Annual Report
for the year ended 30 June 2023
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Rural Funds Group (RFF, the Fund) is an agricultural Real Estate
Investment Trust (REIT). RFF was listed in 2014 and is included in
the S&P/ASX 300 index. The Fund owns a diversified portfolio of
Australian agricultural assets which are predominantly subject to
long-term triple net leases to high-quality lessees. Distribution
growth of 4% per annum is targeted.
Rural Funds Management Limited (RFM) is the manager and
the Responsible Entity of RFF. RFM manages over $2.0 billion of
agricultural assets on behalf of retail and institutional investors
and has a depth of experience accumulated over 26 years owning,
developing and operating Australian farmland, agricultural
infrastructure and other assets. The management team includes
specialist fund managers, finance professionals, horticulturalists,
agronomists and other agricultural managers. RFM’s culture is built
on the core principle of ‘managing good assets with good people’.
Contents
Letter from the Managing Director
Strategy
Portfolio metrics
Results highlights
Portfolio overview
Sustainability
ASX additional information
Financial Statements
Investor information and glossary
4
6
7
8
9
10
18
20
96
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 226 701
Issued on: 28 September 2023
Cover image: Cattle grazing on developed cultivation area, Rewan,
central Queensland, August 2023.
Adjacent image: Almond trees in bloom, Kerarbury, NSW August 2023.
Letter from the
Managing Director
Dear Unitholder,
We are pleased to provide you with the Rural
Funds Group (RFF, the Fund) Annual Report for
the financial year ended 30 June 2023 (FY23).
Financial results
During FY23, Rural Funds Management (RFM)
announced it had leased 3,000 ha of macadamia
orchards which are being developed by the
Fund.1 This lease was the main driver for property
revenue to increase 10.6%, to $81.8m.
During the period, RFF generated earnings of
$115.5m, or 30.1 cents on a per unit basis, as a
consequence of property revenue and increased
independent valuations, that were completed on
two thirds of the Fund’s assets.
Independent valuations also increased RFF’s
adjusted net asset value (NAV). Adjusted NAV
increased 8.9%, to end the year at $2.93 per
unit. Higher valuations were recorded for the
main asset classes within the Fund, including
macadamia orchards, almond orchards, cattle
properties, cropping properties and vineyards.
Adjusted funds from operations (AFFO) of 10.7
cents per unit (cpu) and distributions of 11.73 cpu
were in line with forecast.
Developments and acquisitions
The significance of the new macadamia lease is
highlighted in Figures 1 and 2. Rent is calculated
on the cumulative capital base which is forecast
to increase from $139m to $244m by the end of
2024 financial year (FY24). Consequently, the
rent received by RFF from the lease, is forecast to
double in FY24 and increase again in FY25.
Cattle is another sector that RFM has previously
identified as having desirable investment
attributes. Two additional cattle properties were
acquired by RFF during FY23. Wyseby, which
adjoins the existing cattle property Rewan, will
add approximately 14,000 ha of fertile land to this
already highly productive farm. Also, a 28,000 ha
cattle and cropping aggregation, Kaiuroo, was
settled in FY23. RFM secured the acquisition in
November 2021 and the development of this asset
will now accelerate.
Strategy update
The macadamia developments and cattle property
acquisitions provide good examples of RFM’s
two primary methods to achieve higher returns
for RFF’s Unitholders: higher and better use and
productivity developments.
The core business of RFF is renting agricultural
assets. However during the early development
phase of assets, some will be operated prior to
leasing, which provides a source of income during
this phase of ownership.
RFM is working on several transactions, primarily
focused on unleased assets. Negotiations on the
leasing of two cotton farms continue to progress.
RFM is also working with parties interested in
Figure 1: Forecast rent capital base2
Figure 2: Forecast rent (FY23–FY25)3
300
200
)
m
$
(
100
0
$322
$328
$330
$309
$277
$244
$105
$139
$139
$33
$33
$13
$6
$2
FY23
FY24
FY25
FY26
FY27
FY28
FY29
20
15
)
m
$
(
10
5
0
$21
$16
$8
FY23
FY24
FY25
Rental capital base
Cumulative capital base
Forecast rent
leasing the mature macadamia assets owned by
the Fund. Material progress is expected on these
transactions in FY24.
We encourage our Unitholders to subscribe to and
read our biannual newsletter which contains
mid-year updates on the Fund.
RFM is also reviewing non-core asset sales, which
as outlined in the June edition of the biannual
newsletter, will assist in managing RFF’s gearing
within the target range of 30–35%.
We also look forward to providing further updates
as part of the half-year results in February 2024. In
the interim, should you have any queries about your
investment, we encourage you to contact our
Investor Services team.
Yours faithfully
David Bryant
Managing Director
Rural Funds Management Limited
Capital management and forecasts
The macadamia developments present the most
significant capital commitment for the Fund. RFM
has arranged sufficient funding for the immediate
capital expenditure through an increase to RFF’s
debt facilities. As at 30 June 2023 the facilities had
$156.8m headroom.
As we entered a higher interest rate environment,
RFM acquired additional interest rate hedges within
the Fund. In FY24, 67.0% of debt will be either fixed
or hedged, compared to 35.9% in FY23.4
As part of the full-year results released on 24
August 2023, RFM announced forecast FY24 AFFO
of 11.2 cpu and distributions of 11.73 cpu.
Conclusion
Over the coming year, we will continue to focus
on completing transactions to further improve
earnings generation to support RFF’s distribution
growth target of 4%.
Kerarbury almond orchard, Riverina NSW, August 2023.
4
1.
2.
3.
4.
Second stage of lease (1,800 ha) subject to completion of water supply infrastructure.
Assumes development costs of $110,000/ha comprising approximately $90,000/ha (land, water, orchard development and planting) and $20,000/ha (capitalised
establishment costs over 5 years).
Rent earned on capital base dependent on timing of deployment throughout the relevant financial year.
FY24 average hedges and total fixed debt facility divided by total facilities. FY23 based on actuals.
5
Riverton 424 ha1
Strategy
Leasing model
Maintain a majority of long WALE triple net
leases of agricultural assets to high-quality
lessees. Target distribution growth of 4% per
annum.
Acquisition considerations
Preference agricultural sectors where:
•
low cost of production assets can be
acquired or developed
• Australia has a comparative advantage
• RFM has operational experience.
Seek appropriate diversification by
agricultural sector and climatic zone. Target
gearing range of 30–35%.
Developments
Seek improved leasing outcomes by
developing assets for increased productivity
or higher and better use. Both strategies aim
to lift the value and income earning potential
of an asset. Income may be generated
during the development phase by operating
assets prior to leasing.
Portfolio
metrics
1.8$
b
adjusted total assets
67
properties
5
agricultural sectors and
multiple climatic zones
13.9
yrs
weighted average
lease expiry (WALE)
%79
FY24f income from
corporate lessees
$2.93
net asset value
(NAV) per unit
%52
2
lease indexation
mechanisms CPI linked
(by FY24f revenue)
$157
m
total debt headroom
%67
3
portion of debt
hedged and fixed
%
35
gearing
Includes planted area and area to be developed.
Includes 29% CPI, 18% CPI (cap and collar) plus profit share, 3% CPI plus market rent review,
2% CPI (cap and collar) plus market rent review.
FY24 average hedges and total fixed debt facility divided by total facilities.
1.
2.
3.
6
Riverton macadamia orchard, central Queensland, August 2023.
7
Results highlights
Portfolio overview
Property revenue increased 10.6%
FY23 results in line with prior forecasts
Asset map
Listed or corporate lessees1
up $7.9m to $81.8m primarily due to rental income
earned on macadamia developments, as a result
of a 40-year lease entered into during the year.
including distributions per unit (DPU) of 11.73
cents and adjusted funds from operations
(AFFO) of 10.7 cpu.
Earnings of 30.1 cents per unit (cpu)1
FY24 forecast AFFO growth of 4.7%
driven by property revenue and asset revaluations.
to 11.2 cpu and forecast distributions of 11.73 cpu.
Adjusted net asset value (NAV) increased
8.9%
up $0.24 to $2.93 per unit, benefiting from
externally revalued assets.
External revaluations increases in FY232
For more detailed information, scan to
access the RFF FY23 financial results
presentation and webinar.
Almonds
$47.1m 11.7%
Cropping
$6.8m
6.5%
Cattle
$26.1m
9.8%
Vineyards
$1.6m
2.7%
Macadamias
$21.9m
14.4%
QLD
Value: $878.2m
Properties: 49
Sectors:
NSW
Value: $525.7m
Properties: 8
Sectors:
VIC
Value: $56.2m
Properties: 2
Sectors:
WA
Value: $33.9m
Properties: 3
Sector:
SA
Value: $56.9m
Properties: 5
Sector:
For more detailed
information, scan to
access the interactive
portfolio map.
Lessees
Sector
% FY24f income
Almonds
Macadamias
Cattle
Almonds
Cattle
Cattle
Vineyards
Cattle
22%
16%
10%
9%
6%
6%
5%
5%
1.
2.
Based on Total Comprehensive Income.
Revaluation movement ($ and %). Excludes Directors’ valuation of water entitlements (value $116.2m, movement -$6.3m).
FY24f revenue by sector2
Weighted average lease expiry (WALE)3
3%
5%
11%
15%
Cattle
34%
Almonds
Macadamias
Cropping
Vineyards
)
m
$
(
e
u
n
e
v
e
r
f
4
2
Y
F
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
13.9 yrs
WALE
32%
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY37
FY38
FY42
FY46
FY63
1.
2.
3.
Income from JBS includes lease income from feedlots and Guarantee fee income from J&F Australia Pty Ltd. TRG (The Rohatyn Group) lessee is a joint venture
between TRG and a global institutional investor.
Figures subject to rounding. Includes AFFO contribution from farming operations from owner-occupied properties including Swan Ridge, Moore Park, Beerwah
and Bauple –macadamias; unleased Maryborough properties –sugar cane; Baamba Plains –cropping; Yarra, Cerberus and Kaiuroo–cattle. Light blue portion of pie
chart (3%) is ‘other’.
Weighted average lease expiry, calculated as the FY24 forecast rent and the year of lease expiry. Excludes J&F Australia guarantee fee, income from annual water
allocation sales, operating income from owner occupied properties and other income.
8
Cattle grazing at Yarra, central Queensland, February 2023.
9
Sustainability
RFM seeks to operate in a sustainable manner by considering the
impact of its activities on the environment, the people within the
business and the local communities where we operate.
As an externally managed fund, RFF adopts the Sustainability Policy of
the Responsible Entity, RFM.
Applying sustainable practices is in the best interest of investors and
the environment, and RFM believes that good environmental practices
typically produce good farming outcomes. Environmental sustainability
is defined as responsible stewardship of natural systems and resources.
RFM's farming activities are dependent on using these natural systems
and resources. To ensure sustainable productivity now and into the
future, we recognise it is important that these assets are managed
appropriately.
RFM’s business is also dependent on its people and other stakeholders,
such as the communities in which the company operates. Social
aspects of sustainability consider the impact of our activities on these
stakeholders.
Appropriate governance is another important element of sustainability,
please refer to the Corporate Governance Statement for further
information on this aspect.
RFM aims to provide information to investors about sustainability
initiatives relevant to RFF. During FY23, continued progress was made
on commitments outlined in the FY22 Annual Report. Key initiatives and
progress on commitments are presented on the following pages.
FY23 highlights
Governance
Carbon feasibility studies
• Implementation of a
Sustainability Policy
considering environmental
and social aspects.
• Updated Risk
Management Policy
to include climatic
considerations.
GHG emissions
• Greenhouse gas (GHG)
emissions quantification.1
• Improved knowledge of
emissions profile and
data capture processes.
Sustainability reporting
progress
• Continued review of
evolving sustainability
reporting.
• Engaged with multiple
lessees to carry out
carbon sequestration
feasibility analysis.
Diversity
• Formalised target of 40%
female representation on
the RFM Board by 2026.
Community engagement
• Engaged with and
supported several groups
throughout the year.
Safety
• Implemented ongoing
improvements to the
safety management
system.
Cattle at Yarra where productivity improvements are
seeking higher average daily weight gains and lower
emissions intensity, central Queensland, February 2023.
1.
Scope 1 and Scope 2 emissions for assets owned for the entirety of FY23 for which RFF receives
the operational proceeds.
10
11
11
Sorghum under water efficient pivot
irrigation, Lynora Downs, central
Queensland, April 2023.
Progress of sustainability focus areas
As part of the development of the Sustainability Policy, RFM identified a number of environmental and
social focus areas. Progress achieved in FY23, and future actions in these areas are presented below:
Focus area
FY23 progress
Future actions
Focus area
FY23 progress
Future actions
Environment: Responsible consumption and production
Projects
Projects and
initiatives 1
• Second year of macadamia orchard
monitoring program.
• Continue macadamia program,
project and trial.
• Two macadamia progeny field trials
planted.
• Recycling project on macadamia
irrigation installation.
Environment: Protecting land and water
Certifications
Projects and
initiatives 1
• Awarded accreditation with Hort360
• Finalise myBMP Certification.
Reef Certification.
• Commenced myBMP Certification.
Environment: Climate change and climate-related risk management
Governance
•
Implementation of Sustainability
Policy considering environmental
and social aspects.
• Review and update of relevant
policies as required.
Scope 1 and
Scope 2
emissions
Projects and
initiatives 2
Carbon project
feasibility
Projects and
initiatives 3
Sustainability
reporting
Projects and
initiatives 4
Resourcing
and oversight
• Updated Risk Management Policy to
include climatic considerations.
• Quantified Scope 1 and Scope 2
emissions from assets for which RFF
receives the operational proceeds.
Improved internal knowledge of RFF
emissions profile.
•
• Developed internal processes for
primary data capture for ongoing
emissions analysis.
• Engaged with multiple lessees to
carry out carbon sequestration
project feasibility analysis,
specifically, environmental plantings,
human induced regeneration, and
soil carbon.
• Submission of two carbon
abatement project applications with
the Clean Energy Regulator, which
are now conditionally registered.
• Reviewed evolving sustainability
reporting standards.
• Dedicated resource for sustainability
analysis and reporting.
• Established sustainability as a
responsibility within the leadership
team.
• Quantify appropriate Scope 1
and Scope 2 emissions to enable
comparison.
• Utilise cattle supplement program
and deep-rooted perennial pastures
with legumes on appropriate
grazing assets, which can decrease
emissions intensity.
• Use of precision agricultural
practices to optimise fertiliser
application.
• Continued review of carbon
abatement opportunities.
• Continue towards alignment with
evolving sustainability reporting
requirements.
• Continue to improve internal
processes to aid with ongoing
reporting on sustainability topics.
Social: Safety
Health, safety,
and wellbeing
Projects and
initiatives 5
• Ongoing improvements to safety
management system.
• Continue improvements to existing
processes and standards.
• Additional training.
•
Improved Employee Assistance
Program service.
Social: Diversity and inclusion
Diversity,
equity and
inclusion
Projects and
initiatives 6
• Formalised target of 40% female
• Ongoing review of relevant
•
representation on the RFM Board by
2026.
Improved recruitment processes to
establish gender-balanced shortlists
whenever possible.
processes.
Social: Learning and development
Training
•
Implemented additional training,
including:
– Mental health
– Indigenous cultural awareness
– Anti-discrimination and human
rights
– Emissions reporting
– Diversity, equity, and inclusion
– Workplace, health and safety.
•
Implement additional training
focusing on identified areas
including health, safety and
wellbeing.
Social: Community
Engagement
Projects and
initiatives 7
Industry
development
• Engaged with a number of
organisations to build community
partnerships.
• Expansion of partnerships with
identified organisations.
• Engaged with Advance
Rockhampton – Rockhampton
Regional Council and Queensland
Agricultural Workforce Network
(QAWN) through in-kind donation.
• Participate in the AgCAREERSTART
Program providing opportunities for
multiple positions in the program
across horticulture, livestock and
cropping.
Social: Governance
Governance
• Review of all policies and updates
including:
– Corporate Governance Statement
– Risk Management Policy
– Code of Conduct
– Equal Employment Opportunity
– Diversity Policy
– Leave Policy.
Implementation of Sustainability
Policy.
•
• Review and update of all relevant
•
policies as required.
Implement two new policies to
formalise our employment practices:
– Sexual Harassment Policy
– Reward and Recognition Policy.
Renewable
energy
• Converted nine bore pumps from
diesel to solar energy.
• Continue to explore renewable
energy options where viable.
Projects and initiatives
Please see the following pages for more details on the projects and initiatives.
12
13
Projects and initiatives
1. Responsible production and consumption
projects
RFM recognises that the sustainability of natural resources is
linked to responsible consumption and production. We seek
to minimise environmental impacts by improving resource
efficiency and reducing waste and pollution, aligning with our
aim to produce more with less. The following are key examples
of our initiatives in this area.
• Orchard monitoring program: The program is in its second
year of operation and was expanded to include additional
Permanent Samples Plots (PSP). The PSP provide data
to improve precision agronomic management concerning
nutrient efficiency and yield.
• Progeny trial: In collaboration with The University of
Queensland, the trial seeks to develop resource efficient
macadamia cultivars capable of producing higher yields
and high-quality nuts. Trees planted in Maryborough and
Rockhampton in FY23.
• Polyethylene pipe recycling: Included as part of the
installation of an irrigation pipeline to supply water from
the Fitzroy River to several water storages within the
macadamia developments. The recycling program reduced
waste from pipe welding. Believed to be a first of its kind,
the project is estimated to recycle approximately 18 cubic
metres of polyethylene plastic shavings which would
otherwise have become landfill.
• myBMP Certification: Occurring on cotton
properties, the certification focuses on farm-
level improvements to promote sustainable
production through efficient water use, water
storage and water quality as well as maintaining
and enhancing soil structure and fertility.
• Hort360 Reef Certification: The certification
attained for Bundaberg macadamia orchards
promotes standards to protect sensitive
marine environments such as the Great Barrier
Reef from potential run-off, including sediment
and fertiliser.
Video equipped drone used to locate cattle as part of
muster process, Cerberus, central Queensland, May 2023.
2. Emissions quantification
RFM quantified RFF’s FY23 Scope 1 and Scope 2 emissions in accordance
with the Australian National Greenhouse Gas Inventory (NGGI) method.
As an agricultural real estate investment trust, most of RFF’s assets are
subject to triple-net leases. RFM does not have operational control over
these types of assets and the emissions are the responsibility of lessees.
Therefore, the emissions quantified are for properties for which RFF
receives the operating proceeds.1
As assets are usually operated by RFF during their initial development
phase, the pool of operated assets are likely to change year-to-year.
However, quantification enables RFM to better understand the emission
profiles across invested agricultural sectors and better incorporate emission
considerations into management decisions.
Quantification and potential reduction strategies were presented to RFM’s
senior management team. Emissions were primarily generated by methane
from cattle, and fuel and fertiliser from cropping. Activities which seek to
address these emissions include:
• Herd management practices to improve livestock feed utilisation and
breeding efficiency to improve weight gains and reduce methane
emissions per kilogram produced.
• Establishment of deep-rooted perennial pastures with a mix of legumes
which improves weight gains and reduces enteric fermentation
emissions.
Installation of solar energy where feasible.
•
• Precision agricultural management to promote informed decisions
about land use and management, such as fertiliser application.
Macadamia orchard monitoring program PSP including
communications, vapour pressure deficit sensor, sap
flow meter and soil moisture sensor at Riverton, central
Queensland, September 2023.
Polyethylene waste recycling program
during installation of the rising main
pipeline, Rookwood Farms, central
Queensland, July 2023.
14
15
1.
Sectors and properties include: cattle (Yarra and Cerberus), cropping (Baamba Plains, Maryborough sugarcane properties) and macadamia orchards (Beerwah and Bauple).
Mustering cattle at Mutton Hole station,
Carpentaria, northern Queensland, July 2021.
4. Sustainability
reporting update
This year, the International
Sustainability Standards Board
(ISSB) issued two sustainability
reporting standards, IFRS
S1 and IFRS S2, relating to
sustainability disclosure. Locally,
The Treasury of the Australian
Government has carried out
consultation on climate-related
financial disclosure. Based
on these consultation papers,
climate-related disclosure is
likely to become mandatory, with
mandated reporting potentially
commencing for the largest
entities from 2024/25 onwards.
At this stage, RFF is likely to be
part of cohort 3 (2027/2028) for
mandatory reporting.
As part of the FY22 Annual Report
RFM presented how climate-
related risks and opportunities
were considered using the
Taskforce on Climate-related
Financial Disclosure framework.
During FY23, further progress
towards aligning with sustainability
reporting frameworks by
establishing emissions and
updating policies and procedures.
RFM will continue towards
alignment with evolving
sustainability reporting
requirements.
3. Carbon projects
RFM continued to conduct due diligence, profiling the risks
and opportunities across the available Australian carbon
credit methodologies. We engaged with multiple lessees to
carry out carbon sequestration project feasibility analysis for
environmental plantings, human induced regeneration, and soil
carbon.
Two applications were submitted with the Clean Energy
Regulator (CER) for carbon abatement projects on cattle
properties under the Human-Induced Regeneration Method.
These projects are now conditionally registered. The projects
will establish forest cover through assisted regeneration on
land that has not had forest cover for at least the last ten years.
RFM will continue to assess projects with the potential to
benefit RFF and/or it’s lessees.
Staff at Riverton undertaking routine maintenance,
central Queensland, September 2023.
5. Safety
The safety of RFM employees and contractors is a
priority. RFM supports, promotes, and protects the
health, safety and wellbeing of employees.
A culture of safety is fostered through our
management system that is focused on precision
and practicality. These principles are promoted
through our online platform which includes policies,
procedures, risk assessments, meetings, machinery
inspections and other safety tasks.
Throughout the year the implementation of the
online platform was significantly broadened.
Improved approaches to safety are monitored on an
ongoing basis and all incidents are reported monthly
to the Board. Safety obligations are also included in
RFF lessee agreements.
RFM corporate staff, Canberra office,
September 2023.
6. Diversity, equity and inclusion
RFM values its employees and recognises them
as one of its greatest assets. We are committed
to maintaining gender balance throughout the
organisation and ensuring equity across genders
in respect of remuneration, benefits and equal
work. We aim to attract people with diverse skills,
experience and backgrounds, and create a fair
and flexible working environment that promotes
personal and professional growth.
RFM has committed to achieving 40% female
participation on the RFM Board by 2026 and
continues to aim for gender balanced shortlists in
recruitment whenever possible. RFM's corporate
team consists of 46% female representation and
we continually strive to provide opportunities and
improve the gender balance in our operational
and corporate teams. See RFM website for further
details.
7. Community partnerships
RFM continues to engage and provide support to organisations connected to the agricultural
industry, regional service providers, community groups, and organisations linked to our
employees, including:
• Hartley Lifecare: supported accommodation for people with disabilities.
• Yoorana: Maryborough based womens domestic violence and resource service.
• Queensland Agricultural Workforce Network: Queensland Government program.
•
Tahen Project: RFM project to mentor Cambodian farmers in the village of Tahen to develop
a sustainable and diversified agricultural enterprise.
• AgCAREERSTART: program introducing young Australians to the agriculture industry.
More information is available on the RFM website.
16
17
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 11 September 2023.
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
5,047
6,488
2,845
4,046
191
Class
Ordinary fully stapled securities
Ordinary fully stapled securities
Ordinary fully stapled securities
Ordinary fully stapled securities
Ordinary fully stapled securities
Substantial Unitholders1
Unitholder
The Vanguard Group, Inc
Argo Investments Limited
Number of units
32,584,896
19,260,565
%
9.7%
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 $2.01 as at 11 September 2023 is set out below:
Number of Unitholders
1,189
Number of units
127,169
Voting rights
The voting rights attaching to the ordinary units, set out in section 253C of the Corporations Act 2001,
are:
(i) On a show of hands, each member of a registered scheme has one vote; and
(ii) On a poll, each member of the scheme has one vote for each dollar of the value of the total interests
they have in the scheme.
The 20 largest Unitholders
Unitholder
HSBC Custody Nominees Australia Limited
J P Morgan Nominees Australia Pty Limited
Argo Investments Limited
Citicorp Nominees Pty Ltd
Rural Funds Management Ltd
National Nominees Limited
BNP Paribas Noms Pty Ltd
Netwealth Investments Limited
Bryant Family Services Pty Ltd
Number of units
%
62,394,893
16.159%
55,276,823 14.315%
21,282,657
5.512%
14,875,591
3.852%
11,843,659
3.067%
8,825,436
2.286%
8,387,770
2.172%
3,793,025
0.982%
3,768,012
0.976%
One Managed Investment Funds Ltd
2,800,722
0.725%
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
SCCASP Holdings Pty Ltd
BNP Paribas Nominees Pty Ltd
Charter Hall Wholesale Management LTD ATF DVAP3
Boskenna Pty Ltd
Netwealth Investments Limited
BNP Paribas Nominees Pty Ltd ACF Clearstream
DGMH Super Pty Ltd
Citicorp Nominees Pty Ltd
Bond Street Custodians Limited
2,000,140
0.518%
1,663,073
0.431%
1,644,210
0.426%
1,387,615
0.359%
1,353,044
0.350%
1,235,658
0.320%
1,231,641
0.319%
1,014,497
0.263%
993,827
0.257%
823,985
0.213%
On-market buy-back
RFF confirms there is no on-market buy-back facility in operation.
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.
1.
Based on the latest substantial holder notice lodged with the ASX.
18
19
Financial
Statements
for the year ended 30 June 2023
Rural Funds Group
Contents
Contents
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Net Assets Attributable to Unitholders
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Information for Listed Public Entities
21
22
33
34
36
38
39
40
88
89
1
2
13
14
16
18
19
20
68
69
76
Rural Funds Group
Corporate Directory
Registered Office
Responsible Entity
Directors
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
Andrea Lemmon
Company Secretary
Emma Spear
Custodian
Auditors
Share Registry
Bankers
Certane CT Pty Limited
ACN 106 424 088
Level 6, 80 Clarence Street
SYDNEY NSW 2000
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
BARANGAROO NSW 2000
Boardroom Pty Limited
Level 8, 210 George Street
SYDNEY NSW 2000
Ph: 1300 737 760
Australia and New Zealand Banking Group Limited (ANZ)
242 Pitt Street
SYDNEY NSW 2000
Cooperatieve Rabobank UA
Darling Park Tower 3
201 Sussex Street
SYDNEY NSW 2000
National Australia Bank (NAB)
Level 6, 2 Carrington 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
20
1
21
Rural Funds Group
Directors’ Report
30 June 2023
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 2023.
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
Andrea Lemmon
Non-Executive Chairman
Managing Director
Non-Executive 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. 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 carries out farming operations on an interim basis for unleased properties and properties under
development.
The Group also provides a guarantee to J&F Australia Pty Ltd (J&F), a wholly owned subsidiary of RFM, 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 July 2022, the Group acquired Brooklands, a 972ha property west of Rockhampton in Central Queensland for
$6.2m including transaction costs. The property will be incorporated as part of Rookwood Farms.
In August 2022, the Group acquired Greenfields, a 229ha property west of Rockhampton in Central Queensland
for $3.1m including transaction costs. The property will be incorporated as part of Rookwood Farms.
In September 2022, the Group entered into an agreement to lease up to 3,000ha of macadamia orchards to a
company managed by The Rohatyn Group (TRG) on behalf of a joint venture between TRG and a global
institutional investor. The lease commenced in January 2023.
In November 2022, the Group completed the disposal of Dohnt, a 37ha vineyard located in Coonawarra, South
Australia for $0.6m.
In December 2022, the Group increased its available core debt to $670,000,000 (2022: $520,000,000). The facility
limit on the $110,000,000 tranche expiring in November 2023 was increased to $260,000,000 and extended to
November 2025.
In April 2023, the Group acquired 412 Macgroves in the 2007 Macgrove Project. In June 2023, the Group acquired
the remaining 167 Macgroves in the 2007 Macgrove Project. The 2007 Macgrove Project was in the business of
growing, harvesting and marketing of macadamia nuts to be sold for processing and consumption in Australia and
internationally. The 2007 Macgrove Project operated on the Group’s Swan Ridge and Moore Park properties. The
2007 Macgrove Project was subsequently wound up in July 2023. Following the wind up, the Group will operate
the macadamia orchards on these properties.
In April 2023, the Group acquired Kaiuroo, a 27,879ha property north-west of Rockhampton in Central Queensland
for $74.0m including plant and equipment and transaction costs.
22
2
Rural Funds Group
Directors’ Report
30 June 2023
In June 2023, the Group acquired a property adjoining the Rewan cattle property, Wyseby, as a tenant-in-common
arrangement (57.25% ownership) for $37.0m including transaction costs. The total property is 18,500ha located
south-west of Rockhampton in Central Queensland.
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 2023 amounted to $94,498,000
(2022: $209,136,000). The consolidated total comprehensive income of the Group for the year ended 30 June
2023 amounted to $115,521,000 (2022: $210,206,000).
The Group holds investment property, bearer plants, owner-occupied property and derivatives at fair value. After
adjusting for the effects of unrealised fair value adjustments, depreciation, impairments and non-cash tax expense,
and one-off transaction costs during the year, the profit would have been $41,077,000 (2022: $44,215,000),
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
Property related
Change in fair value of investment property
Change in fair value of bearer plants
Impairment of property - owner occupied
Impairment of intangible assets
Depreciation - bearer plants
Depreciation and impairments - other
Gain on sale of assets
Farming operations
Change in fair value of biological assets
(unharvested crops not realised and unsold cattle)
Change in fair value of biological assets
(prior year biological assets realised during the year)
Macgrove acquisition
Impairment of goodwill - Macgrove acquisition
Loss on settlement of pre-existing relationship - Macgrove
acquisition
Gain on bargain purchase - Macgrove acquisition
Revenue items
Rental revenue - prepaid rent (TRG)
Lease incentive amortisation (TRG)
Straight-lining of rental revenue
Interest component of JBS feedlot finance lease
Other
Change in fair value of financial assets/liabilities
Change in fair value of interest rate swaps
Income tax payable (AWF)
AFFO
AFFO cents per unit
2023
$'000
94,171
(61,106)
(2,475)
3,202
247
9,583
2,838
(802)
1,505
1,819
195
1,281
(440)
6,050
9
(1,470)
(4,187)
(156)
(8,930)
(257)
41,077
10.7
2022
$'000
210,463
(123,191)
4,103
912
1,059
5,533
1,634
(320)
(1,819)
814
-
-
-
-
-
735
(3,187)
(669)
(51,852)
-
44,215
11.7
3
23
Rural Funds Group
Directors’ Report
30 June 2023
Financial position
The net assets of the consolidated Group have increased to $993,159,000 at 30 June 2023 from $917,011,000 at
30 June 2022. At 30 June 2023, the Group had total assets of $1,671,009,000 (2022: $1,403,829,000).
At 30 June 2023, 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 $178,972,000 (2022:
$169,663,000). Directors obtain independent valuations on RFF properties ensuring that each property will have
been independently valued at least 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 2023 was $314,486,000 (2022: $279,979,000). The value of water entitlements is
illustrated in the table overleaf:
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
2023
$'000
166,988
11,464
520
178,972
135,514
314,486
2022
$'000
157,679
11,464
520
169,663
110,316
279,979
The following depicts the net assets of the Group following the revaluation of water entitlements comprising
intangible assets and investments in BIL and CICL per these valuations.
Net assets per Consolidated Statement of Financial Position
Revaluation of intangible assets per valuation
Adjusted net assets
Adjusted NAV per unit ($)
Property leasing
2023
$'000
993,159
135,514
1,128,673
2.93
2022
$'000
917,011
110,316
1,027,327
2.69
At 30 June 2023 the Group held 67 (2022: 67) properties as follows:
•
•
•
•
•
•
3 almond orchards (4,068 planted hectares);
6 vineyards (636 planted hectares);
13 macadamia orchards (1,906 planted hectares);
7 macadamia orchards currently being developed or with the potential to be developed into macadamia
orchards (2.520 planted and planned hectares);
23 cattle properties made up of 18 breeding, backgrounding and finishing properties (721,863 hectares)* and
5 cattle feedlots with combined capacity of 150,000 head;
15 cropping properties (14,573 hectares).
During the year ended 30 June 2023, the properties held by the Group recorded an increment in the fair value of
investment properties of $61,106,000 (2022: $123,191,000), an increment in the fair value of bearer plants of
$22,128,000 (2022: $5,446,000 impairment), an impairment of intangibles of $247,000 (2022: $1,059,000
impairment) relating to water entitlements and an impairment of property – owner occupied of $1,359,000 (2022:
$374,000 increment) relating to properties carrying out various farming operations.
* Area for Wyseby (held as tenant-in-common in the interest of 57.25%) excluded from number of hectares.
Rural Funds Group
Directors’ Report
30 June 2023
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 4,068 hectares (2022: 4,139 hectares):
• Yilgah 935 planted hectares (2022: 1,006 hectares);
•
Tocabil 603 planted hectares (2022: 603 hectares);
• Kerarbury 2,530 planted hectares (2022: 2,530 hectares).
These properties are under lease to the following tenants:
• Select Harvests Limited (SHV) 935 planted hectares (2022: 1,006 hectares);
• Olam Orchards Australia Pty Limited (Olam) 3,133 planted hectares (2022: 3,133 hectares);
The planted area of the Yilgah property decreased due to a loss of trees from floods to the area.
For its almond orchards the Group owns water entitlements of 55,525ML (2022: 55,525ML) 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 (2022: 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 six vineyards, with five 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 884ML of water entitlements (2022: 936ML). All vineyards are leased to Treasury Wine Estates Limited
and produce premium quality grapes. All of the vineyards are leased until June 2026.
Macadamia orchards
Three established macadamia orchards are located near Bundaberg, Queensland and leased to the following
tenants:
• Swan Ridge and Moore Park, 234 hectares (2022: 234 hectares), located in Bundaberg leased to the 2007
Macgrove Project (M07). Following the wind up of M07, the properties will be operated by the Group.
• Bonmac, 27 hectares (2022: 27 hectares), located in Bundaberg currently leased to RFM Farming.
Beerwah and Bauple, 475 hectares (2022: 475 hectares) located in the Glass House mountains and Wide Bay
regions of Queensland are unleased and currently operated by the Group.
Swan Ridge South, located in Bundaberg, Queensland totalling 123 hectares (2022: 123 hectares) is under
development to 40 hectares of planned macadamia plantings.
The following initial properties are leased to a company managed by The Rohatyn Group:
• Cygnet, located in Bundaberg, Queensland consists of 37 hectares (2022: 37 hectares) of newly established
plantings.
• Nursery Farm, located in Bundaberg, Queensland consists of 41 hectares (2022: 41 hectares) of newly
•
established plantings and a macadamia tree nursery, separately leased to another external party.
Four properties located in Maryborough, Queensland, Glendorf, Charleville, Dowlings and Marriots totalling
1,335 hectares (2022: 1,335 hectares) are under development, consisting of 753 hectares of newly established
macadamia plantings.
• Riverton property 1,015 hectares (2022: 1,015 hectares), located in the Fitzroy region in Queensland is under
development, consisting of 321 hectares of newly established plantings and 99 hectares of planned
macadamia plantings.
24
4
5
25
Rural Funds Group
Directors’ Report
30 June 2023
Property leasing (continued)
Macadamia orchards (continued)
Rural Funds Group
Directors’ Report
30 June 2023
Property leasing (continued)
Cropping property
The following properties are currently under development:
Cropping properties held by the Group comprise of:
• Six properties located in Maryborough, Queensland totalling 1,188 hectares (2022: 1,188 hectares) with 661
•
hectares of planned and planted macadamia plantings.
The Rookwood Farms aggregation, totalling 4,136 hectares (2022: 2,452 hectares), located in the Fitzroy
region in Queensland with 1,150 hectares of planned macadamia plantings.
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 (2022: 17,479 hectares);
• Mutton Hole and Oakland Park located in far north Queensland 225,800 hectares (2022: 225,800 hectares);
• Natal aggregation located near Charters Towers in north Queensland 390,600 hectares (2022: 390,600
hectares);
• Comanche located in central Queensland 7,600 hectares (2022: 7,600 hectares);
• Cerberus located north west of Rockhampton in central Queensland 8,280 hectares (2022: 8,280 hectares);
• Dyamberin located in the New England region of New South Wales 1,728 hectares (2022: 1,728 hectares);
• Woodburn located in the New England region of New South Wales 1,063 hectares (2022: 1,063 hectares);
• Cobungra located in the East Gippsland region of Victoria 6,497 hectares (2022: 6,497 hectares);
• Petro, High Hill and Willara located in Western Australia 6,196 hectares (2022: 6,196);
• Yarra located south west of Rockhampton in central Queensland 4,090 hectares (2022: 4,090);
• Homehill located north west of Rockhampton in central Queensland 4,925 hectares (2022: 4,925);
• Coolibah and River Block located south west of Rockhampton in central Queensland 724 hectares (2022: 724
hectares);
•
Thirsty Creek located south west of Rockhampton in central Queensland 762 hectares (2022: 762 hectares);
• Prime City, Mungindi, Caroona, Beef City and Riverina, 5 cattle feedlots with a combined capacity of 150,000
head (2022:150,000 head).
• Kaiuroo, located north west of Rockhampton in central Queensland, 27,879 hectares (2022: 27,879 hectares).
• Wyseby, held as tenant-in-common arrangement (57.25% interest), located south-west of Rockhampton in
Central Queensland adjoining Rewan 14,071 hectares (2022: nil).
The properties comprise a combined 663,374 hectares and are leased to the following tenants:
• Australian Agricultural Company Limited, leasing Rewan, Comanche and Home Hill;
• 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;
• Stone Axe Pastoral Company Pty Limited, leasing Dyamberin, Woodburn, Cobungra, Petro, High Hill and
Willara;
• Mort & Co Lot Feeder Pty Limited, leasing Coolibah, River Block and Thirsty Creek; and
• Clarke Creek Energy Pty Limited, leasing a portion of Cerberus.
• Caldwell Family (Milong) Pty Limited, leasing a portion of Wyseby.
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 2023.
Cerberus, Yarra and Kaiuroo are currently being operated by the Group, allowing for capital development and
improvement designed to improve the productivity of the properties while a long-term lessee is currently being
sought.
•
Lynora Downs, a 4,963 hectare (2022: 4,963 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 2027.
• Mayneland, a 2,942 hectare (2022: 2,942 hectare) cropping property located 25 km north of Lynora Downs in
central Queensland, currently under negotiation to be leased to RFM Farming Pty Limited (a wholly owned
subsidiary of RFM) until 30 June 2024. A long-term lessee is being sought.
• Baamba Plains, a 4,130 hectare (2022: 4,130 hectare) cropping property located 60 km south-east of Emerald
in central Queensland. A capital development program has been designed to improve the productivity of the
property. The property is currently operated by the Group on an interim basis while a long-term lessee is being
sought.
The 22 Maryborough properties located in Queensland, have potential to be developed into approximately
2,200 hectares of macadamia orchards. 12 of these properties are currently being leased out or owner
occupied for various cropping operations.
•
Other activities
The Group provides a $132,000,000 (2022: $132,000,000) limited guarantee to J&F Australia Pty Ltd (J&F). The
guarantee is currently used to support $132,000,000 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 herd assets under finance lease of $16,621,000 (2022: $16,365,000) are leased to Cattle JV.
Agricultural plant and equipment with a net book value of $2,244,000 (2022: $2,248,000) is owned by the Group
and leased to Cattle JV and RFM Farming. Agricultural plant and equipment with a net book value of $24,801,000
(2022: $14,282,000) is used for the Group’s farming operations and macadamia developments.
Banking facilities
At 30 June 2023 the core debt facility available to the Group was $670,000,000 (2022: $520,000,000), with a drawn
balance of $574,606,000 (2022: $455,100,000). The facility is split into two tranches with a $410,000,000 tranche
expiring in November 2024 and a $260,000,000 tranche expiring in November 2025. At 30 June 2023, RFF had
active interest swaps totalling 44.0% (2022: 40.2%) of the drawn balance to manage interest rate risk.
Distributions
Distribution declared 1 June 2022, paid 29 July 2022
Distribution declared 1 September 2022, paid 31 October 2022
Distribution declared 1 December 2022, paid 31 January 2023
Distribution declared 01 March 2023, paid 28 April 2023
Distribution declared 01 June 2023, paid 31 July 2023
Earnings per unit
Net profit after income tax for the year ($'000)
Weighted average number of units on issue during the year
Basic and diluted earnings per unit (total) (cents)
Cents
per unit
2.9331
2.9325
2.9325
2.9325
2.9325
Total
$
11,219,540
11,233,192
11,250,718
11,268,192
11,285,919
94,498
383,760,812
24.62
26
6
7
27
Rural Funds Group
Directors’ Report
30 June 2023
Indirect cost ratio
Rural Funds Group
Directors’ Report
30 June 2023
Indemnity of Responsible Entity and Custodian
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.
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.
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.
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
Non-Executive Chairman
Bachelor of Laws from The University of Melbourne
Guy 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.
Special responsibilities
Member of Remuneration Committee.
Directorships of other
entities in the last three years
listed
None
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 leads the RFM team.
RFM manages approximately $2.0 billion of agricultural assets. David focuses
on strategic planning, maintaining key commercial relationships and sourcing
new business opportunities.
Special responsibilities
Managing Director
Directorships of other
entities in the last three years
listed
None
The ICR for the Group for the year ended 30 June 2023 is 1.65% (2022: 2.11%).
Matters subsequent to the end of the year
As at 30 June 2023 a borrowing facility provided to the Group relating to the Wyseby property was $24,455,000.
At balance date, the facility was due to mature on 26 June 2024. Subsequent to the year end, this facility was
extended to 26 September 2024.
During the year ended 30 June 2023, the Group acquired all 579 Macgroves in the 2007 Macgrove Project which
was in the business of growing, harvesting and marketing of macadamia nuts to be sold for processing and
consumption. The 2007 Macgrove Project operated on the Group’s Swan Ridge and Moore Park properties. The
2007 Macgrove Project was subsequently wound up in July 2023. Following the wind up, the Group will operate
the macadamia orchards on these properties.
In August 2023, the Group received approval from the banking syndicate to reduce the interest cover ratio financial
covenant from 2.00:1.00 to 1.50:1.00 with distributions permitted if the interest cover ratio is not less than 1.65:1:00
from 1 July 2023 to 30 June 2025. At 30 June 2023, the Group was in compliance with its banking covenants.
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 breaches of any
environmental requirements applicable to the Group.
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.
Units on issue
384,856,558 units in Rural Funds Trust were on issue at 30 June 2023 (2022: 382,514,759). During the year
2,341,799 units (2022: 42,614,203) were issued by the Trust and nil (2022: nil) were redeemed.
28
8
9
29
Rural Funds Group
Directors’ Report
30 June 2023
Rural Funds Group
Directors’ Report
30 June 2023
Information on Directors of the Responsible Entity (continued)
Information on Directors of the Responsible Entity (continued)
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.
Michael is currently the Chair of Viridis Ag Pty Limited, a Director of Paraway
Pastoral Company Limited and Incitec Pivot Limited. Michael also runs his own
cattle business in south west Victoria.
Former board positions include the Australian Rural Leadership Foundation,
Genetics Australia, Regional Investment Corporation, 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
entities in the last three years
listed
Incitec Pivot Limited
Andrea Lemmon
Qualifications
Experience
Diploma in Financial Planning from Deakin University
Andrea was employed by RFM from its inception in 1997 until her retirement
in October 2018. During her tenure with RFM, Andrea held a variety of senior
executive roles and was responsible for overseeing RFM’s investment into the
macadamia industry. From August 2020 until November 2022, Andrea was
Chair of Marquis Macadamias Ltd, Australia’s largest macadamia processor
and a non-executive Director of Marquis Marketing, the company responsible
for marketing around 25% of the global macadamia crop. Andrea’s extensive
experience consists of previously serving as a non-executive director of Perth
Markets Limited and Market City Operator.
Special responsibilities
Member of Audit Committee and Remuneration Committee
Directorships of other listed
entities in the last three years
None
Interests of Directors of the Responsible Entity
Balance at 30 June 2021
Additions
Balance at 30 June 2022
Additions
Balance at 30 June 2023
Guy Paynter David Bryant*
Units
1,559,104
185,606
1,744,710
-
1,744,710
Units
15,238,034
1,087,428
16,325,462
619,000
16,944,462
Michael
Carroll
Units
218,402
36,338
254,740
12,668
267,408
Julian
Widdup
Units
115,765
19,261
135,026
6,714
141,740
Andrea
Lemmon
Units
-
183,357
183,357
-
183,357
Michael held previous roles as Chairman of Elders Limited and Director of
Select Harvests Limited.
*Includes interests held by Rural Funds Management Limited as the Responsibly Entity.
Non-Executive Director
Company Secretary of the Responsible Entity
Julian Widdup
Qualifications
Experience
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.
Julian is currently a director of Equip Super, Screen Canberra and the
Australian Catholic University. His former board positions include the
Australian Catholic Superannuation Retirement Fund, Darwin International
Airport, Alice Springs Airport, NZ timberland company Taumata Plantations,
Regional Livestock Exchange Company, Merredin Energy power utility,
Cultural Facilities Corporation, Victorian Agribioscience Research Facility,
Casey Hospital and Mater Hospital. Julian has over 20 years’ experience in
the financial services including as an executive director of Palisade Investment
Partners, a partner of Access Capital Advisers, a consultant with Towers Perrin
(now Willis Towers Watson) and previously worked in the Australian
Government.
Special responsibilities
Member of Audit Committee and Remuneration Committee
Directorships of other listed
entities in the last three years
None
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 16 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
13
13
13
13
13
13
12
12
10
12
-
-
2
2
2
-
-
2
2
2
Remuneration Committee
meetings
No. eligible
to
attend
1
-
1
1
1
No.
attended
-
-
1
1
1
Guy Paynter
David Bryant
Michael Carroll
Julian Widdup
Andrea Lemmon
Non-audit services
Fees of $36,812 (2022: $35,647) were paid or payable to PricewaterhouseCoopers for compliance audit services
provided for the year ended 30 June 2023.
30
10
11
31
Rural Funds Group
Directors’ Report
30 June 2023
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 2023 has been received and is included on page 13 of the financial report.
3333
The Directors’ report is signed in accordance with a resolution of the Board of Directors of Rural Funds
Management Limited.
David Bryant
Director
24 August 2023
Auditor’s Independence Declaration
As lead auditor for the audit of Rural Funds Group for the year ended 30 June 2023, 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 Group and the entities it controlled during the period.
Rod Dring
Partner
PricewaterhouseCoopers
Sydney
24 August 2023
32
12
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.
13
33
Rural Funds Group
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
Rural Funds Group
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
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
Note
2023
$'000
2022
$'000
111,953
(17,455)
94,498
206,812
2,324
209,136
132,976
(17,455)
115,521
207,882
2,324
210,206
Earnings per unit
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
24.62
29.17
(4.55)
55.29
54.68
0.61
Revenue
Other income
Management fee
Asset management fee
Property expenses
Other expenses
Finance costs
Cost of goods sold - farming operations
Property and other expenses - farming operations
Gain on sale of assets
Loss on settlement of pre-existing relationship - Macgrove acquisition
Gain on bargain purchase - Macgrove acquisition
Impairment of goodwill - Macgrove acquisition
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 - farming operations
Change in fair value of interest rate swaps
Change in fair value of financial assets/liabilities
Net profit before income tax
Income tax credit/(expense)
Net profit after income tax
Other comprehensive income:
Items that will not be reclassified to profit or loss
Revaluation increment - Bearer plants
Revaluation increment - Property - owner occupied
Income tax (expense)/benefit relating to these items
Other comprehensive income for the year, net of tax
Total comprehensive income attributable to unitholders
Note
B3
B3
G3
G3
C2
C3
C3
C5
C6
F4
D1
C3
C6
D1
2023
$'000
95,004
3,493
(8,558)
(6,419)
(3,165)
(7,522)
(17,281)
(13,049)
(5,408)
802
(1,281)
440
(195)
(2,838)
61,106
2,475
(9,583)
(247)
(3,202)
513
8,930
156
94,171
327
94,498
19,653
1,843
(473)
21,023
115,521
2022
$'000
81,865
3,475
(6,850)
(5,138)
(3,457)
(6,638)
(11,186)
(7,708)
(1,745)
320
-
-
-
(1,634)
123,191
(4,103)
(5,533)
(1,059)
(912)
5,054
51,852
669
210,463
(1,327)
209,136
(1,343)
1,286
1,127
1,070
210,206
34
14
15
35
The accompanying notes form part of these financial statements.
The accompanying notes form part of these financial statements.
Rural Funds Group
Consolidated Statement of Financial Position
As at 30 June 2023
Rural Funds Group
Consolidated Statement of Financial Position
As at 30 June 2023
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
Total net assets attributable to unitholders
Note
E7
F9
E7
2023
$'000
2022
$'000
459,078
70,265
468,034
997,377
6,834
(11,052)
(4,218)
993,159
465,076
49,417
385,183
899,676
6,721
10,614
17,335
917,011
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Assets held for sale
Biological assets
Inventories
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
Deposits
Derivative financial assets
Deferred tax assets
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Unearned income
Interest bearing liabilities
Derivative financial liabilities
Distributions payable
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Deferred tax liabilities
Unearned income
Other non-current liabilities
Total non-current liabilities
Total liabilities (excluding net assets attributable to
unitholders)
Net assets attributable to unitholders
Note
2023
$'000
2022
$'000
F1
F2
F3
C8
F4
F5
D2
C2
C3
C4, E2
C5
C6
C7
C9
E3
D2
F3
F6
F7
E1
E3
E8
E1
D2
F7
F8
5,753
10,553
1,860
-
14,295
1,853
259
34,573
923,405
217,700
102,488
166,988
144,200
27,045
-
42,040
918
11,652
1,636,436
1,671,009
6,878
975
33,150
-
11,942
52,945
607,463
8,334
5,902
3,206
624,905
677,850
993,159
4,961
6,742
1,922
715
7,826
455
1,038
23,659
786,981
190,488
97,729
157,679
68,427
16,530
18,504
33,698
-
10,134
1,380,170
1,403,829
5,153
657
2,723
589
11,756
20,878
455,100
7,634
-
3,206
465,940
486,818
917,011
Total liabilities
1,403,829
*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.
1,671,009
36
The accompanying notes form part of these financial statements.
16
17
37
The accompanying notes form part of these financial statements.
Rural Funds Group
Consolidated Statement of Changes in Net Assets Attributable to Unitholders
For the year ended 30 June 2023
Rural Funds Group
Consolidated Statement of Cash Flows
For the year ended 30 June 2023
2023
Note
Issued
units
$'000
Asset
revaluation
reserve
$'000
Retained
earnings
$'000
Non-
controlling
interest
$'000
Total
$'000
Total
$'000
Balance at 1 July 2022
465,076
49,417
385,183
899,676
17,335
917,011
D1
Other comprehensive income
Total other comprehensive
income
Profit before income tax
Income tax credit/(expense)
Total comprehensive
income for the year
Transfer from property -
owner occupied to
investment property
Transfer on disposal of
bearer plants to retained
earnings
Issued units
-
-
-
-
-
-
-
21,023
21,023
-
-
-
-
21,023
21,023
-
-
113,465
113,465
(19,294)
(1,512)
(1,512)
1,839
21,023
21,023
94,171
327
21,023
111,953
132,976
(17,455)
115,521
(148)
148
(27)
27
-
-
-
-
-
-
Units issued during the year
Total issued units
Distributions to unitholders
E7
B5,E7
5,552
5,552
(11,550)
-
-
-
-
-
5,552
5,552
113
113
5,665
5,665
(29,277)
(40,827)
(4,211)
(45,038)
Balance at 30 June 2023
459,078
70,265
468,034
997,377
(4,218)
993,159
2022
Note
Balance at 1 July 2021
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
D1
Total issued units
E7
Distributions to unitholders
B5,E7
Balance at 30 June 2022
Issued
units
$'000
Asset
revaluation
reserve
$'000
Retained
earnings
$'000
Non-
controlling
interest
$'000
Total
$'000
Total
$'000
380,440
48,347
206,767
635,554
12,990
648,544
-
-
-
-
-
1,070
1,070
-
-
-
-
1,070
1,070
-
-
1,070
1,070
207,143
207,143
3,320
210,463
(331)
(331)
(996)
(1,327)
1,070
206,812
207,882
2,324
210,206
103,788
(2,770)
101,018
(16,382)
-
-
-
-
-
-
-
103,788
(2,770)
101,018
2,061
105,849
(40)
(2,810)
2,021
103,039
(28,396)
(44,778)
-
(44,778)
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 received/(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 financial assets - property related
Payments for intangible assets
Payments for property - owner occupied
Payments for plant and equipment
Payments for deposits
Payments for financial assets - other
Payments for other assets
Proceeds from sale of investment property
Proceeds from sale of financial assets - property related
Settlement of financial assets - property related
Proceeds from sale of intangible assets
Proceeds from sale of property - owner occupied
Proceeds from sale of plant and equipment
Proceeds from assets held for sale
Acquisition of new business
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
Note
D2
G5
C2
C5
C6
C7
C9
G3
E7
2023
$'000
89,183
(57,609)
389
14,118
(17,281)
415
29,215
(80,266)
(13,415)
(420)
(9,556)
(54,743)
(12,892)
-
-
(1,518)
26
893
323
-
-
361
530
(1,392)
40
2022
$'000
71,961
(37,080)
49
14,671
(11,186)
(561)
37,854
(60,623)
(40,028)
(936)
(46,093)
(52,777)
(10,438)
(18,504)
(4,427)
(5,997)
-
-
18,205
581
3,283
458
1,621
-
65
(172,029)
(215,610)
5,665
303,107
(120,317)
(44,849)
143,606
792
4,961
5,753
103,039
378,220
(267,145)
(43,044)
171,070
(6,686)
11,647
4,961
465,076
49,417
385,183
899,676
17,335
917,011
Net cash inflow 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
F1
38
The accompanying notes form part of these financial statements.
18
The accompanying notes form part of these financial statements.
19
39
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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 24 August 2023 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 G4.
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
with Australian Accounting Standards, Australian Accounting
Interpretations, and other authoritative
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.
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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.
Working capital
The deficiency in working capital at 30 June 2023 is due to the timing of distributions and the classification of
Wyseby debt as current as at balance date. Subsequent to the year end, the Wyseby debt facility was extended to
24 September 2024. Based on the forecast cash flows, the Group believes it can pay all its debts as and when
they fall due for at least a minimum period of 12 months from the date of these accounts. The Group has headroom
in its syndicated bank facility of $95.4m as at 30 June 2023 subject to compliance with the Group’s bank covenants.
Comparative amounts
Comparative amounts have not been restated unless otherwise noted.
40
20
21
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B1 Segment information (continued)
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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 2023 is $178,972,000 (2022: $169,663,000).
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 contain 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 2023 was $314,486,000 (2022: $279,979,000) representing the value of the water rights of $135,514,000
(2022: $110,316,000) above cost.
The following is a reconciliation of the book value at 30 June 2023 to an adjusted value based on the Directors’
valuation of the water rights which are assessed by the chief operating decision maker.
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities (excluding net assets attributable to
unitholders)
Net assets attributable to unitholders
Net asset value per unit ($)
Per Statutory
Consolidated
Statement of
Financial
Position
$'000
Revaluation
of water
entitlements
per
Directors'
valuation
$'000
34,573
1,636,436
1,671,009
-
135,514
135,514
52,945
624,905
677,850
993,159
2.57
-
-
-
135,514
0.36
Directors'
valuation
(Adjusted)
$'000
34,573
1,771,950
1,806,523
52,945
624,905
677,850
1,128,673
2.93
25
45
Rural Funds Group
Notes to the Financial Statements
30 June 2023
B1 Segment information (continued)
2023
Almonds
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)
Coolibah aggregation (QLD)2
Thirsty Creek (QLD)
Kaiuroo (QLD)
Wyseby (QLD)
Cropping
Lynora Downs (QLD)
Mayneland (QLD)
Maryborough – Cropping (QLD)
Baamba Plains (QLD)
Macadamias
Swan Ridge (QLD)
Moore Park (QLD)
Bonmac (QLD)
Swan Ridge South (QLD)
Cygnet (QLD) 3
Nursery Farm (QLD) 3,4
Riverton (QLD) 3
Maryborough – Macadamias (QLD) 3
Maryborough – Macadamias (QLD)
Rookwood Farms (QLD)5
Beerwah(QLD)
Bauple (QLD)
30 June 23
Adjusted
property
value
$'000
30 June 22
Adjusted
property
value
$'000
Most Recent Independent
Valuation
Date
$'000
Encumbered
Valuation
$'000
114,500
61,500
272,500
105,000
52,851
242,130
Jun 2023
Jun 2023
Jun 2023
72,500
19,000
9,900
138,490
35,104
24,784
21,015
62,989
11,461
52,200
16,825
8,780
8,260
24,788
20,156
5,688
5,225
71,000
34,951
45,400
28,550
38,383
37,450
7,164
4,402
3,061
1,980
4,014
5,458
36,081
70,727
23,778
33,886
38,300
19,700
62,400
16,838
8,654
137,756
35,064
24,318
21,000
58,802
11,250
40,800
13,514
6,404
5,861
23,822
19,476
5,683
5,220
-
-
41,709
24,554
38,208
30,673
7,188
4,487
3,141
1,619
3,294
6,193
18,447
38,852
20,789
17,356
35,638
17,969
Nov 2022
Jun 2023
Jun 2023
Apr 2022
Apr 2022
Apr 2022
Mar 2022
N/A
Mar 2022
Dec 2022
Jun 2023
Jun 2023
Jun 2023
Dec 2021
Apr 2022
Apr 2022
Apr 2022
Jun 2023
Jun 2023
Jun 2023
Jun 2023
Apr 2022
Jun 2023
Sep 2021
Sep 2021
Sep 2021
Sep 2021
Oct 2022
Oct 2022
Oct 2022
Oct 2022
Apr 2022
Apr 2022
Jun 2023
Jun 2023
114,500
61,500
272,500
72,500
19,000
9,900
137,250
35,000
24,300
21,000
N/A
11,250
52,200
16,825
8,780
8,260
23,600
19,325
5,625
5,220
71,000
34,951
45,400
28,550
37,832
37,450
7,000
4,550
3,200
1,600
3,850
4,200
26,700
57,850
20,788
12,775
38,300
19,700
Area 1
935 ha
603 ha
2,530 ha
17,479 ha
140,300 ha
85,500 ha
390,600 ha
7,600 ha
8,280 ha
1,728 ha
150,000 hd
1,063 ha
6,497 ha
2,942 ha
1,601 ha
1,653 ha
4,090 ha
4,925 ha
724 ha
503 ha
27,879 ha
14,071 ha
4,963 ha
2,942 ha
2,537 ha
4,130 ha
130 ha
104 ha
27 ha
40 ha
37 ha
41 ha
420 ha
743 ha
661 ha
1,150 ha
340 ha
135 ha
Valuations are encumbered unless not applicable (for example where a property is not subject to lease or at acquisition)
1 Unless otherwise denoted, the almond, vineyard and macadamia areas refer to planted and planned development areas. Wyseby held
as tenant-in-common arrangement with a 57.25% interest.
2 Coolibah aggregation comprises of the Coolibah and River Block properties.
3 Initial properties are subject to the lease with a company managed by The Rohatyn Group (TRG) from January 2023.
4 Nursery Farm at 30 June 2022 included the value of trees in the tree nursery. Since 30 June 2022 trees have been allocated to the
respective macadamia orchards as plantings occur.
5 Rookwood Farms aggregation comprises of the Stoneleigh, Corrowah, Tongola, Greenfields and Brooklands properties.
6 Dohnt vineyard was disposed in November 2022.
7 Director’s valuation of River water (NSW) and Ground water (NSW) at 30 June 2023 based on information from external independent
valuations.
46
26
Rural Funds Group
Notes to the Financial Statements
30 June 2023
2023
Vineyards
Kleinig (SA)
Geier (SA)
Dohnt (SA)6
Hahn (SA)
Mundy and Murphy (SA)
Rosebank (VIC)
Water rights
River water (NSW) 7
River water (QLD)
Ground water (NSW) 7
Total property and water assets
Cattle finance leases and other assets
Plant and equipment
Other receivables and equipment leases
Kaiuroo deposit
Total adjusted property assets
Revaluations from external valuations
30 June 23
Adjusted
property
value
$'000
30 June
22
Adjusted
property
value
$'000
Most Recent Independent
Valuation
Date
$'000
Encumbered
Valuation
$'000
206 ha
243 ha
30 ha
50 ha
55 ha
82 ha
21,800
25,900
-
4,800
4,400
4,000
21,100
25,373
715
4,800
4,100
3,900
8,754 ML
2,155 ML
8,338 ML
76,597
1,113
33,353
1,661,914
77,910
1,113
38,355
1,384,326
Jun 2023
Jun 2023
Mar 2021
Jun 2023
Jun 2023
Jun 2023
Jun 2022
Jun 2020
Jul 2021
21,800
25,900
1,200
4,800
4,400
4,000
77,910
1,099
38,355
17,487
27,045
2,231
-
17,431
16,530
2,120
18,504
1,708,677
1,438,911
The total uplift for the year ended 30 June 2023 has been largely due to the external valuer’s assessment of the
value of land and water. The uplift has largely been driven by continued strength in demand and market sentiment
for almond, cropping, macadamia and cattle properties in the respective regions during the year. All of the Group’s
properties have been valued by an independent valuer within the last 24 months. 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.
Macadamia valuations have been obtained for the properties leased out to The Rohatyn Group. The adopted
valuation is on an encumbered (subject to lease) basis.
A number of properties acquired during the period were subject to independent valuations. Revaluation movements
for these properties largely relate to transaction costs incurred that were written off in the independent valuations.
Adjusted property values movements after the most recent independent valuation
Increases to the adjusted property value from the last 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 adjusted property value from last valuation is primarily a result of depreciation on the bearer plants.
A director’s valuation has been adopted for 8,754ML of River water (NSW) and 8,338 ML of Ground water (NSW)
based on information obtained from external independent valuation reports.
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.
27
47
Rural Funds Group
Notes to the Financial Statements
30 June 2023
Rural Funds Group
Notes to the Financial Statements
30 June 2023
B2 Adjusted funds from operations (AFFO) (continued)
B3 Revenue
Rental income
Sale of agricultural produce - farming operations
Sale of livestock and agistment income
Finance income
Interest received
Total
2023
$'000
63,130
8,250
4,930
18,305
389
95,004
2022
$'000
54,452
7,909
-
19,455
49
81,865
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 primarily arises from the leasing of property assets at commencement 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.
Sale of agricultural produce and livestock is recognised when the performance obligation of passing control of
agricultural produce and livestock at an agreed upon delivery point to the customer has been satisfied.
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
Total
2023
$'000
3,043
450
3,493
2022
$'000
3,142
333
3,475
Sale of temporary water allocations is recognised when the water allocations are received by the customer.
Expenses
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.
Revenue
Other income
Management fee
Asset management fee
Property expenses
Other expenses
Finance costs
Income tax payable (AWF)
Revenue adjustments
Straight-lining of rental revenue
Rental revenue – prepaid rent (TRG)
Lease incentive amortisation (TRG)
Interest component of JBS feedlot finance lease
Farming operations
Revenue from farming operations
Cost of goods sold - farming operations
Change in fair value of biological assets
(realised from harvested crops and cattle)
Change in fair value of biological assets
(prior year biological assets realised during the year)
Property and other expenses - farming operations
Adjusted Funds From Operations (AFFO)
Property related
Change in fair value of investment property
Change in fair value of bearer plants
Impairment of property - owner occupied
Impairment of intangible assets
Depreciation - bearer plants
Depreciation and impairments - other
Gain on sale of assets
Farming operations
Change in fair value of biological assets
(unharvested crops not realised and unsold cattle)
Change in fair value of biological assets
(prior year biological assets realised during the year)
Macgrove acquisition
Impairment of goodwill - Macgrove acquisition
Loss on settlement of pre-existing relationship - Macgrove acquisition
Gain on bargain purchase - Macgrove acquisition
Revenue items
Rental revenue – prepaid rent (TRG)
Lease incentive amortisation (TRG)
Straight-lining of rental revenue
Interest component of JBS feedlot finance lease
Other
Change in fair value of financial assets/liabilities
Change in fair value of interest rate swaps
Income tax credit/(expense)
Net profit after income tax
2023
$'000
81,824
3,493
(8,558)
(6,419)
(3,165)
(7,522)
(17,281)
(257)
(1,470)
6,050
9
(4,187)
13,180
(13,049)
2,018
1,819
(5,408)
41,077
61,106
2,475
(3,202)
(247)
(9,583)
(2,838)
802
(1,505)
(1,819)
(195)
(1,281)
440
(6,050)
(9)
1,470
4,187
156
8,930
584
94,498
2022
$'000
73,956
3,475
(6,850)
(5,138)
(3,457)
(6,638)
(11,186)
-
735
-
-
(3,187)
7,909
(7,708)
3,235
814
(1,745)
44,215
123,191
(4,103)
(912)
(1,059)
(5,533)
(1,634)
320
1,819
(814)
-
-
-
-
-
(735)
3,187
669
51,852
(1,327)
209,136
AFFO cents per unit
10.7
11.7
48
28
29
49
Rural Funds Group
Notes to the Financial Statements
30 June 2023
B4 Earnings per unit
Per stapled unit
Net profit after income tax for the year ($'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 ($'000)
Weighted average number of units on issue during the year (thousands)
Basic and diluted earnings per unit (total) (cents)
Per unit of RF Active
Net (loss)/profit after income tax for the year ($'000)
Weighted average number of units on issue during the year (thousands)
Basic and diluted earnings per unit (total) (cents)
2023
2022
94,498
383,761
24.62
111,953
383,761
29.17
(17,455)
383,761
(4.55)
209,136
378,227
55.29
206,812
378,227
54.68
2,324
378,227
0.61
Basic earnings per unit are calculated on net profit attributable to unitholders of the Group divided by the weighted
average number of issued units.
B5 Distributions
The group paid and declared the following distributions during the year:
Distribution declared 1 June 2022, paid 29 July 2022
Distribution declared 1 September 2022, paid 31 October 2022
Distribution declared 1 December 2022, paid 31 January 2023
Distribution declared 01 March 2023, paid 28 April 2023
Distribution declared 01 June 2023, paid 31 July 2023
Cents
per unit
2.9331
2.9325
2.9325
2.9325
2.9325
Total
$
11,219,540
11,233,192
11,250,718
11,268,192
11,285,919
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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
Deposits
Total
Leasing arrangements
C2
C3
C4
C5
C6
C7
C8
C9
2023
$'000
923,405
217,700
93,825
166,988
144,200
27,045
-
-
1,573,163
2022
$'000
786,981
190,488
89,271
157,679
68,427
16,530
715
18,504
1,328,595
Minimum lease payments receivable under non-cancellable operating leases of investment properties, bearer
plants, water rights and plant 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
2023
$'000
64,874
65,807
68,414
61,816
57,748
743,692
1,062,351
2022
$'000
53,804
53,362
53,942
54,602
47,478
274,282
537,470
During the year, the Group entered into a 40 year lease with a company managed by The Rohatyn Group (TRG).
The lease includes lessee termination rights under certain conditions including if the orchards fail to produce the
equivalent of a mature yield of 3.6 tonnes per hectare over a rolling five-year period commencing in year 10.
Key changes to the property portfolio during the year:
•
•
•
•
•
•
In July 2022, the Group acquired Brooklands, a 972ha property west of Rockhampton in Central
Queensland for $6.2m including transaction costs. The property will be incorporated as part of Rookwood
Farms.
In August 2022, the Group acquired Greenfields, a 229ha property west of Rockhampton in Central
Queensland for $3.1m including transaction costs. The property will be incorporated as part of Rookwood
Farms.
In September 2022, the Group entered into an agreement to lease up to 3,000ha of macadamia orchards
to a company managed by The Rohatyn Group (TRG) on behalf of a joint venture between TRG and a
global institutional investor. The lease commenced in January 2023.
In November 2022, the Group completed the disposal of Dohnt, a 37ha vineyard located in Coonawarra,
South Australia for $0.6m.
In April 2023, the Group acquired Kaiuroo, a 27,879ha property north-west of Rockhampton in Central
Queensland for $74.0m including transaction costs.
In June 2023, the Group acquired Wyseby as a tenant-in-common in the interest of 57.25% for $37.0m
including transaction costs. The total property is 18,500ha located south-west of Rockhampton in Central
Queensland adjoining Rewan.
50
30
31
51
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C1 RFF property assets (continued)
Macadamia development
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C1 RFF property assets (continued)
Valuations (continued)
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
Independent desktop valuations were obtained for a number of properties during the year. The Directors have
considered these desktop valuations as part of the fair value assessment at 30 June 2023.
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 underlying lease arrangement.
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.
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. Conditions associated with individual assets are considered as part of the valuation allocation.
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 plantings
have been established.
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.
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.
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.
The following existing properties had relevant independent valuations during the year ended 30 June 2023:
Investment property, Bearer plants and Property – owner occupied
Almond properties
Cattle properties
Macadamia properties
Cropping properties
Kerarbury, Tocabil, Yilgah
Rewan, Cobungra, Petro, High Hill, Willara, Oakland Park, Mutton Hole
Cygnet, Nursery Farm, Glendorf, Charleville, Dowlings, Marriots, Riverton,
Beerwah, Bauple
Baamba Plains, Lynora Downs, Mayneland
The following properties had relevant independent desktop valuations during the year ended 30 June 2023:
Vineyard properties
Geier, Kleinig, Hahn, Rosebank, Mundy and Murphy
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 periods
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 main level 3 inputs used by the Group include discount rates, terminal capitalisation rates, rate per area of land,
adult equivalent rates and carrying capacity estimated in the respective valuations based on comparable transactions
and industry data.
At the end of each reporting period, the directors update their assessment of the fair value of each property. Changes
in level 3 fair values are analysed at each reporting date and during discussions with the independent valuers.
52
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4
3
Notes to the Financial Statements
30 June 2023
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
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.
Rent capitalisation
Valuation based on passing rent applied against a capitalisation rate.
Allocation technique
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
and Macadamias
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.
Conditions associated with individual assets are considered as part of the
valuation allocation.
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 allocates value to water assets based on comparable
encumbered rental data. The value of land is determined based on comparable
sales data. Orchard infrastructure including irrigation is determined based on a
replacement cost assumption adjusted for an estimate of the age of the assets.
Bearer plants are 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.
35
55
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Rural Funds Group
Notes to the Financial Statements
30 June 2023
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/planted hectare
The higher the value per irrigated/planted 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
2023
Opening net book amount
Acquisitions
Additions
Capitalisation of borrowing costs
Disposals
Transfer
Transfer to property - owner
occupied
Transfer to bearer plants
Transfer from property - owner
occupied
Amortisation of lease incentives
Fair value adjustment
Closing net book amount
2022
Opening net book amount
Acquisitions
Additions
Capitalisation of borrowing costs
Classified as held for sale or
disposals
Transfer to intangible assets
Transfer from property - owner
occupied
Amortisation of lease incentives
Fair value adjustment
Closing net book amount
Almond
property
$'000
141,080
-
1,202
-
(71)
-
Cattle
property
$'000
433,090
36,993
5,112
436
-
-
Vineyard
property
$'000
35,727
-
-
-
-
-
Cropping
property
$'000
88,931
-
76
84
-
(7,220)
Macadamia
property
$'000
88,153
9,563
23,511
3,289
-
7,220
Total
$'000
786,981
46,556
29,901
3,809
(71)
-
-
-
-
-
-
-
-
21,452
163,663
(200)
28,514
503,945
-
(290)
-
-
5
35,442
-
-
-
(5,445)
(5,445)
-
(290)
1,058
1,058
-
1,569
83,440
-
9,566
136,915
(200)
61,106
923,405
Almond
property
126,189
-
1,356
-
Cattle
property
305,151
21,958
4,417
-
Vineyard
property
34,540
-
924
-
Cropping
property
83,300
-
4,012
-
Macadamia
property
47,744
-
27,710
246
-
-
-
-
-
-
(542)
-
(2,556)
-
-
-
9,541
9,541
-
13,535
141,080
(200)
101,764
433,090
-
805
35,727
-
4,175
88,931
-
2,912
88,153
(200)
123,191
786,981
Total
596,924
21,958
38,419
246
(542)
(2,556)
-
-
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C2 Investment property (continued)
Macadamia properties under development include Maryborough – Macadamias, Riverton, Rookwood Farms and
Swan Ridge South. Development costs for these properties have been capitalised.
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 capitalised to the investment property and amortised on a straight-line basis over the term
of the lease as a reduction of rental revenue.
C3 Plant and equipment – bearer plants
2023
Opening net book amount
Additions
Capitalisation of borrowing costs
Transfer from investment property
Lease incentive
Amortisation of lease incentive
Depreciation and impairment
Fair value adjustment - profit and loss
Fair value adjustment - other comprehensive
income
Closing net book amount
2022
Opening net book amount
Acquisitions
Additions
Capitalisation of borrowing costs
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
Bearer
Plants -
Vineyards
$'000
Bearer
Plants -
Macadamias
$'000
124,948
232
-
-
-
-
(5,761)
(544)
10,246
129,121
Bearer
Plants -
Almonds
$'000
125,580
-
363
-
-
(2,808)
-
1,813
124,948
17,260
24
-
290
-
-
(941)
961
1,578
19,172
48,280
12,166
262
-
1,702
(9)
(2,881)
2,058
7,829
69,407
Bearer
Plants -
Vineyards
$'000
23,815
-
-
-
(173)
(1,213)
(1,413)
Bearer
Plants -
Macadamias
$'000
11,387
35,480
5,001
14
-
(1,512)
(2,690)
(3,756)
17,260
600
48,280
Total
$'000
190,488
12,422
262
290
1,702
(9)
(9,583)
2,475
19,653
217,700
Total
$'000
160,782
35,480
5,364
14
(173)
(5,533)
(4,103)
(1,343)
190,488
Bearer plants are solely used to grow produce over their productive lives and are accounted for under AASB 116
Property, Plant and Equipment.
RFF initially measures and recognises bearer plants at cost, including planting costs and direct costs associated
with establishing these plants to maturity. 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.
Investment properties comprise land, buildings and integral infrastructure including shedding, irrigation and
trellising.
56
36
37
57
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C3 Plant and equipment – bearer plants (continued)
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.
Lease incentives relate to orchard establishment costs incurred by the Group subsequent to lease commencement.
Lease incentives are capitalised to bearer plants and amortised on a straight-line basis over the term of the lease
as a reduction of rental revenue.
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 considers when
the trees reach maturity or on the commencement of lease. The useful lives and maturity assumptions used for
each class of depreciable asset are shown below:
Fixed asset class:
Almond bearer plants
Vineyard bearer plants
Macadamia bearer plants
Useful life:
30 years
40 years
45 - 55 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
Other receivables
Total
2023
$'000
185,241
(24,557)
(3,277)
157,407
2023
$'000
520
11,464
16,621
62,989
164
2,067
93,825
2022
$'000
172,268
(15,330)
(5,752)
151,186
2022
$'000
520
11,464
16,365
58,802
1,522
598
89,271
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.
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C4 Financial assets – property related (continued)
Finance Lease – Breeders is comprised of breeders owned by the Group which have been leased to Cattle JV, 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.
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 the lessee, Cattle JV and an annual valuation process. There has been no
expected credit loss recognised at 30 June 2023 (2022: 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.
Other receivables relate 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
2023
$'000
6,055
6,051
6,026
6,015
22,456
57,334
103,937
2022
$'000
6,027
6,005
5,960
5,797
21,888
61,360
107,037
58
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Rural Funds Group
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Notes to the Financial Statements
30 June 2023
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C
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.
Impairment recognised during the year relating to the directors’ valuation on Ground water (NSW). Offset by the
reversal of impairment in the cropping segment largely relating to the Lynora Downs and Baamba Plains properties
based on the 30 June 2023 independent valuation.
C6 Property – owner occupied
2023
Land
Building
Irrigation
Total
Opening net book amount
Acquisitions
Additions
Capitalisation of borrowing costs
Transfer from deposit
Transfer from investment property
Transfer to investment property
Depreciation
Impairment
Fair value adjustment - other comprehensive
income
Closing net book amount
$'000
61,796
41,812
1,003
1,003
18,504
3,687
(1,030)
-
1,184
$'000
6,035
2,549
1,945
8
-
1,522
(28)
(370)
(579)
$'000
596
-
6,420
3
-
236
-
(132)
(3,807)
$'000
68,427
44,361
9,368
1,014
18,504
5,445
(1,058)
(502)
(3,202)
1,771
129,730
72
11,154
-
3,316
1,843
144,200
2022
Land
Building
Irrigation
Total
Opening net book amount
Acquisitions
Additions
Transfer to investment property
Disposals
Depreciation
Impairment
Fair value adjustment - other comprehensive
income
Closing net book amount
$'000
27,405
45,563
482
(9,002)
(3,265)
-
(659)
$'000
$'000
816
5,753
433
(529)
(25)
(174)
(253)
63
-
546
(9)
-
(4)
-
$'000
28,284
51,316
1,461
(9,540)
(3,290)
(178)
(912)
1,272
61,796
14
6,035
-
596
1,286
68,427
Property – owner occupied relates to owner occupied property that is being used to conduct farming operations by
the Group and accounted for under AASB 116 Property, Plant and Equipment. Property – owner occupied are held
under the revaluation model. As at 30 June 2023, this included properties that were operated by the Group including
the Maryborough properties (cropping), Baamba Plains (cropping), Beerwah, Bauple (macadamias) and Kaiuroo
(cattle).
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.
41
61
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C6 Property – owner occupied (continued)
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:
Fixed asset class:
Land
Buildings
Irrigation
Useful life:
Not applicable
20 years
40 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.
Property – owner occupied as stated on a historical cost basis is as follows:
2023
Cost
Accumulated depreciation and impairment
Net book amount
2022
Cost
Accumulated depreciation and impairment
Net book amount
C7 Plant and equipment – other
Land
Building
Irrigation
$'000
127,813
(1,126)
126,687
$'000
12,446
(1,378)
11,068
$'000
7,259
(3,943)
3,316
Land
Building
Irrigation
$'000
62,834
(2,310)
60,524
$'000
6,450
(429)
6,021
$'000
600
(4)
596
Opening net book amount
Additions
Transfers from finance lease - equipment
Disposals
Depreciation
Decrement (depreciation capitalised to developments)
Closing net book amount
Cost
Accumulated depreciation
Accumulated impairment
Net book amount
2023
$'000
16,530
12,892
1,151
(221)
(2,336)
(971)
27,045
40,633
(12,266)
(1,322)
27,045
Total
$'000
147,518
(6,447)
141,071
Total
$'000
69,884
(2,743)
67,141
2022
$'000
8,716
10,438
44
(382)
(1,456)
(830)
16,530
26,811
(8,959)
(1,322)
16,530
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 attends to properties where assets are located
on a regular basis.
Rural Funds Group
Notes to the Financial Statements
30 June 2023
C7 Plant and equipment – other (continued)
The useful lives and 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
Total
Note
C2
C3
2023
$'000
-
-
-
2022
$'000
542
173
715
At 30 June 2022, investment property and bearer plants held for sale relates to the Dohnt vineyard sold during the
year.
C9 Deposits
Deposit for acquisition of Kaiuroo property
Total
2023
$'000
-
-
2022
$'000
18,504
18,504
The Kaiuroo deposit includes stamp duty calculated on the amount paid. The property was acquired in April 2023
and recognised as property - owner occupied.
C10 Capital commitments
Capital expenditure across all properties largely relates to macadamia developments, cattle property developments
cropping property developments and almond property improvements. These commitments are contracted for but
not recognised as liabilities. The decrease in commitments during the year largely relates to the settlement of the
Kaiuroo property in April 2023.
Investment property
Bearer plants
Intangible assets
Plant and equipment
Total
2023
$'000
95,862
28,301
24,766
1,508
150,437
2022
$'000
142,709
17,254
34,263
570
194,796
62
42
43
63
Rural Funds Group
Notes to the Financial Statements
30 June 2023
D. TAX
Since 1 July 2014, Rural Funds Trust (a subsidiary of Rural Funds Trust at the time) became a flow through trust
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. Rural Funds Trust considers itself an attribution managed
investment trust (AMIT). 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.
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.
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
Total
Deferred income tax expense included in income tax expense comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Total
Amounts charged or credited directly to equity
Capitalised issue costs
Change in fair value taken through asset revaluation reserve
Total
64
2023
$'000
364
(651)
(40)
(327)
(327)
(327)
918
(1,136)
(218)
-
473
473
2022
$'000
-
1,327
-
1,327
1,327
1,327
-
184
184
(16)
(1,127)
(1,143)
44
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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% (2022: 30%)
Tax effect of amounts that are not taxable in determining taxable income
Derecognition of tax losses
Adjustments in respect of tax of previous years
Total
2023
$'000
94,171
28,251
(32,523)
3,985
(40)
(327)
2022
$'000
210,463
63,139
(61,812)
-
-
1,327
The Group has derecognised deferred tax assets amounting to $3,985,000 as at the end of the financial year
relating to carried forward tax losses in RF Active that are available to be utilised.
Franking credits
At 30 June 2023 there were $1,986,000 of franking credits available to apply to future income distributions (2022:
$3,755,000).
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
Intangible assets
Other
Unused income tax losses
Gross deferred tax assets
Set off of deferred tax liabilities
Net deferred tax assets
2023
$'000
3,408
1,390
5,151
876
10,825
(2,491)
8,334
216
1,513
64
1,616
3,409
(2,491)
918
2022
$'000
2,947
1,447
4,895
1,276
10,565
(2,931)
7,634
47
-
61
2,823
2,931
(2,931)
-
Recognised tax assets and liabilities
Current income tax
Deferred income tax
2023
$'000
1,038
(364)
-
(415)
259
2022
$'000
477
-
-
561
1,038
Opening balance
Charged to income
Credited to equity
Tax payments
Closing balance
Tax expense in the Consolidated Statement of Comprehensive Income
Amounts recognised in the Consolidated Statement of Financial Position:
Deferred tax asset
Deferred tax liability
2023
$'000
(7,634)
691
(473)
-
(7,416)
(327)
918
(7,416)
2022
$'000
(7,450)
(1,327)
1,143
-
(7,634)
1,327
-
(7,634)
45
65
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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 as a proportion of 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)
Borrowings (Rabobank)
TRG loan
J&F Guarantee - Borrowing loss provision
Total
Non-current
Borrowings (ANZ)
Borrowings (Rabobank)
Borrowings (NAB)
TRG loan
Total
2023
$'000
2,783
24,455
5,714
198
33,150
281,393
242,565
50,648
32,857
607,463
2022
$'000
2,525
-
-
198
2,723
220,864
184,236
50,000
-
455,100
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 consolidated 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
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 the 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.
The J&F Guarantee is a $132.0 million (2022: $132.0 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 $132.0 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 $132.0 million.
The guarantee fee received from J&F during the year was $7,615,000 (2022: $9,662,000). The return to the Group
relating to the guarantee fee arrangement for the year was approximately 7.6% (2022: 10.8%) 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 2023
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 not to 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 nil (2022: $149,000).
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 but will incur a break fee if exercised before year ten in 2028.
Borrowings
At 30 June 2023 the core debt facility available to the Group was $670,000,000 (2022: $520,000,000), with a drawn
balance of $574,606,000 (2022: $455,100,000). The facility is split into two tranches, with a $410,000,000 tranche
expiring in November 2024 and a $260,000,000 tranche expiring in November 2025.
As at 30 June 2023 RFF had active interest rate swaps totalling 44.0% (2022: 40.2%) of the syndicated debt
balance to manage interest rate risk. Hedging requirements under the terms of the borrowing facility may vary with
bank consent.
As at 30 June 2023 the TRG loan balance was $38,571,000. A $40,000,000 loan was provided to the Group on
commencement of the initial lease with an additional $60,000,000 provided during the balance of the development.
Debt is repaid with interest over 7 years.
As at 30 June 2023 a borrowing facility provided by Rabobank to the Group relating to the acquisition of Wyseby
property was $24,455,000. At balance date, the facility was due to terminate on 26 June 2024. Subsequent to the
year end, this facility was extended to 26 September 2024.
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 2023:
• maintain a maximum loan to value ratio of 55% (2022: 55%);
• maintain net tangible assets (including water entitlements) in excess of $400,000,000; and
•
an interest cover ratio for the Group not less than 2.00:1.00 with distributions permitted if the interest
cover ratio is not less than 2.15:1.00.
The loan to value ratio calculation includes the J&F guarantee of $132.0 million (2022: $132.0 million).
Rural Funds Group has complied with the financial covenants of its borrowing facilities during the year.
In August 2023, the Group received approval from the banking syndicate to reduce the interest cover ratio financial
covenant to 1.50:1.00 with distributions permitted if the interest cover ratio is not less than 1.65:1:00 from 1 July
2023 to 30 June 2025.
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 the 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), Cooperatieve Rabobank UA (Rabobank) and
National Australia Bank (NAB) 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.
66
46
47
67
Rural Funds Group
Notes to the Financial Statements
30 June 2023
E1 Interest bearing liabilities (continued)
The following assets are pledged as security over the loans:
2023
Mortgage: Leased
Properties
Other assets
Equipment
Total
2022
Mortgage: Leased
Properties
Other assets
Equipment
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
923,406
-
-
923,406
100,959
66,029
-
166,988
217,700
-
-
217,700
74,974
16,784
-
91,758
-
-
27,045
27,045
- 1,317,039
82,813
-
-
27,045
- 1,426,897
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
786,981
86,647
190,488
70,786
-
715 1,135,617
-
-
786,981
71,032
-
157,679
-
-
190,488
17,887
-
88,673
-
16,530
16,530
-
-
88,919
16,530
715 1,241,066
E2 Financial assets – other (non-property related)
Investment - Marquis Macadamias Limited
Investment - Almondco Australia Limited
Total
2023
$'000
5,231
3,432
8,663
2022
$'000
5,270
3,188
8,458
The Group’s investments in Marquis Macadamias Limited and Almondco Australia Limited are held at fair value
through profit and loss. Fair value has been assessed based on the latest financial information and management’s
assessment of net realisable value.
E3 Derivative financial instruments measured at fair value
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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 2023, cattle biological assets are level 2, and all other non-financial assets are level 3.
RFF’s unlisted equity investments, BIL, CICL, Marquis Macadamias Ltd 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 (2022: 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).
2023
$'000
2022
$'000
a. Financial assets
Assets
Non-current
Interest rate swaps
Total other assets
Current
Interest rate swaps
Total other liabilities
42,040
33,698
42,040
33,698
-
-
589
589
The Group’s derivative financial instruments are held at fair value (level 2 - see section E4).
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.
68
48
49
69
Rural Funds Group
Notes to the Financial Statements
30 June 2023
E5 Financial instruments (continued)
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.
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
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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
The Group’s derivatives, investments in Marquis Macadamias Ltd and Almondco are held at fair value through
profit or loss.
a. Financial risk management policies
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 are measured at fair value through profit or loss include the Group’s derivatives. All other
financial liabilities are measured at amortised cost.
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.
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 42.2% (2022: 40.2%) of the Group's floating rate
debt at 30 June 2023.
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
2023
%
3.37
2.81
3.25
2022
%
3.42
3.06
3.01
2023
$'000
143,000
33,000
77,000
253,000
2022
$'000
13,000
93,000
77,000
183,000
70
50
51
71
Rural Funds Group
Notes to the Financial Statements
30 June 2023
E6 Financial risk management (continued)
Rural Funds Group
Notes to the Financial Statements
30 June 2023
E6 Financial risk management (continued)
b.
Interest rate risk and swaps held for hedging (continued)
d. Credit risk
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 favour 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 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.
The following interest rate swap contracts that have been entered into but are not yet effective as at 30 June 2023
are:
Effective average interest rate
payable
Balance
Maturity of notional amounts
Settlement - between 0 to 3 years
Settlement - 3 to 5 years
Settlement - greater than 5 years
Total
2023
%
2.66
3.26
2.25
2022
%
-
3.59
2.27
2023
$'000
20,000
155,000
230,000
405,000
2022
$'000
-
40,000
230,000
270,000
The net gain recognised on the swap derivative instruments for the year ended 30 June 2023 was $8,930,000
(2022: $51,852,000).
At 30 June 2023 the Group had the following mix of financial assets and liabilities exposed to variable interest
rates:
Cash
Interest bearing liabilities (current)
Interest bearing liabilities (non-current)
Total
2023
$'000
5,753
(24,454)
(574,606)
(593,307)
2022
$'000
4,961
-
(455,100)
(450,139)
At 30 June 2023, 6.46% (2022: 0.55%) of the Group’s debt is fixed, excluding the impact of interest rate swaps.
c.
Interest rate risk (sensitivity analysis)
At 30 June 2023, the effect on profit before tax and net assets attributable to unitholders as a result of changes in
the interest rate, including the effect of interest rate swaps, finance income and revaluation of derivatives, 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%
2023
$'000
18,563
(20,341)
18,563
(20,341)
2022
$'000
22,530
(25,135)
22,530
(25,135)
72
52
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Rural Funds Group
4
5
Notes to the Financial Statements
30 June 2023
E7 Issued units
Units on issue at the beginning of the period
Units issued during the year
Distributions to unitholders
Units on issue
2023
No.
382,514,759
2,341,799
-
384,856,558
$'000
471,797
5,665
(11,550)
465,912
2022
No.
339,900,556
42,614,203
-
382,514,759
$'000
385,140
103,039
(16,382)
471,797
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 totalling $45,038,000 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
2023
$'000
11,942
11,942
2022
$'000
11,756
11,756
3
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55
75
Rural Funds Group
Notes to the Financial Statements
30 June 2023
F. OTHER ASSETS AND LIABILITIES
F1 Cash and cash equivalents
Cash at bank
Total
Reconciliation of cash
2023
$'000
5,753
5,753
2022
$'000
4,961
4,961
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
2023
$'000
5,753
2023
$'000
8,550
1,146
857
10,553
2022
$'000
4,961
2022
$'000
6,239
154
349
6,742
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 assets
Current
Prepayments
Total
Non-current
Deposits
Other
Total
2023
$'000
1,860
1,860
11,649
3
11,652
2022
$'000
1,922
1,922
10,005
129
10,134
Rural Funds Group
Notes to the Financial Statements
30 June 2023
F4 Biological assets
2023
Opening net book amount
Additions
Increases/(decrease) due to
biological transformation
Decreases due to sales
Closing net book amount
Soy beans
$'000
-
32
Sugar Macadamias
$'000
$'000
1,925
2,437
3,328
2,693
Cropping
$'000
534
3,405
Cattle
$'000
2,930
10,523
Total
$'000
7,826
19,981
(11)
(21)
-
991
(2,258)
2,087
(296)
513
(3,755)
2,366
(2,592)
403
(3,702)
2,324
(3,955)
9,202
(14,025)
14,295
2022
Opening net book amount
Additions
Increases/(decrease) due to
biological transformation
Decreases due to sales
Closing net book amount
Soy beans
$'000
-
2
Sugar Macadamias
$'000
$'000
2,988
-
1,440
2,696
Cropping
$'000
-
422
(2)
2,102
-
-
(5,349)
2,437
2,834
(2,349)
1,925
120
(8)
534
Cattle
$'000
-
2,930
-
-
2,930
Total
$'000
2,988
7,490
5,054
(7,706)
7,826
Biological assets relate to the Group’s farming operations. In accordance with AASB 141 Agriculture. The Group’s
cropping biological assets have been recognised at fair value as determined based on the present value of
expected net cash flows from the crops.
Cattle biological assets relates to livestock recognised at fair value as determined based on sales for similar cattle
in active markets.
Fair value has been based on expected net cash flows from the crops discounted from the time of harvest. The
main level 3 inputs used by the Group includes estimates based on production costs (including input and harvest
costs) and the estimated time of harvest adjusted for the risks of the cash flows.
Significant estimates used in determining the expected net cash flows:
Sugar from cane planted (tonnes per ha)
The higher the sugar from cane planted, the higher the fair value
Yield
Price ($ per tonne)
The higher the yield, the higher the fair value
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.
Judgements and estimates are made in determining the fair values of the biological assets 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 its biological assets into three levels prescribed under the
accounting standards.
2023
Sugar
Macadamias
Cropping
Cattle
Total biological assets
Level 1
$'000
-
-
-
-
-
Level 2
$'000
-
-
-
9,202
9,202
Level 3
$'000
2,366
403
2,324
-
5,093
Total
$'000
2,366
403
2,324
9,202
14,295
76
56
57
77
Rural Funds Group
Notes to the Financial Statements
30 June 2023
F4 Biological assets (continued)
Rural Funds Group
Notes to the Financial Statements
30 June 2023
F7 Unearned income
Level 1
$'000
-
-
-
-
-
Level 2
$'000
-
-
-
2,930
2,930
Level 3
$'000
2,437
1,925
534
-
4,896
Total
$'000
2,437
1,925
534
2,930
7,826
Current
Unearned lease income
Total
Non-current
Unearned lease income
Total
2023
$'000
975
975
5,902
5,902
2022
$'000
657
657
-
-
Unobservable inputs
Range of inputs
2023
2022
Unearned lease income – non-current relates to rent received from TRG prior to lease commencement. Lease
income is subsequently recognised on a straight-lined basis over the term of the lease.
2022
Sugar
Macadamias
Cropping
Cattle
Total biological assets
Farming
operations
Sugar
Fair value at
2023
$'000
2,366
2022
$'000
2,437
Sugar from cane planted
(tonnes per ha)
Macadamias
403
Cropping (mungbean)
95
Cropping (cotton)
971
Cropping (other crops)
1,258
184
Net price ($ per tonne)
(+/- 10%)
1,925 Macadamia yield (tonnes)
(+/- 10%)
Farmgate NIS price ($ per
tonne)
(+/-10%)
Mungbean yield (tonnes
per ha)
(+/-10%)
Mungbean price ($ per
tonne)
(+/-10%)
Cotton yield (bale per ha)
(+/-10%)
Cotton lint price ($ per
bale)
(+/-10%)
Cost approximates fair
value less costs to sell
350
-
Total
5,093
4,896
F5 Inventories
Current
Agricultural produce - farming operations
Other
Total
F6 Trade and other payables
Trade payables
Accruals
Sundry creditors
Total
78
2.5 - 7.2
tonnes per
ha
$547 - $668
per tonne
718.9 -
878.6 tonnes
$1,530 -
$1,870 per
tonne
0.28 - 0.23
tonnes per
ha
$900 -
$1,000 per
tonne
6.8 - 8.2
bales per ha
$573 - $700
per bale
-
4.2 - 6.8
tonnes per
ha
$479 - $586
per tonne
690.4 -
843.9 tonnes
$3,400 -
$4,200 per
tonne
0.90 - 1.10
tonnes per
ha
$861 -
$1,052 per
tonne
-
-
-
2023
$'000
929
924
1,853
2023
$'000
3,935
2,072
871
6,878
2022
$'000
8
447
455
2022
$'000
2,142
2,136
875
5,153
58
F8 Other non-current liabilities
Lessee deposits
Total
F9 Asset revaluation reserve
Opening balance
Disposal of Plant and equipment - bearer plants
Transfer from Property - owner occupied to Investment property
Property - owner occupied - revaluation
Plant and equipment - bearer plants - revaluation
Total comprehensive income
Income tax applicable
Closing balance
2023
$'000
3,206
3,206
2023
$'000
49,417
(27)
(148)
1,843
19,653
21,321
(473)
70,265
2022
$'000
3,206
3,206
2022
$'000
48,347
-
-
1,286
(1,343)
(57)
1,127
49,417
59
79
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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 2023.
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
Andrea Lemmon
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 2023
are:
Balance at 30 June 2021
Additions
Balance at 30 June 2022
Additions
Guy Paynter
Units
1,559,104
185,606
1,744,710
-
David
Bryant*
Units
15,238,034
1,087,428
16,325,462
619,000
Balance at 30 June 2023
1,744,710
16,944,462
Michael
Carroll
Units
218,402
36,338
254,740
12,668
267,408
Julian
Widdup
Units
115,765
19,261
135,026
6,714
141,740
Andrea
Lemmon
Units
-
183,357
183,357
-
183,357
*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 (2022: 0.6%) of adjusted total assets; and,
• Asset management fee: 0.45% per annum (2022: 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.
Rural Funds Group
Notes to the Financial Statements
30 June 2023
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 and capital expenditure reimbursed to RFM Macadamias
Expenses reimbursed to Cattle JV
Expenses reimbursed to RFM Farming
Dividends declared to the Responsible Entity
Total amount paid to RFM and related entities
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
Finance income from J&F Australia
Expenses charged to RFM Macadamias
Expenses charged to RFM Farming
Expenses charged to Cattle JV
Total amounts received from RFM and related entities
2023
$'000
8,558
6,419
14,977
8,356
12,321
273
3,594
1,530
41,051
22
1,913
1,378
1,775
1,052
1,670
7,615
737
126
198
16,486
2022
$'000
6,850
5,138
11,988
8,290
6,927
383
363
1,460
29,411
20
1,748
2,001
2,871
1,296
1,835
9,662
305
69
152
19,959
The terms and nature of the historical transactions between the Group and related parties have not changed during
the year ended 30 June 2023. Transactions entered 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 as legal, audit and tax matter costs, and regulatory fees and charges. During the year ended 30
June 2023, additional costs were incurred by RFM on behalf of the Group as a result of an increase in the Group’s
operations.
RFM Macadamias and RFM Farming perform management activities, including capital development and farm
management on behalf of the Group. Expenses include service recharge cost recoveries, costs relating to farm
management and capital development costs. These costs incurred by RFM Macadamias and RFM Farming are
subsequently reimbursed by the Group. Additional costs were incurred by RFM Macadamias and RFM Farming on
behalf of the Group as a result of the ongoing macadamia developments and the Group’s farming operations.
In April 2023, the Group acquired 412 Macgroves in the 2007 Macgrove Project (M07) for $1,144,000. In June
2023, the Group acquired the remaining 167 Macgroves in M07 for $572,000. M07 was a fund managed by RFM
and the transaction is considered a related party transaction. Further details are disclosed in note G3. M07 was
subsequently wound up in July 2023. Following the wind up, the Group will operate the macadamia orchards on
these properties.
Rental income from RFM Farming largely relates to rental income from the Mayneland property.
Rental income from Cattle JV largely relates to rental income from Mutton Hole and Oakland Park.
Rental income from Cotton JV relates to rental income from Lynora Downs.
80
60
61
81
Rural Funds Group
Notes to the Financial Statements
30 June 2023
G2 Related party transactions (continued)
Responsible Entity (Rural Funds Management) and related entities (continued)
Rental income from 2007 Macgrove Project (M07) largely relates to rental income from Swan Ridge and Moore
Park prior to the Group’s acquisition of Macgroves during the year.
Finance income from Cattle JV relates to breeder herds under finance.
Finance income from J&F Australia Pty Limited (J&F) relates to the $132.0 million (2022: $132.0 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.
Expenses charged to RFM Macadamias, RFM Farming and Cattle JV relate to farm management operating costs
and property rates that are incurred by the Group and subsequently reimbursed to the Group.
Debtors and finance lease receivables
RFM Farming Pty Limited
RFM Macadamias Pty Limited
Cattle JV Pty Limited
Total
2023
$'000
340
171
16,657
17,168
2022
$'000
-
1,639
16,769
18,408
Receivables are not secured and have terms of up to 30 days. Interest is charged on overdue amounts. Finance
lease receivables are secured by the Group's ownership of the relevant assets. Outstanding balances are settled
through payment.
Finance lease receivable from Cattle JV relates to the breeders and agricultural plant and equipment leased to
Cattle JV. $304,000 of additional breeders was funded during the year.
Creditors
Rural Funds Management Limited
RFM Farming Pty Limited
RFM Macadamias Pty Limited
Cattle JV Pty Limited
Total
Custodian fees
Australian Executor Trustees Limited
Total
Financial Guarantee
2023
$'000
814
91
130
39
1,074
2023
$'000
437
437
2022
$'000
884
17
30
-
931
2022
$'000
365
365
The Group provides a $132.0 million (2022: $132.0 million) guarantee to J&F Australia Pty Limited (J&F), a
subsidiary of RFM. The guarantee is currently used to support $132.0 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.
Entities with influence over the Group
Rural Funds Management
2023
Units
13,157,659
2022
%
3.42
Units
12,538,659
%
3.28
Rural Funds Group
Notes to the Financial Statements
30 June 2023
G2 Related party transactions (continued)
Other
David Bryant was appointed as a director of Marquis Macadamia Limited. Marquis during the year. Macadamia
Limited provides processing and selling services for the Group’s farming operations on the Beerwah, Bauple, Swan
Ridge and Moore Park properties. The Group also holds shares in Marquis Macadamia Limited. Marquis
Macadamia Limited is not a related party as defined by AASB 124 Related Party Disclosure. Procedures are in
place to manage any potential conflicts of interest.
G3 Business Combination
In April 2023, the Group acquired 412 Macgroves in the 2007 Macgrove Project (M07), which was a fund managed
by RFM. In June 2023, the Group acquired the remaining 167 Macgroves in the 2007 Macgrove Project. The 2007
Macgrove Project was in the business of growing, harvesting and marketing of macadamia nuts to be sold for
processing and consumption in Australia and internationally. The 2007 Macgrove Project operated on the Group’s
Swan Ridge and Moore Park properties. The 2007 Macgrove Project was subsequently wound up in July 2023.
Following the wind up, the Group will operate the macadamia orchards on these properties.
The following table shows the assets acquired, liabilities and the purchase consideration at the acquisition dates.
Purchase consideration:
Cash paid
Capital contribution
Total purchase consideration
Effect of the settlement of pre-existing relationship
Fair value of consideration transferred
The fair value of identifiable assets and liabilities
recognised as a result of the acquisition were as
follows:
Cash
Debtors
Biological assets
Prepayment
Loan from RFM
Creditors
Net identifiable assets acquired
Add: Goodwill
Less: Gain on bargain purchase
Net assets acquired
412 groves
$'000
167 groves
$'000
Total
$'000
1,144
(1,144)
-
(419)
(419)
276
125
184
114
(434)
(244)
21
-
(440)
(419)
572
-
572
(372)
200
48
144
17
-
-
(204)
5
195
-
200
1,716
(1,144)
572
(791)
(219)
324
269
201
114
(434)
(448)
26
195
(440)
(219)
Pre-existing relationship
The settlement of pre-existing relationship relates to $490,000 net receivables between the Group and M07 and
$1,281,000 settlement loss relating to the contract terms when compared to the market.
Revenue contribution
The acquired business contributed revenues of $410,000 to the Group for the period from acquisition to 30 June
2023.
82
62
63
83
Rural Funds Group
Notes to the Financial Statements
30 June 2023
G4 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:
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
2023
$'000
2022
$'000
16,475
1,628,596
1,645,071
29,321
1,321,574
1,350,895
15,089
661,082
676,171
459,078
66,718
443,104
968,900
110,257
17,927
128,184
16,746
458,306
475,052
465,075
47,505
363,263
875,843
207,328
2,413
209,741
Rural Funds Group
Notes to the Financial Statements
30 June 2023
G5 Cash flow information
Reconciliation of net profit after income tax to cash flow from operating activities
Net profit after income tax
Cash flows excluded from profit attributable to operating activities
Non-cash flows in profit
Change in fair value of investment property
Change in fair value of bearer plants
Impairment of intangible assets
Impairment of property - owner occupied
Depreciation - bearer plants
Depreciation and amortisation/impairment - other
Gain on sale of assets
Amortisation of lease incentives
Interest component of JBS feedlot finance lease
Straight-lining of rental revenue
Change in fair value of financial assets/liabilities
Change in fair value of biological assets - farming operations
Change in fair value of interest rate swaps
Loss on settlement of pre-existing relationship - Macgrove acquisition
Gain on bargain purchase - Macgrove acquisition
Impairment of goodwill - Macgrove acquisition
Dividend income classified as investing cash flows
Changes in operating assets and liabilities
Increase in trade and other receivables
Increase in inventories
(Increase)/decrease in biological assets
Decrease/(increase) in other current assets
Increase in trade and other payables
Increase in unearned income
Increase in net tax liabilities
Decrease in other liabilities
Net cash inflow from operating activities
Net debt reconciliation
2023
$'000
94,498
(61,106)
(2,475)
247
3,202
9,583
2,838
(802)
209
(4,187)
(1,470)
(156)
(513)
(8,930)
1,281
(440)
195
(40)
(3,661)
(1,398)
(5,755)
62
1,725
6,220
88
-
29,215
2022
$'000
209,136
(123,191)
5,533
1,059
912
4,103
1,634
(320)
200
(3,187)
735
(669)
(5,054)
(51,852)
-
-
-
(65)
(1,798)
(455)
216
(1,064)
1,789
657
750
(1,215)
37,854
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
2023
$'000
5,753
(27,238)
(607,463)
(628,948)
5,753
(35,640)
(599,061)
(628,948)
2022
$'000
4,961
(2,525)
(455,100)
(452,664)
4,961
(2,525)
(455,100)
(452,664)
84
64
65
85
Rural Funds Group
Notes to the Financial Statements
30 June 2023
G6 Remuneration of auditors
Rural Funds Group
Notes to the Financial Statements
30 June 2023
G7 Other accounting policies (continued)
During the year the following fees were paid or payable for services provided by the auditor of the Group:
Provisions
PricewaterhouseCoopers Australia:
Audit and review of financial statements
Compliance audit
Total
G7 Other accounting policies
Cash and cash equivalents
2023
$
558,153
36,812
594,965
2022
$
494,639
35,647
530,286
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 part of the property assets and amortised on a straight-
line basis over the life of the lease term.
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.
G8 Limited guarantee – Wyseby
During the year the Group acquired a property adjoining the Rewan Cattle Property, Wyseby, as a tenant-in-
common arrangement (57.25%). A borrowing facility was provided by Cooperatieve Rabobank relating to the
acquisition of the property. In addition, the Group has provided a limited guarantee to Rabobank Australia Limited
in respect of the other purchasing party’s debt obligations relating to their share of Wyseby. The parties will seek
to subdivide the property, in their respective ownership portions, after which the guarantee will no longer be
required.
G9 Events after the reporting date
As at 30 June 2023 a borrowing facility provided to the Group relating to the Wyseby property was $24,455,000.
At balance date, the facility was due to mature on 26 June 2024. Subsequent to the year end, this facility was
extended to 26 September 2024.
During the year ended 30 June 2023, the Group acquired all 579 Macgroves in the 2007 Macgrove Project which
was in the business of growing, harvesting and marketing of macadamia nuts to be sold for processing and
consumption. The 2007 Macgrove Project operated on the Group’s Swan Ridge and Moore Park properties. The
2007 Macgrove Project was subsequently wound up in July 2023. Following the wind up, the Group will operate
the macadamia orchards on these properties.
In August 2023, the Group received approval from the banking syndicate to reduce the interest cover ratio financial
covenant from 2.00:1.00 to 1.50:1.00 with distributions permitted if the interest cover ratio is not less than 1.65:1:00
from 1 July 2023 to 30 June 2025. At 30 June 2023, the Group was in compliance with its banking covenants.
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.
G10 Contingent liabilities
In June 2023, a civil claim was filed in the Supreme Court of Queensland against the Rural Funds Group, RFM
Farming Pty Ltd (RFMF) and an employee of RFMF relating to alleged spray drift from the Baamba Plains property
in Queensland. RFM is defending this claim and based on the relevant facts and an indemnity provided by RFM
Farming to the Rural Funds Group, there is no material exposure expected to the Group.
Other than what has been disclosed there are no contingent liabilities as at 30 June 2023.
86
66
67
87
Rural Funds Group
Directors’ Declaration
30 June 2023
In the Directors of the Responsible Entity’s opinion:
1
The financial statements and notes of Rural Funds Group set out on pages 14 to 67 are in accordance
with the Corporations Act 2001, including:
34
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 2023 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
24 August 2023
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 2023 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 2023
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
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
Liability limited by a scheme approved under Professional Standards Legislation.
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68
69
8989
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
How our audit addressed the key audit matter
Valuation of agricultural properties, which
comprise: - Investment property $923.4m-
Bearer plants $217.7m - Intangibles (water
entitlements) $166.9m - Property – owner
occupied $144.2m (Refer to note C2, C3, C5
and C6)
The Group holds agricultural properties for long-term
leasing or for further development.
Each agricultural property held for leasing or
development comprises one or more of the following
three components:
• investment property (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.
For a selection of external valuations obtained by
the Group, together with PwC real estate property
valuation experts we performed the following
procedures, amongst others:
• we assessed the competency, qualifications,
experience and objectivity of the external valuers
• we read the external 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 and/or other supporting documents
90
71
91
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 Audit scope •For the purpose of our audit we used overallGroup materiality of $2,053,850, whichrepresents approximately 5% of the Group’sAdjusted Funds from Operations.•We applied this threshold, together withqualitative considerations, to determine thescope of our audit and the nature, timing andextent of our audit procedures and toevaluate the effect of misstatements on thefinancial report as a whole.•We chose Adjusted Funds from Operationsbecause, in our view, it is the benchmarkagainst which the performance of the Groupis most commonly measured.•We utilised a 5% threshold based on ourprofessional judgement, noting it is within therange of commonly acceptable thresholds.•Our audit focused on where the Group madesubjective judgements; for example,significant accounting estimates involvingassumptions and inherently uncertain futureevents.•The audit of the Group was performed by ateam which included individuals with industryexpertise, as well as property valuationexperts, who assisted in our assessment ofthe reasonableness of some of thesesubjective judgements.70 • we assessed the appropriateness of certain
inputs including, where applicable, comparable
sales, market rents, discount rate, terminal
capitalisation rate, $ per irrigated or planted
hectare, average $ per plantable hectare, $ per
adult equivalent (AE) carrying capacity 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 inquired with management and evaluated the
directors’ internal assessment of the fair value of
the properties and their assertion that the
properties are carried at fair value as per the
latest external valuation report, adding any capital
expenditure made during the intervening period.
We conducted site inspections of all almond
properties.
We assessed the reasonableness of the
disclosures in Notes C1, C2, C3, C5 and C6 of
investment property, bearer plants, water
entitlements and property-owner occupied
considering the requirements of Australian
Accounting Standards.
External valuations provide an aggregate value for
each agricultural property. Key variables and
considerations in the valuations can include discount
rates, terminal capitalisation rate, market rent, cattle
carrying capacity. Factors such as associated lease
agreements, comparable sales, 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
property (carried at fair value), bearer plants (carried
under revaluation model), water entitlements (carried at
cost less accumulated impairment), and property –
owner occupied (carried under revaluation model).
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 nature of agricultural property valuations is
inherently subjective due to the use of assumptions
and estimates in the valuation model
• the selection and application of allocation techniques
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 terminal capitalisation rates, the
utilisation of comparable sales data and to allocation
techniques.
Key audit matter
How our audit addressed the key audit matter
Related party transactions (refer to
note G2)
We performed the following procedures over related party
transactions, amongst others:
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
• finance income from the lease of cattle
• management fees and asset management
fees paid
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 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 a sample of cropping expenses/macadamia development
costs recharged, we obtained and agreed to relevant
supporting documents including invoices.
• distributions from investments
• reimbursement of operating expenses and
capital expenditure
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.
• provision of a limited financial guarantee
and receipt of associated finance income
We inquired with management to develop an understanding
of the business rationale for the related party transactions.
Related party transactions were a key audit
matter due to the significant impact of these
transactions 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.
In relation to the financial guarantee, we developed an
understanding of the arrangement from reading the historic
Explanatory memorandum, subsequent amendments and
from discussions with management and others of the
purpose, terms and conditions, and substance of the
arrangement. For a sample of guarantee income recorded we
agreed to relevant supporting documents including invoices.
We assessed the reasonableness of the disclosures in Note
G2, of related party relationships and transactions
considering the requirements of Australian Accounting
Standards.
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72
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93
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
Sydney
24 August 2023
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 2023, 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, Additional Information for Listed
Public Entities and the Corporate Directory. 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 through our opinion on the financial
report.
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 determine 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 intend 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.
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95
Investor
information
and glossary
The RFM Investor Services team strives to provide Unitholders
quality service with up-to-date information about their
investment.
Distribution payments
Distribution payments are forecast to be made quarterly for the
three-month periods to 30 September, 31 December, 31 March
and 30 June each year. Distribution statements are available in
print and electronic formats. Distributions are paid only by direct
credit into nominated bank accounts. To update the method
of receiving documents please visit the investor portal of our
external registry, Boardroom Limited, at
www.investorserve.com.au.
Unclaimed distribution income
If a distribution has been withheld due to an incorrect bank
account or no bank account on file, repayment of this distribution
will be made on or around the 22nd of the month in which the
registry receives updated banking information.
If a distribution has an amount withheld due to no tax file number
or Australian business number on file, this amount must be
claimed via the Australian Taxation Office.
Reporting calendar
HY24 financial results reporting date
February 2024
FY24 financial results reporting date
August 2024
Forecast distribution calendar for financial year ending 30 June 2024:
Period end
30 September 2023
31 December 2023
31 March 2024
30 June 2024
Ex-distribution date
28 September 2023
28 December 2023
27 March 2024
27 June 2024
Record date
29 September 2023
29 December 2023
28 March 2024
28 June 2024
Payment date
31 October 2023
31 January 2024
30 April 2024
31 July 2024
AMMA statements
LinkedIn
An Attribution Managed Investment Trust
Member Annual (AMMA) statement is sent to
Unitholders following the completion of the
external audit, expected to occur in September
each year.
The statement summarises distributions
provided during the financial year and includes
information required to complete a tax return.
AMMA statements are also available online at
www.investorserve.com.au.
Distribution Reinvestment Plan (DRP)
Participation in the DRP is optional. Investors
electing to participate will automatically have
their distribution applied to acquire additional
units in accordance with the DRP rules,
and without incurring brokerage or other
transaction costs.
The number of units received is calculated
based on a 1.5% discount to the weighted
average market price of RFF units traded on
the ASX during the 20 consecutive trading
days before the Record Date. Full details are
available on our website,
www.ruralfunds.com.au.
Making contact
If Unitholders have questions regarding their
holding or wish to update their details, they can
phone RFM Investor Services on 1800 026 665,
or the external registry, Boardroom Limited on
1300 737 760.
For speed and to reduce environmental impact,
Unitholders can opt to receive all or some
communications electronically. Communication
preferences can be changed at any time by
emailing investorservices@ruralfunds.com.au
or logging in to www.investorserve.com.au.
RFM regularly posts RFF updates on LinkedIn.
Follow us at www.linkedin.com/company/rural-
funds-management-limited.
Glossary
Adjusted NAV – Net Asset Value (NAV)
adjusted for the independent valuation of water
entitlements, Adjusted total assets – Total
assets adjusted for the independent valuation
of water entitlements, ASX – Australian
Securities Exchange, AFFO – Adjusted funds
from operations, a financial metric used in the
REIT sector to measure available cash flow
from operations (adjustment relates to non-
cash tax expense), CPI – Consumer Price Index,
cpu – cents per unit, Earnings –calculated TCI/
weighted average units, Fair value – Value of an
asset as determined by an independent valuation,
FY – Financial year, FY22 – Full-year ended 30
June 2022, FY23 – Full-year ended 30 June 2023,
FY24 – Full-year ended 30 June 2024, Gearing –
Calculated as external borrowings/adjusted total
assets, ha – Hectare(s), HY24 – Half-year ended
31 December 2023, m – Million(s), NAV – Net
asset value, calculated as assets minus the value
of liabilities (does not recognise fair value of water
entitlements), REIT – Real Estate Investment
Trust, RFF – Rural Funds Group (ASX: RFF), RFM
– Rural Funds Management Limited, manager
and responsible entity for RFF, TCFD – Taskforce
on Climate-related Financial Disclosure, TCI –
Total comprehensive income, Total assets – Total
value of assets as presented on the balance
sheet (water entitlements recorded at the lower
of cost or fair value), WALE – Weighted average
lease expiry, calculated as the FY24 forecast
rent and the year of lease expiry (excludes J&F
Australia guarantee fee, income from annual water
allocation sales, operating income from owner
occupied properties and other income).
96
Macadamia tree racemes, Beerwah orchard, Sunshine
Coast Queensland, September 2023.
97
Responsible Entity and Manager
Rural Funds Management Limited
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
Custodian
Certane CT Pty Limited
ACN 106 424 088
Level 6, 80 Clarence Street
SYDNEY NSW 2000
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
circumstance 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. Financial information in
this publication is as at 30 June 2023, unless stated otherwise.
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. Certane CT Pty Limited is the custodian for the Rural Funds Group. To read more about
their privacy principles, please visit privacy-policy.pdf (certane.com).
98
Brahman cross cattle at Cerberus, central Queensland, May 2023.
Managed by:
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