1
Annual Report
for the year ended 30 June 2024
2
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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: 27 September 2024
Cover image: Irrigated mungbean crop at Lynora Downs, central
Queensland, March 2024.
Adjacent image: Macadamia trees in bloom at the Beerwah orchard,
south-east Queensland, August 2024.
Contents
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92
Letter from the Managing Director
Strategy
Portfolio metrics
Results highlights
Portfolio overview
Sustainability
ASX additional information
Financial Statements
Investor information and glossary
Rural Funds Group is an agricultural Real Estate
Investment Trust (REIT) listed on the ASX under
the code RFF. RFF owns a diversified portfolio of
Australian agricultural assets. RFF’s strategy is to
generate capital growth and income from developing
and leasing agricultural assets. Distributions are paid
quarterly. RFF is a stapled security, incorporating
Rural Funds Trust (ARSN 112 951 578) and RF Active
(ARSN 168 740 805).
Rural Funds Management Limited (RFM) is the
manager and the Responsible Entity of RFF. RFM
manages over $2.4 billion of agricultural assets
on behalf of retail and institutional investors and
has a depth of experience accumulated over 27
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’.
4
5
Wheat at Kaiuroo, central Queensland, January 2024.
1.
Lessee is TRG JV, a company managed by The Rohatyn Group (TRG) on behalf of a joint venture between TRG and a global institutional investor.
2.
Purchase of shares in July 2024 totals $5.0m, convertible debt facility (two tranches) totals $2.0m. Repayment of debt through issue of additional equity to RFF. The
equity ownership in Inform Ag is 35%, increasing to 43% following the conversion of both tranches of the debt facility, with options over an additional 7%.
3.
Lessee is TRG JV. The transaction is expected to settle HY25, subject to various conditions precedent and Foreign Investment Review Board (FIRB) approval.
4.
Pro forma to 30 June 2024 includes Mayneland and Baamba Plains partial sale ($39.2m) plus associated plant and equipment ($5.3m), which is expected to settle
HY25 subject to various conditions precedent and FIRB approval; and investment in Inform Ag ($7.0m).
5.
Current hedges and total fixed debt drawn divided by total debt drawn.
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 2024 (FY24).
Financial results
A significant feature of the 2024 financial year
has been the continued development of the
macadamia orchards that are leased to a global
institutional investor.1 This lease was the main
driver for property revenue to increase 8.0%
to $88.4m during the year. The 40-year lease
is forecast to constitute almost a fifth of RFF’s
revenue this year and will continue to increase
as rent is earned on additional capex.
During the period, RFF generated earnings
of $117.2m, or 30.3 cents per unit (cpu),
through a combination of property revenue
and independent asset valuations that were
conducted on 69% of the Fund’s assets.
Independent valuations also drove an increase in
RFF’s adjusted net asset value (NAV) of 7.2%, to
end the year at $3.14 per unit.
Adjusted funds from operations (AFFO) of 11.0
cpu were achieved during FY24. In line with prior
forecasts, the Fund paid unitholders 11.73 cpu of
distributions.
Leasing and developments update
At the full-year results, Rural Funds Management
(RFM) was pleased to advise that the 3,000 ha
agricultural assets. While a significant number of
assets have been leased, several assets are being
operated by RFF to generate income through
their development, and prior to leasing.
This includes two cattle properties, Kaiuroo
and Yarra. Both farms carry significant water
entitlements enabling the development of
irrigated cropping fields. These developments and
other improvements will increase productivity,
enhancing value and rent payments once they are
leased.
Four mature macadamia orchards are also being
operated by the Fund. During the period of recent
lower macadamia prices, RFM has undertaken
various improvements on areas in a number of
these farms which seeks to increase their yield in
future years. It is expected that the productivity
improvements and macadamia price recovery, will
make them more attractive to lessees.
These developments are expected to provide
better leasing outcomes, further supporting the
quarterly distributions which RFF has paid to
Unitholders since listing.
Capital management and forecasts
During the year RFF’s syndicated debt facility
was refinanced. The combined facilities increased
from $795m to $867m during FY24 to provide
funding for the macadamia developments. As of
30 June 2024, the facilities pro forma headroom
was $98m, providing sufficient funding for
committed FY25 capex.4
Taking into account the fixed facility and interest
hedges, 70% of RFF’s debt is fixed as at 30 June.
RFF’s weighted average hedge rate for FY25 is
2.8%.5
As part of the full-year results released on 23
August 2024, RFM announced forecast FY25
AFFO of 11.4 cpu, representing 3.6% growth on
the prior year, and distributions of 11.73 cpu.
of leased macadamia orchard developments,
which commenced in 2021, are on track to be
materially complete by the end of 2024. The
orchards are mainly located in Maryborough
and Rockhampton and their completion will be
a major achievement for the Rural Funds Group
– representing a forecast $287m of capital by
the end of the coming financial year, and an
estimated 7% of Australia’s total planted area.
During the orchard’s development, a continued
focus on precision is expected to culminate in
high yielding, low cost of production assets
for the lessee. Achieving high yields and
management efficiency will be assisted through
the integration of new technology. To this end,
RFF made a $7m investment in a technology
company whose data and farm management
systems are being incorporated in the
macadamia orchards.2
RFM also announced the lease and partial sale
of two cropping properties, valued at $76m, to
a global institutional investor.3 An additional
lease of a $26m cattle property has also been
arranged with a local lessee.
The lease of these properties will improve
the earnings profile of the Fund by reducing
operating exposure. Where transactions include
partial sales, proceeds will provide funds to
reduce gearing.
Strategy update
The core business of RFF is to generate capital
growth and income from developing and leasing
David Bryant
Managing Director
Rural Funds Management Limited
Sustainability
Key sustainability initiatives for the year included
quantifying emissions and continuing to include
sustainability principles in the development
of assets. More detail is included in the
‘Sustainability’ section of this report.
Conclusion
Over the next year we will continue to focus on
completing transactions to further improve the
earnings and risk profile of the portfolio through
transactions on cattle, cropping and macadamia
assets.
We encourage our Unitholders to read our
biannual newsletter which contains updates on
the Fund.
We also look forward to providing further updates
as part of the half-year results in February 2025.
In the interim, should you have any queries about
your investment, we encourage you to contact our
Investor Services team.
Yours faithfully
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Portfolio
metrics
properties
67
net asset value
(NAV) per unit
$3.14
FY25f income from
corporate lessees
1
81%
37.3%
adjusted total assets
$2.0b
agricultural sectors and
multiple climatic zones
5
FY25f weighted average
lease expiry (WALE)
yrs
13.5
gearing
2
distribution yield
3
5.6%
1.
Percentage of FY25f income from corporate lessees includes TRG JV cropping leases
of Mayneland and Baamba Plains (2% of FY25f revenue by lessee), expected to settle
HY25 subject to various conditions precedent and FIRB approval.
2.
Gearing pro forma includes Mayneland and Baamba Plains partial sale ($39.2m) plus
associated plant and equipment ($6.1m), expected to settle HY25 subject to various
conditions precedent and FIRB approval; and investment in Inform Ag ($7.0m).
3.
Distribution yield based on $2.09 per unit close price on 21 August 2024.
Beerwah macadamia orchard, south-east Queensland, June 2024.
Beerwah macadamia orchard
340 ha (planted area)
Strategy
To generate capital growth and income from
developing and leasing agricultural assets,
with distributions paid quarterly.
Leasing model
Maintain a majority of long WALE, triple-net leases
of agricultural assets to high quality lessees.
Active management
Seek to improve assets by developing for improved
productivity or higher and better use. Generate
income during development phase by operating
assets prior to leasing.
Diversification
Diversify by agricultural sector and climatic zone.
Capital management
Target gearing between 30–35%.
Investment criteria
Preference agricultural sectors where low-cost of
production assets can be acquired or developed.
Focus on commodities where RFM has operating
experience or Australia has a comparative
advantage.
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Results highlights
Property revenue increased 8.0%
Earnings of 30.28 cents per unit (cpu)
FY25 forecast AFFO growth of 3.6%
Adjusted net asset value (NAV) increased 7.2%
FY24 DPU and AFFO
up $6.5m to $88.4m primarily due to additional
rental income earned on macadamia
developments and lease indexation.
largely driven by property revenue and
independent property valuations.1
to 11.4 cpu and forecast distributions of 11.73 cpu.
up $0.21 to $3.14 per unit, benefiting from
independent asset valuations.
including distributions per unit (DPU) of 11.73
cents and adjusted funds from operations (AFFO)
of 11.0 cpu.
For more detailed information, scan to
access the RFF FY24 financial results
presentation and webinar.
$1.6m
0.3%
13.4%
19.4%
$47.4m
$52.4m
$0.3m
$5.3m
$1.5m
Independent valuations in FY242
Cattle
$354.2m
Almonds
$451.8m
Macadamias
$270.1m
Cropping
$117.5m
Vineyards
$61.2m
Water
$110.0m
(0.3%)
(8.7%)
1.4%
1.
Based on total comprehensive income.
2.
Value of assets externally revalued shown in coloured box (inclusive of capex since 30 June 2023 of $0.1b, excluding revaluations). Revaluation movement
(plus/minus) $ and % includes depreciation on bearer plants and owner-occupied properties.
Portfolio overview
FY25f revenue by sector3
Weighted average lease expiry (WALE)
Corporate and institutional lessees
Asset map
For more detailed
information, scan to
access the interactive
portfolio map.
1.
Total TRG JV FY25f revenue (percentage by lessee) is 20% with 18% macadamias and 2% cropping. TRG JV cropping leases, expected to commence HY25, are
subject to conditions precedent being satisfied, including FIRB approval.
2.
JBS revenue includes J&F Australia guarantee fee.
3.
FY25f revenue/total adjusted property assets – by sector: cattle $35.9m/$741.5m, almonds $31.7m/$453.6m, macadamias $21.2m/$402.1m, cropping
$7.9m/$208.2m, vineyards $4.7m/$56.1m and other $3.5m/$90.2m. Includes TRG JV cropping leases, subject to conditions precedent being satisfied, including
FIRB approval.
34%
30%
21%
8%
4%
3%
20%
1
2
9%
9%
6%
7%
5%
Cattle
Cattle
Cattle
Almonds
Macadamias
Cropping
Lessees
Sector
% FY25f income
21%
Almonds
4%
Cattle
Cattle
Almonds
Macadamias
Cropping
Vineyards
Other
VIC
WA
SA
NSW
Value: $34.6m
Properties: 3
Sector:
QLD
Sectors:
Value: $1,099.0m
Properties: 49
Value: $52.2m
Properties: 5
Sector:
Value: $646.9m
Properties: 8
Sectors:
Value: $56.5m
Properties: 2
Sectors:
Steers at Kaiuroo, central Queensland, January 2024.
13.5yrs
WALE
FY25 revenue ($m)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY37
FY38
FY42
FY46
FY63
Vineyards
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Sustainability
Rural Funds Management (RFM) is pleased
to provide an update on sustainability-related
projects for the Rural Funds Group (RFF, the Fund)
for the financial year ended 30 June 2024 (FY24).
During FY24 RFM continued to progress various
sustainability initiatives, highlights included:
•
Greenhouse gas (GHG) emissions
quantification – quantified RFF FY23 Scope
1 and Scope 2 emissions (disclosed in
December 2023)1
•
Diversity, equity and inclusion – set target of
40% female representation on the RFM Board
by December 2026
•
Wellbeing and safety – implemented
improvements to the safety management
system
•
Carbon feasibility studies – continued
work on feasibility studies of various carbon
projects
•
Protecting land and water – continued
engagement with voluntary industry-led best
management practice systems myBMP and
Hort360
•
Sustainability reporting progress – ongoing
progress to align with sustainability reporting
standards
•
Community engagement – engaged with
and continued to support community groups
throughout the year.
Over the coming year RFM has identified several
areas of focus, including:
•
Greenhouse gas (GHG) emissions – improve
Scope 1 and Scope 2 emissions quantification
process to incorporate emissions intensity
tracking
•
Carbon projects – continue assessment of
additional carbon opportunities
•
Sustainability reporting – progress climate-
related scenario analysis
•
Modern slavery statement – release modern
slavery statement by 31 December 2024.
Additional detail and updates are provided in this
section on several topics, including:
•
sustainability policy updates and framework
•
climate related reporting
•
emissions disclosure
•
social considerations.
Throughout the year, updates on sustainability-
related topics are also included in various
publications, including the biannual newsletter.
In the June 2024 edition, an article titled
‘Developing sustainable macadamia orchards’
presented a detailed discussion of elements
of the developments which seek to improve
environmental outcomes, conserve water and
maximise yield.
The macadamia developments have represented
the most significant activity in terms of capital
deployment over the past few years. Figure 2 and
3 outlines sustainability elements that are being
incorporated into these developments.
Sustainability policy updates and framework
During the year RFM updated its Sustainability
Policy (Policy). RFF, as an externally managed
entity, adopts the Policy of its Responsible Entity,
RFM.
The Policy outlines RFM's commitment and
approach to conducting its activities in an
environmentally and socially responsible manner.
This is achieved by assessing the impact of its
operations on the environment, its employees,
lessees, and the local communities in which it
operates. Figure 1 summarises the areas of focus
within the policy which have been identified as
relevant to RFM’s business. The Policy is publicly
available on RFM’s website.
Permanent Sample Plot (PSP)
Solar powered PSP sites are established throughout the
orchard to collect data from trees and soil via sapflow meters,
soil moisture potential probes and dendrometers. Climatic and
irrigation data is also collected throughout the orchard.
Data-informed decision making
Data from PSPs and across the orchard is provided to
dashboards which are used for data-informed and science-
based orchard management decision making, seeking to
maximise yields and optimise inputs.
Wi-Fi
Wi-Fi mesh network across the orchards provide for
transmission of PSP data, remote control of infrastructure and
other connectivity benefits.
Varietal selection
Higher yielding cultivars capable of producing quality nuts are
planted throughout the orchard. RFM is also collaborating with
The University of Queensland to seek to develop improved
varieties for potential future use.
Circularity principles
Macadamia husks and prunings are composed and applied
across the orchards to enhance soil health, carbon levels, and
water holding capacity.
Remnant vegetation
Helps minimise sediment movement and promotes biodiversity.
Sustainability elements are incorporated into macadamia orchard developments, seeking to achieve more
efficient operations and improved yields, while aligning with goal of ‘growing more with less’.
Dual irrigation systems
Efficient water application supports trees and interrow
grasses, improves soil health, reduces erosion and assists in
managing stress during heatwave events.
Safety
Employees have access to an online safety platform which is
one element contributing to an overall culture of safety and
precision.
Remotely controlled irrigation
Irrigation valves can be controlled remotely to improve the
precision of water application.
Environmental certification
Implementation of Hort360 Reef standards for practices to
protect sensitive marine environments, such as the Great
Barrier Reef, by minimising potential run-off from sediment
and fertiliser.
Orchard design
Diversion banks and grassed drains minimise sediment loss
and maintain soil integrity by limiting water accumulation and
velocities during rain events.
Carbon sink
The macadamia trees, remnant vegetation and soil serve as
carbon sinks by sequestering carbon.
Climate change and climate-related
risk management
Responsible consumption and
production
Protecting land and water
Diversity, equity and inclusion
Wellbeing and safety
Continuous process improvement
Community
ENVIRONMENTAL
SOCIAL
C
O
R
P
O
R
A
T
E
G
O
V
E
R
N
A
N
C
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1.
RFM has elected to disclose Scope 1 and Scope 2 emissions for assets for which RFF receives the operational proceeds for a given financial year.
2.
The graphic is for illustrative purposes only. Not all of the systems outlined are included across all RFF orchards.
Figure 1. Sustainability policy framework
Figure 2. Sustainability and macadamia orchards2
Macadamia
varietial selection
Remnant
vegetation
Environmental
certification
Dual irrigation
systems
Permanent Sample Plot
Circularity principles
Wi-Fi
Safety
Orchard design
Remotely controlled
irrigation
Carbon sink
Data-informed
decision-making
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Emissions disclosure
In FY23, RFM made a commitment to quantify
emissions from assets for which the Fund receives
operational proceeds. While RFF's strategy is to
lease agricultural assets, the Fund will generate
income by operating assets prior to leasing, for
example while being developed.
The first emissions disclosure was included in
the December 2023 biannual newsletter with
a detailed discussion on the sources of these
emissions and the Fund’s overall strategy.
RFM’s strategy is focused on developing
properties to operate more efficiently, aligning
with the Group’s overarching goal of ‘growing
more with less’. In recognising the challenges
associated with reducing emissions in agriculture,
as outlined in the December 2023 biannual
newsletter, RFM has implemented a range of
initiatives to address these complexities and
continues to explore further opportunities for
improvement.
In FY24, RFM has improved its capacity to
account for greenhouse gas (GHG) emissions by
establishing in-house capability for calculating
Scope 1 and Scope 2 emissions. RFM calculated
RFF Scope 1 and Scope 2 emissions for cattle,
cropping and macadamia activities across
identified assets.3
Despite the overall size of RFF’s portfolio, the
Scope 1 and Scope 2 emissions remain relatively
modest. This is primarily due to the majority of
the assets being leased, and therefore not under
RFF’s direct operational control. The emissions
from these leased assets are accounted for under
the lessees’ Scope 1 and Scope 2 emissions as per
the National Greenhouse and Energy Reporting
(NGER) Scheme.
During FY24, Scope 1 and Scope 2 emissions
were quantified at 21,585 tonnes of CO2 equivalent
(CO2-e), comprising 20,447 tonnes under Scope
1 and 1,138 tonnes under Scope 2.4 A detailed
breakdown is presented in Figure 4.
Calculated emissions in FY24 included an
additional property, Kaiuroo, which is being
developed prior to leasing. The inclusion of this
property added approximately 8,800 tonnes of
CO2-e in FY24 due to the significant cattle herd.
The carbon sequestration potential of soil and
remnant vegetation on RFF properties and of
the trees within the orchards themselves is not
currently accounted for in the RFF emissions
calculations. This represents an additional,
unquantified contribution to the Group’s overall
emissions abatement.
While the current focus has been on quantifying
Scope 1 and Scope 2 emissions, RFM
acknowledges the importance of quantifying
Scope 3 emissions in the future. Scope 3
emissions encompass the indirect emissions that
occur in the value chain, including those from
leased assets and supply chain activities. RFM
plans to gradually expand its emissions profiling
over time to include Scope 3 emissions to align
with climate reporting standards.
Figure 4: FY24 Scope 1 and Scope 2 emissions
Figure 3: Macadamia orchard technology
Climate-related reporting
During the year RFM has also continued to monitor
the evolving climate-related reporting standards.
The Australian Accounting Standards Board
(AASB) has developed Australian Sustainability
Reporting Standards (ASRS) for the Disclosure
of Climate-related Financial Information for local
entities.
Based on current understandings of the standards
and the reporting thresholds, RFF will likely form
part of Group 3 and will therefore be required to
align with the ASRS in FY28.
RFM already considers climate-related risk, as
deemed appropriate for property acquisitions or
investments, and manages climate-related risk in
line with the Risk Management Framework. RFM
is considering Representative Concentration
Pathway (RCP) climate modelling scenarios and
will seek to evaluate potential climate impacts for
multiple RCP scenarios and properties.
Social considerations
As detailed in Figure 1, RFM's social sustainability
framework considers diversity, equity and
inclusion, wellbeing and safety, continuous
process improvement and community.
RFM considers workforce diversity a strength and
is committed to fostering an inclusive environment
that values diverse perspectives. RFM promotes
diversity, equity and inclusion through various
policies.
RFM has formalised a target to achieve 40%
female representation on the RFM Board by
December 2026. Within RFM corporate roles,
females comprise 47% of employees. Recognising
agriculture is traditionally male-dominated, RFM
continues to implement strategies to improve
operational roles held by women. RFM’s employee
age composition reflects a diverse workforce, with
representation across all age groups.
While RFM has not had a high incidence of
workplace injuries, during FY24 RFM’s People
and Safety team focused on enhancing return-to-
work strategies. This is achieved by engaging with
injured workers whenever practicable. Developed
through consultation with the injured worker,
their treating medical professional, the worker’s
manager and the return-to-work coordinator, the
approach identifies meaningful and suitable duties
that allow a staged return to pre-injury roles. This
positively impacts the worker and has reduced the
total lost time injury rate to about half the industry
(Agriculture, Forestry and Fisheries) average.
RFM’s employee retention rate in FY24 was 92%,
reflecting the positive work environment across
both corporate offices and operational sites.5
These figures highlight RFM’s commitment to
being an attractive and stable employer.
RFM continues to support and engage with
organisations connected to the agricultural
industry and our employees. Information about the
organisations supported by RFM is available on
the RFM website.
Sources:
Cattle
Fuel
Electricity
Crop residues
Atmospheric
deposition
Fertiliser & soil
ameliorants
19%
11%
5%
1%
1%
63%
59%
77%
27%
20%
12%
3%
1%
N2O fertiliser application
CH4 enteric fermentation
N2O fertiliser leaching and runoff
CH4 manure management
CO2 fertiliser application
CH4 urine and dung
CO2 lime application
12
3.
For assets for which RFF receives the operational proceeds for a given financial year.
4.
Scope 1 and Scope 2 emissions were derived using the Greenhouse Accounting Framework (GAF), developed by the Primary Industries Climate Challenges Centre
(PICCC) and the University of Melbourne for one cotton property, three cattle properties, four macadamia orchards and 16 properties with sugar cane.
5.
12 months to 30 April 2024.
Environmental, tree and soil data collection
Remotely controlled irrigation
Management dashboard
14
15
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 24 September 2024.
Distribution of equity securities
Holding size
Unitholders
Class
1 – 1,000
5,224
Ordinary fully stapled securities
1,001 – 5,000
6,417
Ordinary fully stapled securities
5,001 – 10,000
2,741
Ordinary fully stapled securities
10,001 – 100,000
4,142
Ordinary fully stapled securities
100,001 and over
200
Ordinary fully stapled securities
Substantial Unitholders1
Unitholder
Number of units
%
The Vanguard Group, Inc
32,584,896
9.7%
Argo Investments Limited
24,296,798
6.3%
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
$1.98 as at 24 September 2024 is set out below:
Number of Unitholders
Number of units
2,917
725,630
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.
ASX additional
information
The 20 largest Unitholders
Unitholder
Number of units
%
J P Morgan Nominees Australia Pty Limited
58,511,145
15.044%
HSBC Custody Nominees (Australia) Limited
53,329,622
13.711%
Argo Investments Limited
24,296,798
6.247%
Citicorp Nominees Pty Limited
14,896,462
3.830%
Rural Funds Management Ltd
11,843,659
3.045%
Prudential Nominees Pty Ltd
8,200,000
2.108%
BNP Paribas Nominees Pty Ltd
4,155,497
1.068%
Bryant Family Services Pty Ltd
3,768,012
0.969%
Netwealth Investments Limited
3,644,118
0.937%
BNP Paribas Nominees Pty Ltd
2,967,077
0.763%
National Nominees Limited
2,842,827
0.731%
BNP Paribas Noms Pty Ltd
2,120,231
0.545%
HSBC Custody Nominees (Australia) Limited - A/C 2
2,016,430
0.518%
BNP Paribas Nominees Pty Ltd
2,004,128
0.515%
Sccasp Holdings Pty Ltd
1,663,073
0.428%
One Managed Investment Funds Ltd
1,500,000
0.386%
Boskenna Pty Ltd
1,353,044
0.348%
Netwealth Investments Limited
1,199,874
0.308%
Merrill Lynch (Australia) Nominees Pty Limited
1,154,462
0.297%
Citicorp Nominees Pty Limited
1,078,919
0.277%
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.
16
17
Rural Funds Group
Corporate Directory
Registered Office
Level 2, 2 King Street
DEAKIN ACT 2600
Responsible Entity
Rural Funds Management Limited
ABN 65 077 492 838
AFSL 226701
Level 2, 2 King Street
DEAKIN ACT 2600
Ph: 1800 026 665
Directors
Guy Paynter
David Bryant
Michael Carroll
Julian Widdup
Andrea Lemmon
Company Secretary
Emma Spear
Custodian
Certane CT Pty Limited / Australian Executor Trustee Limited
ACN 106 424 088 / ACN 007 869 794
Level 6, 80 Clarence Street
SYDNEY NSW 2000
Auditors
PricewaterhouseCoopers
One International Towers Sydney
Watermans Quay
BARANGAROO NSW 2000
Share Registry
Boardroom Pty Limited
Level 8, 210 George Street
SYDNEY NSW 2000
Ph: 1300 737 760
Bankers
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
for the year ended 30 June 2024
Contents
Financial
statements
17
18
28
29
31
33
34
35
85
86
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
18
19
Rural Funds Group
Directors’ Report
30 June 2024
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 2024.
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 period and up to the date of this
report:
Guy Paynter
Non-Executive Chair
David Bryant
Managing Director
Michael Carroll
Non-Executive Director
Julian Widdup
Non-Executive Director
Andrea Lemmon
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 December 2023, the Group increased its available core debt to $750,000,000 (2023: $670,000,000). The facility
limit on the $410,000,000 tranche expiring in November 2024 was extended to November 2026. The facility limit
on the $260,000,000 tranche expiring in November 2025 was increased to $340,000,000.
In February and March 2024, the Group contracted to dispose of two Maryborough cropping properties for
$3,105,000, expected to settle in the second half of 2024.
In April 2024, the Group reduced the J&F guarantee from $132,000,000 to $123,000,000.
In June 2024, the lease commenced for the remaining macadamias properties making up approximately 3,000ha
of macadamia orchards to a company managed by The Rohatyn Group (TRG).
In June 2024, the Group completed the acquisition of 22,100 megalitres of Fitzroy River water allocations on
completion of the Rookwood Weir for $36,300,000 including acquisition costs.
In June 2024, the Group announced that it had entered into a transaction for a 10-year lease of Mayneland and
Baamba Plains to a company managed by The Rohatyn Group and a sale of 50% interest in both properties,
subject to Foreign Investment Review Board (FIRB) approval. As part of the transaction, the Group is expected to
receive catch up rent for part of the year ended 30 June 2024 for these properties.
In the opinion of the Directors, there were no other significant changes in the state of affairs of the Group during
the year.
Rural Funds Group
Directors’ Report
30 June 2024
Operating results
The consolidated net profit after income tax of the Group for the year ended 30 June 2024 amounted to $80,441,000
(2023: $94,498,000). The consolidated total comprehensive income of the Group for the year ended 30 June 2024
amounted to $117,155,000 (2023: $115,521,000).
The Group holds investment property, bearer plants, owner-occupied property and derivatives at fair value. The
Group also reports adjusted funds from operations (AFFO) as a performance measure which adjusts profit for the
effects of contracted rent, rental straight-lining, unrealised fair value adjustments, depreciation, impairments, non-
cash tax expense, one-off transaction costs and other transactions. AFFO for the year was $42,373,000 (2023:
$41,077,000) and is reconciled to net profit before income tax below.
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:
2024
2023
$'000
$'000
Net profit before income tax
81,560
94,171
Property related
Change in fair value of investment property
(58,057)
(61,106)
Change in fair value of bearer plants
128
(2,475)
Impairment of property - owner occupied
558
3,202
(Reversal of impairment) / impairment of intangible assets
(1,400)
247
Depreciation - bearer plants
11,271
9,583
Depreciation - property - owner occupied
946
502
Depreciation and impairments - other
3,546
2,336
Gain on sale of assets
(444)
(802)
Farming operations
Change in fair value of biological assets
(unharvested crops and unsold cattle)*
(725)
1,505
Change in fair value of biological assets
(prior year biological assets realised during the year)
(581)
1,819
Contracted farming cost recovery (TRG cropping)
850
-
Revenue items
Rental revenue - prepaid rent (TRG macadamias)
4,803
6,050
Contracted rent (TRG cropping)
2,726
-
Lease incentive amortisation (TRG macadamias)
68
9
Straight-lining of rental revenue
(3,203)
(1,470)
Interest component of JBS feedlot finance lease
(2,172)
(4,187)
Other
Change in fair value of financial assets/liabilities
(154)
(156)
Change in fair value of interest rate swaps
3,297
(8,930)
Income tax payable (AWF)
(644)
(257)
Macgrove acquisition
Impairment of goodwill - Macgrove acquisition
-
195
Loss on settlement of pre-existing relationship - Macgrove
acquisition
-
1,281
Gain on bargain purchase - Macgrove acquisition
-
(440)
AFFO
42,373
41,077
AFFO cents per unit
11.0
10.7
*FY24 excludes revaluation of calves on weaning
21
20
Rural Funds Group
Directors’ Report
30 June 2024
Financial position
The net assets of the consolidated Group have increased to $1,071,317,000 at 30 June 2024 from $993,159,000
at 30 June 2023. At 30 June 2024, the Group had total assets of $1,901,214,000 (2023: $1,671,009,000).
At 30 June 2024, 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 $213,708,000 (2023:
$178,972,000). 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 2024 was $360,150,000 (2023: $314,486,000). The value of water entitlements is
illustrated in the table below:
2024
2023
$'000
$'000
Intangible assets (water entitlements)
201,724
166,988
Investment in CICL
11,464
11,464
Investment in BIL
520
520
Total book value of water entitlements
213,708
178,972
Revaluation of intangible assets per valuation
146,442
135,514
Adjusted total water entitlements
360,150
314,486
Adjusted net asset value
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.
2024
2023
$'000
$'000
Net assets per Consolidated Statement of Financial Position
1,071,317
993,159
Revaluation of intangible assets per valuation
146,442
135,514
Adjusted net assets
1,217,759
1,128,673
Adjusted NAV per unit ($)
3.14
2.93
Banking facilities
At 30 June 2024 the core debt facility available to the Group was $750,000,000 (2023: $670,000,000), with a drawn
balance of $724,606,000 (2023: $574,606,000). The facility is split into two tranches with a $410,000,000 tranche
expiring in November 2026 and a $340,000,000 tranche expiring in November 2025. At 30 June 2024, RFF had
active interest swaps totalling 68.5% (2023: 42.2%) of the drawn balance on the floating debt facility to manage
interest rate risk.
Units on issue
388,243,046 units in Rural Funds Trust were on issue at 30 June 2024 (2023: 384,856,558). During the year
3,386,488 units (2023: 2,341,799) were issued by the Trust and nil (2023: nil) were redeemed.
Distributions
Cents
Total
per unit
$
Distribution declared 01 June 2023, paid 31 July 2023
2.9325
11,285,919
Distribution declared 01 September 2023, paid 31 October 2023
2.9325
11,323,511
Distribution declared 01 December 2023, paid 31 January 2024
2.9325
11,343,210
Distribution declared 01 March 2024, paid 30 April 2024
2.9325
11,365,302
Distribution declared 03 June 2024, paid 31 July 2024
2.9325
11,385,227
Rural Funds Group
Directors’ Report
30 June 2024
Earnings per unit
Net profit after income tax for the year ($'000)
80,441
Weighted average number of units on issue during the year
386,899,957
Basic and diluted earnings per unit (total) (cents)
20.79
Property leasing
At 30 June 2024 the Group held 67 (2023: 67) properties as follows:
•
3 almond orchards (4,068 planted hectares);
•
6 vineyards (638 planted hectares);
•
12 macadamia orchards (1,916 planted hectares and 71 planned hectares);
•
7 macadamia orchards currently being developed (1,773 planted and planned hectares) and other areas with
the potential to be developed into macadamia orchards;
•
23 cattle properties made up of 18 breeding, backgrounding and finishing properties (717,434 hectares)* and
5 cattle feedlots with combined capacity of 150,000 head;
•
16 cropping properties (14,617 hectares).
During the year ended 30 June 2024, the properties held by the Group recorded fair value movements and
deprecation as follows:
2024
2023
$'000
$'000
Change in fair value of investment property
58,057
61,106
(Impairment)/reversal of impairment of bearer plants
(128)
2,475
Revaluation increment - Bearer plants
27,352
19,653
Depreciation - bearer plants
(11,271)
(9,583)
Reversal of impairment/(impairment) of intangible assets
1,400
(247)
Impairment of property - owner occupied
(558)
(3,202)
Revaluation increment - Property - owner occupied
9,446
1,843
Depreciation - property - owner occupied
(946)
(502)
Total property revaluation through total comprehensive income
83,352
71,543
Revaluation of water entitlements per Directors' valuation
10,928
25,198
Total property revaluation
94,280
96,741
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 (2023: 4,068 hectares):
•
Yilgah 935 planted hectares (2023: 935 hectares);
•
Tocabil 603 planted hectares (2023: 603 hectares);
•
Kerarbury 2,530 planted hectares (2023: 2,530 hectares).
These properties are under lease to the following tenants:
•
Select Harvests Limited (SHV) 935 planted hectares (2023: 935 hectares);
•
Olam Orchards Australia Pty Limited (Olam) 3,133 planted hectares (2023: 3,133 hectares);
For its almond orchards the Group owns water entitlements of 55,525ML (2023: 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 (2023: 21,430ML) of water delivery entitlements that
provide access to water delivery through CICL, with a low annual allocation expected to be provided.
* The Group’s Area for Wyseby (held as tenant-in-common in the interest of 57.25%) included in the number of hectares.
23
22
Rural Funds Group
Directors’ Report
30 June 2024
Property leasing (continued)
Vineyards
The vineyard properties held by the Group include six vineyards, with five located in South Australia, in the Barossa
Valley and Adelaide Hills regions, and one located in the Grampians in Victoria. For its vineyards, the Group owns
909ML of water entitlements (2023: 909ML). 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:
•
Swan Ridge and Moore Park, 234 hectares (2023: 234 hectares), currently operated by the Group.
•
Bonmac, 27 hectares (2023: 27 hectares), currently leased to RFM Farming.
Beerwah and Bauple, 475 hectares (2023: 475 hectares) located in the Glass House mountains and Wide Bay
regions of Queensland are unleased and currently operated by the Group.
The following properties are leased to a company managed by The Rohatyn Group:
•
Cygnet, located in Bundaberg, Queensland consists of 37 hectares (2023: 37 hectares) of newly established
plantings.
•
Nursery Farm, located in Bundaberg, Queensland consists of 41 hectares (2023: 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, consisting
of 743 hectares (2023: 743 hectares) of newly established macadamia plantings and 11 hectares of planned
macadamia plantings..
•
Riverton, located in the Fitzroy region in Queensland consisting of 360 hectares (2023: 321 hectares) of newly
established plantings and 60 hectares (2023: 99 hectares) of planned macadamia plantings.
The following properties under development are leased to a company managed by The Rohatyn Group:
•
Six properties located in Maryborough, Queensland, Little Tinana, Tulesco, Iindah, Owanyilla, Bidwill and
Magnolia with 190 newly planted macadamia plantings and 557 hectares (2023: 661 hectares) of planned
macadamia plantings.
•
The Rookwood Farms aggregation, located in the Fitzroy region in Queensland with 411 hectares of newly
planted macadamia plantings and 615 hectares of planned macadamia plantings totalling 1,026 hectares
(2023: 1,150 hectares).
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 (2023: 17,479 hectares);
•
Mutton Hole and Oakland Park located in far north Queensland 225,800 hectares (2023: 225,800 hectares);
•
Natal aggregation located near Charters Towers in north Queensland 390,600 hectares (2023: 390,600
hectares);
•
Comanche located in central Queensland 7,600 hectares (2023: 7,600 hectares);
•
Cerberus located north west of Rockhampton in central Queensland 8,280 hectares (2023: 8,280 hectares);
•
Dyamberin located in the New England region of New South Wales 1,728 hectares (2023: 1,728 hectares);
•
Woodburn located in the New England region of New South Wales 1,063 hectares (2023: 1,063 hectares);
•
Cobungra located in the East Gippsland region of Victoria 6,497 hectares (2023: 6,497 hectares);
•
Petro, High Hill and Willara located in Western Australia 6,196 hectares (2023: 6,196);
•
Yarra located south west of Rockhampton in central Queensland 4,090 hectares (2023: 4,090);
•
Homehill located north west of Rockhampton in central Queensland 4,925 hectares (2023: 4,925);
•
Coolibah and River Block located south west of Rockhampton in central Queensland 724 hectares (2023: 724
hectares);
•
Thirsty Creek located south west of Rockhampton in central Queensland 503 hectares* (2023: 762 hectares);
•
Prime City, Mungindi, Caroona, Beef City and Riverina, 5 cattle feedlots with a combined capacity of 150,000
head (2023:150,000 head).
•
Kaiuroo, located north west of Rockhampton in central Queensland, 27,879 hectares (2023: 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 (2023: 14,071 hectares).
* A portion of Thirsty Creek was allocated to Macadamias - Rookwood Farms during the year.
Rural Funds Group
Directors’ Report
30 June 2024
Property leasing (continued)
Cattle property (continued)
The following cattle properties 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 2024.
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 long-term lessees are being sought.
The lease arrangement for Natal aggregation includes a $5,000,000 cattle leasing arrangement to fund the
purchase of cattle. The balance drawn as at 30 June 2024 net of security deposits held is $1,871,000 (2023: Nil).
Cropping property
Cropping properties held by the Group comprise of:
•
Lynora Downs, a 4,963 hectare (2023: 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.
•
The 22 Maryborough properties located in Queensland, have potential to be developed into approximately
2,200 hectares (2023: 2,200 hectares) of macadamia orchards. 12 of these properties are currently held for
cropping purposes of which 3 properties are currently held for sale as at 30 June 2024.
•
Swan Ridge South, located in Bundaberg, Queensland totalling 123 hectares (2023: 123 hectares)
•
Mayneland, a 2,942 hectare (2023: 2,942 hectare) cropping property located 25 km north of Lynora Downs in
central Queensland. The property was licensed to and operated by RFM Farming Pty Limited (a wholly owned
subsidiary of RFM) on an interim basis for a period of FY24.
•
Baamba Plains, a 4,130 hectare (2023: 4,130 hectare) cropping property located 60 km south-east of Emerald
in central Queensland. A capital development program has been implemented to improve the productivity of
the property. The property was operated by the Group on an interim basis for a period of FY24.
In June 2024, the Group announced that it had entered into transaction for a 10-year lease of Mayneland and
Baamba Plains to a company managed by The Rohatyn Group and a sale of 50% interest in both properties,
subject to Foreign Investment Review Board (FIRB) approval. As part of the transaction, the Group is expected to
receive catch up rent for part of the year ended 30 June 2024 for these properties.
Other activities
The Group provides a $123,000,000 (2023: $132,000,000) limited guarantee to J&F Australia Pty Ltd (J&F). The
guarantee is currently used to support $123,000,000 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. During the year, the guarantee was reduced from $132,000,000 to
$123,000,000. In addition, the guarantee was extended to support the funding of grain in JBS’ Rivalea business as
part of the existing arrangement. 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 period.
Breeder herd assets under finance lease of $18,864,000 (2023: $16,621,000) are leased to Cattle JV.
Agricultural plant and equipment with a net book value of $400,000 (2023: $2,244,000) is owned by the Group and
leased to RFM Farming and Cattle JV. Agricultural plant and equipment with a net book value of $28,601,000
(2023: $24,801,000) is used for the Group’s farming operations and macadamia developments. $6,244,000 is
classified as held for sale at 30 June 2024.
25
24
Rural Funds Group
Directors’ Report
30 June 2024
Risks and opportunities
Climate-related risk
As the Responsible Entity for the Group, RFM acknowledges the potential risk of climate change. RFM implements
the Group’s climate diversification strategy to mitigate these risks within the portfolio. In accordance with the
Group's Sustainability Policy, RFM manages climate-related risks within its Risk Management Framework.
Extreme weather events have the potential to damage assets and disrupt operations. The majority of assets are
subject to triple-net leases where the lessee is responsible for operations and insurance costs. 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 term. 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.
The Group is working towards climate-related risk disclosure to align of the Australian Sustainability Reporting
Standards. RFM monitors Scope 1 and Scope 2 emissions, focusing on carbon dioxide, methane, and nitrous oxide
from assets operated by the Group. RFM is enhancing internal systems to enable more transparent and
comprehensive reporting in line with these disclosures. This approach will support the Group in managing climate
related risks while improving asset management practices.
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 on properties operated by the Group and seeks to implement
infrastructure and practice changes.
Capital and funding requirements
Volatility in capital markets and debt markets will impact on the Group’s ability to access capital. RFM will continue
to explore opportunities to diversify funding sources through capital partnering and by managing debt levels in line
with the Group’s internal target gearing of between 30-35%. The optimal capital structure is reviewed periodically
with reference to prevailing market conditions.
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. A key part of the Group’s strategy is the continued development of macadamia orchards
in Queensland in addition to identifying opportunities for the Group to enter into leases of the assets that the Group
is currently operating. Management continues to look 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.
Indirect cost ratio
The indirect cost ratio (ICR) is the ratio of the Group’s management costs over the Group’s average net assets for
the year, expressed as a percentage.
Management costs include management fees and other expenses such as corporate overheads in relation to the
Group, but do not include transactional and operational costs such as brokerage. Management costs are not paid
directly by the unitholders of the Group.
The ICR for the Group for the year ended 30 June 2024 is 1.71% (2023: 1.65%).
Indemnity of Responsible Entity and Custodian
In accordance with its constitution, Rural Funds Group indemnifies the Directors, Company Secretary and all other
officers of the Responsible Entity and Custodian when acting in those capacities, against costs and expenses
incurred in defending certain proceedings.
Rural Funds Group
Directors’ Report
30 June 2024
Matters subsequent to the end of the year
In July 2024, the Group contracted for the disposal of a Maryborough cropping property for $3,000,000, to settle in
the second half of 2024.
In July 2024, the Group made a $7,000,000 investment in Inform Ag, an agriculture technology company which
includes an upfront purchase of shares totalling $5,000,000 and a convertible debt facility in two tranches totalling
$2,000,000. Repayment of the debt facility will be through the issue of additional equity to RFF. The initial ownership
in Inform Ag would be 35%, this would increase to 43% following the conversion of both tranches of the debt facility.
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.
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
Non-Executive Chair
Qualifications
Bachelor of Laws from The University of Melbourne
Experience
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
listed
entities in the last three years
None
David Bryant
Managing Director
Qualifications
Diploma of Financial Planning from the Royal Melbourne Institute of
Technology and Masters of Agribusiness from The University of Melbourne.
Experience
David Bryant established RFM in February 1997 and leads the RFM team.
David focuses on strategic planning, maintaining key commercial relationships
and sourcing new business opportunities.
Special responsibilities
Managing Director
Directorships
of
other
listed
entities in the last three years
None
27
26
Rural Funds Group
Directors’ Report
30 June 2024
Information on Directors of the Responsible Entity (continued)
Michael Carroll
Non-Executive Director
Qualifications
Bachelor of Agricultural Science, La Trobe University and Master of Business
Administration, Melbourne University Business School. Michael has
completed the Advanced Management Program, Harvard Business School,
Boston, and is a Fellow of the Australian Institute of Company Directors.
Experience
Michael is currently the Chair of Viridis Ag Pty Limited, a Director of Paraway
Pastoral Company Limited and Incitec Pivot Limited.
Former board positions include the Australian Rural Leadership Foundation,
Genetics Australia, Regional Investment Corporation, RFM Poultry, 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
Chair of Audit Committee and Remuneration Committee
Directorships
of
other
listed
entities in the last three years
Incitec Pivot Limited
Julian Widdup
Non-Executive Director
Qualifications
Bachelor of Economics and Master of Business Administration 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.
Experience
Julian is currently a director of Equip Super, Australian Catholic University and
Catholic Schools NSW. Julian’s prior experience includes executive roles in
investment management, asset consulting and with the Australian
Government.
Special responsibilities
Member of Audit Committee and Remuneration Committee
Directorships of other listed
entities in the last three years
None
Andrea Lemmon
Qualifications
Diploma in Financial Planning from Deakin University
Experience
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
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 Limited, 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 includes 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
Rural Funds Group
Directors’ Report
30 June 2024
Interests of Directors of the Responsible Entity
Guy Paynter
David Bryant*
Michael
Carroll
Julian
Widdup
Andrea
Lemmon
Units
Units
Units
Units
Units
Balance at 30 June 2022
1,744,710
16,325,462
254,740
135,026
183,357
Additions
-
619,000
12,668
6,714
-
Balance at 30 June 2023
1,744,710
16,944,462
267,408
141,740
183,357
Additions
300,000
-
16,686
6,741
-
Balance at 30 June 2024
2,044,710
16,944,462
284,094
148,481
183,357
*Includes interests held by Rural Funds Management Limited as the Responsibly Entity.
Company Secretary of the Responsible Entity
Emma Spear is RFM’s company secretary. Emma joined RFM in 2008, is a member of CPA Australia and is
admitted as a Legal Practitioner of the Supreme Court of the ACT.
Meetings of Directors of the Responsible Entity
During the financial year 18 meetings of Directors (including committees of Directors) were held. Attendances by
each Director during the year were as follows:
Directors meetings
Audit Committee meetings
Remuneration Committee
meetings
No. eligible
to attend
No.
attended
No. eligible
to attend
No.
attended
No. eligible
to
attend
No.
attended
Guy Paynter
15
14
-
-
1
1
David Bryant
15
15
-
-
-
-
Michael Carroll
15
15
2
2
1
1
Julian Widdup
15
15
2
2
1
1
Andrea Lemmon
15
14
2
2
1
1
Non-audit services
Fees of $50,931 (2023: $36,812) were paid or payable to PricewaterhouseCoopers for compliance audit services
provided for the year ended 30 June 2024.
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 2024 has been received and is included on page 12 of the financial report.
The Directors’ report is signed in accordance with a resolution of the Board of Directors of Rural Funds
Management Limited.
David Bryant
Director
23 August 2024
28
29
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.
Auditor’s Independence Declaration
As lead auditor for the audit of Rural Funds Group for the year ended 30 June 2024, 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.
Marc Upcroft
Sydney
Partner
PricewaterhouseCoopers
23 August 2024
12
Rural Funds Group
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
The accompanying notes form part of these financial statements.
2024
2023
Note
$'000
$'000
Revenue
B3
109,763
95,004
Other income
B3
2,740
3,493
Management fee
(9,976)
(8,558)
Asset management fee
(7,482)
(6,419)
Property expenses
(3,451)
(3,165)
Other expenses
(7,402)
(7,522)
Finance costs
(20,567)
(17,281)
Cost of goods sold - farming operations
(20,629)
(13,049)
Property and other expenses - farming operations
(8,822)
(5,408)
Gain on sale of assets
444
802
Depreciation and impairments - other
(3,546)
(2,336)
Change in fair value of investment property
C2
58,057
61,106
(Impairment)/reversal of impairment of bearer plants
C3
(128)
2,475
Depreciation - bearer plants
C3
(11,271)
(9,583)
Reversal of impairment/(impairment) of intangible assets
C5
1,400
(247)
Impairment of property - owner occupied
C6
(558)
(3,202)
Depreciation - property - owner occupied
C6
(946)
(502)
Change in fair value of biological assets - farming operations
F4
7,077
513
Change in fair value of interest rate swaps
(3,297)
8,930
Change in fair value of financial assets/liabilities
154
156
Loss on settlement of pre-existing relationship - Macgrove acquisition
-
(1,281)
Gain on bargain purchase - Macgrove acquisition
-
440
Impairment of goodwill - Macgrove acquisition
-
(195)
Net profit before income tax
81,560
94,171
Income tax (expense)/credit
D1
(1,119)
327
Net profit after income tax
80,441
94,498
Other comprehensive income:
Items that will not be reclassified to profit or loss
Revaluation increment - Bearer plants
C3
27,352
19,653
Revaluation increment - Property - owner occupied
C6
9,446
1,843
Income tax expense relating to these items
D1
(84)
(473)
Other comprehensive income for the year, net of tax
36,714
21,023
Total comprehensive income attributable to unitholders
117,155
115,521
28
31
30
Rural Funds Group
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
The accompanying notes form part of these financial statements.
2024
2023
Note
$'000
$'000
Total net profit after income tax for the year attributable to
unitholders arising from:
Rural Funds Trust
83,247
111,953
RF Active (non-controlling interest)
(2,806)
(17,455)
Total
80,441
94,498
Total comprehensive income for the year attributable to
unitholders arising from:
Rural Funds Trust
119,961
132,976
RF Active (non-controlling interest)
(2,806)
(17,455)
Total
117,155
115,521
Earnings per unit
Basic and diluted earnings per unit attributable to the unitholders:
Per stapled unit (cents)
B4
20.79
24.62
Per unit of Rural Funds Trust (cents)
B4
21.52
29.17
Per unit of RF Active (cents)
B4
(0.73)
(4.55)
Rural Funds Group
Consolidated Statement of Financial Position
As at 30 June 2024
The accompanying notes form part of these financial statements.
2024
2023
Note
$'000
$'000
ASSETS
Current assets
Cash and cash equivalents
F1
7,243
5,753
Trade and other receivables
F2
20,538
10,553
Other current assets
F3
2,186
1,860
Assets held for sale
C8
48,876
-
Biological assets
F4
12,907
14,295
Inventories
F5
2,222
1,853
Derivative financial assets
E3
619
-
Income tax receivable
D2
-
259
Total current assets
94,591
34,573
Non-current assets
Investment property
C2
1,003,241
923,405
Plant and equipment - bearer plants
C3
248,842
217,700
Financial assets
C4, E2
112,860
102,488
Intangible assets
C5
201,724
166,988
Property - owner occupied
C6
169,796
144,200
Plant and equipment - other
C7
29,001
27,045
Derivative financial assets
E3
38,124
42,040
Deferred tax assets
D2
-
918
Other assets
F3
3,035
11,652
Total non-current assets
1,806,623
1,636,436
Total assets
1,901,214
1,671,009
LIABILITIES
Current liabilities
Trade and other payables
F6
6,783
6,878
Unearned income
F7
507
975
Current tax payable
D2
705
-
Interest bearing liabilities
E1
35,994
33,150
Distributions payable
E8
11,948
11,942
Total current liabilities
55,937
52,945
Non-current liabilities
Interest bearing liabilities
E1
751,749
607,463
Deferred tax liabilities
D2
7,914
8,334
Unearned income
F7
10,581
5,902
Other non-current liabilities
F8
3,716
3,206
Total non-current liabilities
773,960
624,905
Total liabilities (excluding net assets attributable to
unitholders)
829,897
677,850
Net assets attributable to unitholders
1,071,317
993,159
Total liabilities
1,901,214
1,671,009
*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.
33
32
Rural Funds Group
Consolidated Statement of Financial Position
As at 30 June 2024
The accompanying notes form part of these financial statements.
2024
2023
Note
$'000
$'000
NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
Unitholders of Rural Funds Trust
Issued units
E7
424,533
459,078
Asset revaluation reserve
F9
106,979
70,265
Retained earnings
546,700
468,034
Parent entity interest
1,078,212
997,377
Unitholders of RF Active
Issued units
E7
6,963
6,834
Retained earnings
(13,858)
(11,052)
Non-controlling interest
(6,895)
(4,218)
Total net assets attributable to unitholders
1,071,317
993,159
Rural Funds Group
Consolidated Statement of Changes in Net Assets Attributable to Unitholders
For the year ended 30 June 2024
The accompanying notes form part of these financial statements.
2024
Note
Issued
units
Asset
revaluation
reserve
Retained
earnings
Total
Non-
controlling
interest
Total
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2023
459,078
70,265
468,034
997,377
(4,218)
993,159
Other comprehensive income,
net of income tax
-
36,714
-
36,714
-
36,714
Net profit after income tax
-
-
83,247
83,247
(2,806)
80,441
Total comprehensive
income for the year
-
36,714
83,247
119,961
(2,806)
117,155
Issued units
Units issued during the year
6,292
-
-
6,292
129
6,421
Total issued units
E7
6,292
-
-
6,292
129
6,421
Distributions to unitholders
B5,E7
(40,837)
-
(4,581)
(45,418)
-
(45,418)
Balance at 30 June 2024
424,533
106,979
546,700 1,078,212
(6,895)
1,071,317
2023
Note
Issued
units
Asset
revaluation
reserve
Retained
earnings
Total
Non-
controlling
interest
Total
$'000
$'000
$'000
$'000
$'000
$'000
Balance at 1 July 2022
465,076
49,417
385,183
899,676
17,335
917,011
Other comprehensive income,
net of income tax
-
21,023
-
21,023
-
21,023
Net profit after income tax
-
-
111,953
111,953
(17,455)
94,498
Total comprehensive
income for the year
-
21,023
111,953
132,976
(17,455)
115,521
Transfer from property -
owner occupied to
investment property
-
(148)
148
-
-
-
Transfer on disposal of
bearer plants to retained
earnings
-
(27)
27
-
-
-
Issued units
Units issued during the year
5,552
-
-
5,552
113
5,665
Total issued units
E7
5,552
-
-
5,552
113
5,665
Distributions to unitholders
B5,E7
(11,550)
-
(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
35
34
Rural Funds Group
Consolidated Statement of Cash Flows
For the year ended 30 June 2024
The accompanying notes form part of these financial statements.
2024
2023
Note
$'000
$'000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
94,347
89,183
Payments to suppliers (inclusive of GST)
(57,160)
(57,609)
Interest received
B3
1,094
389
Finance income
B3
13,609
14,118
Finance costs
(20,567)
(17,281)
Income tax received
D2
259
415
Net cash inflow from operating activities
G4
31,582
29,215
Cash flows from investing activities
Payments for investment property
C2
(64,779)
(80,266)
Payments for plant and equipment - bearer plants
(9,715)
(13,415)
Payments for financial assets - property related
(4,672)
(420)
Payments for intangible assets
(33,041)
(9,556)
Payments for property - owner occupied
C6
(14,363)
(54,743)
Payments for plant and equipment
(11,852)
(12,892)
Payments for financial assets - other
(217)
-
Payments for other assets
(301)
(1,518)
Proceeds from sale of investment property
80
26
Proceeds from sale of financial assets - property related
206
893
Settlement of financial assets - property related
34
323
Proceeds from sale of plant and equipment
312
361
Proceeds from assets held for sale
-
530
Acquisition of new business
-
(1,392)
Distributions received
62
40
Net cash outflow from investing activities
(138,246)
(172,029)
Cash flows from financing activities
Proceeds from issue of units
E7
6,421
5,665
Proceeds from borrowings
223,369
303,107
Repayment of borrowings
(76,225)
(120,317)
Distributions paid
(45,411)
(44,849)
Net cash inflow from financing activities
108,154
143,606
Net increase in cash and cash equivalents held
1,490
792
Cash and cash equivalents at the beginning of the year
5,753
4,961
Cash and cash equivalents at the end of the year
F1
7,243
5,753
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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 23 August 2024 and have the power to amend and reissue the Financial Report.
Items included in the financial statements of each of the Group entities are measured using the currency of the
primary economic environment in which the entity operates (functional currency). The consolidated financial
statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.
The separate financial statements and notes of the parent entity, Rural Funds Trust, have not been presented
within this financial report as permitted by amendments made to the Corporations Act 2001. Parent entity
information is included in section G3.
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 material 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.
37
36
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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 (vacant possession) value, evidence of other market transactions and the analysis of
those component parts, which along with other sources, including the nature of capital expenditure on the property,
is used to determine the encumbered allocation to components. Significant judgement is applied as part of these
allocations, which vary from property to property, given the individual circumstances of the leasing arrangements.
The allocation technique may change to reflect the best estimate of fair value attributable to each component at
reporting date. Allocation techniques are disclosed in Note C1.
Estimation of useful lives of bearer plants
The useful lives of bearer plants have been estimated by assessing industry data. The useful lives of bearer plants
are disclosed in Note C3.
Comparative amounts
Comparative amounts have not been restated unless otherwise noted.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B. RESULTS
B1 Segment information
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Directors of
the Responsible Entity. During the year ended 30 June 2024, the Group held property in agricultural sectors presented in five segments (2023: five segments) each holding and
leasing agricultural property and equipment. Segment revenue includes rental income, finance income and interest income. Segment property assets include investment property,
bearer plants, intangible assets, property – owner occupied, financial assets and plant and equipment. Revenue and property assets not categorised in these sectors are managed
at a corporate level. Liabilities and direct or indirect expenses are not allocated to individual segments as these are reviewed by the chief operating decision maker on a
consolidated basis.
Segment revenue and revaluation movements
Almonds
Cattle
Vineyards
Cropping
Macadamias
Other*
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Rental revenue**
30,052
20,516
4,929
5,404
14,448
2,714
78,063
Rental revenue - prepaid rent (TRG)**
-
-
-
(3,054)
(4,475)
-
(7,529)
Lease incentive amortisation
-
-
-
-
(68)
-
(68)
Rental revenue - straight-lining
130
127
63
-
2,848
35
3,203
Revenue from farming operations
-
-
-
-
-
21,391
21,391
Interest received
-
713
-
-
-
381
1,094
Finance income
-
13,609
-
-
-
-
13,609
Total revenue
30,182
34,965
4,992
2,350
12,753
24,521
109,763
Other income
-
-
-
-
-
2,740
2,740
Gain on disposal
-
33
206
73
48
84
444
Depreciation - bearer plants
(6,241)
-
(1,089)
-
(3,941)
-
(11,271)
Depreciation - property (owner occupied)
-
(169)
-
(451)
(326)
-
(946)
Change in fair value through profit or loss
417
47,417
(2,931)
(2,471)
14,756
1,737
58,925
Revaluation increment through other comprehensive income
2,987
-
279
2,186
31,346
-
36,798
Total revaluation
3,404
47,417
(2,652)
(285)
46,102
1,737
95,723
Revaluation of water entitlements per director's valuation
4,408
-
(1,586)
391
7,715
-
10,928
Total revaluation including water entitlements
7,812
47,417
(4,238)
106
53,817
1,737
106,651
*Other rental revenue relates to lease of water entitlements.
**Includes Rental revenue – prepaid rent (TRG macadamias) and Contracted rent (TRG cropping).
39
38
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B1 Segment information (continued)
Segment revenue and revaluation movements (continued)
Revaluation for cattle segment largely relates to the external valuation for the Natal Aggregation. The revaluation increment from the external valuation is mainly due to market
movements which are supported by comparable sales transactions.
Revaluation for macadamia segment largely relates to the external valuations for the Swan Ridge and Moore Park properties and the next group of macadamia properties under
development that were leased to a company managed by TRG during the year. For the Swan Ridge and Moore Park properties, the revaluation increment is due to market
movements supported by comparable sales transactions and the properties now being valued on an unencumbered (vacant possession) basis, following the wind up of the 2007
Macgrove Project. The next group of macadamia properties under development were leased during the year with the effective lease commencement date in June 2024. The
revaluation increment on these macadamia properties under development reflects the recognition of the lease and the ongoing development of the properties to a higher and
better use.
Revaluation for almond segment relates to the external valuations for the Kerarbury, Tocabil and Yilgah properties. Net revaluation increments are due to the indexation of rent
and market movements supported by comparable sale transactions, offset by an increase to discount rates for certain properties.
Revaluation for vineyard segment relates to the external valuations for Geier, Kleinig, Hahn, Rosebank and Mundy and Murphy properties. Revaluation movements are due to
market movements supported by comparable sales transactions.
Revaluation for cropping segment relates to external valuations for the Maryborough cropping properties, with market movements supported by comparable sales transactions.
In addition, the revaluation of Mayneland and Baamba Plains properties were recognised, through investment properties and owner occupied properties respectively, based on
transaction price from the 50% sale subject to final approvals.
Revaluation for other segment relates to external valuations for water entitlements. Revaluation increment is due to market movements supported by comparable sales
transactions.
Refer to section C1 for details on properties valued during the year.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B1 Segment information (continued)
Segment revenue and revaluation movements (continued)
Almonds
Cattle
Vineyards
Cropping
Macadamias
Other*
Total
2023
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Rental revenue**
29,364
17,931
4,809
3,446
9,585
2,584
67,719
Rental revenue - prepaid rent (TRG)**
-
-
-
-
(6,050)
-
(6,050)
Lease incentive amortisation
-
-
-
-
(9)
-
(9)
Rental revenue - straight-lining
(6)
342
183
-
951
-
1,470
Revenue from farming operations
-
-
-
-
-
13,180
13,180
Interest received
-
262
-
-
-
127
389
Finance income
-
18,251
-
-
54
-
18,305
Total revenue
29,358
36,786
4,992
3,446
4,531
15,891
95,004
Other income
-
-
-
-
-
3,493
3,493
Gain/(loss) on disposal
(45)
52
707
8
80
-
802
Depreciation - bearer plants
(5,761)
-
(941)
-
(2,881)
-
(9,583)
Depreciation - property (owner occupied)
-
(25)
-
(294)
(183)
-
(502)
Change in fair value through profit or loss
20,908
26,086
967
4,148
12,977
(4,798)
60,288
Revaluation increment through other comprehensive income
10,246
-
1,578
-
9,672
-
21,496
Total revaluation
31,154
26,086
2,545
4,148
22,649
(4,798)
81,784
Revaluation of water entitlements per director's valuation
21,764
-
-
2,638
2,109
(1,313)
25,198
Total revaluation including water entitlements
52,918
26,086
2,545
6,786
24,758
(6,111)
106,982
*Other rental revenue relates to lease of water entitlements.
**Includes Rental revenue – prepaid rent (TRG macadamias) and Contracted rent (TRG cropping).
41
40
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B1 Segment information (continued)
Segment assets
Almonds
Cattle
Vineyards
Cropping
Macadamias
Unallocated
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Investment property
167,334
535,575
33,253
71,372
195,707
-
1,003,241
Plant and equipment - bearer plants
125,899
-
17,946
-
104,997
-
248,842
Financial assets - property related
11,589
87,601
766
-
3,799
35
103,790
Intangible assets (water)
66,707
21,437
500
6,831
26,251
79,998
201,724
Property - owner occupied
-
92,200
-
38,869
38,727
-
169,796
Plant and equipment
112
4,668
-
4,361
19,860
-
29,001
Assets held for sale
-
-
-
48,876
-
-
48,876
Total property assets per statutory accounts
371,641
741,481
52,465
170,309
389,341
80,033
1,805,270
Revaluation of intangible assets per director's valuation
81,951
-
3,679
3,030
12,749
45,033
146,442
Total adjusted property assets at director's valuation
453,592
741,481
56,144
173,339
402,090
125,066
1,951,712
Other assets per statutory accounts
-
-
-
-
-
95,944
95,944
Total adjusted assets
453,592
741,481
56,144
173,339
402,090
221,010
2,047,656
Almonds
Cattle
Vineyards
Cropping
Macadamias
Unallocated
Total
2023
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Investment property
163,663
503,945
35,442
83,440
136,915
-
923,405
Plant and equipment - bearer plants
129,121
-
19,172
-
69,407
-
217,700
Financial assets - property related
11,460
80,713
703
-
949
-
93,825
Intangible assets (water)
66,707
14,831
500
11,966
6,954
66,030
166,988
Property - owner occupied
-
62,220
-
50,830
31,150
-
144,200
Plant and equipment
214
4,389
-
6,205
16,237
-
27,045
Total property assets per statutory accounts
371,165
666,098
55,817
152,441
261,612
66,030
1,573,163
Revaluation of intangible assets per director's valuation
77,542
-
5,266
3,547
4,126
45,033
135,514
Total adjusted property assets at director's valuation
448,707
666,098
61,083
155,988
265,738
111,063
1,708,677
Other assets per statutory accounts
-
-
-
-
-
97,846
97,846
Total adjusted assets
448,707
666,098
61,083
155,988
265,738
208,909
1,806,523
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B1 Segment information (continued)
Net asset value adjusted for water rights
The chief operating decision maker of RFF assesses the segments on property asset values adjusted for water
rights. RFF owns permanent water rights and entitlements which are recorded at historical cost less accumulated
impairment losses. Such rights have an indefinite life and are not depreciated. The carrying value is tested annually
for impairment as well as for possible reversal of impairment. If events or changes in circumstances indicate
impairment, or reversal of impairment, the carrying value is adjusted to take account of impairment losses.
The book value of the water rights (including investments in BIL and CICL recognised as financial assets) at 30
June 2024 is $213,708,000 (2023: $178,972,000).
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 2024 was $360,150,000 (2023: $314,486,000) representing the value of the water rights of $146,442,000
(2023: $135,514,000) above cost.
The following is a reconciliation of the book value at 30 June 2024 to an adjusted value based on the Directors’
valuation of the water rights which are assessed by the chief operating decision maker.
Per Statutory
Consolidated
Statement of
Financial
Position
Revaluation
of water
entitlements
per
Directors'
valuation
Directors'
valuation
(Adjusted)
$'000
$'000
$'000
Assets
Total current assets
94,591
-
94,591
Total non-current assets
1,806,623
146,442
1,953,065
Total assets
1,901,214
146,442
2,047,656
Liabilities
Total current liabilities
55,937
-
55,937
Total non-current liabilities
773,960
-
773,960
Total liabilities (excluding net assets attributable to
unitholders)
829,897
-
829,897
Net assets attributable to unitholders
1,071,317
146,442
1,217,759
Net asset value per unit ($)
2.76
0.38
3.14
43
42
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B1 Segment information (continued)
2024
Adjusted
2023
Adjusted
Most Recent Independent
Valuation
Area1
property
value
property
value
Date
Valuation
30 June 2024
$'000
$'000
$'000
$'000
Almonds
Yilgah (NSW)
935 ha
111,566
114,500
May 2024
111,500
Tocabil (NSW)
603 ha
61,523
61,500
May 2024
61,500
Kerarbury (NSW)
2,530 ha
280,269
272,500
May 2024
280,500
Cattle
Rewan (QLD)
17,479 ha
72,455
72,500
Nov 2022
72,500
Mutton Hole (QLD)
140,300 ha
19,370
19,000
Jun 2023
19,000
Oakland Park (QLD)
85,500 ha
10,074
9,900
Jun 2023
9,900
Natal Aggregation (QLD)
390,600 ha
184,032
138,490
Oct 2023
183,600
Comanche (QLD)
7,600 ha
36,128
35,105
May 2024
36,250
Cerberus (QLD)
8,280 ha
26,088
24,784
May 2024
25,900
Dyamberin (NSW)
1,728 ha
23,235
21,015
Sep 2023
23,235
JBS Feedlots Finance Lease Receivable (NSW/QLD)
150,000 hd
65,160
62,989
N/A
N/A
Woodburn (NSW)
1,063 ha
12,540
11,461
Sep 2023
12,539
Cobungra (VIC)
6,497 ha
52,764
52,200
Feb 2024
52,700
Petro (WA)
2,942 ha
17,386
16,825
Jun 2023
16,825
High Hill (WA)
1,601 ha
8,995
8,780
Jun 2023
8,780
Willara (WA)
1,653 ha
8,261
8,260
Jun 2023
8,260
Yarra (QLD)
4,090 ha
33,478
24,788
May 2024
27,200
Homehill (QLD)
4,925 ha
20,825
20,156
May 2024
20,825
Coolibah aggregation (QLD)2
724 ha
5,660
5,688
May 2024
5,660
Thirsty Creek (QLD)3
503 ha
6,785
5,225
Oct 2023
3,867
Kaiuroo (QLD)
27,879 ha
75,516
71,000
Jun 2023
71,000
Wyseby (QLD)
14,071 ha
34,952
34,951
Jun 2023
34,951
Cropping
Lynora Downs (QLD)
4,963 ha
45,578
45,400
Jun 2023
45,400
Mayneland (QLD)
2,942 ha
30,511
28,550
Jun 2023
28,550
Maryborough – Cropping (QLD)
2,460 ha
39,460
38,383
Oct 2023
38,780
Baamba Plains (QLD)
4,130 ha
45,183
37,450
Jun 2023
37,450
Swan Ridge South (QLD)
123 ha
2,002
1,980
Oct 2023
2,000
Macadamias
Swan Ridge (QLD)
130 ha
23,420
7,164
Oct 2023
23,650
Moore Park (QLD)
104 ha
17,801
4,402
Oct 2023
18,000
Bonmac (QLD)
27 ha
4,572
3,061
Oct 2023
4,650
Cygnet and Nursery Farm – Tranche 1 (QLD)4
78 ha
9,609
9,472
Oct 2023
8,900
Riverton – Tranche 1 (QLD)4
420 ha
44,726
36,081
Oct 2023
39,550
Maryborough – Tranche 1 (QLD)4
754 ha
73,621
70,727
Oct 2023
72,050
Maryborough – Tranche 2 (QLD)5
747 ha
57,558
23,778
Oct 2023
46,350
Rookwood Farms – Tranche 2 (QLD)5
1,026 ha
76,306
22,613
Oct 2023
40,000
Rookwood Farms (QLD)
N/A
14,953
11,273
Oct 2023
14,450
Beerwah (QLD)
340 ha
36,770
38,300
Jun 2023
38,300
Bauple (QLD)
135 ha
19,093
19,700
Jun 2023
19,700
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 A portion of Thirsty Creek is included in Rookwood Farms – Tranche 2, allocated during the year.
4 Tranche 1 properties subject to the lease with a company managed by The Rohatyn Group (TRG) from January 2023
5 Tranche 2 properties subject to lease with a company managed by TRG from June 2024
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B1 Segment information (continued)
2024
Adjusted
2023
Adjusted
Most Recent Independent
Valuation
property
value
property
value
Date
Valuation
30 June 2024
$'000
$'000
$'000
$'000
Vineyards
Kleinig (SA)
206 ha
20,100
21,800
Jun 2024
20,100
Geier (SA)
244 ha
23,700
25,900
Jun 2024
23,700
Hahn (SA)
50 ha
4,000
4,800
Jun 2024
4,000
Mundy and Murphy (SA)
55 ha
4,400
4,400
Jun 2024
4,400
Rosebank (VIC)
83 ha
3,700
4,000
Jun 2024
3,700
Water rights
River water (NSW)
8,754 ML
76,597
76,597
Jun 2024
76,597
River water (QLD)
600 ML
394
1,113
N/A
N/A
Rookwood weir (QLD)
8,227 ML
13,140
-
N/A
N/A
Ground water (NSW)
8,338 ML
34,900
33,353
Dec 2023
34,900
Total property and water assets
1,889,156
1,661,914
Cattle finance leases and other assets
21,910
17,487
Plant and equipment
35,245
27,045
Other receivables and equipment leases
5,401
2,231
Total adjusted property assets
1,951,712
1,708,677
Revaluations from external valuations
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.
The total uplift for the year ended 30 June 2024 has been largely due to the external valuer’s assessment of the
continued strength in demand and market sentiment for cattle properties.
The uplift has also included market movements and a change in valuation basis to an unencumbered (vacant
possession) basis for the Swan Ridge and Moore Park macadamia properties now operated by the Group.
The uplift has also included the Tranche 2 Macadamia properties with an effective lease commencement date in
June 2024, reflecting the recognition of the lease and the ongoing development of the properties to a higher and
better use. Tranche 2 Macadamia properties were previously valued on an unencumbered (vacant possession)
basis prior to the commencement of leases. The encumbered (subject to lease) valuation has been adopted for
these properties as at 30 June 2024.
The Group’s remaining macadamia properties under development have been valued on an unencumbered (vacant
possession) basis.
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 for properties is primarily a result of depreciation on owner
occupied property and bearer plants (where relevant).
45
44
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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.
2024
2023
$'000
$'000
Revenue
88,372
81,824
Other income
2,279
3,281
Management fee
(9,976)
(8,558)
Asset management fee
(7,482)
(6,419)
Property expenses
(3,451)
(3,165)
Other expenses
(7,402)
(7,522)
Finance costs
(20,567)
(17,281)
Income tax payable (AWF)
(644)
(257)
Revenue adjustments
Rental revenue - prepaid rent (TRG macadamias)
4,803
6,050
Contracted rent (TRG cropping)
2,726
-
Lease incentive amortisation (TRG macadamias)
68
9
Straight-lining of rental revenue
(3,203)
(1,470)
Interest component of JBS feedlot finance lease
(2,172)
(4,187)
Farming operations
Revenue from farming operations
21,391
13,180
Other income - farming operations
461
212
Cost of goods sold - farming operations
(20,629)
(13,049)
Change in fair value of biological assets
(realised from harvested crops and cattle)*
6,352
2,018
Change in fair value of biological assets
(prior year biological assets realised during the year)
(581)
1,819
Property and other expenses - farming operations
(8,822)
(5,408)
Contracted farming cost recovery (TRG cropping)
850
-
Adjusted Funds From Operations (AFFO)
42,373
41,077
Property related
Change in fair value of investment property
58,057
61,106
Change in fair value of bearer plants
(128)
2,475
Impairment of property - owner occupied
(558)
(3,202)
Impairment of intangible assets
1,400
(247)
Depreciation - bearer plants
(11,271)
(9,583)
Depreciation - property owner occupied
(946)
(502)
Depreciation and impairments - other
(3,546)
(2,336)
Gain on sale of assets
444
802
Farming operations
Change in fair value of biological assets
(unharvested crops and unsold cattle)**
725
(1,505)
Change in fair value of biological assets
(prior year biological assets realised during the year)
581
(1,819)
Contracted farming cost recovery (TRG cropping)
(850)
-
Revenue items
Rental revenue - prepaid rent (TRG macadamias)
(4,803)
(6,050)
Contracted rent - (TRG cropping)
(2,726)
-
Lease incentive amortisation (TRG macadamias)
(68)
(9)
Straight-lining of rental revenue
3,203
1,470
Interest component of JBS feedlot finance lease
2,172
4,187
Other
Change in fair value of financial assets/liabilities
154
156
Change in fair value of interest rate swaps
(3,297)
8,930
Income tax (expense)/credit
(475)
584
Macgrove acquisition
-
(1,036)
Net profit after income tax
80,441
94,498
AFFO cents per unit
11.0
10.7
*FY24 includes revaluation of calves on weaning
**FY24 excludes revaluation of calves on weaning
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B3 Revenue
2024
2023
$'000
$'000
Rental income
73,669
63,130
Sale of agricultural produce - farming operations
15,151
8,250
Sale of livestock and agistment income
6,240
4,930
Finance income
13,609
18,305
Interest received
1,094
389
Total
109,763
95,004
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
2024
2023
$'000
$'000
Sale of temporary water allocations
1,811
3,043
Other income
929
450
Total
2,740
3,493
Sale of temporary water allocations is recognised when the water allocations are received by the customer.
Expenses
Expenses such as Responsible Entity fees, property expenses and overheads are recognised on an accruals basis.
Interest expenses are recognised on an accrual basis using the effective interest method.
47
46
Rural Funds Group
Notes to the Financial Statements
30 June 2024
B4 Earnings per unit
2024
2023
Per stapled unit
Net profit after income tax for the year ($'000)
80,441
94,498
Weighted average number of units on issue during the year (thousands)
386,900
383,761
Basic and diluted earnings per unit (total) (cents)
20.79
24.62
Per unit of Rural Funds Trust
Net profit after income tax for the year ($'000)
83,247
111,953
Weighted average number of units on issue during the year (thousands)
386,900
383,761
Basic and diluted earnings per unit (total) (cents)
21.52
29.17
Per unit of RF Active
Net (loss)/profit after income tax for the year ($'000)
(2,806)
(17,455)
Weighted average number of units on issue during the year (thousands)
386,900
383,761
Basic and diluted earnings per unit (total) (cents)
(0.73)
(4.55)
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:
Cents
Total
per unit
$
Distribution declared 01 June 2023, paid 31 July 2023
2.9325
11,285,919
Distribution declared 01 September 2023, paid 31 October 2023
2.9325
11,323,511
Distribution declared 01 December 2023, paid 31 January 2024
2.9325
11,343,210
Distribution declared 01 March 2024, paid 30 April 2024
2.9325
11,365,302
Distribution declared 03 June 2024, paid 31 July 2024
2.9325
11,385,227
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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
2024
2023
$'000
$'000
Investment property
C2
1,003,241
923,405
Plant and equipment - bearer plants
C3
248,842
217,700
Financial assets - property related
C4
103,790
93,825
Intangible assets
C5
201,724
166,988
Property - owner occupied
C6
169,796
144,200
Plant and equipment - other
C7
29,001
27,045
Assets held for sale
C8
48,876
-
Total
1,805,270
1,573,163
Leasing arrangements
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:
2024
2023
$'000
$'000
Within 1 year
70,745
64,874
Between 1 and 2 years
71,942
65,807
Between 2 and 3 years
65,741
68,414
Between 3 and 4 years
61,646
61,816
Between 4 and 5 years
59,276
57,748
Later than 5 years
1,035,426
743,692
Total
1,364,776
1,062,351
The Group has entered into a 40 year lease for 3,000ha of macadamia orchards 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 February and March 2024, the Group contracted to dispose of two Maryborough cropping properties
for $3,105,000, expected to settle the second half of 2024.
•
In June 2024, the lease to a company managed by The Rohatyn Group for the additional macadamia
properties making up the 3,000ha development commenced.
•
In June 2024, the Group completed the acquisition of 22,100 megalitres of Fitzroy River water allocations
on completion of the Rookwood Weir for $36,300,000 including acquisition costs
•
In June 2024, the Group announced that it had entered into a transaction for a 10-year lease of Mayneland
and Baamba Plains to a company managed by The Rohatyn Group and a sale of 50% interest in both
properties, subject to Foreign Investment Review Board (FIRB) approval. As part of the transaction, the
Group is expected to receive catch up rent for part of the year ended 30 June 2024 for these properties.
Macadamia development
The Group is developing macadamia orchards across a number of properties located in Queensland, Australia. As
part of the development, costs relating to the acquisition, construction and development of macadamia orchards
will be capitalised to the respective asset class that the cost relates to. The asset classes identified are investment
property, bearer plants and water entitlements.
49
48
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C1 RFF property assets (continued)
Macadamia development (continued)
Investment Property
This includes costs associated with the acquisition for land, buildings, orchard and irrigation infrastructure and any
costs directly attributable to bringing the asset to the condition necessary for it to be capable of operating in the
manner intended by management.
Bearer Plants
This includes costs associated with the acquisition of macadamia trees, planting costs, growing costs incurred for
the trees to reach maturity including fertiliser and watering costs and costs associated with establishing the
macadamia trees in the orchard and bringing the asset to the condition necessary for it to be capable of operating
in the manner intended by management.
Water entitlements
This includes costs associated with the purchase of water entitlements. Water entitlements are deemed ready for
use on acquisition.
Borrowing costs
Borrowing costs may be capitalised on qualifying assets up until the property is deemed ready for use. Borrowing
costs relating to the acquisition, construction and development of properties 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.
The following existing properties had relevant independent valuations during the year ended 30 June 2024:
Almond properties
Kerarbury, Tocabil, Yilgah
Cattle properties
Natal Aggregation, Woodburn, Dyamberin, Thirsty Creek, Cobungra,
Yarra, Cerberus, Comanche, Coolibah aggregation
Macadamia properties
Swan Ridge, Moore Park, Bonmac, Cygnet, Nursery Farm, Riverton,
Maryborough – Macadamias, Rookwood Farms
Cropping properties
Maryborough – Cropping, Swan Ridge South
Vineyard properties
Geier, Kleinig, Hahn, Rosebank, Mundy and Murphy
Water allocation
8,338ML Murrumbidgee Groundwater, 8,754ML Murrumbidgee Riverwater
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 Directors have revalued Mayneland and Baamba Plains properties based on the transaction price from the
50% sale subject to final approvals.
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, property – owner occupied and water entitlements, where relevant.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C1 RFF property assets (continued)
Valuations (continued)
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.
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.
If this information is not available, the valuation report may provide additional information, such as the summation
basis of the unencumbered (vacant possession) 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.
Investment property, Bearer plants and Property – owner occupied
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.
51
50
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C1 RFF property assets (continued)
Valuations (continued)
The following table summarises the quantitative information about the significant unobservable inputs used in recurring level 3 fair value measurement:
Description*
Fair value at
Primary valuation
technique
Allocation
technique
Unobservable inputs**
Range of inputs
2024
2023
2024
2023
$'000
$'000
%
%
Almond orchard
property
293,233
292,784 Discounted Cash Flow
Rental base
Component based
Discount rate (%)
Terminal Capitalisation Rate (%)
7.25 - 8.00
7.75 - 10.00
7.25 - 8.00
7.75 - 10.20
Cattle property
and infrastructure
627,775
566,165 Summation assessment
Productive unit
Component based
$ per adult equivalent (AE)
carrying capacity
(Backgrounding properties)
$ per adult equivalent (AE)
carrying capacity (Breeder
properties)
$5,793 - $11,829
$1,630 - $3,489
$5,792 - $11,742
$1,590 - $3,051
Vineyard property
and infrastructure
51,199
54,614 Discounted Cash Flow
Component based
Discount rate (%)
Terminal Capitalisation rate (%)
8.25
8.50 - 9.00
7.50 - 8.50
8.50 - 9.00
Cropping property
and infrastructure
152,873
134,270 Summation assessment
Component based
$ per irrigated hectare per
property
Average $ per plantable hectare
(Maryborough)
$15,770 - $21,090
$20,433
$12,500 - $16,314
$21,248
Macadamia
orchard property
339,431
237,472 Discounted Cash Flow
Summation assessment
Rental base
Component based
Discount rate (%)
Terminal Capitalisation rate (%)
Average $ per planted hectare
(Orchard > 5 years)
Average $ per planted/plantable
hectare (Orchard < 5 years)
8.25
6.50 - 7.00
$132,121
$89,291
7.25 - 8.00
6.50 - 8.00
$96,898
$52,291
Total
1,464,511
1,285,305
*Fair values disclosed exclude water assets.
**There were no significant inter-relationships between unobservable inputs that materially affect fair values. Unobservable inputs are based on assessments by external valuers.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C1 RFF property assets (continued)
Valuations (continued)
Primary valuation technique
External valuations typically assess property values using different valuation techniques.
Discounted cash flow
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.
Summation assessment
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.
Productive unit
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
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.
Component based
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.
Component based – Almonds
and Macadamias
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.
53
52
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C2 Investment property
2024
Almond
property
Cattle
property
Vineyard
property
Cropping
property
Macadamia
property
Total
$'000
$'000
$'000
$'000
$'000
$'000
Opening net book amount
163,663
503,945
35,442
83,440
136,915
923,405
Additions
3,254
8,841
327
5,851
40,795
59,068
Capitalisation of borrowing costs
-
1,054
-
1,396
3,261
5,711
Classified as held for sale
-
-
-
(17,136)
-
(17,136)
Transfer
-
-
-
58
(58)
-
Transfer to property - owner
occupied
-
(25,677)
-
-
-
(25,677)
Transfer from bearer plants
-
-
-
-
13
13
Amortisation of lease incentives
-
(200)
-
-
-
(200)
Fair value adjustment
417
47,612
(2,516)
(2,237)
14,781
58,057
Closing net book amount
167,334
535,575
33,253
71,372
195,707
1,003,241
2023
Almond
property
Cattle
property
Vineyard
property
Cropping
property
Macadamia
property
Total
Opening net book amount
141,080
433,090
35,727
88,931
88,153
786,981
Acquisitions
-
36,993
-
-
9,563
46,556
Additions
1,202
5,112
-
76
23,511
29,901
Capitalisation of borrowing costs
-
436
-
84
3,289
3,809
Disposals
(71)
-
-
-
-
(71)
Transfer
-
-
-
(7,220)
7,220
-
Transfer to property - owner
occupied
-
-
-
-
(5,445)
(5,445)
Transfer to bearer plants
-
-
(290)
-
-
(290)
Transfer from property - owner
occupied
-
-
-
-
1,058
1,058
Amortisation of lease incentives
-
(200)
-
-
-
(200)
Fair value adjustment
21,452
28,514
5
1,569
9,566
61,106
Closing net book amount
163,663
503,945
35,442
83,440
136,915
923,405
Investment properties comprise land, buildings and integral infrastructure including shedding, irrigation and
trellising.
Macadamia properties under development include Maryborough – Macadamias, Riverton and Rookwood Farms.
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.
55
54
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C3 Plant and equipment – bearer plants
2024
Bearer
Plants -
Almonds
Bearer
Plants -
Vineyards
Bearer
Plants -
Macadamias
Total
$'000
$'000
$'000
$'000
Opening net book amount
129,121
19,172
69,407
217,700
Additions
32
-
12,402
12,434
Capitalisation of borrowing costs
-
-
191
191
Transfer to investment property
-
-
(13)
(13)
Lease incentive
-
-
2,645
2,645
Amortisation of lease incentive
-
-
(68)
(68)
Depreciation
(6,241)
(1,089)
(3,941)
(11,271)
Fair value adjustment - profit and loss
-
(416)
288
(128)
Fair value adjustment - other comprehensive
income
2,987
279
24,086
27,352
Closing net book amount
125,899
17,946
104,997
248,842
2023
Bearer
Plants -
Almonds
Bearer
Plants -
Vineyards
Bearer
Plants -
Macadamias
Total
$'000
$'000
$'000
$'000
Opening net book amount
124,948
17,260
48,280
190,488
Additions
232
24
12,166
12,422
Capitalisation of borrowing costs
-
-
262
262
Transfer from investment property
-
290
-
290
Lease incentive
-
-
1,702
1,702
Amortisation of lease incentive
-
-
(9)
(9)
Depreciation
(5,761)
(941)
(2,881)
(9,583)
Fair value adjustment - profit and loss
(544)
961
2,058
2,475
Fair value adjustment - other comprehensive
income
10,246
1,578
7,829
19,653
Closing net book amount
129,121
19,172
69,407
217,700
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.
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.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C3 Plant and equipment – bearer plants (continued)
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:
Useful life:
Almond bearer plants
30 years
Vineyard bearer plants
40 years
Macadamia bearer plants
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:
2024
2023
$'000
$'000
Cost
196,671
185,241
Accumulated depreciation
(31,362)
(24,557)
Accumulated impairment
(2,564)
(3,277)
Bearer plants at historical cost less accumulated impairment
162,745
157,407
C4 Financial assets – property related
2024
2023
$'000
$'000
Financial Assets - property related
Investment - BIL
520
520
Investment - CICL
11,464
11,464
Finance Lease - Breeders
18,864
16,621
Finance Lease - Feedlots
65,160
62,989
Finance Lease - Equipment
130
164
Finance Lease - DA & JF Camm Pty Limited
2,381
-
Other receivables - straight-line asset
5,271
2,067
Total
103,790
93,825
Barossa Infrastructure Ltd (BIL) is an unlisted public Company supplying non-potable supplementary irrigation
water for viticulture in the Barossa. The Group holds a minority interest in BIL.
Coleambally Irrigation Co-operative Limited (CICL) is one of Australia’s major irrigation companies and is wholly
owned by its farmer members. CICL’s irrigation delivery system delivers water to 400,000 hectares of area across
the Coleambally Irrigation District, in the Riverina, near Griffith, NSW. The Group holds a minority interest in CICL.
Finance Lease – Breeders is comprised of breeders owned by the Group which have been leased to Cattle JV, a
wholly-owned subsidiary of Rural Funds Management Limited, for a term of ten years ending in 2028. 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 2024 (2023: 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.
57
56
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C4 Financial assets – property related (continued)
Finance Lease – DA & JF Camm Pty Limited comprises of cattle owned by the Group and leased to DA & JF Camm
Pty Limited, the lessee of the Natal aggregation, as part of a $5,000,000 facility. The gross balance drawn as at 30
June 2024 was $2,381,000 (2023: nil). The balance drawn net of security deposits held is $1,871,000 (2023: nil).
The expected credit loss on the finance lease are based on an assessment of the value of the security held. There
has been no expected credit loss recognised at 30 June 2024 (2023: nil).
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:
2024
2023
$'000
$'000
Within 1 year
6,125
6,055
Between 1 and 2 years
24,882
6,051
Between 2 and 3 years
4,516
22,501
Between 3 and 4 years
4,490
4,367
Between 4 and 5 years
65,295
4,333
Later than 5 years
-
57,334
Total
105,308
100,641
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C5 Intangible assets
Intangible assets are made up of water rights and entitlements. Refer to note B1 for Directors’ valuation of water rights and entitlements.
2024
Almonds
Cattle
Vineyards
Cropping
Macadamias
Unallocated
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-current
Opening net book amount
66,707
14,831
500
11,966
6,954
66,030
166,988
Additions
-
6,397
-
-
15,995
13,140
35,532
Capitalisation of borrowing costs
-
369
-
165
380
-
914
Transfers
-
-
-
(2,190)
2,910
(720)
-
Classified as held for sale
-
-
-
(3,110)
-
-
(3,110)
(Impairment)/reversal of impairment
-
(160)
-
-
12
1,548
1,400
Closing net book amount
66,707
21,437
500
6,831
26,251
79,998
201,724
Cost
67,462
22,434
500
7,135
26,354
83,486
207,371
Accumulated impairment
(755)
(997)
-
(304)
(103)
(3,488)
(5,647)
Net book amount
66,707
21,437
500
6,831
26,251
79,998
201,724
2023
Almonds
Cattle
Vineyards
Cropping
Macadamias
Unallocated
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-current
Opening net book amount
66,707
6,038
500
7,961
5,441
71,032
157,679
Additions
-
8,862
-
-
454
-
9,316
Capitalisation of borrowing costs
-
56
-
65
119
-
240
Transfers
-
-
-
(940)
940
-
-
(Impairment)/reversal of impairment
-
(125)
-
4,880
-
(5,002)
(247)
Closing net book amount
66,707
14,831
500
11,966
6,954
66,030
166,988
Cost
67,462
15,668
500
12,270
7,069
71,066
174,035
Accumulated impairment
(755)
(837)
-
(304)
(115)
(5,036)
(7,047)
Net book amount
66,707
14,831
500
11,966
6,954
66,030
166,988
59
58
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C5 Intangible assets (continued)
Water rights
Permanent water rights and entitlements are recorded at historical cost less accumulated impairment losses. Such
rights have an indefinite life and are not depreciated. The carrying value is tested annually for impairment as well
as for possible reversal of impairment. If events or changes in circumstances indicate impairment, or reversal of
impairment, the carrying value is adjusted to take account of impairment losses.
C6 Property – owner occupied
2024
Land
Building
Irrigation
Total
$'000
$'000
$'000
$'000
Opening net book amount
129,730
11,154
3,316
144,200
Additions
1,143
1,979
5,362
8,484
Capitalisation of borrowing costs
5,142
229
508
5,879
Transfer from investment property
14,974
1,973
8,730
25,677
Classified as held for sale
(16,158)
(2,033)
(4,195)
(22,386)
Depreciation
-
(650)
(296)
(946)
Impairment
(151)
(305)
(102)
(558)
Fair value adjustment - other comprehensive
income
5,932
233
3,281
9,446
Closing net book amount
140,612
12,580
16,604
169,796
2023
Land
Building
Irrigation
Total
$'000
$'000
$'000
$'000
Opening net book amount
61,796
6,035
596
68,427
Acquisitions
41,812
2,549
-
44,361
Additions
1,003
1,945
6,420
9,368
Capitalisation of borrowing costs
1,003
8
3
1,014
Transfer from deposit
18,504
-
-
18,504
Transfer from investment property
3,687
1,522
236
5,445
Transfer to investment property
(1,030)
(28)
-
(1,058)
Depreciation
-
(370)
(132)
(502)
Impairment
1,184
(579)
(3,807)
(3,202)
Fair value adjustment - other comprehensive
income
1,771
72
-
1,843
Closing net book amount
129,730
11,154
3,316
144,200
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 2024, this included properties that were operated by the Group including
the Maryborough properties (cropping), Beerwah, Bauple, Swan Ridge, Moore Park (macadamias), Yarra (cattle)
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.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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:
Useful life:
Land
Not applicable
Buildings
20 years
Irrigation
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:
30 June 2024
Land
Building
Irrigation
Total
$'000
$'000
$'000
$'000
Cost
132,311
14,585
17,662
164,558
Accumulated depreciation and impairment
(527)
(2,324)
(4,340)
(7,191)
Net book amount
131,784
12,261
13,322
157,367
30 June 2023
Land
Building
Irrigation
Total
$'000
$'000
$'000
$'000
Cost
127,813
12,446
7,259
147,518
Accumulated depreciation and impairment
(1,126)
(1,378)
(3,943)
(6,447)
Net book amount
126,687
11,068
3,316
141,071
C7 Plant and equipment – other
2024
2023
$'000
$'000
Opening net book amount
27,045
16,530
Additions
12,877
12,892
Transfers from finance lease - equipment
-
1,151
Disposals
(153)
(221)
Classified as held for sale
(6,244)
-
Depreciation
(3,456)
(2,336)
Depreciation capitalised to developments
(1,068)
(971)
Closing net book amount
29,001
27,045
Cost
45,534
40,633
Accumulated depreciation
(15,211)
(12,266)
Accumulated impairment
(1,322)
(1,322)
Net book amount
29,001
27,045
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.
61
60
Rural Funds Group
Notes to the Financial Statements
30 June 2024
C7 Plant and equipment – other (continued)
The useful lives and for each class of depreciable asset are shown below:
Fixed asset class:
Useful life:
Capital works in progress
Not applicable
Plant and equipment
2-16 years
Farm vehicles and equipment
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
2024
2023
Note
$'000
$'000
Investment property
C2
17,136
-
Intangible assets
C5
3,110
-
Property - owner occupied
C6
22,386
-
Plant and equipment - other
C7
6,244
-
Total
48,876
-
At 30 June 2024, assets held for sale relates to 50% interest in Mayneland and Baamba Plains and three
Maryborough cropping properties.
In February and March 2024, the Group contracted to dispose of two Maryborough cropping properties for
$3,105,000, expected to settle in the second half of 2024.
In June 2024, the Group was in the process of selling a Maryborough cropping property, the sale is expected to
settle in the second half of 2024.
In June 2024, the Group entered into a transaction for a 10-year lease of Mayneland and Baamba Plains to a
company managed by The Rohatyn Group and a sale of 50% interest in both properties, subject to Foreign
Investment Review Board (FIRB) approval. The Group is expected to settle in the coming months. Any gain or loss
recognised on the Mayneland property is included in change in fair value of investment property. An impairment of
$151,000 was recognised on the Baamba Plains property.
C9 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.
2024
2023
$'000
$'000
Investment property
71,269
95,862
Bearer plants
20,658
28,301
Intangible assets
2,243
24,766
Plant and equipment
-
1,508
Total
94,170
150,437
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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 is 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. All entities within the Group are tax residents in Australia.
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 Consolidated Statement of Comprehensive Income 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:
2024
2023
$'000
$'000
Current tax
705
364
Deferred tax
414
(651)
Adjustments in respect of deferred income tax of previous years
-
(40)
Income tax expense reported in the Statement of Comprehensive
Income
1,119
(327)
Income tax expense is attributable to:
Profit from continuing operations
1,119
(327)
Total
1,119
(327)
Deferred income tax expense included in income tax expense comprises:
Decrease in deferred tax assets
918
918
Decrease in deferred tax liabilities
(420)
(1,136)
Total
498
(218)
Amounts charged or credited directly to equity
Change in fair value taken through asset revaluation reserve
84
473
Total
84
473
63
62
Rural Funds Group
Notes to the Financial Statements
30 June 2024
D1 Income tax expense (continued)
Numerical reconciliation of income tax expense to prima facie tax payable
2024
2023
$'000
$'000
Net profit before income tax
81,560
94,171
At the statutory income tax rate of 30% (2023: 30%)
24,468
28,251
Tax effect of amounts that are not taxable in determining taxable income
(24,833)
(32,523)
Derecognition of tax losses
1,484
3,985
Adjustments in respect of tax of previous years
-
(40)
Total
1,119
(327)
Tax losses
2024
2023
$'000
$'000
Unused tax losses for which no deferred tax asset has been recognised
18,230
13,283
Potential tax benefit @ 30%
5,469
3,985
The unused tax losses relate to RF Active and can be carried forward indefinitely.
Franking credits
At 30 June 2024 there were $1,277,000 of franking credits available to apply to future income distributions (2023:
$1,986,000).
D2 Deferred tax and current tax
2024
2023
$'000
$'000
Deferred tax liabilities
Bearer plants
3,041
3,408
Plant and equipment
1,131
1,390
Fair value investment property
4,834
5,151
Other assets
1,674
876
Gross deferred tax liabilities
10,680
10,825
Set off of deferred tax assets
(2,766)
(2,491)
Net deferred tax liabilities
7,914
8,334
Deferred tax assets
Investments
(175)
216
Intangible assets
1,048
1,513
Other
45
64
Unused income tax losses
1,848
1,616
Gross deferred tax assets
2,766
3,409
Set off of deferred tax liabilities
(2,766)
(2,491)
Net deferred tax assets
-
918
The deferred tax assets include an amount of $1,848,000 which relates to carried-forward tax losses in RF Active
and RFM Australian Wine Fund. The group expects to be able to recover these losses against taxable income over
the following few years.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
D2 Deferred tax and current tax (continued)
Recognised tax assets and liabilities
Current income tax
Deferred income tax
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Opening balance
259
1,038
(7,416)
(7,634)
Charged to income
(705)
(364)
(414)
691
Credited to equity
-
-
(84)
(473)
Tax refund
(259)
(415)
-
-
Closing balance
(705)
259
(7,914)
(7,416)
Tax expense in the Consolidated Statement of Comprehensive Income
1,119
(327)
Amounts recognised in the Consolidated Statement of Financial Position:
Deferred tax asset
-
918
Deferred tax liability
(7,914)
(8,334)
65
64
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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
2024
2023
$'000
$'000
Current
Equipment loans (ANZ)
5,641
2,783
Wyseby facility
24,454
24,455
TRG loan
5,714
5,714
J&F Guarantee - Borrowing loss provision
185
198
Total
35,994
33,150
Non-current
Borrowings (ANZ)
290,159
281,393
Borrowings (Rabobank)
286,397
242,565
Borrowings (NAB)
148,050
50,648
TRG loan
27,143
32,857
Total
751,749
607,463
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 $123.0 million (2023: $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 $123.0 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 and grain to JBS Australia Pty Limited (JBS) for its grain fed business.
During the year, the guarantee was extended to support the funding of grain in JBS’ Rivalea business as part of
the existing arrangement. 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 $123.0 million.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
E1 Interest bearing liabilities (continued)
J&F Guarantee (continued)
The guarantee fee received from J&F during the year was $5,215,000 (2023: $7,615,000). The return to the Group
relating to the guarantee fee arrangement for the year was approximately 6.7% (2023: 7.6%) inclusive of interest
offset savings. There was no event of default during the year, and as a result, the guarantee has not been called.
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
reduction in credit loss provision recognised in the year was $13,000 (2023: nil).
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 2024 the syndicated debt facility available to the Group was $750,000,000 (2023: $670,000,000), with
a drawn balance of $724,606,000 (2023: $574,606,000). The facility is split into two tranches, with a $340,000,000
tranche expiring in November 2025 and a $410,000,000 tranche expiring in November 2026.
As at 30 June 2024 RFF had active interest rate swaps totalling 68.5% (2023: 42.4%) 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 2024 the TRG loan balance was $32,857,000. A $40,000,000 loan was provided to the Group on
commencement of the initial lease with an additional $60,000,000 to be provided during the balance of the
development. Debt is repaid with interest over 7 years to March 2030.
As at 30 June 2024 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 is due to expire on 31 March 2025.
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 2024:
•
maintain a maximum Loan to Value Ratio of 55% (2023: 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 1.50:1.00 (2023: 2.00:1.00) with distributions
permitted if the Interest Cover Ratio is not less than 1.65:1.00 (2023: 2.15:1.00).
The loan to value ratio calculation includes the J&F guarantee of $123.0 million (2023: $132.0 million).
Rural Funds Group has complied with the financial covenants of its borrowing facilities during the year.
In September 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.
67
66
Rural Funds Group
Notes to the Financial Statements
30 June 2024
E1 Interest bearing liabilities (continued)
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) and Certane
CT Pty Limited (Certane) as custodians 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
and Certane as custodians for Rural Funds Trust and its subsidiaries.
The following assets are pledged as security over the loans:
2024
Investment
property
Water
licences
Plant and
equipment
- Bearer
Plants
Financial
assets
Property -
owner
occupied
Plant and
equipment
Assets
held for
sale
Total
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Mortgage:
Properties
1,003,241
121,727
248,842
77,145
169,796
-
42,632
1,663,383
Other assets
-
79,997
-
21,375
-
-
-
101,372
Equipment
-
-
-
-
-
29,001
6,244
35,245
Total
1,003,241
201,724
248,842
98,520
169,796
29,001
48,876
1,800,000
2023
Investme
nt
property
Water
licences
Plant and
equipment
- Bearer
Plants
Financial
assets
Property -
owner
occupied
Plant and
equipment
Assets
held for
sale
Total
$'000
$'000
$'000
$'000
$’000
$'000
$'000
$'000
Mortgage:
Properties
923,406
100,959
217,700
74,974
144,200
-
-
1,461,239
Other assets
-
66,029
-
16,784
-
-
-
82,813
Equipment
-
-
-
-
-
27,045
-
27,045
Total
923,406
166,988
217,700
91,758
144,200
27,045
-
1,571,097
E2 Financial assets – other (non-property related)
2024
2023
$'000
$'000
Investment - Marquis Macadamias Limited
5,315
5,231
Investment - Almondco Australia Limited
3,755
3,432
Total
9,070
8,663
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
2024
2023
$'000
$'000
Assets
Current
Interest rate swaps
619
-
Total other assets
619
-
Non-current
Interest rate swaps
38,124
42,040
Total other assets
38,124
42,040
The Group’s derivative financial instruments are held at fair value (level 2 - see section E4).
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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 2024, 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 (2023: nil).
Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments via level 2 inputs include:
•
the use of quoted market prices or dealer quotes for similar instruments;
•
the fair value of interest rate swaps is calculated as the present value of estimated future cash flows based
on observable yield curves
Specific valuation techniques used to value financial assets, investment property and bearer plants via level 3 are
discussed in section C1.
E5 Financial instruments
Financial instruments are recognised initially using trade date accounting, i.e. on the date that the Group becomes
party to the contractual provisions of the instrument.
On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for
instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).
a.
Financial assets
Financial assets are divided into the following categories which are described in detail below:
•
financial assets at amortised cost; and
•
financial assets at fair value through profit or loss.
Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of
the instrument and its purpose. A financial instrument’s category is relevant to the way it is measured and whether
any resulting income and expenses are recognised in profit or loss or in other comprehensive income.
69
68
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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
The Group’s derivatives, investments in Marquis Macadamias Ltd and Almondco are held at fair value through
profit or loss.
Assets included within this category are carried in the Consolidated Statement of Financial Position at fair value
with changes in fair value recognised in profit or loss.
Any gain or loss arising from derivative financial instruments is based on changes in fair value, which is determined
by direct reference to active market transactions or using a valuation technique where no active market exists.
d.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual agreements of the
instrument. All interest-related charges are reported in profit or loss and are included in the Consolidated Statement
of Comprehensive Income 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.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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
•
Credit risk
•
Liquidity risk
The principal categories of financial instrument used by the Group are:
•
Loans and receivables
•
Finance lease receivables
•
Cash at bank
•
Bank overdraft
•
Trade and other payables
•
Floating rate bank loans
•
Interest rate swaps
a.
Financial risk management policies
Risks arising from holding financial instruments are inherent in the Group’s activities and are managed through a
process of ongoing identification, measurement and monitoring. The Responsible Entity is responsible for
identifying and controlling risks that arise from these financial instruments.
The risks are measured using a method that reflects the expected impact on the results and net assets attributable
to unitholders of the Group from changes in the relevant risk variables. Information about these risk exposures at
the reporting date, measured on this basis, is disclosed below.
Concentrations of risk arise where a number of financial instruments or contracts are entered into with the same
counterparty, or where a number of counterparties are engaged in similar business activities that would cause their
ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions.
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 68.5% (2023: 42.2%) of the Group's floating rate
debt at 30 June 2024.
At balance date, the details of the effective interest rate swap contracts are:
Effective average interest rate
payable
Balance
2024
2023
2024
2023
%
%
$'000
$'000
Maturity of notional amounts
Settlement - between 0 to 3 years
2.91
3.37
351,000
143,000
Settlement - 3 to 5 years
3.08
2.81
52,000
33,000
Settlement - greater than 5 years
2.50
3.25
110,000
77,000
Total
513,000
253,000
71
70
Rural Funds Group
Notes to the Financial Statements
30 June 2024
E6 Financial risk management (continued)
b.
Interest rate risk and swaps held for hedging (continued)
The following interest rate swap contracts that have been entered into but are not yet effective as at 30 June 2024
are:
Effective average interest rate
payable
Balance
2024
2023
2024
2023
%
%
$'000
$'000
Maturity of notional amounts
Settlement - between 0 to 3 years
-
2.66
-
20,000
Settlement - 3 to 5 years
-
3.26
-
155,000
Settlement - greater than 5 years
2.17
2.25
165,000
230,000
Total
165,000
405,000
The net loss recognised on the swap derivative instruments for the year ended 30 June 2024 was $3,297,000
(2023: $8,930,000 gain).
At 30 June 2024 the Group had the following mix of financial assets and liabilities exposed to variable interest
rates:
2024
2023
$'000
$'000
Cash
7,243
5,753
Interest bearing liabilities (current)
(24,454)
(24,454)
Interest bearing liabilities (non-current)
(724,606)
(574,606)
Total
(741,817)
(593,307)
At 30 June 2024, 4.89% (2023: 6.46%) of the Group’s debt is fixed, excluding the impact of interest rate swaps.
c.
Interest rate risk (sensitivity analysis)
At 30 June 2024, 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:
2024
2023
$'000
$'000
Change in profit before income tax:
Increase in interest rate by 1%
17,570
18,563
Decrease in interest rate by 1%
(18,973)
(20,341)
Change in equity:
Increase in interest rate by 1%
17,570
18,563
Decrease in interest rate by 1%
(18,973)
(20,341)
Rural Funds Group
Notes to the Financial Statements
30 June 2024
E6 Financial risk management (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.
73
72
Rural Funds Group
Notes to the Financial Statements
30 June 2024
E6 Financial risk management (continued)
e.
Liquidity risk and capital management
The Responsible Entity of the Group defines capital as net assets attributable to unitholders. The Group's objectives when managing capital are to safeguard the going concern
of the Group and to maintain an optimal capital structure. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate headroom on borrowing
facilities are maintained. The Group is able to maintain or adjust its capital by divesting assets to reduce debt or adjusting the amount of distributions paid to unitholders.
The table below reflects all contractually fixed repayments and interest resulting from recognised financial liabilities as at 30 June 2024. The amounts disclosed in the table are
the contractual undiscounted cash flows which have been estimated using interest rates applicable at the reporting date. For interest rate swaps, the undiscounted cash flows
have been estimated using forward interest rates applicable at the end of the reporting period.
Less than 6 months
6 months to 1 year
1 to 3 years
3 to 5 years
Over 5 years
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Financial liabilities
Interest bearing liabilities
25,289
20,413
49,181
44,769
779,465
622,610
12,714
13,403
4,415
10,601
871,064
711,796
Trade and other payables
6,783
6,878
-
-
-
-
-
-
-
-
6,783
6,878
Equipment loans
656
430
612
584
2,111
1,252
1,409
798
-
-
4,788
3,064
Total
32,728
27,721
49,793
45,353
781,576
623,862
14,123
14,201
4,415
10,601
882,635
721,738
Rural Funds Group
Notes to the Financial Statements
30 June 2024
E7 Issued units
2024
2023
No.
$'000
No.
$'000
Units on issue at the beginning of the period
384,856,558
465,912
382,514,759
471,797
Units issued during the year
3,386,488
6,421
2,341,799
5,665
Distributions to unitholders
-
(40,837)
-
(11,550)
Units on issue
388,243,046
431,496
384,856,558
465,912
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 $45,418,000 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
2024
2023
$'000
$'000
Distributions payable
11,948
11,942
Total
11,948
11,942
75
74
Rural Funds Group
Notes to the Financial Statements
30 June 2024
F. OTHER ASSETS AND LIABILITIES
F1 Cash and cash equivalents
2024
2023
$'000
$'000
Cash at bank
7,243
5,753
Total
7,243
5,753
Reconciliation of cash
Cash and cash equivalents reported in the Consolidated Statement of Cash Flows are reconciled to the equivalent
items in the Consolidated Statement of Financial Position as follows:
2024
2023
$'000
$'000
Cash and cash equivalents
7,243
5,753
F2 Trade and other receivables
2024
2023
$'000
$'000
Current
Trade receivables
14,763
8,550
Sundry receivables
2,340
1,146
Receivables from related parties
3,435
857
Total
20,538
10,553
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
2024
2023
$'000
$'000
Current
Prepayments
2,186
1,860
Total
2,186
1,860
Non-current
Deposits
2,996
11,649
Other
39
3
Total
3,035
11,652
Rural Funds Group
Notes to the Financial Statements
30 June 2024
F4 Biological assets
Soy beans
Sugar
Macadamias
Cropping
Cattle
Total
2024
$'000
$'000
$'000
$'000
$'000
$'000
Opening net book amount
-
2,366
403
2,324
9,202
14,295
Additions
112
2,473
4,085
4,537
1,293
12,500
Increases due to biological
transformation
85
903
2,691
1,734
1,664
7,077
Decreases due to sales
(197)
(3,934)
(5,030)
(6,106)
(5,698)
(20,965)
Closing net book amount
-
1,808
2,149
2,489
6,461
12,907
Soy beans
Sugar
Macadamias
Cropping
Cattle
Total
2023
$'000
$'000
$'000
$'000
$'000
$'000
Opening net book amount
-
2,437
1,925
534
2,930
7,826
Additions
32
2,693
3,328
3,405
10,523
19,981
Increases/(decrease) due to
biological transformation
(11)
991
(2,258)
2,087
(296)
513
Decreases due to sales
(21)
(3,755)
(2,592)
(3,702)
(3,955)
(14,025)
Closing net book amount
-
2,366
403
2,324
9,202
14,295
Biological assets relate to the Group’s farming operations. In accordance with AASB 141 Agriculture. The Group’s
cropping biological assets have been recognised at fair value as determined based on the present value of
expected net cash flows from the crops. The fair value of biological assets relating to Baamba Plains is estimated
at cost due to the contracted farming cost recovery as part of the 50% sale transaction (subject to final approvals).
Cattle biological assets relates to livestock recognised at fair value as determined based on sales for similar cattle
in active markets.
Fair value has been based on expected net cash flows from the crops discounted from the time of harvest. The
main level 3 inputs used by the Group includes estimates based on production costs (including input and harvest
costs) and the estimated time of harvest adjusted for the risks of the cash flows.
Significant estimates used in determining the expected net cash flows:
Sugar from cane planted (tonnes per ha)
The higher the sugar from cane planted, the higher the fair value
Yield
The higher the yield, the higher the fair value
Price ($ per tonne)
The higher the net price, the higher the fair value
Changes in the fair value of biological assets are recognised in the Consolidated 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.
77
76
Rural Funds Group
Notes to the Financial Statements
30 June 2024
F4 Biological assets (continued)
Level 1
Level 2
Level 3
Total
2024
$'000
$'000
$'000
$'000
Sugar
-
-
1,808
1,808
Macadamias
-
-
2,149
2,149
Cropping
-
-
2,489
2,489
Cattle
-
6,461
-
6,461
Total biological assets
-
6,461
6,446
12,907
Level 1
Level 2
Level 3
Total
2023
$'000
$'000
$'000
$'000
Sugar
-
-
2,366
2,366
Macadamias
-
-
403
403
Cropping
-
-
2,324
2,324
Cattle
-
9,202
-
9,202
Total biological assets
-
9,202
5,093
14,295
Farming
Fair value at
Unobservable inputs
Range of inputs
operations
2024
2023
2024
2023
$'000
$'000
Sugar
1,808
2,366
Sugar from cane planted
(tonnes per ha)
2.3 - 7.0
tonnes per ha
2.5 - 7.2
tonnes per ha
Net price ($ per tonne)
(+/- 10%)
$592 - $723
per tonne
$547 - $668
per tonne
Macadamias
2,149
403
Macadamia yield (tonnes)
(+/- 10%)
861.8 -
1,053.3
tonnes
718.9 - 878.6
tonnes
Farmgate NIS price ($ per
tonne)
(+/-10%)
$2,880 -
$3,520 per
tonne
$1,530 -
$1,870 per
tonne
Cropping (mungbean)
-
95
Mungbean yield (tonnes per
ha)
(+/-10%)
-
0.28 - 0.23
tonnes per ha
Mungbean price ($ per
tonne)
(+/-10%)
- $900 - $1,000
per tonne
Cropping (cotton)
-
971
Cotton yield (bale per ha)
(+/-10%)
-
6.8 - 8.2
bales per ha
Cotton lint price ($ per bale)
(+/-10%)
-
$573 - $700
per bale
Cropping (other
crops)
2,489
1,258
Cost approximates fair value
less costs to sell
-
-
Total
6,446
5,093
Rural Funds Group
Notes to the Financial Statements
30 June 2024
F5 Inventories
2024
2023
$'000
$'000
Current
Agricultural produce - farming operations
1,279
929
Other
943
924
Total
2,222
1,853
F6 Trade and other payables
2024
2023
$'000
$'000
Trade payables
4,320
3,935
Accruals
2,270
2,072
Sundry creditors
193
871
Total
6,783
6,878
F7 Unearned income
2024
2023
$'000
$'000
Current
Unearned lease income
507
975
Total
507
975
Non-current
Unearned lease income
10,581
5,902
Total
10,581
5,902
Unearned lease income – non-current relates to rent received from or contracted with TRG prior to lease
commencement. Lease income is subsequently recognised on a straight-lined basis over the term of the lease
upon lease commencement.
F8 Other non-current liabilities
2024
2023
$'000
$'000
Lessee deposits
3,716
3,206
Total
3,716
3,206
F9 Asset revaluation reserve
2024
2023
$'000
$'000
Opening balance
70,265
49,417
Disposal of Plant and equipment - bearer plants
-
(27)
Transfer from Property - owner occupied to Investment property
-
(148)
Property - owner occupied - revaluation
9,446
1,843
Plant and equipment - bearer plants - revaluation
27,352
19,653
Total comprehensive income
36,798
21,321
Income tax applicable
(84)
(473)
Closing balance
106,979
70,265
79
78
Rural Funds Group
Notes to the Financial Statements
30 June 2024
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 2024.
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 2024
are:
Guy Paynter
David
Bryant*
Michael
Carroll
Julian
Widdup
Andrea
Lemmon
Units
Units
Units
Units
Units
Balance at 30 June 2022
1,744,710
16,325,462
254,740
135,026
183,357
Additions
-
619,000
12,668
6,714
-
Balance at 30 June 2023
1,744,710
16,944,462
267,408
141,740
183,357
Additions
300,000
-
16,686
6,741
-
Balance at 30 June 2024
2,044,710
16,944,462
284,094
148,481
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 (2023: 0.6%) of adjusted total assets; and,
•
Asset management fee: 0.45% per annum (2023: 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 2024
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:
2024
2023
$'000
$'000
Management fee
9,976
8,558
Asset management fee
7,482
6,419
Total management fees
17,458
14,977
Expenses reimbursed to RFM
10,590
8,356
Expenses and capital expenditure reimbursed to RFM Macadamias
16,763
12,321
Expenses reimbursed to Cattle JV
19
273
Expenses reimbursed to RFM Farming
5,449
3,594
Dividends declared to the Responsible Entity
1,543
1,530
Total amount paid to RFM and related entities
51,822
41,051
Rental income received from RFM
44
22
Rental income received from RFM Farming
1,025
1,913
Rental income received from Cattle JV
1,419
1,378
Rental income received from Cotton JV
1,696
1,775
Rental income received from 2007 Macgrove Project
-
1,052
Finance income from Cattle JV
1,777
1,670
Finance income from J&F Australia
5,215
7,615
Expenses charged to RFM Macadamias
781
737
Expenses charged to RFM Farming
544
126
Expenses charged to Cattle JV
125
198
Expenses charged to Cotton JV
27
-
Total amounts received from RFM and related entities
12,653
16,486
The terms and nature of the historical transactions between the Group and related parties have not changed during
the year ended 30 June 2024. Transactions entered between related parties during the year have been reviewed.
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 2024, 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, farming
operations 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.
Rental income from RFM Farming largely relates to rental income from the Mayneland and Bonmac properties. In
June 2024, the Group announced that it had entered into a transaction for a 10-year lease of Mayneland and
Baamba Plains to a company managed by The Rohatyn Group and a sale of 50% interest in both properties,
subject to Foreign Investment Review Board (FIRB) approval. The rental income from RFM Farming - Mayneland
relates to the period prior to the agreed lease commencement date.
Rental income from Cattle JV largely relates to rental income from Mutton Hole and Oakland Park properties.
Rental income from Cotton JV relates to rental income from Lynora Downs property.
Finance income from Cattle JV relates to breeder herds under finance.
81
80
Rural Funds Group
Notes to the Financial Statements
30 June 2024
G2 Related party transactions (continued)
Finance income from J&F Australia Pty Limited (J&F) relates to the $123.0 million (2023: $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
2024
2023
$'000
$'000
RFM Farming Pty Limited
-
340
RFM Macadamias Pty Limited
2,885
171
Cattle JV Pty Limited
19,052
16,657
Cotton JV Pty Limited
62
-
Total
21,999
17,168
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. $2,292,000 of additional breeders were funded during the year.
Creditors
2024
2023
$'000
$'000
Rural Funds Management Limited
1,502
814
RFM Farming Pty Limited
-
91
RFM Macadamias Pty Limited
9
130
Cattle JV Pty Limited
-
39
Total
1,511
1,074
Custodian fees
2024
2023
$'000
$'000
Certane CT Pty Limited/Australian Executor Trustee Limited
512
437
Total
512
437
Financial Guarantee
The Group provides a $123.0 million (2023: $132.0 million) guarantee to J&F Australia Pty Limited (J&F), a
subsidiary of RFM. The guarantee is currently used to support $123.0 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. During the year, the remit of the guarantee
was extended to support the funding of grain in JBS’ Rivalea business as part of the existing arrangement. 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.
Rural Funds Group
Notes to the Financial Statements
30 June 2024
G2 Related party transactions (continued)
Entities with influence over the Group
2024
2023
Units
%
Units
%
Rural Funds Management
13,157,659
3.39
13,157,659
3.42
Other
David Bryant is a director of Marquis Macadamias Limited. Marquis Macadamias Limited provides processing and
selling services for the Group’s macadamia operations on the Beerwah, Bauple, Swan Ridge and Moore Park
properties. The Group also holds shares in Marquis Macadamias Limited. Marquis Macadamias 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 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:
2024
2023
$'000
$'000
Statement of Financial Position
ASSETS
Current assets
15,775
16,475
Non-current assets
1,862,891
1,628,596
Total assets
1,878,666
1,645,071
LIABILITIES
Current liabilities
16,796
15,089
Non-current liabilities
812,800
661,082
Total liabilities
829,596
676,171
NET ASSETS ATTRIBUTABLE TO UNITHOLDERS
Issued units
424,533
459,078
Asset revaluation reserve
95,634
66,718
Retained earnings
528,903
443,104
Total equity
1,049,070
968,900
Statement of Comprehensive Income
Net profit after income tax
92,222
110,257
Other comprehensive income for the year, net of tax
27,073
17,927
Total comprehensive income attributable to unitholders
119,295
128,184
83
82
Rural Funds Group
Notes to the Financial Statements
30 June 2024
G4 Cash flow information
Reconciliation of net profit after income tax to cash flow from operating activities
2024
2023
$'000
$'000
Net profit after income tax
80,441
94,498
Cash flows excluded from profit attributable to operating activities
Non-cash flows in profit
Change in fair value of investment property
(58,057)
(61,106)
Change in fair value of bearer plants
128
(2,475)
Impairment of intangible assets
(1,400)
247
Impairment of property - owner occupied
558
3,202
Depreciation - bearer plants
11,271
9,583
Depreciation - property - owner occupied
946
502
Depreciation and amortisation/impairment - other
3,546
2,336
Gain on sale of assets
(444)
(802)
Amortisation of lease incentives
268
209
Finance income - lease receivable
(2,172)
(4,187)
Straight-lining of rental revenue
(3,203)
(1,470)
Change in fair value of financial assets/liabilities
(154)
(156)
Change in fair value of biological assets
(7,077)
(513)
Change in fair value of interest rate swaps
3,297
(8,930)
Loss on settlement of pre-existing relationship - Macgrove acquisition
-
1,281
Gain on bargain purchase - Macgrove acquisition
-
(440)
Impairment of goodwill - Macgrove acquisition
-
195
Dividend income classified as investing cash flows
(62)
(40)
Changes in operating assets and liabilities
Increase in trade and other receivables
(9,987)
(3,661)
Increase in inventories
(369)
(1,398)
Decrease/(increase) in biological assets
8,465
(5,755)
Decrease/(increase) in other current assets
(326)
62
(Decrease)/increase in trade and other payables
(95)
1,725
Increase in unearned income
4,211
6,220
Increase in net tax liabilities
1,287
88
Increase in other liabilities
510
-
Net cash inflow from operating activities
31,582
29,215
Net debt reconciliation
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:
2024
2023
$'000
$'000
Cash and cash equivalents
7,243
5,753
Borrowings - repayable within one year
(30,095)
(27,238)
Borrowings - repayable after one year
(751,749)
(607,463)
Net debt
(774,601)
(628,948)
Cash and cash equivalents
7,243
5,753
Gross debt - fixed interest rates
(32,784)
(35,640)
Gross debt - variable interest rates
(749,060)
(599,061)
Net debt
(774,601)
(628,948)
Rural Funds Group
Notes to the Financial Statements
30 June 2024
G5 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group:
2024
2023
$
$
PricewaterhouseCoopers Australia:
Audit and review of financial statements
589,553
558,153
Compliance audit
50,931
36,812
Total
640,484
594,965
G6 Other accounting policies
Cash and cash equivalents
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
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 Consolidated Statement of Comprehensive Income.
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.
85
84
Rural Funds Group
Notes to the Financial Statements
30 June 2024
G7 Limited guarantee – Wyseby
In June 2023, 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.
G8 Events after the reporting date
In July 2024, the Group contracted for the disposal of a Maryborough cropping property for $3m, to settle in the
second half of 2024.
In July 2024, the Group made a $7m investment in Inform Ag, an agriculture technology company which includes
an upfront purchase of shares totalling $5m and a convertible debt facility in two tranches totalling $2m. Repayment
of the debt facility will be through the issue of additional equity to RFF. The initial ownership in Inform Ag would be
35%, this would increase to 43% following the conversion of both tranches of the debt facility.
No other matter or circumstance has arisen since the end of the year that has significantly affected or could
significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group
in future financial years.
G9 Contingent liabilities
In June 2023, a civil claim was filed in the Supreme Court of Queensland against Australian Executor Trustees
Limited as custodian of 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 2024.
Rural Funds Group
Directors’ Declaration
30 June 2024
In the Directors of the Responsible Entity’s opinion:
1
The financial statements and notes of Rural Funds Group set out on pages 13 to 68 are in accordance
with the Corporations Act 2001, including:
a.
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
b.
giving a true and fair view of the Group’s financial position as at 30 June 2024 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.
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
23 August 2024
29
84
87
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.
70
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 (RFT) and its controlled entities, which
includes RF Active (RFA), (together 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 2024 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
For the purpose of consolidation accounting, RFT is the deemed parent entity and acquirer of RFA.
The financial report represents the consolidation financial results of RFT and includes RFT and its
controlled entities and RFA.
The financial report comprises:
•
the consolidated statement of financial position as at 30 June 2024
•
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, including material accounting policy information 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.
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 RFT have been stapled to the units in RFA. For the
purposes of consolidation accounting, RFT is 'deemed' the parent and the Group
financial report reflects the consolidation of RFT and its controlled entities, including RFA.
Audit scope
Key audit matters
•
Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
•
The audit of the Group was performed by a team
which included individuals with industry expertise,
as well as property valuation experts, who assisted
in our assessment of the reasonableness of some
of these subjective judgements.
•
Amongst other relevant topics, we communicated
the following key audit matters to the Audit and
Risk Committee:
•
Valuation of agricultural properties; and
•
Related party transactions
•
These are further described in the Key audit
matters section of our report.
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.
86
89
88
Key audit matter
How our audit addressed the key audit matter
Valuation of agricultural properties, which
comprise: - Investment property $1,003.2m-
Bearer plants $248.8m - Intangibles (water
entitlements) $201.7m - Property – owner
occupied $169.8m (Refer to notes 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.
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.
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:
• assessed the competency, qualifications,
experience and objectivity of the external valuers
• 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
• interviewed external valuers in relation to properties
subject to valuation and on the rationale behind the
chosen allocation techniques and key assumptions
• compared 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
• 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.
• 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 in the
current year, we evaluated the directors’ internal
assessment of the fair value of the properties and the
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 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.
Key audit matter
How our audit addressed the key audit matter
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
• by nature the agricultural property valuations are
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.
Related party transactions (refer to
note G2)
The Group’s Responsible Entity, along with
other funds for which it is the Responsible
Entity, are considered related parties of the
Group.
Key transactions with these parties include:
• rental income from the lease of
agricultural properties
• finance income from the lease of cattle
• management fees and asset management
fees paid
• distributions from investments
• reimbursement of operating expenses and
capital expenditure
• provision of a limited financial guarantee
and receipt of associated finance income.
Related party transactions were a key audit
We performed the following procedures over related
party transactions, amongst others:
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
and bank statements.
For a sample of cropping expenses/macadamia
development costs recharged, we obtained and agreed
to relevant supporting documents including invoices.
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.
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90
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 in
accordance with Australian Accounting Standards and the Corporations Act 2001 including giving a
true and fair view and for such internal control as the directors of the Responsible Entity determine is
necessary to enable the preparation of the financial report that 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.
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
Marc Upcroft
Sydney
Partner
23 August 2024
Key audit matter
How our audit addressed the key audit matter
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.
We inquired with management to develop an
understanding of the business rationale for the related
party transactions.
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 and bank
statements.
We assessed the reasonableness of the disclosures in
Note G2, of related party relationships and transactions
considering the requirements of Australian Accounting
Standards.
Other information
The directors of the Responsible Entity are responsible for the other information. The other information
comprises the information included in the annual report for the year ended 30 June 2024, 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.
93
Forecast distribution calendar for financial year ending 30 June 2025
92
Investor
information
and glossary
The RFM Investor Services team aims 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
HY25 financial results reporting date
February 2025
FY25 financial results reporting date
August 2025
Almond in bloom at Kerarbury, Darlington Point NSW,
August 2023.
AMMA statements
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.
Period end
30 September 2024
31 December 2024
31 March 2025
30 June 2025
Ex-distribution date
27 September 2024
30 December 2024
28 March 2025
27 June 2025
Record date
30 September 2024
31 December 2024
31 March 2025
30 June 2025
Payment date
31 October 2024
31 January 2025
30 April 2025
31 July 2025
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), Capex – capital expenditure, Earnings –
calculated TCI/weighted average units, Fair value –
Value of an asset as determined by an independent
valuation, FY – Financial year, FY23 – Full-year
ended 30 June 2023, FY24 – Full-year ended 30
June 2024, FY24 – Full-year ended 30 June 2024,
Gearing – Calculated as external borrowings/
adjusted total assets, ha – Hectare(s), Hort360 –
a benchmarking and risk assessment platform
designed to give growers a 360-degree view of
their farm business operations, assisting growers
identify potential risks, capitalise on business
opportunities and highlight unnecessary farm
expenses, HY25 – Half-year ended 31 December
2024, m – Million(s), myBMP – a voluntary farm and
environmental management system which provides
self-assessment mechanisms, practical tools
and auditing processes to ensure that Australian
cotton is produced according to best practice,
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, 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), TRG JV – a company managed by
The Rohatyn Group (TRG) on behalf of a joint
venture between TRG and a global institutional
investor, WALE – Weighted average lease expiry,
calculated as the FY25 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).
95
94
Disclaimer and important information
This publication has been prepared by Rural Funds Management Limited (ACN 077 492 838,
AFSL 226 701) (RFM) as the responsible entity of Rural Funds Group (RFF) and has been
authorised for release by the Board of RFM. This publication is not an offer of investment or
product financial advice. RFM 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 2024, 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).
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
Wheat at at Lynora Downs central Queensland, September 2023.
Custodian
Certane CT Pty Limited
ACN 106 424 088
Level 6, 80 Clarence Street
SYDNEY NSW 2000
Managed by: