Annual Report 2006 - Venture Corporation Limited

notes to financial statements
December 31, 2006
36 ACQUISITION OF SUBSIDIARY
On November 29, 2006, the group acquired 100% of the issued share capital of GES for cash consideration of
$961,516,000. This transaction has been accounted for by the purchase method of accounting.
The net assets and intangible assets acquired in the transaction, and the goodwill arising, are as follows:
Acquiree’s carrying
amount before
combination
Fair value of
assets and liabilities
acquired
Fair value
adjustments
$’000 $’000 $’000
Net assets acquired:
Property, plant and equipment 63,245 - 63,245
Intangible assets - 168,483 168,483
Investment in joint venture 2,393 - 2,393
Other investments (1) 12,753 - 12,753
Deferred tax assets 631 - 631
Inventories 159,950 13,105 173,055
Trade receivables 103,339 595 103,934
Other receivables 3,497 - 3,497
Cash and bank balances 60,823 - 60,823
Trade payables (74,614) - (74,614)
Other payables (36,951) - (36,951)
Short term bank loans (26,180) - (26,180)
Income tax payable (2,145) - (2,145)
Deferred tax liabilities (577) (37,696) (38,273)
266,164 144,487 410,651
Goodwill 550,865
Total consideration, satisfied by cash 961,516
Net cash outflow arising on acquisition:
Cash consideration paid (961,516)
Cash and cash equivalents acquired 60,823
(900,693)
(1)
This includes an investment of $12,500,000 in a private equity fund which was disposed off to a former executive
director of GES subsequent to the year end at carrying value. Accordingly, the amount was classified as asset held for
sale as at year end.
Goodwill arising from the acquisition of GES is attributable to the anticipated profitability of the company’s original
design manufacturing of higher margin Point-of-Sales systems. In addition, opportunities to cross sell products and
services to an enlarged customer base, cost savings through economies of scale, consolidation of purchasing volumes
and better management of supply chain are expected to create synergies for future growth and expansion.
GES contributed $83,414,000 and $2,653,000 to the group’s revenue and profit for the year respectively for the post
acquisition period. The profit for the year is arrived at after accounting for amortisation of customer relationships (Note
15), realisation of inventories from fair value adjustments, interest expense from borrowings, and the release of deferred
tax liabilities (Note 21).
88 venture corporation limited