PRG Holdings Berhad Annual Report 2020

15 Annual Report 2020 Management Discussion and Analysis cont’d which has boosted the performance of the Group. In addition, lower impairment losses on assets of RM44.0 million (2019: RM55.9 million) was recognised during current financial year. FINANCIAL REVIEW & REVIEW OF STRATEGIES BY SEGMENT Manufacturing The Group is a long-established textile and webbing manufacturer in Malaysia and Vietnam. The products are manufactured and sold in Malaysia and Vietnam, and also exported to over 30 countries including the United States, United Kingdom, India, Indonesia, Australia, Sri Lanka and Pakistan. In 2019, the Group has diversified its products to include polyvinyl chloride (“PVC”) related products through an acquisition of a group of companies in Hong Kong and the PRC. The Manufacturing Division recorded a total revenue of RM96.3 million (2019: RM119.6) and loss before tax of RM9.2 million (2019: RM37.3 million) in FY2020. The revenue decreased by approximately RM23.3 million or 19.5% as compared to FY2019, mainly due to the lockdown and movement restrictions order implemented by various countries under the COVID-19 pandemic, resulting in the decrease in sales volume for elastic textile, webbing and PVC related products during the financial year. The temporary closure of certain plants of the Group for approximately two (2) months during the financial year also disrupted the production and delayed the delivery of products to customers. The loss before tax was improved by RM28.1 million as compared to preceding year mainly due to lower impairment loss on goodwill of RM16.3 million (2019: RM34.5 million) was recognised in FY2020. The impairment loss was based on the best estimate of the management after taking into consideration of the uncertainty of market conditions and operational challenges may continue to be affected by the outbreak of the COVID-19 pandemic. Setting aside the one-off impairment losses and fair value change of financial assets at fair value through profit or loss, the Manufacturing Division made a profit before tax of approximately RM9.2 million (2019: RM3.0 million) for the financial year mainly due to improvement of gross profit margin in certain subsidiaries resulted from lower raw materials cost as well as effectiveness of the cost rationalisation strategies implemented with the Group. As part of continuing streamline its Manufacturing Division, the Group has completed the disposal of its non-contributing subsidiary in Vietnam. With the disposal, the Group is able to focus the resources on its core products such as elastic textile and webbing products. The market demand and outlook has also been evaluated cautiously to plan the roll - out of capital expenditure in order to safeguard the assets and liquidity resources of the Group. In view of the rapid change of global economy, in particular, during the pandemic period, the Manufacturing Division has taken steps to review and adjust its business strategies, revisit the market demand that is severely impacted by global demand and supply disruption to rationalise the pricing strategies, productivity improvement and cost structure review has been carried out to ensure long term sustainability of the Division’s businesses.