Rural Funds Group · ASX:RFF
Rural Funds — Bell Potter Conference Day (March 2016)
31 slides from Rural Funds's conference presentation, Mar 23, 2016
Slide 1: Rural Funds Group (RFF) Investor presentation
For personal use only Rural Funds Group (RFF) Investor presentation March 2016
Slide 2: Disclaimer
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 (ARSN 168
Slide 3: Introduction
For personal use only Introduction
Slide 4: RFF is an agricultural REIT
Rural Funds Group (RFF) RFF is an agricultural REIT For personal use only Key information as at 31 Dec 2015 Key asset locations Adjusted total assets1 $312.1m Adjusted net assets1 $193.7m Adjusted NAV per unit1 $1.18 New South Wales South Market capitalisation $230.2m Australia Number of properties
Slide 5: RFF revenue diversification
RFF revenue diversification RFF is diversified across three key sectors For personal use only Pro forma forecast revenue incorporating FY16 forecast revenue by lessee1 Tocabil & Kerarbury developments2 5% 4% 10% 13% 30% 39% 11% 15% 10% 13% 35% 15% RFM Poultry (NSX: RFP) Olam Orchards Australia RFM P
Slide 6: Rural Funds Management (RFM)
Rural Funds Management (RFM) RFM is the manager of RFF For personal use only Key information Established 1997 Assets under management $380m Turnover $85m Ownership D Bryant & staff RFF RFM Poultry Funds managed StockBank Almond Funds 06-08 2007 Macgrove Project Asset locations NSW, SA, Vic & Qld Far
Slide 7: Key events
Key events RFF compliance listed on ASX in February 2014 For personal use only Total shareholder return1 & key events since July 2014 March 2015 Oct 2015 March 2016 $15m equity raised for 600ha $35m equity raised for 1,500ha Entered S&P ASX300 Index almond orchard development almond orchard developm
Slide 8: Tocabil development of 600ha almond orchard on schedule
Tocabil $32m Tocabil development of 600ha almond orchard on schedule For personal use only August 2015 February 2016 • Orchard development on schedule: 400 ha planted 2015 calendar year, and a further 200 ha planned for 2016 • RFF has acquired 5,314ML1 of water entitlements to date, with Pump statio
Slide 9: Kerarbury development of 1,500ha almond orchard on schedule
Kerarbury $110m Kerarbury development of 1,500ha almond orchard on schedule, additional plantings possible For personal use only Orchard development on schedule: 1,200 ha to be planted Kerarbury development 2016 calendar year (increase of 200 ha) and a further 300 ha in 2017. Additional 2017 plant
Slide 10: Growth
Growth Pro forma adjusted total assets will grow to $413m1, driven by existing development program For personal use only RFF adjusted total assets growth2 • Tocabil and Kerarbury orchard developments are forecast to total $141.6m. $54.7m deployed to 31 Dec 15 with remaining portion funded with debt
Slide 11: Outlook
For personal use only Outlook
Slide 12: RFF objective
RFF objective RFM has been successful in achieving RFF’s stated objective to date For personal use only RFM has communicated the following objective for RFF: Net asset, market cap and liquidity improvement • Increase market liquidity by growing net assets $250m $50m Adjusted Net Assets, Market Cap
Slide 13: Investment case
Investment case RFF uses a leasing model in an underserviced domestic agricultural sector For personal use only Australian property sectors1 Observations: – Academic research demonstrates that leasing 160 assets provides capital management benefits and flexibility to lessees, and is linked to high
Slide 14: Spectrum of investment opportunities
Spectrum of investment opportunities RFF will pursue acquisitions of additional assets to grow the quantum and diversity of its earnings For personal use only Spectrum of investment opportunities1 The investment strategy is to invest across the full range of the asset continuum shown below, with t
Slide 15: Climatic diversification
Climatic diversification RFM is pursuing climatic diversification For personal use only RFM has conducted a study on rainfall variability correlation across Australia to identify the likelihood of above or below average seasons occurring in the same year across different locations1 While the maj
Slide 16: Acquisition opportunities
Acquisition opportunities RFM has identified a range of sectors considering climatic diversification and RFF’s investment For personal use only criteria In seeking further opportunities to expand the portfolio RFM has identified new sectors that consider climatic diversification across three uncor
Slide 17: Macadamia orchards
Macadamia orchards Macadamia orchards are part of RFF’s climate diversification strategy For personal use only Macadamia orchards location RFF acquired three macadamia orchards (259 ha) Orchards located near Bundaberg in Queensland 234 ha leased to a tax effective managed investment scheme (MI
Slide 18: Perth Markets Limited investment
Perth Markets Limited investment PML offers networking opportunities as part of RFF’s climate diversification strategy For personal use only Perth Markets On 12 February 2016 RFF announced the acquisition of an 8.96% stake in Perth Markets Limited (PML) for $5.275m PML is a consortium consisting
Slide 19: Australian cattle industry – demand
Australian cattle industry – demand GDP per capita and beef consumption1 For personal use only 25 United States There is a strong positive relationship between BEEF CONSUMPTION PER CAPITA income levels and the consumption of beef2 20 Israel Australia Chile Canada 15 As China’s middle class conti
Slide 20: Australian cattle industry – supply
Australian cattle industry – supply For personal use only Total herd – historical and forecast1 Destocking due to drought resulted in high slaughter numbers The Australian cattle herd is forecast to decline to 26.2 million head by 30 June 2016, the lowest level since 1994 The slaughter of fema
Slide 21: Australian cattle investment rationale
Australian cattle investment rationale RFM is currently exploring investment opportunities in cattle For personal use only An investment in the cattle sector may be attractive for the following reasons: – Large industry with comparative advantage – Potential for high capital and income growth • La
Slide 22: Conclusion
Conclusion RFF has appealing investment qualities For personal use only 1. REIT structure 2. Quality assets; quality lessees 3. A growing fund in a growing sector 4. Managed by RFM managing good assets with good people 22
Slide 23: Appendices
For personal use only Appendices
Slide 24: HY2016 results summary
HY2016 results summary For personal use only Metrics as at 31 December 2015 Income Net profit before income tax $5,182,000 AFFO $6.2m (pre-tax) and AFFO per Total comprehensive income $4,932,000 unit 4.3 cents in line with previous Adjusted funds from operations (AFFO) $6,194,000 forecast to 30 Ju
Slide 25: HY2016 property reconciliation
HY2016 property reconciliation For personal use only Adjusted property assets reconciliation HY2016 300,000,000 36,696,000 1,004,000 294,720,000 290,000,000 280,000,000 270,000,000 7,854,000 260,000,000 249,020,000 -1,009,000 579,000 576,000 250,000,000 240,000,000 Adjusted Poultry Almond Vineyard T
Slide 26: HY2016 AFFO composition
HY2016 AFFO composition For personal use only Composition of AFFO (pre-tax) AFFO1 is pre-tax and excludes fair 6 mths ended 6 mths ended value adjustments, depreciation and 31 December 2015 31 December 2014 impairment to represent RFF’s $ $ property rental business Property revenue 12,453,000 10,6
Slide 27: Debt facility
Debt facility For personal use only Debt metrics Key changes for FY15: • Negotiated lower debt cost, 31 Dec 2015 30 June 2015 effective FY16 Term debt facility limit1, 2 $136.0m $103.0m • Increased amount and tenor of interest rate hedges to more closely align with weighted Term debt drawn $103.0m
Slide 28: Lessee summary
Lessee summary RFF has attracted a range of quality lessees For personal use only Assets Poultry Almonds Vineyards Other farms • Select Harvests • RFM Poultry (NSX: • Treasury Wine • 70+ Livestock (ASX: SHV) RFP) Estates (ASX: TWE) Operators (lessees for - Australia’s largest - World’s largest liste
Slide 29: Key assets further details
Key assets further details For personal use only Almond orchards Poultry farms Vineyards Two established almond orchards located near 154 sheds on 17 farms. Consisting of 134 sheds Seven vineyards with 666 ha planted to vines Hillston, NSW, of which 1,221 ha leased to SHV, on 13 farms in Griffith, N
Slide 30: RFM board and management team
RFM board and management team RFF is externally managed and governed by a highly experienced management team and board For personal use only Board of directors Contact • Joined RFM in 2003 • RFM Company Secretary • Former director of broking firm JBWere with more than • Responsible for reviewing and
Slide 31: Corporate information
Corporate information For personal use only 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 rel
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