Gareth Davis - Chairman Mike Powell - CFO John Martin - Group Chief Executive.

Elodie Rall - JP Morgan Chase & Co. Arnaud Lehmann - Bank of America Suhasini Varanasi - Goldman Sachs Aynsley Lammin - Canaccord Genuity Ami Galla - Citi John Messenger - Redburn Robert Eason - Goodbody Stockbrokers Paul Checketts - Barclays Capital Gregor Kuglitsch - UBS Clyde Lewis - Peel Hunt.

Welcome to Ferguson's Full Year Results Presentation for 2019. As you know, it's rare for me to be accorded a speaking part on these occasions, but the executive management have decided to risk it on this occasion. Firstly, I'd like to extend a very warm welcome to Geoff Drabble, who is in the audience today.

Geoff will take over the reins from me in November as Chairman. I'm sure Geoff needs no introduction and he joins Ferguson following 12 years as the Chief Executive of Ashtead. He's been one of the most successful CEOs in the FTSE in recent years and his record of value creation has been simply outstanding.

He brings a wealth of experience in the distribution, technology and manufacturing sectors, particularly in the United States. And I've no doubt he will be a wise counsel for our executive team and will lead the Board with great skill and personality.

For those who don't know Geoff is a Newcastle supporter, but despite that he is well-known for his cheery disposition. Secondly, as we announced in September this will also be John Martin's final set of results at Ferguson. John joined the Board as Chief Financial Officer in 2010 before being appointed Group Chief Executive in 2016.

Now during his time with us, the Group has been significantly simplified, exiting less attractive markets, and focusing resources on those markets where the company is best equipped to win. John, who has brought great strategic clarity to Ferguson and he leaves the business in very good shape.

John's numbers for his tenure at the company are particularly impressive. He has turned in 37 quarters of revenue growth, a 9 consecutive years of trading profit growth for the Group. Total shareholder return during his time at Ferguson has been a very impressive 436%.

Away from the numbers, John's been a great ambassador for the company, and John thank you for your service and on behalf of the Board we wish you the very best for the future, which I’m sure will be exciting. I’m also delighted to say that Kevin Murphy will succeed John as Chief Executive in November.

Kevin is a very experienced executive operating in the plumbing and heating industry in the United States. He was appointed CEO of Ferguson Enterprises and he joined the Board two years ago. He has got a strong track record of delivery having previously served as Ferguson's Chief Operating Officer for 10 years.

Under Kevin's leadership, Ferguson has continued to gain market share and generate profitable growth, and we continue to execute a highly effective strategy. Now Kevin will be joining John and Mike Powell on the Roadshow over the next couple of weeks. And I know many of you have met Kevin at previous Investor Days and Roadshows.

Mike Powell, of course, will be particularly delighted both today and on the roadshow to talk to any Australians who might be foolish enough to get into his presence. Finally, they always say end on a high and I'm delighted to sign off as Chairman with another strong set of results.

I just wanted to say that it's been a huge privilege for me to have served this great company, and I'm very confident that you are in safe hands with Kevin, Geoff and Mike at the helm. Thanks very much..

Gareth, thank you very much indeed for those very kind words, and good morning everybody. Welcome to the presentation of our results for the 31 July. I got Mike and I presenting this morning. We are also joined as Gareth mentioned by Geoff, who is taking over from Gareth, the AGM as Chairman. Now as you know I’m handing over to Kevin Murphy in November.

Kevin is joining Mike and I for the roadshow. He couldn’t be here today because of prior commitments, but he is joining us on the whole of the roadshow. So shareholders will have plenty of opportunity to hear from the whole of our team about why we are so enthusiastic about the opportunities for Ferguson in the years ahead.

2019 has been an extraordinary year for the company. I’d like to share some of the highlights. Firstly, as you can see on the chart, it is our 9th consecutive year of growth with sales up nearly 8%. And it's also the 9th consecutive year of gross margin expansion, up another 10 basis points.

It's worth reflecting that if our gross margins today were at the same level that they were back 10 years ago, our profits would be $500 million less than they are.

It's also the 9th year of trading profit growth, perhaps surprising when you think of all the businesses that we sold over that period, up another 7.5% and also the 9th year of EPS growth, up 16%. The markets weakened over this year, but I'm very proud that we continue to take market share.

We took prompt and decisive action to control our costs and I'm very proud about how Kevin and the team got about this. The cost base today is in very good shape as we go into the new year. We invested over $600 million of the cash that we generated on some great acquisition, helping to improve further our market positions.

Own brand, which we will come to a little bit later has also been a strategic focus that now represents 8.6% of group sales in the second half, but the economics are about twice as important due to stronger gross margins. We’ve also concluded on the future of Wolseley in the U.K., which will be demerged as an independent company listed in London.

It was another great year of cash generation with a record $1.6 billion of cash from operations contributing to further expansion as you can see from the chart in our return on capital employed.

We returned another $600 million to shareholders by dividends and buybacks and that strong cash position has enabled us to increase the dividend by a further 10% this year. So those are the highlights. And now over to Mike for the financials..

Morning. I’m pleased obviously to present the Group's full-year results, which show we've had a strong finish to the financial year. Revenue growth for the Group clearly driven by our U.S organic business, but a good decent contribution from bolt-on acquisitions through the year.

Ongoing trading profit $1.6 billion, over a $100 million was 7.5% in constant currency with headline EPS up 16.4%. As you'll see later, cash generation has been excellent again this year and the balance sheet is in great shape at 7x levered at the end of the year.

And we’ve recommended a final dividend to be increased by 10%, which reflects our ongoing confidence in the business. Moving on to the revenue and trading profit growth. What I've done here for the overall Group is I have expanded the first chart to expand the revenue growth of the 7.1% and the profit growth of 7.2%.

You can see the organic profit growth of 5.3% exceeding the top line revenue growth and that’s due to good gross margin performance and tight cost control. There's also a significant contribution from acquisitions, and it's pleasing to see the effort put in by the teams to bring these businesses into the Ferguson family.

The profit for the acquisitions shown here is after $14 million of integration costs. Organic revenue growth in the U.S did moderate in the second half, albeit again some tough comparators. We continue to take market share, something John will come back to later. Inflation has been running about 2% to 3% across all of our businesses through the year.

In the U.K., on a like-for-like basis broadly flat and Canada showed some declines into the second half of the year. So moving on to the business results and first and foremost our largest region, the U.S., delivered a strong performance. And we continue to outgrow the wider market and deliver good revenue growth.

Gross margin is well-controlled through good pricing discipline, particularly in light of the market environment. Around the half year, we took decisive action on costs to control our cost growth, particularly around labor which as you know compromises around 60% of the operating cost base.

And this is ensured we had a good finish to the financial year. In July, we've also initiated a voluntary early retirement program and made some selective closures of underperforming branches.

These actions allow us to ensure we have the correct cost base going into this new financial year, whilst also allowing us to invest where appropriate in the growth elements of the business, whilst protecting the income statement. Trading profit therefore for the year up $1, 508 million, over $100 million ahead with trading margins at 8.2%.

Not only am I very pleased with the incremental absolute dollars of course, but also by the manner in which the team got after this result and the shape of the result in the latter half, particularly pleasing as it shows our ability to deliver in a low growth environment. You can see that that revenue growth in the U.S was pretty broadly based.

We've shown our blended branches on the map, roughly 6% across all of the geographies. Elsewhere Waterworks continue to grow well and the HVAC and industrial businesses both generated strong performance during the year. Revenue growth in e-business was lower as we continue to consolidate our pay-per-click advertising spend across fewer websites.

On to the U.K., and as you know during early September, we announced the demerger, the intention to demerge the U.K operations. John will come back to that one as well in a little while. Like-for-like revenue in the U.K broadly flat, difficult repairs, maintenance, improvement market.

Gross margins were slightly ahead due to the improved product mix and trading profit was ahead of last year in local currency and the teams work very hard to get this business back onto a much firmer footing and it's pleasing for us to see the turn of the tide here and deliver a modest increase in profit, in which is a pretty -- in a pretty lackluster market environment.

Canada faced into pretty challenging market environment this year. We saw markets go ex-growth in the second half and you can see therefore 1.1% lower for the year. Acquisitions contributing 5% to revenue growth.

Residential markets, which represent about 60% of our mix of business in Canada, weakened through the year as a result of the government measures to restrict mortgage credit, the impact of foreign buyer taxes and rising interest rates.

But despite those tougher market conditions through the year, we worked hard defending gross margins, which were ahead of last year and we also implemented here again decisive cost control measures as the markets weakened particularly into the second half and therefore pleasing to see underlying profit growth in the year overall.

Moving on to exceptional items. These were $94 million in the year. As I’ve already commented on, we offered a voluntary retirement program in the U.S and its some small brand based restructuring that totaled $60 million and to the top line the U.K restructuring costs remain in line with what we booked at the half year, so no change there.

And whilst I’ve described the impact on the income statement, please do remember that cash effect is very different as we worked on disposals at both the Dutch business and the sale of the U.K distribution center.

Those combined generated about $150 million of cash and therefore the cash position during the year on these exceptionals is nearer $100 million inflow.

Finance and tax charges, as expected, the increase in finance charges were principally due to the prior year debt levels being artificially low as we have the proceeds of the Nordics in the prior year debt numbers. And the effective tax rate for this year was lower than 2018 as we benefited from U.S tax reform. On to cash.

Strong cash generation and the disciplines around it continue to be an important priority and quality of our business. Cash flow from operations $1,609 million, after slightly better working capital performance than I expected.

As we guided, capital investment was a little higher in 2019 mainly due to additional investments in the new Perris distribution center, which is now up and running in Southern California. We completed a number of attractive bolt-on acquisitions mainly in the USA and you can see that cash outflow of $657 million.

We also worked hard on disposing of non-core assets. The $303 million cash inflow represents that. That’s our Dutch plumbing and heating business, some surplus Nordic properties and the disposal of the distribution center in the U.K. And then towards the bottom, repatriation to shareholders of nearly $600 million in the year.

The profit and cash flow that I’ve just described, that delivery means that we finished the period with a strong balance sheet. Net debt to EBITDA .7x. At the balance sheet date, we’ve completed $150 million, of the 500 million share buyback that we announced in June.

Since then, as I stand here today, we’ve done another $160 million and I’d expect to complete that buyback in the next couple of months.

And with that in mind as I think about the pro forma debt that we ended the year, if you have the buyback in fully, that .7x on a pro forma basis I don’t think of as ending the year at around .9x, if you add all that buyback back in.

And as is normal, I clearly expect as we go into our peak months for working capital, which is generally around the Christmas time for us to leverage a little bit more .3x or .4x, which is our normal seasonal working capital. So moving on to technical guidance. We have one additional trading day this year. That’s about $12 million of profit.

I’ve included the impact of the completed acquisitions that we have done for the full-year reflecting to FY '20. And as previously guided, we’d expect the tax rate to move up to 25% to 26% for FY '20 and onwards after the change in the Swiss tax reform that was announced earlier this year. CapEx will be at more normal levels in the year.

I'd expect those to be around the $300 million to $350 million mark and that still has some ability for us to expand capacity within that number. Finally we wanted to remind you the capital allocation priorities, which you can see on the top of the slide. And I’ve certainly covered in previous sessions, these have not changed.

The strong cash characteristics of the business allow us to invest organically and to be self-sufficient. The Board remains committed to a progressive dividend policy and we expect to grow dividends through the cycle and in line with long-term earnings.

We will continue to invest in selective bolt-on M&A opportunities and return any surplus capital to shareholders in a reasonably prompt manner. So let me wrap up. I’m pleased with 2019. We’ve delivered a good set of numbers, good earnings. We’ve got continued excellent cash generation.

We’ve got a strong balance sheet and therefore we are in a great position as we head into the new financial year 2020. With that, I will hand back to John for the last time..

Thank you very much, Mike. I will start today with a couple of comments about how the markets have developed during the year.

The growth of the market is most clear from the supplier data that we’ve referred to in our press releases this year, which show that overall U.S growth slow from about 6% in the first half as you can see there on the chart through to about 1% in the second half.

As we’ve done for several years, we grew faster than the markets and continued to gain market share. Again, as can see on the chart in each sector outperforming the markets by just over 3%.

This chart from Zelman shows how the market for all building products, that’s building products going into new resi, into home improvement and also commercial construction has moved over time.

Our markets across represent a subset of that market, but this data also suggest that the market for overall building materials has been growing over the last six months by about 1% or 2%, and that's the backdrop of the market that we’ve been operating in.

I think as Mike said, the results that we’ve produced in this environment really confirm the strength both of the operational management in our business and also the attractions of our service driven business model. Now one of the key strategies of the Group is to ensure that we constantly maintain and improve the efficiency of our operating model.

That's important for two fundamental reasons. Firstly, we need to make sure that both the services and the product availability that we provide to our customers is the very best in the industry. And that we provide our associates with the tools to fulfill that promise to our customers.

And secondly, we want to maintain and improve the financial returns in the business. On the chart here, the dark blue columns to the left represent the organic revenue growth that we achieved in each quarter of the year. And the pale blue lines represent the growth in headcount at the end of each of those quarters.

You can see during the year how we balanced and brought down headcount in line with the lower growth rates in each quarter. And that strong control over costs has enabled us to continue to invest in our strategic initiatives and also to protect the P&L.

In the fourth quarter just before the end of the year, as Mike mentioned, we also offered a voluntary early retirement program to selective associates in the U.S. That's an efficient and associate friendly way of both reducing headcount and also freeing positions to be filled by the next generation of management. I mentioned own brand.

Our product portfolio includes 22 brands. Some of them you see up there on the screen apply to thousands of products and categories such as referent finished plumbing, appliances, vanities and lighting.

These products offer greater choice and value to our customers with excellent quality and excellent reliability, but also with nationwide availability supported by the strength and post sales support of Ferguson.

They also drive profitability accounting for more than 17% of our U.S gross profit in the final quarter, rather than to maximize their commissions.

Now our organic growth of own brands during the year was more than double the organic revenue growth rate of the business as a whole and that was boosted by acquisitions of Safe Step, James Martin and Jones Stephens during the year. We talked before about the reconfiguration of our distribution centers. Now just to touch on Southern California.

Southern California and the adjoining South-Western States, this is a fantastic market for us. It's a $6 billion market in which we have a 21% market share. That’s grown at double-digit rates now for several years.

Perris, that you see on the screen, this is the site of our newest distribution center serving a 130 branches across California, Arizona, Nevada and Utah across all business units. It's also going to house a consolidation center that import into the West Coast of the U.S.

At over a 1 million square feet, it's replaced the leasehold facility at nearby Mira Loma, which was half the size, but beyond full capacity. So we are having to lease out short-term capacity in the area.

In the first full-year of operation, throughput at the site will be more than $700 million and the investment will enable further throughput over time of another $400 million of product. Cash operating costs at the site are $1.3 million a year, lower than the cost of renewing the lease at the previous site.

This site has been brought into operation during the year with no disruption whatsoever to customer service. One final thing on Perris. To improve the efficiency, safety and sustainability, we're incorporating fully reusable totes and we're installing solar power system, which will generate more than 3.5 million kilowatt-hours of electricity per year.

As Mike mentioned, it's been a very busy on the acquisition front. Our largest acquisition was Blackman. Blackman is the market leader for residential and commercial plumbing in Long Island. Long Island is a great market. It's got a population of 8 million people, many of whom are quite affluent, but they all need water and waste water supplies.

We did have a number of branches on Long Island, but we were significantly underrepresented. We’ve been trying to acquire Blackman now for several years. Gareth, we bought it to the Board about five years ago. First time we didn't quite get there.

The transaction was the culmination of a huge amount of hard work and patience on behalf of the acquisitions team. But for our technology and supply chain teams, of course, the hard work only really began when we concluded the deal.

A combination of former Blackman Associates and Ferguson Associates worked tirelessly to integrate Blackman into the Ferguson family. Including switching the operational systems to trilogy, combining the supply chain networks to ensure access to our distribution centers in Coxsackie and Secaucus.

We had up to 100 Ferguson Associates working full-time on the integration during the year and we invested $8 million in the integration project. Now historically, Blackman didn’t generate the net margins that we come to expect of ourselves in Ferguson.

But given Blackman's market position in Long Island, we knew we could generate very significant synergies, leverage our scale to provide the best product availability and service, so that over the long-term we do expect this to generate very good returns for shareholders.

Now our vision for Ferguson is to be the trusted business partner and to provide the very best service to our customers available in this industry. By focusing relentlessly on customers, they come back to us day after day, year after year, we then put ourselves in pole position to make great returns for shareholders.

One of our values is innovation that you see over there in the right. We are an innovative business. To give you an example, our innovation team is invested in a number of exciting opportunities this year bringing new technology and process to the built environment. One of our investments is in a field service management company called [indiscernible].

This has developed an innovative package of solutions helping residential plumbing and HVAC contract as we’ve scheduling with workflow management and payment processing.

Now increasingly our shareholders and stakeholders are interested quite rightly not just in the financial results that we produce, but in how our business is run, how we achieve those results. And I wanted to share with you today just a couple of examples of our own values in action. The safety of our associates is our prime responsibility.

It is the first item on the agenda of management meetings and the first item in management reports. This year we improved our total recordable injury rates by 22% with a range of initiatives supporting our associates to focus on the right safety equipment and the right way to handle materials.

And Ferguson is also being included -- just been included in the Dow Jones sustainability index, achieving a perfect score in the environmental reporting category and a 35% improvement on our score last year. I thought it would be a good idea today to reflect on the excellent market positions that we have in the U.S. You might remember this chart.

It's the chart of our key customer groups and the estimated market share that we have in servicing each of them. The first three of those groups on the left hand side, have very strong market positions serving both residential and commercial trades people and contractors in RMI and new build markets.

The infrastructure is principally the blended branches network and showrooms, which service both contractors and unconnected customers. Now Waterworks, HVAC and industrial customers are served both by blended branches and also where appropriate by standalone branches and then Facilities Supply and the standalone e-business at the end.

Those businesses do leverage the asset base of the group to serve new customer groups, but with significant product overlap in the maintenance and decorative plumbing projects markets. It's worth reflecting each of these groups has excellent growth characteristics and generate similarly attractive net margins and returns on capital.

Now this chart shows the degree to which those custom groups are served by leveraging our core infrastructure. Along the bottom there -- along the bottom of the chart is an indication of the customer strategies adopted by the largest competitors. That's WinWholesale, F.W. Webb, Hajoca and Morrison.

They are very similar in their strategic breadth to Ferguson, though of course far smaller. Now moving on to the U.K. We announced last month, we are going to demerge the U.K business that will become a stand-alone, independent listed company in London. Wolseley has the largest network of practice.

We have a good market position in each of those segments, particularly focused on repair and maintenance markets. The focus of the business under new management over the last 18 months has been on industry-leading availability in-night branch fulfillment and driving customer service.

And the team are now applying operational excellence in our supply chain and are driving demonstrable improvements in the business. There is some good opportunities for the U.K to leverage its assets, including own brand, which accounts for over 8% of sales and very effective e-commerce functionality.

In addition to the high availability of the core range in branch, overnight fulfillment from distribution centers enables a further 30,000 products to be available in store 7 AM the next day.

There's a good opportunity in the business to drive better pricing discipline, including central guidance over contract pricing and consistent great value pricing for spot sales to local trades people.

The closure of the Leamington distribution center as Mike mentioned during the year, that released more than £40 million of cash without disrupting service and there are further opportunities to improve the capital efficiency of the business. It's also worth a reminder of the underlying financials of the business.

You can see last year whilst market growth here was low on an underlying basis, trading profits were slightly ahead. We've made a small acquisition after the end of the year adding to some of the momentum of that business that Mike talked about. Listing. The Board has kept listing its structure of the group under review over several years.

Following the demerger of the U.K business, 100% of our profits will come from North America and about 40% of the company's shareholders are based in the U.S. A number of shareholders have asked us to assess the listing structure. Again, we announced last month as you know, that we’ve started to do that.

As we talked to shareholders over summer, we've heard a number of messages very clearly, shareholders wanted to hear from the company. They want the company to set out our analysis of the benefits and costs of each option and they've encouraged us to do the right thing for the company for the long-term.

That's great guidance for the company to follow, that’s we’re going to do. A number of you have asked about the factors that we need to take into account during that assessment. Some of those are shown on the chart. Some of these are complex, right. We have an absolute duty to shareholders to address them diligently and in detail.

We work promptly on this, but we will work properly and thoroughly and we will continue to consult with shareholders along the way. So in terms of outlook. Look the markets are broadly flat right now. We have continued to grow our order books, which stands at little over $2 billion, suggesting continued modest growth in the months ahead.

We do expect to continue to outperform the market and to make further progress this year. Thank you. Look, just before we open the floor to questions, this is my last set of Ferguson numbers. I’d love to make a couple of closing remarks and get my own back on to Chairman, which has never happened before.

It has been a huge honor to serve Ferguson, Gareth and Wolseley for nearly 10 years. I've enjoyed every minute of it. Nearly every minute of it. The Ferguson story I think is a great example of the value of strategic clarity and simplicity in customers, all brought about by the best associates.

The best associates, the best colleagues and the best Board that I've had the privilege to work with. Our shareholders have been patient and the Board has been very supportive, in particular, we have been supremely well served by our Chairman, by Gareth, to whom I owe a huge debt of gratitude and thank you, Gareth, for your guidance and wise counsel.

I’m absolutely delighted that the company is going to continue to be managed by strong and capable leaders such as Kevin Murphy, such as Mike Powell and that they will be supported in the next stage of our development by Geoff Drabble. And Gareth mentioned Geoff's track record in the generation of shareholder value is absolutely fantastic.

I am quite confident that this company faces a very bright future under this leadership team. And thank you all too for your unbiased coverage. I've enjoyed nearly every buy note, and I've ignored nearly every sell note. Thank you very much. Have we got a mike, Mark. Mark with a mike..

Hi. Good morning. Elodie Rall from JP Morgan. Thank you for these. I’ve a couple of questions, if I may.

First of all, can you come back on to slide 25 on the cost flexibility and give us a bit of color of how much additional cost flexibility you see in the business? Should we see a little bit more pressure on the top line in the U.S., in particular? Second, how is the acquisition pipeline shaping up? Is it still as strong as usual or we seeing any headwinds from, I don’t know, higher valuation or anything? And lastly, I know you touched a bit on that, but if you could give us a bit more color about the feedback that you got from shareholders on the listing options? Thanks..

Okay. Thank you. Well given its that the cost is a forward statement, I will not let John commit us to anything forward..

There is lot more to do..

I think you’ve seen from what we’ve done, let me just roll back, I’m very pleased with what we’ve delivered in the second half. It is very easy to sit here when the business has been growing at 10% a year and say when tough times come you’re going to reduce your cost base.

That’s what this guy use to do, okay? I’m very pleased that actually we’ve at least showing that we’ve got after that in a quarter, okay? Which is only a quarter and we need to keep on that case.

That’s why we’ve just launched the voluntary early retirement program to keep making sure that we get the cost base right for the top line, but also provide succession for our future management, so get the real growth characteristics of the business locked in for the future. So I think we will always stay cognizant of it.

I’m very pleased, we’ve actually shown we can do it, because actually it’s the first test of the business in truth in a low growth environment for years, okay. So we thought we could do it. We’ve actually just shown we can do it. We need to keep on doing it. Labor is 60% of our cost base.

So it is actually about labor, but it's also about protecting the opportunity for the upside when the upside comes. So I come from a manufacturing background were all about costs. The great strength of Ferguson is taking those growth opportunities when they come. So it is a balancing act, okay? So we will get after the cost base.

There are clearly opportunities, but it is in labor and it is labor that get you to growth when the growth comes. So Kevin and the team are very close to that as I am, and there's always a bit of ying and yang around cost out versus future growth, that will continue.

And I think that’s a healthy tension for us to continue, but we will keep absolutely on top of the cost base. Now we’ve got to a good place, we will keep on top of that cost base, okay? In terms of acquisition pipeline, absolutely normal. That means nothing, because of course acquisitions come and go. We look at a number of acquisitions.

I would say most of the acquisitions we are looking at would fall into a normal pipeline. That guidance will over the years, John, that's normally average around $200 million, $250 million. If you wanted a number, it's not that number, but it's likely to be wrong because, of course, I'll either look, it will likely be not a lot or it will be more.

But it's mostly normal at the moment. There is nothing abnormal about our pipeline. We continue to work it hard..

Yes, and Elodie, look, on the shareholders -- because we talked to about two thirds of the shareholders representing about two thirds of the shares of the company, which is about 35. Shareholders, I would say this has been a wide range of view.

So far, we've posted sort of three or four questions, carefully scripted questions, same questions to that group of shareholders and heard back from them.

And I think now we need to reflect on that, but all -- and be informed that in our work because I think next time that we go into sort of a more sort of structured consultation with shareholder -- shareholders have said they would like the company to set out the costs and benefits.

One thing that is clear is not all shareholders have got a very clear view of actually what the options are, what they would mean, what they mean for the company vis-a-vis what they mean to shareholders.

And then the other point that I would say that there isn't a single -- there isnt going to be a single shareholder view of what the right way forward is for the company. There's a wide range of views and some of them are not going to be reconcilable, but the Board need to.

And I think the encouragement Mike and we spoke to shareholders is pretty much everybody has said do the right thing. I think that's great guidance for the company and for the Board..

Hello. I’ve got the mike. So I will go for it. Arnaud Lehmann, Bank of America. A couple of questions. Firstly for you, John, I guess we knew the direction of travel for Ferguson would be to have you as -- sitting as CEO in the medium-term, but I guess everybody was slightly surprised that the move can probably faster than expected.

So could you maybe give us a bit of color around what happened at Board level or at shareholder level that accelerated the change considering you’re still extremely young and he's done a -- as you related, you’ve done a good job..

I’m good looking. So thank you, Arnaud..

Precisely. That too, absolutely. My second question is on the decision to demerge the U.K. Again, can you give us a bit of color.

Is it was it a business that maybe you wanted to sell and you couldn’t find the right buyer? And I guess related to that, do you believe it as critical size to be a standalone entity, and would you consider a combination with another U.K player either in merchanting or heating and plumbing in order to make it a more visible assets once its demerged? Thank you..

Let me take the first one. Let me take the second one, first on the demerger, Arnaud, if I may. Look, the business has -- we haven't have the business for sale. We said we are going to demerge it. That’s we intend to do is to follow through on the demerger. We absolutely think it's got critical size.

It's 1.7 billion sterling business and made 54 million trading profit last year. So clearly the EBITDA numbers sort of north of that. And so, yes, we do think it got the -- it got critical size. It's a cash generative business. It's got a good -- it's got decent assets.

There is no reason the business shouldn't do well as a standalone business in our view. The combination, I got to say we’ve looked over the years at almost every possible -- every conceivable combination of the business with another and that hasn't worked so fine. It has a good future as an independent business.

Slightly strangely, this summer, we did find one small acquisition. It's a nice little transaction, but it's small. It isnt going to change the structure of the industry, it just strengthens our business. So that's the background on the demerger.

Look, with regards to -- with regard to me sort of moving on to carry, I don’t see -- I see the timing as being absolutely logical. I saw that, the Board saw that, this was the most neutral -- when we are a 100% North American. So I'm delighted to be handing over -- truly delighted to be handing over to Kevin.

I sponsored him and appointed him two years ago to the position that he is currently in. He has done a great job. He is a strong, smart energetic leader of the business that felt entirely appropriate. What wouldn't have felt appropriate is for me to have relocated to the U.S that would clearly have left sort of two people with CEO on their cards.

That just wouldn't have felt right. So now felt like a good time from my perspective and I think that was something which the Board entirely agreed, all right..

Will Kevin be based in the U.K or he is moving to …?.

No, he is in Virginia, yes..

Thank you..

Good morning. Suhasini from Goldman Sachs. Just a couple of questions, please. Can you please clarify how the trading has been post full-year close, August-September.

Has it been consistent with the trends that you’ve seen in the second half of the year? And second one by when can we get an update on the potential new listing structure? Will it by year-end, in a month's time? Thank you..

Thanks. I think trading since year-end nothing unusual. So I think if you look, we haven't given specific monthly data that doesn't really help, but if I said to you it is bang in line with our budget. So no dramatic trends there. Look, on the listing we just need -- you saw the things on this charts.

One of the things it's been interesting, Mike, as we've dug into this, there isn't whole heaps of precedents. There was Invesco in ….

2007..

… 2007, that's delisted and relisted, fine. We need to sort of work through that, but that is just a lot of detailed work to do. And I think we've been surprised as we've dug in. There aren't thousands of professionals who know exactly how to do this assessment and what the options are and so it just needs to be worked through.

So it is going to take us a number of months to work through that work, okay?.

Thanks. Aynsley Lammin from Canaccord. Just three, please. First of all, just wonder if you could comment on the kind of market backdrop in the U.S.

Is it still -- not easy, but is it still achievable from the market share gains with decent gross margins or is it being more competitive given the flat markets? Secondly, just on the end markets, may be a bit more color if you break down the kind of private non-resi side, any change in trends within those categories, and similarly just comment on the resi.

And then thirdly, just on the U.K comments you just made on track with your budgets, but have you seen any further deterioration, a bit more fragility in the U.K market given the kind of political backdrop? Thanks..

Let me take the U.K first and then I will let John pickup on the U.S. I think, listen, I mean it's pretty early in the year still, so I don't think we've seen dramatic shift in the U.K. It's clearly not gotten any easier.

But Mark and the team there are doing a good job around making sure we got the right product set that are offering to customer and that right service capability as John has touched on, making sure that we are absolutely attractive to the customers.

But the market remains pretty challenging in the U.K., but I don't think we've seen a significant shift in the last couple of months any different than we’ve seen in the last 12 probably..

Yes, look, I mean the end markets, the competition, I wouldn't say there's a step change or even a very clear trend in the competitivity of the markets.

And it is interesting if you went back over several years, competitive intensity it can become more intensive on a local basis at some point, that’s usually -- its usually is sort of a pinpointed reason, specific competitors in a specific local market.

And as you know we don't have any national competition in the core -- in the core, for example, residential building market. We don't have national players. We are competing its local players. So I don’t think we’ve seen anything sort of more intense on competition.

And it is interesting looking through the cycle even if you went all the way back to the last downturn, our strategy was to hold our gross margin. And I think that served us well, because it's quite difficult to rebuild gross margin if you let it go, particularly when you've got distributed the responsibility for pricing.

So I think that's very important for us culturally to maintain the gross margins as we touched on in the presentation. In terms of end markets, if you look at new -- I will go through new resi improvements existing and then sort of commercial just very quickly.

The new resi market actually over the summer months has been a little bit more positive news there, permits and starts up little bit over summer and completions. And new home prices are up about 2%. New residential revenue, if you go to Zelman is something that’s also up about 2% over the last sort of 2 or 3 months.

Home improvement, again revenues look flat to low growth. I think the Zelman data is sort of between -- it is about 1% over the last 3 and 6 months. JCHS LIRA has come off a little bit and therefore causing a flattening of the market next year.

If you look at the existing home sales which of course might be an indicator, actually existing home sales have popped back up again. So they had come down from 5.5 million to about 5 million. They are back up now at about 5.5 million.

And Case-Shiller, the August reading was 3.2%, actually plus or minus 3% depending on where you are in the 20 metropolitan areas. There was only one negative and that was minus 0.6%, which was Seattle, I think. And so the existing -- the sale of existing properties seems to be okay. Inventory is still tight, delinquency rate is still very low.

Delinquency rate is the 90 day delinquency rate is -- it dropped to 1.1% last year, which was historically at very low levels. I think commercial, you saw Dodge was down a little bit in August 1 .3%, but actually if you look at the movement in Dodge this calendar year it remained pretty stable.

The billings index again was slightly lower in August, but -- and that’s been lower for a couple of months. So you would say that resi is probably looking slightly more optimistic. Commercial, perhaps slightly south of where it's been. But overall -- the overall markets look to be reasonably stable..

Ami Galla from Citi. Just a couple of question for me. The first one on trading in the U.S again.

I was wondering if you could give us some color what sort of visibility do you have from the order book? And is there any differential trends that you’re seeing in large contract work over the last six months? My second question is on the own brand, and as you progress on this journey, I was wondering if you can talk a bit about the sort of experience or the feedback that you’ve had from customers? Are there any product categories where you would have an intension of significantly increasing your penetration of own brand? Is that a possibility? And my third question really was on ecommerce penetration.

Just wondering if you could give us some color so how has that progressed, and across your submarkets -- sub segments to an extent..

Yes. Thank you. Look, the order book is just over $2 billion. So it's not that significant given -- it's not that significant, but it does give us some sort of directional feel for what's happening. And directional movements in it are they do correlate reasonably well to growth or slowing growth or even we have contraption.

There are no significant trends in large contract work particularly over recent months, with one exception in industrial there is less large project work in industrial.

Now it's not that big for us sort of 7% or 8% -- 8% to 9% of the business, it's a bit less large and industrial tends to be, particularly if they’re building new facilities that can tend to be larger scale work. It has been a bit less than that and you saw I think in our industrial growth rate, industrial grew in the first half at 30%.

In the second half it was down at single digits, low single-digit growth. That's fine. We know, we make good margins in both of those places, but that really strong growth back at the end of '18 and into the first half of last year was boosted by a couple of large contract, that's the only area it's made a difference.

Own brand, look, I mean now we are -- we got a really good dedicated team on own brand looking consistently at what are the next categories that we should be looking at. Firstly, customer feedback is excellent. It just gives more choice. We really care about going all the way back through the supply chain, which we own.

We own the design, we own the procurement, so we got QA people out in -- out in low-cost countries making sure that these products are properly manufactured in proper facilities and that the quality is there and we position them well.

I think the most important thing is not just thinking, here is an own brand product, we will put it in our branches and it will sell. Because all of our vendors have got salespeople out in our branches, we also have to go out to our branches and convince them that these are great products.

They should stock them, they should sell them, this is where they fitting to the whole product architecture, which will be familiar with from retail, sort of good, better, best or that type of pyramid architecture. So we do have to put a lot of support behind own brand. Regarding where we go next, it is absolutely incremental on each category.

So I would like to give anything away, because to some extent you have to do a lot of work with the vendors that are currently there in the space to make sure that they're not threatened by our own brand offerings during that time.

And hence if you look at the early products to be adopted for own brand, it was things like decorative plumbing, where there are already dozens and dozens of players and you're not going to be displacing one. If you were to go into another category where the two players with 90% of the market, that might be a bit more.

We grew at double the organic growth rate, that is broadly what we’ve been targeting. Can we grow at just good double-digit growth rates in own brand by the addition of new lines, but also by the -- by additional penetration in own brand. E-commerce, the important thing on e-commerce has not been just to grow a percentage.

We've realized this over the last sort of a couple of years. The important thing is that customers really use it and like the experience. And so we spend a huge amount of time building functionality for the customers who already are using ecommerce, rather than this just be we want a percent that will continue to increase.

I think the other thing to say is that the most important functionality is things like search functionality is important but also having really good product data.

And we set out over the last 18 months to have the best product data in the industry and we’ve -- we are on that program by integrating our systems to take vendors' product data lock, stock and barrel into our system and building that link so that we never have to update it again.

As soon as the vendor makes a change to their product specification it flows through to our product files and we’re putting more of those -- those products were additionally what we would call behind the wall. So you have to get a log on to see and buy those products. Now we are opening that wall up so that it is more publicly available.

There is risk in that, because we're making out data available and our data is valuable. But we're pretty sure we want to be the leader in the management of vendor data, because that's going to be important over the next generation. So those have been key things in the movement on e-commerce over the last year or so.

And then one other, in B2C, we are using the B2C assets now more integrated with the showrooms so that there is -- historically, if you look at the standalone e-business, it was standalone e-business.

I think more and more that's going to be merged into our other customer facing and -- the other customer-facing parts of the business, which is most obviously showrooms. So we are now using that functionality in the showrooms far better. Did it give you a sense? Thank you.

John?.

John messenger from Redburn. And its two to Mike and two to John, please.

Mike, can I just ask on the U.K the -- to give us an idea of what we should think about in the shape going forward? The annual leasing cost that sits in the U.K, if we get a rough idea of what that is relative to the 54 of EBIT, and your view on the cash or that you’re going to move across or what will likely be required in terms of the financing structure for the U.K business? Second one was just on and this is playing a bit devil's advocate, but $62 million as a redundancy charge figure is like 4% of last year's EBIT.

What is the justification for treating it as exceptional and that I could argue that its next year's operational gearing kind of being neutralized and you taking it early. So just to understand why that should be treated as exceptional in investors' eyes. Third one was for John. You mentioned Blackman didn't happen five years ago.

And it's sort of portfolio the only chance we will have to ask yourself and Gareth to understand what changed over that 5-year period? Was it your confidence about what you could get out of it, was it the price, was it the change of ownership at Blackman, because it obviously went into the kind of trust structure, what was the kind of changing dynamic there? And final one, just coming back to this whole shape of the U.K like-for-like -- sorry the U.S like-for-like, obviously you flagged 13% was the industrial kind of boost first half of last year, down to zero in the second half.

Is that one of the biggest ingredients so when we are thinking about the shape of 2020? Is it a first half no industrial that annualized in the second half? Guess, what I’m getting to is, is it 2% half one for half to you have to get 3% for the year, that’s a broad kind of feel as to what you would be looking for this year in the U.S? Thank you..

Excellent. Well, thank you for allocating the questions today. Of course, our jobs are more easier. Listen, on the U.K., I’m going to duck that question totally because we are working through all the details on the U.K with all the advisors.

So we will give all the details on the U.K at the appropriate time, in terms if we need to obviously define the exact parameters of the demerger, it's easy for us to sit here. I think U.K there's clearly we need to make sure that we understand the parameter and give the right financial information out at the right time. So we'll do that in due course.

And I loved your accounting question on why is it exceptional? The very simple answer is we have accounting policies, which are stated and clear. It is by size and by nature defined in our accounting policies, that's -- those are the rules we follow. Those are the rules we set out.

And under those rules, a $62 million charge by size and actually by nature, falls into the exceptional category. I think the good news is at least we’ve disclosed it very clearly, so investors can quite rough. I was trying to figure a better phrase, but listen, it's clearly disclosed.

It is a big number, but I think it's absolutely the right I think you use the word operational leverage, John, absolutely. It is to get our cost base in the right space and grow that young talent to come through the Ferguson organization. So it is absolutely in my view a great investment, shareholder funds albeit separately disclosed.

I will grant you that..

Yes. Just on that exceptional, do you know it is interesting thing. It's the first exceptional item in Ferguson Enterprises for 10 years. Every other exceptional that I had the misfortune to have prior to Mike when I did his job, every other one was somewhere else in the group. And I think to Mike's point, we absolutely encourage the team.

And I think Kevin and team have done a great job on this to look at is there anything that we should do now to position the business well. And I think to Mike's point where it goes -- fine, it's cash, all right. We all agree. It's cash and it's -- and it goes through. It can't be distributed to shareholders.

It's cash, but it was an important thing for us because I think the net headcount reduction as a result is 500 people. So it's absolutely worth doing. Blackman, what changed? The owner died. U.S like-for-likes, the -- I wouldn't get carried away with the industrial. Industrial bit doesn't make that much difference.

I think the shape of the year, it's easy to look back and think well last year we had sort of a 9% plus growth in the first half and 3%-ish in the second and therefore the comps will get easier. The comps will mathematically get easier, but I still don’t know what’s going to happen to the growth rate.

So I think our budgets are more balanced than that. So, yes, I mean, it would be lovely to think there is going to be better growth in the second half, but it is too early in the year for us to get visibility on that at the moment, John..

Robert Eason from Goodbody's. It's kind of more follow-up questions. And just in terms of what you are thinking about the cost base in the U.S., just to help us if you -- if you could see the chart, I think at the presentation where you benchmarked against like-for-like growth clearly all the work is coming true in Q4 that annualizes.

Is it simply that you’re just trying to offset underlying cost inflation in this slower growth environment? How are you thinking about it or is it more than that you want to take out in terms of the cost base, so just a bit more thinking around that.

And as the growth have slowed in the U.S., and the challenging markets in the U.K., are you seeing any change in behavior either by yourselves or your competitors in the use of working capital in terms of getting that volume in? And how more watchful or -- I’m sure, you always are watchful, but how much is bad debts changing or materializing in the business is materializing in one area, large contractors versus small contractors, just a general kind of conversation around bad debts?.

Sure. So little more on the cost base. The cost base as I say, it's easy to sit here to do the financial modeling. We will get the cost base, we've talked about the bottom line growth being at least as good as the top line growth, okay? We do need to be careful because we're getting into small numbers.

So that maths starts to work against you and therefore don’t come at me in any quarter. As I’ve always said, we don't run the business by quarter or by year-end periods. But what is important philosophically is in a very low growth environment you can deliver a better bottom line growth than your top line, that is really, really important.

There aren't actually any -- back to our -- simple folk like me and, you said, yourself. There's only a couple of ways to doing that. One is gross margin and the other one is costs, okay? So we must get our cost base aligned for the market environment that we existed.

It sounds obvious, okay? But you’ve seen most of the coverage this morning has got growth 2.5%, 3% for our top line. And therefore we need to make sure our cost base is managed accordingly. That's what we set out to do.

Clearly, back to your earlier question, if the markets continue to come off as they did in the rather large recession, we will act accordingly. And are we planning to do that today, we've got a plan, but we're not executing that plan. We expect our markets to grow as we’ve set out today and therefore we set out our path to growth in that.

I think the other thing to grow as always balanced is if we will -- I generally as the FD never get beaten up when we miss out on growth opportunities, because you don't know we miss them.

But internally it's really, really important to us and our customers to make sure we service our customers when the upturn in that growth comes, okay? So it is always a balance and it is definitely important to invest in the future of the organization. So you heard us talk about some of the investment in technology. We will invest in technology still.

We will continue to invest in training. We will continue to invest in health and safety. Those are fundamentals of our business. So again back into our mind on costs, those are investment costs that are really important for the longevity of this business. And those are just as important to us to continue to invest in.

In terms of the U.K market, again John can comment as well. We have seen a little bit more bad debts. It's quite unpredictable. I would say the last couple of months has been a bit slower, so slightly odd. Back to your earlier question, you might have expected to pick up.

But it is quite unpredictable we are seeing businesses particularly the sort of small, medium sized businesses that have been around for years and years and years with little [technical difficulty] actually going quite quickly. Don’t get me on to prepack deals, but there are a number that go quite quickly and the number of going into prepack deals.

So it's one for us to certainly watch, as the economy certainly is difficult in the U.K..

Yes. And then with regard to the U.S in working capital position, there is no change at all in our vigilance or the customers behavior or competitors behavior in the market. I mean just to give a sense of and we are very good managing credit. Very good.

If you think about the million customers that we have to manage for trade credit, our total charge in the U.S last year was $10 million on $18 billion.

So our total credit losses were $10 million on $18 billion in the U.S with no change from the year before when it was also $10 million on a slightly lower top line, okay? Paul?.

Morning. It's Paul Checketts from Barclays Capital. [Indiscernible] with that, please. And then the second is you’ve also got a new slide on shared infrastructure. Conceptually, how significant would the dissynergies be if you are to separate out any of your verticals? Thanks..

Yes. Distribution centers we set out a few years ago that we got sort of 11 distribution centers, which are therefore replenishment of branches across the U.S. We have no plans for more distribution centers. The market distribution centers are there for final mile fulfillment as and they may also be used to replenishment of local branches.

That’s the area where we will see investments over time. The strategy is to move to those. Most of those will be consolidation facilities in specific markets. I think last year we talked about Denver, for example, which is the consolidation of four sites.

There's another one at the moment which is Phoenix, which is a consolidation of three sites, but they are more in the normal. They will be in the normal course of business. If we’ve got growth, then we'll absolutely be adding capacity, but it will be proportionate to that growth, Paul.

So it doesn’t -- and all the numbers are within mike's CapEx guidance. So that’s -- and that will just happen now I think over quite frankly many years on an incremental basis. The shared infrastructure, look, I think with regard to blended branches, I think that the phrase blended branches is sort of it does what it says on the 10.

If you are an HVAC customer you can come into a blended branch and get a range of products. And so to me the issue isn't a question of separation. The issue is really this. If you have a contractor who does some plumbing and some HVAC, you want to go into a branch and get all your products, can you come to Ferguson. So we’re never going to stop. Never.

Doesn’t matter any management change, any Board change, we are never going to stop selling HVAC products in America. You have to get that about Ferguson. We sell plumbing, we sell heating, it's in the name, heating, ventilation and air conditioning.

We will never stop selling those products because if a customer comes and you want to sell them what they have. So should you separate out of those 8 to 9 customer groups, should you separate out HVAC customers? No, because it would be bonkers. You will never stop doing it. Does that make sense? So we're not going to separate out HVAC.

We are going to carry on selling HVAC, because where would you stop? Oh, we will stop selling taps, faucets, all right. You’re not in plumbing supplies if you stop selling faucets.

Well, we don't like pipe, because MRC or somebody sell pipe and we don't like -- no, we are going to sell pipe, because we are a plumbing, heating, ventilation, air conditioning, we are there to service those customers and those contractors. So I think that's how I see our business.

Now then you could say well actually why you would have a standalone branch? The reason for a standalone branch is because there is sufficient scale in that area. Let's say you're in Houston and you've just got a massive industrial and not much residential in this particular area of Houston, which if you know Houston well, it's a whole chunk of it.

Then actually having a standalone industrial branch makes a lot of sense. Why would you put a whole load of residential faucets into a branch, which is in an industrial area selling to industrial customers there isn't much point.

Do you see what I mean, but whether or not we put those industrial products or whether we let industrial customers into our blended branches or into a standalone branch, we are always going to be selling.

You know what we are always going to selling plumbing, heating, fixtures to industrial customers, valves, fittings, fixings, the whole works, gaskets, pumps. We are always going to be selling those to industrial customers.

We are always going to sell them to commercial customers, we are always going to sell them to residential customers, because that’s what Ferguson is and that's what we -- that's we do. So we're not going to separate those customers out if that makes sense. And I think we might have misled people on the chart.

That's how we look at the customer needs, the strategic customer needs. They are not really separate businesses or some of them do have standalone branches.

Does that make sense?.

Yes..

Thank you. Gregor Kuglitsch from UBS. Three questions, with many things answered already.

But just on the headcount reduction on U.S., could you just be clear all that happened in the fourth quarter there is nothing kind of still coming into the first, because I see in the slide that I think your headcount on sort of year-over-year basis organic was done 250 or something like that. That’s question number one. Question two, on the U.K.

And again in the fourth quarter it looks you had a pretty -- I’m not radioactive or anything like that, but there was a pretty significant kick up in operating margin, so I want to understand what happened there and whether you think that’s a sustainable performance? And then maybe wrapping up your guidance, I think in your statement this morning you’re talking about good progress on I guess operating profit or trading profit.

Is your thinking that that is a similar -- was last year good or was last year better than good, I guess? And then, finally, on the U.S listing, obviously this has been something that you've considered and we’ve talked about this in this kind of forum, I think, for certainly a number of years.

Historically, what has been this key area of that kind of box chart that you gave us in the presentation that held you back from doing this.

So what was kind of -- if you had or maybe if you pick out sort of 1 to 3 items that you really saw were negative and therefore you stayed with the status quo, what were those? All right, I’m going to give this back..

Yes. Can I just get your first question again? By whilst I’m doing that. Just so I’m clear on your headcount question..

[Indiscernible]..

Okay. I think the question on the headcount was, was it all done in the fourth quarter? The actions that we talk at the half year were completed. The voluntary early retirement program that we talked about was initiated in July, that will work through by the end of Q1. So no for the second one. Yes, for the first one.

Your question on guidance was did we think this year was a good year and further progress into this year? Just help me clarify your question..

I think that was in the U.K..

So the -- that’s fine. The -- I think in your text you're talking about another year of good progress. I think consensus is like 2%. In my mind that’s not particularly good. Last year you did 7%.

I guess the question is to get a little bit more essence what the level of growth you think you can achieve? I guess, there's a few technical items and maybe you want to go through those that are tailwind on operating profit..

Yes. Well, look, I mean I think if you look at consensus at the moment, there's 3% or 4% revenue growth at consensus. I think it's important for us if we get 3% or 4% revenue growth and Mike touched on our ability to be able to generate profit growth in a lower growth environment, I think that's important and that's what we should expect of ourselves.

If we get top line growth, then we should -- and I know we are talking about smaller numbers, but we should still be making progress at the bottom line. And if the markets are relatively flat, we should be taking market share, that's what we expect of ourselves, we've doing that for some time, we should carry on doing it.

So that’s I think our sort of view of making progress. If we’ve got a market at the moment, which is 1% or 2%, flat to 1% to 2% depending on whether it's resi, whether it's commercial, whatever. And we can take a little bit of share. We can do a little bit better than that and make sure that we get that down to the bottom line.

That is what is reflected today in our budgets in our plan..

On the U.K., I think your question on U.K was, it was the quarterly performance sort of -- do you roll that forward? I've always said we should look at the -- all businesses sort of over a period of time. I think we set for the U.K as you think next year versus this year, the markets are flat probably at best in the U.K.

I think some competitors would say they’re getting worse today. Mark and the team clearly continuing to take internal actions, but I wouldn't expect heroics out of the U.K business. We have got small acquisition.

So I think we will see some progress in the U.K., but it wouldn’t be a market I would be too overexcited about in terms of the numbers getting ahead of themselves right now. We’ve been through pretty tough years, pretty tough market, good management team, good progress. I would say sort of more slow and steady rather than revolutionary in the U.K.

Gregor, your question on listing and how we looked at this historically? I think there were a couple of things historically. And of course, we were busy back then as well.

I think at the time we looked at listing, we were absolutely -- we were pretty clear and it was certainly pretty strongly advised that any change to the listing structure in any case was not achievable. That’s the first thing historically.

Okay? And also there have been changes to the technology that change the question about, for example dual listing. Now of course over time, our -- the proportion of our income coming from North America has just inexorably risen.

And actually as it happens because Mark has worn out a lot of shoe leather in North America and we've become more U.S owned as well. So I think those are the things that’s -- that has sort of moved over time, Gregor..

Thank you..

Clyde Lewis at Peel Hunt. I’ve got two, if I may. Maybe I’ve missed it, but have you mentioned anywhere how you performed in the MRO business in the U.S? I mean, obviously it's tucked away in various of those divisions, but we didn’t seem to get an update as to how Ferguson is performing in the end market. And the second one I had was on share gains.

John, you referred to it just then, but Ferguson is very consistently for as long as I can remember, grown in share in virtually all of its markets very consistently.

But the reason for those share gains, I’m sure have evolved and we will continue to evolve, but as you are leaving there or and as you’re looking forward, and obviously Mike and Kevin and Geoff's challenge going forward, how -- I suppose do you think that share sort of story is going to evolve? What are the big challenges there for the biggest group? Is it still a service? Is it still product availability? Is it still the geographical infill that has completed the map? I mean you’re not there yet, There's still opportunities there, but just sort of hear your, I suppose, views as you sort of step out of the door, what really are the challenges on that front in particular?.

Look, MRO, so the Facilities Supply business actually did pretty well last year, pleased and growing certainly towards the -- in the second half of the year it grew well. And I think the focus on that business we decided sort of Kevin, Mike and I decided year and a half ago, we won't be doing any more acquisitions until we got the organic growth.

That business going really well. We talked some time ago about the quality of Ferguson bringing our own associates through training them really well, getting them on the road, I think that’s worked now very well and the business has performed -- has performed really well in -- particularly in the second half of last year.

I would say, it's still a relatively new business and by far the smallest of the customer groups on there. By the way just why does it make sense? About -- between 40% and 50% of the products that we want to sell to those customers are core Ferguson products, yes.

So getting that right mix of products was absolutely fundamental to the profitability and the margin of that Facilities Supply business, yes. And that's been fundamentals, because that's one of the reasons why we decided we were going to take a pause on M&A for Facilities Supply at that time.

So I think steady -- good steady progress, but it's still a -- we’ve been at it, what, for five years now. Two little acquisitions. It's a nice little business, but I still want to see, we would still want to see years and years and years of really good growth to make that business, to make that customer group really very profitable.

And look, the reasons for the share gains, I’m afraid they are a little bit what you touched on. I think availability is absolutely fundamental and over many years having the distribution centers, that has been a competitive advantage.

Distribution centers replenishing branches constantly that's given an advantage to our vendors as well because it's just given better availability of products throughout the network. And of course having that service, the combination of outside sales with inside sales who can really source product as well as price up project, that's been important.

I do think going forward now, technology will become more important. And in particular the tools that we provide to our associates, particularly on that inside sales space, because historically inside sales have -- they’ve had a fantastic work ethic and a fantastic service ethic.

I think now if we can bring more technology to that, we can really get good productivity and drive up service levels in terms of the speed it takes to respond customers and the access to both our own product and to vendor's product.

I think that's there's gold in those hills on the technology side, but certainly I don’t think the business model is going to need comprehensive change, but I do see more evolution on the technology side. Right, you must be exhausting, Mike, and -- I am all right. I can carry on, but thank you all very much indeed. Thanks very much for coming..