Travelex Holdings Limited Annual report & consolidated financial ...

Travelex Holdings Limited 

Annual report & consolidated financial statements 

for the year ended 31 December 2001 

Contents 

24 Directors’ report 

27 Independent auditors’ report to the members of Travelex Holdings Limited 

28 Consolidated profit and loss account for the year ended 31 December 2001 

29 Statement of Group total recognised gains and losses for the year ended 31 December 2001 

29 Reconciliation of movements in Group shareholders’ funds for the year ended 31 December 2001 

30 Balance sheets at 31 December 2001 

31 Consolidated cash flow statement for the year ended 31 December 2001 

32 Notes to the financial statements for the year ended 31 December 2001 

Directors and Advisers for the year ended 31 December 2001 

Directors 

L M Dorfman 

C I Kahn 

N H Page 

J G Conroy 

D C Painter 

K R Richbell 

P G Birch 

J Hempsey 

Secretary 

S Pignet 

Auditors 

PricewaterhouseCoopers 

Southwark Towers 

32 London Bridge Street 

London SE1 9SY 

Solicitors 

Dechert 

2 Serjeants’ Inn 

London EC4Y 1LT 

Registered Office 

65 Kingsway 

London WC2B 6TD 

Registered Number 

4090247 

23 

Travelex Holdings Limited

24 


Directors’ report 


The directors present their report and the audited accounts of Travelex Holdings Limited and its subsidiaries (the Group) and 

Travelex Holdings Limited (the Company) for the year ended 31 December 2001. The Group accounts comprise the 

consolidated accounts of the Company including its subsidiary and associated undertakings as defined by the Companies Act 

1985. The comparatives are for the Travelex plc group for the period 7 August 2000 to 31 December 2000. 

The Company was incorporated on 13 October 2000 under the name of IBIS (621) Limited. On 9 January 2001 it changed 

its name to Travelex Holdings Limited. On 25 January 2001, the Company acquired all of the issued shares of Travelex plc, 

the previous holding company, prior to which the Company had been a dormant entity. 

During the year the Company purchased the Global and Financial Services (G&FS) divisions of Thomas Cook Holdings Limited 

and subsequently undertook an integration and restructuring programme. 

Principal activities 

The Group’s principal activities are the provision of travel money services, funds transfer services, issuance of travellers 

cheques, dealing in foreign bank notes and provision of other travel and financial related services. The Group operates in the 

United Kingdom, Americas, Asia Pacific, Continental Europe and Africa. 

Review of business and future developments 

The Chairman’s statement contains a review of the Group’s trading results for the year and future developments. 

Results and dividend 

The Group made an operating profit of £35.0 million (2000: £7.1 million). The year’s profit before taxation was £21.6 million 

(2000: £3.9 million). 

Interim dividends of £33,200 were paid on the ‘A’ ordinary shares during the year (2000: nil). The directors do not recommend 

the payment of a final dividend (2000: nil). 

Introduction of the euro 

The Group has operations in a number of the countries that adopted the euro as a single currency on 1 January 1999 and 

introduced euro bank notes on l January 2002. 

The Group experienced a trouble-free transition on both occasions. No material expenditure was incurred as a consequence 

of the change. 

The directors believe that the introduction of the single currency into countries in which the Group operates has presented 

opportunities to gain a larger share of the market for travel money services.

Directors’ report continued 


Directors and their interests 

The current directors of the Group and their interests in the share capital of the Group at the year end were: 

L M Dorfman Appointed 15 January 2001 566,950* 

C I Kahn ACA Appointed 15 January 2001 28,605 

J G Conroy BA Hons Appointed 25 January 2001 – 

N H Page MA FCA Appointed 25 January 2001 4,042 

P G Birch CBE Appointed 25 January 2001 6,737 

K R Richbell BA Hons, MBA, FCIB Appointed 25 January 2001 – 

D C Painter BA Hons ACMA Appointed 25 April 2001 – 

J Hempsey BA CA Appointed 25 April 2001 – 

*Including family interests 

25 


Ordinary Shares of £1 each 

The directors on formation, Dechert Nominees Limited, resigned on 15 January 2001. On 28 February 2001, O A Hajilou 

(appointed 25 January 2001) also resigned as a director. 

Employees 

The Group is committed to employee involvement as business objectives are best achieved if the Group’s staff understand 

and support the Group’s strategy. Staff members are kept informed of performance through briefing meetings, supplemented 

by a range of staff magazines and internal communications. 

Executives regularly visit business locations and discuss matters of current interest with staff. The Company’s financial 

performance is presented and explained to staff during the year. 

Equal opportunities 

The Group’s policy is not to discriminate against anyone, on any grounds. Training is provided and available to all levels 

of staff, and investment in employee development continues to be a priority. Within this policy, the Group gives full 

consideration to applications for employment from disabled persons where the requirements of the job can be adequately 

fulfilled by a disabled person. 

Where existing employees become disabled, it is the Group’s policy wherever practicable to provide continuing employment 

under normal terms and conditions and to provide training and career development and promotion to disabled employees 

wherever appropriate. 

Policy and practice on payment of creditors 

The Group’s policy is to fix terms of payment for all suppliers when agreeing the terms of such business transactions, to 

ensure the supplier is aware of those terms and to abide by the agreed terms of payment. At the year-end trade creditors, 

including amounts payable under contracts to supply foreign currency, represented three days of purchases. 

Charitable and political donations 

During the year, the Group made donations in the United Kingdom for charitable purposes amounting to £62,500 

(2000: £10,373). Political donations were £6,300 (2000: nil).

26 


Directors’ report continued 


Post-balance sheet events 

To the best of the directors’ knowledge, there have been no material post-balance sheet events affecting these financial 

statements. 

Directors’ responsibilities 

Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the 

state of affairs of the Company and of the profit or loss of the Company for that year. In preparing those financial statements, 

the directors are required to: 

• select suitable accounting policies and then apply them consistently; 

• make judgements and estimates that are reasonable and prudent; 

• state whether applicable accounting standards have been followed, subject to any material departures disclosed 

and explained in the financial statements; and 

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company 

will continue in business. 

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the 

financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 

1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the 

prevention and detection of fraud and other irregularities. 

Auditors 

PricewaterhouseCoopers have informed the Group of their willingness to continue in office as auditors. In accordance with 

Section 385 of the Companies Act 1985, a resolution proposing their re-election as auditors will be submitted to the Annual 

General Meeting. 

By order of the Board 

Sylvain Pignet 

Secretary 

Registered office 

65 Kingsway 

London 

WC2B 6TD

Independent auditors’ report to the members 

of Travelex Holdings Limited 


27 


We have audited the financial statements on pages 28 to 60 which have been prepared under the historical cost convention 

and the accounting policies set out on pages 32 to 34. 

Respective responsibilities of directors and auditors 

The directors’ responsibilities for preparing the annual report and the financial statements in accordance with applicable United 

Kingdom law and accounting standards are set out in the statement of directors’ responsibilities on page 26. 

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and United 

Kingdom Auditing Standards issued by the Auditing Practices Board. 

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in 

accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not consistent with 

the financial statements, if 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 transactions 

is not disclosed. 

We read the other information contained in the annual report and consider the implications for our report if we become aware 

of any apparent misstatements or material inconsistencies with the financial statements. 

Basis of audit opinion 

We conducted our audit in accordance with auditing standards issued by the Auditing Practices Board. An audit includes 

examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes 

an assessment of the significant estimates and judgements made by the directors in the preparation of the financial 

statements, and of whether the accounting policies are appropriate to the Group’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 financial statements 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 financial statements. 

Opinion 

In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group at 

31 December 2001 and the profit and cash flows of the Group for the year then ended and have been properly prepared 

in accordance with the Companies Act 1985. 

PricewaterhouseCoopers 

Chartered Accountants and Registered Auditors 

London 

27 March 2002

28 


Consolidated profit and loss account 


Continuing operations 

Acquisitions Total Total 

5 months 

2001 2001 2001 2000 

Note £’000 £’000 £’000 £’000 

Turnover (including share of joint ventures) 169,802 228,124 397,926 71,101 

Less: share of turnover of joint ventures (75) – (75) – 

Turnover 2 169,727 228,124 397,851 71,101 

Cost of sales (101,285) (116,690) (217,975) (37,759) 

Gross profit 68,442 111,434 179,876 33,342 

Net operating expenses 3 (60,973) (83,920) (144,893) (26,210) 

Operating profit 7,469 27,514 34,983 7,132 

Income from interests in associated undertakings – 697 697 – 

Share of operating loss in joint ventures (100) – (100) – 

Profit on ordinary activities before interest 7,369 28,211 35,580 7,132 

Interest receivable and similar income 4 588 400 988 209 

Interest payable and similar charges 4 (9,372) (5,591) (14,963) (3,464) 

Profit/(loss) on ordinary activities before taxation 5 (1,415) 23,020 21,605 3,877 

Tax on profit/(loss) on ordinary activities 7 (3,188) (318) (3,506) (2,362) 

Profit/(loss) on ordinary activities after taxation (4,603) 22,702 18,099 1,515 

Equity minority interests 21 (756) (160) (916) (280) 

Profit/(loss) for the financial year (5,359) 22,542 17,183 1,235 

Dividends 9 – (33) (33) – 

Retained profit/(loss) for the financial year (5,359) 22,509 17,150 1,235 

The profit on ordinary activities above is in respect of continuing operations. 

There is no difference between the profit on ordinary activities before taxation and the retained profit for the year stated above 

and their historical cost requirements.

29 


Statement of Group total recognised gains and losses 


2001 2000 

£’000 £’000 

Profit for the financial year 17,183 1,235 

Currency translation differences on foreign currency net investments (767) 444 

Total gains and losses recognised since last annual report 16,416 1,679 

Reconciliation of movements in Group shareholders’ funds 


2001 2000 

£’000 £’000 

Profit for the financial year 17,183 1,235 

Dividends (33) – 

17,150 1,235 

Other recognised (losses)/gains relating to the year (767) 444 

Nominal value of ordinary shares issued – 900 

Premium (net of issue expenses) on ordinary shares issued – 19,100 

Net change in shareholders’ funds 16,383 21,679 

Shareholders’ funds at 1 January 21,679 – 

Shareholders’ funds at 31 December 38,062 21,679

30 


Balance sheets 

at 31 December 2001 

Group Company 

2001 2000 2001 2000 

Note £’000 £’000 £’000 £’000 

Fixed assets 

Intangible assets 11 401,830 68,385 – – 

Tangible assets 12 74,420 19,655 – – 

Investments 

Investments in joint ventures 

13 2,957 – 900 – 

– share of gross assets 160 – – – 

– share of gross liabilities (260) – – – 

479,107 88,040 900 – 

Current assets 

Stock 

Debtors 

14 62,478 13,802 – – 

– due within one year 15 747,236 170,242 70,713 – 

– due after more than one year 

Investments 

15 2,475 – – – 

– due within one year 16 534,367 – – – 

– due after more than one year 16 684,811 – – – 

Cash at bank and in hand 44,102 28,393 298 – 

2,075,469 212,437 71,011 – 

Creditors – amounts falling due within one year 17 (2,190,230) (198,879) (3,850) – 

Net current (liabilities)/assets (114,761) 13,558 67,161 – 

Total assets less current liabilities 364,346 101,598 68,061 – 

Creditors – amounts falling due after more than one year 18 (314,889) (78,609) (60,808) – 

Provisions for liabilities and charges 23 (10,817) (1,030) – – 

Net assets 38,640 21,959 7,253 – 

Capital and reserves 

Called up share capital 28 900 900 900 – 

Share premium account 29 – 19,100 – – 

Other reserves 29 19,100 – – – 

Profit and loss reserve 29 18,062 1,679 6,353 – 

Total shareholders’ funds 38,062 21,679 7,253 – 

Equity minority interests 21 578 280 – – 

Capital employed 38,640 21,959 7,253 – 

The financial statements on pages 28 to 60 were approved by the Board of Directors on 27 March 2002 and were 

signed on its behalf by: 

L M Dorfman C I Kahn 

Director Director

Consolidated cash flow statement 



31 


Acquisitions Total 

2001 2001 2001 2000 

Note £’000 £’000 £’000 £’000 

Net cash (outflow)/inflow from operating activities 

Returns on investments and servicing of finance 

24 28,746 (44,106) (15,360) 3,982 

Interest received 588 400 988 209 

Interest paid (9,040) (3,683) (12,723) (3,224) 

Interest received in advance on structured deposit – 274,254 274,254 – 

Interest element of finance lease payments – (255) (255) (102) 

Dividends paid to minority interests (618) – (618) – 

Net cash inflow/(outflow) from returns on investments 

and servicing of finance (9,070) 270,716 261,646 (3,117) 

Taxation 

Capital expenditure and financial investment 

(3,133) (15,097) (18,230) (2,562) 

Purchase of tangible fixed assets (14,544) (6,799) (21,343) (3,117) 

Sale of tangible fixed assets 838 916 1,754 34 

Net cash outflow for capital expenditure and financial investment (13,706) (5,883) (19,589) (3,083) 

Acquisitions 

Purchase of subsidiary undertakings (250) (409,763) (410,013) (26,358) 

Net cash acquired with subsidiary undertakings 26 – 16,529 16,529 11,160 

Net cash outflow for acquisitions (250) (393,234) (393,484) (15,198) 

Equity dividends paid to shareholders (33) – (33) – 

Net cash (outflow)/inflow before use 

of liquid resources and financing 25 2,554 (187,604) (185,050) (19,978) 

Management of liquid resources 

Reduction/(increase) in short-term deposits with banks – 183,278 183,278 71,680 

Financing 

Capital element of finance lease payments (529) (794) (1,323) (1,099) 

Decrease in borrowings – – – (31,233) 

Net cash outflow from financing (529) (794) (1,323) (32,332) 

(Decrease)/increase in net cash 24 2,025 (5,120) (3,095) 19,370

32 


Notes to the financial statements 


1 Accounting policies 

(a) Basis of preparation 

These financial statements have been prepared under the historical cost convention, in accordance with applicable accounting 

standards. A summary of the more important Group accounting policies is set out below, together with an explanation 

of where changes have been made to previous policies on the adoption of new accounting standards in the year. 

The Group financial statements consolidate the financial statements of the Company and all its subsidiaries. All significant 

intercompany transactions have been eliminated on consolidation. Equity accounting is applied for all associate undertakings. 

The Company was incorporated on 13 October 2000 as the ultimate holding company of the Group. 

On 25 January 2001, the company acquired all of the issued shares of Travelex plc, the previous holding company, by issuing 

an equal number of shares in the Company to the shareholders of Travelex plc. This has been accounted for using merger 

accounting principles. The consolidated and Company financial statements for the year ended 31 December 2001 include the 

results of the new parent from 13 October 2000 to 31 December 2001. The comparatives show the consolidated and 

Company results of the previous holding company, Travelex plc, for the period 7 August 2000 to 31 December 2000. 

(b) Changes in accounting policies 

The Group has adopted FRS 19 ‘Deferred tax’ in these financial statements. The adoption of this standard represents 

a change in accounting policy, however there were no changes to the comparative figures. 

FRS 18 ‘Accounting policies’ has been adopted in the current year, however this did not require any change 

in accounting policy. 

(c) Revenue recognition 

The key components of turnover are described below: 

1 Revenue from currency exchange transactions is recognised as the difference between the cost and selling price 

of currency, together with foreign exchange commissions on the sale and purchase of currencies and commissions 

on the sale and purchase of travellers cheques. 

2 Revenue from the sale of insurance policies is recognised at the time of sale of the insurance policy and represents the 

commission earned on the sale of the policy. 

3 Revenue from global payments is recognised as the currency margin on the transactions at the rates prevailing on the 

transaction date plus any commissions charged. 

4 Income from investment activities is derived principally from the investment of funds arising from the sale of travellers 

cheques. Such funds are held to satisfy unencashed travellers cheques included within the travellers cheques awaiting 

redemption balance. The income comprises interest on deposits with financial institutions. 

In the opinion of the directors, disclosure of revenue is most appropriately represented for the Group by including the items 

above. This represents an adaptation of the profit and loss account format laid down in Schedule 4 to the Companies Act 

1985 due to the special nature of the Group’s business. 

(d) Cost of sales 

Cost of sales comprises direct selling costs (including salaries), rebates and incentive commissions.

Notes to the financial statements continued 


33 


(e) Goodwill and intangible assets 

The excess of the fair value of the cost of investments in subsidiaries over the fair value of net assets acquired which is not 

otherwise allocated to individual assets and liabilities is determined to be goodwill and is amortised on a straight-line basis over 

a period not exceeding 20 years. 

An impairment review of goodwill balances is performed in the first financial year following a year in which an acquisition 

generating goodwill occurred. The carrying amount of goodwill is reviewed by analysing the financial performance of the 

business acquired compared to the forecasts on which the acquisition was based. When any such impairment exists, the 

related goodwill is written down to fair value. 

(f) Tangible fixed assets 

Tangible fixed assets are initially recorded at cost and depreciated so as to write off the cost of the asset over its estimated life. 

Cost includes those which are directly attributable to bringing the asset into working condition for its intended use. 

Where events or changes in circumstances indicate that the carrying amount of fixed assets may not be recoverable the 

assets are written down to their recoverable amount. 

Depreciation is provided to write off the cost, less any estimated residual value, of all tangible fixed assets over their expected 

useful lives. It is calculated on a straight-line basis using the following rates: 

Freehold land Nil 

Freehold and long leasehold property 2% per annum 

Short leasehold property 10 – 20% per annum or over the term of the lease if shorter 

Furniture, fittings and equipment 10 – 50% per annum 

Automatic cash machines 12.5% per annum 

Computer hardware and software 33.3% per annum 

Motor vehicles 20% per annum 

(g) Fixed asset investments 

Fixed asset investments are stated at cost unless, in the opinion of the directors, there has been a permanent diminution in value. 

(h) Current asset investments 

Current asset investments comprise money market deposits and a series of structured deposits, which are held to maturity 

and are stated at the face value of the deposit. 

(i) Deferred taxation 

Full provision is made for all tax timing differences. 

Deferred tax assets are recognised where it is more likely than not there will be suitable taxable profits from which the future 

reversal of the underlying timing differences can be deducted. 

(j) Foreign currencies 

Assets and liabilities of overseas subsidiaries are translated at the closing exchange rate. Income and expenditure of these 

subsidiaries are translated at the average rates of exchange during the year. 

Exchange differences on the translation of opening net assets of subsidiary undertakings are taken to reserves. 

All other exchange profits and losses, which arise from normal trading activities, are included in the profit and loss account 

as incurred.

34 




(k) Travellers cheques awaiting redemption 

A liability is recorded for all travellers cheques issued but not encashed. This is then adjusted to take account of the value 

of those cheques, which it is anticipated will never be presented for payment. In estimating this amount the directors use the 

services of a firm of independent actuaries. The difference between the opening and closing position of this float write-back 

is included in turnover. 

(l) Currency stock 

Currency stock consists of all foreign currencies held in tills, in transit and in distribution centres. Currency stock is valued 

at the lower of cost and net realisable value. 

(m) Financial instruments 

Financial instruments include forward foreign currency exchange contracts and foreign exchange swaps in the foreign 

exchange markets. The Group uses these instruments to hedge existing assets and liabilities (refer to note 22 – Financial 

instruments – Objectives, policies and strategies in holding and managing financial instruments). 

Gains and losses on these instruments are included in turnover. The gross asset and liability relating to forward foreign 

currency exchange contracts are reported on the balance sheet. 

Where the instrument is used to hedge an underlying transaction which itself is marked-to-market, the instrument is valued 

in the same way and changes in the market value are recognised in the profit and loss account in the same period. Where the 

underlying transaction is recorded on an accruals basis, the instrument is recorded in a similar manner. In this case, the costs 

of establishing the hedge instrument are capitalised; the market value of the instrument is not recognised in the profit and loss 

account but the effective rate applied in expensing the underlying transaction. 

Forward foreign currency exchange contracts entered into as foreign exchange deals and foreign currency assets and liabilities 

are valued at the rate of exchange ruling at the balance sheet date. 

(n) Leases 

Assets held under finance leases are included within fixed assets at fair value which is considered to approximate the present 

value of minimum lease payments and are depreciated over the shorter of the lease term or their estimated useful life. Future 

instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between 

the finance element, which is charged to the profit and loss account as interest, and the capital element, which reduces the 

outstanding obligation for future instalments. 

Rentals under operating leases are charged to the profit and loss account on a straight-line basis over the lease term. 

Incentives offered to/received as lessees are spread over the shorter of the lease term and a date from which it is expected 

that the prevailing market rental will be payable, on a straight-line basis as a reduction to rental income/expense. 

(o) Finance costs 

Finance costs associated with the issue of debt are deducted from the proceeds of the issue and released to the profit and 

loss account over the term of the debt on a straight-line basis. 

(p) Pension costs 

Contributions to the Group’s defined contribution pension schemes are charged to the profit and loss account as incurred. 

Contributions to the Group’s defined benefit schemes are charged to the profit and loss account so as to spread the cost 

of providing pensions over the employees’ working lives within the Group. Variations in pension cost, which are identified 

as a result of actuarial valuations, are amortised over the average expected remaining working lives of the employees.



2 Segmental reporting 

Business analysis 

The business analysis represents the major categories of business conducted by the Group. 

35 


Travel money – includes bureaux de change operations, encompassing locations in airports, tourist locations and on board 

international ferry services, the issue of travellers cheques, income arising from the investment of travellers cheque fund, the 

operation of automatic teller machines (ATMs) and the provision of travel money services to corporates. 

Global payments – includes international funds transfer services for commercial customers. 

Third party outsourcing – includes the provision of outsourced travel money services to fulfil individual orders of retail 

customers of major high street banks, travel agencies and financial institutions. 

Insurance – includes the distribution of travel insurance policies to US residents through a dedicated website, airport bureaux 

locations, third parties and call centres. 

Other operations – includes person-to-person funds transfer services for retail customers, the provision of travel-related 

emergency and concierge services and wholesale bank note and dealing operations. 

Turnover Profit before tax Net assets 

2001 2000 2001 2000 2001 2000 

Business analysis £’000 £’000 £’000 £’000 £’000 £’000 

Travel money 258,473 46,600 34,120 1,807 (154,628) 13,935 

Global payments 50,460 7,443 24,388 2,344 19,711 2,639 

Third party outsourcing 41,259 13,322 4,596 2,598 4,982 4,320 

Insurance 9,955 3,736 1,231 230 1,385 1,065 

Other operations 37,704 – (887) – 4,470 – 

Central overheads and financing – – (23,383) (1,154) – – 

Goodwill – – (18,460) (1,948) 401,830 – 

Interest received in advance – – – – (239,109) – 

Total 397,851 71,101 21,605 3,877 38,640 21,959

36 




Geographical analysis 

Geographical analysis is based on the country in which a transaction takes place, which in the case of international 

funds transfers is the location in which the transaction is initiated. In the case of travellers cheques analysis is based 

on the domicile of the entity investing the travellers cheque float. The acquisition of the Thomas Cook Global and Financial 

Services Group (G&FS) during the year did not require the expansion of the geographical segments. 

No restatement of comparatives has been necessary. 

Turnover Profit before tax Net assets 

2001 2000 2001 2000 2001 2000 

Geographical analysis £’000 £’000 £’000 £’000 £’000 £’000 

United Kingdom 191,113 38,673 24,269 (1,540) (61,766) 12,558 

Continental Europe 44,619 9,069 9,009 2,680 43,717 2,086 

North America 103,867 17,864 20,308 5,580 (92,335) 6,745 

Asia Pacific 58,276 5,495 9,768 259 (15,064) 570 

Other regions (24) – 94 – 1,367 – 

Central overheads and financing – – (23,383) (1,154) – – 

Goodwill – – (18,460) (1,948) 401,830 – 

Interest received in advance – – – – (239,109) – 

Total 397,851 71,101 21,605 3,877 38,640 21,959 

The Thomas Cook G&FS business was acquired during the year and therefore no comparatives are given for that business. 

3 Net operating expenses 


Acquisitions Total 

2001 2001 2001 2000 

£’000 £’000 £’000 £’000 

Net operating expenses: 

Administrative expenses 60,973 94,739 155,712 26,210 

Other operating income – (10,819) (10,819) – 

60,973 83,920 144,893 26,210 

Other operating income primarily relates to the provision of administrative services to Thomas Cook Holdings Limited.



4 Interest and similar items 

37 


2001 2000 

£’000 £’000 

Interest payable: 

Interest payable on bank loans and overdrafts (4,402) (402) 

Interest payable on senior notes (7,875) (2,822) 

Amortisation of deferred consideration discount (1,654) – 

Amortisation of issue costs of senior notes (332) (138) 

Interest payable on other loans (445) – 

Interest payable on finance leases (255) (102) 

Total interest and similar charges payable (14,963) (3,464) 

Interest receivable: 

Interest on bank deposits and money market instruments 46,869 – 

Interest on operating bank accounts 988 209 

Total interest receivable and similar income 47,857 209 

Less: included in turnover (in accordance with accounting policies) (46,869) – 

Net interest payable and similar items (13,975) (3,255) 

Continuing operations (8,784) (3,255) 

Acquisitions (5,191) – 

Net interest payable and similar items (13,975) (3,255)

38 




5 Profit/(loss) on ordinary activities before taxation 

2001 2000 

£’000 £’000 

Profit/(loss) before taxation is stated after charging/(crediting): 

Staff costs (note 6) 

Depreciation of tangible fixed assets 

110,674 16,073 

– owned assets 10,852 1,633 

– under finance leases 

Amortisation of goodwill 

3,293 324 

– subsidiaries 18,460 1,948 

Loss on disposal of fixed assets 12 71 

Hire of machinery and equipment 1,342 106 

Other operating lease rentals 

Auditors’ remuneration 

48,029 601 

– Audit 1,152 161 

– Non-audit 328 186 

6 Employees and directors 

The average monthly number of persons employed during the year, calculated on a full-time equivalent basis, by the Group 

were as follows: 

2001 2000 

Analysed by geographical location Number Number 

United Kingdom 3,025 947 

Continental Europe 341 257 

North America 884 366 

Asia Pacific 1,028 290 

Other regions 26 – 

5,304 1,860 

2001 2000 

Staff costs for the group during the year £’000 £’000 

Wages and salaries 98,205 14,321 

Social security costs 8,668 1,452 

Other pension costs (note 27) 3,801 300 

110,674 16,073



39 


2001 2000 

Directors’ remuneration £’000 £’000 

Aggregate emoluments 3,001 1,012 

Company contributions to pension schemes 99 39 

No director has any benefits accruing under defined benefit schemes (2000: nil). 

3,100 1,051 

2001 2000 

Highest paid director £’000 £’000 

Aggregate emoluments 1,069 288 

Company pension contributions 30 15 

7 Tax on profit on ordinary activities 

1,099 303 

2001 2000 

Analysis of charge in period £’000 £’000 

United Kingdom tax 

Corporation tax at 30% (2000: 30%) 1,918 1,043 

Prior year under provision 350 – 

2,268 1,043 

Foreign tax 

Corporation taxes 5,921 1,211 

Prior year over provision (13) – 

Total current tax 

Deferred tax 

8,176 2,254 

Origination and reversal of timing differences (4,670) 108 

Representing: 

United Kingdom (4,387) 108 

Foreign tax (283) – 

Total deferred tax (4,670) 108 

Tax on profit on ordinary activities 3,506 2,362

40 




The tax for the year is lower (2000: higher) than the standard rate of corporation tax in the UK (30%). 

The differences are explained below: 

Profit on ordinary activities before tax 21,605 

2001 

£’000 

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% 

Effects of: 

6,482 

Adjustment to tax in respect of prior period 337 

Adjustment in respect of foreign tax rates (4,692) 

Expenses not deductible for tax purposes 1,379 

8 Profits of holding company 

Of the profit for the financial year, a profit of £6.4 million (2000: nil) is dealt with in the accounts of Travelex Holdings Limited. 

This profit includes interest receivable from subsidiaries of £18.5 million. The directors have taken advantage of the exemption 

available under Section 230 of the Companies Act 1985 and not presented a profit and loss account for the company alone. 

9 Dividends 

3,506 

2001 2000 

£’000 £’000 

Equity – ‘A’ Ordinary shares 

Final paid for 2000 4 – 

Interim paid 29 – 

10 Security charged over assets 

33 – 

The Group has given fixed and floating charges over predominantly all of their assets in relation to various facilities provided 

by the Group’s bankers, in the normal course of business.



11 Intangible fixed assets 

41 


Group Goodwill 

£’000 

Cost 

At 1 January 2001 73,684 

Additions (note 26) 351,515 

Increase of existing goodwill 250 

Exchange adjustments 155 

At 31 December 2001 425,604 

Aggregate amortisation 

At 1 January 2001 (5,299) 

Charge for the year (18,460) 

Exchange adjustments (15) 

At 31 December 2001 (23,774) 

Net book amount at 31 December 2001 401,830 

Net book amount at 31 December 2000 68,385 

Goodwill arising on the acquisition of subsidiaries and businesses is amortised on a straight-line basis over the periods detailed 

below. These periods are those in which the directors estimate the values of the underlying businesses acquired are expected 

to exceed the value of the underlying assets. 

Thomas Cook Global and Financial Services Group 20 years 

Travellers Exchange Corporation Limited 20 years 

Travelex Group Investments Limited 20 years 

Transpay division of Barclays Bank plc 10 years

42 




12 Tangible fixed assets 

Freehold Furniture, 

land & fixtures & Motor 

buildings equipment vehicles Total 

£’000 £’000 £’000 £’000 

Cost 

At 1 January 2001 – 21,347 252 21,599 

Additions at cost – 20,741 602 21,343 

Acquisitions 24,758 23,175 1,388 49,321 

Disposals – (3,068) (847) (3,915) 

Exchange adjustment – 61 14 75 

At 31 December 2001 24,758 62,256 1,409 88,423 

Depreciation 

At 1 January 2001 – (1,922) (22) (1,944) 

Charge for the year (273) (13,347) (525) (14,145) 

Disposals – 1,741 408 2,149 

Exchange adjustment – (58) (5) (63) 

At 31 December 2001 (273) (13,586) (144) (14,003) 

Net book value at 31 December 2001 24,485 48,670 1,265 74,420 

Net book value at 31 December 2000 – 19,425 230 19,655 

The net book value of tangible fixed assets includes an amount of £1,730,000 (2000: £3,695,000) in respect of assets held 

under finance leases and hire purchase contracts. 

Freehold land and buildings are stated at cost less accumulated depreciation. 

Company 

The Company has no tangible fixed assets.



13 Investments 

43 


2001 

Group interest in associated undertakings £’000 

At 1 January 2001 – 

Additions in year 2,257 

Share of post-acquisition reserves 697 

Exchange adjustments 3 

At 31 December 2001 2,957 

2001 

Company shares in Group undertakings £’000 

At 1 January 2001 – 

Additions in year 900 

At 31 December 2001 900 

The Company additions in the year of £900,000 represents the acquisition by Travelex Holdings Limited of all the issued share 

capital of Travelex plc. 

Investments in Group undertakings are stated at cost. As permitted by Section 133 of the Companies Act 1985, where the 

relief afforded under Section 131 of the Companies Act 1985 applies, cost is the aggregate of the nominal value of the relevant 

number of the company’s shares and the fair value of any other consideration given to acquire the share capital of the 

subsidiary undertakings. 

The directors consider that to give full particulars of all subsidiary undertakings, associate undertakings and joint ventures 

would lead to a statement of excessive length. The principal operating subsidiaries, associates and joint ventures have 

therefore been detailed in note 33. A full list of subsidiary undertakings, associate undertakings and joint ventures, 

at 31 December 2001, will be annexed to the Company’s next annual return. 

14 Stock 

Group 

2001 2000 

£’000 £’000 

Foreign currency 56,585 13,802 

Travellers cheques 2,785 – 

Precious metals 984 – 

Other 2,124 – 

There is no stock held by the Company. 

62,478 13,802

44 




15 Debtors 

Group Company 

2001 2000 2001 2000 

£’000 £’000 £’000 £’000 

Amounts falling due within one year: 

Trade debtors 324,195 15,608 – – 

Amounts due from Group undertakings – – 70,000 – 

Amounts due from associated undertakings 83 – – – 

Amounts due from joint ventures 34 – – – 

Forward exchange contracts 386,553 144,391 – – 

Other debtors 24,448 6,415 713 – 

Prepayments and accrued income 9,358 3,828 – – 

Deferred tax 2,565 – – – 

747,236 170,242 70,713 – 

Amounts falling due after more than one year: 

Forward exchange contracts 1,653 – – – 

Other debtors 822 – – – 

16 Current asset investments 

2,475 – – – 

Group Company 

2001 2000 2001 2000 

£’000 £’000 £’000 £’000 

Amounts due within one year: 

Money market deposits 303,704 – – – 

Money on structured deposits 230,663 – – – 

534,367 – – – 

Amounts due after more than one year: 

Money on structured deposits 684,811 – – – 

Funds have been placed on a series of structured deposits with a bank. The repayment profile of the deposits have been 

structured to match the expected travellers cheque encashment profile over the term of the deposits. The Group is able to make 

early draw downs against the funds if necessary, subject to certain charges and restrictions as to the timing of draw downs.



17 Creditors – amounts falling due within one year 

45 


Group Company 

2001 2000 2001 2000 

£’000 £’000 £’000 £’000 

Bank and other borrowings (note 19) 27,849 9,023 71 – 

Obligations under finance leases (note 20) 2,921 1,465 – – 

Trade creditors 119,931 18,127 – – 

Travellers cheques awaiting redemption (1) 1,476,733 – – – 

Forward exchange contracts 387,636 144,011 – – 

Corporation tax 1,146 2,736 3,432 – 

Other taxes and social security costs 1,376 814 – – 

Other creditors 15,772 7,834 – – 

Accruals and deferred income 114,855 14,869 347 – 

Interest received in advance (2) 42,011 – – – 

2,190,230 198,879 3,850 – 

(1) Travellers cheques awaiting redemption represents the value of all travellers cheques issued but not encashed. This is then 

adjusted to take account of the value of those cheques, which it is anticipated will never be presented for payment. 

(2) An amount of the travellers cheque funds have been placed on a series of structured deposits with a bank for a term of 23 

years (refer to note 16). The net present value of interest receivable on the deposits has been paid in advance. 

18 Creditors – amounts falling due after more than one year 

Group Company 

2001 2000 2001 2000 

£’000 £’000 £’000 £’000 

Loans and other borrowings (note 19) 72,151 71,819 – – 

Hire purchase and finance lease obligations (note 20) 959 790 – – 

Deferred consideration for acquisitions (1) 43,025 6,000 37,025 – 

Amounts due to Group undertakings – – 23,783 – 

Forward exchange contracts 1,656 – – – 

Interest received in advance (2) 197,098 – – – 

314,889 78,609 60,808 – 

(1) Deferred consideration of £43,025,000 represents: (1) £6,000,000 relating to the acquisition of Transpay in September 

1999, and is based on the directors’ best estimate of the balance due on the acquisition. This business is conducted by 

the 80% owned subsidiary Travelex Currency Services Limited; (2) £37,025,000 relating to the acquisition of Thomas Cook 

Global and Financial Services Group during the current year. The amount is based on the fixed principal payable in 2006 

of £47,500,000 discounted to its current net present value. 

(2) Refer to notes 16 and 17 for explanation of interest received in advance.

46 




19 Loans and other borrowings 

Group Company 

2001 2000 2001 2000 

£’000 £’000 £’000 £’000 

10.5% Senior Notes due 2010 75,000 75,000 – – 

Unamortised issue costs (2,849) (3,181) – – 

Bank loans and overdrafts 27,849 9,023 71 – 

Finance leases 3,880 2,255 – – 

103,880 83,097 71 – 

Maturity of debt 

In one year or less, or on demand 30,770 10,488 71 – 

In more than one year, but not more than two years 575 648 – – 

In more than two years, but not more than five years 384 142 – – 

In more than five years 72,151 71,819 – – 

20 Obligations under leases 

103,880 83,097 71 – 

2001 2000 

Finance leases £’000 £’000 

Amounts payable: 

Within one year 3,195 1,640 

Between one and two years 671 726 

Between two and five years 407 160 

4,273 2,526 

Less: Finance charges allocated to future periods (393) (271) 

3,880 2,255 

Shown as: 

Due within one year 2,921 1,465 

Due after one year 959 790 

3,880 2,255



47 


Land & Land & 

Buildings Other Buildings Other 

Annual commitments under non-cancellable 2001 2001 2000 2000 

operating leases are as follows: £’000 £’000 £’000 £’000 

Operating leases which expire: 

Within one year 53,264 362 1,647 – 

Between two and five years 39,055 534 5,423 – 

After five years 11,143 – 9,642 – 

21 Equity minority interests 

103,462 896 16,712 – 

2001 2000 

£’000 £’000 

Opening balance 280 – 

Minority interest in current year profit 916 280 

Dividend paid during the year (618) – 

22 Financial instruments 

578 280 

Objectives, policies and strategies in holding and managing financial instruments 

Foreign currency exposures in respect of overseas subsidiaries are minor due to related foreign currency borrowings. Other 

currency exposure is managed through currency hedging, where appropriate. 

Where the Group undertakes a transfer of funds denominated in foreign currency, on behalf of customers, this exposure 

is hedged to the extent that it cannot be covered out of existing currency exposures. 

Gains and losses on foreign exchange contracts are recognised on the contract date of the matched contracts. 

At the year-end there are no unrecognised gains or losses on foreign exchange contracts. The amounts at which the foreign 

exchange contracts are disclosed in debtors and creditors reflect their fair value. 

The long-term foreign exchange exposure of the Group’s bureaux de change business is managed through foreign currency 

borrowings and other hedging instruments. 

All foreign exchange hedging activities are strictly controlled and regularly monitored as part of the Group’s treasury function. 

Short-term debtors and creditors have been included in all the following disclosures.

48 




Currency and interest rate risk profile of financial liabilities of the Group 

A financial liability is defined as any liability that is a contractual obligation to deliver cash or another financial asset to another 

entity, or to exchange financial instruments with another entity. Financial liabilities include creditors – amounts falling due within 

one year, creditors – amounts falling due after one year and provisions for liabilities and charges, excluding corporation tax and 

other taxes and social security costs. 

The currency and interest rate risk profile of the Group’s financial liabilities at 31 December 2001, was: 

Financial 

Floating liabilities on 

rate Fixed rate which no 

financial financial interest 

Total liabilities liabilities is paid 

Currency £’000 £’000 £’000 £’000 

Sterling 910,620 19,895 76,031 814,694 

US dollars 1,256,467 2,573 – 1,253,894 

Euro 73,334 2,531 – 70,803 

Canadian dollars 57,429 1,137 – 56,292 

Australian dollars 108,898 829 – 108,069 

Other currencies 104,936 884 – 104,052 

At 31 December 2001 2,511,684 27,849 76,031 2,407,804 

Sterling 196,621 7,777 74,074 114,770 

US dollars 49,908 807 – 49,101 

Euro 387 92 – 295 

Australian dollars 27,022 347 – 26,675 

At 31 December 2000 273,938 9,023 74,074 190,841 

The Group did not have any interest rate swaps in 2001 (2000: nil). 

The major fixed rate financial liability as at 31 December 2001 is the Senior Notes with a rate of 10.5% (2000: 10.5%) and 

a remaining term of 8.5 years (2000: 9.5 years). 

Floating rate financial liabilities bear interest at rates, based on relevant national LIBOR equivalents, which are fixed in advance 

for periods of between one month and six months. 

Financial liabilities on which no interest is paid consists primarily of travellers cheques awaiting redemption of £1,476,733,000 

(2000: nil) (note 17), current liabilities due within one year (note 17) and discounted deferred consideration of £43,025,000 

(2000: £6,000,000) on which the discount rate applied was 5.5%.



49 


Currency and interest rate risk profile of financial assets of the Group 

A financial asset is defined as any asset that is cash, including cash at bank, short-term deposits and monetary investments, 

a contractual right to receive cash or another financial asset from another entity, to exchange financial instruments with another 

entity under conditions that are potentially favourable or an equity instrument of another entity. Financial assets comprise all 

current assets except the deferred taxation. 

Financial 

Floating Fixed assets on 

interest rate interest rate which no 

financial financial interest is 

Total assets assets received 

Currency £’000 £’000 £’000 £’000 

Sterling 601,513 4,694 136,907 459,912 

US dollars 1,214,431 23,880 974,960 215,591 

Euro 76,109 5,861 42,077 28,171 

Canadian dollars 45,841 3,578 25,239 17,024 

Australian dollars 100,574 2,525 34,192 63,857 

Other currencies 34,436 3,564 5,803 25,069 

At 31 December 2001 2,072,904 44,102 1,219,178 809,624 

Floating sterling 130,087 19,636 – 110,451 

Fixed US dollars 50,231 3,303 – 46,928 

Euro 5,008 3,665 – 1,343 

Australian dollars 27,111 1,789 – 25,322 

At 31 December 2000 212,437 28,393 – 184,044 

The major fixed interest rate assets are a series of long-term structured deposits (note 16) placed with a bank in various 

currencies for which the interest has been paid in advance. The balance of the fixed rate assets are money market deposits 

primarily held in sterling and US dollars which are placed with banks on short-term deposits and earn interest at an average 

of 2% (2000: 3%) per annum. 

Floating rate cash earns interest based on relevant national LIBOR equivalents or government bond rates. 

Financial assets on which no interest is received primarily consists of debtors due within one year.

50 




Maturity of financial liabilities 

The maturity profile of the carrying amount of the Group’s financial liabilities (as defined above) at 31 December was as follows: 

Other Other 

Finance financial Total Finance financial Total 

Debt leases liabilities 2001 Debt leases liabilities 2000 

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 

In one year or less, 

or on demand 27,849 2,921 2,165,284 2,196,054 9,023 1,465 184,841 195,329 

In more than one year but 

not more than two years – 591 33,579 34,170 – 648 – 648 

In more than two years but 

not more than five years – 368 102,183 102,551 – 142 3,600 3,742 

In more than five years 72,151 – 106,758 178,909 71,819 – 2,400 74,219 

100,000 3,880 2,407,804 2,511,684 80,842 2,255 190,841 273,938 

The 10.5% Senior Notes 2010 are shown at the aggregate principal amount of £75,000,000 less unamortised issue costs. 

Interest is calculated at 10.5% and paid semi-annually. The Notes mature on 31 July 2010. 

Borrowing facilities 

The Group had £36,484,000 (2000: £8,931,000) of undrawn borrowing facilities available at 31 December 2001 in respect of 

which all conditions precedent had been met at that date. The total facility is £45,000,000 of which £15,000,000 is renewable 

on 10 August 2003 and £30,000,000 (which was not used at 31 December 2001) is renewable on 31 March 2002. 

Fair values of financial assets and financial liabilities 

There are no significant differences between the market value and the book value of the financial assets and liabilities held 

on the balance sheet at 31 December. The fair value of short-term deposits, loans and overdrafts approximates the carrying 

amount because of the short maturity of these instruments. The fair value of the Notes has been estimated using quoted 

market prices as at 31 December 2001. In the case of bank loans and other loans, the fair value approximates the carrying 

value reported in the balance sheet as the majority are floating rate where payments are reset to market rates at intervals 

of less than one year. 

Currency exposures 

There were no significant unhedged currency exposures held in the balance sheets of subsidiary companies and as a 

consequence no significant exchange gains and losses have been recognised in the results. The directors therefore believe 

that the exposures are not sufficiently material to warrant disclosure as required by FRS 13 ‘Derivatives and other Financial 

Instruments: disclosures’. 

Hedges 

The Group does not undertake any interest rate hedging. As described above the Group does enter into currency hedges. 

Gains and losses are recognised in the financial statements.



23 Provisions for liabilities and charges 

51 


Onerous Deferred 

contracts tax Other Total 

£’000 £’000 £’000 £’000 

At 1 January 2001 – 1,030 – 1,030 

On acquisition of G&FS (note 26) 8,698 1,640 5,543 1 5,881 

Exchange adjustments (107) – 10 (97) 

Charged to profit and loss account – (940) 835 (105) 

Utilised in year (2,527) – (2,898) (5,425) 

Transfer from/to profit and loss account – – (467) (467) 

At 31 December 2001 6,064 1,730 3,023 10,817 

Onerous contracts 

With the acquisition of G&FS the Group acquired an onerous lease provision relating to Hong Kong airport, which expires 

December 2002, and contracts relating to an abandoned software development project. 

2001 2000 

£’000 £’000 

Deferred taxation has been provided in respect of: 

Capital allowances (357) 1,030 

Short-term timing differences 2,087 – 

There is no deferred tax provision in the Company. 

1,730 1,030 

Deferred taxation in respect of earnings which are retained overseas is not provided for because the availability of double 

taxation relief will ensure that no tax will be payable on earnings remitted to the United Kingdom. 

There is no other material unprovided deferred taxation liability for the Group and Company.

52 




24 Cash flow from operating activities 

(a) Reconciliation of operating profit to operating cash flows 

2001 2000 

£’000 £’000 

Operating profit 34,983 7,132 

Depreciation charge (net of profit/loss on disposals) 14,157 2,028 

Deferred interest income amortisation (35,145) – 

Goodwill amortisation 18,460 1,948 

(Increase)/decrease in stocks (3,006) 483 

Increase in debtors (361,921) (56,297) 

Increase in creditors 335,315 48,888 

Decrease in travellers cheques awaiting redemption (17,586) – 

Exchange adjustment (617) (200) 

Net cash (outflow)/inflow from operating activities (15,360) 3,982 

(b) Reconciliation to net (debt)/cash 

2001 2000 

£’000 £’000 

(Decrease)/increase in net cash (3,095) 19,370 

Cash inflow/(outflow) from short-term deposits with banks (183,278) (71,680) 

Cash (inflow)/outflow from finance leases 1,323 1,099 

Cash (inflow)/outflow from borrowings – 31,233 

Net cash (outflow)/inflow before use of liquid resources and financing (185,050) (19,978) 

Acquisitions of deposits 1,402,456 (35,569) 

Acquisition of finance leases (2,949) – 

Other non-cash changes (332) (138) 

Exchange adjustments (22) 982 

1,214,103 (54,703) 

Net cash/(debt) at 1 January (54,703) – 

Net cash/(debt) at 31 December 1,159,400 (54,703)



25 Analysis of net (debt)/cash 

53 


Acquisition 

At 1 (excluding Other At 31 

January cash and non-cash Exchange December 

2001 Cash flow overdrafts) changes movements 2001 

£’000 £’000 £’000 £’000 £’000 £’000 

Cash in hand and at bank 28,394 15,700 – – 8 44,102 

Overdrafts (9,023) (18,795) – – (31) (27,849) 

(3,095) 

Deposits and money on call – (183,278) 1,402,456 – – 1,219,178 

Debt due after one year (71,819) – – (332) – (72,151) 

Debt due within one year – – – – – – 

Finance leases (2,255) 1,323 (2,949) – 1 (3,880) 

26 Acquisitions 

(54,703) (185,050) 1,399,507 (332) (22) 1,159,400 

Acquisition of Thomas Cook Global and Financial Services Group (G&FS) 

The Group purchased G&FS on 27 March 2001 for a total consideration of £487,634,000. The total adjustments required 

to the book values of the assets and liabilities acquired in order to present the net assets at fair values in accordance with 

Group accounting principles were £29,026,000, details of which are set out within this note, together with the resultant 

amount of goodwill arising. This has been accounted for as an acquisition. 

From the date of acquisition to 31 December 2001 the acquisitions contributed £228,124,000 to turnover, £13,270,000 to 

profit before interest and amortisation, £28,211,000 to profit before interest and £23,020,000 to profit after interest. G&FS 

contributed an outflow of £44,931,000 to the Group’s net operating cash flows, received £270,716,000 in respect of interest, 

utilised £15,097,000 in respect of taxation and utilised £6,799,000 for capital expenditure. 

In its last financial year to 31 December 2000 G&FS made a profit after tax and minority interests of £31,586,000. For the 

period since that date to the date of acquisition, G&FS management accounts show: 

Turnover 

£’000 

78,043 

Cost of sales (36,079) 

Net operating expenses (32,260) 

Profit before interest and taxation 9,704 

Net interest (1,702) 

Taxation and minority interests (2,629) 

Profit attributable to shareholders 5,373

54 




Net assets acquired 

Consistency of 

accounting Provisional 

Book value Revaluations policy Other fair value 

G&FS acquisition £’000 £’000 £’000 £’000 £’000 

Intangible fixed assets 646 – – – 646 

Tangible fixed assets 71,806 (22,485) – – 49,321 

Investments in associate undertakings 2,910 (653) – – 2,257 

Stock 51,683 – – – 51,683 

Debtors 255,939 – – 2,348 258,287 

Creditors (128,552) – – (9,244) (137,796) 

Travellers cheques awaiting redemption 

Taxation 

(1,486,377) – (7,942) – (1,494,319) 

– Current (14,514) – – 3,854 (10,660) 

– Deferred 1,917 – – (3,557) (1,640) 

Cash 44,484 – – – 44,484 

Overdrafts (27,955) – – – (27,955) 

Current asset investments 1,393,804 8,653 – – 1,402,457 

Net assets acquired 165,791 (14,485) (7,942) (6,599) 136,765 

Goodwill 350,869 

Consideration 487,634 

Consideration satisfied by: 

Cash 393,530 

Acquisition costs paid 16,233 

Net present value of deferred consideration 35,371 

Debt forgiven 42,500 

The book value of the assets and liabilities have been taken from the management accounts of G&FS at 27 March 2001 

(the date of acquisition) at actual exchange rates on that date. 

Revaluation adjustments in respect of tangible fixed assets result from the impairment review of certain computer hardware 

and software. 

487,634 

Revaluations of current asset investments reflects the adjustment to estimated realisable value. The estimated realisable value 

at the date of acquisition is based on the sale value immediately following the acquisition. 

The fair value adjustment for the alignment of accounting policies reflects the restatement of a component of the travellers cheque 

float write-back, in respect of travellers cheques not considered likely to be encashed, in accordance with the Group’s policies.



The fair value adjustment to creditors is primarily the establishment of provisions against onerous contracts. 

55 


The book values of the net assets acquired included provisions for reorganisation and restructuring costs amounting 

to £199,000. These provisions were established by G&FS and relate to an irrevocable reorganisation commenced by 

G&FS management before the acquisition. However, on review at the time of acquisition, the provisions were considered 

to be insufficient to cover the expected costs and have been increased by £1,578,000. 

27 Pensions 

The principal pension scheme in the UK is a defined contribution scheme, the assets of which are held separately from those 

of the Group in an independently administered fund. Overseas, the Group operates predominantly defined contribution 

schemes, however it does provide a defined benefit scheme in Canada. The total pension cost for all of the Group’s pension 

schemes in 2001 was £3.8 million (2000: £300,000). 

For the Group’s defined benefit scheme in Canada, a full actuarial valuation was carried out at 1 January 2001 by a qualified 

independent actuary. 

The total net pension cost of the defined benefit scheme was £291,000 (2000: £106,000). The cost is assessed in accordance 

with the advice of Towers Perrin, consulting actuaries. The latest actuarial valuation of the scheme was performed as at 

1 January 2001 using the Projected Unit Method. The principal assumptions adopted in the valuation were that, over the 

long term, the investment return would be 9.25% per annum and the rate of salary increase would be 4.5% per annum. 

At the date of the latest actuarial valuation, the market value of the assets of the scheme was £2,155,000 and the actuarial 

value of the assets was sufficient to cover 82.9% of the benefits that had accrued to members, after allowing for expected 

future increases in earnings. 

The Company contributes the minimum required under the Employee Retirement Income Security Act on an annual basis 

as calculated by the actuary. 

FRS 17 disclosure 

This valuation was updated as at 31 December 2001 as required by FRS 17. The major assumptions used by the actuary were: 

Rate of increase in salaries 4.0% 

Discount rate 7.25% 

Inflation assumption 2.5% 

The assets in the scheme and the expected rate of return were: 

Long-term rate 

of return at Value at 

31 December 31 December 

2001 2001 

£’000 

Equities 9.25% 2,031

56 




The following amounts at 31 December 2001 were measured in accordance with the requirements of FRS 17. 

Total market value of assets 2,031 

Present value of scheme liabilities (3,473) 

Deficit in the scheme (1,442) 

Related deferred tax asset (at 35%) 505 

Net pension liability (937) 

If the above amounts had been recognised in the financial statements the Group’s net assets and profit and loss reserve 

at 31 December 2001 would be as follows: 

Net assets excluding pension asset 38,640 

Pension liability (937) 

Net assets including pension liability 37,703 

Profit and loss reserve excluding pension liability 18,062 

Pension reserve (937) 

Profit and loss reserve 17,125 

28 Share capital 

£’000 

£’000 

Group and Company 

2001 2000 

Number of 2001 Number of 2000 

Shares £’000 shares £’000 

Authorised: 

Ordinary shares – £1 each 

Ordinary shares 1,000,000 1,000 1,000,000 1,000 

‘A’ ordinary shares 500,000 500 500,000 500 

1,500 1,500 

Allotted, issued and fully paid: 

Ordinary shares – £1 each 

Ordinary shares 606,334 606 606,334 606 

‘A’ ordinary shares 293,333 294 293,333 294 

900 900



57 


On 25 January 2001, Travelex Holdings Limited acquired all of the issued shares of Travelex plc, by issuing an equal number 

of shares in Travelex Holdings Limited to the shareholders of Travelex plc. The classification of and rights attaching to the share 

capital of Travelex Holdings Limited was not changed. 

The holders of ‘A’ ordinary £1 shares (3i Group plc) are entitled to a fixed dividend at a rate of 10% (net) per annum on the paid 

up amount including share premium. The holders of ‘A’ ordinary shares shall be entitled to a participating dividend equal to a 

sum which added to the aggregate fixed dividend payable in each financial year is equal to 8% of profit after tax, such dividend 

to accrue from 30 September 2003. The holders of the ‘A’ ordinary shares are also entitled to the same ordinary dividend as 

the ordinary shareholders on a pari passu basis. The holders of ‘A’ ordinary £1 shares may at any time, with the agreement 

of a qualified class majority, convert the whole of their ‘A’ ordinary £1 shares into a like number of £1 ordinary shares. 

29 Reconciliation of movement in equity shareholders’ funds 

Profit 

Share Share and loss Other 

capital premium reserve reserves Total 

Group 

At beginning of year 900 19,100 1,679 – 21,679 

Profit retained for period – – 17,150 – 17,150 

Exchange adjustment – – (767) – (767) 

Other movement (1) – (19,100) – 19,100 – 

At end of year 900 – 18,062 19,100 38,062 

Company 

At beginning of year – – – – – 

Profit retained for period – – 6,353 – 6,353 

Shares issued in year 900 – – – 900 

At end of year 900 – 6,353 – 7,253 

(1) The movement of £19.1 million from share premium reserve to other reserves reflects the reclassification of the share 

premium in Travelex plc (as presented as comparative information in accordance with merger accounting principles). 

30 Related party transactions 

Mr L M Dorfman is the controlling party, highest paid director and he has a continuous service contract with a notice period 

of 12 months. 3i Group plc own all ‘A’ ordinary shares and received a dividend totalling £33,200. Additionally 3i Group plc 

received a management fee of £12,000 in 2001.

58 




31 Capital and other financial commitments 

Group Company 

2001 2000 2001 2000 

£’000 £’000 £’000 £’000 

Contracts placed for future capital expenditure 

not provided in the financial statements 908 999 – – 

The Group has committed in a number of locations to undertake refurbishment of certain corporate office and bureaux 

premises. 

32 Contingent liabilities 

(a) The Company and Group have undertaken to make available such funds as certain subsidiary companies may require 

in order that they may meet the claims of third party creditors as they fall due. 

(b) The Group has given guarantees and counter indemnities to third parties of approximately £19 million to enable subsidiaries 

to obtain facilities. Counter indemnities amounting to approximately £14 million, have been given to banks, which have given 

guarantees in respect of the Group’s due performance of its obligations in the normal course of business. 

(c) Pursuant to a guarantee facility agreement with Barclays Bank, we have agreed to reimburse Barclays Bank for all calls made 

on the performance of guarantees. The amount of obligations guaranteed by Barclays Bank cannot exceed £1.5 billion. 

(d) At 31 December 2001, there is a contingent liability for the Group of £113 million, representing travellers cheques issued 

which in the opinion of the directors will not be encashed. The contingent liability of the Company is nil. 

(e) The Group is currently contesting a small number of legal claims, which have arisen during the normal course 

of business. The directors have been advised by their lawyers that the estimated maximum aggregate exposure 

is approximately £500,000.



33 Principal operating companies 

59 


The principal subsidiary undertakings, associate undertakings and joint ventures of Travelex Holdings Limited at 31 December 

are shown below. 

Country of incorporation or registration Name Principal nature of business Direct % 

Subsidiary undertakings 

England Travelex plc Holding company 100% 

Travellers Exchange Corporation Ltd Services 100% 

Travelex Group Investments Ltd Holding company 100% 

Travelex UK Ltd Bureaux de change 100% 

Travelex Global Payments Ltd Financial services 100% 

Travelex Currency Services Ltd Currency fulfilment 80% 

Travelex Foreign Coin Services Ltd Foreign coin services 100% 

Travelex Worldwide Money Ltd 

Travelex Global & Financial Services Ltd 

Financial services 100% 

(formerly Thomas Cook Group Ltd) Bureaux de change 100% 

Interpayment Services Ltd Travellers cheques 100% 

Travelex Maritime Services Ltd 

Travelex France Holdings Ltd 

Bureaux de change 100% 

(formerly Thomas Cook Bankers France Ltd) Holding company 100% 

Thomas Cook Rand Travellers Cheque Ltd Travellers cheques 51% 

Euro Travellers Cheques Nederland Ltd 

Travelex Financial Services Ltd 

Travellers cheques 51% 

(formerly Thomas Cook Financial Services Ltd) Holding company 100% 

Australia Travelex (Investments) Australia Pty Ltd Investment company 100% 

Travelex Australia Pty Ltd 

Travelex Ltd 


(formerly Thomas Cook Ltd) Financial services 100% 

Travelex Global Payments Pty Ltd Financial services 100% 

Thomas Cook Australia Pty Ltd Travellers cheques 100% 

Interpayment Australia Pty Ltd 

Travelex Superannuation Pty Ltd 


(formerly Thomas Cook Services) Pensions 100% 

France Banque Travelex SA 

(formerly Thomas Cook Bankers France SA) Financial services 100% 

Travelex Change SA 

(formerly Thomas Cook SA) Bureaux de change 100% 

Travelex France SA Bureaux de change 100% 

Travelex SA 

Travelex Change SA 


(formerly Thomas Cook Change SA) Bureaux de change 100% 

Belgium Travelex Belgium NV Bureaux de change 100% 

The Netherlands Travelex Nederland BV 

(formerly Thomas Cook Nederland BV) Bureaux de change 100% 

Travelex Nederland Holdings BV 

(formerly Thomas Cook Nederland BV) Holding company 100%

60 




USA Travelex America Inc. Holding company 100% 

Thomas Cook Inc. 

Travelex Services Inc. 


(formerly Thomas Cook Services Inc.) 

Travelex Currency Services Inc. 

Currency fulfilment 100% 

(formerly Thomas Cook Currency Services Inc.) Financial services 100% 

Travelex Insurance Services Inc. 

Travelex Investments Inc. 

Travel insurance 100% 

(formerly Thomas Cook Investments Inc.) Investments 100% 

US Deposits Holdings LLC Holding Company 100% 

US Deposits LLC Investments 100% 

Canada Travelex Canada Ltd 

(formerly Thomas Cook Group (Canada) Ltd) Travellers cheques and financial services 100% 

Luxembourg Travelex TC Investments Sarl Financial services 100% 

New Zealand Travelex Financial Services NZ Ltd 

(formerly Thomas Cook Financial Services NZ Ltd) Bureaux de change 100% 

Germany Travelex Deutschland GmbH 

Travelex Financial Services GmbH 


(formerly Thomas Cook Financial Services GmbH) Financial services 100% 

Czech Republic Travelex Czech Republic AS 

(formerly Thomas Cook AS) Bureaux de change 100% 

Malta Travelex Malta Ltd 

(formerly Thomas Cook Malta Ltd) 

Travelex Financial Services Malta Ltd 


(formerly Thomas Cook Financial Services Malta Ltd) Financial services 100% 

Hong Kong Travelex Holdings (HK) Ltd 

(formerly Thomas Cook (HK) Ltd) 

Travelex Hong Kong Ltd 

Holding Company 100% 

(formerly Thomas Cook Hong Kong Ltd) 

Travelex Travel Services (China) Ltd 


(formerly Thomas Cook Travel Services (China) Ltd) Travel services 100% 

Thomas Cook Hung Kai Airport Currency Exchange Ltd Bureaux de change 75% 

Singapore Travelex Singapore PTE Ltd 

(formerly Thomas Cook (Singapore) PTE Ltd) 

Travelex Travel Services (Singapore) PTE Ltd 


(formerly Thomas Cook Travel Services (Singapore) PTE Ltd) Travel related 100% 

Associated undertakings 

Philippines Thomas Cook (Philippines) Inc Travel related 40% 

England MoneyGram International Ltd Financial Services 49% 

Joint ventures 

England Travelex ATMs Ltd Cash machines 50% 

Hong Kong Hong Kong and Shanghai Travelex Ltd 

(formerly Hong Kong and Shanghai Thomas Cook Ltd) Financial Services 50% 

The class of shares held are equity unless stated otherwise. 

The above information is only in respect of principal operating companies. A complete list of subsidiary and associated 

undertakings will be annexed to the next annual return.

Travelex offices worldwide 

Group Head Office 

65 Kingsway 

London 

WC2B 6TD 

T: +44 (0)20 7400 4000 

F: +44 (0)20 7400 4001 

European HO/Admin 

Worldwide House 

Thorpe Wood 

Peterborough 

PE3 6SB 

T: +44 (0)1733 502000 

F: +44 (0)1733 502033 

Canada 

Scotia Plaza 

100 Yonge St, 15th Floor 

Toronto 

Ontario 

T: +1 416 359 3700 

F: +1 416 359 3675 

www.travelex.com 

Designed by Smith&Milton T +44 (0)20 7608 4242 

Printed in England by Jones and Palmer T +44 (0)121 236 9007 

Asia 

Unit 2210-2218 

Level 22 Tower 1 

Millennium City 

388 Kwun Tong Road 

Kwun Tong 

Kowloon 

Hong Kong 

T: +852 2853 9888 

F: +852 2267 2866 

Australasia 

355 Bulwara Road 

Ultimo 

NSW 2007 

Australia 

T: +61 (0)2 8585 7000 

F: +61 (0)2 8585 7575 

USA 

1000 Franklin Avenue – Suite 100 

Garden City 

NY 11530 

T: +1 516 663 5200 

F: +1 516 663 5291 

2121 North 117 th Avenue – Suite 300 

Omaha 

Nebraska 

68164 

T: +1 402 4913 200 

F: +1 402 4910 016

Travelex Holdings Limited Annual report & consolidated financial ...

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