PRG Holdings Berhad Annual Report 2018

STRATEGIC REVIEW During the financial year, the Group through Furniweb Holdings Limited (“Furniweb”) ventured into a luxury fashion brand by entering into a business collaboration with Philipp Plein International and Plein Sport for the appointment as the authorised dealer for the distribution, promotion and sale of “Philipp Plein” in Singapore, Thailand and Malaysia. Our Group looks forward to the upcoming flagship shop to be opened in Marina Bay Sands, Singapore, before end of 2019. Through this collaboration, Furniweb will have the opportunity to broaden its revenue base through the apparel and retail industry. On 4 May 2018, the Group had also entered into Shares Sale Agreement for the proposed acquisition of 55% equity interest in PRG Active Sdn. Bhd.’s (formerly known as S P Chin Healthcare Sdn. Bhd.) enlarged share capital for a purchase consideration of RM4.125 million. By doing so, the Group is strategically tapping into the healthcare industry which is comparatively stable and is expected to compensate for business cycle fluctuations in other segments. The proposed acquisition was approved by Bursa Securities on 13 June 2018 for the listing of and quotation for the new shares of PRG to be issued followed by its completion on 16 July 2018. In addition to the above-mentioned, the Group had on 13 July 2018 entered into a Shares Sale Agreement, Shareholders Agreement and Call Option Agreement with the owners of Esther Postpartum Care Sdn. Bhd. (“EPC”) and EPC. At present, the Group owns 26.21% shares of EPC. The investment into EPC, which was completed on 11 October 2018, was part of the Group’s vertical integration along the value chain in the wellness segment of the healthcare industry which is thriving and is expected to diversify the income stream of the Company. PRG had on 3 October 2018 disposed 60,480,000 ordinary shares of HKD0.10 each representing 12% equity interest in Furniweb for cash consideration of HKD0.50 per share. The disposal will allow PRG to monetise part of its investment in Furniweb while allowing PRG to continue participating in the future operations and plans of Furniweb through its remaining equity interest in Furniweb. The proceeds raised from this disposal will enable PRG to fund for PRG Group’s operations and to enhance its financial position. This was followed by a Memorandum of Understanding with Capital World Limited (“Capital World”), which was signed and announced on 5 November 2018. Subsequently, PRG entered into a conditional Subscription and Options Agreement with Capital World to subscribe to 265,000,000 new Capital World shares and an option to further subscribe for up to 44,000,000 new Capital World shares. Following the fulfilment of all the relevant conditions of the Agreement, the subscription was completed on 14 March 2019. The investment was part of our overall strategy to continue building up our Property Development & Construction Division to be a significant property player in Malaysia. The subscription would also enable PRG to invest in a profitable business, as well as introduce medical and wellness elements in Capital World’s projects which would boost Capital World’s product offerings. The Group had on 28 December 2018 entered into a conditional Sale and Purchase Agreement with Alifya Forestry Sdn. Bhd. to acquire two parcels of agricultural land planted with teak trees in Kelantan state for a total purchase consideration of RM89.1 million. The Proposed Acquisition would allow PRG to diversify its revenue base with the aim of minimising earnings volatility. The Proposed Acqusition is still subject to satisfactory due diligence results and relevant authorities and shareholders’ approvals. chairman’s statement (continued) PRG HOLD I NGS BERHAD 11 Dato’ Dr. Awang Adek bin Hussin Independent Non-Executive Chairman