Vision International People Group Public Ltd announced the acquisition of 100% of the share capital of each of Vision Asia Limited Liability Partnership (“Vision Asia”), VIP Asia Limited Liability Partnership (“VIP Asia”) and Vision Pavlodar Limited Liability Partnership (“Vision Pavlodar”), collectively referred to “Vision Kazakhstan group”.
The decision to conclude the acquisitions was resolved during the Board of Directors meeting of Vision International People Group Public, which was convened on the 27th April, 2006, at the Company’s offices in Nicosia. The acquisitions have also been fully reviewed and approved by the Audit Committee and have been conducted purely on a commercial basis.
The acquired Companies are all limited liability partnerships registered and validly existing in Kazakhstan. Vision Asia is the wholesale company of the group and was incorporated on 25th November, 2003, VIP Asia and Vision Pavlodar are the retail companies and were incorporated on 23rd October, 2001 and 5th November, 2001, respectively. These companies operate, on an independent and exclusive basis, the downstream selling and distribution activities of Vision International People Group Public Limited in Kazakhstan via selling depots and, in the case of Vision Asia, a wholesaler operation.
Prior to the transaction, the acquired Companies were operating the aforementioned selling and distribution activities on the basis of signed franchise agreements with Vision International People Group Public Limited.
The acquisition of 100% of the share capital of each of the acquired Companies will be effected in cash using funds generated internally. The total purchase price payable as consideration for the transaction is US$200,000, which will be paid in full by no later than the 13th June, 2006. The effective date of acquisition is 1st January, 2006.
According to unaudited management accounts as at 31st December, 2005, Vision Kazakhstan group had a Net Asset position of US$179,778, which the Management believes is equal to the fair value of the net assets acquired.
The transaction results in an estimated goodwill of US$20,222 arising in the consolidated financial statements of Vision International People Group Public Limited. As per the Group’s accounting policies, this goodwill arising on business combination is recognised at the acquisition date as an asset and initially measured at its cost, being the excess of cost over the fair value of the identifiable assets, liabilities and contingent liabilities recognised.
The benefits accruing from this acquisition are important for Vision International People Group Public Limited and primarily relate to the following:
It will have control of the entire logistics and selling operations in Kazakhstan, which constitutes one of it’s key markets;
The direct involvement in the management of the wholesale and selling operations in Kazakhstan will, in Management’s opinion, strengthen the relationship extant between it and its Kazakh and other Central Asian distributors, hence providing the opportunity for both parties to share the same objectives and to improve the effectiveness, efficiency and customer service levels of the Kazakh operation;
It will have greater operational transparency in Kazakhstan, thereby enabling it to manage better the supply chain and the stock levels; and
Financially, it will have the opportunity to benefit in full from the fortunes of the acquired Companies who, it is expected, will have a direct favourable impact on the profitability of Vision International People Group Public Limited. In this context, it is expected that “Vision Kazakhstan group” will contribute additional Turnover of circa US$700,000 and additional Net Profit of circa US$30,000 to the consolidated financial results for the year ending December 31st, 2006.
Vision Latvia takeover
Vision International People Group Public Limited also announced the acquisition of 100% of the share capital of Vision Eurotrade Private Limited Company, referred to as “Vision Latvia”.
The acquisition was concluded by virtue of a Share Sale and Purchase Agreement dated 28th April, 2006. The decision to conclude the acquisition was resolved during the Board of Directors meeting of Vision International People Group Public, which was convened on the 27th April, 2006 in Nicosia. The acquisition has also been fully reviewed and approved by the Audit Committee and has been conducted purely on a commercial basis.
The acquisition of 100% of the share capital of the acquired Company will be effected in cash using funds generated internally. The total purchase price payable as consideration for the transaction is US$750,000, of which US$187,500 will be paid within two weeks of the signing of the agreement, namely the 12th May, 2006, US$375,000 is to be paid up to six months following the signing of the agreement and US$187,500 will be paid by no later than the 31st December, 2006. The effective date of acquisition is 1st January, 2006
During the period 1st January, 2006 to 28th of April, 2006, the Group was under negotiations to finalise the legalities of the acquisition.
According to unaudited management accounts as at 31st December, 2005, Vision Latvia had a Net Asset position of US$199,744, which the
management believes is equal to the fair value of the net assets acquired.
The acquired Company, the main business of which is the Latvian selling and distribution operations, were acquired on the basis of a professional valuation performed by an independent specialist. The transaction results in an estimated goodwill of US$550,256 arising in the consolidated financial statements of Vision International People Group Public Limited.
