PRG Holdings Berhad Annual Report 2020

17 Annual Report 2020 Management Discussion and Analysis cont’d Retail The Group had ventured into retail business in second quarter of 2019 and became an authorised dealer of the luxurious apparel brand “Philipp Plein” in Singapore, Malaysia, Thailand and a few approved additional territories. The first flagship store was opened in Marina Bay Sands, Singapore in April 2019, which is the first “Philipp Plein” store in South East Asia. The second store which is 49% owned by the Group was opened in IconSiam, Bangkok in Thailand in July 2019. The revenue of the Retail Division was approximately RM2.7 million (2019: RM6.4 million), a decreased by RM3.7 million or 57.8% as compared to FY2019. This is mainly due to the outbreak of the COVID-19 pandemic, which led to a decrease in tourists’ arrival in our Singapore and Thailand stores and deteriorated the overall consumers’ spending during FY2020. In addition, the store in Singapore was temporarily closed for two (2) months in the second quarter of 2020 under the ‘circuit breaker’ lockdown policy implemented by the Singapore government to curb the spread of COVID-19. Higher loss before tax of RM23.8 million (2019: RM7.7 million) was mainly due to a total of RM18.1 million impairment of property, plant and equipment, right-of- use assets and amount owing by an associate in FY2020. The Management has taken a prudence view for the assessment of impairment losses of retail’s assets as we believe that the retail business would not recover until end of 2021, when the vaccination programs are rolled out effectively worldwide. During the current adverse operating environment caused by the outbreak of COVID-19, the Retail Division has negotiated with landlords for rental concessions, shortened store operational hours, and explored different sales channels such as digital retailing and social media. We have also implemented cost-saving strategies to overcome this challenging time.