Aspen net profit up 63%, on track for stronger second half

Aspen Group Ltd has resported an underlying net profit after tax of $19 million for the half year, representing a 63 per cent increase on the corresponding period.

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

The underlying net profit after tax result represents net profit after tax excluding non cash items, namely movements in fair value of investment properties, equity and hedge investments.

Revenue from ordinary activities, including unrealised gains on properties of $36.9 million (2006:$48.2 million), edged down 4 per cent to $67.5 million.

Aspen Group managing director Angelo Del Borrello said the first half results reflected the strong underlying business which Aspen had developed over the past few years.

"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".

"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".

Commenting on current market conditions, Mr Del Borrello said "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", said Mr Del Borrello.

Aspen's well positioned property assets and focus on active property management continued to underpin the good performance of its investment portfolio. As there were no acquisitions during the period, revaluations of $36.6 million largely accounted for the increase in book value of 13 per cent to $380 million.

The group's major commercial office properties, Septimus Roe Square and MTAA House, have benefited from the strong rental growth in the Perth and Adelaide CBD markets.

Combined with higher occupancy levels across the portfolio, revenues from the group's property portfolio lifted 11.8 per cent to $16.1 million on a like for like basis.

Septimus Roe Square reported a 22 per cent uplift in value to $93.9 million capitalising on the strong Perth CBD office market.

Aspen said the multi tenant nature of the building would see further opportunity for rental growth through market rent reviews in the coming period.

Aspen's entry into the Adelaide CBD office market, through its acquisition of MTAA House, has also proven timely with demand for office space resulting in the building's occupancy achieving 99 per cent. This has resulted in a 20 per cent increase in value to $93.5 million.

The group's funds management business performed strongly throughout the period. Contributions from all established Fund businesses resulted in funds management revenues up 101 per cent to $14.5 million for the period.

Mr Del Borrello said Aspen entered the second half of the financial year in sound financial shape, and waslooking 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".

Mr Del Borrello said Aspen had delivered an impressive first half result, in line with the board's expectations, and was well placed to deliver a stronger second half as per previous years.

Aspen shares had gained 1 cent, or 0.96 per cent more, to $1.58 at the close.