John Martin - Group Chief Executive Dave Keltner - Interim Group Chief Financial Officer.

Paul Roger - Exane Tom Sykes - Deutsche Bank Aynsley Lammin - Canaccord Gregor Kuglitsch - UBS Charlie Campbell - Liberum Manish Beria - Societe Generale Arnaud Lehmann - Bank of America Ami Galla - Citigroup Kevin Cammack - Cenkos Securities.

Good day and welcome to the Wolseley First Quarter Interim Management Statement IMS Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. John Martin. Please go ahead, sir..

Thank you, Cecilia. Good morning, everybody, and welcome to the Wolseley Q1 conference call. This is John Martin, you’ve got here. I’ve got Dave Keltner, our Interim CFO on the line. Dave is travelling today in the U.S., but has dutifully dialed in despite the horrible time difference.

We’ve also got Mark Fearon and Nick Hopkins from the IR team here with me too. Just touch on some brief highlights from the first quarter and then get straight into your questions. Firstly, we made total constant currency revenue growth of 5.2% in the quarter and that included like-for-like growth of 1.8%.

Commodity deflation was still a headwind in Ferguson knocking 2.4% off the growth rate in the U.S. equivalent to £12 million of trading profits in the quarter. So volumetric growth is still pretty good, with a growth rate in Ferguson overall of 6.6%. Turning to the market, U.S.

residential and construction markets have continued to grow well and actually industrial end-markets have progressively steadied. In the other regions, we were more challenged, as the UK heating market remained weak and Nordic construction markets deteriorated.

We did have an extra day in the quarter and some branch growth so total organic growth was 3.3% and acquisitions worth another 1.9%. Exchange rates had a significant impact with the stronger dollar and euro adding 17.7% to the total reported growth of just under 23%.

We were really pleased with our gross margin performance continuing to make excellent progress recovering the value that we add to our customers. So total gross profit at constant currency was up 5.9%.

A few weeks ago, the full-year results, we talked about our investment plans in the areas of e-commerce, MRO and technology and we’re getting on with each of those. They have contributed to overall cost growth, which at constant exchange rates was 7.4%, including 2% from acquisitions.

We are also very close to the cost base, because we want to make sure it doesn’t exceed growth in gross profits. But we don’t want to choke up growth either in those markets, which are growing, but we have implemented careful restrictions on headcount where that’s appropriate in the business. Trading profit overall was 1.4% ahead at constant exchange.

One more trading day, which is worth about £6 million of trading profit and FX chipped in £48 million of additional trading profit. Net debt at the end of the quarter was £1.169 billion and since the end of the quarter, we’ve also paid final dividend of £167 million.

In the quarter as a whole, we invested £206 million in four bolt-on acquisitions that includes Signature and Westfield licensing, which we told you about at the full-year.

Since then, we’ve bought two blended branches businesses, Ramapo Wholesalers in New York and New Jersey, that’s a seven-branch residential plumbing business, nice business, and another really nice business in Hawaii called The Plumbing Source.

And since the end of the quarter, we also bought Underground Pipe, which is a Waterworks business in Indiana and Michigan for a further £10 million. Let’s move on now to the operations. Ferguson grew at 4.2% on a like-for-like basis, with acquisitions contributing another 2.6%.

Blended branchs, HVAC, fire and fab, all generated good like-for-like revenue growth, with volumes holding up very well. B2C growth was particularly strong. Residential, which is about 45% of Ferguson sales, continue to grow at a healthy 10%, including a bit of a kick from acquisitions.

Commercial, which is 28% of Ferguson revenue also with a little bit of favorable impact from acquisitions grew between 5% and 6%. In the more industrialized regions, such as North Central, growth was weaker. But industrial now was only slightly down year-on-year. Municipal, which is about 15% of sales grew at 4%.

As we mentioned, we did continue to feel the effect of commodity deflation that reduced revenue in U.S. by 2.4%. But at current selling prices that drought on sale and profitability should begin to ease off in the second and third quarters.

We made really great progress again with gross margin in Ferguson all the major businesses ahead of last year and overall Ferguson trading profit was £55 million higher than last year, including £39 million of favorable FX movements. In the UK, revenue was 2.9% lower like-for-like.

RMI markets, which is where we get the most of our sales have stayed pretty weak. As you know, we work hard over a considerable period of time now to try and improve the gross margins in the business, which we did this time in highly competitive market conditions.

It was great to see gross margin edge ahead in the quarter though trading profit was £2 million behind last year. The Nordics was also 2.9% lower on a like-for-like basis with weak consumer sales, particularly in Denmark and Sweden.

Gross margins were also a little bit weaker there and trading profit at constant exchange rates was £5 million behind at this time last year. Canada and Central Europe were 2.7% behind like-for-like. Gross margins weaker, trading profit was a £1 million behind last year, including a £4 million benefit from favorable FX.

Canada, demand in Alberta, which is the major oil-producing hub has been very weak, but the other regions held up very well. Demand was also pretty weak though in Switzerland.

Just touching on restructuring actions, the turnaround in restructuring plan in the UK that is proceeding well, we are very pleased with progress and that we’ve made some very strong appointments.

We’re working through the first phase of 22 branch closures, all subject to consultation, but we’re also making very good progress, for example, with the customer sides, the RM side, and also on the supply chain solution side. In the Nordics, the strategy review is well underway.

The team is doing a really great job and we remain on schedule to finalize that work in the spring. In the interim, we are reviewing any unprofitable branches and we are implementing cost reduction initiatives, as you would expect us to. Just a reminder, there are no material restructuring charges in the numbers today.

We have incurred less than £5 million exceptional restructuring costs in the year to-date. Finally, just turning to the outlook. Like-for-like revenue growth since the end of the quarter has been broadly in line with Q1. Markets continue to be mixed. There is some uncertainty in the outlook. But we stay confident.

We will make further progress in the year ahead, and we expect trading profit for the group to be broadly in line with analyst expectations at current rates. That’s it for me, Cecilia. Many thanks. I hand it back now over to you to get everybody’s questions. Thank you..

Thank you. [Operator Instructions] We will now take our first question from Paul Roger from Exane. Please go ahead..

Yes, good morning, everyone. So I’ll just have two questions to kick off please. The first one is about the U.S. incremental margin. I think in Q4, this is about 5%. In Q1, it’s got a bit better to 7%, but it’s obviously below your double-digit sort of medium-term target.

I was just wondering why exactly that’s the case, whether this is the new normal? What drop we should expect for the rest of the year? That’s the first question. The second question is on the cost base. I think, you said it increases by 5.4% due to new investments.

Is that investment likely to continue at this rate, and how should we think about a return on that investment?.

Thank you, Paul. Look, on the incremental margin it is – the first question, it is something new. I think, when talked about this before. We’ve seen slightly lower growth rates in dollar terms, though we have seen higher volumetric growth rates and certainly over the last six or nine months whilst we [state] [ph] that deflation.

We got a business where we have to handle the volume, which essentially we’re not being paid for. So that is certainly an impact, which has dragged on the flow through over recent quarters and that is continuing at the moment. As we said, we would be sort of cautiously confident.

But at current rates, we will see the end of some of that deflationary drag. So that’s the first sort of impact. And the second impact is the investments we’re making. Look, these are very commensurate by the way with the scale of our business.

I think, as Dave pointed out at the end of year, we’ve got an extra $30 million in Ferguson this year to invest in those three areas, $32 million, I think it was. And these are investments that we are pressing on with.

We are absolutely eager to make them because they will yield, we think good results, in the areas of e-commerce, MRO, and the technology investments. If you look at the returns on our investments, e-commerce, it is very clear to us, now, if you look at that investment, it’s both in B2C and in B2B.

B2C, you get the benefit straight through on essentially incremental sales of top line. B2C continues to grow very strongly, we’re very pleased with the progress of that. And B2B, this makes us more – it makes us more efficient.

And we think long-term, it will also make the customer – it’s a great service for customers, it will make customers more sticky if that’s the right word as well. So – but the returns there really are returns long-term in lowering our cost base. If you look at the MRO, that’s a new adjacency. And we currently know, it’s currently profitable.

It’s a good business. But it’s quite early days for us to really have great visibility on where that will go; the scale of that business, the scale of the growth, and the profit flow through. But all of those, we’re doing this, because we believe and we believe strongly that there will be good returns there over time.

So, I hope that gets you some color..

Yes, I mean, it does.

If you think about the commodity deflation basically eases from Q2, but you continue to make the investments how should we think about the trade up in terms of the drop to your margin for the rest of the years? I mean, do you think for double-digit, it’s achievable when we think about full-year 2017?.

Go on Dave..

I was just going to say for our flow through, you’re right, I mean, it’s – the deflation has had a pretty significant impact on that in the first quarter, about £12 million of the trading profit came off with these investments. And the deflation, we’d say, we still believe we can hit high single digits in our flow-through for the year..

That’s great. Thank you..

We will now take our next question from Tom Sykes from Deutsche Bank. Please go ahead..

Yes, morning, everybody. And just on your headcount outlook for the U.S. and what you’re actually seeing on like-for-like wage increases, which you would be able to give a bit of clarity on that please? And then you speak about the trends being broadly in line? If you exclude the deflationary effect on the U.S.

growth, do you think that you will see an acceleration from here, or are you seeing an acceleration from here? And maybe could you just pick out the main points on the movement in gross margin, is that business mix sort of one off sales, rebates, what’s the biggest driver on your gross margin, please?.

Dave, do you want to take the first couple of those, and I’ll take the movements on the gross margin?.

Yes, that’s fine. So our headcount outlook has been fairly steady. We have added people who we have needed in the first quarter, but at a decreasing rate. The cost of those we have not yet really seen inflation for new hires coming in.

And we did – we do our merit increases in August and provided about a 2% annual increase for the bulk of our associates, which we still feel is competitive in the market. Clearly, we are seeing and hearing signs that this is likely to pick up. But we’re not seeing it in our numbers yet.

In terms of the trends on the like-for-like sales, as we – as you mentioned, we do have pretty strong volumetric sales of 6.6% when you add back the deflation impact.

As that deflation starts to go away, we would anticipate that we maintain about that same level of volumetrics, but not seeing really any increase to the like-for-likes over and above the volumetric piece..

Thanks, Dave. And then on the reasons for growing the gross margin, Tom, I think I’m afraid, there are a number of these as we’ve talked before.

One of them on a mix basis, we’re rather keen to make sure that we grow those channels, where we can secure better margin by adding more value to customers, that includes the counter channel and also [showroom] [ph] channel. I think if you look, we’ve continued this quarter in Ferguson to make good market share gains.

That’s very relevant to the negotiating position with vendors. Many of our vendors for a long, long periods of time have grown with us. And of course, they have to reward us as well properly for that – for those market share gains, because we are helping them gain market share as well.

And I think the other sort of really key area is to make sure all of our markets are competitive. But it’s to make sure it was a great culture of this, particularly in Ferguson of selling our value appropriately, pricing our value appropriately and not pursuing sort of ever lower margin business. I think our value is well understood by our sales team.

It’s well understood by our branch based and counter associates. And we work very hard not to give it away and also to make sure that pricing is reasonably fair, reasonably consistent over time and across geography. So those are some of the levers, that we call if that’s the right word, to grow gross margin..

Thank you.

And just on the volume versus price in the U.S., is there anywhere the easing, because pricing came down particularly on the back of commodities that people were buying more in volume, and therefore, you’re looking at lower volume as prices come back at all? As People, I don’t think, they stock up anymore…?.

Go on Dave..

I was going to say I really don’t see that. I think if it it’s just around the margin, but nothing substantial..

Okay, great. Thank you very much..

Thanks, Tom..

We will now take our next question from Aynsley Lammin from Canaccord. Please go ahead..

All right, thanks. Good morning. Just two from me as well actually. Firstly, just on the UK, most flag up, the market remains competitive, but gross margins are up in the UK.

Just wonder if you could explain that mix effect or is that actually pricing holding up? And as you look into kind of calendar 2017, what you expect for the cost price inflation do intend to fully recover that? How hopeful are you for the UK recovery of the cost and price increases? And then secondly, you comment on the outlook like-for-like growth since the quarter has been around with the first quarter, is that across all the regions kind of UK, U.S., Nordics, is that just a quick comment? Thanks..

Yes. Yes, the UK market absolutely remains very competitive. But pricing is something that we have to set. The same rules really apply to in Ferguson, which is, if we’re delivering a great service and that service is differentiated, and we do think we’re making great progress in doing that in the UK.

Our net promoter score has continued to move forward, but very pleased with that. We have to make sure that we recover that service in our price, and that’s really where it’s coming from. It’s less, so I am in the UK for mix. So there’s a little bit for mix, but I think, predominantly in the UK, this is coming from more disciplined pricing.

With respect to pricing, price increases on, we’ve still got a lot of domestic purchases in the UK. But the majority of our purchases are domestic. We do, do some particularly in so, which is our B2C channel in the U.K. that is all priced in US dollars.

And those input price increased will have to be passed on because we will have to do that and the competition will have to do that as well.

So, we will recover it all, I don’t know at the moment, but we will certainly expect; a, to go back to our vendors and make sure that they are not being predatory, if that is the right word, in testing their prices; and b, making sure that we recover them appropriately because otherwise the relative benefit of imported products will reduce on one of the source more products in the U.K., which should be fine.

So, and then sort of your third question, I see was around like-for-like growth around the peak. Look, there is nothing – there are no changes which we should bring to your attention today. Any changes between few one and where we are trading now are de minimis, I am afraid that’s really not a lot of color to be added to those growth rates..

That’s very clear. Thank you..

Thank you..

We will now take your our next question from Gregor Kuglitsch from UBS. Please go ahead..

Hi good morning. Couple of questions, sorry to come back to the deflation point, I appreciate you saying it’s easing. I think if you look – maybe you can give us your best guess when you hit the zero mark based on sort of where we are in terms of copper and plastic particular.

Second question is on M&A, can you tell us the actual profit contribution to trading profit in the quarter from the deals you’ve done and indeed the full-year profit contributions that they expect that you have done a few additional deals. Then maybe the final question to come back on the U.S.

drop through, can you just remind us how you define drops was it is really as simple as dividing change in sales of a change in revenues in dollar terms, or do you sort of skip out M&A and trading days in this sort of stuff or just that we are clear on what the high single digit refers to? Thank you..

Okay, Dave, why don’t you do one and two, I will just do 3, because I think you might have to find that second number there. So, on the drop through growth we look at incremental trading profit divided by incremental revenue and we do that growth on an organic basis and also to determine the impact of acquisitions and branch investments on that.

So, we try and look at it without the individual components, as well as looking at it overall.

Okay, so when Dave was talking earlier about we are expecting high-single digits flow-through during the rest of the year, which is broadly what we put in our budget, that that is organic basis because of course, we don’t know what the acquisitions – what any acquisitions in the year will give on that basis..

Thank you..

Dave, deflation and M&A contribution for you..

Sure. Gregor, on the deflation side, we have kind of been fairly consistent saying if commodity prices stay about where they are, we will start to see easing in the second quarter and significantly more in the third.

I think again we would expect and we’ve got a chart that we usually provide that would show by the end of the third quarter again, given current prices that we should be pretty much lapping where we were. Copper, we made up a little bit quicker, and certainly had a little bit of a run here in the last month or so.

The rest of the commodities are still staying pretty stagnant..

Thank you..

On the M&A front, with the five transactions we’ve done so far this year the annualized profit on those is approximately 23 million..

Dollars or sterling?.

Sterling..

And in the quarter?.

In the quarter, I’m going to have to get that and get back to you on that one. I do not have that one handy..

No problem. Thank you..

Okay we will see if we could, any change find out on the call? We will come back to you Gregor. Thank you..

Thank you..

We will now take our next question from Charlie Campbell from Liberum. Please go ahead..

Good morning everyone. Okay, couple of questions from me. Guess just on acquisitions, you guided at the beginning of the year spending £300 million either so that you’ve identified, just wonder if that’s consistent with the spend that you’ve announced today. And the second question just thinking about U.S.

residential market, I mean clearly we are all aware that the 30-year mortgage rates has gone up quite a bit.

Is that something we should start to think about starting a slowing impact on residential activity in the states or are those sort of just some underlying strength to maintain underlying momentum even with mortgage rates moving up slightly?.

Yes Charlie, I mean on the acquisitions yes. That’s the 216, now done in the year it is absolutely consistent with the 300 million and the pipeline remains reasonably healthy that we’ve generally, you know generally with bolt-on opportunities. I think with the U.S.

residential market and if you look at the indicators like we do there are still plenty of reasonably optimistic indicators and, and I’m so sure mortgage rates are edging up, but presumably if the Fed rates is raised before the end of the year, they are doing up because they want to because they think they kind of – the economy can withstand it.

I guess it remains to be seen if they raise rates and it chocks of residential construction, I would be surprised at current levels of residential construction, but nevertheless we will need to wait and see. And so I think we are sort of still looking at the indicators. We are still cautiously optimistic for a continued sensible residential.

As you know, this market peaked up and whenever it was also 892.2 [ph] million net used ops and we are down at sort of half of that level today. So and on that level of new stock has been quite consistent in material terms for some time. So we are quite able to do well in that type of stable sensible markets.

That’s what we really like to see continuing..

Thank you..

We will now take our next question from Manish Beria from Societe Generale. Please go ahead..

Yes, good morning. So, I have just two questions, first is, can you quantify your gross margin improvement in the U.S. business and second question is also what is your M&A budget for 2017, so obviously you have done 200 million in this quarter, but you obviously have some kind of budget.

So soon we will see something like 400 million to 500 million spend for FY 2017 in the M&A?.

Dave, you want to take the first one, I’ll take the second?.

Sure. The U.S. had a good gross margin run as well. It was positive and up level 50 basis points..

Okay. So on the M&A units, look we don’t have a budget for M&A. As such, we indicated this year that we are expected to conclude this 300 million, because we have done some of them in the others consider to be remittance, which they are, but I would expect us to get now to somewhat no for the 300 million.

We said we sold the 300 million in the pipeline, which was recently good. We still see the 300 million in the pipeline remains good. Could we get to them, but you are talking about 400 million, 500 million – 500 million sounds a lot. It is possible. I don’t see that in the pipeline today, but certainly 400 is quite possible..

Manish, I just spoke to, the U.S. margin was up 20 basis points..

I thought you were breaking that one Dave. 50 basis points that’s a good opening bid for your budget next year Dave..

That’s right..

Okay. So are you saying – sorry to come back, so you are saying U.S.

gross margin is up by 20 basis points right?.

Yes..

So – but how does it add up, I mean, because you say Group gross margin is up by 30 basis points and you see gross margin decline in Nordics, as well as in Canada? So it doesn’t add up, I mean, otherwise, UK has increased quite a lot?.

No, we will give you the absolute numbers. It certainly up. Bear just for a moment, again, we will give you the numbers. So U.S. is up 20, UK is up 30, Nordic is down 20, and Canada is, we’ve got lost in the moment anyway, so it adds up, okay. You have to wait it for the relative size of the businesses..

Okay..

Okay..

Yeah..

We will now take our next question from Arnaud Lehmann from Bank of America..

Thank you very much good morning. Two questions from me please. Firstly, just briefly on the Nordics, I think you mentioned Sweden as the weaker market as well.

I think previously we heard about Finland and Denmark primarily so, is there are change in trend in Sweden, because I think everybody so far have seen slightly positive trend there? My second question is related to your tax rate. There have been discussion in the U.S. under the new administration for potential reduction in the U.S.

corporate tax rate, so could you confirm that you are currently paying the full 35% corporate tax rate on your U.S.

operations and have you estimated the implication of a lower tax rate in the future?.

Arnaud, look Sweden, yes. Just to be clear in – so we have had weakness in Finland previously. Finland have done a little bit better this quarter. We’re pleased with that. Denmark without a doubt, the market is relatively weak and now a B2C channel that we have certainly seen some considerable weakness. That is a market issue.

Sweden I think we are weaker, we had very strong growth this time last year. And we have come of that growth, so we have not done as well I am afraid this year that is more an internal matter than it is a market matter. So that is a very fair point. Tax rate, we absolutely pay all the taxes that are appropriate.

It is too early really for us to assess the impact of what the new administration might do on taxation because the issue isn’t just simply what’s the headline rate, the issue is what else is around it, what are the other deductions that you are allowed and whatever are. I think overall we would be positive about the U.S.

headline rate coming down, but it is too early to estimate what impact that could have because it is all in the detail I am afraid with tax..

Sure, of course. Thank you very much..

We will now take our next question from Ami Galla from Citigroup. Please go ahead..

Thank you. I just have a couple too.

Firstly on the U.S., can you give us a sense of how the completion in the market stands today? There has obviously been some consolidation in the market over the past two years, has there been any change in the way your competitors behave in the market today, what is the kind of competition that you have from the online guys? Also more specifically in whatever there’s been a change in ownership of one of the companies has there been any difference, I mean do you find it more difficult to gain more share in this market now or looking forward from here? And my second one in the UK again on the question on competition, we’ve heard that in the plumbing and heating side the competition in the online shade side has significantly increased, is that your experience and would like to hear your thoughts on that actually..

Sure. Look in the main U.S. business our B2B servicing price people contractors and consumers through assurance that has been available for consolidation in that main market of ours either over the last two years or for a much longer period, very little.

If you look at our relative market share it remains very similar to what it was, we have edged up, nobody else is changing the market dynamics. Most of our competition remains good low cost or regional independent players, plus the professional offerings of Home Depot and Lowes. That position has not changed.

However, on the B2C side, I think that is where certainly some of the competition have stepped up some of their investments. I would say so we, and we have a very competitive and compelling offering for our customers we continue to take market share in that space.

You can go online, you can see our offerings, you know bill.com and our associated brands, we are growing there – continue to grow there, very strongly. So we are very pleased with that. But no, there is no change in the main business in the U.S. there has been no change in the competitive intensity of our business.

I think the waterworks change in ownership that you referred to is a relatively small business which was 40 line. I think that size is about $300 million that is how it is just negligible impact really on our – they where there competing before. They were sold to Morrison Supply. There is no change in the competitive intensity of these things.

We have a very good market position, an attractive market position and very profitable plus generative business, although good business, we have taken market share organically every year for certainly the last six or seven years while starting the group and very pleased with that and there is no change in that competitive intensity.

Ami just on the UK the UK online I think there are sort of two years I would tough on, one is the B2C, again we are growing that business very well, really pleased.

We’ve got a really good management team, Dave and I were with them a few days ago we’ve great review at the end of the first quarter, really pleased, good top line growth, sensible margins dealing well with the increase in cost of goods sold due to dollar denominated import, just doing a really nice job.

So very pleased with that and if people are finding that more competitive than good, we absolutely aim to be competitive in that as well, by the way there are some of the, clearly there are some other operators we are only one of four or five operators in that space we want to continue to grow that business clearly just as strongly and just as fast as we can..

And, I mean just a follow-up on the – in the B2B side in the UK do you see a great online competition today..

Apologies here, I should have touched on that. I think if you look between ourselves and the other merchants, operators, the traditional operators if you want, we have a very good offering B2B again, team here really, really motoring. Very pleased on the growth rate spend.

Now this is principally a conversion from existing channels to the online channels, but growing very strongly really pleased with the progress, which our team are making.

The only thing that – the sort of the other people who have really good online presence there is one of the other retailers in the UK has very good online offering for a – in a more generalist installer base rather than a specialist base.

So, they are, I assume they are doing pretty well because they are certainly growing well, but remember we are a specialist in this space offering a very broad range of plumbing and heating products and not really moving over into the general or general install of things..

Okay. That’s it. Thank you..

Okay..

We will now take our next question from Kevin Cammack from Cenkos. Please go ahead..

Good morning. Two from me, please, if that’s alright.

Firstly, can you just slightly delve into the Nordics a bit more and I think you gave a number early in the presentation that EBIT was off about 5 million was that correct in the quarter?.

Yes..

I mean I think we are also recently aware of the backdrop between the market, is it your sense that putting the business on the review is a – so you lead some business in that area until you make a decision on exactly where you are going to position what you are still going to be an etcetera, do you think there is a real danger the business continues to go backwards in short-term? And the second question I had was really very general.

But to an outsider like me, did you think four years of Trump, he is going to have any difference whatsoever to the prospects for the U.S.

businesses overall?.

Right, Kevin, I’ll take the first of those and then Dave you can – Dave is an expert Trump, so you can take the second one..

Look, the Nordics, first thing to say has the – is the review having any adverse impact on the business. I’m quite sure, the answer to that is no. The review, we are – we have got some external help in with that and clearly, our senior team has to be engaged in that and are very engaged in it. That’s not having any adverse impact.

The purpose of the review is to make sure that the strategy that we’re pursuing longer-term is the right operating strategy for each of the businesses and that we bring the right investment focus, all of those things to the business going forward. Clearly, at the moment we’re having a pretty tawdry time, absolutely no doubt.

I’m pleased with a lot of the actions. When you sit in my position, the most important thing is to understand all of the things that the management team is doing to the yields results. And myself and Soren Olesen, who is the CEO of that business, we sat down earlier this year and then look for priorities.

One of those was to turn around the finish business almost to reduce central costs, almost to improve the gross margins in building materials business in Denmark, and the other was to return to profitable growth in Sweden. Three of those four, we’ve made very good progress on, and I’m very pleased. The last one we haven’t. Unfortunately, it’s material.

However, I’m very positive that the management are doing some very positive things to move within that direction, at the same time is doing the strategic review. So it is absolutely difficult trading at the moment.

But you look really for activity and results and those things that you focus on and the management team today is very focused and eventually that will show through in better performance..

To be clear, John, the review is underway.

There is nothing that has been done in the business in the last three to six months, as a result, consequent to the review happening that all remain actions that will happen in the future?.

Well, so with one exception, I think, we talked two months ago, we are doing a review of any loss-making branches. I don’t think it’s highly appropriate. That is independent really at this – at the strategy review. It’s to say, where should we allocate our results? We’ve got 250 branches in the region. You don’t need 250 branches.

There isn’t a significant network if that’s. Those branches should be run as profitable operations independently. We have – so we do have a program of work, which is reviewing branches, where we shouldn’t – where we’re not making a profit, and frankly, we shouldn’t invest it going forward.

We want to take those resources and invest them in places, where we are well equipped to win. That’s the only caveat to that, Kevin, if that makes sense..

Okay, you have another my sense..

Okay.

Dave, Trump, how is he going to do?.

Sure. Obviously, we’ve had a lot of questions over here asking the same thing. And Trump pre-election made a lot of claims or a lot of promises around increased infrastructure spend of 15% corporate tax rate, et cetera. But I think it really remains to be seen what happens, he’s not President yet, doesn’t become President on next year.

And things have a way of changing in the U.S. between pre-election politics and post-election actions. So at this point, some of what he’s claimed couldn’t be positive, yes, but it’s not in force today and we don’t know what it will be, so it will mostly be conjecture. I think over the four-year period, we will clearly have a better view of that.

But right now, I would assume negative or positive impact..

Okay.

The risks which you’re suggesting would see more on the upside than the downside there?.

Yes. Clearly, I think, if some of his campaign initiatives come to fruition, it could benefit our municipal and our Waterworks business, et cetera or not, so the tax rate can benefit us as well..

Okay. Thank you..

That’s the most positive I’ve ever heard you talk about Trump, Dave..

He is now my President and I have to..

Well done, that’s good, it’s your patriotic duty, Dave. Cecilia, I think, we’ve got time for another question and then we’ll draw it then I think to a close..

There are no further questions in the queue, sir. At this time, I would like to turn it back for any additional or closing remarks..

Okay. Cecilia, thank you very much, indeed. Look, thank you very much everybody for dialing in this morning. If you’ve got any other follow-up question, please call Nick or Mark or Dave later on when the sun rises in Virginia, or myself, very happy to take any other questions that you’ve got.

But thank you all very much indeed for dialing in this morning. Cecilia, We’ll cut it there please..

Thank you. That will conclude today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect..