John Martin - CFO Mark Fearon - Director of Group Communications and IR

Andy Murphy - Bank of America Clyde Lewis - Peel Hunt Gregor Kuglitsch - UBS Paul Checketts - Barclays Capital Yassine Touahri - Exane Kevin Cammack - Cenkos Adedapo Oguntade - Morgan Stanley Harry Goad - Credit Suisse

Jeff, thank you very much. Good morning, everybody.

Welcome to the Wolseley Q1 conference call. I’ve got Mark and Cheryl here with me as well.

We’re doing this update a bit earlier than usual, as you know in advance of the Investor Day, so that we can focus on strategy on Thursday. If you are unable to come along on Thursday, there will be a webcast on the website from 1 o’clock UK time.

We kept the Q1 to a point because we only had six weeks trading since our last results but we will give you some brief highlights for the quarter and then get straight into your questions. Starting with the highlights -- and all the comments that we will make this morning will relate to the ongoing operations.

Firstly, markets were pretty mixed in Q1. We generated modest like-for-like revenue growth of 3.2%, a bit lower than previous quarters.

In the U.S., we achieved good growth in decent residential and commercial markets but they were offset by weaker industrial markets and against tough prior-year comparators. The Nordics also generated good growth but the UK declined in pretty challenging markets in the UK.

We’ll come back to the regional trends in just a minute. And overall, acquisitions contributed just under 2% of growth.

Gross margins were ahead of last year and that remains a real focus for us. We continue to target a better mix of customers at suppliers and also sales into those higher margin channels such as counters and showrooms.

I’m very pleased that gross margins were ahead overall. Trading profit was 6% ahead.

We had one fewer trading day in the period that cost us £6 million but at the same time FX was £6 million favorable compared with last year and so a wash after those two items. Net debt at the end of the quarter was £990 million and that’s after investing £120 million in our own shares.

Net capital investment of £50 million was in line with guidance for the full year. We made four small bolt-on acquisitions in the U.S.

since the end of the year, total cost of £44 million and annualized revenue to just under £100 million. These included Living Direct and Wentworth both online appliance retailers; Atlantic American, which is a fire and fab business in the Midwest and Central Pipes and Supply, which is a PVF business out of Alabama.

We’re staying very close to the cost base at the moment; just want to make sure that cost growth doesn’t exceed growth in gross profits. We don’t want to choke off growth in markets which are still growing, but we have implemented headcount restrictions to get the benefits of turnover in heads or attrition of you want.

In some markets like Canada, we will reduce the cost base a little bit more actively. And in line with our full year guidance, we still expect up to £20 million of restructuring costs to be charged to the trading profit in the remainder of the year.

We’re making decent progress on the sale of the remaining activities in France and we signed last week, an exclusivity agreement with an acquirer relating to that disposal. Works council consultation starts today.

Those activities all classified as discontinued operations. Now, I’d just move on to the operations.

Ferguson grew at 4.5% on a like-for-like basis, and acquisitions contributed another 1.8%. Those results are against very strong comparatives of 12.4% in the same quarter a year ago.

We have seen decent activity levels in residential and commercial; and those account for three quarters of revenue in Ferguson. We have continued to see the weaker industrial markets which account for 15% of U.S.

sales. As we talked at the full-year results, there are two or three issues, the low oil prices and strong dollar, really have impacted that industrial demand.

Industrial revenues in the quarter were down 14% compared to last year, although they were against strong prior year comparators as well. We’re also seeing or continuing to see quite a bit of commodity price deflation, most notably from copper and steel and that impacted overall Ferguson growth rates by between 1.5% and 2%.

Overall, Ferguson trading profit was £22 million higher than last year; that includes £10 million of favorable exchange rate movements. In the UK, revenue was 1.1% lower on a like-for-like basis and RMI market, which is where we generate a majority of our sales, have remained pretty weak.

Gross margins were also lower in a weak heating market. And that coupled with the lower number of sales days, plus some additional investment in marketing and IT capability has led to trading profit 5 million lower than last year in the quarter.

The Nordics grew at 5.5% on a like-for-like basis with the oil countries generating good like-for-like growth. Trading profit was £1 million ahead of last year in constant currency, but we had an exchange rate impact of £2 million.

Canada was 3.7% off on a like-for-like basis. Actually the blended branch network in Canada held up well, generating modest like-for-like growth but that has been offset by weaker demand from oil and gas customers in the west of Canada.

Gross margin and costs were in line, trading profits slightly lower in constant currency. In Central Europe, like-for-like revenues fell 1.2% as Switzerland remains weak; actually Holland did pretty well.

Gross margins were in line, operating costs were reduced to offset the profit shortfall. So trading profit actually is slightly ahead in Central Europe on a constant currency basis and quite a low impact of FX there in the quarter.

Central costs were £1 million higher and that is after a £2 million one-off insurance charge in the period. Just moving on to the outlook, look it’s really a bit soon to meaningfully update the guidance that we gave you six weeks ago on 29th of September.

Jeff, many thanks; I’ll now hand it back over to everybody’s questions please.

I just got a couple of questions. One is on the industrial, whether you could just talk a little bit about the exit rates coming out of the quarter, whether that 14% was getting progressively more onerous as the period went on?

Second question sort of relates to that. If I try and back out the sort of the rest of the business in terms of like-for-likes, I get to 7.5% from 9.2 from Q1 versus Q4.

Do you recognize those figures; and could you perhaps talk a little bit about it? I realize that even at 7.5% it’s still quite a good result.

But I was wondering whether you could give us any sort of color on that and whether you’re seeing any destocking maybe which is perhaps part of the reason for the weakness? And I was wondering whether there is anything behind the net debt figure being up 130 odd million and whether there’s more to say around that please.

I will leave it there.

Andy, look, I’ll do one and three, you’ll have to come again on -- I didn’t recognize it I’m afraid. But industrial, the exit rate, look, I don’t particularly think you could read anything into exit rate in industrial.

I think if you took that as sort of a rate across the quarter, not to carry reflection, it’s a little bit volatile and of course it’s our smallest end market. But no, do we see this absolutely plummeting from here on in?

No, I’d actually be quite surprised if that was the case. And we are up against some very strong comparators, I think last year Q1 we were up 16 from memory and in industrial.

So, we don’t see this as being in a dramatic decline. Nevertheless, as you can see in the numbers, it is quite painful.

Net debt, no -- net debt is absolutely in line, it’s where it should be. And there are no concerns.

In fact, usually we have an outflow in Q1 because of the more significant inflow in Q4. So, I think that net debt is in a good position.

Obviously, 120 million went up for the buyback, so it’s probably that’s the difference.

And the second one, Andy? Sorry.

So I was trying to back out from the -- you’re talking about 15% of the business being industrial, so I was trying to work out given all the rest of the figures what the like-for-likes were in the balance of the business and we came up with a figure of 7.5% for Q1 and 9.2% for Q4. I was wondering whether i.e.

whether you recognize those figures, if we’ve done our math correctly and whether there is anything to sort of say around the trend or destocking or anything at all around that part of the market.

Sorry, I get you now and you’ve absolutely done your math correctly. So, thank you.

Look, I think overall, the only other trend other than industrial has been the impact of commodities. And that has continued into the first quarter.

Look, you know we deal in commodities, we do $70 million or $80 million a month of relatively commodity rich pie in the states and it’s something that we deal with. We have to deal with, we get on with it, we deal with it properly, professionally, it’s still profitable business, we want to do it.

I don’t know what the impact of that is comparative on the fourth quarter. But I would still say across the rest of the business, if you look at commercial, we got good growth, residential builder, consumer, trade, good growth in a good range of growth, clearly north of the overall growth rates in the Ferguson business, HVAC was strong, fire and fab was good growth, B2C was strong; Woodworks, slightly lower but that’s against very, very strong comparatives.

And we remain quite positive about that. So, there is nothing there to reference.

And then even regionally, Andy, east, west, south, central, all good growth, the only area where we’ve had any particular weakness is exactly where you’d expect it where we had the great concentration of industrial which is in the North Central region.

Good morning, John, Mark, and Cheryl. A couple if I may.

One, just following up a little bit on the commodities and linking that back into the progress you’ve made on the gross margins. Can you maybe just take us through the dynamics of the GM improvement and whether again, the drop in commodities has helped there or actually hindered in terms of the progress of the GM because obviously you made the comment about the UK being down; presumably, the U.S.

is up, so I’m just wondering is there a mixed change in there or is it very much your improvement that is driving that GM up. And the second one I had really was on the UK, obviously you flagged the tough market in terms of pricing.

What’s again, I suppose a little bit on the exit rate, what has been happening over the quarter in terms of the moving parts there? Has it been getting worse or has it actually been getting a little bit easier in terms of both the GM movements and the like-for-like rate in terms of the market activity?

Look, I think overall, if you look at the gross margin, if I just sort of focus on the U.S., no, I don’t think there is any tailwind from the commodities, I absolutely don’t see that. And I know one or two of the people dialing in today have asked me the same question over time.

It is just more difficult when you’ve got a difficult pricing. When you’ve got falling commodities, you’ve got a conversation on price, that’s the first thing compared to if they are flat.

And the more conversations that you have the more you get -- generally, the more you get squeezed. I would absolutely attribute the gross margin improvements in the U.S.

and also elsewhere in the business, other than the UK, to our management’s strong focus on this from all the things that we talked about. Now that is partly systemizing more our output pricing, partly it is pursuing better margin products which includes suppliers and mix, and better margin channels as well.

All the things that we’ve talked about before, and they have continued and I think we were pleased with the gross margin overall in the quarter. Let me just come to the UK.

I think overall, if you look at the growth rate, look, there is very little growth in the UK market. The heating market, there is no doubt heating is down still in the UK, year on year.

And there isn’t a lot of warmth, if you pardon the pun, in some of the PVF type areas other. And in terms of trends, no, I don’t think you can see any particular trend.

It was a weak quarter; actually, it was weaker in September as it happens and slightly better in August and October but still very flat. I certainly wouldn’t call any change in this market just yet, Clyde although, if I look at some of the CPA data, they’re absolutely calling a better ‘16, fine; I want to see it really.

If you look at the gross margins, firstly, our team is working very hard at this. We talked before about gross margins having come off through last year.

In all of the initiatives that we’re undertaking on gross margins, certainly, I would recognize the hard work of the team, as a lot of the systematic things that we’re implementing which we are very confident are going to be successful. However, so far, we haven’t arrested the year-on-year declines quite in gross margins.

There is some evidence that the declines -- that the rate of decline is slowing and that’s precisely what you want to see. But again, I wouldn’t call it too early, Clyde because we did have a lower gross margin this year than last year and that’s not where we want to be.

Just to follow up on UK pricing, you obviously gave the impact on the U.S. revenue from the weaker commodities.

Have you got a number for the UK in terms of what it would have done to UK revenue?

Yes, actually volumes are about flat. But pricing is -- the like-for-like fall is broadly pricing.

Not Barclays just yet. Not that I’m aware of at least.

I’ve got three questions. The first one is just on the Group and U.S.

growth, I think when you spoke to us in September, you were guiding for 4% for the Group and 6% for the like-for-like -- for the U.S. Obviously, now you’ve reported 3.2% for the Group and 4.5% for the U.S.

I guess the conclusion from our side of the fence I guess is that October must have been quite difficult. I don’t know if you can confirm that and what has changed in the last six weeks to result in that I guess deterioration.

The second question is on the UK, I think overall your margins are down 100 basis points, EBIT margins rather than growth. Is that a trend that you think will continue for the foreseeable future or is this an aberration or timing of costs in, I think you flagged some IT costs for example, going into the equation?

And then finally on profit growth, so you’ve done basically 6% like-for-like once you adjust for FX and trading days, is that what you are basically looking for now or is that do you think that the first quarter will be a little bit subpar when you think about the full year? Thank you.

Look, first thing, we gave our guidance six weeks ago; clearly we had sort of five, six weeks data at that time. And I mean, it doesn’t really deteriorate, September, October have been very similar actually, both within the U.S.

and within the group, first thing. Secondly, the Q1 numbers last year were very, very strong as you know and there is almost certainly something in that comparative piece.

Thirdly, the rate of decline in which have been really restricted to industrial and also what we have seen in commodities, at some point we will come up against less challenging comparators in those parts of the business as well. So, we’re not changing our guidance today sure.

You could argue that the four and the six are slightly more challenging than they were five or six weeks ago, but five or six weeks doesn’t change in our view the trajectory of the business and it doesn’t change the sentiment of the large majority of our customers in commercial, residential, which we believe are still looking pretty attractive markets. Hence, we haven’t changed.

Is it a little bit more difficult than it was four or five weeks ago? Yes.

But bluntly, we’ll see in the next sort of 10 or 12 weeks whether we make our first half number and of course in the second half, we should have providing the markets stay where they are, we should have a slightly better sort of comparative position. UK, the margins being down, no, I’m not happy with that and I don’t expect that going forward.

Clearly that’s our -- it’s our job to make sure that doesn’t continue. Now, if you look at the decline in profitability, it’s split into three buckets really, about a third of it is margin, we talked about what we -- gross margins, sorry.

We talked about what we are doing on that and we expect the investments that we made in training, in process, in systems, in people to deliver a better gross margin comps, first point. Second, about a third of it is the day, fine, we’ll never get that back and but -- no, absolutely, we do expect -- we don’t expect declines of that scale in the UK going forward.

Now, I do think Q2 is likely to remain a little bit weak because I can’t see the short-term changes in the top-line. But nevertheless, we have an energized and well motivated team in the UK, they are doing some great stuff and no, I don’t expect the margins to continue to be off.

Thirdly, the 6%, I don’t know, I mean in the first quarter I guess given the top-line growth and also given the momentum in your cost base -- in our cost base, sorry, which is you do have a lot of momentum in the cost base or put it this way, when the top-line comes off, it does take you a number of weeks or even months to respond. I’m not disappointed in that sense in the flow through in Q4.

But if we get better top-line growth later in the year, then I absolutely would expect to get back to better flow through, which we’ve talked about before. And as you rightly said, in this period, there are two impacts really, there is the day which is about 6 million and there was this insurance one-off which is about 2 million which is just a bit -- is a niggle for us without which the growth would have been sort of 7% or 8% a little bit more respectable but we should be at better levels if we get back to top-line growth later in the year.

So, just to be clear, you are speaking to the six months like-for-like growth looking for four despite the fact that you obviously tipping below that?

We said about 4% and so whether it is three, or four, or five, we don’t know. As you know we don’t have that much visibility on our business.

But there is nothing in the business today or nothing that has happened in the last five weeks that particularly would change our view of the overall trajectory of the business. Clearly, when it gets down to sort of 0.5% or 1% of a quarter sales, you are talking about some 20 million, 30 million patents, 2 million or 3 million of profit, it’s around the edges.

What we really want to see is the like-for-likes now returning to better levels and over the last sort of five years across the group, that’s been just over 5% and in Ferguson been just over 8% over the last five years. Those are the levels that we want to get back to and providing industrial doesn’t decline further and we trade through, we will trade through commodities at some point, we don’t see any reason why we can’t get back to those levels in some time.

Yes, I’m at Barclays. Sounds like I’m might have lost my job there in this coming month.

Can I ask a couple of questions please? The first is on the UK.

The heating market seems to be particularly challenged, John. Could you expand on plumbing where the dynamics are better?

Obviously you’ve -- and you’ve bought the online business. I wonder if there’s options to broaden out into parts of the market that are a bit more attractive.

And then the second question is on the Nordics. Maybe you could break down into what you’re seeing in the different countries because if I look at the data there, it’s getting a bit better, but it looks like you’re taking share.

So, I’m interested in perhaps if that’s what your data is telling you and what it is that’s driving that share.

UK, we have been predominantly a heating business, but we do have good sales in the plumbing category. And actually the plumbing category was nicely ahead in the quarter.

And so that is absolutely part of the strategy. Now, we have a good, big, profitable heating business.

The economics of it, the market economics of it at the moment are pretty dull, as you know. And that’s in boilers and that’s in radiators and even in some of the areas of parts and controls.

Plumbing is doing better and we have got a very aggressive category strategy to expand into that. Just to remind, last year’s growth in plumbing was about 8%.Q1 growth was only slightly lower than that.

So, we are pleased with the progress but would like to be making more progress in plumbing. We are well equipped to do well in plumbing.

We’ve got great sites; we’ve got great distribution and supply chain capability; we’ve got good systems; we’ve got great people. We need to step on now in that plumbing category, whilst maintaining our strong and profitable heating business.

Just coming all the way back to Nordics by country Paul I think was your question. Like-for-like, Denmark, it’s got back to decent growth, sort of 4%-odd like-for-like growth in the quarter; Sweden actually stronger than that, good; even Norway is doing okay, decent, sort of low growth in Norway.

That’s fine. Finland is the surprising one.

Finland has been very weak for a long time that we really would like to see turn. And it actually has been a little bit better in the quarter.

It would be great to see that sustained. But of course for us the big money is in Denmark and Sweden.

Market share over time, we’ve got very good teams in Denmark, in Sweden, in Finland, a very good new team recently over the last 12 months, 18 months in Norway really made good progress. Yes, we absolutely expect them to take market share but I do think at the moment market conditions are okay.

Are we taking a little bit of market share? Yes, I think that we probably are.

We’re definitely taking a little bit of share in Sweden as we speak. But, the market conditions are also little bit better too.

So, couple of questions. You mentioned that in the UK the heating market was under pressure.

Could you give us a little bit more color about why this market is under pressure? And also, could you give us a little bit of medium-term outlook?

What could be the catalyst for the recovery; and would you expect a recovery in the next, let’s say, 12 months to 24 months? And then the second question on market share, could you give us a little bit more color on the market share, on your market share evolution in the UK and the U.S.; are you gaining market share; are you losing a little bit of market share because you’re focusing on prices?

That would be very helpful.

Look, why is the market under pressure? That’s a great question.

I think the first question -- we have a lot of questions of shareholders, particularly in the U.S., who say well, look the UK economy is doing well. Why aren’t more people replacing their boilers, replacing their radiators and all the rest of it?

I’m not sure that we really know the answer to that, except for if you look at the long-term, if you look at long-term volumes in the boiler and radiator market, they do tend to be fairly stable long-term year-on-year. Sure, if there’s a bit of bad weather and in the middle of winter there’s a cold snap, you can get a bit of a surge, but there are 1.6 million odd boilers installed in the UK this year and last year and the year before in round terms.

And I’m not sure that there is a short-term catalyst to change that’s the trajectory of that business. I just see this is much more of a replacement business.

It’s you do it when you need to. It is less related to I think anyway consumer spending or fashion fads and whatever else, which do encourage people, certainly if I talk to my family, encourages people to change their kitchens and bathrooms.

So, catalyst for recovery, one of the things I would say this was a very good market in the downturn. It was a consistent market.

People still -- if you’re without your hot water, you’ve got to replace your boiler. People want to be warm and comfortable, but I don’t see a strong catalyst.

And remember, only about a hundred and something thousand of these boilers are going into new homes, the other 1.5 million are replacement boilers in the existing housing stock. So whatever happens to new home volumes, it won’t make any difference to those numbers in material terms.

Hence, we need to stay in this business, do well in this business, operate our business efficiently, but also be better and bigger in the other categories, particularly plumbing, to Paul’s point before. Market share, look we’re absolutely holding market share in the UK.

Are we ceding it on price? No, we’re not.

That’s not where we are. I think if you look at the results of all the major competitors, they have also referenced the heating segment being pretty challenging as well.

We are absolutely not ceding share. We don’t want to cede share in that market.

We want to maintain share and also maintain our gross margins. On the share side, big tick; we’re happy with that.

We have done that. On the gross margin control side over the last 12 months, 18 months we have not, which we’ve talked about before.

In the U.S., we are still taking share. Now, industrial in the short-term, it is a challenging market.

I don’t believe we’re losing share in that market. As it happens, if you look at all of the industrial competitors, you’ll see similar patterns of growth I think across that sector and particularly in any areas which are either directly or indirectly impacted by oil and gas.

And certainly you’ll hear on Thursday from the Ferguson team, we think we are going to continue to take good market-share. We certainly have done quarter in, quarter out now for five years.

We’ve taken to the 3% or 4% market-share gains in the U.S. and we believe that the business is a very well set up business and our people are really well set up to continue to drive those market share gains in Ferguson.

I’ve actually got two questions. Firstly, just coming back to the Nordics, and I’ll completely accept that six weeks is not exactly anything to base much off, but the -- do you have any immediate concerns that the pull-through in the Nordics doesn’t seem to be any better than the top-line movement?

And is that down to the sort of mix of where the improvements have been coming from, in individual countries? And the second thing I had is just -- I’ll probably confess to a lack of knowledge here.

But in relation to the U.S. industrial business, to what extent are there elements of a standalone business there that you can directly address costs or is the majority of this business just simply coming through the existing network as it were -- and it’s actually quite difficult to isolate that business in terms of making direct savings to the cost base?

I mean the Nordics flow-through actually is not far off where we would expect. But just to set my expectations, and I am sure some of my colleagues in Denmark will be listening this morning and we know, we expect double-digit flow-through on that growth this year.

There is no reason we shouldn’t get double-digit flow-through on this year’s top-line growth in the Nordics. If you look at the industrial, look about half of the business, about half of those sales are made through standalone branches and about half of the sales are made through the blended branch network.

In terms of cost control, what we’re doing on cost control, look there is some targeted -- are there some targeted measures in either of those? Yes, there are.

They are going to be attrition-based at the moment. So, we’re not looking at any sort of significant restructuring or anything.

Just to remind you, this remains a very good business. It’s a very profitable business.

Its net margins are quite compatible with the rest of Ferguson’s margins. Its returns on capital are very good and excellent in comparison with any of the relative competition.

So, we are pleased with this business? Sure, at the moment, I would love to be getting better growth out of it, better profit growth.

But I think we are reasonably confident that this will rebound in the reasonably foreseeable future. So, we’re not going to take lots of resources.

One of the things in the last downturn we had to take a lot of heads out of the business. And then at the end of the downturn you’ve got to re-recruit them and retrain them.

And we know that the single biggest factor that differentiates us from our competition is having really great people, well-trained, knowledgeable people who can talk to our customers, who understand how to get the right partnership arrangements with our suppliers and understand how to do our business. So, we aren’t taking wholesale heads out of that business.

Sure, we are trimming costs is the best way to think of it just at the moment.

Over what period of time; if you saw, I don’t know, four consecutive quarters -- not necessarily the same degree of decline but four consecutive quarters in some form of decline, would that change your view? The only reason I ask those, because if you look at the factors you cite, primarily commodity, high dollar, oil and gas, one could easily think that those factors will still be predominantly potentially negative in 12 months time.

I think there’s couple of things. One is if you look at standalone branches, you never shut a profitable standalone branch.

Even if its profitability has fallen, all you do is look at reducing its cost base. You don’t shut a profitable branch.

It would just be inappropriate, first point. Secondly, you never fire a very profitable sales person.

So, now around the answer is that’s what I mean about trimming, do you use the opportunity to look again at the profitability of both our associates, if you want, in respect of salespeople and also branches? Well, yes, of course and if you saw something that was sustained, if we saw years and years growth -- sorry, of decline.

The reality on a monthly basis is industrial has only turned negative since May, just to give you a sense. And we are clearly in a position where we need to look at what all of the forward indicators say, to have a look what do our order books say, what do our -- what’s our economic outlook.

And whilst oil prices may remain weak, they took the big turn down from sort of $100 plus to $50, $60 second half of the last calendar year. And I don’t know whether we’d expect them to halve again.

Now look, I’m not calling oil prices. Oil prices may well be 30 bucks a barrel in six months’ time or 12 months’ time, so and there’s no I told you so about it.

Clearly, we could then look at redeploying resources, some resources into residential and commercial. Ferguson has been excellent over time at redeploying great resources to where the opportunities are.

That’s what you saw for example in water works in the last downturn where the municipal market -- sorry, where the new resi markets got weak and we redeployed a lot of resources into municipal market actually very successfully. So, there would be some of that prior to any more restructuring, if you want.

But would we allow this business to become unprofitable? No, of course we wouldn’t.

No, that’s not going to happen. And having built the profitability, the margins to where they are today, we would be very reluctant to see those margins eroded.

I just have two questions this morning. The first one, given that you achieved like-for-like growth of 3.2% for the quarter, how confident are you about achieving the 4% guidance, like-for-like growth for the first half of 2016?

In your release, you said no significant change to your Company’s guidance. How should we interpret this?

Is 3% growth for the Group now a possibility? Then, my second also you achieved U.S.

like-for-like growth of 4.5%. You made reference to weak industrial markets, as well as the strength of the U.S.

dollar. Clearly like-for-like growth you can achieve depends to a great extent on the overall market performance.

You’ve provided comments on the performance in this end market but what do you think you can achieve in Q2 FY16, especially given the strong prior year comparators?

I don’t choose the questions. Actually I just sit here and listen to them.

So, it’s not me who chooses the questions. If anyone doesn’t get their questions chosen, don’t blame me.

I am sure Mark or someone is sat there with a computer or something. How confident are we in the 4%?

Certainly, as I said before Ade, I don’t think we have any data to update that particular view. Could it be 3%, 4%, 5%?

Yes, it could. I think if it was outside that type of range, we would have said something different, but our expectations would still be in that type of range at the moment and hence not updating it.

Degree of confidence, I am paid to be skeptical, I am paid to be cynical. If you ask any of my colleagues, they’d say, well he’s all of those things and worse.

We’ve just posted 3.2%. It’s clearly a little bit more challenging therefore to get to the 4% than it was in the first six weeks of the year when it looked slightly more likely, but week-on-week, it can change -- it can certainly change by 1%, 1.5%, 2% quite easily, week-on-week.

So I remain cautiously optimistic, if that’s the right way. And in terms of the U.S., I think the most important thing, when you’re sat where I’m sat is can we continue to grow the business and outperform the market.

And that’s what we’re paid to do, that’s what we expect to do, that’s what we’ve come to expect of our team, of our team in Ferguson as well as the rest of the group. But Ferguson has proven very, very capable over a long period of time at taking market-share gains.

And clearly at the moment, the two areas of weakness in the market are on those commodity sales and on industrial. I think we’re still taking good market share, by the way.

Sure is the market slightly weaker in this quarter than it was before? Yes, I think it is.

But I don’t doubt that we have got into a really good habit by using service, using product availability, using excellent product knowledge of our associates, all of those things and more continuing to drive market share gains and also doing that at margins which are fair and sustainable. So, over the short-term in the U.S.

look, I’m sure as you referenced the second quarter Ade, the second quarter is still up against tough comparators. But actually all of these are stacked at some point and we would expect to wash through.

And just to reiterate, we still see residential and commercial markets in good health today.

Just one from me at the end, please. You’ve talked a fair bit about the margin performance in the U.S.

and the negative drag from the inflation; I guess that’s offset on the other side by a bit of operational leverage. Is there anything else going on at the gross margin level in terms of structural enhancements or otherwise that you could flag up or we should be aware of?

Look only the same stuff, I am afraid that we’ve talked about before, which is all the initiatives that we have been progressing in terms of structured pricing, in terms of being very selective over our supplier partnerships, and in terms of driving the more profitable sales channels. So, all of those things remain important.

One thing that I would say, if you look over a considerable period of time in Ferguson, because we’ve taken market share very consistently for a long period of time, we become more and more relevant to our chosen supplier partners. Many of those have grown really well with us.

That’s great. It’s great for them; it’s great for us.

Clearly, we’re in partnership with them. We need to make sure that we and them are both profiting from that.

That is part of this driving growth margins over time. A lot of suppliers, a lot of vendors who I meet, they say exactly that same thing.

They’re very happy with the relationship over a long period of time. Clearly, they set in one or two instances, they give us higher tiers, we hit those tiers, we get more -- we get higher rebates, great.

All of that is part of this. But Harry, there is nothing new.

This is just driving it, grinding it out like the rest of our business. So, there is nothing big ticket that’s new in there, I am afraid.

Jeff, thank you very much. We won’t stay on the call just at the moment.

We do really look forward to seeing many of you tomorrow in New York. And in the meantime, if you’ve got any further questions for Mark or Cheryl or myself, do give us a call with those questions today.

Thank you very much. And thank you Jeff for hosting the call.