PRG Holdings Berhad Annual Report 2018

FINANCIAL REVIEW (SEGMENT) 1. Manufacturing Division The Manufacturing Division recorded total revenue of RM92.6 million and profit before tax of RM1.7 million for FY2018 (2017: RM109.7 million and RM6.4 million). The lower revenue was mainly due to the reduced sales for certain existing products as those customers became more prudent in their procurement plan in view of the uncertainty in the global trade market as a result of the on-going trade spat between the United States with China and other countries. Besides that, certain customers also reduced orders as certain new specifications of products were under development stage while some customers reduced procurement as their local currencies depreciated against USD. Due to the competitive business environment, higher proportion of lower margin products was sold during the year. The weakening in USD against RM in FY2018 against FY2017 has lowered the revenue reported in RM for the sales denominated in USD. The exclusion of revenue from sales of metal components for furniture (from the subsidiary which has become an associate since 14 September 2017) from consolidation also contributed to the decrease in revenue during the financial year. Decrease in profit before tax was mainly due to lower revenue from sales of various products and an increase in raw material costs. The profit before tax was further impacted by additional post-listing administrative and corporate expenses, start up expenses incurred for new retail division in Singapore as well as higher share of loss from an associate during the financial year. 2. Property Development & Construction Division The Property Development & Construction Division recorded total revenue of RM56.1 million and loss before tax of RM2.3 million for FY2018 (2017: total revenue and profit before tax of RM48.8 million and RM0.7 million respectively). Higher revenue for FY2018 was mainly due to revenue contribution from a construction project in Batu Gajah as well as effects of restatement of revenue for FY2017 post adoption of MFRS. Loss before tax for FY2018 was due to adoption of MFRS whereby the total Gross Development Value has been adjusted downward and total Gross Development Costs has been revised upward. 3. Healthcare Division The Healthcare Division recorded loss before tax of RM1.0 million for FY2018. This was mainly due to timing of certain initial expenses which are non-recurring in nature as well as corporate exercise fees incurred for acquisitions of healthcare businesses during FY2018. 2018 A N N U A L R E P O R T 16 group managing director’s management discussion and analysis (continued)