Aspen's profits keep climbing

ASPEN Group did not show signs of been battered down by the current volatility in the marketplace, instead it delivered an increase of 63% in its interim net profit after tax.

For the six months period to December 2007, Aspen Group reported underlying net profit after tax of $19.0 million.

Aspen’s managing director Angelo Del Borrello said contributions across all business divisions have combined to produce this result, leaving the group well placed to record a strong full year performance.

Aspen’s growth in underlying earnings has enabled further distribution growth with a 35% increase to 7.75 cents per security for the half year.

“Our business strategy of building a quality property investment portfolio alongside an innovative national funds management business has contributed to the strong growth in recurring income and enhanced earnings quality.

“The most significant feature of the half year result has been the strong increase in underlying revenue and earnings as a result of Aspen’s focus on building strong recurring income streams,” he added.

At the same time, the group’s conservative gearing position provided the capacity during the period to acquire several assets for its funds management business, including the seeding of two new funds.

This resulted in gearing increasing marginally to 34% as at December 31. Funds utilised totaled $108 million and will be repaid through both debt and equity raisings within these funds. This would result in Aspen‘s gearing reducing to 20%, leaving a core debt position of $110 million. This core debt position is fully hedged for a weighted average 2.9 years at an ‘all-up’ rate of 6.56%.

The group’s funds management business performed strongly throughout the period. Contributions from all established Fund businesses resulted in funds management revenues up 101% for the period.

“Aspen’s focus on astute capital management has positioned the group well to manage the current volatility in credit markets and higher interest rate environment in Australia”.

“Aspen’s prudent capital management is underpinned by its long dated finance facility which matures in October 2011 representing a 3.85 year term,” Del Borrello said.

Meanwhile, as there were no acquisitions during the period within Aspen’s investment portfolio, revaluations of $36.6 million largely accounted for the increase in book value of 13% to $380 million.

Del Borrello said Aspen enters the second half of the financial year in sound financial shape, looking to consolidate its standing as a leading property investment and management group within the Australian market.

“Aspen’s core business has been largely unaffected by the recent market volatility, with its assets under management diversified across traditional and emerging sectors in the Australian property market resulting in a robust portfolio.

“Looking forward, the second half will see Aspen enter the retirement and affordable accommodation sectors through two new Funds, Aspen Communities and Aspen Villages,”

“Aspen is well placed to continue its impressive earnings growth, underpinned by a sound balance sheet, growing funds management business and high calibre property people with expertise across all property sectors,” he concluded.

Aspen’s shares close 1.5 cents weaker at $1.58.

Australian Property Journal