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  Operating leases

Non-cancellable operating lease rentals are payable as follows:

	2006	2005
Less than one year	89	81
Between one and five years	172	166
More than five years	43	37
	304	284

The Group leases a number of offices and operating equipment under operating leases. The leases typically run for a period of 3-5 years, with an option to renew the lease after that date. 

 Contingencies and guarantees

In November 2004, the French competition authorities started investigations relating to alleged infringements of European and French competition law by Groupe Vedior France and certain competitors. The investigations are still ongoing and to date, no conclusions have been reached by the competition authorities on the outcome of their review. The Company has not recorded a provision.

The Group is involved in a number of legal proceedings relating to normal business activities. The Company believes that sufficient provisions have been made for their outcome.

The Group has given indemnifications, representations and warranties with respect to companies disposed of in recent years.

With respect to obligations of group companies, Vedior N.V. is committed to some banks as main co-debtor and has extended guarantees in addition to consolidated liabilities of subsidiaries for an amount of €378 million (2005: €386 million). Vedior N.V. issued statements for joint and several liability for Dutch subsidiaries in which it holds a majority interest. These companies are included in the consolidated accounts. At 31 December 2006, the total debt of these companies amounted to €286 million (2005: €190 million).

The borrower of the Syndicated credit facility and the Senior Notes described in note 21 is one of the Group companies and Vedior N.V. has extended a guarantee for all obligations under these agreements

 Subsequent events

In December 2006, it was announced that Vedior had agreed to acquire a majority interest in Corridor AS. Corridor is a Norwegian recruitment specialist with annual sales of €6.8 million in 2006. The transaction was completed in January 2007.

 Acquisition of subsidiaries

During the financial year 2006 the Group has acquired several subsidiary undertakings as specified below:

Name of company	Country	Date of acquisition	Percentage of ownership
Mailprofs Employment	Netherlands	January	100%
Talisman Software	Switzerland	February	68%
Special Agent	UK	February	85%
The Blomfield Group	UK	April	70%
CNC	Canada	May	93%
MOT Models	UK	May	75%
Rest Personal Eventual	Argentina	May	75%
Walker-Cox	UK	May	97%
Coopers Recruitment	Australia	July	75%
Armadillo	UK	October	70%
Digby Morgan Consulting	UK	December	80%
Voxius	Netherlands	December	66%

In addition to these acquisitions, Vedior also made a number of other investments during the course of the year. The consideration paid for the acquisitions and investments amounts to €157 million, which has been paid in cash. All acquisitions have been accounted for by the purchase method of accounting. Vedior grants put options to certain minority shareholders; as a consequence these acquisitions are accounted for as 100% acquisitions and the fair value of the liability to the minority shareholder is presented as deferred consideration (please refer to the section ‘Business combinations’ for a further explanation).

The acquisitions had the following effect on the Group’s assets and liabilities:

Acquirees’ assets and liabilities at the acquisition date	Carrying amounts
Property, equipment and software	6
Current assets	54
Current liabilities	-38
Cash and cash equivalents	10
Non current liabilities	-1
Net identifiable assets and liabilities	31
Goodwill on acquisition	169
Total purchase consideration	200
Less: cash and cash equivalents acquired	-10
Less: deferred consideration business combinations	-33
Net cash outflow	157

Goodwill on the acquisitions has arisen due to acquired companies’ management experience and knowledge of the local business, which does not meet the recognition criteria of intangible assets. See also the note on significant accounting principles.

The acquired companies have contributed €9 million since the acquisition to the Group’s net profit for the year 2006.

  Retirement benefit obligations

Liability for defined benefit obligations

	2006	2005
Present value of obligations	90	87
Fair value of plan assets	-79	-74
Present value of net obligations	11	13
Unrecognised actuarial gains and losses		-1
Recognised liability for defined benefit obligations	11	12

The Group makes contributions to one defined benefit plan that provides pension benefits for employees upon retirement. The plan assets are investments held by an external insurance company. These assets are not available to the company and consist mainly of investments in government bonds.

The participants in the defined benefit plan will join a new defined contribution plan as of 1 January 2007. The curtailment effect has been included in the income statement and no future salary increases have been taken into account.

Movements in the net liability for defined benefit obligations recognised in the balance sheet

	2006	2005
Net liability for defined benefit obligations at 1 January	12	15
Contributions received	-2	-6
Expense recognised in the income statement	1	3
Net liability for defined benefit obligations at 31 December	11	12

Expenses recognised in the income statement

	2006	2005
Current service cost	3	3
Interest cost	4	3
Curtailment effect	-6
Net actuarial loss	3
Expected return on plan assets	-3	-3
	1	3

	2006	2005
Actual return on plan assets	3	6

Liability for defined benefit obligations
Principal actuarial assumptions at the balance sheet date, expressed as weighted annual averages:

	2006	2005
Discount rate at 31 December	4.5%	4.0%
Expected return on plan assets at 31 December	5.0%	4.5%
Future salary increase		2.3%
Pension increases	1.7%	1.0%
Inflation	2.0%	2.0%

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