Light at the end of tunnel for Reliance Pacific?

KUALA LUMPUR: Reliance Pacific Bhd, which recorded two years of quarterly losses could be seeing light at the end of a tunnel following the emergence of two new substantial shareholders and some changes in key management.

While it continued to be in the red in terms of profit attributable to shareholders (a loss of RM226,000), the tourism-based company managed to churn out a small profit before tax (PBT) of RM557,000 in the fourth quarter ended March 31, 2017.

“This augurs well for the group and justified the major organisational and management changes that were instituted by the new management,” Reliance said in the quarterly financial report to Bursa Malaysia.

“These changes, improvement and momentum will be sustained and intensified and we are confident of more positive results in the proceeding quarters,” it added.

In a press statement also issued yesterday, See Ah Sing, who was appointed group managing director and chief executive in October last year following the resignation of Datin Irene Tan, noted that some “very unpopular changes” were made last year but “these difficult steps have finally paid off”.

“The company reached a nadir in the first half of the financial year with losses of RM21mil, So to come back from that position over a period of two subsequent quarters is very encouraging,” he said.

“We basically had to overhaul the three core divisions within the company, namely the hotel, property and tourism divisions.”

The hotel division (the Avillion brand) and property division swung to profitability. However, the tourism division (travel services and tours) and “RPB and others divisions” division (advertising, media and office services, etc) stayed loss-making.

To recap, two substantial shareholders emerged last year: Ibu Kota Developments, in which former finance minister Tun Daim Zainuddin’s son Datuk Md Wira Dani Abdul Daim has an interest, and Mazmur Capital Sdn Bhd, in which See, an executive director at Reliance, has a stake.

On July 27, 2016, Dani was appointed executive director (ED) while Reliance announced that long-time CEO Irene Tan would resign on Sept 30, 2016. (Dani unexpectedly resigned as ED on Aug 18 after a bankruptcy case was brought against him.)

In the latest report to the stock exchange, Reliance said its better bottom line performance was achieved on 12% lower revenue of RM42.28mil. The lower revenue was mainly due to the 20% drop in the tourism division’s revenue following a slowdown in tourist arrivals to Hong Kong and Singapore.

Adding to the weaker revenue was the deferment in the launching of the phase two project in Desa Impian, Bandar Tenggara (Johor). under its property division. Reliance said the deferment was mainly due to external factors beyond its control.

Reliance’s next phase of focus, according to its press statement, is firmly on the property and tourism divisions to cpaitalise on internal strategies.