Rural Funds Group · ASX:RFF
Rural Funds — HY19 Earnings Presentation
33 slides from Rural Funds's earnings presentation, Feb 21, 2019
Slide 1: Financial results presentation
For personal use only Managed by: Financial results presentation For the half year ended 31 December 2018 February 2019
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 Active (
Slide 3: Contents
Managed by: Contents RFM presenters For personal use only 1. Financial results David Bryant Managing Director 2. Capital management Stuart Waight Executive Manager 3. Strategy and portfolio update 4. Outlook and conclusion Daniel Yap Financial Controller 5. Appendices James Powell General Manager -
Slide 4: Financial results
Financial 1 For personal use only results Recently announced cattle property acquisition; Cobungra, Omeo, Victoria, October 2018.
Slide 5: Key events: July 2018 to February 2019
Managed by: Key events: July 2018 to February 2019 Acquisitions totalling $87.1m will be funded from balance sheet capacity following the July 2018 Entitlement Offer. For personal use only • Conducted an Entitlement Offer to raise $149.5m at $1.95 per unit to fund two transactions with JBS Australia
Slide 6: HY19 financial results
Managed by: HY19 financial results FY19 forecast AFFO and DPU reaffirmed. FY20 forecast DPU of 10.85 cents, consistent with 4% annual growth target. For personal use only Income and earnings metrics • Property revenue 27% higher due to recent 6 mths ended 6 mths ended transactions, development capit
Slide 7: HY19 financial results
Managed by: HY19 financial results Gearing remains within the target range of 30-35%, with sufficient capacity for committed capital expenditure. For personal use only Balance sheet summary Pro forma3 • Increase in pro forma adjusted total assets of As at As at as at 31 Dec 2018 30 June 2018 $200m d
Slide 8: HY19 financial results
Managed by: HY19 financial results The Kerarbury almond orchard revaluation represents a 10% increase. For personal use only Adjusted property assets movements ($m) • Cattle acquisitions include:2 – Cerberus $10.8m – Dyamberin $14.1m – Mungindi, Caroona and Prime City feedlots $28.4m – Woodburn $7.5
Slide 9: Capital management
Capital 2 For personal use only management Three-year-old almond trees on Kerarbury almond orchard, Darlington Point, New South Wales, January 2019.
Slide 10: Debt facility and interest rate hedges
Managed by: Debt facility and interest rate hedges Debt facility limit to be increased in conjunction with settlement of Cobungra. Facility remains within all covenants. For personal use only Debt metrics Pro forma debt facility expiry1 Pro forma 31 Dec 30 June $250m 31 Dec 25.0 2018 2018 20181 Term
Slide 11: Strategy and portfolio update
Strategy 3 For personal use only and portfolio update Baled raw cotton. Lynora Downs, Queensland, July 2018.
Slide 12: Sectors and assets
Managed by: Sectors and assets The portfolio includes 49 properties diversified across six agricultural sectors and multiple climatic zones.1 For personal use only Note: 1. Shaded areas denote climatic zones differentiated by rainfall seasonality. Source: Bureau of Meteorology; see RFF Climatic Dive
Slide 13: Portfolio strategy and diversification
Managed by: Portfolio strategy and diversification Targeted diversification aims to assist in achieving the objectives of generating a stable income plus capital growth and growing distributions consistently at 4% p.a. For personal use only Sector by asset value1 Climatic zone (FY19f revenue) 4% 2%
Slide 14: Natural resource developments
Managed by: Natural resource developments Productivity developments continue on the existing natural resource predominant assets, with similar potential for productivity improvements on recently acquired assets. For personal use only Note: 1. Development opportunities on Cerberus, Comanche, Dyamberi
Slide 15: Forecast capital expenditure
Managed by: Forecast capital expenditure Forecast capex of $65.5m will attract rent as it is deployed. For personal use only 1H19 2H19f FY20f Total Description ($m) ($m) ($m) ($m) FY20 represents water acquisitions for Kerarbury. This commitment may be Almonds 11.1 12.2 21.6 44.9 met by utilising th
Slide 16: Outlook and conclusion
Outlook and 4 For personal use only conclusion Maturing almonds in final stage of growth, Mooral almond orchard, Hillston, NSW, January 2019.
Slide 17: Conclusion
Managed by: Conclusion RFM continues to oversee and manage existing assets, including capex and developments, while pursuing new investments and lessees. For personal use only Acquisitions Acquisitions have been consistent with RFF’s strategy and objectives, to: • Increase diversification, scale and
Slide 18: Appendices
5 For personal use only Appendices Geier vineyard, Barossa Valley, South Australia, March 2018.
Slide 19: HY19 results - comprehensive income
Managed by: HY19 results - comprehensive income For personal use only Summarised statement of comprehensive income 6 mths ended 6 mths ended • Property revenue has increased primarily as 31 Dec 2018 31 Dec 2017 a result of rent on new acquisitions, $ $ guarantee fee, rent on development capital Prop
Slide 20: HY19 results - AFFO
Managed by: HY19 results - AFFO For personal use only Composition of AFFO (pre-tax) 6 mths ended 6 mths ended • AFFO is pre-tax and excludes fair value 31 Dec 2018 31 Dec 2017 adjustments, depreciation and impairment $ $ to represent RFF’s property rental business. Property revenue 30,607,000 24,141
Slide 21: HY19 results - reconciliation of net profit
Managed by: HY19 results - reconciliation of net profit For personal use only Reconciliation of net profit after tax to AFFO 6 mths • Non cash items added back to reconcile 6 mths ended ended net profit after tax to AFFO. 31 Dec 2018 31 Dec 2017 $ $ • Major items for HY19: Net profit after income ta
Slide 22: HY19 results - summarised balance sheet
Managed by: HY19 results - summarised balance sheet For personal use only Summarised balance sheet • Accounting standards and ASIC guidance Pro Forma As at As at require water entitlements to be 31 Dec 2018 31 Dec 2018 30 Jun 2018 recorded as intangible assets, and held $ $ $ at the lower of cost or
Slide 23: HY19 results - total assets reconciliation
Managed by: HY19 results - total assets reconciliation Total assets reconciliation For personal use only Adjustment for Financial Investment Bearer Intangible water Adjusted assets - Other assets Total property plants assets1,3 entitlements at total assets property2,3 fair values1,3 $ $ $ $ $ $ $ $
Slide 24: Independent valuations
Managed by: Independent valuations RFM has a policy to independently value assets at least every two years. Asset and last independent valuation date For personal use only Last independent valuation Sector Asset Brief description (by reporting date) Mooral 800 ha mature orchard, NSW June 2018 Yilgah
Slide 25: Investment overview and strategy
Managed by: Investment overview and strategy Rural Funds Group is an agricultural real estate investment trust (REIT) that leases properties to agricultural operators and processors. For personal use only Description Key principles underpinning assessment of acquisition opportunities Strategy 1 Main
Slide 26: Distribution growth
Managed by: Distribution growth A combination of lease indexation, reinvestment of retained AFFO and market rent review mechanisms has enabled DPU growth to be maintained at or above the 4% per annum target. FY20 forecast distributions of 10.85 cents per unit in line with this target. For personal u
Slide 27: Key lessees and counterparts
Managed by: Key lessees and counterparts Lessees and counterparts include leading agricultural producers and processors. Top 75% lessees/counterparts by FY19f revenue For personal use only Largest almond grower in Australia, producing approximately 45% of the Olam Orchards national crop. Wholly owne
Slide 28: Lease expiry profile
Managed by: Lease expiry profile Portfolio WALE of 11.4 years. For personal use only Lease expiry profile Portfolio WALE of 11.4 years 28
Slide 29: Favourable acquisition environment
Managed by: Favourable acquisition environment Capital constraints have limited operator’s ability to undertake productivity improvements. The need for intergenerational transfer provides acquisition and development opportunities. For personal use only Capital sources for investment update1 Farms by
Slide 30: Manager with multi sector expertise
Managed by: Manager with multi sector expertise RFM is a fund and farm manager with 22 years’ experience in Australian agriculture, with operational and development experience across multiple agricultural sectors. For personal use only 1997 Key farm management team and sector experience 1997 RFM est
Slide 31: Rural Funds Management
Managed by: Rural Funds Management RFM is a fund and farm manager with 22 years’ experience in Australian agriculture. For personal use only Key information Board and management team contacts and tenure Established 1997 Assets under $1.2 billion management Ownership Directors & staff Guy Paynter Dav
Slide 32: Glossary and table of abbreviations
Managed by: Glossary and table of abbreviations Term Definition Term Definition For personal use only Adjusted Net Asset Value (NAV) adjusted for the independent valuation ha Hectare(s) - an area of 10,000m2 NAV of water entitlements Adjusted Total assets adjusted for the independent valuation of wa
Slide 33: Rural Funds Management Ltd
Rural Funds Management Ltd 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 For personal use only Website: ruralfunds.com.au Managing good assets with good people For further information: For media enquiries: Inv