BRITISH TOURIST AUTHORITY TRADING AS VISITBRITAIN ...

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VisitBritain and VisitEngland Annual report and financial statements for the year ended 31 st March 2010 Pension Schemes Employee benefits, including pensions and other post retirement benefits are presented in these financial statements in accordance with I<strong>AS</strong> 19 ‘Employee Benefits’. Under I<strong>AS</strong> 19 the valuation of the main pension scheme, the British Tourist Boards Pension Scheme, VisitBritain’s share of the deficit was £19.282m as at 31 st March 2010 compared to £2.659m surplus last year. This scheme is a multi-employer pension scheme and in the previous years was not consolidated to the main financial statements, but as the actuary was able to split the share of each employer on consistent and reasonable basis, the current year deficit has been included to the financial statements. This deterioration in the scheme is due to significant changes in market conditions. In particular, the discount rate (based on AA bond yields) has come down from 6.7% to 5.5% leading to a significant increase in liabilities, with each 0.5% decrease adding nearly £11 million. At the same time the inflation assumption has increased from 2.65% to 3.4%, due to an increase in market expectations of future inflation. Again, each 0.5% increase in inflation adds nearly £11m to the liabilities. In overall terms these changes have added around £40m to the liabilities. This increase in liabilities has been partially offset by better than expected returns on the scheme assets, which lead to an increase in asset value of around £17m. Following negotiations with the Trustees of the Scheme, the employers have agreed a deficit recovery plan. The plan requires VisitBritain to pay, in proportion to its share of the deficit, 6% of pensionable payroll, VisitBritain’s estimated annual cost is £603k. The employer contribution in respect of future service will increase from the current 10% to 17.3% from 1 July 2010. VisitBritain also has an additional pension liability of £322k for pension payments to ex-chairmen which are unfunded and are included on the balance sheet. The US pension scheme valuation reported an increase surplus of £571k (2008/09 £422k) which was capped to £486k, the maximum amount that can be recognised equivalent to the future service costs. The employers’ contribution rate will continue to be nil in 2009/10 to utilise this surplus. Fixed Assets In accordance with Treasury guidelines, fixed assets have been revalued to their value to the business, using current replacement cost, by adjusting historic cost to current value using price indices. In 2009/10 the price indices were lower compared to the previous year which resulted in reduction in the revaluation. Therefore, a net adjustment of (£175k) has been recognised in these accounts by reducing the value of fixed assets and a corresponding decrease to the revaluation reserve. There were total additions of £304k to tangible fixed assets, of which £300k was funded from grant-in-aid specifically designated for capital expenditure by DCMS and the remaining amount funded by non-government funding. This figure was for additions to leasehold improvements of £304k, mainly for the refurbishment of the offices at Palace Street. Working Capital VisitBritain’s strategy is to continue to operate within its grant-in-aid allocation whilst taking into account the increasing amount of non-government funding being generated. As outlined above under “Financial Policy”, the result of the Comprehensive Spending Review was a reduction of the grant-in-aid for the years 2008/09 to 2010/11. Accordingly, VisitBritain’s plans and operations have been drawn-up on the basis of the reduced grant-in-aid but also taking into account the outcome of the British Tourism Framework Review. The stock value increase is mainly due to the increase in the commercial activities in relation to the opening of a number of additional online shops. The higher year end cash/bank balance is also due to increased foreign currency receipts from commercial activities, mainly the online shops (see note 19 & 21). Treasury Management In order to finance its overseas operations, VisitBritain has a requirement to purchase approximately £8m per annum of foreign currency; the biggest amounts being in US Dollars and Euros. The reduction in requirement from the previous year is due to reduced spend (following reorganisation of overseas networks in 2008/09) and the increase in retail revenue in foreign currency. VisitBritain has a Treasury Policy in place, which has been agreed by the VisitBritain Board and Audit Committee. The latter receives reports at each meeting on currency purchases and the outstanding position at that time. 8
VisitBritain and VisitEngland Annual report and financial statements for the year ended 31 st March 2010 Treasury Management (continued) To manage the risk of currency fluctuation, the policy sets out that foreign currency requirements sufficient to meet the fixed costs of overseas operations, but not more than 75% of total foreign currency required, are purchased at the start of the financial year. The balance is purchased during the financial year to allow for changes required between currencies and depending on activity and foreign currency income generated during the year. The decrease in interest received (see note 14) is due to the global reduction in interest rates. Creditor Payments Policy VisitBritain is a signatory to the Confederation of British Industry code of practice on supplier payment and is committed to the payment of its suppliers to agreed terms or within 30 days. From 1 st November 1998 the organisation has incorporated into this policy the regulations contained in the Late Payment of Commercial Debts (Interest) Act 1998. There were no claims for interest payment under the terms of this Act in this financial year. During 2009/10 - 83% (2008/09 - 81%) of suppliers’ invoices not in dispute were paid within 30 days of receipt. 9. PERSONAL DATA MANAGEMENT In April 2008, the Cabinet Office issued guidance on the reporting of personal data related incidents in the Management Commentary to Departments’ Resource Accounts for 2007/08. DCMS has indicated that it wishes such reporting to be included in the Annual Reports of its sponsored bodies and from 2008/09 onwards an explicit mention of the management of information risk will be made in the Statement of Internal Control. The disclosure of incidents which could create an unacceptable risk of harm may be excluded in accordance with the exceptions contained in the Freedom of Information Act 2000 or may be subject to the limitations of other UK information legislation. The disclosure required is in three areas: Summary of protected personal data related incidents formally reported to the Information Commissioner’s Office Summary of other protected personal data related incidents Number of incidents under the above categories since 2004. In 2009/10, VisitBritain has had no incidents covered by the first two paragraphs above and is not aware of any incidents in previous years which would result in security breaches. During the course of 2009/10 VisitBritain, in conjunction with its internal auditors, reviewed its existing Data Protection policies, procedures and recording to ensure they reflect the latest Cabinet Office guidance. 10. AUDITORS The audit of VisitBritain’s Statement of Accounts by the National Audit Office (NAO) enables the Comptroller and Auditor General to fulfil his statutory duty under the Development of Tourism Act 1969, to lay before Parliament certified copies of the annual accounts and his report. Deloitte Touche Tohmatsu in Stockholm audited the Swedish subsidiary, British Travel Centre AB in Stockholm (see note 18). The fees paid to the NAO and Deloitte for the audit services amount to £57.2k and £6k respectively. The NAO fee of £57.2k comprises £51k for the annual audit, £5k for International Financial Reporting Standards audit and £1.2k for the London Development Agency Grant audit work. There are no other services provided by the NAO or Deloitte. As Accounting Officer I confirm that: There is no relevant audit information of which the auditors are unaware I have taken all the steps I ought to ensure that I am aware of relevant audit information I have taken all the steps I ought to establish that VisitBritain auditors are aware of the information. 9
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