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Wh Smith

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Financial Accounting Group Assignment Module: ACFI 3201 Accounting 3 Name: Jiefeng LIU p09011270 Chen GONG p09011375 Ting ZHANG p09260791 Ling WANG p09259669 Time: 16 December, 2010 Summary With TUI Travel PLC group revenue for 2009 was slightly lower than the prior year at £13,863m (2008: £13,932m) and adjusted profit kept showed deficit in recent years. TUI Travel needs to take over a company (WH Smith Plc) which has a strong free cash flow to rebalance its financial weaknesses. Simultaneously, the operation principles by WH Smith are useful to TUI Plc to keep further profit growth and strong cash generation. This report aims to evaluate the necessity and feasibility for the acquisition of WH Smith by …show more content…

In addition, The Annual Report (2009) for TUI Travel Plc also set out the main reasons for the increase of net debt, compared with the amount of 2008: “...1) The cash impact of costs incurred to deliver the synergy benefits; 2) A working capital outflow driven by capacity reductions and the later booking curve; 3) Acquisitions made in the year; and an adverse impact arising on the translation of foreign currency denominated debt...” • Due to the Volcanic ash in the atmosphere, there is a reduction in the volume of holiday by widespread closure of European airspace. The extra cost, as welfare, compensation and repatriation, for the customers who were stranded in resort and the cancelled holidays is around £90m 2.3 Opportunity • Although the bad weather affects the profit and share price for the company, yet in the other side, it is also an opportunity for the company to establish and fixing its own brand consciousness. For instance, the bad weather will arouse the closure for the airport. At this time, compared with the small company, a large company such as TUI Travel Plc should supports satisfaction place for the retention customers, even pay particular amount of competence. This is an opportunity to apply their high level and quality service. • As the investment in the Russian market, the large potential of the Russian market can brings more opportunities for TUI Travel. The operational Highlights (Annual Report, 2009)

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