So, we have got everybody in? Good morning, everybody and welcome. Firstly, introductions, very pleased to have Gareth Davis, our Chairman here down in the front row and not further away, Dave Keltner. Now some of you know Dave from his full-time role as the CFO of Ferguson. I am really delighted Dave has been able to stand in as the Group CFO whilst we complete our search. He is already doing a much better job than his predecessor. I will kick off today just by sharing a few highlights. Dave will take you through the financials today in a bit more detail and we will talk about some of the priorities for the year ahead. Firstly, on the financials, we made some progress in the year, not as much as we planned at the start of the year. Like-for-like revenue growth was 2.4%. Volumetric growth in sales in Ferguson’s commercial and residential markets continues to be very impressive, but demand in industrial markets was weaker. We experienced some pretty unprecedented deflation. We also got no growth out of the international businesses. Gross margin development was good again, up 30 basis points and we feel good about that. And overall, our teams responded very professionally as costs were brought into line with the lower growth environment. Cash flow was excellent. Dave will take you through the details shortly. We have been reviewing our UK operations and you will see this morning we are now executing a strategy that we have announced today. Nordic markets have been challenging. Our performance reflects that. It’s time to review how we do business there and we are starting that review now as we speak. We made excellent progress on e-commerce, in technology investment and infrastructure investment. We are really pleased as well with our progress on acquisitions. Those are some of the highlights. Now, I will hand you over to Dave for the financial review.

Thank you, John and good morning everyone. We did make reasonable progress this year against the backdrop of mixed markets overall. Our like-for-like revenue growth was 2.4% despite deflation knocking 1.5% of our revenue growth rate. Total growth at constant currency was 4.2%. We made good progress on gross margins which were up 30 basis points as John mentioned and ongoing trading profit of £917 million was a new record high, with growth at constant currency of 1.6% and £46 million boost from foreign exchange movements. Headline EPS was up 7.6%, reflecting profit growth in the year and accretion from the buybacks. Working capital was very well managed, with net debt at £936 million at year end and we are proposing a 10% increase to our ordinary dividend, increasing it to 100p. As we told you at Q3, our final quarter started slowly but finished in line with our full year average, so Q4 like-for-like was 1.5%. Commodity deflation had its biggest impact in Q4 knocking 2.4% off the U.S. growth rate and 1.5% off the group rate. Overall, revenue growth in the period was 8.5%, which was really comprised of the following: like-for-like growth of 2.4%, actually volumetric growth of 3.9% less deflation of 1.5% to get to the 2.4% like-for-like, acquisitions which contributed 1.8% and new branches which added 0.3%. There was one fewer trading day, which knocked 0.3% off the top line, so the total growth at constant currency was 4.2%. The impact of translating overseas revenue into sterling added 4.3% to the reported growth rate. We generated £45 million of organic trading profit growth, plus a further £40 million from gross margin expansion. Acquisitions added £6 million and foreign exchange £46 million. We continued to invest in our business, adding £36 million. One fewer trading day…

Dave thanks very much. Before we launch into the strategy and the priorities, I will just take a step back for a minute and reflect on the principles that the executive team and I again were adopt in managing the business now going forward. We have got a great set of businesses and a good growth record in our core U.S. market. Organic growth, which is measured by our ability to win market share from our existing assets, is the most valuable way of creating shareholder value, perhaps it’s going to remain our primary focus going forward. When we talk about adjacencies, think of the huge shareholder value that’s been generated over the years in the waterworks business in Ferguson, not a massive strategic gamble, just really I think the smart pursuit of synergies with our core business. Today, the commercial MRO market, which is a market that we already service very effectively, is a really attractive opportunity which we are going to invest in. We will carry on working hard to identify bolt-on acquisitions and that’s where we can generate strong synergies. We will also target niche businesses that can add capability to our business, but we are only going to do those. We have got the management bandwidth and also the trading momentum in our business. There is a great service effect that runs really wide and deep through our organization. Great people deliver great service and that’s a start, that’s a really good starting point in our attempts to secure value from those services in our pricing. Throughout Ferguson, we have a really strong sales culture. Most senior managers have spent part of their careers on the road at some point. Elsewhere, we got opportunities to improve, but if we deliver great service, we shouldn’t be apologetic…

Good morning. Rajesh Kumar from HSBC. Could you give us some color on how the supplier negotiations move when commodity price deflation occurs? How do you treat your inventory write-downs? And basically, is all the effect reflected in the balance sheet on the inventory?

Sure. We move – we don’t hold much inventory on the commodity, so they move through the system pretty quickly. Clearly, with any major short-term moves, we will adjust market, but normally, that’s flowing through our system pretty fair right and so our cost is reflective of the market cost.

And how do you negotiate with your suppliers, vendor rebates and things like that?

I don’t think the negotiation side changes tremendously. Obviously, we are always trying to get the best transaction value that we can. But traditionally, as we are dealing with our vendors we normally agree pricing at the beginning of the year with commodities. Obviously, they are more based on the market and whatever commitments we have had that needs the other in terms of how they will be priced throughout the year. So, a lot of it is set in agreements.

So are they set on the value of the sales or the volume of the sales?

Well, if you are talking broader than just commodities, if you are talking in general, typically, we have pricing that’s set based on the volume that we purchase and some of those have tiers, so that they will have a step up when we hit certain levels, we will receive additional rebates on the pricing side.

And they tend to be settled at year end normally?

A lot of them are settled – some of them are settled monthly, a lot of them were settled quarterly and there are some settled at year end.

Thank you.

I am sorry, just to put that into context. We hold £100 something million of commodities at anytime and broadly, that’s going to be a 5-week sales or something. So, there is no write-down if you think about the margins that we recovered on them. That’s still sold it’s a profit and it’s just the margin is narrow.

Good morning. [indiscernible] from Exane. A few questions on the U.S. A number of your competitors have mentioned slower U.S. trends in July and August, but you are suggesting that your like-for-like is accelerating. Is this more a function of market share gains or end-market exposure? And does this acceleration seem sustainable?

Well, we did have – we had a pretty slow May, but June and July bounced back in line with our full year average. And as John mentioned, August and so far in September, we have been running about 4.5%. So, we definitely think we are taking market share. I think last year, we believe we took 2% to 3% market share, which is pretty much in line with where we have been traditionally. And I think in that sense, we are not seeing any other signs of a slowdown from what we are seeing right now. And so we are pretty optimistic in terms of being able to maintain that level of like-for-like.

And in terms of the margin expansion again in the U.S., there was a slowdown sequentially in Q4 versus Q3, does this suggest that further profit improvements will become more challenging and if so, how should we think about the long-term margin for the U.S. business?

We remain very confident in our margin progression. I mean we have got a long history of increasing margins. We were up 40 basis points last year, which was a good move. And we remain both committed and believing that we can continue to make margin improvements on a yearly basis, not necessarily 40 basis points, but clearly some improvement every year is what we shoot for and what we believe we can drive.

And maybe one last question, if I may. Just in term of the New Year, you showed the like-for-like plus 4.5% in the U.S., plus 1.5% in the rest of the group, could you give a bit more granularity and their position on what you saw in the other markets, the UK for example and the Nordics, sorry?

Yes. I mean the growth rates remained poor. I mean if you look at those Q4 growth rates, we have certainly not seen any improvement on those Q4 growth rates in the UK and Nordics.

Okay, thank you.

Thank you. It’s Gregor Kuglitsch from UBS. I have got a few questions. Can I just go back on the slide on M&A, can I just be 100% clear, the £300 million, is that to compared with the £19 million or is there some additional profit that you have acquired, but on deals perhaps you haven’t actually closed and perhaps as a small follow-up to that, I think the acquired businesses suggests it’s nearly a 20% margin, I may have done that math slightly incorrectly, but if that’s true, what is that business, because obviously, pretty unusual for distribution. Second question is on deflation, can you just give us a sense, you said you expect the effect to sort of dissipate over the next two quarters, can you give us within the U.S. perhaps the current run rate 4.5%, how much deflation is within there and perhaps how you see that trending. Third question is on the UK I think you are shutting around a 10% of your branches, should we be effectively knocking off 10% of the revenue, are you trying to retain some of that elsewhere in the – within the system and within that, when you talk about the £25 million, £30 million cost savings, should we be then also, I suppose on the offsetting side, taking off the gross profit loss on the shut branches, in other words, do you believe coming out of this that you will have a smaller business that has as higher margin, do you actually think your profitability would be up in absolute terms because you are shrinking it? I will leave it there. Thanks.

John, you cover the margin and deflation and I will do the UK.

That’s fine. So first of all, I think your one question was how the £19 million related to the £300 million in acquisitions. So we have either closed or approved £300 million since the beginning of the year. The £19 million are only for those that have closed so far and so there, you should expect some increase for the remainder of those deals if and when they do close. The business that we acquired at the beginning of August was a business called Signature Hardware. They are a kitchen and bathroom high end private label B2C business, so their margins are accretive to us and it’s a very strong business with a good management team. We are very happy to have them join the team.

And okay, so deflation was the second one.

Yes. So deflation was – in the fourth quarter, it was about 2.4%. In the first couple of months, I think it’s slightly below that, but it’s still roughly in that 2% range.

Okay. And then coming to the UK, the UK question, the closure of the branches, look we are going to fight for it to retain every single pound of sales that we possibly can from those branches that we shut. If you think about why we are making the changes to the branch network, we are making the changes to the branch network because we think we can service our customers from a more compact branch network. So we absolutely will have plans in every single branch to make sure that we retain as much of that revenue as we possibly can. Second point, the whole of the sort of the repositioning, the transformation of the UK business, this is not just a cost out operation. This is designed to give us the best service in the industry and to differentiate us from the other competitors. Now sure, that needs to be executed and sure that will take time, but that is it in design. So whilst in the short-term, if we shut a branch and it’s just inconvenient for any one individual customer and I am sure there will be some of those, but the purpose of this process is to make sure that we get the UK back into an area where it can grow profitably, which is what we have really been short of in the last few years. Hence, coming all of that to the cost savings, are we trying to sort of cut our way to a higher margin business? No, that’s not the purpose of this. We are trying to design a business that we will be able to grow. At the same time, we do expect those cost savings. We haven’t given guidance on the revenue line, because frankly that is going to take some time. If you think about it, if we are designing a better platform to service our customers, we have got to implement that and then we have got to go out there and sell that strongly before the sales growth is going to come through. So, hence, we have just given guidance on the cost side.

Can you just go back on the M&A point? Maybe you can give us the annualized revenues and profit of the £300 million, because I guess that’s what we will be plugging into our model?

Well, you have got the ones that we have completed, the ones that – sorry…

How much of that £300 million have you completed?

The numbers, £187 million, sorry, yes.

Thank you.

More questions?

Good morning. It’s Paul Checketts from Barclays. I think I have got three. To go back to the UK, John, what do you think is a realistic timeline for the different stages of the turnaround and repositioning? And is then the £40 million of incremental investment, how does that split between CapEx and OpEx? And maybe you could just elaborate on exactly what that is going to be going on? And then with regards to the U.S., when I look at the regional growth, I can say this in the second half, the South-Central region actually accelerated, which includes Texas and Louisiana, which is slightly surprising given the macro there. Could you perhaps explain why that is? And then the other thing that stood out to me is that you have had growth of 11.7% like-for-like in that division that you have booked it in HVAC, fire and fab, etcetera. If you look to those individual parts, which are going well?

Sure. Look, the timeline in the UK that there is – there are eight detailed work streams. They have all got individual timelines. I don’t want to announce today the timeline, excuse me, on closures. That’s for the team to work through into. I know there is a consultation process that we need to go through for all of that. I think the whole program is going to take 2 to 3 years. Clearly, we would like to compress that as much as we can, but it needs to be done. It needs to be done properly, diligently and quickly. So, I wouldn’t want to delay the cost initiatives, because trading today is very weak, but at the same time, a lot of the technology enabled stuff and particularly, the logistics stuff that is going to take time because of the implementation of systems. The £40 million investment is all CapEx, so it’s the incremental CapEx. We have a run-rate in the UK at the moment of £20 million, £25 million a year. This is on top of that. And it’s a combination of some refurbishment in those ongoing branches which need refurbishing and technology, about 50:50 on those. The U.S. South-Central, yes, I mean it has been – it’s actually been remarkably resilient given the industrial. There isn’t as much industrial by a long way as there is in the North-Central, first point. And I know – so the oil and gas dependence is actually far lower than you would expect. So, we are pleased with the performance there. And then the breakout of the other HVAC has had another very good year, actually really good year. The fire and fabrication which does commercial – the fittings for the fire suppression but it’s actually continued in for several years that’s how it has been on a real good role. That’s done very well. So, there are no weak spots in that. We haven’t talked any brackets in there either. So, there are no real weak spots in all of that.

Our B2C business as well has grown very strongly.

And if I could just have one more which is on the Nordics and if you look at the year-on-year progression that the profitability has fallen on a reported basis by £12 million and it may on a constant currency be slightly more. Can you just help us understand what that delta is maybe in terms of the businesses?

Yes. I mean there have been two big deltas in Nordics this year. Finland ongoing, Finland accounts for I think £6 million of the drop in the region, which is very, very disappointing and very challenging. We probably have too much capacity there bluntly, so we will get at that. Denmark is the biggest, the start business in Denmark, good business. The margins there have been under quite a lot of pressure this year. Now, we have a very good program. I spent a couple of weeks up there in the summer and the team are absolutely on top of it. It’s quite a new team in that business and they are absolutely on top of making sure that we do a better job of selling our gross margins, down 90 bps odd over the year, which is quite significant in the business of that size.

Is that a competitive issue?

It’s certainly a competitive market, but there is plenty that we can do, Paul. We will just respond to your self help or whatever the phrase is. I mean it’s absolutely well. There are things that we can do.

Thanks.

Thanks. I am Aynsley Lammin from Canaccord. I just got three, please. Firstly, just on acquisitions, again obviously, you stepped up, you have kind of £300 million, but are there bigger acquisitions in the pipeline we should be thinking about and maybe just give any guidance what you could expect at this stage the total acquisition spend for the full year to be. And then secondly, just on net debt to EBITDA, you said you are happy with the range of 1x to 2x, I think recent years, you have kind of kept out around 1x, would you be happier to go to maybe 1.5x or should we still think about 1x being the kind of limit there. And then thirdly, just on the UK, you said that the trends like-for-like growth hasn’t really changed very much from Q4, but just wondered if your comments on the kind of impact of Brexit and the pattern of trading you have seen through July, August, any kind of noticeable impact from the Brexit for you? Thanks.

I mean in terms of acquisitions, the – there is nothing monstrous in the pipeline. You saw Dave has talked about the Signature acquisition, which is great, a little bit bigger than we have been used to. There are one or two prospects which could be a little bit larger, but nothing huge. Most of our acquisitions are going to be of the sort of scale. And the hundred and something million that we approved at the Board last week, that’s four or five transactions, so just to give you a sense. And that is the color of the pipeline really that we still see, so it’s possible that there would be sort of known of the transaction like Signature or whatever else if they come off, that’s great and if they don’t then it will be because of either due diligence or pricing. Net debt actually, when we complete those acquisitions, we pay the dividend you know that the year end net debt, the July net debt is usually a seasonal low. And we usually end up at least as high as that in January, so I think net debt will be slightly higher any way by, but it will be higher by January. And Q4 look Brexit, it’s been weak in the UK. There is nothing that we could say, we believe this is as a consequence of Brexit. The market was weak prior to Brexit and it’s been at least as weak post-Brexit, but I don’t think that would – you wouldn’t really say that was cause and affect with the data that we have got.

Ami Galla from Citi. I just have two, please. You have talked about a turnaround plan for your UK and Nordics business I wondered if you could talk a bit more about Canada and Central Europe, potentially are there businesses in your group where you could consider exiting because you cannot see restructuring in a big way in those businesses. And my second question, can I clarify the majority of the branches that you are closing in the UK, are they in areas where you do have an overlap between drain center and plumb center?

Yes. Just on Canada and Central Europe, sorry and the reason we haven’t sort of labored them too much today is because we wanted to share with you how we saw the priorities and the importance that we give to those priorities. It doesn’t mean that Canada and Central Europe aren’t important. I saw Simon Oakland wondering in earlier, so Simon they are up, it’s certainly important to get the profits up, please. And look, these are good businesses. I mean actually, very good businesses, good market shares, good margins, decent managements, lots going on. I think the exit question, in a sense, you know, we disposed the 33 businesses over the last 6 years. We don’t need to – we don’t need credentials in terms of trying to sort of figure out are we the best owner for these businesses. Actually, all these businesses are in our core heating and plumbing space, first point. Second, they are – they have got good local management teams, good market positions. If there is a combination of our business with any other business that makes sense, if you recall, what we did in, for example, the south of France then we should look at that. And we should look at that dispassionately absent sort of – absent sort of thinking about ownership, whether that’s a merger or a joint venture or an acquisition or a disposal, we should look at it is there an industrial logic if you want in a combination of businesses. We do that and we do that absolutely as a matter of course, but no, today, that there is absolutely no – there is no intention to exit. There is no intention or need to exit any of those businesses today. Just on to the UK, yes, some of these branches will be overlapping, because we are taking all of the formats that we currently use and saying what do we need to run one combined network of those 440 local branches and 80 destination branches? So, there will be some areas where the formats overlap. Today, there will be some that are in more remote areas where the economics are more margin and there will be some where we believe we can improve the logistics in metropolitan areas. So, I was up with the UK team last week and went into the room. It’s a room twice the size of this lecture theater. Every single local network, the local network is about only between sort of 6 and a dozen branches mapped out right, where is the hub going to be, what’s that going to look like, how is it going to be served, what are the distances, how strong is the – what’s our market position, how – looking at traffic flows, all of that stuff that you would expect, so very, very local decisions overlaid on that strategy which says we need 80 fewer branches. Does that make sense?

Thank you.

Good morning. Arnaud Lehmann from Bank of America/Merrill Lynch. Two questions I guess related to timing in the context of you, John, becoming CEO of the company. Firstly, on acquisition in the U.S., is it just a question of opportunities and these acquisitions came in the last few months and you decided to go for it or should we interpret that as under your management whereas they will be more focused on M&A and maybe less focused on cash return? That’s the first question. And the second question, also on timing on the UK restructuring, I mean, obviously, the business outlook in the UK including the Brexit in the recent months is a bit softer, with some uncertainties heading into next year. So, it makes sense to restructure the business. On the other hand, you could argue this business has been a bit underperforming for a number of years, so why today rather than 2 years ago?

Yes, no thank you for those. Look, the timing in the U.S., I would love to say this was because three weeks ago when I took the corner office, I didn’t actually, Dave has the corner office now, but I would love to say that this was – that these acquisitions were all a consequence of my swashbuckling management style and Gareth is sitting down here, so I will say that. No, I am afraid these have been in the pipeline for some time. It’s just we have worked hard on them now some of these happened to have just been converted. Very pleased about that. There really isn’t any change in the degree of rigor, desire, appetite, discipline that we are applying to the due diligence and the price negotiations. I am afraid it’s just – it’s a bit like buses with M&A, they all seemed to come along at the same time. Timing in the UK and Brexit and why now, I think you are right, I mean looking back over the last few years, we have probably overestimated where we thought the market demand would be. That’s the first thing. And I don’t think we were alone in that. A lot of people overestimated UK growth. And second thing is we did probably overestimate our capability. And the important thing I think right now for me coming into the job new is to make sure that we look at that very independently and dispassionately and we do the right thing. Now, you know we started this review six months, seven months ago, the team have been very focused on that. Clearly, I have also been pretty engaged in supporting the team to do that review and they have come up with a good strategy, so very pleased about that. The impact, the sort of timing of Brexit, I don’t know really. I think the strategy would have been very similar absent Brexit. And Brexit looks to be too early to call. Is it going to fundamentally damage our core market in the UK, I would have thought not. We are principally an RMI business and I don’t see those opportunities being substantially damaged long-term by exit from the European Union hard, sort or how uncertain is it may be.

Okay. Howard Seymour with Numis, it’s actually, sorry another couple of questions on UK and actually Brexit timing. One is more structural just to sort of devil’s advocate on this, you are announcing this change – companies have changed their business, there is a lot of change going in the industry, is there another danger that everybody is trying to move into the same area at the same time and therefore, the overcapacity issue is just sort of shifting a little bit down the road. And secondly, probably related to that on Brexit, obviously one thing it does do is importing material costs gone up and obviously you have said defending areas, what’s your strategy on sort of imported pricing, etcetera, are you looking to pass that on or is this going to be part of the defending position which potentially could hit gross margin?

Yes. Look, on the first one, it’s good question, we have sort of thought of that and we tried to think about capacity in the industry as well. Of course, we are taking capacity out here. We are taking 80 branches in a distribution center out and that’s certainly at least the other two quoted competitors have both done something sort of vaguely similar. I think the objective of making sure that we have the very best service and making sure that’s aligned with our customer needs, that needs to be done absolutely regardless and that should be done regardless of the extent of the demand. This is a good business in terms of it makes good margins and it makes good returns on capital, so we absolutely, in a sense, we have to defend this position and we have to look after the customer service proposition because that is the basis on which the business was built, it isn’t not just an Internet startup where it’s selling stuff cheap as chips. Our customers come in, they want to be serviced promptly, they want the local service, they want great advice, they want product knowledge. If you look those four or five things come up in every single customer survey, that’s what we are, that’s what we are giving. Our ability to pass on price increases, there are already some discussions from some vendors along those. Actually, it might be nice to the bit of inflation back in the system. I always said 6 or 7 years ago, I have never said that inflation was a good thing, being a child of the ‘70s, well, alright, ‘60s. But – so I don’t see that getting out of control. Of course, if our suppliers are putting their prices up, then we will have the usual negotiations which is please defer them for us. And there will be some selective inventory investment because there often is in those things and we try to work hard to defer price rises for as long as we can. And then at the certain point, prices are going to go up. There is still a lot of domestically produced products there in our range, a lot. I mean it always amazes me just how much of this stuff is produced onshore.

Clyde Lewis of Peel Hunt. Three if I may. And jumping across Atlantic rather than sticking on the UK, but just looking at Ferguson, I am looking at some of the quoted competitors, obviously, there is a range of margin results, like the Fastenal, Grainger, etcetera and some of those are quite a bit higher than yours and obviously your business mix is different, but last year was probably the first time in a while that the operating margins haven’t really moved in Ferguson, where do you now think you can push Ferguson margins to as the sort of emphasis shifted in terms of that volume versus net margins rather than gross across that business. And I suppose also in the U.S. is I suppose what are the thoughts about your industrial capacity and branches on that side of the marketplace? Do you need to adjust downwards in terms of your capacity there? And the third one I had was Canada. I am a little bit surprised to be honest to see it rolled in with the Netherlands and Switzerland as an operating structure quite frankly and not remaining with the U.S. So, if you could take me through the logic of that, because I still don’t understand why Ferguson isn’t just going to manage Westburne from a day-to-day basis, but maybe there were different medium-term thoughts behind that structure and might change there.

Well, I will talk to the first.

I told you the margins were lower than faster, okay.

No. You have told me that every month, John. I think a lot of those competitors that you mentioned, we clearly look at them, but it is a different mix and a different customer base that we are selling to. Until typically, they maybe appropriate for a piece of our business, but not looking at the margin over all the business. Having said that, we were flat last year at 8.2% on the trading margin. We did have some, clearly, the deflation in the industrial headwinds pushed us back on the top line and yet from a volumetric standpoint, on the deflation, we are still handling the same volume of products. So, I think that had a bit to do with our trading margin not increasing last year, but we absolutely believe and every year go for both gross margin improvement and trading margin improvement. And it maybe a few basis points, it maybe 10, but we absolutely believe that we can do that and budget to do that.

I think there is enough dynamic. There is definitely an impact of the rate of growth. It is just easier to get to double-digit flow-through if your growth is in the high single-digits, just it is. And we had a lot of discussion last year with Dave when he sat on the other side of the table and the team about actually what flow through should we expect at lower growth levels and you know that Ferguson has had a very good record of growth over quite sometime. That has absolutely fueled that in accommodation with really just tweaking the gross margin, a lot of hard work that goes into that. That’s what’s really allowed us to get to double-digit flow through. Industrial capacity, no, we have no – there is almost no such thing as a loss-making branch. The industrial business, as David said, still makes very good returns, actually not far south of our overall Ferguson net margins. So, whilst there is always a bit of a reallocation of resources in terms of headcount resources, there is no reason to exit any of those and there aren’t actually that many standalone industrial branches anyway. This isn’t a huge network. We have put in standalone branches pretty selectively. Canada, Westburne, gosh, that’s a name from the past. This has all been re-branded, Wolseley Canada now. So, it’s always more than just – it’s more than just the old Westburne business. But what’s the logic behind this? The logic really is we need to retain our focus on those three key things. Now as I said, Canada and Central Europe are important, but the alternative to having Simon in this instance managing those businesses was for me to have another three reports, frankly. And my time is better spent focused on those three priorities, in particular, the growth of Ferguson. So, that’s the reason really for putting them altogether. Simon always reminds me now that the sun never sets on his empire, I am not sure that’s quite true, but nevertheless, it’s not far off. It is just – it clearly is – there are no synergies between those businesses except for know-how. It is just an effective way of managing the business.

John Messenger, Redburn. Four if I could, please, John. First one, just on obviously, this year, you had just over 7.5% underlying earnings growth. The one thing you mentioned up there was long-term dividends growing in line with earnings. Obviously, historically, that’s been quantified as kind of the 10% level from being taking over. Is that 10% something that you would still sit comfortably with today given that obviously last year, there is a combination of the buyback impact helping that earnings number as well? So, that’s the first one. The second was just on the UK, can I understand a bit in terms of the branch network? Obviously, you had 737, you are guiding to 520 under the new format. Just thinking around what else is there in that burden, so it clearly is one thing, but it looks like there is 137 units elsewhere. What brands will remain outside once you finished the merging of the various bits and pieces here? And the other one was just on the UK, Slide 46 talks about nonnegotiable pricing across a range of SKUs. Can I just understand, is almost what you are looking to do particularly with the 80 stores almost create a cell co for a plumber? And I am just trying to understand exactly and how big is that price fixing, obviously a big issue in the industry. Is there going to be more price transparency? Is that 2,000 SKUs out of four or is it a much smaller number? Just to understand that there. And finally, Build.com, just to understand what the quantum of sales is? You have got a good mention in the weekend press, but you have overstated, I think, so if we just know what Build.com was? Thank you.

You can do Build and I will do the others, Dave. The growth, look, I think the 10% earnings growth, yes, it would have been strange to have changed that this year in the sense that we have got no better data than to believe that’s a sensible long-term through the cycle growth expectation. Look one day, it won’t be, because we will have a recession and it can be very difficult to get new growth and whatever else, but longer – and as you know, 2 or 3 years ago, we had much better growth than that. So, I think there will be some ebbs and flows in that. What gets you there? If you get mid single-digit top line growth and you look after the gross margin and then you grow your expense base sort of 1.5%, 2% below that growth that gets you there. It isn’t bullish and neither is it for the fainthearted in just because [indiscernible] neither is it for the fainthearted, because we are in a low inflation environment. So, in essence, those returns are more real than they once were. So – but no, I think today, the board are – we think that’s a good sense of a long-term view. The UK branch network, yes, what you picked up on there is that the branch count in the bat, we have got some shared properties, so there are some – so we will need to – there are some properties where we have got more than one format. We will actually need to scrub that data for you going forward.

But this burden is -- basically, John, is...

Yes, it does.

That’s the only single brand left, otherwise, it’s all Wolseley?

Yes, it’s the infrastructure brands, yes. In terms of nonnegotiable pricing, it’s not 2,000 SKUs. And I am not sure we have certainly never thought of ourselves as becoming the cell co for blunt [ph], I suppose. So, there will still be a lot of pricing which is customer specific. Now, we are doing that in a more structured way to make sure that, yes, if you buy £10,000 a year of this type of product and somebody else buys £10,000 a year of this type of product, it should be – it should look fair and consistent. And the nonnegotiable pricing will be on several hundred items, not several thousand items, okay? So, out of the 4,000 SKUs, probably 300 or 400 will be on that consistent pricing. Dave, do you want to go to the Build?

Sure. On Build, Build continues to grow nicely and we did a couple of acquisitions last year as well, but it did over £800 million in revenue in ‘16. And obviously now, with the Signature Hardware, we expect it to be over £1 billion and continue to grow at a pretty good clip.

Signature Hardware is it purely – does it involve – is it vertically integrated? Is it actually making its own high end or is it purely intermediary just to understand, because, obviously, high margin, but is it actually making some….

It does significant amount of importing on the product that they do add value to the product in terms of some of the products, pretty minor, not expensive, but they sell, for example, clawfoot bathtubs and they will modify those slightly from where the consumer wants the drain or the faucet handles. So, they will do slight modification and in both kitchen and bath.

Got Tom up there, he is going to turn up as well, sorry.

Yes, good morning. Charlie Campbell from Liberum. I mean, just one question really. On the US business, I am looking at the commercial side of the business you talked about industrial I guess residential is fairly easy to follow. But on the commercial side, what’s your view of the sort of more medium outlook maybe as we look into 2017, could you just talk us through any lead indicators that you have there in terms of inquiries? Just to give us some more visibility on the outlook for that part of the business?

Sure. Our commercial segment, which represents about 28% of our overall business, it grew at 7% last year, so good solid growth. And we think that, that commercial will remain strong. We have got an order backlog, which includes not just commercial, but is highly commercial, is a high part of it of about £1.4 billion, which gives us a good year-over-year growth in terms of where we were last year. So, we still feel pretty comfortable on the commercial side. It’s growing well and we expect it to maintain pretty good growth.

Does it share what that year-on-year growth in that order book is?

No, it’s healthy though.

Good morning. Tom Sykes from Deutsche Bank. Just couple of quick questions. A follow-up on Build.com, does all of that go into that residential category that you split out the U.S. business in? And could you maybe be a little bit more granular about what very strong means, please? And then what residential is actually growing at excluding Build.com? And then just you give the sort of 4.5% run-rate now and you build out that tower of underground and HVAC and fire and fab, could you maybe just give a view as maybe what’s above, what’s below the 4.5% at the moment?

On the build, the vast majority of that is residential consumer business. We have small amount of trade business that will trade on Build.com’s sites, but it’s largely residential. The residential growth, which is our biggest segment, was about 45% in the last year of our sales and it was growing at 10%, so good growth there.

Yes. And that isn’t significantly I mean it would be 9 point something X build.

Okay, yes.

Yes. So, I mean it hasn’t skewed that number, Tom, if that was the question…

Basically just, yes.

And then the sort of color on what’s doing, I mean, if you look to the geography on Dave’s chart earlier, North-Central remains the area of weakness in blended, but blended is doing okay. B2C is kind of continuing very well. Industrial, you know about it, is still negative essentially post year end, waterworks, slightly slower. HVAC has had a very good year. It’s been a good – we have had a good role in HVAC, so that was...

And run-rate on industrial is negative, but less negative than it was in Q3, Q4?

A little bit, yes.

Yes, okay. Thank you.

We have got time for another one before we – there aren’t anymore. Excellent. Well, thank you all very much indeed for coming and have a good day.