Advance Synergy re-working its future business plans

Advance Synergy Bhd is re-working its future business plans to minimise any potential negative impact arising from the on-going Covid-19 pandemic.

The group said that all its business divisions have been adversely affected by the virus outbreak (since 2019), especially Hotels & Resorts, and Travel & Tours.

For the financial year ended December 31, 2020 (FY2020), the group’s revenue declined by 57.4 per cent to RM117.2 million from RM275.5 million posted in the previous financial year (FY2019).

Advance Synergy said in a filing with Bursa Malaysia that all its divisions reported lower revenue in FY2020 compared to FY2019 except for the property development and investment division.

The property development and investment division recorded higher revenue at RM6.9 million in FY2020 compared to RM700,000 in FY2019.

However, despite the higher revenue, the division’s pre-tax loss increased by RM1.3 million from RM900,000 in FY2019 to RM2.2 million in FY2020.

In terms of prospects for the division, the group said that development approvals have been obtained for Phase 2 of its Federal Park project and Sejijak project and this will drive revenue in FY2021.

Phase 2 of the Federal Park project comprises 116 units of houses, and the expected launch is by mid this year.

“This will be followed by the launching of the Sejijak project comprising 208 units of residential houses in the following financial year,” it said.

The Hotels & Resorts division recorded lower revenue of RM20 million in FY2020 compared to RM55.8 million in FY2019.

Advance Synergy said the outbreak of Covid-19 in various countries and the movement control order imposed in Malaysia on March 18, 2020, affected the performance of the group’s hotels and resorts.

This resulted in lower revenue from all hotels operated and managed by the division, it said in the filing.

The group said the termination of direct flights from four cities in China to Langkawi had a direct impact on the occupancy of its hotel in Langkawi.

“Besides that, closure of hotels such as City Villa, Malaysia, and Holiday Villa London contributed to the overall lower revenue in FY2020,” it said.

Advance Synergy said with the substantial drop in revenue coupled with lower operating income for FY2020, the division reported a pre-tax loss of RM6.7 million in FY2020 compared with a pre-tax profit of RM5.8 million in FY2019.

It said other operating income for FY2019 included an additional insurance claim of RM17.6 million for the hotel in Arosa which was destroyed in a fire in 2016 compared to the gain on disposal before tax of land in Arosa of RM6.6 million and foreign exchange gain coupled with a reversal of provision of RM3 million in FY2020.

“The business outlook for FY2021 is expected to be challenging due to the uncertainty in the recovery of the economy, relaxation of travel restrictions and opening of borders,” it said.

It said the recovery of bookings for the local meetings, incentives, conferences, and exhibitions market segment remains highly uncertain as the Covid-19 pandemic may be prolonged coupled with the uncertainty of an economic recovery.

Advance Synergy said in line with the division’s business plan, the focus to grow the hotels and resorts businesses regionally is still intact.

It also said the division will continue to develop business from the Asia region and major market segments.

“The upgrading of our hotels in Cherating and Langkawi and the renovation of our aparthotel in Earls Court, London, are underway and will continue during this expected slow period in 2021 in order to capitalise on the properties once the industry recovers,” it said.

Source: NST