ASPEN GROUP — Annual Report 2021

Aug 18, 2021

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Aspen Group Limited

ABN: 50 004 160 927

Appendix 4E and Financial Report for the year ended

30 June 2021

A s p e n G r o u p

Details of reporting periods:
Current period	30 June 2021
Corresponding period	30 June 2020
Revenue and Net Profit/(Loss)

Revenue from ordinary activities Profit after tax Profit after tax attributable to securityholders of Aspen Group Operating Profit before tax*	Percentage Change % Amount $’000
	up 15.44% to 35,522 up 113.89% to 25,391 up 113.89% to 25,391 up 35.50% to 8,996

• Operating profit represents earnings before tax excluding non-underlying items. Non- underlying items include depreciation, gains and losses on fair value movements and disposals, and non-recurring items which are not part of ordinary operating performance.

Dividends/Distributions

	Combined
	30 June 2021	30 June 2020
	Cents per Stapled Security Total $‘000	Cents per Stapled Security Total $‘000
Interim	3.10 3,607	2.75 2,649
Final	3.50 4,073	3.25 3,781
	6.60 7,680	6.00 6,430

	Aspen Property Trust
	30 June 2021	30 June 2020
	Cents per Unit Total $‘000 Deferred tax %	Cents per Unit Total $‘000 Deferred tax %
Interim	3.10 3,607 70.7%	2.75 2,649 56.5%
Final	3.50 4,073 82.0%	3.25 3,781 69.8%
	6.60 7,680	6.0 6,430

ii

A s p e n G r o u p

Dividends/Distributions (continued)

Aspen Group Limited

	30 June	2021			30 June	2020
			Tax rate				Tax rate
	Cents per	Total	for franking		Cents per	Total	for franking
Period	Share	$‘000	credit %	Period	Share	$‘000	credit %
Jul–Jun 21	-	-	-	Jul–Jun 20	-	-	-
	-	-			-	-

Record date for determining entitlements to the dividend/distribution was:

Interim dividend/distribution 31 December 2020 Final dividend/distribution 30 June 2021

iii

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ASPEN GROUP LIMITED

(THE COMPANY) (ABN: 50 004 160 927)

ASPEN PROPERTY TRUST

(THE TRUST) (ARSN: 104 807 767)

ANNUAL REPORT FOR THE YEAR ENDED

30 JUNE 2021

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 1

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Annual Report contents

	Page
Directors’ report	3
Auditor’s independence declaration	28
Independent auditor’s report	29
Consolidated financial statements	33
Notes to the consolidated financial statements	39
Directors’ declaration	75

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 2

Directors’ Report Aspen Group Limited For the year ended 30 June 2021

Directors’ Report contents

	Page
Directors	4
Company secretaries	6
Operating and financial review	6
Safety and environment	11
Significant changes in the state of affairs	11
Proceedings on behalf of the company	11
Remuneration report	12
Principal activities	22
Distributions	22
Shares under option or issued on exercise of options	22
Events subsequent to reporting date	22
Indemnification and insurance of officers and auditors	23
Non-audit services	23
Environmental, Social and Corporate Governance	23
Auditor’s independence declaration under Section 307C of the
Corporation Act 2001	27
Rounding off	27

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 3

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

The Directors of Aspen Group Limited (“AGL” or the “Company”) present their report together with the Company’s financial report for the year ended 30 June 2021 and the Independent Auditor’s Report thereon. The Company’s financial report comprises the consolidated financial report of the Company and its controlled entities, including Aspen Property Trust (“APT” or the “Trust”) and its controlled entities.

The shares of the Company are “stapled” with the units of the Trust and trade on the Australian Securities Exchange (“ASX”) as one security (ASX Code: APZ). Evolution Trustees Limited (“ET” or “Responsible Entity”) is the responsible entity of the Trust. Perpetual Corporate Trust Limited is custodian of the Trust. Aspen Funds Management Limited provided investment management services to the Group throughout the year. In this report, the Company and the Trust are referred to collectively as Aspen, Aspen Group or the Group.

In accordance with Accounting Standard AASB 3 Business Combinations, the stapling of the Company and the Trust is regarded as a business combination. The Company has been identified as the parent for preparing consolidated financial reports.

Directors

The Directors of the Company at any time during or since the end of the current period were:

Non-Executive Directors (NEDs)

Clive Appleton (Chairman) Guy Farrands

Executive Director

John Carter (Joint Chief Executive Officer)

Company Secretaries

David Dixon (Joint Chief Executive Officer) Mark Licciardo Belinda Cleminson (resigned 1 December 2020)

Qualifications, experience and special responsibilities

Clive Appleton – Independent Chairman (appointed chairman on 7 June 2016)

BEc, MBA, AMP (Harvard), GradDip (Mktg), FAICD

Mr Appleton has had a successful career in property and funds management with over 30 years’ experience in several of Australia’s leading retail property investment, management and development groups.

Mr Appleton’s early career was spent with the Jennings Group where he held senior executive roles from 1986, responsible for managing and developing the retail assets jointly owned by Jennings Properties Limited (JPL) and Jennings Property and Investment Group. In 1990, following a restructure of JPL to become Centro Properties Limited, Mr Appleton became Managing Director.

From 1997 to 2004 he was the Managing Director of the Gandel Group, one of Australia’s leading retail property investment, management and development groups.

In 2005 Mr Appleton joined APN Property Group Limited as Managing Director.

From December 2011 to June 2015, Mr Appleton was a Non-Executive Director of Federation Centres.

Mr Appleton is currently Deputy Chairman of the Gandel Group, a Non-Executive Director of Vicinity Limited, APN Property Group Limited, Perth Airport Pty Limited, and Perth Airport Development Group Pty Limited and the Non-Executive Chairman of Pancare Foundation.

Appointed a Non-Executive Director of Aspen on 30 April 2012, the Chairman of the Remuneration Committee on 22 June 2015 and a member of the Nomination Committee on 22 January 2013. Mr Appleton was a member of the Remuneration Committee between 10 May 2012 and 22 June 2015.

Directorships of other listed entities within last 3 years:

Non-Executive Director of APN Property Group Limited – current (ASX: APD)

Non-Executive Director of Vicinity Limited – appointed September 2018 to current (ASX: VCX)

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 4

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Guy Farrands – Independent Non-Executive Director

BEc, Grad Dip Man, FAPI, MAICD

Mr Farrands has over 30 years' experience in direct and listed property markets in Australia and internationally across commercial, retail, industrial, residential and retirement property classes. He was managing director and CEO of GEO Property Group (now Villaworld Homes) between 2007 and 2011. Previously Mr Farrands was CEO of Valad Property Group between 2005 and 2007. Prior to that Mr Farrands was head of corporate development and investor relations for Valad.

Mr Farrands' former roles included division Director of the real estate division of Macquarie Bank's Investment Banking Group where he managed IPOs, equity raisings and mergers and acquisitions, Associate Director and Joint Head of Property for Heine Management Limited and Manager in the Investment Sales Department at Jones Lang LaSalle.

Mr Farrands is currently the Chief Executive Officer of ALE Property Group.

Appointed a Non-Executive director on 26 November 2012 and Chairman of the Audit Committee (reconstituted as the Audit, Risk and Compliance Committee in February 2016) on 22 January 2013.

Directorships of other listed entities within last 3 years:

Executive Director of ALE Property Group – appointed October 2020 to current (ASX: LEP)

John Carter - Executive Director

MBA (Syd), BAppSc (Property Resource Mgmt) (UniSA), AAPI, GAICD

Mr Carter has over 30 years’ experience in real estate and financial markets. On 14 March 2019, Mr Carter was appointed joint Chief Executive Officer of Aspen Group Limited. In 2004 Mr Carter established Mill Hill Capital to pursue private equity opportunities in real estate, agriculture and equities. Prior to this Mr Carter was Managing Director, Co-Head of Equities and on the Australian Executive Committee for UBS in Australasia from 2001 to 2004.

From 1991 to 2001 Mr Carter was Head of Real Estate at UBS. While at UBS, Mr Carter led over $10 billion of M&A and $20 billion of capital raising transactions for Australia's leading companies including Colonial, Westfield, Stockland, GPT, Mirvac, AMP, Multiplex, Macquarie Airports and Bankers Trust.

Prior to UBS Mr Carter was involved in commercial real estate at two international real estate consultancy groups.

Appointed a Non-Executive Director on 23 February 2015. With Mr Carter’s appointment as Joint CEO of Aspen Group Limited, he became an Executive Director from 14 March 2019.

Directorships of other listed entities within last 3 years: Nil

Directors’ meetings

The number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member) were:

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Audit, Risk and Compliance
Board of Directors Committee
Directors Held Attended Held Attended
C Appleton 6 6 2 2
G Farrands 6 6 2 2
J Carter 6 6 - -
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ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 5

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

Interests of Directors

Securities in the Group held by directors, company secretaries or their associates as at 30 June 2021 were:

	Issued Securities	Rights
Clive Appleton	605,613	-
Guy Farrands	170,475	-
John Carter*	9,449,910	609,450
David Dixon*	9,831,197	609,450

*John Carter and David Dixon hold an indirect interest in Aspen Group Limited via their directorship of Mill Hill Capital Pty Ltd and interest in the Mill Hill Capital Strategic Real Estate Fund, and separate interests through their associated entities.

Company Secretaries

Mr David Dixon was appointed as Aspen Group Limited’s Joint Chief Executive Officer on 14 March 2019 and was appointed to the position of Joint Company Secretary on 18 November 2019. David has over 30 years’ experience in real estate and financial markets in Australia. David is a joint owner and managing director of Mill Hill Capital Pty Limited, a private equity real estate group. From 2010 to 2014 David was Head of Real Estate Investment Banking (REIB) for Morgan Stanley. For the period 2006 to 2010 Mr Dixon was Joint Head of REIB at Credit Suisse. David was Head of REIB at Deutsche Bank from 1998 to 2006 and during this period he held a dual role in its Equity Capital Markets division. Prior to Deutsche Bank, David helped build Bankers Trust’s real estate franchise into one of Australia’s largest, most active and diversified investors at that time.

Mr Mark Licciardo was appointed to the position of Joint Company Secretary in 30 September 2016. He is the founder and Managing Director of Mertons Corporate Services Pty Limited. As a former company secretary of ASX 50 companies, Transurban Group and Australian Foundation Investment Company Limited, his expertise includes working with boards of directors in the areas of corporate governance, business management, administration, consulting, and company secretarial matters. He is also the former Chairman of the Governance Institute of Australia Victoria division and Melbourne Fringe Festival and a current Non-Executive Director of a number of public and private companies. Mr Licciardo holds a Bachelor of Business Degree (Accounting) from Victoria University and a Graduate Diploma in Company Secretarial Practice, is a Fellow of the Australian Institute of Company Directors, the Institute of Chartered Secretaries and Administrators and the Governance Institute of Australia.

Operating and financial review

Aspen’s Business

Aspen is a leading provider of quality accommodation on competitive terms in residential, retirement and park communities. Aspen’s opportunities are enormous within Australia’s $8 trillion residential market given significant unsatisfied demand for suitable accommodation at more affordable prices and rents. Aspen’s fully integrated platform encompasses operations, asset management, development, and capital management. We provide a broad spectrum of products and services to our customers under different regulatory regimes and ownership schemes: Rentals – Shared Equity – Sales.

We provide one, some or the entire range of our accommodation products and services at each of our properties. We seek to maximise the profitability and value of properties and reduce risk by continually optimising the product and customer mix based on demand, relative pricing and expenses, regulatory requirements, capital costs and other factors.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 6

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Operating and financial review (continued)

Operations

The operating environment was challenging in FY2021 due to the COVID-19 pandemic and associated lockdowns and regulations such as WA’s moratorium on rent increases. Also, after Woodside’s lease expiry in January 2021 at Aspen Karratha Village, we needed to build a new customer base from scratch. Pleasingly, we navigated the challenges well by, amongst other things, pivoting our traditional holiday cabins between short stay and longer stay leases as the environment kept changing, improving our properties such as adding new entertainment and function facilities at Darwin Freespirit Resort, and reducing costs.

Development and trading activity continued to increase. Volumes, prices and profits increased for new house sales at our Four Lanterns and Sweetwater Grove land lease communities. We also refurbished and sold some of our Perth houses after leases expired, where we believed it was more beneficial to sell than re-lease. Our two Funds’, from which Aspen earns project management fees, had an exceptional year with the development and sale of 87 houses and land lots at very attractive margins.

Financial Performance – FY2021

Aspen’s financial performance improved in FY2021 compared to FY2020:

• Statutory net profit after tax increased 114% to $25.39 million

• Operating profit increased 36% to $9.00 million equating to 7.73 cents per security, an increase of 14%

• Ordinary distributions per security increased 10% to 6.60 cents

• Net cashflow from operating activities increased 13% to $12.743 million

• Total rental and ancillary services revenue increased by 3% to $29.1 million, with the main drivers being the new acquisitions, Upper Mount Gravatt and Cooks Hill Co-Living communities, contributing $0.7 million, a $2.1 million (51%) increase at Darwin Freespirit Resort, and a $4.2 million (45%) decline at Aspen Karratha Village

• Net operating income from the properties increased 8% to $12.68 million and operating margin improved from 42% to 44% due to tight cost controls

• Development and trading profit increased 220% to $2.16 million from the sale of eleven houses at Four Lanterns, twelve houses at Sweetwater Grove, and two houses from our Perth residential portfolio. Margin improved slightly from 30% to 31%

• Net corporate overheads increased by 1% to $4.50 million, with Aspen earning $0.40 million in project management fees from the Mill Hill Capital funds. Management Expense Ratio declined from 2.3% to 1.8%

• EBITDA increased 29% to $10.34 million

• Net finance expense decreased 3% to $1.344 million, with the increase in debt largely offset by a decline in interest rates

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 7

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Operating and financial review (continued)

The tables below summarise Aspen’s underlying operating profit (non-statutory) and bridge to audited statutory profit:

	FY21 FY20 % Change
	($’000) ($’000)
Rental and ancillary services revenue	29,073 28,126 3%
Direct property expenses	(16,394) (16,343) 0%
Net operating income (NOI)	12,679 11,783 8%
Operating margin	44% 42%
Revenue from development and trading activities**	6,877 2,247 206%
Cost of sales	(4,717) (1,571) 200%
Net development and trading income	2,160 676 220%
Development margin	31% 30%
Operating and development net income	14,839 12,459 19%
Net corporate overheads	(4,499) (4,434) 1%
EBITDA	10,340 8,025 29%
Net finance expense	(1,344) (1,386) (3%)
Tax*	- -
Operating profit	8,996 6,639 36%
No. of Securities (weighted – ‘000)	116,363 97,592 19%
Operating profit per security (cents)	7.73 6.80 14%
Ordinary distributions per security (cents)	6.60 6.00 10%

• For the purpose of illustrating operating profit above, the net deferred tax asset movement has been excluded.

** Revenue from development includes proceeds from sale of investment properties totalling $0.850 million which is excluded from the statutory revenue reported.

	FY21	FY20	% Change
	($’000)	($’000)
Statutory net profit after tax attributable to parent entity	25,391	11,871	114%
Adjustments:
Depreciation of property, plant and equipment	729	523
Asset revaluation gains	(17,793)	(3,401)
Asset transaction costs & other	2,121	771
Insurance claim proceeds	(577)	-
Deferred tax benefit recognised	(875)	(3,125)
Operating profit	8,996	6,639	36%
Net finance expense	1,344	1,386	(3%)
EBITDA	10,340	8,025	29%
Net corporate overheads and other	4,499	4,434	1%
Operating & development net income	14,839	12,459	19%

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 8

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Operating and financial review (continued)

Balance Sheet

The value of Aspen’s property portfolio increased by 37% over the year to $228.6 million, through revaluation gains and acquisitions. During the year we acquired Co-Living Communities at Upper Mount Gravatt QLD ($60k per room) and Cooks Hill, Newcastle NSW ($68k per unit), the Lewis Field Retirement Village at Strathalbyn SA ($30k per approved site), Residential Land at Mount Barker SA ($46k per approved site), and a partially completed Build to Rent Residential Community in Burleigh Heads, Queensland ($175k per dwelling). Our diverse range of products enables us to service the entire range of Australian households that require quality accommodation that they can afford. The low entry prices enable us to also generate attractive returns for securityholders.

* Pre-acquisition costs

As at 30 June 2021, Aspen had total assets of $246.5 million, total liabilities of $94.0 million (including gross debt of $74.7 million) and net asset value (NAV) of $152.6 million equating to $1.31 per security, an increase of 14% over the year. The increase in NAV is attributable to an increase in property valuations, a recognition of value for deferred tax assets and retained earnings. In our opinion, the portfolio is attractively valued on a weighted average capitalisation rate (WACR) of 7.7% and an average value of approximately $83,000 per approved site including dwellings and land sites.

At 30 June 2021 gearing was 28% which is below our targeted range of 30-40%. Aspen has a debt facility of $91 million expiring in April 2024, of which $16.1 million was undrawn at balance date. Total margin (line fee plus drawn margin) is 190bps. At 30 June 2021 $25 million of BBSW exposure was fixed at 81bps with interest rate swaps to January 2023. Post the end of the year, Aspen closed the $25 million interest rate swap and re-entered into a new $40 million interest rate swap with BBSW fixed at 50bps to April 2024.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 9

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Operating and financial review (continued)

The table below summarises Aspen’s balance sheet.

The table below summarises Aspen’s balance sheet.
	30 June 2021	30 June 2020
	($’000)	($’000)
Investment properties	209,774	150,085
Investment property assets held for sale	1,200	-
Property, plant and equipment	17,680	16,919
Carrying value of properties	228,654	167,004
Cash	8,277	8,161
Other assets*	9,565	15,269
Total assets	246,496	190,434
Financial debt **	74,197	42,218
Other liabilities	19,748	14,186
Total liabilities	93,945	56,404
Net Asset Value (NAV)	152,551	134,030
NAV per security ($)	1.31	1.15

• This includes a deferred tax asset of $4.000 million at 30 June 2021 (30 June 2020: $3.125 million).

** Net of borrowing transaction costs of $0.455 million (FY20: $0.280 million)

Outlook

Market conditions in the residential and retirement sectors are generally buoyant across Australia, particularly in regions that offer more attractive lifestyles and cheaper accommodation, but still within a reasonable commute of jobs, and facilities such as retail, hospitals and schools. Additionally, increasing residential house prices and very low interest rates makes it even more appealing for retirees to move to the regions and downsize, which frees up capital in their homes to help fund living expenses. We expect to maintain high occupancies, and rents and prices to increase at Aspen’s residential and retirement properties over the next 12 months.

We expect the short stay component of our business to continue to be volatile due to the COVID-19 pandemic and lockdowns, and as we rebuild custom at Aspen Karratha Village, which would benefit from the greenlighting of some significant proposed projects in the region. We will continue to manage the risks by pivoting between short stay and longer stay leases depending on the season and lockdown status, and keeping tight cost controls. There is the potential for buoyant intrastate and interstate travel activity, particularly over the summer period because vaccination rates are increasing, and there is probably pent-up demand for vacations.

Aspen will continue to seek opportunities to grow its portfolio of affordable residential, retirement and park communities through acquisition and development.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 10

Directors’ Report (continued)

Aspen Group Limited For the year ended 30 June 2021

Operating and financial review (continued)

Business risks

Aspen has policies and processes in place for the oversight and management of business risks. Further details of the risk management framework and processes are detailed in Aspen’s Corporate Governance Statement, and a discussion of risks, including credit risk, liquidity risk, market risk and operation risk factors are detailed in note 17 of the financial statements. Listed below are relevant key risks for the business identified in the risk management matrix:

• Exposure to travel restrictions / border closures due to COVID-19 – Aspen offers a variety of accommodation products and services. Income from the park communities that primarily focus on short stay customers is more variable than income from residential and retirement properties. During the COVID-19 event, restrictions have been placed on the movement of people which is negatively impacting the demand for Aspen’s short stay products and services

• Leasing and sales rates of retirement / residential dwellings – there are a number of risks associated with the development, leasing and sale of dwellings which could impact future earnings. These risks include the timing of achieving planning and regulatory approvals, the potential for cost overruns, variable demand for our products, and the level of rents and pricing achieved

• Tourism market conditions – short stay income is volatile and often seasonal, and occupancy levels and rates for rooms, cabins and sites are dependent on many variables which could negatively impact Aspen’s short stay earnings. Some examples include subdued economic conditions (including during the current COVID-19 event), changes in consumer preferences, weather conditions, increased competition, and increased operating costs particularly labour, insurance, energy and rates & taxes

• Exposure to the resources industry – more specifically, the risk that the demand for accommodation declines in Karratha, a key resource region in Western Australia. Aspen has exposure through the ownership of Aspen Karratha Village (AKV), where our customer base needs to be rebuilt after the major tenant vacated the property in January 2021. Aspen is now offering the rooms to other customers and is now exposed to short term market fluctuations which, at this stage, has resulted in a material decline in earnings and could impact asset value

• Due Diligence and integration risk – Aspen is expected to continue to acquire properties. There is a risk that income is materially lower and or capital expenditure requirements are materially higher than expected regardless of the level of due diligence undertaken. This risk is elevated in the case of tourism-related properties with highly variable income and costs, and refurbishment and development activities. Additionally, acquisitions involve transaction costs and disruption through the transition of ownership and management which may impact operating performance, particularly in the short term

• Environmental risk – Aspen’s properties are subject to environmental risks including but not limited to bushfires, storm events (eg. cyclones), coastal erosion and flooding. As the climate continues to change in future these risks may increase. Aspen holds insurance for these types of events, but in recent years insurance cover has become more limited and increasingly expensive

Safety and environment

No significant accidents or injuries involving Aspen employees were recorded during the year.

Once the COVID-19 event became evident, we implemented various measures across our businesses to ensure the safety of our employees, customers, suppliers and others, and to ensure compliance with health regulations across the various states. This included, amongst other initiatives, increased frequency of cleaning, reducing interactions between people, and strict procedures around vetting and monitoring customers and others at our properties. To date there have been no reported incidents of COVID-19 infection at any of our properties.

Significant changes in the state of affairs of the Group

Other than noted elsewhere in this Annual Report, there were no significant changes in the state of affairs of Aspen Group that occurred during the year.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of Aspen, or to intervene in any proceedings to which Aspen is a party, for the purpose of taking responsibility on behalf of Aspen for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of Aspen with leave of the Court under section 237 of the Corporations Act 2001.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 11

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report

Introduction

The directors present the remuneration report for Aspen Group for the year ended 30 June 2021. This report forms part of the directors’ report and has been audited in accordance with the Corporations Act 2001 . This report sets out remuneration information for Aspen Group’s:

• Non-Executive Directors; and

• Joint Chief Executive Officers (Executives).

These personnel, collectively known as the Key Management Personnel (KMP), are accountable for planning, directing and controlling the affairs of Aspen Group and its controlled entities.

The broader management group (who are participants in various incentive programmes) are referred to as senior managers.

Remuneration of KMP is referred to as compensation throughout this report.

Key management personnel

The table below provides details of the KMP for FY21. For those KMP who served as KMP for part of the year, this Remuneration Report only sets out the amounts they received as remuneration in their capacity as a KMP.

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Name Position Term as KMP during the year
Executives
John Carter Joint Chief Executive Officer KMP for full year
David Dixon Joint Chief Executive Officer KMP for full year
Directors Position
Clive Appleton Non-Executive Director KMP for full year
Guy Farrands Non-Executive Director KMP for full year
John Carter Executive Director KMP for full year
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Remuneration Governance

The Board oversees the remuneration practices of Aspen and is responsible for:

• establishing an overarching remuneration framework for Aspen;

• the assessment of the performance of the CEOs which is conducted on both an informal and continuous basis, as well as formally at the end of each financial year; and

• approval of all elements of KMP compensation.

Expert consultants are engaged where necessary to help the Board establish policies to attract, reward, motivate and retain employees. The Board is committed to ensuring KMP pay is fair and comparable to like companies, and importantly, aligns financial rewards with the interests of securityholders.

Remuneration consultants

The Board has in prior years engaged remuneration consultants to advise on remuneration practices and to assess the quantum and structure of fees and incentives.

In FY21 there were no consultants engaged by the Board and consequently no recommendations obtained, and no disclosures required under the Corporations Act 2001 .

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 12

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

Remuneration framework

The objective of Aspen’s remuneration framework is to remunerate its employees both competitively and appropriately such that Aspen Group attracts, retains and motivates a skilled and qualified KMP team. The framework considers, amongst other things:

• Alignment to securityholders’ interests:

• key financial drivers of securityholder value, including net operating income, earnings per security, distributions per security, net asset value and total securityholder returns

• key non-financial drivers of securityholder value, including risk management

• attracting and retaining high calibre KMP and senior managers

• Alignment to employees’ interests:

• rewards capability and experience

• provides recognition for both individual contribution and teamwork

• provides a clear structure of earning rewards

The remuneration framework provides a mix of fixed and variable (“at risk”) pay. As employees gain seniority within Aspen and have a greater role in driving business growth, the balance of this mix shifts to a higher proportion of the “at risk” components.

Executive remuneration structure

Aspen’s executives had the following remuneration mix for FY21:

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FIXED AT RISK
Fixed Remuneration Short term incentive (STI) Long Term Incentive (LTI)
CASH EQUITY
 Base salary and superannuation  50% of STI awarded is paid in cash and  Performance Rights Plan subject to three-
 Reviewed annually 50% is paid in securities in Aspen Group year vesting period and two performance
(APZ) hurdles:
 Determined by experience,  Entitlement to these securities is deferred  50% Relative Total Securityholder
qualifications and role
by 12 months Return (TSR)
 STI dependent on individual performance  50% Net Asset Value (NAV) growth
relative to KPIs
Base level of reward competitive with the Encourages sustainable performance in the medium to longer term
marketplace
Remuneration mix CEOs Senior Managers
Fixed compensation 50.0% 66.7%
STIs 12.5% 16.7%
LTIs 37.5% 16.7%
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STI, LTI and retention bonus components are “at risk” and are only realised if respective performance hurdles are achieved.

Fixed compensation

Fixed compensation consists of an annual base salary plus employer contributions to superannuation funds plus any applicable fringe benefits provided. No guaranteed base salary increases are included in any executive contracts. Executive remuneration levels are reviewed annually by the Board through a process that considers, amongst other things:

• the Executive’s position and level of experience

• individual, divisional and overall performance of Aspen

• market forces, especially as they relate to companies of comparable size, revenue and in similar industries to Aspen

• advice from external consultants or other market sources.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 13

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

Variable compensation - STI

The STI is an “at risk” incentive awarded annually and is paid in a combination of immediate cash and APZ securities components, subject to agreed KPIs. All STIs are paid at the discretion of the Board. In addition, the STI pool can be scaled up or down by the Board depending upon the actual performance of Aspen. The STI plan links the performance of individual employees to the operational and financial objectives of Aspen. These individual KPIs are agreed with employees at the start of each financial year or commencement of employment as part of the individual’s performance review process.

The Board reserves the right to award no STI at all.

The KPIs measured are linked to Aspen’s overall business strategy and incorporate qualitative indictors of effectiveness, performance and behaviour including, amongst other things:

• Financial priorities – eg. net asset value, earnings and distribution targets, forecast accuracy, expense management

• Business priorities – eg. business growth, business systems, customer relationships

• People leadership and governance – eg. leadership, culture, risk management, stakeholder engagement and ethics

• Strategic priorities – eg. evaluating and implementing change, corporate reputation, future growth initiatives.

STIs for Executives are paid 50% in cash with the remainder taken as APZ securities. The issue of securities is deferred by 12 months. The immediate cash portion is paid in September each year following the finalisation of the consolidated financial statements. To receive the benefit of the deferred STI amount, the Executive must have achieved a further hurdle – that employment with Aspen remains in place and no notice of resignation has been served by the employee.

The following table outlines the treatment of STI upon an employee’s departure from Aspen:

Event	Eligibility criteria
Resignation during performance year	Employee is not considered for a STI payment for that performance year
Redundancy during performance year	Employee will be considered for a pro rata STI payment. Performance is rated at the time of termination. Any deferred STI amounts for KMP is paid upon redundancy
Redundancy after end of performance year	Employee will be considered for a full year STI payment
Dismissal	Employees will not be considered for an STI payment in the event they are dismissed for cause, including for poor performance
Death	Employees will be considered for a pro-rata STI if employment terminates due to death. Any payment will be made to the estate. This includes any deferred STI amounts for Executives
Change of control	STIs will be payable immediately on the settlement of a change in control of Aspen. Each employee who is currently not undergoing performance management will be paid their current year's STI opportunity based on their performance rating at the time of change of control on a pro rata basis. Any extra vesting conditions for deferred STI amounts are deemed to be immediately satisfied after a change of control

Variable compensation – executive retention bonus scheme

The scheme’s objectives are to minimise the risks of disruption caused by the departure of key employees where the departure has the potential to create significant gaps in the knowledge and capacity that would not be in the best interests of the securityholders. No employees were subject to the retention bonus scheme in FY21 (none in FY20).

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 14

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

Variable compensation - LTI

The objective of the LTI plan is to reward and retain Executives and senior managers. Awards are linked to Aspen’s Total Shareholder Returns (“TSR”) and Net Asset Value (“NAV”), therefore an employee’s remuneration is aligned to the creation of securityholder wealth. Under this plan, the more Aspen’s security price and distribution increase over the relevant vesting period, the greater the potential benefit to employees.

Aspen’s LTI is delivered via a Performance Rights Plan (“PRP”), which has been in place since 2010 and which was refreshed at the 2016 Annual General Meeting. The PRP facilitates the grant of performance rights to Executives and senior managers of Aspen. A performance right granted under the PRP is a conditional right to acquire a stapled security for nil consideration (although the terms of the PRP enable the Board to impose an exercise price if considered appropriate).

A performance right holder will only be able to exercise their performance rights to the extent the vesting conditions are satisfied. Performance is assessed relative to two measures, TSR and NAV, with each measure accounting for 50% of the potential entitlement. The vesting conditions for each measure determine the award and are measured over a three-year period from the start of the financial year in which they are offered.

The Board may consider introducing additional or different conditions for future grants of rights should prevailing market conditions support such a decision. Presently, continued employment and meeting TSR and NAV hurdles are the only two vesting conditions.

TSR hurdle

The Board decided to use relative TSR as the vesting condition because relative TSR is easily measured, verifiable by external data and therefore transparent for securityholders, and it is commonly used by ASX companies.

TSR is a measure of the return to securityholders (over the vesting period) provided by security price appreciation, plus distributions expressed as a percentage of initial investment. TSR was selected because it measures Aspen’s returns for securityholders.

The S&P ASX 300 Property Sector index is used as a comparator group as it represents Aspen’s listed property peers that Aspen competes with for equity and talent. The TSR hurdle is tested at the end of the performance period (three years from grant) by calculating the TSR performance of each entity in the comparator group. The performance of each entity is then ranked, using percentiles. Aspen Group’s performance is calculated at the end of each performance period and compared to the percentile rankings. Vesting of performance rights under this hurdle will only occur if Aspen Group outperforms a majority of the entities making up the S&P ASX 300 Property Sector index over the three-year period.

The following vesting schedule applies to the award of any performance rights to eligible participants:

Relative TSR over 3 years	Proportion of TSR related rights vested
At or below the 50thpercentile	0%
At the 51stpercentile	50%
Between the 51stpercentile and the 75thpercentile	Straight-line between 50% and 100%
75thpercentile or above	100%

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 15

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

Variable compensation – LTI (continued)

NAV hurdle

NAV is a measure of the underlying value of securities of the Group. NAV is measured and reported by the Group at each reporting period and is the reference base for the testing of this measure. The NAV hurdle is tested by calculating NAV growth over the three-year measurement period. As distributions by the Group have the effect of reducing the NAV of the Group, the measurement of NAV will take into account distributions over the vesting period. Distributions over the three-year period shall be added to NAV to determine the rate of growth achieved. The vesting of Performance Rights will be determined using the matrix in the table below:

NAV growth over 3 years	Proportion of NAV related rights vested
Below 7 percent per annum	0%
At or above 7 percent per annum but below 8 percent per annum	Straight-line between 50% and 100%
At or above 8 percent per annum	100%

The respective TSR and NAV hurdles must be satisfied to gain the proportion of Performance Rights referred to in the last column (assuming the other vesting conditions have been satisfied).

The following table outlines treatment of LTI upon an employee’s departure from Aspen Group:

Event	Eligibility criteria
Resignation	Any unvested LTIs will automatically lapse and be deemed forfeited
Dismissal	Any unvested LTIs will automatically lapse and be deemed forfeited
Redundancy, retirement or death	Any LTIs will automatically lapse and be deemed forfeited. However, the Board may choose, at its absolute discretion, to allow the unvested LTIs to remain in effect
Change of control	LTIs will be payable immediately on the settlement of a change in control of Aspen. Each employee who is currently not undergoing performance management will be paid their current year's LTI opportunity at the time of change of control on a pro rata basis

Executive remuneration outcomes

Overview of FY21 financial performance

In considering Aspen’s performance in the current financial year, the Board had regard to the following metrics:

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2021 2020 2019 2018 2017
Operating Profit (underlying) (million) $9.00 $6.64 $4.96 $3.05 $4.50
Operating Profit per security (cents) 7.73 6.80 5.15 3.05 4.41
Ordinary distributions per security (cents) 6.60 6.00 5.00 4.20 4.60
Security price (30 [th] June) $1.31 $0.995 $1.06 $0.96 $1.10
Net Asset Value (30 [th] June) $1.31 $1.15 $1.13 $1.19 $1.22
Return on capital employed (Operating Profit / opening NAV) 6.7% 6.0% 4.3% 2.5% 3.5%
NAV growth (change in NAV plus distribution / starting NAV) 19.7% 7.1% (0.8%) 5.1% [1] 0.5%
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1 Includes special distribution of 5 cents per security

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 16

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

Executive remuneration outcomes (continued)

The Board also considered the relative performance of KMP against the execution of Aspen’s strategy. A high-level scoreboard of Aspen performance for FY21 for the purpose of assessing eligibility for STI and LTI has been considered by reference to both positive and negative factors:

• Positive performance indicators Negative performance indicators

• Continued improvement in senior management personnel at  Transition of customer base at Aspen Karratha Village both head office and the properties from Woodside to others has been slower than

• Navigated through COVID-relates issues very well expected  Successfully completed five new acquisitions to grow the  Branding at the property level needs further improvement

• Navigated through COVID-relates issues very well

• Successfully completed five new acquisitions to grow the business and make better use of Aspen’s management platform

• Good progress on new website and social media presence  Property NOI up 8%

• Securities trading in ASX highly illiquid

• Material increase in development and sales activity – more than 120 houses and land lots sold across the Group including Funds

• Development & Trading profit up 220% to $2.16m (only $0.6m in FY20)

• Net corporate overheads flat despite material increase in portfolio scale – Management Expense Ratio (MER) reduced further from 2.3% to 1.8%

• Negotiated insurance payout for summer bushfires in FY20

• Maintained robust balance sheet with gearing of 28% - below bottom of target range of 30-40%

• Debt facility upsized, duration increased to 3 years, more flexible terms, attractive margin of 190bps

• Operating EPS up 14%

• DPS up 10%  NAV up 14% to $1.31 (after writing off all transaction costs on new acquisitions) with property values now strongly underpinned by improved property NOI

• APZ stock price up 32% from 30 June 2020 - gap to NAV closed

• APZ stock total return of 38%

STI outcomes

For the year ended 30 June 2021, two KMP were awarded a STI, determined after performance reviews were completed and approved by the Board. The total STI (excluding super) awarded to these KMP was $0.190 million (FY20 $0.190 million). As a result of the individual performance assessments the average percentage awarded of the maximum STI opportunity for these executives was 100%. A summary of the STIs awarded to these executives during FY21 is outlined below:

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Total % of STI
Deferred STI % of max STI
Cash STI [1] FY21 % of STI not opportunity
payment [1 ] [2] opportunity
$ award yet vested forfeited in
$ vested in year
$ year
John Carter $52,250 $52,250 $104,500 100% 50% 0%
David Dixon $52,250 $52,250 $104,500 100% 50% 0%
Total $104,500 $104,500 $209,000
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1 inclusive of superannuation

2 the deferred STI payment is due in 12 months post release of FY21 audited accounts.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 17

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

LTI outcomes

The table below summarises how Aspen performed compared to vesting conditions for active LTI schemes at 30 June 2021:

	FY21 Scheme	FY20 Scheme
Effective issue date	4 December 2020	19 December 2019
Award starting date	1 July 2020	1 July 2019
Vesting date	30 June 2023	30 June 2022
Current Status	TSR is in the top quartile of peers NAV growth was 20.5% for the year ending 30 June 2020 versus a minimum hurdle of 7.0%	TSR is in the top quartile of peers NAV growth was 13.1% per annum for the two years ending 30 June 2020 versus a minimum hurdle of 7.0%

Executive contract details

Remuneration structure and contract terms for CEOs

The contracts of employment for the Joint CEOs, Messrs Carter and Dixon, have no fixed term and specify the duties and obligations of the role.

Salary and benefits

Messrs Carter and Dixon currently each receive a salary of $380,000 (gross) per annum in addition to superannuation (unchanged from FY20). No directors’ fees will be paid to Messrs Carter and Dixon for being a director or officer of Aspen or any other group company (from the date of appointment as CEO).

Incentive arrangements

Messrs Carter and Dixon may be entitled to discretionary short-term incentives (STI), under Aspen Group’s Short-Term Incentive Policy (STI Policy), depending on Aspen’s and Messrs Carter and Dixon’s performance against financial and non-financial metrics determined by the Board.

Messrs Carter and Dixon are eligible to participate in Aspen’s Performance Rights Plan (PRP) in respect of each completed financial year and to receive a discretionary Long-Term Incentive (LTI) allocation.

The remuneration package for Messrs Carter and Dixon was designed and negotiated to ensure a strong alignment of their financial rewards with the creation of value for Aspen Group securityholders. The equity component of Messrs Carter’s and Dixon’s packages, which include the issue of performance rights, will be subject to approval at the Annual General Meeting in November 2021.

Termination

The employment contracts may be terminated by Aspen Group or Messrs Carter and Dixon by giving 3 months’ notice of an intention to terminate employment. Termination benefits to the extent permitted under the Corporations Act are included in the contracts in the event of certain termination events.

Contract terms for other senior managers

It is Aspen’s policy that employment contracts for Executives and senior managers have no fixed term but are capable of termination on generally three months’ notice and that Aspen retains the right to terminate the contract immediately, by making payment equal to three months’ pay in lieu of notice.

The entitlement of employees to unvested STI and LTI awards is dealt with under the STI and LTI plan rules and the specific terms of grant.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 18

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

Remuneration report (continued)

Details of the nature and amount of each major element of remuneration of key management personnel are:

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Short-term Post-employment
Non- % of Rem Value of LTI
Superannuation Termination Other Long
Year Base salary [1] STI [3] monetary Total LTI [2] Total Performance as % of
benefits benefits Term
benefits Related Total Rem
Current Executives
2021 398,917 104,500 - 503,417 25,000 - - 176,588 705,005 39.9% 25.0%
John Carter
2020 392,430 104,025 - 496,455 25,000 - - 85,537 606,992 31.2% 14.1%
2021 398,917 104,500 - 503,417 25,000 - - 176,588 705,005 39.9% 25.0%
David Dixon
2020 392,430 104,025 - 496,455 25,000 - - 85,537 606,992 31.2% 14.1%
2021 797,834 209,000 - 1,006,834 50,000 - - 353,176 1,410,010 39.9% 25.0%
Total
2020 784,860 208,050 - 992,910 50,000 - - 171,074 1,213,984 31.2% 14.1%
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Notes in relation to the table of key management personnel remuneration

• (1) Base salary includes annual leave and superannuation payments which exceeded the Federal Government superannuation cap.

(2) The stapled securities issued under the various LTI plans are treated for accounting purposes as options and their fair value is calculated at the date of grant using a Monte Carlo option-pricing model and allocated to each reporting period evenly over the period from grant date to vesting date. The value of these Long-Term Incentive Instruments (LTII) disclosed is the portion of the fair value of the instruments allocated to the profit and loss this reporting period. (3) Inclusive of superannuation.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 19

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

LTI grants and movements during the year

The following table provides details of rights granted during the year under the LTI plan, as well as the movement during the year in options and rights granted under the LTI plan in previous financial years:

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Value of
Granted Exercised options and Lapsed / Value of
Balance during the Fair Value / vested rights cancelled options and
Equity as at 30 year as at Grant during exercised / during the rights lapsed Balance as at 30
type June 2020 remuneration date the year vested year / cancelled June 2021
No. No. $ No. $ No. $ No.
Current Executives
John Carter PR 295,807 313,643 273,653 - - - - 609,450
David Dixon PR 295,807 313,643 273,653 - - - - 609,450
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Non-executive director remuneration structure

The total remuneration for Non-Executive Directors for the 2021 financial year was $288,506 (2020: $288,506). There has been no increase in remuneration of individual Directors since FY13, apart from Clive Appleton due to his appointment as Chairman on 7 June 2016.

The remuneration level is within the maximum level of $700,000 previously approved by security holders at the 2010 AGM. Within this limit, the Board reviews the remuneration packages of all Non-Executive Directors on an annual basis. In making its recommendations, the Board has due regard to the current market conditions for the supply of these services and the duties and responsibilities of each member. Remuneration levels are compared to that of similar businesses and advice is sought from external consultants as required.

Non-Executive Directors do not receive performance-based remuneration such as cash bonuses or the ability to participate in Aspen Group’s LTI scheme.

The annual fees payable in FY21 (excluding superannuation) were:

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Position Annual Fees
Non-Executive Chairman $149,625
Non-Executive Director $76,950
Committee Chairman $8,550
Committee Member $4,275
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• The Board has determined that for FY22, there will be no increase in fees.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 20

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Remuneration report (continued)

Non-executive directors’ remuneration

Details of the remuneration paid to Non-Executive Directors are in the table below:

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Non-executive Committee chair Committee Total
Year Superannuation
director fees member fees remuneration
$ $ $ $ $
Directors
2021 164,246 - 4,275 - 168,521
Clive Appleton
2020 149,625 - 4,275 14,621 168,521
2021 76,950 8,550 - 8,123 93,623
Guy Farrands
2020 76,950 8,550 - 8,123 93,623
2021 241,196 8,550 4,275 8,123 262,144
Total Directors
2020 226,575 8,550 4,275 22,744 262,144
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*Director applied for superannuation guarantee exemption for FY21 and elected to pay superannuation as part of base pay

KMP transactions

Loans

There were no loans made during the year, or outstanding at year end, to KMP (current or former).

Movements in securities

The movement during the reporting year in the number of ordinary securities in Aspen held, directly, indirectly or beneficially, by KMP, including their related parties, is as follows:

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Year Balance at beginning of year Net increase / (decrease) Balance at end of year
Current Executives
2021 9,517,342 313,855 9,831,197
David Dixon
2020 22,382,539 (12,865,197) 9,517,342
2021 9,436,465 13,445 9,449,910
John Carter
2020 22,382,539 (12,946,074) 9,436,465
Non-executive directors
2021 265,613 340,000 605,613
Clive Appleton
2020 98,613 167,000 265,613
2021 170,475 - 170,475
Guy Farrands
2020 150,475 20,000 170,475
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*John Carter and David Dixon hold an indirect interest in Aspen Group Limited via their directorship of Mill Hill Capital Pty Ltd and interests in the Mill Hill Capital Strategic Real Estate Fund, and separate interests through their associated entities.

Directors and KMP received distributions on the above securities from the date acquired.

This concludes the Remuneration Report, which is audited.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 21

Directors’ Report (continued) Aspen Group Limited For the year ended 30 June 2021

Principal activities

The principal activities of Aspen during the year were owning and operating properties in the affordable accommodation sector. Other than as disclosed above, there was no significant change in the nature of the activities of Aspen during the year.

Distributions

Distributions paid to unitholders during the year were as follows:

	2021
	$’000
Final distribution for the year ended 30 June 2020 of 3.25 cents per security paid on 28 August 2020	3,781
Half year distribution for the period ended 31 December 2020 of 3.10 cents per security paid on 26 February 2021	3,607
	7,388

On 24 June 2021, Aspen announced the expected payment of a final distribution for the year ended 30 June 2021 of 3.50 cents per security ($4.073 million in total). This distribution was subsequently approved by the Board and will be paid on or around 20 August 2021.

Shares under option or issued on exercise of options

There were no shares under options as at 30 June 2021 (2020: nil).

Events subsequent to reporting date

Aspen Group has entered into agreements to acquire a portfolio of apartments in Perth’s inner-metro suburbs (Perth Apartment Portfolio) that are owned by associates of the Buckeridge Group of Companies. Aspen Group has entered into a Nomination Deed with a third party to facilitate the acquisition by Aspen of the properties. The purchase price is $52 million (pre transaction costs). The acquisitions of the Perth Apartment Portfolio and Wodonga Gardens post 30 June 2021, are intended to be funded with approximately $28m of equity, via issuing new stapled securities, and approximately $34 million of debt. Aspen’s debt facility provider has agreed to increase the revolving debt facility limit to $150 million, subject to formal documentation and completion of the equity raising. Gearing is expected to increase from 29% to 35% post acquisition on a 30 June 2021 pro forma basis. Further information on the acquisition and equity raising has been released to the ASX on 19 August 2021.

Subsequent to the end of the year, there continues to be restrictions implemented by state and federal governments in response to the COVID-19 pandemic. These authorities are likely to continue to pursue a strategy of suppressing COVID-19 with the goal of no local community transmission, at least until sufficient rates of vaccination have occurred. Continued or further lockdowns and restrictions introduced by governments will impact local tourism and therefore this part of Aspen’s business. This may in turn negatively affect the Group’s operating performance and the valuation of these properties, as well as potentially the recoverability of certain financial assets such as trade debtors.

The directors do not consider the impact of COVID-19 to likely compromise the ability of the Group to continue operating profitably for the foreseeable future.

There has not arisen any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors of Aspen, to significantly affect the operations of Aspen, the results of those operations, or the state of affairs of Aspen, in future financial periods.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 22

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

Indemnification and insurance of officers and auditors

During the financial year Aspen paid premiums in respect of directors’ and officers’ liability and legal expense insurance contracts for the year ended 30 June 2021 and, since year end Aspen has paid premiums in respect of such insurance contracts up to the annual insurance renewal date of 30 June 2022. Such insurance contracts insure against certain liability (subject to specific exclusions), persons who are or have been directors or executive officers of Aspen.

The directors have not included details of the nature of the liabilities covered nor the amount of the premiums paid in respect of the directors’ and officers’ liability and legal expenses insurance contracts, as such disclosure is prohibited under the terms of the contract.

Aspen has agreed to indemnify the following current officers of the Company, Mr Appleton, Mr Carter, Mr Farrands, and Mr Dixon against all liabilities to another person (other than Aspen) that may arise from their positions as officers of Aspen, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that Aspen will meet the full amount of any such liabilities, including costs and expenses.

Other than this, Aspen has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify any officer or auditor of Aspen or of any related body corporate against a liability incurred as such by an officer or auditor.

Non-audit services

During the year Deloitte Touche Tohmatsu (‘Deloitte’), Aspen’s auditor, has not performed any other services in addition to their audit service.

Environmental, Social and Corporate Governance

Aspen aims to be a trusted and ethical business wherever our operations are located and in doing so, return value to investors as well as local stakeholders. This objective applies across our business of owning, operating and developing real estate.

The needs of current and future generations are at the heart of our decision-making processes. Our key decisions recognise the interdependence between environment, people and economics. Sustainability practices underline our day-to-day operations and are integrated into our organisational culture, stakeholder engagement, governance and management practices. This environment helps our people excel and our customers and communities to prosper. Aspen’s employees proudly deliver sustainable outcomes for investors, customers, communities and the environment.

Socia l

Aspen improves society and reduces inequality by providing quality accommodation on affordable terms to a wide variety of Australian households in residential, retirement and park communities. Many of our customers are disadvantaged with belowaverage wealth and income, and therefore find it difficult to secure suitable accommodation. We typically rent dwellings for under $400 per week and land sites for under $200 per week and sell new houses at our land lease communities for under $400,000.

Aspen values quality stakeholder relationships that are connected, responsive and collaborative. Through these relationships we understand the communities' needs, aspirations, cultures and their sense of place. We support our customers in a variety of ways so that they can live happier and healthier lives. For instance, we foster a social, diverse and inclusive culture in our communities by providing on-site management, customer services and community spaces and facilities. This gives our customers a sense of home and meaningful connections to the community.

Some of our properties are located in past and present Indigenous communities and we actively seek to help these communities and conserve heritage items. For instance, to help protect the Barlings Beach Aboriginal Place, we recently completed an archaeological dig within our Barlings Beach park community with the assistance of the Mogo Local Aboriginal Land Council. Another example is the protection and proposed public display of an Aboriginal Scar Tree within our Mount Barker property.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 23

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

Environmental, Social and Corporate Governance (continued)

Environment

With a growing portfolio of properties located across Australia, the environmental impact of our communities, environmental risks, and opportunities to mitigate risks and reduce our ecological footprint are a key focus of our ESG program.

Looking after the environment, today and for future generations is essential. We recognise the need to continually reduce environmental impacts, work towards sustainable resource use and ensure emissions are at or below levels that can be reabsorbed without harm. Additionally, we apply the precautionary principle when considering environmental impacts: uncertainty in the longterm outcomes of environmental effects should not delay action to reduce pollution and reduce consumption of non-renewable materials. Aspen has a carbon emission reduction target for the assets that it controls that is in accordance with the 2015 Paris Agreement.

Our portfolio is highly diversified in terms of age, location and community types which presents some challenges and opportunities around environmental impacts and performance, and we consider this through our acquisition, operating and development processes. In reviewing our environmental performance and objectives we consider not only the impact of our own operations but the performance of the dwellings within our communities that are owned by our customers.

Reduced resource use, energy intensity and CO2 emissions are inherent in Aspen’s business model because we provide accommodation with some or all the following attributes:

• Communal living – more efficient sharing of resources such as living, dining, entertaining and recreational spaces, and transport (eg. community bus)

• Dwelling size less than half the Australian average for new homes – about 40% of household energy use is for temperature control (heating and cooling) and this is proportional to floorspace

• New homes and community facilities with improved building techniques, designs and materials that meet current regulated building standards including energy efficiency (eg. replacing obsolete vans/annexes with highly insulated modern dwellings that require significantly less energy to operate)

• Renewable energy installations such as rooftop solar, solar-boosted gas/electric water heaters and solar street lighting - we intend to install batteries at our properties if they become economic for our customer base

• Water saving devices and recycling - clean water requires energy to produce and distribute

• Community gardens - local food production reduces transport requirements and absorbs CO2

• Recycling and composting facilities - composting food reduces CO2 emissions relative to burying food

• Relatively high levels of vegetation that absorbs CO2

• Replacing our vehicles with more efficient or electric/hybrid versions when appropriate

• Metering – making customers more aware of their electricity, gas and water use and charging directly for it to influence behaviour

We continually embrace new technologies to deliver innovative products and services to our customers whilst minimising costs and our ecological footprint.

Some of our properties, particularly our park communities, are located in attractive natural environments and are therefore subject to heightened environmental risks and increasing insurance costs. This includes properties located along coastlines and other waterways and close to bushland, which increases the risks of erosion, flood and fire. We also own properties in regions where cyclones are common such as Karratha and Darwin. We seek to protect these properties through, amongst other things, undertaking physical risk assessments, constructing more robust buildings and infrastructure and maintaining them well, and good land management practices such as bushfire management programs and maintaining sand dunes and natural waterways. None of Aspen’s properties have suffered material physical damage from flood, fire or cyclones over the past 10 years.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 24

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

Environmental, Social and Corporate Governance (continued)

Sustainable Procurement

Aspen has commenced a review of its procurement processes to understand how ESG considerations could be more deeply embedded into its processes. Based on this review, we will identify a prioritised set of initiatives to ensure we are appropriately managing ESG risk in our supply chain, including considering modern slavery as a priority.

The Property Council of Australia has established and launched a supplier platform for Modern Slavery reporting. The initiative aims to engage suppliers to the industry via a common modern slavery questionnaire, and achieve greater consistency, efficiency and transparency in reporting. Aspen may invite its key suppliers across its highest risk categories to disclose their labour management practices via the tool, which will allow us to deepen our understanding of modern slavery risk in our supply chain and identify areas for further supplier engagement.

Due to the types of inputs Aspen uses and that the majority are produced and sourced onshore, we believe the risk is low.

Employees

Aspen’s employees provide a competitive advantage for our business, with a high level of sector knowledge and expertise that is critical to our overall business performance. The wellbeing and engagement of our team is essential in providing quality communities for our residents and guests and ensuring the ongoing growth and success of the business.

We work to maintain a performance oriented and inclusive culture, to attract, develop and retain talented people, and to drive a high level of employee engagement and success. We embrace and value all employee differences including gender, gender-identity, age, culture, race, religion and lifestyle choices, and support each of our employees to achieve their potential and their career goals. Our commitment to diversity extends to all aspects of employment, from recruitment to career development, promotion and remuneration. We recognise the competing demands that are often placed on employees outside of work and we seek to provide appropriate options to achieve work-life balance.

We are committed to improving diversity and in particular, the number of females in leadership and other traditionally male dominated roles within the business. Over the past 24 months, Aspen has recruited females into the head office roles of Head of Marketing & Sales, Operations Manager, Business Administration Manager, Asset Manager and Business Development Manager. We have also increased the proportion female property managers. Our senior management team including all our head office employees and our property managers is currently 45% female.

Aspen’s rapid business growth has created significant opportunities for employees. We believe that investing in the development of our people will benefit the business as well as motivate individual employees to achieve their own career objectives while delivering sustainable results. Our development, talent and succession planning processes seek to ensure that we maximise learning and progression for our people and continue to attract and retain individuals aligned with our vision and values. These processes include:

• A defined performance management process that sets clear and measurable goals for individual employees that are aligned with the Group’s strategy, culture and values

• Continuous performance reviews

• Career development planning

• Customer service training for all levels of the business

• Role-specific training across all departments

Individual performance is regularly assessed both internally and through customer feedback and all our head office employees and senior management at the properties can benefit from Aspen’s remuneration incentive programs.

Occupational Health and Safety

In operating and developing our communities the safety and health of our people, residents and guests is paramount. We aim to create and maintain safe and healthy environments, ensuring that the operations of the Group are conducted in a manner which safeguards the health and wellbeing of our teams, residents, guests, contractors and other visitors to our communities. Relevant staff have KPIs which are related to health and safety, reinforcing the importance of our health and safety framework. We ensure that contractors who control development activity and tradespeople hold appropriate accreditation standards for health, safety, environment and quality and are appropriately inducted on work practices required at our sites.

We engage the services of Donesafe, insurers and other experts to provide support and training to on the ground teams, to help identify and mitigate health and safety risks, and to help ensure compliance with relevant legislation. Ensuring that we have adequate resources and processes to address risks to health and safety, responding to any issues in a timely manner and reporting to management and the Board are key priorities.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 25

Aspen Group Limited For the year ended 30 June 2021

Directors’ Report (continued)

Environmental, Social and Corporate Governance (continued)

Governance

Aspen Group comprises the stapled head entities Aspen Group Limited and Aspen Property Trust. Aspen Group Limited is a company with a Board of Directors. Aspen Property Trust is a trust governed by a Responsible Entity, Evolution Trustees Limited which is independent from Aspen Group Limited and has its own Board. Between the two entities’ Boards, there are currently six members of which four are considered independent. The member of the AGL Board who is considered non-independent is the Joint Chief Executive Officer by virtue of his executive role and substantial shareholding in Aspen Group.

Aspen's governance framework is led by the Aspen Group Limited Board and the senior executives. They currently focus on the following from a sustainability perspective:

• The health and safety of employees, contractors, customers and visitors

• Legal and regulatory requirements

• Environmental impacts

• Stakeholder engagement

The Board has ultimate responsibility for ensuring that Aspen’s sustainability strategies are robust and that systems are in place for managing Aspen's key areas of sustainability risk and opportunity.

Our senior executives ensure that the organisation continues to perform in a way that demonstrates integrity on our environmental position, our commitment to the communities in which we operate and the opportunities we provide for our people and business partners to contribute to current and future generations.

Our current Key Management Personnel include the Joint Chief Executive Officers. They are aligned to the long-term performance of Aspen Group through their substantial personal shareholdings and the structure of their remuneration packages where 50% of total remuneration is deferred for up to 3 years and subject to vesting conditions including qualitative and quantitative performance measures.

Aspen’s Corporate Governance Statement is available on its website at

• • http://www.aspengroup.com.au/shareholder information/corporate governance/

Aspen’s governance framework is outlined below, showing the relationship between the Board, its Committees and the CEO position.

External Governance Framework

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ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 26

Directors’ Report (continued)

Aspen Group Limited For the year ended 30 June 2021

Auditor’s independence declaration under Section 307C of the Corporations Act 2001

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 28 and forms part of the Directors’ Report.

Rounding off

The Consolidated Group is of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191 and in accordance with the Instrument, amounts in the Financial Report and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the directors made pursuant to Sec 298(2) of the Corporations Act 2001 .

On behalf of the directors of Aspen Group Limited

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Clive Appleton

Chairman

SYDNEY, 19 August 2021

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 27

Deloitte Touche Tohmatsu ABN 74 490 121 060

Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia

Phone: +61 2 9322 7000 www.deloitte.com.au

19 August 2021

The Board of Directors of Aspen Group Limited and the Responsibility Entity of Aspen property Trust Upper Ground, 285A Crown St Surry Hills NSW 2010

Dear Directors

Aspen Group Limited and the Responsibility Entity of Aspen Property Trust

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Aspen Group Limited and the directors of the Responsibility Entity of Aspen Property Trust.

As lead audit partner for the audit of the financial report of Aspen Group Limited and Aspen Property Trust for the year ended 30 June 2021, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

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DELOITTE TOUCHE TOHMATSU

Michael Kaplan Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Organisation

28

Deloitte Touche Tohmatsu ABN 74 490 121 060

Grosvenor Place 225 George Street Sydney, NSW, 2000 Australia

Phone: +61 2 9322 7000 www.deloitte.com.au

Independent Auditor’s Report to the

Stapled Security Holders of Aspen Group Limited and Aspen Property Trust

Opinion

We have audited the financial report of Aspen Group Limited (the “Company”), Aspen Property Trust (the “Trust”) and their controlled entities (together referred to as the “Group”) which comprises the consolidated balance sheet as at 30 June 2021, the consolidated statement of profit and loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year then ended; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to directors of the Company and the directors of Evolution Trustees Limited (the “Responsible Entity”) would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Asia Pacific Limited and the Deloitte Organisation.

	How the	scope of our audit responded to the
KeyAudit Matter	KeyAudit Matter
Fair value assessment of property assets	Our procedures included, but were not limited to:
	•	Obtaining an understanding of and evaluating
The Group accounts for its property assets valued		management’s key processes and controls in so
at $228.565 million (2020: $166.985 million)		far as they apply to the fair value determination
comprising property, plant and equipment (PP&E)		of property assets.
and Investment Property by adopting the fair value model measurement approach in accordance with AASB 13_Fair Value Measurement_, as disclosed in Note 7 and 8.	•	Agreeing fair values of those property assets externally valued in the current year to external valuations and assessing the competency, objectivity and independence of the external
		valuers.
The Group determines the fair value of its PP&E	•	For a sample of the property assets, comparing
and investment properties on the basis of external valuations conducted on a 3-year rotation basis and director valuations in interval years. The valuations are judgemental and determined by factors such as prevailing market conditions, the individual nature, condition and location of each asset, as well as net operating income (NOI) and		the NOI adopted in the valuations to the FY2021 actual performance and FY2022 budget, with specific consideration of the impact of COVID-19 and other market or asset specific factors impacting current year and forecast performance.
capitalisation rate valuation inputs and other	•	For a sample of valuations comparing the
relevant factors such as the impact of COVID-19.		capitalisation rates adopted in current and
		previous year valuations and validating the basis
		supporting the rate adopted by the external
		valuers and/or management.
	•	Assessing the appropriateness of the Group’s
		disclosures including key judgements and
		assumptions underlying the valuations in the
		Notes to the financial statements.

Other Information

The directors are responsible for the other information. The other information comprises the Directors’ Report which we obtained prior to the date of this auditor’s report and also includes the following information which will be included in the Group’s annual report (but does not include the financial report and our auditor’s report thereon): Chairman’s report and additional ASX disclosures and Shareholder information, which is expected to be made available to us after that date.

Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Chairman’s report and additional ASX disclosures and Shareholder information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action.

ASPEN GROUP LIMITED

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 30

Responsibilities of the Directors for the Financial Report

The directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

ASPEN GROUP LIMITED

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 31

Auditor’s Responsibilities for the Audit of the Financial Report (continued)

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 12 to 21 of the Directors’ Report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of Aspen Group Limited for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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DELOITTE TOUCHE TOHMATSU

Michael Kaplan Partner Chartered Accountants Sydney, 19 August 2021

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021

Page 32

Aspen Group Limited For the year ended 30 June 2021

Consolidated Financial Statements

Consolidated Financial Statements Contents

Consolidated Financial statements Notes to the consolidated financial statements	Page
	Consolidated statement of profit and loss 34
	Consolidated statement of comprehensive income 35
	Consolidated balance sheet 36
	Consolidated cash flow statement 37
	Consolidated statement of changes in equity 38
	About this report 39 Segment information 41
Primary	Capital Risk Corporate Structure Other Unrecognised Items
1. Revenue 11	. Capital management 16. Derivative liability 19. Subsidiaries 22. Resident loans 30. Commitments and contingencies
2. Other income / Expenses and other items 12	. Distributions 17. Financial risk management 20. Discontinued operations 23. Rights of use assets 31. Subsequent events
3. Tax expense 13	. Equity and reserves 18. Impairment of non-financial assets 21. Non-controlling interests 24. Net investment in sublease
4. Cash and cash equivalents 14	. Earnings per stapled security 25. Lease liability
5. Trade and other receivables 15	. Interest bearing loans and borrowings 26. Parent entity disclosures
6. Trade and other payables	27. Remuneration of auditors
7. Property, plant and equipment	28. Related party transactions
8. Investment properties	29. Accounting standards adoption
9. Investment property assets held for sale
10. Provisions
Signed reports	Directors’ declaration 75

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 33

Consolidated statement of profit and loss

Aspen Group Limited For the year ended 30 June 2021

CONSOL 2021 Note $’000	IDATED 2020 $’000
Continuing operations Rental income 26,708 Home sales 6,027 Food and Beverage, other ancillary sales, and net gaming revenue 2,337 Other revenue 1 450	26,923 2,247 1,203 397
Total revenue 35,522	30,770
Other income – insurance claim proceeds 2 577 Net fair value gain on Investment properties 8 17,793 Gain from sale of investment properties 187 Expenses Operational expenses 2 (4,978) Property expenses 2 (6,463) Cost of Homes sold (4,054) Employee expenses 2 (8,604) Administration expenses 2 (1,704) Depreciation and amortisation expenses (729) Other expenses 2 (1,875)	- 3,401 - (6,184) (5,699) (1,571) (7,709) (2,039) (523) (1)
Total expenses (28,407)	(23,726)
Earnings before interest and income tax expense (EBIT) 25,672 Finance income 2 163 Finance costs 2 (1,318)	10,445 170 (1,868)
Profit before income tax 24,517 Income tax benefit 875	8,747 ) 3,125
Profit from continuing operations 25,392 Discontinued operations Loss for the year from discontinued operations 20 (1)	11,872 (1)
Profit for the year 25,391	11,871
Profit attributable to ordinary equity holders of the parent entity 25,391 Profit/(Loss) attributable to non-controlling interest -	11,871 -
Profit for the year 25,391	11,871
Earnings per security (EPS) attributable to ordinary equity holders of the parent entity from continuing operations Cents Basic earnings per security 14 21.82 Diluted earnings per security 14 21.68	Cents 12.17 12.17
Earnings per security attributable to ordinary equity holders of the parent entity
Basic earnings per security 14 21.82	12.17
Diluted earnings per security 14 21.68	12.17

The above consolidated statement of profit and loss should be read in conjunction with the accompanying notes.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 34

Consolidated statement of comprehensive income

Aspen Group Limited For the year ended 30 June 2021

2021 Note $’000	2020 $’000
Profit for the year 25,391	11,871
Other comprehensive income Items that will not be reclassified to profit or loss: Fair value gain on property, plant and equipment 364	-
Other comprehensive income for theyear, net of tax 25,755	11,871
Total comprehensive income for the year from: Continuing operations 25,756 Discontinued operations (1)	11,871 -
25,755	11,871
Total comprehensive income for the year attributable to:
Securityholders of Aspen 25,755 Non-controlling interests -	11,871 -
25,755	11,871

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 35

Aspen Group Limited As at 30 June 2021

Consolidated balance sheet

30 June 2021 Note $’000	30 June 2020 $’000
Assets Current assets Cash and cash equivalents 4 8,277 Trade and other receivables 5 1,556 Investment property assets held for sale 9 1,200 Inventories 1,081 Net investment in sublease 24 1,256	8,161 6,630 - 1,958 1,108
Total current assets 13,370	17,857
Non-current assets Investment properties 8 209,774 Property, plant and equipment 7 17,680 Intangible assets 103 Right of use assets 23 798 Deferred tax assets 3 4,000 Net investment in sublease 24 158 Other 613	150,085 16,919 82 538 3,125 1,384 444
Total non-current assets 233,126	172,577
Total assets 246,496	190,434
Liabilities Current liabilities Trade and other payables 6 9,023 Provisions 10 1,473 Lease liability 25 1,630	9,046 1,213 1,291
Total current liabilities 12,126	11,550
Non-current liabilities Interest bearing loans and borrowings 15 74,197 Resident Loans 22 6,420 Lease liability 25 937 Derivative liability 16 265	42,218 - 2,255 381
Total non-current liabilities 81,819	44,854
Total liabilities 93,945	56,404
Net assets 152,551	134,030
Equity Equity attributable to equity holders of the parent Issued capital 13 509,745 Reserves 13 981 Accumulated losses (354,338)	509,715 201 (372,049)
Total equity attributable to equity holders 156,388	137,867
Non-controlling interest 21 (3,837)	(3,837)
Total equity 152,551	134,030

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 36

Consolidated cash flow statement

Aspen Group Limited For the year ended 30 June 2021

CONSO 2021 Note $’000	LIDATED 2020 $’000
Cash flows from operating activities Receipts from customers (inclusive of GST) 40,495 Payments to suppliers and employees (inclusive of GST) (27,752)	33,489 (22,244)
Net cash flows from operating activities 4 12,743	11,245
Cash flows (used in)/from investing activities Acquisition of investment properties (35,452) Acquisition of property, plant and equipment (1,068) Proceeds from sale of investment property assets, net of selling costs 826 Interest received 163	(36,025) (4,123) - 170
Net cash flows used in investing activities (35,531)	(39,978)
Cash flows (used in)/from financing activities Proceeds from borrowings 32,154 Repayment of borrowings - Proceeds from net investment in sublease 1,078 Distributions paid (7,384) Payment of financing and borrowing costs (1,635) Payment of lease liability (1,309) Issuance of stapled securities (net of costs) -	29,998 (12,000) 942 (5,253) (1,528) (1,098) 19,367
Net cash flows used in financing activities 22,904	30,428
Net decrease in cash and cash equivalents 116 Cash and cash equivalents at beginning of year 8,161	1,695 6,466
Cash and cash equivalents at end ofyear 4 8,277	8,161

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 37

Consolidated statement of changes in equity

Aspen Group Limited For the year ended 30 June 2021

Non- controlling interest Issued Reserves Accumulated Total capital losses equity CONSOLIDATED Note $’000 $’000 $’000 $’000 $’000	Non- controlling interest Issued Reserves Accumulated Total capital losses equity CONSOLIDATED Note $’000 $’000 $’000 $’000 $’000	Non- controlling interest Issued Reserves Accumulated Total capital losses equity CONSOLIDATED Note $’000 $’000 $’000 $’000 $’000	Non- controlling interest Issued Reserves Accumulated Total capital losses equity CONSOLIDATED Note $’000 $’000 $’000 $’000 $’000
Balance at 1 July 2019 490,348 - (361,184) (20,143) 109,021
Net profit for the year - - 11,871 - 11,871
Total comprehensive income for the year - - 11,871 - 11,871 Issue of stapled securities 13 19,367 - - - 19,367 Deregistration of non-controlling interest - - (16,306) 16,306 - Security based compensation 13 - 201 - - 201 Distributions payable or paid to securityholders - - (6,430) - (6,430)
Balance at 30 June 2020 and 1 July 2020 509,715 201 (372,049) (3,837) 134,030
Net profit for the year - - 25,391 - 25,391 Revaluation of property, plant and equipment 13 - 364 - - 364	- - 25,391	- 25,391
Total comprehensive income/(loss) for the year - 364 25,391 - 25,755 Issue of stapled securities 13 30 - - - 30 Security based compensation 13 - 416 - - 416 Distributions payable or paid to securityholders - - (7,680) - (7,680)
Balance at 30 June 2021 509,745 981 (354,338) (3,837) 152,551

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 38

About this report

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

Aspen Group (“the Group” or “Aspen”) is a stapled entity comprising Aspen Group Limited (“the Company”) and its controlled entities, and Aspen Property Trust (“the Trust”) and its controlled entities.

Aspen was established for the purpose of facilitating a joint quotation of the Trust and the Company and their controlled entities on the ASX, with both entities being stapled together. The Deed of the Trust and the Constitution of the Company ensure that, for so long as the two entities remain jointly quoted, the number of units in the Trust and the number of shares in the Company shall be equal and that unitholders and shareholders be identical. With the establishment of Aspen via a stapling arrangement, the combined group has common business objectives, and operates as a combined entity in the core business of investing in and operating within the affordable accommodation sector.

The Trust, the Company and their controlled entities are domiciled in Australia. The address of Aspen’s registered office is Suite 21, 285A Crown Street, Surry Hills, New South Wales 2010.

The consolidated financial statements of Aspen as at and for the year ended 30 June 2021 are combined financial statements that present the financial statements and accompanying notes of both the Company and the Trust along with their subsidiaries and their interests in associates and jointly controlled entities. Aspen is a for-profit entity and is primarily involved in investment in and operation of affordable accommodation assets.

The consolidated financial statements were authorised for issue by the Board on 19 August 2021.

The consolidated financial statement is a general-purpose financial report which:

• has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB);

• complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);

• has been prepared on a historical cost basis, except for derivative financial instruments, investment property, certain classes of property, plant and equipment and share-based payments;

Key judgements and estimates

The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Information about judgements, estimates and assumptions that have a significant effect on the consolidated financial statements are found in the following notes:

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Note 3: Deferred tax assets 45 to 46
Note 7: Property, plant and equipment 48 to 49
Note 8: Investment properties 50 to 53
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Basis of consolidation

These consolidated financial statements consist of the Company, the Trust, and their controlled entities. A list of controlled entities (subsidiaries) at year end is contained in note 19.

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of Aspen’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Gains and losses are recognised when the contributed assets are consumed or sold by the equity accounted investees or, if not consumed or sold by the equity accounted investees, when the consolidated entity’s interest in such entities is disposed of.

Further details on the basis of consolidation can be found within the following notes:

not consumed or sold by the equity accounted investees, when the consolidated entity’s interest in such entities is disposed of. Further details on the basis of consolidation can be found within the following notes:	not consumed or sold by the equity accounted investees, when the consolidated entity’s interest in such entities is disposed of. Further details on the basis of consolidation can be found within the following notes:	not consumed or sold by the equity accounted investees, when the consolidated entity’s interest in such entities is disposed of. Further details on the basis of consolidation can be found within the following notes:
Page
Note 19: Subsidiaries 66
Note 21:	Non-controlling interests	68

• is presented in Australian dollars with all values rounded to the nearest thousand dollars ($‘000) unless otherwise stated, in accordance with ASIC Corporations Instrument 2016/191;

• discloses comparative information where required for consistency with the current year’s presentation;

• adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the operations of Aspen and effective for reporting periods beginning on or after 1 July 2020. Refer to notes 23 to 25 for further details; and

• does not early adopt any Accounting Standards and Interpretations that have been issued or amended but are not yet effective.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 39

About this report

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

Other accounting policies

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the consolidated financial statements are provided throughout the notes to the financial statements.

The notes to the financial statements

The notes are organised into the following sections:

Key numbers: provides a breakdown of individual line items in the consolidated financial statements that the directors consider most relevant and summarises the accounting policies, judgements and estimates relevant to understanding these line items;

Capital: provides information about the capital management practices of Aspen and security returns for the year;

Risk: discusses Aspen’s exposure to various financial risks, explains how these affect Aspen’s financial position and performance and what Aspen does to manage these risks;

Corporate structure: explains aspects of Aspen’s structure and how changes have affected the financial position and performance of Aspen;

Unrecognised items: provides information about items that are not recognised in the financial statements but could potentially have a significant impact on Aspen’s financial position and performance; and

Financial performance and position

During the year ended 30 June 2021 Aspen recorded a profit after tax of $25.391 million (2020: profit after tax of $11.871 million). At 30 June 2021 Aspen had net assets of $152.551 million (30 June 2020: $134.030 million), cash reserves of $8.277 million (30 June 2020: $8.161 million) and current assets exceeded current liabilities by $1.244 million (30 June 2020: $6.307 million).

The consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

The Board believes that Aspen will continue as a going concern, and Aspen’s cash flow forecast supports the Board’s opinion that Aspen’s working capital position will remain positive for at least the next twelve months from the date of signing the consolidated financial statements.

Significant changes in the current reporting period

There have been no significant changes to the structure and presentation of this financial report, except where otherwise indicated in this financial report.

Other: provides information on items which require disclosure to comply with Australian Accounting Standards and other regulatory pronouncements, however, are not considered critical in understanding the financial performance or position of Aspen.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 40

Notes to the consolidated financial statements Segment information

Aspen Group Limited For the year ended 30 June 2021

Operating segments

Aspen has four operating segments as detailed below, which hold different asset classes and offer different products and services and are based on Aspen’s management reporting and oversight.

The identification of Aspen’s operating segments has changed during the current year based on expansion of the Group’s asset portfolio and resultant changes in the internal reporting to the chief operating decision makers to assess performance and determine the allocation of resources. Reporting of FY2020 segment information has been changed to reflect the new identified segments in the current year.

The following details the three operating and reporting segments, namely residential, retirement communities, park communities and other:

Geographical segments

Aspen is based in Australia and has its current operating activities spread throughout Australia. There are no other geographical segments.

Major customers

Revenue from one customer of Aspen’s property portfolio represents approximately $5.120 million of Aspen’s total revenues within the Park Communities segment (2020: $9.427 million).

• Residential – this segment consists of the two Lindfield apartment buildings, the Perth House Portfolio, the Cooks Hill co-living community, the Burleigh Heads residential community, the Mount Barker land site, and the Upper Mount Gravatt co-living community

• Retirement Communities – this segment consists of four communities that cater to customers who are typically over-50 years old including Four Lanterns, Sweetwater Grove, Mandurah Gardens, and Lewis Fields

• Park Communities – this segment consists of seven park communities that cater to a broad range of customers on varying lease types and terms

• Other – this segment includes items that are not allocated to an operating segment. This includes corporate overheads and income, interest income and interest expense.

Recognition and measurement

An operating segment is a component of Aspen that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of Aspen’s other components. The operating results of all segments are reviewed regularly by Aspen’s joint chief executive officers (Chief Operating Decision Makers – “CODM”) to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

Segment results that are reported to the joint chief executive officers include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and liabilities, corporate office expenses, and income tax assets and liabilities and are allocated to the “other” segment.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 41

Segment information

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

		Residential 2021 2020 $’000 $’000	Residential 2021 2020 $’000 $’000		Retirement Communities 2021 2020 $’000 $’000	Retirement Communities 2021 2020 $’000 $’000		Park Communities 2021 2020 $’000 $’000	Park Communities 2021 2020 $’000 $’000		Other 2021 2020 $’000 $’000	Other 2021 2020 $’000 $’000		Consolidated 2021 2020 $’000 $’000	Consolidated 2021 2020 $’000 $’000
Rental income Home sales 1 Food and beverage, other ancillary sales, and net gaming revenue Other revenue Total segment revenue2 Operating EBITDA 3 Finance income Finance costs Operating profit / (loss) before depreciation and income tax Depreciation and amortisation Net Fair value gain/(loss) on Investment properties Other expenses4 Insurance claim proceeds Income tax benefit Profit / (loss) after tax attributable to parent entity Segment assets and liabilities reviewed by CODM can be analysed as follows Segment assets Segment liabilities Additions to non-current assets during the year		2,800	1,122 - - -		3,621	3,465 2,247 - -		20,287	22,324 - 1,215 -		-	- - - 397		26,708	26,923 2,247 1,203 397
		850			6,027			-			-			6,877
		-			-			2,337			-			2,337
		-			-			-			450			450
		3,650	1,122		9,648	5,712		22,624	23,539		450	397		36,372	30,770 8,025 27 (1,413)
		1,739	504 -		4,139	3,020 -		8,960	8,935 -		(4,498)	(4,434) 27		10,340
		-			-			-			5			5
		-	-		-	-		-	-		(1,349)	(1,413)		(1,349)
		1,739	504 - 1,207 - - -		4,139	3,020 - 1,422 - - -		8,960	8,935 (474) 772 (32) - -		(5,842)	(5,820) (49) - (739) - 3,125		8,996	6,639 (523) 3,401 (771) - 3,125
		-			-			(619)			(110)			(729)
		7,063			(167)			10,897			-			17,793
		(2,056)			8			(27)			(46)			(2,121)
		-			-			577			-			577
		-			-			-			875			875
		6,746	1,711		3,980	4,442		19,788	9,201		(5,123)	(3,483)		25,391	11,871
			32,756			38,745			95,484			23,729			190,714
		70,597			48,626			109,343			17,930			246,496
		-	-		-	-		-	-		(93,945)	(56,684)		(93,945)	(56,684)
			31,549			2,340			2,101			23			36,013
		31,637			10,060			3,037			85			44,819

1 Home sales revenue includes proceeds on sale of investment properties totalling $0.850 million, consistent with reporting format to CODM . This is excluded from statutory revenue and recognised on a net basis as ‘Gain from sale of investment properties’ totalling $0.187 million.

• 2 All segment revenues are derived from external customers.

3 Operating EBITDA represents earnings before interest, tax, depreciation and amortisation and excluding non-underlying items.

• 4 Other expenses are expenses which are excluded from CODM’s review of operating profits. This includes expenses such as share-based payments, fair value adjustment on interest rate swaps, and asset acquisition transaction costs.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 42

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

1: Revenue

2: Other income / Expenses and other items (continued)

(a) Other revenue

(a) Other revenue
2021	2020
$’000	$’000
Management fees 400 Miscellaneous income 50	347 50
Total other revenue 450	397

Recognition and measurement

Revenue

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and can be reliably measured. Revenue brought to account but not received at balance date is recognised as a receivable.

Rental income (short and long stay) is recognised on a straightline basis over the accommodation period. Fixed rental increases are recognised on a straight-line basis until the next market review date. Rent received in advance is recognised as contract liabilities.

Revenue from the sale of homes is recognised at the point in time when control of the home is transferred to the customer, on settlement of the home.

Food and beverage, other ancillary sales, and net gaming revenue are recognised when the provision of the service is provided to the customer.

Management fees are recognised over the period the provision of the related service is transferred to the customer. Interest income is recognised as the interest accrues, using the effective interest rate method.

2: Other income / Expenses and other items

(a) Other income – insurance claim

As previously reported, the Group made claims for material damages and business disruption arising from the bush fires in FY20 at two of its parks, Barlings Beach Holiday Park and Tween Waters Holiday Park. The parties have agreed to a net payment to Aspen of $0.577 million (after deductibles and expenses).

(b) Operational expenses

b) Operational expenses
2021	2020
$’000	$’000
Contractors 876 Consumables 1,000 Services and supplies 992 Marketing expenses 287 Other operational costs 1,823	3,339 565 852 376 1,052
Total operational expenses 4,978	6,184

(c) Property expenses

c) Property expenses
2021	2020 $’000
$’000
Repairs and maintenance 789 Motor vehicle expenses 95 Utilities 2,862 Insurance 1,445 Rates and taxes 1,242 Other property expenses 30	776 116 2,801 1,070 890 46
Total property expenses 6,463	5,699

(d) Employee expenses

d) Employee expenses
2021	2020
$’000	$’000
Salary and wages 7,494 Superannuation 583 Security-based payments 415 Other employee costs 112	6,766 556 201 186
Total employee expenses1 8,604	7,709

1 Government incentives received in the form of JobKeeper payments totalling

$0.6 million (2020: $0.6 million) have been netted off against salary and wages.

(e) Administrative expenses

e) Administrative expenses
2021	2020
$’000	$’000
Corporate administration costs 1,595 Occupancy costs 107 Other expenses 2	1,829 114 96
Total administrative expenses 1,704	2,039

(f) Other

f) Other
2021	2020
$’000	$’000
Asset acquisition transaction costs 2,061 Revaluation of equity investments (186)	12 (11)
Total other 1,875	1

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 43

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

2: Other income / Expenses and other items (continued) Recognition and measurement

Security-based payments expense

Securities may be issued to employees of Aspen under the Performance Rights Plan (“PRP”). The securities issued are accounted for as options in Aspen. The fair value of the options granted is recognised as an employee expense by Aspen with a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the options. The amount recognised is adjusted to reflect the actual number of security options that vest, except for those that fail to vest due to market vesting conditions not being met. The fair value is measured at the grant date using an appropriate pricing model, taking into account the terms and conditions upon which the options were granted. The fair value is expensed on a straight-line basis over the vesting period.

Finance income and costs

inance income and costs	inance income and costs
2021
$’000
Interest – bank deposits 6 Interest - Investment in Sublease 157	27 143
Finance income 163	170
Interest – loans and borrowings 1,278 Interest – Rights of use assets 156 Interest – Swaps (mark to market) (116)	1,345 142 381
Finance costs 1,318	1,868

Finance income

Finance income comprises interest income on bank deposits and interest income on loans to related parties. Interest income is recognised as it accrues, using the effective interest method.

Employee benefits expense

Aspen’s accounting policy for liabilities associated with employee benefits is set out in note 10.

Government incentives received in the form of JobKeeper payments totalling $0.6 million have been netted against salary and wages expense. Government incentives are recognised when there is reasonable assurance that the related eligibility conditions have been satisfied and the incentive will be received.

Employee benefit expenses are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset.

Depreciation expense

Refer to note 7 on depreciation expense.

Occupancy costs

Occupancy costs represent charges pursuant to operating leases which are for short term duration of under 12 months or in respect of low value items.

Finance costs

Finance costs comprise interest on borrowings, unwinding of the discount on provisions, right of use assets, and mark to market losses through profit or loss and impairment losses recognised on financial liabilities that are recognised in the profit or loss. Borrowing costs that are not capitalised are recognised in profit or loss using the effective interest model.

Capitalisation of borrowing costs

Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of significant value enhancing property, plant and equipment that takes a prolonged period of time to complete. Once capitalised, these borrowing costs form part of the qualifying asset.

In addition, borrowing costs are capitalised when they pertain to the establishment of a new debt facility, with these capitalised borrowing costs being amortised over the term of the debt facility.

Amortisation

Licenses are amortised over the period of their expected useful life.

Goods and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 44

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

3: Tax expense

: Tax expense	: Tax expense	: Tax expense
2021
$’000
Income statement (continuing operations) Current income tax expense Current year (394) Deferred income tax expense Temporary differences 1,269		- 3,125
Income tax reported in the income statement 875		3,125
Tax reconciliation Profit before tax 24,517		8,747
Income tax at the statutory tax rate of 26% (2019:27.5%) (6,374) Prima facie income tax on profit from trusts 3,792 Non-deductible items (49) Recognition of previously unrecognised temporary differences - Recognition of previously unrecognised tax losses 3,506		(2,405) 1,545 (64) 501 3,548
Income tax on profit before tax 875		3,125
Recognised net deferred tax assets 875		3,125
Deferred tax not recognised on the balance sheet relates to the following: Tax losses 21,724		24,836

Deferred tax assets

The recognised deferred tax assets consist of the following:

2021
$’000
Trade and other payables 311 Lease arrangement 89 Provisions 252 Employee benefits 523 Other liabilities 66 Blackhole expenditure 460 Tax losses 5,735	345 132 280 332 95 65 2,624
Deferred tax assets 7,436	3,873
Set off against deferred tax liabilities Property, plant and equipment (437) Investment properties (2,999)	(33) (715)
Deferred tax liabilities (3,436)	(748)
Net deferred tax assets 4,000	3,125

At 30 June 2021, the Group has approximately gross $86.9 million (2020: $99.3 million) of unrecognised tax losses including approximately $27.5 million (2020: $39.5 million) of unrecognised capital losses, calculated on a provisional basis.

Recognition and measurement

Current taxes

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of professionals within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent tax advice.

Deferred taxes

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

At 30 June 2021, the Group has recognised additional deferred tax assets in respect of previously unrecognised tax losses totalling $3.5 million. The recognition of the additional tax asset is based on an assessment of probable future tax profits that will be generated within a reasonable forecast period that will allow the deferred tax assets to be utilised.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 45

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

3: Tax expense (continued) Deferred taxes (continued)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The directors reviewed the Group's investment property portfolios and concluded that none of the Group's investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, the directors have determined that the ‘sale’ presumption set out in the amendments to IAS 12 is not rebutted. As a result, the Group has not recognised any deferred taxes on changes in fair value of the Group’s Trust owned investment properties which are not subject to any income taxes on gains realised on disposal.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current tax and deferred tax for the year

Current tax and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Tax consolidation

The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 1 July 2004 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is the Company.

Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the taxconsolidated group using the ‘separate taxpayer within group’ approach by reference to the carrying amounts of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.

The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent that it is probable that future taxable profits of the taxconsolidated group will be available against which the asset can be utilised.

Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of the probability of recoverability is recognised by the Company only.

The Trust

Under current Australian Income Tax Legislation, the Trust is not liable for income tax, provided that the taxable income (including any assessable component of any capital gains from the sale of investment assets) is fully distributed to unit holders each year. Tax allowances for building and plant and equipment depreciation may be distributed to unit holders in the form of tax deferred components of distributions.

Key judgement

At 30 June 2021 a net deferred tax asset of $4.00 million has been recognised based on an assessment of probable future tax profits that will be generated within a reasonable forecast period that will enable the deferred tax assets to be utilised

A deferred tax asset of $21.7 million (2020: $24.8 million) for unused tax losses has not been recognised based on the assessment that there is insufficient certainty as to the reasonable probability of generating future tax profits or being able to utilise the tax losses beyond the period in respect of which the recognised deferred tax asset has been recognised as at 30 June 2021.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 46

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

4: Cash and cash equivalents

: Cash and cash equivalents
	Consolidated
2021		2020 $’000
$’000
Cash at bank and in hand 8,127 Term deposits 150		8,011 150
8,277		8,161

Australian Financial Services Licence (“AFSL”) regulations require Aspen Group’s subsidiary, Aspen Funds Management Limited (“AFM”), to maintain a minimum $0.075 million of cash and Net Tangible Assets (“NTA”), as defined by the regulations, of $0.150 million. At 30 June 2021 AFM maintained the minimum cash and NTA requirement.

Reconciliation of net profit/ (loss) after tax to net cash flows from operations 2021 $’000	2020
	$’000
Net profit/ (loss) for the year 25,391 Adjustments for: Depreciation and amortization 729 Change in fair value of investment properties (17,793) Finance income (163) Change in fair value of equity investment (186) Gain from sale of investment property assets (187) Share based payments expense 416 Finance and borrowing costs 1,506 Investment property acquisition costs 2,061 Deferred tax benefit recognised (875) Other expense 101	11,871 523 (3,401) (169) (11) - 201 1,712 12 (3,125) 338
Adjusted profit before movements in working capital and provisions 11,000 Decrease in assets Trade and other receivables 978 Other assets 877 (Decrease)/Increase in liabilities Trade and other payables (112)	7,951 178 773 2,343
Net cash inflows from operating activities 12,743	11,245

Recognition and measurement

Cash and cash equivalents

Cash and cash equivalents comprise cash balances which are immediately available only.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

5: Trade and other receivables

: Trade and other receivables	: Trade and other receivables
2021
$’000
Trade receivables, net 1,117 Other debtors 225 Prepayments and other 214 Deposit for acquisition of properties1 -	1,913 332 262 4,123
1,556	6,630
Trade receivables past due Under 90 days 249 Over 90 days 526	288 469
Trade receivables past due 775	757
Recognised expected credit losses (358)	(270)
Trade receivables past due after provision for expected credit losses 417	487

1 The 2020 balance includes the deposit paid for the Co-Living Community at Cooks Hill, Newcastle, NSW and Resident Community at Burleigh Heads, QLD

Recognition and measurement

Trade and other receivables are initially measured at their fair value and subsequently measured at amortised cost less expected credit losses. Trade receivables have maturities of less than 12 months, therefore the Group has adopted the ‘simplified’ model approach in calculating expected credit losses. Under this approach current trade receivables will recognise ‘lifetime expected credit losses’. These are the credit losses expected over the term of the receivables.

Aspen’s credit terms for commercial customers is typically 30 days.

6: Trade and other payables

2021
$’000
Trade payables 3,251 Distributions payable 4,177 Contract liabilities 1,595	4,307 3,880 859
9,023	9,046

Recognition and measurement

Trade and other payables are recognised initially at their fair value and subsequently measured at their amortised cost using the effective interest method. Aspen’s credit terms with suppliers is typically between 7 - 30 days.

Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.

A liability is recognised for the amount of any distribution (see Note 12) declared by the Group on or before the end of the reporting period but not distributed at Balance Sheet date

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 47

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

7: Property, plant and equipment

: Property, plant and equipment
			Consolidated
			Plant and	Corporate
	Land	Buildings	equipment	assets
	(fair value)	(fair value)	(fair value)	(cost)	Total
	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2021
Cost or valuation	8,639	5,826	4,925	108	19,498
Accumulated depreciation and impairment	-	(630)	(1,169)	(19)	(1,818)
Net carrying amount	8,639	5,196	3,756	89	17,680
Movement
Net carrying amount at the beginning of the year	8,639	5,196	3,065	19	16,919
Additions	-	-	946	85	1,031
Depreciation	-	(176)	(443)	(15)	(634)
Revaluation	-	176	188	-	364
Net carrying amount at the end of theyear	8,639	5,196	3,756	89	17,680
Year ended 30 June 2020
Cost or valuation	8,639	5,650	3,791	23	18,103
Accumulated depreciation and impairment	-	(454)	(726)	(4)	(1,184)
Net carrying amount - adjusted	8,639	5,196	3,065	19	16,919
Movement
Net carrying amount at the beginning of the year	9,596	5,375	2,529	-	17,500
Additions	-	-	953	23	976
Depreciation	-	(179)	(341)	(4)	(524)
Revaluation	(957)	-	(76)	-	(1,033)
Net carrying amount at the end of theyear	8,639	5,196	3,065	19	16,919

Property, plant and equipment (PPE) represent assets held principally for use in the production or supply of goods or services or for administration purposes.

Recognition and measurement

PPE is initially measured at the historical cost of the asset, less depreciation and impairment. The cost of PPE includes the cost of replacing parts that are eligible for capitalisation.

PPE is subsequently measured at fair value at each balance date. Fair value is determined on the basis of either an independent valuation prepared by external valuers as at the balance sheet date or directors’ valuation. Corporate office assets are not subsequently revalued and are carried at historical cost. Independent valuations of PPE are obtained at intervals of not more than 3 years and are performed by external, independent property valuers with appropriate professional qualifications and experience in the category of the property being valued.

The fair value of PPE can be measured via either the capitalisation method, the discounted cash flow approach, or by comparison to comparable sales. Aspen may consider all three techniques and reconciles and weighs the estimates under each technique based on its assessment of the judgement that market participants would apply. A revaluation decrease is recognised in profit or loss.

Refer further details regarding fair value assessment in note 8.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 48

Primary

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

7: Property, plant and equipment (continued)

Depreciation

Items of property, plant and equipment are depreciated on a straight-line basis over their useful lives. The estimated useful life of buildings is between 10 and 40 years; plant and equipment is between 5 and 10 years and corporate office assets is between 3 and 10 years. Land is not depreciated.

De-recognition

An item of PPE is de-recognised when it is sold or otherwise disposed of, or when its use is expected to bring no future economic benefit. Any gain or loss from derecognising the asset (the difference between the proceeds of disposal and the carrying amount of the PPE) is included in the income statement in the period the item is derecognised.

Level 3 fair value

The fair value measurement of PPE of $17.591 million (30 June 2020: $16.900 million) has been categorised as a Level 3 fair value based on the unobservable inputs to the valuation technique used. The carrying amount table above shows the reconciliation from the opening balance to the closing balance for Level 3 fair values. Details of the valuation is included in Note 8.

If Aspen’s total land, buildings and plant and equipment were measured using the cost model, the carrying amount would be as follows:

Property	Land	Buildings	Plant & Equipment	Total
	$’000	$’000	$’000	$’000
Year ended 30 June 2021
Cost	8,639	5,375	4,615	18,629
Accumulated depreciation and impairment	-	(630)	(1,170)	(1,800)
Net carrying amount	8,639	4,745	3,445	16,829

Key judgment and estimates

Judgement is required in assessing classification of accommodation property assets as either PPE or Investment Properties. Accommodation assets are classified as PPE where their principal purpose is for use in the supply of goods or services, and are classified as Investment properties where their principal purpose is to earn rentals or for capital appreciation or for both. Key factors considered in the assessment include the principal purpose of the asset as well as other asset specific characteristics such as the workforce and skillset associated with the property and the level of ancillary services offered by the asset in addition to accommodation services. PPE includes the Darwin Free Spirit Resort.

The fair value methodology which is used when valuing property assets via the capitalisation method requires significant assumptions to be made in respect of both sustainable net operating income and market capitalisation rate. This applies to both assets classified as PPE and investment properties.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 49

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

• 8: Investment properties

Investment properties	30 June 2021 $’000 30 June 2020 $’000
Opening balance Investment properties acquired Investment properties reclassified to investment property assets held for sale Net change in fair value*	150,085 110,540 43,735 36,144 (1,839) - 17,793 3,401
Closing balance	209,774 150,085

* Net change in fair value excludes investment property acquisition costs totalling $2.1 million which are recognised in other expenses.

Investment properties comprise those which are held for the principal purpose of earning rental income or for capital appreciation or both.

During the year, Aspen acquired the Cooks Hill residential co-living community, the Burleigh Heads residential community, the Mount Barker land, the Lewis Fields retirement community, and the Upper Mount Gravatt residential co-living community. The acquisitions were acquired principally for the purposes of earning rental income and capital appreciation.

Recognition and measurement

Land and buildings have the function of an investment and are regarded as composite assets. In accordance with applicable accounting standards, the buildings, including plant and equipment, are not depreciated. Investment property includes property under construction.

Investment properties are measured initially at cost, including transaction costs. Subsequently, investment properties are stated at fair value and as a result, transaction costs are charged to statement of profit and loss as “other” expenses. Subsequent gains or losses arising from changes in the fair values of investment properties at reporting date are included in the statement of profit and loss in the period they arise as “Net Fair value gain/(loss) on Investment properties”.

Fair value

The fair value disclosures below relate to all property assets owned by the Group as follows:

	30 June 2021 $’000 30 June 2020 ’000
Classified as: Property plant and equipment Investment properties Investmentpropertyassets held for sale	17,591 16,900 209,774 150,085 1,200 -
	228,565 166,985

Property assets which have been subject to an independent valuation during the year are as follows:

Segment Percentage of portfolio independently valued in current year Total of latest independent valuations $’000		Total carrying value
		$’000
Residential 57% 66,735 Retirement Communities 25% 45,245 Park Communities 57% 108,650		70,598
		48,626
		109,341
Total 220,630		228,565

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 50

Primary

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

8: Investment properties (continued)

The following table presents individual properties owned by the Group:

				Latest
	Original acquisition	Original acquisition costs4	Latest independent	independent valuation	Book value at 30 June 2021	Book value at 30 June 2020
Property	date	$ ‘000	valuation date	$ ‘000	$ ‘000	$‘000
Residential Properties
Pacific Highway (Kalinda) NSW	Aug 2019	4,929	Jun 2019	4,530	7,004	4,928
Treatts (Kiah) NSW	Aug 2019	5,443	Jun 2019	4,120	5,059	6,650
Perth Portfolio WA	Nov 2019	21,178	May 2021	28,050	28,050	21,178
Cooks Hill1	Jul 2020	3,750	May 2020	3,750	3,872	-
Mt Barker1 2	Dec 2020	4,510	Nov 2020	4,510	4,594	-
Burleigh Heads1 2	Dec 2020	3,275	Nov 2020	3,275	3,519	-
Upper Mount Gravatt1	Apr 2021	18,500	Mar 2021	18,500	18,500	-
Retirement Communities Properties
Four Lanterns NSW	Jan 2015	7,420	May 2019	12,240	12,442	12,430
Mandurah WA	Jun 2015	10,200	Jun 2020	13,725	13,730	13,725
Sweetwater Grove NSW	Aug 2015	10,500	May 2019	10,500	13,634	12,590
Lewis Fields1 3	Jun 2021	8,780	Jun 2021	8,780	8,820	-
Park Communities Properties
Adelaide SA	Oct 2015	9,250	June 2021	13,100	13,100	11,900
Tween Waters	Dec 2016	6,880	Jun 2020	8,100	8,100	8,100
Barlings Beach	Jan 2017	13,250	June 2021	16,450	16,450	14,700
Koala Shores NSW	Sep 2017	10,200	May 2019	9,750	9,750	8,430
Darwin FreeSpirit NT	Dec 2017	19,300	May 2020	16,900	17,591	16,900
Highway 1 SA	Oct 2018	23,060	June 2021	28,350	28,350	24,440
Aspen Karratha Village WA	Jun 2005	29,378	Nov 2020	16,000	16,000	11,014
At 30 June 2021/2020				220,630	228,565	166,985

1 Acquired during the year 2 Note that these are currently earmarked as residential but are currently in development stages 3 Note that for the purposes of the financial statements, the gross value of the Lewis Field property is included in assets and the value of the obligation to repay loans to and a share of capital gains to residents is accounted for separately as a liability. The net value of Lewis Fields is $2.40 million 4 Excludes transaction costs

Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at measurement date, in the principal market for the asset or liability, or the most advantageous market in its absence.

It is the Group’s policy to have all properties independently valued at intervals of no longer than three years. It is the policy of the Group to review the fair value of each property at every six-month reporting period and to revalue properties to fair value when their carrying value materially differs to their fair values. In determining fair values, the Group considers relevant information including the capitalisation of rental streams using market assessed capitalisation rates, expected net cash flows discounted to their present value using market determined risk-adjusted discount rates, and other available market data such as recent comparable transactions. The assessment of fair value of properties does not take into account potential capital gains tax assessable.

The fair value measurement of the investment property assets totalling $209.774 million (30 June 2020: $150,085 million) and PPE assets totalling $17.591 million (30 June 2020: $16.900 million) have been categorised as a Level 3 fair value based on the unobservable inputs to the valuation technique used. The carrying amount tables above shows the reconciliation from the opening balance to the closing balance for Level 3 fair values for investment property and PPE assets.

The Board has reviewed the carrying value of all properties as at 30 June 2021 and adopted directors’ and independent valuations for all properties as at this date, taking into account historical, current and forecast trading performance, the most recent valuations, and market evidence. Specific consideration has been given to the impact of COVID-19 in respect of consideration of historical and forecast performance. Independent valuations were commissioned for nine properties/portfolios during the financial year including the new acquisitions noted above, with director valuations being undertaken for the remaining balance of properties. As a result of the independent valuations received, as well as the use of directors’ valuations as at 30 June 2021, there was a net upwards movement of $18.2 million (adjusted for capital expenditure since the previous valuation) in the portfolio carrying value during the year ended 30 June 2021.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 51

Primary

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

8: Investment properties (continued)

Certain external valuers have indicated in their reports that the events of COVID-19 present unprecedented set of circumstances on which to base a judgement regarding property values. As a result, they have indicated that their valuations are reported on the basis of ‘material valuation uncertainty’ as per Valuation Reports (VPS 3) and matters that may give rise to material valuation uncertainty (VPGA 10) of the RICS Red Book Global. Consequently, less certainty and a higher degree of caution should be attached to their valuations than would normally be the case.

They have further indicated that given the volatility impact and the level of volatility from COVID-19 means that conditions change on a daily basis and would therefore need to be reviewed and updated with greater frequency than might normally apply. In summary the valuers recognise that the global risk outlook, particularly with regard to COVID-19 is extremely fluid and that resultant volatility may adversely impact property valuations. The directors consider that the same cautions apply equally to the internal valuations undertaken at year end.

The impacts of COVID-19 have continued into 1Q FY22 and the Group’s operating conditions and settings are largely unchanged from Q4 FY21. Aspen’s operating environment is expected to continue to be mixed over the next 12 months, particularly for our Parks Communities. The Group is being prudent and maintaining a relatively high level of longer stay patronage and exercising tight control on costs. The directors believe Aspen can continue to perform relatively well in this environment as domestic household tenants and tourists seek lower cost accommodation in attractive locations. Nonetheless, continued or further closures and restrictions introduced by governments will impact local tourism and therefore Aspen’s business. This may in turn negatively affect the Group’s operating performance and the valuation of its properties.

Valuation technique and significant unobservable inputs

The following table shows the valuation technique used in measuring the fair value of PPE and investment property assets as well as the significant unobservable inputs used.

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Inter-relationship between key
Valuation technique Significant unobservable inputs unobservable inputs and fair value
measurement
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Valuation technique Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement	Valuation technique Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement	Valuation technique Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement
Capitalisation method and discounted cashflow approach: The Group considers either of the techniques or when deemed appropriate, both of the techniques. Where both techniques are considered, the Group reconciles and weighs the estimates under each technique based on its assessment of the judgement that market participants would apply. In the current year the capitalisation method was the primary valuation technique adopted. The capitalisation method estimates the sustainable net income (where applicable) of the property, and then applies a capitalisation (or discount/risk) rate to this sustainable net income to derive the value of the asset. One off capital adjustments were made in the current year, where appropriate, to reflect the anticipated impact of COVID-19 to the underlying derived valuation. These adjustments were made to two of the Group’s park communities which are most exposed to short-stay accommodation. The discounted cashflow approach considers the present value of net cash flows to be generated from the property, taking into account the receipt of contractual rentals, expected future market rentals, letting up periods, escalation (of sales and costs), occupancy rate, lease incentive costs such as rent-free periods and other costs not paid by tenants. The expected net cash flows are discounted using risk-adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location, tenant credit quality and lease terms.	For the financial year ended 30 June 2021, the properties were primarily valued using the capitalisation method. Residential Valuation inputs include:  Net sustainable operating income ranging from $0.13 million to $1.02 million  Capitalisation rate ranging from 3.01% to 5.75% Retirement Communities Valuation inputs include:  Net sustainable operating income ranging from $0.69 million to $0.97 million  Capitalisation rate ranges ranging from 6.50% to 8.50% Park Communities Valuation inputs include:  Net sustainable operating income ranging from $0.75 million to $2.88 million  Capitalisation rate ranging from 7.75% to 17.00%	The estimated fair value would increase (decrease) if:  Net sustainable income increases (decreases)  Capitalisation rates and or discount rates decrease (increase) which could result from: o Interest rates decreasing (increasing) o The required risk premium decreasing (increasing)

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 52

Notes to the consolidated financial statements

Primary

Aspen Group Limited For the year ended 30 June 2021

8: Investment properties (continued)

Sensitivity analysis

The Group has conducted sensitivity analysis on the fair value of the property assets to changes in key assumptions used in the valuation as follows:

		Key assumptions	Key assumptions
	0.5% increase in cap rate	0.5% decrease in cap rate	5% decrease in NOI	5% increase in NOI
(Decrease)/Increase in total value $’000)	(16,603)	15,709	(12,158)	8,049
Change in value (%)	(7%)	7%	(5%)	4%

9: Investment property assets held for sale

: Investment property assets held for sale	: Investment property assets held for sale
Consolidated
2021	2020
$’000	$’000
Opening balance at 1 July -	-
Reclassifications from investment properties 1,839	-
Disposals through sale (639)	-
Closing balance at 30 June 1,200	-

Recognition and measurement

Investment property assets classified as held for sale includes assets from the Perth residential portfolio. During the year, Aspen settled the sale of two Port Kennedy Houses from the Perth portfolio with total asset value of $0.64 million. Three additional Port Kennedy Houses from the Perth portfolio were listed for sale as at 30 June 2021 with a total asset value of $1.20 million.

Impairment

Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with Aspen’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Cumulative income or expense included in Other Comprehensive Income (“OCI”)

There is no cumulative income or expenses included in OCI relating to the assets classified as held for sale.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 53

Primary

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

10: Provisions

2021
$’000
Current Employee benefits 1,463 Other 10		1,153 60
1,473		1,213

Short term employee benefits

Liabilities for employee benefits for wages, salaries, and annual leave represent present obligations resulting from employees’ services provided to reporting date and are calculated at undiscounted amounts based on remuneration wage and salary rates that Aspen expects to pay as at reporting date including related on-costs, such as workers compensation insurance and payroll tax.

A provision is recognised for the amount expected to be paid under short-term bonus plans if Aspen has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Movements in provisions during the financial year

2021
$’000
Carrying amount at beginning of the year 1,213 Provision reclassified per AASB 161 - Additional provisions recognised 1,129 Provisions used (869)		1,984 (912) 1,012 (871)
Carrying amount at end of theyear 1,473		1,213

1 At the date of initial application of AASB 16, the provision for onerous lease is included in the initial calculation of the investment in sublease.

Long term employee benefits

Aspen’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increase in wages and salary rates including related on-costs and expected settlement dates.

Key estimates:

Management judgement is required in determining the following key assumptions used in the calculation of long service leave at balance date:

– future increases in salaries and wages;

Recognition and measurement

A provision is recognised if, as a result of a past event, Aspen has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

– future on-cost rates; and

– experience of employee departures and period of service.

The total long service leave liability is $0.17 million (2020: $0.14 million)

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 54

Capital

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

11: Capital management

Net debt reconciliation[1]

Aspen’s capital management objectives

At 30 June 2021, Aspen had net debt of $66,375 million (2020: net debt of $34.337 million).

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain the future growth of Aspen’s business.

Net debt reconciliation1 t 30 June 2021, Aspen had net debt ebt of $34.337 million).	Net debt reconciliation1 t 30 June 2021, Aspen had net debt ebt of $34.337 million).
2021
$’000
Cash and cash equivalents 8,277 Gross borrowings – repayable after one year (at variable interest rates); (74,652)	8,161 (42,498)
Net(debt) / cash1 (66,375)	(34,337)

The Board monitors and determines the level of distributions paid to securityholders.

													$’000	$’000
			Consolidated					Cash and cash equivalents					8,277	8,161
			2021			2020		Gross borrowings – repayable after (at variable interest rates);	one year				(74,652)	(42,498)
			$’000			$’000		Net(debt) / cash1					(66,375)	(34,337)
Equity and reserves
Issued capital			509,745			509,715	1	Net debt excludes the lease liabilities totalling				$2.567 million (2020:
Reserves			981			201	$3.546 million) and borrowing transactions costs totalling							$0.455
Accumulated losses			(354,338)		(372,049)		million (2020: $0.280 million)
Non-controlling interests			(3,837)			(3,837)
Net capital			152,551			134,030
Net financial debt									Cash and cash				Borrowing – due after Total
Net interest-bearing debt less cash*			(66,375)			(34,337)			equivalents				one year
									$’000				$’000 $’000
Aspen has outstanding gross debt of $74.652 million (2020: $42.498				million)				As at 1 July 2019	6,466				(24,500) (18,034)
spen regularly assesses the adequacy of its equirements, cost of capital and gearing as part roader strategic plan.					capital of its			Cashflows/borrowings As at 30 June 2020	1,695 8,161				(17,998) (16,303) (42,498) (34,337)
he Board can alter the capital structure of Aspen by, mongst other things:								Cashflows/borrowings		116			(32,154) (32,038)
- raising capital by issuing new securities; - the operation or suspension of a dividend								As at 30 June 2021	8,277				(74,652) (66,375)

*Aspen has outstanding gross debt of $74.652 million (2020: $42.498 million)

Aspen regularly assesses the adequacy of its capital requirements, cost of capital and gearing as part of its broader strategic plan.

The Board can alter the capital structure of Aspen by, amongst other things:

• the operation or suspension of a dividend reinvestment plan;

• buying back securities;

• adjusting the amount of distributions paid to securityholders;

Aspen was compliant with its debt covenants during the financial year.

• returning capital to securityholders;

• selling assets to reduce debt or increase cash on hand;

• buying assets and increasing debt or decreasing cash on hand; and

• adjusting the timing of development and capital expenditures.

The Group holds finance facilities totalling $91.000 million. The facility comprises a $85.000 million revolver, a $5.000 million overdraft facility and a $1.000 million guarantee facility, has a tenure ending April 2024 and is aligned to support the broader strategic objectives of the group. The facility has been established on commercial terms consistent with the scale and operations of the group. At 30 June 2021, Aspen had a gross debt of $74.652 million from the drawdown of these finance facilities (2020: $42.498 million).

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 55

Capital

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

12: Distributions

Aspen securityholders Cents per security Total a 2021 2020 2021 Cents Cents $’000	mount 2020 $’000
Paid during the year Final distribution for the previous year 3.25 2.70 3,781 Interim distribution for the year 3.10 2.75 3,607	2,601 2,649
6.35 5.45 7,388	5,250
Proposed and unpaid at the end of the year Final distribution for the year 3.50 3.25 4,073	3,781

Aspen’s distributions policy considers, amongst other things, operating profits of the consolidated group, taxable income of the Trust, the current balance sheet, future capital requirements and forecast cash flows.

2021 Dividend franking accounts $’000	2020 $’000
Franking credits - calculated at current tax rate of 26% (2020: 27.5%) available to securityholders of Aspen for subsequent financial years 1,892	2,001

The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:

(a) Franking credits that will arise from the payment of the current tax liabilities;

(b) Franking debits that will arise from the payment of dividends recognised as a liability at the year-end;

(c) Franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year-end; and

(d) Franking credits that the Company may be prevented from distributing in subsequent years.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 56

Capital

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

13: Equity and reserves

3: Equity and reserves
	Securities
Movement in stapled securities	‘000 units $’000
At 1 July 2019	96,322 490,348
Issue of stapled securities	20,019 19,367
At 30 June 2020	116,341 509,715
Issue of stapled securities	27 30
At 30 June 2021	116,368 509,745

The nature of Aspen’s contributed equity

Aspen does not have an authorised capital or par value in respect of its issued securities. Holders of stapled securities are entitled to receive dividends and distributions as declared from time to time and are entitled to one vote per stapled security at securityholder meetings. The liability of a member is limited to any remaining unpaid amount in relation to a member’s subscription for securities.

Issued capital

Issued capital represents the amount of consideration received for stapled securities issued by Aspen. Issue related costs directly attributable to the issue of capital are accounted for as a deduction from equity, net of tax, from the proceeds.

Reserves

eserves
	Security-based payment reserve Asset revaluation reserve Total Reserves
Reserves	$’000 $’000 $’000
At 1 July 2019 Security-based payment	- - - 201 - 201
At 30 June 2020	201 - 201
Security-based payment Property, plant and equipment revalued during the year	416 - 416
	- 364 364
At 30 June 2021	617 364 981

Security-based payment reserve

The security-based payment represents the Long-Term Incentives (LTI) granted to the executive management team of Aspen during the year. The LTI vests upon certain performance hurdles being met, as well as remaining in employment when the performance rights vest.

During the year, Aspen issued 792,361 performance rights to the senior management team. The performance rights are issued at nil consideration for a total fair value of $691,335. This is in line with the LTI plan and are granted in accordance with performance guidelines established by the Board. The performance rights are issued upon the satisfaction of the TSR and NAV hurdles below:

TSR hurdle

The Board decided to use relative TSR as the vesting condition because relative TSR is easily measured, verifiable by external data and therefore transparent for securityholders, and it is commonly used by ASX companies.

TSR is a measure of the return to securityholders (over the vesting period) provided by security price appreciation, plus distributions expressed as a percentage of initial investment. TSR was selected because it measures Aspen’s returns for securityholders.

The S&P ASX 300 Property Sector index is used as a comparator group as it represents Aspen’s listed property peers that Aspen competes with for equity and talent. The TSR hurdle is tested at the end of the performance period (three years from grant) by calculating the TSR performance of each entity in the comparator group. The performance of each entity is then ranked, using percentiles. Aspen Group’s performance will be calculated at the end of the performance period and compared to the percentile rankings. Vesting of performance rights under this hurdle will only occur if Aspen Group outperforms a majority of the entities making up the S&P ASX 300 Property Sector index over the 3-year period.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 57

Capital

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

13: Equity and reserves (continued)

Security-based payment reserve (continued)

The following vesting schedule applies to the award of any performance rights to eligible participants:

Relative TSR over 3 years	Proportion of TSR related rights vested
At or below the 50thpercentile	0%
At the 51stpercentile	50%
Between the 51stpercentile and the 75thpercentile	Straight-line between 50% and 100%
75thpercentile or above	100%

NAV hurdle

NAV is a measure of the underlying value of securities of the Group. NAV is measured and reported by the Group at each reporting period and shall be the reference base for the testing of this measure. The NAV hurdle will be tested by calculating NAV growth over the three-year measurement period. As distributions by the Group have the effect of reducing the NAV of the Group, the measurement of NAV will take into account distributions over the vesting period. Distributions over the three years period shall be added to NAV to determine the rate of growth achieved. The vesting of Performance Rights will be determined using the matrix in the table below:

he table below:
NAV growth over 3 years Below 7 percent per annum At or above 7 percent per annum but below 8 percent per annum At or above 8 percent per annum	Proportion of NAV related rights vested
	0%
	Straight-line between 50% and 100%
	100%

The respective TSR and NAV hurdles must be satisfied to gain the proportion of Performance Rights referred to in the last column (assuming the other vesting conditions have been satisfied).

Set out below are summaries of performance rights granted under the plan:

0 June 2021 Grant date	Expiry date 30/06/2023 30/06/2022	Balance at the start of the year	Granted	Vested / Converted to shares	Expired/ forfeited/ other
						Balance at
						the end of
						the year
4/12/2020		-	792,361	-	(55,025)	737,336
9/12/2019		695,404	-	-	-	695,404

None of the performance rights converted to shares during the year.

For the performance rights granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows:

Grant date	Expiry date 30/06/2023	Share price at grant date	Expected volatility	Dividend yield	Risk-free interest rate	Fair value
						at grant date
4/12/2020		$1.21	26.0%	4.99%	0.11%	$0.873

Asset revaluation reserves

The reserve is used to recognise increments and decrements in the fair value of property, plant and equipment, excluding investment properties.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 58

Capital

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

14: Earnings per stapled security

4: Earnings per stapled security	4: Earnings per stapled security
Consolidated 2021 2020
(Loss)/Profit for the year attributable to ordinary equity holders of the parent entity ($ ‘000) 25,391 Basic weighted average number of stapled securities (No. ‘000) 116,363 Diluted weighted average number of stapled securities (No. ‘000) 117,103 EPS from total operations: Basic earnings per stapled security (cents per security) 21.820 Diluted earnings per stapled security (cents per security) 21.683 EPS from continuing operations: Basic earnings per stapled security (cents per security) 21.821 Diluted earnings per stapled security (cents per security) 21.683 EPS from discontinuing operations: Basic earnings per stapled security (cents per security) (0.001) Diluted earnings per stapled security (cents per security) (0.001)*	11,871 97,541 97,541 12.170 12.170 12.170 12.170 - -

• Potential ordinary securities are only considered dilutive if loss per security increases on conversion to ordinary securities. Contingently issuable ordinary securities are included in diluted weighted average number of securities only if the conditions of the issue (ie. events have occurred) are satisfied at the end of the reporting period assuming the end of the reporting period is the end of the vesting period.

Calculation of earnings per stapled security

Basic earnings per stapled security

Basic earnings per stapled security is calculated by dividing the profit/(loss) attributable to securityholders of Aspen by the weighted average number of ordinary stapled securities outstanding during the year.

Diluted earnings per stapled security

Diluted earnings per stapled security is calculated by dividing the profit/(loss) attributable to securityholders of Aspen by the weighted average number of ordinary stapled securities outstanding during the year after adjusting for the effective dilutive securities granted under security plans accounted for as options and rights granted under employee security plans.

15: Interest bearing loans and borrowings

	Consolidated	Consolidated
	2021	2020
	$’000	$’000
	Current Secured debt facilities - Non-current Secured debt facilities – Gross 74,652 Less borrowing transaction costs (455)	- 42,498 (280)
	Total interest-bearing loans and borrowings 74,197	42,218

Recognition and measurement

Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are measured at amortised cost with any difference between cost and redemption value being recognised in the Income Statement over the period of the borrowing on an effective interest basis.

Funding activities

Aspen holds a finance facility with a total limit of $91.00 million (inclusive of a $85.00 million revolver, $5.00 million overdraft facility and a $1.00 million guarantee facility). This facility is secured with first ranking registered real property mortgages over Aspen Group’s directly owned properties, and a fixed and floating charge over Aspen Group Ltd, Aspen Property Trust, Aspen Living Villages Pty Ltd, Aspen Property Developments Pty Ltd, Realise Residential WA Pty Ltd, Realise Residential WA 2 Pty Ltd, Realise Residential WA 3 Pty Ltd, Realise Residential WA 4 Pty Ltd, NEST QLD Pty Ltd and Footprint MB Pty Ltd.

Terms and debt repayment schedule

	Consolidated	Consolidated
	Face value Carrying value Face value
	2021 2021 2020
	$’000 $’000 $’000	$’000
Maturity Secured debt April 2024 74,652 74,197 42,498		42,218

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 59

Notes to the consolidated financial statements

Risk

Aspen Group Limited For the year ended 30 June 2021

16: Derivative liability

The Group enters into derivative financial instruments to manage its exposure to interest rate risks, including interest rate swaps.

2021 $’000	2020 $’000
Interest rate swaps(notional value:$25.00 million) 265	381
Closing balance 265	381

The term of the interest rate swap is at fixed interest rate of 0.81% over a period to January 2023.

Recognition and measurement

Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately as hedge accounting is not applied.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and an intention to offset.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not due to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 60

Risk

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

17: Financial risk management

Aspen may hold financial instruments for the following purposes:

Financing : to raise finance for Aspen’s operations or, in the case of short-term deposits, to invest surplus funds.

Operational : Aspen’s activities generate financial instruments, including cash, trade receivables, trade payables and finance advances.

Risk management : to reduce risks arising from the financial instruments described above, including interest rate swaps.

Aspen’s holdings of financial instruments exposes it to risk. The Board reviews and approves policies for managing each of these risks, which are summarised below:

• credit risk

• liquidity risk; and

• market risk, including interest rate risk.

These risks affect the fair value measurements applied by Aspen.

Credit risk

The following concentrations of the maximum credit exposure of current trade and other receivables are shown for the consolidated entity:

Consolidated 2021 2020 $’000 $’000	Consolidated 2021 2020 $’000 $’000
$’000
Trade receivables (net of provisions) 1,117 Other receivables 225	1,913 332
1,342	2,245

Liquidity risk

Nature of the risk

Liquidity risk is the risk that Aspen will not be able to meet its financial obligations as they fall due. Aspen is exposed to liquidity risk primarily due to its capital management policies, which has debt as a component of Aspen’s capital structure (see note 11).

Nature of the risk

Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument or customer contract that results in a financial loss to Aspen. Aspen is exposed to credit risk from its operating activities (primarily from trade and other receivables) and from its financing activities, including deposits with financial institutions and holdings of other financial instruments.

Credit risk management

Aspen’s policy is to, wherever possible, trade with recognised, creditworthy third parties and to obtain sufficient collateral or other security where appropriate as a means of mitigating the risk of financial loss from defaults. Derivative counterparties and cash transactions are limited to high credit quality financial institutions. Management performs ongoing monitoring of settlements based on contract terms.

Other than as disclosed as major customers on page 41, Aspen has a diverse range of customers and tenants, and therefore there are no significant concentrations of credit risk either by nature of industry or geographically.

An ageing of trade receivables past due is included in note 5. The credit risk of trade receivables neither past due nor impaired has been assessed as low on the basis of credit ratings (where available) or historical information about counterparty default. Refer to note 5 for the details on the impairment recognised on Aspen’s financial assets.

Liquidity risk management

Liquidity risk is managed by monitoring cash flow requirements on a continuous basis to ensure that Aspen will have sufficient liquidity to meet its liabilities when due without incurring unacceptable losses. Aspen endeavours to maintain funding flexibility by keeping committed credit lines available. Surplus funds are, where possible, paid against debt, or invested in instruments that are tradeable in highly liquid markets with highly rated counterparties.

	2021
	$’000
Secured financing facilities available Revolver Overdraft Guarantees Facilities used at balance date Revolver Guarantees Facilities unused at balance date Revolver Overdraft Guarantees		65,000 5,000 1,000
	85,000
	5,000
	1,000
	91,000	71,000
		42,498 243
	74,652
	255
	74,907	42,741
		22,502 5,000 757
	10,348
	5,000
	745
	16,093	28,259

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 61

Risk

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

17: Financial risk management (continued)

Assets pledged as security

At 30 June 2021, Aspen’s property assets, comprising investment properties and property, plant and equipment, have been pledged as security against debt facilities. Refer to note 15 regarding the secured debt facilities.

Maturity of financial liabilities

The following tables analyse Aspen’s financial liabilities, including net and gross settled financial instruments, into relevant maturity periods based on the remaining period at the reporting date to the contractual maturity date.

The amounts disclosed in the table are the contractual undiscounted cash flows and hence will not necessarily reconcile with the amounts disclosed in the balance sheet. The future cashflows on derivative instruments may be different from the amount in the table as interest rates change. Except for these liabilities, it is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or for significantly different amounts.

							Carrying
						Total	amount
		6-12				contractual	(assets)/
	< 6 months	months	1-2 years	2-5 years	> 5 years	cash flows	liabilities
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Year ended 30 June 2021
Non-derivatives
Trade and other payables	9,023	-	-	-	-	9,023	9,023
Lease liability	804	845	369	110	959	3,087	2,567
Interest bearing loans and borrowings	448	448	896	75,401	-	77,193	74,197
Total non-derivatives	10,275	1,293	1,265	75,511	959	89,303	85,787
Derivatives	84	84	97	-	-	265	265
Year ended 30 June 2020
Non-derivatives
Trade and other payables	9,046	-	-	-	-	9,046	9,046
Lease liability	695	718	1,490	220	-	3,123	3,546
Interest bearing loans and borrowings	259	259	518	43,714	-	44,750	42,218
Total non-derivatives	10,000	977	2,008	43,934	-	56,919	54,810
Derivatives	74	74	147	86	-	381	381

Market risk

Aspen is exposed to market risk primarily due to interest rates that can affect Aspen’s interest expense and the value of its holdings of financial instruments.

Interest risk management

As part of the managing interest rate risk, Aspen fixed a proportion of its interest rates on borrowings by entering into interest rate swaps to minimise potential adverse interest rate movements. At 30 June 2021, $25 million of its floating interest rate exposure was fixed at a BBSW rate of 0.81% to January 2023.

Exposure

As at the reporting date, Aspen had the following financial assets and liabilities with exposure to interest rate risk. Interest on financial instruments, classified as variable rate, is repriced at intervals of less than one year. Interest on financial instruments, classified as fixed rate, is fixed until maturity of the instrument. Other financial instruments of Aspen that are not included in the following table are non-interest-bearing and are therefore not subject to interest rate risk.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 62

Notes to the consolidated financial statements

Risk

Aspen Group Limited For the year ended 30 June 2021

17: Financial risk management (continued)

7: Financial risk management(continued)
2021 Balance Weighted average interest rate $’000 %	202 Balance $’000	0 Weighted average interest rate %
Fixed rate instruments Term deposits 150 0.30% Interest rate swaps (265) 0.81%	150 (381)	0.95% 0.81%
(115)	(231)
Variable rate instruments Cash and cash equivalents 8,127 0.07% Interest bearing loans and borrowings1 (74,197) 1.96%	8,011 (42,218)	1.13% 1.94%
(66,070)	(34,207)
Total fixed and variable rate instruments (66,185)	(34,438)

1 Includes facility fees of 0.77% (2020: 0.72%)

Aspen’s sensitivity to interest rate movements

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year. A 100bps increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

tes.
	Impact on profit	Impact on equity
	$’000	$’000
2020
Australian	variable interest rate +100bps (219)	(219)
Australian	variable interest rate -100bps 219	219
2021
Australian Australian	variable interest rate +100bps (279) variable interest rate -100bps 279	(279) 279

Equity price risk

Equity investments are long term investments that have been classified as available for sale. Aspen is exposed to insignificant equity price risk arising from its equity investments.

Fair values

The carrying amounts and estimated fair values of all of Aspen’s financial instruments recognised in the financial statements are materially the same.

The methods and assumptions used to estimate the fair value of financial instruments are as follows:

Cash - the face value of cash is considered as the fair value due to the liquid nature of these assets.

Receivables/payables - due to the short-term nature of these financial rights and obligations, the face value of receivables/payables are estimated to approximate their fair values, less allowance for credit losses, if applicable.

Other financial assets/liabilities - the fair values of derivatives, corporate bonds, term deposits and borrowings are calculated by discounting the expected future cash flows at prevailing interest rates using market observable inputs. The fair values of loan notes and other financial assets are calculated using market interest rates. The fair value of the net investment in sublease and lease liabilities are discounted using Aspen’s incremental borrowing rate.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. Subsequent changes in the fair value are recognised in profit or loss.

Regular way purchases and sales of financial assets are accounted for at trade date, ie. the date that Aspen commits itself to purchase or sell the asset.

Resident loans – fair value of resident loans is recognised based on estimation of settlement obligation when resident occupation expires.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 63

Notes to the consolidated financial statements

Risk

Aspen Group Limited For the year ended 30 June 2021

17: Financial risk management (continued)

Valuation of financial instruments

For financial instruments measured and carried at fair value, Aspen uses the following to categorise the method used:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (ie. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Aspen has an established control framework with respect to the measurement of fair values. This includes finance staff that have overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and who report directly to the Joint Chief Executive Officers.

These finance staff regularly review significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or independent valuations are used to measure fair values, the finance staff assess the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of accounting standards, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation matters are reported to the Aspen Audit, Risk and Compliance Committee.

At reporting date, the Group held the following financial instruments measured at fair value:

	Level 1 $’000	Level 2 $’000	Level 3 $’000	Total $’000
Group Financial assets Other financial assets held at fair value Financial liabilities Interest rate swaps Resident loans		-	593	593
	-
	-	- 265 -	593 - 6,420	593 265 6,420
	-
	-
	-	265	6,420	6,685

There have been no transfers between Level 1, Level 2 and Level 3 fair value measurements during the year ended 30 June 2021 (2020: $Nil).

Other financial assets held at fair value – Level 3

Information about how the fair value of financial instruments is calculated and other information required by the accounting standards, including the valuation process and critical assumptions underlying the valuations are disclosed in the table below:

==> picture [483 x 103] intentionally omitted <==

----- Start of picture text -----

Fair value measurement, valuation techniques and inputs
Class of assets / liabilities Equity investment in unlisted company
Fair value hierarchy Level 3
Valuation technique Based on Net Asset Value (NAV) per share
Inputs used to measure fair value Latest audited accounts available
Unobservable inputs as at 30 June 2021 NAV based on the latest audited accounts available
----- End of picture text -----

The following table shows a reconciliation of movements in Aspen’s other financial assets held at fair value :

:	2021 $’000	2020 $’000
	Opening Balance 408 Totalgain or losses inprofit or loss 185	396 12
	Closing Balance 593	408

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 64

Risk

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

17: Financial risk management (continued)

Resident loans – Level 3

A critical accounting judgment affecting retirement communities investment properties is whether the performance obligations in relation to the underlying retirement unit have been satisfied and control has been passed to the resident. If so, then a sale is recognised on the initial occupation of a retirement unit and a resident loan is not recognised. If the Group believes that those rights to control have not been transferred in respect of its retirement units, regardless of the legal form of title granted to the resident, the Group recognises resident loans in respect of those of its retirement units that are occupied by residents. This affects the carrying amount of the retirement communities properties because, although the underlying valuation of the properties are not affected by this accounting judgment, the carrying amount of the properties are grossed up by the recognised resident loans. Refer Note 22 for further details.

The valuations are reconciled to the investment properties carrying amount as follows:

2021
$’000
Carrying amount of investment properties and property, plant and equipment (park communities) 228,565 Less : Resident loans (6,420)		166,985 -
Valuations 222,145		166,985

Reversal of impairment

An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss reversal in respect of an investment in an equity instrument classified as available for sale is not reversed through profit or loss.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised.

18: Impairment of non-financial assets

Non-financial assets

The carrying amounts of Aspen’s non-financial assets, other than investment property, property plant and equipment (at fair value), inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is then estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Reversal of impairment

Impairment losses, other than in respect of goodwill, are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed.

Impairment losses previously recognised in Aspen’s investment in equity accounted investments are subsequently reversed if the associate subsequently recognises an impairment charge on its assets, and results in Aspen recognising an increased share of equity accounted losses.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 65

Corporate Structure

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

19: Subsidiaries

Parent entity Ownership interest 2021 % Aspen Group Limited (stapled entity - Aspen Property Trust) - Subsidiaries Aspen Funds Management Limited 100 Aspen Living Villages Pty Limited 100 Aspen Property Developments Pty Limited 100 Aspen Equity Investments Pty Limited 100 Midland Property Trust 100 Caversham Property Development Pty Ltd 100 Realise Residential WA Pty Ltd 100 Realise Residential WA 2 Pty Ltd 100 Realise Residential WA 3 Pty Ltd 100 Realise Residential WA 4 Pty Ltd 100 Nest QLD Pty Ltd 100 Footprint MB Pty Ltd1 100 Aspen WhitsundayShores PtyLimited 56	Ownership interest 2020 %
	- 100 100 100 100 100 100 100 100 100 100 100 - 54

1 New subsidiary incorporated during the year

Recognition and measurement

Subsidiaries

Subsidiaries are entities controlled by either the Company or the Trust. The Company or the Trust controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries are consistent with Aspen’s accounting policies.

Loss of control of subsidiaries

Upon the loss of control, Aspen derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If Aspen retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 66

Corporate Structure

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

20: Discontinued operations

0: Discontinued operations
Disposal grou	ps held for sale Non-core operations held for sale
2021	2020 2021	2020 2021
$’000	$’000 $’000	$’000 $’000
Results of discontinued operations Revenue - Expenses (1)	- - (1) -	- - - (1)	- (1)
Profit/(loss) before income tax (1) Finance income - Gain/ (Loss) on disposal after income tax - Net change in fair value -	(1) -	- (1)	(1) - - -
	- - - - - -	- - - - - -
Profit/(loss) after tax from discontinued operations (1)	(1) -	- (1)	(1)
Assets and liabilities of discontinued operations Assets Cash and cash equivalents - Trade and other receivables - Properties held for sale - Prepayments and other assets -			- - - -
	- - - - - - - -	- - - - - - - -
Total assets -	- -	- -	-
Liabilities Trade and other payables - Provisions and other liabilities -			- -
	- - - -	- - - -
Total liabilities -	- -	- -	-
Net assets -	- -	- -	-
Cash flows of discontinued operations Net cash from / (used in) operating activities (1) Net cash from investing activities - Net cash from/ (used in) financing activities -			(1) - -
	(1) - - - - -	- (1) - - - -
Net cash flows for theyear (1)	(1) -	- (1)	(1)

Recognition and measurement

Discontinued operations

A discontinued operation is a component of Aspen’s business, the operations and cash flows of which can be clearly distinguished from the rest of Aspen and which:

• represents a major line of business or geographical area of operations;

• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or

• is a subsidiary acquired exclusively with a view to re-sale.

When an operation is classified as a discontinued operation, the comparative Consolidated Income Statement is represented as if the operation had been discontinued from the start of the comparative year.

Disposal groups held for sale

Aspen has one development subsidiary classified as a disposal group held for sale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 67

Corporate Structure

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

21: Non-controlling interests

1: Non-controlling interests
	ADF AWSS FBSV ADLL	Total
NCIpercentage as at 30 June 2021	- 44% - -
	$’000 $’000 $’000 $’000	$’000
Opening balance at 1 July 2019	(15,060) (3,837) 821 (2,067)	(20,143)
Share of comprehensive income/(expense)	- - - -	-
Transfer to accumulated losses of parent entity upon deregistration of subsidiaries	15,060 - (821) 2,067	16,306
Closing balance at 30 June 2020	- (3,837) - -	(3,837)
Share of comprehensive income/(expense)	- - - -	-
Transfer to accumulated losses of parent entity
upon deregistration of subsidiaries	- - - -	-
Closing balance at 30 June 2021	- (3,837) - -	(3,837)

Recognition and measurement

Acquisition of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result. The adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on the proportionate amount of the net assets of the subsidiary.

Negative non-controlling interests

Aspen has recognised non-controlling interest for AWSS as at 30 June 2021 even though this NCI is negative. AWSS is a limited company, and there is no ability for Aspen to recoup the negative equity attributed to non-controlling interest.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 68

Other

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

22. Resident loans

Resident loans

The resident loans are classified as financial liabilities at fair value through profit and loss with resulting fair value adjustments recognised in the profit or loss. Fair value is the amount payable on demand and is measured at the principal amount plus the resident’s share of any increases in the market value to reporting date less deferred management fees contractually accruing to the reporting date.

Resident loans are non-interest bearing and are payable at the end of the resident contract. The rate at which the Group’s retirement residents vacate their units, and hence the rate at which the resident loans will fall due for repayment, can be estimated based on statistical tables. In the vast majority of cases, the resident obligations are expected to be able to be repaid from receipts from incoming residents.

The resulting estimates of amounts expected to be settled less than and more than 12 months after reporting date are:

2021 $’000	2020 $’000
Expected to be settled:
No more than 12 months after reportingdate -	- -
More than 12 months after reportingdate 6,420
Closing balance 6,420	-

The following table presents the movement of resident loans for the financial year.

2021 $’000	2020 $’000
Openingbalance -	-
Items recognised in theprofit or loss -	- - - - -
- Deferred management fees -
- Changes in the fair value of the resident loans -
Resident loans acquired through acquisition of new retirement village 6,420
Net cash receipt on resident arrivals and departures -
Closing balance 6,420	-

Resident loans are classified as Level 3 in the fair value hierarchy. This means that a key assumption used in their valuation is not directly observable. The key assumption is the aggregated current market value of the occupied retirement units of $7.520 million. This was determined on the same basis as the market value of both occupied and unoccupied units used as an input to the fair value of the retirement communities – see Note 8.

If the value used for this input was 5% higher, the fair value of these loans would be $0.276 million higher, and if the input was 5% lower, the fair value of these loans would be $0.326 million lower.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 69

Other

Notes to the consolidated financial statements

Aspen Group Limited For the year ended 30 June 2021

23: Rights of use assets

23: Rights of use assets
	Consolidated 2021 2020
	$’000	$’000
Land and buildings Accumulated depreciation	888	559 (21)
	(90)
	798	538

24: Net investment in sublease

	Consolidated	Consolidated
	2021	2020
	$’000	$’000
Current net investment in sublease	1,256	1,108
Non-current net investment in
sublease	158	1,384
Total net investment in sublease	1,414	2,492

25: Lease liability

	Consolidated	Consolidated
	2021	2020
	$’000	$’000
Current lease liability	1,630	1,291
Non-current lease liability	937	2,255
Total lease liability	2,567	3,546

Refer to Note 17 for the maturity analysis of the lease liability.

26: Parent entity disclosures

	Par	ent 2020 $’000
2021
$’000 Assets Current assets 35,952 Non-current assets 59,262
		43,946 29,147
Total assets 95,214		73,093
Liabilities Current liabilities 2,681 Non-current liabilities 70,394		47,173 41,206
Total liabilities 73,075		88,379
Net assets/ (liabilities) 22,139		(15,286)
Equity Issued capital 158,745 Accumulated losses (136,606)		158,722 (174,008)
Total Equity 22,139		(15,286)
Profit/(loss) attributable to members of the parent 36,241		(1,878)
Total comprehensive profit/(loss) for the year, net of tax, attributable to members of theparent 36,241		(1,878)

The directors have not identified any material contingencies for the Parent as at 30 June 2021 (30 June 2020: $Nil).

Parent entity financial information

The financial information for the parent entity of Aspen Group has been prepared on the same basis as Aspen Group’s consolidated financial statements, except as set out below.

Investments in subsidiaries and associates

Investments in subsidiaries and associates are accounted for at cost in the financial statements of the parent entity. Dividends received from associates and subsidiaries are recognised in the parent entity’s statement of profit or loss when its right to receive the dividend is established.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 70

Notes to the consolidated financial statements

Other

Aspen Group Limited For the year ended 30 June 2021

26: Parent entity disclosures (continued)

Guarantees

The Parent has provided performance guarantees to third parties in respect of certain obligations of its subsidiaries.

The Parent and its subsidiaries as per note 19 provide an unlimited guarantee and indemnity in favour of the Trust’s banking facilities. The Parent and the Trust have provided guarantees to financiers and insurance bond providers for a number of Aspen’s subsidiaries. Under the terms of the agreements, the Parent and the Trust will make payments to reimburse the financiers upon failure of the guaranteed entity to make payments when due. The parent does not expect to incur any material loss in respect of such guarantees.

Parent entity financial information

As at 30 June 2021 the parent had a loan receivable from the Trust of $4.365 million (2020: loan payable to the Trust $20.757 million). Under the loan agreement in which the Trust is the lender, the maturity of the loan is 1 July 2024. Both the Board of the Responsible Entity and AGL agrees that the terms of the agreement would remain the same in the event AGL becomes the lender.

Going concern

The parent entity has a net asset position of $22.139 million (2020: net liability of $15.286 million) with current assets exceeding current liabilities by $33.271 million (2020: deficit of $3.227 million). The financial statements for the parent entity have been prepared on a going concern basis which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

27: Remuneration of auditors

==> picture [373 x 88] intentionally omitted <==

----- Start of picture text -----

Consolidated
2021 2020
Fees paid or payable for services provided by the auditor of the Aspen Group: $ $
Audit or review of financial statements – Deloitte Touche Tohmatsu
- Current 193,000 189,000
- Underprovision for prior year 29,000 -
222,000 189,000
----- End of picture text -----

28: Related party transactions

Director and executive remuneration

The remuneration disclosures are provided in section 7 of the directors’ report on pages 12 to 21 of this annual report designated as audited and forming part of the directors’ report.

2021
$
Short-term benefits 1,260,854 Long-term benefits 58,123 Equity compensation benefits 353,176		1,232,310 72,744 171,074
1,672,153		1,476,128

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 71

Notes to the consolidated financial statements

Other

Aspen Group Limited For the year ended 30 June 2021

28: Related party transactions (continued)

Other related party transactions

The following transactions occurred with related parties:

ther related party transactions he following transactions occurred with related parties:	ther related party transactions he following transactions occurred with related parties:	ther related party transactions he following transactions occurred with related parties:
2021
$ Sales of goods and services Project management fees earned from Mill Hill Capital Pty Ltd, an entity associated with Mr Carter and Mr Dixon (Joint CEOs) 400,033 Payment for goods and services Payment of office rental (GST exclusive) to Belinda Evans, partner of Mr Carter (Director / CEO) 63,019 Payment of responsible entity fees to Evolution Trustees Limited 81,750
		347,160 72,578 86,272

The Company has an arrangement with Mill Hill Capital Pty Ltd (MHC), an entity associated with Mr Carter and Mr Dixon (Joint CEOs). Under this arrangement, Aspen manages MHC’s Affordable Accommodation & Land Fund, and Marina Hindmarsh Island Fund. In return, Aspen earns project management fees from these funds in line with MHC’s project management fee entitlement under its existing contracts.

29: Accounting standards adoption

(a) New and amended standards adopted from 1 July 2020

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current year.

New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group are:

• AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business

• AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material

• AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework

• AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 72

Notes to the consolidated financial statements

Other

Aspen Group Limited For the year ended 30 June 2021

29: Accounting standards adoption (continued)

(a) New and amended standards adopted from 1 July 2020 (continued)

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Amending standard Description
AASB 2018-6 Amendments This Standard amends AASB 3 Business Combinations. The Group has adopted the amendments for the
to Australian Accounting first time in the current year. The amendments clarify that while businesses usually have outputs,
Standards – Definition of a outputs are not required for an integrated set of activities and assets to qualify as a business. To be
Business considered a business an acquired set of activities and assets must include, at a minimum, an input and a
substantive process that together significantly contribute to the ability to create outputs.
The amendments remove the assessment of whether market participants are capable of replacing any
missing inputs or processes and continuing to produce outputs. The amendments also introduce
additional guidance that helps to determine whether a substantive process has been acquired.
The amendments introduce an optional concentration test that permits a simplified assessment of
whether an acquired set of activities and assets is not a business. Under the optional concentration test,
the acquired set of activities and assets is not a business if substantially all of the fair value of the gross
assets acquired is concentrated in a single identifiable asset or group of similar assets. The amendments
are applied prospectively to all business combinations and asset acquisitions for which the acquisition
date is on or after 1 January 2020.
AASB 2018-7 Amendments This Standard amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies,
to Australian Accounting Changes in Accounting Estimates and Errors, and makes consequential amendments to several other
Standards – Definition of pronouncements and publications. The Group has adopted these amendments for the first time in the
Material current year. The amendments make the definition of material in AASB 101 easier to understand and are
not intended to alter the underlying concept of materiality in Australian Accounting Standards. The
concept of 'obscuring' material information with immaterial information has been included as part of the
new definition.
The threshold for materiality influencing users has been changed from 'could influence' to 'could
reasonably be expected to influence'. The definition of material in AASB 108 has been replaced by a
reference to the definition of material in AASB 101. In addition, the Standard also amends other
Australian Accounting Standards and the Conceptual Framework that contain a definition of 'material' or
refer to the term ‘material’ to ensure consistency.
AASB 2019-1 Amendments The Group has adopted the amendments included in AASB 2019-1 for the first time in the current year.
to Australian Accounting The amendments include consequential amendments to affected Australian Accounting Standards,
Standards – References to Interpretations and other pronouncements to reflect the issuance of the Conceptual Framework for
the Conceptual Framework Financial Reporting (Conceptual Framework) by the AASB. The amendments:
• Update numerous pronouncements to refer to the new Conceptual Framework for Financial Reporting
or to clarify which version of the Framework is being referenced. These amendments apply to for-profit
private sector entities that have public accountability and are required by legislation to comply with
Australian Accounting Standards and other forprofit entities that voluntarily elect to apply the new
Conceptual Framework
• Permit other entities to continue using the Framework for the Preparation and Presentation of
Financial Statements adopted by the AASB in 2004.
AASB 2019-5 Amendments
This Standard makes amendments to AASB 1054 Additional Australian Disclosures by adding a disclosure
to Australian Accounting
requirement for an entity intending to comply with IFRS Standards to disclose the information specified
Standards – Disclosure of
in paragraphs 30 and 31 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors on
the Effect of New IFRS
the potential effect of an IFRS Standard that has not yet been issued by the AASB. The Group has
Standards Not Yet Issued in
adopted these amendments for the first time in the current year.
Australia
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(b) New accounting standards and interpretations issued but not yet applied

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2021. From an initial assessment made, there are no standards not yet applied which are considered to have a material impact for the Group. The Group will continue to assess the impact of new accounting standards and interpretations issued but not yet applied.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 73

Unrecognised Items

Aspen Group Limited For the year ended 30 June 2021

Notes to the consolidated financial statements

30: Commitments and Contingencies

2021
$’000 Capital commitments(i) Contracted but not provided for and payable: Within 1 year 12,210 Greater than 1 year but not more than 5 years -
	5,500 -
12,210	5,500
Other expenditure commitments Bank guarantees issued to third parties 255	243

• (i) Relates to the contracted new homes at Sweetwater Grove and Four Lanterns, development work at Burleigh Heads and other various cabins and park upgrade.

Other than the above, Aspen Group is not aware of any material contingent liabilities existing at 30 June 2021.

31: Subsequent events

Aspen Group has entered into agreements to acquire a portfolio of apartments in Perth’s inner-metro suburbs (Perth Apartment Portfolio) that are owned by associates of the Buckeridge Group of Companies. Aspen Group has entered into a Nomination Deed with a third party to facilitate the acquisition by Aspen of the properties. The purchase price is $52 million (pre transaction costs). The acquisitions of the Perth Apartment Portfolio and Wodonga Gardens post 30 June 2021, are intended to be funded with approximately $28m of equity, via issuing new stapled securities, and approximately $34 million of debt. Aspen’s debt facility provider has agreed to increase the revolving debt facility limit to $150 million, subject to formal documentation and completion of the equity raising. Gearing is expected to increase from 29% to 35% post acquisition on a 30 June 2021 pro forma basis. Further information on the acquisition and equity raising has been released to the ASX on 19 August 2021.

Subsequent to the end of the year, there continues to be restrictions implemented by state and federal governments in response to the COVID-19 pandemic. These authorities are likely to continue to pursue a strategy of suppressing COVID19 with the goal of no local community transmission, at least until sufficient rates of vaccination have occurred. Continued or further lockdowns and restrictions introduced by governments will impact local tourism and therefore this part of Aspen’s business. This may in turn negatively affect the Group’s operating performance and the valuation of these properties, as well as potentially the recoverability of certain financial assets such as trade debtors.

The directors do not consider the impact of COVID-19 to likely compromise the ability of the Group to continue operating profitably for the foreseeable future.

There has not arisen any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors of Aspen, to significantly affect the operations of Aspen, the results of those operations, or the state of affairs of Aspen, in future financial periods.

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 74

Directors’ declaration Aspen Group Limited For the year ended 30 June 2021

Directors’ Declaration

1. In the opinion of the directors of Aspen Group Limited:

2. (a) the consolidated financial statements and notes set out on pages 33 to 74, are in accordance with the Corporations Act 2001 , including:

   • (i) giving a true and fair view of Aspen’s Group’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and

   • (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), the Corporations Act 2001 ; and other mandatory professional reporting requirements.

3. (b) there are reasonable grounds to believe that Aspen Group Limited will be able to pay its debts as and when they become due and payable.

4. The directors have been given the declaration required by Section 295A of the Corporations Act 2001 from the Joint CEOs for the financial year ended 30 June 2021.

5. The directors draw attention to notes to the consolidated financial statements, which includes statement of compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board .

Signed in accordance with a resolution of the directors.

Clive Appleton

Chairman

SYDNEY, 19 August 2021

ASPEN GROUP LIMITED ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Page 75