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<strong>KNM</strong> GROUP BERHAD I Annual Report 201271Notes to the Financial Statements (cont’d)2. Significant accounting policies (Cont’d)(q)Operating segmentsAn operating segment is a component of the Group that engages in business activities from which it mayearn revenues and incur expenses, including revenues and expenses that relate to transactions withany of the Group’s other components. All operating segment’s operating results are reviewed regularlyby the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, tomake decisions about resources to be allocated to the segment and assess its performance, and forwhich discrete financial information is available.(r)ProvisionsA provision is recognised if, as a result of a past event, the Group has a present legal or constructiveobligation that can be estimated reliably, and it is probable that an outflow of economic benefit will berequired to settle the obligation. Provisions are determined by discounting the expected future cashflows at a pre-tax rate that reflects current market assessments of the time value of money and the risksspecific to the liability.(s)Contingent(i)Contingent liabilitiesWhere it is not probable that an outflow of economic benefits will be required, or the amount cannotbe estimated reliably, the obligation is not recognised in the statements of financial position and isdisclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrenceof one or more future events, are also disclosed as contingent liabilities unless the probability ofoutflow of economic benefits is remote.Where the Company enters into financial guarantee contracts to guarantee the indebtedness ofother companies within its group, the Company considers these to be insurance arrangements,and accounts for them as such. In this respect, the Company treats the guarantee contract as acontingent liability until such time as it becomes probable that the Company will be required tomake a payment under the guarantee.(ii)Contingent assetsWhere it is not probable that there is an inflow of economic benefits, or the amount cannot beestimated reliably, the asset is not recognised in the statements of financial position and is disclosedas a contingent asset, unless the probability of inflow of economic benefits is remote. Possibleobligations, whose existence will only be confirmed by the occurrence or non-occurrence of oneor more future events, are also disclosed as contingent assets unless the probability of inflow ofeconomic benefits is remote.
72<strong>KNM</strong> GROUP BERHAD I Annual Report 2012Notes to the Financial Statements (cont’d)3. Property, plant and equipmentFurniture, CapitalGroup Building Plant and Motor fittings and work-in-Land Buildings improvements machineries vehicles equipment progress TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Cost/ValuationAt 1 January 2011 83,557 413,205 7,914 445,497 12,246 60,918 7,964 1,031,301Additions 2,781 2,881 725 24,022 648 10,969 16,206 58,232Disposals – – – (349) (831) (37) (1,872) (3,089)Written off – – – – – (2,735) – (2,735)Acquisition through businesscombination (Note 32) – – – – – 2 – 2Effect of movements inexchange rates (960) 5,256 2,075 2,583 (1,536) 4,094 (2,305) 9,207At 31 December 2011/1 January 2012 85,378 421,342 10,714 471,753 10,527 73,211 19,993 1,092,918Additions 181 3,927 606 25,453 1,188 14,773 19,948 66,076Disposals – – – (2,571) (209) (22) – (2,802)Reclassification – – – 356 – (1) (355) –Acquisition through businesscombination (Note 32) 128,952 – – – – – – 128,952Effect of movements inexchange rates (2,698) (7,343) (5,520) (10,367) (289) (6,198) (85) (32,500)At 31 December 2012 211,813 417,926 5,800 484,624 11,217 81,763 39,501 1,252,644Depreciation andimpairment lossAt 1 January 2011Accumulated depreciation – 19,743 3,112 196,145 9,582 37,007 – 265,589Depreciation for the year 279 15,122 697 35,849 811 8,071 – 60,829Disposals – – – (37) (511) (10) – (558)Written off – – – – – (2,735) – (2,735)Impairment Loss 4,353 – – – – - – 4,353Effect of movements inexchange rates 71 501 1,925 685 (682) 1,126 – 3,626At 31 December 2011/1 January 2012Accumulated depreciation 350 35,366 5,734 232,642 9,200 43,459 – 326,751Accumulated impairment loss 4,353 – – – – – – 4,3534,703 35,366 5,734 232,642 9,200 43,459 – 331,104Depreciation for the year 464 15,317 367 36,611 817 9,060 – 62,636Disposals - – – (1,187) (195) (7) – (1,389)Impairment loss – – – 3,600 – 900 – 4,500Effect of movements inexchange rates (22) 1,933 (3,470) (4,673) (294) (4,027) – (10,553)At 31 December 2012Accumulated depreciation 792 52,616 2,631 263,393 9,528 48,485 – 377,445Accumulated impairment loss 4,353 – – 3,600 – 900 8,8535,145 52,616 2,631 266,993 9,528 49,385 – 386,298Carrying amountsAt 1 January 2011 83,557 393,462 4,802 249,352 2,664 23,911 7,964 765,712At 31 December 2011/1 January 2012 80,675 385,976 4,980 239,111 1,327 29,752 19,993 761,814At 31 December 2012 206,668 365,310 3,169 217,631 1,689 32,378 39,501 866,346
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