Rural Funds Group · ASX:RFF
Rural Funds — Wilson HTM Rapid Insights Conference (November 2015)
37 slides from Rural Funds's conference presentation, Nov 12, 2015
Slide 1: Rural Funds Group (RFF) Corporate presentation
For personal use only Rural Funds Group (RFF) Corporate presentation November 2015
Slide 2: Disclaimer
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 (ARSN 168
Slide 3: Agenda
Agenda For personal use only 1. Overview 2. Assets and lease arrangements 3. FY15 results summary 4. Outlook 5. Appendices 3
Slide 4: Overview
For personal use only Overview
Slide 5: RFF overview
RFF overview RFF is the only diversified agricultural REIT listed on the ASX For personal use only Asset locations Listed February 2014 $0.75, 52 week high $1.40 Specialised REIT: agricultural assets Quality portfolio of 29 properties deriving revenue New South Wales from 3 primary agricultura
Slide 6: RFF snapshot
RFF snapshot RFF has an attractive forecast distribution supported by a long-dated WALE For personal use only Key statistics 30 June 2015 Key forecasts FY16 Actual Pro forma1 30 June 2015 30 June 2015 Distributions per unit FY16 8.93 cents Total assets $252.7m $291.0m Distribution growth rate 4% Net
Slide 7: RFF performance & distributions
RFF performance & distributions RFF has materially outperformed both the ASX A-REIT index and ASX All Ordinaries accumulation index For personal use only Total shareholder return 1 July 2014 – 31 Oct 20151 AFFO2 and distributions per unit 70% 60% 50% 40% 30% 20% 10% 0% February 2014: compliance list
Slide 8: Agricultural property leasing
Agricultural property leasing RFF uses a leasing model in an underserviced domestic sector For personal use only Australian property sectors Observations: – Academic research demonstrates that leasing assets provides capital management benefits and flexibility to lessees and is linked to higher co
Slide 9: Assets and lease arrangements
For personal use only Assets and lease arrangements
Slide 10: Assets and lessees overview
Assets and lessees overview Rural Funds Group (ASX: RFF) is a stapled security For personal use only Rural Funds Trust RF Active Poultry Almond Vineyards Other Assets farms orchards • RFM Poultry (NSX: • Select Harvests • Treasury Wine • 60+ Livestock RFP) (ASX: SHV) Estates (ASX: TWE) Operators (le
Slide 11: Key assets further details
Key assets further details For personal use only Poultry farms Almond orchards Vineyards 154 sheds on 17 farms. Consisting of 134 sheds Two established almond orchards located near Seven vineyards with 666 ha planted to vines on 13 farms in Griffith, NSW, and 20 sheds on 4 Hillston, NSW, of which 1,
Slide 12: Diversified assets and counterparts
Diversified assets and counterparts For personal use only Pro forma adjusted asset values1 Pro forma FY16 forecast revenue by lessee2 Notes: 1 Based on pro forma property valuations to adjusted total assets of $262.2m as at 30 June 2015 and assumes Tocabil ($32.1m) and Kerarbury ($109.5) development
Slide 13: Exposure to water assets
Exposure to water assets For personal use only • RFF provides investors with exposure to the Australian water Pre-transaction: asset allocation at 30 June 2015 entitlement markets. Water entitlements are regularly traded in secondary markets and are independently valued by qualified 5% valuers 15% P
Slide 14: Kerarbury acquisition details
Kerarbury acquisition details Key points Kerarbury – Darlington Point, NSW For personal use only • RFF announced a completed $12.6m Placement and $22.4m fully underwritten Funding Entitlement Offer on 28 September 2015 • Remainder of funding from retained earnings and debt • Refers to two properties
Slide 15: Tocabil development update
Tocabil development update For personal use only Tocabil lease features and development update • Placement and Entitlement Offer completed April 2015 to fund the development of a 600 ha almond orchard leased to Olam Orchards Funding Australia Pty Ltd (Olam) • The property, Tocabil, is situated near
Slide 16: FY15 results summary
For personal use only summary FY15 results
Slide 17: FY15 highlights
Highlights For personal use only FY15 highlights Net profit before income tax of $9.4m Adjusted funds from operations of $11.0m in line with previous forecast Net Asset Value (NAV) of $1.15 per unit, adjusted NAV of $1.22 per unit Gearing 35.1% FY16 distribution forecast to increase 4% to 8.93 cpu 1
Slide 18: FY15 results summary
FY15 results summary For personal use only Metrics as at 30 June 2015 Income Net profit before income tax $9,441,000 AFFO $11.0m (pre-tax) and AFFO per Total comprehensive income $10,161,000 unit 9.1 cents in line with previous Adjusted funds from operations (AFFO) $11,009,000 forecast to 30 June
Slide 19: Property revaluations
Property revaluations For personal use only Adjusted property assets reconciliation FY151 $260,000,000 249,020,000 10,135,000 $250,000,000 $240,000,000 12,791,000 1,400,000 227,724,000 $230,000,000 -3,030,000 $220,000,000 Property assets 30 Poultry Almond orchard Vineyard Tocabil CAPEX Adjusted prop
Slide 20: Debt facility
Debt facility Debt metrics For personal use only • Approval received for $33m increase to Post-transaction existing debt facility Actual pro forma1 30 June 2015 30 June 2015 – Sufficient to fund development through to December 20165 Term debt facility limit $103.0m $103.0m Term debt drawn $89.7m $94
Slide 21: Outlook
For personal use only Outlook
Slide 22: Forecast distributions
Forecast distributions For personal use only FY16 forecast & actual distributions Each lease contains indexation clauses which Record date CPU provide RFF with annual increases in rent, and 30 September 2015 2.23 therefore additional free cash flow that can be distributed to Unitholders. In 2016,
Slide 23: Areas of focus for management
Areas of focus for management For personal use only 1. Managing the growth of funds from operations and therefore distributions per unit 2. Continue to address differential between trading price and adjusted NAV, through: a) Growth via accretive acquisitions b) Increased market awareness RFM continu
Slide 24: Spectrum of investment opportunities
Spectrum of investment opportunities RFF will pursue acquisitions of additional assets to grow the quantum and diversity of its earnings For personal use only The investment strategy is to invest across the full range of the asset continuum shown below, with the objective of ensuring the asset mix
Slide 25: Investment criteria
Investment criteria The Kerarbury almond orchard development is in line with RFM’s stated long term For personal use only objectives for RFF Long term objectives Grows adjusted net assets from $162m to $195m, with potential Increase net assets for further capital appreciation Immediately AFFO accret
Slide 26: Appendices
For personal use only Appendices
Slide 27: FY15 results
FY15 results For personal use only Summarised statement of comprehensive income Unrealised loss relating to interest rate 12 mths ended 12 mths ended swaps of $0.73m primary difference to 30 June 2015 30 June 2014 previous forecast of $10.75m $ $ Stapled Rural Funds Trust (RFT) to RF Property re
Slide 28: FY15 results: Adjusted balance sheet
FY15 results For personal use only Adjusted balance sheet Water entitlements are held at cost Statutory Revaluation of Adjusted based on ASIC guidance and balance sheet at water balance sheet at 30 June 2015 entitlements 30 June 2015 accounting standards As at 30 June 2015 External valuations at
Slide 29: AFFO
AFFO For personal use only Reconciliation of net profit after tax to AFFO Table adds back non cash items to 12 mths ended 12 mths ended reconcile net profit after tax to AFFO 30 June 2015 30 June 2014 Major items for FY15 $ $ Net profit before tax 9,441,000 3,402,000 – $0.73m unrealised loss on
Slide 30: Australian agriculture
Australian agriculture Australian agriculture is benefiting from a number of macro trends and comparative advantages For personal use only Growth in Australian agricultural land values: 1978 to 2014 • Trends supporting Australian agriculture include: - Emerging Asian middle class: rising wealth and
Slide 31: Lease agreements
Lease agreements RFF seeks indexed leases and develops a full lifecycle model to capital commitments For personal use only Payment Indexation Lessee Rent review Capital commitments frequency mechanism R&M and ongoing capital expenditure on The lessee and the lessor have the right of 65% of Consumer
Slide 32: About RFM
About RFM RFM is one of the oldest and most experienced agricultural funds management organisations in For personal use only Australia Rural Funds Management Limited (RFM) is an experienced fund and asset manager that specialises in Australian agriculture Established in 1997, RFM operates as an
Slide 33: RFM board and management team
RFM board and management team RFF is externally managed and governed by a highly experienced management team and board For personal use only Board of directors Contact • Joined RFM in 2003 • RFM Company Secretary • Former director of broking firm JBWere with more than • Responsible for reviewing and
Slide 34: Key risks
Key risks Specific risks For personal use only Counterparty risk All land and infrastructure assets owned by RFF are leased in order to ensure that Unitholders are not exposed to operational risk. There is a risk that a counterparty may default on its lease obligations to RFF. Any default by a count
Slide 35: Key risks
Key risks For personal use only Property market risks (continued) Property illiquidity The majority of assets owned by RFF are large scale. Given this scale, the number of potential buyers is limited. Therefore the sale of assets at book value may take longer to realise. Water availability Pursuant
Slide 36: Key risks
Key risks General risks (continued) For personal use only Gearing RFF has secured a debt facility that sets limits for the next five years. Beyond this there is a risk that RFF’s bank could reduce the gearing limit. In these circumstances, where asset values have not increased sufficiently to offset
Slide 37: Corporate information
Corporate information For personal use only Rural Funds Management Limited 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: www.ruralfunds.com.au For further information: For media enquiries: Investor rel
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