Annual Report 2010

Annual Report

2010

Contents

Chairman's Letter Managing Director's Review Corporate Structure Investment Property Portfolio Funds Management Board of Directors Investor Relations Directors' Report Financial Report Additional Securities Exchange Information Corporate Directory

3 5 8 9 13 22 24 25 45 115 Inside Back Cover

Aspen Group is a national ASX-listed property investment and funds management company. Our focus is on acquiring quality property assets and developing and managing innovative property funds and syndicates.

"Strategy and platform in place to pursue earnings growth"

Year in Review

? FY10 Operating EPS and DPS guidance met ? Strong full year operating cash flows of $31m, up from

$15m in the prior year

? Asset values stabilised ? "New look" executive team with a clear strategy ? Established platform to pursue solid earnings growth

Financial Summary

Key Financial Results

Operating Revenue* Operating Profit After Tax* Total Assets Net Borrowings Securityholder Equity Gearing

2006 $41.1 m $18.5 m $352.4 m $165.3 m $168.1 m

32%

2007 $60.4 m $33.5 m $536.9 m $161.9 m $331.8 m

31%

2008 $77.3 m $43.8 m $652.7 m $211.2 m $379.9 m

33%

2009 $70.2 m $33.2 m $620.8 m $186.9 m $400.9 m

30%

2010 $71.9 m $33.6 m $646.9 m $220.8 m $388.6 m

34%

Key Investor Data

2006

Operating Earnings Per Security*

12.81 cents

Distributions Per Security

10.00 cents

Net Tangible Assets Per Security (NTA)** $1.09

2007 15.99 cents 12.75 cents

$1.35

2008 18.06 cents 15.50 cents

$1.53

2009 11.91 cents 8.995 cents

$0.71

2010 6.04 cents 4.20 cents

$0.69

* Operating revenue and profit after tax represents total revenue and earnings adjusted for certain significant items which in the opinion of the Directors do not represent the ongoing operating business of the Group

** Excludes non-dilutive employee share options

ASPEN GROUP ANNUAL REPORT 2010 PAGE 1

Whitsunday Shores, QLD.

"Lot sales increased 120% on the previous period,reflecting more stabilised residential markets and an improvement in investor confidence"

PAGE 2 ASPEN GROUP ANNUAL REPORT 2010

Dunsborough Lakes , WA.

Chairman's Letter

Dear Investors,

The last financial year saw continued difficult trading conditions for the Australian property market. Whilst the worst of the Global Financial Crises appeared to be behind us, equity markets were beset with new challenges, as a result of uncertainty in the financial health of a number of European countries and the continued global reluctance of banking institutions to ease their credit practices, both of which inhibited the expected rebound in the property sector.

Despite these challenges, the Group reported an operating profit of $33.6 million, slightly ahead of the prior year result of $33.2 million, a significant achievement considering the uncertain landscape we operated in.

This equated to operating earnings per security of 6.04 cents, allowing us to pay distributions of 4.2 cents per security, in line with guidance provided at the start of the year.

Our property portfolio continues to deliver solid recurring earnings to the Group and the outcome of recent independent valuations undertaken clearly illustrates a stabilisation in commercial property values.

It was also very encouraging to see a recovery in our funds management business, after two very difficult years. Lot sales within our residential division increased substantially, reflecting more stabilised residential markets and an improvement in investor confidence.

The imminent commencement of projects in our development fund is also a significant achievement for the Group, following two years of tight credit markets that stalled commencement of these projects.

Your Board and senior executive team has made some difficult decisions over past 2 years which are now having a positive impact to our bottom line. Operating costs decreased by 20% through a number of cost cutting initiatives including streamlining the management team, implementing freezes on executive salaries and the rationalisation of non-income producing business units.

Over the past five months we also announced key changes to our senior executive team, changes that in the Board's view were appropriate to take the Group forward and ensure its continued growth and development as a quality national property and funds management business. I would like to extend the Board's appreciation at this time to Mr Angelo Del Borrello for the significant contribution he played in the development of the Group over his many years as Managing Director.

I would like to thank my fellow Board members and all Aspen staff for their dedication and perseverance over the past year. Their hard work leaves the Group transformed and well placed to take advantage of more positive conditions going forward.

On behalf of the Board, executive management team and staff I would like to thank you for your continued support of Aspen Group and I look forward to reporting to you next year.

Reg Gillard Chairman

ASPEN GROUP ANNUAL REPORT 2010 PAGE 3

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