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Chairman's Statement

On behalf of the Board of Directors (Board), it is my pleasure to present the Annual Report and Audited Financial Statements for the financial year ended 31 March 2016.

OVERVIEW OF THE INDUSTRIES

The Group continued to operate under difficult and challenging environment for the period under review.

The Hotel Industry experienced a slow down in demand which was further dampened by four months of haze which was beyond our control. This has a direct impact on our Hotel Division's performance.

The Tourism Division in general recorded a drop in both tourist and visitor arrivals, reduced length of stays and tourism receipts. The harsh environment has severely affected the performance of the Tourism Division.

The general property market has been weak and lackluster at the back of weak economic growth, declining disposable incomes and subdued financing policies. In this context, the Group like other property developers also faced declining margins on certain categories of housing especially affordable housing.

FINANCIAL REVIEW

The Group registered a turnover of RM194 million for the Financial Year 2015/2016 as compared to RM188 million for the financial year 2014/2015. Nonetheless, as mentioned above due to the challenging and difficult operating conditions, the Group posted a loss of RM10.6 million before impairment loss on goodwill and taxation. The Board, taking cognizance of the difficult and challenging operating environment of some of its subsidiary companies agreed to impair loss of goodwill amounting to RM12.3 million during the period under review.

The Hotel Division posted a lower revenue of RM40.6 million and a profit of RM2.0 million for the year under review due to the general slowdown resulting from substantial drop in corporate spending which commands high yields and margins. Our strong branding has resulted in the entering of a new hotel management contract which will contribute positively to the Division when it is opened.

The Tourism Division posted a higher revenue of RM126.7 million due to depreciation of Ringgit against foreign currencies in the countries in which we operate. The loss of RM4.8 million is mainly due to a substantial drop in high yielding customers which has severely impacted the industry.

The Property Division also saw a marginal increase in revenue from RM17.5 million in the preceding Financial Year to RM24.6 million for the current Financial Year. Not unlike other property developers, the Division suffered a loss of RM2 million mainly due to lower margins as the bulk of the revenue was from affordable housing in Desa Impian, Bandar Tenggara.

PROSPECTS FINANCIAL YEAR 2016/2017

The general consensus is that the Malaysian economy will grow by 4% to 4.5% in 2016. As a Group we have undergone a challenging period of external and domestic shocks affecting the economy and the operating environment for all our Divisions. Nonetheless, barring unforeseen circumstances, we expect the Group to improve its performance for Financial Year 2016/2017. Our focus will be on higher yields and margins and prioritizing profits over growth.

The Hotel Division will continue to leverage on its strong branding in hotels, resorts, spa and residences. Going forward, we will continue with our strategy to optimise yields and profitability. At the same time, we are also looking at the rejuvenation of our assets to enhance its marketability and yield.

The Tourism Division is cautiously optimistic on its performance barring any unforeseen circumstances which are beyond our control.

The Property Division will continue to focus on implementing Zone 2 of Desa Impian, Bandar Tenggara. In addition, we shall review the development mix of the remaining development in order to enhance margins. However, we shall remain prudent and moderate when considering new ventures or capital investment and seek to monetize some of our unproductive assets.

APPRECIATION AND ACKNOWLEDGEMENT

Finally, I would like to extend my sincere appreciation to my fellow Board members, the management and employees of the Group for their untiring efforts, sacrifices and selfless striving under challenging circumstances.

On behalf of the Board, I would like to thank our shareholders, associates and bankers for their continued support. We look forward to a better performance in 2016 and beyond.

Thank you.

Tan Sri Dato' Sri Dr Samsudin Bin Hitam
Chairman


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