ASPEN GROUP — Interim / Quarterly Report 2017

Feb 21, 2017

Aspen Group 1H FY17 Results Presentation

21 February 2017

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BIG4 Koala Shores Holiday Park
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BIG4 Tween Waters Holiday Park
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1H FY17 highlights

1

2 Performance review

3 Outlook

Appendices

2

1H FY17 HIGHLIGHTS

Aspen has made significant progress executing its business plan

Underlying performance in line with expectations

• Statutory profit to $0.5 million

• Operating profit[1 ] of $2.5 million

• Corporate cost structure realigned to match business scale

  • 2

• NAV per share of $1.25

• Distribution for 1H FY17 in line with guidance at 2.1 cents

• Three high quality acquisitions during 1H FY17

• Tween Waters $ 6.8 million at an ingoing yield of 9.4%[3 (Settled Dec-16)]

Portfolio rebuild underway

• Barlings Beach $13.25 million at an ingoing yield of 9.1%[3 (Settled Jan-17)] 4

• o Koala Shores $10.2 million reflects an ingoing yield of 9.5%3

• Total sites of ~1200 once acquisitions are completed

• 28 site expansion DA approved at Four Lanterns

• Tomago Van Village DA for an additional 34 sites in progress

Positioned for growth

• 5

• • Strong pipeline of potential acquisitions in varying stages of diligence: > $100.0 million

• Operating leverage to support future expansion

• Forecast FY17 distributable earnings based on current portfolio[6] expected to be in a range of 4.8 – 5.3 cps

• 1 Operating profit is a non-IFRS measure used to reflect the underlying operating performance of the business.

• 2 Includes impact of 1H FY17 distribution announced on 19 January 2017

• 3 Excludes acquisition costs

• 4 Acquisition remains conditional - expected to be completed Q4 FY17

• 5 There is no certainty that all or any of this pipeline of potential acquisitions may actually be acquired

• 6 Assumes completion of Koala Shores acquisition in Q4 FY17

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KEY MILESTONES

Post - APPF, Aspen has commenced building its affordable accommodation business

2H FY17

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1H FY17
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  - **Acquisitions – Tourist Parks**

  - **`o` Barlings Beach** **`o` Koala Shores[1]**

• Establish finance facility

• • Simplification of corporate structure & reduced corporate overhead • Continued expansion program

• •Management change •Full year distributable earnings range of o Appointment of CEO Joel Cann and 4.8 - 5.3 cps

• 2016 CFO Emmanuel Zammit

• Divestment of interest in APPF • Acquisition – Tourist Park o Tween Waters

• • Debt extinguished

• 1H FY17 distribution 2.1 cps

• • Share buy-back • Distribution 9.2 cps

1 Acquisition remains conditional - expected to be completed Q4 FY17

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Aspen Karratha Village
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1H FY17 highlights

1

2

Performance review

3 Outlook

Appendices

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KEY PERFORMANCE METRICS

Performance reflects rebasing of group at lower scale. Expansion of portfolio underway

Operational Performance	1H FY17 $m	1H FY16 1 $m	Change %
Revenue	9.0	9.4	(4.7)
Statutory profit / (loss)2	0.5	5.6	(91.1)
Operating profit2	2.5	2.7	(5.6)
MER%4	3.8%	4.1%

Revenue

• Portfolio revenue increased 10% due to distribution gains and full ownership for the 1H FY17 period.

• Offset by prior year inclusion of APPF management fees of $1.2 million.

Statutory profit

Distributable earnings	1H FY17 $m	cps
Operating profit	2.5	2.5
_add:_Depreciation	0.4	-
_less:_Stay in business capex	(0.2)	-
Distributable earnings	2.7	2.7
Distribution		2.1
Payout Ratio		78%

• Statutory profit in prior period benefited from the gains on the deconsolidation of APPF.

Operating profit

• MER shows slight improvement reflecting benefits of corporate restructuring initiative.

• Further improvement expected in H2.

Distribution

• 2.1cps in line with guidance.

• 1 FY16 figure presented on a deconsolidated basis excluding APPF performance

• 2 Excludes the non-controlling interest share of APPF results

• 3 FY16 revenue excludes APPF management fee

• 4 Annualised 6 month MER based on average total assets

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RECONCILATION OF STATUTORY PERFORMANCE TO OPERATING PROFIT

	1H FY17 $m 1H FY16 1 $m Statutory profit after tax 0.5 5.6 Tax benefit - - Statutory profit before tax 0.5 5.6 Profit / (loss) from discontinued operations 0.7 0.2 Revaluation of Properties 0.9 9.6 Fair value gain on deconsolidation of APPF - (17.5) Transaction / acquisition costs 0.7 3.2 Other (0.3) 1.6 Non-operating (loss) / profit 2.0 (2.9) Operating profit 2.5 2.7

1 FY16 figure presented on a deconsolidated basis excluding APPF performance

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FINANCIAL POSITION

Balance Sheet	Dec 16 $m	Jun 16 $m	Change $m
Property Assets1 Cash	86.8 36.7	80.0 48.8	6.8 (12.1)
Debt	-	-	-
Gearing %	-	-	-
NAV2	127.5	129.6	(2.1)
NAV2 $ per security	1.25	1.26	(0.01)

• 1 Includes acquisition costs incurred on accommodation park acquisitions - $2.5m (Jun 16: $1.8m) 2 Includes impact of 1H FY17 distribution announced on 19 January 2017

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NAV per security 0.02 0.01 0.01 (0.05)
(0.02)
0.36
0.08
0.28
1.27 1.25
0.10
0.47
Tourism/ Corporate Spearwood Assets held Cash Trade and Deposits Other Liabilities NAV 1H Adjusted
Retirement for sale other 31 Distribution NAV
receivables December 31
16 December
16
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• One acquisition (Tween Waters) settled during 1H FY17 for $6.8 million.

• Two further properties under contract.

• Cash utilisation of $13 million

• Acquisitions - $7.9 million (incl. deposits for Tween Waters and Barlings Beach)

• 1H FY16 Distribution - $4.9 million

• o Share buyback - $0.7 million

• Business retains significant cash holdings, with no debt – Gearing Nil

• NAV of $1.27

• Reduces to $1.25 on a like-for-like basis post the 1H distribution

• ~29% of NAV represented in cash

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PROPERTY PORTFOLIO

Acquisition of 3 additional tourism parks negotiated in 1H FY17

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$140 m
$120 m
$100 m
$41 m
$80 m $10 m Tourism
Retirement
Corporate (Resources)
$60 m $30 m $30 m Industrial Asset
Other
$40 m $11 m $10 m
$20 m $29 m $29 m
$6 m $6 m
Jun-16 Dec-16
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30 June 2016	$m	%
Tourism / Retirement	40	46%
Corporate	11	13%
Industrial	29	33%
Held for Sale	6	8%
Total Property	86	100%

31 December 2016	$m	%
Tourism / Retirement	71	61%
Corporate	10	9%
Industrial	29	25%
Held for Sale	6	5%
Total Property1	116	100%

1 Includes Barlings Beach Holiday Park and Koala Shores which were subject to purchase contracts as at 31 December 2016

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ACCOMMODATION PORTFOLIO DETAILS

	State Segment / accommodation type Carrying value ($m) Land tenure Area (ha)	Four Lanterns Estate Tomago Van Village Mandurah Gardens Estate Adelaide Caravan Park BIG4 Tween Waters Barlings Beach5 BIG4 Koala Shores6 Aspen Karratha Village NSW NSW WA SA NSW NSW NSW WA Retirement Retirement1 Retirement Tourism Tourism Tourism Tourism Corporate 8.2 11.5 10.4 9.7 7.3 13.3 10.2 10.3 Freehold Freehold Freehold Freehold2 Freehold Freehold Freehold/ Leasehold Freehold 3.9 13.9 6.8 1.5 1.9 8.8 6.5 2.9	Total - - 80.9 - 46.2
	Existing long-stay Short-stay cabin3 Short-stay sites4	102 74 158 - - 22 - - - 68 - 45 31 208 358 180 - 14 - 31 77 29 108 -	356 567 259
	Total	102 156 158 76 108 259 143 180	1,182
	DA approved Pre-DA	28 15 - 9 - - - - - 34 - 27 - - - -	52 36
	Total	28 49 - 11 - - - -	88
	Total potential sites	130 205 158 87 108 259 143 180	1,270

• 1 Assumes future conversion from mixed use to predominately retirement

• 2 In-place zoning for medium density residential

• 3 Cabins used for short-stay, annual or corporate accommodation

• 4 Sites used for caravans or designated camping

• 5 Acquisition settlement – 31 January 2017

• 6 Acquisition remains conditional - expected to be completed Q4 FY17

• 7 DA, if approved, converts existing chapel into group lodging accommodating ~15 guests

• 8 Includes group lodge accommodating ~12 guests

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Four Lanterns Estate
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1H FY17 highlights

1

2 Performance review

3 Outlook

Appendices

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OPERATING MODEL

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• Aspen continues to identify and pursue opportunities in our three existing sectors – Tourism, Retirement and Corporate

• Our operating model enables expansion into adjacent sectors leveraging our capability in Operations, Development and Marketing / Distribution

• Additional efficiency opportunities exist through the establishment or building of geographic clusters

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GROWTH OPPORTUNITIES

Earnings growth potential in line with 1H portfolio expansion

• Aspen continues to have significant acquisition appetite

• Cash of ~$32m was allocated to new portfolio assets during 1H FY17

• One tourism asset acquired during 1H – Tween Waters

• Two further tourism acquisitions totalling ~$24m announced

  • Barlings Beach – acquired 31 January 2017

  • Koala Shores – expected settlement March / April 2017

• Recent acquisitions have been secured on ingoing yields of 9.0 – 9.5%

Further capacity for growth

• Aspen balance sheet remains ungeared

• Clear capacity for debt with solid underlying earnings in place and anticipated improvement as low yield cash is deployed into higher yielding operating assets

• Balance sheet expected to have the capacity to support ~$60-70 million of debt funded acquisitions

• $6 million of assets held for sale which once exited is available for acquisitions

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GROWTH OPPORTUNITIES (continued)

Expansion opportunities

• Plans to intensify utilisation of Tomago Van Village and Four Lanterns Estate remain in progress

• Four Lanterns DA has been approved allowing a further 28 sites to be added Development targeted to commence Oct – Dec 2017

• Tomago masterplan submission has been lodged

Masterplan seeks to increase current DA approved expansion of 15 sites by an additional 34 sites

• Council consideration in progress

• Development timing to be confirmed once DA application process is concluded

• Continue to build the affordable accommodation portfolio with high quality assets that offer attractive yields and allow Aspen’s strength in distribution and operations to be leveraged

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BUSINESS OUTLOOK

Earnings outlook

• FY17 distributable earnings[1] expected to be in a range of 4.8 – 5.3 cps

• Second half distribution range of 2.0 - 2.5 cps anticipated subject to satisfactory performance and funding requirements.

• Acquisitions[1] contracted in 1H FY17 are expected to yield distributable earnings of ~$2.4 million in FY18.

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• 1 Includes Koala Shores acquisition which is expected to complete in Q4 FY17. The acquisition remains conditional on the satisfaction of conditions precedent which if not satisfied may result in the acquisition not completing which will impact the forecast outlook detailed above.

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Mandurah Gardens Estate
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1H FY17 highlights

1

2 Performance review

3 Outlook

Appendices

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ASPEN ACCOMMODATION PORTFOLIO

Portfolio clusters established on NSW Central and South Coasts

1 7 8 6 2 3 4 5 1 2 3 4 5 6 7 8	NSW Property Type No. of sites Four Lanterns Retirement 102 Tomago Retirement 156 Koala Shores Tourism 143 Tween Waters Tourism 108 Barlings Beach Tourism 259 Total 768 SA Property Type No. of sites Adelaide Tourism 76 Total 76 WA Property Type No. of sites Karratha Village Corporate 180 Mandurah Retirement 158 Total 338

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ACQUISITION – BIG4 TWEEN WATERS HOLIDAY PARK

South Coast, NSW (7.5hrs South of Sydney)

• Location - Far South Coast, adjacent Merimbula town centre (170kms south of Batemans Bay)

• Type - Beachfront, full tourist park with recently renovated cabins and water play park

• Scale – 108 sites including 31 cabins

• Opportunity – Earnings growth via leveraging of distribution capability and establishment of South Coast cluster

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Ingoing yield
Acquisition price Long-term sites Short-term sites Total area Tenure
(excl. acq. costs)
$6.8m 9.4% - 108 1.9 ha Freehold
Tween Waters Holiday Park
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ACQUISITION – BARLINGS BEACH HOLIDAY PARK

South Coast, NSW (6hrs South of Sydney)

• Location – Absolute beachfront adjacent to Tomakin Village 17km’s south of Batemans Bay

• Type – Beachfront, predominantly tourism park with Canberra, Sydney and local region client base

• Scale – 246 sites including 20 permanents, 167 annuals, 34 cabins and 25 sites

• Opportunity – Highly stable earnings due to predominant share of annual and permanent sites, earnings improvement opportunity through leveraging of distribution capability

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Ingoing yield Long-term /
Acquisition price Short-term sites Total area Tenure
(excl. acq. costs) annual sites
1
$13.3m 9.1% 187 59 8.7 ha Freehold
1
includes $1.25m delayed settlement (12 months)
Barlings Beach Holiday Park
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ACQUISITION – BIG4 KOALA SHORES HOLIDAY PARK PENDING Central Coast, NSW (2hrs North of Sydney)

• Location - 45km from Newcastle, 25km from Tomago Van Village – establishes NSW North Coach cluster

• Type - Full tourist park, water frontage, newly renovated cabins and excellent park presentation

• Scale - 142 sites including 34 cabins

• Opportunity – Earnings growth potential via leveraging of distribution capability and clustering with Tomago Van Village

• Acquisition remains conditional - expected to be completed Q4 FY17

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Ingoing yield
Acquisition price (excl. acq. costs Long-term sites Short-term sites Total area Tenure
and house)
Freehold /
$10.2m 9.5% - 142 6.5 ha
Leasehold
Koala Shores Holiday Park
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FOUR LANTERNS: EXPANSION

Development to unlock significant 30% expansion of sites

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• Property purchased in January 2015

• Consists of 102 sites

• Since acquisition, over 5% of sites have been purchased and recycled with modern homes

• DA approved to add 28 residential sites

• Strong community interest and demand for affordable product in metropolitan Sydney.

• Home price ~ $300k compares favourably to local median house ~ $754k

• Site recycling has enhanced the overall presentation of the park to deliver improved yields and increase customer demand for the larger scale development

• Development expected to commence in Q4 FY17

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OPERATING EARNINGS

1HFY17 $m 1HFY16 1 $m Profit / (loss) from operations Accommodation - Aspen Group properties 3.4 3.5 - APPF management fees / equity - 2.0 Non-core 1.6 1.6 Total gross profit 5.0 7.1 Operating expenses (3.0) (4.0) Net Financial income / (expenses) 0.5 (0.4) Operating profit before tax 2.5 2.7 Income tax expense - - Operating profit after tax 2.5 2.7 add backs1 0.2 0.6 Distributable earnings 2.7 3.3

• 1 FY16 figure presented on a deconsolidated basis excluding APPF performance

• 2 Relates to depreciation less stay in business capex

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BALANCE SHEET

	Dec 16 $m Jun 16 $m Cash 36.7 48.8 Property Assets1 86.8 80.0 Assets held for sale / other2 11.4 11.7 Total Assets 134.9 140.5 Debt - - Other3 7.4 10.9 Total liabilities 7.4 10.9 Net assets 127.5 129.6 Net assets attributed to Aspen Group 127.5 129.6 NAV3 per share 1.25 1.26 Gearing % n/a n/a

• 1 Includes $2.5 million (FY16: $1.8 million) in unrecognised acquisition costs included in NAV.

• 2 December 16 includes deposits paid for Barlings Beach and Koala Shores ($1.2 million); Property assets held for sale ($5.9 million)

• 3 Includes impact of 1H FY17 distribution announced on 19 January 2017

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Disclaimer

This presentation has been prepared by Aspen Group (“Aspen”) and should not be considered in any way to be an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of any security, and neither this document nor anything in it shall form the basis of any contract or commitment. Prospective investors should make their own independent evaluation of an investment in Aspen. Nothing in this presentation constitutes investment, legal, tax or other advice. The information in this presentation does not take into account your investment objectives, financial situation or particular needs. The information does not purport to constitute all of the information that a potential investor may require in making an investment decision.

Aspen has prepared this presentation based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Aspen , its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

This presentation contains forward looking information. Indications of, and guidance on, future earnings, distributions and financial position and performance are forward looking statements. Forward looking statements are based on Aspen Group’s current intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties and other factors which could cause actual results to differ materially. Aspen Group and its related bodies corporate and their respective directors, officers, employees, agents, and advisers do not give any assurance or guarantee that the occurrence of any forward-looking information, view or intention referred to in this presentation will actually occur as contemplated.

All references to dollar amounts are in Australian currency unless otherwise stated.

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