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Notes to the Company financial statements 115
Wolseley plc Annual Report and Accounts 2008
14. 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.
At 31 July 2008 the Company has a quantifiable contingent liability for value added tax of certain subsidiary undertakings of £16 million (2007: £13 million) which arose in the ordinary course of business and has not been provided for in these accounts since no actual liability is expected to arise.
At 31 July 2008 the Company has counterparty exposure of £408 million (2007: £232 million) in respect of unsettled currency swaps. 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 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.
15. Employees, employee costs and auditors’ remuneration
The average number of employees (including Directors) of the Company in the year ended 31 July 2008 was 17 (2007: 17). Total employee costs of the Company for the year were £5 million (2007: £6 million).
Fees payable to the auditors for the audit of the Company’s financial statements are set out in note 3, on page 74, to the Wolseley plc consolidated financial statements.
16. Dividends
Details of the Company’s dividends are set out in note 8, on page 77, to the Wolseley plc consolidated financial statements.
17. Related party transactions
The Company has taken advantage of the exemption available under the terms of paragraph 3 (a) of FRS 8 ‘Related Party Disclosures’ to dispense with the requirement to disclose transactions with subsidiaries, 90 per cent or more whose voting rights are held within the Group, and which are included in the Wolseley plc consolidated financial statements.
18. Post balance sheet events
Details of significant post balance sheet events are set out in note 42, on page 105, to the Wolseley plc consolidated financial statements.
19. Accounting standards, interpretations of and amendments to published standards
not yet effective
Certain new standards, amendments to and interpretations of existing standards have been published that are mandatory for the Company’s accounting periods beginning on or after 1 August 2008 or later periods, but which the Company has not early adopted. The new standards which are expected to be relevant to the Company’s operations are as follows:
Amendment to FRS 20 Share-based Payment (effective from 1 August 2009)
This amendment clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. It also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. Management is currently assessing the impact of this amendment on the Company’s financial statements.
Independent auditors’ report
to the members of Wolseley plc
116 Independent auditors’ report to the members of Wolseley plc
Wolseley plc Annual Report and Accounts 2008
We have audited the parent company financial statements of Wolseley plc for the year ended 31 July 2008 which comprise the balance sheet and the related notes. These parent company financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Remuneration report that is described as having been audited. We have reported separately on the group financial statements of Wolseley plc for the year ended 31 July 2008.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the Remuneration report and the parent company financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Directors’ responsibility statement.
Our responsibility is to audit the parent company financial statements and the part of the Remuneration report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for the company’s members as a body in accordance with section 235 of the Companies Act 1985 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. We report to you our opinion as to whether the parent company financial statements give a true and fair view and whether the parent company financial statements and the part of the Remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Report of the Directors is consistent with the parent company financial statements. The information given in the Report of the Directors includes that specific information presented in the Performance review that is cross referred from the Business review section of the Report of the Directors.
In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report and consider whether it is consistent with the audited parent company financial statements. The other information comprises only those sections listed in the contents page under the headings ‘Our business’, ‘Performance review’, ‘Other information’ and the Report of the Directors, the Corporate governance statement, and the unaudited part of the Remuneration report. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the parent company financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the parent company financial statements and the part of the Remuneration report to be audited. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the parent company financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the parent company financial statements and the part of the Remuneration report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the parent company financial statements and the part of the Remuneration report to be audited.
Opinion
In our opinion:
• the parent company financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the company’s affairs as at 31 July 2008;
• the parent company financial statements and the part of the Remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985; and • the information given in the Report of the Directors is
consistent with the parent company financial statements. PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors London
22 September 2008