BRITISH TOURIST AUTHORITY TRADING AS VISITBRITAIN ...

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VisitBritain and VisitEngland Notes forming part of the financial statements for the year ended 31 st March 2010 1 Accounting policies These financial statements have been prepared in accordance with the 2009-10 Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of VisitBritain, for the purpose of giving a true and fair view, has been selected. The particular accounting policies adopted by VisitBritain are described below. They have been applied consistently in dealing with items that are considered material to the accounts, unless otherwise stated. This is the first time that the Entity has prepared its financial statements in accordance with International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Details of how the transition from UK GAAP to IFRS has affected the group’s reported financial position are provided in note 33. Basis of preparation and going concern These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment and inventories. The financial statements have been prepared on a going concern basis, which assumes that the Group and the Entity will continue in operational existence for the foreseeable future. At the year end 31 st March 2010, the Group had a taxpayers’ deficit of £17,214,000 (Entity: taxpayers’ deficit of £17,259,000). The Board has considered the position of the Group and of VisitBritain, with respect to its obligations to ensure the business can continue in operational existence for the foreseeable future and confirms its approval to adopt the going concern basis for preparing these accounts. The main factors the Board has considered in reaching this conclusion are summarised as follows: The taxpayers deficit is considered to be primarily caused by the retirement benefit obligation and related actuarial losses recognised for the year in the amount of £21,474,000. Following negotiations with the Trustees of the scheme the employers’ have agreed a deficit recovery plan (see further explanation in note 28). The group remains cash flow positive and based on current forecasts and budgets it will continue to do so for the foreseeable future. VisitBritain is a non-departmental public body funded by the Department for Culture, Media and Sport (DCMS) on a three year cycle through the comprehensive spending review process. On this basis, the Board considers it appropriate to prepare the financial statements on a going concern basis. Basis of consolidation These consolidated financial statements present the results of the parent and its subsidiary undertaking (“the Group”) as if they formed a single entity. The VisitBritain group financial statements for 2009/10 consolidate the financial statements of the parent (VisitBritain) and its wholly owned subsidiary undertaking, British Travel Centre AB (Sweden), its accounts being made up to 31 st March. Intercompany transactions and balances between members of the Group are therefore eliminated in full. 40
VisitBritain and VisitEngland Notes forming part of the financial statements for the year ended 31 st March 2010 (Continued) Accounting policies (Continued) Property, plant and equipment Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs. Property, plant and equipment are subsequently carried at fair value and are subject to revaluation under Modified Historic Cost Accounting (MHCA) when material. Changes in fair value are recognised in the revaluation reserve. An appropriate transfer is made from the revaluation reserve to the income and expenditure reserve when property, plant and equipment are expensed through the comprehensive statement of income and expenditure (e.g. through depreciation, impairment or sale). The group has a policy of capitalisation of all property, plant and equipment over £5,000. Intangible assets (software both purchased and developed in house) are written off in the year of purchase. Depreciation Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items over their expected useful economic lives or to their estimate residual values. It is applied at the following rates:- Improvement to leasehold land and building - the lease term Fixtures and fittings - six years Computer equipment - three years Motor vehicles - four years Depreciation is charged for a full year in the year of purchase and no charge is made in the year of disposal. Inventories Inventories consist of publications, maps/guides, transport tickets and attraction tickets. Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Net realisable value is based on estimated selling price less further expected costs to be incurred to completion and disposal. Costs incurred in producing publications and promotional items for which no revenue is obtained are charged to the comprehensive statement of income and expenditure in the year in which they are incurred. Weighted average cost is used to determine the cost of ordinarily interchangeable items. Derivatives and financial instruments The disclosure of financial instruments complies with I<strong>AS</strong> 39 – “Financial Instruments – Recognition and Measurement” in so far as it applies to VisitBritain. Financial assets The Group has not classified any of its financial assets as held to maturity or available for sale. The group accounting policy for each category is as follows:- Fair value through profit and loss: This category comprises only in-the-money derivatives. They are carried in the statement of financial position at fair value with changes in fair value recognised in the comprehensive statement of expenditure in finance income. Other than derivative financial instruments which are not designated as a hedging instrument, VisitBritain does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit and loss. Receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables). They are recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue. 41
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BRITISH TOURIST AUTHORITY TRADING AS VISITBRITAIN ...

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