BRITISH TOURIST AUTHORITY TRADING AS VISITBRITAIN ...

VisitBritain and VisitEngland
Notes forming part of the financial statements for the year ended 31 st March 2010 (Continued)
3 Financial instruments and risk management (Continued)
Foreign currency risk
Foreign exchange transaction risk arises when individual operations enter into transactions denominated in a currency other
than their functional 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 of the Committee on currency purchases and the outstanding position at that time. To
manage the risk of currency fluctuation, the policy requires that on production of the book keeping rates for the future financial
year, that forward foreign currency contracts will be placed on order to cover the infrastructure costs as listed. This figure
should not exceed 75% of the total actual requirements prior to the start of the financial year. The balance is purchased during
the financial year to allow for changes required between currencies and depending on the foreign currency income generated
during the year.
At 31st March 2010 there were commitments to purchase foreign currency ratio forward contracts with a guarantee of currency
to a total sterling value of £2.021m (2009 £8.415m). These contracts are based on forward option strike rates, if the strike rate
is achieved 100% is paid, if the strike rate is not achieved a guaranteed 25% to 30% is paid. The £2.021m sterling value
represents the guarantee of each contract. If all strike rates were achieved the value would equate to £7.221m. The
guaranteed values are EUR 1.65m, USD 0.9m and JPY 11.25m with the full strike rate values set at EUR 6.0m, USD 3.0m and
JPY 45.0m. Overall there was no material difference between the total value of these currency contracts at spot rates on the
statement of financial position date, and at the contracted forward purchase rates. The reduction in the purchase value of
forward contracts reflects the increase in cash receipts in foreign currency from the e-commerce activities worldwide.
4 Segment information
IFRS 8 ‘Operating Segments’ requires an entity to disclose information to enable users of its financial statements to evaluate
the nature and financial effects of the business activities in which it engages and the economic environments in which it
operates. VisitBritain overall has determined eight reportable segments (four each for VisitBritain and VisitEngland) that are
largely organised and managed separately according to a combination of nature of services provided and operational spend,
and geographical location based on the management information.
The main reportable segments are as follows:
VisitBritain
Britain Marketing: This segment is all about international marketing activities with the core objective of ‘inspiring travellers from
overseas to visit and explore Britain’;
Global Network & Retail segment is all about delivering a global network to support tourism promotion overseas, providing an
overseas office network for all the national and regional tourist boards and for the tourism industry. By sharing market
intelligence, customer insights, local contacts and operational and execution capabilities, VisitBritain helps its UK partners reach
overseas customers and together create substantial efficiency savings;
Championing Tourism: This is all about tourism and engaging industry and government in support of its growth. VisitBritain
worked with a number of partners during the year to move tourism up the political and economic agendas. Central to this work
was a new study by Deloitte to establish the economic contribution of the visitor economy, commissioned by VisitBritain in
consultation with the national boards;
Shared Services: This division involves the business and administration services of VisitBritain.
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