Rural Funds Group · ASX:RFF
Rural Funds — H1 FY2017 Earnings Presentation
38 slides from Rural Funds's earnings presentation, Feb 21, 2017
Slide 1: Financial results presentation, Half year ended 31 December 2016
Managed by: For personal use only Managed by: Financial results presentation Half year ended 31 December 2016 21 February 2017
Slide 2: Disclaimer
Managed by: 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 Acti
Slide 3: Agenda
Managed by: Agenda For personal use only RFM attendees 1. Highlights David Bryant Managing Director 2. Results 3. Capital management Stuart Waight Chief Operating Officer 4. Portfolio update 5. Outlook Daniel Yap 6. Appendices Financial Controller James Powell Investor Relations & Distribution Manag
Slide 4: Highlights
1 For personal use only Managed by: Highlights Geier Vineyard, Barossa Valley, Dec 2016
Slide 5: Results highlights
Managed by: Results highlights Acquisitions, developments and rent indexation have improved key metrics For personal use only Further Financial metrics Dec 16 Dec 15 Movement details Earnings 8.55 cpu 3.41 cpu +150% p.10 Adjusted funds from operations (AFFO) 6.29 cpu 4.26 cpu +48% p.11 Distributions
Slide 6: Key events and portfolio highlights
Managed by: Key events and portfolio highlights Strategic acquisitions and an improvement to the debt facility Portfolio highlights For personal use only • $61.0m equity raised via a fully underwritten Entitlement Offer at $1.475 per unit with 59% of investors participating. Funds Number of properti
Slide 7: Strategy
Managed by: Strategy Diligent management of existing assets and examination of measured growth opportunities For personal use only • RFM will continue to execute on strategy: Net asset, market cap and liquidity growth – focusing on existing portfolio; and – expanding scale through selective acquisit
Slide 8: Results
2 For personal use only Managed by: Results Poultry assets, Griffith, Dec 2016
Slide 9: HY17 results summary
Managed by: HY17 results summary Metrics as at 31 December 2016 For personal use only • AFFO $12.6m (pre-tax) and AFFO per Income Net profit before income tax 17,533,000 unit 6.29 cents in line with previous Total comprehensive income 19,814,000 forecast Adjusted funds from operations (AFFO) 12,634,
Slide 10: HY17 results - comprehensive
Managed by: HY17 results - comprehensive For personal use only Summarised statement of comprehensive income Restated1 • Revenue has increased primarily as 6 mths ended 6 mths ended a result of acquisitions and planned 31 Dec 2016 31 Dec 2015 capital expenditure $ $ • Property and overhead expenses P
Slide 11: HY17 results AFFO
Managed by: HY17 results AFFO For personal use only Composition of AFFO (pre-tax) • AFFO is pre-tax and excludes fair Restated1 value adjustments, depreciation 6 mths ended 6 mths ended and impairment to represent RFF’s property rental business 31 Dec 2016 31 Dec 2015 $ $ • AFFO higher due to increa
Slide 12: Capital management
3 For personal use only Managed by: Capital management
Slide 13: Capital management
Managed by: Capital management Improved debt facility and expanded equity base For personal use only Equity Debt facility Syndicate (ANZ and Rabobank) with Share (Unit) 11% increase for period 30 June 2016 bi-lateral pricing and common terms price to 31 December 2016 ($1.58 to $1.75) Facility (e.g.
Slide 14: Debt facility
Managed by: Debt facility Interest rate strategy balances protection from fixed rates with exposure to floating rates For personal use only Debt metrics 31 Dec 2016 30 June 2016 • Debt facility reviewed, with syndication implemented and debt tenor increased (see disclosure 24 August 2016) Term debt
Slide 15: Portfolio update
4 For personal use only Managed by: Portfolio update Tocabil almond orchard, Hillston, Dec 2016
Slide 16: Portfolio snapshot
Managed by: Portfolio snapshot A growing, diversified portfolio of assets and lessees1 For personal use only Notes: 1 Shaded areas denote different climatic zones. Source: Bureau of Meteorology (BOM). See page 33 2 See page 28 for details 16
Slide 17: Development and other capex
Managed by: Development and other capex Development and other capex attracts additional lease income1 For personal use only Development and capex timetable Total 1H17 2H17 FY18 FY19 FY20 ($m) Almonds: Kerarbury Development 2,500 ha orchard2 $23.7 $18.4 $31.1 $13.7 $26.9 $113.8 Almonds: Tocabil Devel
Slide 18: Almond developments update
Managed by: Almond developments update Olam almond developments are on track For personal use only 2015 Tocabil plantings 2016 Kerarbury plantings 600 ha planting complete CY16 (planted in two stages). Tree development is 1,218 ha of almond trees planted CY16. Approx. a further 1,282 ha exceeding ex
Slide 19: Cattle capex update
Managed by: Cattle capex update RFF is funding capex with the aim of improving asset values and performance For personal use only Fig 1: Cattle property capex • Capex (forecast $1.5m) is being deployed for watering infrastructure and pasture Rewan, Central Qld Mutton Hole, Gulf improvements (Fig 1).
Slide 20: Other capex update
Managed by: Other capex update RFF is funding capex with the aim of improving asset values and performance For personal use only Lynora Downs (cotton property) • Cotton property - Stage 1 development (forecast capex $5.8m): – increase the water storage capacity – expand the area for irrigated cotton
Slide 21: Outlook
5 For personal use only Managed by: Outlook Cattle in feedlot, Rewan, Dec 2016
Slide 22: Forecasts
Managed by: Forecasts RFF remains on track for existing guidance For personal use only Key forecasts FY17 • AFFO and DPU forecast remains consistent with existing AFFO per unit 12.42 cents guidance Distributions per unit 9.64 cents • FY17 distributions are expected to continue to have a majority tax
Slide 23: Areas of focus for management
Managed by: Areas of focus for management RFM continues oversee and manage existing assets, including the capex and development programs, while pursuing new investments and lessees For personal use only Principles underpinning assessment of new investments Provides exposure to income and capital gro
Slide 24: Appendices
6 For personal use only Managed by: Appendices Geier Vineyard, Barossa Valley, Dec 2016
Slide 25: HY17 results: reconciliation of net profit after tax to AFFO
Managed by: HY17 results For personal use only Reconciliation of net profit after tax to AFFO • Table adds back non cash items to Restated1 reconcile net profit after tax to AFFO 6 mths ended 6 mths ended • Major items for FY17 31 Dec 2016 31 Dec 2015 • $1.7m property revaluations $ $ largely due to
Slide 26: HY17 results: summarised balance sheet
Managed by: HY17 results For personal use only Summarised balance sheet • Net assets $277.3m Restated1 • NAV per unit $1.34 As at As at • Adjusted NAV per unit $1.50 (refer to 31 Dec 2016 30 June 2016 page 27 for further details) $ $ • Equity raising totalling $61.0m Cash 4,731,000 3,034,000 underta
Slide 27: HY17 results: total assets reconciliation
Managed by: HY17 results Total assets reconciliation For personal use only Adjustment for Investment Bearer Intangible Financial water Adjusted total Other assets Total property plants1 Assets2,4 assets3,4 entitlements at assets fair values2,4 $ $ $ $ $ $ $ $ Balance as at 30 June 2016 168,951,000 1
Slide 28: Rural Funds Group (RFF)
Managed by: Rural Funds Group (RFF) RFF is an agricultural REIT For personal use only Key information as 31 December 2016 Weighted average lease expiry profile2 Adjusted total assets1 $552.4m 23% 22% Adjusted net assets1 $311.2m Adjusted NAV per unit1 $1.50 Market capitalisation ($1.745 per unit) $3
Slide 29: Key assets and counterparts
Managed by: Key assets and counterparts RFF is diversified by agricultural sectors, lessees and indexation mechanisms For personal use only FY17 forecast revenue Indexation mechanisms by FY17 forecast revenue 1 1 Note: 1 Other refers predominately to Plant and Equipment lease income, which has no in
Slide 30: Key assets and counterparts
Managed by: Key assets and counterparts Almond orchards Poultry farms Vineyards Cattle assets Cotton assets For personal use only Brief 1,814 ha mature almond 154 sheds on 17 farms 666 ha mature vineyards Three cattle properties and 4,880 ha cropping property description: orchards and 3,100 ha of on
Slide 31: Key assets and leases further details
Managed by: Key assets and leases further details Almond orchards Poultry farms Vineyards Cattle assets Cotton assets For personal use only Description: 1,814 ha across two 154 sheds on 17 farms Seven vineyards with 666 ha Three cattle properties 4,880 ha cropping property mature almond orchards con
Slide 32: Agricultural REIT structure
Managed by: Agricultural REIT structure RFF’s REIT model benefits from trends supporting agriculture and has significant expansion potential in Australia For personal use only Australian property sectors estimates1 Macro economic trends supporting agriculture: $150b, est. up to 15% leased2 $280 b,
Slide 33: Climate diversification strategy
Managed by: Climate diversification strategy Strategic geographic diversification reduces lessee concentration in any one climatic zone and introduces new commodities and counterparts For personal use only The benefits of climatically diversifying RFF’s portfolio include1: Climatic zones and RFF a
Slide 34: Sector diversification strategy
Managed by: Sector diversification strategy Acquiring natural resource predominant assets complement existing infrastructure predominant assets and aims to grow NAV, FFO and DPU over medium to long term For personal use only Spectrum of investment opportunities1 Note: 1 The income and growth figures
Slide 35: Productivity capex
Managed by: Productivity capex Productivity capex aims to increase farm values, lease income and counterpart profitability For personal use only • Gains in farming productivity (e.g. via 125 yrs of agricultural returns (10yr moving avg of % price change)1 technology or science) have historically sup
Slide 36: Fund and farm manager
Managed by: Fund and farm manager RFM is a fund and farm manager with 20 years experience in Australian agriculture For personal use only Key information Key responsibilities Established 1997 Oversight as a fund and asset manager including: Assets under management $608m • Compliance to financial, fa
Slide 37: RFM Board and management team
Managed by: RFM Board and management team RFF is externally managed and governed by a highly experienced management team and board Board Contacts For personal use only • Former director of broking firm JBWere with more than • Joined RFM in 2003 30 years’ experience in corporate finance • RFM Company
Slide 38: Corporate information
Managed by: Corporate information For personal use only 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: www.ruralfunds.com.au For further information: For media enquiries: Inv