Aspen Group Limited · ASX:APZ
Aspen — H1 FY2015 Earnings Presentation
42 slides from Aspen's earnings presentation, Feb 23, 2015
Slide 1: 2015 Half Year Results Presentation
For personal use only Aspen Group 2015 Half Year Results Presentation February 2015 1
Slide 2: Agenda
Agenda 1. Review of the half year For personal use only 2. Financial results 3. Business update 4. FY15 priorities Questions Appendices 2
Slide 3: 1. Review of the half year
For personal use only 1. Review of the half year 3
Slide 4: Progress over 1H FY15
Progress over 1H FY15 Key priorities Progress For personal use only • Settlement of Noble Park in October 2014 Non-core assets • $17.8m of non-core assets sold and due to settle 2H FY15 • Spearwood only material non-core asset remaining Aspen Parks • Recapitalisation of APPF complete Fund • Aspen Gr
Slide 5: Park operating performance
Park operating performance Strong performance of main short-stay/residential portfolio For personal use only Resource sector weakness continues to be a drag on performance Cost control evident across the portfolio 1HFY15 1HFY14 Change $m $m Net income Short-stay/residential 8.2 7.3 12% Resourc
Slide 6: Valuation movements
Valuation movements Valuation movements mirror performance For personal use only 4 short-stay/residential parks revalued up $3.8m All resource properties revalued, down $18.9m – mostly Aspen Karratha Village Slight impairment to resorts, including provision for selling costs AKV re-leasing
Slide 7: Resource sector challenges
Resource sector challenges FY13 Performance - Key Points Resource sector generally remains under significant pressure. During 1H FY15: For personal use only ~25% fall in iron ore price ~50% fall in oil price Oil (Brent US$/BBL) Iron Ore (Spot US$/t) 140 160 120 140 100 120 80 100 60 80 40 60 D
Slide 8: Non-core assets
Non-core assets Sale FY13process largely complete Performance - Key Points For personal use only Noble Park settled in October 2014 Remaining material non-core asset is the Spearwood industrial estate, Perth Environmental classification on track, with expected resolution in 2H FY15 Leasing c
Slide 9: Further reduction in overheads
Further reduction in overheads FY13 Performance Underlying - Keya Points overheads down further 5% from 2H FY14, down 40% from 1H For personal use only FY14 Further material reduction of at least 10% is expected with Sydney corporate office relocation (to occur mid March 2015) 10 9 $m 8 7 6 5 8.
Slide 10: Predominant accommodation business
Predominant accommodation business Major shift in the business achieved – focus on accommodation For personal use only Current1 30 June 2013 12% 9% 14% 26% 62% 77% Accommodation Non-accommodation Cash 1 31 December 2014 pro forma for Four Lanterns acquisition 10
Slide 11: Acquisition of Four Lanterns
Acquisition of Four Lanterns Leppington, Metropolitan Sydney NSW For personal use only 100% permanent residential park Sydney Metro location desirable for affordable accommodation Medium density zoning 102 sites, with potential development upside (subject to Council approval) 100% occupied
Slide 12: Acquisition of Harrington
Acquisition of Harrington Harrington Holiday Park, Harrington NSW For personal use only Popular northern NSW coastal location Tourism and permanent mix with development Acquisition metrics potential upside from residential conversion Purchase price $7.7m 321 sites (24% annuals / 76% short stay
Slide 13: 2. Financial results
For personal use only 2. Financial results 13
Slide 14: Operating earnings
Operating earnings FY13 Performance - Key Points For personal use only 1H FY15 1H FY14 $m CPS $m Profit / (Loss) from Operations Commercial/Industrial 5.5 4.7 12.2 Accommodation - Aspen Karratha Village 2.8 2.9 7.3 - Aspen Parks Property Fund 7.1 6.1 3.2 Development and other - - (3.3) Total Profit
Slide 15: Group financial result
Group financial result Statutory loss for 1H FY15 For personal use only 1H FY15 1H FY14 $m CPS $m Operating profit 7.8 6.7 8.3 Profit / (loss) from discontinued operations 2.1 1.8 (48.0) Revaluation of Aspen karratha Village (12.0) (10.3) (11.5) Impairment of equity accounted investees - - (7.2) Par
Slide 16: Balance sheet
Balance sheet 31-Dec-14 30-Jun-14 For personal use only $m $m Cash 44.3 44.7 Assets held for sale 112.9 115.2 Investment properties (AKV) 26.5 38.5 Equity investments - 10.7 Parks properties carrying value 170.9 - Head office assets 0.1 1.4 Other 8.2 11.2 Total Assets 363.0 221.7 Liabilities held fo
Slide 17: Debt structure
Debt structure Look through gearing of 18% For personal use only Simple structure: 2 facilities Both debt facilities refinanced during 1H FY15, with an increase in term, and reduction in margin Senior Debt facilities APZ APPF Maturity date Sep 16 Sep 17 Total drawn debt 40.0m 82.3m Senior debt
Slide 18: NAV per security movement
NAV per security movement Decline in NAV of $0.13 per security over the half year For personal use only Decline in resource properties value offset by some retained operating earnings 2 0.01 0.14 1 $/ share 1.50 1.37 0 NAV 30 Jun 14 Retained Earnings Resource properties NAV at 31 Dec 14 18
Slide 19: 3. Business update
For personal use only 3. Business update 19
Slide 20: Reallocating capital
Reallocating capital Shifting capital from resources exposure… For personal use only Pilbara occupancy is extremely low (~30%) Identified opportunity to relocate unused cabins to Perth Vineyards, where there are immediately available residential sites Relocation cost of ~$40k is significantly
Slide 21: Reallocating capital
Reallocating capital …to annuity residential Perth exposure For personal use only Test cabin was completed, to assess feasibility, with no wear and tear or cost issues Market demand for product at Perth Vineyards has been strong, with 3 cabins sold within the first month Sale price <$200k for
Slide 22: Development opportunity
Development opportunity For personal use only In-house development management capability Pipeline re-starting with availability of capital from non-core asset sales Currently progressing $6.0m of development on short-stay product Highly accretive stabilised ROA in mid teens Currently inves
Slide 23: Optimising existing portfolio
Optimising existing portfolio For personal use only Positive cyclical forces Lower Australian dollar Lower petrol prices Value for money Management focus Cost efficiencies Revenue enhancement / more active yield management Aspen Karratha Village re-leasing 23
Slide 24: Acquisition pipeline
Acquisition pipeline For personal use only With low gearing, from non-core asset sales acquisition capacity of $100m+ Currently investigating a number of opportunities: Focus on residential and mixed use short stay/residential parks Enhancing existing park clustering, or opportunities for ne
Slide 25: 4. FY15 priorities
For personal use only 4. FY15 priorities 25
Slide 26: Priority action points
Priority action points For personal use only Finalise sale of Spearwood Continue to focus on acquisitions – there are a large number of opportunities Grow residential development pipeline to create annuity rental streams Optimise operational returns Maintain discipline on overhead cost F
Slide 27: Questions
For personal use only Questions 27
Slide 28: Appendices
For personal use only Appendices 28
Slide 29: Accommodation business
Accommodation business Consistent “value-for-money” customer proposition For personal use only ASPEN GROUP LIMITED own own Subsidiary (42%) KARRATHA ASPEN PARKS FOUR LANTERNS Business Workforce PROPERTY FUND Permanent Residential lines Accommodation Holiday Parks Customers Corporate Tourists Residen
Slide 30: Resource properties
Resource properties FY13 Performance - Key Points For personal use only Focus on: Securing lease extension at AKV Cost management Independent revaluation of all resource parks during 1H FY15 Dec-14 Capitalisation Jun-14 Change Property $m rate $m $m Aspen Karratha Village 26.5 21.0% 38.5 (12
Slide 31: Short-stay/residential parks
Short-stay/residential parks For personal use only Independent valuation of 4 short-stay/residential parks during half. Carrying values rose slightly Dec-14 Capitalisation Jun-14 Change Property $m rate $m $m Geelong Riverview Tourist Park 3.2 22.9% 2.4 0.8 Horseshoe Lagoon Holiday Park 8.5 12.5%
Slide 32: Aspen Parks Property Fund
Aspen Parks Property Fund Carrying values For personal use only Dec-14 Jun-14 Movement Property Sector $m $m $m % A Shady River Holiday Park Short Stay residential 6.0 6.0 - - Ashley Gardens BIG4 Holiday Village Short Stay Residential 19.5 19.5 - - Balmoral Holiday Park Resource 2.5 3.9 (1.4) (36%)
Slide 33: Financial highlights
Financial highlights For personal use only 1H 1H Revenue decline due to Key financial metrics FY15 FY14 Change asset sales, partially offset by the consolidation of APPF Revenue 33.8m 42.2m (19.9%) during the period Statutory loss (18.2m) (70.2m) 74.1% Like for like net income growth of 12% in m
Slide 34: NAV per security composition
NAV per security composition $0.39 per security in cash available for acquisitions For personal use only Of the $1.00 per security in assets held for sale, $0.16 has been contracted, and $0.60 pertains to Spearwood 4 0.01 3 0.39 0.82 1.00 0.27 $/ share 2 0.17 0.52 1 1.51 1.37 0.23 0 34
Slide 35: Non-core development asset sales
Non-core development asset sales FY13 Performance Substantially - Key sale completed Points programme For personal use only 25 4.7 0.8 20 Development Assets ($m) 15 17.8 26.5 22.7 10 5 4.8 0 30 June 2014 Settled Reversal of 31 December 2014 Under contract For sale impairment 35
Slide 36: APZ Operating earnings deconsolidated
APZ Operating earnings deconsolidated For personal use only APPF deconsolidated and reflected as equity accounted investment 1H FY15 1H FY14 $m CPS $m Profit / (Loss) from Operations Industrial 5.2 4.4 12.2 Accommodation - Aspen Karratha Village 2.8 2.4 7.3 - Aspen Parks Property Fund 1.2 1.1 3.2 De
Slide 37: APZ profit/loss deconsolidated
APZ profit/loss deconsolidated APPF deconsolidated and reflected as equity accounted For personal use only investment 1H FY15 1H FY14 $m CPS $m Accommodation operating profit 1.2 1.0 6.2 Industrial operating profit 5.2 4.5 6.9 Development operating loss (0.1) (0.1) (4.8) Operating profit 6.3 5.4 8.3
Slide 38: APZ balance sheet deconsolidated
APZ balance sheet deconsolidated APPF deconsolidated and reflected as equity accounted For personal use only investment 31-Dec-14 30-Jun-14 $m $m Cash 39.3 44.7 Assets held for sale 89.8 115.2 Investment properties 26.5 38.5 Equity investments 48.0 10.7 Property, plant and equipment 0.1 1.4 Other 7.
Slide 39: APPF operating earnings
APPF operating earnings For personal use only 1H FY15 1H FY14 $m CPS $m Revenue from operations Mixed use net property income 8.5 4.5 7.4 Resources net property income 2.8 1.5 4.4 Resorts net property income 2.0 1.1 2.1 Other revenue 0.1 - 0.2 Total revenue 13.3 7.1 14.1 Operating expenses (4.0) (2.
Slide 40: APPF profit/loss
APPF profit/loss For personal use only 1H FY15 1H FY14 $m CPS $m Mixed use underlying profit 3.5 1.9 1.8 Resources underlying profit 2.0 1.1 3.1 Resorts underlying profit 1.2 0.6 0.9 Total operating profit 6.7 3.7 5.8 Mixed use property valuations 0.4 0.2 (14.9) Resource property valuations (1.4) (0
Slide 41: APPF balance sheet
APPF balance sheet For personal use only 31-Dec-14 30-Jun-14 $m $m Cash 5.1 5.9 Property, plant and equipment 165.4 177.6 Goodwill 13.8 12.0 Resort assets held for sale 23.5 12.0 Other assets 2.7 2.9 Total assets 210.4 210.3 Interest bearing liabilities 81.3 110.2 Other liabilities 15.8 13.9 Total l
Slide 42: 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