Managed by:
Annual Report
for the year ended 30 June 2021
Annual Report
for the year ended 31 June 2021
Managed by:
About Rural Funds Management Limited (RFM)
About Rural Funds Group (ASX: RFF)
RFM is the responsible entity and manager
of RFF. RFM is an agricultural fund and asset
manager established in 1997. The management
team includes specialist fund managers,
corporate professionals, horticulturists,
agricultural scientists and managers. RFM’s
company culture is informed by its long-
standing motto “managing good assets with
good people”.
Rural Funds Group is an agricultural Real Estate
Investment Trust (REIT) listed on the ASX under
the code RFF. RFF owns a diversified portfolio of
Australian agricultural assets which are leased
predominantly to corporate agricultural operators.
RFF targets distribution growth of 4% per annum
by owning and improving farms that are leased to
good counterparties.
Rural Funds Group (ASX: RFF) stapled group comprising:
Rural Funds Trust ARSN 112 951 578 and
RF Active ARSN 168 740 805
Responsible Entity: Rural Funds Management Limited
ACN 077 492 838 AFSL 226701
Issued on: 30 September 2021
Image: Dryland wheat crop, Lynora Downs, central Queensland, July 2021.
Cover image: Full water storage, Lynora Downs, central Queensland, March 2021.
Contents
Letter from the Managing Director
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio overview
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FY21 financial results and highlights
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental, Social and Governance
. . . . . . . . . . . . .. . . . . . . . . . . . . . . .
ASX additional information
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
04
06
08
10
18
22
Image: Macadamia planting material, Nursery Farm, Bundaberg, central Queensland, August 2020.
Letter from the Managing Director
Dear Unitholder,
We are pleased to present to you the Rural Funds Group
(RFF, the Fund) Annual Report for the year ended 30 June
2021 (FY21).
FY21 saw RFM continue the implementation of the
strategies of developing properties for higher and better
use and improving productivity on farms.
With regard to the first strategy, RFF has acquired $104m
of cropping land, cattle properties and water entitlements
in Rockhampton, Maryborough and Bundaberg. These
assets will be developed to 5,000 ha of macadamia
orchards over the next five years.
At Maryborough and Bundaberg, the Fund has over
5,400 ha of primarily cropping land, of which 2,500 ha
will be planted to macadamias. This will fully commit
the Fund’s water entitlements in these regions; however,
additional areas may be utilised for other types of
cropping. At Rockhampton, the Fund owns over
3,400 ha of cattle properties and has secured sufficient
water to plant 2,500 ha to macadamias as well as to
support irrigated cattle operations.
First plantings of the macadamia orchards commenced
during FY21 and by the end of FY22, RFM expects to have
completed the initial 1,000 ha. Once the orchards have
been planted, RFM will seek a long-term lessee on terms
that are attractive to the Unitholders of RFF. We believe
that by having the orchards planted before contracting
lessees, we can achieve a higher rate of return for RFF
Unitholders.
Importantly, the investment into macadamias aims to
increase the lease income and total return generated
from these assets, and further diversify sector revenue.
Currently, the macadamias generate approximately 2% of
RFF’s revenue.
Funding for the above acquisitions included proceeds
from the sale of the Mooral almond orchard. This orchard
is an example of RFM’s experience in converting assets
to higher and better use. The almond orchard was
developed by RFM in 2006 on a cropping and grazing
property. The sale in FY21 was at a 21% premium to the
value recorded in the RFF accounts1. Overall, the asset
generated an internal rate of return in excess of 15% per
annum for RFF.
Another major activity in the past 12 months was the
Entitlement Offer announced in July which raised $100m
of new equity. The Entitlement Offer was conducted at a
price of $2.47 per unit and was well supported by existing
investors. The proceeds from the Entitlement Offer will be
used to continue the macadamia orchard developments
and for new acquisitions.
After allowing for development expenditure, RFF
has $100m of capital that can be allocated to cattle
and cropping acquisitions. This enables the Fund to
implement the second strategy mentioned above;
acquiring natural resource assets such as cattle and
cropping properties and improving their productivity.
An example of the successful implementation of
improving productivity is Comanche, which is a
7,600 ha cattle property that RFF acquired in July 2018.
Since acquiring the property, RFM has installed
centre-pivot irrigation, further watering points, and
improved pastures. These developments have increased
the carrying capacity of the property by approximately
50%. By increasing carrying capacity, farm productivity
is increased, as are the potential profits of the lessee.
Importantly, because the farm is more profitable, it is
more valuable, as evidenced by the internal rate of return
of over 15%.
Continuation of RFF’s development strategies were able
to be carried out despite the ongoing challenges of the
COVID-19 pandemic. In addition, there was no material
impact to RFF as a result of the pandemic. In fact,
favourable seasonal and market conditions have aided
many agricultural industries to prosper in the past 12
months, including those in which RFF leases assets.
FY21 financial results
Total comprehensive income and earnings were
approximately double that generated during the prior
year. The higher earnings were driven primarily by
independent valuations which were conducted on three
quarters of RFF’s assets.
Adjusted funds from operations (AFFO), a measure of
cash flow generated by RFF, was 11.9 cents per unit
(CPU); slightly ahead of the prior forecast of 11.7 CPU.
Distributions of 11.28 CPU were paid during FY21, which
was in line with prior forecasts.
Adjusted total assets2 of RFF are now $1.2b and the
adjusted net asset value (NAV) has increased by 13%, to
$2.20 per unit. The adjustment relates to the recognition
of water entitlements at their independent valuations.
In terms of the debt facility, the overall limit was
increased to $380m in FY21. External borrowings2
were $290m with gearing at 25%; well below the target
gearing range of 30–35%. During the period, $60m of
new forward-dated interest rate hedges were entered
into as RFM seeks to take advantage of low debt funding
costs.
Looking forward
RFM will continue its focus on the development of
macadamia orchards in central Queensland and
acquiring new cattle and cropping assets funded from
the balance sheet capacity.
Forecast AFFO for FY22 is 11.6 CPU. Additional AFFO
is expected to be driven by new acquisitions. RFM
confirmed FY22 forecast distributions of 11.73 CPU
representing 4% growth on FY21.
We look forward to providing you with updates as they
arise during FY22 and encourage you to contact our
Investor Services team if you have any queries about
your investment.
Yours faithfully
David Bryant
Managing Director
Rural Funds Management Limited
4
1.
2.
Value recorded in the RFF accounts adjusted for independent valuation of water entitlements which are recognised at the lower of cost or fair value on balance sheet.
Pro forma for $100m Entitlement Offer announced 8 July 2021. Funds raised to acquire water assets ($38.4m), debt reduction ($58.6m) and transaction costs ($3.0m).
5
Portfolio overview
The portfolio of assets is diversified by climatic
zone and agricultural sector. The Fund seeks
to invest in sectors in which Australia has
a comparative advantage and the manager,
RFM, has operating knowledge. Assets are
leased predominantly to corporate agricultural
operators.
Lease income growth is achieved through
indexation mechanisms, productivity
improvements and higher and better use
developments.
$1.2b3
Pro forma
adjusted total assets
9.3 yrs
Weighted average
lease expiry
66 properties
Across 5 sectors and
multiple climatic zones
78%
FY22 forecast revenue from
corporate or listed tenants
Image: Aerial photo of Geier vineyard, Barossa
Valley, South Australia, January 2021.
Assets map, sector information and key lessees4
Cattle
Properties:
Description:
41%
21
680,805 ha of breeding and
backgrounding land. 150,000 head
feedlot capacity.
FY21 value:
$398.5m
FY22f revenue:
$28.4 m (41%)
Water entitlements: 7,746 ML
41%
Vineyards
Properties:
7
6%
Description:
666 ha of mature vineyards.
FY21 value:
$64.9m
FY22f revenue:
$4.2m (5%)
Water entitlements: 936 ML
Corporate and
listed lessees:
Macadamias
2%
Properties:
Description:
FY21 value:
12
391 ha of planted area.
$70.9m
FY22f revenue:
$1.3m (2%)
Water entitlements: 6,740 ML
Corporate and
listed lessees:
Almonds
Properties:
3
Description:
4,139 ha of established orchards.
FY21 value:
$382.3m
FY22f revenue:
$28.6m (41%)
Water entitlements: 55,525 ML
Corporate and
listed lessees:
Cropping
10%
Properties:
Description:
23
11,868 ha of irrigated cropping and
dryland cropping land.
Pro forma FY21
value:
$156.3m
FY22f revenue:
$6.4m (10%)
Pro forma water
entitlements:
45,687 ML
Corporate and
listed lessees:
3.
Adjusted assets incorporates most recent independent property valuations, inclusive of water entitlements. Pro forma for $100m Entitlement Offer announced 8 July
2021.Funds raised to acquire water assets ($38.4m), debt reduction ($58.6m) transaction costs ($3.0m).
6
4.
Shaded areas denote climatic zones differentiated by rainfall seasonality. Source: Bureau of Meteorology; see Climatic Diversification discussion paper, 20 June
2016. Numbers in the circles/boxes on map show number of assets. Blue square boxes denote cattle feedlots. Cropping pro forma for 8,338 ML water entitlements
announced on 8 July 2021 for $38.4m. Unencumbered water entitlements with a value of $66.8m not shown. Excludes other income (e.g. from annual water allocation
sales, cropping operations and agistment). Corporate and listed lessees shown represent 78% of FY22 forecast lessee revenue exposure; other lessee types include
RFM farming operations (9% FY22f), investment funds (2% FY22f) and private farming operators (11% FY22f).
7
FY21 financial results
and highlights
The increase in earnings and adjusted net
assets were largely driven by the receipt of
independent property valuations and the
sale of the Mooral almond orchard at a 21%
premium to adjusted book value.
RFM continues to focus on two strategies
within the portfolio which seek to increase
earnings for Unitholders. Firstly, the
conversion of assets to higher and better
use, with an initial 1,000 ha of macadamia
orchards expected to be developed in
central Queensland by June 2022. The
second strategy, improving the productivity
of natural resource assets, is being
deployed on existing cattle and cropping
assets within the portfolio, including
those revalued during the period. RFM is
also seeking to acquire additional cattle
and cropping properties which have
development potential.
Both strategies are consistent with
RFM's approach of investing in sectors in
which Australia participates globally, and
utilising RFM’s development and operating
knowledge.
Following the Entitlement Offer completed
in August 2021, RFF has a pro forma
balance sheet capacity of up to $185m
which is intended to be used to fund
additional acquisitions and macadamia
orchard developments. Future adjusted
funds from operations (AFFO) accretion
is expected to be driven by finalisation
of macadamia lessee arrangements and
additional acquisitions.
Forecast FY22 distributions per unit
(DPU) total 11.73 cents, representing a 4%
increase on FY21. The weighted average
lease expiry of the portfolio is 9.3 years.
RFF has delivered a total Unitholder return
of 348.9% over the period 2014 to 2021,
compared to the index return of 116.0%.7
Image: Aerial photo of Mooral almond orchard (sold December 2020) Hillston, NSW, August 2020.
FY22f DPU
11.73 cents
4% on FY21
Pro forma gearing6
24.6%
Compared to 30%-35%
target range
FY21 pro forma adj. NAV6
$2.20 per unit
13% on FY20
FY21 AFFO per unit
11.9 cents
0.2 cents on prior forecast
FY21 earnings (total
comprehensive income) per unit
36.56 cents
98% on FY20
DPU yield
4.5%
Based on FY22f DPU and
21 September 2021 close price of $2.63
Lease expiry profile5
Total Unitholder return: RFF and S&P/ASX 300 A-REIT accumulation index7
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
)
m
$
(
e
u
n
e
v
e
r
f
2
2
Y
F
Weighted average
lease expiry
9.3 years
n
r
u
t
e
R
r
e
d
o
h
y
t
i
r
u
c
e
S
l
l
a
t
o
T
$5.00
$4.50
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
$4.13
+348.9%
$1.99
+116.0%
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
Jun-14
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Financial year end
Vineyards
Almonds
Cattle
Macadamias
Cropping
Other
5.
Excludes other income (e.g. from annual water allocation sales, cropping operations and agistment). Weighted average lease expiry (WALE) calculated as the FY22 forecast
rent and the year of lease expiry.
RFF
S&P/ASX 300 REIT ACC
6.
7.
Pro forma for $100.0m equity raising at $2.47 per unit disclosed 8 July 2021. Funds raised to acquire water assets ($38.4m), debt reduction ($58.6m) transaction costs ($3.0m).
S&P/ASX 300 A-REIT accumulation Index accumulation index 1 July 2014 to 21 September 2021 rebased to $1.00. RFF accumulation return rebased to $1.00 and assumes dividends
reinvested.
8
9
Environmental, Social
and Governance
responsibilities
Image: Cattle at Comanche, Rockhampton, central Queensland, May 2021.
Environmental
RFF owns a portfolio of Australian agricultural assets and the
stewardship of these assets is of critical importance to the
performance and growth of RFF. As operators and custodians
of agricultural assets RFM recognises the importance of
acknowledging the potential risks that climate change could
present to the Groups assets. As part of RFM’s ongoing strategy
to mitigate and improve climate related risks, RFM will continue
to monitor emissions and seek to implement infrastructure and
practice changes.
RFF leases require operators to use appropriate agricultural
production methods. These include farm management methods
to minimise environmental impact, protect biodiversity,
manage water and sustain soil health. Wherever practical, the
Responsible Entity as manager of the Fund promotes:
• monitoring of industry developments and adopting farm
management practices that incorporate the latest research
findings and technologies to minimise environmental
impact, protect biodiversity and better use natural
resources;
• maximising water-use efficiency by using modern, well-
managed irrigation systems;
• water management practices that consider and manage
•
•
•
water quality and minimise run-off;
use of communication technologies to access water-use
data remotely; and, assisting with optimal water use,
adoption of nutrient management practices that improve
long-term soil health;
pest and weed management requiring the use of chemicals
occurs in a safe and environmentally responsible manner;
and
lessees and personnel who understand and are focused on
sustainable farming principles and adhere to environmental
legislation and regulations.
RFM leases or operates some of the assets of RFF. During FY21
RFM updated it’s Environmental Policy including a commitment
to seek to undertake activities, particularly farming activities, in
a sustainable manner. This includes identifying ways to utilise
natural resources more efficiently and minimise the impact our
production systems have on the environment. A summary of
some of the specific actions include:
•
•
nutrient management practices improving long term soil
health, and avoiding over grazing of pastures;
seeking energy efficiency and undertaking renewable
energy feasibility studies on appropriate assets;
• maximising water use efficiency and minimising nutrient or
effluent run-off.;
• maintaining relevant sites to protect biodiversity;
•
considering the impact of emissions and seeking to
implement infrastructure and practice changes where
appropriate;
disposing of waste responsibly and utilising progressive
farming practices to minimise environmental damage; and
taking all practical steps to adhere to the requirements of
relevant environmental laws, regulations and standards.
•
•
A copy of this policy is available on RFM’s website.
Image: Cobungra station, Victorian high country,
June 2020.
The following case studies provide examples of initiatives
RFM has undertaken in FY21 and those which are planned
for FY22.
Case study: Greenhouse gas (GHG)
reduction research and initiatives
During FY21 RFM commenced research on multiple
projects which seek to quantify and reduce GHG
emissions. Research has focused primarily on methods
which have been outlined by the Australian Government
Clean Energy Regulator. These methods generally
fall into two approaches; either reducing emissions
that would normally be produced, or actively storing
carbon in vegetation or soil. The methods of which RFM
commenced research during FY21 are detailed below:
Beef herd management
During FY20 RFM in conjunction with Meat and
Livestock Australia (MLA) undertook an assessment
of the emissions intensity of Mutton Hole, Rewan and
Comanche and grazing land in NSW. Emissions intensity,
rather than total emissions, is a metric used for assessing
farming enterprises as it compares the GHG emissions
generated per unit of farm product, such as kilograms
of beef. Improved emissions intensity may be a result of
higher farm production and a significant level of avoided
emissions that would have otherwise been produced for
the same level of output.
The report calculated that from 2016-17 to 2018-19 GHG
emissions intensity declined by 17% on the New South
Wales properties and 43% on the Queensland properties.
The report identifies that improved feed quality and animal
management are contributing factors to these results. A
copy of the report is available on the MLA website.
Action: During FY21 RFM engaged with a research
scientist to continue this project to provide
recommendations on activities which further reduce
GHG emissions.
Soil carbon sequestration
Soil carbon is a part of the organic matter in soil.
Improving soil carbon sequestration involves managing
agricultural land to encourage increases in soil carbon,
such as through changes to farm management practices
and converting land usage. The efficacy of these changes
is determined through soil sampling which establishes
existing soil carbon levels and changes over time.
Action: During FY22 RFM plans to engage an external
consultant to commence baseline soil carbon levels
on suitable properties and identify ways these may be
reduced.
Image: Mustering cattle, Mutton Hole station,
Queensland August 2021.
Reforestation
During FY21 RFM has commenced assessment of
reforestation projects. Reforestation involves planting trees
to reduce the amount of GHG entering the atmosphere, as
carbon remains stored in the trees while they grow.
Action: During FY22 RFM plans to engage an external
consultant to assess the application of tree planting on
suitable properties.
Emissions assessments
During FY21 RFM commenced assessment of emissions
study on a mature macadamia orchard. This incorporates
farm emissions from fuel, fertiliser use, and transportation
of harvested macadamias to the processing facility.
Action: During FY22 RFM plans to engage an external
contractor to establish baseline data so that future
emissions reductions can be quantified.
Solar energy assessment
During FY21 RFF funded the installation of 26 solar-
powered water pumps on its north Queensland cattle
properties Mutton Hole, Oakland Park and the Natal
Aggregation.
Solar-powered water pumps utilise power from solar
panels, pumping water from nearby water sources such
as a dam or bore. These systems have replaced existing
diesel-powered pumps, as well as being utilised in new
installations.
The pumps provide a direct reduction in emissions,
not only through reduced diesel usage, but also in the
reduction of travel requirements for farm staff as regular
refueling of the pumps is no longer necessary.
Also during the year, RFM continued work with a major
Australian energy company to complete a feasibility study
for solar energy systems on almond orchards. These
projects are ongoing and subject to lessee agreement.
12
13
Image: Macadamia planting material, Nursery Farm,
Bundaberg, Queensland, May 2021.
•
•
•
precision tree planting and geo-referenced records,
enabling the adoption of emerging low energy
technologies including automation;
high-specification dual irrigation systems, that
provides targeted tree irrigation to maximise
water use efficiency and minimise nutrient loss or
leaching; and
grassed interrows, which assists with the prevention
of solids being removed with water run-off.
Adjacent to orchard development sites, active
preservation and improvement of waterways to protect
flora and promote biodiversity, is also being planned.
Case study: Reducing herbicide
application
RFM are continually considering new innovations to
improve agricultural practices and processes that
improve productivity and benefit the environment.
In 2021, RFM undertook a trial of weed seeker technology
on RFM's cropping operations in central Queensland.
The technology uses near infrared cameras to detect and
treat weeds.
The total amount of herbicide used is reduced
significantly as the sprayed area is substantially lower,
spraying only weeds and not bare soil.
In RFM’s recent trial, weeds were treated in a fallow
field, resulting in a material reduction of chemical
application in the field area. This provided the benefits
of a proportional reduction in chemical use and cost, as
well as improved agronomic outcomes.
Case study: Environmental impact
assessment as part of macadamia
developments
During the planning stages of RFF’s macadamia
orchard developments, critical design principles that
seek to minimise negative environmental impacts and
optimise productivity are being considered. Examples
include:
•
•
detailed soil surveys and assessment of
topography data. This allows water drainage
plans to be designed to increase the likelihood
that water flows from rain events are manageable
in terms of volumes and velocities of water, to
minimise soil erosion;
optimal layout of irrigation design, providing
operational efficiencies and reduced inputs, such
as diesel consumption;
Image: Early sorghum crop, Lynora Downs, central
Queensland, May 2021.
14
Social
People and safety
RFF does not directly employ staff. The Responsible
Entity, RFM, is responsible for employees associated
with the management and operation of the Fund.
RFM’s guiding motto “managing good assets with
good people” emphasises that our people are core
to our business. The motto defines our approach
to the selection and management of our people
who are experienced and dedicated, and diligently
support the RFM group. Our employees follow our
Code of Conduct which promotes being respectful,
being precise and diligent when doing our work,
being honest, ethical, and doing what is best for the
RFM group.
In return, we value, respect, and reward the
contribution of our employees. We recognise
employee contribution by providing:
•
•
•
•
training and development opportunities;
non-financial benefits such as life and salary
continuance insurance;
financial rewards by way of competitive
remuneration and bonuses; and
support for the well-being of our employees and
their families through our Employee Assistance
Program, flexible work practices, paid maternity
leave and paid domestic violence leave.
An important element of our current work is an
increased value on a culture of precision in our
workplaces. Doing precise work provides many
benefits, most importantly, it achieves a safer
workplace.
During the year RFM has reviewed many policies,
including the Safety Management System (SMS)
and Safe Operating Procedures (SOPs). RFM
also implemented an online safety system for
the delivery of this information, providing easy
access to key documentation that educates and
supports activities on the ground. Additionally, RFF
lessees are required to comply with safety and
environmental obligations, and these are included
in our leases. We also reviewed and strengthened
our engagement processes and management of
contractors, many of whom work on RFF properties
undertaking development activities.
We recognise there is gender and cultural
disparity in the industry in which we operate,
and we are taking active steps to remove
unconscious bias from our recruitment processes
by using anonymised screening and providing
opportunities for minority groups. We do not
set specific diversity targets however seek to
ensure the candidate pool at each stage of the
recruitment process reflects the diversity mix
of total applications received. Further, we have
committed to improving gender diversity at Board
level by 2022.
Animal welfare
Some of RFF’s properties are leased to
agricultural producers involved in intensive
production, such as cattle feedlots. The
Responsible Entity has policies and procedures
that are explicit about animal treatment and
welfare.
RFF’s cattle lessees are required to comply
with best husbandry and pastoral practice. This
is stipulated in leases signed with RFF. Best
practice includes low-stress handling, disease
minimisation and sustainable stocking rates. Most
cattle sold by RFF lessees are sold and processed
domestically, but a small number may be sold to
the live export market.
Case study: Low stress
cattle handling
RFM has policies and procedures for its operated
properties that ensure that the mustering staff have
the appropriate experience and training. The aim
of each muster is to move the cattle in a controlled
fashion, minimising the stress placed on the cattle,
and reducing the risk of injury.
A range of techniques are used, such as:
ensuring cattle are moved at a controlled pace,
•
• where possible walking cattle in the cooler
parts of the day; and
regularly resting cattle at water points.
•
Further, access to the online safety system was
provided to contractors to give them access to
key induction and safety information and collect
key documentation. The streamlining of the SMS
includes guidance for our people about consultation
with, management and monitoring of contractors on
the ground.
Image: Aerial photo of rice crops, Rice crop, Tahen, Battambang prefecture of western Cambodia, 2019.
Staff use the most appropriate method for the
situation to achieve the best outcome for animal
welfare.
15
Community involvement
An integral part of our corporate culture is to donate to
charities and causes that are close to the hearts of our
employees, including in the communities in which we
operate or can have a positive impact. RFM continues
to provide support to Tahen, a village in the Battambang
province of Cambodia. An overview of this project is
included in the adjacent case study. In the past RFM
has also supported a number of organisations through
donations and labour, further details can be located on
our website.
Case study: Tahen Project
In FY21 RFM continued it’s commitment to allocate
resources towards an agricultural project in the
Cambodian village of Tahen.
Tahen is located in the Battambang prefecture of
western Cambodia, approximately 350km northwest
of the capital Phnom Penh, and RFM’s commitment
includes the provision of both agricultural expertise and
financial resources to improve farming practices in the
village.
The funds donated by RFM enables the employment
of a local, university educated agronomist as well as
access to an Australian agricultural consultant who is a
long-term Cambodian resident. These two resources,
together with the project leader who is an agronomic
engineer, are overseeing the rollout of updated farming
practices to a team of 12 farmers.
RFM’s funding has also enabled structural changes to
farming operations, such as farming co-operatively in
larger areas, the development of irrigation areas and
acquisition of new equipment.
RFM maintains an ongoing and active involvement
in the project. By providing education, mentoring,
expertise and funding, it is hoped that RFM can provide
sustainable economic and social benefits to the
community. Although the structure and funding of this
project is designed specifically for the Tahen village,
RFM hopes that the lessons of this project can also be
applied to other local communities.
Updates on the Tahen Project are regularly published
on the RFM website.
Image: RFM staff examining cotton, Mayneland, central Queensland, May 2021.
Governance
Corporate Governance Statement
Separate to this Annual Report RFM has
released a Corporate Governance Statement.
Some of the elements of the Statement which
are relevant to Environment, Social, Governance
(ESG) are summarised below.
Corporate Governance
RFM has an Internal Compliance Committee
(ICC) that reports to the Board of Directors
quarterly.
Conflicts of interest and related party
transactions
RFM manages a number of entities. Where
related party transactions occur between RFF
and another RFM-managed entity, they are
subject to the Conflict of Interest Management
Policy. The Responsible Entity’s responsibilities
and contractual obligations are set out in the
Fund’s Constitution, the Corporations Act, the
ASX Listing Rules and it’s AFSL Licence. As
the Responsible Entity, RFM must always act
in the best interests of Unitholders, and if there
is a conflict between Unitholders’ interests
and its own interests, it must give priority to
Unitholders’ interests.
The Responsible Entity has also established
protocols, including appointing separate
personnel to act for each entity with separate
advice. To monitor compliance with these
obligations, the Board receives a monthly report
from the Compliance Department, who reports
on the Responsible Entity’s compliance, any
conflicts of interest or related party transactions.
Ethical conduct
The Responsible Entity’s employees are
obligated to conduct themselves in accordance
with the standards set out in the RFM Code of
Conduct, the Corporate Governance Charter
and other related policy documents. Our
employees are expected to conduct themselves
with integrity, in compliance with legislative
requirements and internal policies and
procedures.
RFM’s anti-money laundering and counter-
terrorism financing program aims to identify,
mitigate and manage the risk that the Company
or its Officers may unwittingly facilitate money
laundering or financing of terrorism. The
Responsible Entity manages the above risks in
accordance with its Risk Management Policy
which is available on the Responsible Entity’s
website.
The RFF Corporate Governance
Statement, and RFM Policies, are
available on RFM's website:
www.ruralfunds.com.au
Image: Aerial photo of rice crops, Tahen, Battambang prefecture of western Cambodia, 2019.
16
17
ASX additional
information
18
19
Image: Ground preparation for macadamia orchard, Glendorf, central Queensland, May 2021.
ASX additional information
Additional information required by the ASX Limited (ASX) Listing Rules and not disclosed elsewhere in this
report is set out below. This information is effective as at 6 September 2021.
Distribution of equity securities
Holding size
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Unitholders
4,399
6,362
2,727
3,961
201
Class
Ordinary fully stapled securities
Ordinary fully stapled securities
Ordinary fully stapled securities
Ordinary fully stapled securities
Ordinary fully stapled securities
Substantial Unitholders
Unitholder
The Vanguard Group, Inc
Argo Investments
Number of units
38,418,056
19,170,328
%
10.9%
5.0%
Holders of less than marketable parcels
The number of holders of less than marketable parcels, being $500 based on the ASX unit closing price of
$2.62 as at 6 September 2021 is set out below:
Number of unitholders
2,372
Number of units
612,973
Voting rights
The voting rights attaching to the ordinary units, set out in section 253C of the Corporations Act 2001, are:
(i)
(ii) on a poll, each member of the scheme has 1 vote for each dollar of the value of the total interests
on a show of hands, each member of a registered scheme has 1 vote; and
they have in the scheme.
Twenty largest unitholders
Unitholder
Number of units
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Pty Limited
Argo Investments Limited
CITICORP Nominees Pty Limited
Netwealth Investments Limited
Rural Funds Management Ltd
National Nominees Limited
One Managed Investment Funds Ltd
Bryant Family Services Pty Ltd
Netwealth Investments Limited
BNP Paribas Noms Pty Ltd
BNP Paribas Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
SCCASP Holdings Pty Ltd
Boskenna Pty Ltd
Neweconomy Com Au Nominees Pty Ltd <900 Account>
BNP Paribas Nominees Pty Ltd Six Sis Ltd
BNP Paribas Nominees Pty Ltd ACG Clearstream
BNP Paribas Nominees Pty Ltd
DGMH Super Pty Ltd
On-market buy-back
58,053,286
51,482,855
19,170,328
18,666,174
14,141,155
11,843,659
5,767,850
4,000,000
3,580,012
2,958,162
2,287,330
1,949,536
1,849,558
1,663,073
1,353,044
1,306,779
1,265,759
1,141,699
1,045,415
920,939
%
15.246%
13.521%
5.035%
4.902%
3.714%
3.110%
1.515%
1.051%
0.940%
0.777%
0.601%
0.512%
0.486%
0.437%
0.355%
0.343%
0.332%
0.300%
0.275%
0.242%
RFF confirms there is no on-market buy-back facility in operation.
Material lease details subsequent to listing rule 10.1 waiver
Pursuant to ASX Listing Rule 10.1, RFF confirms all relevant material leases have been terminated prior to
the financial year.
Securities exchange
The Fund is listed on the ASX. The ASX reserves the right (but without limiting its absolute discretion) to
remove Rural Funds Trust (RFT), or RF Active (RFA) from the official list if any of their securities cease to
be “stapled” together, or any securities are issued by RFA which are not stapled to equivalent securities
in RFT, or any securities are issued by RFT which are not stapled to equivalent securities in RFA.
20
21
Financial
Statements
for the year ended 30 June 2021
Rural Funds Group (ASX: RFF) stapled group comprising:
Rural Funds Trust ARSN 112 951 578 and
RF Active ARSN 168 740 805
Responsible Entity: Rural Funds Management Limited
ACN 077 492 838 AFSL 226701
Image: Improved pasture, Rewan , central Queensland, August 2021.
22
23
Rural Funds Group
Corporate Directory
Registered Office
Responsible Entity
Directors
Company Secretary
Custodian
Auditors
Share Registry
Bankers
Level 2, 2 King Street
DEAKIN ACT 2600
Rural Funds Management Limited
ABN 65 077 492 838
AFSL 226701
Level 2, 2 King Street
DEAKIN ACT 2600
Ph: 1800 026 665
Guy Paynter
David Bryant
Michael Carroll
Julian Widdup
Emma Spear
Australian Executor Trustees Limited
ABN 84 007 869 794
Level 19, 60 Castlereagh Street
SYDNEY NSW 2000
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
BARANGAROO NSW 2000
Boardroom Pty Limited
Level 12, 225 George Street
SYDNEY NSW 2000
Ph: 1300 737 760
Australia and New Zealand Banking Group Limited (ANZ)
242 Pitt Street
SYDNEY NSW 2000
Rabobank Australia Group
Darling Park Tower 3
201 Sussex Street
SYDNEY NSW 2000
Stock Exchange Listing
Rural Funds Group units (Rural Funds Trust and RF Active form a
stapled investment vehicle) are listed on the Australian Securities
Exchange (ASX)
ASX Code
RFF
Rural Funds Group
Directors’ Report
30 June 2021
Rural Funds Group (RFF or the Group) comprises the stapled units in two Trusts, Rural Funds Trust (RFT) (ARSN
112 951 578) and RF Active (RFA) (ARSN 168 740 805) (collectively, the Trusts). The Directors of Rural Funds
Management Limited (RFM) (ACN 077 492 838, AFSL 226701), the Responsible Entity of Rural Funds Group
present their report on the Group for the year ended 30 June 2021.
In accordance with AASB 3 Business Combinations, the stapling arrangement referred to above is regarded as a
business combination and Rural Funds Trust has been identified as the parent for the purpose of preparing the
consolidated financial report.
The Directors’ report is a combined report that covers both Trusts. The financial information for the Group is taken
from the Consolidated Financial Statements and notes.
Directors
The following persons held office as Directors of the Responsible Entity during the year and up to the date of this
report:
Guy Paynter
David Bryant
Michael Carroll
Julian Widdup
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Principal activities and significant changes in state of affairs
The principal activity of the Group during the year was the development and leasing of agricultural properties and
equipment. The Group is a lessor of agricultural property with revenue derived from leasing almond orchards,
macadamia orchards, vineyards, cattle properties, cropping properties, agricultural plant and equipment, cattle and
water rights.
The Group also provides a guarantee to J&F Australia Pty Ltd (J&F), a wholly owned subsidiary of Rural Funds
Management, earning a return equivalent to an equity rate of return calculated on the amount of the guarantee
during the year.
The following activities of the Group changed during the year:
In November 2020, the Group settled on the Maryborough acquisition, consisting of 5,258 hectares of sugar cane
farms and 7,740 megalitres of water entitlements located in Maryborough, Queensland and associated plant and
equipment for approximately $83.7m including transaction costs. The farms have the potential to be progressively
converted to approximately 2,200 hectares of macadamia orchards with a substantial portion of the remaining area
able to be used for cropping. Cropping operations have been performed on an interim basis for unleased portions
of land where macadamia developments have not commenced.
In November 2020, the Group purchased the Riverton property located in the Fitzroy region in Queensland for
$6.5m including transaction costs with potential for development into macadamia orchards.
In December 2020, the Group purchased the Stoneleigh property which will form part of the Rookwood Farms
aggregation, located in the Fitzroy region in Queensland for $6.6m including transaction costs with potential for
development into macadamia orchards.
In December 2020, the Group completed the sale of the Mooral almond orchard and associated plant and
equipment for a contracted price of approximately $98.0m excluding transaction costs and adjustments. A
remaining portion of the land contracted for $4.1m as part of the transaction was settled in February 2021.
In December 2020, the Group purchased an additional 1,655 hectares of land as part of the Homehill property,
located in the Fitzroy region in Queensland for $4.3m including transaction costs.
In February 2021, the Group purchased the Corrowah property which will form part of the Rookwood Farms
aggregation, located in the Fitzroy region in Queensland for $1.9m including transaction costs with potential for
development into macadamia orchards.
In February 2021, the Group increased the guarantee to J&F Australia Pty Ltd (J&F), a wholly owned subsidiary of
Rural Funds Management, from $82.5m to $99.9m to facilitate an increase in J&F’s supply of cattle to JBS as part
of its grain fed business. The guarantee earns a return for RFF equivalent to an equity rate of return which is
calculated on the amount of the guarantee during the year.
24
1
2
25
Rural Funds Group
Directors’ Report
30 June 2021
Principal activities and significant changes in state of affairs (continued)
In March 2021, the Group purchased the Tongola property which will farm part of the Rookwood Farms
aggregation, located in the Fitzroy region in Queensland for $3.2m including transaction costs with potential for
development into macadamia orchards.
In May 2021, the Group completed the sale of the Wattlebank property located in the Fitzroy region in Queensland
for approximately $1.0m. Water entitlements associated with the property were not sold as part of the transaction.
In the opinion of the Directors, there were no other significant changes in the state of affairs of the Group during
the year.
Operating results
The consolidated net profit after income tax of the Group for the year ended 30 June 2021 amounted to
$119,634,000 (2020: $48,988,000). The consolidated total comprehensive income of the Group for the year ended
30 June 2021 amounted to $123,917,000 (2020: $61,938,000).
The Group holds investment property, bearer plants and derivatives at fair value. After adjusting for the effects of
fair value adjustments, depreciation, impairments, non-cash tax expense and one-off transaction costs during the
year, the profit would have been $40,423,000 (2020: $45,427,000), representing adjusted funds from operations
(AFFO).
Adjusted funds from operations (AFFO)
The adjusted funds from operations (AFFO) calculated below effectively represents the underlying and recurring
cash earnings from the Group’s operations from which distributions are funded:
Net profit before income tax from continuing operations
Change in fair value of interest rate swaps
Depreciation and impairments - other
Depreciation - bearer plants
Change in fair value of biological assets (unharvested crops)
Change in fair value of bearer plants
Change in fair value of investment property
Impairment of property - owner occupied
Change in fair value of financial assets/liabilities
Impairment of intangible assets
Straight-lining of rental revenue
Interest component of JBS feedlot finance lease
Income tax payable (RF Active)
Gain on sale of assets
Net profit before income tax from discontinued operations
Depreciation and impairments
Change in fair value of investment property
Income tax payable (RF Active)
Loss on disposal
Loss on disposal - one off transaction costs
AFFO
AFFO cents per unit
26
2021
$'000
120,292
(12,923)
840
4,032
(1,028)
(1,007)
(42,289)
1,651
(116)
4,188
852
(769)
(432)
(32,868)
-
-
-
-
-
-
40,423
11.9
2020
$'000
49,096
7,624
2,244
4,838
-
499
(16,194)
-
(510)
798
(1,232)
(789)
(884)
(4,032)
1,502
649
1,250
(57)
29
596
45,427
13.5
3
Rural Funds Group
Directors’ Report
30 June 2021
Financial position
The net assets of the consolidated Group have increased to $648,544,000 at 30 June 2021 from $557,966,000 at
30 June 2020. At 30 June 2021, the Group had total assets of $1,041,904,000 (2020: $914,920,000).
At 30 June 2021, the Group held total water entitlements (including investments in Barossa Infrastructure Limited
(BIL) and Coleambally Irrigation Co-operative Limited (CICL)) at a book value of $122,402,000 (2020:
$129,246,000). Directors obtain independent valuations on RFF properties ensuring that each property will have
been independently valued every two years or more often where appropriate. These valuations attribute a value to
the water entitlements held by the Group. The Directors have taken into account the most recent valuations on
each property and consider that they remain a reasonable estimate of fair value. On this basis the fair value of
water entitlements at 30 June 2021 was $212,580,000 (2020: $226,945,000). The value of water entitlements is
illustrated in the table below:
Intangible assets (water entitlements)
Investment in CICL
Investment in BIL
Total book value of water entitlements
Revaluation of intangible assets per valuation
Adjusted total water entitlements
Adjusted net asset value
2021
$'000
110,418
11,464
520
122,402
90,178
212,580
2020
$'000
117,262
11,464
520
129,246
97,699
226,945
The following depicts the net assets of the Group following the revaluation of water entitlements comprising
intangible assets and investments in BIL and CICL per these valuations.
Net assets per Consolidated Statement of Financial Position
Revaluation of intangible assets per valuation
Adjusted net assets
Adjusted NAV per unit
Property leasing
At 30 June 2021 the Group held 66 (2020: 41) properties as follows:
2021
$'000
648,544
90,178
738,722
2020
$'000
557,966
97,699
655,665
2.17
1.94
•
•
•
•
•
•
3 almond orchards (4,139 planted hectares);
7 vineyards (666 planted hectares);
3 macadamia orchards (261 planted hectares);
3 macadamia orchards under development (118 hectares);
2 properties with potential for areas to be developed into macadamia orchards (3,467 hectares);
21 cattle properties made up of 16 breeding, backgrounding and finishing properties (672,342 hectares) and
5 cattle feedlots with combined capacity of 150,000 head;
2 cropping properties (7,905 hectares).
•
• Maryborough, a total of 25 properties, with areas under development into macadamia orchards, leased out
and owner operated (total 5,258 hectares).
During the year ended 30 June 2021, the properties held by the Group recorded an increment in the fair value of
investment properties of $42,289,000 (2020: $16,194,000), an increment in bearer plants revaluation of $6,510,000
(2020: $12,451,000), an impairment of intangibles of $4,188,000 (2020: $798,000) relating to water entitlements
and an impairment in property – owner occupied of $1,651,000 (2020: nil) relating to properties carrying out various
cropping operations.
4
27
Rural Funds Group
Directors’ Report
30 June 2021
Property leasing (continued)
Almond orchards
The three fully established almond orchard properties (including water entitlements) are located in Hillston, NSW
and Darlington Point, NSW and are leased to tenants who make regular rental payments. These encompass a
planted area of 4,139 hectares (2020: 4,947 hectares):
• Yilgah 1,006 planted hectares (2020: 1,006 hectares);
•
Tocabil 603 planted hectares (2020: 603 hectares);
• Kerarbury 2,530 planted hectares (2020: 2,530 hectares).
These properties are under lease to the following tenants:
• Select Harvests Limited (SHV) 1,006 planted hectares (2020: 1,221 hectares);
• Olam Orchards Australia Pty Limited (Olam) 3,133 planted hectares (2020: 3,133 hectares);
For its almond orchards the Group owns water entitlements of 55,525ML (2020: 67,743ML) comprising
groundwater, high security river water, general security river water, supplementary river water, and domestic and
stock river water. In addition, the Group owns 21,430ML (2020: 21,430ML) of water delivery entitlements that
provide access to water delivery through CICL, with a low annual allocation expected to be provided.
Vineyards
The vineyard properties held by the Group include seven vineyards, with six located in South Australia, in the
Barossa Valley, Adelaide Hills and Coonawarra regions, and one located in the Grampians in Victoria. For its
vineyards, the Group owns 936ML of water entitlements (2020: 936ML). All vineyards are leased to Treasury Wine
Estates Limited and produce premium quality grapes. Six of the vineyards are leased until June 2026 and one is
leased until June 2022.
Rural Funds Group
Directors’ Report
30 June 2021
Property leasing (continued)
Cattle property (continued)
• Homehill located north west of Rockhampton in central Queensland 4,925 hectares (2020: 3,270); and
• Prime City, Mungindi, Caroona, Beef City and Riverina, 5 cattle feedlots with a combined capacity of 150,000
head (2020:150,000 head).
The properties comprise a combined 672,342 hectares and are leased to the following tenants:
• Australian Agricultural Company Limited, leasing Rewan;
• Cattle JV Pty Limited, a wholly owned subsidiary of RFM, leasing Mutton Hole and Oakland Park;
• DA & JF Camm Pty Limited, a member of the Camm Agricultural Group, leasing the Natal aggregation;
• Elrose Enterprises Pty Limited, leasing Comanche;
• Katena Pty Limited, leasing Cerberus; and
• Stone Axe Pastoral Company Pty Limited, leasing Dyamberin, Woodburn, Cobungra, Petro, High Hill and
Willara.
In addition to this, JBS Australia Pty Limited (JBS) leases the Prime City, Mungindi, Caroona, Beef City and Riverina
feedlots.
The remaining properties are not currently leased as at 30 June 2021.
The lease arrangement for the Natal aggregation includes a $10 million secured loan provided to the lessee and a
$5 million cattle leasing arrangement to fund the purchase of cattle.
The lease arrangement for the Cerberus property includes a $1.6 million financing facility to fund the purchase of
cattle. On 1 July 2021, the lease on the Cerberus property by Katena Pty Ltd was terminated by mutual agreement
and all amounts owing to the Group have since been paid. A long-term lessee is currently being sought.
Macadamia orchards
Cropping property
Three established macadamia orchards are located near Bundaberg, QLD and leased to the following tenants:
Cropping properties held by the Group comprise of:
•
2007 Macgrove Project (M07) 234 hectares (2020: 234 hectares);
• RFM Farming Pty Limited 27 hectares (RFM) (2020: 27 hectares).
The Cygnet property located in Bundaberg, Queensland is currently unleased with 37 hectares of macadamia
plantings.
The Swan Ridge South property located in Bundaberg, Queensland is currently unleased and under development
to 40 hectares of planned macadamia plantings.
The Nursery Farm property located in Bundaberg, Queensland is currently unleased with 41 hectares of
macadamia plantings and a macadamia tree nursery.
The Riverton property and Rookwood Farms aggregation, totaling 3,467 hectares, located in the Fitzroy region in
Queensland are currently unleased which have been identified as potential development sites for macadamia
orchards.
Cattle property
Cattle properties held by the Group comprise of cattle breeding, backgrounding and finishing properties and cattle
feedlots.
• Rewan located near Rolleston in central Queensland 17,479 hectares (2020: 17,479 hectares);
• Mutton Hole and Oakland Park located in far north Queensland 225,800 hectares (2020: 225,800 hectares);
• Natal aggregation located near Charters Towers in north Queensland 390,600 hectares (2020: 390,600
hectares);
• Comanche located in central Queensland 7,600 hectares (2020: 7,600 hectares);
• Cerberus located north west of Rockhampton in central Queensland 8,280 hectares (2020: 8,280 hectares);
• Dyamberin located in the New England region of New South Wales 1,728 hectares (2020: 1,728 hectares);
• Woodburn located in the New England region of New South Wales 1,063 hectares (2020: 1,063 hectares);
• Cobungra located in the East Gippsland region of Victoria 6,497 hectares (2020: 6,497 hectares);
• Petro, High Hill and Willara located in Western Australia 6,196 hectares (2020: 6,196);
• Yarra located south west of Rockhampton in central Queensland 2,173 hectares (2020: 2,173);
28
5
•
Lynora Downs, a 4,963 hectare (2020: 4,958 hectare) cropping property located near Emerald, QLD is leased
to Cotton JV Pty Limited (Cotton JV), a joint venture between RFM and Queensland Cotton Corporation Pty
Limited (a subsidiary of Olam International Limited) until April 2022.
• Mayneland, a 2,942 hectare (2020: 2,942 hectare) cropping property located 25 km north of Lynora Downs in
central Queensland, is leased to RFM Farming Pty Limited (a wholly owned subsidiary of RFM) until 30 June
2022. A long-term lessee is being sought.
Maryborough
The Maryborough properties located in Queensland, comprise of 5,258 hectares and 7,740 ML of water
entitlements, with areas having potential to be developed into approximately 2,200 hectares of macadamia
orchards. While in the development phase, parts of the property will be:
• Under development into macadamia orchards
•
• Owner occupied and carrying out various cropping operations
Leased out to different parties for cropping operations
Other activities
The Group provides a $99,900,000 (2020: $82,500,000) limited guarantee to J&F Australia Pty Ltd (J&F). The
guarantee is currently used to support $99,900,000 of J&F’s debt facility which is used for cattle purchases, feed
and other costs associated with finishing the cattle on the feedlots, enabling J&F to supply cattle to JBS Australia
Pty Limited (JBS) for its grain fed business. The guarantee earns a return for RFF equivalent to an equity rate of
return which is calculated on the amount of the guarantee during the year.
Breeder assets under finance lease with a net book value of $17,778,000 (2020: $14,383,000) are leased to Cattle
JV Pty Limited.
Agricultural plant and equipment with a net book value of $3,422,000 (2020: $6,449,000) is owned by the Group
and leased to M07, Cotton JV, Cattle JV and RFM Farming. Agricultural plant and equipment with a net book value
of $5,294,000 (2020: $520,000) is used for the Group’s cropping operations and developments.
6
29
Rural Funds Group
Directors’ Report
30 June 2021
Banking facilities
At 30 June 2021 the core debt facility available to the Group was $380,000,000 (2020: $335,000,000), with a drawn
balance of $344,143,000 (2020: $297,248,000). The facility is split into two tranches with a $270,000,000 tranche
expiring in November 2022 and a $110,000,000 tranche expiring in November 2023. At 30 June 2021, RFF had
active interest swaps totaling 53.2% (2020: 61.6%) of the drawn balance to manage interest rate risk.
Distributions
Distribution declared 2 June 2020, paid 31 July 2020
Distribution declared 1 September 2020, paid 30 October 2020
Distribution declared 2 December 2020, paid 29 January 2021
Distribution declared 1 March 2021, paid 30 April 2021
Distribution declared 1 June 2021, paid 30 July 2021
Earnings per unit
Net profit after income tax for the year ($'000)
Weighted average number of units on issue during the year
Basic and diluted earnings per unit (total) (cents)
Indirect cost ratio
Cents
per unit
2.7118
2.8203
2.8203
2.8203
2.8203
Total
$
9,158,113
9,542,697
9,558,150
9,572,536
9,586,215
119,634
338,961,068
35.29
The indirect cost ratio (ICR) is the ratio of the Group’s management costs over the Group’s average net assets for
the year, expressed as a percentage.
Management costs include management fees and other expenses such as corporate overheads in relation to the
Group, but do not include transactional and operational costs such as brokerage. Management costs are not paid
directly by the unitholders of the Group.
The ICR for the Group for the year ended 30 June 2021 is 1.89% (2020: 1.99%).
Matters subsequent to the end of the year
On 1 July 2021, the lease on the Cerberus property by Katena Pty Ltd was terminated by mutual agreement and
all amounts owing to the Group have since been paid. A long-term lessee is currently being sought.
On 8 July 2021, the Group announced that it was undertaking a fully underwritten equity raise for $100.0m to fund
the development of 1,000ha of macadamia orchards, acquire cattle properties to be leased by corporate lessees,
and for the acquisition of 8,338 megalitres of Lower Murrumbidgee ground water entitlements for $38.4m. The
purchase is expected to settle in August 2021, and the entitlements will be leased to a private farming company for
five years.
On 15 July 2021, the Group completed the sale of a portion of surplus land on Kerarbury for approximately $1.6m.
No other matter or circumstance has arisen since the end of the year that has significantly affected or could
significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group
in future financial years.
Likely developments and expected results of operations
The Group expects to continue to derive its core future income from the holding and leasing of agricultural property
and water entitlements. Management is continually looking for growth opportunities in agricultural and related
industries.
Environmental regulation
The operations of the Group are subject to significant environmental regulations under the laws of the
Commonwealth and States or Territories of Australia. Water usage for irrigation, domestic and levee purposes,
including containing irrigation water from entering the river, water course or water aquifer are regulated by the
Water Management Act 2000. Responsibility of water licences that are leased to external parties then requires the
tenant to meet the legislative requirements for these licences. There have been no known significant breaches of
any environmental requirements applicable to the Group.
Rural Funds Group
Directors’ Report
30 June 2021
Climate change risk
RFM is aware of the potential risks that climate change could present to the Group’s assets. RFM has committed
to a climatic diversification strategy in order to mitigate these risks. Some of the areas that RFM is focused on is
the impact of emissions from Group’s assets, including carbon dioxide, methane, and nitrous oxide.
The Group’s assets produce these emissions through its agricultural infrastructure and machinery, cattle assets
and through the application of fertiliser. As part of RFM’s ongoing strategy to mitigate and improve climate related
risks, RFM will continue to monitor emissions and seek to implement infrastructure and practice changes. RFM
considers that climate change may present risks for the Group primarily in the form of residual risk of the Group’s
assets at the end of the lease terms. These risks may be mitigated by how the assets are managed. External
valuations consider these types of factors as well as other risks when determining the valuations of the assets.
COVID-19 outbreak
The outbreak of Coronavirus Disease 2019 was ongoing during the year ended 30 June 2021 and as at the date
of the financial statements. There have been unprecedented measures put in place by the Australian Government,
as well as governments across the globe, to contain the coronavirus which has led to significant uncertainty and
has had a significant impact on the Australian and global economies. Following the outbreak, the Group continues
to operate with no significant impacts to its ongoing operation to date. RFM will continue to monitor the potential
impacts of the outbreak.
Units on issue
339,900,556 units in Rural Funds Trust were on issue at 30 June 2021 (2020: 337,713,420). During the year
2,187,136 units (2020: 3,449,827) were issued by the Trust and nil (2020: nil) were redeemed.
Indemnity of Responsible Entity and Custodian
In accordance with its constitution, Rural Funds Group indemnifies the Directors, Company Secretary and all other
officers of the Responsible Entity and Custodian when acting in those capacities, against costs and expenses
incurred in defending certain proceedings.
Rounding of amounts
The Group is an entity to which ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
applies and accordingly amounts in the consolidated financial statements and Directors’ report have been rounded
to the nearest thousand dollars.
Information on Directors of the Responsible Entity
Guy Paynter
Qualifications
Experience
Special responsibilities
Non-Executive Chairman
Bachelor of Laws from The University of Melbourne
Guy Paynter is a former director of broking firm JB Were. Guy brings to
RFM more than 30 years of experience in corporate finance. Guy is a
former member of the Australian Securities Exchange (ASX) and a former
associate of the Securities Institute of Australia (now known as the
Financial Services Institute of Australasia). Guy’s agricultural interests
include cattle breeding in the Upper Hunter region in New South Wales.
Member of Audit Committee and Remuneration Committee
Directorships of other listed entities
in the last three years
RFM Poultry
30
7
8
31
Rural Funds Group
Directors’ Report
30 June 2021
Rural Funds Group
Directors’ Report
30 June 2021
Information on Directors of the Responsible Entity (continued)
Information on Directors of the Responsible Entity (continued)
David Bryant
Qualifications
Experience
Managing Director
Diploma of Financial Planning from the Royal Melbourne Institute of
Technology and Masters of Agribusiness
from The University of
Melbourne.
David Bryant established RFM in February 1997 and since that time has
led the team that is responsible for the acquisition of large-scale agricultural
property assets and associated water entitlements. RFM manages
approximately $1.3 billion of agricultural assets. David is responsible for
leading the RFM management team, maintaining key commercial
relationships and sourcing new business opportunities.
Special responsibilities
Managing Director
Directorships of other listed entities
in the last three years
RFM Poultry
Michael Carroll
Qualifications
Experience
Non-Executive Director
Bachelor of Agricultural Science, La Trobe University and Master of
Business Administration, Melbourne University Business School. Michael
has also completed the Advanced Management Program, Harvard
Business School and is a Fellow of the Australian Institute of Company
Directors.
Chair of Viridis Ag Pty Limited and the Australian Rural Leadership
Foundation. Director of Paraway Pastoral Company Limited, Genetics
Australia and the Regional Investment Corporation. Michael also runs his
own cattle business in south west Victoria.
Former board positions include Select Harvests Limited, Elders Limited,
Sunny Queen Australia Pty Limited, Tassal Group Limited, the Australian
Farm Institute, Warrnambool Cheese and Butter Factory Company
Holdings Limited, Queensland Sugar Limited, Rural Finance Corporation
of Victoria, Meat and Livestock Australia and the Geoffrey Gardiner Dairy
Foundation.
Michael’s executive experience includes establishing and leading the
National Australia Bank’s Agribusiness division and as a Senior Adviser in
NAB’s internal investment banking and corporate advisory team. Prior to
that Michael worked
for Monsanto Agricultural Products and a
biotechnology venture capital company.
Special responsibilities
Chairman of Audit Committee and Remuneration Committee
Directorships of other listed entities
in the last three years
Michael held previous roles as Chairman of Elders Limited and Director of
Select Harvests Limited, Tassal Group Limited and RFM Poultry.
Julian Widdup
Qualifications
Experience
Non-Executive Director
Bachelor of Economics, Master of Business Administration and University
Medal from the Australian National University. Completed the Senior
Executive Leadership Program at Harvard Business School. Fellow of the
Institute of Actuaries of Australia and Fellow of the Australian Institute of
Company Directors.
is currently a director of
Julian Widdup
the Australian Catholic
Superannuation & Retirement Fund, Screen Canberra and Cultural
Facilities Corporation. He worked in the financial services industry for over
20 years including as a senior executive of asset management companies,
Palisade
Investment Partners and Access Capital Advisers (now
Whitehelm Capital). Julian brings extensive experience to the RFM board
having been a director of Darwin International Airport, Alice Springs Airport,
NZ timberland company Taumata Plantations Limited, Regional Livestock
Exchange Investment Company, Merredin Energy power utility and the
Victorian AgriBioscience Research Facility.
Special responsibilities
Member of Audit Committee and Remuneration Committee
Directorships of other listed entities
in the last three years
RFM Poultry
Interests of Directors of the Responsible Entity
Balance at 30 June 2019
Additions
Balance at 30 June 2020
Additions
Balance at 30 June 2021
Guy Paynter
Units
1,059,104
500,000
1,559,104
-
1,559,104
David Bryant* Michael Carroll
Units
27,623
57,111
Units
14,414,854
823,180
Julian Widdup
Units
-
110,203
15,238,034
-
15,238,034
84,734
133,668
218,402
110,203
5,562
115,765
*Includes interests held by Rural Funds Management Limited as the Responsibly Entity.
Company Secretary of the Responsible Entity
Emma Spear is RFM’s company secretary. Emma joined RFM in 2008, is a member of CPA Australia and is
admitted as a Legal Practitioner of the Supreme Court of the ACT.
Meetings of Directors of the Responsible Entity
During the financial year 19 meetings of Directors (including committees of Directors) were held. Attendances by
each Director during the year were as follows:
Directors meetings
Audit Committee meetings
No. eligible
to attend
No.
attended
No. eligible
to attend
No.
attended
15
15
15
15
15
15
15
15
2
-
2
2
2
-
2
2
Remuneration Committee
meetings
No. eligible
to
attend
2
-
2
2
No.
attended
2
-
2
2
Guy Paynter
David Bryant
Michael Carroll
Julian Widdup
Non-audit services
Fees of $20,395 (2020: $15,960) were paid or payable to PricewaterhouseCoopers for compliance audit services
provided for the year ended 30 June 2021.
32
9
10
33
Rural Funds Group
Directors’ Report
30 June 2021
Auditor’s independence declaration
The auditor’s independence declaration in accordance with section 307C of the Corporations Act 2001 for the year
ended 30 June 2021 has been received and is included on page 12 of the financial report.
35 of the annual report.
The Directors’ report is signed in accordance with a resolution of the Board of Directors of Rural Funds
Management Limited.
David Bryant
Director
25 August 2021
Auditor’s Independence Declaration
As lead auditor for the audit of Rural Funds Group for the year ended 30 June 2021, I declare that to
the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Rural Funds Trust and the entities it controlled during the period.
Rod Dring
Partner
Sydney
25 August 2021
34
11
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
12
35
Rural Funds Group
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Continuing operations
Revenue
Other income
Management fees
Property expenses
Finance costs
Cost of goods sold
Other expenses
Gain on sale of assets
Depreciation and impairments - other
Change in fair value of investment property
Change in fair value of bearer plants
Depreciation - bearer plants
Impairment of intangible assets
Impairment of property - owner occupied
Change in fair value of biological assets
Change in fair value of interest rate swaps
Change in fair value of financial assets/liabilities
Net profit before income tax from continuing operations
Income tax expense
Net profit after income tax from continuing operations
Net profit before income tax from discontinued operations
Income tax expense on discontinued operations
Net profit after income tax from discontinued operations
Net profit after income tax
Other comprehensive income:
Items that will not be reclassified to profit or loss
Revaluation increment - Bearer plants
Income tax relating to these items
Other comprehensive income for the year, net of tax
Total comprehensive income attributable to unitholders
Note
B3
B3
C2
C3
C3
C5
C6
F7
D1
C3
D1
2021
$'000
67,166
3,935
(11,017)
(2,829)
(10,498)
(484)
(5,609)
32,868
(840)
42,289
1,007
(4,032)
(4,188)
(1,651)
1,136
12,923
116
120,292
(658)
119,634
-
-
-
2020
$'000
66,818
4,397
(9,621)
(2,038)
(10,255)
-
(4,938)
4,032
(2,244)
16,194
(499)
(4,838)
(798)
-
-
(7,624)
510
49,096
(1,553)
47,543
1,502
(57)
1,445
119,634
48,988
5,503
(1,220)
4,283
123,917
12,950
-
12,950
61,938
Rural Funds Group
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Note
Total net profit after income tax for the year attributable
to unitholders arising from:
Rural Funds Trust
RF Active (non-controlling interest)
Total
Total comprehensive income for the year attributable to
unitholders arising from:
Rural Funds Trust
RF Active (non-controlling interest)
Total
Total comprehensive income for the year attributable to
unitholders arising from:
Continuing operations
Discontinued operations
Total
Earnings per unit
Basic and diluted earnings per unit from continuing operations:
Per stapled unit (cents)
Per unit of Rural Funds Trust (cents)
Per unit of RF Active (cents)
Basic and diluted earnings per unit attributable to the unitholders:
Per stapled unit (cents)
Per unit of Rural Funds Trust (cents)
Per unit of RF Active (cents)
B4
B4
B4
2021
$'000
117,696
1,938
119,634
121,979
1,938
123,917
123,917
-
123,917
35.29
34.72
0.57
35.29
34.72
0.57
2020
$'000
44,627
4,361
48,988
57,577
4,361
61,938
60,493
1,445
61,938
14.15
12.85
1.30
14.58
13.28
1.30
The accompanying notes form part of these financial statements.
The accompanying notes form part of these financial statements.
13
36
14
37
Rural Funds Group
Consolidated Statement of Financial Position
As at 30 June 2021
NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
Unitholders of Rural Funds Trust
Issued units
Asset revaluation reserve
Retained earnings
Parent entity interest
Unitholders of RF Active
Issued units
Retained earnings
Non-controlling interest
Note
E7
F6
E7
2021
$'000
2020
$'000
380,440
48,347
206,767
635,554
4,700
8,290
12,990
355,923
59,412
131,628
546,963
4,651
6,352
11,003
Total net assets attributable to unitholders
648,544
557,966
Rural Funds Group
Consolidated Statement of Financial Position
As at 30 June 2021
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Assets held for sale
Biological assets
Income tax receivable
Total current assets
Non-current assets
Investment property
Plant and equipment - bearer plants
Financial assets
Intangible assets
Property - owner occupied
Plant and equipment - other
Derivative financial assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax payable
Interest bearing liabilities
Derivative financial liabilities
Distributions payable
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Other non-current liabilities
Derivative financial liabilities
Total non-current liabilities
Total liabilities (excluding net assets attributable to
unitholders)
Net assets attributable to unitholders
Total liabilities
Note
F1
F2
F3
C8
F7
D2
C2
C3
C4, E2
C5
C6
C7
E3
F4
D2
E1
E3
E8
E1
D2
F5
E3
2021
$'000
11,647
4,945
4,995
1,621
2,988
477
2020
$'000
5,085
5,446
2,688
63,358
-
-
26,673
76,577
596,924
160,782
107,177
110,418
28,284
8,716
2,930
1,015,231
1,041,904
3,195
-
2,456
3,604
10,022
19,277
344,143
7,450
4,421
18,069
374,083
393,360
648,544
1,041,904
474,838
153,528
100,225
106,551
-
3,201
-
838,343
914,920
3,502
1,533
3,814
3,666
9,460
21,975
297,248
5,855
3,877
27,999
334,979
356,954
557,966
914,920
*Water entitlements are held at cost less accumulated impairment in the Consolidated Statement of Financial
Position in accordance with accounting standards. Refer to note B1 Segment information, for disclosure of the
Directors’ valuation of water entitlements, which are supported by independent property valuations.
The accompanying notes form part of these financial statements.
The accompanying notes form part of these financial statements.
15
38
16
39
Rural Funds Group
Consolidated Statement of Changes in Net Assets Attributable to Unitholders
For the year ended 30 June 2021
2021
Note
Balance at 1 July 2020
Other comprehensive income
Total other comprehensive income
Profit before income tax
Income tax expense
Total comprehensive income for the
year
Transfer on disposal of bearer plants to
retained earnings
Issued units
Units issued during the year
Issue costs
Total issued units
Distributions to unitholders
Balance at 30 June 2021
2020
Balance at 1 July 2019
Other comprehensive income
Total other comprehensive income
Profit before income tax
Income tax expense
Total comprehensive income for the
year
Issued units
Units issued during the year
Issue costs
Total issued units
Distributions to unitholders
Balance at 30 June 2020
Issued
units
$'000
355,923
-
Asset
revaluation
reserve
$'000
Retained
earnings
$'000
Non-
controlling
interest
$'000
Total
$'000
Total
$'000
59,412
4,283
131,628 546,963
4,283
-
11,003 557,966
4,283
-
-
-
-
-
-
4,871
-
4,871
D1
E7
B5, E7
19,646
4,283
-
4,283
-
4,283
-
-
117,527 117,527
169
169
2,765 120,292
(658)
(827)
4,283
117,696 121,979
1,938 123,917
(15,348)
15,348
-
-
-
-
-
-
-
-
-
-
4,871
-
4,871
49
-
49
4,920
-
4,920
(57,905)
(38,259)
- (38,259)
380,440
48,347
206,767 635,554
12,990 648,544
Issued
units
$'000
358,269
-
Asset
revaluation
reserve
$'000
46,462
12,950
Retained
earnings
$'000
Total
$'000
114,565 519,296
12,950
-
Non-
controlling
Total
interest
$'000
$'000
6,576 525,872
12,950
-
D1
-
-
-
-
12,950
-
12,950
-
12,950
-
-
45,213
(586)
45,213
(586)
5,385
(1,024)
50,598
(1,610)
12,950
44,627
57,577
4,361
61,938
E7
B5, E7
6,494
79
6,573
(8,919)
355,923
-
-
-
-
59,412
6,494
-
79
-
6,573
-
(36,483)
(27,564)
131,628 546,963
66
-
66
6,560
79
6,639
- (36,483)
11,003 557,966
Rural Funds Group
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Finance income
Finance costs
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for investment property
Payments for plant and equipment - bearer plants
Payments for intangible assets
Payments for financial assets
Payments for property - owner occupied
Payments for plant and equipment
Proceeds from sale of Mooral assets
Proceeds from sale of investment property
Proceeds from sale of plant and equipment
Proceeds from sale of intangible assets
Proceeds from sale of poultry assets
Transaction costs on disposal of poultry assets
Distributions received
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of units
Proceeds from borrowings
Repayment of borrowings
Distributions paid
Net cash inflow/(outflow) from financing activities
Net increase in cash and cash equivalents held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
C2
C3
C5
C6
C7
E7
2021
$'000
64,194
(29,318)
126
13,197
(10,498)
(2,293)
35,408
(84,163)
(4,457)
(8,055)
(7,096)
(29,959)
(7,187)
97,330
960
968
-
-
-
64
(41,595)
4,920
185,293
(139,766)
(37,698)
12,749
6,562
5,085
11,647
2020
$'000
71,021
(26,723)
139
10,218
(10,881)
(439)
43,335
(59,779)
(2,997)
(3,250)
(27,243)
-
(2,228)
-
-
173
6,668
71,913
(596)
50
(17,289)
6,639
78,101
(72,316)
(35,973)
(23,549)
2,497
2,588
5,085
The accompanying notes form part of these financial statements.
17
The accompanying notes form part of these financial statements.
40
18
41
Rural Funds Group
Notes to the Financial Statements
30 June 2021
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements,
estimates and assumptions in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various
factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions and conditions and may materially affect financial results or the financial
position reported in future periods.
The following are areas for which significant judgements, estimates or assumptions are made:
Valuation of property related assets
Independent valuations on the Group’s properties are obtained, ensuring that each property will have been
independently valued every two financial years or more often where appropriate. Independent valuation reports
assess and provide value for properties in their entirety.
Significant judgement is applied in order to allocate the total property value, as disclosed in the independent
valuation reports where applicable, to investment property, bearer plants and water entitlements. The allocation
technique will vary depending on the nature of the lease arrangement.
Where information is available, each component of the property, meaning the land and infrastructure, the trees and
any water assets, disclosed in the financial statements as investment property, bearer plants and water
entitlements, will be allocated on an encumbered (subject to lease) basis.
If this information is not available, the valuation report may provide additional information, such as the summation
basis of the unencumbered (not subject to lease) value, evidence of other market transactions and the analysis of
those component parts, which along with other sources, including the nature of capital expenditure on the property,
is used to determine the encumbered allocation to components. Significant judgement is applied as part of these
allocations, which vary from property to property, given the individual circumstances of the leasing arrangements.
The allocation technique may change to reflect the best estimate of fair value attributable to each component at
reporting date. Allocation techniques are disclosed in Note C1.
Estimation of useful lives of bearer plants
The useful lives of bearer plants have been estimated by assessing industry data. The useful lives of bearer plants
are disclosed in Note C3.
Comparative amounts
Comparative amounts have not been restated unless otherwise noted.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
A. REPORT OVERVIEW
General information
This financial report covers the consolidated financial statements and notes of Rural Funds Trust and its Controlled
Entities including RF Active (Rural Funds Group, the Group or collectively the Trusts). Rural Funds Group is a for
profit entity incorporated and domiciled in Australia. The Directors of the Responsible Entity authorised the
Financial Report for issue on 25 August 2021 and have the power to amend and reissue the Financial Report.
Items included in the financial statements of each of the Group entities are measured using the currency of the
primary economic environment in which the entity operates (functional currency). The consolidated financial
statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.
The separate financial statements and notes of the parent entity, Rural Funds Trust, have not been presented
within this financial report as permitted by amendments made to the Corporations Act 2001. Parent entity
information is included in section G3.
COVID-19 outbreak
The outbreak of Coronavirus Disease 2019 was ongoing during the year ended 30 June 2021 and as at the date
of the financial statements. There have been unprecedented measures put in place by the Australian Government,
as well as governments across the globe, to contain the coronavirus which has led to significant uncertainty and
has had a significant impact on the Australian and global economies. Following the outbreak, the Group continues
to operate with no significant impacts to its ongoing operation to date. RFM will continue to monitor the potential
impacts of the outbreak.
Basis of preparation
The Trusts have common business objectives and operate collectively as an economic entity known as Rural Funds
Group. The financial statements are general purpose financial statements that have been prepared in accordance
Interpretations, and other authoritative
with Australian Accounting Standards, Australian Accounting
pronouncements of the Australian Accounting Standards Board, the Corporations Act 2001 and the Trusts’
Constitution. The report has been prepared on a going concern basis.
The significant accounting policies used in the preparation and presentation of these financial statements are
provided below and are consistent with prior reporting periods unless otherwise stated. The financial statements
are based on historical cost, except for the measurement at fair value of selected non-current assets, financial
assets and financial liabilities.
These financial statements are consolidated financial statements and accompanying notes of both Rural Funds
Trust and RF Active.
Rounding of amounts
The Group is an entity to which ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
applies and accordingly amounts in the consolidated financial statements and Directors’ report have been rounded
to the nearest thousand dollars.
Principles of consolidation
The consolidated financial statements include the financial position and performance of controlled entities from the
date on which control is obtained until the date that control is lost.
Intragroup assets, liabilities, income, expenses and cash flows relating to transactions between entities in the
consolidated Group have been eliminated in full for the purpose of these financial statements.
Appropriate adjustments have been made to the controlled entity’s financial position, performance and cash flows
where the accounting policies used by that entity were different from those adopted by the consolidated entity. All
controlled entities have a 30 June financial year end.
Controlled entities
In accordance with AASB 3 Business Combinations, Rural Funds Trust is deemed to control RF Active from the
stapling date of 16 October 2014. Rural Funds Trust is considered to be the acquirer of RF Active due to the size
of the respective entities and as the stapling transaction and capitalisation of RF Active was funded by a distribution
from Rural Funds Trust that was compulsorily used to subscribe for units in RF Active.
42
19
20
43
1
2
2
2
f
o
s
r
o
t
c
e
r
i
D
e
h
t
s
a
d
e
i
f
i
t
n
e
d
i
n
e
e
b
s
a
h
,
s
t
n
e
m
g
e
s
g
n
i
t
a
r
e
p
o
e
h
t
f
o
e
c
n
a
m
r
o
f
r
e
p
i
g
n
s
s
e
s
s
a
d
n
a
s
e
c
r
u
o
s
e
r
g
n
i
t
a
c
o
l
l
a
r
o
f
i
l
e
b
s
n
o
p
s
e
r
s
i
o
h
w
,
r
e
k
a
m
n
o
s
c
e
d
i
i
g
n
i
t
a
r
e
p
o
f
i
e
h
c
e
h
T
d
n
a
i
g
n
d
o
h
l
h
c
a
e
)
s
t
n
e
m
g
e
s
i
x
s
:
0
2
0
2
(
s
t
n
e
m
g
e
s
e
v
i
f
n
i
d
e
t
n
e
s
e
r
p
s
r
o
t
c
e
s
l
a
r
u
t
l
u
c
i
r
g
a
n
i
y
t
r
e
p
o
r
p
l
d
e
h
p
u
o
r
G
e
h
t
,
1
2
0
2
e
n
u
J
0
3
d
e
d
n
e
r
a
e
y
e
h
t
g
n
i
r
u
D
.
y
t
i
t
i
l
n
E
e
b
s
n
o
p
s
e
R
e
h
t
,
y
t
r
e
p
o
r
p
t
n
e
m
t
s
e
v
n
i
e
d
u
c
n
l
i
s
t
e
s
s
a
y
t
r
e
p
o
r
p
t
n
e
m
g
e
S
.
e
m
o
c
n
i
t
s
e
r
e
t
n
i
d
n
a
e
m
o
c
n
i
e
c
n
a
n
i
f
,
e
m
o
c
n
i
l
a
t
n
e
r
s
e
d
u
c
n
l
i
e
u
n
e
v
e
r
t
n
e
m
g
e
S
.
t
i
n
e
m
p
u
q
e
d
n
a
y
t
r
e
p
o
r
p
l
a
r
u
t
l
u
c
i
r
g
a
g
n
s
a
e
i
l
d
e
g
a
n
a
m
e
r
a
s
r
o
t
c
e
s
e
s
e
h
t
n
i
d
e
s
i
r
o
g
e
t
a
c
t
o
n
s
t
e
s
s
a
y
t
r
e
p
o
r
p
d
n
a
e
u
n
e
v
e
R
i
.
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
d
n
a
s
t
e
s
s
a
l
l
i
a
c
n
a
n
i
f
i
,
d
e
p
u
c
c
o
r
e
n
w
o
–
y
t
r
e
p
o
r
p
,
s
t
e
s
s
a
e
b
g
n
a
l
i
t
n
i
l
,
s
t
n
a
p
r
e
r
a
e
b
a
n
o
r
e
k
a
m
i
n
o
s
c
e
d
i
g
n
i
t
a
r
e
p
o
i
f
e
h
c
e
h
t
y
b
d
e
w
e
v
e
r
i
e
r
a
e
s
e
h
t
s
a
s
t
n
e
m
g
e
s
l
i
a
u
d
v
d
n
i
i
o
t
d
e
t
a
c
o
l
l
a
t
o
n
e
r
a
s
e
s
n
e
p
x
e
t
c
e
r
i
d
n
i
r
o
t
c
e
r
i
d
d
n
a
s
e
i
t
i
l
i
b
a
L
i
.
l
e
v
e
l
t
e
a
r
o
p
r
o
c
a
t
a
s
t
n
e
m
e
v
o
m
n
o
i
t
a
u
a
v
e
r
d
n
a
l
e
u
n
e
v
e
r
t
n
e
m
g
e
S
i
.
s
s
a
b
t
d
e
a
d
i
l
o
s
n
o
c
0
0
0
$
'
6
2
9
,
3
5
6
2
1
)
2
5
8
(
6
6
9
,
3
1
6
6
1
,
7
6
)
3
(
1
3
2
0
0
0
$
'
4
-
2
3
2
0
0
0
$
'
1
0
3
,
1
-
-
4
3
5
3
3
,
1
8
6
8
,
2
3
1
0
2
-
)
4
2
(
)
2
3
0
,
4
(
3
0
5
,
5
3
7
5
,
7
3
6
7
0
,
3
4
8
6
7
,
8
4
4
8
,
1
5
-
-
-
-
-
8
3
4
8
3
4
-
)
8
1
2
(
5
5
3
2
9
7
)
3
7
6
,
5
(
)
1
8
8
,
4
(
)
6
2
5
,
4
(
-
-
-
0
0
0
$
'
4
1
8
,
3
-
-
8
1
0
0
0
$
'
7
3
0
,
4
4
1
8
,
3
5
5
0
,
4
-
-
)
4
2
(
-
-
8
4
7
,
1
8
4
7
,
1
8
4
7
,
1
-
-
)
6
1
0
,
1
(
8
6
0
,
4
4
3
4
,
1
2
4
6
6
7
0
,
2
)
4
3
6
,
2
(
0
0
0
$
'
8
8
7
,
3
1
)
8
(
0
2
1
0
2
9
,
3
1
0
2
8
,
7
2
-
-
6
8
1
-
-
3
2
6
,
5
4
3
2
6
,
5
4
3
2
6
,
5
4
0
0
0
$
'
)
9
5
8
(
5
5
7
,
0
3
2
2
1
0
1
9
,
9
2
1
8
4
,
2
3
-
)
8
9
7
,
2
(
3
4
6
)
8
4
8
(
3
3
3
,
7
5
8
4
,
6
)
0
9
4
,
1
(
l
a
t
o
T
r
e
h
t
O
s
a
i
m
a
d
a
c
a
M
i
g
n
p
p
o
r
C
s
d
r
a
y
e
n
V
i
e
l
t
t
a
C
s
d
n
o
m
A
l
t
n
e
m
e
r
c
n
i
l
n
o
i
t
a
u
a
v
e
r
e
h
T
.
n
o
i
t
a
g
e
r
g
g
A
l
a
t
a
N
e
h
t
d
n
a
a
r
g
n
u
b
o
C
l
,
e
o
H
n
o
t
t
u
M
,
k
r
a
P
d
n
a
k
a
O
l
,
n
a
w
e
R
f
o
n
o
i
t
a
u
a
v
l
l
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
h
g
u
o
r
h
t
t
n
e
m
e
r
c
n
i
n
o
i
t
l
a
u
a
v
e
R
s
s
o
l
r
o
t
i
f
o
r
p
h
g
u
o
r
h
t
e
u
a
v
l
r
i
a
f
n
i
e
g
n
a
h
C
n
o
i
t
a
u
a
v
l
s
'
r
o
t
c
e
r
i
d
r
e
p
s
t
n
e
m
e
l
t
i
t
n
e
r
e
t
a
w
f
o
n
o
i
t
l
a
u
a
v
e
R
n
o
i
t
a
u
a
v
e
r
l
l
a
t
o
T
)
d
e
i
p
u
c
c
o
r
e
n
w
o
(
y
t
r
e
p
o
r
p
-
n
o
i
t
a
i
c
e
r
p
e
D
l
s
t
n
a
p
r
e
r
a
e
b
-
n
o
i
t
a
i
c
e
r
p
e
D
g
n
n
i
i
l
-
t
i
h
g
a
r
t
s
-
e
u
n
e
v
e
r
l
a
t
n
e
R
e
u
n
e
v
e
r
l
a
t
n
e
R
1
2
0
2
i
d
e
v
e
c
e
r
t
s
e
r
e
t
n
I
e
m
o
c
n
i
e
c
n
a
n
F
i
e
u
n
e
v
e
r
l
a
t
o
T
l
i
a
s
o
p
s
d
n
o
n
i
a
G
a
n
r
e
t
x
e
e
h
t
o
t
s
e
t
a
e
r
y
e
g
r
a
l
l
l
t
n
e
m
g
e
s
e
l
t
t
a
c
e
h
t
r
o
f
n
o
i
t
l
a
u
a
v
e
R
n
o
i
t
a
u
a
v
e
r
l
l
a
t
o
T
s
a
f
f
o
n
e
t
t
i
r
w
n
e
e
b
e
v
a
h
t
a
h
t
s
t
s
o
c
n
o
i
t
c
a
s
n
a
r
t
o
t
s
e
t
a
e
r
l
l
y
e
g
r
a
l
n
o
l
i
t
a
u
a
v
e
r
e
h
T
i
.
s
a
m
a
d
a
c
a
M
d
n
a
i
g
n
p
p
o
r
C
e
h
t
o
t
d
e
t
a
c
o
l
l
a
n
e
e
b
s
a
h
s
t
e
s
s
a
h
g
u
o
r
o
b
y
r
a
M
e
h
t
f
o
n
o
i
t
l
a
u
a
v
e
R
.
s
t
n
e
m
e
v
o
m
t
e
k
r
a
m
o
t
l
e
u
d
y
n
a
m
s
i
i
s
t
n
e
m
e
t
a
t
S
i
l
a
i
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
p
u
o
r
G
s
d
n
u
F
l
a
r
u
R
n
o
i
t
a
m
r
o
f
n
i
t
n
e
m
g
e
S
1
B
S
T
L
U
S
E
R
.
B
1
2
0
2
e
n
u
J
0
3
44
.
n
o
i
t
a
c
o
l
l
a
t
n
e
m
g
e
s
e
h
t
f
o
s
l
i
a
t
e
d
r
e
h
t
r
u
f
r
o
f
e
t
o
n
h
g
u
o
r
o
b
y
r
a
M
–
1
B
n
o
i
t
c
e
s
o
t
f
r
e
e
R
.
n
o
i
i
t
i
s
u
q
c
a
e
h
t
f
o
t
r
a
p
)
d
e
u
n
i
t
n
o
c
s
i
d
(
l
a
t
o
T
r
e
h
t
O
y
r
t
l
u
o
P
s
a
i
m
a
d
a
c
a
M
i
g
n
p
p
o
r
C
s
d
r
a
y
e
n
V
i
e
l
t
t
a
C
s
d
n
o
m
A
l
.
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
u
a
v
l
s
e
i
t
r
e
p
o
r
p
n
o
s
l
i
t
a
e
d
r
o
f
1
C
n
o
i
t
c
e
s
o
t
r
e
f
e
R
)
d
e
u
n
i
t
n
o
c
(
s
t
n
e
m
e
v
o
m
n
o
i
t
a
u
l
a
v
e
r
d
n
a
e
u
n
e
v
e
r
t
n
e
m
g
e
S
)
d
e
u
n
i
t
n
o
c
(
n
o
i
t
a
m
r
o
f
n
i
t
n
e
m
g
e
S
1
B
s
t
n
e
m
e
t
a
t
S
i
l
a
i
c
n
a
n
F
e
h
t
o
t
s
e
t
o
N
1
2
0
2
e
n
u
J
0
3
p
u
o
r
G
s
d
n
u
F
l
a
r
u
R
0
0
0
$
'
0
2
6
,
9
5
9
3
1
2
3
2
,
1
7
8
9
,
0
1
8
7
9
,
1
7
)
5
2
6
(
)
8
3
8
,
4
(
0
7
2
0
0
0
$
'
-
5
3
-
5
0
3
-
-
-
4
2
-
0
0
0
$
'
6
3
1
,
5
0
6
1
,
5
)
5
2
6
(
-
0
5
9
,
2
1
-
-
7
5
1
,
4
1
8
5
5
)
0
5
2
,
1
(
7
0
1
,
7
2
8
5
5
)
0
5
2
,
1
(
0
3
9
,
0
2
7
8
6
,
6
1
)
5
9
5
,
2
(
7
3
0
,
8
4
5
4
2
,
7
1
)
5
4
8
,
3
(
-
)
7
1
2
(
4
4
5
1
6
9
5
6
)
9
2
(
0
3
6
-
-
-
)
4
3
5
(
)
4
3
5
(
-
)
4
3
5
(
-
6
)
3
(
0
0
0
$
'
5
3
3
,
1
-
-
-
0
0
0
$
'
6
9
2
,
3
-
-
6
5
0
0
0
$
'
1
9
8
,
3
8
3
3
,
1
6
9
2
,
3
7
4
9
,
3
-
)
5
6
9
(
-
-
0
8
1
0
5
1
8
9
,
0
1
7
9
7
,
3
2
0
0
0
$
'
0
0
0
$
'
5
3
2
,
2
1
7
5
4
,
3
3
-
-
-
8
7
6
5
3
1
,
4
3
)
6
5
6
,
3
(
g
n
n
i
i
l
-
t
h
g
a
r
t
s
i
-
e
u
n
e
v
e
r
l
a
t
n
e
R
i
d
e
v
e
c
e
r
t
s
e
r
e
t
n
I
e
m
o
c
n
i
e
c
n
a
n
F
i
e
u
n
e
v
e
r
l
a
t
n
e
R
e
u
n
e
v
e
r
l
a
t
o
T
0
2
0
2
s
t
n
a
l
p
r
e
r
a
e
b
-
n
o
i
t
a
i
c
e
r
p
e
D
l
a
s
o
p
s
i
d
n
o
s
s
o
L
-
-
-
-
-
6
6
8
,
2
1
3
7
4
,
2
-
5
3
3
,
2
1
6
6
8
,
2
1
8
0
8
,
4
1
-
7
6
8
,
6
6
6
8
,
2
1
5
7
6
,
1
2
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
o
h
g
u
o
r
h
t
t
n
e
m
e
r
c
n
i
n
o
i
t
a
u
a
v
e
R
l
s
s
o
l
r
o
t
i
f
o
r
p
h
g
u
o
r
h
t
e
u
a
v
l
r
i
a
f
n
i
e
g
n
a
h
C
s
'
r
o
t
c
e
r
i
d
r
e
p
s
t
n
e
m
e
l
t
i
t
n
e
r
e
t
a
w
f
o
n
o
i
t
a
u
a
v
e
R
l
n
o
i
t
a
u
l
a
v
e
r
l
a
t
o
T
n
o
i
t
a
u
a
v
l
n
o
i
t
a
u
l
a
v
e
r
l
a
t
o
T
e
m
o
c
n
i
45
l
a
t
o
T
d
e
t
a
c
o
l
l
a
n
U
s
a
i
m
a
d
a
c
a
M
i
g
n
p
p
o
r
C
s
d
r
a
y
e
n
V
i
e
l
t
t
a
C
s
d
n
o
m
A
l
0
0
0
$
'
0
0
0
$
'
4
2
9
,
6
9
5
2
8
7
,
0
6
1
2
1
3
,
4
0
1
8
1
4
,
0
1
1
4
8
2
,
8
2
6
1
7
,
8
1
2
6
,
1
-
-
-
-
-
4
1
3
6
6
,
2
3
7
5
0
,
1
1
0
,
1
7
7
6
,
2
3
8
7
1
,
0
9
1
9
0
,
4
3
5
3
2
,
1
0
1
,
1
8
6
7
,
6
6
0
0
0
$
'
4
4
7
,
7
4
7
8
3
,
1
1
2
5
9
4
6
4
,
4
-
1
1
9
,
5
-
8
0
4
8
5
4
,
0
7
6
6
8
,
0
7
-
-
0
0
0
$
'
0
0
3
,
3
8
-
6
3
2
,
4
4
8
2
,
8
2
5
6
0
,
2
-
5
8
8
,
7
1
1
0
0
0
$
'
0
4
5
,
4
3
5
1
8
,
3
2
8
3
7
0
0
5
-
-
-
0
3
3
,
5
3
9
5
,
9
5
0
0
0
$
'
0
0
0
$
'
-
6
4
8
,
0
9
8
4
8
,
1
1
5
1
,
5
0
3
-
-
0
4
6
9
8
1
,
6
2
1
0
8
5
,
5
2
1
2
6
7
,
1
1
7
0
7
,
6
6
-
0
0
1
1
2
6
,
1
7
4
8
,
0
3
7
4
8
,
0
3
-
-
-
-
-
s
t
n
u
o
c
c
a
y
r
o
t
u
t
a
t
s
r
e
p
s
t
e
s
s
a
r
e
h
t
O
2
8
0
,
2
3
1
,
1
5
1
6
,
7
9
6
6
8
,
0
7
5
8
8
,
7
1
1
3
2
9
,
4
6
5
8
4
,
8
9
3
8
0
3
,
2
8
3
s
t
e
s
s
a
d
e
t
s
u
d
a
j
l
a
t
o
T
5
8
8
,
7
1
1
3
2
9
,
4
6
5
8
4
,
8
9
3
8
0
3
,
2
8
3
s
'
r
o
t
c
e
r
i
d
t
a
s
t
e
s
s
a
y
t
r
e
p
o
r
p
d
e
t
s
u
d
a
j
l
a
t
o
T
n
o
i
t
a
u
l
a
v
5
8
4
,
8
9
3
9
5
9
,
1
3
3
s
t
n
u
o
c
c
a
y
r
o
t
u
t
a
t
s
r
e
p
s
t
e
s
s
a
y
t
r
e
p
o
r
p
l
a
t
o
T
-
9
4
3
,
0
5
n
o
i
t
a
u
a
v
l
s
'
r
o
t
c
e
r
i
d
r
e
p
s
t
e
s
s
a
i
l
e
b
g
n
a
t
n
i
f
o
n
o
i
t
a
u
a
v
e
R
l
)
d
e
u
n
i
t
n
o
c
(
n
o
i
t
a
m
r
o
f
n
i
t
n
e
m
g
e
S
1
B
s
t
e
s
s
a
t
n
e
m
g
e
S
1
2
0
2
e
n
u
J
0
3
l
s
t
n
a
p
r
e
r
a
e
b
-
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
P
l
y
t
r
e
p
o
r
p
t
n
e
m
t
s
e
v
n
I
1
2
0
2
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
p
u
o
r
G
s
d
n
u
F
l
a
r
u
R
s
e
t
o
N
46
d
e
t
a
e
r
l
y
t
r
e
p
o
r
p
-
s
t
e
s
s
a
l
i
a
c
n
a
n
F
i
i
d
e
p
u
c
c
o
r
e
n
w
o
-
y
t
r
e
p
o
r
P
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
P
l
l
e
a
s
r
o
f
d
e
h
l
s
t
e
s
s
A
)
r
e
t
a
w
(
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
I
3
2
4
2
l
a
t
o
T
d
e
t
a
c
o
l
l
a
n
U
s
a
i
m
a
d
a
c
a
M
i
g
n
p
p
o
r
C
s
d
r
a
y
e
n
V
i
e
l
t
t
a
C
s
d
n
o
m
A
l
8
3
8
,
4
7
4
8
2
5
,
3
5
1
7
5
5
,
7
9
-
-
7
1
0
0
0
$
'
0
0
0
$
'
1
5
5
,
6
0
1
4
6
5
,
1
3
1
0
2
,
3
8
5
3
,
3
6
9
9
6
,
7
9
3
3
0
,
9
9
8
-
-
1
8
5
,
1
3
2
5
6
,
3
3
0
0
0
$
'
9
1
7
,
1
1
7
6
9
,
6
7
1
8
1
6
1
,
1
3
4
6
,
1
-
3
5
7
0
3
,
2
2
0
0
0
$
'
6
9
8
,
7
4
-
-
-
2
7
6
,
3
8
4
0
,
1
-
6
1
6
,
2
5
0
0
0
$
'
0
7
1
,
8
3
6
5
7
,
9
1
-
-
0
2
7
0
0
5
8
8
6
,
4
6
4
1
,
9
5
0
0
0
$
'
0
0
0
$
'
-
2
8
3
,
3
8
7
4
9
,
2
4
3
5
,
9
4
2
-
0
1
5
9
1
5
,
7
2
1
5
0
8
,
6
2
1
1
2
6
,
2
1
7
0
7
,
6
6
-
8
5
3
,
3
6
2
3
7
,
6
9
9
3
3
2
,
5
6
0
6
3
,
2
2
6
1
6
,
2
5
4
3
8
,
3
6
3
7
3
,
6
3
3
6
1
3
,
6
5
4
s
'
r
o
t
c
e
r
i
d
t
a
s
t
e
s
s
a
y
t
r
e
p
o
r
p
d
e
t
s
u
d
a
j
l
a
t
o
T
n
o
i
t
a
u
l
a
v
7
8
8
,
5
1
7
8
8
,
5
1
-
-
-
-
-
s
t
n
u
o
c
c
a
y
r
o
t
u
t
a
t
s
r
e
p
s
t
e
s
s
a
r
e
h
t
O
9
1
6
,
2
1
0
,
1
0
2
1
,
1
8
0
6
3
,
2
2
6
1
6
,
2
5
4
3
8
,
3
6
3
7
3
,
6
3
3
6
1
3
,
6
5
4
s
t
e
s
s
a
d
e
t
s
u
d
a
j
l
a
t
o
T
47
3
7
3
,
6
3
3
0
1
0
,
7
9
3
s
t
n
u
o
c
c
a
y
r
o
t
u
t
a
t
s
r
e
p
s
t
e
s
s
a
y
t
r
e
p
o
r
p
l
a
t
o
T
-
6
0
3
,
9
5
n
o
i
t
a
u
a
v
l
s
'
r
o
t
c
e
r
i
d
r
e
p
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
i
f
o
n
o
i
t
a
u
a
v
e
R
l
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
p
u
o
r
G
s
d
n
u
F
l
a
r
u
R
s
e
t
o
N
)
d
e
u
n
i
t
n
o
c
(
n
o
i
t
a
m
r
o
f
n
i
t
n
e
m
g
e
S
1
B
)
d
e
u
n
i
t
n
o
c
(
s
t
e
s
s
a
t
n
e
m
g
e
S
1
2
0
2
e
n
u
J
0
3
l
s
t
n
a
p
r
e
r
a
e
b
-
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
P
l
y
t
r
e
p
o
r
p
t
n
e
m
t
s
e
v
n
I
0
2
0
2
d
e
t
a
e
r
l
y
t
r
e
p
o
r
p
-
s
t
e
s
s
a
l
i
a
c
n
a
n
F
i
)
r
e
t
a
w
(
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
I
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
P
l
l
e
a
s
r
o
f
d
e
h
l
s
t
e
s
s
A
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B1 Segment information (continued)
Maryborough allocation
The Maryborough properties located in Queensland, comprise of 5,258 hectares and 7,740 ML of water
entitlements, with areas having potential to be developed into a planned 2,200 hectares of macadamia orchards.
While in the development phase, parts of the property will be:
Under development into macadamia orchards (classified as investment property)
Leased out to different parties for cropping operations (classified as investment property)
•
•
• Owner occupied and carrying out various cropping operations (classified as property – owner occupied). While
these properties are being operated by the Group, the intention is for these properties to be leased out and/or
developed into macadamia orchards.
Revaluation movements for the year largely relates to transaction costs that have been written off as part of the
acquisition.
Revaluation
2021
Change in fair value of investment property
Impairment of property (owner occupied)
Depreciation - property (owner occupied)
Impairment of intangible assets
Total revaluation
Assets
2021
Investment property
Plant and equipment - bearer plants
Property - owner occupied
Intangible assets
Total property assets per statutory
accounts
Revaluation of intangible assets per
director's valuation
Total adjusted property assets at
director's valuation
Cropping Macadamias
$'000
(1,249)
(1,651)
(24)
(301)
(3,225)
$'000
(1,137)
-
-
(166)
(1,303)
Other
$'000
-
-
-
-
-
Cropping Macadamias
Unallocated
$'000
21,351
-
28,284
4,235
53,870
$'000
21,455
1,053
-
2,342
24,850
-
-
53,870
24,850
$'000
-
-
-
-
-
-
-
Total
$'000
(2,386)
(1,651)
(24)
(467)
(4,528)
Total
$'000
42,806
1,053
28,284
6,577
78,720
-
78,720
25
48
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B1 Segment information (continued)
Net asset value adjusted for water rights
The chief operating decision maker of RFF assesses the segments on property asset values adjusted for water
rights. RFF owns permanent water rights and entitlements which are recorded at historical cost less accumulated
impairment losses. Such rights have an indefinite life and are not depreciated. The carrying value is tested annually
for impairment as well as for possible reversal of impairment. If events or changes in circumstances indicate
impairment, or reversal of impairment, the carrying value is adjusted to take account of impairment losses.
The book value of the water rights (including investments in BIL and CICL recognised as financial assets) at 30
June 2021 is $122,402,000 (2020: $129,246,000).
Independent valuations on the Group’s properties are obtained, ensuring that each property will have been
independently valued every two years or more often where appropriate. Independent valuation reports assess and
provide value for properties in their entirety. The independent valuation reports contains information with which
judgement is applied in order to allocate values to investment property, bearer plants and water entitlements. The
Directors have taken into account the most recent valuations on each property and consider that they remain a
reasonable estimate and on this basis the fair value of water entitlements before deferred tax adjustments at 30
June 2021 was $212,580,000 (2020: $226,945,000) representing the value of the water rights of $90,178,000
(2020: $97,699,000) above cost.
The following is a reconciliation of the book value at 30 June 2021 to an adjusted value based on the Directors’
valuation of the water rights which are assessed by the chief operating decision maker.
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities (excluding net assets attributable
to unitholders)
Net assets attributable to unitholders
Net asset value per unit ($)
Per Statutory
Consolidated
Statement of
Financial
Position
$'000
Revaluation of
water
entitlements
per Directors'
valuation
$'000
26,673
1,015,231
1,041,904
19,277
374,083
393,360
648,544
1.91
-
90,178
90,178
-
-
-
90,178
Directors'
valuation
(Adjusted)
$'000
26,673
1,105,409
1,132,082
19,277
374,083
393,360
738,722
2.17
26
49
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B1 Segment information (continued)
30 June 2021
Almonds
Mooral (NSW)
Yilgah (NSW)
Tocabil (NSW)
Kerarbury (NSW)
Cattle
Rewan (QLD)
Mutton Hole (QLD)
Oakland Park (QLD)
Natal Aggregation (QLD)
Comanche (QLD)
Cerberus (QLD)
Dyamberin (NSW)
JBS Feedlots Finance Lease Receivable (NSW/QLD)
Woodburn (NSW)
Cobungra (VIC)
Petro (WA)
High Hill (WA)
Willara (WA)
Yarra (QLD)
Homehill (QLD)
Cropping
Lynora Downs (QLD)
Mayneland (QLD)
Maryborough – Cropping (QLD)
Macadamias
Swan Ridge (QLD)
Moore Park (QLD)
Bonmac (QLD)
Cygnet (QLD)
Swan Ridge South (QLD)
Nursery Farm (QLD)**
Riverton (QLD)
Rookwood Farms (QLD)***
Maryborough – Macadamias (QLD)
Vineyards
Kleinig (SA)
Geier (SA)
Dohnt (SA)
Hahn (SA)
Mundy and Murphy (SA)
Rosebank (VIC)
Water rights
River water (NSW)
River water (QLD)****
Total property and water assets
Cattle finance leases and other assets
Plant and equipment
Other receivables and equipment leases
Plant and equipment held for sale
Total adjusted property assets
30 June 21
Adjusted
30 June 20
Adjusted
Most Recent Independent
Valuation
Area*
property
value
$'000
property
value
$'000
Date
$'000
Encumbered
Valuation
$'000
808 ha
1,006 ha
603 ha
2,530 ha
- 75,879
105,112
106,563
47,119
48,876
223,282
226,472
Mar 2020
Mar 2021
Mar 2021
Mar 2021
76,000
107,000
49,000
228,000
17,479 ha
140,300 ha
85,500 ha
390,600 ha
7,600 ha
8,280 ha
1,729 ha
150,000 hd
1,063 ha
6,497 ha
2,942 ha
1,601 ha
1,653 ha
2,173 ha
4,925 ha
50,400
16,680
8,500
88,500
24,238
13,963
13,959
55,615
7,397
40,800
12,221
4,967
4,985
6,245
12,875
43,159
9,209
5,605
63,700
22,003
13,849
13,900
54,846
7,300
35,050
11,700
4,900
4,900
6,194
7,750
Dec 2020
Jun 2021
Jun 2021
Jun 2021
Jun 2020
Jun 2020
Jun 2020
N/A
Jun 2020
Jun 2021
Dec 2019
Dec 2019
Dec 2019
Jun 2020
Jun 2020
50,400
16,680
8,500
88,500
21,997
13,844
13,900
N/A
7,300
40,800
11,700
4,900
4,900
6,150
11,839
4,963 ha
2,942 ha
3,962 ha
41,500
20,450
53,870
33,736
17,832
-
Jun 2021
Apr 2020
Nov 2020
41,500
17,500
53,806
130 ha
104 ha
27 ha
37 ha
40 ha
41 ha
1,015 ha
2,452 ha
1,296 ha
6,679
3,882
2,797
2,826
1,692
5,914
4,900
10,463
24,850
6,653
3,953
2,852
1,770
1,645
3,028
-
-
-
206 ha
243 ha
30 ha
50 ha
55 ha
82 ha
22,997
27,562
1,196
5,069
4,093
3,788
22,286
27,748
1,019
5,154
4,062
3,365
Oct 2019
Oct 2019
Oct 2019
Apr 2021
-
Apr 2021
Mar 2021
Mar 2021
Nov 2020
Mar 2021
Mar 2021
Mar 2021
Mar 2021
Mar 2021
Mar 2021
6,400
4,000
2,900
2,800
-
3,800
4,520
7,070
20,853
23,100
27,700
1,200
5,100
4,100
3,800
8,754 ML
3,710 ML
65,655
1,099
1,054,538
65,216
1,795
957,571
Jun 2021
Jun 2020
65,655
1,099
29,031
35,582
3,201
8,716
3,161
2,399
- 3,768
996,732
1,101,235
* Unless otherwise denoted, the almond, vineyard and macadamia areas refer to planted and planned development areas.
**Nursery Farm includes the value of immature trees in the nursery which is not accounted for in the external valuation. Cost of
immature trees approximates fair value.
***Rookwood Farms aggregation comprises of the Stoneleigh, Corrowah and Tongola properties. Encumbered valuation for the
Tongola property has not yet been obtained.
****Comparative value relates to the Wattlebank property sold during the year. Water entitlements associated with the property
were not sold as part of the transaction.
27
50
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B1 Segment information (continued)
Total property assets by property (continued)
Revaluations from external valuations
The cattle properties have increased in value during the year ended 30 June 2021. An external valuation was
completed for Rewan during the half year ended 31 December 2021. External valuations were obtained for the
Natal aggregation, Cobungra, Oakland Park and Mutton Hole properties during second half of the year ended 30
June 2021. The total uplift for the year ended 30 June 2021 has been largely due to the external valuer’s
assessment of the value of the land which can be measured by an increase in the rate of adult equivalents for the
property. The uplift has been driven by improved demand and market sentiment for cattle properties in the
respective regions. All of the Group’s cattle properties have been valued by an independent valuer within the last
18 months. Demand and market sentiment have also been affected by a decrease in the cost of funding. Further
information on the significant unobservable inputs adopted by the external valuer in the fair value measurement of
the properties is described in note C1.
Adjusted property values movements after the most recent independent valuation
Increases to the adjusted property value from the last encumbered valuation is primarily a result of new acquisitions
or capital expenditure subsequent to the valuation, designed to improve an asset’s productivity and value.
Decrease to the adjusted property value from the last encumbered valuation is primarily a result of depreciation on
the bearer plants.
28
51
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B2 Adjusted funds from operations (AFFO)
The following presents the components of adjusted funds from operations (AFFO) and provides a reconciliation
from AFFO to Net profit after income tax which is assessed by the chief operating decision maker.
Continuing operations
Revenue
Other income
Cost of goods sold (cropping operations)
Change in fair value of biological assets (harvested crops)
Management fees
Property expenses
Finance costs
Other expenses
Straight-lining of rental revenue
Interest component of JBS feedlot finance lease
Income tax payable on public trading trust (RF Active)
Discontinued operations
Revenue
Other income
Management fees
Property expenses
Finance costs
Other expenses
Income tax payable on public trading trust (RF Active)
Adjusted Funds From Operations (AFFO)
Change in fair value of interest rate swaps
Depreciation and impairments - other
Depreciation - bearer plants
Change in fair value of investment property
Change in fair value of investment property - discontinued operations
Change in fair value of financial assets/liabilities
Change in fair value of biological assets (unharvested crops)
Change in fair value of bearer plants
Impairment of intangible assets
Impairment of property - owner occupied
Straight-lining of rental revenue
Interest component of JBS feedlot finance lease
Income tax expense
Gain on sale of assets
Loss on disposal - one off transaction costs on disposal
Net profit after income tax
2021
$'000
67,166
3,935
(484)
108
(11,017)
(2,829)
(10,498)
(5,609)
852
(769)
(432)
-
-
-
-
-
-
-
40,423
12,923
(840)
(4,032)
42,289
-
116
1,028
1,007
(4,188)
(1,651)
(852)
769
(226)
32,868
-
119,634
2020
$'000
66,818
4,397
-
-
(9,621)
(2,038)
(10,255)
(4,938)
(1,232)
(789)
(884)
5,160
4
(334)
(28)
(626)
(150)
(57)
45,427
(7,624)
(2,893)
(4,838)
16,194
(1,250)
510
-
(499)
(798)
-
1,232
789
(669)
4,003
(596)
48,988
AFFO cents per unit
11.9
13.5
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B3 Revenue
Continuing operations
Rental income
Finance income
Interest received
Total
2021
$'000
53,074
13,966
126
67,166
2020
$'000
55,716
10,987
115
66,818
The Group’s revenue is largely comprised of income under leases and finance income. All revenue is stated net of
the amount of goods and services tax (GST).
Rental income arises from the leasing of property assets and operational plant and equipment and is accounted for
on a straight-line basis over the period of the lease. The respective leased assets are included in the Consolidated
Statement of Financial Position based on that nature.
Finance income arises from the provision of financial guarantees and working capital loans, finance leases on cattle
feedlots and cattle breeders and leased agricultural plant and equipment and recognised on an accrual basis using
the effective interest rate method.
Other Income
Sale of temporary water allocations
Other income
Sale of agricultural produce
Other income - discontinued operations
Total
Expenses
2021
$'000
3,275
176
484
-
3,935
2020
$'000
4,308
89
-
4
4,401
Expenses such as Responsible Entity fees, property expenses and overheads are recognised on an accruals basis.
Interest expenses are recognised on an accrual basis using the effective interest method.
B4 Earnings per unit
Per stapled unit
Net profit after income tax for the year ($'000)
Weighted average number of units on issue during the year (thousands)
Basic and diluted earnings per unit (total) (cents)
Per unit of Rural Funds Trust
Net profit after income tax for the year ($'000)
Weighted average number of units on issue during the year (thousands)
Basic and diluted earnings per unit (total) (cents)
Per unit of RF Active
Net profit after income tax for the year ($'000)
Weighted average number of units on issue during the year (thousands)
Basic and diluted earnings per unit (total) (cents)
2021
2020
119,634
338,961
35.29
117,696
338,961
34.72
1,938
338,961
0.57
48,988
336,035
14.58
44,627
336,035
13.28
4,361
336,035
1.30
Basic earnings per unit are calculated on net profit attributable to unitholders of the Group divided by the weighted
average number of issued units.
52
29
30
53
Rural Funds Group
Notes to the Financial Statements
30 June 2021
B5 Distributions
The group paid and declared the following distributions during the year:
Distribution declared 2 June 2020, paid 31 July 2020
Distribution declared 1 September 2020, paid 30 October 2020
Distribution declared 2 December 2020, paid 29 January 2021
Distribution declared 1 March 2021, paid 30 April 2021
Distribution declared 1 June 2021, paid 30 July 2021
Cents
per unit
2.7118
2.8203
2.8203
2.8203
2.8203
Total
$
9,158,113
9,542,697
9,558,150
9,572,536
9,586,215
54
31
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C. PROPERTY ASSETS
This section includes detailed information regarding RFF’s properties, which are made up of multiple line items on
the Consolidated Statement of Financial Position including Investment property, Plant and equipment – bearer
plants, Financial assets – property related, Intangible assets, Property – owner occupied and Plant and equipment
– other.
C1 RFF property assets
Investment property
Plant and equipment - bearer plants
Financial assets - property related
Intangible assets
Property - owner occupied
Plant and equipment - other
Asset held for sale
Total
C2
C3
C4
C5
C6
C7
C8
Rental income and fair value movements from RFF property assets
Continuing operations
Rental income from property assets
Change in fair value of investment property
Revaluation increment/(decrement) - bearer plants
Depreciation - bearer plants
Discontinued operations
Rental income from property assets
Change in fair value of investment property
Loss on disposal
Leasing arrangements
2021
$'000
596,924
160,782
104,312
110,418
28,284
8,716
1,621
1,011,057
2021
$'000
67,040
42,289
6,510
(4,032)
-
-
-
2020
$'000
474,838
153,528
97,557
106,551
-
3,201
63,358
899,033
2020
$'000
66,703
16,194
12,451
(4,838)
5,136
(1,250)
(625)
Minimum lease payments receivable under non-cancellable operating leases of investment properties, bearer
plants, plant and equipment, water rights and assets held for sale not recognised in the financial statements, are
receivable as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Later than 5 years
Total
2021
$'000
52,016
51,510
49,673
50,140
50,758
305,258
559,355
2020
$'000
56,860
56,959
56,902
55,239
55,785
370,538
652,283
32
55
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C1 RFF property assets (continued)
Key changes to the property portfolio during the year:
•
•
•
•
•
•
•
•
In November 2020, the Group settled on the Maryborough acquisition, consisting of 5,258 hectares of
sugar cane farms and 7,740 megalitres of water entitlements located in Maryborough, Queensland and
associated plant and equipment for approximately $83.7m including transaction costs. The farms have the
potential to be progressively be converted to approximately 2,200 hectares of macadamia orchards with
a substantial portion of the remaining area able to be used for cropping.
In November 2020, the Group purchased the Riverton property located in the Fitzroy region in Queensland
for $6.5m including transaction costs with potential for development into macadamia orchards.
In December 2020, the Group purchased the Stoneleigh property which will form part of the Rookwood
Farms aggregation, located in the Fitzroy region in Queensland for $6.6m including transaction costs with
potential for development into macadamia orchards.
In December 2020, the Group completed the sale of the Mooral almond orchard and associated plant and
equipment for a contracted price of approximately $98.0m excluding transaction costs and adjustments.
A remaining portion of the land contracted for $4.1m as part of the transaction was settled in February
2021.
In December 2020, the Group purchased an additional 1,655 hectares of land as part of the Homehill
property, located in the Fitzroy region in Queensland for $4.3m including transaction costs.
In February 2021, the Group purchased the Corrowah property which will form part of the Rookwood
Farms aggregation, located in the Fitzroy region in Queensland for $1.9m including transaction costs with
potential for development into macadamia orchards.
In March 2021, the Group purchased the Tongola property which will form part of the Rookwood Farms
aggregation, located in the Fitzroy region in Queensland for $3.2m including transaction costs with
potential for development into macadamia orchards.
In May 2021, the Group completed the sale of the Wattlebank property located in the Fitzroy region in
Queensland for a contracted price of approximately $1.0m. Water entitlements associated with the
property were not sold as part of the transaction.
Macadamia development
The Group is developing macadamia orchards across a number of properties located in Queensland, Australia. As
part of the development, costs relating to the acquisition, construction and development of macadamia orchards
will be capitalised to the respective asset class that the cost relates to. The asset classes identified are investment
property, bearer plants and water entitlements.
Investment Property
This includes costs associated with the acquisition for land, buildings, orchard and irrigation infrastructure and any
costs directly attributable to bringing the asset to the condition necessary for it to be capable of operating in the
manner intended by management.
Bearer Plants
This includes costs associated with the acquisition of macadamia trees, planting costs, growing costs incurred for
the trees to reach maturity including fertiliser and watering costs and costs associated with establishing the
macadamia trees in the orchard and bringing the asset to the condition necessary for it to be capable of operating
in the manner intended by management.
Water entitlements
This includes costs associated with the purchase of water entitlements. Water entitlements are deemed ready for
use on acquisition.
Borrowing costs
Borrowing costs may be capitalised on qualifying assets up until the property is ready for use. Borrowing costs
relating to the acquisition, construction and development of the macadamia orchards are capitalised to the
respective asset classes up until the property is deemed ready for use. Properties could be deemed ready for use
when the property has been leased or when the property is operating in a manner as intended by management, for
example, a macadamia orchard may be deemed operational when the orchard is fully planted and the trees have
reached maturity.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C1 RFF property assets (continued)
Valuations
Independent valuations on the Group’s properties are obtained, ensuring that each property will have been
independently valued every two financial years or more often where appropriate. Independent valuers engaged
hold recognised and relevant professional qualifications with experience in agricultural properties.
The following existing properties had relevant independent valuations during the year ended 30 June 2021:
Almond properties
Cattle properties
Macadamia properties
Vineyard properties
Cropping properties
Maryborough properties
Other
Kerarbury, Yilgah, Tocabil
Rewan, Natal Aggregation, Cobungra, Oakland Park, Mutton Hole
Cygnet, Nursery Farm
Geier, Kleinig, Hahn, Rosebank, Mundy and Murphy, Dohnt
Lynora Downs
Maryborough
Unleased High Security Murrumbidgee Water
The Directors have considered independent valuations and market evidence where appropriate to determine the
appropriate fair value to adopt. The Directors have adopted all valuations from independent valuers in the years
where valuations have been obtained.
The Directors have deemed that independent valuations were not required on the remaining properties as there
have been no material changes to the industry, physical and geographical conditions of these properties in which
the independent valuers have previously assessed. For these properties, the Directors have performed internal
assessments, considering the latest valuation reports, that the carrying amount is still reflective of the fair value of
the properties at reporting date.
The Group’s properties, including those under development, are carried at fair value excluding the value of water
rights. Water rights are treated as intangible assets, which are held at historical cost less accumulated impairment
losses. Independent valuation reports assess and provide value for properties in its entirety. The independent
valuation reports contain information with which judgement is applied in order to allocate values to investment
property, bearer plants and water entitlements, where relevant.
Judgement is applied in order to allocate the total property value, as disclosed in the independent valuation reports,
to each component; investment property, bearer plants and water entitlements. The allocation technique will vary
depending on the nature of the lease arrangement.
Where information is available, such as when provided by the external valuer, each component of the property,
meaning the land and infrastructure, the trees and any water assets, disclosed in the financial statements as
investment property, bearer plants and water entitlements, will be allocated on an encumbered (subject to lease)
basis.
If this information is not available, the valuation report may provide additional information, such as the summation
basis of the unencumbered (not subject to lease) value, which along with other sources, including the nature of
capital expenditure on the property, is used to determine the encumbered allocation to components. Judgement is
applied as part of these allocations which vary from property to property given the individual circumstances of the
leasing arrangements. The allocation technique may change to reflect the best estimate of fair value attributable to
each component at reporting date.
Valuation reports obtained during the year ended 30 June 2021 have referred to circumstances of uncertainty as a
result of the outbreak of COVID-19. For the avoidance of doubt, such references have not meant that the valuations
cannot be relied upon but rather ensures transparency of the fact that in the current circumstances, less certainty
can be attached to the valuation than would otherwise be the case. Discussions held with the valuers have
confirmed that there is no expected material impact to the valuations as a result of COVID-19.
Significant accounting judgements, estimates and assumptions in relation to valuation of property assets
At the end of each reporting period, the Directors update their assessment of fair value of each property, considering
the most recent independent valuations. The Directors determine a property’s value using reasonable fair value
estimates from the most recent independent valuer’s valuation reports.
Independent valuation reports assess and provide fair values for properties in their entirety. Judgement is applied
in order to allocate the total property values as disclosed in the independent valuation reports, to investment
property, bearer plants, property – owner occupied and water entitlements. The independent valuation reports
contain information with which judgement is applied to allocate values to investment property, bearer plants,
property – owner occupied and water entitlements.
56
33
34
57
y
t
i
c
a
p
a
c
g
n
y
r
r
a
c
d
n
a
i
s
e
t
a
r
l
i
t
n
e
a
v
u
q
e
t
l
u
d
a
,
d
n
a
l
f
o
a
e
r
a
r
e
p
e
t
a
r
,
s
e
t
a
r
n
o
i
t
a
s
i
l
a
t
i
p
a
c
,
s
e
t
a
r
n
o
i
t
a
s
i
l
a
t
i
p
a
c
l
i
a
n
m
r
e
t
,
s
e
t
a
r
i
t
n
u
o
c
s
d
e
d
u
c
n
l
i
p
u
o
r
G
e
h
t
y
b
d
e
s
u
s
t
u
p
n
i
3
l
e
v
e
l
i
n
a
m
e
h
T
r
i
a
f
e
h
t
f
o
t
n
e
m
s
s
e
s
s
a
r
i
e
h
t
e
t
a
d
p
u
s
r
o
t
c
e
r
i
d
e
h
t
,
d
o
i
r
e
p
g
n
i
t
r
o
p
e
r
h
c
a
e
f
o
d
n
e
e
h
t
t
A
.
a
t
a
d
y
r
t
s
u
d
n
i
d
n
a
s
n
o
i
t
c
a
s
n
a
r
t
l
e
b
a
r
a
p
m
o
c
n
o
d
e
s
a
b
s
n
o
i
t
a
u
a
v
l
e
v
i
t
c
e
p
s
e
r
e
h
t
n
i
d
e
t
a
m
i
t
s
e
.
s
r
e
u
a
v
l
t
n
e
d
n
e
p
e
d
n
i
e
h
t
h
t
i
i
w
s
n
o
s
s
u
c
s
d
i
g
n
i
r
u
d
d
n
a
e
t
a
d
g
n
i
t
r
o
p
e
r
h
c
a
e
t
a
d
e
s
y
a
n
a
l
e
r
a
s
e
u
a
v
l
r
i
a
f
3
l
e
v
e
l
n
i
s
e
g
n
a
h
C
.
y
t
r
e
p
o
r
p
h
c
a
e
f
o
e
u
a
v
l
%
0
2
0
2
%
1
2
0
2
i
e
u
q
n
h
c
e
t
0
2
0
2
0
0
0
$
'
5
7
.
7
-
0
0
.
7
0
5
.
7
-
5
7
.
6
)
%
(
e
t
a
r
t
n
u
o
c
s
D
i
e
s
a
b
l
a
t
n
e
R
h
s
a
C
d
e
t
n
u
o
c
s
D
i
3
0
2
,
3
0
3
1
2
0
2
0
0
0
$
'
9
6
7
,
1
5
2
0
5
.
2
1
-
0
5
.
8
0
5
.
2
1
-
5
2
.
8
)
%
(
e
t
a
R
n
o
i
t
a
s
i
l
a
t
i
p
a
C
l
i
a
n
m
r
e
T
1
8
3
,
7
$
-
0
0
6
,
2
$
-
0
7
8
$
7
0
5
,
1
$
1
8
3
,
7
$
-
4
0
8
,
3
$
0
0
0
,
2
$
-
6
2
4
,
1
$
i
g
n
y
r
r
a
c
)
E
A
(
l
t
n
e
a
v
u
q
e
i
t
l
u
d
a
r
e
p
$
)
s
e
i
t
r
e
p
o
r
p
i
g
n
d
n
u
o
r
g
k
c
a
B
(
y
t
i
c
a
p
a
c
)
s
e
i
t
r
e
p
o
r
p
r
e
d
e
e
r
B
(
y
t
i
c
a
p
a
c
i
g
n
y
r
r
a
c
)
E
A
(
l
t
n
e
a
v
u
q
e
i
t
l
u
d
a
r
e
p
$
d
e
s
a
b
t
n
e
n
o
p
m
o
C
d
e
s
a
b
t
n
e
n
o
p
m
o
C
t
i
n
u
e
v
i
t
c
u
d
o
r
P
n
o
i
t
a
m
m
u
S
t
n
e
m
s
s
e
s
s
a
w
o
F
l
4
3
5
,
9
4
2
1
5
1
,
5
0
3
0
0
.
8
-
0
5
.
7
0
0
.
0
1
-
5
2
.
8
)
%
(
e
t
a
r
n
o
i
t
a
s
i
l
a
t
i
p
a
C
l
i
a
n
m
r
e
T
5
7
.
8
-
5
2
.
8
0
5
.
8
-
0
5
.
7
)
%
(
e
t
a
r
t
n
u
o
c
s
D
i
d
e
s
a
b
t
n
e
n
o
p
m
o
C
h
s
a
C
d
e
t
n
u
o
c
s
D
i
6
2
9
,
7
5
5
5
3
,
8
5
w
o
F
l
d
n
a
y
t
r
e
p
o
r
p
e
l
t
t
a
C
e
r
u
t
c
u
r
t
s
a
r
f
n
i
d
r
a
h
c
r
o
d
n
o
m
A
l
y
t
r
e
p
o
r
p
y
t
r
e
p
o
r
p
d
r
a
y
e
n
V
i
e
r
u
t
c
u
r
t
s
a
r
f
n
i
d
n
a
s
t
u
p
n
i
f
o
e
g
n
a
R
*
*
s
t
u
p
n
i
e
l
b
a
v
r
e
s
b
o
n
U
i
e
u
q
n
h
c
e
t
n
o
i
t
a
c
o
l
l
A
n
o
i
t
a
u
l
a
v
y
r
a
m
i
r
P
t
a
e
u
l
a
v
r
i
a
F
*
n
o
i
t
p
i
r
c
s
e
D
:
t
n
e
m
e
r
u
s
a
e
m
e
u
a
v
l
r
i
a
f
3
l
e
v
e
l
g
n
i
r
r
u
c
e
r
n
i
d
e
s
u
s
t
u
p
n
i
l
e
b
a
v
r
e
s
b
o
n
u
t
n
a
c
i
f
i
n
g
s
e
h
t
i
t
u
o
b
a
n
o
i
t
a
m
r
o
f
n
i
e
v
i
t
a
t
i
t
n
a
u
q
e
h
t
s
e
s
i
r
a
m
m
u
s
l
e
b
a
t
i
g
n
w
o
l
l
o
f
e
h
T
0
0
0
,
0
2
$
-
0
5
7
,
6
1
$
0
0
0
,
0
2
$
-
0
5
2
,
5
1
$
e
r
a
t
c
e
h
d
e
t
a
g
i
r
r
i
r
e
p
$
d
e
s
a
b
t
n
e
n
o
p
m
o
C
n
o
i
t
a
m
m
u
S
t
n
e
m
s
s
e
s
s
a
6
9
8
,
7
4
4
8
5
,
1
1
1
y
t
r
e
p
o
r
p
i
g
n
p
p
o
r
C
e
r
u
t
c
u
r
t
s
a
r
f
n
i
d
n
a
-
0
5
.
8
-
5
2
.
7
0
3
4
,
0
1
$
0
5
.
8
-
5
2
.
7
)
h
g
u
o
r
o
b
y
r
a
M
(
)
%
(
e
t
a
r
t
n
u
o
c
s
D
i
0
5
.
8
-
5
2
.
7
0
5
.
8
-
5
2
.
7
)
%
(
e
t
a
r
n
o
i
t
a
s
i
l
a
t
i
p
a
C
l
i
a
n
m
r
e
T
e
r
a
t
c
e
h
l
e
b
a
t
n
a
p
l
r
e
p
$
e
g
a
r
e
v
A
-
8
0
5
,
2
1
$
e
r
a
t
c
e
h
l
e
b
a
t
n
a
p
l
r
e
p
$
e
g
a
r
e
v
A
e
t
a
n
o
i
t
r
o
p
o
r
P
/
e
s
a
b
d
e
s
a
b
t
n
e
n
o
p
m
o
C
w
o
F
l
y
t
r
e
p
o
r
p
l
a
t
n
e
R
h
s
a
C
d
e
t
n
u
o
c
s
D
i
6
8
6
,
8
1
1
3
1
,
9
5
i
d
r
a
h
c
r
o
a
m
a
d
a
c
a
M
)
t
n
e
m
p
o
e
v
e
D
l
(
5
4
2
,
7
7
6
0
9
9
,
5
8
7
.
s
t
e
s
s
a
r
e
t
a
w
e
d
u
c
x
e
d
e
s
o
c
s
d
l
l
i
s
e
u
a
v
l
r
i
a
F
*
l
a
t
o
T
.
s
r
e
u
a
v
l
l
a
n
r
e
t
x
e
y
b
s
t
n
e
m
s
s
e
s
s
a
n
o
d
e
s
a
b
e
r
a
s
t
u
p
n
i
l
e
b
a
v
r
e
s
b
o
n
U
l
.
s
e
u
a
v
r
i
a
f
t
c
e
f
f
a
y
l
l
a
i
r
e
t
a
m
t
a
h
t
s
t
u
p
n
i
l
e
b
a
v
r
e
s
b
o
n
u
n
e
e
w
t
e
b
s
p
h
s
n
o
i
t
a
e
r
-
r
e
t
n
l
i
i
i
t
n
a
c
i
f
i
n
g
s
o
n
e
r
e
w
e
r
e
h
T
*
*
5
3
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C1 RFF property assets (continued)
Valuations (continued)
Primary valuation technique
External valuations typically assess property values using different valuation techniques.
Discounted cash flow
Summation assessment
Productive unit
Allocation technique
Valuation based on future net rental cash flows discounted to the present
value. The terminal value (as determined by the terminal capitalisation rate)
is typically assessed and discounted in these types of valuations. The valuer
may also use comparative sales as supporting information.
Assessment of the property on an asset by asset basis based on
comparative sales evidence and typically driven by a rate per productive
hectare and assessment of other components such as water and supporting
buildings.
Assessment on the property driven by the value per adult equivalent head
that is supported by the property and carrying capacity of the property.
Independent valuation reports assess and provide value for properties in their entirety. Component allocation
techniques are adopted to allocate the total property value to investment property, bearer plants, property – owner
occupied and water entitlements. The component allocation technique applied is assessed on each external
valuation to ensure that the allocation technique is consistent with the nature and characteristics of the property
including any lease encumbrances. The allocation technique may change to reflect the best estimate of fair value
attributable to each component at reporting date.
The following allocation techniques have been applied:
Rental base
Component based
Component based – Almonds
Proportionate
Applied for properties with long term indexed leases by allocating value to
component assets using the rental base. The rental base is identifiable and
generally determined by the cost of the assets. The allocation by rental base
reflects the encumbered nature of the assets where rental incomes are not
affected by short term market fluctuations in the value of the assets due to
lack of rental review mechanism.
The encumbered value is allocated based on information in the valuation
report which enables the allocation by components on an encumbered basis.
To determine the allocation of components on an encumbered basis, the
external valuer will assess various factors such as market indicators,
comparable sales data of encumbered assets, comparable rental data and
other relevant information such as replacement cost concepts.
Applied for properties where leases include rental reviews. Information is
provided in the valuation to allocate the encumbered value of the property to
water assets, investment property and bearer plants on an encumbered
basis.
Firstly, the approach allocated value to water assets based on comparable
encumbered rental data. The value of land was determined based on
comparable sales data. Orchard infrastructure including irrigation was
determined based on a replacement cost assumption adjusted for an
estimate of the age of the assets. Bearer plants was identified as being the
residual value of the total encumbered value of the property.
Applied for properties where leases include rental reviews and where
component based information is not able to be used. For properties with
water assets, the allocation considers the unencumbered value of water
assets and allocates this on a proportionate basis to the encumbered value
of the property. Judgement is then applied to allocate encumbered values to
investment property and bearer plants using available information, including
information from the valuation report and the nature of capital expenditure
on the relevant property.
36
59
i
d
e
p
u
c
c
o
r
e
n
w
o
–
y
t
r
e
p
o
r
P
d
n
a
s
t
n
a
p
r
e
r
a
e
B
l
)
d
e
u
n
i
t
n
o
c
(
s
n
o
i
t
a
u
l
a
V
,
y
t
r
e
p
o
r
p
t
n
e
m
t
s
e
v
n
I
)
d
e
u
n
i
t
n
o
c
(
s
t
e
s
s
a
y
t
r
e
p
o
r
p
F
F
R
1
C
1
2
0
2
e
n
u
J
0
3
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
p
u
o
r
G
s
d
n
u
F
l
a
r
u
R
s
e
t
o
N
58
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C1 RFF property assets (continued)
Valuations (continued)
Unobservable inputs
Unobservable inputs are assumptions based on the assessments and determinations made by external valuers in
their capacity as qualified experts which are key inputs in the valuation techniques utilised.
Discount rate (%)
The higher the discount rate the lower the fair value
Terminal capitalisation rate (%)
The higher the terminal capitalisation rate the lower the fair value
$ per irrigated hectare
The higher the value per irrigated hectare, the higher the fair value
Average $ per plantable hectare
The higher the value per plantable hectare, the higher the fair value
$ per adult equivalent carrying
capacity
The higher the value per adult equivalent carrying capacity, the higher the
fair value
C2 Investment property
2021
Opening net book amount
Acquisitions
Additions
Capitalisation of borrowing
costs
Classified as held for sale or
disposals
Amortisation of lease incentives
Fair value adjustment
Closing net book amount
2020
Opening net book amount
Acquisitions
Additions
Classified as held for sale or
disposals
Amortisation of lease incentives
Fair value adjustment
Closing net book amount
Almond
property
$'000
127,519
-
3,717
Cattle
property
$'000
249,534
4,413
6,507
Vineyard
property
$'000
38,170
-
11
Cropping
property
$'000
47,896
22,599
5,433
Macadamia
property
$'000
11,719
36,932
4,483
Poultry
property
$'000
-
-
-
-
-
(3,392)
(774)
-
-
-
-
-
(1,655)
126,189
(200)
45,671
305,151
-
(3,641)
34,540
-
7,372
83,300
68
-
-
(5,458)
47,744
-
-
-
-
-
Almond
property
136,016
-
7,911
(18,881)
-
2,473
127,519
Cattle
property
193,447
38,753
3,908
Vineyard
property
37,651
-
519
Cropping
property
46,260
-
2,170
Macadamia
property
4,857
5,329
904
Poultry
property
71,096
-
285
-
-
-
-
(70,131)
(89,012)
(200)
13,626
249,534
-
-
38,170
-
(534)
47,896
-
629
11,719
-
(1,250)
-
(200)
14,944
474,838
Total
$'000
474,838
63,944
20,151
68
(4,166)
(200)
42,289
596,924
Total
489,327
44,082
15,697
Investment properties comprise land, buildings and integral infrastructure including shedding, irrigation and
trellising.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C2 Investment property (continued)
Investment properties are held for long-term rental yields and capital growth and are not occupied by the Group.
RFF measures and recognises investment property at fair value where the valuation technique is based on
unobservable inputs. Changes in fair value are presented through profit or loss in the Consolidated Statement of
Comprehensive Income.
Capital expenditure that enhances the future economic benefits of the assets are capitalised to investment property.
Incentives provided are also capitalised to the investment property and are amortised on a straight-line basis over
the term of the lease as a reduction of rental revenue.
C3 Plant and equipment – bearer plants
2021
Opening net book amount
Additions
Capitalisation of borrowing costs
Disposals
Depreciation and impairment
Fair value adjustment - profit and loss
Fair value adjustment - other comprehensive
income
Closing net book amount
2020
Opening net book amount
Additions
Classified as held for sale or disposals
Depreciation and impairment
Fair value adjustment - profit and loss
Fair value adjustment - other comprehensive
income
Closing net book amount
Bearer
Plants -
Almonds
$'000
126,805
948
-
(18)
(2,798)
-
Bearer
Plants -
Vineyards
$'000
19,756
-
-
-
(1,016)
1,007
Bearer
Plants -
Macadamias
$'000
6,967
3,845
1
-
(218)
-
Total
$'000
153,528
4,793
1
(18)
(4,032)
1,007
643
4,068
792
5,503
125,580
23,815
11,387
160,782
Bearer
Plants -
Almonds
$'000
145,226
2,897
(29,998)
(3,655)
-
12,335
Bearer
Plants -
Vineyards
$'000
20,721
-
-
(965)
-
Bearer
Plants -
Macadamias
$'000
6,968
100
-
(217)
(499)
Total
$'000
172,915
2,997
(29,998)
(4,837)
(499)
-
615
12,950
126,805
19,756
6,967
153,528
Bearer plants are solely used to grow produce over their productive lives and are accounted for under AASB 116
Property, Plant and Equipment.
Bearer plants are held for long-term rental yields and are not operated by the Group. RFF initially measures and
recognises bearer plants at cost. After initial measurement, the Group adopts the revaluation model and bearer
plants are carried at fair value less any accumulated depreciation and accumulated impairment losses.
Bearer plants are subject to revaluations based on the Group’s valuation policies. Increases in the carrying amounts
arising from revaluation of bearer plants are recognised in other comprehensive income and accumulated in net
assets attributable to unitholders under asset revaluation reserve. Revaluation increases which reverse a decrease
previously recognised in profit and loss are recognised in profit or loss. Revaluation decreases which offset previous
increases are recognised in other comprehensive income in the asset revaluation reserve. Any other decreases
are recognised in profit and loss.
Bearer plants are subject to depreciation over their respective useful lives calculated on a straight-line basis on the
carrying amount. Depreciation commences when bearer plants are assumed ready for use which is based on when
the trees reach maturity. The useful lives and maturity assumptions used for each class of depreciable asset are
shown below:
60
37
38
61
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C3 Plant and equipment – bearer plants (continued)
Fixed asset class:
Almond bearer plants
Vineyard bearer plants
Macadamia bearer plants
Depreciation commences from years:
Useful life:
6 years
30 years
40 years
4 years
45 years 13 years
At the end of each annual reporting period, the useful life, maturity assumptions and carrying amount of each asset
is reviewed. Any revisions are accounted for prospectively as a change in estimate.
Bearer plants as stated on a historical cost basis is as follows:
Cost
Accumulated depreciation
Accumulated impairment
Bearer plants at historical cost less accumulated impairment
C4 Financial assets – property related
Financial Assets - property related
Investment - BIL
Investment - CICL
Finance Lease - Breeders
Finance Lease - Feedlots
Finance Lease - Equipment
Cattle Facility - Katena Pty Ltd ATF Schafferius Family Trust
Finance Lease - DA & JF Camm Pty Limited
Term Loan - DA & JF Camm Pty Limited
Other receivables
Total
2021
$'000
130,585
(12,809)
(1,827)
115,949
2021
$'000
520
11,464
17,778
55,615
1,066
532
6,004
10,000
1,333
104,312
2020
$'000
148,698
(14,389)
(2,840)
131,469
2020
$'000
520
11,464
14,383
54,846
978
1,300
1,881
10,000
2,185
97,557
Barossa Infrastructure Ltd (BIL) is an unlisted public Company supplying non-potable supplementary irrigation
water for viticulture in the Barossa. The Group holds a minority interest in BIL.
Coleambally Irrigation Co-operative Limited (CICL) is one of Australia’s major irrigation companies and is wholly
owned by its farmer members. CICL’s irrigation delivery system delivers water to 400,000 hectares of area across
the Coleambally Irrigation District, in the Riverina, near Griffith, NSW. The Group holds a minority interest in CICL.
Finance Lease – Breeders is comprised of breeders owned by the Group which have been leased to Cattle JV Pty
Limited, a wholly-owned subsidiary of Rural Funds Management Limited, for a term of ten years ending in 2026.
As part of the arrangement, the lessee is required to maintain the breeder herd and maintain an active breeding
program. During the year, additional breeders were leased to Cattle JV Pty Limited and were included as part of
the breeder herd. The expected credit loss on the finance lease is assessed on the value of the breeder herd
secured against the finance lease. This assessment involves the monitoring of the value of the breeder herd through
a bi-annual mustering process conducted by Cattle JV Pty Limited and an annual valuation process. There has
been no expected credit loss recognised at 30 June 2021 (2020: nil).
Finance Lease – Feedlots is comprised of feedlots leased to JBS Australia Pty Limited (JBS) for a term of ten years
ending in 2028 with a repurchase call option exercisable by JBS and a sale put option exercisable by the Group.
The call option held by JBS can be exercised from year six but will incur a break fee if exercised before year ten.
Finance Lease – Equipment is comprised of agricultural plant and equipment leased to 2007 Macgrove Project and
Cattle JV Pty Limited.
A $1,600,000 cattle financing facility with a term of ten years was extended to Katena Pty Ltd, the lessee of the
Cerberus property to fund the purchase of trade cattle. The facility is due to expire in September 2028. The balance
drawn as at 30 June 2021 is $532,000 (2020: $1,300,000). Its fair value approximates its carrying amounts. On 1
July 2021, the lease arrangement with Katena Pty Ltd was terminated by mutual agreement and all amounts owing
to the Group have since been paid
39
62
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C4 Financial assets – property related (continued)
Finance Lease – DA & JF Camm Pty Limited comprises of cattle owned by the Group and leased to DA & JF Camm
Pty Limited, the lessee of the Natal aggregation, as part of a $5,000,000 facility. The facility is secured and due to
expire in December 2022. The gross balance drawn as at 30 June 2021 is $6,004,000 (2020: $1,881,000). The
balance drawn net of security deposits held is $4,789,000 (2020: $1,505,0000). A $10,000,000 loan secured by
properties with a term of ten years was also extended to DA & JF Camm Pty Limited and is due in December 2027.
Its fair value approximates the carrying amount. The expected credit loss on the finance lease and term loan are
based on an assessment of the value of the security held. There has been no expected credit loss recognised at
30 June 2021 (2020: nil).
Other receivables relates to recognition of rental revenue on a straight-line basis in accordance with AASB 16
Leases.
Significant accounting judgements in the valuation of Coleambally Irrigation Co-operative and Barossa
Infrastructure Limited shares
The investments in BIL and CICL are treated the same as water rights, that is, recorded at historical cost less
accumulated impairment losses and not revalued.
Finance leases
Finance leases are measured at amortised cost. Each lease payment was allocated as a reduction to the finance
lease receivable and as finance income. The finance income was charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of the receivable for each period. These
represent leases of property or biological assets where all the risks and benefits incidental to the ownership of the
asset, but not the legal ownership, are substantially transferred from the lessor.
Minimum lease payments receivable under non-cancellable finance leases of feedlots, breeders and equipment
not recognised in the financial statements, are receivable as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Later than 5 years
Total
2021
$'000
5,880
5,876
5,858
5,802
23,183
63,567
110,166
2020
$'000
5,234
5,201
5,200
5,185
5,148
81,788
107,756
40
63
l
a
t
o
T
0
0
0
$
'
5
5
0
,
8
1
5
5
,
6
0
1
-
)
8
8
1
,
4
(
8
1
4
,
0
1
1
9
5
1
,
6
1
1
)
1
4
7
,
5
(
8
1
4
,
0
1
1
l
a
t
o
T
0
0
0
$
'
0
5
2
,
3
1
3
5
,
8
1
1
)
1
2
7
,
3
(
)
1
1
7
,
0
1
(
)
8
9
7
(
1
5
5
,
6
0
1
4
0
1
,
8
0
1
)
3
5
5
,
1
(
1
5
5
,
6
0
1
1
4
y
r
t
l
u
o
P
)
d
e
u
n
i
t
n
o
c
s
i
d
(
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
d
e
t
a
c
o
l
l
a
n
U
e
r
u
t
c
u
r
t
s
a
r
f
n
i
s
a
i
m
a
d
a
c
a
M
i
g
n
p
p
o
r
C
s
d
r
a
y
e
n
V
i
e
l
t
t
a
C
s
d
n
o
m
A
l
1
2
0
2
-
4
6
5
,
1
3
-
9
9
0
,
1
3
6
6
,
2
3
3
6
6
,
2
3
-
3
6
6
,
2
3
-
-
-
-
-
-
-
-
y
r
t
l
u
o
P
1
6
1
,
1
8
1
5
,
3
-
)
5
1
2
(
4
6
4
,
4
5
6
7
,
4
)
1
0
3
(
4
6
4
,
4
-
2
7
6
,
3
7
3
5
,
4
)
3
7
9
,
3
(
6
3
2
,
4
9
0
2
,
8
6
3
2
,
4
)
3
7
9
,
3
(
-
-
-
0
0
5
-
0
0
5
0
0
5
0
0
5
-
7
4
9
,
2
)
9
9
0
,
1
(
-
8
4
8
,
1
0
6
5
,
2
)
2
1
7
(
8
4
8
,
1
-
-
-
7
0
7
,
6
6
7
0
7
,
6
6
2
6
4
,
7
6
)
5
5
7
(
7
0
7
,
6
6
t
n
u
o
m
a
k
o
o
b
t
e
n
g
n
n
e
p
O
i
t
n
e
r
r
u
c
-
n
o
N
s
n
o
i
t
i
d
d
A
s
r
e
f
s
n
a
r
T
t
n
e
m
r
i
a
p
m
I
t
n
u
o
m
a
k
o
o
b
t
e
n
g
n
i
s
o
C
l
t
n
e
m
r
i
a
p
m
i
l
d
e
t
a
u
m
u
c
c
A
t
n
u
o
m
a
k
o
o
b
t
e
N
t
s
o
C
)
d
e
u
n
i
t
n
o
c
s
i
d
(
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
0
0
0
$
'
d
e
t
a
c
o
l
l
a
n
U
e
r
u
t
c
u
r
t
s
a
r
f
n
i
s
a
i
m
a
d
a
c
a
M
i
g
n
p
p
o
r
C
s
d
r
a
y
e
n
V
i
e
l
t
t
a
C
s
d
n
o
m
A
l
0
2
0
2
-
-
4
6
5
,
1
3
4
6
5
,
1
3
4
6
5
,
1
3
-
-
-
-
-
-
-
-
-
6
3
2
,
4
3
9
4
0
,
1
)
2
7
6
,
2
(
)
9
4
0
,
1
(
-
-
5
1
8
2
3
4
)
6
8
(
1
6
1
,
1
7
4
2
,
1
)
6
8
(
1
6
1
,
1
2
7
6
,
3
0
0
5
-
-
-
-
-
2
7
6
,
3
2
7
6
,
3
2
7
6
,
3
-
-
-
-
-
0
0
5
0
0
5
0
0
5
-
-
9
9
5
,
1
0
6
0
,
2
)
2
1
7
(
7
4
9
,
2
9
5
6
,
3
)
2
1
7
(
7
4
9
,
2
8
5
7
0
6
6
,
6
7
)
1
1
7
,
0
1
(
-
-
7
0
7
,
6
6
2
6
4
,
7
6
)
5
5
7
(
7
0
7
,
6
6
t
n
u
o
m
a
k
o
o
b
t
e
n
g
n
n
e
p
O
i
t
n
e
r
r
u
c
-
n
o
N
l
e
a
s
r
o
f
l
d
e
h
s
a
d
e
i
f
i
s
s
a
C
l
s
n
o
i
t
i
d
d
A
t
n
u
o
m
a
k
o
o
b
t
e
n
g
n
i
s
o
C
l
t
n
e
m
r
i
a
p
m
I
t
n
e
m
r
i
a
p
m
i
l
d
e
t
a
u
m
u
c
c
A
t
n
u
o
m
a
k
o
o
b
t
e
N
t
s
o
C
l
s
a
s
o
p
s
D
i
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C5 Intangible assets (continued)
Water rights
Permanent water rights and entitlements are recorded at historical cost less accumulated impairment losses. Such
rights have an indefinite life and are not depreciated. The carrying value is tested annually for impairment as well
as for possible reversal of impairment. If events or changes in circumstances indicate impairment, or reversal of
impairment, the carrying value is adjusted to take account of impairment losses.
The impairment recognised during the year in the cropping segment largely relates to the Lynora Downs property
based on the 30 June 2021 independent valuation.
C6 Property – owner occupied
2021
Land
Building
Irrigation
Total
Opening net book amount
Additions
Impairment
Depreciation
Closing net book amount
2020
Opening net book amount
Additions
Depreciation and impairment
Closing net book amount
$'000
-
29,056
(1,651)
-
27,405
$'000
-
840
-
(24)
816
$'000
63
-
-
63
$'000
-
29,959
(1,651)
(24)
28,284
Land
$'000
Building
Irrigation
$'000
$'000
Total
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Property – owner occupied relates to owner occupied property that is being used to conduct cropping operations
by the Group and accounted for under AASB 116 Property, Plant and Equipment. Property – owner occupied are
held under the revaluation model.
These assets are subject to revaluations based on the Group’s valuation policies. Increases in the carrying amounts
arising from revaluation of Property are recognised in other comprehensive income and accumulated in net assets
attributable to unitholders under asset revaluation reserve. Revaluation increases which reverse a decrease
previously recognised in profit and loss are recognised in profit or loss. Revaluation decreases which offset previous
increases are recognised in other comprehensive income in the asset revaluation reserve. Any other decreases
are recognised in profit and loss.
Elements of Property – owner occupied are subject to depreciation over their respective useful lives calculated on
a straight-line basis on the carrying amount. The useful lives and for each class of depreciable asset are shown
below:
The depreciation rates used for each class of depreciable asset are shown below:
Fixed asset class:
Land
Buildings
Useful life:
Not applicable
20 years
At the end of each annual reporting period, the useful life of each asset is reviewed. Any revisions are accounted
for prospectively as a change in estimate.
42
65
.
s
t
n
e
m
e
l
t
i
t
n
e
d
n
a
s
t
h
g
i
r
r
e
t
a
w
f
o
n
o
i
t
a
u
a
v
l
’
s
r
o
t
c
e
r
i
D
r
o
f
1
B
e
t
o
n
o
t
r
e
f
e
R
.
s
t
n
e
m
e
l
t
i
t
n
e
d
n
a
s
t
h
g
i
r
r
e
t
a
w
f
o
p
u
e
d
a
m
e
r
a
s
t
e
s
s
a
l
i
e
b
g
n
a
t
n
I
s
t
n
e
m
e
t
a
t
S
l
i
i
a
c
n
a
n
F
e
h
t
o
t
p
u
o
r
G
s
d
n
u
F
l
a
r
u
R
s
e
t
o
N
64
1
2
0
2
e
n
u
J
0
3
s
t
e
s
s
a
i
l
e
b
g
n
a
t
n
I
5
C
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C6 Property – owner occupied (continued)
Property – owner occupied as stated on a historical cost basis is as follows:
2021
Cost
Accumulated depreciation and impairment
Net book amount
2020
Cost
Accumulated depreciation and impairment
Net book amount
C7 Plant and equipment – other
Land
$'000
29,056
(1,651)
27,405
Building
Irrigation
$'000
$'000
840
(24)
816
63
-
63
Total
$'000
29,959
(1,675)
28,284
Land
$'000
Building
Irrigation
$'000
$'000
Total
$'000
-
-
-
-
-
-
-
-
-
-
-
-
2021
Plant and equipment
Opening net book amount
Additions
Transfers from held for sale
Disposals
Depreciation
Decrement (depreciation capitalised to developments)
Impairment
Closing net book amount
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
2020
Opening net book amount
Additions
Classified as held for sale or disposals
Depreciation
Impairment
Closing net book amount
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
66
$'000
3,201
7,187
248
(767)
(787)
(337)
(29)
8,716
16,711
(6,673)
(1,322)
8,716
Plant and equipment
$'000
8,537
2,228
(4,671)
(1,600)
(1,293)
3,201
10,043
(5,549)
(1,293)
3,201
43
Rural Funds Group
Notes to the Financial Statements
30 June 2021
C7 Plant and equipment – other (continued)
Classes of plant and equipment other than bearer plants are measured using the cost model as specified below.
The asset is carried at its cost less any accumulated depreciation and any impairment losses. Costs include
purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and removing the
asset, where applicable.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
The Group manages and monitors its leased assets and physically attend to properties where assets are located
on a regular basis.
The depreciation rates used for each class of depreciable asset are shown below:
Fixed asset class:
Capital works in progress
Plant and equipment
Farm vehicles and equipment
Useful life:
Not applicable
2-16 years
2-16 years
At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is
reviewed. Any revisions are accounted for prospectively as a change in estimate.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in profit and loss.
C8 Assets held for sale
Investment property
Bearer plants
Intangible assets
Plant and equipment
Total
Note
C2
C3
C5
C7
2021
$'000
1,621
-
-
-
1,621
2020
$'000
18,881
29,998
10,711
3,768
63,358
At 30 June 2021, investment property held for sale related to a portion of surplus land on Kerarbury contracted for
sale for $1.6m. The sale was completed on 15 July 2021.
During the year, the Group completed the sale of the Mooral almond orchard and associated plant and equipment
for a contracted price of approximately $98.0m excluding transaction costs and adjustments. The Mooral almond
orchard is not considered a separate line of business and has not been treated as a discontinued operation.
C9 Capital commitments
Capital expenditure across all properties largely relates to macadamia developments, almond property
improvements, cattle property developments and cropping property developments. These commitments are
contracted for but not recognised as liabilities. Increase in the commitments during the year largely relates to
contracted purchases of water entitlements in relation to Rookwood Weir.
Bearer plants
Investment property
Intangible assets
Total
2021
$'000
16,235
38,923
35,432
90,590
2020
$'000
2,728
22,050
-
24,778
44
67
Rural Funds Group
Notes to the Financial Statements
30 June 2021
D. TAX
Since 1 July 2014 both Rural Funds Trust and RFM Chicken Income Fund (a subsidiary of Rural Funds Trust)
became flow through trusts for tax purposes. As a result, it is no longer probable that a tax liability will be incurred
in these entities in relation to future sale of assets for a gain or through trading. RFM Chicken Income Fund was
treated as a flow through trust up until the date of disposal. RFM Australian Wine Fund (a subsidiary of Rural Funds
Trust) is the head of a separate tax consolidated group, taxed in its own right. RF Active (a subsidiary of Rural
Funds Trust) is a public trading trust and is taxed as a company.
D1 Income tax expense
The charge for current income tax expense is based on the profit adjusted for any non-assessable or disallowed
items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet
date.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
D1 Income tax expense (continued)
Numerical reconciliation of income tax expense to prima facie tax payable
Net profit before income tax
At the statutory income tax rate of 30% (2020: 30%)
Tax effect of amounts that are not taxable in determining taxable
income
Adjustments in respect of tax of previous years
General capital gain tax discount on the sale of capital assets
Total
2021
$'000
120,292
36,088
(35,427)
(3)
-
658
2020
$'000
50,598
15,179
(12,977)
-
(592)
1,610
Deferred tax is accounted for using the balance sheet method in respect of temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Franking credits
No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding in a business
combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is charged/credited in the income statement except where it relates to items that
may be credited directly to net assets attributable to unitholders, in which case the deferred tax is adjusted directly
against net assets attributable to unitholders.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on management’s
judgement, the assumption that no adverse change will occur in income taxation legislation and the anticipation
that the consolidated group will derive sufficient future assessable income to enable the benefit to be realised and
comply with the conditions of deductibility imposed by the law.
The major components of income tax expense comprise:
Current tax
Deferred tax
Adjustments in respect of deferred income tax of previous years
Income tax expense reported in the Statement of Comprehensive
Income
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operation
Total
Deferred income tax expense included in income tax expense comprises:
Increase in deferred tax liabilities
Total
Amounts charged or credited directly to equity
Change in fair value taken through asset revaluation reserve
Total
2021
$'000
283
378
(3)
658
658
-
658
1,596
1,596
2021
$'000
1,220
1,220
2020
$'000
1,533
77
-
1,610
1,553
57
1,610
77
77
2020
$'000
-
-
45
At 30 June 2021 there are $2,434,000 of franking credits available to apply to future income distributions (2020:
$901,000).
D2 Deferred tax and current tax payable
Deferred tax liabilities
Bearer plants
Plant and equipment
Fair value investment property
Other assets
Gross deferred tax liabilities
Set off of deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Investments
Other
Unused income tax losses
Gross deferred tax assets
Set off of deferred tax liabilities
Net deferred tax assets
2021
$'000
5,051
1,026
4,838
383
11,298
(3,848)
7,450
223
33
3,592
3,848
(3,848)
-
Recognised tax assets and liabilities
Current income tax
Deferred income tax
Opening balance
Charged to income
Credited to equity
Tax payments
2021
$'000
(1,533)
(283)
-
2,293
2020
$'000
(439)
(1,533)
-
439
Closing balance
Tax expense in the Consolidated Statement of Comprehensive
Income
Amounts recognised in the Consolidated Statement of Financial Position:
477
(1,533)
Deferred tax asset
Net deferred tax liability
2021
$'000
(5,855)
(375)
(1,220)
-
(7,450)
658
-
(7,450)
2020
$'000
3,795
2,208
4,461
60
10,524
(4,669)
5,855
223
35
4,411
4,669
(4,669)
-
2020
$'000
(5,778)
(77)
-
-
(5,855)
1,610
-
(5,855)
46
68
69
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E. CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT
RFM, the Responsible Entity of RFF, is responsible for managing the policies designed to optimise RFF’s capital
structure. This is primarily monitored through an internal gearing ratio target range of 30-35% calculated as interest
bearing liabilities on adjusted total assets. The optimal capital structure is reviewed periodically, although this may
be impacted by market conditions which may result in an actual position which may differ from the desired position.
E1 Interest bearing liabilities
Current
Equipment loans (ANZ)
J&F Guarantee - Borrowing loss provision
Total
Non-current
Borrowings (ANZ)
Borrowings (Rabobank)
Total
2021
$'000
2,407
49
2,456
220,252
123,891
344,143
2020
$'000
3,775
39
3,814
190,008
107,240
297,248
Interest bearing liabilities are initially recognised at fair value less any related transaction costs. Subsequent to
initial recognition, interest bearing liabilities are stated at amortised cost. Any difference between cost and
redemption value is recognised in the statement of comprehensive income over the entire period of the borrowings
on an effective interest basis. Interest-bearing liabilities are classified as current liabilities unless the Group has an
unconditional right to defer the settlement of the liability for at least twelve months from the balance sheet date.
J&F Guarantee Accounting policy
Subsequent to initial recognition, financial guarantee contracts are measured as financial liabilities at the higher of
any loss allowance calculated and the amount initially recognised. A loss allowance is recognised for expected
credit losses on a financial guarantee contract. The expected credit loss is assessed based on the probability of
default and whether there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period. To assess whether there is a significant increase in credit risk, the risk of default at reporting date
is compared to the risk of default at the date of initial recognition. Consideration is made to factors that could impact
the financial guarantee such as actual or expected significant adverse changes in business, financial or economic
conditions, and any material / adverse changes to the operating results of the associated parties of the financial
guarantee.
J&F Guarantee
The J&F Guarantee is a $99.9 million limited guarantee provided by the Group to J&F Australia Pty Ltd (J&F), a
wholly owned subsidiary of Rural Funds Management Limited, for a period of ten years from August 2018. From
the provision of this guarantee, the Group earns a guarantee fee classified as finance income as noted in B3, paid
on a monthly basis. The guarantee is currently used to support $99.9 million of J&F’s debt facility which is used for
cattle purchases, feed and other costs associated with finishing the cattle on the feedlots, enabling J&F to supply
cattle to JBS Australia Pty Limited (JBS) for its grain fed business. Given J&F’s primary source of income is from
payments from JBS, a J&F default is only likely to occur in the event of a JBS default. In the event of a JBS default,
J&F would cease buying cattle and commence selling cattle in the feedlots. As cattle are sold, J&F bank loans
would be repaid. Given that lot-fed cattle can gain up to 2kgs per day, and are sold on a per kg basis, a material
fall in the cattle price would be required for there to be a shortfall. The guarantee would be called to cover any
shortfall between J&F borrowings and cattle sales, but limited to $99.9 million, or up to a maximum of $100.0 million
if any future increases in the guarantee have been agreed.
The guarantee fee received from J&F during the year was $7,117,000 (2020: $5,622,000). The return to the Group
relating to the guarantee fee arrangement for the year was approximately 10.6% (2020: 11.0%) inclusive of interest
offset savings. There was no event of default during the year, and as a result, the guarantee has not been called.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E1 Interest bearing liabilities (continued)
J&F Guarantee (continued)
The financial guarantee was recognised at fair value at inception, which was nil. Subsequently, it is carried at the
value of the expected credit loss. The credit loss has been calculated considering the likelihood of the financial
guarantee being triggered and its financial impact on the Group. In calculating the allowance, consideration is given
to counterparty risk associated with the arrangement, with JBS being the ultimate counterparty. The credit risk of
JBS was determined to not have increased significantly since initial recognition, therefore the loss allowance for
the guarantee has been recognised at an amount equal to 12-month expected credit losses. Consideration is also
given to the value of cattle in assessing any potential shortfall should the guarantee be called by the Group. The
credit loss allowance is recognised at fair value through profit or loss. The additional credit loss provision recognised
in the year was $10,000.
As part of the JBS transaction, the Group purchased five feedlots from JBS Australia Pty Limited (JBS) and leased
them back to JBS. The feedlots are classified as a finance lease with a repurchase call option exercisable by JBS
and a sale put option exercisable by the Group as noted in C4. The call option held by JBS can be exercised from
year six in 2024 but will incur a break fee if exercised before year ten in 2028.
Borrowings
At 30 June 2021 the core debt facility available to the Group was $380,000,000 (2020: $335,000,000), split into
two tranches, with a $270,000,000 tranche expiring in November 2022 and a $110,000,000 tranche expiring in
November 2023.
As at 30 June 2021 RFF had active interest rate swaps totaling 53.2% (2020: 61.6%) of the drawn down balance
to manage interest rate risk. Hedging requirements under the terms of the borrowing facility may vary with bank
consent.
Loan covenants
Under the terms of the updated borrowing facility, the Group was required to comply with the following financial
covenants for the year ended 30 June 2021:
• maintain a maximum loan to value ratio of 50%;
• maintain net tangible assets (including water entitlements) in excess of $400,000,000;
•
•
a minimum hedging requirement of 40% of debt drawn under the borrowing facility; and
an interest cover ratio for the Group not less than 3.00:1.00.
The loan to value ratio calculation includes the J&F guarantee of $99.9 million (2020: $82.5 million).
Rural Funds Group has complied with the financial covenants of its borrowing facilities during the year.
Loan amounts are provided at the Bankers’ floating rate, plus a margin. For bank reporting purposes, these assets
are valued at market value based on latest external valuation report. Refer to section B1 for Directors’ valuation of
water rights and entitlements.
Borrowings with Australian and New Zealand Banking Group (ANZ) and Rabobank Australia Group (Rabobank)
are secured by:
•
•
a fixed and floating charge over the assets held by Australian Executor Trustee Limited (AETL) as
custodian for Rural Funds Trust, RFM Australian Wine Fund (a subsidiary of Rural Funds Trust) and RF
Active; and
registered mortgages over all property owned by the Rural Funds Trust and its subsidiaries provided by
AETL as custodian for Rural Funds Trust and its subsidiaries.
70
47
48
71
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E1 Interest bearing liabilities (continued)
The following assets are pledged as security over the loans:
2021
Mortgage: Leased
Properties
Other assets
Equipment loans
Total
2020
Mortgage: Leased
Properties
Other assets
Equipment loans
Total
Investment
property
Water
licences
$'000
$'000
Plant and
equipment
- Bearer
Plants
$'000
Financial
assets
Plant and
equipment
Assets
held for
sale
Total
$'000
$'000
$'000
$'000
596,924
75,648
160,782
70,464
-
1,621
905,439
-
-
596,924
34,770
-
110,418
-
-
160,782
24,848
-
95,312
-
8,716
8,716
-
-
1,621
59,618
8,716
973,773
Investment
property
Water
licences
$'000
$'000
Plant and
equipment
- Bearer
Plants
$'000
Financial
assets
Plant and
equipment
Assets
held for
sale
Total
$'000
$'000
$'000
$'000
474,838
74,987
153,528
12,649
-
59,590
775,592
-
-
474,838
31,564
-
106,551
-
-
153,528
74,093
-
86,742
-
3,201
3,201
-
3,768
63,358
105,657
6,969
888,218
E2 Financial assets – other (non-property related)
Investment - Macadamia Processing Co
Investment - Almondco Australia Limited
Total
2021
$'000
824
2,041
2,865
2020
$'000
664
2,004
2,668
The Group’s investments in Marquis Macadamias Limited (formerly Macadamia Processing Co Limited) and
Almondco Australia Limited are held at fair value through profit and loss (level 3 – see section E4).
E3 Derivative financial instruments measured at fair value
Derivative financial assets
Non-current
Interest rate swaps
Total other assets
Derivative financial liabilities
Current
Interest rate swaps
Total other liabilities
Non-current
Interest rate swaps
Total other liabilities
2021
$'000
2,931
2,931
3,604
3,604
18,069
18,069
The Group’s derivative financial instruments are held at fair value (level 2 - see section E4).
2020
$'000
-
-
3,666
3,666
27,999
27,999
49
72
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E4 Fair value measurement of assets and liabilities
This note explains the judgements and estimates made in determining fair values of Investment property, Plant
and equipment – bearer plants and financial assets and liabilities that are recognised and measured at fair value
in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value,
the Group has classified each item into the three levels prescribed under Australian Accounting Standards as
mentioned above.
Level 1 Fair value based on unadjusted quoted prices in active markets for identical assets or liabilities that the
entity can access at the measurement date (such as publicly traded equities).
Level 2 Fair value based on inputs other than quoted prices included within level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3 One or more significant inputs to the determination of fair value is based on unobservable inputs for the
asset or liability.
RFF’s financial assets and liabilities relating to interest rate swap derivatives are level 2.
At 30 June 2021, all non-financial assets are level 3.
RFF’s unlisted equity investments, BIL, CICL, Marquis Macadamias Ltd (formerly MPC) and Almondco are level 3.
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels at the end of the reporting
period. There were no transfers in the current year (2020: nil).
Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments via level 2 inputs include:
the use of quoted market prices or dealer quotes for similar instruments;
the fair value of interest rate swaps is calculated as the present value of estimated future cash flows based
on observable yield curves
•
•
Specific valuation techniques used to value financial assets, investment property and bearer plants via level 3 are
discussed in section C1.
E5 Financial instruments
Financial instruments are recognised initially using trade date accounting, i.e. on the date that the Group becomes
party to the contractual provisions of the instrument.
On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for
instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).
a. Financial assets
Financial assets are divided into the following categories which are described in detail below:
•
•
financial assets at amortised cost; and
financial assets at fair value through profit or loss.
Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of
the instrument and its purpose. A financial instrument’s category is relevant to the way it is measured and whether
any resulting income and expenses are recognised in profit or loss or in other comprehensive income.
b. Financial assets at amortised cost
Financial assets held with the objective of collecting contractual cash flows are recognised at amortised cost. After
initial recognition these are measured using the effective interest method, less provision for expected credit loss.
Any change in their value is recognised in profit or loss.
Discounting is omitted where the effect of discounting is considered immaterial.
For trade receivables, finance lease receivables and loans receivables, impairment provisions are recorded in a
separate allowance account with the loss being recognised in profit or loss. Subsequent recoveries of amounts
previously written off are credited against other income in profit or loss.
50
73
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E5 Financial instruments (continued)
c. Financial assets at fair value through profit or loss
The group classifies the following financial assets at fair value through profit or loss:
•
•
debt investments that do not qualify for measurement at either amortised cost
equity investments for which the entity has not elected to recognise fair value gains and losses through
other comprehensive income
The Group’s derivatives, investments in Marquis Macadamias Ltd and Almondco are at fair value through profit or
loss.
Assets included within this category are carried in the consolidated statement of financial position at fair value with
changes in fair value recognised in profit or loss.
Any gain or loss arising from derivative financial instruments is based on changes in fair value, which is determined
by direct reference to active market transactions or using a valuation technique where no active market exists.
d. Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the
instrument. All interest-related charges are reported in profit or loss and are included in the income statement line
item titled "finance costs".
Financial liabilities that measured at fair value through profit or loss include the Group’s derivatives. All other
financial liabilities are measured at amortised cost.
E6 Financial risk management
The Group is exposed to a variety of financial risks through its use of financial instruments. The Group‘s overall
risk management plan seeks to minimise potential adverse effects due to the unpredictability of financial markets.
The Group does not speculate in financial assets.
The most significant financial risks which the Group is exposed to are described below:
• Market risk - interest rate risk and price risk
• Credit risk
•
Liquidity risk
The principal categories of financial instrument used by the Group are:
Loans and receivables
Finance lease receivables
•
•
• Cash at bank
• Bank overdraft
•
•
•
Trade and other payables
Floating rate bank loans
Interest rate swaps
a. Financial risk management policies
Risks arising from holding financial instruments are inherent in the Group’s activities and are managed through a
process of ongoing identification, measurement and monitoring. The Responsible Entity is responsible for
identifying and controlling risks that arise from these financial instruments.
The risks are measured using a method that reflects the expected impact on the results and net assets attributable
to unitholders of the Group from changes in the relevant risk variables. Information about these risk exposures at
the reporting date, measured on this basis, is disclosed below.
Concentrations of risk arise where a number of financial instruments or contracts are entered into with the same
counterparty, or where a number of counterparties are engaged in similar business activities that would cause their
ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions.
51
74
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E6 Financial risk management (continued)
b.
Interest rate risk and swaps held for hedging
Interest rate risk is managed by using a floating rate debt and through the use of interest rate swap contracts. The
Group does not speculate in the trading of derivative instruments.
Interest rate swap transactions are entered into by the Group to exchange variable to fixed interest payment
obligations to protect long-term borrowings from the risk of increasing interest rates. The economic entity has
variable interest rate debt and enters into swap contracts to receive interest at variable rates and pay interest at
fixed rates.
The notional principal amounts of the swap contracts approximate 53.2% (2020: 62.6%) of the Group's drawn down
debt at 30 June 2021.
At balance date, the details of the effective interest rate swap contracts are:
Maturity of notional amounts
Settlement - between 0 to 3 years
Settlement - 3 to 5 years
Settlement - greater than 5 years
Total
Effective average interest rate
payable
Balance
2021
%
2.70
3.24
2.97
2020
%
2.70
3.42
3.06
2021
$'000
15,000
73,000
95,000
183,000
2020
$'000
15,000
13,000
155,000
183,000
The following interest rate swap contracts that have been entered into but are not yet effective as at 30 June 2021
are:
Maturity of notional amounts
Settlement - greater than 5 years
Total
Effective average interest rate
payable
Balance
2021
%
1.99
2020
%
1.99
2021
$'000
90,000
90,000
2020
$'000
90,000
90,000
The net gain recognised on the swap derivative instruments for the year ended 30 June 2021 was $12,923,000
(2020: $7,624,000 loss).
At 30 June 2021 the Group had the following mix of financial assets and liabilities exposed to variable interest
rates:
Cash
Interest bearing liabilities (non-current)
Total
2021
$'000
11,647
(344,143)
(332,496)
2020
$'000
5,085
(297,248)
(292,163)
At 30 June 2021, 0.72% (2020: 1.25%) of the Group’s debt is fixed, excluding the impact of interest rate swaps.
52
75
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E6 Financial risk management (continued)
c.
Interest rate risk (sensitivity analysis)
At 30 June 2021, the effect on profit before tax and net assets attributable to unitholders as a result of changes in
the interest rate, net of the effect of interest rate swaps, with all other variables remaining constant, would be as
follows:
Change in profit before income tax:
Increase in interest rate by 1%
Decrease in interest rate by 1%
Change in equity:
Increase in interest rate by 1%
Decrease in interest rate by 1%
d. Credit risk
2021
$'000
17,353
(18,923)
17,353
(18,923)
2020
$'000
19,749
(21,794)
19,749
(21,794)
The maximum exposure to credit risk (excluding the value of any collateral or other security) at balance date to
recognised financial assets is the carrying amount, net of any provisions for impairment of those assets. This has
been disclosed in the Consolidated Statement of Financial Position and notes to the financial statements.
Credit risk and associated impacts are also managed through security, in the form of guarantees, security deposits
and property security in favor of the group. Counterparty credit risk for finance leases and term loans have also
been assessed and accounted for through the recognition of credit loss provisions.
All of the entity’s debt investments at amortised cost are considered to have low credit risk and the loss allowance
recognised during the year was therefore limited to 12 months’ expected losses. Management considers the credit
risk to be low where the counterparty does not have material outstanding repayments and has capacity to meet its
contractual debt obligations. Debt investments are secured against collateral which is monitored by management.
In recognising any potential credit loss provisions, management also assesses the collateral held. Where the fair
value of such collateral is greater than the debt investment, a lower loss allowance amount is recognised.
s
t
n
e
m
e
t
a
t
S
p
u
o
r
G
s
d
n
u
F
l
i
i
a
c
n
a
n
F
e
h
t
o
t
l
a
r
u
R
s
e
t
o
N
53
1
2
0
2
e
n
u
J
0
3
)
d
e
u
n
i
t
n
o
c
(
t
n
e
m
e
g
a
n
a
m
k
s
i
r
l
i
a
c
n
a
n
F
6
E
i
t
n
e
m
e
g
a
n
a
m
l
a
t
i
p
a
c
d
n
a
k
s
i
r
i
y
t
i
d
u
q
L
i
.
e
n
r
e
c
n
o
c
g
n
o
g
i
e
h
t
d
r
a
u
g
e
f
a
s
o
t
e
r
a
l
a
t
i
p
a
c
i
g
n
g
a
n
a
m
n
e
h
w
s
e
v
i
t
c
e
b
o
s
p
u
o
r
G
e
h
T
j
'
l
.
s
r
e
d
o
h
t
i
n
u
o
t
l
e
b
a
t
u
b
i
r
t
t
a
s
t
e
s
s
a
t
e
n
s
a
l
a
t
i
p
a
c
s
e
n
i
f
e
d
p
u
o
r
G
e
h
t
l
i
f
o
y
t
i
t
n
E
e
b
s
n
o
p
s
e
R
e
h
T
i
g
n
w
o
r
r
o
b
n
o
m
o
o
r
d
a
e
h
e
t
a
u
q
e
d
a
t
a
h
t
g
n
i
r
u
s
n
e
d
n
a
s
w
o
l
f
h
s
a
c
t
s
a
c
e
r
o
f
g
n
i
r
o
t
i
n
o
m
y
b
k
s
i
r
y
t
i
d
u
q
i
i
l
s
e
g
a
n
a
m
p
u
o
r
G
e
h
T
.
e
r
u
t
c
u
r
t
s
l
a
t
i
p
a
c
l
a
m
i
i
i
t
p
o
n
a
n
a
t
n
a
m
o
t
d
n
a
p
u
o
r
G
e
h
t
f
o
4
5
0
2
0
2
0
0
0
$
'
1
2
0
2
0
0
0
$
'
0
2
0
2
0
0
0
$
'
1
2
0
2
0
0
0
$
'
0
2
0
2
0
0
0
$
'
1
2
0
2
0
0
0
$
'
0
2
0
2
0
0
0
$
'
1
2
0
2
0
0
0
$
'
0
2
0
2
0
0
0
$
'
1
2
0
2
0
0
0
$
'
0
2
0
2
0
0
0
$
'
1
2
0
2
0
0
0
$
'
l
a
t
o
T
s
r
a
e
y
5
r
e
v
O
s
r
a
e
y
5
o
t
3
s
r
a
e
y
3
o
t
1
r
a
e
y
1
o
t
s
h
t
n
o
m
6
s
h
t
n
o
m
6
n
a
h
t
s
s
e
L
.
e
t
a
d
g
n
i
t
r
o
p
e
r
e
h
t
t
a
l
e
b
a
c
i
l
p
p
a
s
e
t
a
r
t
s
e
r
e
t
n
i
g
n
s
u
i
d
e
t
a
m
i
t
s
e
n
e
e
b
e
v
a
h
i
h
c
h
w
s
w
o
l
f
h
s
a
c
d
e
t
n
u
o
c
s
d
n
u
i
l
a
u
t
c
a
r
t
n
o
c
e
h
t
2
0
5
,
3
5
7
7
,
3
5
9
1
,
3
7
0
4
,
2
4
3
3
,
8
0
3
6
6
1
,
2
5
3
-
-
-
-
-
-
7
8
7
,
3
2
7
0
0
,
1
2
8
9
3
,
9
3
3
5
7
7
,
8
7
3
0
8
2
,
6
0
8
2
,
6
0
3
2
,
4
0
3
2
,
4
8
4
9
,
3
7
-
7
5
9
8
3
8
,
6
3
4
7
,
1
8
-
-
1
9
4
9
3
0
,
6
0
3
5
,
6
8
5
2
,
1
3
2
6
4
8
,
8
4
3
4
6
5
,
1
0
6
6
,
1
-
8
5
6
,
1
3
0
0
,
7
-
1
1
3
,
1
4
3
1
,
7
9
1
9
,
9
3
2
1
9
2
,
7
5
3
-
7
8
5
3
3
8
,
1
4
8
9
,
3
-
0
9
2
2
0
8
,
1
2
5
7
,
3
4
6
5
,
1
2
0
5
,
3
3
7
5
3
3
8
,
1
2
7
4
,
7
0
6
6
,
1
5
9
1
,
3
5
1
3
2
0
8
,
1
2
7
9
,
6
s
e
i
t
i
l
i
b
a
i
l
g
n
i
r
a
e
b
t
s
e
r
e
t
n
I
l
s
e
b
a
y
a
p
r
e
h
t
o
d
n
a
e
d
a
r
T
s
e
i
t
i
l
i
b
a
i
l
l
a
i
c
n
a
n
F
i
s
t
e
s
s
a
l
a
i
c
n
a
n
F
i
s
p
a
w
s
e
t
a
r
t
s
e
r
e
t
n
I
s
n
a
o
l
t
n
e
m
p
u
q
E
i
l
a
t
o
T
e
r
a
l
e
b
a
t
e
h
t
n
i
d
e
s
o
c
s
d
l
i
s
t
n
u
o
m
a
e
h
T
.
1
2
0
2
e
n
u
J
0
3
t
a
s
a
s
e
i
t
i
l
i
b
a
i
l
l
i
a
c
n
a
n
i
f
i
d
e
s
n
g
o
c
e
r
m
o
r
f
g
n
i
t
l
u
s
e
r
t
s
e
r
e
t
n
i
d
n
a
s
t
n
e
m
y
a
p
e
r
d
e
x
i
f
y
l
l
a
u
t
c
a
r
t
n
o
c
l
l
a
s
t
c
e
l
f
e
r
w
o
e
b
l
l
e
b
a
t
e
h
T
l
.
s
r
e
d
o
h
t
i
n
u
o
t
i
d
a
p
s
n
o
i
t
u
b
i
r
t
s
d
i
f
o
t
n
u
o
m
a
e
h
t
g
n
i
t
s
u
d
a
j
r
o
t
b
e
d
e
c
u
d
e
r
o
t
s
t
e
s
s
a
g
n
i
t
s
e
v
d
i
y
b
l
a
t
i
p
a
c
s
t
i
t
s
u
d
a
j
i
r
o
n
a
t
n
a
m
o
t
i
l
e
b
a
s
i
p
u
o
r
G
e
h
T
i
i
.
d
e
n
a
t
n
a
m
e
r
a
s
e
i
t
i
l
i
c
a
f
76
77
Rural Funds Group
Notes to the Financial Statements
30 June 2021
E7 Issued units
Units on issue at the beginning of the period
Units issued during the year
Distributions to unitholders
Units on issue
2021
2020
No.
337,713,420
2,187,136
-
339,900,556
$'000
360,574
4,920
19,646
385,140
No.
334,263,593
3,449,827
-
337,713,420
$'000
362,854
6,639
(8,919)
360,574
The holders of ordinary units are entitled to participate in distributions and the proceeds on winding up of the Group.
On a show of hands at meetings of the Group, each holder of ordinary units has one vote in person or by proxy,
and upon a poll each unit is entitled to one vote. Voting is determined based on the closing market value of each
unit.
The Group does not have authorised capital or par value in respect of its units.
Distributions totaling $38,259,000 were declared during the year. Distributions are allocated to the components of
equity which is comprised of issued units and retained earnings.
E8 Distributions payable
Distributions payable
Total
2021
$'000
10,022
10,022
2020
$'000
9,460
9,460
78
55
Rural Funds Group
Notes to the Financial Statements
30 June 2021
F. OTHER ASSETS AND LIABILTIIES
F1 Cash and cash equivalents
Cash at bank
Total
Reconciliation of cash
2021
$'000
11,647
11,647
2020
$'000
5,085
5,085
Cash and cash equivalents reported in the Statement of Cash flows are reconciled to the equivalent items in the
Statement of Financial Position as follows:
Cash and cash equivalents
F2 Trade and other receivables
Current
Trade receivables
Sundry receivables
Receivables from related parties
Total
2021
$'000
11,647
2021
$'000
3,427
787
731
4,945
2020
$'000
5,085
2020
$'000
3,607
623
1,216
5,446
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected
loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue with no significant overdue amounts.
F3 Other current assets
Prepayments
Deposits
Inventory
Total
F4 Trade and other payables
Trade payables
Accruals
Sundry creditors
Total
2021
$'000
797
4,137
61
4,995
2021
$'000
1,597
1,413
185
3,195
2020
$'000
2,101
587
-
2,688
2020
$'000
725
1,189
1,588
3,502
56
79
Rural Funds Group
Notes to the Financial Statements
30 June 2021
F5 Other non-current liabilities
Lessee deposits
Total
F6 Asset revaluation reserve
Opening balance
Disposal of bearer plants
Bearer plants revaluation
Total comprehensive income
Income tax applicable
Closing balance
F7 Biological assets
Opening net book amount
Additions
Increases due to biological transformation
Decreases due to sales
Closing net book amount
2021
$'000
4,421
4,421
2021
$'000
59,412
(15,348)
5,503
5,503
(1,220)
48,347
2021
$'000
-
2,336
1,136
(484)
2,988
2020
$'000
3,877
3,877
2020
$'000
46,462
-
12,950
12,950
-
59,412
2020
$'000
-
-
-
-
-
In November 2020, the Group settled on the Maryborough acquisition, consisting of 5,258 hectares of sugar cane
farms and 7,740 megalitres of water entitlements located in Maryborough, Queensland. The farms have the
potential to be progressively converted to approximately 2,200 hectares of macadamia orchards. Farms that are
unleased or where development has not actively commenced have being retained for cropping operations in the
short term.
Biological assets relate to the Group’s cropping operations. In accordance with AASB 141 Agriculture the Group’s
biological assets have been recognised at fair value as determined based on the present value of expected net
cash flows from the crops.
Fair value has been based on expected net cash flows from the crops discounted from the time of harvest. The
main level 3 inputs used by the Group include estimates based on the expected sugar per hectare of cane planted,
production costs (including input and harvest costs), and the estimated time of harvest adjusted for the risks of the
cash flows.
Segment
Biological
assets (sugar)
Fair value at
30 June
2021
$’000
2,988
30 June
2020
$’000
-
Unobservable inputs
Range of inputs
30 June
2021
30 June
2020
Sugar from cane planted
(tonnes per ha)
4.3 - 7.0
tonnes per ha
Net price
($ per tonne)
$366.05 - $463.67
per tonne
-
-
Total
2,988
-
Significant estimates used in determining the expected net cash flows:
Sugar from cane planted (tonnes per ha)
The higher the sugar from cane planted the higher the fair value
Net price ($ per tonne)
The higher the net price, the higher the fair value
Changes in the fair value of biological assets are recognised in the statement of comprehensive income in the year
they arise.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G. ADDITIONAL INFORMATION
G1 Key management personnel
Related parties are persons or entities that are related to the Group as defined by AASB 124 Related Party
Disclosures. These include directors and other key management personnel and their close family members and
any entities they control as well as subsidiaries and associates of the Group. The following provides information
about transactions with related parties during the year as well as balances owed to or from related parties as at 30
June 2021.
Directors
The Directors of RFM are considered to be key management personnel of the Group. The Directors of the
Responsible Entity in office during the year and up to the date of this report are:
Guy Paynter
David Bryant
Michael Carroll
Julian Widdup
Interests of Directors of the Responsible Entity
Units in the Group held by Directors of RFM or related entities controlled by Directors of RFM as at 30 June 2021
are:
Balance at 30 June 2019
Additions
Balance at 30 June 2020
Additions
Balance at 30 June 2021
Guy Paynter
Units
1,059,104
500,000
1,559,104
-
1,559,104
David Bryant
Units
14,414,854
823,180
Michael Carroll
Units
27,623
57,111
Julian Widdup
Units
-
110,203
15,238,034
-
15,238,034
84,734
133,668
218,402
110,203
5,562
115,765
*Includes interests held by Rural Funds Management Limited as the Responsibly Entity.
Other key management personnel
In addition to the Directors noted above, RFM, as Responsible Entity of the Group is considered to be key
management personnel with the authority for the strategic direction and management of the Group.
The constitutions of Rural Funds Trust and RF Active (the stapled entities forming the Group) are legally binding
documents between the unitholders of the Group and RFM as Responsible Entity. Under the constitutions, RFM is
entitled to the following remuneration:
• Management fee: 0.6% per annum (2020: 0.6%) of adjusted total assets; and,
• Asset management fee: 0.45% per annum (2020: 0.45%) of adjusted total assets.
Compensation of key management personnel
No amount is paid by the Group directly to the Directors of the Responsible Entity. Consequently, no compensation
as defined in AASB 124 Related Party Disclosures is paid by the Group to the Directors as key management
personnel. Fees paid and payable to RFM as Responsible Entity are disclosed in note G2.
80
57
58
81
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G2 Related party transactions
Responsible Entity (Rural Funds Management) and related entities
Transactions between the Group and the Responsible Entity and its associated entities are shown below:
Management fee
Asset management fee
Total management fees
Expenses reimbursed to RFM
Expenses reimbursed to RFM Macadamias
Expenses reimbursed to RFM Almond Fund
Dividends declared to the Responsible Entity
Total amount paid to RFM and related entities
Rental income received from RFM Almond Fund
Rental income received from RFM Almond Fund 2006
Rental income received from RFM Almond Fund 2007
Rental income received from RFM Almond Fund 2008
Rental income received from RFM
Rental income received from RFM Farming
Rental income received from Cattle JV
Rental income received from Cotton JV
Rental income received from 2007 Macgrove Project
Finance income from Cattle JV
Interest income from Cattle JV
Finance income from J&F Australia Pty Limited
Rental income received from RFM Poultry
Expenses charged to RFM Almond Fund
Expenses charged to RFM Macadamias
Expenses charged to RFM Farming
2021
$'000
6,296
4,722
11,018
6,664
1,703
-
1,336
20,721
2,123
-
-
-
8
1,640
1,702
2,502
1,219
1,618
50
7,117
-
788
123
2
2020
$'000
5,689
4,266
9,955
5,222
-
90
1,272
16,539
2,640
717
266
753
409
2,168
1,363
2,320
1,096
1,198
87
5,622
5,158
59
108
169
Total amounts received from RFM and related entities
18,892
24,133
The terms and nature of the historical transactions between the Group and related parties have not changed during
the year ended 30 June 2021. Transactions entered into between related parties during the year have been
reviewed.
The key movements during the year:
Expenses reimbursed to RFM relates to expenses incurred or paid by RFM on behalf of the Group which are
subsequently reimbursed by the Group. Examples of these expenses include corporate overheads, professional
service fees such a legal, audit and tax matter costs and regulatory fees and charges. During the year ended 30
June 2021, additional costs were incurred by RFM on behalf of the Group as a result of transaction activity including
the sale of the Mooral almond orchard and property acquisitions and developments.
Expenses reimbursed to RFM Macadamias relates to expenses incurred or paid by RFM Macadamias on behalf
of the Group in relation to the Group’s macadamia developments.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G2 Related party transactions (continued)
Responsible Entity (Rural Funds Management) and related entities (continued)
Rental income from RFM Almond Fund (RAF) relates to rent on the Mooral almond orchard which was previously
charged to RFM Almond Fund 2006, RFM Almond Fund 2007, RFM Almond Fund 2008 and RFM’s Almond Lots
which merged to form RAF during the prior year ended 30 June 2020. Rental income from RAF ceased on 2
December 2020 when the Group completed the sale of the Mooral almond orchard and associated plant and
equipment. Expenses charged to RFM Almond Fund largely relates to the usage of water entitlement allocations
for the Mooral orchard.
Rental income from RFM Poultry ceased on 18 December 2019 when the poultry assets were sold to ProTen
Investment Management Pty Ltd as trustee for ProTen Investment Trust (ProTen).
Finance income from J&F Australia Pty Limited (J&F) relates to the $99.9 million (2020: $82.5 million) limited
guarantee provided to J&F, a wholly owned subsidiary of Rural Funds Management Limited. From the provision
of this guarantee, the Group earns a guarantee fee classified as finance income.
Debtors and finance lease receivables
RFM Farming Pty Limited
RFM Macadamias Pty Limited
Cattle JV Pty Limited
Cotton JV Pty Limited
J&F Australia Pty Limited
RFM Almond Fund
Total
2021
$'000
329
946
18,120
-
-
-
19,395
2020
$'000
307
429
14,352
8
575
721
16,392
Receivables are not secured and have terms of up to 30 days. Finance lease receivables are secured by the
Group's ownership of the relevant assets. Outstanding balances are settled through payment.
$172,000 was overdue from Cattle JV Pty Limited as at 30 June 2021. Interest is charged on any overdue amounts.
Creditors
RFM
Total
Custodian fees
Australian Executor Trustees Limited
Total
Financial Guarantee
2021
$'000
-
-
2021
$'000
309
309
2020
$'000
195
195
2020
$'000
286
286
The Group provides a $99.9 million (2020: $82.5 million) guarantee to J&F Australia Pty Limited (J&F), a subsidiary
of RFM. The guarantee is currently used to support $99.9 million of J&F’s debt facility which is used for cattle
purchases, feed and other costs associated with finishing the cattle on the feedlots, enabling J&F to supply cattle
to JBS Australia Pty Limited (JBS) for its grain fed business. The guarantee earns a return for RFF equivalent to
an equity rate of return which is calculated on the amount of the guarantee during the year.
82
59
60
83
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G2 Related party transactions (continued)
Entities with influence over the Group
Rural Funds Management
Other
2021
Units
11,843,659
%
3.48
2020
Units
11,843,659
%
3.51
Reconciliation of net profit after income tax to cash flow from operating activities
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G4 Cash flow information
Michael Carroll was a director of Select Harvests Limited up to 25 January 2021. Select Harvests Limited leases
orchards from Rural Funds Group. This is not a related party as defined by AASB 124 Related Party Disclosure.
Transactions are on commercial terms and procedures are in place to manage any potential conflicts of interest.
Mr. Carroll did not participate in the negotiation of these leases.
G3 Parent entity information
The Group was formed by the stapling of the units in two trusts, Rural Funds Trust and RF Active. In accordance
with Accounting Standard AASB 3 Business Combinations, the stapling arrangement referred to above is regarded
as a business combination and the Rural Funds Trust has been identified as the parent for preparing Consolidated
Financial Reports. RFM Australian Wine Fund and Agricultural Income Trust Fund 1, holding the Group’s vineyard
assets, are wholly owned subsidiaries of Rural Funds Trust. The financial information of the parent entity, Rural
Funds Trust has been prepared on the same basis as the consolidated financial statements, except as set out
below.
Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for at historical cost less any accumulated impairment.
Distributions received from equity investments are recognised in the parent entity’s profit or loss when its right to
receive the distribution is established.
The individual financial statements of the parent entity, Rural Funds Trust, show the following aggregate amounts:
2021
$'000
2020
$'000
Statement of Financial Position
ASSETS
Current assets
Non-current assets
Total assets
LIABILITIES
Current liabilities
Non-current liabilities
Total liabilities
NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
Issued units
Asset revaluation reserve
Retained earnings
Total equity
Statement of Comprehensive Income
Net profit after income tax
Other comprehensive income for the year, net of tax
Total comprehensive income attributable to unitholders
84
19,183
977,665
996,848
12,563
374,422
386,985
380,440
45,093
184,330
609,863
2021
$'000
118,089
1,435
119,524
9,789
859,031
868,820
12,639
332,453
345,092
355,923
59,006
108,799
523,728
2020
$'000
52,769
12,950
65,719
61
Net profit after income tax
Cash flows excluded from profit attributable to operating
activities
Non-cash flows in profit
Gain on sale of assets
Depreciation and amortisation/impairment - other
Depreciation - bearer plants
Amortisation of lease incentives
Finance income - lease receivable
Finance lease income received but excluded from profit
Change in fair value of investment property
Change in fair value of financial assets/liabilities
Change in fair value of bearer plants
Impairment of property - owner occupied
Impairment of intangible assets
Change in fair value of biological assets
Change in fair value of interest rate swaps
Straight-lining of rental revenue
Dividend income classified as investing cash flows
Changes in operating assets and liabilities
Decrease/(increase)in trade and other receivables
Increase in other assets
Decrease in trade and other payables
(Decrease)/increase in net tax liabilities
Increase in other liabilities
Net cash inflow from operating activities
Net debt reconciliation
2021
$'000
119,634
(32,868)
840
4,032
200
(769)
235
(42,289)
(116)
(1,007)
1,651
4,188
(1,136)
(12,923)
852
(64)
503
(4,159)
(305)
(1,635)
544
35,408
2020
$'000
48,988
(3,407)
2,893
4,838
200
(789)
-
(14,944)
(510)
499
-
798
-
7,624
(1,232)
(50)
(403)
(989)
(2,600)
1,171
1,248
43,335
This section sets out an analysis of net debt and the movements in net debt for each of the years presented.
Reconciliation of net debt is presented below:
Cash and cash equivalents
Borrowings - repayable within one year
Borrowings - repayable after one year
Net debt
Cash and cash equivalents
Gross debt - fixed interest rates
Gross debt - variable interest rates
Net debt
2021
$'000
11,647
(2,407)
(344,143)
(334,903)
11,647
(2,407)
(344,143)
(334,903)
2020
$'000
5,085
(3,775)
(297,248)
(295,938)
5,085
(3,775)
(297,248)
(295,938)
62
85
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G7 Events after the reporting date
On 1 July 2021, the lease on the Cerberus property by Katena Pty Ltd was terminated by mutual agreement and
all amounts owing to the Group have since been paid. A long-term lessee is currently being sought.
On 8 July 2021, the Group announced that it was undertaking a fully underwritten equity raise for $100.0m to fund
the development of 1,000ha of macadamia orchards, acquire cattle properties to be leased by corporate lessees,
and for the acquisition of 8,338 megalitres of lower Murrumbidgee ground water entitlements for $38.4m. The
purchase is expected to settle in August 2021, and the entitlements will be leased to a private farming company for
five years.
On 15 July 2021, the Group completed the sale of a portion of surplus land on Kerarbury for approximately $1.6m.
No other matter or circumstance has arisen since the end of the year that has significantly affected or could
significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group
in future financial years.
G9 Contingent liabilities
Other than what has been disclosed in the accounts there are no contingent liabilities as at 30 June 2021.
Rural Funds Group
Notes to the Financial Statements
30 June 2021
G5 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group:
PricewaterhouseCoopers Australia:
Audit and review of financial statements
Other statutory assurance services
Compliance audit
Total
G6 Other accounting policies
Cash and cash equivalents
2021
$
396,657
-
20,395
417,052
2020
$
379,473
90,168
15,690
485,331
Cash and cash equivalents comprise cash on hand, demand deposits and short-term investments with less than 3
months of original maturity which are readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value.
Bank overdrafts also form part of cash equivalents for the purpose of the consolidated statement of cash flows and
are presented within current liabilities on the consolidated statement of financial position.
Goods and services tax (GST)
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as part of trade and other receivables
or payables in the Consolidated Statement of Financial Position.
Cash flows in the Consolidated Statement of Cash Flows are included on a gross basis and the GST component
of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
Leases
Leases of fixed assets or biological assets where substantially all the risks and benefits incidental to the ownership
of the asset, but not the legal ownership, are transferred from the lessor, are classified as finance leases.
Lease payments for operating leases, where substantially all of the risks and benefits have not been transferred
from the lessor, are charged as expenses on a straight-line basis over the life of the lease term.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over
the life of the lease term.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured.
Provisions are measured at the present value of management's best estimate of the outflow required to settle the
obligation at the end of the reporting period. The discount rate used is a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to
the unwinding of the discount is taken to finance costs in the income statement.
Provisions for distributions
Provision is made for the amount of any distribution declared, being appropriately authorised and no longer at the
discretion of the Group, on or before the end of the reporting period but not distributed at the end of the reporting
period.
86
63
64
87
Rural Funds Group
Directors’ Declaration
30 June 2021
In the Directors of the Responsible Entity’s opinion:
1
The financial statements and notes of Rural Funds Group set out on pages 13 to 64 are in accordance
with the Corporations Act 2001, including:
36
87
a.
b.
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
performance for the year ended on that date; and
2
There are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
Note A confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the persons performing the chief executive officer and chief
financial officer functions as required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of the Directors of Rural Funds Management
Limited.
David Bryant
Director
25 August 2021
Independent auditor’s report
To the stapled security holders of Rural Funds Group
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Rural Funds Trust (the Registered Scheme) and its controlled
entities (together Rural Funds Group, or the Group) is in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2021
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in net assets attributable to unitholders for the year then
ended
the consolidated statement of cash flows for the year then ended
the notes to the financial statements, which include significant accounting policies and other
explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
88
65
66
89
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The structure of Rural Funds Group is commonly referred to as a “stapled group”. In a stapled group
the securities of two or more entities are 'stapled' together and cannot be traded separately. In the case
of the Group, the units in Rural Funds Trust have been stapled to the units in RF Active. For the
purposes of consolidation accounting, Rural Funds Trust is 'deemed' the parent and the Group
financial report reflects the consolidation of Rural Funds Trust and its controlled entities, including RF
Active.
Materiality
•
For the purpose of our audit we used overall Group materiality of $2 million, which represents
approximately 5% of the Group’s Adjusted Funds From Operations.
• We applied this threshold, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial report as a whole.
• We chose Adjusted Funds From Operations because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured.
• We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
•
•
Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
The audit of the Group was performed by a team which included individuals with industry expertise and
property valuation experts.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit Committee.
Key audit matter
Valuation of agricultural properties, which comprise:
- Investment property $596.9m
- Bearer plants $160.8m
- Water entitlements $110.4m
- Property – owner occupied $28.3m
(Refer to notes C2, C3, C5 and C6)
The Group holds agricultural properties for long-term leasing or
for development into orchards. Cropping operations are
performed on an interim basis for unleased portions of land
where developments have not commenced.
Each agricultural property held for leasing or development
comprises one or more of the following three components:
• investment properties (including land and infrastructure
attached to land)
• bearer plants (including almond trees, macadamia trees and
wine grape vines)
• water entitlements.
Agriculture properties on which cropping operations are
currently conducted by the Group are classified as property –
owner occupied.
The Group’s valuation policy requires agricultural properties to
be externally valued by an expert every two years or more often
where the Group considers appropriate.
External valuations provide an aggregate value for each
agricultural property. Key variables and consideration in the
valuations can include discount rates, passing rents, comparable
sales, market rent, cattle carrying capacity, value per cattle adult
equivalent. Factors such as associated lease agreements,
prevailing market conditions, and the individual nature,
condition and location of these properties impact these
variables, and overall valuations.
The aggregate value of each agricultural property is allocated
across the components of investment properties (carried at fair
How our audit addressed the key audit
matter
For a selection of external valuations obtained
by the Group, together with PwC real estate
property valuation experts:
• we assessed the competency, qualifications,
experience and objectivity of the external
valuers
• we read the valuers’ terms of engagement to
identify any terms that might affect their
objectivity or impose limitations on their
work relevant to the valuation
• we interviewed external valuers in relation
to a selection of properties subject to
valuation and on the rationale behind the
chosen allocation techniques
• we compared a sample of inputs used in the
valuation and allocation models, such as
rental income and lease terms, to the
relevant lease agreements
• we assessed the reasonableness of certain
inputs including, where applicable, market
rents, discount rates and capitalisation rates,
rates per ha, cattle carrying capacity, value
per cattle adult equivalent used in the
valuation and allocation models, for a
sample of properties based on benchmark
market data
• we inspected the final valuation reports and
compared the fair value as per the valuation
to the value recorded in the Group’s
accounting records.
For properties not subject to external
valuations, we discussed with the directors and
evaluated the directors’ internal assessment of
the fair value of the properties and their
assertion that the properties are carried at fair
90
67
68
91
Key audit matter
How our audit addressed the key audit
matter
value), bearer plants (carried under revaluation model), water
entitlements (carried at cost less accumulated impairment), and
property – owner occupied (carried under revaluation model).
value as per the latest external valuation
report, adding any capital expenditure made
during the intervening period.
We conducted site inspections of two cattle
properties in Northern Queensland.
We assessed the adequacy of the disclosures in
Notes C1, C2, C3, C5 and C6 of investment
properties, bearer plants, water entitlements
and property-owner occupied considering the
requirements of Australian Accounting
Standards.
The directors, or external valuers where appropriate, determined
the suitable allocation technique to be applied to each
agricultural property, considering the nature and characteristics
of the property including any lease encumbrances.
This was a key audit matter because:
• agricultural properties are fundamental to the Group’s
business model. Investment properties, bearer plants and
water entitlements, and property – owner occupied form the
majority of the Group’s assets in the consolidated statement of
financial position
• the quantum of changes in fair value of agricultural properties
directly impact the consolidated statement of comprehensive
income
• the nature of agricultural property valuations is inherently
subjective due to the use of assumptions and estimates in the
valuation model. The COVID-19 outbreak has caused an
increase in estimation uncertainty for fair value of properties
• the selection and application of allocation technique are
inherently subjective due to the unique characteristics of each
property
• the valuations and allocation outcomes are sensitive to key
inputs/assumptions in the model such as the discount rate and
capitalisation rates, the utilisation of comparable sales data
and to allocation techniques.
Key audit matter
Related party transactions
(Refer to note G2)
The Group’s Responsible Entity, along with other funds for
which it is the Responsible Entity, are considered related parties
of the Group. Key transactions with these parties include:
•
rental income from the lease of agricultural properties and
plant and equipment
finance income from the lease of cattle
finance and interest income
•
•
• management fees and asset management fees paid
•
•
•
distributions from investments
reimbursement of operating expenses
provision of a limited financial guarantee and receipt of
associated fee income
Related party transactions were a key audit matter due to the
significant impact of these transaction on the results of the
Group. Additionally, because of their nature, they are pervasive
and material to the presentation of and disclosures within the
financial report.
How our audit addressed the key audit
matter
We developed an understanding of the Group’s
relevant controls and processes for identifying
related parties and related party transactions.
For significant contracts entered into during
the year, we verified that the transactions were
appropriately approved.
For a sample of lease income recorded during
the year, we compared the lease income to the
relevant supporting documents including the
lease agreements.
For management fees and asset management
fees, we compared the rates used to determine
fees to the rates disclosed in the explanatory
memorandum issued on formation of the
Group.
We discussed the related party transactions
with management to develop an understanding
of the business rationale for the transactions.
In relation to the financial guarantee, we
developed an understanding of the
arrangement from reading the Explanatory
memorandum, and from discussions with
management and others of the purpose, terms
and conditions, and substance of the
arrangement.
We assessed the adequacy of the disclosures in
Note G2, of related party relationships and
transactions considering the requirements of
Australian Accounting Standards.
Other information
The directors of the Responsible Entity are responsible for the other information. The other
information comprises the information included in the annual report for the year ended 30 June 2021,
but does not include the financial report and our auditor’s report thereon. Prior to the date of this
auditor's report, the other information we obtained included the Directors' report and Additional
Information for Listed Public Entities. We expect the remaining other information to be made
available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not
express an opinion or any form of assurance conclusion thereon.
92
69
70
93
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the directors of the Responsible
Entity and use our professional judgement to determine the appropriate action to take.
Responsibilities of the directors of the Responsible Entity for the financial report
The directors of the Responsible Entity are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the Corporations
Act 2001 and for such internal control as the directors of the Responsible Entity determines is
necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors of the Responsible Entity are responsible for assessing
the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors of the Responsible
Entity either intends to liquidate the Group or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
PricewaterhouseCoopers
Rod Dring
Partner
94
Sydney
25 August 2021
71
Responsible Entity and Manager
Rural Funds Management Ltd
ABN 65 077 492 838
AFSL 226 701
Level 2, 2 King Street Deakin ACT 2600
Locked Bag 150 Kingston ACT 2604
Phone: 1800 026 665
Email: investorservices@ruralfunds.com.au
Website: www.ruralfunds.com.au
Registry
Boardroom Pty Limited
GPO Box 3993 Sydney NSW 2001
Phone: 1300 737 760
Website: www.boardroomlimited.com.au
Disclaimer and important information
This publication is not an offer of investment or product financial advice. Rural Funds Management Limited (RFM),
ABN 65 077 492 838 AFSL No. 226701, has prepared this publication based on information available to it. Although
all reasonable care has been taken to ensure that the facts and opinions stated herein are fair and accurate, the
information provided has not been independently verified. Accordingly, no representation or warranty, expressed or
implied, is made as to the fairness, accuracy or completeness or correctness of the information and opinions contained
within this document. Whilst RFM has taken all reasonable care in producing the information herein, subsequent
changes in circumstance may at any time occur and may impact on the accuracy of this information. Neither RFM,
nor its directors or employees, guarantee the success of RFM’s funds, including any return received by investors in
the funds. Past performance is not necessarily a guide to future performance. The information contained within this
document is a general summary only and has been prepared without taking into account any person’s individual
objectives, financial circumstances or needs. Before making any decisions to invest, a person should consider the
appropriateness of the information to their individual objectives, financial situation and needs, and if necessary seek
advice from a suitably qualified professional.
RFM is the Responsible Entity and Manager for Rural Funds Group (ASX: RFF). RFF is a stapled entity incorporating
Rural Funds Trust ARSN 112 951 578 and RF Active ARSN 168 740 805. Australian Executor Trustees Limited is the
custodian for the Rural Funds Group. To read more about their privacy principles, please visit www.aetlimited.com.au/
privacy.
Managed by: