Rural Funds Group · ASX:RFF
Rural Funds — Wilson HTM Rapid Insights Conference (February 2016)
37 slides from Rural Funds's conference presentation, Feb 11, 2016
Slide 1: Rural Funds Group (RFF) Corporate presentation
Rural Funds Group (RFF) Corporate presentation November 2015
Slide 2: Disclaimer
Disclaimer 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 Active (ARSN 168 740 805). The informa
Slide 3: Agenda
Agenda 1. Overview 2. Assets and lease arrangements 3. FY15 results summary 4. Outlook 5. Appendices 3
Slide 4: Overview
Overview
Slide 5: RFF overview
RFF overview RFF is the only diversified agricultural REIT listed on the ASX Asset locations Listed February 2014 $0.75, 52 week high $1.40 Specialised REIT: agricultural assets Quality portfolio of 29 properties deriving revenue New South Wales from 3 primary agricultural sectors; poultry far
Slide 6: RFF snapshot
RFF snapshot RFF has an attractive forecast distribution supported by a long-dated WALE Key statistics 30 June 2015 Key forecasts FY16 Actual Pro forma1 30 June 2015 30 June 2015 Distributions per unit FY16 8.93 cents Total assets $252.7m $291.0m Distribution growth rate 4% Net Asset Value (NAV) $15
Slide 7: RFF performance & distributions
RFF performance & distributions RFF has materially outperformed both the ASX A-REIT index and ASX All Ordinaries accumulation index Total shareholder return 1 July 2014 – 31 Oct 20151 AFFO2 and distributions per unit 70% 60% 50% 40% 30% 20% 10% 0% February 2014: compliance listed on ASX without rais
Slide 8: Agricultural property leasing
Agricultural property leasing RFF uses a leasing model in an underserviced domestic sector Australian property sectors Observations: – Academic research demonstrates that leasing assets provides capital management benefits and flexibility to lessees and is linked to higher company returns – The co
Slide 9: Assets and lease arrangements
Assets and lease arrangements
Slide 10: Assets and lessees overview
Assets and lessees overview Rural Funds Group (ASX: RFF) is a stapled security Rural Funds Trust RF Active Poultry Almond Vineyards Other Assets farms orchards • RFM Poultry (NSX: • Select Harvests • Treasury Wine • 60+ Livestock RFP) (ASX: SHV) Estates (ASX: TWE) Operators (lessees for - Australia’
Slide 11: Key assets further details
Key assets further details Poultry farms Almond orchards Vineyards 154 sheds on 17 farms. Consisting of 134 sheds Two established almond orchards located near Seven vineyards with 666 ha planted to vines on 13 farms in Griffith, NSW, and 20 sheds on 4 Hillston, NSW, of which 1,221 ha leased to SHV,
Slide 12: Diversified assets and counterparts
Diversified assets and counterparts Pro forma adjusted asset values1 Pro forma FY16 forecast revenue by lessee2 Notes: 1 Based on pro forma property valuations to adjusted total assets of $262.2m as at 30 June 2015 and assumes Tocabil ($32.1m) and Kerarbury ($109.5) developments completed 2 Pro form
Slide 13: Exposure to water assets
Exposure to water assets • RFF provides investors with exposure to the Australian water Pre-transaction: asset allocation at 30 June 2015 entitlement markets. Water entitlements are regularly traded in secondary markets and are independently valued by qualified 5% valuers 15% Property and infrastruc
Slide 14: Kerarbury acquisition details
Kerarbury acquisition details Key points Kerarbury – Darlington Point, NSW • RFF announced a completed $12.6m Placement and $22.4m fully underwritten Funding Entitlement Offer on 28 September 2015 • Remainder of funding from retained earnings and debt • Refers to two properties: “Kerarbury” and “Kam
Slide 15: Tocabil development update
Tocabil development update Tocabil lease features and development update • Placement and Entitlement Offer completed April 2015 to fund the development of a 600 ha almond orchard leased to Olam Orchards Funding Australia Pty Ltd (Olam) • The property, Tocabil, is situated near Hillston in central we
Slide 16: FY15 results summary
FY15 results summary
Slide 17: Highlights
Highlights FY15 highlights Net profit before income tax of $9.4m Adjusted funds from operations of $11.0m in line with previous forecast Net Asset Value (NAV) of $1.15 per unit, adjusted NAV of $1.22 per unit Gearing 35.1% FY16 distribution forecast to increase 4% to 8.93 cpu 17
Slide 18: FY15 results summary
FY15 results summary Metrics as at 30 June 2015 Income Net profit before income tax $9,441,000 AFFO $11.0m (pre-tax) and AFFO per Total comprehensive income $10,161,000 unit 9.1 cents in line with previous Adjusted funds from operations (AFFO) $11,009,000 forecast to 30 June 2015 Adjusted NAV an
Slide 19: Property revaluations
Property revaluations Adjusted property assets reconciliation FY151 $260,000,000 249,020,000 10,135,000 $250,000,000 $240,000,000 12,791,000 1,400,000 227,724,000 $230,000,000 -3,030,000 $220,000,000 Property assets 30 Poultry Almond orchard Vineyard Tocabil CAPEX Adjusted property June 2014 infrast
Slide 20: Debt facility
Debt facility Debt metrics • Approval received for $33m increase to Post-transaction existing debt facility Actual pro forma1 30 June 2015 30 June 2015 – Sufficient to fund development through to December 20165 Term debt facility limit $103.0m $103.0m Term debt drawn $89.7m $94.6m • Security: – Real
Slide 21: Outlook
Outlook Rural Funds Management
Slide 22: Forecast distributions
Forecast distributions FY16 forecast & actual distributions Each lease contains indexation clauses which Record date CPU provide RFF with annual increases in rent, and 30 September 2015 2.23 therefore additional free cash flow that can be distributed to Unitholders. In 2016, indexation and 31 Dece
Slide 23: Areas of focus for management
Areas of focus for management 1. Managing the growth of funds from operations and therefore distributions per unit 2. Continue to address differential between trading price and adjusted NAV, through: a) Growth via accretive acquisitions b) Increased market awareness RFM continues to perform an overs
Slide 24: Spectrum of investment opportunities
Spectrum of investment opportunities RFF will pursue acquisitions of additional assets to grow the quantum and diversity of its earnings The investment strategy is to invest across the full range of the asset continuum shown below, with the objective of ensuring the asset mix can continue to fund
Slide 25: Investment criteria
Investment criteria The Kerarbury almond orchard development is in line with RFM’s stated long term objectives for RFF Long term objectives Grows adjusted net assets from $162m to $195m, with potential Increase net assets for further capital appreciation Immediately AFFO accretive and increasingly a
Slide 26: Appendices
Appendices
Slide 27: FY15 results
FY15 results Summarised statement of comprehensive income Unrealised loss relating to interest rate 12 mths ended 12 mths ended swaps of $0.73m primary difference to 30 June 2015 30 June 2014 previous forecast of $10.75m $ $ Stapled Rural Funds Trust (RFT) to RF Property revenue 22,218,000 15,76
Slide 28: FY15 results
FY15 results Adjusted balance sheet Water entitlements are held at cost Statutory Revaluation of Adjusted based on ASIC guidance and balance sheet at water balance sheet at 30 June 2015 entitlements 30 June 2015 accounting standards As at 30 June 2015 External valuations at 30 June 2015 Assets $
Slide 29: AFFO
AFFO Reconciliation of net profit after tax to AFFO Table adds back non cash items to 12 mths ended 12 mths ended reconcile net profit after tax to AFFO 30 June 2015 30 June 2014 Major items for FY15 $ $ Net profit before tax 9,441,000 3,402,000 – $0.73m unrealised loss on Adjusted for merger tr
Slide 30: Australian agriculture
Australian agriculture Australian agriculture is benefiting from a number of macro trends and comparative advantages Growth in Australian agricultural land values: 1978 to 2014 • Trends supporting Australian agriculture include: - Emerging Asian middle class: rising wealth and 600 incomes leading to
Slide 31: Lease agreements
Lease agreements RFF seeks indexed leases and develops a full lifecycle model to capital commitments Payment Indexation Lessee Rent review Capital commitments frequency mechanism R&M and ongoing capital expenditure on The lessee and the lessor have the right of 65% of Consumer account of lessee RFM
Slide 32: About RFM
About RFM RFM is one of the oldest and most experienced agricultural funds management organisations in Australia Rural Funds Management Limited (RFM) is an experienced fund and asset manager that specialises in Australian agriculture Established in 1997, RFM operates as an external manager and i
Slide 33: RFM board and management team
RFM board and management team RFF is externally managed and governed by a highly experienced management team and board Board of directors Contact • Joined RFM in 2003 • RFM Company Secretary • Former director of broking firm JBWere with more than • Responsible for reviewing and optimising the 30 yea
Slide 34: Key risks
Key risks Specific risks Counterparty risk All land and infrastructure assets owned by RFF are leased in order to ensure that Unitholders are not exposed to operational risk. There is a risk that a counterparty may default on its lease obligations to RFF. Any default by a counterparty would reduce R
Slide 35: Key risks
Key risks Property market risks (continued) Property illiquidity The majority of assets owned by RFF are large scale. Given this scale, the number of potential buyers is limited. Therefore the sale of assets at book value may take longer to realise. Water availability Pursuant to the terms of the Tr
Slide 36: Key risks
Key risks General risks (continued) Gearing RFF has secured a debt facility that sets limits for the next five years. Beyond this there is a risk that RFF’s bank could reduce the gearing limit. In these circumstances, where asset values have not increased sufficiently to offset any decrease in geari
Slide 37: Corporate information
Corporate information Rural Funds Management Limited 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 Website: www.ruralfunds.com.au For further information: For media enquiries: Investor relations enquiries: Davi
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