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Annual Report 2017
Reliance Pacific Berhad 244521 A •
Incorporated in Malaysia •
MANAGEMENT DISCUSSION AND ANALYSIS
Business Overview
The Group’s principal business remained unchanged for the period under review. Our principal business
activities are reflected in the three core business divisions, namely Hotel, Property and Tourism. Being heavily
skewed in the services and hospitality industry, the Group continued to face a challenging operating
environment as demand is very much dependent of the state of the economy, public and corporate sector
spending and the disposal income of households.
Review of Financial Performance
For the Financial Year ended 31 March 2017, the Group recorded a turnover of RM154 million, a decline of
20.6% against the preceding Financial Year. However, Net loss for the Financial Year ended 31 March 2017
was lower by 13.8% when compared to the preceding Financial Year.
The performance of the Group has improved despite a higher provision for impairment and write-offs of
RM15.959 million against the preceding Financial Year of RM12.321 million. As such, the performance of the
Group before Interest, Tax, Depreciation and Amortization showed a lower loss of RM8.889million compared
to a loss of RM9.934 million in preceding Financial Year. Year-on-year, Loss before Interest, Tax, Depreciation
and Amortization had declined by 10.5% for Financial Year ended 31 March 2017 compare to preceding
Financial Year.
Despite the losses experienced by the Group, as the Chairman mentioned in his statement, we are at the
threshold of a new dawn and a watershed beginning from the second half of Financial Year 2016/2017.
Management is please to report that after three consecutive quarters of Losses before Interest, Tax,
Depreciation and Amortization since Q4, Financial Year 2015/2016, the Group has recorded two consecutive
quarters of Profit before Interest, Tax, Depreciation and Amortization from the second half of Financial Year
2016/2017. However, despite this, the Group suffered losses due to cumulative losses incurred in the first half
of Financial Year 2016/2017. The improvement in the last two quarters of Financial Year 2016/17 is a direct
result of a change in the control of the Group and a new management at the helm.
Sectoral Business Review
After three quarters of consecutive losses, the Hotel Division began a turnaround beginning from third quarter
Financial Year 2016/2017. A recalibration and revamp of existing sales and marketing strategies and plans
by the new management paid off as sales, occupancy and revenue continue to see an uptrend. Profit
before tax in the last two quarters of Financial Year 2016/2017 has improved by 143.9% against the last two
quarter in Financial Year 2015/2016.
The main activities of the Property Division were focused on the preparation of the groundwork to launch
Phase 2 of Desa Impian. Its launch has been delayed as the division endeavored to resolve residual issues
regarding the subdivision of the land involved. Work has also begun to launch Phase 4, 5 and 6 as a single
phase for a proposed development under the Housing for Civil Servants Scheme (PPA1M). The division
registered a small profit from the sale of existing stock and non core assets.
The TourismDivision remained the weakest link in the Group as a result of weak demand from source countries,
travel restrictions imposed by China into Hong Kong, poor yields, legacy issues and high operating costs in
both Hong Kong and Singapore. As a result, turnover in this division fell 22% against Financial Year 2015/2016
and losses widened to RM11 million of which RM7.7 million is a result of impairment on receivables. Both Hong
Kong and Singapore has undergone a re-structuring and cost rationalization exercise and will also seek new
markets as well as strengthen their outbound sectors. Actions have also being put into place to enhance the
linkages and synergies between the Tourism and Hotel Divisions to generate higher revenue.