TRAVEL HOUSE OF AUSTRALIA PTY. LTD - REPORT
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1972
VICTORIA
REPORT
OF THE
INSPECTOR APPOINTED PURSUANT TO THE
PROVISIONS OF THE COMPANIES ACT 1961
TO INVESTIGATE THE AFFAIRS OF-
TRAVEL HOUSE OF AUSTRALIA PTY. LTD.
RETURN to an Order of the House
Ordered by the Legislative Assembly to be printed, 5th September, 1972.
By Authority:
C. H. RIXON, GOVERNMENT PRINTER, MELBOURNE.
C. No. 2.-8078 /72.-PRICE 30 cents3
The Honourable the Attorney·General-
SIR,
On the 1st August, 1972, I, Michael Wallace Adey of the Companies Office, 451 Latrobe·street,
Melbourne, was appointed under Section 171 (l) of the Companies Act 1961, to investigate, in
respect of the period commencing on the lOth November, 1970, and ending on the 31st July, 1972,
the following particular affairs of Travel House of Australia Pty. Ltd.-
(a) whether the company has carried on business in Victoria ;
(b) whether the company has virtually or in substance ceased or suspended the carrying
on of business in Victoria ;
(c) whether in the course of carrying on business in Victoria the company, incurred
obligations, arising out of or in connexion with the payment to it by members
of the public of sums of money, which have not been and will not be performed ;
and
(d) whether the company can or cannot pay its debts.
I have now completed my investigation and taking each matter separately submit the following
report:-
(a) Travel House of Australia Pty. Ltd. (hereinafter referred to as "the company") was
registered in Victoria on the lOth November, 1970. The first directors were James Todesco and
Dirck Floris Hagers described as solicitor and airline pilot respectively.
On the 31st May, 1971, Ronald John Bailey and John Reginald Rose, each described as
manager, were appointed directors of the company.
On the 1st November, 1971, Mr. Hagers was removed from the Board of Directors and was
no longer associated with the management of the company.
The primary object of the company was to act as a tourist and travel agent for-
(1) carriers of passengers by land, sea or air ; and
(2) hotels, motels and guest houses and to supply all other necessary services to
travellers.
The company pursued this object firstly through an office in the Lower Plaza, 131 Bourke·street,
Melbourne, then expanded until by the middle of 1972 the company was offering services to the
public through as many as seventeen offices throughout Australia, including five in Melbourne.
In addition the company had offices or agencies in London, Singapore, Kuala Lumpur,
Bangkok, New York, New Zealand and Amsterdam. (Appendix A).
The company carried on business in Victoria from the lOth November, 1970 until the 18th
July, 1972.
(b) On the 18th July, 1972, all offices of the company in Australia were closed to the public.
Shortly afterwards it was reported in the press that associated companies overseas had also ceased
business.
James Todesco (now known as James Todd), Chairman of Directors, remained overseas
and was not available as a witness to the inquiry. Ronald Bailey, the Managing Director, it was
reported to me, stayed in Melbourne at an undisclosed address until the end of July. At that time
he left Australia, it was presumed, to join James Todd in London, and therefore was not available
as a witness.
The third director, John Rose, was available and was called as a witness to this inquiry.
Mr. Rose has stated that all the offices and agencies in Australia have ceased business with
the exception of Economy Travel in Perth. The manager of that agency was considered self·employed
and was paid on a commission basis. Thus, Travel House of Australia Pty. Ltd. was not that
agency's only source of business.
Graham William Behrendorff also appeared as a witness to this inquiry. He was appointed
as head financial accountant of the company on the 15th May, 1972, and it was intended that he
become secretary of the company. This latter appointment did not eventuate due to Mr.
Behrendorff's dissatisfaction with the management of the affairs of the company and the reluctance
to follow his accounting advice. Mr. Behrendorff did however, remain with the company until it
ceased business, primarily to assist the accounting firm, Hungerford, Spooner and Kirkhope, prepare
a report on the financial position of the company as at the 23rd June, 1972. (Appendix B).
The company was suffering greatly from the lack of liquidity and the balance·sheet produced
by Hungerford, Spooner and Kirkhope was to be used to encourage investment in the company,
particularly by Cathay Pacific Airways Ltd., already the company's largest creditor.
The investment did not take place with the result that the company outdistanced its credit
resources and was forced to cease business.4
(c) To understand the company's outstanding obligations to the public it is necessary to
examine the procedure followed by the company in arranging travel for its customers.
A charter passenger travelling from Australia to London via Singapore would pay his full
return fare to the company. He would however, be issued with tickets to Singapore or London
only and issued with a voucher or vouchers entitling him to tickets for the second leg or the return
journey to Australia.
The vouchers could be handed to Travel House Corporation Pte. Ltd. in Singapore and
Tobar Travel (U.K.) Ltd. in London. These associated companies of Travel House of Australia
Pty. Ltd. would then, in return for the voucher, obtain and pay for tickets for the passenger and should
rightly charge the cost to Travel House of Australia Pty. Ltd.
This method has the advantage of retaining deposits in the bank and receiving interest on such
moneys until required. Due to the declining profitability of the company this money was being
eroded by overhead expenses and in an increasing vicious circle it is apparent that payments in
advance by prospective passengers were financing the return of passengers to Australia from
London and Singapore.
The company eventually was forced to seek credit facilities from air and shipping companies
and finally, requiring a large investment of funds in the company which did not eventuate, was
forced to cease business.
Many passengers were caught in Singapore and London holding vouchers which could not
be converted into tickets.
Accurate figures may never be known, as to the number of persons involved who may be
holding vouchers nor the financial liability incurred to those persons, due to the lack of financial
control by the company.
Reports from overseas indicate that many hundreds of persons have been affected either
by holding vouchers or having made payments or part-payments in advance to agencies of the
company overseas.
In Victoria, on the 12th July, 1972, an account styled "Passenger Trust Account" was
opened by the company on the advice of the consulting accountants. Into this account, up until
the time the company ceased business, amounts totalling $84,184.33 were deposited.
Mr. Rose has stated that that amount represents payments from some 400 prospective
passengers and he is aware that only approximately six passengers have received any benefit.
Certain expenses of the company have been met from this account and the balance at this date is
$64,141.31.
There is doubt that this account can be considered a valid trust account. At best, certain
prospective passengers whose funds are held in this particular account could have the greater part
of their moneys returned and in the adverse situation approximately 400 more persons must rank
with the other creditors of the company.
Moneys received as deposits or fares in advance before the 12th July, 1972, were paid into a
Deposit Holdings Account or a Fares Account, which at this time totals slightly in excess of
$7,000.
Members of the Victoria Police Force have received complaints from and subsequently
interviewed over 200 persons who have suffered losses due to the company ceasing business.
It is a fact therefore, that in the course of carrying on business, specifically in Victoria, the
company has incurred obligations, arising from the payment to it by members of the public of sums
of money, which have not been and will not be performed.
The financial extent of these obligations is estimated as at the 31st July, 1972, at $663,816.
(d) As previously stated the accounting firm, Hungerford, Spooner and Kirkhope was
engaged by John Rose to determine the financial position of the company as at the 23rd June, 1972.
The statement produced showed that the company had a deficiency of assets over liabilities
of $548,763. However, the statement contained in effect, the following reservations :-
(1) The statement had not been audited.
(2) No reliance could be placed on the financial records of the company and therefore,
at best, the estimated figures can only be taken as an indication of the situation.
(3) The statements do not include the assets and liabilities of either T obar Travel (U.K.)
Ltd. or Travel House Corporation Pte. Ltd.
(4) They have been unable to ascertain whether or not liabilities have been incurred by
either Tobar Travel (U.K.) Ltd. or Travel House Corporation Pty. Ltd. on
behalf of the company.5
The statements were prepared under the supervision of John 0. Miller, B.A., B.Com.,
F.A.S.A. and chartered accountant, a partner of the firm Hungerford, Spooner and Kirkhope,
and John M. Opie, chartered accountant, an employee of that firm.
Both persons have appeared as witnesses to this inquiry and have stated that they are of the
opinion that the figures produced are the most accurate available considering the state of the
financial records and the information available at that date. ·
John G. Whelan, F.A.S.A., State Audit Inspector, has also examined the books and records
of the company and made comparisons with the statements produced by Hungerford, Spooner and
Kirkhope. As a witness to this inquiry he has stated that in his opinion the statements as at 23rd
June, 1972, show as true and fair a view of the company's affairs as circumstances allow. I have
examined personally, the accounting and other records of the company and agree that the statements
produced by Hungerford, Spooner and Kirkhope, taking into consideration the listed reservations,
shows as true and fair a view of the company's financial position, at the 23rd June, 1972, as
circumstances allow.
These statements therefore, may be used as a commencing point to ascertain the company's
position as at the 31st July, 1972. An examination of the company's activities between the 24th
June and 31st July, 1972, together with other information that has come to my knowledge allows
the following comments to be made
(1) The company appears to have one subsidiary, Bluebird Express Pty. Ltd., registered
in South Australia. All other agencies in Australia are registered or unregistered
business names with proprietors, in my belief, similar or related to the directors
of the company.
The agency in London, Tobar Travel (U.K.) Ltd., is a company with the same
Board of Directors and in Singapore, Travel House Corporation Pte. Ltd., a
company with the same directors but includes two other directors to comply
with local legislation.
The situation in other countries is not known accurately but appears to be
similar. Thus, with the exception of Bluebird Express Pty. Ltd., all other
agencies are separate entities and not legally part of the company. Thus, their
financial affairs should in no way be consolidated with the financial affairs of
Travel House of Australia Pty. Ltd., other than to bring to account amounts
owing from one entity to another.
The directors, however, chose to see Travel House of Australia Pty. Ltd. as
the head office of a business spreading throughout Australia and overseas. In
relation to receipts from and payments to these " branch " offices all financial
affairs were combined as if only one company existed.
The agencies in Australia, treated as an extension of the company, were
staffed by employees of the company and these employees were paid directly
by the company, by cheque, from the head office in Melbourne.
Rent payable on offices used by these agencies in Australia was also paid
directly by the company and in the instances brought to my attention, the
lease was in the name of the company.
These agencies, having the main operating expenses paid directly by the
company, generally managed other expenses in an unprofessional manner.
Receipts, by way of fares, collected were remitted by bank transfer to
Melbourne two or three times per week. It can be seen that in some instances
moneys required by the agency for matters ranging from petty cash to
purchases of equipment were deducted from the remittance. Whatever brief
description, if any, was attached was not taken into consideration when advice
of the remittance was received at head office.
In other instances, claims from agencies for reimbursement of a list of
assorted payments to creditors was all charged to the Fares Account.
An extension of this type of accounting includes amounts remitted overseas
by telegraphic transfer and charged to fares. No attempt is made to reconcile
this account or distinguish between fares, hotel accommodation, refunds and
other expenses.
Due to the combined interests of the directors it was the consolidated
financial position that was required when Hungerford, Spooner and Kirkhope
were engaged. It was necessary for that firm however, to endeavour to prepare
an individual financial statement for Australia, and obtain statements from
London and Singapore to determine inter-company debtors and creditors.
The result was found to be that the company's records could not be
relied upon, an unsubstantiated statement was received from London
(Appendix C) and Singapore could not produce such a statement, (Appendix
D).6
(2) According to information supplied by Tobar Travel (U.K.) Ltd., that company
owes Travel House of Australia Pty. Ltd., $A245,852 which amount is reflected
in the estimated deficiency of the London company of $A318,756.
Despite such a large amount presumed to be owing the company was still
remitting large amounts to London, on account of fares until late in June,
1972.
The estimated financial position of Tobar Travel (U.K.) Ltd., shows assets
totalling only $A24,716. Therefore, although no reliance can be given to the
amount of $A245,852 owing to Travel House of Australia Pty. Ltd., such
amount as is owing is almost certainly irrecoverable.
(3) The state of the accounts between Australia and Singapore is an unknown
quantity. Mr. Rose has stated that it was usual to remit less money to
Singapore on account of fares, accommodation and other expenses than was
required by Singapore. Thus, the company most probably is in debt to
Travel House Corporation Pte. Ltd. in Singapore.
(4) Between the 24th June and the 31st July, 1972, the company received income of
$257,505. From this amount payment was made on fares, wages and other
expenses to the extent of $219,213 which was an overall improvement in the
cash position of $38,292.
However, against this, in the Passenger Trust Account alone, there is a
liability of $81,167 to be brought to account as fares received in advance.
(5) Taking into consideration the two other bank accounts operated by the company,
the current liability for fares paid in advance may be ascertained as follows:-
$
Account in balance-sheet as at 23rd June, 1972 (estimated) 566,311
Plus fares received 24th June to 31st July, 1972 257,505
823,816
Less amounts expended on fares and refunds in that period :
cannot be accurately ascertained but would not exceed 160,000
Fares paid in advance as at 31st July, 1972 (estimated) 663,816
This amount, all things considered, should reflect financially, the company's
obligations to the public which cannot now be performed.
(6) The directors of the company were responsible for importing into Australia four
motor vehicles, purchased cheaply on the second-hand market in the United
Kingdom but having considerably more value in Australia.
The vehicles are two Jaguar 3 · 8 saloons and a Jaguar E type purchased
through Tobar Travel (U.K.) Ltd. and an Aston Martin, purchaser unknown.
The vehicles were all used by directors of the company when in Melbourne
and are still in their possession.
Taking into consideration that the freight on these vehicles, although
charged to the Directors' Loan Accounts, was paid by the company ; the
Aston Martin it is alleged, was assigned to the company by James Todd to support
his loan account and that Tobar Travel (U.K.) Ltd., may owe moneys to the
company, it follows that the company may have some claim to these vehicles.
(7) It is known that expenses such as rent and wages, incurred by offices throughout
Australia, were paid directly by the company. Other expenses in many instances
were deducted from the amount remitted to the company in respect of fares.
It is possible therefore, that office furniture and equipment exists in these
offices that has been purchased with the company's money and has not been
brought to account as an asset of the company.
(8) In the financial statement, prepared by Hungerford, Spooner and Kirkhope, appears
an asset styled "Advances (Unsecured) $57,119 ".
On the testimony of Mr. Rose, the bulk of this amount must be considered
as irrecoverable as it consists of $21,710, advanced to an associated company,
Credivit (Aust.) Corporation Pty. Ltd., having the same directors as Travel
House of Australia Pty. Ltd., and $16,000 advanced to G. Wills. This person
is a shipping agent in Perth and it is most likely that this advance has been eroded
by expenses connected with the chartered vessel " Kota Singapore ".
(9) Similarly, an account styled "Directors' Loans-$45,822" also appears as an asset.
Two of the directors are overseas and the financial position of all three directors
is unknown. This asset must also be considered uncertain to be recovered.7
(10) Mr. Rose has testified that certain commissions, rightfully earned by the company,
were for a period of approximately three months prior to his commencement with
the company, paid into the private bank accounts of James Todd and Dirck
Hagers overseas. The amount involved is approximately $50,000.
(11) Taking into account the considered opinion of witnesses to this inquiry and a
personal examination of the company's records, the following itemized matters
contributed mainly to the deficiency of the company-
(i) The company was not operating on the basis of a straight commission,
costs being a basis of negotiation with the air and shipping companies.
Due to mismanagement the company was not achieving gross profit
margins sufficient to cover operating costs.
The company could expect to earn commissions up to 15 per cent.
but a calculation based on the company's records reveals that for the
period July, 1971 to June, 1972, a commission of only 3 per cent. was
earned on total fares.
The company's only source of income was commissions and to
illustrate this position clearly the gross profit, which represents the
commission received by the company, of $113,662 for the year ended
23rd June, 1972, should be compared with wages and directors'
salaries-$209,722, and advertising-$167,020.
(ii) The accounting records were insufficient and unreliable for an operation
of this scale. That they were balanced only on a yearly basis further
obscured the true position. Mr. Behrendorff considers that he was
appointed because directors had doubts as to the accounts and finances
of the company and instructed him to install an accounting system.
(iii) The attempt to profit by chartering a vessel to carry passengers between
Australia and Singapore was a costly exercise to the group as a whole.
The amount contributed by the company cannot be accurately ascertained
as in most cases it was charged to the Fares Account, but in all the cash position
of the group was depleted by well over $100,000.
Thus, with payments to creditors being deferred, the daily operating
costs of the company's offices and the daily operating costs of the vessel, the
financial situation of the company has been deteriorating on a daily basis since
the estimated position at the 23rd June, 1972, until the company ceased business.
Particularly in the last few weeks of the company carrying on business,
many summonses were received and as at the 24th August, 1972, three creditors
had obtained judgments against the company.
I am of the opinion that to ascertain the true deficiency of the company
a complete reconciliation would be necessary with all offices and associated
companies in Australia and overseas.
However, I am confident that such a reconciliation would not materially
affect the overall situation and would certainly not erase the large deficiency of
Travel House of Australia Pty. Ltd.
Excluding the amount that Tobar Travel (U.K.) Ltd. may owe the company
and any amount that the company may owe Travel House Corporation Pte. Ltd.
and excluding the deficiencies of those associated companies but taking into
consideration the afore-mentioned adjustments necessary to the financial
statement as at 23rd June, 1972, the deficiency of assets over liabilities of the
company is at best approximately $650,000 and at worse, well over $700,000.
The creditors of the company are estimated at $774,000 whilst the realizable
assets of the company will be less than $100,000. Therefore, the company
cannot pay its debts and in a liquidation, after expenses of the liquidator are met,
would pay less than 13 cents in the dollar.
There is a possibility however, that the company structure could be sold
to a company interested in the accumulated losses as a taxation benefit.
In conclusion, I must report that there are many unanswered questions concerning the
financial and other affairs of the company. Many of the answers to these questions lie outside
Australia.
However, I have satisfied myself, within the terms of my appointment that the company :-
(1) has carried on business in Victoria ;
(2) has now ceased carrying on business in Victoria ;8
(3) has in the course of carrying out business in Victoria, incurred obligations, arising
out of or in connexion with the payment to it by members of the public of
sums of money, which have not been and will not be performed ; and
(4) cannot pay its debts.
Thus, I report that I am of the opinion
(i) that the company cannot pay its debts and should be wound up ; and
(ii) that it is in the interests of the public and the creditors that the company should
be wound up.
M. ADEY, A.A.S.A., R.C.A.
30th August, 1972.9
APPENDICES.
A. Chart of the organizational structure prepared by the company.
B. Financial statements of the company as at 23rd June, 1972, prepared by Hungerford,
Spooner and Kirkhope.
C. Contents of telegram from London on 7th July, 1972, detailing estimated financial position
of Tobar Travel (U.K.) Ltd. as at 30th June, 1972, and assumptions made.
D. Balance-sheet consolidating the Australian, United Kingdom and Singapore financial position
as at 23rd June, 1972, and notes forming part of that balance-sheet, prepared by the
company.APPENDIX A
TRAVEL HOUSE OF AUSTRALIA PTY. LTD.
ORGANIZATION STRUCTURE 16th 1972.
Board of Directors
James Todd
John Rose
Ron Bailey
Ian Rinder
-'"'"rPtnrv : G. Behrendorff
Resident Director Director Director Manager
Australia South East Asia U.K. & Europe U.S.A.
Ron Bailey, Ian Rinder John Rose James Todd Peter Rudge
Secretary: Jan Williamson
.--------------------------------------------------------,
I
I Ross Tumbull
I ,_.
I
r ·~~-
0
company Secretary Communications Manager Financial Manager Reservation Manager Marketing Manager
G. Behrendorff Alice Voss G. Behrendorff !an Cross Des Lundmark
Establishme11t Officer: P. Trewick Secretary: Sue Gray
Establishment Officer: R. Wilkinson
Secretary: Leoni Wall
I I I
EXECUTIVE DIVISION COMMUNICATIONS DIVISION FINANCIAL DIVISION RESERVATIONS DIVISION MARKETING DIVISION
--------, -----~-------,--------r--------+--------.--------,,-------~
Office of Office of Office of Perso . 1 Disburse- Record Scheduling Shipping Jet Public
Board of Company General nne ments lnfo.
Secretary Manager Dept. Dept. Dept. Dept. Dept. Dept.
Directors
--~----~--~---------+
N.S.W.
~
N.Z.
- I I' !0 !0 ~ ~
.,-;;; QLD.
r:
=§Li~~ ~ ~
.5
c ...MARKETING STRUCTURE
M"'keting Managa J
Des Lundmark
Secretary : Sue Gray ~~~
I Head Office I
I
Establishment Officer
Roy Wilkinson
Secretary: Leoni Wall
I
I I I I I I
A.C. T. Mktg. Manager N.S. W. Mktg. Manager QLD. Mktg. Manager S.A. Mktg. Manager I V/C. Mktg. Manager W.A. Administration W.A. Mktg. Manager
Terry Brown
Capital Travel Centre
Terry Brown
Space Travel
Eddie Stoyle
Crest Travel
Bev. Cobb
Bluebird E): press P/L
Bob Curtin
London Arcade Travel
Ted O'Connor
~~~~~~~·····
Bernie Rose
....
Travel House of Aust.
~~- .... - --
Manager Brian Mills Manager Barry Burns Manager Eddie Stoyle Manager Bev. Cobb Manager Karen Cower Denise Holt Manager Bernie Rose
Cheryl Knight Shaun Bretnall Lisa Bonutto Gus Capogreco Keith Davidson Cheryl Reid M. Gardner
Yvonne Lloyd Julie Flannagan Robyn Mathews Heather Sprunt R. Gardner
Linda Newman Barbera Rinder -·· K. Motteram
Wynyard Travel Jan Ardley (P/T) Travel House of Aust.
Manager John Baillie Travel House of Aust. , Manager Penny Jackson . St. George Travel
Glenda O'Donohue Travel House of Aust. Manager Steve Wisby
Dennis Whiteman
Manager Noel Baker Evelyn Scheltus Chelsea Travel
John Evans
Marie Cufo
Christine Phillips Economy Travel
Pacific Cruise Centre
....
Manager Helmut Saul
~~-
Constantine Krokas Trans Global12
APPENDIX B.
7th July, 1972.
Mr. J. Rose,
Travel House of Australia Pty. Ltd.,
14 Lansdowne Street,
East Melbourne, 3002.
Dear Sir,
In accordance with your instructions we have prepared and enclose a statement of estimated
assets and liabilities of Travel House of Australia Pty. Ltd. as at 23rd June, 1972, and a statement of
estimated income and expenditure of the company for the period Ist July, 1971, to 23rd June, 1972.
We bring to your attention the following reservations regarding these statements :-
(a) These statements have been prepared from the financial records of the company and have
not been audited by us.
(b) From our work in preparing the statements we are of the opinion that no reliance can be
placed on the financial records of the company and therefore, at best, the estimated
figures referred to in these financial statements can only be taken as an indication of
the situation.
(c) The statements do not include the assets and liabilities of either Tobar (U.K.) Ltd. or
Travel House Corporation Pte. Ltd.
We have been unable to ascertain whether or not liabilities have been incurred by
either of these companies on behalf of Travel House of Australia Pty. Ltd.
We now set down comments on certain accounts-
Liabilities.
Bank overdrafts.
We have reconciled these accounts with bank statements as at 23rd June, 1972, but
we have not obtained the respective bank certificates.
7th July, 1972.
Mr. J. Rose,
We have been informed by the company that these accounts are unsecured but
this has not been confirmed by us.
Deposits and fares received in advance.
This account represents fares and deposits paid by passengers who have not yet
travelled. This information has been supplied to us by the respective branches and we
have been unable to reconcile these branch returns with the head office records.
Assets.
Deposits.
Being deposits paid to S.E.C. $50 and Wilkinson Advertising Agency $4,000. We
have not confirmed these deposits and we do not know whether they are recoverable.
Advances.
Being advances to the following :-
$
Credivit (Aust.) Corporation Pty. Ltd ... 21,710
L. Roberts 500
I. Cross 250
T. Brown 150
T.I.L. 8,413
Faun 10,096
G. Wills 16,000
57,119
We have not confirmed these advances and we do not know whether they are
recoverable.
Directors' loan account.
We are unable to say whether or not these are advances to directors or whether
they are proper expenses of the company. We do not know whether they are recoverable
either wholly or in part ; nor do we know to which directors the loan account applies.
Investments at cost.
Being shares in public companies purchased from directors. We have not
determined the market value of these investments nor sighted certificates for the shares.13
APPENDIX B-continued.
7th July, 1972.
Mr. J. Rose,
Fixed assets.
These have been arrived at using the depreciation schedule prepared as at the
30th June, 1971, adjusted for additions referred to in the books of account.
The provision for depreciation is an estimate only.
We have not confirmed either the cost or existence of these assets.
Yours faithfully,
HUNGERFORD, SPOONER AND KIRKHOPE.
Partner.
(Unaudited)
STATEMENT OF ESTIMATED LIABILITIES AND ASSETS AT 23Ro JUNE, 1972.
$ $
Share capital and reserves-
Authorized capital 10,000
Deficiency of share capital-
Issued and paid-up capital 4,000
Accumulated loss 552,763
548,763
Represented by-
Current liabilities-
Bank overdrafts-
C.B.A. No. 2 Account
C.B.A. General Account 2,174
C.B.A. Deposit Holdings Account 6,531
Deposits and fares received in advance 566,311
Trade creditors and accrued expenses 108,217
683,233
Deduct-
Current assets-
C.B.A. Fares Account 9,674
Deposits .. 4,350
Advances (unsecured) 57,119
Directors' Loan Accounts 45,822
116,965
Investments, at cost 3,110
Fixed assets, at cost-
Motor vehicles 700
Office furniture and equipment 14,296
Carpet and curtains 598
15,594
Accumulated depreciation 1,199
14,395
134,470
Excess of liabilities over assets 548,763
----
This is the statement referred to in our report of 7th July, 1972.14
(Unaudited)
STATEMENT OF ESTIMATED INCOME AND EXPENDITURE AT 23Ro JUNE, 1972.
$ $
Profit (loss) on operations .. 113,662
Singapore expenses 400
Canberra expenses .. 62
Adelaide expenses 41
Perth expenses and suspense {$1,700) 38,452
Sydney expenses .. {900)
New Zealand expenses 2,000
Accountancy and audit 2,867
Advertising 167,020
Bank charges 19,205
Commission 31,373
Depreciation 1,050
Freight .. 1,310
Hire of staff 1,534
Hire-purchase commitments
Insurance .. 535
Legal fees 720
Motor vehicle expenses 215
Office expenses 4,858
Printing and stationery 13,532
Rates 492
Rent-premises and equipment 48,419
Repairs and maintenance 3,238
Staff amenities 808
Sundry expenses .. 9,624
Telephone 58,504
Travelling allowances 4,511
Travelling and entertainment 19,524
Wages and directors' salaries 209,722
Light and power .. 1,525
640,641
Loss for year 526,979
Accumulated loss brought forward 25,784
Accumulated loss at 23rd June, 1972 552,763
This is the statement referred to in our report of 7th July, 1972.15
APPENDIX C.
lOth July, 1972
TELEGRAM from London-7th July, 1972.
Attention : Mr. John Miller.
Figures attached as requested but draw your attention to assumptions made. Definitely no audit
work possible in the time available. Records extremely poor to April, 1972 T.T. (U.K.) Ltd.
Statement of affairs 30th June, 1972-
£ £
Fixed assets at depreciated values, furniture etc. 1,543
Motor vehicles 2,314
Current assets 3,857
Debtors' group .. 3,429
Others .. 2,884
----
6,313
Cash at bank 1,801
Cash in hand 86
8,200
Sub-total 12,057
Less liabilities-
Group 119,928
Others 35,595
133,523
Deficit .. 121,466
Share capital 1,996
Less deficit 123,462
Total 121,466
Assumptions made in preparation of above figures-
]. Share capital proceeds original credited to Australian current account.
2. Australia, New York, Amsterdam and Singapore current accounts not agreed and no
reconciliations ever attempted by the company.
3. Considerable supporting information to accounts, e.g. office stationery, expenses, etc. have been
estimated after reference to suppliers information as with Todd but not available to
company consequently no guarantee all liabilities included.
4. No asset verification undertaken, e.g. three Jaguar cars, of which two are in Australia.
5. Complete lack of detailed vouchers etc on petty cash expenditure most of which assumed
recoverable from Australia had ? being for Rose and
Todd.
6. Loss could be substantially overstated for period to 1 May, 1972 due to lack of detail of
analysis of purchases some of which could be chargeable to Australian account being
in redemption of voucher travel.
7. Salaries could be contingent liabilities for income tax of overseas staff seconded from other
offices not accepted as such by U.K. revenue authorities.
8. No audit work undertaken.
Attached figures based on books of account and information supplied by company officials. Do
you require any further information.
Signed,
BRIAN JONES.16
APPENDIX D.
TRAVEL HOUSE.
Co::-~soLIDATED STATEMENT or EsTIMATED AssETs AND LIABILITIES.
Notes Forming Part of the Attached Balance-sheet and to be Read in Conjunction with it :
(1) The notes to be read in conjunction with the Australian balance-sheet prepared by
Hungerford, Spooner and Kirkhope apply.
(2) The Singapore balance-sheet is prepared solely on information relating to creditors
provided by Singapore office together with estimates. The resultant deficiency is the
balancing item only. The operations of the Bangkok office have not been included.
(3) The London balance-sheet is as provided from London adjusted to include as a liability
the total amounts paid by passengers for future travel. This figure was supplied by
London accountants. As all advances overseas from Australia were treated in the
accounts as a payment for fares and therefore, reflected in the Australian accounts as
a deficiency, the liability to associated companies in London has been treated as
" income " for London as a basis for consolidation.
(4) Figures for Europe, New Zealand, U.S.A. operations generally have not been included.
(5) The consolidated balance-sheet cannot be presumed to be accurate and at best provides
an indication only.
(6) Assets in each country shown do not necessarily reflect the ownership of the asset.
(7) Currently there is an action for damages against Fitzpatricks of Singapore by Tobar
(U.K.) Ltd.
TRAVEL HOUSE.
CONSOLIDATED BALANCE-SHEET AS AT 23RD JUNE, 1972.
As Qualified by Accountants' Reports Associated Therewith and including Estimates.
Areas of Operation-Australia, Singapore, London.
Est. Aust. Est. Sing. ESt. Lond. Total
$ Aust. $ Aust. S Aust. $ Aust. $ Aust.
Shareholders' Funds-
Paid-up Capital 4,000 4,500 4,091 12,591
Accum. Deficiency (552,763) 2,700 (322,847) 245,852 (627,058)
(548,763) 7,200 (318,756) (614,467)
Represented by :
Current Liabilities-
Bank Overdrafts 8,705 8,705
Deposits and Fares in Advance 566,311 15,200 69,750 651,261
Trade Creditors, etc. 108,217 114,000 27,870 250,087
Assoc. Cos. Advance 245,852 (245,852)
683,233 129,200 343,472 910,053
Deduct:
Current Assets-
Bank Account 9,674 3,868 13,542
4,350 4,350
Deposits ..
Advances (Unsecured)
Directors' Loan Accounts
Ship-Advance, Hire, etc.
57,119
45,822
120,000
} 12,941 70,060
45,822
120,000
116,965 120,000 16,809 253,774
Investments (at cost) 3,110 3,110
Fixed Assets (net) 14,395 2,000 7,907 24,302
Total Assets .. 134,470 122,000 24,716 281,186
Excess of Liabilities over Assets (548,763) 7,200 (318,756) (614,467)
---
N.B.-The attached notes must be read in conjunction with this balance-sheet.
By Authority: C. H. RrxoN, Government Printer, Melbourne.You can also read
