Rural Funds Group · ASX:RFF
Rural Funds — FY2023 Earnings Presentation
27 slides from Rural Funds's earnings presentation, Aug 24, 2023
Slide 1: Financial results presentation
Managed by: Financial results presentation for the year ended 30 June 2023 24 August 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 Contents Presenters 1. Financial results summary 1. Financial results summary David Bryant Tim Sheridan Managing Director Chief Operating Officer 2. Strategy 2. Portfolio and strategy update 3. Portfolio and sustainability James Powell Daniel Yap 3. Outlook and conclusion Chief Financial Of
Slide 4: Financial results summary
1 Financial results summary Learn more: Tocabil almond orchard late-season, Riverina NSW, April 2023.
Slide 5: Earnings summary
Earnings summary Property revenue increased 11% primarily due to macadamia developments. • Property revenue increased $7.9m, or 10.6%, primarily due to rental income Income and earnings metrics FY23 FY22 earned on macadamia developments, rent reviews (cattle and vineyards) and lease indexation. Prop
Slide 6: Balance sheet summary
Balance sheet summary Adjusted NAV increased 10% primarily due to external asset revaluations. Balance sheet metrics 30 June 2023 30 June 2022 • Adjusted net assets increased $101.3m, or 9.9%, primarily due to asset revaluations Total assets – $ 1,671,009,000 1,403,829,000 of $97.2m. Adjustment for
Slide 7: Capital management
Capital management Increased interest rate hedging. Sufficient headroom for capex. Debt facility limits, maturity (FY) and headroom • Debt facilities increased to $794.5m (FY22: $520m), comprising $694.5m floating rate facility plus $100.0m fixed rate facility. ‒ Sufficient headroom ($156.8m) for FY
Slide 8: Portfolio and strategy update
2 Portfolio and strategy update Learn more: Macadamia orchard development, Maryborough, Queensland, May 2023.
Slide 9: Strategy
Strategy To generate income and capital growth from improving and leasing agricultural assets. Productivity improvement Leasing model • Maintain a majority of long WALE triple net leases of agricultural assets to high-quality lessees. ‒ Distribution growth target of 4% p.a. • Improve leasing outcome
Slide 10: Macadamia developments
Macadamia developments Macadamia developments progressing well and generating additional lease income. Macadamia investment thesis • 3,000 ha 40-year lease with TRG commenced FY23.1 • Growing sector of a growing industry: • Capital expenditure funded through existing balance sheet capacity, majority
Slide 11: AFFO growth
AFFO growth Forecast FY24 AFFO growth 5%. Several other transactions planned which seek to further improve AFFO. 11
Slide 12: Transactions
Transactions Material progress expected in FY24 on transactions which seek to improve gearing, operating exposure and earnings. Cropping properties Mature macadamia orchards Developments and divestments Additional macadamia developments • Lease of two cropping properties in • Lease of five mature or
Slide 13: Sustainability
Sustainability RFM continues progress on relevant sustainability priorities. Additional information to be included in FY23 Annual Report. Environmental • Emissions: ‒ Quantification of scope 1 and 2 emissions from assets for which RFF receives operational proceeds. ‒ Worked with multiple lessees to
Slide 14: Outlook and conclusion
3 Outlook and conclusion Learn more: Cotton harvest at Mayneland, central Queensland, June 2023.
Slide 15: Outlook and conclusion
Outlook and conclusion Macadamia development income commenced. Several other transactions in various stages of progress. • Forecast AFFO increased 5%: developments expected to contribute to Rural Funds Group attributes continued growth. ‒ FY24 forecast AFFO 11.2 cpu Defensive property sector Quarter
Slide 16: Appendices
4 Appendices Appendix A – Summarised comprehensive income Appendix B – AFFO composition Appendix C – Reconciliation of net profit to AFFO Appendix D – Summarised balance sheet Appendix E – Total assets reconciliation Appendix F – Portfolio Appendix G – Lessees Appendix H – Indexation and lease expir
Slide 17: Appendix A – Summarised comprehensive income
Appendix A – Summarised comprehensive income • Sale of produce and cost of goods sold relates to sale of farming proceeds (primarily Summarised statement of comprehensive income cattle, sugar and macadamias). 12 months ended 12 months ended 30 June 2023 30 June 2022 • Other income mainly relates to
Slide 18: Appendix B – AFFO composition
Appendix B – AFFO composition • Adjusted funds from operations (AFFO) is pre-tax and excludes fair value Composition of AFFO (pre-tax) adjustments, depreciation and impairment to represent RFF’s operating result. 12 months ended 12 months ended 30 June 2023 30 June 2022 • Property expenses relate to
Slide 19: Appendix C – Reconciliation of net profit to AFFO
Appendix C – Reconciliation of net profit to AFFO • Non-cash items added back to reconcile net profit after tax to AFFO. Reconciliation of net profit after tax to AFFO 12 months ended 12 months ended 30 June 2023 30 June 2022 • Key adjustments include: $ $ ‒ Property revaluations (excluding other co
Slide 20: Appendix D – Summarised balance sheet
Appendix D – Summarised balance sheet • Water entitlements are recorded as intangible assets and held at the Summarised balance sheet lower of cost less accumulated impairment or fair value in accordance As at As at with accounting standards and ASIC guidance. The adjustment for 30 June 2023 30 June
Slide 21: Appendix E – Total assets reconciliation
Appendix E – Total assets reconciliation Total assets reconciliation Adjustment for Investment Bearer Intangible Property-owner Financial assets Plant and water Adjusted Deposits Other assets Total property plants assets1, 3 occupied (property)2, 3 equipment entitlements at total assets fair value1
Slide 22: Appendix F – Portfolio
Appendix F – Portfolio Portfolio consists of majority long WALE triple net leased assets. Asset sector and locations2 Metrics Year listed 2014 Adjusted total assets $1.8b Number of properties/states 67/5 Weighted average lease expiry (WALE) 13.9 years Adjusted NAV per unit $2.93 Gearing 35.5% Sector
Slide 23: Appendix G – Lessees
Appendix G – Lessees Majority of lessees are listed or corporate entities.1 US asset manager joint venture Subsidiary of JBS SA, Brazil listed Subsidiary of Olam Group, with global institutional investor (BVMF: JBSS3) Singapore listed (SGX: O32) Sector: Lessee since: % income: Sector: Lessee since:
Slide 24: Appendix H – Indexation and lease expiry
Appendix H – Indexation and lease expiry Weighted average lease expiry of 13.9 years with diversified mix of indexation mechanisms. Lease indexation mechanisms (by FY24f revenue)1 Weighted average lease expiry (WALE) 13.9 years WALE Note: 1. Figures are subject to rounding. CPI (cap and collar) plus
Slide 25: Appendix I – Property compendium
Appendix I – Property compendium Policy to conduct independent valuations at least every two years. Note: 1. For full details of asset valuation methodology please refer to Financial Statements. Total adjusted property assets include cattle financial lease and other assets $17.5m, plant and equipmen
Slide 26: Appendix J – Investment and development strategy
Appendix J – Investment and development strategy To generate income and capital growth from improving and leasing agricultural assets. Spectrum of investment opportunities1 Development strategies Productivity developments Increasing the amount of the commodity that can be produced which supports inc
Slide 27: Rural Funds Management Limited
Managed by: Rural Funds Management Limited For further information: ACN 077 492 838 James Powell: AFSL 226701 E jpowell@ruralfunds.com.au Level 2, 2 King Street Deakin ACT 2600 T +61 2 6203 9742 T 02 6203 9700 Tim Sheridan: E investorservices@ruralfunds.com.au E tsheridan@ruralfunds.com.au W www.rur