Ian Meakins - CEO John Martin - CFO Mark Fearon - Director, Group Communications and IR.

Andy Murphy - Bank of America Howard Seymour - Numis Gregor Kuglitsch - UBS Paul Checketts - Barclays Capital Tom Sykes - Deutsche Bank Yuri Serov - Morgan Stanley Aynsley Lammin - Citigroup Clyde Lewis - Peel Hunt John Messenger - Redburn.

All right. Good morning, everybody. Welcome to the Wolseley Half Year Results. In terms of the highlights, we saw good improvement in like for like growth at the topline and good gains in market share.

This was driven across the group by improvements and better service, product availability and the scale and efficiency of our sales teams and more tailored customer propositions. Clearly the U.S. had an excellent six months and we did see improving topline performance in the rest of the group as we planned.

Gross margin progress remains a constant battle. Our initiatives around managing our mix better, improving pricing management and better sourcing are all gaining traction, but as we begin to see recovery in markets, there is also some growth in lower margin segments, new residential and commercial and in the U.K., the heating products market.

However we absolutely believe, we can grow our gross margins over time. We do not believe that we have to accept lower gross margins to gain share. We know that there are plenty of profit actions we can execute better to offset the margin pressure we feel. We've continued to invest in gaining share and improving the efficiency of our business model.

This work is beginning to pay back in the U.S. as you can see from the leverage we delivered and we believe we will see the same in the rest of the Group as markets recover slowly. Flow through was good in the U.S. at 12%, but disappointing in Europe, driven by increased investment to drive growth and some gross margin pressure.

However, we do expect to see better productivity and profitability in the second half of the year. Net our whole focus continues to be on executing our strategy as effective as we can.

Now let me hand over to John who'll go through the numbers and I'll come back and give you some color on the progress and some of the initiatives that we're undertaking..

Thank you very much Ian and good morning, everybody.

At this time last year, we said we were going to redouble our efforts to get a bit more topline growth into the Group and it's great to see now that we got the best topline growth that we've achieved since the financial crises with growth at constant, rates of over 10% in total and 7.8% on a like-for-like basis.

The cost price of our products over the last six months has fallen slightly with lower commodity prices giving us modest deflation in the U.S. in Central Europe and in the U.K. That makes the growth we've achieved even more valuable. Despite that deflation and some FX headwinds, like-for-like gross margins were slightly ahead in the period.

The trading profit of our ongoing business of £390 million is 12% higher than last year and that's despite the investment that we've made in the continuing development of improvements of our business model. The trading margin is 20 basis points higher than last year and now we're closing in on that former peak of 6.3%.

Headline earnings per share 13.3% ahead and our net debt, which is usually at a seasonal high in January is in line with expectations after the final dividend and after share buybacks of £1.2 billion. Ferguson has delivered a really sparkling performance with topline revenues up 11.7%.

Market conditions across the United States are good with market growth of just over 5%. Residential growth rates have slowed a little, consistent with housing starts and also with house price indices, but commercial markets have picked up a little though the AIA Commercial and Industrial Index came up a little last month.

Overall the market in the U.S. looks fine. We've got no reason to believe that it's going to either substantially speed up or slow down in the short term. Gross margins in Ferguson were higher again and that's as a result of our ongoing work on pricing compliance, on vendor selection, on choosing the best channels.

Gross margins gains may become a little bit more difficult with the increase in the mix of commercial in the months ahead. Good headcount and good cost control has given us that strong growth in trading profit with Ferguson profits up 22%. All of our businesses in the U.S. have made impressive market share gains.

Customer service, which is measured using our net promoter score is at highs of 68. Inventory availability is also at very high levels.

Ferguson as you know has a really strong sales culture and we continue to implement best practice to support even greater efficiency with things like CRM tools, customer and product availability and sharply focused incentive schemes.

Ian is going to give you some more detail in a few minutes on the sales management initiatives both in Ferguson and also across the rest of the group.

The performance in Blended Branches, the biggest business in the Group, was exceptional across all three regions; all three regions showing strong growth and continued progress driving gross margins combined with good cost control.

Waterworks, which is the second largest business in the Group, that continued to grow at double-digit growth rates and to take market share and that's despite being up against tough comparative numbers. Excellent margins and good cost control gave very strong profit growth. HVAC, you might remember this time last year was somewhat weather impacted.

That's performed very well this year. Pipes, valves and fittings and also our other industrial businesses have also grown well as has Fire and Fabrication with both gross margins and trading profits nicely ahead. The MRO acquisitions we did one in last year and one this year, they've both performed well.

They're ahead of plan and they've been integrated successfully. Build.com, which is our online business to consumer business in the U.S., that grew even more strongly at margins that are comparable with the rest of Ferguson margins.

Since the start of the year we’ve done nine acquisitions, and those have been integrated both with our supply chain and also into our trilogy systems very successfully that means that we can get the synergies as quickly as possible. Headcount and costs were well managed.

We kept a very sharp focus on the delivery of results, but at the same time, we've continued to make the investment in the ongoing growth and development of our business models. These investments cost us an additional £11 million in the period.

We're beginning to see some of the benefits of that development in areas such as future state architecture, CRM, national sales center, regional quotation centers and branches of the future. Our B2B and B2C eCommerce offerings appeal to a wide range of customers. They can check availability. They can check pricing.

They can check proof of delivery to be invoiced and settle an invoice via the Internet, as we'll as providing excellent service that also gives us a great opportunity to drive efficiency and to drive economies of scale. Ian is going to cover some of the progress that we're making in eCommerce across the group later on.

Customer facing activities in our business are very local, but we get good leverage by supporting those with effective central services and the combination of those things in Ferguson has delivered a very strong financial performance. Overall flow-through at 12% was in line with our expectations and the trading margin reached a new high of 7.9%.

In Canada, the Blended Branch network grew well with decent flow-through to profitability and we opened 10 new branches and showrooms. Waterworks was pretty flat, but we've taken a number of new sales and operations staff both to generate a bit more topline growth and also to improve the consistency of our service.

The industrial PVF business also continues to perform well and we made a small acquisition. The only weak part of Canada is a small HDPE pipe segment, which went backwards. But overall trading profit was 5% ahead of last year at constant currency, FX cost us a £1 million, the trading margin 5.9%.

And just to touch on oil, about 4% of Group sales are directly into the oil and gas sectors concentrated in Texas and Alberta. In Texas, our customers are generally more focused on downstream activities and we think the impact of falling oil prices is going to be modest. In the West of Canada, we have a strong presence.

Our customers are more focused on upstream activities. Falling oil prices clearly hit drilling activity and that hit the profitability of our customers and also a knock-on on to government revenues. So we do expect revenue and profit in Canada next year to be lower, we’re reducing our costs now and we will be very targeted with future investments.

About 6% of Group purchases are made from oil based products and we expect some purchase price deflation, but it’s interesting the linkage between oil prices and those products is not always very strong. Fuel, power and freight costs are already falling, they're about a £1 million a month lower than they were.

So all in all so far the impact of oil prices falling on the Group has been negligible. The impact on Canada going forward should be broadly offset we think by benefits elsewhere in the Group. So we don’t expect any material impact on profits.

In the U.K., the heating market declined by about 1% and that's because of there were no Eco volumes in this year’s figures. Against that backdrop, our plumbing and heating business grew by 1% on a like-for-like basis, but the market weakness did impact pricing.

The market became even more competitive and our gross margins were 70 basis points lower than the same time last year. Piping climates tend to grew more strongly. The pricing environment was equally challenging. Burdens and Fusion, which were the two acquisitions over the last couple of years serving the utilities market they both performed very well.

Costs continue to be well controlled and we continue to do that investment in our infrastructure and technology to support the capabilities of our business going forward. Trading profit in the first half of £43 million pounds was 10% lower than last year. The trading margin was 4.4%.

Now Eco-2 should generate some additional demand and we expect profits in the second half of the year to be slightly higher than last year. Like-for-like revenue growth in the Nordics was 3.3% with a further 8% coming from last year’s acquisition in Finland.

The Finnish market remains depressed, like-for-like sales were down 4% both our teams have done a good job integrating the Puukeskus acquisition we now have a much stronger market position. The profits were lower in the period. The building materials markets in Denmark, in Sweden and Norway were lackluster.

We took a decision to try and gain market share in those markets and as a result we got a like-for-like growth of between 3% and 7%. Combined with good pricing discipline, gross profits were comfortably ahead of last year. Overall though like-for-like profits were down £8 million and that’s because of two areas in investments.

Firstly, additional sales and marketing resources to generate better profitable growth and secondly investments we made in development of the business model. Notwithstanding those investments, we need to do better on productivity.

We are reducing the current run rate of our cost base by £7 million a year for the remainder of this year and we expect second half profits to be better than the same period last year. Reported trading profit in the seasonally weaker first half of £22 million is at a margin of 2.4% that was impacted by a fact which cost us £3 million.

Just to touch on the impairment charge, we took a significant impairment charge again Nordic Goodwill and that reflects the high price that we paid for the acquisition of that business in 2006. We do have really strong market positions in quite sensible and stable markets.

So we continue to believe that we can generate very attractive shareholder returns from these businesses. Central Europe now comprises our businesses in Switzerland and Holland. Like-for-like sales were down 1.5%, trading profit was £2 million lower at constant currency.

That's primarily due to the sharp movements in the Swiss front towards the end of the period. That’s led to some quite heavy discounting across the industry in Switzerland. We are rebasing the Central European overhead structure and we do expect to reduce cost now by £2 million a year.

Notwithstanding the disruption in Central Europe because of currency, the trading margin was still a respectable 6.5%.

Last year when we said we were going to focus on generating a bit more topline growth, the reason for that you can see in this chart organic growth has delivered nearly £414 million worth of additional revenue in the period giving £47 million worth of additional profit. Acquisitions added just over £200 million of sales and £8 million of profit.

The flow-through from those acquisitions is lower than the flow-through on our organic business because we're absorbing integration costs in the first year before we realize all the synergies. Underlying growth margins were 10 basis points ahead again despite some headwinds and some pretty fierce price competition in the U.K.

and FX turbulence in Switzerland. The investment in developing our business model across the Group was £19 million. We're going to come back to that in a minute. Ian is going to show you where some of those investments are paying off. Other cost inflation was more than offset by efficiency gains.

We said before we have a measure about productivity, which is the conversion of gross profit into trading profit and that was up by 50 basis points to 21.7% in the period. We had one fewer sales data that cost us about £6 million. We will get that back in the second half.

Perhaps surprisingly on an average basis, FX still cost us £2 million, but of course now FX is going back in our favor. We planned before the sensitivity of the carrying value of Nordic goodwill to changes in growth assumptions.

Trading conditions in the region have not improved as we expected and we've taken an impairment charge this year of £245 million. After taking that charge, we have a £116 million of goodwill left in Nordics on the balance sheet. Our operations in France are now classified as discontinued.

We are pretty close to concluding the sale of our two wood businesses subject to consultation. We'll then just have the building material business left to sell. We're working on that at the moment.

The assets in this business are classified as held for sale in the balance sheet, but we're not allowed to provide for them and its quite likely that when they're sold, there will be a loss on disposal in the region of £60 million to £70 million.

Further on the chart you'll see an £8 million gain that arose on the disposal of specialty pipe in the U.S. and a £5 million finance charge, which is the recycling of FX, FX losses previously put through reserves through operating profit as we continued the growth simplification, the entity reduction process.

All of those charges gave rise to cash outflow of £4 million. Further down the P&L central cost and underlying finance charges are in line with last year and the expected tax charge this is 28%, slightly higher than last year because of that rich mix of U.S. profits.

Just coming to cash, our managers -- ourselves and our managers, are incentivized on cash as well as P&L measures. Our business is highly cash generative. In the first half, we saw the normal seasonal working capital outflow consistent with last year.

Disposals netted to useful £44 million, cash tax slightly higher, because of the higher levels of profitability. Investment on acquisitions and CapEx was £144 million and in line with our plans. And we returned £358 million pounds in the six months period to shareholders through dividends and share buyback.

The dollar strengthened Sterling by 8% on a stop basis. Our FX hedging is very straightforward. We hold borrowings proportional to EBITDA. So borrowings were revalued upwards by £62 million, compared to last year. All in all, cash was very much under control.

M&A is a valuable addition to our organic growth plans and added 3.5% to topline growth in the period. The businesses that we bought over the last six months really fall into three categories. Some acquisitions provide access to products, to expertise, that would be otherwise either costly or expensive time consuming to obtain.

Those products can then be rolled out throughout our network. Other acquisitions in that second bucket, they give us access to either new channels, new capabilities, experienced associate system knowledge, knowhow process, they bring those things into the Group. Several years ago, that’s how Build.com in the U.S.

came into the Group and it’s been a huge success. In a similar like, we’re really pleased with the recent acquisition of majority stake in BathEmpire. And then of course in that third bucket, that are bolt-ons. These extend our geographic reach. We integrate them promptly and that yields us benefits of scale.

The M&A pipeline continues to present some good opportunities. There’s nothing very large in the pipeline today, but we’ll carry on trying to convert the good opportunities and avoid the lousy ones. We have substantial resources to pursue attractive targets where we can add value to them. As planned, we stepped up our organic investments this year.

Capital investment was £160 million, split actually pretty evenly between technology, free holds and maintenance CapEx.

Technology projects to improve our business model that includes business intelligence tools, Middleware, Master Data Management, CRM Solutions, eCommerce applications and also the whole implementation at our future state architecture strategy.

Investment in freehold DCs and Ian will come back to this in a moment, those principally in the period relates to a new ship hub in Secaucus and in new DC in Coxsackie and Upstate New York.

And finally branch expansion and refurbishment cost, they're a bit higher this year, bit higher than usual because of a major upgrade program across our showroom network in the U.S. supporting new vendors. The associated operating cost was £19 million. Our approach to capital structure remains the same.

The half year usually represents a seasonal high in our borrowings. Net debt stood at £1.2 billion, 1.3 times EBITDA. Before M&A, we expect net debt to be about one times EBITDA by the end of the year at the bottom end of our target range. The net pension position showing a deficit of £84 million and that's because bond yields have fallen.

This time last year, I think the discount rate was 4.4%, it’s now 3.1% in the U.K. We've got committed facilities of £2.3 billion, that provides substantial headroom if the appropriate acquisitions come up.

And headline EPS up 13.3% along with the continued good cash generation has enabled us to buyback £214 million of our own shares at an average price of just under £33. It also supports the interim dividend, which is up 10% at 30.25 pence a share. Using full year consensus earnings, headline dividend cover would be about 2.5 times.

So what’s the outlook like? Well, we expect like-for-like growth in the second half to be about 6%. We’re going to continue to invest in the development of our business models at similar rates to the first half. In light of market conditions in Europe and Canada we’re going to be extra vigilant on cost. We’ll take cost out that we talked about.

We do expect some associated restructuring cost about £10 million in the second half. We were a trading day short in the first half. We’ll get that back and at a dollar exchange rate of $1.51 last year's second half profits would have been worth £26 million more.

Effective tax rate should be 28% as there are no other changes to our guidance on capital and working capital. So those are the highlights in the first half. I’d like to hand it back to Ian to give the strategy to you..

Great, thanks John.

Good look, our strategy has basically remained unchanged, but clearly we are emphasizing different aspects of it now and the bulk of the group-wide resource allocation work has now been completed and as we explore ways to exit our last business in France, this is the remaining significant action of getting the right portfolio of businesses in the right geographies, assuming of course this business perform well going forward.

So now we’re focusing more on point three, accelerating profitable growth, both organically and by bolt-on M&A and also point for improving the efficiency and productivity of our business model. Most of the group synergies are being captured and John has also explained how we planned to keep an appropriately geared balance sheet going forward.

So today I want to focus on points three and four. For points three, specifically how we're accelerating organic -- growth organically, we review progress on bolt-on M&A at the last set of results.

For point four, how we're trying to improve our productivity and generate the benefits of scale we know exists, specifically today looking at how eCommerce is becoming an important channel for our customers. In terms of the growth end, the first half has shown a significant pick up from the low point of the first half of 2013.

We’re now at 7.8% like-for-like versus 3.6% two years ago. Clearly this has been driven by better like-for-like growth in the U.S. where we are now hitting 11.7%, but we’re also growing again in the U.K. by just under 2% and the Nordics is growing again by nearly 3.5%.

Overall the trends are improving, although H1 was particularly strong flat compared with some weak competitors of last year.

That’s why we believe that about 6% growth is the right forecast for the rest of this year although of course we'll be trying to beat this number; however, we want to make sure, we do also keep nudging our gross margins ahead in all our clusters not just the U.S.

We’ve been focusing on six mainly risks to improve our organic growth, customer services fundamental and we constantly work to keep moving ahead here in terms of better availability, speed and range better than the competition.

Employee engagement, we strive to have the best employees in the industry, train them better and keep them longer, relationships in this industry do count.

Building out our network in all our geographies where we're underrepresented, particularly in the faster growing metro areas in the U.S., Canada and Europe and I’ll use New York as an example in the next couple of slides.

We continue to roll out our customer segmentation work to develop better targeted customer propositions and having the biggest and best sales team in the industry is also critical in terms of winning new work, solving problems for our customers, ensuring that more sales resources are deployed more efficiently.

This is part of why we have gained share in the first half. I’ll come back to this topic later as well. And finally pricing management is becoming even more important, particularly as larger project work returns to the market.

We’ve explained many times that there is that silver bullet to our business, but improving in these six areas will allow us to increase wallet share as well as retain and gain new customers. Looking at how we expand our networks, New York is a good example. In New York, we’ve mapped out the growth opportunities down to a very local level.

So we’re taking the resource allocation process we used at a group level down into each business and now down into each specific geography. Just to remind you before we get into the details of New York, if we look at our regional share across the U.S. it is very variable.

We have some highs of over 30% in some areas, but also some other areas where -- which are economically important where we have market shares of less than 5%. We've some very strong positions like Virginia, Florida, California, but also some relatively weak positions in some key metro areas particularly in the south and northeast and New York.

So it's very important we prioritize rigorously from a U.S. perspective and invest where we can get growth and returns, rather than what the local manager might prefer to do. So looking at the detail of Greater New York, clearly it’s a huge market opportunity for us. Nearly $6 billion of our products are sold in this market.

The market is clearly buoyant. There is good growth across all end markets plus the competitors and customer base is pretty fragmented, which improves our chances of gaining share at better margins as well. We’re now the local market leader with only a 9% absent market share. Three years ago, we had half of that market share.

To ensure we have the right network, we have quantified down to zip codes for each of our businesses where the best opportunities are for us based on overall RMI and new building activity based on building permits, job locations, applications to build and other local activity measures.

This example is for our plumbing and heating business in terms of the commercial opportunity in the New York metro area. Some areas like Suffolk, Queens and Downtown New York, all look very attractive, but closely in Nassau and Rockland up to activity levels are much lower.

This detailed analysis allows us to plan out branch network expansion, the people resources required and also the best logistics network to deliver best service at lowest cost.

But if we cut the data using a Waterworks lens then we end up with different areas being more or less attractive, hence we need to flex our investments between our lines of business, because of new build infrastructure projects, Nassau is now very attractive and other -- and also Ocean in New Jersey, whereas Rockland and Warren are not still great opportunities for us.

So this sort of local opportunity mapping is fundamental to deliver faster growth and better returns. This approach means we can have dedicated sales people and branches, but benefit overall by sharing infrastructure costs. If we look back to 2012, when we stared this approach in New York Metro, we were relatively poorly placed with only 22 branches.

We had only 400 people on the ground in the whole of the metro area. We were shipping from Front Royal, our distribution center 300 miles away, providing relatively poor availability in service and this led us to having only a 5% share and just over a $0.25 billion of sales.

Since then, we’ve invested both organically about $65 million in building a competitive supply chain and bolt-on M&A, we have invested about $100 million. We now have 40 branches and employ over 820 people, 21 of these branches are also showrooms.

We’re building a new DC in Coxsackie, and a ship-up in Secaucus, New Jersey, which will give us daily picked order delivery into the metro and Downtown area significant improving our availability and service and also significantly reducing our unit costs.

We're now the local market leader with over 9% market share in the area and revenue just in excess of $0.5 billion under the better margin because of the better customer mix and lower cost. So the New York approach has been driven by detailed analysis of end markets and customers.

We’ve built organically, but also by successful bolt-on M&A and the Davis & Warshow acquisition being the largest investment.

The local management structure now supports each line of business, be it Blended Branches, Waterworks or HVAC with specialists rather than generalists and we have an integrated infrastructure, both logistics and call centers to support the business now and into the future giving us a great platform for future growth.

We see no reason why we cannot gain at least another three or four points of share over the next three years or so, which could be worth $0.25 in revenue at a good healthy margin. This approach is being replicated in another 19 metro locations across the U.S.

like Houston, Chicago, Pennsylvania and also into the rest of our business in Canada and Europe. Turning now to another key profit areas for generating profitable share growth across the Group, I want to review the progress that we're making on sales management.

Although recognized we still have a long way to go here, if you remember last year, I explained that we did not benchmark well compared to analogous businesses outside of our own sector.

We have two primary ways of dealing with our customers, small customers, who use the branches regularly for their needs are serviced by the local branch staff, but larger customers who are looking for more support when they're bidding for large customers and need more technical support are designated to a specific sales team, which is a combination of inside sales people who are located within our offices and also external sales people, who are out calling on regular and potential new customers.

These customers are large enough and profitable enough to be served by our outside sales team, roughly 60% of our Group revenue comes from customers who are the responsibility of our commission sales teams and this is pretty consistent across all the customers.

We have nearly 8,000 sales people, over 20% of our total sales -- total staff made up of nearly 5,000 inside sales folk and 3,000 external sales people.

So making sure, we're getting the right return by allocating them to the right customers and that they are as efficient as they can be, has a massive impact from our growth rate as well as our profitability. The value that these sales teams bring to our customers is enormous.

In all of our research, the relationship between our sales people is often a critical reason for winning or losing wallet share.

Our sales team help customers bid for new work by developing tailored solutions to met the bid conditions, help to meet technical spec demands, provide lower cost alternative products for our customers and generally provide solutions to problems from product availability to logistics to billing queries.

This is often the basis of a strong long term relationship and some customers are very loyal to our sales people and will follow them if they decide to go to a competitor. Clearly we need to have the right number of sales people and we have been investing in more about another 150 in the past six months.

We're implementing CRM systems across the Group and also making sure our training and reward schemes do incentivize the right behavior and retain the talent we need. We do see our sales people as an essential part of our increasing wallet share, regaining lost customers or wining new customers.

We now have good sales management dashboards, down to each sales person in each business units and have in the U.S. introduced a cost to serve customer profitability module so that we can work out ways with our customers to improve their and our profitability.

This module is being rolled out for the rest of the Group along with the CRM systems and processes. From the dashboard we can look at the performance of a specific sales person in terms of sales and gross profit versus budget in last year.

We can also look at the product mix, they are selling within the sales rep customer base and look for opportunities to add on sales compared to other customers and we can benchmark the performance of the sales people with a similar mix of customers and identify reasons for under or over performance.

And in terms of customer profitability the model analysis the specific customer costs of their order channel, their delivery channel and also their payment terms and the discounts that they receive.

When we see margin problems, we can work jointly with our customers to reduce wasted costs, bit lowering the level of product returns, reducing delivery during high costs times of the day or encouraging them to use the most efficient order channel, which of course is eCommerce. In the Nordics, our dashboard also captures more forward-looking metrics.

So not just sales and gross profit versus targets, but also what is the average bid value per job and how old are these bids. Have they been actively chased down to a conclusion? How many are still alive and worth chasing plus what is our hit rate? This is crucial in terms of getting better topline performance.

Sometimes we have different branches competing for the same job and clearly that is not efficient for us. We can see retention rate of regular customers and we're also looking at the order books that are booked and not yet invoiced as a forward measure. This data is now available daily by business and down to each branch and sales person.

So we're serving up far more useful and actionable data to our teams on a far more timely basis than we were say five years ago. In the U.K. we're taking a similar approach. On the top of the financial performance of each salesman like in the U.S.

we can now look at our activities on a daily basis down to a branch or a person, which allows us to cost correct during the week or the month. Jobs that we bid for can be up to 60% of our revenue and depending on the business and customers mix managing this process better will obviously drive faster growth.

We're monitoring all the new quotes going out and have real visibility on how successful different regions and people are at actually coating for a value of business. Again we found a lot of duplication and also lack of professionalism in our bidding and pricing processes.

We set up regional pricing and bidding office so that experts are doing this work and making sure the quality and margins are higher and also the duplication is reduced. Lastly for each person, we can track their bid record and what they've won and lost or what is still to come and the reasons why.

Now turning to how we're trying to improve the productivity of our business model and as part of this specifically, what progress we're making in terms of increasing our eCommerce business.

We do see the eCommerce channel as a way to better meet the needs of our customers, but also it's a lower cost served channel for us leveraging the brand, the branch and logistics network without extra capacity being added.

There will be over time, real benefits of scale from eCommerce given the investment required in platforms, data and dedicated sales people. In the first half we sold over £800 million in all our eCommerce channels. This now represents 13% of our total sales and is still growing much faster than our traditional channels. In the U.S.

18% of our sales in total are eCommerce. B2B was just over £0.5 billion sales in the first half and B2C was nearly £200 million, again both continue to grow rapidly at 23% for B2B and 16% for B2C. The other clusters are also beginning to get some rapid growth albeit from a much lower base, but this is how the adoption patent developed in the U.S.

over five years ago. And even where we're most penetrated in Switzerland and Holland at about 30% of sales going through eCommerce this channel is still growing faster than the traditional channels showing there’s plenty of room for expansion longer term.

Taking reasonable assumptions for the next six months we can see an eCommerce business group-wide between £1.7 billion to £1.9 billion of sales and reach about 15% of our total business by the year end. The reasons for the uptake are clear for our customers. They can order and transact and check product arability with us 24/7.

We’re now seeing significant traffic at the weekend. Clear our customers have their own discounts for this and they can easily compare this to market pricing. It is far easier to access technical data from our product catalog online and customers can choose which delivery option works best for them depending on their work schedule.

For us we’ve continued to invest significant resources across the Group. This year, we’ll continue to invest in improving all aspects of our offering from this platform.

In terms of data and keeping the specs up to date we've dedicated sales people in each cluster, working with our customers to get them set up online and we know once customers are setup and have tried the channel, they quickly become adopters. For example in the U.S. alone, this investment is around £10 million of CapEx and £3 million OpEx.

We’re now testing Click and Collect with 21 branches in the U.K. Early signs are encouraging and as a distributed branch, business across the Group with more than 3,000 outlets, we’re well setup to provide a good Click and Collect service. Also we benchmark ourselves versus best-in-class.

Players like Amazon and Grainger to make sure we stay well ahead of our traditional competitors and catch-up with the best. The benefits of Wolseley are clear. Our customers rate our eCommerce offering highly. The net promoter score in this channel is 73 in the U.S. we’re just higher than our core business at 68 building loyalty amongst our customers.

The economic are slightly better in terms of basket size, gross margin and net margins given the lower cost of serve. It is clearly an area, where local players often don't have the resources or skill set to invest, yet customers are beginning to value it very highly.

Take some examples across the clusters in the U.S., our B2B business has grown from $370 million to nearly $800 million. From the data we have so far, the majority of this business is transferred from our traditional channel, but we’re now beginning to see some new customers coming to us simply, because we have a great online offering.

In terms of self service events which improves our productivity, we’re now up to an annualized rate of over £10 million and this is still growing by about 30% a year and finally our customers are continuing to convert with another 40,000 signing up in the last couple of years. We have in the U.S.

improved our search functionality with multiple My List options. We've personalized e-site to meet the exact needs of each different customer segment with Waterworks or facilities management and our mobile transactional site has been live over a year now and is growing healthily.

We’ve also set up E enabled inventory management systems with barcode reading and replenishment processes and this now takes up nearly 30% of our eCommerce sales. Some of the same for dispensing machines, which we’re finding have some real traction especially for our industrial customers.

We are e-trading with large customers and are running at a rate of about $100 in sales in H1, the other huge benefit of eCommerce is that we can test different executions. The example here being we tested a promotion and it gave us a 40% increase of share of business from existing customers ordering online. In the U.K.

we’re adopting the same path as the U.S. in terms of implementing what we know works well. ECommerce now represents over 4% of our B2B business, but it is growing at nearly 40% a year. We’re trading well with some larger customers and continuing to convert more with dedicated sales resources and there are over a 150 larger customers in the pipeline.

During H1 we have reformatted, so we platform the site to improve functionality and ease of usage. Our mobile transactional site went live late last year and we’re already seeing large usage visits are up to a 140,000 per week and growing rapidly. A trial of click and collect in 21 branch has started.

We also acquired a number two B2B eCommerce business in the U.K., which has annualized revenue of £25 million and is growing strongly at these margins.

In Switzerland and Holland where eCommerce is nearly 30% of our business, we’re continuing to improving our offering, although the growth has slowed, it is still at 7% which is faster than the core business and we've enhanced the technical product specs to a new level of accuracy and picture quality, product can be electronically ordered by scanning storage boxes, using a simple low cost scanner and labels printed from a standard sheet and we're also e-invoicing many of our customers to save costs.

In summary then, we’ve continued to make good progress over the last six months with board-based better topline performance across the Group. Flow-through was good in the U.S., but we need to improve flow-through in Europe in H2 and we do expect as John said to grow our profits in the U.K. and Nordics in H2 versus last year.

We have plenty of attractive long term growth opportunities to invest in and we plan to continue to invest behind the six key levers I outlined earlier to continue to gain profitable market share.

Today we’re only focused on three of them, firstly the network expansion in key metro areas particularly in the U.S., secondly, how we plan to grow larger and more productive sales teams and thirdly, continue to drive more activity through our existing network so that we do driver better leverage.

Supporting further e-commerce growth is an important part of doing this. Overall the investments we're making are beginning to deliver good returns and these investments are incremental and relatively low risk and this is why we believe we can continue to deliver attractive returns for our shareholders over the short and longer term.

On that note, we’ll happily take any questions. You can just wait for the microphone and explain who you are that would be great. And we go to the second row to start with..

Good morning, Andy Murphy from Bank of America, Merrill Lynch. Two questions, first of all on the e-commerce slide, obviously things are moving quite quickly and it's obviously offering you a lot of opportunity. Can you just give us a flavor for the like -- well, the growth rates you quoted? Are they including M&A? I suspect they might be.

But perhaps more importantly could you maybe, if you can, give us a flavor what margin improvement a growing proportion of eCommerce might be able to offer the Group? And just secondly on the potential disposals in France, could you give us a flavor for the amount of cash that might be raised, if that's possible? And just a flavor of what might be left after disposal in terms of properties and what income that might generate.

Thank you..

Just on eCommerce, all the data we got there was organic eCommerce. We haven’t got the M&A information of past empire or anything like that or Build.com.

So all the data is organic and look, in terms of margin improvement as I said, we are seeing, I mean this is why we’re encouraged by, now this may just be a function of the customers who adopt early, so we can’t be absolutely sure that it will happen across the whole of the customer base, but a little bit of an improvement in the basket size people are buying a few more items, it seems as if they're being more planful about it.

Secondly, marginally, marginally better gross margins and that’s predominantly because people -- customers can’t effectively negotiate with this, they have a set of trade terms or discounts. If they come into the branch, they will often -- they have big job want to negotiate again.

So we're seeing -- when you're buying online, you don’t have that opportunity, and thirdly, just slightly better net margins for us as well because it is lower cost to serve channel for us. So if we got to 50% of our business, how much of impact it will have be very difficult to tell at the moment, but it positive for us. France, do you want to….

France, yes, so I mention we got about £60 million of working capital assets on the ground in building materials business and I think it would be optimistic to think we're going to recover those. That’s where my £60 million to £70 million estimate of loss of disposals comes from.

There are about the same again in terms of property assets, real estate assets, associated with our business. It would be disappointing not to be able to recover those. So we ought to be able to exit France with the receipt of our property valuations of about £60 million or £70 million..

Does that exclude the wood solutions businesses?.

Yeah, the wood solutions business. All the accounting has gone through except for there are some loan notes on our books, but they're not material Andy..

Thank you..

Just pass it forward..

Howard Seymour from Numis, a couple for me. Firstly, could I just start on the U.K. because there is sort of two things you mentioned.

One, the markets are weak, but two competitive -- difficult to quantify, but do you perceive that the biggest issue at the moment is the weakness of the market because you mentioned you're a bit happier about life going out in the second half because there does appear to be an element of market share war going on between the two biggest players?.

Yes, look I think the -- actually if you look back over the last five years, in fact you take the market share of ourselves and our nearest competitor - actually together, we have actually gained market share.

Now clearly we've been -- we have and we do compete absolutely head to head with Travis, day in and day out, but I think your point is well made. At the moment it's more to do I think with market weakness than maybe there are probably three things going on, but the market is weak.

John outlined why, because there was lot of Eco activity a year ago that hasn’t now -- Eco too hasn’t kicked off, it only kicks off in April and our suspicion is that because of the election, all the big players will be waiting to see what happens in Eco-2. Eco-2 is quite a lot smaller in the boiler activity. It's about 15% in quantum terms.

Secondly, you do have to have two measures of efficiency improvements to get a qualification and thirdly some of the big players did have some hangover from Eco-1 over delivery that they can use to count an Eco-2. So we're not anticipating anything like the disruption that we saw in Eco-1.

I think the other factor is clearly the boiler manufacturers have been -- they've had a very tough time in the last six months. They had a good time a year ago. They've been very aggressive in the market as well. So I don't think it's just down to the distributors..

Okay. And secondly probably a general question, but you mentioned that the sales management, what you're doing there etcetera, does that require a change in terms of the incentivization to the salesman as well because obviously you are from the one hand you're judging them too aggressively.

But on the other hand do they then expect a bigger share of the wallet as a result?.

Yes, I think look across all the classes and it does vary quite a lot between the classes. I mean the U.S. has got a well established commission structure based on the metrics of gross margin and then obviously the scale and size of the customer that they're dealing with.

That has worked very well and you can see it in the results and we pay our salesman good commissions in the U.S.

In Europe and when we come back to Europe, the commission structures are far less -- historically have been far less ambitious and we've increased the degree of leverage in those schemes and that is part of the reason why cost in H1 have gone up a bit. We have put more money at risk in terms of these incentivization schemes.

We've also I think become because of the data we've got now, we've been able to really penetrate the management, the day to day management of the sales teams and bluntly weed out the really strong performance from the not so strong performance and making sure that the strong performance are really getting the rewards that they thoroughly deserve.

So I think we like to move all of the businesses more towards a more [mortgage] [ph] commission structure and bluntly we've got to test our way to get to the right position here. We just don't know in the U.K.

and Nordics and also in Canada as well where will be the right sort of balance between incentivization and topline trading off a bit, but I think we still got a fair way to go in that respect, but we're working -- it's a good point -- we're working very hard to get those incentivization schemes to work for us now..

Thank you..

We'll go directly behind those two gentlemen..

Hi, Gregor Kuglitsch from UBS. Can I ask a question on the Scandi, it's obviously in more difficult reflecting I think your impairment charge, can I -- could I get a sense to what you think this business can go to long term? I think you're now sort of 4% margin, it used to be north of 7%.

Is there any reason why you think you can't get there and perhaps some kind of view on how quickly?.

Sure..

And the second question is on U.S. flow through. You mentioned 12%, I think in the second quarter it was quite a bit lower than that. Can you may be elaborate on expectations of flow through rates from here obviously with the higher level now in terms of revenue base and have quite a bit.

And then finally in terms of -- you're obviously getting rid of France, now you've got relatively small Continental European business left is performing well. Is there any reason, I know it’s performing well, but is there any reason that should remain in the group considering a sort of a little bit isolated now. Thank you..

Sure. I’ll do one and three John, you can have a crack at two here. Look in terms of Scandi yes, we do think we can get back to far better margins than we have now. The peak margins in Scandi was about 7.4%.

That was let me stress that was at a time when a buy-out company was selling it to us and we were undoubtedly paying, I think a full, very full price.

The reason for that is several fold, firstly, we didn’t see any structural differences or any material major shifts in the market that would prevent us from doing; our gross margins are very similar to where they were pre the recession, so there hasn’t been a decline in gross margins, and clearly in a market like the U.S.

where we’ve now had four or five years of good growth, you can see what we can do in terms of net margins and it's pleasing to say that we're now well ahead of our historic peak. But I think as we've always said, we do now need three or four years of good growth in the market that we're playing.

Scandinavia has been I think it's been a surprise to us in terms of actually out of the recession, the first two years out of recession, if you would back at the numbers. We actually did get some good leverage. We got the margins back up to the sort of 5.7 to 5.8 levels and it’s come down again since then which is disappointing.

But the markets have been very tough for the past three years. Only in the last six months, literally we've begun to see a little bit of growth in Denmark. I think some reasonable growth in Sweden, but Finland as you all know is still a very tough place for business.

So it's pleasing to see our topline performing better and that was obviously a very conscious decision on our part to invest in more sales and marketing activity to drive that topline and we do anticipate that top coming through in the second half to better profitability.

To get back to peak we're going to require three or four years of good solid market growth but fundamentally, we don’t see any reason why we can’t get back in terms of the margins. In terms of the Switzerland and the Dutch businesses, they are both very good businesses, the plumbing and heating businesses we know them. We understand them.

They are in relatively good market share positions. They're well run. They're decent businesses. They are well above the WAC for the Group. So they're not in any way dilutive to us. Switzerland, we have a super business there. It has a north of 8% return on sales.

In Holland it is tougher, but again I think from a eCommerce perspective, we're learning a lot from both these businesses and actually we do plan to invest more in trying to build a B2C business based out of our Dutch platform, which is a very, very efficient platform because it’s a relatively lower gross margin business.

So we think those are two good businesses for the longer term..

Yes U.S. flow-through in Q2 was sort of slightly lower than I guess we had expected. We lost a trading day, which has an impact. The GM was tough, it was quite tough going on margins in Q2 in the U.S. and then the third is the acquisitions were quite dilutive as well. You can see that in the numbers.

So I think going forward, we haven’t changed our outlook, our view, we haven’t changed the team. We haven’t changed its view. This is very much is a 12-week period. So we're looking forward to getting better flow through than we had in Q2 going forward..

Okay, good thank you..

It's Paul Checketts from Barclays. I've got three questions as well please. The first one is on the U.S. opportunity Ian, perhaps could you summarize what you think in the U.S. really are the biggest opportunities either by vertical of by geography as opposed to New York. It sounds like it would be on that list.

And the second is on the acquisition of BathEmpire, I appreciate its not new news today, but perhaps you could explain what it was that attracted you to this business because I know there is another one out that was probably on the agenda and what’s the strategy from here to grow that and as a second part of that, why was the Build.com didn’t work in the U.K.

And the last one for John please, maybe you could outline what the M&A pipeline looks like at the moment?.

Sure, look I think in the U.S., we've -- we really do see a sort of metrics here of growth opportunity. We can see very good growth in all of our core lines of business. Our Blended Branches business, we've got an 18% absolutely market share. We're the market leader. There is a huge amount of fragmentations still to go.

So a lot of organic growth there across the whole of the geographies, certainly organic, but also we would do bolt-on M&A whenever we see that coming up and we will take that opportunity. Waterworks, we're over 20% market share, we're the number two player just behind HD Supply, again lots of opportunity for organic growth there.

We would take all of the big metro areas and look to see how we could expand that business, probably more limited in terms of bolt-on M&A because in certain states, we will be probably running into some competition issues and very few of those companies will come up for sale.

But exactly the same we would say for HVAC, industrial and also in terms of fire and fab and the B2C eCommerce business, we want to grow all those businesses organically and sensible bolt-on M&A and to your point geographically, it really is now far more around the big metro areas as I outlined.

Sure New York is a huge one, we've put a lot of capital deployed there. We won’t need to deploy the same amount of capital obviously in some of the other metros. We’ve already got good infrastructure. DC's a branch that we can use, but absolutely we see a huge, huge way of growing organically across the dock.

In terms of BathEmpire, it’s a very nice business.

It is predominantly driven by an own label offering, the BathEmpire offering and that’s what really attract -- so the size, the scale the growth and the own label nature of the business, which does give far higher gross margins and that was really the reason why we were not succeeding in TapOutlet, UK the business that we set up because we were selling branded product there, they weren’t own label and the gross margins were just nowhere near the degree or the level that we thought was going to be exciting for us moving forward.

So I think BathEmpire for us and had we not acquired BathEmpire, we were absolutely going to do this organically. So it came along at the right time for us..

And in terms of M&A pipeline, John?.

M&A pipeline there are eight to 10 opportunities in the M&A pipeline at the moment, $300 million or $400 million turnover in total. So it does move quite a lot, if one or two is the larger end of those, so it just move a little bit month-on-month, but it's nice to land some of those in the second half. There is nothing very large in that pool..

Good, thanks and just last one is on Chicago is that possible organically to replicate?.

It will be a combination of organic and bolt-on M&A in Chicago. Again, we would like to do more bolt-on M&A, but if not we will be doing it and are doing it organically now..

Can you pass the mic to Tom behind you?.

Thanks very much, Tom Sykes from Deutsche Bank. Just a few questions on the U.S. please.

So firstly just you mentioned the gross margin was a bit weaker in the quarter in the U.S., were you getting a benefit though of Workers Comp rates coming down? So was the gross margin include those and if you haven’t got the benefit yet, would you expect the benefits of those to come through over the course of the second half and then just when one looks at the gross margin improvement over the last say three years, could you say roughly how much of the operating margin improvement has come from gross margin improvement and how much may have come from leverage overall of advantages leveraging the business.

And then just finally, you gave that diagram, which you’ve given before of the percentages of market share by state.

I just wondered if you could say how consolidated your business is in say the top five states in the U.S.? How important -- how much of sales and in particular perhaps at the moment, how much of the growth of the accounting for it as well please?.

Yes, so gross margin Workers Comp is totally irrelevant to our cost space. So it’s not -- it’s just immaterial Tom. G&A over the last three years it’s a nice, it is an adult.

Why have we been relentless in talking about gross margins, since Ian and I arrived to the business? The reason is to make sure that we don’t get them beat down because it's very hard work when they start getting bid down, but most of the leverage has come through volume growth essentially that is very important in the business.

The third is the top -- the revenue of the top five states is 45% that is pretty similar to the GDP of those top five states, you can guess which certainly four of them are and given that our home is Virginia, we can probably guess the fifth. So the growth though is very broadly based.

The growth in those states, there is no significant difference between the growth in those top five states and the growth in the other 45 on a percentage basis obviously the numbers are bigger..

Okay. And just would you be able to split out Texas from that and how important….

Texas is about 10% of the U.S. business..

And growing....

And growing similarly to the U.S. business..

Okay, great. Thank you. And just going back to what you said about the gross margin, and I think you did say before the gross margin was mainly plus minus 100 basis points over the course of the cycle. So therefore have you seen that kind of movement in the U.S.

gross margin given that you’re stating that your back at record highs?.

On the net, well we're back at record highs on the net margins of 7.9% as it happens that gross margins are at peaks as well, but if you look back over time, the gross margin for 20 years is improved pretty consistently in the U.S.

not every single year, but nevertheless if you put it on the chart, the chart goes from the bottom left to the top right and I look it’s a few percent, I mean it sits 2.5% over 20 years..

Okay.

But that's the sort of progression that we've had, that’s neither accelerated nor decelerated particularly in the last two or three. Lots of different reasons by the way for that margin at different points in that evolution, does that answer the question..

Yes, it does thank you..

If we pass the mic across in front quick....

Yeah, morning Yuri Serov of Morgan Stanley; a few questions not that many.

First of all on acquisitions, may I just ask you a bit more specifically, you only spent £28 million in the first half then you had five more acquisitions since the ending of the period? What is your expectation on the total spend including those five for the full year and also, could you also give us your expectation as to whether you think that you’re going to spend on acquisitions more in your fiscal '16 than in this year? What's your intention and yes, I know that it's hard to predict and it's lumpy, but from your perspective what are you desires, what are your plans?.

So as you said in the first half the investment was about £30 million, since its yearend, it's been about another, sorry since the end of the period, it's been about another £50 million. If you look at sort of conversion of the pipeline are we going to get to £200 million this year, don't know.

So likely to be less than £200 million, I would think £150 million is a decent estimates. Don't hold me to that in six months time.

Next, we haven’t really changed over view Yuri on sort of the likely incidents of M&A coming up and our ability to sort of system through and convert the ones we want to £200 million or £300 million a year would be -- would continue to be our estimate of what we're likely to bring home..

And your expectation is that that level, will basically remain in the future years. You don’t expect to grow at I don’t know 25% every year. .

Well, I think it will be -- I think they're volatile. I think we said before, we've looked to sort of three or four over the last sort of four or five years, which have been quite a lot bigger that was sort of break through that.

I think they will continue to be somewhat lumpy if you bring one of those home by which you mean, if there arises an opportunity and it stacks up in due diligence and we really want to buy it because we add value to it, then it's quite binary. So I don’t really see that it will step up at 25%.

I think it will be volatile along the way and £200 million to £300 million remains our best view of the likely range..

Okay, thanks. The next question if I may, so you’re pushing for market share in many markets. In the U.S. you're growing very rapidly faster than the market. At the same time there is price deflation and we’re talking about gross margin pressure.

Is there a correlation there? Are you being more price competitive, is that your current tactic and you’re also talking about investing and increasing your revenue more now than in the past..

Yuri look no, very, very specifically, we do not want to become share gainers by reducing our prices, okay. I think we’ve highlighted quite clearly, as the markets have come back, there is growth in new build, new build be it residential, commercial or institutional or industrial is the contracted work that is lower margin work.

So as you get market growth recovery, there will be margin pressure point one. I think the second thing is we are very explicit with our teams about what we’re trying to achieve here, which is to manage the mix of our business to improve our gross margins going forward.

So there is no desire for us to reduce price on a given product or given SKU to gain share. Now around the edges at the margin there’s bound to be some element of that. Clearly we can’t control 8,000 sales people on a day to day basis.

And we have made it very clear in the company we do want to step up our rate of organic growth, but not at the expense of gross margin. So the good news in the states we've managed to hold our gross margin and nudge up a bit. In the Nordics, we got good growth and held our gross margin. We talked about the U.K.

it was disappointing from a gross margin point of view and the team are hard at it trying to improve the mix of the business, because where the gross margin improvements have come from over time, is not by selling more of a standard SKU, it’s by improving the mix of the business.

So selling more plumbing equipment a bigger showroom business, more pipe valves fittings business, more drainage products, those are the products where there are far higher margins and better pricing control.

So we believe there’s still a hell of a lot that we can do to gain market share, but to do that profitably without increasing the price pressure..

There’s probably just wroth commenting Yuri on deflation and what we mean by deflation that’s a measure of our input prices, our purchase prices. So we said that in the U.S. and U.K. and Central Europe, this time we got modest deflation. Actually it was less than 1% and we got modest inflation in Canada and Nordics of about the same amount.

And then the only other sort of area where deflation really has shown if you’ve got commodities, you know copper has come off for example quite a lot over the last couple of years. Some of our customers are quite sensitized if you’re buying copper pipe, a lot of those customers know what the copper input is.

That's not reflected in our pricing strategy. Our pricing strategy in a sense is independent, because we’re trying to edge our margins up. So we’re not trying to use price or deflation as a way of sort of gaining share and reducing our margins that’s not there, that’s not in our talk..

Okay. And if I may just one last question. On the branches are you starting to add more branches to your network you are showing two or three additions in the U.S. some of that will be acquisitions I don’t know when maybe you publish the number how of much of that acquisitions is just didn’t notice.

Can you talk about that a bit?.

Yeah it’s in the appendix. So you’ll see the branch movements in the appendix. But just overall, there is some branch expansion. I touched on to for example Canada, we have some very specific opportunities and we have not been able over time to find the acquisition opportunities.

And therefore we’re absolutely pursuing a Greenfield strategy, we’ll also continue to look at M&A. If you look for example in the U.S. something slightly different is happening where we’ll be looking at the network and see is that the best network to reach -- to reach and service the customers.

So in some instances, we’re still doing some modest consolidation. Look it’s not a lot, but I think you’ll see the network remaining fairly stable in terms of numbers, of course over time, we’ll need a bit more volume to put more volume through in some areas.

But I don’t think you’ll see the whole shape of the network changing very substantially except where we’ve got areas like New York and Ian talked about where we’re absolutely trying to expand our footprint substantially..

But your revenue growth is continuing how much more capacities do you have in your branches? At some point to continue growing you probably will need to start adding branches even if you don’t want to capture new areas, but simply just to service the business in the existing….

And if you go back sort of five years, we had a lot of questions about how much surplus capacity was there in the business. That’s not how we think about our business. What we really think about is what you’ve got all the channels and you’ve got fulfillment channels.

Those fulfillment channels include Supplier Direct, they include DC Direct, they will include -- will include now Hub Direct to Ian's point about for example the cyclical ship hub, branch pick up and branch delivered. It's only really the branch pick up that needs you to have lots more branch space.

So we need to see how important that fulfillment channel becomes as a part of the overall revenue growth Yuri. In some areas, yes we’ll need larger branches. You need a large marshalling area. You need to carry more local inventory. But for those other fulfillment channels, you don’t necessarily need more space close to the customer. That makes sense.

So it will vary a little bit but I don’t think, we will see -- if you look now, we’ve had 40% something of growth over the last four years in the States and we haven’t added very much capacity at all into the U.S. and that's partly because of really trying to optimize the use of those fulfillment channels..

Okay..

Aynsley Lammin from Citigroup, Just given your comments on the run rate for likely runway for acquisitions and sale of France should we reasonably expect some more kind of share, capital returns and given the share price, we’re at balance should you have to announce a share buyback.

Should that be -- should we expect that to be more in the form of special dividends and if you just comment on what should we expect in that 12 months in terms of scale as well.

And then secondly just on the -- if you could confirm the kind of and what you think consensus trading profit for the full year is?.

I am not allowed to make any comments about consensus because John will smack me, so definitely no. But just I think in terms of your adjusted balance sheet, we’re very clear we want to fund organic growth dividend, bolt-on M&A and then if we have spare cash we will return to shareholders. So we do that process every half year and every full year.

It depends on conversations around the M&A pipeline, exactly where will be at the full year and then 12 months from now. So I don’t think, we've changed our view on that. It totally depends very much on where we are and I think we're kind of agnostic in terms of which way we get it back to shareholders, whatever is the best use at the time..

On consensus, I think yesterday night consensus was 855 for ongoing trading profit I’m getting some notes from 855?.

Clyde Lewis from Peel Hunt. Two if I may. Just one on the comments in the U.S. and your competitors, you flagged up Grainger and Amazon as being best in class.

Could you maybe just run through how you think you will fare compared to them and I obviously understand the differences versus Amazon but Grainger obviously there is little bit more of a similarity.

So just wanted to go through that and whether you think you’re out or underperforming those two piece in particular and the second one I had was on the U.K., obviously there is change in management that is actually sort of knock on and have any other impacts in terms of sort of how the structure as opposed within the U.K.

and within the European business will also post that management change?.

Look in terms of Amazon and Grainger, if you take Grainger first and actually Grainger’s results seemed to have slowed down a little bit on the top line in the last six to nine months they're still a great business.

So there is still very good and certainly from an eCommerce perspective, they have a penetration way up into the mid-30s getting a close on to 40% of that business. So we look at them as a very valid analogy for us.

We don’t compete directly probably about 10% of our business is overlapped with them and look what we do is we benchmark our performance in all the functionality of our eCommerce offering, website availability, product availability, list all the way through it.

Two, three years ago, we would have said, we would have been scoring versus Grainger six or seven out of 10. We’re now up at about nine out of 10. So I think we have done well to catch up.

Still a lot more to do and again they keep moving forward, but I think we feel okay now about where we are in terms of our eCommerce offering versus Grainger clearly versus virtually all of our local smaller competitors in the states we're a long way ahead. We've invested a lot over the past five years.

It would be CapEx wise upwards of $30 million, $40 million to put a really good eCommerce platform in place compared to the local competition, I think we're in very good shape. Versus Amazon you know two years ago they announced the launch of the Amazon trade offering.

It doesn’t seem to have gone that well for them and if we look at the latest set of announcements, they look to have been as our American colleagues say sun-setting this offering. I think they're not going to do it anymore, but I’m not sure I may be need to interpret that one.

But we followed the electronic traffic on it and it never it really picked up, it’s a tough market to come in with just the straightforward big range SKU offering. You do need sales people. You do need advisory. You do need relationships with our people, if you go into our branches, I know you’ve done you see a lot of conversation going on.

It’s not always easy just to order the SKU you want. You got an old pump, you need spare part, all these sorts of things and I think that’s what Amazon have found difficult and therefore I think they’ve got better fish to fry. Now we're not complacent. We'll keep a close look on it so far. Amazon hasn’t had a material impact on our business at all.

And in terms of the U.K. management, look it was the right time, Steve was keen to do something else. I think we all agreed it was the right time to move on. Patrick has done a good job in Central Europe. It has been easy for him, but he is a smart guy. He actually has a good eCommerce background as well and I think he will drive the U.K.

business further forward. Would we expect massive management changes in that? No I wouldn’t. We've got to get that gross margin moving forward and he obviously understands that..

Thanks John Messenger from Redburn. Maybe if I could stick with that last question Ian just carry on for a moment, when you look at the U.K., obviously earlier we saw the 60:40 split in terms of sales kind of driven revenues. Can you give us a bit of a shape on what the U.K.

actually looks like today because I suppose behind this I’m thinking with Steve leaving, is there not more fundamentally issue for the U.K. going forward in that you got 762 branches, big DC up in Leamington.

When we look at one of your key competitors is doing the argument is look the cost certainly needs to be incredibly low for that kind of high volume contract market and we need a slim down network with DCs to deliver to that. Is there not actually a challenge for Peter coming in that actually the U.K.

needs a pretty dramatic overhaul just make it fit for purpose or is there a sales mix differential that you would say look we still need the branches, we still need cross service offering, we have to have that. Second question was just on the guidance for U.K.

and Nordic making progress in the second half, can I just be clear whether that’s on a like-for-like or including acquisitions because obviously Fusion Provida and Puukeskus were in the second half benefit or should be an accrual coming through there.

So are you thinking like-for-like or is that with the benefit of the tailwind from acquisitions that you expect U.K.

and Nordic progress? Third was just BathEmpire, can you give us an idea of what it means, how much have you bought in terms of the equity stake, because obviously we've minority going forward and was that the company you mentioned in USPG and about B2B offering, are you defining it as B2B or do you think it as B2C because you mentioned something around the $25 million in your speech and final one was just again in terms of actually I will stop there?.

Good. John I will go to the first one as you could take two and three..

Yes..

John it's a fair challenge about the U.K. market, when we benchmark our overall sort of supply chain cost and look at it, it’s very competitive.

We think it’s a good network to have as you rightly point out over 750 branches, which gives us good deep coverage to where we want to in terms of the plumbing and heating business in the Pipe and Climate business and the DC network is not just one DC, we have several across the country, we just opened up a new one to support the Pipe and Climate business and mission.

So I think from a supply chain point of view, I would anticipate that we need to do radical changes there. We know it’s a good infrastructure. I think fundamentally we have got to get more volume through it, but more volumes through it at the right margin and to the earlier conversation there is still a hell of a lot more that we can do.

Steve has done a good job getting us to where we to go to. We got out of some very unattractive businesses, he and the team did that very well, I think moving forward it very much is about though driving that mix of business. Relative to our U.S. business, we are significantly underpenetrated in the plumbing business.

We have 40 showrooms if you do the math, we should and we absolutely planned to have 100 showrooms okay over a period of time. That is a better mix, higher gross margin business for us similarly our other business is the Pipe and Climate business is a higher gross margin business as well.

And thirdly, I think the discipline that we have in some of our other businesses in terms of pricing management again we made good strides in the U.K. I think again there is more we can go at.

We're just putting in now a place, a very good price guidance system, basically for every single item in the branch, it drags out the last six months worth of transactions across the whole of the branch network and says these are the ranges of pricing, you want to be pricing this you knit at. So you don’t need to guess it anymore.

This is the price you ought to be going in at and this is the price that people are buying at. So it is robust and our people are really trusting. So we got that in 69 branches, now we’re planning to roll that out. So I think it is very much around managing more profitable volumes through the existing network rather than reentering the whole network.

John do you want to add?.

Yes the U.K. and Nordics the comment are really made on an absolute basis just reported versus reported. We expect reported profits to be higher in the U.K. and Nordics in the second half than reported profits last year, John. Just in terms of BathEmpire, we've acquired a majority stake. It turned over last year £26 million.

We’re being very respectful to our joint venture partners in this. We still own a significant minority stake. So we’re not disclosing profitability in those types of things. It's not material actually to the Group. So we’re not going to disclose too much on that.

What we’re going to do is support the business to carry on growing in the way that it has and try and get the best possible growth out of that business..

John that was a B2C business, it's B2B, apologies its B2C..

And sorry, there was one final just France.

Just looking at the numbers because the 66 kind of just to be clear that, when you think of building materials France that is international wood solutions and BM is that total working capital numbers that you mentioned, is that correct?.

No, the wood business accounting has been done, that’s what given rise to the exceptional item in the first half. The BM business, that accounting could not be done at the half year because you're not allowed to anticipate essentially a loss on disposal under IFRS 5..

So when we look at net assets at £129 million in terms of what's carried forward as discontinued, you're basically saying look we should get property back at £70 million and the other balance effectively we make at zero.

Just on -- is that because we're talking working capital here, clearly I guess the diary issue in terms of what you have to basically get going with the business to get somebody to buy it, but is not an argument to actually just run the bloody thing down brutally or is there -- does the just property valuation rely on the ongoing business effectively as the rent grow..

I think it’s more the latter John because we’ve got 2,500 staff as well. So we need to be suitably careful with that, business loss $4 million in the first half and actually in the second half of course its seasonally strongest.

So we should get to breakeven in the second half, but the market is in a very challenging place at the moment in France because you can see new starts that have come off very substantially and 50% of that business is serving the new built market. So it’s a tough all old market. Look hopefully we’ve been glum.

It would be nice to stand up there in six months or 12 months however long it takes us and say, we've been glum and we got something for us. It’s just a -- its our best view at the moment John..

Thank you..

Sorry time for one more. I think if take the last one here..

Thank you. I've just got two questions to come back on basically answers that you’ve given. Firstly, I’m slightly struggling to understand the basis on which you took the goodwill impairment in Nordic.

If you’re still saying its perfectly achievable medium term to retrace the sort of margin profitability levels that you've had in the past and secondly, when in respect of your 6% like-for-like second half in view of what was achieved in the first half again going back to your sort of commentary through the divisions.

I’m sort of struggling to see which areas you seem is going to be growing slower than the first half?.

Yeah. So, I think on the goodwill, if you look back, what you have with goodwill and I'll give the accounts in terms because Ian can give the positive stuff. The reality is if you look back two or three years ago over time, we have not achieved our expectations.

As a combination of the market and finding other factors as well, but we haven’t achieved it and therefore, we have to look pretty, pretty totally up that as a bench of attendance and that’s what we've done. Clearly with our -- we’re absolutely going to define it at like hell to make that that business as good as we possibly can.

The accounting for it, I think is just a reality of where the business is trading compared with where we expect it to be trading two or three years ago..

Yeah, I suppose the underlying question is there is no hint in what you're doing here that you're in any sense preparing to market the business or any other businesses..

No, that’s not the purpose of the accounting. The accounting is just done very coldly and very analytically, completely separate any commercial considerations are clearly, if we're going to market it you wouldn't. If we were going to market it last thing you would do is want to take an impairment.

For the impairment review just stands alone it's a cold harsh analytical accounting exercise. Do we regret having to take, yes of course we do. It’s a relatively long time. We absolutely bitterly regret having to take an impairment charge, but we really bitterly regret is that we haven’t managed to achieve a better performance in the business.

Does that make sense? Just on a like-for-like in the second half, I think if you look at the Q2 like-for-likes, they were clearly pretty good compared with weaker comparatives this time last year. If you remember this time last year Q1 going into Q2, we've had some lousy weather in the U.S.

and the like-for-likes were quite a lot lower as a consequence. So today, the sort of Q1, Q2 like-for-likes particular in Ferguson have been comparatively stronger because they were against weaker comparatives. Now we are coming up against some pretty tough comparatives in Ferguson.

First one and then second if you look around Europe, Finland, Switzerland and Canada as well, those three in particular have still got some headwinds. So we wouldn’t expect those necessarily to improve in the short term. So that’s the reason for our overall view on the 6% in the second half..

Thank you..

That was going back and actually we got no plans to market the Nordic business, just so we're crystal clear on that..

Good, I think that’s it in terms of time. Thank you very much for coming..

Thank you..