Aspen Group Limited · ASX:APZ
Aspen — H1 FY2016 Earnings Presentation
31 slides from Aspen's earnings presentation, Feb 23, 2016
Slide 1: Welcome to Aspen Group presentation
Good morning and welcome to this presentation from Aspen Group. My name is Clem Salwin, the Chief Executive of Aspen. Today Aspen has made two significant announcements. First of all, we have announced our financial results for the December half; and secondly we have announced the Mill Hill Capital
Slide 2: Presenters and presentation outline
Today I am joined by Mr Frank Zipfinger, the Independent Chairman of Aspen Group, and also by Mr John Carter, a director of Aspen Group as well as of Mill Hill Capital. I will briefly review the half year and provide a portfolio update. John will speak to the Mill Hill presentation on its proposal a
Slide 3: Half year overview and APPF sale
Two and a half years into our business turnaround, Aspen is in a strong position. Our interests in APPF have been sold at a very substantial premium. The business has been simplified. We have an attractive portfolio focused on value-for-money accommodation. And we have a very strong financial positi
Slide 4: Outlook after APPF sale and buyback
Looking forward, following the successful APPF sale, the business will continue with seeking to grow, in a broader definition of affordable accommodation, with a yield focus. The strong balance sheet allows Aspen to pursue multiple acquisition opportunities as well as capital management initiatives.
Slide 5: NAV uplift over the half year
Turning to the key drivers of the financial performance and position. This slide illustrates our NAV uplift over the half year to $1.31: - There was a 19 cent uplift from the APPF sale, 15 cents on the investment and 4 cents on the management rights - There was a negative impact of the significant w
Slide 6: Acquisition capability and distribution guidance
I mentioned earlier that our cash holding provides Aspen with strategic optionality. Aspen has significant acquisitions capability. Even post the on-market buyback of 10% of shares, Aspen would have some $100 million of acquisition capability, at a pro-forma gearing level of around 29% - well within
Slide 7: Portfolio update and development pipeline
Now turning to a brief update our portfolio position. Aspen now holds 5 accommodation assets. The two acquisitions completed over the half were Tomago Van Village near Newcastle in NSW and Adelaide Caravan Park in the centre of Adelaide. This continues our successful trend at making acquisitions, wh
Slide 8: Accommodation portfolio composition
With the sale of APPF and our recent acquisitions, the composition of our accommodation portfolio exposure has changed. Permanent residents now comprise 50% of our sites and the only 100% short stay property is in Adelaide, which is a central city location with an existing medium density residential
Slide 9: Adelaide Caravan Park value add
At Adelaide, we could also saw multiple opportunities to add value, which attracted us to acquire this property, in addition to its extraordinary location. The first was to introduce a greater emphasis on on-line sales and marketing. The revenue for the first three months of our ownership to the end
Slide 10: Karratha Village and Spearwood South
Our remaining accommodation asset is the Aspen Karratha Village (AKV). Here there has been a significant reduction in carrying value to $12 million, from $22 million previously. This reflects continued very weak conditions in resource sector accommodation. The property continues to have Woodside as
Slide 11: Mill Hill Capital proposal governance
My name is Frank Zipfinger, the Independent Non-executive Chairman of Aspen. In reviewing the proposal from Mill Hill Capital, the Board has been very conscious of the governance implications. Formal conflict protocols were immediately put in place and are fully operational, including that only the
Slide 12: Conclusion
This brings us to the conclusion of today’s presentation. Thank you for joining the call. I will be joining management in meetings with securityholders over the next several days. I am also happy to be contacted directly. Thank you and good bye. 12
Slide 13: Appendices
Appendices 13
Slide 14: Accommodation portfolio details
ACCOMMODATION PORTFOLIO DETAILS {aspen Mandurah Tomago Adelaide Aspen Four Lanterns Estate Gardens Van Caravan Karratha Estate Village Park Village State NSW WA Nsw SA - WA ‘Segment / accommodation 100% (i tl 100% short- Transient 100% permanent residential / - type permanent Seeestay stay worker Va
Slide 15: Acquisition of Tomago Van Village
ACQUISITION OF TOMAGO VAN VILLAGE <jaspen Located 18 km from the Newcastle CBD *» Adjacent to the Tomago industrial area, which is a substantial source of customer demand * 156 sites, 136 of which are licensed for long-term utilisation ' Almost all of the short-stay cabins are used for relatively lo
Slide 16: Acquisition of Adelaide Caravan Park
ACQUISITION OF ADELAIDE CARAVAN PARK aspen Located 3km from the centre of the Adelaide CBD Property backs onto the River Torrens and is within walking distance to the Adelaide Oval and Adelaide CBD “76 short-term sites (45 tourist cabins / 31 caravan / tent sites) Acquisition price Total area Tenure
Slide 17: Development: site recycling
DEVELOPMENT: SITE RECYCLING aspen Significant opportunity for site recycling and upgrade Site recycling and upgrade is a key source of value » Modern home product to meet contemporary customer demand » Development margin on new home » Quick turnaround of an existing site (essentially in place infras
Slide 18: Four Lanterns expansion
FOUR LANTERNS: EXPANSION aspen Development to unlock significant 30% expansion of sites “> Property purchased in January 2015 » Consisted of 102 homes in various condition ~ Since acquisition, over 5% of sites have been purchased and recycled with modern homes Detailed asset management has resulted
Slide 19: Tomago Van Village expansion / redevelopment
TOMAGO VAN VILLAGE: EXPANSION / REDEVELOPMENT aspen Acquired with consistent / reliable income stream in place, with the ability to augment with additional permanent dwellings “Property purchased in August 2015 ~ Licensed for 136 long-term sites » Existing DA for an additional 24 residential sites “
Slide 20: Mandurah Gardens expansion
MANDURAH GARDENS EXPANSION ' aspen Heads of Agreement on adjacent site 63 DA approved long-term sites with additional 11 long-term sites subject to DA approval and a further three long-term sites subject to environmental approvals (potential 77 total sites), which adds to 158 existing sites at Mandu
Slide 21: Development indicative timetable
DEVELOPMENT: INDICATABLE TIMETABLE ' <jaspen Development expansion pipeline beginning to ramp up Four Lanterns Concept Feasibility analysis Market research FIP DA Prepare Lodge/Receipt Detailed Design CC & Tender Selling: Tomago Concept Feasibility analysis Market research FIP DA Prepare Lodge/Recei
Slide 22: Financial highlights
FINANCIAL HIGHLIGHTS <jaspen * Operating earnings lower due to sale of APPF and sale of non-core assets * Distribution for 1H FY16 in line with guidance at 4.6 cps Key financial metrics 1H FY16 2H FY15 AHIEYAS Me ee oot FY16- 1H FY15 Revenue $31.1m $31.7m $33.8m (8%) Statutory profit / (loss) $6.0m
Slide 23: Operating earnings
OPERATING EARNINGS Profit from operations Accommodation - Aspen Group properties 3.5 3.1 2.8 - APPF properties 9.3 8.3 7.1 - APPF management fees / equity 0.2 0.2 - Non-core 1.6 1.4 5.4 Total gross profit 14.6 12.9 15.3 Operating expenses / depreciation (8.4) (7.4) (8.2) Financial expenses (2.4) (2.
Slide 24: Statutory performance
— STATUTORY PERFORMANCE 1H FY16 1H FY15 $m CPS $m Operating profit 3.9 3.5 5.4 Profit / (loss) from discontinued operations (0.2) (0.2) 21 Revaluation of Aspen Karratha Village (10.0) (8.8) (12.0) Fair value gain on deconsolidation of APPF 17.5 15.5 - Transaction / acquisition costs (3.2) (2.8) - Ot
Slide 25: Balance sheet
BALANCE SHEET <jaspen 31-Dec-15 (proforma) 31-Dec-15 30-Jun-15 $m Cash ' 61.3 6.4 23.3 Spearwood South 29.0 29.0 28.3 Aspen Karratha Village 12.0 12.0 22.0 Accommodation property * 39.5 37.7 199.7 Equity investment in APPF * - 46.3 - Assets held for sale / other * 12.7 27:2! 89.1 Total assets 154.5
Slide 26: APZ operating earnings deconsolidated
APZ OPERATING EARNINGS DECONSOLIDATED <{aspen APPF deconsolidated and reflected as equity accounted investment 1HFY16 1HFY’ $m CPS Profit from operations Accommodation -AKV 2.2 1.9 2.8 - Residential / short stay 1.3 V2 - - APPF management fees / equity 2.0 1.8 1.2 Non-core / other 1.6 1.4 7.3 Total
Slide 27: APZ profit / loss deconsolidated
APZ PROFIT / LOSS DECONSOLIDATED <{aspen APPF deconsolidated and reflected as equity accounted investment 1H FY16 1H FY15 $m CPS $m Accommodation / resource operating profit 3.5 3.1 0.4 Industrial operating profit 1.6 1.4 5.2 Development operating profit / (loss) q - (0.1) Other (2.4) (2.1) (0.3) Op
Slide 28: APZ balance sheet deconsolidated
APZ BALANCE SHEET DECONSOLIDATED — APPF deconsolidated and reflected as equity accounted investment 31-Dec-15 30. $m Cash 6.4 Accommodation assets 51.6 Spearwood / assets held for sale 37.1 Equity investment 60.9 Other 4.4 Total assets 160.4 Borrowings 5.7 Subsidiary liabilities held for sale - Othe
Slide 29: Non-core assets
NON-CORE ASSETS Segment / Accommodation type Carrying value Dec-15 $m Midland, Perth WA Industrial 25 Aspen Whitsunday Shores (AWSS), Bowen QLD Englobo residential development site 3.7 Restricted cash * - 15 Bonds * : 0.3 Total * 8.0 1 Conditionally sold 2 Due June-16 3 Refer to Financial Report pag
Slide 30: Tax asset position - June 2015
TAX ASSET POSITION — 30 JUNE 2015 <jaspen Realised (current) | Unrealised Total tax assets ($m) ' (deferred) ($m) * ($m) Revenue 18.0 1.2 19.2 Capital 15.0 58.9 73.9 Total 33.0 60.1 93.1 * Realised (or current) tax losses are losses or deductions claimed within historic tax returns, and are carried
Slide 31: Disclaimer
Disclaimer aspen 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 anything in it shall