Annual Grower and Adviser update August 2017 1 Managed by: - - PowerPoint PPT Presentation

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August 2017

Annual Grower and Adviser update

RFM Almond Funds (AF06, AF07 & AF08)

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RFM AFSL 226701 as Responsible Entity (RE) for RFM Almond Fund 2006 (ARSN 117 859 391), RFM Almond Fund 2007 (ARSN 124 998 527) and RFM Almond Fund 2008 (ARSN 127 947 960), has prepared this presentation based on information available to it. Although all reasonable care has been taken to ensure that the facts stated and opinions given in this presentation are fair and accurate, the information provided in this presentation has not been independently verified. Accordingly, no representation or warranty, expressed or implied is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this presentation. Whilst RFM has taken all reasonable care in producing the information in this presentation, subsequent changes in circumstances may occur at any time and may impact on the accuracy of the information. Neither RFM or its directors

• r employees guarantee the success of the Funds including any return received by Growers in the Funds.

The information contained in this presentation is by way of general summary only and has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before making any decision 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.

Disclaimer

Cover image: RFM Management assessing almonds, Mooral almond orchard, Hillston, NSW, December 2016

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1. Grower and Adviser update

– FY17 harvest overview – FY17 unaudited results – FY18 cash flow estimates – Industry update – Key projects & conclusion

• 2. Appendix

– Almondco Riverina processing facility

James Powell Investor Relations & Distribution Manager

RFM presenters

Agenda

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Andrea Lemmon Executive Manager, Funds Management Daryl Winter National Manager, Almonds

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Mooral almond orchard, Hillston, NSW, December 2016

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Grower and Adviser update

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FY17 Harvest overview

• Key observations for the FY17 crop and harvest:

– Biennial bearing nature of almonds resulted in a lower crop for all varieties – Yields also impacted by inclement weather during flowering and pollination

Yields were lower in 2016 following the substantial 2015 crop of 4.2+ tonnes/hectare (ha)

Almond Fund 2006 2007 2008

2015 Project year 9 8 7 2015 yield - t/ha 4.18 4.34 4.28 FY16 almond price - ($/kg) $11.26 $11.27 $11.28 2016 Project year 10 9 8 2016 yield (for FY17 result) - t/ha 2.67 3.00 3.13 FY17 almond price - ($/kg) $7.44 $7.43 $7.40

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FY17 Grower position (pre-adjustments)

Almond Fund 20061 20071 20081

Harvest proceeds from 2016 crop $4,959.69 $4,806.87 $5,001.30 Interest revenue $32.33 $19.85 $18.86 Less: Management Fee ($216.03) ($228.72) ($228.72) Licence Fee ($1,480.86) ($1,322.97) ($1,322.96) Operating Costs (excl. GST) ($4,085.80) ($3,406.18) ($3,556.30) FY17 invoice per Grove (excl. GST) ($790.67) ($131.16) ($87.82) GST ($553.52) ($470.42) ($485.65) FY17 invoice per Grove (inc. GST) ($1,344.19) ($601.58) ($573.47)

Note: 1. Figures are unaudited and therefore estimates only

Lower yield (biennial bearing) has contributed to a negative cash flow for FY17

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FY17 Grower adjusted position

Almond Fund 20061 20071 20081

Shortfall: FY17 total per Grove (inc. GST) ($1,344.19) ($601.58) ($573.47) Paid by: RFM (to provide 12 month funding) (excl. GST) ($790.67) ($131.16) ($87.82) RFM (to provide 12 month funding) (GST) ($79.07) ($13.12) ($8.78) Grower invoice for GST ($474.46) ($457.30) ($476.87) Grower position: Grower invoice for GST ($474.46) ($457.30) ($476.87) GST refund $474.46 $457.30 $476.87 Grower position after GST refund ($0) ($0) ($0)

RFM will provide 12 month funding for the FY17 invoice, adjusting for GST refund. Growers will be in a neutral cash flow position, after receiving the GST refund

Note: 1. Figures are unaudited and therefore estimates only

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FY18 cash flow estimate

RFM will deduct the FY17 shortfall which includes the RFM funding from the FY18 distribution

Note: 1. Figures are unaudited and therefore estimates only

Almond Fund 2006 2007 2008

2017 crop estimated yield - t/ha 3.74 3.92 3.77 Estimated almond price - ($/kg) $7.20 $7.20 $7.20 Cash flow estimates per Grove: Estimated harvest proceeds from 2017 crop $6,239.78 $5,647.70 $5,439.86 Budgeted operating expenses (excl. GST) ($5,344.38) ($4,787.59) ($4,729.38) FY18 invoice estimate per Grove (excl. GST) $895.40 $860.11 $710.48 Carried forward FY17 shortfall (excl. GST) ($790.67) ($131.16) ($87.82) FY18 invoice estimate per Grove including shortfall $104.73 $728.95 $622.66 GST ($613.50) ($491.88) ($481.72) GST refund $613.50 $491.88 $481.72 Estimated Grower FY18 position after GST refund $104.73 $728.95 $622.66

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Timeline

Growers are strongly encouraged to seek advice about claiming their GST refund. RFM is not a licensed taxation adviser

Event Date

Invoices dispatched 11 September 2017 Latest payment date for first quarter GST reporting 30 September 2017 Final payment due date 31 October 2017 GST reporting date (assumes Grower is submitting an activity statement quarterly on a cash basis)1 28 October 2017

Notes: 1. The GST submission date reflects the deadline for submitting the activity statement under each reporting frequency. Depending on your situation, you may

• nly be able to claim the GST refund back once the invoice has been paid. If so, the GST submission date may be the following reporting period based on

your situation 2. The GST submission date for an annual return is the same date as the lodgment of your income tax return, or 28 February following the annual tax period if you are not required to lodge an income tax return

GST reporting frequency and corresponding reporting date

Monthly Quarterly Annual 21 October 28 October Tax return2

• For Growers who wish to change from an annual activity statement to quarterly, the Grower will

need to contact the ATO on 132 861. The deadline to make changes is 28 October 2017

• The ATO generally process GST refunds reasonably promptly
• RFM will contact defaulting Growers after the payment due date of 31 October 2017 as accounts

must be maintained in good order for ongoing scheme participation

• Reminder – You must pay your invoice in order to remain a scheme member. RFM is not funding

the amount equivalent to the GST refund

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Industry update – production

Key statistics from the 2016 Australian season1

• 2016 production of 82,333 tonnes
• Australia produced 7.7% of the global crop to

remain the world’s second largest producer behind the USA (80% of world production)

• Orchard area planted to almonds increased by

15.8% or 4,904 ha in 2016 to total 35,886 ha Almond production in the NSW Riverina

• Orchard plantings have doubled over the 2010-17

period in the NSW Riverina2

• The NSW Riverina has grown to represent 15% of

the national plantings and continues to expand2

• New Almondco hulling and shelling facility located

at Griffith to meet increased processing demand (see appendix for further information)

2016 orchard area planted to almonds (ha)1 Australian almond production (2010-2020f)1

Notes: 1. Source: Almond Insights (2016-17), Almond Board of Australia 2. Source: Various Almond Insights (2010-17), Almond Board of Australia

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• In April 2017, the five year

drought in California lifted, with a deep snowpack and flooding rains in winter

• The initial USDA 2017 subjective

crop estimate for the US was 1 million tonnes (increase on 2016 crop by 3%) Outlook

• Indian and Chinese

consumption contributing to demand growth

• Almonds remain a possible

substitute product for walnuts, cashews and pistachios due to relative pricing Global almond price 1994-2014 (USD)1

Industry update – price and outlook

Note: 1. Source: American Almond Board

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Industry update – price and outlook

Almond price 2005 – 2017 (AUD)1

Note: 1. Data sourced from Almondco. Average almond price is calculated using the $US average price data for Nonpareil, Carmel and Price 23-25 almonds per ounce category almonds, converted into AUD Almond prices are based on the average monthly Landed Price (Import Parity). Prices are a "domestic" market pricing guide only and may not reflect actual market conditions. Exchange rate used is the average AUD v USD rates based on average FX rate from 15th day

• f each month to the 15th day of the next month

Price

• Current prices remain at similar levels to 2016 prices
• The 10 year average price is now $7.74/kg, on a domestic market pricing guide basis (see note)
• Prices for 2016 crop will be between $7.40/kg and $7.44/kg

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• 2017 harvest update
• Orchard pruning program (FY17)
• Ongoing irrigation and technology upgrades

Corporate

• The outlook for financial returns from the Almond Funds remains sound, supported by a productive

almond orchard and high quality management team

• Projects are structured so that in the final year harvest proceeds are distributed without corresponding

farming operating costs and the license fee. For example using the FY18 budget as a proxy, this would be1: – Almond Fund 2006: $4,844 – Almond Fund 2007: $4,054 – Almond Fund 2008: $4,116

• FY18 corporate projects:

– Assessing possible structural improvements to the Funds to e.g. lower volatility – Identifying possible cost savings

• Growers have 10 to 12 years remaining in schemes provided their accounts are maintained in good order

Outlook and key projects

Notes:

• 1. Calculated harvest proceeds less processing costs, management fees and corporate overheads. Actual return will differ

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Conclusion

• Lower yields (biennial bearing) have resulted in a shortfall for FY17, following substantial

FY16 distributions

• RFM will provide 12 month funding (i.e. to be incorporated in next years distribution) for

the FY17 invoice adjusting for GST refund. Funding is limited to 12 months duration and should there be a shortfall for FY18, the amount of the shortfall must be paid by the Grower

• An invoice for the GST component will be sent to Growers for payment by 31 October

2017

• Growers may choose to pay on or before 30 September 2017 to claim the GST refund on

28 October 2017

• Growers are strongly encouraged to seek advice about claiming GST to minimise

time to receive their refund

• Growers must pay their invoice to remain scheme members
• FY18 harvest proceeds to benefit from crop yields of 3.7-3.9 tonnes/ha

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Maturing almonds in nut fill stage of growth, Mooral almond orchard, Hillston, NSW, December 2016

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Appendix

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Riverina Almondco processing facility

New Almondco facility

New Almondco processing facility1

• hulling and shelling facility located in the

Griffith region

• meet increased demand for hulling and

cracking services in the NSW Riverina area.

• capable of processing around 5-6 tonne of

almonds per hour

• installed state-of-the-art equipment enabling

it to better meet quality demands of both domestic and overseas Benefits to RFM Almond Funds

• substantially closer to RFM orchards than

existing processing facilities

• can receive road trains, improving the ability
• f RFM to deliver large amounts of product to

the processor

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1. Source: Almondco

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Corporate information

Rural Funds Management Ltd

ACN 077 492 838 AFSL 226701

Canberra Office Level 2, 2 King Street Deakin ACT 2600 Telephone: +61 2 6203 9700 Facsimile: +61 2 6281 5077 Website: ruralfunds.com.au

For further information: For media enquiries: Investor relations enquiries:

David Bryant Managing Director Rural Funds Management T 02 6203 9700 E DBryant@ruralfunds.com.au Stuart Waight Chief Operating Officer Rural Funds Management T 0419 126 689 E SWaight@ruralfunds.com.au James Powell Investor Relations and Distribution Manager Rural Funds Management T 0420 279 374 E JPowell@ruralfunds.com.au