s changed that we can see since when the Group managed to do nearly 23% on that conversion rate because nothing fundamental that’s poor about the markets in which we are competing.

No, I think John is absolutely right. What we do need though is a little bit of wind in the sales from Europe. We're going to need at least sort of two or three years now of European growth to get back to those peak margins. In terms of U.S. residential, look you guys see all the stats as well. Housing starts actually just when they peak to just over a million and now they’ve stepped back a little bit in the past couple of months, sales prices continue to increase. All of the other stats are still looking positive but be very rapid percentage changes we were seeing, six months, 12 months ago clearly are beginning to level-off a little bit now. And I think for our business you just remember in the states new residential is only 14% of our total business. So we need the RMI market to be -- continue to pickup and that is continuing to do well. But I think what we're seeing at the moment is a good steady growth of sort of 5%. We're not seeing an acceleration in the U.S. market growth at the moment.

And sorry, just to be clear the question was on the non-residential side and when that might start to pickup to contribute to the demand across…

Sorry, Yes, on the non-res, well we’re seeing now certainly a pickup in the commercial sector in the states. We have a small business of Fire and Fabrication business that serves all of the fire systems for new build and that is actually beginning to pickup quite nicely in sort of good single-digit top line growth so there is some growth coming back in that sector now.

Sorry come over here because the microphone and then we will come back.

Yes, good morning. (inaudible) from Exane BNP Paribas, so a couple of question on the U.K. France and gross margin. First on the United Kingdom, could you give us a bit more color about the evolution of like-for-like growth, it has accelerated a bit versus the last quarter, do you think that any growth will continue to accelerate and could you give us a bit more color on the different market? Is that coming from housing, residential, new innovation? My second question would be on France. So you perceived a £10 million trading profit this year, are you expecting a smaller loss next year. What would you expect next year excluding both restructuring charges, if we look at the underlying business excluding those restructuring would you expect an improvement or stability. And my last question is on gross margin. You -- could you give us a bit more of an outlook market by market in Europe in terms of what you expect for 2014? You mentioned that in the U.K. you hope to improve gross margin. Is it the same in some of other country in Europe?

Sure, okay, well if I had to do the first analyses, John you can do France. In terms of the U.K. again we've seen a bit of a pickup in terms of consumer confidence. It's still negative about negative 10, but it was negative 30 going back about nine, twelve months ago. Housing transactions have picked up again in the last sort of six months about 5% and you can see a recovery in house pricing as well. And housing starts again have picked up a little bit back to a sort of more, more I guess a more historic level about a 120,000 starts a year. So yeah we think the U.K. market is definitely coming back a little bit now. In our business we think the market is growing between 0% and 1% and we're gaining about three points above that in terms of market share. Clearly there are two other areas that are helping our market specifically potentially longer term the Green Deal that’s being 58,000 assessments done so for, but only 419 actual green deals have been struck. So clearly it's not having much effect on the U.K. market at the moment. I think as we talked last time, the financing for a consumer for the green deal is pretty complex. Whereas we're seeing some pickup those in the Eco spend particularly in the affordable warmth market. There are 115 installations and 30,000 of those were boilers. And we look forward over the next sort of two, three years we anticipate about 250.000 boilers going through this scheme, which will deliver about 3%, 4% additional growth to our market. So from a sort of like-for-like market to growth point of view the U.K. now is looking more positive, but I mean we're outperforming the market by about three points. Okay France?

Yeah so when we've done the restructuring, the whole sort of strategic review in France that we talked about back at interim, we will be left in the BM business in France, which is what you see in the French segment here with about 600 million of turnover. And clearly after all the work that we've done, we’re expected to be profitable. I think it will take some time to rebuild profitability in that business. If you look now there was a article in [Lozeko] last week, sales of new single family homes allowed is for 20, clearly a tough environment. New housing starts on a 12-month basis is down some 25% from peaks and that’s a big part of our business in France. I think the other thing is going to France relatively frequently, I just sense there is still a drag on sort of confidence in France. So I think that’s what needs to come back into play there. But we're going to spend this year completing the transfers of the businesses that we're selling, closing the ones that we are closing and rightsizing the central costs to make sure the business is in a great shape going forward. I’m sure in FY15 we certainly don’t expect to be still generating losses in France.

Do you still [expect to still see losses].

No we would not expect to see losses in FY15. We would expect today to make a profit in FY15.

And excluding also joint charges in 2014, would you expect the business to be profitable -- slightly profitable.

It maybe but there are -- we are still declining fairly sharply in France, even the July numbers were down and if you look at the July market numbers, individual new builds 16% down. It’s a tough market. And in terms of gross margins if I just pick up sort of the three big plus, I guess in the states we had a -- you can see, we had a good year on gross margin in the year just finished. I think the guys and the team -- Frank and the team they’ve done a very good job really managing the mix of their business better. They did a good job on sourcing. They got faster growth in the showroom business. Faster growth in the counter business, which is higher margin business for us. And actually I think they did a good job as well in terms of managing pricing. There was a greater compliance with the pricing matrices that we've talked about in the past whereby we do less manual intervention in the branch. We know whenever we get into a negotiation with someone clearly we lose margin. And I think again there’s more we can go out in the States, so again we’d expect 5, 10, 15 basis points of improvement across the Group. I think in the states, we can probably do a little bit better than that, but that’s the sort of order of magnitude at a group level. Look the U.K. gross margin last year it was disappointing driven really by firstly a change in the mix or an increased mix of boiler sales, we gained share of some of our major customers who are big boiler sales customers, boilers are significantly lower margin for our business okay. But it was disappointing to see that…

Go backwards, sorry go straight behind you and then.

Hi, good morning. Hello. Yuri Serov from Morgan Stanley. Ian when you were talking about the business, you were talking about sales management, it was quite curious to hear from you the words that you were using which were poor, inefficient, inadequate and so on, for a newcomer coming into this room that may have come across as you’re talking about a business in complete disarray and you have totally mismanaged. We all know that’s not the case. The question is, is it possible for you to give us like a pintsized description of the road travel so far where you were, how you got to the business which you still describe as poor. And give us an assessment as to how much more you need to travel in the future and how that compares to what you have already done.

Yeah, I think that’s fair. Look I mean bluntly we set very high standards, so when I describe this as being poor, I’m comparing us to some great companies that I’ve seen in the past, that worked with or consulted to, so I think I do know what really great looks like and we are not really great. We're good at taking care of our customers. So there’s an enormous amount of time spent talking, understanding, looking after the customer from a relationship point of view. But in terms of the hardcore I would describe negotiation in terms of pricing by SKU, pricing by job, really understanding the net profitability of our customers and how their discount structure should reflect their business. Yeah I think we still have a long way to go. It's always difficult to say just how bad we were. It doesn’t really matter other than say I think there’s a lot we can do and hence what we're doing is now rolling out I think good -- really good quality CRM systems and processes using modern techniques that can get us there. So does that give you a sense? Yeah.

And can I ask a second question which is a bit simpler. Canada the like-for-like performance is reasonably good and the market from what I was expecting and from what people have seen is -- should be fairly poor. The housing sales or housing production is falling and generally the climate is not really positive. So, could you tell us whether you’re outperforming the market? I mean the comments that John made were -- the promise was hard faugh, but on the other hand the market share has been consistent. How do we reconcile that?

Well, I think towards the end of the year we did stock a bit of market share. I think you can see that in the Q3, Q4 numbers. So, the market has been declining at sort of overall 1% to 2% in that period and we've taken a little bit of share. You have to really look down by regions in Canada to see where we’re strong. We’ve got some huge opportunities to grow both in the East and the West. We are very strong already in the sort of Calgary, Edmonton type of region. We’re quite strong in Quebec. So, you have to see where the – and that’s been more – I think the market in Quebec has been very challenging, particularly there is all sorts of governmental problems there that some of you are aware of. So, we’ve taken bits of share. There’s a huge opportunity there in Canada. There’s a lots to go – lot to go at and lot to go for. And it’s also quite a good margin opportunity, but I don’t think the market is going to give us a lot in the short term.

And you’re saying that the market is declining 1% or 2%, are you seeing that continuing? Your description was that you expect the trends at the start of this year to mimic what you saw in Q4? So the conclusion is that the market is likely to carry on at that pace?

Well, I think if you look at month by month in the market stats, the decline has been very similar. It's been sort of broadly anywhere between sort of minus one, minus two back to sort of flat by month, month and month is good market data available in Canada. And we had just very, very small amount of growth. We haven’t submitted a forward-looking comment the eight weeks since the year-end our business has been very similar to Q4.

Okay. Good.

Aynsley.

Aynsley Lammin from Citi. Just wondered on the U.S., the cost base particularly for example, wage inflation, if you’re seeing any kind of change in the trends as you’re going to this financial year versus last couple of years. And then secondly, just following on from Yuri’s question, I wonder if you can give us a bit of an insight of where you see kind of the margins in U.S. Ferguson business potentially able to get to a bit of volume recovery some of these kind of improvements you’re making, would a double digit margin be reasonable.

Pretty reasonable and you could promise the margin. There’s been a little bit more salary inflation in the U.S. for actually the last sort of couple of years than there has been elsewhere around a bit, but it’s not been runaway. I think there is a reality, unemployment is still very high in U.S. by historical standards and I think there is a reality in that market, that if you’ve got a great job now a great and well paying job, you should keep it. And of course the other thing is with us having put in 2% additional headcount, a lot of our staff are getting better bonuses and commissions as a result of the strong performance and good, that’s where we would like to put the money. So I don’t think we -- we’re certainly not seeing now any more inflation, wage inflation that we’ve seen over the last 12 to 18 months. The only sort of frustrating cost shock thing in the U.S. continues to be healthcare cost, proportionately it’s not that much of the cost base but nevertheless it's something that we manage pretty actively.

I think in terms of the margin potential, it’s a great question in blending. We don’t spend a lot of time trying to analytically work out what could be the final end game because we don’t know. What we absolutely are committed to is we continue to drive all of the key profit levers that we’ve talked about here in terms of the mix of the business. I’ve just answered the question already about is there more gross margin potentially in the U.S. Yes, I think there is. We’re making I think good progress there. I would say, and again to the earlier point there will be a better way of pricing push back on us, because we will get increasingly into more new built, which is contracted and contracted work is genuinely, generally about two points lower than non-contractive work, so you can see a switch in that mix of business would be damaging to us. We’re doing a lot around e-commerce which is improving the productivity in the business and we've highlighted earlier today all the work that we’re doing around the new business model work, which again longer term absolutely can take us further forward. So what might it get to over the next five years, obviously we don’t know. We’re just going to keep on pushing forward and certainly 8%, 9%. We don’t see any reason why over time we can’t see that happening. At some stage you know, the recession will occur. That will happen, God knows when, but that will undoubtedly have a downward impact I suspect on our margins. I guess that within in the short-term because of the external investment that we’re making and John’s already described some of the cost pressures, we had a very good flow through this in the year just finished. I wouldn’t expect us to be able to replicate that flow-through in the States in the year that we’re now in given the external investment that we’re putting in place.

Okay.

Sir, behind you.

Clyde Lewis at [Citi]. I think following to with, I think three questions are on the U.S. as well if I may. Firstly it's in the branches I am just wondering if you can give us a little bit of an update as to how many new stores you’re looking to open this year? Secondly, I think it was 12 or 18 months ago, you flagged up some sort of key target markets, I think it was MRO, hotels and government areas, you have not said anything about that today, I’m just wondering if you can refresh where you are in terms of sort of achieving the extra growth in those areas. And then finally, could you just say a little bit about your capacity and how they are reacting to your performance and your market share gains and the threats particularly now you’ve flagged up Amazon earlier on in terms of sort of what they are doing and also some other work-based competitors as well?

We are not allowed to talk about competitors. Yeah looking at the branches, I think we opened up just over 15 in the year gone by. That’s sort of number would make sense for us going forward as well. I think we closed about 15 or 20 as well. So, expect us around the edges net increments of 30, 40 that will make sense. I think as we’ve said in the past, we have the right geographic footprint now. So there are going to be 100, 200 openings in a year. Probably 1.2, we’re very, very committed to driving the whole e-commerce business clearly, that doesn’t ignore branches, it doesn’t need points of delivery locally and we have that with our branch network, so I think from a branch point of view gradual increase would be – what would be sort of signaling. I think in terms of the other target markets we talked about that is effectively captured now within our facilities maintenance business, which is basically the ledger and the hotels industry that is capturing facilities maintenance. That’s up now to revenue of about $300 million in total, okay? It's growing at around about 17% a year, so that segment-- those segments of the market are doing well. We now have 65 dedicated sales people now organized on a national basis and it is the national sales center that we’re using to service these customers. These are predominantly regional or national hotel chains or ledger chains, okay to give to that sense. In terms of competitors, yeah, I don’t think there’s anything particularly new at the moment. In many of our markets still the small local competitor is often the best alongside us, they would be their best competitor. They will be good service providers. We think the…

You just stole the microphone there.

It’s Paul Checketts from Barclays Capital. I’ll keep it to one. It's on the acquisition pipeline please. Could you give us a quick update on geographically what’s on the target list and maybe a sense of the size, how many are of any larger value and the second part of that is I guess you probably bid on a transaction that’s happened in Canada recently. Can you maybe comment on why you weren’t successful?

I’ll take the second one for me. I think from a shareholder perspective we were, we were quite successful. I’ve never seen such a multiple, such a price paid for a loss making business. I think you would have given us a pretty hard time if we had succeeded on that one. It was just a huge amount of money for a business that was -- that was a loss making business. I think it will take -- it was going to take a huge amount of integration. Put simply I -- the day it was -- the day it was announced, I told to a few shareholders and I said look actually I’d rather take the money and invest it in organic growth in that space. Even if we're more -- even if we're more aggressive, I think our shareholders would understand that. And I think that’s what we should be absolutely prepared to do. You have to be prepared to -- that’s my priority, you have to be prepared to walk away. So that’s what we -- that’s what we did.

We did make sure the window paid a full price. So we were an interested participant in that game and I think John is absolutely right. We want to be there at the end but fundamentally it was -- it was quite a bit above what we were prepared to pay. So good luck, John.

So I mean I think on the overall pipeline as Ian said it's your words, looking a bit more interested, I like that. There’s nothing huge or eminent in there at the moment, so -- but there a number of small to -- they are relatively small acquisitions. I think the couple of sort of -- one of things that we are asking the team to work hard to think what are the businesses that we would like to buy. What are the areas that we would like to be stronger? What are the markets that we’d like to consolidate in making sure that we're working hard at that? Just to reiterate now over the last sort of three or four years we haven’t -- we haven’t had transactions that we've regretted not buying okay genuinely and there is often a bit of -- there is often a bit of format for these. There was one transaction earlier in the year where -- where we weren’t as you had put it, successful and one of our competitors was successful, we picked up 15 sales staff from that particular business. They’re probably regretting being quite as successful as we were though. So sometimes transactions you’ve got to be sensitive to how you’re going to integrate it and whether or not people are going to be successful in your business, there’s that cultural fit and you’re going to be able to integrated or imported. So there are more -- there are more targets there in the pipeline at the moment. And I think we would be sort of quietly confident that we will convert slightly more of those just because there are some more quality businesses in there that we might convert some more of those this year than we did say last year fine. Yes. Alright okay. Alright.

Thank you. Kevin Cammack at Cenkos. Just two very quick ones. Firstly in relation to the -- well both should be in investment, but in relation to the IT investment that you’ve identified today, is there any significant ongoing OpEx cost that comes with that permanently into the future. And secondly just following the acquisition line you obviously made a point of stressing the conservatives you need in the balance sheet, the ratios you need to keep. But presuming deciding the level of special dividend you must have made yourself a budget of spend on acquisition this year. Is there any broadly speaking any sort of figures you can give around that?

So on the IT, on the IT investment, I think what we will see over time now, if you recalled historically, we invested quite a lot in physical infrastructure and probably with the exception of SAP and we invested less than we should have done in the processing technology infrastructure of the business and I think as Ian set out today we are absolutely at addressing that I think imbalance. I think the second thing is with the development of some of our business model, we are pretty cautious about just putting new real estate and plunking it down everywhere. We've got a great footprint. We can service our customers in most countries, most regions from the existing footprint that we got. So there will be some churn of branches, relocations, there’ll be some consolidations and there’ll be some new branches. But I suspect that the mix of our capital investment going forward will be a little bit more technology rich and a little bit less branch based. So the flow through of that to the cost base I think will be very similar to what it's been historically. If you look at the additional £35 million this year and look now all these projects need to have a payback as well, we’re not doing this for sort of a grant business or charitable purposes. Everyone of those projects is going to have a proper return. So sure there’ll be some drag through of cost into future years, but there also need to be a relevant sales or margin or cost reductions to accommodate that. But I do think if you look at that £20 million additional cost, incremental cost this year, I think that is likely in a sense we're not going to stop doing these technology projects, it's not a one year project. This is an ongoing, this is an ongoing thing. We think it's pretty proportional to our cost base overall. So it's not going to crush on us. But I do think you should see that to sort of reasonably ongoing. And then genuinely to the second question on the sort of acquisitions, we don’t have -- I think we've said before £200 million a year might be a normal sort of rate of acquisition spend, who knows it might get slightly north of that this year. But we genuinely don’t have a budget for acquisitions. I think we are rather reluctant to have a target because you can just incentivize or promote or motivate the wrong behavior and there is nobody -- there is nobody that thinks that we should be doing that in the company. So we've absolutely got the results just to do those acquisitions if they arise and if the opportunities are there, then we will continue to be disciplined with the cash.

Okay. Good.

Come forward here.

I am Gregor Kuglitsch from UBS. We have three questions sort of the transformation side of thing. So first, if you could just us maybe I don’t know if you can, but some numbers perhaps on sort of pricing compliance, I don’t know because obviously you mentioned that specifically, can you give us an idea when you speak about pricing components, do you actually track business by business? How much is complaint and what you feel I’m not sure how much this is possible but growth margin difference is. So we can sort of just quantify where we are and similar on sourcing because I think you’ve given us some date in the past in the U.S. where we are in terms of our own label where you think it can -- it can go. And then sort of as a third question maybe that summarizes that really is on the IT spend and sort of the incremental investment you’re putting into the business in general. What kind of paybacks are we talking about? Are you sort of in two, three years or is it much longer date to get a feel in terms of what this additional cost brings, thanks?

Look in terms of pricing compliance, in our core business units across all of the group now, we are -- we are measuring -- beginning to measure it. The range in terms of compliance is between 30% to sort of 70%, 80% okay in terms of the performance of the business unit. I think once you get up to the 70%, 80% mark, that’s about as high as you’re going to be able to take it because there will always be either a big contract or special deal or something like that. So I’d be very happy if we were running at 50% or 60% across the Group that would be great. It’s very difficult to put a number on it in terms of what it's worth because clearly you don’t know what it might have been had you not had pricing compliance other than we do know that in the market in the States in the U.K. where we're getting compliance, we're getting gross margin improvements. So I think its part of the overall program of looking to get 5, 10, 15 basis points pickup.

In terms of own label, actually own label we are running now at about just under 7%, remember bulk store was predominantly own label and that has left us. So actually our percentage of own label has come down a little bit this year. And again I’m not that fussed about the percentage of own label we have. What I’m very fussed about is the gross margin. So for example in the U.K. we've been sort of processed with some of our supplies where basically we are saying look unless you are prepared to give us a secondary brand, we will go own label. Some of the suppliers have given us a secondary brand at a better margin. I am fine with that, okay. So again in certain categories we are not going to be driving own label in copper tubing and things like that effectively their commodities anyway. So I would expect own label to pick up gradually through time, but for us the most important thing is as a lever, in terms of gross margin, gross margin development and in terms of the IT spend any of the finance programs that John is running, I would expect about a two month payback, but for most IT projects, we look at about a two or three year payback. I mean that’s a sort of sensible timeframe when you can get to sort of the returns, okay. Gregor Kuglitsch – UBS: Thank you.

Behind you and then we will come across through John and there was one behind as well.

[Julia] from Credit Suisse. Two top down questions if I may. The first one is just on the U.S. now that you are talking about putting out new distribution centers in the U.S., could you give us an update on the accessible market in the U.S. how you are thinking of it and may be the other way around of asking the same question what would be your estimate of the market share of independent more players in the U.S. And then the other one just again on the U.S. RMI activity you’ve mentioned that obviously in lieu of business in the U.S. is it relatively small portion of your business. At the same time, you are expecting some push back because of the new build proportion increase and so could you give us an update on the RMI activity in the U.S. what you are seeing and what you would have a trend now that the new bill has been recovering very few quarters now?

Sure in terms of the addressable market, in our blended branch business, we have a 17.5% market share nationally. Therefore we have an enormous amount of market share potential. In certain parts of the states, we have market shares locally in excess of 30%, 35%. So why wouldn’t be looking to sort of double our market share over the long term. In terms of the other competitors, actually we define at the moment our number two competitors being what Home Depot would sell to trades people and the number three competitor would actually be a Joker, okay. So they are about four times smaller than us. So they are around about 4% market share, okay, nationally. And then you go down to a lot of -- a lot smaller regional and local players. So the fragmentation in the U.S. is still roughly half the market is very, very small local players to give you a sense and I think in terms of the growth in RMI, we've seen good expenditure there. The sort of measures we look out which is the Harvard Joint [Study], there is growth there. We have good growth in the architecture index as well, which is a reasonable measure of RMI activity and also just consumer confidence is now back up to the levels that we saw sort of getting to the prerecession levels of consumer confidence, not there yet, but certainly getting back that way. So again we see good growth opportunity in the RMI. Time for probably just two more I think, unless you got 10 questions Joe?

I’ve got eight actually, I am kidding. Sorry it is three. First one was sort of elaborate, but just coming back given the U.S. is kind of the clear growth engine and that’s going to the same position for the next 12 months, I think back at the Q3 call, John I think you gave the kind of ceiling on operational gearing where you mentioned $0.15, obviously today these numbers you are floating again, look it would be difficult to beat what you did in the full year, but when we look at the numbers are you thinking of the drop through being kind of 20% or 23% because actually there is an 11 million kind of inventory last year, so if we think about 81 on 409, is that the number you are thinking obviously a 20% drop through was what you did last year, are you thinking of a higher number 91, 92?

Sorry, just because it's some one-off, so when we think about what actually you delivered that drop through gearing that was just delivered in the numbers we sold, it was like 23% drop through if I take the headline number.

Yes, I think…

I mean I think in a sense in the U.S. particularly in the fourth quarter, we had a bit of a perfect store, nothing went wrong which is good. Gross margins were excellent and all the way through that quarter and our cost base is absolutely tied down. The things that always just perceive like that.

Barring kind of gross margin, means that 15 drop 3 is probably that number that you think actually looks a sensible metric for people to think about?

Well, I think, if you look at the overall metric of our business, I’ve already said on the flow through, X gross margin expansion which you know 10 bps – everyone of our business is 10 bps next year. Actually that will be a great result. And we just want to keep on making sure that compound it. X that this year that we have about 11% variable cost, 11% of sales. So working on an overall margin of 28, you down at a maximum of 17, if nothing happens to be fixed cost base. Well unfortunately inflation happens and actually we do want to expand the business. So, I had always thought in our business that long-term double-digit flow through is a good performance in our business. I know some of you have different ideas. I just think that double-digit flow-through for us is a good performance in our business. What I’d like to do is deliver double-digit flow-through, low double-digit flow through consistently. And sure, if we go into a downturn it will be lower than you’d expect it to improve coming out of the downturn, but just in normal condition double-digit growth should be a very good performance. I think this year, we said on the guidance, we just need to be careful, because we have got those restructuring charges. Now we got another that one sort of headwinds and we are putting in this incremental – invest incremental investments and because we think that right thing to the business.

And just on U.S. Can you give us an update where is Build.com in terms of broad revenues today and is it the right thing for the U.K. e-commerce to be managed over the U.S. in that I can understand the craziest technology and these guys know what they are doing. But if I look at your U.K. business needs a bigger customer presence. You got Victoria Plumb, TV advertising from a number of players, if you want to actually mass that business up, you got to spend a bit more money and you need guys here saying, look this is what we need to do. I just wondered is that something…

I mean Build is now to $0.5 billion in terms of sales and growing at a round about 15%. So it’s still performing well. Gross margins have come off a little bit and Build net margin has held up well. So it’s still – and again the gross margins are sort of two points lower than our average in the state. And the net margin though is only slightly lower than our total net margin. So it’s a good business for us. And I think John, it’s a fair question. John, its right, absolutely right, so let the US team manage that, because A, that the sharing as you know, we took the platform from the U.S. absolutely below sort of cut and paste into the U.K., all of the transactions are occurring on the U.S. platform, okay? So what we have in the U.K. is effectively a sales team, a telesales operation and that’s about it. Okay. Now clearly all of the marketing, all the activity is being driven by a team in the U.K., but rather than reporting to the U.K. team, I want them reporting to the U.S. team. I think really thought for two reasons, one, if you have them reporting to the U.K. team there’s a natural reluctance to drive e-commerce as hard as you can do, because is it going to cannibalize by core business. And that’s exactly what we had in the States by the way, going back before I joined the Company effectively we split off Build.com and had it reporting directly in to Frank rather than historically reported even low in the organization. I think that was a very good thing for us to have done, because it stopped all the internecine warfare about cannibalization. And secondly, let us be clear, when we have the marketing expertise in the States, I mean, we are well hooked into Google, all of those sorts of algorithm, understanding how that works, we don’t have that degree of expertise in our U.K. marketing department. They are more B2B than B2C. It is as know, John, quite a different business. But I think you made a fair point while we are doing things together sourcing in the U.K., absolutely we’re going and then talking to our major suppliers together -- together and/or separately we think we can get better deals.

Make sense. Yes. And just very finally from me, in the U.K., plumb and parts, the merger of counters is that simply just a book thing in the back of our packs here or has there being something more fundament in the way, if I walk into a plumb center now, I’ll be dealt with – I’m going there for replacement parts versus the rest of the business?

Well, I know and you will, so anything good. No, there is something, I mean it is different. We are making sure now that our staff can service customers who want to actually buy and plumb or parts. We run separate counters and I think there was a good reason for doing that in building the business and also frankly in protecting margins because as you know parts -- just because of the stockholding period, you have to command a better margin on those products. So I think now we are -- if you weren’t those counters, so that any staff member can service either plump or parts and that’s required a lot of training, it's required some systems changes and those types of things, lot of organizational changes and that’s the reason for doing it. It's clearly more efficient that way and we are reasonably confident that we are not going to lose out sales line in that--.

There is one more at the back, so there is time for one more and then we should call it a day.

Andy Murphy at Merrill. So just a quick one. On that £20 million restructuring, can you just give us a flavor of the geographic location that’s going to be spend and this is a follow-up, what risk is there if any that could be expanded as the year progresses to other actions that you might be considering?

Andy thanks. So -- and I will answer one other question, which is why couldn’t we take it last year? The reason for that is just an accounting issue. If you haven’t actually notified the staff by 31 July, you can’t take it. The geographic locations are frankly throughout front and Central Europe, Nordics. There are certainly two projects at the moment, clearly for France we need to complete and there is one part of Nordics where we are still where we are still going to take some more -- take some more decisive action. So those are the two projects ongoing at the moment, which is the £8 million. I think could it be higher, well if we continue to decline at current rates, yes it could. So I think there is an expectation at some point that actually the markets will at least stabilize and we will get back to growth rather than declines and if that happens by the end of the first half, then that should be okay. I think the second thing is there is this sort of two factors here in what actions do we take now, do we take going forward? If you look for example in Finland, I think Ian mentioned before, we've negotiated with some of our workforce to go home for three months over Christmas which is over winter I should say, which is partly funded by the government in order to just cut costs over that period. We are doing that again now this year already just well in advance because we know that trading remains very tough. We didn’t think last year that we were going to be able to do that. We said, we though it's going to be a one-off, but actually the team absolutely active. So there are plenty of things that we can do still to manage our cost base and very actively outside of just the restructuring. So at the moment, our best view is £20 million, it's £12 million that’s not committed where will it be and I am not 100% sure today, but the £80 million is in Nordics and France.

Thank you very much. Good. Thanks John. Thank you.