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 (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. 48
VisitBritain and VisitEngland Notes forming part of the financial statements for the year ended 31 st March 2010 (Continued) Segment information (Continued) VisitEngland England Marketing: This segment is all about Marketing England both Domestic & International Industry Services: Manages accommodation and tourist attraction grading schemes and provides advice and business support with the overall aim to improve the quality of tourism provision in England. Industry Leadership: VisitEngland’s role is to provide leadership across the sector and build on sound insights and robust data. Shared Services: This segment involves the business and administration services of VisitEngland. Measurement of operating segment income and expenditure, assets and liabilities The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Group evaluates performance on the basis of operating deficit i.e. excluding the effects of finance income and notional costs. There are no inter-segment revenue streams. Due to the nature of VisitBritain and VisitEngland’s business, assets and liabilities are not managed on a sector basis and consequently no allocation of assets and liabilities are made to individual operating segments. 49
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BRITISH TOURIST AUTHORITY TRADING AS VISITBRITAIN ...

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