PRG Holdings Berhad Annual Report 2017

• PRG HOLDINGS BERHAD 124 14. PROPERTY DEVELOPMENT COSTS Group 2017 2016 RM’000 RM’000 Property development costs at beginning of financial year: - leasehold land 123,389 123,389 - development costs 52,840 24,221 - accumulated cost recognised in profit or loss (19,306) (1,313) 156,923 146,297 Costs incurred during the financial year: - leasehold land 21,569 - - development costs 44,143 28,619 65,712 28,619 Costs recognised in profit or loss during the financial year: - leasehold land (14,149) (4,482) - development costs (40,527) (13,511) (54,676) (17,993) Property development costs at end of financial year: - leasehold land 144,958 123,389 - development costs 96,983 52,840 - accumulated cost recognised in profit or loss (73,982) (19,306) 167,959 156,923 (a) 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. During the financial year, the Group paid the final instalment of RM10,000,000 as full settlement of the purchase consideration of the leasehold land in accordance with the terms of JVA. The Group has accrued the remaining amount of RM15,219,000 (2016: RM31,054,000) payable to ASB for the purchase consideration of the leasehold land as disclosed in Note 21(c)(i) to the financial statements.  (b) 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. During the financial year, the Group paid RM7,103,000 (2016: RM3,897,000) as part of the purchase consideration of the leasehold land in accordance with the terms of DJVA. The Group has accrued the remaining amount of RM10,569,000 (2016: RMNil) payable to BPSB for the balance of the purchase consideration of the leasehold land as disclosed in Note 21(c)(ii) to the financial statements. (c) Included in property development costs is interest expense of RM1,675,000 (2016: RM2,553,000) capitalised during the financial year at interest rate ranging from 6.27% to 6.36% (2016: 6.36%) per annum. (d) The leasehold land together with development costs with a total carrying amount of RM167,959,000 (2016: RM156,923,000) have been pledged to licensed banks for banking facilities granted to the Group as disclosed in Note 20 to the financial statements. N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 3 1 D E C E M B E R 2 0 1 7 ( c o n t ’ d )