Loss-making Avillion under spotlight as Daim charged in court

KUALA LUMPUR (Jan 29): The charge against former finance minister Tun Daim Zainuddin for failing to declare his assets has cast a spotlight on Avillion Bhd.

Avillion and 23 of its subsidiaries were listed among the 71 assets in the Malaysian Anti-Corruption Commission’s (MACC) charge sheet, in its case against Daim.

Daim pleaded not guilty before judge Azura Alwi to one charge under Section 36(2) of the MACC Act 2009, concerning an offence pertaining to disclosure of assets. He was charged with not declaring one Amanah Saham bank account, seven vehicles including a Rolls-Royce, an Austin Morris Austin and a Jaguar XJS HE, 38 companies and 25 properties, some of which are linked to the companies he owns.

Among the companies mentioned were Ibu Kota Developments Sdn Bhd, Maya Seni Holdings Sdn Bhd, Menara Ampang Sdn Bhd, Dream Cruiser Sdn Bhd, Landbelt Corporation Sdn Bhd, Avillion Bhd, Avillion Hotel Group, Admiral Cove Development Sdn Bhd and Avillion Hotels International Sdn Bhd, to name a few.

The loss-making group’s largest shareholder is Daim’s son Datuk Md Wira Dani Abdul Daim, with a 21.82% stake via Ibu Kota Developments Sdn Bhd and Daza Holdings Sdn Bhd.

Wira Dani has been the group’s substantial shareholder since April 2016 — when the group was known as Reliance Pacific Berhad. Dani and his mother Toh Puan Mahani Idris emerged as substantial shareholders in the group at the same time, but Mahani exited in 2020 after she transferred all her 247.3 million shares or 26.3% equity to a Maybank Trustees Bhd account.

Avillion is involved in property, hotel and travel businesses. It is well known in the tourism sector, as it owns the Avillion Hotel Group, which operates a chain of luxury hotels and resorts in Port Dickson, Melaka, Kuang, Janda Baik and Kuala Lumpur, as well as Bali.

The company has been suffering losses between FY2016 and FY2023. In its FY2023 ended March 31, the group recorded RM4.76 million in net loss. For the six-month period ended Sept 30, 2023, Avillion’s net loss widened to RM3 million, from a net loss of RM2.37 million in the same period a year before.

The bigger net loss was due to increases in operating expenses, which rose 35.82% to RM32.3 million from RM23.79 million a year before, higher finance costs of RM3.17 million compared with RM2.94 million a year prior, and higher depreciation and amortisation of RM5.1 million.

As at end September 2023, the group’s total borrowings stood at RM87.31 million, a slight increase from RM86.87 million in the corresponding period in 2022. Of its total borrowings of RM87.31 million in the six months to Sept 30, 2023, RM34.04 million represented short term borrowings.

It should be noted that its external auditor Messrs Baker Tilly Monteiro Heng PLT raised concerns about the group’s ability to continue operating as a going concern in its audited financial statements for the financial year ended March 31, 2023 (FY2023).

Its bourse filing in end-July 2023 reported its auditor as saying Avillion incurred net losses of RM5.4 million at the group level and RM4.84 million at the company level in FY2023, although the group’s hospitality, property and travel divisions have recovered after the Covid-19 pandemic.

“[This] thereby indicates the existence of a material uncertainty which may cast significant doubt about the group’s and the company’s ability to continue as a going concern,” it said.

According to Avillion’s 2023 annual report, the group has properties with a combined value of RM285.92 million in terms of net book value (NBV). Among notable properties include Avillion Hotel Port Dickson, which has an NBV of RM137.77 million.

Avillion has seven plots of lands in Port Dickson with an NBV of RM100.07 million. Six of these lands are listed for development, while the remaining one is where the Admiral Cove Premier Integrated Marina Resort sits.

On its prospects, Avillion said the overall growth outlook for the group is encouraging as the near term outlook of the leisure and hospitality industry remains positive in the longer term, its bourse filing on Nov 2023 showed.

“We will continue to source for new income streams to ensure long term sustainability of the group. We are confident there will be greater visibility in the near future barring any unforeseen circumstances,” it added.

Avillion’s share price has been lacklustre. Its stock performance has been declining since hitting its peak of 78.5 sen in 2011, and sagged to its lowest point of three sen on March 19, 2020 — a day after the movement control order was enforced due to the Covid-19 pandemic outbreak.

On Monday, Avillion shares closed up 0.5 sen or 9.09% to six sen, giving the group a market capitalisation of RM68 million.