Rural Funds Group · ASX:RFF
Rural Funds — Investor Presentation (March 2015)
33 slides from Rural Funds's investor presentation, Mar 6, 2015
Slide 1: Rural Funds Group Equity raising presentation
For personal use only Rural Funds Group (ASX: RFF) Equity raising presentation 6 March 2015
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 Trust (ARSN 112 951 578) and RF Active (ARSN 168 740 805), collectively known as the Rural Funds Group (“RFF”) in co
Slide 3: Contents
Contents For personal use only Section 1: Tocabil almond development Section 2: Equity Raising Section 3: Key risks Section 4: Appendices 3
Slide 4: Tocabil almond development
For personal use only Tocabil almond development
Slide 5: Overview
Overview For personal use only Tocabil acquired on 31 October 2014 for $5.2m plus stamp duty 22 year lease signed in March 2015 with Olam Orchards Australia to develop and operate a 600 ha almond orchard – Lease to commence on completion of the Equity Raising and FIRB approval Almond orchard d
Slide 6: Proposed Tocabil development
Proposed Tocabil development For personal use only Proposed almond orchard development • 6,900ha Tocabil • Includes 766ha of developed irrigation land, of which 600 ha is to be property developed into almonds and leased to Olam Orchards Australia purchase • Includes significant groundwater entitleme
Slide 7: Almond orchard development overview
Almond orchard development overview For personal use only Development timetable and capital cost FY15 FY16 FY17 FY18 FY19 Total Additional water entitlements 1.5 4.0 $5.5m Infrastructure and trees 7.1 2.4 $9.6m Orchard maintenance1 0.2 1.7 2.9 3.4 4.1 $12.4m Total development $8.9m $8.2m $2.9m $3.4m
Slide 8: Rationale
Rationale For personal use only An almond orchard development, and associated equity raising, is consistent with RFF’s stated objectives RFF’s objectives are long term Grows net assets from $137m to $151m, with potential for further capital Increase net assets appreciation Small dilution effect in
Slide 9: Key assets
Key assets For personal use only Existing assets Poultry Almond Pre-transaction Tocabil almond Pro Vineyards infrastructure orchards (weighted average) development5 forma6 Slight increase in pre-transaction Gross lease rate1 9.1% as at 31 December 2014 weighted average 2.5% p.a. 2.5% p.a. Annual 65%
Slide 10: Improved counterpart diversification
Improved counterpart diversification For personal use only Pre-transaction FY15 forecast revenue Pro forma FY15 forecast revenue1 RFM Poultry (NSX: RFP) RFM Poultry (NSX: RFP) Olam Orchards Australia RFM Almonds RFM Almonds Select Harvests (ASX: SHV) Select Harvests (ASX: SHV) Treasury Wine Estates
Slide 11: Improved WALE
Improved WALE For personal use only Pre-transaction: weighted average lease expiry – 12.2 years $6.0 RFF weighted average lease expiry $5.0 to increase from 12.2 to 13.4 years $4.0 $m $3.0 No RFF lease expires before 2022 $2.0 $1.0 $0.0 Pro forma: weighted average lease expiry – 13.4 years1 $6.0
Slide 12: Equity Raising
For personal use only Equity Raising
Slide 13: Equity Raising
Equity Raising For personal use only Pre-transaction FY15 forecast revenue • $7.5m Placement to institutional and sophisticated investors • 7.1 million New Units (~6% of pro forma issued capital, including the Entitlement Offer) • 2 for 33 non-renounceable Entitlement Offer to raise up to $7.5m Stru
Slide 14: Sources and uses of funds
Sources and uses of funds For personal use only Sources and uses of funds FY15 The development is initially funded entirely by equity raised under this Offer, with surplus funds being used ($000s) to reduce debt: Sources On completion of the Equity Raising, all Entitlement Offer 7,500 proceeds a
Slide 15: Pro forma summarised balance sheet
Pro forma summarised balance sheet For personal use only Actual Offer Offer Pro forma ($000s) 31 December 2014 proceeds Costs 31 December 2014 Note 1 Note 2 Cash 800 - - 800 Property investments 238,045 - - 238,045 Deferred tax assets 1,596 - - 1,596 Other assets 6,991 - - 6,991 Total Assets 247,432
Slide 16: Debt
Debt For personal use only Debt metrics Post-transaction Actual pro forma1 Amortisation of $2 million per 31 December 2014 31 December 2014 annum commencing 30 Sept 2016 Term debt facility limit $103.0m $103.0m Key financial covenants: Term debt drawn $99.3m $85.0m – LVR <50% Headroom $3.7m $18.
Slide 17: Development impact - assumptions
Development impact - assumptions For personal use only Development timetable and capital cost FY15 FY16 FY17 FY18 FY19 Total Additional water entitlements 1.5 4.0 $5.5m Infrastructure and trees 7.1 2.4 $9.6m Orchard maintenance1 0.2 1.7 2.9 3.4 4.1 $12.4m Total development $8.9m $8.2m $2.9m $3.4m $4
Slide 18: Development impact – FFO
Development impact – FFO For personal use only Tocabil development impact FY15 FY16 FY17 FY18 FY19 Total Total leased assets $13.1m $21.7m $24.6m $28.0m $32.1m $32.1m Rental income1 $0.2m $1.4m $2.0m $2.3m $2.7m $8.5m Net interest2 $0.1m $0.1m ($0.2m) ($0.4m) ($0.6m) ($1.0m) Management fee ($0.0m) (
Slide 19: Timetable
Timetable For personal use only Placement key dates Recommence trading Tuesday, 10 March 2015 Settlement of Placement units Tuesday, 17 March 2015 Allotment and trading of Placement units Wednesday, 18 March 2015 Entitlement Offer key dates Ex-date for Entitlement Offer Thursday, 12 March 2015 Recor
Slide 20: Key risks
For personal use only Key risks
Slide 21: Key Risks
Key Risks For personal use only An investment in RFF, like any investment, involves risk. These risks can be broadly divided between specific risks, property market risks, and general risks relevant to RFF. Whilst the assumptions used in generating the forward looking statements within this presenta
Slide 22: Key Risks - Specific risks (continued)
Key Risks For personal use only Specific risks (continued) Risk Summary There is a risk that a suspension event could occur under the terms of the chicken growing contracts. Under the terms of the RFM Poultry lease, any reduction in the grower fee revenue relating to a suspension event will result i
Slide 23: Key Risks - Specific risks (continued)
Key Risks For personal use only Specific risks (continued) Risk Summary Rental yield and profitability of RFF is attached to the valuations of the leased properties, biological assets and water rights. Factors affecting asset valuations include capitalisation and discount rates, the economic growth
Slide 24: Key Risks - Specific risks (continued)
Key Risks For personal use only Specific risks (continued) Risk Summary RFM is the responsible entity for RFF and for a number of other funds. It is possible that investment opportunities will arise for RFF through RFM’s relationship with those other funds. Therefore, from time to Conflict of intere
Slide 25: Key Risks - Property Market risks
Key Risks For personal use only Property Market risks Risk Summary RFF owns property including land, water and infrastructure for agricultural production. Decline in asset value The value of these assets may rise or fall because of general economic conditions, local and global agricultural condition
Slide 26: Key Risks - General risks
Key Risks For personal use only General risks Risk Summary The following economic conditions may impact the performance of RFF assets: national economic growth; industry change; Change in economic conditions interest rates; inflation; exchange rates; and changes to government economic po
Slide 27: Appendices
For personal use only Appendices
Slide 28: RFF overview
RFF overview For personal use only Total return performance since listing2 Listed on the ASX in February 2014 at a market capitalisation of ~$88 million1 ASX300 A-REIT accumulation index ASX200 accumulation index – Created through the merger and compliance 160 RFF (all distributions reinvested) li
Slide 29: Responsible entity relationship
Responsible entity relationship For personal use only 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 199
Slide 30: RFM board and management team
RFM board and management team For personal use only RFF is externally managed and governed by a highly experienced management team and board Board of directors Contact • Joined RFM in 2003 • Responsible for reviewing and optimising the • Former director of broking firm JBWere with more than performa
Slide 31: Almond industry outlook
Almond industry outlook For personal use only Three key factors provide a promising outlook for the Australian almond industry: Improving supply and demand outlook Difficult conditions for Californian growers – source of 80% of the worlds almonds Declining AUD – Favourable for Australian growers
Slide 32: Olam International Limited
Olam International Limited For personal use only Overview Key shareholders Leading global agribusiness company operating from seed to shelf in 65 countries Temasek 23,000 employees Kewalram Chanrai Covers 16 product platforms with leadership positions in a variety of commodities including coco
Slide 33: Corporate information
Corporate information For personal use only Rural Funds Management Ltd ACN 077 492 838 AFSL 226701 Canberra Office Level 2 2 King Street Canberra ACT 2600 Telephone: +61 2 6203 9700 Facsimile: +61 2 6281 5077 Website: www.ruralfunds.com.au For further information: For media enquiries: Investor relat
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