ANNUAL REPORT 2008 - KNM Steel Sdn Bhd

NOTES TO THE
FINANCIAL STATEMENTS (CONT’D)
32. Acquisition of subsidiaries and minority interest (CONT’D)
32.1 Business combination (Cont’d)
Pre-acquisition carrying amounts were determined based on applicable FRSs immediately before the
acquisition. The values of assets and liabilities recognised on acquisition are their estimated fair values.
In determining the fair value of intangible assets acquired (comprise mainly technology including patents,
customers related intangibles including customer contracts and supply agreement and marketing related
intangibles including tradenames), the Group applied the discount rate of 7.6% to 10.1% to the relevant
discounted cash flow.
The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the
acquired business’ work force and the synergies expected to be achieved from integrating the companies
into the Group’s existing oil, gas and petrochemical industry.
32.2 Acquisition of minority interest
In March 2008, the Group acquired an additional 40% interest in KNM Renewable Energy Sdn. Bhd.
for RM199,000 in cash, increasing its ownership from 60% interest to 100%. The carrying amount of
KNM Renewable Energy Sdn. Bhd.’s net assets in the consolidated financial statements on the date of
acquisition was RM467,500. The Group recognised a decrease in minority interest of RM199,000.
In April 2007, the Group acquired an additional 49% (less 1 share) interest in KNM Pty Ltd for
RM15,924,000 in cash, increasing its ownership from 51% (plus 1 share) interest to 100%. The carrying
amount of KNM Pty Ltd’s net assets in the consolidated financial statements on the date of the acquisition
was RM27,520,000. The Group recognised a decrease in minority interest of RM13,485,000 and goodwill
of RM2,439,000.
KNM GROUP BERHAD
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ANNUAL REPORT 2008