notestothefinancialstatements cont’d34 ACQUISITION OF SUBSIDIARIES cont’d2002During the previous financial year, the <strong>Group</strong> acquired the following subsidiaries:In RM’000Cash Inflow/(Outflow),Net of Cash and CashNote Equivalents Acquired Acquired Byi Palmco Holdings Berhad 34.5 31,075 <strong>IOI</strong> Corporation Berhadii Riang Takzim Sdn Bhd 34.6 (1,000) Cahaya Kota Development Sdn Bhdiii Lush Development Sdn Bhd 34.7 (37,713) Cahaya Kota Development Sdn Bhd(11,417) Riang Takzim Sdn Bhd(49,130)(19,055)34.5 Palmco Holdings BerhadAs at end of the financial year ended 30 June 2001, the <strong>Group</strong> held 32% equity interest in Palmco HoldingsBerhad (“Palmco”) and Palmco was accounted for as an associate of the <strong>Group</strong>.During the first 3 months of the previous financial year, the <strong>Group</strong> acquired an additional 27,641,231ordinary shares of RM1.00 each in Palmco (“Palmco Shares”) and the effective equity interest in Palmco asan associate of the <strong>Group</strong> increased from 32% to 40% as at 30 September 2001.Subsequent to that, the <strong>Group</strong> has further acquired 43,051,408 Palmco Shares representing 19% effectiveequity interest for a total cash consideration of RM188.3 million. Palmco was accounted for as a subsidiarywith effect from 4 October 2001 when the Mandatory General Offer became unconditional.Details of fair value of the net assets acquired and cash inflow on acquisition of subsidiary were as follows:In RM’000<strong>IOI</strong> Corporation BerhadAnnual Report 2003192Property, plant and equipment 463,710Investment in associates 135,921Other long term investments 7,357Net current assets 308,426Long term borrowings (40,000)Other long term liabilities (52,164)Minority interests (317,938)Less: Net assets previously accounted for as interest in associate (350,632)Net assets acquired 154,680Goodwill on consolidation 33,663Cost on acquisition 188,343Purchase consideration discharged by cash 188,343Less: cash and cash equivalents of subsidiary acquired (219,418)Cash inflow on acquisition of subsidiary (31,075)
34 ACQUISITION OF SUBSIDIARIES cont’d34.5 Palmco Holdings Berhad cont’dThe effect of the above acquisition on the financial results of the <strong>Group</strong> during the previous financial yearwas as follows:In RM’0002002As an As aAssociate Subsidiary TotalRevenue - 568,398 568,398Operating cost - (509,293) (509,293)Operating profit - 59,105 59,105Interest income - 4,455 4,455Interest expense - (1,597) (1,597)Share of results of associate 13,653 32,760 46,413Profit before taxation 13,653 94,723 108,376Taxation (1,809) (4,164) (5,973)Profit after taxation 11,844 90,559 102,403Minority interest - (37,899) (37,899)Net profit for the financial year 11,844 52,660 64,504Less: <strong>Group</strong>’s share of results in associate had the <strong>Group</strong>not acquired the additional equity interest (11,844) (39,128) (50,972)Increase in <strong>Group</strong>’s net profit - 13,532 13,532The effect of the above acquisition on the financial position of the <strong>Group</strong> as at 30 June 2002 was as follows:In RM’0002002Property, plant and equipment 480,468Associate 150,449Other long term investments 6,534Goodwill on consolidation 91,171Net current assets 299,857Long term borrowings (29,816)Other long term liabilities (6,545)Deferred taxation (45,314)Minority interest (359,758)<strong>Group</strong>’s share of net assets 587,046Less: Amount accounted for as an associate (350,632)Less: <strong>Group</strong>’s share of results in associate had the <strong>Group</strong>not acquired the additional equity interest (39,128)Increase in <strong>Group</strong>’s net assets 197,286193<strong>IOI</strong> Corporation BerhadAnnual Report 2003