Rural Funds Group · ASX:RFF
Rural Funds — FY2021 Earnings Presentation
29 slides from Rural Funds's earnings presentation, Aug 25, 2021
Slide 1: Financial results presentation for the year ended 30 June 2021
Managed by: Financial results presentation for the year ended 30 June 2021 25 August 2021
Slide 2: Disclaimer and glossary of terms
Disclaimer and glossary of terms 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) and has been authorised for release by the Board of RFM. RFF is a stapled security, incorporati
Slide 3: Contents and Presenters
Contents 1. Financial results 2. Capital management Presenters 3. Portfolio update and forecasts 4. Conclusion 5. Appendices David Bryant Tim Sheridan Daniel Yap James Powell Managing Director Chief Operating Chief Financial General Manager – Officer Officer Investor Relations & Marketing 3
Slide 4: Financial results
1 Financial results Grain sorghum crop, Lynora Downs, central Queensland, March 2021. 4
Slide 5: Earnings and balance sheet summary
Earnings and balance sheet summary Earnings of 36.6 cents up 98%. Pro forma adjusted NAV of $2.20 up 13%. Income and earnings metrics 12 months ended 12 months ended • Property revenue decreased 7% primarily due to the disposal of poultry assets 30 June 2021 30 June 2020 and the Mooral almond orchar
Slide 6: Property movements
Property movements Independent net revaluations totalling $47.7m, primarily from cattle properties. • Key movements (see page 22 for further details): Adjusted property assets movements ($m) by sector1 ▪ Almonds: disposal of Mooral almond orchard for $81.2m, depreciation of $2.7m, net of development
Slide 7: Capital management
2 Capital management Improved pasture, Rewan, central Queensland, August 2021. 7
Slide 8: Capital management: equity and debt
Capital management $100m Entitlement Offer completed August 2021. Equity Debt Item Details Item Details Increase of 30.7% ($2.02 to $2.64) from 1 July 2020 to 30 June 2021. Current Facility Refinance of the $270.0m facility due to expire in FY23 underway. Trading price price $2.59 (23 August 2021).
Slide 9: Debt facility and interest rate hedges
Debt facility and interest rate hedges Reduced debt costs. Debt facility metrics Debt facility tenor (at 30 June 2021)8 Pro forma 30 June 2021 30 June 2020 30 June 20218 $300m 1, 2 Term debt facility limit $380.0m $380.0m $335.0m Debt Term debt drawn $285.5m $344.1m $297.2m $250m facility Headroom $
Slide 10: Portfolio update and forecasts
3 Portfolio update and forecasts Cotton bales, Mayneland, central Queensland, March 2021. 10
Slide 11: Portfolio update
Portfolio update The Entitlement Offer provided capital to continue investment strategies. Macadamia orchard development locations1 • In August 2021 RFF completed a $100m Entitlement Offer. The proceeds will be used to fund macadamia orchard developments (higher and better use strategy) and acquire
Slide 12: Replicating proven strategies
Replicating proven strategies RFM has a track record of executing higher and better use development and productivity improvement strategies. Case study: Higher and better use development Case study: Productivity improvements Name and location ▪ Mooral - Hillston, New South Wales Name and location ▪
Slide 13: Forecasts
Forecasts AFFO accretion to be driven by finalisation of macadamia lessee arrangements and additional acquisitions. DPU, DPU growth, AFFO payout and adjusted NAV • FY22 forecast AFFO 11.6 CPU. ▪ Reduction in FY21 and FY22f AFFO is primarily a result of the sale of poultry assets and the Mooral almon
Slide 14: Conclusion
4 Conclusion Shiraz grape vines at Geier vineyard, Barossa Valley, South Australia, January 2021. 14
Slide 15: Conclusion
Conclusion Portfolio poised for additional growth. Investment FY21 financial Portfolio highlights results highlights highlights Agricultural REIT 11.28 cents 9.3 years • FY21 financial results included material increase in earnings and adjusted NAV. Included in the S&P/ASX 300 FY21 distributions per
Slide 16: Appendices
5 Appendices Tinana Creek, water supply for macadamia orchards, Maryborough, central Queensland, May 2021. 16
Slide 17: FY21 results – summarised comprehensive income
FY21 results – summarised comprehensive income • Property revenue has decreased primarily as a result of the disposal of the poultry Summarised statement of comprehensive income assets and the Mooral almond orchard, offset by the income from new acquisitions, 12 months ended 12 months ended 30 June
Slide 18: FY21 results – AFFO composition
FY21 results – AFFO composition Composition of AFFO (pre-tax) 12 months ended 12 months ended 30 June 2021 31 June 2020 • AFFO has decreased primarily as a result of the disposal of the poultry assets and $ $ the Mooral almond orchard, offset by the income from new acquisitions, Property revenue 67,
Slide 19: FY21 results – reconciliation of net profit to AFFO
FY21 results – reconciliation of net profit to AFFO Reconciliation of net profit after tax to AFFO 12 months ended 12 months ended 30 June 2021 30 June 2020 • Non-cash items added back to reconcile net profit after tax to AFFO. $ $ • Key adjustments include: Net profit after income tax 119,634,000 4
Slide 20: FY21 results – summarised balance sheet
FY21 results – summarised balance sheet Summarised balance sheet Pro forma As at As at 30 June 2021 30 June 2021 30 June 2020 • Water entitlements are recorded as intangible assets, and held at $ $ $ the lower of cost or fair value in accordance with accounting Cash 11,647,000 11,647,000 5,085,000 s
Slide 21: FY21 results – total assets reconciliation
FY21 results - total assets reconciliation Total assets reconciliation Adjustment for Investment Bearer Intangible Property – Financial assets – Plant and Adjusted Other assets Total water entitlements property plants assets1, 3 owner occupied property2, 3 equipment total assets at fair value1, 3 $
Slide 22: Valuations, valuers and lease expiry
Valuations, valuers and lease expiry Policy to conduct independent valuations at least every two years and rotation of valuers1. Note: 1. Where no independent valuation has been conducted since acquisition, the purchase price and acquisition date have been listed. JBS Feedlots are not independently
Slide 23: Portfolio overview
Portfolio overview Diversification by climatic zone, sector and lessee. Assets map, sector information and key lessees1 Note: 1. Shaded areas denote climatic zones differentiated by rainfall seasonality. Source: Bureau of Meteorology; see Climatic Diversification discussion paper, 20 June 2016. Numb
Slide 24: Revenue by lessees type, sector and indexation
Revenue by lessees type, sector and indexation Assets are leased predominantly to corporate agricultural operators. Revenue by lessee type1 Lease revenue by sector 2 Revenue by lease indexation mechanisms3 Notes: 1. Figures shown are subject to rounding. Lessees shown by FY22f revenue. Olam refers t
Slide 25: Weighted average lease expiry
Weighted average lease expiry Weighted average lease expiry (WALE) of 9.3 years. Lease expiry profile1 20.0 18.0 16.0 14.0 12.0 FY22f revenue ($m) 10.0 8.0 6.0 4.0 2.0 0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Financial year end Vineyards Almonds C
Slide 26: Development assets and capital expenditure
Development assets and capital expenditure Productivity and higher and better use developments underway across most sectors. Development and capital expenditure summary1 Note: 1. Five-year developments refer to development potential of assets. Pasture improvement includes stylo and leucaena. Cultiva
Slide 27: Investment strategy
Investment strategy Productivity improvements and higher and better use development strategies aim to increase total returns and AFFO generation. Spectrum of investment opportunities1 Note: 1. The income and growth figures presented in the chart above have been provided to differentiate the profile
Slide 28: Environment, social and governance (ESG)
Environment, social and governance (ESG) Policies and procedures addressing ESG issues. Tahen project In May 2019, Rural Funds Management committed to providing resources and agricultural Environment Social Governance expertise to improve the economic and social prospects of the village of Tahen, lo
Slide 29: RFM corporate and operations management
Managed by: RFM corporate and operations management (listed alphabetically by surname) Rural Funds Management Limited For further information: ACN 077 492 838 Tim Sheridan David Bryant AFSL 226701 ChiefDirector Managing Operating Officer Level 2, 2 King Street, Deakin, ACT, 2600 T 029700 6203 9700 T