Aspen Group Limited · ASX:APZ
Aspen — H1 2010 Earnings Presentation
46 slides from Aspen's earnings presentation, Feb 22, 2010
Slide 1: Aspen Group 1H2010 Results Presentation
For personal use only Aspen Group 1H2010 Results Presentation
Slide 2: Agenda
Agenda For personal use only Aspen Overview 1. Group Results Summary 2. Financial Summary 3. Investment Property Portfolio 4. Funds Management 5. Direct Development Portfolio 6. Outlook Questions Appendices 2 Aspen Group 1H2010 Results Presentation
Slide 3: Aspen Overview: Corporate Structure
Aspen Overview Corporate Structure For personal use only 3 Aspen Group 1H2010 Results Presentation
Slide 4: Aspen Overview: Business Fundamentals
Aspen Overview Business Fundamentals For personal use only • 80% of headstock assets independently valued December Confidence in our 09 (all others August 09) asset values • Cap rate (excl Karratha) 9.40% • 93% of AUM independently valued within last 12 months Strengthened balance • Capital manageme
Slide 5: Group Results Summary
1. Group Results Summary For personal use only Stable profit performance, in line with expectations Operating profit before tax up 5% to $13.3m Strong operating performance from investment properties with core market fundamentals holding up well Distribution of 2.10 cps paid from operating earnings
Slide 6: 2. Financial Summary
For personal use only 2. Financial Summary Aspen Group 1H2010 Results Presentation
Slide 7: Results Overview
2. Financial Summary Results Overview For personal use only 1H10 ($M) 1H09 ($M) Change Income from operations Rental income 25.1 20.2 24% Funds management 6.7 10.1 (34%) Other Income 3.9 4.5 35.7 34.8 Expenses Direct property expenses (8.5) (6.1) 39% Employment (5.9) (7.4) (20%) Administrative and o
Slide 8: Revenue & Earnings Breakdown
2. Financial Summary Revenue & Earnings Breakdown For personal use only Revenue and Other Income - by source 40 Operating profit before tax by segment 35 1H10 1H09 ($’m) (%) ($’m) (%) 30 1H10 1H09 Investment Property 12.2 92% 8.9 70% 25 Funds Management 1.8 14% 4.7 37% $ million Developments (1.1) -
Slide 9: Results Overview: Financial Position
2. Financial Summary Results Overview For personal use only 1H10 1H09 Financial Position Gearing 33% 38% Look through gearing 39% 44% Total assets $646.9m $640.5m Weighted average number of securities 556.9m 254.5m Net tangible assets per security¹ 71 cps 125 cps ¹ NTA excludes non-dilutionary emplo
Slide 10: Summary of Group Debt Facilities
2. Financial Summary Summary of Group Debt Facilities For personal use only Debt Facility Expiry 250 (Core) 200 150 $’m 100 50 (Retirement) (Karratha)* 0 FY10 FY11 FY12 FY13 FY14 Weighted average cost of debt 7.8% Earnings interest cover 3.5x (EBITDA / Interest expense) No current term facility expi
Slide 11: APZ Value Proposition Metrics
2. Financial Summary APZ Value Proposition Metrics For personal use only Yield at current security price Cents per security Peer Group Averages* ($0.45) Operating EPS FY10 6.0 13.3% 8.7% Distribution at 70% 4.2 9.3% 6.3% Discount to NTA 35% 19.6% Supported by: Sustainable Recurring Revenues • Circa
Slide 12: 3. Investment Property Portfolio
For personal use only 3. Investment Property Portfolio Aspen Group 1H2010 Results Presentation
Slide 13: Investment Property Portfolio strategy
3. Investment Property Portfolio For personal use only “Strong rental growth and stable asset values were positive outcomes for the half” Identify Leverage Actively quality Underpins strong manage income Aspen’s NTA cashflow for tenancy producing & earnings business profiles properties growth 13 Asp
Slide 14: Overview & Outlook
3. Investment Property Portfolio Overview & Outlook For personal use only Key Events 18% uplift in net rental income on 1H09 (10% excluding Karratha Village completed Dec 08 & Gardentown sold in Jan 09) Portfolio emerging from bottom of valuation cycle 80% of portfolio independently valued with only
Slide 15: Growth in net rental income
3. Investment Property Portfolio Growth in net rental income For personal use only 1H10 1H09 Change Net Rental Income $16.6m $14.1m 18% Adjusted for: Karratha Village * ($3.8m) ($1.6m) Gardentown Shopping Centre ** - ($0.9m) Normalised Net Rental Income $12.8m $11.6m 10% * Karratha Village completed
Slide 16: Summary of properties
3. Investment Property Portfolio Summary of properties For personal use only 1H10 Change to Property Latest Independent Book Value Book Value Cap Rate Valuation Date ($m) (%) (%) Septimus Roe, WA Dec 09 87.0 5.2% 9.25 Alcoa Office Complex, WA Dec 09 28.0 -3.8% 9.00 Elders Woolstores, WA Dec 09 52.0
Slide 17: Outlook supported by Key Metrics
3. Investment Property Portfolio Outlook supported by Key Metrics For personal use only Blue chip and Government account for 70% of tenants Weighted average cap rate 9.40% Occupancy 92% 2012 – Elders 13% * WALE 3.2 yrs 2014 – Woodside 21% ** Income Covenant Profile 27% 26% Government * Key lease exp
Slide 18: Outlook supported by Key Metrics
3. Investment Property Portfolio Outlook supported by Key Metrics For personal use only Blue chip and Government account for 70% of tenants Weighted average cap rate 9.40% Occupancy 92% 2012 – Elders 13% * WALE 3.2 yrs 2014 – Woodside 21% ** Income Covenant Profile 27% 26% Government * Key lease exp
Slide 19: Funds Management strategy
4. Funds Management For personal use only “Strong platform for recurring management fee growth with transactional activity to provide earnings upside” Identify Leverage in- Deliver property Efficient house recurring and sectors with utilisation of property non-recurring investment Group capital capa
Slide 20: Funds Management Business Summary
4. Funds Management Business Summary For personal use only Aspen Aspen Aspen Aspen Development Parks Diversified Living Fund No.1 Sector Tourism and Accommodation Core Income Residential Estates Development Projects Asset value $270m $140m $303m $247m Aspen ownership 14% 36% 30% (w. average) 48% 1H1
Slide 21: Aspen Parks Property Fund
4. Funds Management Aspen Parks Property Fund For personal use only Dec 09 Dec 08 Assets under Management $270m $265m Half Year recurring contribution to pre tax operating profit1 $3.2m $3.3m Aspen’s equity interest in Fund 14% 14% ¹ Recurring contribution = recurring fees + Aspen’s equity share of
Slide 22: Aspen Parks Property Fund: Platform and Dealer Group representation
4. Funds Management Aspen Parks Property Fund For personal use only Strong Platform and Dealer Group representation Platform Representation Dealer Group No. of Advisors AMP FP 1,360 Colonial First Wrap BT Wrap Millenium 3 (case basis) 810 Macquarie Wrap Symmetry CommonWealth FP (case basis) 688 Fina
Slide 23: Aspen Diversified Property Fund
4. Funds Management Aspen Diversified Property Fund For personal use only Dec 09 Dec 08 Assets under Management $140m $165m Half Year recurring contribution to pre tax operating profit1 $1.0m $1.3m Aspen’s equity interest in Fund 36% 31% ¹ Recurring contribution = recurring fees + Aspen’s equity sha
Slide 24: Aspen Living
4. Funds Management Aspen Living For personal use only Dec 09 Dec 08 Assets under Management $303m $318m Half Year recurring contribution to pre tax operating profit1 $2.6m $0.2m Aspen’s equity interest in Fund 30% 23% ¹ Recurring contribution = recurring fees + Aspen’s equity share of profits Key e
Slide 25: Aspen Living – Emerging from bottom of cycle
4. Funds Management Aspen Living–Emerging from bottom of cycle For personal use only Key Metrics 1H10 1H09 Lot sales 144 14 GRV $32.3m $4.7m GM% 20% 8% GRV by Financial Year $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 GRV $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- 06 07
Slide 26: Aspen Living – Pipeline
4. Funds Management Aspen Living – Pipeline For personal use only Development timeframe by Estate Dunsborough Lakes Seaside Fernbay St Leonards Estate Whitsunday Shores Estate Key growth area for the Group with Aspen Living holding a strong pipeline of 4,000 urban zoned lots Well positioned to benef
Slide 27: Aspen Development Fund No.1
4. Funds Management Aspen Development Fund No.1 For personal use only Dec 09 Dec 08 Assets under Management $247m $274m Half Year recurring contribution to pre tax operating profit1 $1.0m $4.7m Aspen’s equity interest in Fund 48% 25% ¹ Recurring contribution = recurring fees + Aspen’s equity share o
Slide 28: Forecast Development Timetable
4. Funds Management Forecast Development Timetable For personal use only FY10 FY11 FY12 FY13 FY14 FY15 GRV Project Sector $m Byford on the Scarp Residential Land Subdivision 88 Chittering Rural Residential Land Subdivision 41 Upper Swan Subdivision Land Bank 14 Mariner Apartments 50% interest Touris
Slide 29: 5. Direct Development Portfolio
For personal use only 5. Direct Development Portfolio 29 Aspen Group 1H2010 Results Presentation
Slide 30: Direct Development Portfolio strategy
5. Direct Development Portfolio For personal use only “Pipeline of direct development projects to generate new earnings streams” Develop strategic Recycle non- Create further retirement & strategic assets diversity in other assets to reduce debt earnings 30 Aspen Group 1H2010 Results Presentation
Slide 31: Overview and Outlook
5. Direct Development Portfolio Overview and Outlook For personal use only The portfolio comprises $41m of land assets held on balance sheet for future development Includes the retirement asset portfolio ($28m) pipeline of 753 units Further non-strategic assets ($13m) held for future zoning or recyc
Slide 32: Retirement Village Pipeline
5. Direct Development Portfolio Retirement Village Pipeline For personal use only Communities Proposed Unit Yield 140 120 108 108 108 108 108 100 80 76 69 60 40 36 26 20 6 - - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Ballina Units Byford Units West Swan Units 32 Aspen Group 1H2010 Resu
Slide 33: 6. Outlook
For personal use only 6. Outlook Aspen Group 1H2010 Results Presentation
Slide 34: Divisional Strategies
6. Outlook Divisional Strategies For personal use only • Maintain revenue growth while mitigating major lease Property Portfolio expiries • Capitalise on rebounding residential markets, organic Funds Management development opportunities & Aspen Parks success • Progress Ballina Retirement Village con
Slide 35: Key Business Drivers
6. Outlook Key Business Drivers For personal use only Return of more normalised property fundamentals has eased pressure on market values across all sectors Landmark resource projects (Gorgon, Pluto, Iron-Ore projects, Olympic Dam Expansion) to benefit the Group due to asset weightings in WA & SA In
Slide 36: Financial Deliverables
6. Outlook Financial Deliverables For personal use only FY2010 operating earnings guidance of 6.00 cps = Earnings yield of 13.3% (at security price of $0.45) Distribution guidance for FY2010 of circa 70% of operating earnings = Distribution yield of 9.3% (at security price of $0.45) Funds management
Slide 37: Questions
For personal use only Questions Aspen Group 1H2010 Results Presentation
Slide 38: Reconciliation of Operating Profit to Headline Profit
Appendix 1 Reconciliation of Operating Profit to Headline Profit For personal use only 1H10 1H09 ($M) ($M) Operating Net Profit 15.6 17.1 Swap revaluations 1.1 (11.7) Property revaluations (0.9) (12.4) Share option expense/other (1.0) (2.0) Fair value of equity investments - (27.5) Revaluation of in
Slide 39: Balance Sheet
Appendix 2 Balance Sheet For personal use only 31 Dec 09 30 June 09 Mvt Assets $m $m $m Current Assets Cash and Other 45.1 52.7 Non Current Investment Properties 362.2 368.6 Equity Investments 89.5 59.8 29.7¹ Inventories & assets held for sale 43.7 35.0 Other 106.4 104.7 Total Assets 646.9 620.8 Cur
Slide 40: Summary of Group Debt Facilities
Appendix 3 Summary of Group Debt Facilities For personal use only Facility Facility Purpose Maturity ICR LVR Covenants Limit NAB Core Long Term Core ICR 1.5x $213m Feb-12 LVR 69% to maturity Facility Facility 2.0x* 56% As per core facility NAB Karratha $21.0m Karratha Village Dec-13 however amortisi
Slide 41: Investment Property Portfolio
Appendix 4 Investment Property Portfolio For personal use only SEPTIMUS ROE SQUARE ALCOA BUILDING 256 ADELAIDE TERRACE, PERTH, WA LOT 4, DAVY STREET, BOORAGOON, WA DESCRIPTION DESCRIPTION Septimus Roe Square is a medium rise office building comprising two levels of Alcoa Building comprises a high qu
Slide 42: Investment Property Portfolio
Appendix 4 Investment Property Portfolio For personal use only 564 ST KILDA ROAD 215 BROWNS ROAD MELBOURNE, VIC NOBLE PARK, VIC DESCRIPTION DESCRIPTION The property comprises a modern commercial office building constructed over 8 The property comprises a complex of office/warehouse buildings incorpo
Slide 43: Investment Property Portfolio
Appendix 4 Investment Property Portfolio For personal use only MTAA SUPER HOUSE 51-63 HEATON STREET 55 CURRIE STREET, SA ROCKLEA, QLD DESCRIPTION DESCRIPTION MTAA Super House comprises a high quality 'A' Grade office building built to The property is improved with 2 industrial warehouse buildings of
Slide 44: Investment Property Portfolio
Appendix 4 Investment Property Portfolio For personal use only 33 YORK STREET ELDERS WOOLSTORES SYDNEY, NSW CNR PHOENIX & SUDLOW ROAD, BIBRA LAKE, WA DESCRIPTION DESCRIPTION The property comprises a strata titled office floor of 544 sqm situated on level 5 The property comprises a large industrial d
Slide 45: Investment Property Portfolio: Karratha Village
Appendix 4 Investment Property Portfolio For personal use only KARRATHA VILLAGE LOT 1 RADLEY DRIVE, KARRATHA, WA DESCRIPTION Developed on the site is an accommodation village comprising a total of 180 units. The individual unit layouts comprise 1 main room separated into a lounge/living area with a
Slide 46: 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