Travelex Holdings Limited Annual report & consolidated financial ...

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