Wiring Honeywell THR840DUK

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Hi, I need some help please...
I want to replace an Drayton analogue thermostat with a Honeywell digital thermostat.
The issue I have is I am not exactly sure of which way to wire it up, the Honeywell product states it a two wire product, but I have 3 wires (Red (live) Blue (neutral) and Yellow (not sure what this is)).
I have attached picture of the existing wiring and existing wiring case and the new Honeywell system, can someone please advise which wire goes where please?

Thanks

Charn
 

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