Rural Funds Group · ASX:RFF
Rural Funds — H1 FY2014 Earnings Presentation
32 slides from Rural Funds's earnings presentation, Feb 27, 2014
Slide 1: Rural Funds Group 2014 Half Year Results
Rural Funds Group (ASX: RFF) 2014 Half Year Results 27 February 2014
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Rural Funds Management Limited (ACN 077 492 838) (“RFM”) as the responsible entity of Rural Funds Group (ARSN 112 951 578) (“RFF”). The information contained in this presentation is not investment or financial product advice and is not intended to be
Slide 3: 1. Rural Funds Group Overview
1. Rural Funds Group Overview
Slide 4: The evolution of Rural Funds Group
The evolution of Rural Funds Group Rural Funds Group was created through the merger of 3 existing unlisted funds The RFM Chicken Income Fund (CIF) and RFM Australian Wine Fund (AWF) were merged with RFM RiverBank (RiverBank) RFM RiverBank was subsequently renamed the Rural Funds Group and listed
Slide 5: Overview of Rural Funds Group (RFF)
Overview of Rural Funds Group (RFF) RFF generates lease revenue and potential capital growth through owning agricultural assets Key Statistics at 31 December 2013 Rural Funds Group (RFF or the Fund) is a listed property trust with a diversified portfolio of Australian agricultural assets Net Asset
Slide 6: Investment highlights
Investment highlights Quality, pure play Australian agricultural property trust 1 • Exposure to quality agricultural properties located in major chicken, wine and almond producing regions of Australia • Assets include commercial scale poultry growing infrastructure, productive almond orchards, premi
Slide 7: Quality Australian agricultural portfolio
Quality Australian agricultural portfolio Exposure to quality agricultural properties located in the major chicken, wine and almond producing regions of Australia Portfolio Overview Key Portfolio Statistic as at 31 December 2013 The properties are centred around the south east corner of Number of
Slide 8: Diversified, stable income stream
Diversified, stable income stream Income is underpinned by fixed rental payments with rental increases and potential capital growth over time Tenant Portfolio Diversification by FY14 Revenue Diversified, stable revenue stream underpinned by: – Fixed lease payment with annual escalation mechanisms
Slide 9: 2. Half Year Results
2. Half Year Results Rural Funds Management
Slide 10: 2014 half year results
2014 half year results Key metrics as at 31 December 2013 All results in line with expectations for Income the period Net loss after income tax (3,591,962) Adjust for merger transactions 4,798,149 Transitional period: Adjusted net profit after tax 1,206,187 – 170 days pre merger Adjusted FFO per
Slide 11: 2014 half year results: summarised income statement
2014 half year results Summarised income statement Transitional period: 6 months ended 6 months ended – 170 days pre merger Dec-13 Dec-12 – 13 days post merger Property revenue 5,467,207 3,992,599 Dec 13 includes merger related Other income 98,052 35,085 expenses of Total income 5,565,258 4,027,
Slide 12: 2014 half year results: summarised balance sheet
2014 half year results Summarised balance sheet Merger increased assets by 156% As at As at NAV $118.4m Dec-13 Jun-13 Total interest bearing liabilities $97.6m Cash 6,618,835 182,462 Loan to Security Ratio 41% Property investments 225,887,478 89,332,456 – 40% core Inventory 381,568 987,119 D
Slide 13: 2014 half year results: funds from operations
2014 half year results Funds from operations (FFO) 6 months ended 31 Dec 2013 FFO per unit reflects pre merger Net property income 4,959,707 entity and is adjusted for Gross income 4,959,707 transaction costs Property expenses and overheads (1,742,346) FFO of 3.10 cents per unit EBIT 3,217,361 (
Slide 14: Financing facilities
2014 half year results Financing facilities 31 December 2013: bank facilities of $94 million fully drawn 14 February 2014: bank facilities amended on listing – $97.5 million facility for a 5 year term with $2 million per annum amortisation commencing 30 September 2016 – 50% Loan to Security Rati
Slide 15: 3. Strategy and Outlook
3. Strategy and Outlook
Slide 16: RFF distribution profile
RFF distribution profile Declared: Record date 22 November 2013 - $0.0213 unfranked (on post merger basis) Record date 31 December 2013 - $0.0213 unfranked Forecast: Record date 10 March 2014 - $0.0213 unfranked Record date 30 June 2014 - $0.0213 unfranked Quarterly thereafter - $0.021
Slide 17: Strategy & outlook
Strategy & outlook Forecasts on track Manager focus on: – Improving awareness of RFF to increase liquidity and fair valuation – Cost control – Ongoing assessment of opportunities along the agricultural leasing spectrum Preparing unitholder resolutions to create stapled security and upgrade con
Slide 18: Investment opportunities
Investment opportunities RFF has identified a range of potential investment opportunities RFF will pursue acquisitions of additional assets to grow the quantum and diversity of its earnings The investment strategy is to invest across the full range of the asset continuum shown below, with the ob
Slide 19: 4. Appendices
4. Appendices
Slide 20: Appendix 1: reconciliation of net loss after tax to adjusted FFO
Appendix 1: reconciliation of net profit/(loss) after tax to adjusted FFO Reconciliation from net loss after tax to Adjusted FFO 6 months ended Dec 2013 Net loss after tax (3,591,962) Add: Merger related transactions 3,466,807 Income tax assets written off due to merger 2,059,684 Fair value loss on
Slide 21: Appendix 2 – sector outlook: agricultural land
Appendix 2 – sector outlook: agricultural land Agricultural land values have grown at an average rate of 5.3% over the period of 1978-2011 • Growth in the value of agricultural land is driven by Growth in Australian agricultural land values: 1978 to 20112 increasing farm productivity and increases i
Slide 22: Appendix 2 – sector outlook: poultry
Appendix 2 – sector outlook: poultry Chicken meat has continued to grow as a proportion of total Australian meat consumption as it is a cheap source of protein relative to other meats. This trend is forecast to continue in the near-to-medium term Forecast Australian poultry production Increasing Aus
Slide 23: Appendix 2 – sector outlook: vineyards
Appendix 2 – sector outlook: vineyards Australian wine industry is still challenged by AUD and excess supply. Higher priced wine labels remain very profitable. Global wine supply and demand Australian wine grape crush and average price 8.00 3,400 2.5 1,000 3,300 900 Average wine grape price ($/tonne
Slide 24: Appendix 2 – sector outlook: almonds
Appendix 2 – sector outlook: almonds The almond outlook is positive. Global almond demand is growing at 8-10% pa with supply only growing at 4% pa. Forecast domestic production Global demand and supply outlook 100,000 Forecasts 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - 2003 20
Slide 25: Appendix 3: properties and assets - poultry farms
Appendix 3: properties and assets - poultry farms The sheds provides shelter, heating and cooling for the Asset Metrics chickens 17 poultry farms consisting of 154 All sheds are fully automated. Farm managers can monitor Location sheds located in Griffith, NSW and and modify temperature, food an
Slide 26: Appendix 3: properties and assets - vineyards
Appendix 3: properties and assets - vineyards RFF owns 7 vineyards Asset Metrics – 6 located in South Australia within the Barossa 7 vineyards located in South Valley, Adelaide Hills and Coonawarra Location Australia and Victoria – 1 located in Grampian, Victoria 31 Dec 13 value $36.9 million Al
Slide 27: Appendix 3: properties and assets – almond orchards and water entitlements
Appendix 3: properties and assets – almond orchards and water entitlements RFF owns 2 Almond Orchards located near Hillston NSW Asset Metrics – Yilgah – 1,006 planted ha Location Hillston, NSW – Mooral – 808 planted ha 1221 ha leased to SHV, and 593 ha leased to RFM 31 Dec 13 value $84.7 million
Slide 28: Appendix 3: properties and assets – StockBank
Appendix 3: properties and assets – StockBank RFF owns $5 million of StockBank Units as at 31 Dec Asset Metrics 2013 StockBank purchases livestock that are leased to Location Various (NSW, VIC, SA) landowners 31 Dec 13 value $5 million StockBank generally divides its investment between approxi
Slide 29: Appendix 4: the responsible entity
Appendix 4: the responsible entity RFM is one of the oldest and most experienced agricultural funds management organisation in Australia Rural Funds Management Limited (RFM) is an experienced fund and asset manager that specialises in Australian agriculture Established in 1997, RFM is the respon
Slide 30: Appendix 4: management team and board
Appendix 4: management team and board RFF is externally managed and governed by a highly experienced management team and board Board of Directors Executive Management • Joined RFM in 2003 • Former director of broking firm JBWere with more than 30 years’ experience in corporate finance • Responsible
Slide 31: Appendix 4: relationship with RFM
Appendix 4: relationship with RFM The Responsible Entity, on behalf of the Fund, has entered into agreements with RFM in relation to management activities RFM will charge a fee and expense recovery for managing and administering the Fund • Management Fee of 0.6% p.a. of gross asset value Funds Man
Slide 32: Corporate information
Corporate information Rural Funds Management Pty Ltd ACN 077 492 838 AFSL 226701 Canberra Office Level 2 2 King Street Canberra ACT 2600 Telephone: +61 2 6203 9700 Facsimile: +61 2 6281 5077 Website: www.ruralfunds.com.au For further information: For media enquiries: David Bryant Stuart Waight Manag