PRG Holdings Berhad Annual Report 2020

16 PRG HOLDINGS BERHAD Management Discussion and Analysis cont’d The improvement in loss before tax for FY2020 as compared to preceding year was mainly due to the one-off realisation of previously unrealised profits on intercompany construction works for Picasso Residence upon the disposal of PDMSB to third party. The higher profit was also contributed by our Embayu Project. The sales conversion of our Embayu Project was affected by the Movement Control Order (“MCO”) as the sales gallery was closed for two (2) months during the MCO period. Furthermore, Embayu Project’s construction site was closed from 18 March until mid-June 2020 and was reopened after implementing stricter COVID-19 standard operating procedures. As a result, lower revenue than budgeted was recognised. However, we have now shifted our marketing efforts via social media platforms and enhanced our video conferencing solutions to engage better with our potential customers. The Property Development & Construction Division will be playing a more prominent role in the Group with the realignment of the strategies and business objective of the Group. Our focus in this Division has shifted to the affordable housing segment as we anticipated the demand for properties priced at RM500,000 and below remains strong. In order to stimulate the property market and provide financial relief to home buyers following the COVID-19 outbreak, the Government has launched the HOC during 2019, and subsequently extended to 31 May 2021. Furthermore, with the introduction of stamp duty holidays during the HOC coupled with the lower interest rates target set by Bank Negara in July 2020, we hope the housing market will be stimulated during these challenging times. The Group strives to continue innovating and staying abreast of current property industry trends. The primary focus of the Group for 2021/2022 is to complete the Embayu Project while exploring other projects, landbank and/or joint venture opportunities with land owners which align with our strategies and business objectives. Property Development and Construction Property Development & Construction Division recorded a revenue of RM96.5 million in FY2020, which was RM90.4 million higher than RM6.1 million recorded in preceding year. The segment’s loss before tax of RM4.1 million in FY2020 was improved by RM7.3 million as compared to loss before tax of RM11.4 million recorded in preceding year. The increase in revenue for FY2020 was mainly due to the recognition of higher progress of Embayu Project and one-off realisation of previously unrealised revenue on intercompany construction works for Picasso Residence upon the disposal of PDMSB to third party. Our new Melaka school project also contributed higher revenue during current financial year. The Property Development & Construction Division will be playing a more prominent role in the Group with the realignment of the strategies and business objective of the Group.