Aspen Group Limited · ASX:APZ
Aspen — FY2015 Earnings Presentation
51 slides from Aspen's earnings presentation, Aug 24, 2015
Slide 1: Aspen Group 2015 Full Year Results Presentation
For personal use only Aspen Group 2015 Full Year Results Presentation August 2015
Slide 2: Agenda
Agenda For personal use only 1. Strategy progress 2. Financial results 3. Business update 4. FY16 priorities Appendix 2
Slide 3: 1. Strategy progress
For personal use only 1. Strategy progress
Slide 4: FY15: Delivering on business strategy
FY15: Delivering on business strategy For personal use only • Aspen is now substantially a pure-play accommodation business Strategic focus • Strong thematics: demographics; affordability; public policy • Attractive asset pricing • Strong performance in core residential / short-stay portfolio offset
Slide 5: FY15: Delivering on business strategy
FY15: Delivering on business strategy For personal use only • FY15 group overheads reduced by a further 35% over FY14, reflecting Financial strong cost focus performance • Operating profit of $10.2m • NAV per security $1.26 – negatively impacted by devaluation of resources properties and Spearwood S
Slide 6: Aspen Group has been refocused to deliver a clear and consistent business strategy
Aspen Group has been refocused to deliver a clear and consistent business strategy For personal use only Restructured Refocused Optimise and reinvest 2012 2013 2014 2015 YTD Board restructure and Senior management Sale of majority of non‐ Commenced manufactured housing development appointmen
Slide 7: Strategic transition in face of significant headwinds
Strategic transition in face of significant headwinds For personal use only Exceptionally challenging environment of the severe downturn in the Iron Ore Price resources industry 150 Operating results, excluding our resource exposure, have been solid 100 US$ per tonne However, the impact of the
Slide 8: Acquisitions momentum, with disciplined capital allocation
Acquisitions momentum, with disciplined capital allocation For personal use only Continue to see attractive opportunities Acquisitions by quarter1 30 25 Acquisitions per qtr ($m) 20 15 10 5 ‐ Dec‐14 Mar‐15 Jun‐15 Sep‐15 QTD 1 Consolidated portfolio (inclusive of APPF) 8
Slide 9: Shift to permanent residential
Shift to permanent residential Portfolio has been shifting towards residential/permanents For personal use only ¾ Acquisitions have been 56% residential/permanents ¾ Sale of short stay resort-style assets in north-west WA Portfolio composition1,2 6,000 5,000 4,000 3,000 2,000 1,000 0 Pre‐FY15 Curr
Slide 10: Non-core asset sales largely complete
Non-core asset sales largely complete For personal use only $108.4 million of non-core asset sales announced or settled Noble Park ($20.7m) and Adelaide City Central ($12.0m) settled during FY15 Sale of Spearwood North in April 2015 (settled August 2015) for $35.0m Spearwood South only materia
Slide 11: Further reduction in overheads
Further reduction in overheads FY13 Performance Overheads in 2H FY15-down Key24% Points from 1H FY15 For personal use only 2H FY15 overheads down 64% from 1H FY13 levels Aspen Group overheads, FY13 – FY15 9.0 6.0 $m 8.8 7.7 7.0 3.0 4.4 4.2 3.2 ‐ Dec‐12 Jun‐13 Dec‐13 Jun‐14 Dec‐14 Jun‐15 11
Slide 12: 2. Financial results
For personal use only 2. Financial results
Slide 13: Accommodation operating performance
Accommodation operating performance Strong performance of core residential/short stay assets For personal use only Resource assets: further reduction in income, reflecting severe weakness in the resources sector Cost and yield management a key focus to drive margins FY15 FY14 Change $m $m % Ne
Slide 14: Operating earnings
Operating earnings For personal use only FY15 FY14 $m CPS $m Profit / (loss) from operations Accommodation - Aspen Group properties 5.9 5.2 10.7 - APPF properties 15.8 13.9 0.0 - APPF management fees / equity 1.1 1.0 5.0 Commercial / industrial 6.9 6.1 15.2 Development and other 0.8 0.7 (4.3) Total
Slide 15: Statutory performance
Statutory performance FY15 FY14 For personal use only $m CPS $m Operating profit 14.2 12.5 14.7 Residential / short stay revaluations 4.0 3.5 (2.3) Resource property revaluations (29.0) (25.6) (14.8) Non-core revaluations (3.0) (2.7) (66.7) Acquisition cost impairment (3.4) (3.0) 0.0 Administration
Slide 16: Balance sheet
Balance sheet For personal use only 30-Jun-15 30-Jun-14 $m $m Cash 23.3 44.7 Property, plant and equipment 209.8 1.4 Goodwill 12.0 0.0 Assets held for sale 108.5 115.2 Investment properties / equity investment 0.0 49.2 Other 8.9 11.2 Total assets 362.4 221.7 Borrowings 141.9 26.7 Subsidiary liabilit
Slide 17: Valuation movements
Valuation movements Short stay properties showed an increase over the half-year of $3.3m For personal use only Resource parks continued to be weak, down $6.4m, over the half year, reflecting lower income Aspen Karratha Village (AKV) down $4.5m ¾ Two year lease extension to January 2018 for 83%
Slide 18: NAV per security
NAV per security For personal use only Decline in NAV of $0.11 per security over 2H FY15 Movement in NAV per security, FY15 1.60 1.40 (0.13) (0.06) (0.03) (0.01) (0.01) 1.20 1.00 $ / Share 0.80 1.50 1.37 0.60 1.26 0.40 0.20 ‐ NAV 30 Jun 14 First half NAV 31 Dec 14 Resource Spearwood Acquisition cost
Slide 19: 3. Business update
For personal use only 3. Business update
Slide 20: Business priorities
Business priorities For personal use only 1. Improving leveraging deep operational operational expertise performance: 2. Prudent development significant potential growth: within the portfolio 3. Disciplined portfolio consistent investment acquisitions criteria 4. Conservative capital Disciplined use
Slide 21: 1. Improving operational performance
1. Improving operational performance Operational focus For personal use only Building on over 11 years of management experience Focus on driving revenue gains and cost New customer website efficiencies New customer website launch in June 2015 as part of upgraded digital strategy, and broadening
Slide 22: Selective operational development
1. Improving operational performance Selective operational development For personal use only Nearly $5.0m in capex underway Occupancy and rate growth drive strong expected returns on capital employed Dubbo Parklands Ashley Gardens 4 three bed cabins underway, to cater to Spare land at centra
Slide 23: Creating value from development
2. Prudent development growth Creating value from development For personal use only Multiple approaches to manufactured housing development ¾ Upgrade of existing residential sites ¾ Conversion of short-stay sites ¾ Utilisation of additional land on properties Key development characteristics ¾ Re
Slide 24: Growing development pipeline
2. Prudent development growth Growing development pipeline For personal use only Manufactured housing development commenced in FY15 ¾ 3 settled in FY15; as at 30 June 2015, 6 in stock and 7 under construction, across multiple properties ¾ Continuing “flow” development DAs submitted, or in proces
Slide 25: Key investment thematics
3. Disciplined portfolio acquisitions Key investment thematics For personal use only Strong recurring income yield Metropolitan, major population centres and existing clusters Development/expansion upside opportunities Recent acquisitions reflect these key themes ¾ Permanent residential - Ma
Slide 26: Acquisition case study: Four Lanterns
3. Disciplined portfolio acquisitions Acquisition case study: Four Lanterns For personal use only Low risk acquisition Mature park: 100% occupancy, 100% permanent Minimal short-term capex requirements Strong demographics in surrounding catchment area: Sydney median house prices, population app
Slide 27: Commitment to capital discipline
4. Conservative capital management Commitment to capital discipline For personal use only Reallocating capital from the weak resources sector to stronger demand for affordable housing in Perth ¾ Process will continue as approvals achieved Sale of three north-west WA resort-type assets for $34m t
Slide 28: 4. FY16 priorities
For personal use only 4. FY16 priorities
Slide 29: Priority action points for FY16
Priority action points for FY16 For personal use only Positive industry thematics – Aspen is well placed Drive operational returns – revenue generation and cost discipline Manufactured housing development – execute and expand pipeline to create annuity rental streams Acquisitions– actively r
Slide 30: Aspen Group 2015 Full Year Results Presentation
For personal use only Aspen Group 2015 Full Year Results Presentation August 2015
Slide 31: Appendix A: the Aspen business
For personal use only Appendix A: the Aspen business
Slide 32: Substantially pure play accommodation following strategic refocus
Substantially pure play accommodation following strategic refocus For personal use only Portfolio composition over time1 30-Jun-13 30-Jun-152 Strategic objective Sale of non‐core assets Acquisition of accommodation parks 16% 28% 100% 72% 84% Accommodation Non‐accommodation 1 Consolidated portfolio (
Slide 33: Business structure
Business structure For personal use only Aspen Group Manager 100% 42% Direct holdings APPF Unlisted retail property fund • 4 accommodation properties1 • 21 accommodation properties2 • APPF management contract • Established 2004 • Non-core assets 1 Includes Tomago Van Village acquired post 30 June 20
Slide 34: Business activities
Business activities For personal use only Aspen’s mix of revenue across segments of “value for money” accommodation to diversify and improve earnings quality Aspen Group core revenue sources Short‐stay Manufactured Permanent Long‐term rentals / home residents corporate leases tourism development 34
Slide 35: Accommodation portfolio
Accommodation portfolio1,2 For personal use only Carrying value split by property type3 Carrying value split by state3 Value % overall # of sites ($m)3 Mixed permanent/short 63.6 44% 3,137 stay 100% short stay 18.9 16% 447 Mixed permanent/short stay AKV WA NSW SA VIC QLD 100% permanent 100% Short st
Slide 36: Accommodation portfolio
Accommodation portfolio1,2 Consolidated accommodation portfolio comprises 25 accommodation For personal use only parks and MHEs across Australia with over 5,000 cabins and sites Queensland Western Australia Carrying Cap Property value ($m) rate (%) Carrying Cap Property value ($m) rate (%) 1 Austral
Slide 37: Aspen Group direct portfolio
Aspen Group direct portfolio For personal use only Carrying values Segment / Jun-15 Jun-14 Movement Property Accommodation type $m $m $m % Four Lanterns Estate1 100% permanent 8.0 - - - Mandurah Gardens Estate1 100% permanent 10.7 - - - Mixed permanents/short- Tomago Van Village 1 11.2 - - - stay As
Slide 38: APPF portfolio
APPF portfolio Carrying values For personal use only Jun-15 Jun-14 Property State Accommodation type $m $m Ballina Lakeside NSW Residential/short-stay 17.2 - Harrington1 NSW Residential/short-stay 8.3 - Maiden’s Inn NSW Residential/short-stay 15.0 14.5 Shady River NSW Residential/short-stay 5.8 6.0
Slide 39: Strong acquisition momentum in east coast markets: Harrington, Australiana
Strong acquisition momentum in east coast markets: Harrington, Australiana For personal use only Harrington Holiday Park Australiana Holiday Park Harrington, New South Wales Hervey Bay, Queensland Acquisition announced: 8 December 2014 Acquisition announced: 20 March 2015 Purchase price: $7.8 millio
Slide 40: Strong acquisition momentum in east coast markets: Ballina, Tomago
Strong acquisition momentum in east coast markets: Ballina, Tomago For personal use only Ballina Lakeside Holiday Park Tomago Van Village Ballina, New South Wales Newcastle, New South Wales Acquisition announced: 15 May 2015 Acquisition announced: 3 August 2015 Purchase price: $16.5 million Purchase
Slide 41: MHE acquisitions aligned to focus on 'value-for-money' accommodation
MHE acquisitions aligned to focus on ‘value-for-money’ accommodation For personal use only Four Lanterns Estate Mandurah Gardens Estate Leppington, New South Wales Mandurah, Western Australia Acquisition announced: 13 January 2015 Acquisition announced: 22 June 2015 Purchase price: $7.4 million Purc
Slide 42: Appendix B: detailed financials
For personal use only Appendix B: detailed financials
Slide 43: Financial highlights
Financial highlights For personal use only Key financial metrics ($m) FY15 FY14 Change Revenue 65.2 110.6 (41.0%) Statutory Loss (31.7) (81.8) 62.2% Operating Profit1 10.2 14.7 (30.6%) Operating Profit (cps) 9.0 12.3 (26.8%) Operating Cashflow 3.4 40.5 (113.6%) Gearing 35.1% nil 35.1% Net Asset Valu
Slide 44: Debt structure
Debt structure For personal use only Simple debt structure ¾ Facility for each of Aspen Group and APPF ¾ Both refinanced during FY15, with an increase in term, and reduction in margin Senior debt facilities APZ APPF Maturity date Sep 17 Sep 17 Total drawn debt 35.1m 107.4m Senior debt facilities 6
Slide 45: NAV per security composition
NAV per security composition For personal use only Of the $0.96 per security in assets held for sale, $0.62 has been contracted for sale ¾ $0.26 pertains to the unsold half of Spearwood South 3.50 3.00 0.16 2.50 0.96 (1.26) $ / security 2.00 0.37 (0.55) 1.50 (0.08) 1.00 1.65 1.26 0.50 ‐ Residentia
Slide 46: APZ operating earnings deconsolidated
APZ operating earnings deconsolidated For personal use only APPF deconsolidated and reflected as equity accounted investment FY15 FY14 $m CPS $m Profit / (loss) from operations Accommodation - AKV 5.7 5.0 10.7 - Four Lanterns 0.2 0.2 0.0 - APPF management fees / equity 6.3 5.5 5.0 Commercial / indus
Slide 47: APZ balance sheet deconsolidated
APZ balance sheet deconsolidated For personal use only APPF deconsolidated and reflected as equity accounted investment 30-Jun-15 30-Jun-14 $m $m Cash 21.5 44.7 Property, plant and equipment 39.6 1.4 Goodwill 1.6 0.0 Assets held for sale 74.3 115.2 Investment properties / equity investment 45.1 49.2
Slide 48: APPF operating earnings
APPF operating earnings For personal use only FY15 FY14 $m CPS $m Profit / (loss) from operations Residential / short stay 16.1 7.4 14.1 Resources 4.4 2.0 7.0 Non-core assets 3.8 1.7 4.6 Total income 24.2 11.2 25.6 Operating expenses (5.6) (2.6) (5.5) Fund management fees (2.1) (1.0) (3.1) Financial
Slide 49: APPF profit/loss
APPF profit/loss For personal use only FY15 FY14 $m CPS $m Operating profit 11.6 5.4 10.7 Residential / short stay revaluations 1.7 0.8 (29.9) Resource property revaluations (12.2) (5.6) (21.7) Non-core revaluations (2.1) (1.0) (20.0) Acquisition cost impairment (2.3) (1.1) 0.0 Administration and re
Slide 50: APPF balance sheet
APPF balance sheet For personal use only 30-Jun-15 30-Jun-14 $m $m Cash 1.8 3.9 Property, plant and equipment 172.9 177.6 Goodwill 16.3 10.3 Assets held for sale 34.2 12.0 Other 2.9 4.9 Total assets 228.0 208.6 Borrowings 106.6 110.2 Other 14.0 12.2 Total liabilities 120.5 122.4 Net assets 107.5 86.
Slide 51: 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