PRG Holdings Berhad Annual Report 2020

19. PROPERTY DEVELOPMENT COSTS (continued) Group 2020 2019 RM’000 RM’000 Costs recognised in profit or loss during the financial year: - leasehold land (961) (198) - development costs (6,289) 8,585 (7,250) 8,387 Reclassification to assets held for sale (Note 28): - leasehold land - (123,389) - development costs - (135,850) - accumulated cost recognised in profit or loss - 91,107 - (168,132) Property development costs at end of financial year: - leasehold land 21,569 21,569 - development costs 19,163 11,203 - accumulated cost recognised in profit or loss (10,093) (2,843) 30,639 29,929 (a) Leasehold land represents costs incurred as a consequence of having right-of-use assets to produce inventories during the financial year in accordance with MFRS 102 Inventories . (b) Included in the leasehold land under development is a piece of land provided by Almaharta Sdn. Bhd. (“ASB”), a third party, pursuant to the Joint Venture Agreement (“JVA”) dated 31 December 2013 for the development in Wilayah Persekutuan, Kuala Lumpur. Pursuant to the JVA, ASB agreed to receive the purchase consideration of the leasehold land on a deferred payment basis progressively subject to the fulfilment of the conditions precedent contained in the JVA. All conditions precedent in accordance to the JVA had been fulfilled and the JVA was deemed unconditional with effect from 30 July 2014. In the previous financial year, the leasehold land has been reclassified to assets held for sale. (c) Included in the leasehold land under development is a piece of land purchased from Baycity Park Sdn. Bhd. (“BPSB”) pursuant to the Development Joint Venture Agreement (“DJVA”) entered between BPSB and Premier Baycity Sdn. Bhd. for the proposed development of the development land in Subang U5, Selangor. The Group has accrued the remaining amount of RM9,310,000 (2019: RM9,308,000) payable to BPSB for the balance of the purchase consideration of the leasehold land as disclosed in Note 26(c)(i) to the financial statements. (d) Included in property development costs is interest expense of RM284,000 (2019: RM330,000) capitalised during the financial year at interest rate of 6.27% (2019: 6.27%) per annum. (e) The leasehold land together with development costs with a total carrying amount of RM30,639,000 (2019: RM29,929,000) have been pledged to licensed banks for banking facilities granted to the Group as disclosed in Note 25(a) to the financial statements. PRG HOLDINGS BERHAD 146 Notes to the Financial Statements 31 December 2020 cont’d