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He has repaid more than $120 thousand in loans. Now Virginia Governor Bob McDonnell says he will return gifts from a wealthy contributor.
The Governor made his latest comments on the gift controversy Tuesday morning during his monthly call-in show on Washington radio station WTOP.
He repeated his assurance that contributor Jonnie Williams and Williams' company Star Scientific did not receive any special treatment from the state, but he said he is repaying loans, returning gifts and reimbursing mansion expenses to regain the public's trust.
"So as I had heard that people had expressed concern about my financial relationship with one particular donor," McDonnell said, "I thought the best way I could make that right was repay those loans."
Harry Wilson is WDBJ7's Senior Political Analyst. "This is what the Governor should have done three months ago," Wilson said in an interview. "He should simply have gotten everything out, put it all on the table... And had he done that three months ago, we wouldn't be doing this interview now and this would probably be in everybody's rear-view mirror by now."
McDonnell said it's a fair question to ask whether the state's law on gifts to public officials should be changed, whether or not a cap should be placed on the number of gifts.
McDonnell said he's gone through a lot of self-reflection and will offer some proposals in the near future.


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About the Book
Theatre of the Mind is a captivating look at consciousness that explores the most recent and controversial research on the brain. Author Jay Ingram, co-host and producer of the Discovery Channel's award-winning Daily Planet, gives us popular science at its best, ushering us into the Theatre of the Mind for a fascinating look at how we think and how various cultures consider consciousness.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
A captivating look at consciousness, exploring the most recent and controversial research on the brain.
If the brain is the theatre, consciousness is the play. But who or what controls what we watch and how we watch it?
In Theatre of the Mind, Jay Ingram, whose past scientific investigations include the properties of honey on toast and the complexities of the barmaid's brain, tackles one of the most controversial of subjects: consciousness. Scientists have long tried to map our brains and understand how it is that we think and are self-aware, but what do we really know? Any discussion of the brain raises more questions than answers, and Ingram illuminates some of the most perplexing ones: What happens in our minds when we're driving and we suddenly realize that we don't remember the last few miles of highway? How do we remember images, sounds, and aromas from our past so vividly, and why do we often recreate them so differently in our dreams? Ingram's latest book is a mind-bending experience, a cerebral, stylish ride through the history, philosophy, and science of the brain and the search for the discovery of the self.
Educator and Librarian Resources
Product Details
- Imprint: Harper
- On Sale: 11/02/2010
- Trimsize: 5.313 (w) x 8 (h) x 0 (d)
- Pages: 304
- List Price: 16.99 USD
- BISAC1: SCIENCE / Life Sciences / General

subset: commoncrawl


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CARUTHERSVILLE -- Sikeston's golf team showed marked improvement on Monday, taking third at the Farms Tournament, sponsored by Caruthersville.
The Bulldogs finished with a team score of 332, finishing behind Jackson at 312 and Poplar Bluff at 317.
"It's a shot-makers course," explained Sikeston coach Rick Oetting. "Today, we seemed to do that well."
Tanner Fritz led the Bulldogs with an eight over par 80, finishing in eighth place overall. Other scores came from E.C. Atchison at 83, Martin Schaefer at 84 and Matt Hon at 85.
"We hoped for a little stronger score, but this was our first time to see the course and it played tougher than we expected," said Oetting. "There weren't too many low scores."
Behind Jackson, Bluff and Sikeston, Cape Central came in fourth place with 335 points. They were followed by Jackson Black, Doniphan, NMCC, Notre Dame, Kennett, Clearwater, Caruthersville, Bloomfield, Malden, Cape Central Orange and Greenville.
Poplar Bluff's Josh Dowdy was the low medalist with a 73. He was followed by Jackson's Eric Fraley at 75 and Cape's Blake Driskell at 77.
Sikeston's golf team will be back in action today, hosting Kennett at 4 p.m.
PORTAGEVILLE -- Chaffee's softball team cruised past Portageville in four innings on Monday afternoon, 24-1.
"I thought the girls played a really good game," said Chaffee coach Debbie Lewis. "We're starting to play solid softball."
Abby Walter picked up the win, allowing the one run on two hits and two walks. She recorded five strikeouts.
Kegan Orr paced Chaffee's offense, batting 3-for-5 with a double. Walter was 2-for-5 with a homer in the second inning. Casey Guzman and Mallory Kiefer were also both 2-for-5.
Chaffee scored two runs in the first inning, seven in the second, five in the third and 10 in the fourth.
For Portageville, Crafton and Stafford both pitched in the loss. Cayton and Brasher had the team's only hits.
Chaffee (4-2) will host Woodland today at 4 p.m.
NEW MADRID -- New Madrid County Central kept its unbeaten streak alive on Monday, blanking Gideon 5-0.
The game was originally scheduled for Gideon, but was moved to New Madrid due to field conditions.
Heather Robey pitched another gem for the Lady Eagles, allowing one hit and three walks over seven innings. She took 16 Gideon batters down via strikeout.
NMCC led 2-0 going into the sixth inning, then Jenni Glenn provided a two-run triple to give the Lady Eagles a comfortable lead.
Other hits came from Robey, Megan Rinehart, Heather Redd and Ashley Brittain.
NMCC (10-0) will host Scott City today at 4 p.m.
"It was another well-pitched game," said NMCC coach Steve Rogers. "The girls fielded the ball well behind (Robey) and we had some timely hitting. Hopefully we can get the offense going again (today) against Scott City."


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Taking on riot police
An opposition supporter climbs over the heads of riot police during a rally to protest against a Russian language bill passed by parliament in Kiev July 4, 2012. Hundreds of protesters clashed with riot police in central Kiev and Ukraine's parliament speaker offered to resign on Wednesday amid uproar after a move to boost the status of the Russian language in the former Soviet Republic. Riot police fired tear gas and used batons to push back protesters, who had massed in front of a building where President Viktor Yanukovich was due to hold a news briefing. The bill would upgrade the status of Russian in the former Soviet republic.
Anatolii Stepanov, Reuters
Copyright © 2016, Hartford Courant


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Morgan Stanley and BofA Avoid Trading Loss Spike
It was a mixed day for trading losses at banks. Morgan Stanley and Bank of America both released their overall trading-loss days for 2013 in annual reports filed with the Securities and Exchange Commission Tuesday.
For Morgan Stanley, losses were less frequent in 2013, with the firm racking up 33 days of net trading losses in 2013, down from 37 days of losses. Of the down days, three left Morgan Stanley with more than $50 million in losses, the firm said in Tuesday's filing. On 14 very profitable days, net trading revenues exceeded $100 million at the firm.
Bank of America had fewer trading loss days than Morgan Stanley, but saw an uptick to 10 days of trading losses in 2013, compared to six days of trading losses in 2012.
Neither firm saw the same kind of move as J.P. Morgan Chase & Co., did. In its annual report filed last week, the bank disclosed a new methodology for calculating trading-day losses.
Between 2010 and 2011, J.P. Morgan reported declines on 40 days, and then on 41 days in 2012 as the bank wrestled with billions of dollars in trading losses stemming from a series of bad bets taken by a trader nicknamed the "London whale." The soured positions eventually cost the bank more than $6 billion in losses and roughly $1 billion in legal settlements with U.S. and foreign regulators.
The bank bounced back in 2013, according to the old methodology, posting zero trading-day losses.
But under the new methodology, which includes a definition of "market risk-related gains and losses" that is narrower than one previously used, the bank suffered trading losses on 83 of 260 trading days. The new measure excludes fees, commissions, net interest income and certain accounting adjustments, as well as gains and losses arising from intraday trading. Bank of America and Morgan Stanley also exclude many of the same items.


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Ian Meakins - Group Chief Executive: Got off to an early start. Good morning everybody. I am here with John Martin, CFO of Wolseley and I believe our (guest) Chairman is lurking somewhere. Mr. Gareth Davis in the corner here.
Welcome to the Wolseley half year results. I will just do brief summary and then hand over to John and then come back and give a summary of where we are on the strategic development of the Group.
Overall, we made decent progress again in the last six months, driven by very good performance in the U.S. However, the economic slowdown in Europe has affected our markets, especially in that Nordics and even more so in France. We have achieved reasonable like-for-like growth and gained or held share in most of our key businesses.
There has been no letup in the pricing environment, especially in Europe where we have been fighting for every order, but we continue to work hard to offset this pressure and overall across the Group we managed to nudge our gross margins up a little.
The control of operating expenses has been good across the Group. Our operating expenses increased by 2.7% in constant currency. We have slightly reduced headcount by more than 1,500 heads before acquisitions, which is about 3.7% of our total workforce. We'll retain this operating discipline and we have further cost reductions plans to make sure that we protect our margins going forward.
The costs of performances were impacted significantly by widely different market conditions. We continue to make good progress in the States, U.K. Canada and Central Europe performed pretty well in difficult markets, Nordics demonstrates how resilient our strategically strong businesses are in tough markets and it was disappointing to go into losses in France, but our teams have thought extremely hard to try and reduce operating expenses in line with rapidly declining new residential market conditions.
As John outlined we have good plans to address our underperformance in France, these plans are of course subject to employee consultation and competition terms. We have also managed to increase group margins and delivered reasonable leverage by productivity improvements on a slow top line performance.
So in summary, we believe we are well placed to generate a very good growth in the States and we will continue to take significant actions in Europe to protect our business. We will continue to invest where we see growth and where we need to improve our infrastructure for the longer term.
John, over to you.
John Martin - CFO: Thanks very much Ian and good morning to everybody. Given the difficult economic conditions in Europe it's great to be reporting like-for-like growth albeit just over 2% driven a strong performance in the U.S. The pricing environment in the period was demanding but we also improved gross margins. Costs are well under control.
Trading profits of GBP324 million was 7.6% ahead and the trading margin improved to 5.2%. Net debt increased after very large dividends, pension payments and also investments in shares for the employee shares schemes in the second quarter and we are proposing a 10% increase in the interim dividend to GBP0.22.
Overall the like-for like growth rate in the second quarter was in line with the first quarter at 2.3%, but market conditions were very different across our regions. Demand in the U.S. remained pretty consistent at a good level and combined with good market share gains, we delivered strong growth.
Markets in Canada and U.K. were weaker. Despite some share gains in the U.K. like-for-like growth there, pretty flat. European markets weakened further in France, Sweden, Denmark and Finland and our like-for-like reflects this weakness.
Just before we jump into the operations review, it's hard to believe in these days of the plunging (parent), but FX went against just during the period, knocking GBP6 million off trading profit, perhaps we'll get a little bit of that back in the second half. We also had one less trading day in the period, worth GBP5 million of trading profits and will have one less day in the second half, too.
Let's look at the operations by region. Revenue in the U.S. was 8.3% ahead on a like-for-like basis including inflation at about 1%. Demand in RMI was good and the recovery in new construction continued, as you know new residential construction accounts for just 14% of our sales in the U.S.
Blended Branches continue to grow well across the country and we made good improvements in market share. The ongoing focus on gross margins contributed to good profit flows through.
Waterworks which is our second largest business in the U.S. grew strongly and made impressive share gains as did HVAC and Fire and Fabrication. The very strong growth rates in Build.com over the last couple of years continued and we're on track now to do $1.5 billion of revenue this year from sales in Build.com. Industrial sales were held by lower shale gas activity, but the PVF business continued to make good progress.
Gross margins were ahead reflecting considerable management focus and also pretty stable commodity prices. Operating expenses were 7.9% higher, of which 2% came from acquisitions and GBP5 million of additional investments in B2C marketing costs. Our focus on margins and tight cost control contributed to really good flow through with trading profit 29% ahead.
In Canada revenue was 2.3% ahead on like-for-like basis. The growth rate slowed in the second quarter as news residential markets fell, but infrastructure investments carried on growing in the region supported by the mining industry. Gross margins were ahead of last year and operating cost growth is held at 2.7%. So, trading profit was GBP3 million higher.
Blended Branches and Waterworks grew modestly despite strong comparators and Industrial continues to grow well with improved profitability. In January, we launched Build.com in Canada using our successful U.S. platform. The trading margin grew to respectable 6.4%.
Revenue in the U.K. was flat. The heating market declined and inflation was negligible, but we did increase our market share. Gross margins were lower overall due to pricing pressure but we controlled operating costs tightly and reduced headcount before the acquisition of Burdens by 234. Trading profit of GBP45 million was GBP 1 million ahead of last year.
Plumb and Parts saw (medicine) weak markets and achieved really decent operating results in line with last year due to tight cost control. Pipe and Climate was held back a little by weaker Industrial market, but it improved its gross margin, held its cost base down and posted a better operating results. We invested GBP2 million more in new B2C business, which is ramping up now really nicely in the U.K.
At right at the end of January we got OFD clearance to complete the acquisition of 22 Burdens branches and we're now are rebuilding revenue in that business. The consultation on restructuring of our business started last week. The trading margin in the U.K. edged up to 5.3%.
In the Nordics like-for-like revenue was down 6% including about 1% inflation and that reflects falling consumer sentiments and rapidly falling construction demand. Our business has performed broadly in line with the market.
But lower activity levels hit demand from building materials in Denmark and Sweden and in Finland. Despite those we protected gross margins and we lowered the cost base which was 3.3% better mainly due to headcount which was 700 heads lower than in July.
The DIY business in Denmark performed really well, grew profits again and in Norway, though the demand was pretty subdued, we also made good progress and improved our trading performance.
Notwithstanding all the work on gross margins and great work on costs across the region trading profit was GBP7 million lower and the trading margins dips to 4.2%. We also sold two small non-core business in the period for GBP12 million.
Revenue in France fell 10% including about 1% inflation as the market deteriorated shortly. I'll just give you sense of this new residential starts year-on-year have fallen now by 20% and that is nearly 40% of our business in France. Gross margins were also slightly and we brought operating expenses down by 4.5% with headcount down by 230. This was not enough to present trading loss of GBP7 million.
You see the results this morning in the release of the strategic review, let me just touch on a few key aspects. Firstly, Wood Solutions, Wood Solutions is a decent business. It's got a strong strategic position. We made good progress in 2012.
We think in focusing and repositioning the business it will be retained. Management of Wood Solutions has been transferred to Central Europe and that's to allow our team in France to really focus 100% on building materials.
As Ian said, subject to works Council consultation and competition clearance we will sell 88 Reseau Pro branches in the South of France to Chausson in return for which we will get a bond convertible to 11% of Chausson in 2020.
In addition we will keep free-hold property with the rental income of GBP1.2 million a year. We are also negotiating an agreement with Chausson to cooperate nationally on sourcing which will improve our business in the North.
For the remaining business we wanted to simplify and focus. So, again subject to consultation we propose to close 24 loss-making branches and we'll look to exit another 15 specialist branches which don't fit our simplified format.
Admin functions and offices will be rationalized and our structures simplified. In conjunction with all of this we have a comprehensive plan to refocus our customer proposition to improve productivity and grow margins, looking back to financials shortly.
In Central Europe like-for-like revenue was 1.2% ahead, with no significant inflation. Switzerland and the Netherlands grew modestly. Austria was flat. The gross margin was slightly lower, but operating costs were down and headcount was reduced by 60. Revenue and trading profit were adversely impacted by currency movements and the trading margin dropped to 5.1%.
Group costs increased by GBP2 million, including additional investment in systems and processes. We also incurred GBP3 million of one-off cost in relation to Hurricane Sandy and GBP2 million of acquisition costs.
Let's move down the P&L. Redundancy cost of GBP10 million, principally arose in the Nordics and Austria. Fixed assets write-downs in France and Nordics were GBP58 million and lease provisions another GBP14 million, with other restructuring cost of GBP11 million. The cash impact of these charges is GBP39 million.
In the second half restructurings like to give rise to further charges of GBP70 million and GBP80 million and they will have cash impact of about GBP20 million. There are two other exceptional items. In France we were subject to a fraud which resulted in a number of unauthorized payments. We are pursuing the recovery vigorously, but we've provided for the maximum exposure of GBP10 million.
On a more positive note, the credit of GBP16 million arose from gains on disposable and the write back of earlier disposal provisions. This chart shows the movement in revenue, gross profit and margin from the first half last year to the first half this year. You can see the importance here of like-for-like growth, worth GBP36 million of gross profit.
Acquisitions and gross margin improvements, particularly another GBP26 million of gross profit, the GBP11 million in other related to one-off items last year avoided in this year. New branches in this period were less important as a source of growth, as we look to different channels to reach our customers and Ian is going to talk more about that later on.
The underlying improvements in gross margin was about 10 basis points, which is a decent result, we think in very challenging market conditions. This chart shows the movement in operating expenses for the ongoing business on the same basis.
Acquisitions in new branches added GBP19 million and a further GBP17 million of variable cost was needed to service the like-for-like growth. Additional B2C investment cost GBP6 million. Once again, as you can see on the chart, pay rises and cost increases have been offset by efficiency savings.
One of the productivity measures that we use is to look at our effectiveness in converting gross profit into trading profits and that increased by another 1% during the period to 18.6%.
Net financings charges fell to GBP11 million, that partly reflects the fact that the cash outflow, principle cash outflows rose in the last couple of months, the second half charges will be a little higher. The effective tax rate 27.5% and that's because a large proportion of our profits were generated in the U.S. and therefore tax at the higher U.S. rate.
So look at the cash flow. Excluding the unwind as the year-end working capital position that we told you about in October, the seasonal working capital outflow in the period was about a GBP100 million higher than last year and principally related to additional inventory in the U.S. to support growth initiatives and to manage commodities.
Also at the end of the period, we carried some extra inventory to ensure really good availability for our customers in the event of the certain forward strike. If you look at average cash to cash days across the Group, which we look at every month measured throughout the period. We were actually a day better than last year and we do expect working capital to be favorable in the second half.
As you can see we made a one-off payments of GBP125 million into the U.K. pension scheme and we have started consultation with employees to close that scheme to future accrual. GBP100 million of tax payment is slightly higher than the tax charge for the period, but dividends including the special dividend were $462 million. We invested a GBP110 million to buy shares for employee share schemes as we told you back in October.
We also invested just over GBP100 million of cash in acquisitions. PED is an online distributor of generators, power tools and other equipment's. Since the acquisition in the autumn it's turn exactly what we wanted it's performed really well.
Davis & Warshow is a Blended Branches business based in New York it was literally in the eye of the storm of Hurricane Sandy it's recovered really well. It's a really good quality business. We are confident Burden sites that we have bought can be developed into a really compelling offering for our U.K. customers.
We also have some really exciting organic growth prospects in the pipeline, and there is some infrastructure investments to support them, including GBP17 million for a new DC in Ohio.
Technology investments are becoming much more prevalent in the business now with significant projects to ensure quality of master data to ensure our assets are really well-managed so that we can leverage them for their maximum potential. As you know, we are rolling out our B2C capability using the Build.com platform.
Net debt at the end of the period was just over GBP870 million, and pension liabilities was GBP318 million, and that reflects both the additional contributions that we've made but also changes, increases in inflation expectations.
Despite the higher capital employed in the first half, returns on capital edged up again to 30%. The EU Payment Directive as we talked about back in October has been implemented in most of Europe. One or two countries have missed the deadline, but we've no significant impacts from this so far.
Finally, let me summarize our dividend policy. We will pay an interim dividend of GBP22 per share, an increase of 10%. That growth rate reflects our prudent view of the potential long-term earnings growth rates of the business. If we are wrong then we will use cash for those other capital structure priorities, including acquisitions, if they meet our investment criteria and falling that we'll returns of surplus cash to shareholders just as did in December.
Thank you very much. I will hand back to (indiscernible).
Unidentified Company Speaker: Thanks, John. Just on the slide I used last time to explain the six key building blocks of our strategy, but today I only want to focus on points two, three and four. To do this I'll give you a quick update on progress in our Blended Branch business in the states, also the actions we are taking in our Nordics businesses and how we are continuing to develop better more efficient business models.
So picking up on the first element of driving performance systematically across the Group. Last time I showed you how we are now looking consistently at the same variables across all of our 29 business units. This being customer service, market share, wallet share, the same financial reporting systems and using the same strategic planning process.
We now have detailed the consistent visibility of the performance downturn to all of our businesses. This ability look holistically at each business unit performance has helped us to keep margins moving forward in some tough market conditions.
There is still a long way to go to make sure that this discipline is working in all of our nearly 3,200 branches and with all of our nearly 40,000 people. Our Group margin is up 40 basis points in the return on capital as John just taken us through now just over 30%.
Returns in all clusters have held up well except France. We are close to peak margins in the states, Canada and Central Europe. Our U.K. business has done well to deliver better trading margins in a market declining by about 3%.
The Nordics margins is only 20 basis points lower than last year in a market that is deteriorated sharply and in France as you are all aware, we are not able to reduce our cost base without lengthy employee consultation. So we were not able to reduce our operating costs to offset the 20% decline we've seen in the new residential construction markets in the past 12 months.
As John outlined earlier, following the strategic review we have a clear set of actions that we want to execute to tackle our underperforms in France. Of course, these actions are subject to employee consultation and competition clearance. In Central Europe, our margins held up well in flat or declining markets.
Turning now to how we have been able to accelerate profitable organic growth in our largest business unit in the Group, the Blended Branches business in the States. But before we look at the detail, it's worth reviewing briefly the trends of all the key market indicators that we look at in all of our businesses, and obviously we'd use the sort of data across all of the clusters.
In terms of consumer confidence, we can see a steadily improving trend, similarly in terms of single-family home sales and the months' stock of inventory has now fallen to about 4.5 months, which is well below normal levels in a balanced market of about six months. Housing starts are growing by more than 30% on an annualized basis and the house prices and NAHB index have risen back to reasonable levels.
The (indiscernible) of forward-looking RMI indicators recovered well and it's predicting continued growth for the coming 12 months. The AIA Billings Index has now recovered to over 50 point levels for both commercial/industrial, as well as institutional activity. The non-residential construction put in place indicator has also recovered well. The only negative indicator we see is in the water supply construction business, which has come well down from the peak in 2010 due to the reduction in the government's stimulus packages and the current levels of activity are far more normal.
Consumer spending has picked up and unemployment continues to decline. We not only look at all the external indicators, but we also look at our order book and what our customers are telling us. We don't have a big forward order book in the U.S., it's only about 10% of our business is contracted, but it is a reasonable indicator for our businesses. The order book has been gradually increasing over the past year and is now reaching very healthy levels compared with the past. There is some volatility in the book as you can see, but overall the trend is supportive of good growth over the coming months.
We also survey a broad base of our customers regularly to find out what they see in the coming year, (against of course) a steadily increasing market of around 5% level, net the trajectory in the U.S. for the rest of this year looks pretty robust.
I used this slide last time to give you an understanding of the full menu of profit levers we used to improve our performance. We've made point consistently that our businesses do not yield to grand gestures. It's far more the case that the additive effect of many small actions can generate great performance. So for our each business we develop a targeted plan that reflects the prevailing market conditions.
In the States we will focus very much on top – on growth of top line, share gains and margin and productivity improvements, it was in the Nordics, for example, our focus is more on holding share and operating cost control to protect our margins in a very tough market grinding out some decent result.
We've continued to make great progress in our U.S. Blended Branches business. It represents about 60% of our U.S. turnover. We have a 17% market share with twice the size of our nearest competitor. We serve more than 100,000 customers with 733 branches in an active SKU base of 275,000 SKU.
We've continued to take good share in a market that is now growing by about 5%, as well as pushing our gross margin up and also generating very good leverage down to the bottom line with a flow through of more than 20%. This share growth has come from improved service driven by the top 3,000 SKU initiative, where we are aiming for 100% availability in the branch. Similar programs now exist in all of our businesses across the Group.
Our Pro Plus loyalty program is beginning to gain traction and increase our wallet share. We continue to grow in the adjacent segments of facility maintenance and hospitality, on the back of this core business, our Build.com B2C business maintains a 30% top line growth rate.
We also completed the acquisition of Davis & Warshow, the leading local player in New York, the largest metropolitan market and historically an area of weakness for us. What is particularly pleasing is that we've achieved good growth very broadly across the U.S., here you can see where the growth has come from. We are growing 96% of our business with good growth in key states of California, Florida we've achieved 12% growth, Texas more than 10% growth, Virginia, Washington area where we have more than 25% share, we grew at nearly 10% as well.
We grew by healthy double digits in other important states for us, Minnesota, New York, Pennsylvania, Tennessee and Wisconsin and we only declined in three markets where we have a meaningful business. Within these states the business is 10 times smaller than our business in California. So, in Georgia, Indiana, and Nevada and this decline were driven very much by local market conditions even in these states we managed to hold market share.
This broad-based growth has come by us improving our customer service performance. The last couple of months have been our best ever service performance, hitting a net promoter score of 64%, some 4% better than our two-year average. This as we know the best performance in our industry and benchmarks very well with best-in-class comparatives. As you can see, we've pushed the performance (indiscernible) up across all the metrics with small incremental improvements everywhere. We've made the point several times that this type of customer service measurement is carried out across all of all businesses, so we can drive the performance consistently across the Group.
The other aspect of performance we measure across all of our business units is employee engagement. We know that our people are really engaged and motivated; this also drives better service and leads to greater profitability in these branches.
Like the customer net promoter score, we also ask our people what they think of us and Frank Roach and the team in the States have done a great job at really motivating and developing our teams.
So when asked would they recommend Ferguson to customers, more than 90% agreed or agreed strongly. When asked are we a good company to work for, 90% were in agreement and would our people recommend a friend to come and work for us, again more than 90% agreed or agreed strongly. Again, these are very high scores when benchmarked against comparative companies.
This as we know the beating heart of our businesses, and again we do measure our performance across all our businesses and even in the units where we're reducing roles significantly like in the Nordics, U.K. and France we still score well.
At the same as driving share gain, in Blended Branches we've also achieved some progress in terms of gross margin uplift and improving productivity. If we look first gross margin, part of our gross margin expansion is a result of progressively reducing our pricing flexibility at the branch level and gradually ensuring that the branches adopt the regionally and centrally managed processes.
We now have far greater compliance with our predetermined pricing matrices, so the customers get the discounts in terms of their business justify rather than who can negotiate the best at the counter. We're closed now to nearly 50% compliance in this area. Compliance in our essentially negotiated supplier programs which are run through our DCs are now running well over 80%.
Our category mix is also a key lever of gross margin. We actively drive the higher margin products and channels like own label, counter trade and showroom business. Simply, we're expanding as we explained last time into attractive adjacent customer segments; for example, our facility management business continues to grow well and will deliver close to GBP300 million revenue this year.
Now, turning to activities that improve our productivity. We have tightened our controls on headcount expansions, so we can be very confident about the commercial justification. Our recently established national sales center is now increasingly giving its benefits of scale and taking close to the 40,000 calls a month and growing at 20%.
We have tested successfully in Fort Myers, our hub and spoke model like the U.K. So the tele sales and sales reps can be managed across a larger area rather than tied to a specific branch. This test will deliver significant sales uplift and also lower cost as we have managed to share the busy times better and get better service overall but with few people.
We continue to drive e-commerce hard across the business, and in total, in January Ferguson did 14% of its overall revenue by our e-commerce. Within just the Blended Branches business, it is now 10% of our total sales and is growing by more than 30% a year.
But it is not just sales growth that we benefit from, e-commerce customers want to be able to answer queries without calling the branch. This year we are on track to handle 8 million self-service events; (crude) calculations would mean we can save about 100 people and redeploy these to other activities.
E-commerce is becoming an increasing part of our business across the whole Group, especially as our recently launched mobile apps begin to be used by our customers, hence why we're stepping up our investments in these areas in all businesses.
Clearly, all the above activities have led to more productive business with better leverage and generating the scale benefits that exists. Over the past few years our core ratios of labor costs and other costs as a percentage of gross profit have improved as we have gained share and the markets have returned to growth. At the same time, we have sweated our infrastructure harder. However, we know there's still plenty to go at by continuing to invest in better process and IT platforms.
We've now started gradually taking processes off the old legacy systems in all of our businesses across the Group and by using up-to-date databases and middleware packages we will progressively replace our legacy systems over the coming three to five years.
All these changes have delivered excellent leverage in the first half of Blended Branches with our revenue growing by 9.5%, with trading profit growth 33%. Clearly, we have been helped in the U.S. by reasonable market growth, but with the continued share gains and improvements in efficiency we can see in our business model, we do believe we can push on and exceed the peak margins we achieved in 2007, 2008.
Turning now to Europe, and especially the Nordics, as we've outlined last time, we are taking a different approach than in the U.S. In the Nordics, we are looking to hold share and at the same time protect our gross margins and ensure we rebuild profitability.
As John explained earlier, these markets are suffering from a sharp reduction in construction activity as well as a drop in consumer confidence and this has led to our markets in Denmark, Sweden and Finland declining overall by 6% to 8%.
However, our businesses in the Nordics are strategically strong and despite the rapid market slowdown have managed to increase gross margins and take out significant operating costs to suffer only a small loss in trading margin of 20 basis points.
12 months ago, we were beginning to see some decent like-for-like growth in the region of more than 6%. Since then, the trends have reversed significantly and our like-for-likes are down 8% in the last quarter. These trends are pretty consistent across the major geographies of Denmark, Sweden and Finland.
Our businesses are strategically strong being number one or two in their main markets. Stark with 16% share is nearly twice as large as its direct competitor (indiscernible) a local player, Silvan with 11% share. Our retail DIY business is almost the same size as Bauhaus, Beijer with 8% share as twice as large as Optimera in Sweden and Starkki is just under half the size of the Kesko in Finland, but has a 15% share which is sufficiently large to generate decent benefits of scale.
Our focus has been getting the right balance between holding share and managing price, so that our gross margins gradually recover which they have done even these tough market. We have lost the little share in Stark by reducing our exposure on very low margin direct business whereas in Silvan we've managed to gain some share in the consumer market.
Our share performance in Beijer and Starkki has been flat to up a little bit, however by very active management of our cost base, we will remain much more profitable and we've remained much more profitable than our key competitors in the region and we've managed to retain our healthy return on capital.
To protect the business, we've maintained our superior levels of customer service and look to hold share. At the same time, we've taken action to protect and build our gross margins using the same profit levers as in the U.S. improving our compliance with pricing (metricizes) and sourcing programs.
We've drilled into the performance of each salesman with better front-end sales management practices. We've used e-auctions and spot actions to drive better sourcing cost for us when they are tactical opportunities. In Silvan, we've driven more items in revenue per basket. We have selectively reduced our exposure to very low margin direct business and also rewarding our loyal customers to pick up in branch lowering the prices and saving us an operating expenses.
Sadly though only Michael and his team have been very busy reducing roles within the businesses to reflect the market downturn. We have also in Finland temporarily laid-off 145 staff during the low season. Salary increases have been held to a statutory minimum. We have also cut back on marketing expenditure, which will need to be reinstated as markets recover. We're developing more productive business models along similar lines as our other businesses and we're progressively taking some processes that have historically been driven in the branches and execution, these are at the regional or national level. We've invested in the logistics hub in Stockholm to avoid having to increase our branch footprint. We are testing ways of showing locations between our trade brands, Stark and Beijer and our consumer businesses of Silvan and (GP).
We continue to rollout GP chain in Sweden with a low cost of Greenfield model. And lastly, we are increasing our investment in e-commerce in the region. It is a tough times in the Nordics, but we are very actively managing our operating cost and improving our models to become more productive in the future, so we can protect our margins and grow rapidly and profitably when the markets return to growth.
Turning now to the last part of today, as I highlighted last time, our customers' needs are evolving differently by segment. We need to find ways that can deliver better service, but also take cost out of the value chain. The advantage of investing in more efficient business models where we have the benefits of scale is at the small competition will not be able to match us over time.
Last time, I explained how we were working at sharpening our customer segmentation and developing a full multi-channel approach and also progressively moving from a (lose) confederation of branches to a more systematically managed network as well as ensuring that we do stay ahead of new players like Amazon who are coming into our markets. In time say through, I only want to focus on the first three topics.
This consumption map is typical of our markets. For example in the U.K. the total market is about GBP5.5 billion and it's split roughly 60-40 between trade and consumer sales. Within the consumer market, there are broadly three segments. Based on price and quality, between the high-end branded business with good margins often sold by showrooms and the low-end unbranded business which is unattractive given this low margin.
The trade market is split between large, medium, and small customers. Our homeland is the profitable medium to small customers requiring credit.
In the past we have traditionally had a one-size-fits-all approach, but going forward, we need to have more tailored solutions for each segment to ensure that we remain competitive and profitable where we compete.
Our core service offerings with large SKU range, very high availability and fully developed multichannel approach, are all well-suited for the trade market. So this where Ferguson, Plumb and Parts, Stark and Beijer and other brands are positioned and will continue to compete well. Ferguson has also developed a strong showroom business in excess of $1 billion in sales, targeted at the higher end customer and we need to see how we can replicate that success across (Europe).
We've also developed in the states a very powerful B2C business in Build.com, targeted at the consumer middle ground. This business has been launched in the U.K. as (topoutlet.com) and we plan to replicate this business model in Canada, we've launched and also in Europe. It's early days, but the results are encouraging. In January we sold nearly GBP600,000 of sales which on an annualized basis is worth seven branches and clearly we have no more property costs.
We believe there was also decent profit pool to be tackled with a low cost proposition based on high availability of very limited SKU and cash sales rather than credit, this would allow us to tackle the really small customers, who are more generalist, but still quite profitable provided our operating costs are low. We have launched (HeatingTrade.com) in the U.K. and we'll test the branch based model as well, which we have pooled in the short line offering. This is also where our (GP) business in Sweden competes. In summary, we will need more sub brands or different branded propositions to meet the specific needs of each customer segment profitably.
Turning now to our multichannel approach, there is clearly a growing need from customers for a totally flexible order capture and deliverable model. You see from the data that in the last three years customers are far more like to use the Internet at home and particularly used our mobile device.
We can also see that three years ago there was still a desire to see, touch, feel some of the products, but in most recent surveys, the need has dropdown, the packing order some four places announced far more about search is taking too long and getting better prices in branches as reasons for people not to buy on the Internet. But consumer behavior is still very focused around the branch network.
Our customers fundamentally want that basket of products and need to be able to meet their unplanned needs for broken boilers for example, and do not have the storage facilities to keep the products. Hence they are and will remain very reliant on the branch for access to products.
So for our customers, we will continue to develop the branch infrastructure, so that we can still receive the -- they can still receive the Personal Service, but around the branch we're developing processes that would enable the customer to still get the Personal Service, he or she wants but also when they're not in the branch. We were also the best multichannel proportion in our industry, including the best mobile app, the best website and the best call center expertise.
These offerings will not be branch base. We can develop these services nationally and avoid the cost and building them in each branch. We've also started to build the brand presence on Facebook, YouTube and Twitter, we see this is the next natural step for our customers, they will want to connect to us via all of their preferred channels.
As customers need segment more and with the growing demand for a multichannel approach, we will need to evolve our business models to allows to continue to deliver better leverage from our cost base. As I mentioned earlier, this will be moving away gradually from a model where many process and decisions are based on these branch, this is effectively what a small family business does. This evolution from a loose confederation to a systematically managed network will have significant impact on the flexibility of decision making freedom in our branches. We have started to implement these changes, but we know we've further to go.
We believe to achieve greater compliance with our core processes of pricing discounts, core ranges in DC programs. There will be a gradual move towards contact centers, away from fully fledged branches where our scale can be leveraged. The sales force will increasingly be managed at a regional or national level rather than directed by a branch manager. We will have to achieve better compliance with our core vendor programs to ensure we do get best terms and there will be increased use of centralized sourcing processes and driving own-label and specific in-specific categories.
There will be more delivery from DC cutting out the branches and avoiding cost duplication and we will move labor models that reflect more flexibility and reflect the customers' needs on a monthly, daily or even in hourly basis. We will utilize one business model for the Group where it can be leveraged into other geographies like Build.com going into Europe. Overall, people will transition from being jacks of all trades to masters of a few specialist skills. These changes over time would allow us to improve our efficiency and generate better benefits of scale.
In summary on business model evolution, our customers' needs are gradually changing. The end consumer has more influence because of data availability. The range of brands and price points keeps growing giving greater choice, customers want to be able to use all channels of order taking and delivery. This means we have to have a flexible model.
There is also a growing need for real-time data on order pressing, product availability, pricing, technical information, which requires us to be available 24X7 with live data. The business model will evolve, but for the foreseeable future the branch will still be critical for easy, rapid and local access to products and services. However, we do not need to execute all of our processes in the branches. We need to lower our costs and generate the benefits of scale by completing some processes at a regional and national level. We still have plenty of opportunities for growth and margin expansion over the coming years and assuming reasonable market conditions continue in the States and return in Europe, we should be able to exceed our historic peak margins in the U.S. soon and get back there in Europe over the coming years.
Overall then we have continued to make descent progress in the last six months, great performance in the U.S. we've managed to deliver reasonable results in the rest of our business in slowing or rapidly declining markets.
We are well-placed to push on again in U.S. and so now the indicators for the market look pretty robust. We will continue to take actions to protect our margins in Europe and we have very clear proposed plans to tackle the performance of our French business.
We'll continue to invest in all growth opportunities in North America and even in the tough European markets we'll continue to invest sensibly to make sure we're developing business models to allow us to generate benefits of scale that exists in this business.
Thank you. We will now happily take questions. If you could just wait for the microphone and explain who you are and then talk clearly that'd be very helpful.
Ian Osburn - Cantor Fitzgerald: (Ian Osburn from Cantor Fitzgerald). A few questions on the main points, perhaps let's start with one for John on the cash outflow we saw in the first half. Obviously there was a bit of pensions and share buying in that, anything we can expect in the second half or where we see the normal cash inflow in the second half? Do you think that will be strong enough for another special dividend this year; I think just gives you a latest views on the –you know how much we like them, so you've given us one, so can we see another one?
John Martin - CFO: It was very big one.
Gareth Davis - Chairman: Let me touch on that one and you can keep the microphones. Look, Mrs. Martin was happy for the special dividend as well, so I think a couple of things. The larger cash outflows, there have been some larger one-off cash outflows, for example employee share schemes, now they are low populated with the shares for all of the outstanding LTIP share options in the ordinary share plan for our staff, so those were sort of very much off. So, we are expecting good cash generation. The underlying cash generation as I said the cash to cash days in the business is our ongoing measures, slightly better than last year, that's the single most important thing that we say control of cash as an operating level. There is no change in the culture and discipline and what we've done, so absolutely, we intend to going forward to be just as cash generative as we always have been and more so. In terms of sort of availability for future returns to shareholders, we set out our capital structure priorities before. I think we've been sort of fairly boring about reiterating them, but I'll try one last time. Organic growth clearly – that's the single place parity; dividends, that's what good companies do, we want to progress the dividend policy, we want to grow that over time; acquisitions, actually the pipeline acquisition is no more less than it has been over the last year of so, and then fourthly we'll return surplus cash to shareholder if we get the opportunity. I would like to sort of preclude all discussions on those things in sort of 12 months' time. We'll definitely see where (we will get to).
Ian Osburn - Cantor Fitzgerald: Also on the French restructuring that we saw announced today, I believe there is 230 Reseau Pro branches and about 80 Wood Solutions or Silverwood. It seems the 80 are going to be kept, of the rest that you've announced; there is obviously still quite a large ramp there. Do you see that as strategically important and you're building up a viable business in the north. Could we continued -- obviously you can't announce restructuring in that business, but whether you say for the long-term strategically important and the fact that you're only announcing (88) store if you want to predict like that. Does it mean that buyer environment is not particularly great in the France at the moment?
Gareth Davis - Chairman: Certainly to the last point, the buyer environment is not great at the moment in France. I think point two, I think as you can all imagine, we explored all the sources, strategic options in France. I think we signaled it very clearly in July last year that we're going to have a thorough review which is what we've done. We judge that where we got to at the moment is the right outcome in terms of creating shareholder wealth for the long-term. You are obviously right. Our plans are to retain all our businesses that we've described in France, so the Wood Solutions business, which is a good business. It's profitable cash generative. Clearly, is struggling at the moment and our new build housing market down 20% but is still profitable. Then of the businesses that we have left, it will be a northern focused; those merchant emerging business. I think as we've highlighted in the past, our national market share was always about significantly lower than (indiscernible), we were about 8% nationally, they are about 33% nationally. Actually in the north of the country our relative market share compared to (indiscernible) were about 0.7, 0.8 times. So we are far stronger in the north of the country and hence retaining the 144 branches is absolutely the right thing to do for the north of the country. I think that's why selling the 88 branches to Chausson but also we announced this morning our intention to do a joint venture sourcing partnership with Chausson. Actually if we put the two businesses together; we end up with revenue of about EUR1.7 billion. That is actually far bigger in scale terms than we were on our own. So our proposal, we think addresses our strategic weakness in the South and gives us more strategic strength in terms of the buying opportunity in France. So now look, it's all subject to employee consultation and clearly competition clearance, clearly we wouldn't be proposing these changes unless we felt we had a good chance, a very good chance of getting these through, but we have to go through the process, but then we'll keep the business for the foreseeable future. Our job is to turn the performance around and then see where we want to go from there.
Ian Osburn - Cantor Fitzgerald: Just a very quick third one, you obviously came in, in 2009, I think it was to restructure Wolseley, is this the last step? Would you consider and you as well, John, would you see this is more getting (neat) job done or there is a lot more for you to do
John Martin - CFO: (indiscernible).
Ian Osburn - Cantor Fitzgerald: I wouldn't be that obviously, but no (indiscernible)…
John Martin - CFO: We certainly would signify it (indiscernible). That's for Gareth to do, not me. Genuinely, absolutely, we've got miles to go. I mean we have got miles and miles to go, that's the great thing about this job. Every time we pick up something, we find we can improve it and make it better and I think as we try to (cross the outline), it doesn't yield to grand gestures. It is a grind out business, but actually for people like ourselves, we love data, we love getting into the weeds of things. It's absolutely (fascinating), there is still so much more to go out. Where are we on the journey, I don't know. Four out of 10, five out of 10, but we still got actually miles to go.
Olivia Peters - RBC Capital Markets: (Olivia Peters, RBC). Ian, when you first begun speaking, you said you'll give us more details on future cost-cutting program or plans and unless I completely missed, I don't think you actually quantified it or already gave us a target. Second question if you could tell us what your market share gains were in the U.S. compared to rest of the market? Also I just wanted to get a sense of there is a new buy to let lower in France, what the uptake of asset is looking like whether, I mean the (indiscernible) is obviously very successful, how that's comparing under the new government? That's it.
Ian Meakins - Group Chief Executive: Look, just in terms of market share gains in the States at the moment continue to outperform the market by sort of just over 3%, which is a pretty consistent trajectory we've had for the last, I don't know, five halves actually. So that continues. You're right, in terms of target cost reduction, I haven't given the target out there. Look, it depends on the markets. All I can say is that we absolutely are as you would rightly expect to do we're putting contingency plans in place. We will take appropriate action to protect our business clearly in Europe where the markets are toughest and obviously we've announced all of our plans in France that's very transparent. We'll continue to look at our cost base in the Nordics and in Central Europe. In terms of the buy to let lower, I don't think – are you talking there about the recent announcements initially this week.
Olivia Peters - RBC Capital Markets: I think it's (indiscernible) something like that.
Ian Meakins - Group Chief Executive: I mean Blandi, we're seeing what we're seeing and as John highlighted, we are seeing a new build market down 20% on an annualized basis. So it clearly isn't having a great deal of impact. (indiscernible) some more measures this week, but Blandi I think they are pretty small. They're not going to make much difference. It's going to be tough.
John Martin - CFO: Yeah, I mean I think just on that point. There were 20 measures announced on (indiscernible), 20 emergency measures that's what they call. I think the French market has been sharing a lot more sort of disappointment and satisfaction in those announcements. That are held for renovation works where you get a subsidy on installation, that's one of the EUR13, 00 subsidy on installations markets. It's not unwelcome, but it remains to be seen what the advantage is. VAT on social housing has been reduced from 7.5% to 5%. So there are a number of measures. I think it's a clear sign of just how concerned they are and how far the market has fallen. They have brought in 20 specific measures. I think certainly one of the commentators that we have seen has referred to the lack of an aftershock. The lack of sort of real enthusiasm that, yes, there is one thing that really makes a difference to builders or to distributors or manufacturers. So at the moment, yes, 20 measures, there has to be something. We are trying to do something positive from 20 measures, but nevertheless, some of them are pretty detailed. So far all of the talk about simulating the marketing fronts has not offset of what's been 20% reduction in (indiscernible).
Howard Seymour - Numis: Howard Seymour from Numis. Two for me. First one, just to follow around from Olivia's question on market share gains in U.S. As you see the market genuinely get better in the U.S. Would you expect and anticipate to be able to maintain around (73%) market share gains?
John Martin - CFO: Yes, I mean we do expect that. I think this is we are beginning to separate now from the certainly the smaller competitors with the sort of service performance that we are doing – we are keeping cracking that up. It does get better and better. We have a net promoter score 64, that's great, but there are in other industries people are net promoter scores of 75. So I see no reason why we can't push on and gain share, I think it's still the case of that the small companies are struggling in terms of financing their business. So we would expect that to continue. I think for us though the critical thing was pleasing those, but we've also seen an expansion in the gross margin and making sure that we get the right balance between top line growth and a profitable top line growth is very important to us. So we can hold it at 3% that is fine I certainly wouldn't anticipate gaining any more share in the U.S. because I think again, we want to make sure we protect our margins.
Howard Seymour - Numis: Second question is on Europe, sorry just slightly more downgraded and really the question is how you see the delta going forward, because obviously we saw a deceleration of acceleration in the decline, would you expect that to continue in the Nordics French markets or do you think they will sort of – I mean it is delta sort of remains where we are at the moment in terms of like-for-like declines?
John Martin - CFO: It's very, very difficult to call at the moment. I mean again we were just talking before and in a year ago we were looking at 6% like-for-like growth in the Nordics and bluntly I don't think we saw we'd be looking at 8% declines now. So it is very difficult to call at the moment. Trends since the end of January have continued pretty much in line with the quarter June performance so there has been no material change there at all. I think these declines are going to continue (indiscernible) until basically consumer confidence does begin to return to the marketplace and that is just going to be anytime soon. So I think it's going to high.
Tom Sykes - Deutsche Bank: Tom Sykes from Deutsche Bank. Just on your changes to the channel and you're the delivery mechanism. So first of all, in Build.com what's the operational leverage that you are actually generating on that 30% growth and where you are shifting towards e-commerce, what level of marketing spend increases you're having to see and would you expect to see as you shift more towards that channel. And then you've outlined, fairly fundamental change perhaps to the business on the sort of second or third last slide. Do you expect any of those to be disruptive at all in terms of obviously changing some of the functions of the branch, probably changing some of the managerial responsibility, how should we think about the progress towards where you're trying to get to please?
John Martin - CFO: On the economics of the B2C business at the moment, actually the economics are pretty much in line with the rest of our business. The cost base is quite different because as you say Tom, the marketing expenditure is much higher. But of course, what we don't have -- is we don't have we're going to have expensive branches and showrooms, so it's really marketing costs are higher, delivery costs are higher because it's all delivered from DC. But the flow through to the bottom-line at the moment is pretty good and in line with the rest of the business. I mentioned – I referenced couple of times, we have made some more investments this year, strategically we wants to be in an area where (indiscernible) this but a more value-added area of internet retailing in the U.S.. So for example about half of all orders are placed while someone is on the phone to our call center. That's not just because our website is difficult to (maneuver) or whatever else that is because people want advise with products, will this product fit my, will this type fit my sink – do these products go together, how do I fit it and similarly on the internet, if you go to Build.com, you'll see we have literally 100s of sort of how to videos, so that we are showing people how to actually install a product, use a product and also for example, if you look at PED, we are advising on what is the most appropriate product for you. Are you a professional user, an interim user or actually you're just going to be using this thing once or twice, so that we direct people to the right product, so there is quite a lot of investment in that. If you look at the size and you'll see. So, we absolutely want to keep the growth rate up; we absolutely what to be able to convert sales with good economics in that business. We want to grow the business that we want to at the end of it, rather than just invest.
Tom Sykes - Deutsche Bank: So, if you are growing say the 30%, you wouldn't see the needs to generate huge amount of operational gearing at the moment because you're try to get to a critical mass and size?
Gareth Davis - Chairman: Certainly in these numbers, this year, we've got this 5 million in the U.S., couple million elsewhere of net investments. So that has dragged on profitability. So absolutely we've got the increased profitability, but we reinvested in this period, but we need to see the returns on that investment like any other.
Tom Sykes - Deutsche Bank: And the gross margin again on build and PED relative to the rest of the U.S. and maybe rest of the year…?
Gareth Davis - Chairman: Yes, very similar. In terms of your second question about the change in the business model, I think will these changes have an impact on us, obviously yes. But I think most importantly, it will be an evolution. Okay. I put up a slide early on that say you know our customers sill massively value of the branch. As I have done and we've all done spend a lot of time working with plumbers, they can predict that date. They don't know whether it's a (indiscernible) going to breakdown, they are going to go and get one to pick it up from the branch and install it that day. So even 10 years, 20 years from now, do I think there will still be branches, absolutely, yes, but I think what will be done in a branch versus what will be done above a branch that will change, okay. So if you imagine now a lot of pricing negotiation by closing some of our branches, increasingly and by gradual evolution we will reduce the amount of pricing flexibility in a branch. So branches still have the ability to source products locally. Increasingly, we want to reduce that flexibility so we get the real benefits of scale that will come to us. So is there anything that we see at the moment that is massively disrupted to us? No, but 10 years from now will a lot more be happening on the Internet? Of course it will be, but that's why I think we are investing hard to get ahead of that game both in our B2B and in our B2C business, but there is nothing at the movement we see massively disruptive, (Amazon Trade) launched last year in the states in April, quite a flurry of excitement; actually their traffic has dropped off enormously in the last 10 months. It's not easy to get into our sector as John has made the point, you do need to have a lot of people, associates who know a lot about the business.
Gregor Kuglitsch - UBS: Gregor Kuglitsch, UBS. I have three questions. The first one is just on France, I think roughly if you do the math, you sort of (disposable) quarter, quarter gets transferred into Central Europe and then roughly 50%, i.e., the North retain. So the question is, of the bit that you retain, have you sort of formed the view post restructuring, post synergies on the sourcing side with the sort of margin potential in that business is maybe a little bit of a difficult one. Second was your comment, I think you said you want to exceed peak margins, you're now roughly there at 7%. I think you mention that you're putting some cost back in by for example launching a new I think DC and Ohio you mentioned. I'd just be interested to know and again this might be a little bit cheeky one in terms of how high do you think you can actually go? I mean this is a business that could potentially become a double-digit business, or is that right to ambitious for structural reasons? Then finally on the U.K., obviously you're trading flattish, there has been a lot of announcement from the government on housing, just be interested to hear your views to what extent you think that will help your business in due course as transactions pickup?
John Martin - CFO: Yeah, I mean I think for the 144 branches that would be retained the difficulty we've got now of course is that the market the top line is still today coming off fairly sharply. So getting a very clear view on what is going to look like at the other side is challenging. But we do think there is value there put bluntly. If we didn't, we would be having a different discussion. So we want to be able to get that business back to a profitable business with all of the actions that we've talked about. It's going to take some time if you look at the restructuring that we have proposed, I think it's going to take certainly in the rest of the this calendar year and into the start of 2014, fine. I'm a very impatient guy, but nevertheless we'll have to be patient on this one. Hopefully at some point in the market we'll at least and have we'll stop seeing declines, but it would be very disappointing not to get that business back to an acceptable level of profitability.
Gareth Davis - Chairman: In terms of – Marty, you're actually right, in the States we are very close to peak margins now and the business is still some about 7% small than it was back in the peak. So we have delivered I think far better leverage. And assuming – as I said earlier on, assuming reasonable market conditions continued for the next six to 12 months, we will go past peak, which is great to see. How high we could go? Honestly, we don't know. We can run all sorts of massive models, it is almost the relevant. Actually our job is to keep grinding it out, pushing it forward on the gross margin basis, which I think we are showing. Secondly, really working on the sort of work that I outlined earlier on in terms of improving our business models, the productivity of our business models; we think there is a lot that we can go out there. If you look at our most profitable groups and branches in say the Virginia DC area, we make well north of the 7% margin range where we have a strong market share position, and a very good infrastructure supporting it. So how high I don't know but our ambition is absolutely to keep pushing it on. In terms of the U.K. and the budget, yes, it is very difficult to tell. Our take is short term, it won't make much difference, point one. Point two, clearly, anything that will stimulate the housing market be it new build or RMI must be good for our business. Remember, we are basically two-thirds RMI in the U.K. So, new build is interesting, but nowhere near as interesting as RMI. I think from our point of view therefore certain stimulus can be helpful, but actually what's more important for us is consumer confidence. What we do want is stability and consumer confidence far more than (quick) injection, pull forward some activity, and then a year later we have another problem. I mean as you can see in France they pulled forward a lot of activity in 2010 and then we ended up in the position we are in now. That's why I think -- we think things like the Greendale as is now in effect in operation from the end of January, it is going to be slow burner, it is going to take time, but that sort of activity. Now, it is – the financing of it is still we think a bit too complex, but we think overtime it can get there and with the stimulus package in the eco funding that will have some impact on our business. If you do some rough math, it might be worse in total in the industry about 0.25 million boilers, in a given year about 90,000, say we get our fair share of it and say some of this is genuinely incremental, it might be worth 2% or 3% of the market, the Green Deal, but we don't anticipate anything materially changing over the next sort of six, nine months it is going to take a year before that rate swings in.
Yaseen Tuari - Exane BNP Paribas: Yaseen Tuari from Exane BNP Paribas. I would have a question on the U.S. I understand that the (indiscernible) has changed versus the last cycle, but where you pick margin in your Blended Branches business through – you does look at your Blended Branches business with revenue of big margin? Then I would have a question on the U.K. you mentioned some gross margin pressure versus outlook for prices in the second half of the year? Then I would have last question on cost, so you are mentioning that you are working on how do you see (indiscernible), do you have a view (indiscernible) on how long it will take you and my question would you expect to come back to breakeven in the second part of the year or in 2014?
Gareth Davis - Chairman: Look I think in terms of the overall peak margin of Blended Branches would have been of how the peak that we achieved is about 7%. In terms of U.K. gross margin yes, it was disappointing just to be clear. The market was poor in the U.K. in the first half, it was down about 3 percentage points. Our core margin was actually okay and actually in our Pipe and Climate business we managed to get our margins to move up a bit. We did take on an amount of low-margin secondary market business that we sold through our BCG distributor that we sold to other second-line merchants and in there particularly the pricing has been very intense. We made progress recently in (resting) our decline and we are going to reduce our participation in that very low-priced market in the second half, and therefore we'd expect to see improvement in the second half. In terms of how long it will take, I think John has already highlighted the process of how long it will take. We consult now with employees for the next sort of three or four months, there has been a period whereby you (would) have to effectively move through people especially redundancies, you're talking nine to 12 months before the costs actually are out of the business in terms of the people costs.
John Martin - CFO: I don't think you had a specific question about second half and second half profitability. I have said this back in October, I think it would still be disappointing not to breakeven in France for the year, and I think my expectations would be a reasonably modest profit in the Wood Solutions business, and certainly I think the team will be very disappointed if they don't make a modest profit in the second half and beyond, but of course, the important thing is the exit rate into the first half of next year because the first half is usually seasonally weaker.
John Messenger - Redburn Partners: John Messenger from Redburn. Sorry, I've got three, first one. Just rounding off on France if I could, the GBP36 million bond, what's the coupon on that and is it something that you (could broadly) sit there as an investment as cash just in terms of just understanding where it will be? What is the asset value that is going with the GBP36 that you are receiving? We know this is GBP313 million, I think was the total capital employed in France. Just have an idea of how much goes and is there a write-off obviously coming in the second half up and above the figure you quoted for restructuring John? Second question was just on the U.S. Because you mentioned here about the GBP41 million of integrated services accounting revenues. Just to understand what is the operational gearing number we should be looking at as in – is the organic sales in the U.S. (188 or is 229), if we are looking at it like-for-like, just when we think about drop throughs and what the real kind of picture is on the U.S. there? Because if we take out the rebate from last year, but was it 36 million or (188 of 36 on 229)? And final one for me was just on CapEx and working capital. I think I may be wrong, but I think you were originally pitching for 170 of CapEx this year, down to 120. Is that very much U.S. as planned, but given what's going on in Europe, it's the curtailment in Europe that's made the big change there, just to understand the thinking around capital expenditure and where it does hit? Finally, within cash flow, working capital, the GBP197 million underlying, if I strip that back by (140 million) in the U.S. it's still (GBP100 million). Where you disappointed in terms of the working capital performance or is that down to certain factors that you think fundamentally unwinds because it obviously is very difficult to the kind of 12% of sales figure?
John Martin - CFO: So, the bonds, the coupon on it is 0.5%. The reason for the bond is the rational is, this is convertible into the 11.6% of equity. So, it will be held as an investment in our books. The associated accounting has actually essentially gone through in the first half. It is GBP8 million of the first half exception; that is the write-down on assets. However, we will need to look at going forward, what is the appropriate level to hold the bond that's in our books, that's a question mark, now that's something that we need to figure through, as the bond was issued, as the transaction hopefully completes. The GBP41 million in the U.S., John, is just – it is just off revenue, so there is no impact on gross margin, no impact on anything else. It is just to make the revenue recognition in our Integrated Services business consistent between contracts. So we brought the contracts to a consistent place, because of that we brought the accounting to a consistent place. CapEx, yes, I mean it is pretty much that. We are behind on CapEx in Europe and I think I've said this before, as you look at the way managers are – we absolutely want managers to focus on performance and particularly when performance gets tough. So they will absolutely focus more on taking out heads and on really taking a view of any structural loss markers, if that's the right word, during a difficult period, rather than looking at ways to expand the business. On the working capital side truly, the ongoing underlying working capital of the business is fine. If I told you that the payment run dates in the U.S. was at 31st of January and the extent of that was GBP18 million so that been the next day with about GBP18 million more upfront. So what did we mess with that? I've said this now for three years. We are messing with the operations of the business to address the balance sheets. I'd rather comment and just have the discussion. So we are running the business absolutely as normal and then we'll explain to you why it is (indiscernible). So GBP80 million of that is just one payments run in the U.S., which has to happen this year to full on that so year-end date the 31st. Clearly, you usually it will be one day it will be the day after year-end and time will explain that as well. That's why if you recall the year-end situation you have that GBP145 million, we said the underlying debt would be GBP145 million higher than the number that we published at year-end.
John Messenger - Redburn Partners: On the France then, just only think about because yeah to Gregor's question earlier about a quarter, quarter and a half where is the – what is the capital employed in France, because obviously, if eight write-off it sounds like there is only kind of GBP44 million, GBP45 million is the number you're talking about is the way that's been sent off and with the GBP36 million bond. Is there an awful lot of property owned in terms of property working capital is the Wood Solutions business very capital intensive, or just to understand where the capital since because GBP300 million place 40, it's a big divergence there?
John Martin - CFO: Yeah, it is pretty tough invasive. I'll tell you what on the Wood Solutions business we'll just give you the number. So you can see how we got to hand here, if you look at the ongoing working capital. So the balance sheet dates there was I think GBP314 million of net assets in France. That is actually prior to the impairment that we've taken in the period. So there is sort of GBP50 million of that and this transaction is in round terms sort of GBP40 million more of that, John. If it that make sense, I'll give you the (IWS) later Mark, we'll give IWS separate. Ian you could answer this questions. It's quite about but hasn't been in IWS?
Ian Meakins - Group Chief Executive: No. IWS.
John Martin - CFO: So the IWS number is about GBP100 million.
Charlie Campbell - Liberum: It's Charlie Campbell from Liberum. Just two from me. On the U.K., clearly weak sterling might imply rising building material cost inflation. Is that (the same) we should expect in second half and into next year? Then also a question on the U.S. Clearly, strong acceleration like-for-likes moving up from 7 to 10. You are showing us so that's continued into next quarter. Was that 300 basis points come from, is that really new nonresidential finally coming through?
John Martin - CFO: I think I will take the first one, Charlie. I think the inflation that we've seen in the U.K. has actually been very modest in the period. I mean down to pretty low levels and I know some of our competition have also found a similar story. So inflation levels now already – it is difficult in a market that's down, about four percentage, it is difficult for manufacturers, it is difficult for distributors, it is difficult for everybody in the supply chain to be the recovering price increases and I'm not sure, I'd expect that to change much, to change much going forward. I mean over time, logic says it should take up a little, but I think sort of into the second half now and obviously sort of seven weeks in, we haven't seen any change in them.
Gareth Davis - Chairman: I think in terms of the states, look, John made the point earlier on, only 14% of our business is new (resident in States), right now clearly that is now growing again by about 30%. So we are picking up a little bit there. Two things though in that, one, I think we're being very selective about which of the new residential businesses and contracts we really want to get into. It is significantly lower margin, we made this point in the past that as the contracted new res business comes back, it is a lower margin to the tune of a couple of percentage points on gross margins. We have been quite selective. The growth is genuinely coming from the core RMI business. Consumer confidence has picked up and very broadly spread geographically. So there is no doubt that new housing sales, new housing starts is a good indication of consumer confidence. But the actual amount of business, the incremental business we are doing because of new housing is not material.
Charlie Campbell - Liberum: We can't push in a bit further and some 40% of the business is non-residential. So are you saying that your 10% like-for-like is running without much help from the non-residential yet?
Gareth Davis - Chairman: No. I mean the growth is pretty broad spread, try the question again.
Charlie Campbell - Liberum: So 40% comes from non-residential i.e. commercial I guess, I thought from your answer you are telling us that the residential side is really what's driving either RMI or new, so are you saying that there is not really much hope from the commercial side yet?
Gareth Davis - Chairman: No. I mean the commercial side is actually surprising doing pretty well as well. I mean, the business that's right at the forefront of that is our Fire and Fabrication business which is in the commercial. So I mean the office buildings that is growing very well as well, I mean, that's up – sort of the 8%, 9% growth rate. So that why I said, it is very broadly spread across residential and non-residential, does that make sense.
Unidentified Analyst: (Indiscernible) from Morgan Stanley. May I ask you about your two smaller segments please. Two questions, so one on Canada, you are talking about new residential declining, what's the outlook, what are you seeing in the market and how far is it likely to go? Then secondly on Central Europe, you are reporting modest growth in Switzerland and the Netherlands. Is that the new future for those markets, are you seeing stabilization are we going to see the recovery from here, especially in the Netherlands?
John Martin - CFO: Look, Canada in the last 12 months running rate of new housing start, they were up nearly just north of 200,000 which is one of their highest they have been for long time. I think as you all know, they had a good recession. They again recovered very fast. Our Canadian business is now 10%, 15% larger than it was going back five or six years. However, there is no doubt, it is beginning to slowdown. There are particularly multi-family condos in the Toronto area. So we are expecting to see since slowdown in growth, where we are at the moment, we are up some 2%, 3%, flattish for the rest of the year, but I guess where we'd sit. In terms of Central Europe, each market is very different. In Switzerland, what we've seen is a lot of imported products coming in, which has meant we've had a lot of pricing pressure there, but actually the underlying volumes in the Swiss market have been pretty good, growth of about 2%, 3% and that's what we're seeing. In Holland though it's tough going at the moment, very tough going, I think we're gaining some share. If you remember we're – going back two, three years ago, we rightly walked away for some very unprofitable business. We've held our nerve on that. I think we are gaining some share, but I wouldn't anticipate anything other than sort of flattish growth for the rest of this year in Holland.
Paul Checketts - Barclays Capital: My name is Paul Checketts from Barclays Capital. Quickly on the portfolio if you don't mind, acquisitions in the U.S. I think in the past you have said you'll spend between GBP100 million and GBP200 million across the Group. Is the better economy in the U.S meaning prices are raising upwards? Secondly, on disposals, if you look at the Group now, are there any that you would still classify as non-core? We should expect it to leave?
John Martin - CFO: I think the possibly all. I think then this expectations will edge up in the U.S., because I think we said before, there wasn't a lot of capacity coming out of the market in the downturn and the market growing at 4% or 5% is just a lot more for giving, (indiscernible) wins on that, people will look back to former. Their own former peaks, when we think about valuation in a lot of the smaller businesses that's what they think. I got to this level of profitability. So our another business sold, it wasn't a good as mine, and that had a multiple of some fancy multiple. So, I think quite possibly (brands) expectation will tick up. We will stay absolute disciplined on, can we integrate them. Can we really get synergy benefits and is the price right and I think also is there really good quality business. What can we do with it? We are going to be opening branches. We are opening branches in New York on the back of Davis & Warshow. We want to be able to do that. If you buy a failing business, actually all of your energy is internal. Whereas actually if you buy a really good quality business and you make it clear on the way in, this is what we want to do. This is what we want to do in this area and we have (settled) acquisition last year, the Louisiana Chemical. Small little acquisition, it really got – it was up 60% something in the first year, sales were up and the idea was we wanted to a presence in that space and we wanted sort of three or four satellite and that's what we are doing. So, buying decent businesses to really fill some of those sort of areas where we are underrepresented in the State is quite important. But we will absolutely stay disciplined on price whatever the vendors expectation is.
Gareth Davis - Chairman: John is not very good at opening (indiscernible) personally or professionally, so we can rest assure on that one. Look, in terms of disposals – look, we are very happy with the portfolio of the business we have. I think we signaled that very clearly, but let's be very, very clear, every year we go through a very formal, the resource allocation process, that all of my businesses love. They look forward to that every single year, we take it very seriously and look, if market conditions change or something structural happens in a market place we have to think again. We are very conscious; we've got to get the French business back to profitability, that's what we're planning to do. So, we will take a look at all of those businesses in a very cold and calculative way, but at the moment, we are very happy with the portfolio, but they have to earn their return to stay within the Group.
Paul Checketts - Barclays Capital: Can I just ask on the French fraud, over what period of time was that and was it a lot of transactions or maybe…?
John Martin - CFO: 16 transactions over five weeks.
Gareth Davis - Chairman: That was asked, but let's answer that we were very disappointed by what happened obviously. It was illegal, criminal external activity. People did not follow our internal processes and our paying bank also did not follow agreed processes, so we let ourselves down and our partner let ourselves down. We did an independent investigation, external investigation straightaway. We had the authorities involved straightaway; they are still chasing the criminals and trying to recover funds. Obviously, we checked we wouldn't hit by similar fraud across the rest of the Group and we've taken the appropriate disciplinary action against the people who were accountable for actually complying with our Group processes. Time for a couple more.
Kevin Cammack - Cenkos Securities plc: Kevin Cammack, Cenkos Securities. Firstly, on the one-off pensions contribution. Could you just outline whether that has any implications for the P&L ongoing charge and if it is part of the wider deficit reduction plan, is there anything else we need to be aware of going forward? Secondly, just generally looking across the Group, you've made a number of references today to the pricing pressures. When you look at gross margin going forward, is that very clearly the biggest headwind you're facing rather than any movement in the expenses line or other lines below in terms of the gross margin pressure?
John Martin - CFO: So the pensions contribution, we had the last triennial evaluation was three years ago and we had a recovery plan at that time which was for us to inject GBP25 million of cash a year. We have the triennial revaluation coming up this year. I think without sort of prejudging the outcome of that, I expect the recovery plan will continue at a similar level. Disappointing given that we've put in GBP125 million and if you'd recall GBP60 million from the disposal of Build as well. But that reflects the increasing inflation assumptions, it reflects (fall in) bond deals and it reflects increasing longevity over that period. Clearly, that's one of the reasons why we have started consultation to (shift) the scheme to future accrual just to make sure that we haven't just got a problem that's going to grow bigger. The P&L impact of the contributions, actually it is one of the reasons why the interest charge is lower in the first half. So clearly, funding this does have a favorable impact which only has an impact below the trading profit line and the contributions of the (indiscernible) will be similar.
Gareth Davis - Chairman: On pricing pressures, I think it is a very similar theme. It is still very, very tough out there. I mean as we said early on, even in the states, our business is still 7% small than it was at the peak. The market is nowhere near back to the sort of peak levels of 2006 or '07, but I don't think it's getting any worse. I mean again, on a specific contracts and specific area, sure there will be some crazy pricing, but overall the pricing pressures remains just as intense as it has been, no better, no worse. We clearly, in the markets in France and Nordics at the moment. It is particularly intense. But credit – (huge credit), Michael and the guys in the Nordics, they have managed to (crank) their gross margin up a little bit by being far more disciplined and really working on the sourcing side and really putting the pressure back on the supplies as well. So again, the external pricing pressure is probably pretty constant and then there is always more we can do and that's absolutely what their plan to do.
Unidentified Company Speaker: Excellent, well, it's time out anyway. So that's great. Thank you very much.


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NEW MADRID - Carlan Stone Femmer, 85, a lifelong resident of New Madrid, died May 25, 2007, at the Golden Living Center in New Madrid.
Born Jan. 14, 1922, in Cape Girardeau, to the late E.B. and Lillian Stone, she worked in the New Madrid County school system for 38 years as a teacher and counselor before retiring in 1987. She received a Bachelor of Science degree in education from Southeast Missouri State University in 1961 and a master's degree from the University of Missouri through SEMO in 1967. She was a member of the United Methodist Church in New Madrid and a member of the Friendship Quilters Association, the New Madrid Country Club, the New Madrid Eagles Ladies Auxiliary 4206, Red Hat Society and past member of the Order of Eastern Star. She was also present at President Harry Truman's Inaugural Ball.
On July 30, 1943, at Blytheville, Ark., she married Bert Femmer, who preceded her in death on Sept. 21, 2000.
One son, Terry Femmer; one brother, Jerome Stone; and one niece, Irene Stone, also preceded her in death.
Survivors include: two daughters and sons-in-law, Carl and Fredi Holyfield of Hermitage, Tenn. and Carol and Steve Frank of McKinney, Texas; one granddaughter and husband, Leslie and Jeff Welsh of Abilene, Kan.; and three great-grandsons, Jackson, Javin and Joseph.
Visitation is from 5-8 p.m. today at Richards Funeral Home in New Madrid., where services will be conducted at 10 a.m. Wednesday. The Rev. Jack Ketcher will officiate.
Burial will follow in the Evergreen Cemetery in New Madrid.
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Memorial contributions
may be made to:
New Madrid County
Library Fund
431 Mill Street
New Madrid, MO 63869
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