Year ended 31 July 2006
13. Contingent liabilities
Provision is made for the Directors’ best estimate of known legal claims and legal actions in progress. The Company takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to succeed or a sufficiently reliable estimate of the potential obligation cannot be made.
The Company has the following quantifiable contingent liabilities which arose in the ordinary course of business and which have not been provided in these accounts since no actual liability is expected to arise:
| 2006 £m |
2005 £m |
|
|---|---|---|
| Value added tax of certain subsidiary undertakings | 5 | 5 |
| Sundry guarantees, performance bonds and indemnities | 1,018 | 7 |
| Obligations under forward foreign exchange contracts | 497 | 413 |
An amount of £499 million (2005: £402 million) is expected to be received from counterparties in respect of the obligations under forward foreign exchange contracts detailed above.
In addition, the Company has given its principal UK bank authority to transfer at any time any sum outstanding to its credit against or towards satisfaction of the liability to the bank of certain subsidiary undertakings.
The Company acts as guarantor or surety for various subsidiary undertakings in financing and other agreements entered into by them in the normal course of business and has given indemnities and warranties to the purchasers of businesses from the Company and certain Group companies in respect of which no material liabilities are expected to arise. Additionally, the Company has issued a guarantee to the trustees of the Wolseley Group Retirement Benefits Plan in respect of the solvency of the plan and has guaranteed the pension payable by Brossette BTI to Mr. G. Pinault, a former Director.
