All right. Good morning, everybody. Apologies from our Chairman this morning. He's been taken down with a dose of the flu and he's normally here. So, apologies from the Chairman. We will get stuck into the results. Last year, overall, was a good year. We improved service, again, across the group and made decent share gains in our key businesses. We increased our top-line growth rate but also margin – increased gross margin by 10 basis points and delivered good flow through of nearly 11% excluding acquisitions, and achieved a record margin of 6.4%. Performance in the U.S. was really very good across all dimensions and I'll give you some more detail on this later. UK performance was disappointing driven by slow growth in the core markets and a difficult trading environment where, again, pricing was very competitive. This led to gross margin reduction and the year-on-year trend that is improving as we went through the year after a relatively poor start. Nordics, performance improved gradually in H2 after our poor first half, and we did deliver improved profit in H2 on the back of better top-line growth driven by better markets in Sweden, Norway and Denmark, some share gains and good cost control. We continue to invest in the business to make our business models more productive, and John will give you some more details about how we're deploying the capital. M&A spend of £105 million was a bit disappointing. We would've liked to deploy more on bolt-on acquisitions. We were very active in trying to generate deals but with only limited success. We'll continue to push hard knowing that good bolt-on M&As value – very value enhancing for us, but we will remain disciplined in our approach. Cash generation was strong, and the balance sheet remains in good shape, and we're announcing today a buyback of £300 million. In terms of outlook, we still expect to generate good growth in the first half with like-for-like growth of about 4% and deliver good progress overall. Our core markets in the U.S. are robust except for industrial where we've seen some weakness across the whole of North America. In the UK, the markets have been a bit subdued, whereas in Nordics, our businesses have continued to grow well. Let me pass overt to John and then I'll come back and give you a bit more detail on the strategy in the U.S.

Thank you very much, Ian, and good morning, everybody. Last year was another year of good steady progress for the group. Like-for-like growth was pretty robust to just over 7% and that was boosted by some small acquisitions taking the overall growth rate to 10% at constant rates. Import prices across the group was slightly lower, but despite that in a pretty challenging environment in Europe, we continue to make measurable progress on the gross margins which were up 10 basis points. Ongoing trading profit of £857 million was 11.4% ahead at constant rate, plus £17 million from favorable FX movements. The trading margin at 6.4% is now back to its former previous peak level. Headline EPS is up 18% and that's – though 14% there from ongoing trading profit, plus slightly better finance charges, and we got some accretion as well from last year's buyback. Working capital was well managed. We hit our target and we finished the year with £800 million of net debt. The growth rate for the year as a whole was the best for several years that we dipped to 5.4% in the final quarter with slightly lower rates across the board. It is worthwhile reflecting for a minute on the group's performance over the previous three years. We achieved an average growth rate over that three-year period of 4.3%. We still managed to achieve good profit growth and a flow-through overall in those years of 11% to trading profit. If we do enter a period of lower growth, we still expect to grow our profits. We've been consistent in aiming for double-digit flow-through on incremental revenue. For every £10 million more at the top line, we expect at least £1 million more at the bottom line. And again, looking back over the last five…

Good. Thanks, John. In terms of today, normally I wouldn't spend a lot of time looking in the past year, but I do want to spend a bit of time briefly looking at the excellent performance of our U.S. business and also the further potential for growth. I do also want to spend time updating on the progress on two of our strategic initiatives: customer service and embedding – and utilizing segmentation. Last year was a cracking year in the U.S. We gained share in all of our core businesses, driven by great service and product availability, supported by well-trained and motivated teams. We're now performing consistently ahead of most of the competition. We improved our Net Promoter Score incrementally to nearly 65. It is getting tougher to repeat the yearly gains we had five years ago when we were around 40. But even now, you can see the opportunity in our best branches. We are up at 83 and in our worst, there is – we're down at 53. There are many local reasons for lower scores: product availability, customer mix, skills and experience of our people, but a gradual shift up in NPS scale is achievable, and we are very clear what is needed to get there based on the current performance in our top branches. We also knew that service-led share gain is not dilutive to margin. Satisfied customers will reward our performance. Our employee engagement is up again incrementally to 90%. This is extremely high score, which is significantly better than most competition, and benchmarks very well with the very best companies across the whole of the U.S. There is no doubt that over the long term, we have, in Ferguson, managed to train and develop a great team of people who do ultimately deliver our…

It's Greg Kuglitsch from UBS. The first question is on the U.S. and the Industrial. Can you give us a little bit more color where you exited in that business in terms of sort of exit run rate and how you see it shaping up into the first half? Obviously, there's some material change going on there. And if you can give us some detail to what extent this business directly impacted or directly exposed, rather, to the oil and gas segment or to what extent the slowdown is indirect. And sort of a related question on the growth, it's obvious that your comparison basis in the first half is quite challenging in the U.S.

Yes.

And I know that you tend not to give 12 months outlook on growth. But if you can give us a sense of whether you expect the sort 6% that you flagged in the U.S., is that the new normal or do you think that's now sort of a [indiscernible] in the oil and gas adjust and subsequently perhaps we go back to higher growth? And then, the second question is on the UK. I think it's the only segment where so your top line was up but your profit was down. I understand there's some gross margin pressure. I guess the question is do you think that this is now going to start stabilizing and you can start converting some growth into profit or do you think is not going to trend? Thanks.

Okay. Just sort of overall in the U.S. – just before we talk Industrial – let me just stress, I mean the rest of the business, Blended Branches, Waterworks, HVAC, Fire and Fabrication, our B2C business, all continue to grow very well. We haven't seen any material change in the performance of those businesses. And so, therefore, the only area of concern, clearly, is the Industrial area. And if you look at all of the stats around commercial and residential in the U.S., there's still good growth projected for the rest of this year. We look at all of the data you do, and that still looks very robust for the overall U.S. market. And we have two other indicators ourselves. Our order book, which is still in very good shape, and we survey our customers very regularly and ask them how optimistic are they, how did they see the next 6 to 12 months. And again, there's been no change in their degree of optimism. So you're right, the issue is very much I think around industrial. It is about 15% of our total business. I think in H1, we've called out that we would expect to see some slowing directly from the oil and gas segment. It's actually a relatively small part of our total business, only about 4% in the U.S.

4% in group, 6%...

Sorry.

6% across North America and U.S.

In the U.S. And we've seen – but what we have now seen is a bit of a slowdown in the rest of the industry segment and you've seen that in the data. In terms of U.S. comparators, honestly, we're seeing, as John said, 6% at the moment. That's what we see for the next six months. Our order book does not go out more than that, okay? But that's what we would call at the moment. And I think in terms of the UK, yes, I mean, we are a bit disappointed in the performance in the UK. We've got good top line growth. We didn't manage to get the gross margin improvement that we would have liked. It has stabilized as we've gone through the last 12 months. It is getting marginally better now, but it's hard work at the moment. I mean, we face a consolidated market, consolidated customer base, a relatively-consolidated supply base, and, obviously, ourselves, Travis, Saint Gobain and Grafton, there are four or five well-funded competitors out there. I think it's exacerbated though. And if you go back, when you have government intervention, you have Eco 1, which pulled forward. A lot of business going back 24 months ago till 12 months ago. You could go back to the stats and the market was growing very fast. In the last six months, we've seen actually the market flat or a little bit declining. So, it's been a tough market for us in the UK. Look, we've got a lot plans in place to get that business back into growth, and that's absolutely what we anticipate we can do.

Thank you.

Okay. Let's move across in the middle.

Thanks. Good morning. It's Andy Murphy from Merrill Lynch. Just three quick questions. Could you just give us a bit of flavor for the FX impact that you highlighted particularly in the industrial space and how's that affecting your customers? Secondly, can you just give us a flavor for any more heavy lifting that you likely to anticipate? I mean, I think in the past you perhaps suggested that most or all of it is done, but given one or two headwinds that you're talking about I was wondering whether you're considering doing anything else. And then just finally on organic investment, you highlighted quite a lot of very useful information about initiatives that you're working on. I just wondered what scope there was for greater investment than what you've highlighted or other investments fairly well budgeted?

You got those three, John.

The FX impact on industrial is actually quite difficult to call. So, as Ian said, we got 6% of the U.S. overall business into oil and gas and another 9% into non-oil and gas industrial. And it's a little bit unclear at the moment as to what's being caused by oil and gas, what's being caused by FX, by – and anecdotally for other manufacturers like, for example, China. So, it is quite difficult to know that. One thing that I would say, Andy, and that is the other thing that has had an impact during the period is falling commodity prices. That has had an impact on our gross margins. It also has an impact on our top line. Commodities represent about 15% of overall Ferguson sales. Commodities are the biggest element of the cost of goods sold. So, those are the things. But it's very difficult to separate out the individual contributors to weakness in Industrial. The last quarter, I think, to Gregor's question, last quarter, we were down about, we were down sort of mid-single digits in Industrial. But I couldn't say how – whether that was FX, whether that was oil and gas, whether that's China or all of the above. In terms of the heavy lifting and the structuring, look, I mean, you know you've see us doing this successively over the last few years. Firstly, we need to have a cost base commensurate with the gross profit that we can deliver and, therefore, the top line as well. I think at the moment, around most of the business, having the right cost base is really a question of controlling the rate of growth of costs.

Yeah.

You'd still have 6% growth from the U.S. We need to see the rate of cost growth commensurate with that top line growth. We have proven sort of good, like in the past, but it doesn't come easy. We have to work hard at it with the teams. There are a couple of areas where there are more active programs. Clearly, we're taking costs at the moment out in Canada that will continue over this year. We are looking very carefully at the cost base in the UK more widely. And we are also taking some costs out in Switzerland specifically. So, there are some very specific areas and I wouldn't be surprised if there are more. I don't think it will be a huge scale. And I don't think it's likely to be in the sort of north of what we've indicated. But it will depend on top line growth. And the scope for further growth, I mean it's a great question because the constraining factor is probably our technology resources internally. We have been recruiting a lot more technology resources over the last sort of three or four years. And I think that will probably continue because it seems to us quite clear that building a better business for the future need you to continue to reinvest in the technology side of the business. All the things that Ian was talking about through from – we talked and we laughed about [e-polls] [ph] stuff like that and CRM and the e-commerce platforms. You know because we put one or two numbers in e-commerce but there's a lot of other stuff. The master data management stuff is big and expensive. The whole of future state architecture, any of my technology friends that are in the room, it's big and expensive. We'd love to step on it. I don't think we can go any faster than we are broadly at the moment without existing resources.

Thank you.

Okay. Good.

Okay. Howard Seymour from Numis. Apologies. I'm going to hop on in just really again from my first question. And fairly obvious question I suppose, but is there any areas that are of specific concern falling further than anywhere else and whether there'd be any sort of gross margin or EBIT impact because there is sort of variability in terms of the returns you get out with all the businesses?

The areas that are most hit are where we have most density of industrial operations seen at the central belt of the U.S., North Central, specifically, which is still growing over all but at lower rates. The gross margin impact, I mean, yes, they are around the edges but again, back to Andy's question, not sure how much of that is related to the demand itself and how much of it is related to the impact of copper particularly over the year. So – but if you look at the sub-segments of industrial, clearly, oil and gas is the most reacted by far. There are plenty of those sub-segments. And by the way, those sub-segments there have been paper and pulp, energy and power, pharmaceuticals. So, it's quite a broad range of sub-segments. There are plenty that are still growing sort of reasonably. And I don't think there is today – there's certainly is a doom and gloom amongst our management team on this. The outlook, they don't think is terrible. There's just a feeling that this is weak demand at the moment.

And then secondly, just you mentioned, John, regarding the sort of the drop through, the 10% drop through. Do you still see that there will be a variance in that because obviously, the U.S. has been, for example of 12? Are you just sort of saying across the globe, does that – and you'd still, obviously the variances are that the U.S., because of this, the drop through would potentially drop back to that sort of level?

Well, yes. I mean, quite possibly in the short term, I mean specifically by business. I think the U.S. flow through might be slightly weaker going into the New Year. But we do expect, for example, we expect better flow through in Nordics. And we expect better flow-through in the UK. I mean, it's disappointing to get 3% top line growth and not get profit growth.

Yeah. So there will be variability. There will be variability around the business. But just to reiterate, Ian, to earlier point, we still see residential and commercial just three quarters of our U.S. business. We still see the indicators that's pretty robust and there's no reason for the flow through in those businesses not to be – not to continue to be just as attractive.

Yeah. I think I have the point that John has already made but just to reemphasize is that when we talk about slightly lower top-line growth, say, in the U.S. of, say, 6%, that just means we have to grow our cost base by 4% and we still get good flow through. So, we're not actually about – and to your point Andy, we're not in the case of taking a lot of costs out. We just have to grow them proportionally less, okay. So, now, clearly, we'll keep a very close eye on industrial in both the U.S. and Canada in terms of – if those trends do continue, we will have to take some costs out, but we'll be very sensible. It will be a very targeted activity.

Thank you.

Okay. Thanks, Howard. Yeah. Let's go back.

Good morning. It's Rajesh Kumar from HSBC. Just in terms of your discussions with your suppliers and vendors. Do you see any benefit in difficult times from having a market-leading position in terms of what sort of rebates you can pick up going forward?

Yeah. I mean, throughout all of our businesses, I mean, by an absolute sort of fundamental principle for us was to have businesses that ideally had market-leading positions. Now, nearly 90% of our businesses are either number one or number two in their markets. And we know when we are the market leader, we do get better terms because when we acquire other small companies, we see the difference in the gross margins that we are able to get from our sourcing benefits compared to the smaller companies. It can range from about 2 to 4 percentage points, so there is really quite a material difference. It obviously depends on supply, it depends on country. But it's a sort of rule of thumb, 2 to 4 percentage points benefit is what we'd expect to see in terms of sourcing benefits of our scale versus a very small local player. Does that make sense?

Yeah. Thank you.

Come back into the middle here.

It's Charlie Campbell of Liberum. Two unrelated questions. First one, I'm afraid going back to U.S. Industrial. But on the U.S. Industrial side, does that business make a higher gross margin in average for the U.S., so, is there a disproportionate gross margin effect? And then, also, is there is perhaps substitution effects we should think about in doing so as people are selling less, less materials into oil and gas, say, do they push harder into other areas [indiscernible] away? And then, the second unrelated question was on the share buyback program. You alluded in the statement to saying that you've, maybe, not been as active in terms of acquisitions as you'd have liked. Should we start to think of those two things as linked going forward? So, was it acquisition spend is lower than usual, perhaps, we should expect buybacks sort of the two, perhaps, to have a constant total, is that how we should look at things?

Let me do the first one, John. You do the buyback. Just on the gross margin in Industrial note, it's about in line with the rest, marginally lower. These are often larger projects. I mean you're putting many kilometers of steel pipe into a processing plant. But the gross margin is slightly lower than the average, but no material difference there. In term of the substitution, I mean, it'd be a wonderful thing if it happened. But clearly, if activity in Houston declines, overall, it declines. So, of course, our customers will then, obviously, go and try and find pockets of growth in the market. But when you have rig countdown from whatever it was, 1,600 rigs down to about 500 rigs, I mean, it's a big hit in the – as John has already said, specifically in the oil and gas areas. But, no, our customers, and we, will go and search very hard for other activity. I think we've made the point that the rest of our business is growing very well. Therefore, clearly, any of our customers who have a mixed portfolio of residential and some industrial work, they will focus hard back on to the residential. And commercial in these states is growing now very well. It's probably its highest growth that's been for the last five years. In terms of the buyback, John, do you want to...

Yeah. I mean, I think in relation to the buyback, if you look back over the last sort of three or four years of the capital returns that we've done, a chunk of those has come from proceeds of disposal of businesses, about half overall. And, yes, I think you're right. I mean, the rest is surplus that we have not been able to find a suitable investment home for. So, I think that is a – that's the reason that we don't issue a buyback this year. If we've done £300 million or £400 million of acquisitions, I don't think we'd be in that position. So, yes. I think they're absolutely linked in that sense. Qualitatively, they're linked, and you can work out in material terms the numbers. I wouldn't like to give you a fixed link.

Good. Thanks.

Sure. Yes. Do you want to go along to the end? Yeah, John.

Thanks. It's John Messenger from Redburn. Three, if I could, Ian and John. First one was just on the slide that talked about CapEx. There was the – for Houston and Basildon, what have you been doing in Houston? And just thinking about DCs and the U.S. in particular given the volume growth you've had, obviously, a lot put into New York, but is there somewhere in the next 12 to 18 months where you lead to our DC capacity or are you kind of comfortable with that 7 million square meters – square feet as you are now? Second one, sorry to flog the dead horsey on industrial, but when we look at the back slide in the pack, am I right to thinking about industrial at 2015. Is that broadly split in the non-res RMI and non-res new, if that's where it belongs? And is it kind of two-thirds RMI, one-third new or is some of it in civils I suppose? Just for us to try and think around when we're thinking about the future forecasts. And then the final one, Net Promoter Scores which kind of separates from what the markets are doing in volumes, maybe impact on people's confidence and whether they want to talk nicely about your people or not. But, when I see those bar charts and looked at the different countries, it kind of reflects pretty much for the view outside of those businesses. I think Ferguson is very good, UK less than impressive, different pictures in the Nordic countries, and Canada. When you look at them, what is it that differentiates – and I seem it's down to people, but is it – when you look at that, is it training or is it about how you incentivize in there? Is this something that really stands out that means Ferguson is so much further ahead, and do you need to do more so that you created kind of owner-driver culture in those people in the other businesses, because it just looks kind of structurally as Ferguson in the states, so much better than the rest. And are there bigger changes you need to make, to make – to motivate people who work inside Wolseley?

[Indiscernible]. So you do – John, you do CapEx, industrial, and I'll do NPS.

Yeah. So I think on the CapEx side, we haven't got any major DC capacity going in the near future, John. There will always be some hub reorganization. You mentioned sort of Houston. Look, that was a specific investment opportunity. Actually that, and it's proven to be a very good one, and it was one single site similarly to the Appleton where our UK [indiscernible] business just had an inappropriate location. So, those things come along but infrequently. We're not talking about adding in a lot of capacity in the near future. On the flogging the dead horse, just to remind you, this is a very profitable business. So, our industrial business is a good profitable business with excellent returns on capital. It just so happens we've had a quarter of sort of weak growth. And just – the applications – it is – they're going into a combination of new and repair maintenance. And – but they are into industrial applications. So, they are into manufacturing and power-type applications. Does that answer the question, John? Did I get the question right?

Okay. In terms of – John, in terms of NPs, I mean, just to be clear, going back, and I've said this many times before, going back five or six years ago, we didn't even measure it across the group, so then we started measuring it. All the scores in the countries have all got a lot better. So, if you go back five, six years ago with the Ferguson scores, we're down about 40. They've now cranked them up to 65. We've actually made similar sort up progress in terms of delta on NPS scores in all the other countries. So, I did take a bit of offense when you described the UK as – I didn't know what it was but not very good. Actually, a score of 40 is good in our industry, okay? The point you rightly made, though, where I do agree is that it's not differentiated. Now, the UK scores come up a long way, same in the Nordics, same actually in CE, and when you're hitting scores of sort of 40 to 45, you are as good as the other distributors. And we know from mystery shopping scores and things like that, it's exactly how we would sort of rate ourselves. We don't have a point of differentiation, okay? So, the scores are now good across the group. They are, I think, very good in Ferguson, and the score of 65 puts you well up there in the top, sort of decile of companies across all industries in the U.S. That's clearly where we've got to get to. But you can see it's taking us far here to get from 40 to 65. That's a sort of progress if we make 5 NPS score, points a year growth. That's good going. And to…

Thank you.

Good. Come back in here from Mr. Checketts.

Good morning. It's Paul Checketts from Barclays Capital. Three questions from me, please. The first is on the U.S. but a couple of areas where you've been investing. Can you enlighten us in terms how you're performing in the MRO space and also in New York? And then the second question is about the customer segmentation that you talked about, Ian.

Yeah.

Is it – how new is this? Perhaps you could just explain a bit more about what is it you're actually doing and what the benefits could be from it? And then the last one is on the capital structure. John, you talked about the extra interest related to fixing interest rates. How long you're locked in for now and what's the blended rate do you think? Thanks.

Yeah. Look in terms of U.S., the FM business in the U.S., it's now around about just over $550 million in total. Split roughly half what we sell through the blended branch network and half from the acquisitions that we made. It's actually growing very well. It's up at double-digit like-for-like growth. So, we're very happy with the progress that we're making on the FM business. We now have nearly 250 salesman out on the street with a national call center, and I think we see, therefore, a lot of progress that we made in that area. And actually the M&A pipeline in that area is looking a bit better as well. So, I think that's good. New York is going well. We're now up to nearly 10% market share. John mentioned we've just opened a new ship hub there in Secaucus which, in fact, if anyone is coming over to the U.S. in six weeks' time you will see the wonderful new Secaucus ship hub. So, you'll hear all about it then. The start-up was a bit tricky around the edges. I mean this was a big change for us. We weren't opening at DC. We were opening a ship hub, so delivering direct to customer from a major warehouse. But we're working our way through that but the top-line performance is looking pretty good in New York and I think we're very pleased by what we've done. And certainly, the showroom business is going well in New York, so that's good. In terms of segmentation, it's not, by definition, it's not brand new. I mean, we've talked in the past about small customers and big customers. The difference with that is that correlation doesn't actually work well in terms of what a small-jobbing customer wants as opposed to…

Yeah.

Okay.

Yeah. I mean, the pricing on the U.S. private placement, this is the $800 million which is 7 to 12 years, was treasuries plus $135 million to treasuries plus $150 million is the range on those, which is an all-in cost of $365 million, Paul.

Thanks.

Good.

It's Kevin Cammack, Cenkos. Two really. Firstly, when I'm looking at the slightly softer sales growth that you are talking about for the group in the first six months, to what extent in your eyes is that potentially a reflection of the price deflation as opposed to volume? And if there is any sense of that, that is the case, does it equally have slightly more challenging implications for gross margin in the half? And second more specific question, you've obviously seen a very – well, the beginnings of what appears to be a good recovery coming through back in the Nordics, could you possibly give us any view on where you can see margin recovering in that market over the next, say, 12 to 24 months?

Do you want to take the question?

Yeah. I mean, I think on the deflation side, that's a good question. I mean, there clearly has been an impact of deflation in the second half and the drag of that on the top line in, for example, U.S. blended branches is about 1.5%, so this is not an insubstantial impact. That is principally from copper by the way. That's the biggest individual contributor. But we should have seen the impacts of that on margin. So, the drag of that at bottom line is probably about £10 million on the group numbers. Now, really, a question going forward, if commodities are stable at where they are, that washes through our inventory pretty quickly. We only keep 30, 40 days of commodity type inventory around at any point in time. So, by the end of September – if prices stabilize on the 1st of August, by the end of September, you wash it all through on average. So, I'm not sort of excessively worried about the gross margin. It is just something that we have to manage with, and as you know, we do manage with over time.

In terms of the Nordics...

Yeah.

...look, it's good to see delivering profit growth in H2. I think from a market point of view, I mean the Danish market has come back well. Sweden is now growing very rapidly for us, going great guns in that respect. Norway has continued to grow sensibly. The tougher market, as John highlighted earlier, is Finland which I think will remain tough for the next 12 months. Bluntly, there's nothing that we see in the economic or market factor that would say that Finland is going to recover quickly. But it's about 15% of our business in the Nordics. So, the big two of Denmark and Sweden are the critical ones, growing very well. And look, I think probably two things: the market helped us a bit. We've gained good share. It comes back to John's point, we did work hard around the service, the product availability, the core range that we had in the branches. And I think that we've talked about this in H1. We put more resources in terms of sales resources out in to the field which have given us good growth. And I think the teams did a good job holding on to the gross margin at a time when the market was growing and we were beginning to get a little bit more of new build coming back our way so that we'd expect to continue to make decent progress in terms of margin growth and margin expansion in the Nordics. We're down now at around about 4%, so we're 3 percentage points off with our peak. Now, the peak was very peaky given that it was a P/E business, we've the business for Wolseley at the time. But anyway, we're still a long way off. But we do now need four odd years of good market growth to be able to recover to those sorts of margins. I mean, I think if you look back in the past, we've shown that we can recover sort of 30% – 0.3%, 0.5% of our margin point when we hit good top line growth and keep our cost base well under control. That's the sort of growth we'd expect to see.

Thank you.