ASPEN (Group) Holdings : 1F3 0% has responded to several queries posed by the Singapore Exchange Securities Trading (SGX-ST) relating to the company’s financial results for the fiscal year 2022 ended June.

In the lengthy list of responses that were posted in a filing to the bourse late on Friday (Sep 9) were the company’s replies to queries on the likes of the increase in administrative and other operating expenses, a decline in share of results of equity-accounted investees, an increase in trade and other receivables despite a decline in revenue, and the non-disclosure of related party transactions for the financial period under review. 

SGX noted that for the 18-month period ended June, Aspen’s administrative expenses and other operating expenses were up by about S$32.7 million and $28.6 million respectively on a year-on-year basis. It asked Aspen to provide a breakdown of these expenses, and to explain the reason for any significant expenses and fluctuations. 

In its response, the company said the increase in both categories of expenses was due chiefly to 3 factors –  the commencement of the healthcare segment on May 10, 2021; an impairment loss on machineries by the healthcare segment amounting to RM31.8 million (S$9.9 million) due to the “significant scale down” of the operation, and a loss on disposal of associate of RM16.9 million. 

SGX also asked the group about the S$24.2 million increase in its trade and current and non-current receivables despite the S$26 million decline in revenue for the 18-month period. SGX asked Aspen, among other things, to give a breakdown of its trade and other receivables and the reasons for the increase, as well as the board’s assessment on the recoverability of its trade and other receivables. 

In response, Aspen said the spike in receivables came from an increase in trade receivables from the property development segment due to the release of the stakeholder sum – the amount retained by the stakeholder solicitor pursuant to the Housing Development Act to protect the homebuyer’s interest and to ensure that developers rectify the defects during the defect liability period. 

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Aspen added that the recoverability of the receivables is “probable”, and the group does not have any significant credit risk from its property development activities as its products are primarily sold to purchasers with end financing facilities from reputable financiers. The credit risk is also limited, said the group. 

In response to SGX’s question on a S$49.8 million in crease in credit costs from ongoing projects from the corresponding year-ago period, Aspen said the increase of contract costs being capitalised is higher than contract cost being amortised. This is based on revenue recognition principles outlined in Singapore Financial Reporting Standards, the group said. 

The decrease in amortisation rate was mainly caused by the decrease in the percentage of completion of development projects due to delays in construction progress during the Covid-19 lockdown period, particularly for the ongoing projects in Aspen Vision City. 

SGX also asked the company about its acquisitions of property, plant and equipment worth some S$278 million for the 18-month period. 

Aspen said for the 18 months, the acquisitions of buildings for its healthcare segment amounted to RM166.5 million, while plant and machinery for the segment totalled some RM99.4 million. The group added that although “significant” capital expenditure was put into the acquisitions for the healthcare segment, this particular segment had to “significantly scale down” operations after the Covid-19 boom normalised. 

SGX also raised some transactions that Aspen had with its directors, key management personnel, as well as the companies in which they have substantial interests. Aspen, however, had said in its financial statements that there were no interested party transactions for the period under review. 

Aspen said these interested party transactions were conducted during “past financial years” and “progress billings” – invoices that allow purchasers pay upon the property unit’s completion by stages – are issued over a few years period depending on the construction stage. The company also referenced its previous announcements on the bourse in 2018 and 2020. 

SGX also asked if Aspen had made any provisions for legal actions commenced by Tialoc Malaysia and Multipurpose Metal Tech. The company said it has made provisions, and these were recorded in its FY2022 financial results. 

Shares of Aspen fell 14.3 per cent or S$0.007 to close at S$0.042 on Friday.