Embattled developer and funds manager Aspen Group has painted a gloomy outlook for its residential and commercial property syndicates, after launching a strategic review in the wake of a near-$100 million statutory loss for the 2012 financial year.
Aspen announced its full-year results today, with its statutory loss coming in at $99 million, following a $17.4 million statutory profit in FY2011.
The loss included impairments of $133.6 million, in relation to write-downs in the value of a number of the company’s property investment funds.
The group reported operating profit before tax of $30.7 million, down from $33.4 million in FY2011.
Aspen’s property portfolio valuations were up 13 per cent across the board in FY12, for a gain of $41.8 million.
Funds management fee income came in at $14.2 million, down from $15 million in FY2011.
Aspen chairman Frank Zipfinger said the loss was disappointing and reflected the challenging environment in the residential property sector.
“It also highlights the risks associated with development activities, where the group’s interests in a number of syndicates were negatively impacted by planning approval delays, increased planning condition costs and statutory infrastructure charges,” Mr Zipfinger said.
Mr Zipfinger said the impairments reflected the company’s diminishing outlook for the residential and development sector.
“Many of the affected assets were acquired prior to the global financial crisis of 2009 and the markets for these assets have not recovered,” Mr Zipfinger said.
“This contrasts with other parts of our business that have performed in line or better than expectations.
“These outcomes have prompted a strategic review of our involvement in the residential and development sectors, as part of a broader review of Aspen’s operations.”
It has been a tumultuous 12 months for Aspen Group, which said goodbye to its managing director and co-founder Gavin Hawkins last week, with non-executive director Hugh Martin appointed as interim chief executive.
Mr Hawkins won a battle for control of the company with fellow founder Angelo Del Borello midway through 2010.
Aspen said it would launch a comprehensive search for a new chief executive shortly.
Also, Aspen Group founding chairman Reg Gillard stepped down in October last year, replaced by Mr Zipfinger.
Mr Zipfinger said the strategic review launched today aimed to simplify the business by concentrating on its core strengths, and would likely lead to a shift away from management fees and interest revenue generated from residential and development assest.
“With the strategic review underway, there is expected to be limited activity across the syndicates, which would result in a reduction of fee income,” the company said.
At 11:30AM, WST, Aspen stocks were down 7.9 per cent, trading at 29 cents.