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Aspen posts loss of RM130 mil in FY2022 earnings in light of failed diversification into healthcare segment

Chloe Lim
Chloe Lim • 4 min read
Aspen posts loss of RM130 mil in FY2022 earnings in light of failed diversification into healthcare segment
Aspen’s group CEO Dato’ Murly Manokharan. Photo: Aspen
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Aspen (Group) Holdings reported a loss of RM130 million ($40.6 million) for FY2022 ended June, as compared to earnings of RM56.6 million in FY2021. This brings losses per share to 12.02 cents.

On Nov 19, 2021, the group announced a change of its financial year end from Dec 31 to June 30, to allow it to better plan its audit schedule and holding of its annual general meetings during the off-peak period, thereby resulting in better cost-savings and operational efficiencies. With the change of financial year end, FY2022 ended June will cover a period of 18 months from January 1, 2021 to June 30.

On the earnings, the group attributed its losses to the impairments of machines in the group’s healthcare segment totalling to RM31.8 million in light of the scaling down of operations and loss on disposal of an associate company, Bandar Cassia Properties (SC) Sdn Bhd amounting to RM16.9 million.

Apart from the jump in impairment losses, the group’s administrative expenses increased by 41% y-o-y to RM112.6 million, while selling and distribution expenses increased by 25% y-o-y to RM16.3 million.

During the height of the pandemic, CEO Dato’ Murly Manokharan in an interview with The Edge Singapore mentioned that the group, whose main business is in property development in Penang, Malaysia, had decided to diversify its business into the glove making industry. However, the business did not manage to properly take off, which led to the impairment charges mentioned above.

Revenue was at RM379.6 million for FY2022, down 6% from RM405.5 million, with cost of sales at RM350.3 million for FY2021, up by 17% from RM300.7 million. The lower revenue for FY2022 was attributable to lower gross profit due to the sales mix from the property development segment and the margin compression from the healthcare segment.

See also: Cordlife posts net loss of $11.57 mil for 1QFY2024 due to refund fulfilment

For the 2HYF2022 period, the group’s revenue came in 58% higher y-o-y at RM194.5 million, thanks to higher contribution from its property development segment, as take-up rate improved as economic sectors reopened following better control of the Covid-19 pandemic. During the second half period, the healthcare segment faced margin compression from the impact of the drop in demand and average selling price (ASP) normalisation together with higher production costs due to global supply chain challenges and inflation. Hence, the healthcare segment only managed to achieve revenue of RM12.3 million, representing 6% of the group’s revenue for 2HFY2022.

Gross profit for FY2022 was at RM29.2 million, down 72% from RM104.9 million in FY2021.

Cash and cash equivalents for FY2022 were at RM31.8 million, down from RM68 million in FY2021.

See also: Changi Airport Group reports FY2024 earnings of $431 mil, 13.1 times higher y-o-y

To recap, Aspen has been under the limelight lately. On Aug 26, SGX criticised the group for releasing an announcement on SGXNET, disclosing that one of the group’s subsidiaries had entered into an MSA with Honeywell International, that was “non-factual, false and misleading”. The group had also failed to “promptly disclose” the non-consummation of the MSA by Honeywell, as well as the termination of negotiations with Honeywell.

See: SGX slaps Aspen, group CEO Murly and executive directors with public reprimand for the breach of SGX's listing rules

SGX then issued a public reprimand against Dato’ Murly, as well as the group’s executive directors Dato’ Seri Nazir Ariff Bin Mushir Ariff and Ir. Anilarasu Amaranazan for causing the company to flout the rules mentioned.

Amid the challenging climate and all the headwinds that the group faced in the healthcare sector, Aspen had significantly scaled down its glove manufacturing operation. The group had been evaluating various options on the future direction of Aspen Glove Sdn Bhd (AGSB), including disposal of AGSB’s assets and adopting an asset-light business model.

To this end, AGSB is in the midst of negotiations to dispose of its assets which would potentially raise sufficient funds to settle the outstanding due to the payables and bank loan that could immediately reverse the net current liabilities position of the group.

Meanwhile, the take-up rate of the group’s development projects had significantly improved as the economic activity continued to normalise with the easing of the Covid-19 containment measures in Malaysia.

To capitalise on the growing demand, Aspen will focus on its flagship development Aspen Vision City (AVC) at Batu Kawan. The group intends to launch three new projects with a total gross development value (GDV) of RM772.7 million, namely Versa Executive Apartments, Viio Business Hubb and Viluxe Phase two and Phase three.

As at June 30, the total amount of unbilled sales of the group stood at RM538.7 million.

Shares in Aspen closed at 4.3 cents on Aug 29.

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