Aspen Group Limited · ASX:APZ
Aspen — H1 2011 Earnings Presentation
41 slides from Aspen's earnings presentation, Feb 28, 2011
Slide 1: 2011 Half Year Results Presentation
For personal use only 2011 Half Year Results Presentation
Slide 2: Agenda
AGENDA For personal use only 1 1. Ke Highlights and Strategy Key Strateg 2. Financial Summary 3 3. P Property t Portfolio P tf li 4. Funds Management 5. Outlook l k and d Guidance d Appendices 2
Slide 3: 1. Key Highlights and Strategy
For personal use only 1. Keyy Highlights g g and Strategy
Slide 4: Key Highlights and Strategy
Key Highlights and Strategy For personal use only Key Financial Highlights Operating profit before tax up 17.5% to $15.6m Operating EPS of 2.93 cps Distributions of 2.10 cps, representing 70% payout ratio NTA steady at $0.68 $ Clear Strategy for Growth Portfolio : Quality Increase overall
Slide 5: Execution of Strategy
EXECUTION OF STRATEGY For personal use only Portfolio Capital Management Cap rates stable New 3 year senior debt facility for Aspen Group* and Announcement of ATO acquisition which together 12 month extension on ADF facility* with sale of St Kilda Rd will increase WALE from 2.4 New facility
Slide 6: 2. Financial Summary
For personal use only 2. Financial Summaryy
Slide 7: Financial Summary: 1H2011 Highlights
FINANCIAL SUMMARY 1H2011 Highlights Hi hli h For personal use only FY11 Group Earnings Forecasts “On Target” Operating profit before tax up 17.5% 17 5% to $15.6m $15 6m Distributions of 2.10 cps from operating earnings of 2.93 cps Solid operating performance from investment properties – net re
Slide 8: Financial Summary: 1H2011 Contribution by Segment
FINANCIAL SUMMARY C t ib ti b 1H2011 Contribution by SSegmentt For personal use only Revenue Byy Segment g 1H 2011 1H 2010 1% 2% 27% 28% 72% 70% Property Portfolio Funds Management Financial & Other Income “Increase in Funds Management activity will see a high contribution from the Funds Management
Slide 9: Summary of Group Debt Position
FINANCIAL SUMMARY S Summary off Group G D bt P Debt iti Position For personal use only 31 December 2010 30 June 2010 Core Debt Maturity (Nab) February 2014 1 February 2012 Drawn Debt 2 $240.8m $226.5m Gearing 35.7% 34.4% Look through gearing 39.5% 39.5% Weighted Av Cost of Debt 8.7% p.a. 8.3% p.a. L
Slide 10: 3. Property Portfolio
For personal use only 3. Property p y Portfolio
Slide 11: Investment Property Portfolio: Performance and Strategy
INVESTMENT PROPERTY PORTFOLIO P f Performance and d Strategy S For personal use only Key Highlights 10.4% uplift in net rental income on 1H2010 Cap rates unchanged at 9.4% (1.6% reduction in carrying values on assets held for sale) 100% of portfolio independently valued within last 12 months WALE of
Slide 12: Investment Property Portfolio: Portfolio Highlights
INVESTMENT PROPERTY PORTFOLIO Portfolio Highlights For personal use only Key Metrics ‐ Office 31 Dec 30 June Septimus Roe Square (WA) 2010 2010 Resources sector driving significant demand increase Book value $196.0m1 $233.2m for Perth CBD Existing vacancy of 14% compares to market vacancy Net Lettab
Slide 13: ATO Office Building Acquisition
INVESTMENT PROPERTY PORTFOLIO ATO Office Building Acquisition For personal use only ATO Office building acquisition delivers on key strategy to recycle portfolio into high quality assets Acquisition from ADF No.1 is conditional on project debt p is well progressed finance. Aspen p g to secure fundin
Slide 14: ATO Office Building Acquisition: Structure and Risks
INVESTMENT PROPERTY PORTFOLIO ATO Office Building Acquisition For personal use only Structured acquisition for total cost of $183.7m. Total cash outlay of $164m Equity funding to be secured through proceeds of St Kilda Road sale and one further asset sale FY11 profit impact is expected to be margina
Slide 15: Non-Core Land Asset Rationalisation
NON-CORE LAND ASSET RATIONALISATION Strategies and Outlook For personal use only Keyy Strategies g & Outlook Comprises non‐core land assets valued at $41.7m ($29.7m post settlement of Enclave Syndicate land) Active pursuit of strategy to maximise short‐term earnings through either: Developing exis
Slide 16: 4. Funds Management
For personal use only g 4. Funds Management
Slide 17: Funds Management Summary
FUNDS MANAGEMENT F d Management Funds M SSummary For personal use only Aspen Aspen Aspen ADF No.1 Living Parks Diversified Residential Development Tourism and Core Sector Estates Projects Accommodation Income Fund Summary 5 Funds Single Fund Retail Fund Retail Fund Asset Value $316m $227m $282m $127
Slide 18: Funds Management Key Strategies
FUNDS MANAGEMENT K Strategies Key S i For personal use only f Maintain disciplined capital management framework A hi Achieve appropriate i t capital it l mix/gearing i / i level l l for f each h Fund F d to t reduce d earnings risk 9 Facility extensions are well advanced across a number of Funds P
Slide 19: Aspen Living 1H2011 Overview
FUNDS MANAGEMENT A Aspen Li i 1H2011 Overview Living O i For personal use only 1H2011 1H2010 Lot settlements (Number) 1611 34 Lot settlements (Gross Realisable Value) $36.0m $7.4m 1 Fee income on 83 lots in St Leonard Leonard’ss estate lots accrued in 1H2010 Key events Significant increase in lot se
Slide 20: Aspen Living 1H2011 Overview: Land Supply
FUNDS MANAGEMENT A Aspen Li Living i 1H2011 Overview O i For personal use only Current market conditions reflect an inverse relationship between land supply in key markets and the supply of established housing in the market market. The lack of supply of quality affordable land has resulted in an inc
Slide 21: Aspen Living: Key Strategies & Outlook
FUNDS MANAGEMENT A Aspen Li i 1H2011 Overview Living O i For personal use only Key Strategies & Outlook Sector remains price sensitive but confidence in residential market is sound Solid demand for affordable land in keyy corridors Interest rates dampened demand late 2010 however recovering earlier
Slide 22: Enclave at St Leonards Residential Land Syndicate
FUNDS MANAGEMENT E l Enclave at SSt. L Leonards d RResidential id i l L Land d SSyndicate di For personal use only f Launched in November 2010, 15 kms from Perth CBD f Unique 2 year syndicate of 181 lots with zoning already in place f $11.5 $11 5 million illi retailil equity i raising l d on 25th i
Slide 23: ADF No.1 Overview
FUNDS MANAGEMENT ADF No.1 N 1 – FY10 Overview O i For personal use only Key Events Extended senior debt facility by 12 months to September 2012*. Margin reduced by 125 points Settled 2,517 sqm of medical suites at Norwest Private Hospital for $13.6m ATO Office Building (Tower 8) – significantly prog
Slide 24: Aspen Parks Property Fund Overview
FUNDS MANAGEMENT A Aspen P Parks k PProperty Fund F d – Overview O i For personal use only Key Events Strong returns from resource sector assets. Good tourist numbers despite strong $A and inclement weather conditions in certain areas C i d strong operating Continued i cash h flows fl d new equity a
Slide 25: Aspen Diversified Property Fund
FUNDS MANAGEMENT A Aspen Diversified Di ifi d P Property F Fund d For personal use only Key Events Successful leasing of Nunawading industrial property (22,541 sqm) for 15 years Henderson industrial property – secured 2 year 4 month lease to Leighton for 16,419 sqm Portfolio occupancy improved to 94
Slide 26: 5. Outlook and Guidance
For personal use only 5. Outloo Outlook a and d Gu Guidance da ce
Slide 27: Outlook and Guidance
OUTLOOK AND GUIDANCE For personal use only Outlook Continue to work out non‐core assets from the Group into accretive opportunities Stronger 2H2011 funds management fee contribution on back of Aspen Living 2H2011 settlements Continuation of recycling strategy and settlement of ATO office building ac
Slide 28: FY12 Business Activity Outlook
OUTLOOK & GUIDANCE FY12 For personal use only Business Activity Outlook Asset Management Septimus Roe poised for vacancy take up with resources led demand in WA No single major tenancy risk to income in FY12 Diversified No significant change, though potential for some asset sales Parks Stron
Slide 29: Appendices
For personal use only Appendices Aspen Group – 2010 FY 29
Slide 30: Corporate Structure
APPENDIX 1 C Corporate SStructure For personal use only Aspen Group ASX: APZ ‐Funds management fee income Rental Income ‐ Investment income ‐ Interest income Property Portfolio Funds Management c$1 billion of assets under management under the following brands: Aspen Living Aspen Parks Investment Pro
Slide 31: Organisational Structure
APPENDIX 2 O Organisational i i l SStructure For personal use only “Experienced and streamlined Senior Executive Team” Gavin Hawkins Managing Director Philip Barker Lino Brolese Jeff Holloway Jamie Smith Diniz Cardoso Chris Lewis Simon Martin General Manager Head Of Head of Company CEO Head of CFO F
Slide 32: Income Statement (operating earnings)
APPENDIX 3 I Income SStatement ((operating i earnings*) i *) For personal use only 1H11 1H10 Change $m $m (%) Income from operations Rental income 27.1 25.1 7.8% Direct development assets 1.0 ‐ ‐ Funds management 10 7 10.7 10 2 10.2 5 1% 5.1% Other income 0.4 0.4 ‐ Total Income 39.1 35.7 9.5% Expens
Slide 33: Reconciliation of Operating Profit to Headline Profit
APPENDIX 4 Reconciliation of Operating Profit to Headline Profit For personal use only 1H2011 1H2010 Note ($M) ($M) Operating Net Profit 16.4 15.6 Swap revaluations 20 2.0 06 0.6 Property revaluations ‐ (2.2) Share option expense (0.4) (1.5) Equity investments adjustments (3.3) 0.5 1 Impairment of a
Slide 34: Balance Sheet
APPENDIX 5 B l Balance Sheet Sh For personal use only 31 Dec 2010 30 June 10 Note Assets $m $m Current Assets Cash and Other 31.7 26.5 Assets classified as held for sale 163.4 12.2 1 Non‐Current Investment Properties 238.9 379.2 1 Equity Investments 79.1 83.1 Inventories 19.9 27.2 Loans to associate
Slide 35: Cashflow Summary
APPENDIX 6 C hfl Cashflow SSummary For personal use only 1H10 1H09 Mvt Note $m $m $m Cashflow from operating activities 10.2 13.9 ‐3.7 Key cashflows from investing activities Improvements to investment properties (5.7) (5.0) ‐0.7 Proceeds from sale of assets 3.1 ‐ 3.1 1 Acquisition of equity investm
Slide 36: Summary of Investment Properties
APPENDIX 7 S Summary off IInvestment P Properties i For personal use only Latest Independent Book Value Cap Rate WALE Property Valuation Date ($m) (%) (yrs) Investment Property Septimus Roe, WA Dec 09 87.1 9.25 2.27 Woolstores, WA Dec 09 52.0 10.00 1.42 Karratha Village, WA June 10 44.2 18.50 3.00 N
Slide 37: Aspen Living - Pipeline
APPENDIX 8 A Aspen Living Li i - Pipeline Pi li For personal use only Enclave at St 181 lots Mar 2011 1 GRV $40.3mil Leonards Dec 2012 Whitsunday Shores 855 lots 12 GRV $274mil Estate Oct 2022 St Leonards Estate 985 lots 7 GRV $290mil Jan Oct 2007 2017 881 lots Seaside Fernbay 10 GRV $262mil Jan May
Slide 38: Lease Profile - Investment Property Portfolio
APPENDIX 9 L Lease P Profile fil - Investment I P Property P Portfolio f li For personal use only 31 December 2010 Lease Expiry Profile by Financial Year WALE 2.4 yrs 1 (% of rental income) Occupancy 92% 0% 10% 20% 30% 40% 50% 2011 2012 Lease Expiry Financial % of 2013 Year Income 2014 Centrelink FY
Slide 39: ADF No.1 - Forecast Development Timetable
APPENDIX 10 ADF No.1- N 1 Forecast F Development D l Ti Timetable bl For personal use only FY11 FY12 FY13 FY14 FY15 GRV Project Sector $m Byford on the Scarp Residential Land Subdivision 80 Chittering Rural Residential Land Subdivision 42 U Upper S Swan S bdi i i L Subdivision Land dBBank k 41 Marin
Slide 40: Additional Fund Metrics
APPENDIX 11 Addi i Additional lFFund dMMetrics i For personal use only Aspen Fund Bank Maturity Total Assets Drawn Debt Aspen Dunsborough Lakes* Nab FY11 $96m $36m Aspen Whitsunday Shores* Nab FY12 $49m $5m Fern Bay Seaside Village* Bankwest FY12 $89m $32m St Leonard's Estate* Nab FY12 $82m $32m ADF
Slide 41: Disclaimer
DISCLAIMER For personal use only This presentation Thi i has h been b preparedd by b Aspen A G Group (“A (“Aspen”) ”) and d should h ld not beb considered id d ini any way to be an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any securit