Rural Funds Group · ASX:RFF
Rural Funds — FY2018 Earnings Presentation
34 slides from Rural Funds's earnings presentation, Aug 16, 2018
Slide 1: Financial results presentation for the year ended 30 June 2018
Managed by: For personal use only Financial results presentation For the year ended 30 June 2018 16 August 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. Financial results David Bryant Managing Director 2. Capital management 3. Portfolio update Stuart Waight Executive 4. Outlook 5. Appendices Daniel Yap Financial Controller James Powell General Manager - Investor Relations & Marketing 3
Slide 4: Financial results
Managed by: For personal use only Financial results 1 Completed 2,500 ha almond orchard development, Kerarbury, Darlington Point, New South Wales, October 2017
Slide 5: FY18 financial results: income and earnings metrics
Managed by: FY18 financial results For personal use only Income and earnings metrics • Property revenue and AFFO higher for the 12mths ended 12mths ended 30 June 2018 30 June 2017 period due to additional lease income from acquisitions, development capital expenditure Property revenue 51,087,000 41,
Slide 6: FY18 financial results: balance sheet summary
Managed by: FY18 financial results For personal use only Balance sheet summary Pro forma As at As at • Increase in total assets to 30 June 2018 30 June 30 June 30 June predominantly due to the acquisition of the 20181 2018 2017 Natal cattle property aggregation (settled Total assets 743,100,000 673,
Slide 7: Adjusted property assets movements
Managed by: FY18 financial results For personal use only Adjusted property assets movements ($m) • Cattle acquisitions, valuation uplift and capex of $74.6m includes: – acquisition of Natal aggregation2 for $65.0m settled December 2017. – valuation increase for Rewan of $5.4m or $17%. – breeder acqu
Slide 8: Capital management
Managed by: For personal use only Capital management Geier Vineyard , Barossa Valley, South Australia, March 2018 2
Slide 9: Capital management
Managed by: Capital management Equity Debt For personal use only Increase of 15% for the period 30 June Management are in the process of extending Trading price 2017 to 30 June 2018 ($1.85 to $2.12). debt maturity and assessing the merits of a bond placement. This would have the benefit Forecast FY1
Slide 10: Debt facility
Managed by: Debt facility Debt metrics For personal use only Pro forma 30-Jun-18 30-Jun-17 • Debt facility remains within covenants. 1,2 Term debt facility limit 275.0 275.0 250.0 • Pro forma included to present debt facility and Term debt drawn 194.8 269.8 164.5 Debt facility hedging metrics inclus
Slide 11: Portfolio update
Managed by: For personal use only Portfolio update Existing Leucaena under centre pivot irrigation, Comanche, Rockhampton, central Queensland, May 2018 3
Slide 12: Climatic diversification and water security
Managed by: Climatic diversification and water security1,2 A climatic diversification strategy was announced in June 2016, outlining the intention to invest in varying rainfall zones to reduce the likelihood of multiple lessees experiencing extreme conditions at the same time. For personal use only
Slide 13: Climatic diversification and water security: rainfall
Managed by: Climatic diversification and water security1,2 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 Portfolio update Twelve-month rainfall relative to average Notes: 1. Source:
Slide 14: Climatic diversification and water security: water by sector
Managed by: Climatic diversification and water security1 The majority of water owned by RFF is highly reliable, classified as Groundwater and High Security. For personal use only Water by sector (ML) Water by security level (ML) 5,946 4,403 1,432 948 3,862 923 10,405 18,185 44,803 8,680 67,886 18,99
Slide 15: Natural resource developments
Managed by: Natural resource developments Productivity developments continue on the Qld natural resource predominant assets. For personal use only Notes: 1. Date in bracket refer to property settlement date. 2. Pasture improvement refers to planting of Stylo on Mutton Hole and Oakland Park, and Leuc
Slide 16: JBS transactions
Managed by: JBS transactions JBS is Australia’s largest lot feeder and cattle processor. The feedlots are integral to the supply of cattle to JBS processing facilities. For personal use only RFF feedlots and JBS processing facilities1 • On 12 July 2018 RFM announced a $149.5m Entitlement Offer to fu
Slide 17: JBS transactions: spectrum of investment opportunities
Managed by: JBS transactions The JBS transactions are an infrastructure type investment which generates higher levels of income and provides balance sheet capacity for further investments, likely to be natural resource type. For personal use only Spectrum of investment opportunities1 Portfolio updat
Slide 18: Outlook
Managed by: For personal use only Outlook Cattle grazing on an oats crop with Carnarvon Gorge in the background, Rewan, Rolleston, Queensland, August 2018 4
Slide 19: Portfolio diversification by FY19f revenue
Managed by: Portfolio diversification by FY19f revenue The JBS transactions and Comanche acquisition have improved sector diversification. RFM intends to further increase climatic and sector diversification. For personal use only Sector Climatic zone 2% 3% 2% 6% Almonds Southern 46% 29% Northern Cat
Slide 20: Strategy and objectives
Managed by: Strategy and objectives RFF’s strategy is to generate stable income and capital growth by owning, and where appropriate, improving the productivity of farms. For personal use only DPU, DPU growth and retained AFFO per unit • RFM continues to oversee and manage existing 15.0 assets, inclu
Slide 21: Strategy and objectives: acquisitions
Managed by: Strategy and objectives RFM will continue to pursue additional acquisitions funded through balance sheet capacity. Acquisitions are intended to be in existing sectors, with the potential to improve both productivity and RFF’s rent review profile. For personal use only Natural resource ma
Slide 22: Appendices
Managed by: For personal use only Appendices Poultry sheds with recently installed 100 kilowatt rooftop solar panels, Lethbridge, Victoria, January 2018 5
Slide 23: FY18 results – comprehensive income
Managed by: For personal use only FY18 results – comprehensive income Summarised statement of comprehensive income • Property revenue has increased primarily as 12 mths ended 12 mths ended a result of rent on new acquisitions, rent on 30 June 2018 30 June 2017 $ $ development capital expenditure and
Slide 24: FY18 results – AFFO
Managed by: For personal use only FY18 results – AFFO Composition of AFFO (pre-tax) 12 mths ended 12 mths ended • AFFO is pre-tax and excludes fair value 30 June 2018 30 June 2017 adjustments, depreciation and impairment $ $ to represent RFF’s property rental business. Property revenue 51,087,000 41
Slide 25: FY18 results - reconciliation of net profit
Managed by: FY18 results - reconciliation of net profit For personal use only Reconciliation of net profit after tax to AFFO 12 mths ended 12 mths ended • Non cash items added back to reconcile 30 June 2018 30 June 2017 net profit after tax to AFFO. $ $ • Major items for FY18: Profit after tax 36,03
Slide 26: FY18 results - summarised balance sheet
Managed by: FY18 results - summarised balance sheet For personal use only Summarised balance sheet • Accounting standards and ASIC guidance As at As at require water entitlements to be Pro forma1 30 June 2018 30 Jun 2017 recorded as intangible assets, and held $ $ $ at the lower of cost or fair valu
Slide 27: FY18 results - total assets reconciliation
Managed by: FY18 results - total assets reconciliation Total assets reconciliation For personal use only Adjustment Financial for water Investment Bearer Intangible Other Adjusted assets - Total entitlements property plants assets1,3 assets total assets property2,3 at fair values1,3 $ $ $ $ $ $ $ $
Slide 28: Development and capex
Managed by: Development and capex Lease term FY18 FY19f FY20f Total Development update remaining & ($m) ($m) ($m) ($m) For personal use only indexation 2,500 ha land and irrigation development complete. All trees now planted, with Kerarbury (almonds) 39.9 17.3 18.31 75.5 remaining capital expenditur
Slide 29: Key assets and counterparts
Managed by: Key assets and counterparts Almond orchards Poultry farms Vineyards Cattle assets Cotton assets For personal use only Brief 1,814 ha mature almond 154 sheds on 17 farms. 666 ha mature vineyards Seven cattle properties, five 4,880 ha cropping property. description: orchards and 3,100 ha o
Slide 30: Key assets and leases further details
Managed by: Key assets and leases further details Almond orchards Poultry farms Vineyards Cattle assets Cotton assets For personal use only Description: 1,814 ha across two 154 sheds on 17 farms Seven vineyards with 666 ha Seven Queensland cattle 4,880 ha cropping property mature almond orchards con
Slide 31: Valuations
Managed by: Valuations RFM has a policy to independently value assets at least every two years. For personal use only Asset and valuation timing Last independent Sector Asset Brief description valuation (by reporting date) Almonds Mooral 800 ha mature orchard, NSW June 2018 Almonds Yilgah 1,000 ha m
Slide 32: Acquisition criteria
Managed by: Acquisition criteria RFM considers six principles when evaluating acquisition opportunities. For personal use only Key principles underpinning assessment of acquisition opportunities Income secured by long-term leases to quality tenants without • Maintain agricultural REIT 1 structure
Slide 33: 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 $848m Assets under Rural Funds
Slide 34: 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