New York Stock Exchange corporate governance requirements

Whilst the Company is not required to comply with the measures set by the board of the New York Stock Exchange, Inc. to strengthen corporate accountability as it is a private foreign issuer, it does comply in all material respects with those standards. Those standards state that companies should have a nominating/corporate governance committee composed entirely of independent Directors with written terms of reference, which develops and recommends to the board a set of corporate governance principles for the Company. Details of the Company's nominations committee are set out earlier in this section. The nominations committee does not develop corporate governance principles for the Board to approve. The Board itself approves the Group's overall system of internal controls, governance and authority limits. A majority of the members of the nominations committee are independent Non Executive Directors and all such Directors sit on the Board. The Company's practice, in accordance with the UK Companies Act and the Code in relation to the appointment and termination of the external auditors, is that a recommendation is made by the audit committee to the Board, which will then make a recommendation to shareholders in general meeting. This differs from the procedure in the USA, where the external auditors are accountable to the audit committee, which has the authority to appoint or dismiss the external auditors without reference to shareholders.

The US Sarbanes-Oxley Act, the Securities and Exchange Commission and the New York Stock Exchange introduced rules in July 2005 requiring the Company to comply with certain provisions relating to the audit committee. These include a requirement related to the independence of audit committee members and procedures for the treatment of complaints regarding accounting or auditing matters. The Company is fully compliant with these requirements.

Communications with shareholders

The Company places considerable importance on communication with its shareholders, including its employee shareholders. The Group Chief Executive and Group Finance Director are closely involved in investor relations and a senior executive has day-to-day responsibility for such matters. The views of our major shareholders are reported to the Board by the Group Finance Director and by the Chairman and discussed at its meetings. The Annual Report and Accounts are available to all shareholders either in paper form or electronically and can be accessed via the Company's website or via Shareview, an Internet service offered by the Company's registrars, Lloyds TSB Registrars, detailed in the Shareholder Information section.

There is regular dialogue with institutional shareholders and this has been extended to include private shareholders through the Annual General Meeting and meetings with shareholder representatives. Contact with institutional shareholders (and with financial analysts, brokers and the media) is controlled by written guidelines to ensure the protection of share price sensitive information that has not already been made generally available to the Company's shareholders. Contact is also maintained, when appropriate, with shareholders to discuss overall remuneration plans and policies. The Group's preliminary and interim results, as well as all announcements issued to the London and New York Stock Exchanges, are published on the Company's website, www.wolseley.com. The Company issues regular trading updates to the market and these, together with copies of presentations to analysts and interviews with the Group Chief Executive and Group Finance Director, are also posted on the Company's website. The Notice of the Annual General Meeting is circulated to all shareholders at least 20 working days before such meeting and it is Company policy not to combine resolutions to be proposed at general meetings. All shareholders are invited to the Company's Annual General Meeting at which they have the opportunity to put questions to the Board and it is standard practice to have the chairmen of the audit, nominations and remuneration committees available to answer questions. The proxy votes for and against each resolution, as well as abstentions (which may be recorded on the proxy form accompanying the Notice of Meeting), are counted before the Annual General Meeting and the results will be made available at the meeting after shareholders have voted on each resolution on a show of hands. The results are also announced to the London and New York Stock Exchanges and are published on the Company's website shortly after the meeting.

Donations

The Company's Corporate social responsibility report is set out here. The Group's charitable donations in 2006 totalled £2,445,000 (2005: £2,020,711).

At each of the Annual General Meetings held since 2002, shareholders have passed a resolution, on a precautionary basis, to approve donations to EU political organisations and to incur EU political expenditure (as such terms are defined in section 347A of the Companies Act 1985 (as amended)) not exceeding £125,000 per annum. The Board has repeatedly confirmed that it operates a policy of not giving any cash contribution to any political party in the ordinary meaning of those words and that it has no intention of changing that policy. The Directors, however, propose to seek once more, authority for the Group to make donations and incur expenditure of not more than £125,000 in total until the Company's next Annual General Meeting, which they might otherwise be prohibited from making or incurring under the terms of the Act and which would not amount to "donations" in the ordinary sense of the word. The authority sought by Resolution 13 in the Notice of Meeting will last until the Company's next Annual General Meeting.