Rural Funds Group · ASX:RFF
Rural Funds — Investor Presentation (October 2018)
32 slides from Rural Funds's investor presentation, Oct 9, 2018
Slide 1: Domestic and offshore investor presentation
Managed by: For personal use only Domestic and offshore investor presentation October 2018
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 For personal use only RFM presenters 1. Strategy and overview David Bryant Managing Director 2. FY18 results highlights Jonty Ephron 3. Portfolio update Chief Operating Officer 4. Factors supporting James Powell General Manager - ongoing growth Investor Relations & Marketing 5.
Slide 4: Strategy and overview
Managed by: For personal use only Strategy and overview Cabernet grapes ripe for harvest, Geier vineyard, Barossa Valley, South Australia, March 2018 1
Slide 5: Investment overview and strategy
Managed by: Investment overview and strategy Rural Funds Group (ASX:RFF) 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 Strat
Slide 6: Sectors and assets
Managed by: Sectors and assets A portfolio of 47 properties across 6 agricultural sectors in multiple climatic zones.1,2 For personal use only Notes: 1. Shaded areas denote climatic zones differentiated by rainfall seasonality. Source: Bureau of Meteorology. Climatic diversification reduces lessee c
Slide 7: Key lessees and counterparts
Managed by: Key lessees and counterparts Lessees and counterparts include leading agricultural producers and processors. For personal use only Top 80% lessees/counterparts weighted by FY19f revenue Largest almond grower in Australia, producing approximately 45% of the Olam Orchards national crop. Wh
Slide 8: Diversification, scale and liquidity
Managed by: Diversification, scale and liquidity Improved sector diversification, scale and liquidity. For personal use only Key portfolio metrics by 30 June 2015 and pro forma 30 June 2018 revenue 4% 2% 5% Sector revenue 4% 6% 15% Almonds 34% Cattle 44% Poultry Vineyards FY15 FY19f 24% Cotton Macad
Slide 9: Climatic and sector type diversification
Managed by: Climatic and sector type diversification Climatic diversification seeks to reduce the likelihood of multiple lessees experiencing wetter or drier conditions at the same time. Natural resource predominant assets can benefit from productivity development. For personal use only Climatic zon
Slide 10: Leases with market rent reviews
Managed by: Leases with market rent reviews Leases with markets rent reviews seek to enhance AFFO growth, particularly in natural resource predominant sectors. For personal use only Market rent reviews at 30 June 2015 and pro forma 30 June 2018 FY15 Pro forma FY18 Rent reviews by 10 14 sector and as
Slide 11: Distribution growth
Managed by: Distribution growth A combination of lease indexation, reinvestment of retained AFFO and market rent review mechanisms has enable DPU growth to be maintained at least 4% per annum. For personal use only DPU, DPU growth and retained AFFO per unit 15.0 14.0 13.0 12.0 2.77 2.67 11.0 2.78 Ce
Slide 12: FY18 results highlights
Managed by: For personal use only FY18 results highlights Mutton Hole steers grazing forage oats crop, prior to being sold into feedlots, Rewan, Rolleston, Queensland, August 2018 2
Slide 13: FY18 financial results highlights
Managed by: FY18 financial results highlights EPU, AFFO and NAV growth driven by acquisitions, development capex and valuation increases. For personal use only Key highlights Change from • Increase in assets is due to: 30 June 20181 30 June 2017 – acquisitions in the cattle and cotton Financial metr
Slide 14: Recent equity raises and acquisitions
Managed by: Recent equity raises and acquisitions Since the July 2018 equity raise liquidity has improved and three properties in cattle and cotton sectors have been contracted to be acquired. For personal use only Trading price, volume and key events (1 July 2017 – 26 September 2018) Acquisition an
Slide 15: Portfolio update
Managed by: For personal use only Portfolio update Rotation crop (chickpeas), Mayneland, central Queensland, September 2018 3
Slide 16: Drought update
Managed by: Drought update Assets are leased with sufficient water entitlements considering factors such as sector type and the average rainfall of the assets location. For personal use only 2 Twelve-month rainfall relative to average1 Assets supported by High Security and aquifer water entitlements
Slide 17: JBS transaction update
Managed by: JBS transaction update Acquisition of the feedlots has received FIRB approval. The Guarantee commenced in August. For personal use only 1• Feedlots: Foreign Investment Review Board approval has been granted for RFF to acquire the five feedlots from JBS: Overview of JBS transactions – Thr
Slide 18: Recent property acquisitions update
Managed by: Recent property acquisitions update All properties have the potential for additional development. Development capex will attract rent and all leases have a market rent review mechanism. For personal use only Comanche Mayneland Cerberus Dyamberin Sector • Cattle • Cotton • Cattle • Cattle
Slide 19: Natural resource developments
Managed by: Natural resource developments Productivity developments continue on the existing natural resource predominant assets. Recently acquired assets have similar potential for productivity improvements. For personal use only Notes: 1. Pasture improvement refers to planting of Stylo on Mutton H
Slide 20: Factors supporting ongoing growth
Managed by: For personal use only Factors supporting ongoing growth Cattle grazing on an oats crop with Carnarvon Gorge in the background, Rewan, Rolleston, central Queensland, August 2018 4
Slide 21: Manager with multi sector expertise
Managed by: Manager with multi sector expertise RFM is a fund and farm manager with 21 years’ experience in Australian agriculture, with operational and development experience across multiple agricultural sectors. For personal use only 1997 1997 Key farm management team and sector experience RFM est
Slide 22: 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 23: Conclusion
Managed by: For personal use only Conclusion Poultry sheds with recently installed 100 kilowatt rooftop solar panels, Lethbridge, Victoria, January 2018 5
Slide 24: Conclusion
Managed by: For personal use only Conclusion RFM continues to grow RFF in line with stated strategy and objectives: Continued growth • Increased sector diversification, liquidity and scale. in line with stated • Improved portfolio weightings by climatic zone and natural resource strategy and vs. inf
Slide 25: Appendices
Managed by: For personal use only Appendices Macadamia trees, Swan Ridge Orchard, Bundaberg, Queensland, December 2016 6
Slide 26: Spectrum of investment opportunities
Managed by: Spectrum of investment opportunities Strategy to invest across the full range of the asset continuum, whilst ensuring the asset mix continues to fund distributions (Explanatory Memorandum, October 2013) For personal use only Spectrum of investment opportunities1 Portfolio update Higher l
Slide 27: Forecast development and capex
Managed by: For personal use only Forecast development and capex FY19f FY20f Total Description ($m) ($m) ($m) FY19 capex pertains to remaining establishment costs primarily on Kerarbury. Additional expenses for irrigation, water and frost fans on Tocabil, Yilgah & Almonds 24.1 18.3 42.4 Mooral. FY20
Slide 28: Productivity and agricultural investment returns
Managed by: Productivity and agricultural investment returns Productivity gains have significant implications for farm land values. Over the period 1900 to 2017 agricultural commodities declined in real terms compared to farm land which has appreciated For personal use only Commodities, CPI and farm
Slide 29: Recent acquisitions: key details
Managed by: For personal use only Recent acquisitions: key details Comanche Cerberus Dyamberin Mayneland • An independent party • Elrose Enterprises Pty • Stone Axe Pastoral will run a process to Lessee • Katena Pty Ltd Ltd Company select a lessee. RFM to operate in the interim. Lease term • 10 year
Slide 30: Rural Funds Management
Managed by: Rural Funds Management RFM is a fund and farm manager with 21 years experience in Australian agriculture and is the manager of the Rural Funds Group. For personal use only Key information Board and management team contacts and tenure Established 1997 Total $892m Assets under Rural Funds
Slide 31: 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 Calculated as external borrowings divided by adjusted total Gearing NAV of water entitlements assets ha Hectare(s) - an area of
Slide 32: 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
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