FY23 Results Announcement
www.nzrlc.co.nz
29 February 2024
NZL’s FY23 Results Demonstrate Growth and Resilience
New Zealand Rural Land Co (NZL.NZX) is pleased to announce its financial result for the year ended 31 December
2023. NZL recorded a net profit after tax of $10.9m and Adjusted Funds From Operations (AFFO) of $6.0m,
including earnings from properties with put/call arrangements in place.
Post Balance Date Highlights - FY24
• Roc Partners purchased 25% of NZL’s portfolio, validating strategy and partnering for growth.
• FY24 AFFO forecast to be 5.0 cps - 5.4 cps (+19.7% at the midpoint).
• Diversification materially increased by forestry and horticulture acquisitions in FY24.
• WALT increased from 11.7 years to 12.7 years.
• 16,063 hectares of rural land now owned an increase of +8.4% on FY23.
• Gearing lowered to 32.9% with 64% of debt hedged following Roc transaction .
• Dividend reinstated with an amended policy targeting a pay-out of 60% - 90% of AFFO.
• On-market share buyback programme continued.
FY23 Highlights
• NAV per share grew from $1.250 at listing in December 2020 to $1.602 at FY23 year end.
• AFFO grew from 4.13cps in FY22 to 4.35cps (+5.3%) in FY23.
• Forestry acquisitions in FY23 materially increased diversification, funded via an inaugural “Green Loan”.
• Total assets ended FY23 at $369.8m.
• Net asset value ended FY23 at $223.1m.
• Gearing closed FY23 at 36.2%.
• NZL repurchased 611,327 shares at an average price of $0.87 per share.
The FY23 result delivered an increased portfolio value, effective risk management, and sustainable growth for
shareholders.
A detailed results presentation is available at: https://www.nzrlc.co.nz/reports-presentations.
E: info@nzrlc.co.nz | T: +64 9 217 2905
www.nzrlc.co.nz
Roc Transaction
On 19 January 2024, NZL announced it had entered into an agreement to sell a 25% equity interest in its land
portfolio to Roc Partners (Roc). This transaction settled on 9 February 2024.
Roc acquired the equity interest for $44.2m in cash. NZL used the proceeds to repay the $11.8m owing on a
convertible note it drew down in April 2023 to partially fund its forestry acquisition.
A further $20.7m of the proceeds were used or committed to fund orchard and forestry land acquisitions
announced to the market on 20 February 2024 and detailed below.
The balance of the funds have been retained as working capital while opportunities are investigated.
FY24 Dividend Reinstatement and Share Buyback Programme
The NZL Board has resolved to both reinstate NZL’s dividend and amend its dividend policy.
NZL’s intention has always been to pay regular semi-annual dividends with an interim dividend paid in October
and final dividend paid in March each year. NZL’s amended dividend policy targets a pay-out of 60% - 90% of
AFFO. The pay-out range grants the company greater flexibility to deploy NZL’s cash operating earnings in ways
considered most beneficial to increasing shareholder value.
The interim dividend will be based upon results for the period 1 January 2024 to 30 June 2024 and will be paid in
early October 2024.
The company maintains a selective on-market share buyback programme. Pursuant to NZX Listing Rule 4.14.2,
buybacks may take place on and from 1 June 2023 for a period of 12 months. The company may refresh
the programme for further 12 month periods. The total number of shares that may be bought back shall not
exceed 5,350,000 shares. Under the programme, 611,327 shares have been acquired as at the date of this
announcement. Shares are only acquired if the acquisition price represents 90% or less of the company’s
prevailing net asset value per share.
Acquisitions
In April 2023, NZL announced the settlement of two forestry estates totalling 3,137 hectares (7,745 acres). The
estates were purchased for $70.2m and were leased to New Zealand Forest Leasing (NZFL) for an average
weighted lease term of 19.5 years (by value). The leases include annual CPI lease adjustments.
The purchase was funded with NZL’s inaugural Green Loan via Rabobank of $25.2m, the proceeds of NZL’s pro-
rata rights issue and a $12m convertible note issued to an entity associated with NZFL.
On 20 February 2024, subsequent to FY23 year end, NZL announced it had entered agreements to acquire the
land supporting three apple orchards located in Hawkes Bay, and a forestry block located in close proximity to its
existing estates in Whanganui, for a total cost of approximately $27.6m. These two aquisiitons will add meaningful
sector, income and tenant diversification to it’s porfolio, with forestry and horticulture now holding a 31% and 5%
proportion of NZL’s portfolio, respectively. The land will be acquired by the Limited Partnership formed as part of
the Roc transaction.
Post completion of the two recently announced acquisitions, NZL will own 16,063 hectares (39,693 acres) of rural
land (25% of which is owned by Roc) with a 12.7 year WALT (by value), with 100% occupancy across nine tenants.
This represents a +8.4% increase in total land owned by NZL, a +9.5% increase in WALT and continued growth in
the scale and diversity of NZL’s asset and tenant base.
E: info@nzrlc.co.nz | T: +64 9 217 2905
www.nzrlc.co.nz
Outlook
NZL’s strategy is to own quality rural land in New Zealand; growing a diverse portfolio while delivering attractive
risk-adjusted returns as a ground lessor. As detailed in the investor presentation, recent transactions are
delivering on this strategy.
NZL generates shareholder value through a combination of asset value appreciation and cash flow from long-
term leases. NZL’s increase in its asset value of +2.2%, as at 31 December 2023, in an uncertain macroeconomic
environment for real estate assets re-affirms the attractiveness of the company’s rural land asset base and long
term investment strategy.
NZL’s leases incorporate regular CPI reviews. That means higher inflation results in higher than anticipated rental
growth. And NZL is insulated from inflation-impacted, and all other operational on-farm costs by owning only the
land.
Post the most recent acquisitions and Roc transaction, NZL forecasts FY24 AFFO of between $7.0m and $7.5m,
this excludes earnings from properties with put/call arrangements in place (~$1.2m).
Currently, NZL has hedging arrangements in place for 64% of its total borrowings. Gearing amounts to 32.9% of
total assets.
From April 2024, NZL will start to see the positive impact of rental growth with approximately half of its portfolio
(by lease income) due for CPI review. This includes 100% of its forestry leases (acquired in FY23) and 53% of its
pastoral leases, which between lease commencement and year end have accumulated +3.4% and +17.9% in CPI,
respectively. NZL remains excited by its future opportunities, which are augmented by the strategic partnership
with Roc Partners, and the company is positioned well to continue to grow shareholder value.
Rob Campbell
Chair
For further information please contact:
Richard Milsom
Mobile: 021 274 2476
Email: richard@nzrlm.co.nz
E: info@nzrlc.co.nz | T: +64 9 217 2905
---
1
New Zealand Rural Land Company
Rural Land Company
New Zealand
Result for the year ending
31 December 2023
29 FEBRUARY 2024
LISTED ON:
www.nzrlc.co.nz
2
New Zealand Rural Land Company
2
DISCLAIMER
The information and opinions in this presentation were
prepared by New Zealand Rural Land Company (NZL).
NZL makes no representation or warranty as to the accuracy
or completeness of the information in this report. Opinions
including estimates and projections in this report constitute the
current judgment of NZL as at the date of this report and are
subject to change without notice. Such opinions are not guarantees
or predictions of future performance. This report is provided for
information purposes only and does not constitute investment advice.
Neither NZL, nor any of its Board members, officers, employees,
advisers (including New Zealand Rural Land Management Limited) or
any other representatives will be liable for any damage, loss or cost
incurred by any recipient of this report or other person in connection with
this report.
NEW ZEALAND RURAL LAND CO OWNS AND
LEASES SOME OF THE BEST FARMLAND IN
THE WORLD, OFFERING AN UNPARALLELED
INVESTMENT OPPORTUNITY.
Rural Land Co
New Zealand
The Rural Land Investors
3
New Zealand Rural Land Company
FY23 NPAT of $10.9m and AFFO of $6.0m
NAV per share has grown from $1.250 at listing to $1.602 as at 31
December 2023, total returns have been +32.6% or +9.9% CAGR
*
AFFO has grown from 4.13
**
cps in FY22 to 4.35 cps (+5.4%) in FY23.
AFFO forecast to be 5.03 to 5.38 cps in FY24 (+19.7% mid-point)
Gearing ended FY23 at 36.2%. Lowered to 32.9% post Roc
transaction and subsequent acquisitions
Materially increased diversification via forestry acquisition in FY23
and further horticulture and forestry acquisitions early FY24
Dividend reinstated with an amended policy targeting a pay-out
of 60-90% of AFFO
On-market Share Buyback Programme continued
Roc Partners purchase 25% of NZL portfolio, validating strategy
and partnering for growth
3
FY23 RESULT & SUBSEQUENT EVENTS FY24
* This NAV growth has been achieved alongside an expansion of capital base from 60,600,000 shares on
issue at IPO to 139,295,000 on issue as at 31 December 2023. Calculation assumes full participation in rights
issues, plus dividend accumulated to 31 December 2023.
** Sum of AFFO/sh for 6 months to 30 June 2022 and 6 months to 31 December 2022.
4
New Zealand Rural Land Company
ROC PARTNERS TRANSACTION - POST BALANCE DATE
Overview
On 19 January 2024 NZL announced it had entered into an agreement to sell
a 25% equity interest in its land portfolio to Roc Partners (Roc). This transaction
settled on 9 February 2024.
Roc acquired the equity interest for approximately $44.2m in cash.
NZL used the proceeds to repay the $11.8m owing on a convertible note it drew
down in April 2023 to partially fund its forestry acquisition. A further $20.7m
of the proceeds were used to fund orchard and forestry land acquisitions
announced to the market on 20 February 2024.
• Capital recycling at a premium - the transaction is highly value accretive to
shareholders given the value of the 25% sold versus the implied share price value
of the rural land portfolio.
• Improved financial position - the proceeds of the transaction enabled NZL
to repay its convertible note, and have the financial capacity to capitalise on
opportunities that are NAV and AFFO accretive.
• Strategic partner – Roc Partners has extensive experience in rural property
investment and conducted extensive due diligence as part of the transaction. NZL
and Roc have already co-invested (through the LP) in two acquisitions successfully
growing the portfolio.
Key Points
The strategic benefits of this transaction were as follows:
5
New Zealand Rural Land Company
NEW ACQUISITIONS IN FY24
MetricAcquisition 1: Twyford
Orchards
Acquisition 2: Forestry
Estate
LocationHawke’s BayManawatū-Whanganui
Asset ClassApple Orchard, HorticultureForestry
Area97 ha1,119 ha
Purchase Price~$18.1m~$9.5m
TenantKiwi CrunchNew Zealand Forest Leasing
Lease TypeTriple Net LeaseTriple Net Lease
Lease Term 30 years16 years
Year 1 Rent ~$1.35m$760k
Lease Rate 7.50%8.00%
Rent ReviewsAnnual adjustments of 2.5% or
CPI, which ever is higher
Annual CPI adjustments
Overview
Key Points
Subsequent to the settlement of the Roc transaction, NZL entered into two further
acquisitions that are accretive to AFFO and WALT, and further diversify NZL’s
portfolio*.
The first acquisition was the land supporting three apple orchards located in the
Hawke’s Bay region of the North Island. The properties have a total land area of
approximately 97 hectares of which 82 hectares are planted in a range of apple
varieties. This marks NZL’s entry into a new sub-sector (Horticulture).
The second acquisition is a forestry property located in close proximity to its
existing estates in the Manawatū-Whanganui region. This property has a total area
of approximately 1,119 hectares and is leased to New Zealand Forest Leasing (NZFL).
Further detail of the acquisitions can be found here:
www.nzrlc.co.nz/nzx-announcements
Portfolio as at 29 February 2024
Diversity Increased
WALT Increased
Gearing Lowered
AFFO/sh
/ Dividend
5.49
cps
4.12
cps
-25.0%
6.56
cps
+59.3%
Immedi at el y Post Sal e
Post Use of Funds
36.2%
Debt/Assets
32.9%
Debt/Assets
-9.1%
Gearing
30.6%
Debt/Assets
+22.0%
Post Use of Funds
0.53
0.09
0.33
0.05
DairySupportForestryApples
11.7
Years
12.7
Years
+8.5%
59%
10%
31%
55%
9%
31%
5%
DairySupportFore st ryApples
*The properties were acquired through a newly formed Limited Partnership 75% owned by NZL and 25% owned by Roc Partners
6
New Zealand Rural Land Company
DIVIDEND REINSTATEMENT & SHARE BUYBACK PROGRAMME
Dividend
Share Buyback Programme
NZL has resolved to both amend its dividend policy and reinstate NZL’s
dividend. The interim dividend will be based upon results for the period 1
January 2024 to 30 June 2024.
NZL’s amended dividend policy targets a pay-out ratio of 60% - 90% of AFFO.
The pay-out range grants the company greater flexibility to deploy NZL’s cash
operating earnings in ways most beneficial to increasing shareholder value.
NZL maintains a selective on-market buyback programme. Pursuant to
NZX Listing Rule 4.14.2 buybacks may take place over a 12 month period
commencing on 1 June 2023. The programme may be refreshed for
further 12 month periods
As per the policy released on 26 May 2023, the total number of shares
that may be bought back shall not exceed 5,350,000 shares. Shares will
only be acquired if the acquisition price represents 90% or less of NZL’s
prevailing net asset value per share.
The board will regularly determine the exact capital allocation to the
buyback programme while considering prevailing market conditions.
7
New Zealand Rural Land Company
OUTLOOK & FY24 FORECAST
NZL’s leases incorporate regular, uncapped, CPI reviews. Accordingly, high inflation
will result in rental growth. Furthermore, NZL is insulated from inflation-impacted
(and all other operational) on-farm costs by owning only the land.
NZL will start to see the positive impact of inflation in 2024, with many of its leases
up for CPI review. These include:
• 100% of leases for forestry assets acquired in FY23 in April 2024. CPI
accumulated since the leases began in April 2023 is +3.4%*, and is forecast to
be +4.3% at the time of review.
• 54% of its pastoral leases up for review on 1 June 2024. CPI accumulated since
the leases began on 1 June 2021 is +17.9%*, and is forecast to be +18.9% for the
three years to 1 June 2024.
NZL has hedging arrangements in place for 64% of its total borrowings costing,
on average, 4.7%. The remaining debt is floating and the cost of the floating debt
component is 7.7%. NZL’s weighted average cost of debt is 5.8%.
NZL still retains cash from the Roc Partners transaction following its orchard and
forestry acquisitions. NZL will continue to investigate options for deploying this cash
in a way which best serves its shareholders.
Post the most recent acquisitions and Roc transaction, NZL forecasts FY24 AFFO
of between $7.0m and $7.5m (Note: this excludes earnings from properties with
put/call arrangements in place). AFFO per share of 5.03 to 5.38 cents (Based on
139,295,000 shares on issue).
Dividend payout ratio in keeping with NZL’s new policy is 60-90% of AFFO.
*As at 31 December 2023
8
New Zealand Rural Land Company
0.30%
3.00%
3.70%
4.60%
4.90%
6.20%
6.30%
6.80%
14.20%
-10%
-5%
0%
5%
10%
15%
20%
LPV 1LPV 2LPV 3LPV 4
LPV 5LPV 6
LPV 7
LPV 8
NZL
Yield + Growth
Cash YieldAFFOps growth p.a to FY27Yield + Growth Sector Median (4.90%)Yield + Growth
OUTLOOK & FORECAST
Yield & Forecast Growth Across NZX Listed REITs
Source: Craigs Investment Partners, A Sign of Validation (22 January 2024).
New Zealand Rural Land Company
999
FY23 RESULTS OVERVIEW
SECTION 1
10
New Zealand Rural Land Company
FY23 - FINANCIAL HIGHLIGHTS & METRICS
Total Returns
Net asset value per share has grown from $1.25 at IPO*
to $1.602 (at 31 December 2023), total returns have
been +32.6% (NAV growth plus dividends) or +9.9%
CAGR**.
* 21 December 2020
** This NAV growth has been achieved alongside an expansion of capital base from 60,600,000 shares on
issue at IPO to 139,295,000 on issue as at 31 December 2023. Calculation assumes full participation in rights
issues.
Increasing AFFO
FY23 AFFO per share was 4.35 cps. This is in-line
with FY23 guidance of 4.2 - 4.6 cps (Note: two recent
acquisitions in FY24 in the forestry and horticultural
sectors are expected to be accretive to AFFO).
$1.602
NAV per Share
$369.8m
Total Assets
$223.1m
Net Asset Value (NAV)
36.2%
Gearing
11
New Zealand Rural Land Company
FY23 - FURTHER DIVERSIFICATION OF PORTFOLIO
Overview
• NZL’s forestry acquisitions in FY23 added meaningful sector, income
and tenant diversification to its portfolio.
• At balance date forestry represented 30% of NZL’s lease income.
• These new leases are reviewed more regularly than NZL’s
pastoral leases, with annual CPI adjustments rather than 3-yearly
adjustments.
• The acquistions increased NZL’s weighted average lease term
(WALT) from 9.3 years to 11.7 years at 31 December 2023, and its
tenant base from seven to eight.
• This diversification improved the resilience of NZL’s portfolio, in
conjunction with driving greater returns through value appreciation
and an increased overall rental income.
NZL Portfolio By SectorNZL Portfolio By Tenant
20%
6%
7%
3%
20%
10%
3%
31%
Tenant 1Tenant 2Tenant 3Tenant 4
Tenant 5Tenant 6Tenant 7Tenant 8
59%
10%
31%
DairySupportForestry
12
New Zealand Rural Land Company
SUMMARY OF FY23 ACQUISITIONS & CORPORATE ACTIONS
On 14 April 2023, NZL announced the settlement of a forestry estate acquisition
with a total area of approximately 2,400 hectares, for ~$63m and was leased to
New Zealand Forest Leasing (NZFL) for a 20 year period with the first year’s lease
payment being ~$5m.
NZL funded the purchase with $25.2m of borrowings from a Rabobank Green
Loan*, proceeds of NZL’s pro-rata rights issue and a $12m convertible note.
On 28 April 2023, NZL announced the settlement of a supplementary forestry
acquisition for a purchase cost of approximately $8m, which has a total area of 737
hectares. The forest is leased to NZFL for a period of 16 years and was funded by
the aforementioned green loan and rights issue.
Corporate Actions
On 26 May 2023, NZL announced upgraded FY24 earnings and AFFO guidance,
suspension of the FY23 interim dividend and an on-market share buyback.
The earnings upgrade was due to the accretive nature of NZL’s forestry
acquisitions; 2024 is the first full financial year in which the forests will be owned by
NZL.
On 18 September 2023, NZL announced the suspension of its full-year dividend
for FY23 and the continuation of its share buyback programme, as the company
considered that the price of NZL shares materially undervalued both the assets and
the free cash flow profile of the business.
Acquisitions
* Established within a green financing framework managed and reported on in line with Asia Pacific
Loan Market Association’s Green Loan Principles.
New Zealand Rural Land Company
13
New Zealand Rural Land Company
NZL FINANCIALS & RETURN METRICS
for the year ending 31 December 2023
SECTION 2
14
New Zealand Rural Land Company
ADJUSTED FUNDS FROM OPERATIONS (AFFO)
4.35cps
AFFO
4.74cps
FFO
NZ$00031 December 2023
Net Profit After Tax10,854
Adjusted for:
Unrealised Net Gain on Investment Properties(7,388)
Performance Fee Payable in Shares901
Unrealised Net Gain on Derivatives2,512
Deferred Tax Expense / (Benefit)(483)
Amortisation of Rent Free Incentives176
Amortisation of Lease Fee30
Funds from Operations (FFO)6,602
FFO per Share4.74
Adjusted Funds from Operations
Incentives and Leasing Costs120
Future Maintenance Capital Expenditure(663)
Adjusted Funds from Operations (AFFO)6,059
AFFO per share (cents)4.35
AFFO is a proxy for free cash flow commonly used by REITs. AFFO is intended to provide investors with a clearer picture of the company’s free cash flow.
Note: REIT - Real Estate Investment Trust, AFFO - Adjusted Funds From Operations, FFO - Funds From Operations
15
New Zealand Rural Land Company
PROFIT & LOSS STATEMENT
NZ$00031 December 2023
Gross Rental Income
Rental Income
15,350
Net Rental Income
15,350
Less Overhead Costs
Directors Fees
(227)
Insurance
(85)
Shareholder Registry & Communication
(95)
Management Fees
(1,039)
Repairs and Maintenance
(117)
Professional, Consulting and Listing Fees
(394)
Performance Fee
(901)
Total Overhead Costs
(2,858)
Profit / (Loss) Before Net Finance Income, Other
Income and Income Tax
12,492
Finance Income1,879
Finance Expense(11,388)
Net Finance Income(9,509)
Profit /(Loss) Before Other Income and Income Tax
Other Income
Change in Fair Value of Investment Property7,388
Profit / (Loss) Before Tax10,371
Income Tax Expense483
Profit / (Loss) and Total Comprehensive Income for the
Period
10,854
Earnings per Share (EPS) (cents)8.06
$10.85m
NPAT
8.06cps
EPS
16
New Zealand Rural Land Company
BALANCE SHEET
NZ$00031 December 202331 December 2022
Current Assets
Cash and Cash Equivalents1,2581,942
Trade and Other Receivables 378269
Current Tax Receivable713
Total Current Assets1,6432,224
Non-Current Assets
Investment Property346,281267,360
Deposit for Forestry Estate -6,294
Loan Receivable20,36319,114
Deferred Tax Assets1,398915
Derivative Assets712,506
Other Non-Current Assets75377
Total Non-Current Assets368,188296,596
Total Assets369,831298,820
Current Liabilities
Trade and Other Payables1,090594
Borrowings 29,5001,968
Convertible loan11,980-
Other Current Liabilities 169319
Total Current Liabilities42,7392,881
Non-Current Liabilities
Borrowings104,000105,000
Total Non-Current Liabilities104,000105,000
Total Liabilities146,739107,881
Net Assets223,092190,939
$223.1m
Total Equity/ Net Asset
Value
$369.8m
Total Assets
17
New Zealand Rural Land Company
DEBT SUMMARY
2.3 Ye2.3 Years
**
Weighted Average Term
to Expiry
5.8%5.8%
**
Weighted Average
Interest Cost
Key Metrics31 December 202331 December 2022
Debt Drawn ($m)133.5107.0
Debt to Total Tangible Assets36.2%36.2%
Interest Coverage Ratio1.7x2.4x
Weighted Average Term to Expiry (Years)2.32.4
Weighted Average Debt Cost5.8%5.6%
% Of Debt Hedged64%39%
Total Debt Facilities Available ($m)133.5107.0
NZL Debt Facility Expiry Profile
* Gearing is calculated as: bank debt / total tangible assets
** As at 20 February 2024
32.9%
*
Gearing
(Post Roc Transaction)
Key Banking Partner
NZL has hedging arrangements in place for 64% of its total borrowings costing, on average, 4.7%. The remaining debt is floating
and the cost of the floating debt component is 7.7%. Accordingly, NZL’s weighted average cost of debt is currently 5.8%.
64%64%
Hedged
23%
11%
22%22%
21%
0%
10%
20%
30%
40%
FY24FY25FY26FY27FY28
Tranche ATranche BTranche CGreen Loan
18
New Zealand Rural Land Company
1.46
4.71
6.06
7.25
(Mid-
point)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
FY21 AFFOFY22 AFFOFY23 AFFOFY24 AFFO
(Forecast)
AFFO/sh (cents)
AFFO ($m)
AFFO Per Share
2.01
3.63
4.7
(Mid-
point)
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
FY21FY22****FY23 - Dividend
Suspended
FY24 (Forecast)
Dividend Per Share (cents)
1.250
1.360
1.652
1.602
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
IPO as at 21-Dec-20FY21FY22FY23
Net Asset Value Per Share ($)
TOTAL RETURNS
Dividends per Share Since Listing
Since listing on the NZX (21 December 2020), NZL has delivered total returns (NAV per share growth plus dividends) of +32.6%
*
.
NZL delivered $6.06m in AFFO (4.35 cps) in the 12 months to 31 December 2023. This is in-line with NZL’s AFFO guidance released in May 2023.
Post the the most recent acquisitions and Roc transaction, NZL forecasts FY24 AFFO of between $7.0m and $7.5m. This excludes earnings from
properties with put/call arrangements in place (~$1.2m).
* This NAV growth has been achieved alongside an expansion of capital base from 60,600,000 shares on issue at IPO to 139,295,000 on issue as at 31 December 2023. Calculation assumes full participation
in rights issues.
** Calculated from FY22 to FY24 forecast mid-point. FY21 excluded from calculation due to rent holidays in year one. With FY21 included CAGR is +70.3%.
*** Calcuated using FY24 forecast mid-point.
**** Adjusted to reflect the change in balance date from 30 June 2022 to 31 December 2022.
NAV Performance Since Listing
+8.6% CAGR
AFFO & AFFO/sh
+24.0% CAGR (AFFO)**
+32.5% CAGR***
New Zealand Rural Land Company
19
SUSTAINABILITY PROGRAMME
as at 31 December 2023
SECTION 3
20
New Zealand Rural Land Company
SUSTAINABILITY PROGRAMME
NZL continues to work on mapping its current portfolio for marginal land which can be enhanced with planting and a programme to increase
biodiversity. The mitigation of erosion is a key outcome of this planting with potential for carbon sequestration and sediment control. Two
properties marginal areas are planned to start planting in FY24.
NZL has initiated work on several special projects across its portfolio. These include a solar pump upgrade (from diesel), improved effluent
systems on some farm, planned/budgeted during purchase, and native regeneration and predator control at NZL’s forestry estate in partnership
with our tenant New Zealand Forestry Leasing.
Release of NZL’s sustainability programme - “Enduring Land for Life”. Visit our website www.nzrlc.co.nz/ for further detail.
EnvironmentEconomic
Governance
Oversight and management of goals; skills and commitment to “Enduring Land for Life” vision. Strength and diversity.
SocialAnimal Welfare
✓ Soil Health
✓ Water Quality
✓ Biodiversity
✓ Emissions reduction per unit of
production
✓ Land Selection
✓ Partnering with tenants
✓ Creating a virtuous circle of growth,
investment, job creation, community
opportunities
✓ Care of people
✓ Health and safety
✓ Warm, safe living conditions
✓ Enabling career and personal growth
✓ Fair pay
✓ Five freedoms
✓ Prioritising animal wellbeing
✓ Nutrition and care
✓ Adequate shelter
Mana Whenua
✓ Prioritising relationships with mana
whenua / te ahi kaa
We know that the success of any strategy starts with the tone at the top, and we value strong and diverse governance. Having the right mix of skills
and commitment ensures NZL has the capability and vision needed to achieve our mission.
Enduring Land for life: The Framework
1
2
3
21
New Zealand Rural Land Company
HIGHLIGHTS
Enduring Land For Life
Green Loan
NZL has published the programme it uses to ensure land and
partnerships are enduring.
Commitments between NZL and tenants are developed and
refined jointly, incorporating industry best practice, latest
scientific research and learnings from leading tenants. Joint
commitments to preserve the land are made binding by our
leases and NZL incorporates regular audits to monitor this.
As part of its forestry acquisitions NZL established a green
loan programme. The green loan follows the Asia Pacific Loan
Market Association Green Loan Principles. Working within
these principles enables NZL to align itself with UN Sustainable
Development Goal 15 which aims to protect, restore and
promote sustainable use of terrestrial ecosystems, sustainably
manage forests, combat desertification, and halt and reverse
land degradation and halt biodiversity loss.
Planting & Other Initiatives
NZL continues mapping its current portfolio for marginal land
which can be enhanced with replanting. Two properties were
earmarked for planting in the next 12 months. NZL has initiated
work on several special projects across its portfolio. These
include a solar pump upgrade (from diesel), improved effluent
systems on some of our farms, native regeneration and predator
control at NZL’s forestry estate in partnership with our tenant.
New Zealand Rural Land Company
22
APPENDICES
23
New Zealand Rural Land Company
INVESTMENT SUMMARY
NZL PROVIDES INVESTORS WITH EXPOSURE TO:
*This land is owned via an LP, 75% owned by NZL and 25% by Roc Partners
* This NAV growth has been achieved alongside an expansion of capital base from 60,600,000 shares on issue at IPO to 139,295,000 on issue as at 31 December 2023. Calculation assumes full participation in rights
issues, plus dividend accumulated to 31 December 2023.
Favourable Industry
Dynamics
A Proven Value Add
Acquirer of Land
Attractive Total ReturnsHigh Quality Tenants
with Attractive WALT
A Significant Growth
Opportunity
Long term demand for key
commodities and food
vs declining availability
of productive land drives
land values. Productive
rural land is finite in supply
and its value is founded
on worldwide population
growth, growing food
demand, and yield-
boosting innovation
Increasing scarcity of
productive land globally is
mirrored in New Zealand.
New Zealand is one of the
world’s lowest-cost and
lowest-carbon emitting
producers of protein, fibre
and timber in the world.
Successfully acquired
more than 16,063 hectares
of pastoral, forestry and
horticultural land since
listing on 21 December
2020*.
NAV per share increased
from $1.250 (21 December
2020) to $1.602 as at 31
December 2023. This
represents total increase in
NAV per share of +28.2% .
NAV growth has been
achieved alongside an
expansion to capital base
from 60.6m shares on
issue at IPO to ~139.3m
shares on issue as at 31
December 2023.
All tenants have significant
operating experience,
robust balance sheets and
governance frameworks.
12.7 year WALT (by value)
post Roc transaction.
NZL provides unique
investment exposure as it
is currently the only pure-
play listed exposure to
New Zealand rural land.
NZL provides inflation
hedging and stable income
via CPI-linked leases
(uncapped).
NZL’s strategy is to
continue to grow its
portfolio, both in dairy
and other attractive
agricultural opportunities,
to ultimately provide scale
and diversified exposure to
high quality New Zealand
rural land.
NEW ZEALAND
Rural Land Co
NAV per share has grown
by +28.2% since NZL’s IPO.
NZL has paid/declared
a total of 5.64 cps in
dividends. Total returns
have been +32.6% of +9.9%
CAGR**.
Farmland does not
typically experience the
same volatility that mark
economic changes. It
usually experiences
peaks and plateaus
– appreciating at an
attractive rate when
times are positive but not
necessarily retreating when
conditions are tough, this
is driven by its increasing
scarcity.
24
New Zealand Rural Land Company
PORTFOLIO OVERVIEW - AS AT 29 FEBRUARY 2024
4
25% owned by Roc
2
WALT is weighted by lease value.
3
One of our tenants leases farms in both Canterbury and North Otago.
Region
Hawke’s Bay
Manawatū -
Whanganui
CanterburyOtagoSouthlandTotal
Land Area (ha)
974,2566,3333,9911,38616,063
1
Rural Asset Class
HorticultureForestryPastoral FarmsPastoral FarmsPastoral Farms
Pastoral Farms,
Forestry & Horticulture
Current Use
ApplesForestry & Carbon Dairy & SupportDairy & SupportDairy & Support
Dairy, Support,
Forestry, Carbon &
Apples
WALT (years)
2
3018.58.58.38.812.7
# Tenants
113238
3
Occupancy
100%100%100%100%100%100%
21.0%
46.4%
32.5%
Rural Sub-Sector Breakdown
55%
9%
31%
5%
DairySupportFore st ryApples
25
New Zealand Rural Land Company
TENANT CONCENTRATION, LEASE PROFILE & LEASE OVERVIEW - AS AT 29 FEBRUARY 2024
Tenant Concentration as % of Lease Value
NZL expects tenant diversification to increase as it continues to grow its asset base.
NZL’s Weighted Average Lease Term (WALT) is currently 12.7 years
*
(100% occupancy).
NZL’s pastoral farm leases all have three, six and nine year CPI increases with tenant rights of renewal in years 10 or 11.
NZL’s forestry leases all have annual CPI increases.
All leases are triple net leases, tenants are responsible for all repair and maintenance costs.
Lease Expiry Profile by Value
* As at 31 December 2023
19%
6%
7%
2%
18%
9%
3%
31%
5%
Tenant 1
Tenant 2
Tenant 3
Tenant 4
Tenant 5
Tenant 6
Tenant 7
Tenant 8
Tenant 9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
$m
Tenant 1Tenant 2Tenant 3Tenant 4Tenant 5
Tenant 6Tenant 7
Tenant 8Tenant 9
26
New Zealand Rural Land Company
Carbon markets rallied strongly in 2023 with the price of New Zealand Emissions Units (NZUs) rising to $75 from $33. This comes after the
government made a U-turn on it’s alignment with Climate Change Amendment Regulations, which lay out rules surrounding auctions, limits and
price controls for NZUs in the Emissions Trading Scheme (ETS). From the December 2023 auction, the number of NZUs available were reduced and
auction price controls manipulated to reduce demand, steering more emitters down the path of reducing emissions, as opposed offsetting them.
This strategy aims to support New Zealand’s ability to achieve its emission budgets and meet its international climate change commitments.
CARBON & DAIRY MARKET UPDATES
NZU Historical Pricing
Carbon
Dairy
In December 2023, Fonterra increased its forecast 2024 Farmgate Milk Price by $0.25, to a midpoint of $7.50 per kilogram of milk solids (kgMS); with the
forecast range moving to $7.00 - 8.00 per kgMS. This is an improvement on Fonterra’s FY23 mid point milk price of $6.75 kgMS. While demand is improving,
deep structural shifts in the Chinese export market, in conjunction with climate and geopolitical factors, are a potential risk to this positive outlook. So although
demand is expected to rise, the timing and extent of this recovery is uncertain.
ETS Review
Judicial Review
Decision
First Auction with
New Settings
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
NZU Price
27
New Zealand Rural Land Company
KEY PEOPLE
ROB CAMPBELL
Independent Chair
Chancellor - AUT
Chair - Ara Ake
CHRISTOPHER SWASBROOK
Non-Independent Director & Founder
Managing Director – Elevation Capital
Board Member – Financial Markets Authority (FMA)
Director – Bethunes Investments Limited, McCashin’s
Brewery Limited and Swimtastic Limited
Previously a Partner of Goldman Sachs JBWere Pty
Limited & Co-Head of Institutional Equities at Goldman
Sachs JBWere (NZ) Limited
SARAH KENNEDY
Independent Director
CEO - Calocurb Limited
Previously CEO - Designer Textiles
International
Previously Vice President International
Farming - Fonterra
Previously CEO / Member of the Board
of Directors - Vitaco Health Limited
Previously CEO - Healtheries of New
Zealand Ltd
TIA GREENAWAY
Independent Director
Hailing from Ngāti Tūwharetoa and
Waikato-Tainui
CFO - Tupu Angitu
Various roles on Iwi and Ahu Whenua
Trusts and Committees
SHELLEY RUHA
Director
Director - Heartland Bank
Director - Allied Farmers
Director - Icehouse
Director - 9 Spokes
Previously - BNZ Senior Management Team and leader of BNZ
Partners
RICHARD MILSOM
Executive Director & Founder
Managing Director - Allied Farmers & New Zealand Rural Land
Management
Consultant – Bellevue Enterprises Limited – Bovine & Porcine
Genetic Improvement & Sustainable Pork Production Company
INFINZ Emerging Leader 2017
HAYDEN DILLON
Founder & Consultant
Managing Partner Findex (Waikato) & Head of Agribusiness New
Zealand for Findex.
Independent Director - Williams Holdings Limited
Independent Director - Aquila Sustainable Farms Limited and
associated Limited Partner Farms.
Chairman - Bioceta Limited
RURAL PROPERTY MANAGERS
Rural Property Managers
RURAL VALUERS
Independent Consultants
XAVIER LYNCH
General Manager - Corporate
Executive, Corporate Finance - Bancorp Merchant Bankers
Senior Analyst, Corporate Finance - Deloitte New Zealand
Analyst - Todd Property Group
Investment Analyst - Crown Irrigation Investments Limited
CHRISTOPHER SWASBROOK
Founder & Consultant
See above.
AGRICULTURAL ENVIRONMENTAL SPECIALISTS
Independent Consultants
FARM CONSULTANTS
Independent Consultants
New Zealand Rural Land Co
The Rural Land Investors
JOSH JENKINS
Investment Associate
Consultant - True Range - Kenya
Analyst - Airponix Limited - United Kingdom
Livestock Specialist - HHC & Glenthorne Station - NZ
New Zealand Rural Land Management
ELISHA FRIEDLANDER
Investment Director
Vice President - Macquarie Group
Associate - Goldman Sachs
Senior Analyst - Deal Advisory - KPMG
28
New Zealand Rural Land Company
FOREIGN OWNERSHIP RULES & LEVELS
New Zealand
Buyer
NZL is highly advantaged
because it is a
New Zealand buyer
of rural land.
Current Listed
Company Foreign
Ownership Rules
Under the Overseas Investment
Amendment Act 2021, NZL can have
foreign domiciled shareholders of up
to 49.9% of its share register (subject
to certain share parcel restrictions).
Private companies in NZ are limited to
less than 25%.
Current NZL
Foreign
Ownership
As at 31 December 2023,
NZL had foreign domiciled
shareholders amounting to
~22.5% of its share register.
29
New Zealand Rural Land Company
INDEX INCLUSIONS AND BROKER RESEARCH COVERAGE
FTSE Global Micro Cap IndexS&P / NZX All Real Estate Index
Broker Research Coverage
Nicholas Hill
nicholas.hill@craigsip.com
Kieran Carling
kieran.carling@craigsip.com
Arie Dekker
arie.dekker@jarden.co.nz
Vishhal Bhula
vishal.bhula@jarden.co.nz
Index Inclusions
MSCI World Micro Cap Index
S&P / NZX Micro Cap Index
30
New Zealand Rural Land Company
INVESTOR RELATIONS CONTACTS
Richard Milsom
richard@nzrlm.co.nz
+64 21 274 2476
Level 1
85 Fort Street
Auckland Central
Auckland 1010
New Zealand
Xavier Lynch
xavier@nzrlm.co.nz
+64 27 282 8046
Level 1
85 Fort Street
Auckland Central
Auckland 1010
New Zealand
31
New Zealand Rural Land Company
LISTED ON:
Rural Land Co
New Zealand
The Rural Land Investors
New Zealand Rural Land Company
Level 1, 85 Fort Street
Auckland Central
Auckland 1010
New Zealand
+64 9 217 2905
info@nzrlc.co.nz
www.nzrlc.co.nz
nzrlc
nzrlc
---
Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at June 2023
Please do not amend or delete individual rows. As this template relates to prescribed content, changes to content
should only be made where it is clearly indicated that this is permitted, otherwise, if an Issuer considers a particular
element does not apply, mark the row as N/A, Any other changes to this prescribed form must first be approved by
NZX as required under NZX Listing Rule 3.26.1.
Results for announcement to the market
Name of issuer
Reporting Period 12 months to 31 December 2023
Previous Reporting Period 6 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$17,229 +121.5%
Total Revenue $17,229 +121.5%
Net profit/(loss) from
continuing operations
$10,854 +335.6%
Total net profit/(loss) $10,854 +335.6%
Interim/Final Dividend
Amount per Quoted Equity
Security
No final dividend will be paid.
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.5910 $1.6221
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
NZL changed its full year balance date from 30 June to 31
December on 26 August 2022.
Authority for this announcement
Name of person
authorised
to make this announcement
Christopher Swasbrook
Contact person for this
announcement
Christopher Swasbrook
Contact phone number 021 928 262
Contact email address chris@nzrlc.co.nz
Date of release through MAP
29/02/2024
Unaudited financial statements accompany this announcement.
NZ Rural Land Company Limited
---
New Zealand Rural Land Company Limited and its subsidiaries
For the year ended 31 December 2023
Consolidated Financial Statements
New Zealand Rural Land Company Limited and its subsidiaries
Directors' responsibility statement
For and on behalf of the Board
DirectorDirector
The Board of Directors of New Zealand Rural Land Company Limited authorised the financial statements for issue on 29 February 2024.
The directors are pleased to present the financial statements of New Zealand Rural Land Company Limited and its subsidiaries for the
financial year ended 31 December 2023.
2
Rob Campbell
Sarah Kennedy
New Zealand Rural Land Company Limited and its subsidiaries
For the year ended 31 December 2023
Notes
$'000$'000
Rental income615,350 5,681
Total rental income15,350 5,681
Less overhead costs
Directors fees(227)(114)
Insurance(85)(40)
Shareholder registry and communications(95)(35)
Management fees20(1,039)(467)
Repairs and maintenance(117)(295)
Professional, consulting and listing fees(394)(29)
Performance fee20(901)(495)
Total overhead costs(2,858)(1,475)
Profit before net finance expense, other income and income tax12,492 4,206
Finance income1,879 1,590
Finance expense(11,388)(2,615)
Net finance expense7(9,509)(1,025)
Profit before other income and income tax2,983 3,181
Other income
Change in fair value of investment property57,388 2,258
Profit before tax10,371 5,439
Income tax benefit / (expense)8.1483 (174)
Net profit10,854 5,265
Other comprehensive income- -
Total comprehensive income for the period10,854 5,265
CentsCents
Basic and diluted earnings per share258.06 4.59
Consolidated statement of comprehensive income
6 month period
ended 31
December 2022
31 December
2023
These financial statements are to be read in conjunction with the accompanying notes
3
New Zealand Rural Land Company Limited and its subsidiaries
Consolidated statement of financial position
At 31 December 2023
31 December
2023
31 December
2022
Notes
$'000$'000
Current assets
Cash and cash equivalents91,258 1,942
Trade and other receivables10378 269
Current tax receivable7 13
Total current assets1,643 2,224
Non-current assets
Investment property5346,281 267,360
Deposit for forestry estate acquisition- 6,294
Loan receivable1120,363 19,144
Deferred tax assets8.21,398 915
Derivative assets1271 2,506
Other non-current assets75 377
Total non-current assets368,188 296,596
Total assets369,831 298,820
Current liabilities
Trade and other payables131,090 594
Borrowings1429,500 1,968
Convertible loan1511,980 -
Other current liabilities169 319
Total current liabilities42,739 2,881
Non-current liabilities
Borrowings14104,000 105,000
Total non-current liabilities104,000 105,000
Total liabilities146,739 107,881
Net assets223,092 190,939
Share capital16157,419 134,180
Share based payment reserve18901 495
Retained earnings64,772 56,264
Total equity223,092 190,939
$$
Net Assets Value (NAV) per share22.21.6016 1.6517
Net Tangible Assets (NTA) per share22.21.5910 1.6221
These financial statements are to be read in conjunction with the accompanying notes
4
New Zealand Rural Land Company Limited and its subsidiaries
Consolidated statement of changes in equity
For the year ended 31 December 2023
Notes
$'000$'000$'000$'000
Balance at 1 July 2022
129,632 4,115 52,848 186,595
Comprehensive Income
Total comprehensive income for the period
- - 5,265 5,265
Total comprehensive income
- - 5,265 5,265
Transactions with shareholders
Capital raised16
433 - - 433
Performance fee issued in ordinary shares16
4,115 (4,115)- -
Performance fee payable in ordinary shares18
- 495 - 495
Dividends paid17
- - (1,849)(1,849)
Balance at 31 December 2022134,180 495 56,264 190,939
Comprehensive Income
Total comprehensive income for the period
- - 10,854 10,854
Total comprehensive income- - 10,854 10,854
Transactions with shareholders
Capital raised16
22,744 - - 22,744
Performance fee issued in ordinary shares16495 (495)- -
Performance fee payable in ordinary shares18- 901 - 901
Dividends paid17
- - (2,346)(2,346)
Balance at 31 December 2023157,419 901 64,772 223,092
Share capital
Retained
earningsTotal
Share based
payment
reserve
These financial statements are to be read in conjunction with the accompanying notes
5
New Zealand Rural Land Company Limited and its subsidiaries
Consolidated statement of cash flows
For the year ended 31 December 2023
Notes
$'000$'000
Cash flows from operating activities
Lease income received
15,939 5,887
Payments to suppliers
(885) (271)
Management fees paid
(1,026) (377)
Income taxes received / (paid)
6 (3)
Interest paid
(8,698) (3,041)
Interest received
653 329
Net cash generated by operating activities
5,989 2,524
Cash flows from investing activities
Payments for investment properties
(65,441) -
Payments for investment in forestry estate
- (6,294)
Payments for leasehold improvements
- (121)
Proceeds from disposals of assets
29 -
Net cash used in investing activities
(65,412)(6,415)
Cash flows from financing activities
Proceeds from issue of ordinary shares23,346 521
Payment of transaction costs on issue of ordinary shares(593) (43)
Dividends paid(2,346) (1,849)
Proceeds from borrowings30,500 6,200
Repayment of borrowings
(3,968) -
Proceeds from convertible loan12,000 -
Repayment of convertible loan
(200) -
Net cash generated by financing activities
58,739 4,829
Net (decrease) / increase in cash and cash equivalents(684)938
Cash and cash equivalents beginning of the period
1,942 1,004
Cash and cash equivalents at the end of the period91,258 1,942
Year ended 31
December 2023
6 month period
ended 31
December 2022
These financial statements are to be read in conjunction with the accompanying notes
6
Notes to the consolidated financial statements
For the year ended 31 December 2023
1Reporting entity
2Basis of preparation
2.1Statement of compliance and reporting framework
Material accounting policies:
2.2
Functional and presentation currency
2.3Basis of measurement
Revenue, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST) except:
•
•
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice ("NZ GAAP") and
the Financial Markets Conduct Act 2013. They comply with New Zealand equivalents to International Financial Reporting Standards ("NZ
IFRS") and other applicable Financial Reporting Standards, as appropriate. These financial statements comply with International Financial
Reporting Standards ("IFRS") as published by the International Accounting Standards Board. For the purposes of complying with NZ GAAP,
the Group is a for-profit entity. These financial statements have been prepared in accordance with the requirements of the Companies
Act 1993 and on a going concern basis.
for receivables and payables which are recognised inclusive of GST (the net amount of GST recoverable from or payable to the
taxation authority is included as part of receivables or payables).
These financial statements are presented in New Zealand dollars, which is the Group's functional currency. All amounts have been
rounded to the nearest thousand, unless otherwise stated.
The financial statements have been prepared on the historical cost basis except for derivative financial instruments and investment
properties which are measured at fair value.
New Zealand Rural Land Company Limited and its subsidiaries
The Company is incorporated in New Zealand and registered under the Companies Act 1993. The Company is an FMC reporting entity for
the purposes of the Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013. The Company was incorporated on 11
September 2020 and is domiciled in New Zealand. The Company is listed on the New Zealand Stock Exchange (NZX Limited) with ordinary
shares listed on the NZX Main Board. The address of the Company's registered office is 50 Customhouse Quay, Wellington Central,
Wellington, New Zealand.
The consolidated financial statements for New Zealand Rural Land Company Limited (the "Company" or "Parent") and its subsidiaries (the
"Group") are for the economic entity comprising the Company and its subsidiaries. The Group's principal activity is investment in New
Zealand rural farmland and forestry land.
where the amount of GST incurred is not recovered from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
These financial statements are for the financial year ended 31 December 2023. The comparative period is the 6 month period ended 31
December 2022.
7
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
2.4Basis of consolidation
•
•
•
2.5Financial instruments
Financial assets - Derecognition of financial assets
Financial assets - Impairment of financial assets
Financial instruments are classified into the following specified categories: ‘fair value through profit or loss' (FVTPL), and 'at amortised
cost'. The classification depends on the business model and nature of the cash flows of the financial instrument and is determined at the
time of initial recognition.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit
or loss are recognised immediately in profit or loss.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control
of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when
the Company ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of a subsidiary to bring their accounting policies into line with the
Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
has power over the investee;
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and
its subsidiaries. Control is achieved when the Company:
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instruments.
The Group’s financial assets consist of cash, trade receivables, derivatives and loan receivable.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
Impairment of financial assets are recorded through a loss allowance account (bad debt provision). The amount of the loss allowance is
based on the simplified Expected Credit Loss (ECL) approach which involves the Group estimating the lifetime ECL at each balance date.
The lifetime ECL is calculated using a provision matrix based on historical credit loss experience and adjusted for forward looking factors
specific to the debtors and the economic environment.
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more
of the three elements of control listed above.
8
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
2.5Financial instruments (continued)
Financial liabilities - Amortised cost
Financial liabilities - Derecognition of financial liabilities
3
Critical accounting estimates and judgements
• Fair valuation of investment property (note 5)
• Determination that land and forest should be classified and measured as investment property (note 5)
• Deferred tax on investment property (note 8.2)
• Recognition of loan receivable (note 11)
3.1
Fair value estimation
•
•
•
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if
market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value
for measurement and/or disclosure purposes in these financial statements is determined on such a basis.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The
difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in
profit or loss.
The carrying value of all other financial assets and liabilities held at amortised cost reasonably approximates the fair value due to the
short term nature of the financial instruments.
Level 3 inputs are unobservable inputs for the asset or liability.
Financial liabilities at amortised cost (including borrowings, related party payables and trade and other payables) are initially recognised
at fair value and subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and
points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial
recognition.
The Group’s assets and liabilities that are measured at fair value are investment property and derivative financial instruments. Investment
property is measured using level 3 valuation techniques as further detailed in Note 5.
Derivative financial instruments are measured using level 2 valuation techniques, which is based on inputs other than quoted prices in an
active market that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). This
valuation technique maximises the use of observable market data where it is available and relies as little as possible on entity specific
estimates. The derivatives are valued based on the mark to market valuations of the interest rate swaps on 31 December 2023.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are
determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For financial reporting
purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as
follows:
The preparation of these financial statements requires management to make estimates and assumptions. These affect the amounts of
reported revenue and expense and the measurement of assets and liabilities. Actual results could differ from these estimates. The
principal areas of judgement and estimation in these financial statements are:
9
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
4
Segment information
5
Investment properties
Fair value of rural and forestry land investment properties:
31 December 2023
Land area
Opening
balanceAdditions ¹
Lease fee
amortisation
Capitalised
lease
incentive ²
Revaluation
(loss) / gainCarrying value
Hectares$'000$'000$'000$'000$'000$'000
Canterbury
5,765
140,887 277(6) (176) (7,866)133,116
Otago3,50080,786-(3) -(1,485)79,298
Southland
1,386
45,687 9(19) (120) (1,391)44,166
Manawatū-Whanganui
3,137
-71,573(2) -18,13089,701
Fair value of investment properties267,360 71,859 (30) (296) 7,388 346,281
¹
²
Investment property is property held either to earn rental income, for capital appreciation or for both.
Investment property is initially measured at cost and subsequently measured at fair value with any change therein recognised in
comprehensive income. Any gain or loss arising from a change in fair value is recognised in comprehensive income.
The Group operates in one business segment being New Zealand rural land.
Included in the Group's total rental income, more than 10% was received from three significant customers, Performance Dairy Limited,
WHL Capital Limited, and New Zealand Forest Leasing (No.2) Limited. The total rental income derived in the year ended 31 December
2023 from these customers was $3.113 million, $3.648 million, and $3.558 million respectively (6 month period ended 31 December
2022: $1.547 million, $1.824 million, and $nil respectively). No other single customer contributed 10% or more of the Group's total rental
income (6 month period ended 31 December 2022: Performance Livestock Limited: $0.679 million, Sustainable Grass Dairy Limited:
$0.584 million).
Investment properties are derecognised when they have been disposed of and any gains or losses incurred on disposal are recognised in
comprehensive income in the year of derecognition.
Location
Included in the Group's total gross finance income, excluding gains on the fair value of derivative instruments, more than 10% was
received as interest income from two significant customers. The total gross interest income derived in the year ended 31 December 2023
from these customers was $0.629 million and $1.238 million respectively (6 month period ended 31 December 2022: $0.297 million and
$0.610 million respectively). No other single customer contributed 10% or more of the Group's total finance income (6 month period
ended 31 December 2022: nil).
Includes directly attributable acquisition costs.
Initial direct costs incurred in negotiating and arranging operating leases and lease incentives granted are added to the carrying amount
of the leased asset.
Net of amortisation.
Property valuations for the farms are carried out at least annually by independent registered valuers.
Valuations performed on the forestry estates are made and evaluated through discounted cash flows, with independent market inputs
reviewed by independent valuers.
This includes the forestry estate deposit that was separately disclosed on the balance sheet in the financial statements for the
6 months ended 31 December 2022. This deposit has been moved to investment properties upon the completion of the
acquisitions in the year ended 31 December 2023.
10
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
5
Investment properties (continued)
31 December 2022
Land area
Opening
balanceAdditions ¹
Lease fee
amortisation
Capitalised
lease
incentive ²
Revaluation
gainCarrying value
LocationHectares$'000$'000$'000$'000$'000$'000
Canterbury5,765 139,808 -(4) (89) 1,172 140,887
Otago3,500 80,138 -(2) -650 80,786
Southland1,386 44,953 -(18) 316436 45,687
Fair value of investment properties264,899 -(24) 227 2,258 267,360
¹
²
5.1Fair value measurement, valuation techniques and inputs
The Group's investment properties were valued by Colliers International, with values applicable as at 31 December 2023.
The forestry estate is currently being used to capture carbon from the atmosphere with the associated carbon credits sold on the New
Zealand Emissions Trading Scheme (NZ ETS). The forestry estate can, at the tenants election, be harvested for timber. Both the forest and
the associated land are interconnected and inseparable, accordingly they have been classified as investment property and are held to
earn rental income and for capital appreciation.
External, independent valuers, having appropriate recognised professional qualifications and recent experience in the location and
category of the property being valued, value the Group’s Canterbury, Otago and Southland properties at least every 12 months. The fair
values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion. Valuations performed on the forestry estates are made and evaluated by the
company using discounted cash flows, with independent market inputs reviewed by independent valuers.
Includes directly attributable acquisition costs.
The net present value of the income provided under the lease agreements have been assessed to be above prevailing market leases for
similar assets. This results in the Group's interest assessment in the leases being greater than the current fair value for the asset on the
basis of the Comparable Sales Approach.
During the year there were no transfers of investment properties between levels of the fair value hierarchy. The valuation techniques
used in measuring the fair value of investment property, as well as the significant unobservable inputs used are as follows:
Investment properties are classified as level 3 (inputs are unobservable for the asset or liability) under the fair value hierarchy on the
basis that adjustments must be made to observable data of similar properties to determine the fair value of an individual property.
The investment properties (except for forestry assets) have been assessed on a fair value basis utilising the income approach for the
Group's interest as lessor and a market approach to assess the reversionary value of the assets at the expiry of the current lease terms.
The valuation includes the consideration made by the valuer for the applicable climate risks.
Net of amortisation.
In April 2023, the acquisition of the forestry estates in Whanganui/Manawatu settled for $71.6 million. That acquisition and its associated
costs were funded from the proceeds of a pro-rata rights offer in March 2023 for $23.4 million, bank funding of $28.5 million, a
convertible loan issuance for $12 million (refer to note 15), and surplus cash.
Upon settlement, the two estates were simultaneously leased for 20 years and 16 years respectively, with CPI adjusted payments.
11
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
5.1Fair value measurement, valuation techniques and inputs (continued)
Key inputs used to measure fair value:
31 December
2023
31 December
2022
Land growth rate2.75%3.00%
CPI forecast (2026 onwards)
2.00%2.00%
Discount rate
7.35%7.15%
Terminal rate6.85%6.65%
For the forestry assets, a market approach has been used to assess the reversionary value.
The values adopted in these financial statements for the Forestry assets are summarised as ($000):
LeasePost-leaseTotal
$'000 $'000 $'000
Block One57,13013,370 70,500
Block Two5,00114,200 19,201
62,131 27,570 89,701
The post lease valuation of the forestry assets has the following key inputs used to measure fair value:
31 December
2023
Discount rate9.60%
NZU market price January 2039*$234
NZU market price April 2043*$255
NZU's per-hectare at lease end
51,500
Long term NZU price growth rate from 20312.10%
The valuation of the Forest assets has been assessed utilising the income approach for the Group's interest as a lessor and discounted
post-lease cashflows. The value of the post lease period is based on estimated carbon production and carbon unit pricing.
Two forestry assets were acquired in 2023. Block one is an established forestry asset with areas still to be planted, which was leased to a
3rd party with expiry in 2043. Block two was acquired in 2023 as bare land with planting to occur in 2023, which was leased to a 3rd
party until 2039. There is one right of renewal for 10 years. It is assumed that no right-of-renewal will be exercised by the lessees. The
tenant planted most of the land in 2023.
The tenants of both sites have leased the land to derive income from either carbon or timber. It is assumed based on the current pricing
and outlook that carbon will be the most likely income source, it is therefore assumed that the forests will not be harvested and will
slowly revert to native forest.
The current value is also driven by the volumes of estimated carbon sequestration over the life of the forest which has been modelled by
external experts based on comparable properties and the I300 method which is used to express the productivity of a site in terms of
volume growth for Pinus radiata. It is the mean annual volume increment in cubic metres per hectare of a 300 stem per hectare Radiata
pine stand at age 30 years. As a measure of productivity used in modelling and forecasting tree growth and stand yield, it is relevant even
where crops are not intended to be thinned to a stocking as low as 300 stems per hectare or grown to age 30.
*NZU pricing has been forecast and the mid-point is adopted for these purposes. 2039 and 2043 relate to the dates of the end of the two
leases.
12
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
5.2Valuation methodology
Key valuation inputDescription
Land growth rateIncreaseDecrease
CPIIncreaseDecrease
Discount rateDecreaseIncrease
Terminal rateDecreaseIncrease
IncreaseDecrease
IncreaseDecrease
The key two subjective inputs into the post-lease valuation are:
1.Discount rate of 9.60%
2.The prices of NZU’s at lease termination
Low Medium High
Estimates for 2039$134$234$335
Estimates for 2043$146$255$364
During 2023, NZU experienced volatility in their prices, and the range of potential future outcomes is significant.
Revised
ValuationImpact
$'000 $'000
Low price path64,500 (25,201)
High price path115,700 25,999
Value adopted by management based on advice from third parties.
The discount rate of 9.6% has been determined by utilising the Capital Asset Pricing Model (CAPM) to determine WACC for this type of
asset by external experts.
The Group engaged an independent 3rd party expert to provide guidance on the expected future price path of NZU’s over the next 40
years. They provided three scenarios and estimated values as follows:
Management adopted the Medium scenario in the valuations as a mid-point between two price paths deemed to be optimistic and
pessimistic.
The valuation of the forestry assets is highly sensitive to changes in the estimated future prices. The valuation of $89.7 million at 31
December 2023 would be impacted as follows if different price path assumptions had been applied:
Forecast NZU prices
Decrease in
input
Market rental assessment
Increase in
input
The expected inflation increase applied to the lease income every three
years. Used in the income approach.
The rate applied to discount future cashflows, it reflects transactional
evidence from similar types of property assets. Used in the income
approach.
The rate used to assess the terminal value of the property. Used in the
income approach.
The rate applied to the expected land value growth. Used in the income
approach.
Measurement sensitivity
The valuer's assessment of the annual net market income per hectare
attributable to the property. Used in the income approach.
13
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
6Rental income
Gross lease receipts15,9385,452
Straight line rental adjustments(120)317
Revenue received in advance adjustments(292)-
Amortisation of capitalised lease incentives(176)(88)
Rental income15,3505,681
6.1Lessor contractual operating lease income
Future minimum rental receivables under non-cancellable operating leases are as follows:
Within 1 year16,954 11,338
After 1 year but not more than 5 years67,817 45,353
More than 5 years116,633 50,588
Total property operating lease income
201,404 107,279
7Finance income and expense
$'000$'000
Finance income
Interest income
1,879919
Gain on fair value of derivative instruments-671
Finance expense
Interest expense(8,876)(2,615)
Loss on fair value of derivative instruments(2,512)-
Net finance expense(9,509)(1,025)
Finance expense includes interest expense incurred on borrowings and any loss on fair value of derivative instruments. Interest expense
is recognised using the effective interest method. Gain on fair value of derivative instruments details are included in note 12.
6 month
period ended
31 December
2022
The commitments above are calculated based on the contract rates using the term certain expiry dates of lease contracts. Actual rental
amounts in future may differ due to CPI adjustments within the lease agreements.
31 December
2023
6 month
period ended
31 December
2022
31 December
2023
Rental income from investment property leased to clients under operating leases is recognised in the consolidated statement of
comprehensive income on a straight-line basis over the term of the lease, taking into account rent free periods. Where lease incentives
are provided to customers, the cost of incentives are recognised over the lease term on a straight-line basis as a reduction to rental
income.
31 December
2023
6 month
period ended
31 December
2022
The Group has entered into investment property leases (as lessor) which have remaining non-cancellable lease terms of between 10 and
20 years.
Finance income includes interest income derived from financial assets and any gain on fair value of derivative instruments. Interest
income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of
income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount on initial recognition.
14
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
8Income taxes
8.1Income tax recognised in statement of comprehensive income
$'000$'000
Current tax expense
--
Deferred tax (benefit) / expense
(483)174
Income tax (benefit) / expense
(483)174
Reconciliation of income tax expense to prima facie tax payable:
Profit before tax
10,3715,439
Income tax expense calculated at 28%
2,9041,523
Effect of expenses that are not deductible in determining taxable profit
83
Effect of income that is not assessable in determining taxable profit
(2,069)(632)
Tax depreciation
(1,333)(720)
Gain on sale of fixed assets
--
Prior period adjustment
7-
Income tax (benefit) / expense
(483)174
8.2Deferred tax assets
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in
equity respectively.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the
consolidated Statement of Comprehensive Income because of items of income or expense that are taxable or deductible in other years
and items that are never taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
It is assumed that the tax book value of tax depreciable assets reflects their market values. This assumes there would be no depreciation
recovered if disposed of for market value.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred
tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or
the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
31 December
2023
6 month
period ended
31 December
2022
15
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
8.2Deferred tax assets (continued)
31 December 2023
$'000 $'000 $'000
Lease fees / Lease incentives(618) 74(544)
Tax losses1,531 410 1,941
Other2(1)1
Total deferred tax asset / (liability)9154831,398
31 December 2022
$'000 $'000 $'000
Lease fees / Lease incentives(550)(68) (618)
Tax losses1,637(106) 1,531
Other2-2
Total deferred tax asset / (liability)1,089(174)915
Key Judgement
9Cash and cash equivalents
Dec 2023 Dec 2022
$'000$'000
Cash at bank
1,258 1,942
Total cash and cash equivalents
1,2581,942
10Trade and other receivables
Trade receivables are non-derivative financial assets and measured at amortised cost less impairment.
Dec 2023 Dec 2022
$'000$'000
Trade receivables41 41
Prepayments332 228
Other receivables5 -
Total trade and other receivables378269
Recognised in
profit or loss
Opening
balance
Recognised in
profit or loss
Closing
balance
The Group has chosen not to rebut the presumption in NZ IAS 12 Income taxes that the carrying value of investment properties will be
recovered through sale.
Closing
balance
Opening
balance
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short‑term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts.
The Group considers that any future gain on sale of investment properties will not be assessable for income tax purposes as the sale of a
capital asset.
Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related
items in the statement of financial position as follows:
16
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
11Loan receivable
Dec 2023 Dec 2022
$'000$'000
Non-current:
McNaughtons home block
6,943 6,321
Makikihi Farm
13,420 12,823
Total loan receivable
20,36319,144
12Derivatives
Dec 2023 Dec 2022
$'000$'000
Derivative assets
712,506
712,506
13Trade and other payables
Dec 2023 Dec 2022
$'000$'000
Trade payables and accruals
569 436
Revenue in advance
292 -
GST payable
229 158
Total trade and other payables1,090594
The loans are secured by a General Security Deed and cross guarantee from certain Van Leeuwen Group entities.
On 1 June 2021, the Group acquired land at 30 Cooneys Road, Morven (McNaughtons home block) for $5.4 million and simultaneously
entered into a lease and a put and call agreement with Performance Dairy Limited (PDL), a related entity to the vendor. Under the call
agreement, PDL can acquire the land on 31 May in any year (providing a minimum 90 days notice has been provided) from the Group for
$5.4 million plus 10% interest compounding annually. Under the put agreement, from 1 June 2023 the Group can require PDL to acquire
the land on 31 May any year under the same pricing mechanism and notice requirements. The put and call option has a 99 year life.
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid.
The amounts are unsecured and are usually paid within 30 days from recognition. Trade payables are recognised initially at fair value and
subsequently measured at amortised cost.
Key Judgement
On 2 August 2021, the Group acquired land at a North Canterbury Dairy Farm (Makikihi Farm) for $12 million and simultaneously entered
into a lease and a put and call agreement with Makikihi Robotic Dairy Limited (MRDL), a related entity to the vendor. Under the call
agreement, MRDL can acquire the land on 31 May in any year (providing a minimum 90 days notice has been provided) from the Group
for 12 million plus 10% interest compounding annually. Under the put agreement, from 1 August 2023 the Group can require MRDL to
acquire the land on 31 May any year under the same pricing mechanism and notice requirements. The put and call option has a 99 year
life.
The loan receivable balances have been considered and determined no impairment is required at reporting date.
Derivative financial instruments, comprising interest rate swaps are classified as fair value through profit or loss ("FVTPL"). They are
initially recognised at fair value on the date the derivative contract is entered in to. Subsequent to initial recognition, changes in fair value
of such derivatives and gains or losses on their settlement are recognised in the consolidated statement of comprehensive income in
finance income and expense.
The Group has determined that these arrangements have the substance of loans with 10% market interest rates per annum (6 month
period ended 31 December 2022: 10%).
17
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
14Borrowings
Dec 2023 Dec 2022
Notes$'000$'000
Current borrowings:
Rabobank facility14.1
29,500 1,968
Non-current borrowings:
Rabobank facility14.1
104,000 105,000
Total borrowings
133,500106,968
14.1Rabobank Facility
Total
Undrawn
facility
Drawn
amountFair value
Dec 2023
$'000$'000$'000$'000
Bank facility A1 June 20257.60%46,000 -46,000 46,000
Bank facility B1 June 20247.46%29,500 -29,500 29,500
Bank facility C1 June 20267.76%29,500 -29,500 29,500
Bank facility D14 April 20267.72%28,500 -28,500 28,500
133,500 -133,500 133,500
Total
Undrawn
facility
Drawn
amountFair value
Dec 2022
$'000$'000$'000$'000
Bank facility A1 June 20256.35%46,000 -46,000 46,000
Bank facility B1 June 20246.20%29,500 -29,500 29,500
Bank facility B31 January 20236.20%2,000 321,968 1,968
Bank facility C1 June 20266.50%29,500 -29,500 29,500
107,000 32 106,968 106,968
The terms of the borrowings includes the following covenants that the Group must ensure at all times:
•
Interest coverage ratio is greater than 1.6;
•
Loan to valuation ratio does not exceed 40%; and
•
Capital expenditure in each financial year shall not exceed 120% of the budgeted forecast capital expenditure.
The Group has complied with the financial covenants of its borrowing facilities during the year ended 31 December 2023.
Effective
interest rateExpiry date
The Group has entered into a revolving credit facility agreement with Rabobank on 21 May 2021 and renewed on 14 April 2023. The
facility agreement has a limit of $133,500,000 with floating interest rates ranging over the four tranches of the debt. Interest is payable
quarterly in arrears.
Expiry date
There is a general security deed over all of the assets of the Group as security of the borrowings.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of
comprehensive income over the period of the borrowings using the effective interest method. Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Effective
interest rate
The Group's interest cover ratio covenant is 1.6 for the period from 30 June 2023 to 31 December 2024, and 1.75 from 31 March 2025
onwards.
18
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
15
Dec 2023 Dec 2022
$'000$'000
Current:
Convertible loan
11,980 -
16Issued capital
Notes
Authorised and issued
Balance at 30 June 2022129,632112,648,894
Rights issue to existing shareholders
476452,929
Performance fee issued in ordinary shares
4,115 2,499,747
Transaction costs arising on issue of shares
(43) -
Balance at 31 December 2022
134,180115,601,570
Rights issue to existing shareholders
1723,285 23,375,984
Other share issues
595 628,929
Share buy-back
(530) (611,327)
Performance fee issued in ordinary shares
495 299,844
Transaction costs arising on issue of shares
(606) -
Balance at 31 December 2023
157,419139,295,000
17Dividends
Post October 2024 and at that point, the loan could convert to ordinary shares in the forest owning subsidiary. Should that conversion
have occurred, there were put and call arrangements to enable the Group to return to 100% ownership of the forests.
The December 2022 performance fee was settled with 0.3 million shares being issued in March 2023 at an equivalent of $1.6507 per
share (internal NAV measurement).
During the period, total dividends of $2.346 million were declared. An ordinary dividend of $0.020 per share with no supplementary
dividend was issued in March 2023. No imputation credits were attached to the dividend.
$'000
No. of
ordinary
shares
All shares have equal voting rights, participate equally in any dividend distribution or any surplus on the winding up of the Company. The
shares have no par value.
Convertible Loan
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity
instruments issued are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Group's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or
loss on the purchase, sale, issue or cancellation of the Group's own equity instruments.
There have been no payments of the convertible loan balance. The balance as of 31 December 2023 reflects interest and transaction
costs (deducted).
On 14 April 2023, the Group entered into a convertible loan agreement with New Zealand Forest Leasing Limited with a face value of
$12.36 million. In February 2024 the convertible loan was repaid in full (refer to subsequent event note 27).
At 31 December 2023 the convertible loan was expected to be repaid within eighteen months from the date of the loan being issued. The
terms of the agreement required the Group to make quarterly interest payments based on the current outstanding principal amount, at
8% per annum.
In April 2024, the Group was required to make a $1.244 million repayment.
19
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
18Share based payment reserve
Dec 2023 Dec 2022
$'000$'000
Arising on share-based payments (performance fee)
901495
Balance at end of the period
901495
19Remuneration of auditors
Dec 2023 Dec 2022
Assurance and other services
$'000$'000
Statutory audit services64 -
64-
Dec 2023 Dec 2022
Assurance and other services
$'000$'000
Statutory audit services23 102
23102
20Related parties
20.1Remuneration of the Manager
• Providing administrative and general services;
• Sourcing and securing potential investors and communicating with investors;
• Sourcing opportunities for the sale and purchase of Land, and operators for lease agreements in respect of Land;
• Overseeing due diligence for and executing transactions for the sale and purchase, and leasing, of Land;
• Managing the Group’s Property, including Land owned by the Group;
• Arranging regular valuations and audits of the Group; and
• Administering the payment of dividends and distributions in respect of the Group.
The Manager is remunerated via management fees, transaction fees and performance fees.
The following fees were paid or payable for services provided by PricewaterhouseCoopers New Zealand as the former auditor of the
Group:
The share based payment reserve relates to the Manager's performance fee that is settled through the issue of shares. More details on
performance fees are provided in note 20.1.
The Group has appointed an external manager, New Zealand Rural Land Management Limited Partnership through a signed management
agreement. The Manager is responsible for all management functions of the Group, including:
During the year, the Company accepted the resignation of PricewaterhouseCoopers New Zealand as the Company's statutory auditor and
appointed William Buck Audit (NZ) Limited in its place.
The following fees were paid or payable for services provided by William Buck Audit (NZ) Limited as the auditor of the Group:
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
20
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
20.1Remuneration of the Manager (continued)
Fees paid and owing to the Manager:
Fees chargedFees charged
$'000$'000$'000$'000
Basic management services fee1,039 89467 90
Land transaction fees878---
Leasing fees60---
Performance fee901901495 495
Total
2,878 990 962 585
Management fee
Transaction fee
•
•
Performance fee
20.2Key management personnel compensation
A monthly management fee is payable equal to 0.5% per annum of the Group's Net Asset Value, calculated on a monthly basis. The total
management fees for the period ended 31 December 2023 were $1.039 million (6 month period ended 31 December 2022: $0.467
million).
For each purchase or sale of land, a fee equal to 1.25% of the acquisition or divestment cost of the land and improvements;
and
A performance fee is payable to the Manager when the Group's net asset value ('NAV') per share exceeds the Group's NAV per share in
the immediately preceding financial year. This annual performance fee is calculated as 10% of the increase in NAV per share and is settled
through the issue of ordinary shares based on the NAV per share at that date. NAV per share is adjusted for the impact of capital
reconstructions (such as a rights issue at a premium or discount), with the intention of the calculation being neither prejudicial nor
advantageous to the Company or the Manager. Half of the ordinary shares issued are held in escrow and cannot be sold for 5 years. The
value of the performance fee in the year ended 31 December 2023 was $0.901 million (6 month period ended 31 December 2022: $0.495
million). The shares will be issued to the Manager subsequent to balance date.
31 December 2023
6 month period ended 31
December 2022
Transaction fees incurred for the period ended 31 December 2023 were $0.878 million and $0.060 million (6 month period ended 31
December 2022: $nil) in relation to the purchase and lease fee components (respectively). The purchase fee is included in the initial
carrying amount of the acquired investment property. The leasing fee has been added to the carrying value of the leased asset (being
investment properties) as part of the initial direct costs of arranging the lease.
For each lease agreement entered into, a fee of $30,000.
In addition to remuneration of the Manager outlined above, the Group paid directors fees during the period of $0.227 million (6 month
period ended 31 December 2022: $0.114 million) in cash. There was no other compensation of key management personnel during the
period.
A fee is payable for the following transactions:
Owing at 31
Dec
Owing at 31
Dec
21
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
21Subsidiaries
Dec 2023 Dec 2022
Name of entity
Country
incorporatedEquity holdingEquity holding
NZRLC Dairy Holdings LimitedNew Zealand100%100%
SSP NI LimitedNew Zealand100%100%
New Zealand Rural Land Investments GP LimitedNew Zealand100%0%
New Zealand Rural Land Investments Limited Partnership
New Zealand100%0%
22Non-GAAP measures
22.1Reconciliation of net profit after tax to adjusted funds from operations (AFFO)
Notes
$'000$'000
Net profit after tax10,8545,265
Adjustments
Unrealised net (gain) in value of investment properties5(7,388) (2,258)
Performance fee payable in shares18901495
Unrealised net loss / (gain) on derivatives72,512 (671)
Deferred tax (benefit) / expense8.2(483) 174
Amortisation of rent free incentives617688
Amortisation of lease fee30 25
Funds from operations ('FFO')6,6023,118
FFO per share (cents)4.742.70
Adjustments
Incentives and leasing costs120 (315)
Future maintenance capital expenditure¹(663)(329)
Adjusted funds from operations ('AFFO')6,0592,474
AFFO per share (cents)4.352.14
Rural land investment
The following subsidiaries have been consolidated in the Financial Statements of the Group:
Non-GAAP measures do not have a standard meaning prescribed by GAAP and therefore may not be comparable to information
presented by other entities. These measures should not be viewed in isolation, nor considered as a substitute for measures reported in
accordance with NZ IFRS.
31 December
2023
6 month
period ended
31 December
2022
Funds from operations ('FFO') is a non-GAAP financial measure that shows the Group's underlying and recurring earnings from its
operations and is considered industry best practice for a property fund to enable investors to see the cash generating ability of the
business. This is determined by adjusting statutory net profit (under NZ IFRS) for certain non-cash and other items. FFO has been
determined based on guidelines established by the Property Council of Australia and is intended as a supplementary measure of
operating performance. The Manager uses and considers Adjusted Funds From Operations ('AFFO') as a measure of operating cash flow
generated from the business, after providing for all operating capital requirements including maintenance capital expenditure, tenant
improvement works, incentives and leasing costs.
Activities
Rural land investment
Rural land investment
General partner
¹ Represents amounts set aside each financial period for future expected maintenance capital expenditure as considered prudent by the
Manager. These amounts do not qualify for recognition as liabilities on the balance sheet under NZ GAAP.
The consolidated Financial Statements incorporate the assets, liabilities and results of the subsidiaries in accordance with the accounting
policy described in note 2.4.
22
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
22.2Net assets per share and net tangible assets per share
Dec 2023 Dec 2022
Notes
$'000$'000
Total assets369,831 298,820
(Less): Total liabilities(146,739) (107,881)
Net assets223,092190,939
(Less): Deferred tax asset
8.2
(1,398) (915)
(Less): Derivative asset
12
(71) (2,506)
Net tangible assets221,623187,518
Number of shares issued ('000)139,295 115,602
Net assets per share ($)1.6016 1.6517
Net tangible assets per share ($)1.5910 1.6221
23Financial instruments
Categories of financial instruments:
As at 31 December 2023
Assets
$'000 $'000 $'000 $'000
Cash and cash equivalents-1,258 -1,258
Trade and other receivables-46 -46
Loan receivable-20,363 -20,363
Derivative assets71 --71
71 21,667 -21,738
Liabilities
Trade and other payables--569 569
Convertible loan--11,980 11,980
Borrowings--133,500 133,500
--146,049 146,049
As at 31 December 2022
Assets
$'000 $'000 $'000 $'000
Cash and cash equivalents-1,942 -1,942
Trade and other receivables-41 -41
Loan receivable-19,144 -19,144
Derivative assets2,506--2,506
2,50621,127 -23,633
Liabilities
Trade and other payables--436 436
Borrowings--106,968 106,968
--107,404 107,404
Financial
assets at
amortised
cost
Financial
liabilities at
amortised
cost
Financial
assets/
liabilities at
FVTPL
Total
Financial
assets/
liabilities at
FVTPL
Financial
liabilities at
amortised
cost Total
The Group presents net assets per share and net tangible assets per share in these financial statements. The Group believes that these
non-GAAP measures provide useful additional information to readers. Net tangible assets per share is a required disclosure under the
NZX Listing Rules and net assets per share is a measure monitored by management and required for calculating the Manager's
performance fee. The calculation of the Group's net assets per share, net tangible assets per share, and its reconciliation to the
consolidated statement of financial position is presented below:
Financial
assets at
amortised
cost
23
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
24Financial risk management
24.1Interest rate risk
Dec 2023 Dec 2022
$'000$'000
Financial assets
Cash at bank1,2581,942
Financial liabilities
Bank borrowings (net of economic impact of interest rate swaps)48,00064,968
Interest rate applicable at balance date
Cash at bank<1%<1%
Bank borrowings (net of economic impact of interest rate swaps)7.60%6.34%
Interest rate
decrease of
Interest rate
increase of 2%
Interest rate
decrease of
Interest rate
increase of 2%
$'000$'000$'000$'000
Increase / (decrease) in interest expense(960)960(1,299)1,299
There is no interest rate risk on the loan receivable (note 11) as they accrue interest at a fixed rate.
24.2Credit risk
Dec 2023
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause the Group to
incur a financial loss. Financial instruments which are subject to credit risk principally consist of cash, debtors and loans receivable. The
Group’s exposure to credit risk is equal to the carrying value of the financial instruments.
The Group conducts credit assessments of tenants to determine credit worthiness prior to entering into lease agreements. This includes
requiring tenants to have equity at least six times their annual lease obligations or provide other suitable security arrangements. Where
appropriate, the Group will include guarantees and/or security from tenants within lease agreements to support rental payments. In
addition, debtor balances are monitored on an ongoing basis with the result that exposure to bad debts is not significant.
The risk from financial institutions is managed by placing cash and cash equivalents with high credit quality financial institutions only. The
Group has placed its cash and cash equivalents with ASB Bank Limited and Westpac New Zealand Limited, both who are AA- rated
(Standard & Poor's).
The Group intends to further mitigate this risk in the future by expanding into other primary sectors in New Zealand, such as horticulture,
viticulture, sheep and beef.
Interest rate risk is the risk that fluctuations in interest rates impact the Group's financial performance, future cash flows or the fair value
of its financial instruments.
The Group's policy is to manage its interest rates using a mix of fixed and variable rate debt. To manage this mix, the Group enters into
interest rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable rates for
interest calculated by reference to an agreed-upon notional principal amount. These swaps are designed to economically hedge
underlying debt obligations.
The Group's exposure to variable interest rate risk and the weighted average interest rate for interest bearing financial assets and
liabilities as at 31 December 2023 was as follows:
The following sensitivity analysis represents the change in interest expense if the floating interest rates on bank borrowings (net of
economic impact from interest rate swaps) had been 2% higher or lower, with other variables remaining constant:
Dec 2022
24
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
24.3Liquidity risk
The following table outlines the Groups' liquidity profile, as at 31 December 2023, based on contractual non-discounted cash flows:
Total0-1 year1-2 years2-5 years>5 years
As at 31 December 2023
$'000$'000$'000$'000$'000
Trade and other payables
1,0901,090---
Convertible note
11,98011,980---
Borrowings ¹
149,92738,40251,94559,580-
Total
162,99751,47251,94559,580-
Total0-1 year1-2 years2-5 years>5 years
As at 31 December 2022
$'000$'000$'000$'000$'000
Trade and other payables
594594---
Borrowings ¹
123,3288,78435,11579,429-
Total
123,9229,37835,11579,429-
¹
24.4Capital risk management
25Earnings per share
Dec 2023 Dec 2022
Profit after income tax ($'000)10,854 5,265
Weighted average number of shares for the purpose of basic and diluted EPS ('000)134,646 114,636
Basic and diluted earnings per share (cents)8.06 4.59
Basic and diluted earnings per share amounts are calculated by dividing profit after income tax attributable to shareholders by the
weighted average number of shares on issue.
Includes contractual interest payments based on drawn down amounts at reporting date and assuming no repayments of
principal prior to expiry date.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of
ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. The Company has no
dilutive factors.
Liquidity risk is the risk that the Group may encounter difficulty in meeting its obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset. Liquidity risk mainly arises from the Group’s obligations in respect of long term
borrowings, derivatives and trade and other payables.
The Group monitors and evaluates liquidity requirements on an ongoing basis and generates sufficient cash flows from its operating
activities to meet its obligations arising from its financial liabilities and has bank facilities available to cover potential shortfalls. The
Group’s approach to managing liquidity risk is to ensure it will always have sufficient liquidity to meet its obligations when they fall due
under both normal and stress conditions.
When managing capital risk, the Manager's objective is to ensure the Group continues as a going concern as well as to maintain optimal
returns to shareholders and benefits for other creditors.
The Group meets its objectives for managing capital through its investment decisions on the acquisition and disposal of assets, dividend
policy, and issuance of new shares. This includes restricting debt to 40% of total assets and debt will generally be sought on interest-only
repayment terms, subject to maintaining the 40% debt limit. The Group will also seek debt with mortgage security over the rural land
acquired to secure the borrowings.
25
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
26Reconciliation of profit after income tax to net cash flows from operating activities
$'000 $'000
Profit and total comprehensive income for the period
10,8545,265
Add/(less) non-cash items:
Change in fair value of derivatives2,435(714)
Change in fair value of investment property(7,388)(2,258)
Performance fee payable in shares901495
Interest income accrual(1,226)(590)
Deferred tax(483)174
Lease incentives - rent free period297(228)
Interest expense accrual47(424)
Lease fee amortisation3725
Convertible loan amortisation180-
Movements in working capital items:
Decrease / (increase) in other current assets(31)1,240
Decrease / (increase) in income tax receivable6(3)
Increase in trade and other payables68121
Increase / (decrease) in income in advance292(579)
Net cash generated by operating activities5,9892,524
27Subsequent events
Roc Partners Transaction
Transaction features:
•
•The LP then issued units to Roc Partners such that they have a 25% interest in the LP.
•
•
•
•
On 19 January 2024 NZRLC entered into a conditional agreement to sell a 25% economic interest to Roc Partners for $44.2m. Conditions
were subsequently satisfied, and the transaction settled on 9 February 2024.
There are no contingent liabilities or assets as at 31 December 2023 (31 December 2022: nil).
31 December
2023
6 month
period ended
31 December
2022
NZRLC transferred the group assets (other than cash on hand) to a newly created limited partnership (LP). In substance,
NZRLC’s $133.5m revolving credit facility with Rabobank (note 14) was also transferred to the LP.
The general partner of the LP is a company owned by NZRLC and Roc Partners in the same proportions as the LP, 75% and 25%
for NZRLC and Roc Partners respectively.
New Zealand Rural Land Management Limited Partnership (manager) will continue to be the manager of NZRLC and will also
manage the LP. The NZRLC management agreement was amended at completion of facilitating this new structure, reducing
NZRLC’s liability for manager fees to 75% of the LP.
It is intended that NZRLC and Roc Partners will co-invest (through the LP) in future acquisitions to grow the portfolio. Where
this occurs, Roc Partners will fund 25% of the equity needed for an acquisition reducing NZRLC’s associated capital
requirements.
The business strategy of the LP will be the business strategy of NZRLC and remains unchanged. Where NRLC and Roc Partners
approve an acquisition (and, in particular, the funding for that acquisition) the LP will be the acquiring entity. If Roc Partners
does not wish to fund the LP for an acquisition, NZRLC may proceed with that acquisition on its own, sole account. Third party
debt funding of the LP must continue to not exceed a 40% (loan to value ratio) level at all times.
26
Notes to the consolidated financial statements
For the year ended 31 December 2023
New Zealand Rural Land Company Limited and its subsidiaries
27Subsequent events (continued)
•
Apple and forestry land acquisition
There were no other material events subsequent to balance date.
As of 31 December 2023, NZRLC has determined the transaction was not highly probable. The arrangement was still being negotiated
with significant uncertainty as to whether it would proceed. At that time either party had the ability to walk away from the negotiations.
NZRLC is in the process of assessing how it will account for the LP on settlement date (9 February 2024). Key to that assessment is
whether or not NZRLC has sufficient power to direct the relevant activities (those that significantly affect the investee’s return) of the LP
such that it has reached the threshold required for control (as defined in NZ IFRS 10 Consolidated Financial Statements). NZRLC expect to
consolidate the LP on the basis that the activities requiring Roc Partner’s approval are protective in nature.
If NZRLC consolidates the LP it will reflect the 25% held by Roc Partners as a non-controlling interest with no impact in Profit or Loss.
Whilst not NZRLC’s expectation, if it does not consolidate the LP then on settlement date it will de-recognise the assets and liabilities
from its balance sheet and recognise an investment in the LP, with the difference between the two recognised as an accounting loss in
Profit and Loss of $11.3m.
On settlement date 9 February $11.98 million was used to repay the outstanding convertible loan (refer to note 15). The balance of fund
has been retained as working capital while NZRLC considers future growth and capital options.
On 20 February 2024 NZRLC agreed to acquire the land supporting 3 apple orchards located in the Hawkes Bay region in the North Island
and forestry land in close proximity to its existing estates for a total of $27.6m. The acquisition will be acquired by the Limited
Partnership formed as part of the Roc Partners Transaction (above).
The orchard land has a total land area of approximately 97 hectares of which 82 hectares are planted. The orchards will be leased to Kiwi
Crunch for a period of 30 years with a year one income of c.$1.4 million, subject to annual rental adjustments of CPI or 2.5%, whichever is
higher. NZRLC will legally own only the land not the orchard trees. This acquisition is conditional on obtaining certain approvals and
settlement is expected to occur in March 2024.
The forestry land has a total area of approximately 1,119 hectares and is leased to New Zealand Forest Leasing (NZFL) for a period of 16
years. The estate has year one income of $760,000 and is subject to annual CPI-linked rental adjustments. The tenant will utilise the land
for timber and/or carbon sequestration. This acquisition was both signed and settled 20 February 2024.
Subject to certain conditions, Roc Partner’s interest in the LP has a lock-up period of 6 years where it may not sell to a third
party. During this period NZRLC may sell down up to half of its interest in the LP to third parties (should it wish to do so).
27
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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