Chairman's Statement

On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Reliance PacificBerhad (RPB) and its group of companies (Group), for the financial year ended 31 March 2007.

INTRODUCTION

The financial year ended 31 March 2007 was a year of sustained growth for the Group, recording the 4th consecutive year of profit since financial year 31 March 2004. It has been indeed heartening to note that the Management Team at RPB has successfully implemented its plans to further strengthen the Group's financial position.

RPB has delivered good results for the year ended 31 March 2007, primarily driven by a tenacious commitment in the execution of its strategic plans of cost control, yield improvement and demand stimulation.

A key strategic initiative to strengthen its financial position was the divestment of its non-core and low yielding assets. In the year under review, RPB divested its Avillion Hotel, Sydney. The sale has resulted in a strong improvement to its balance sheet.

GRPUP PERFORMANCE
Turnover
The overall financial performance of RPB and the Group for the year ended 31 March 2007 was good. The RPB Group recorded a turnover of RM442 million where the main revenue contributors are the Travel Division contributing 76% and the Hotel Division contributing 21% with the balance of 3% contributed by the Resort Development Division.

Pre tax Profits
The Group recorded a hefty 109% increase in pre tax profits for the year under review marking a sustained profit record over a continuous period of 4 years. Pre tax profits jumped from a RM18.4 million last year to RM39.7 million for the financial year ended 31 March 2007.

DIVISIONAL PERFORMANCE
Travel Division
The Travel Division continues to operate in a very dynamic environment that requires a maintenance of continually fresh trends and innovation in meeting the market demand. Its performance improved significantly because of its distribution expansion particularly in the opening of franchise outlets, export of MICE logistic services and wholesaling of travel products to China, Indonesia and India.

Worth mentioning is the Travel Division's startegic in-roads into online distribution. The financial year 2007 was a year where the Division stepped up its efforts to widen its market reach by aggressively embarking on its online distribution strategy through Reliance Travel.com. With the full range of travel services made available online, the Travel Division has successfully set the stage for further global growth.

The continuous innovation in its product, offline and online distribution, the Travel Division has successfully turned in a pre tax profit of RM22 million for the financial year ended 31 March 2007.

Hotel Division
Our business plans and strategies are geared towards reinventing ourselves to provide more value added services, facilities and products. We are proud to mention that the Hotel Division has been sustaining its good performance over the past few years. The Hotel Division posted yet another year of pre tax profit of RM11.6 million.

In the year under review, the Hotel Division's strategic focus was to sustain yield and higher occupancy rates. The strategic focus was driven by the re-branding and re-positioning of Avillion which delivers higher perceived value to our guests. It was aided by the enhancement of facilities for banqueting to cater for MICE and corporate clients and also the introduction of The Avillion Club facilities and services, to name a few.

Resort Development Division
The Resort Development Division recorded a profit of RM0.4 million. This profit is attributable to the successful sell-out of the first release of 70 units of Marina View Suite Hotel. Response has been very encouraging among investors from United Kingdom, Australia, Hong Kong, Japan, Singapore, Macau and Taiwan. Construction of the Suite Hotel has commenced and is 90% completed

PROSPECTS
The future prospects are bright, bearing any unforeseen circumstances in the global economy that could hinder RPB's growth plans. RPB is gearing up for growth in the Asian region within the next few years.

The Travel Division will continue to expand its presence through opening more franchised outlets, online as well as stepping up its wholesaling distributions in Indonesia. Its MICE Logistics Planning Services will be expanded in China, India and Indonesia. The Visit Malaysia Year 2007 (VMY 2007), has proven to be a boon to the Travel Division and will continue to be so with VMY 2007 having been extended to 31 August 2008.

The Hotel Division having successfully established the Avillion brand in Malaysia and Australia is undertaking a rebranding exercise. Once that is completed, we expect Avillion to have more properties under its management. The new branding coupled with additional facilities and refreshing, innovative and exciting products and services will turn-in higher yields and occupancy rates.

With the successful sell-out of the first release of 70 units of The Marina View Suite Hotel, the Resort Development Division will be releasing the second 40 units for sale in the new financial year of 2007/08. It will also be planning to launch another project The Marina Vista Suite Hotel in the near future. RPB has been performing strongly over the past four years. With its strong financial standing and a healthy balance sheet coupled with its vision of growth strategies in the Asian region, it does expect another good performance in the coming financial year bearing any unforeseen circumstances.

DIVIDENDS

The Board of Directors is pleased to recommend a first and final dividend of 6% less Malaysian income tax at 27% for the financial year ended 31 March 2007.

APPRECIATION

On behalf of the Board of Directors, I would like to thank the management and staff for their contribution during the past year. My unreserved appreciation goes to our shareholders who have supported and displayed much confidence in RPB.