Rural Funds Group · ASX:RFF
Rural Funds — FY2017 Earnings Presentation
36 slides from Rural Funds's earnings presentation, Aug 22, 2017
Slide 1: Financial results presentation
Managed by: For personal use only Financial results presentation Financial year ended 30 June 2017 Managed by: 22 August 2017
Slide 2: Disclaimer
Managed by: Disclaimer For personal use only This presentation has been prepared by Rural Funds Management Limited (ACN 077 492 838, AFSL 226 701) (“RFM”) as the responsible entity of Rural Funds Group (“RFF”). RFF is a stapled security, incorporating Rural Funds Trust (ARSN 112 951 578) and RF Acti
Slide 3: Agenda
Managed by: Agenda For personal use only RFM attendees 1. Financial results David Bryant 2. Capital management Managing Director 3. Portfolio update Stuart Waight Chief Operating Officer 4. Outlook 5. Appendices Daniel Yap Financial Controller — Additional financial information — Asset and lease det
Slide 4: Financial results
1 For personal use only Managed by: Financial results Yearling cattle grazing on a forage crop, Rewan, Rolleston, Qld, July 2017
Slide 5: FY17 results summary
Managed by: FY17 results summary FY17 was a year of significant growth for RFF Key metrics For personal use only • AFFO growth of 3.2 cents per unit 12mths ended 12mths ended primarily a result of almond orchard 30 June 2017 30 June 2016 developments and Select Harvests Ltd market rent review Income
Slide 6: FY17 property assets reconciliation
Managed by: FY17 property assets reconciliation Growth in adjusted property assets through acquisitions, development capex and revaluations For personal use only Adjusted property assets reconciliation ($m)1 • Acquisitions, excluding revaluations and capex, during the period included: – $52.5m cattl
Slide 7: FY17 comprehensive income and AFFO
Managed by: FY17 comprehensive income and AFFO Increase in property revenue and lower operating costs per unit For personal use only Summarised statement of Comprehensive Income • Property revenue increase of 57% on FY16 FY17 FY161 • Total Comprehensive Income mainly impacted by: Property revenue $4
Slide 8: Capital management
2 For personal use only Managed by: Capital management Geier Vineyard, Barossa Valley, South Australia, December 2016
Slide 9: Capital management
Managed by: Capital management Shareholder return continues to exceed index performance For personal use only Equity Debt facility 17% increase for period 30 June 2016 to Debt facility reviewed, with syndication Share price 30 June 2017 ($1.58 to $1.85) implemented December 2016 and debt tenor incre
Slide 10: Debt facility
Managed by: Debt facility Substantial facility headroom and a low LVR positions RFF for future acquisitions For personal use only Debt metrics Interest rate hedges 30 June 2017 30 June 2016 Duration Hedge Start Maturity Amount (years) rate Term debt facility limit1,2 $250.0m3 $200.0m Current Dec 18
Slide 11: Portfolio update
3 For personal use only Managed by: Portfolio update Poultry sheds, Griffith, NSW, August 2009
Slide 12: Portfolio assets and lessees
Managed by: Portfolio assets and lessees WALE of 13.2 yrs and acquisition of four properties For personal use only Notes: • Shaded areas denote different climatic zones. Source: Bureau of Meteorology (BOM). See page 33 • Forecasts rents subject to assumptions on timing of capex where applicable 12
Slide 13: Portfolio diversification (FY18f revenue)
Managed by: Portfolio diversification (FY18f revenue) FY17 investments in cattle and cotton further enhance diversification For personal use only Lessees Lease indexation mechanisms Climatic zone Sector type1 Note: 1. Assumes poultry is infrastructure predominant, vineyards and cattle natural resour
Slide 14: Development and capex
Managed by: Development and capex Development and capex are undertaken by lessees, funded by RFF, and attract additional income For personal use only Total FY17 FY18 FY19 FY20 ($m) Almonds: Kerarbury Development 2,500 ha orchard $46.8 $28.1 $13.7 $25.2 $113.8 Almonds: Tocabil Development 600 ha orch
Slide 15: Cattle properties update
Managed by: Cattle properties update Cattle properties are being further developed to increase productivity, value and AFFO For personal use only Fig 1: Productivity capex • The properties currently hold 27.5% more Adult Equivalents (AE) compared to the initially assessed capacity FY17 FY18f Total •
Slide 16: Cotton property update
Managed by: Cotton property update Lynora Downs expansion program progressing to schedule For personal use only Lynora Downs (cotton property) • Stage 1 development update: – 4,250ML water storage cell scheduled to be complete 1H18 – 400 ha irrigated cotton development scheduled to be complete 1H18
Slide 17: Strategy
Managed by: Strategy Growth has contributed to strategic objectives For personal use only • Management of the existing portfolio and expansion • Principles when assessing acquisitions (see page 31 for through acquisitions with the aim of: further details): – increasing earnings and distribution grow
Slide 18: Outlook
4 For personal use only Managed by: Outlook Water point, Mutton Hole, Gulf of Carpentaria, QLD, June 2017
Slide 19: Forecasts
Managed by: Forecasts FY18 forecast DPU consistent with 4% p.a. target growth For personal use only • RFF has a target of 4% p.a. DPU growth. This is Key forecasts FY18 supported by a combination of a low payout ratio and AFFO growth from: AFFO per unit 12.5 cents – annual lease indexation; combinat
Slide 20: Acquisition strategy
Managed by: Acquisition strategy Strategy to invest across the full range of the asset continuum, whilst ensuring the asset mix continues to fund distributions (Explanatory Memorandum, October 2013) For personal use only Spectrum of investment opportunities1 • When assessing investments RFM models t
Slide 21: Areas of focus for management
Managed by: Areas of focus for management RFM continues to oversee and manage existing assets, including capex and developments, while pursuing new investments and lessees For personal use only • Management of the existing portfolio and expansion through acquisitions with the aim of increasing; earn
Slide 22: Appendices
5 For personal use only Managed by: Appendices Baled raw cotton ready for delivery to Qld Cotton for ginning, Lynora Downs, Queensland, March 2017
Slide 23: FY17 results – comprehensive income
Managed by: FY17 results – comprehensive income For personal use only Summarised statement of comprehensive income Restated1 • Property revenue has increased primarily 12 mths ended 12 mths ended as a result of acquisitions, planned capital 30 June 2017 30 June 2016 expenditure and rental indexation
Slide 24: FY17 results - AFFO
Managed by: FY17 results - AFFO For personal use only Composition of AFFO (pre-tax) Restated1 • AFFO is pre-tax and excludes fair value 12 mths ended 12 mths ended adjustments, depreciation and impairment to represent RFF’s property rental business 30 June 2017 30 June 2016 $ $ • Adjustment to FFO o
Slide 25: FY17 results - reconciliation of net profit
Managed by: FY17 results - reconciliation of net profit For personal use only Reconciliation of net profit before tax to AFFO Restated1 • Non cash items added back to reconcile 12 mths ended 12 mths ended net profit before tax to AFFO 30 June 2017 30 June 2016 • Major items for FY17 $ $ – $14.7m pro
Slide 26: FY17 results - summarised balance sheet
Managed by: FY17 results - summarised balance sheet For personal use only Summarised balance sheet Restated1 • Net assets $357.7m As at As at • NAV per unit $1.41 30 June 2017 30 June 2016 • Adjusted NAV per unit $1.58 $ $ • Equity raising totalling $61.0m Cash 3,838,000 3,034,000 undertaken in July
Slide 27: FY17 results - total assets reconciliation
Managed by: FY17 results - total assets reconciliation Total assets reconciliation For personal use only Adjustment for Investment Bearer Intangible Financial water Adjusted Other assets Total property plants1 Assets2,4 assets3,4 entitlements at total assets fair values2,4 $ $ $ $ $ $ $ $ Balance as
Slide 28: Rural Funds Group key information
Managed by: Rural Funds Group (ASX:RFF) For personal use only Key information as 30 June 2017 Weighted average lease expiry profile2 Adjusted total assets1 $587.5m Adjusted net assets1 $402.2m Adjusted NAV per unit1 $1.58 Market capitalisation ($2.01 per unit)4 $511.3m Number of properties 35 Number
Slide 29: Key assets and counterparts
Managed by: Key assets and counterparts Almond orchards Poultry farms Vineyards Cattle assets Cotton assets For personal use only Brief 1,814 ha mature almond 154 sheds on 17 farms 666 ha mature vineyards on Three cattle properties and 4,880 ha cropping property description: orchards and 3,100 ha of
Slide 30: Key assets and leases further details
Managed by: Key assets and leases further details Almond orchards Poultry farms Vineyards Cattle assets Cotton assets For personal use only Description: 1,814 ha across two mature 154 sheds on 17 farms Seven vineyards with 666 ha Three cattle properties forming 4,880 ha cropping property almond orch
Slide 31: Strategy
Managed by: Strategy Diligent management of existing assets and examination of acquisition opportunities For personal use only Key principles underpinning assessment of acquisition opportunities Acquire properties with income secured by long-term leases to • Maintain agricultural REIT 1 structure ✓
Slide 32: Agricultural REIT structure
Managed by: Agricultural REIT structure RFF’s REIT structure benefits from trends supporting agriculture and has significant expansion potential in Australia For personal use only Australian property sectors estimates1 ▪ Macro economic trends supporting agriculture: $150b, est. up to 15% leased2 $28
Slide 33: Climate diversification strategy
Managed by: Climate diversification strategy Geographic diversification reduces lessee concentration in any one climatic zone and introduces new commodities and counterparts For personal use only ▪ The benefits of climatically diversifying RFF’s portfolio include1: Climatic zones and RFF assets2 ‒ M
Slide 34: Productivity capex
Managed by: Productivity capex Productivity capex aims to increase farm values, lease income and counterpart profitability For personal use only • Gains in farming productivity (e.g. via 125 yrs of agricultural returns (10yr moving avg of % price change)1 technology or science) have historically sup
Slide 35: Rural Funds Management
Managed by: Rural Funds Management RFM is a fund and farm manager with 20 years experience in Australian agriculture For personal use only Key information Board and management team contacts and tenure Established 1997 Total $641m Assets under Rural Funds Group: $588m management RFM Poultry: $9m Mich
Slide 36: Corporate information
Managed by: Corporate information For personal use only ACN 077 492 838 AFSL 226701 Canberra Office Level 2, 2 King Street Deakin ACT 2600 Telephone: +61 2 6203 9700 Facsimile: +61 2 6281 5077 managing good assets with good people Website: www.ruralfunds.com.au For further information: For media enq