Aspen Group Limited · ASX:APZ
Aspen — H1 FY2014 Earnings Presentation
40 slides from Aspen's earnings presentation, Feb 24, 2014
Slide 1: Aspen Group 2014 Half Year Results Presentation
For personal use only ASPEN GROUP 2014 HALF YEAR RESULTS PRESENTATION 1
Slide 2: Agenda
Agenda 1. Progress on business transition For personal use only 2. Financial results 3. Update on the accommodation business 4. FY14 priorities Appendices 2
Slide 3: 2014 - a transition period
2014 - a transition period Major business simplification underway For personal use only Accelerated process of strategic change in August 2013 Simplification process for Aspen to become focussed on accommodation sector Key operational focus on managing the downturn in the resources capex cycle
Slide 4: Checklist of progress towards business simplification
2014 - a transition period Checklist of progress towards business simplification For personal use only Commercial • EOI process continues portfolio sale Non-core • Substantially complete with only $26m remaining • $114m settled since June divestments • Reduced employee numbers by 29% since July 2013
Slide 5: Carrying value impairments
Carrying value impairments Impairment review process FY13 Performance - Key Points For personal use only $m Actual sales prices 3.9 - sold and settled assets Expected sales prices 19.2 - conditional sales / advanced negotiations Estimated sale prices on assets held for sale 24.5 Revaluations on othe
Slide 6: Carrying value impairments: major adjustments
Carrying value impairments Major adjustments For personal use only $m cps Notes Adelaide City Central 15.6 13.0 Impairment on sale negotiations Septimus Roe Office Building 12.1 10.1 Devaluation, selling cost provision Aspen Karratha Village 11.5 9.6 Devaluation - new lease Aspen Parks co-investment
Slide 7: Commercial portfolio sale
Commercial portfolio sale Portfolio key statistics FY13 Performance - Key Points For personal use only Progressing negotiations on asset sales Proceeds allow debt reduction and capital management initiatives Book Value Property Change Cap Rate WALE Occup. Jun-13 Dec-13 2 ($m) ($m) ($m) (%) (yrs)
Slide 8: Non-core development asset sales
Non-core development asset sales FY13 GoodPerformance - Key Pointscomplete sale programme progress to substantially For personal use only $m 200 150 104.8 100 204.9 15.6 9.7 8.8 50 84.6 40.4 74.9 25.6 0 8
Slide 9: Aspen Karratha Village
Aspen Karratha Village Achieved 97% re-leasing For personal use only 180 room worker accommodation facility Executed lease renewal to Woodside for two years expiring January 2016 Additional commitment now takes occupancy to 97% Expected annualised net income of $4.9m down from $13.5m in FY13
Slide 10: Aggressive reduction of overheads
Aggressive reduction of overheads FY13 Performance Down by 21% over the-comparable Key Pointsperiod For personal use only Annualised savings of $3.7m per annum achieved 9 $m 3.0 2.8 6 2.7 3 5.8 5.5 4.2 0 Dec-12 Jun-13 Dec-13 1 Wages & salaries Other overhead 1 Includes a one-off expensing of opt
Slide 11: 1H2014 Financial results
For personal use only 2. 1H2014 Financial results 11
Slide 12: Operating earnings
Operating earnings Overhead reductions FY13 Performance key Points - Key positive contributor For personal use only 1H2014 1H2013 $m CPS $m Gross profit / (loss) from operations Commercial / industrial 12.2 10.1 11.1 Accommodation - Aspen Karratha Village 7.3 6.1 6.6 - Aspen Parks Property Fund 3.2
Slide 13: Group Financial Result
Group Financial Result Statutory loss for 1H2014 1H2014 1H2013 For personal use only $m CPS $m Accommodation operating profit 6.2 5.1 5.5 Commercial / industrial operating profit 6.9 5.8 4.9 Development operating profit / (loss) (4.8) (4.0) 0.2 Total operating profit 8.3 6.9 10.6 Profit / (loss) - s
Slide 14: Balance sheet
Balance sheet 31-Dec-13 30-Jun-13 For personal use only $m $m Cash 40.5 37.6 Assets held for sale 294.7 178.8 Investment properties 38.5 261.0 Equity investments 10.7 39.9 Inventories / assets held for sale 4.6 26.1 Other 14.2 13.8 Total assets 403.2 557.2 Liabilities held for sale 1 167.8 124.5 Bor
Slide 15: NTA composition per share
For personal use only NTA composition per share 4.00 $/ share 3.00 0.26 0.50 0.61 0.04 0.41 0.97 2.00 1.00 1.87 1.65 0.00 1 1 2 Commercial Accomodation Assets HFS Cash Liabilities HFS Other Debt NTA assessed 1 Held for sale 2 Assessed NTA adjusts for negative minority interests 15
Slide 16: Debt management
Debt management Senior debt facility to August 2015 For personal use only Met all debt repayments required Final mandated repayment due June 2014, expected to be funded largely from contracted asset sales Senior Debt facilities Dec-13 Jun-13 Total drawn debt 116.4 117.9 Senior debt facilities
Slide 17: Debt management
Debt management Repayment of facilities on asset disposals For personal use only Repaid $15m 10.5% convertible notes with cash and cheaper debt Current drawn June 2013 drawn W. ave. Cost Group facilities Maturity Hedging debt ($m) debt ($m) Debt Accommodation 9.0 10.5 Aug-15 7.0% 87.0% Commercia
Slide 18: Capital management
Capital management For personal use only Approval gained for up to 25% on-market share buy back Substantial funds would be released from completion of the commercial property sale No guidance for 2H14 distribution: • uncertainty as to asset sales and their timing and extent of share buy back •
Slide 19: Accommodation business
For personal use only 3. Accommodation business 19
Slide 20: Aspen's accommodation business is simple
Aspen’s accommodation business is simple For personal use only Simple business purpose We provide “value for money” accommodation Our customers range from major companies to pensioners Simple business economics We collect rent • No DMFs • No cabin manufacturing • No tenant incentives Scope t
Slide 21: Aspen Karratha Village
Aspen Karratha Village Workforce accommodation is an attractive investment For personal use only Sustainable industry • FIFO workforce requirements • Solutions for resource companies Management expertise • Remote locations; supply chain management • High specification contract Aspen Karratha V
Slide 22: Aspen Parks Property Fund
Aspen Parks Property Fund Second largest owner of holiday parks in Australia For personal use only Unlisted property fund established in No. No. 2004 Properties units % Holiday Parks 14 Leading management platform - cabins 680 14% • Nearly 500 staff - visitor sites 1,223 25% • In-house industry
Slide 23: Aspen Parks Property Fund: resources capex downturn impact
Aspen Parks Property Fund Resources capex downturn impact has been significant For personal use only Resorts weakness – AUD impact Tourism / permanent earnings robust and overheads reduced Aspen Parks net income movement calendar year 2013 20 $m 18 16 14 11.1 12 1.6 0.8 10 19.9 0.6 0.4 1.2 8 6 1
Slide 24: Pilbara Park, Karratha: major falls
Aspen Parks Property Fund Pilbara Park, Karratha: major falls; potential bottoming phase? For personal use only Occupancy rate Occupancy rate - annual change 100% 89% 0% 80% 69% -10% 60% 43% -20% 40% 20% -30% 0% -40% 2011 2012 2013 Average daily rate Average daily rate - annual change $200 $182 $80
Slide 25: Impact of market conditions on the fund
Aspen Parks Property Fund Impact of market conditions on the fund For personal use only Operating management Fund continues to pay monthly distributions • Distributions reduced – annualised rate reduced from 9.9 cps at June 2013, currently 7.4 cps • Distribution rate to be reviewed with fund res
Slide 26: Value-for-Money accommodation
“Value-for-Money” accommodation Strong fundamentals; Aspen well positioned For personal use only Structurally positive supply / demand Strong demographic trend Attractive cash yield Aspen well positioned: • Long established management platform • Aspen Parks # 2 in the holiday park industry 2
Slide 27: FY14 priorities
For personal use only 4. FY14 priorities 27
Slide 28: Priority action points
Priority action points For personal use only Finalise commercial property portfolio sales Capital management to maximise value to shareowners Optimising returns from the accommodation business Maintain discipline on overhead cost reduction 28
Slide 29: Questions
For personal use only ASPEN GROUP 2014 HALF YEAR RESULTS PRESENTATION Questions 29
Slide 30: Appendix: Affordable accommodation industry overview
For personal use only Appendix Affordable accommodation industry overview 30
Slide 31: Accommodation supply
Accommodation supply Supply has been falling markedly For personal use only Holiday Park sites - number From 1991 to 2009, the 300,000 number of holiday park sites has fallen by over 33% 200,000 Local authority leaseholds / special zoning are important Importance of expertise in 100,000 mixed
Slide 32: Accommodation demand
Accommodation demand Relatively stable market share For personal use only Holiday park market share of domestic visitor nights is relatively stable at 22-23% Average visitor stay is much longer than other forms of accommodation Holiday parks - domestic visitor nights - Average visitor stay marke
Slide 33: Accommodation occupancy rate
Accommodation occupancy rate Structurally higher and less seasonal For personal use only Occupancy rate - short term stays 60% Occupancy rates have 50% moved up significantly, largely on back of falling 40% supply 2009 30% 1997 Better utilisation of capital 1989 Seasonality of summer 20% 1979
Slide 34: Structural change: from Caravan Park to Holiday Park
Structural change From “Caravan Park” to “Holiday Park” For personal use only Cabins - number Despite fall in overall sites, 40,000 cabin numbers at parks have grown rapidly Creates scope for business 30,000 customers at parks Unpowered sites in relative decline. Focus on: 20,000 • ensuite sit
Slide 35: Structural change: strong community need
Structural change Strong community need – change of delivery method For personal use only Public sector is no longer a Dwelling approvals - public sector: total substantial direct supplier of 12% affordable housing 10% Indirect public sector support to individuals for 8% provision by private sec
Slide 36: Permanent residential demand
Structural change Permanent residential demand – an affordable residential option For personal use only Robust, simple, easy to Net growth in population aged 65+ understand financial model, with 160,000 residents: 140,000 • owning the cabin 120,000 • renting the land Key demographic trend – at s
Slide 37: Perth metropolitan cluster: mixed accommodation
Importance of broad product expertise Perth metropolitan cluster: mixed accommodation For personal use only • Freehold • 120 Tourist Sites • 89 Permanent Sites • Leasehold • 78 Tourist Sites • 118 Permanent Sites • Leasehold • 146 Tourist Sites • 109 Permanent Sites 37
Slide 38: Technology is more important
Structural change Technology is more important For personal use only Technology is increasingly Online Revenue % (of Tourist Revenue) 30% important to the holiday parks business 25% Bookings on-line / mobile have increased markedly 20% • Now comprise 25% of tourism bookings at Aspen 15% Parks •
Slide 39: Consistent value-for-money customer proposition
Accommodation business Consistent “value-for-money” customer proposition For personal use only ASPEN GROUP LIMITED own manager / 11% co-investor KARRATHA ASPEN PARKS PROPERTY FUND Business Workforce accommodation Holiday Parks lines Customers Corporate Corporate Tourists Residents 39
Slide 40: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Aspen Group (“Aspen”) and should not be considered in any way to be an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security, and neither this document nor anyth