Annual Report 2006 - Venture Corporation Limited

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notes to financial statements December 31, 2006 15 INTANGIBLE ASSETS The Company Computer software $’000 Cost: At January 1, 2005, December 31, 2005 and December 31, 2006 1,467 Accumulated amortisation: At January 1, 2005 546 Amortisation for the year 489 At December 31, 2005 1,035 Amortisation for the year 253 At December 31, 2006 1,288 Carrying amount: At December 31, 2006 179 At December 31, 2005 432 Customer Development Computer Relationships expenditure software Total $’000 $’000 $’000 $’000 The Group Cost: At January 1, 2005 - 23,184 15,874 39,058 On acquisition of a subsidiary - 1,895 - 1,895 Additions - 251 690 941 Exchange differences - 81 - 81 At December 31, 2005 - 25,411 16,564 41,975 On acquisition of a subsidiary 168,483 - - 168,483 Additions - 977 6,572 7,549 Exchange differences - (659) - (659) At December 31, 2006 168,483 25,729 23,136 217,348 Accumulated amortisation: At January 1, 2005 - 18,915 11,769 30,684 On acquisition of a subsidiary - 277 - 277 Amortisation for the year - 3,056 3,070 6,126 Exchange differences - 37 - 37 At December 31, 2005 - 22,285 14,839 37,124 Amortisation for the year 1,404 2,238 2,579 6,221 Exchange differences - (196) - (196) At December 31, 2006 1,404 24,327 17,418 43,149 Carrying amount: At December 31, 2006 167,079 1,402 5,718 174,199 At December 31, 2005 - 3,126 1,725 4,851 70 venture corporation limited
notes to financial statements December 31, 2006 15 INTANGIBLE ASSETS (Cont’d) The amortisation period for development expenditure and computer software is 3 years which approximates the useful lives of the intangible assets. The fair value of the customer relationships which arose from the acquisition of GES (Note 36) will be amortised over its remaining useful life of 10 years and the pro rated amortisation charge for the year of $1,404,000 has been recorded in the profit and loss statement. 16 GOODWILL The Group $’000 Cost: At January 1, 2005 75,748 Elimination of amortisation accumulated prior to the adoption of FRS 103 (9,187) Arising from acquisition of a subsidiary (Note 36) 12,525 At December 31, 2005 79,086 Arising from acquisition of a subsidiary (Note 36) 550,865 Arising from acquisition of additional equity interest in a subsidiary 464 At December 31, 2006 630,415 Accumulated amortisation: At January 1, 2005 9,187 Elimination of accumulated amortisation prior to the adoption of FRS 103 (9,187) At December 31, 2005 and December 31, 2006 - Carrying amount: At December 31, 2006 630,415 At December 31, 2005 79,086 Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (“CGUs”) that are expected to benefit from that business combination. The carrying amount of goodwill has been allocated as follows: 2006 2005 $’000 $’000 (a) GES International Ltd and its subsidiaries (single CGU) 550,865 - (b) Univac Precision Engineering Pte Ltd and its subsidiaries (single CGU) 53,046 53,046 (c) Venture Electronics Solutions Pte Ltd (single CGU) 10,635 10,635 (d) Scinetic Engineering Pte Ltd (single CGU) 12,525 12,525 (e) Others 3,344 2,880 630,415 79,086 The group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using post-tax rates that reflect current market assessment of the time value of money and the risks specific to the CGUs. The growth rates are based on management’s estimates and industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectation of future changes in the market. annual report 2006 71
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