Travelex Holdings Limited Annual report & consolidated financial ...

Notes to the financial statements continued
for the year ended 31 December 2001
33
Travelex Holdings Limited
(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.