Travelex Holdings Limited Annual report & consolidated financial ...

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54 Travelex Holdings Limited Notes to the financial statements continued for the year ended 31 December 2001 Net assets acquired Consistency of accounting Provisional Book value Revaluations policy Other fair value G&FS acquisition £’000 £’000 £’000 £’000 £’000 Intangible fixed assets 646 – – – 646 Tangible fixed assets 71,806 (22,485) – – 49,321 Investments in associate undertakings 2,910 (653) – – 2,257 Stock 51,683 – – – 51,683 Debtors 255,939 – – 2,348 258,287 Creditors (128,552) – – (9,244) (137,796) Travellers cheques awaiting redemption Taxation (1,486,377) – (7,942) – (1,494,319) – Current (14,514) – – 3,854 (10,660) – Deferred 1,917 – – (3,557) (1,640) Cash 44,484 – – – 44,484 Overdrafts (27,955) – – – (27,955) Current asset investments 1,393,804 8,653 – – 1,402,457 Net assets acquired 165,791 (14,485) (7,942) (6,599) 136,765 Goodwill 350,869 Consideration 487,634 Consideration satisfied by: Cash 393,530 Acquisition costs paid 16,233 Net present value of deferred consideration 35,371 Debt forgiven 42,500 The book value of the assets and liabilities have been taken from the management accounts of G&FS at 27 March 2001 (the date of acquisition) at actual exchange rates on that date. Revaluation adjustments in respect of tangible fixed assets result from the impairment review of certain computer hardware and software. 487,634 Revaluations of current asset investments reflects the adjustment to estimated realisable value. The estimated realisable value at the date of acquisition is based on the sale value immediately following the acquisition. The fair value adjustment for the alignment of accounting policies reflects the restatement of a component of the travellers cheque float write-back, in respect of travellers cheques not considered likely to be encashed, in accordance with the Group’s policies.
Notes to the financial statements continued for the year ended 31 December 2001 The fair value adjustment to creditors is primarily the establishment of provisions against onerous contracts. 55 Travelex Holdings Limited The book values of the net assets acquired included provisions for reorganisation and restructuring costs amounting to £199,000. These provisions were established by G&FS and relate to an irrevocable reorganisation commenced by G&FS management before the acquisition. However, on review at the time of acquisition, the provisions were considered to be insufficient to cover the expected costs and have been increased by £1,578,000. 27 Pensions The principal pension scheme in the UK is a defined contribution scheme, the assets of which are held separately from those of the Group in an independently administered fund. Overseas, the Group operates predominantly defined contribution schemes, however it does provide a defined benefit scheme in Canada. The total pension cost for all of the Group’s pension schemes in 2001 was £3.8 million (2000: £300,000). For the Group’s defined benefit scheme in Canada, a full actuarial valuation was carried out at 1 January 2001 by a qualified independent actuary. The total net pension cost of the defined benefit scheme was £291,000 (2000: £106,000). The cost is assessed in accordance with the advice of Towers Perrin, consulting actuaries. The latest actuarial valuation of the scheme was performed as at 1 January 2001 using the Projected Unit Method. The principal assumptions adopted in the valuation were that, over the long term, the investment return would be 9.25% per annum and the rate of salary increase would be 4.5% per annum. At the date of the latest actuarial valuation, the market value of the assets of the scheme was £2,155,000 and the actuarial value of the assets was sufficient to cover 82.9% of the benefits that had accrued to members, after allowing for expected future increases in earnings. The Company contributes the minimum required under the Employee Retirement Income Security Act on an annual basis as calculated by the actuary. FRS 17 disclosure This valuation was updated as at 31 December 2001 as required by FRS 17. The major assumptions used by the actuary were: Rate of increase in salaries 4.0% Discount rate 7.25% Inflation assumption 2.5% The assets in the scheme and the expected rate of return were: Long-term rate of return at Value at 31 December 31 December 2001 2001 £’000 Equities 9.25% 2,031
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