PRG Holdings Berhad Annual Report 2019

PRG HOLDINGS BERHAD 12 As part of strategies to expand of our agriculture business, the Group, had also entered into a subscription agreement with MSK Plantation Sdn. Bhd. (“MSK”) and Teh Choon Yean, sole director of MSK, for the subscription of 51% of new ordinary shares in MSK. We believe with MSK, which principally involved in the business of mixed farming mainly on plantation estate and tropical fruit orchard management, will enable the Group to set up our own plantation arm for planting and management of our own lands in Kelantan. We expect this business segment will contribute positively to PRG Group’s financial performance in the medium to long term through the additional income stream to be generated from the harvesting/logging of teak trees and/or commercial crops on the lands. At the date of this report, the subscription in shares has not been completed. The Group’s retail business is going through a gestation period as higher upfront expenses was incurred for opening ceremonies, brand building and marketing activities. The potential of the business is yet to be fully realised and will require time to develop. As part of the Group on-going exercise towards streamlining its structure and business segments by disposing and dissolving its non-performing subsidiary/ associate companies, the Group entered into a conditional share sale agreement for the proposed disposal of 60% equity interest in Premier De Muara Sdn. Bhd., for a cash consideration of RM7.2 million. The proposed disposal is pending for shareholders’ approval which the extraordinary general meeting date has been fixed on 10 June 2020. Subsequently in October, PRG announced that its 54.19% owned subsidiary, FHL had entered into a binding term sheet with an independent third-party to dispose a subsidiary in Vietnam, Premier Elastic Webbing & Accessories (Vietnam) Co., Ltd, which principally engaged in the manufacture and sale of narrow elastic fabrics. The disposal was subsequently concluded in January 2020 and the Group will allocate its resources to other profitable product lines. Outlook & Future Prospects We are anticipating the business environment for 2020 to be very challenging. The current COVID-19 pandemic is expected to adversely affect the global economy due to lockdowns in various countries, supply chain disruptions and upheavals in the financial markets. Our property construction site, manufacturing plants in Malaysia and retail shops in Singapore and Thailand were temporarily closed due to the movement control implemented to curb the spread of virus. The Group’s results in year 2020 was expected to be affected. On the domestic front, the Bank Negara Malaysia announced the Malaysia’s economic growth, as measured by Gross Domestic Product (“GDP”), is projected at between -2% to 0.5% in 2020 against a highly challenging global economic outlook mainly due to COVID-19 pandemic. CHAIRMAN’S STATEMENT cont’d