Annual Report 2006 - 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.
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