Rural Funds Group · ASX:RFF
Rural Funds — FY2019 Earnings Presentation
33 slides from Rural Funds's earnings presentation, Aug 27, 2019
Slide 1: Financial results presentation
Managed by: Financial results presentation For the year ended 30 June 2019 August 2019
Slide 2: Disclaimer
Managed by: 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). RFF is a stapled security, incorporating Rural Funds Trust (ARSN 112 951 578) and RF Active (ARSN 168 740 805). The
Slide 3: Contents
Managed by: Contents RFM presenters 1. Financial results David Bryant Managing Director 2. Capital management Stuart Waight Executive Manager 3. Portfolio update Daniel Yap 4. Outlook and conclusion Financial Controller 5. Appendices James Powell General Manager - Investor Relations and Marketing 3
Slide 4: Financial results
1 Financial results Harvested almonds positioned for drying, Hillston, New South Wales, April 2019.
Slide 5: FY19 financial results
Managed by: FY19 financial results FY19 AFFO per unit growth of 4.7%. Forecast FY20 DPU of 10.85 cents, an increase of 4.0%. Income and earnings metrics 12 months 12 months • Property revenue increased by 30% due to JBS ended ended transactions, acquisitions, development 30 June 2019 30 June 2018 ca
Slide 6: FY19 financial results
Managed by: FY19 financial results Gearing remains within the target range of 30-35%. Balance sheet summary As at As at • Increase in adjusted total assets of $222.2m 30 June 2019 30 June 2018 primarily due to acquisitions, capex and $ $ revaluations of almond orchards, vineyards and Total assets 86
Slide 7: FY19 financial results
Managed by: FY19 financial results Six properties and three cattle feedlots were acquired during the period. Adjusted property assets movements ($m) by sector1 • Poultry revaluation of ($7.0m) offset by capex of $0.9m.2 • Cattle acquisitions, revaluations and capex includes acquisitions of $114.9m d
Slide 8: Capital management
2 Capital management Kleinig Vineyard during harvest, South Australia, March 2019.
Slide 9: Capital management
Managed by: Capital management Debt facility increased in line with growing equity base. Equity Debt Increase of 10.0% for the period 2 July Facility was refinanced in November 2018, Trading price 2018 to 28 June 2019 ($2.09 to $2.30). with limit increased and split into two tranches of three and fi
Slide 10: Debt facility and interest rate hedges
Managed by: Debt facility and interest rate hedges Increased facility limit and tenor. Debt metrics Debt facility tenor 30 June 2019 30 June 2018 Term debt facility limit 1,2 335.0m 275.0m 250 Term debt drawn 291.4m 269.8m Debt facility 200 Headroom 43.6m 5.2m Effective cost of total debt 4.18% 4.00
Slide 11: Portfolio update
3 Portfolio update Swan Ridge macadamia orchard; variation in canopy colour is due to tree variety, Queensland, July 2019.
Slide 12: Portfolio updates
Managed by: Portfolio updates RFM continues to develop assets. New lessees improve counterpart profile. Lease of Rewan to Australian Agricultural Company (ASX: AAC) • The lease of Rewan to AAC is expected to commence 1 October 2019. Rewan was previously leased by Cattle JV Pty Ltd, a wholly owned su
Slide 13: Developments
Managed by: Developments Productivity developments continue on natural resource predominant assets, seeking to improve value and income over time. Notes: 1. Pasture development refers to stylo on RFF’s North Qld properties, and intensive pastures including Leucaena on Central Qld properties. Cultiva
Slide 14: Portfolio diversification
Managed by: Portfolio diversification RFM continues to seek to diversify RFF by sector, asset type and climatic zone. Sector (FY20f revenue) Climatic zone (FY20f revenue) 6% 2% 4% Southern Almonds 21% 5% Northern Cattle Poultry 42% 14% Vineyards Cotton Macadamias Other 79% 27% Asset type (FY20f reve
Slide 15: Outlook and conclusion
4 Outlook and conclusion Cattle grazing, Rewan, central Queensland, June 2019.
Slide 16: Continued distribution growth
Managed by: Continued distribution growth AFFO growth is derived from lease indexation, reinvestment of retained AFFO and market rent reviews. Distribution growth of 4% p.a. is forecast. DPU, DPU growth, AFFO retention and payout ratio 15.0 14.0 13.0 3.15 12.0 2.87 2.67 11.0 2.87 Cents per unit 10.0
Slide 17: Conclusion
Managed by: Conclusion RFM continues to oversee and manage existing assets, including capex and developments, while pursuing new acquisitions with the potential for productivity development. Consistent portfolio objectives: Consistent • Grow AFFO per unit through lease indexation, reinvestment of re
Slide 18: Appendices
5 Appendices Mayneland cotton crop, central Queensland, March 2019.
Slide 19: FY19 results - comprehensive income
Managed by: FY19 results - comprehensive income Summarised statement of comprehensive income 12 mths ended 12 mths ended • Property revenue has increased primarily as 30 June 2019 30 June 2018 $ $ restated1 a result of income from new investments, development capital expenditure and lease Property r
Slide 20: FY19 results - AFFO
Managed by: FY19 results - AFFO Composition of AFFO (pre-tax) 12 mths ended 12 mths ended • AFFO is pre-tax and excludes fair value 30 June 2019 30 June 2018 adjustments, depreciation and impairment $ $ to represent RFF’s property rental business. Property revenue 65,086,000 51,087,000 • Property ex
Slide 21: FY19 results - reconciliation of net profit
Managed by: FY19 results - reconciliation of net profit Reconciliation of net profit after tax to AFFO 12 mths ended 12 mths ended • Non cash items added back to reconcile 30 June 2019 30 June 2018 net profit after tax to AFFO. $ $ restated1 • Major items for FY19: Net profit after income tax 33,355
Slide 22: FY19 results - summarised balance sheet
Managed by: FY19 results - summarised balance sheet Summarised balance sheet • Accounting standards and ASIC guidance As at As at require water entitlements to be 30 June 2019 30 Jun 2018 recorded as intangible assets, and held $ $ at the lower of cost or fair value. The Cash 2,588,000 1,210,000 adj
Slide 23: FY19 results - total assets reconciliation
Managed by: FY19 results - total assets reconciliation Total assets reconciliation Adjustment Financial for water Investment Bearer Intangible Adjusted total assets - Other assets Total entitlements property plants assets1,3 assets property2,3 at fair values 1,3 $ $ $ $ $ $ $ $ Balance as at 30 June
Slide 24: Sectors and assets
Managed by: Sectors and assets The portfolio includes 50 properties diversified across six agricultural sectors and multiple climatic zones.1,2,3 Notes: 1. Shaded areas denote climatic zones differentiated by rainfall seasonality. Source: Bureau of Meteorology; see RFF Climatic Diversification discu
Slide 25: Key lessees and counterparts
Managed by: Key lessees and counterparts Lessees and counterparts include leading agricultural producers and processors. Top lessees/counterparts by FY20f revenue Largest almond grower in Australia, producing approximately 45% of the national crop. Wholly Olam Orchards owned subsidiary of SGX-listed
Slide 26: Forecast capital expenditure
Managed by: Forecast capital expenditure Forecast capex of $25.0m will attract rent as it is deployed. Total FY19 FY20f FY21f forecast Description ($m) ($m) ($m) ($m) Water acquisitions for Kerarbury complete in Almonds 17.6 9.9 - 9.9 FY19. FY20 capex primarily for remaining Kerarbury infrastructure
Slide 27: Lease expiry profile
Managed by: Lease expiry profile Portfolio WALE of 11.3 years. Lease expiry profile 16.0 Portfolio WALE 14.0 of 11.3 years 12.0 FY20 revenue ($m) 10.0 8.0 6.0 4.0 2.0 0.0 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 Financial year (FY) of lease expir
Slide 28: Independent valuations
Managed by: Independent valuations RFM has a policy to independently value assets at least every two years and rotate valuers every three years. Asset and last independent valuation date Last independent Sector Asset Brief asset description valuation (by Valuer reporting date) Mooral 808 ha mature o
Slide 29: 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). Spectrum of investment opportunities1 Portfolio update Higher lease rate compensates
Slide 30: Acquisition environment
Managed by: Acquisition environment Capital constraints have limited operators’ ability to undertake productivity improvements. The need for intergenerational transfer provides acquisition and development opportunities. Capital sources for investment update1 Farms by size and average age of farmers2
Slide 31: Rural Funds Management
Managed by: Rural Funds Management RFM is a fund and farm manager with 22 years’ experience in Australian agriculture. Key information Board and management team contacts and tenure Established 1997 Assets under $1.2 billion management Ownership Directors and staff Guy Paynter David Bryant Michael Ca
Slide 32: Glossary and table of abbreviations
Managed by: Glossary and table of abbreviations Term Definition Term Definition Adjusted Net Asset Value (NAV) adjusted for the independent valuation ha Hectare(s) - an area of 10,000m2 NAV of water entitlements Adjusted Total assets adjusted for the independent valuation of water Improved Pasture w
Slide 33: 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 Website: ruralfunds.com.au Managing good assets with good people For further information: For media enquiries: Investor relations enquir