Rural Funds Group · ASX:RFF
Rural Funds — H1 2023 Earnings Presentation
25 slides from Rural Funds's earnings presentation, Feb 22, 2023
Slide 1: Half-year ended 31 December 2022
Managed by: half-year ended 31 December 2022 22 February 2023
Slide 2: Disclaimer and glossary of terms
Disclaimer and glossary of terms Disclaimer 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) and has been authorised for release by the Board of RFM. RFF is a stapled security, incorporati
Slide 3: Contents
Contents 1. 1H23 financial results summary Presenters 2. Capital management 3. Portfolio and strategy update 4. Outlook and guidance David Bryant Tim Sheridan Daniel Yap James Powell 5. Appendices Managing Director Chief Operating Chief Financial General Manager – Officer Officer Investor Relations,
Slide 4: 1H23 financial results summary
1H23 financial results summary Wheat crop at Baamba Plains, central Queensland, November 2022.
Slide 5: Earnings and balance sheet summary
Earnings and balance sheet summary Earnings increase of 50% primarily due to higher property revenue and positive revaluations. Income and earnings metrics 6 months ended 6 months ended 31 December 2022 31 December 2021 Property revenue increased 7% primarily due to increased rent, rent on capex and
Slide 6: Property movements
Property movements Adjusted property assets increase of $75m mainly driven by revaluations of $32m and development capex of $31m. Adjusted property assets – main movements ($m) by sector1 Primary contributors to adjusted property assets movements: Revaluations of $32.3m including: • Macadamia orchar
Slide 7: Capital management
Capital management Wagyu steers at Rewan, central Queensland, February 2023.
Slide 8: Debt facility
Debt facility Increased debt facility to provide funding for TRG macadamia orchard developments. Debt facility metrics • Debt facility limit increased by $150.0m during period to 31 December 2022 30 June 2022 $670.0m. Term debt facility limit1,2 $670.0m $520.0m • Tenor of second debt facility extend
Slide 9: Interest rate hedges
Interest rate hedges $175m additional hedges entered since 1 July 2022. Hedging to increase from $190m in FY23 to $402m in FY24. Interest rate hedges (FY23 to FY32) 9
Slide 10: Portfolio and strategy update
Portfolio and strategy update Improved pasture under pivot irrigation, Yarra, central Queensland, February 2023.
Slide 11: Portfolio update
Portfolio update Development pipeline of macadamia, cattle and cropping assets in central and south-east Queensland. Central and south-east Queensland properties Macadamia orchards (see page 12): • 3,000 ha 40-year lease with TRG commenced January 2023.1 ‒ rent calculated on the value of land (and a
Slide 12: Macadamia development update
Macadamia development update Converting properties to higher and better use seeks to increase income and value. Seven cattle and sugar cane properties revalued 1H23 with TRG lease resulted in 21% increase.1 Rockhampton – conversion of cattle properties Delivery of 20 m long, 1 m diameter poly pipes
Slide 13: Cattle and cropping productivity improvements
Cattle and cropping productivity improvements Productivity improvements underway on five cattle and cropping properties prior to seeking long-term lessees.1 Cattle properties • Development of cultivation area, irrigation infrastructure and improved pasture seeks to improve cattle carrying capacity a
Slide 14: Property compendium
Property compendium Productivity or higher and better use developments applicable for 47% of assets. Valuations, valuers and capex by sector1 Notes: 1. Where no independent valuation has been conducted since acquisition, the purchase price and acquisition date have been listed. JBS feedlots are not
Slide 15: Outlook and guidance
Outlook and guidance Almond tree blossoms at the Tocabil orchard, Riverina NSW, August 2022.
Slide 16: Portfolio overview
Portfolio overview 81% FY23f income from corporate and listed lessees. Assets map, sector information and key lessees1 Note: 1. Shaded areas denote climatic zones differentiated by rainfall seasonality (source: Bureau of Meteorology); see Climatic Diversification discussion paper dated 20 June 2016.
Slide 17: Revenue by indexation and lease expiry
Revenue by indexation and lease expiry Weighted average lease expiry of 12.3 years with diversified mix of indexation mechanisms. Lease indexation mechanisms (by FY23f revenue)1 Weighted average lease expiry (WALE)2 12.3 year WALE Notes: 1. Figures are subject to rounding. CPI (cap and collar) plus
Slide 18: Outlook and guidance
Outlook and guidance 1H23 results highlights include the lease for first 3,000 ha of macadamia developments, material increase to hedging position FY24-26 and positive asset revaluations. FY23 forecasts: • Revised forecast AFFO per unit 10.7 cents (0.6 cents reduction to prior forecast)1 • Forecast
Slide 19: Appendices
Appendices Water storage at Lynora Downs, central Queensland, November 2022.
Slide 20: 1H23 results – summarised comprehensive income
1H23 results – summarised comprehensive income Summarised statement of comprehensive income • Property revenue has increased primarily due to the income from market lease review, lease 6 months ended 6 months ended indexation and development capital expenditure. 31 December 2022 31 December 2021 • F
Slide 21: 1H23 results – AFFO composition
1H23 results – AFFO composition Composition of AFFO (pre-tax) 6 months ended 6 months ended • AFFO is pre-tax and excludes fair value adjustments, depreciation and impairment 31 December 2022 31 December 2021 to represent RFF’s property rental business and ancillary farming operations. $ $ • Propert
Slide 22: 1H23 results – reconciliation of net profit to AFFO
1H23 results – reconciliation of net profit to AFFO Reconciliation of net profit after tax to AFFO 6 months ended 6 months ended • Non-cash items added back to reconcile net profit after tax to AFFO. 31 December 2022 31 December 2021 $ $ • Key adjustments include: Net profit after income tax 54,543,
Slide 23: 1H23 results – summarised balance sheet
1H23 results – summarised balance sheet Summarised balance sheet • Water entitlements are recorded as intangible assets and held at the As at As at lower of cost less accumulated impairment or fair value in accordance 31 December 2022 30 June 2022 with accounting standards and ASIC guidance. The adj
Slide 24: 1H23 results – total assets reconciliation
1H23 results – total assets reconciliation Total assets reconciliation Adjustment for Investment Bearer Intangible Property-owner Financial assets Plant and water Adjusted Deposits5 Other assets Total property plants assets1, 3 occupied – property2, 3 equipment entitlements at total assets fair valu
Slide 25: Managed by:
Managed by: ACN 077 492 838 AFSL 226701 Level 2, 2 King Street Deakin ACT 2600 David Bryant Tim Sheridan Daniel Yap Managing Director, Chief Operating Officer, Chief Financial Officer, 26 years 14 years 10 years T 02 6203 9700 E investorservices@ruralfunds.com.au W www.ruralfunds.com.au Emma Spear D