RURAL FUNDS GROUP — Annual Report 2016

Aug 23, 2016

Rural Funds Group (RFF) Financial results presentation year ended 30 June 2016

24 August 2016

==> picture [131 x 52] intentionally omitted <==

Disclaimer

==> picture [131 x 51] intentionally omitted <==

This presentation has been prepared by Rural Funds Management Limited (ACN 077 492 838, AFSL 226 701) (“ RFM ”) as the responsible entity of Rural Funds Group (“ RFF ”). RFF is a stapled security, incorporating Rural Funds Trust (ARSN 112 951 578) and RF Active (ARSN 168 740 805). The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this presentation, RFM has not considered the investment objectives, financial circumstances or particular needs of any particular recipients.

This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. In particular, this presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. This Presentation must not be released or distributed in the United States. Any securities described in this presentation have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.

RFM has prepared this presentation based on information available to it at the time of preparation. No representation or warranty is made as to the fairness, accuracy or completeness of the information, opinions and conclusions contained in this presentation or any other information that RFM otherwise provides. To the maximum extent permitted by law, RFM, their related bodies corporate and their officers, employees and advisers are not liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on this presentation or otherwise in connection with it.

This presentation includes “forward-looking statements”. These forward-looking statements are based on current views, expectations and beliefs as at the date they are expressed. They involve known and unknown risks, uncertainties and other factors which could cause the actual results, performance or achievements of RFF to be materially different from those expressed or implied by the forward-looking statements. Accordingly, there can be no assurance or guarantee regarding these statements and you must not place undue reliance on these forward-looking statements. RFM and RFF disclaim any responsibility for the accuracy or completeness of any forward-looking statements.

2

Agenda

==> picture [131 x 51] intentionally omitted <==

RFM attendees

1. Highlights

2. Results

3. Capital management

4. Outlook

5. Portfolio

6. Appendices

==> picture [52 x 83] intentionally omitted <==

==> picture [52 x 71] intentionally omitted <==

==> picture [52 x 81] intentionally omitted <==

==> picture [52 x 78] intentionally omitted <==

David Bryant

Managing Director

Stuart Waight

Chief Operating Officer

Daniel Yap

Financial Controller

James Powell

Investor Relations & Distribution Manager

3

Highlights

==> picture [127 x 289] intentionally omitted <==

Results highlights

==> picture [131 x 51] intentionally omitted <==

	June 16	June 15	Movement	Further details
Earnings	22.46 cpu	8.38 cpu	+168%	s.11
Adjusted funds from operations (AFFO)	9.26 cpu	9.09 cpu	+2%	s.12
Distributions	8.93 cpu	8.59 cpu	+4%	s.12
Adjusted NAV per unit	$1.43	$1.22	+17%	s.31
Gearing	36.7%	35.1%	+1.6%	s.16
FY17 forecast AFFO	12.42 cpu	9.26 cpu1	+34%	s.18
FY17 forecast distributions	9.64 cpu	8.93 cpu1	+8%	s.18
Weighted Average Lease Expiry (WALE)	13.8 yrs	12.2 yrs	+1.6 yrs	s.23

Note: 1 FY16 actual

5

Key events

• $35.0m equity raising (at $1.10 per unit) to fund the acquisition of

• Oct 15 Kerarbury, a property near Darlington Point, NSW. Leased to Olam Orchards Australia for 22.75 yrs to develop a 1,500 ha almond orchard

• Outlined climate strategy to articulate the benefits of diversifying into

• Feb 16 geographically dispersed climatic regions (discussion paper released via the ASX June 2016)

• Feb 16 $5.3m acquisition (debt funded) of a 9% stake in Perth Markets Ltd, WA

• $8.8m acquisition (initially debt funded) of three macadamia orchards

• March 16 outside Bundaberg, Queensland, totalling 259 ha. Leased to 2007 Macgrove Project (234 ha) and RFM (25 ha) for up to 21 yrs

• Announced an increase FY17 forecast AFFO of 12.36 cpu (up 34%),

• May 16 DPU of 9.64 cpu (up 8%) and lower payout ratio (78%) following completion of a material rent review

• $61.0m equity raising (at $1.475 per unit) to fund acquisitions in three sectors; cattle properties in northern and central Queensland (leased for

• July 16 10 yrs), additional 1,000 ha of almond orchard development on Kerarbury and macadamia orchards acquired March 2016

==> picture [131 x 51] intentionally omitted <==

==> picture [187 x 96] intentionally omitted <==

2,500 ha almond orchard development, NSW

==> picture [189 x 99] intentionally omitted <==

259 ha macadamia orchards, Qld

==> picture [188 x 99] intentionally omitted <==

225,800 ha cattle breeding properties, Qld

6

Property reconciliation

==> picture [131 x 51] intentionally omitted <==

Adjusted property assets reconciliation

==> picture [648 x 234] intentionally omitted <==

----- Start of picture text -----

$480m
441,407,000
50,018,000 11,284,000
$440m
$400m
51,900,000 380,105,000
$360m
73,836,000
$320m
$280m
249,019,000 (5,350,000) 2,500,000 8,200,000
$240m
$200m
Adjusted Poultry Vineyard Macadamias Almond Almond Adjusted Cattle Kerarbury Pro forma
property infrastructure revaluation capex revaluation property assets water property
assets revaluation assets entitlements assets
30 June 2015 30 June 2016
----- End of picture text -----

• Assets are independently valued annually. The primary valuation methodology is on an encumbered basis

• Main movements for period are attributable to capital expenditure deployed on almond developments and revaluations of established orchards

• A directors valuation has been performed for poultry infrastructure, consistent with management’s approach to depreciate the poultry sheds to reflect their increasing average age

• Post reporting period $50.0m on cattle assets and $11.3m on water entitlements as per Entitlement Offer dated 5 July 2016

7

Strategy and performance

==> picture [131 x 51] intentionally omitted <==

Net asset, market cap and liquidity growth

• RFM has communicated the following strategy for RFF:

• expand the scale of the fund through accretive acquisitions (see slide 20)

• The aims of this strategy are:

• improved liquidity and price

• earnings and distribution growth

==> picture [346 x 164] intentionally omitted <==

----- Start of picture text -----

$400m
$350m
$300m
$250m
$200m
$150m
$100m
$50m
$0m
Jun 14 Dec 14 Jun 15 Dec 15 Jun-16 Pro forma11
Adjusted Net Assets Market Cap Value traded (6mths ending)
----- End of picture text -----

• enhanced diversification

Total shareholder return 1 July 2014 – 17 August 2016[2]

• lower operating costs per unit

• Net assets, market capitalisation, and liquidity have all increased since listing, consistent with this strategy

==> picture [327 x 172] intentionally omitted <==

----- Start of picture text -----

$2.20 July 2016: $61m
Entitlement Offer
$2.00
March 2016: S&P/
$1.80 ASX300 inclusion
Oct 2015: $35m
$1.60
March 2015: $15m Entitlement Offer
$1.40 Entitlement Offer & Placement
& Placement
$1.20
$1.00
$0.80
Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
S&P/ASX300 A-REIT RFF All ordinaries
----- End of picture text -----

Notes:

1 Pro forma market cap based on 17 August 2016 closing price of $1.65. Value traded bi-annualised based on trades from 1 July to 17 August 2016

2 Total return assumes $1.00 invested June 2014 and all distributions are reinvested at the DRP price. Total return of indices as provided by S&P. Data current to 17 August 2016

8

Results

==> picture [194 x 289] intentionally omitted <==

FY16 results – summary

==> picture [131 x 51] intentionally omitted <==

Metrics as at 30 June 2016

Income	Net profit before income tax Total comprehensive income	35,963,000 34,774,000		AFFO $14.3m (pre-tax) and AFFO per unit 9.26 cents.
	Adjusted funds from operations (AFFO)	14,342,000		AFFO per unit up from previous
				forecast to 30 June 2016 of 9.20 cents
	AFFO per unit1	9.26 cents		due to reduction and change in timing
	Earningsper unit	22.46 cents		of finance costs
Portfolio	Net asset value (NAV)	207,864,000
	Adjusted NAV	236,279,000		Increase in distributions of 4% as per
	NAV per unit	1.26		forecast
Balance sheet	Adjusted NAVper unit Total assets	1.43 379,039,000		Gearing of 36.7% within target range
	Adjusted total assets	407,454,000		Total assets $379.0m up from $252.7m
	External borrowings	149,530,000		at 30 June 2015 primarily due to
	Gearing2	36.7%		planned capital expenditure and
Distributions	Total distributions	13,998,478		almond orchard revaluations
	CPU per distribution	2.2325 cents
	Total distributions (cpu)	8.93 cents
	Payout ratio3	96%

Notes:

1For reconciliation see slide 29

2Gearing calculated as external borrowings / adjusted total assets

3Payout ratio calculated as distributions per unit / AFFO per unit

10

FY16 results – earnings

==> picture [131 x 51] intentionally omitted <==

Summarised statement of comprehensive income

	12 mths ended	12 mths ended
	30 June 2016	30 June 2015
	$	$
Property revenue	26,549,000	22,218,000
Revenue	26,549,000	22,218,000
Other income	76,000	69,000
Share of net profit – equity accounted investments	61,000	125,000
Property expenses and overheads	(4,019,000)	(3,617,000)
Management fees	(3,165,000)	(2,496,000)
Property revaluations	29,838,000	(344,000)
Finance costs	(5,612,000)	(5,285,000)
Change in fair value of derivatives	(7,116,000)	(734,000)
Depreciation and impairments	(939,000)	(490,000)
Gain/(loss) on sale of assets	290,000	(5,000)
Profit before tax	35,963,000	9,441,000
Income tax(expense)/benefit	(1,175,000)	712,000
Profit after tax	34,788,000	10,153,000
Other comprehensive income	(14,000)	8,000
Total comprehensive income	34,774,000	10,161,000
Earningsper unit2	22.46 cents	8.38 cents

• Revenue has increased primarily as a result of increased leased assets due to planned capital expenditure

• Property expenses and overheads increased largely due to one-off costs associated with the acquisitions during the period

• Finance costs consistent despite increase in debt, due to lower interest rates and banking margins

• Result includes $7.12m unrealised loss relating to interest rate swaps

• RFT treated as a flow through trust for tax purposes. Income tax relates to RF Active and AWF[1]

• Property revaluations based on holding water entitlements at cost. Increase largely due to revaluation of established almond orchards

• Reconciliation to AFFO provided in slide 29

1 RFM Australian Wine Fund (AWF) is a subsidiary of Rural Funds Trust (RFT) that has formed a tax consolidated group

2 Based on the weighted average number of units on issue during the period

Notes:

11

FY16 results – AFFO

==> picture [131 x 51] intentionally omitted <==

Composition of AFFO (pre-tax)

Composition of AFFO (pre-tax)
			
	12 mths ended	12 mths ended
	30 June 2016	30 June 2015
	$	$
Property revenue	26,549,000	22,218,000
			
Directpropertycosts	(645,000)	(809,000)
Netproperty income	25,904,000	21,409,000)
Other income	77,000	69,000	
Share of net profit – equity accounted investments	61,000	125,000	
Fund overheads	(2,923,000)	(2,813,000)
Management fees	(3,165,000)	(2,496,000)
EBIT	19,954,000	16,294,000
Finance costs	(5,612,000)	(5,285,000)
Adjusted funds from operations	14,342,000	11,009,000
AFFO per unit1	9.26 cents	9.09 cents
Distributionsper unit	8.93 cents	8.59 cents

AFFO is pre-tax and excludes fair value adjustments, depreciation and impairment to represent RFF’s property rental business AFFO growth due to increase in revenue as developments progress Property leases are largely triple net Reconciliation to net profit after tax provided in slide 30

Notes:

1Based on the weighted average number of units on issue during the period

12

Capital management

Capital management

Equity

Equity
Share (Unit)	44% increase for period 30 June 2015 to
price	30 June 2016 ($1.10 to $1.58)
Distribution	Forecast FY17 of 9.64 cpu, up 8% on FY16
DRP	Remains open with 1.5% discount
	$35.0m Entitlement Offer and Placement at
Equity	$1.10 per unit completed in October 2015
raised	$61.0m Entitlement Offer at $1.475 per unit
	completed in July 20161

==> picture [131 x 51] intentionally omitted <==

Term debt facility

Limit	Limit increased to $200.0m on 12 July 2016 ($147.5m as at 30 June 2016)
Maturity	Facility expires December 2018
Funding lines available	Undrawn debt capacity of $53.5m on current facility limit (see slide 16)
Hedging	$60.0m long term interest rate hedges expiring 2025, implemented during the period

Note:

1 Included as matters subsequent to the end of the year in Financial Statements for the year ended 30 June 2016

14

Almond developments update

• Tocabil $32m (600 ha) orchard development:

• Capital expenditure of $12.6m for the period, bringing the total to $23.0m, in-line with budget

• Almond plantings now complete, additional capital expenditure to be deployed for further irrigation infrastructure, water acquisitions and planned initial maintenance costs

• 5,898 ML of water entitlements acquired to 30 June 2016, with a further staged acquisition of 1,302 ML by 30 June 2017

 Kerarbury $173m (2,500 ha) orchard development:

• Capital expenditure of $56.0m for the period, in-line with budget overall, water acquisitions ahead of schedule

• Over 600 ha planted, with up to an additional 600 ha to be planted 2016 calendar year

• Some delays experienced in plantings due to significant wet weather during 2016 development period

• Water acquisitions ahead of schedule and irrigation infrastructure well progressed

• 17,000 ML of water entitlements acquired to 30 June 2016, with a further staged acquisition of 11,000 ML by 31 December 2019

==> picture [131 x 51] intentionally omitted <==

==> picture [209 x 152] intentionally omitted <==

Tocabil: Initial 400 ha, trees hedged and showing good early growth and consistency (May 2016)

==> picture [209 x 153] intentionally omitted <==

Kerarbury: Soil surveys, land forming, ripping and mounding complete. Plantings and irrigation infrastructure commenced (August 2016)

15

Debt facility

==> picture [131 x 51] intentionally omitted <==

Debt metrics

Debt metrics
	30 June 2016	30 June 2015
Term debt facility limit1, 2	$200.0m	$103.0m
Term debt drawn	$146.5m	$89.7m
Headroom	$53.5m	$13.3m
Loan to Value Ratio (LVR)3	42.5%	36.7%
Debt Facility expiry	18 Dec 2018	18 Dec 2018
Interest Cover Ratio	4.66x	3.65x
Hedging requirement	>50%	>50%
Proportion hedged4,6	60.1%	83.7%
Weighted average hedge expiry5	7 Sep 2021	10 June 2019
Weighted average hedge rate6	3.43%	3.44%
Effective cost of total debt	4.77%	5.48%

Notes:

• 1 Key financial covenants for FY16: LVR <50%, Interest Cover Ratio >2.5x, with distribution permitted at >2.75x, Net Tangible Assets >$150 million. Limit at 30 June 16 $147.5m, increased to $200m 12 July 2016

• 2 Security: Real property mortgages, general security agreement, cross guarantees between RFF and subsidiaries

• 3 LVR calculated as term debt drawn/directly secured assets

• 4 Proportion hedged based on term debt drawn

• Key changes for FY16:

  • Facility limit increase

• Amortisation of debt removed

• Increased amount and tenor of interest rate hedges to more closely align with weighted average expiry profile of leases

• RFM to review debt tenor and sources of funding, with ongoing monitoring of hedge positions

5 year hedged (fixed rate) position

==> picture [300 x 163] intentionally omitted <==

----- Start of picture text -----

$100.0m 4.00%
95.5
93.0
88.0 88.0 88.0 88.0
$90.0m 3.70%
$80.0m 3.40%
3.43%
3.37%
$70.0m 3.10%
3.19%
3.14% 3.15%
3.10%
$60.0m 2.80%
$50.0m 2.50%
FY16 FY17 FY18 FY19 FY20 FY21
Average amount hedged Weighted average hedge rate
----- End of picture text -----

• 5 Includes hedges not yet commenced

• 6 Excludes hedges not yet commenced

16

Outlook

==> picture [207 x 289] intentionally omitted <==

Forecasts

==> picture [131 x 51] intentionally omitted <==

Key forecasts FY17

• AFFO and distribution forecasts remain consistent with the updated guidance contained within the disclosure on 5 July 2016

• FY17 distributions are expected to continue to have a majority tax deferred component arising from almond development capital expenditure

• RFF is lowering its payout ratio whilst increasing distributions per unit. This will be supported by growth in rent from almond developments (see next slide), lease indexation and accretive investments

• The lower payout ratio creates more retained earnings which are a key part of the funding of the ongoing almond orchard developments, as well as providing scope to pursue productivity capex[2] and new investments

AFFO per unit	12.42 cents
Distributions per unit	9.64 cents
Payout ratio	78%
Future distribution growth rate	4%
Distribution payment frequency	Quarterly
Forecast income yield1	6.1%

Key forecasts FY16 vs FY17

==> picture [320 x 187] intentionally omitted <==

----- Start of picture text -----

14.00
34% AFFO &
12.00
8% DPU increase Retained
earnings
10.00
8.00 96% 78%
payout ratio payout ratio
6.00
4.00
2.00
-
FY16 FY17
DPU AFFO
Cents per unit
----- End of picture text -----

1 FY17 forecast DPU of 9.64 cents divided by 30 June 2016 closing price of $1.58

Notes:

2 Capital expenditure for productivity improvements to attract additional rent and aims to increase property values and improve counterpart profitability

18

Development pipeline

==> picture [131 x 51] intentionally omitted <==

• Retained earnings underpin RFF’s development pipeline in conjunction with raised equity and debt

• Rent received on all capex shown below

• Supports increasing NAV, AFFO, distributions and scale

Timetable and capital costs

		FY17	FY18	FY19	FY20	Total
	Assets
	Kerarbury (Darlington Point)	43.9	37.3	18.3	9.4	$108.9m
	Tocabil, Yilgah and Mooral (Hillston)	6.7	5.5	4.5	0.3	$17.1m
	Vineyards1	0.5	1.3	0.1		$1.9m
	Cattle2	0.5	0.5			$1.0m
	Total development	$51.6m	$44.6m	$22.9m	$9.7m	$128.9m

1 Grafting and redevelopment program agreed with TWE

2 Productivity capex: pasture improvement and additional watering points

Notes:

19

Areas of focus for management

==> picture [131 x 51] intentionally omitted <==

Climatic zones and RFF assets (see slide 35)

• RFM will continue to:

• perform an oversight role as lessor, including development programs

• pursue new investments and lessees that can benefit RFF

• Investments in differing climatic zones and/or in natural resource predominant assets may be beneficial

• Climatic diversification can potentially moderate the collective weather risks for lessees as well as introduce new commodities and lessees

• Natural resources predominant assets have higher levels of potential capital and income growth, and lower levels of depreciating infrastructure

• The ideal lessee is attracted to RFF assets for three key reasons:

• Low cost of production / high quality product

• Utilisation of extra processing capacity; and

• Desire to secure supply and maintain market share

==> picture [307 x 199] intentionally omitted <==

Spectrum of investment opportunities (see slide 34)

==> picture [304 x 154] intentionally omitted <==

20

Conclusion

==> picture [131 x 51] intentionally omitted <==

• Results in line with forecast

• Lowering payout ratio, supporting growth

• REIT structure; stable and growing income yield and the potential for capital growth over time

• Quality assets and quality leases

• Managed by a farm and fund manager; operating for almost 20 years and with direct operational experience in each of the sectors that RFF leases assets

==> picture [239 x 86] intentionally omitted <==

managing good assets with good people

21

Portfolio

Snapshot

==> picture [131 x 51] intentionally omitted <==

Key portfolio metrics

Key forecasts FY17

Key portfolio metrics
	30 June 2016	Post- transaction pro forma 30 June 20161
Adjusted Total Assets2	$407.5m	$468.8m
Adjusted NAV2	$236.3m	$294.6m
Adjusted NAV per unit2	$1.43	$1.43
Units on issue	165.4m	206.7m
Gearing3	36.7%	32.5%
Number of properties	31 properties	34 properties
WALE (pro forma)4	13.8 years	15.1 years
Occupancy	100%	100%
Water entitlements	65,604 ML	70,855 ML

Notes:

• 1 Post-transaction pro forma based on results to 30 June 2016, with an adjustment to include the cattle and water acquisitions post period

• 2 Adjusted assets incorporates independent property valuations, inclusive of water entitlements. Post-transaction pro forma includes assets settled upon completion of the Offer

• 3 Gearing calculated as external borrowings/adjusted total assets

• 4 Lease expiries weighted by forecast FY17 rental income, expressed in years from 30 June 2016. Post-transaction pro forma weighted assuming cattle assets, macadamias, and all almond developments complete

• 5 Calculated forecast FY17 distribution of 9.64 cpu divided by 30 June 16 closing price of $1.58

AFFO per unit	12.42 cents
Distributions per unit (DPU)	9.64 cents
Payout ratio	78%
Future distribution growth rate	4%
Distribution payment frequency	Quarterly
Forecast income yield5	6.1%

Weighted average lease expiry profile

==> picture [286 x 191] intentionally omitted <==

----- Start of picture text -----

$16.0 Olam -
$14.0 Kerarbury
$12.0 expansion
$10.0
Cattle JV RFM
$8.0 Macadamias
$6.0
$4.0
$2.0
$0.0
RFM Poultry (NSX: RFP) Select Harvests (ASX: SHV)
RFM Almonds Treasury Wine Estates (ASX: TWE)
Olam - existing leases Cattle JV
RFM Macadamias Olam - Kerarbury expansion
$m
----- End of picture text -----

23

Assets and lessees overview

==> picture [131 x 51] intentionally omitted <==

Almonds Poultry Cattle Assets Vineyards Other & macadamias farms assets Select Harvests (ASX: RFM Poultry Treasury Wine Estates Cattle JV Pty Ltd 70+ Livestock SHV) (NSX: RFP) (ASX: TWE) - Operators Wholly owned - Australia’s largest One of the largest - World’s largest subsidiary of RFM (lessees for livestock vertically integrated contract chicken growing listed pure-play wine - RFM’s internal cattle owned by RFM nut and health food operations in Australia company, A$6.8b[2] expertise enhanced StockBank[3] ) company, A$0.5b[2] - Key brands: by external Lessees RFP has grower Penfolds, Wolf Blass, consultants RFM Almond Funds Olam Orchards contracts with Baiada Seppelt - & Macgrove Project Australia Pty Ltd Poultry Pty Ltd[1] Structured to accept (Plant and equipment) - a wholly owned investment with subsidiary of SGXsuitable joint venture Perth Markets Ltd Baiada Poultry Pty Ltd listed Olam partner - One of two largest International Ltd, processors in A$5.1b[2] , second Australia largest global almond grower - Key brands: Steggles, Lilydale RFM, RFM Almond Funds, 2007 Macgrove Project

Notes:

1 RFP grower contracts with Bartter Enterprises as at 30 June 2016, a wholly owned subsidiary of Baiada Poultry Pty Ltd

2 Market capitalisation as at 30 June 2016

3 RFM as responsible entity of StockBank has begun the process of returning capital to investors and winding up the business

24

Key assets further details

==> picture [131 x 51] intentionally omitted <==

Almond orchards	Poultry farms	Vineyards	Cattle assets
1,814 ha across two established almond orchards located near Hillston, NSW. Leased to SHV (1,221 ha), RFM Almond Funds (551 ha) and RFM (42 ha). 3,100 ha of orchards under development in two locations; Hillston & Darlington Point, NSW. Developed and leased by Olam Orchards Australia Pty Ltd. WALE1: 16.8 yrs Indexation and market review: RFM & SHV: 2.5% p.a. & SHV 3 yearly market review Olam: CPI Valuation2 30/06/16: $241.4m Valuer: CBRE Valuations	154 sheds on 17 farms. Consisting of 134 sheds on 13 farms in Griffith, NSW, and 20 sheds on 4 farms in Lethbridge, VIC. Aged between 8 and 32 years. Griffith assets located within a 8km radius of the processing facility and contribute ~50% throughput. RFM has managed chicken growing operations since 2003, now operated by RFP. WALE1: 10.8 yrs Indexation: 65% of CPI capped at 2% Valuation2 30/06/16: $88.7m Valuer: Opteon Property Group	Seven vineyards with 666 ha planted to vines leased to TWE. Principally located in the Barossa Valley (499 ha planted primarily to Shiraz) as well as Adelaide Hills, Coonawarra and Grampians. Vineyards have historically contributed essential quantities of Icon, A and B grade fruit for key premium labels. WALE1: 6.0 yrs Indexation and market review: 2.5% p.a. and market review on 1 July 2017 Valuation2 30/06/16: $41.9m Valuer: Gaetjens Pickett Valuers	Three cattle properties forming an integrated breeding to finishing system. Two breeding properties located in the Gulf of Carpentaria, Qld (225,800 ha) and breeding herd. High value backgrounding and finishing property (17,500 ha) located in central Qld. Leased to Cattle JV Pty Ltd, a wholly owned subsidiary of RFM. WALE1: 10 yrs Indexation and market review: CPI + EYCI based indexation & market review at yr 5 (property) Acquisition cost: $41.7m properties + $8.3m cattle Valuer: n/a

Notes:

1 Lease expiries weighted by forecast FY17 rental income

25

2 Independent valuations for all assets shown except Kerarbury (shown at cost) and poultry farms (directors valuation consistent with managements approach to depreciate assets)

Water entitlements

==> picture [131 x 51] intentionally omitted <==

• RFF owns significant water entitlements independently valued at $97.9m as at 30 June 2016, sufficient for the ongoing operation of each key asset

• Australia is internationally recognised as a leader in the regulation of water property rights

• RFM calculates water requirements on a high security equivalent (HSE) basis, which is the MLs adjusted by a reliability factor average. This provides RFF, and its lessees, with a high level of water security in respect to the ongoing operation of each asset

• Water entitlements are regularly traded in transparent secondary markets, independently valued by qualified valuers and used by banks as security at their independent market value

• In accordance with accounting standards and ASIC guidance, water entitlements are classified as intangible assets and recorded at cost in statutory accounts. RFM reports an adjusted NAV to show the independent asset valuations inclusive of water

Water assets details

Portfolio by asset type as at 30 June 2016

Water assets details
Water source	ML	Reliability1	HSE ML
Lachlan groundwater	31,344	100%	31,344
Lachlan river water	4,866	35%	1,705
Murrumbidgee groundwater	8,800	100%	8,800
Murrumbidgee river water	15,725	63%	9,853
Murray river water	2,954	53%	1,566
Other2	1,915	100%	1,915
Total	65,604		55,182

==> picture [247 x 147] intentionally omitted <==

----- Start of picture text -----

7%
Property and
infrastructure
24%
41% Biological assets
Water entitlements
Other assets
28%
----- End of picture text -----

Notes:

1 RFM’s assessment of the average allocation received per annum based on historical data, expressed as a percentage of the notional ML

2 Other includes private irrigation schemes, supplementary licences, and other assets which are functionally equivalent to a water entitlement

26

Diversified assets and revenue

==> picture [131 x 51] intentionally omitted <==

Adjusted asset values 30 June 2016

Revenue FY17 forecast

==> picture [609 x 293] intentionally omitted <==

----- Start of picture text -----

Other
Macadamias 7% Poultry Other, 4%
2% infrastructure Cattle JV, 8%
Vineyards 22% RFMP, 25%
10%
TWE, 8%
RFM Macadamias, 2%
Almond orchards
under
development SHV, 21%
22%
Olam, 23%
Almond orchards
37% RFM Almonds, 9%
RFMP - RFM Poultry (NSX: RFP) Olam - Olam Orchards Australia
Poultry infrastructure Almond orchards
RFM Almonds SHV - Select Harvests (ASX:SHV)
Almond orchards under development Vineyards
RFM Macadamias
Macadamias Other
----- End of picture text -----

RFMP - RFM Poultry (NSX: RFP) RFM Almonds RFM Macadamias Cattle JV

Olam - Olam Orchards Australia SHV - Select Harvests (ASX:SHV) TWE - Treasury Wine Estates (ASX: TWE) Other

27

Appendices

==> picture [193 x 294] intentionally omitted <==

FY16 results

==> picture [131 x 51] intentionally omitted <==

Reconciliation of net profit after tax to AFFO

	12 mths ended	12 mths ended
	30 June 2016	30 June 2015
	$	$
Net profit before tax	35,963,000	9,443,000
Adjusted for:
Property revaluations	(29,838,000)	344,000
Change in fair value of derivatives	7,116,000	734,000
Depreciation and impairment	939,000	490,000
(Gain)/loss on sale of assets	(290,000)	5,000
One-off transaction costs	452,000	-
AFFO	14,342,000	11,016,000
AFFO per unit1	9.26 cents	9.09 cents

• Table adds back non cash items to reconcile net profit after tax to AFFO

• Major items for FY16 – $29.84m property revaluations largely due to revaluation of established almond orchards

• – $7.12m unrealised loss on interest rate hedges

• – $0.45m one-off transaction costs for purchase of macadamia leasing business

1Based on the weighted average number of units on issue during the period

Notes:

29

FY16 results

==> picture [131 x 51] intentionally omitted <==

Summarised balance sheet

	As at 30 June 2016	As at 30 June 2015	 	Net assets $207.9m NAV per unit $1.26
	$	$		Adjusted NAV of $236.3m and $1.43
Cash Property investments	3,034,000 351,691,000	712,000 239,445,000		per unit (refer to slide 31 for reconciliation)
Plant and equipment	4,178,000	3,153,000		Equity raising totalling $35.0m
Equity accounted investments	9,041,000	3,903,000		undertaken in October 2015
Deferred tax assets Other assets	1,120,000 9,975,000	2,317,000 3,133,000		Units on issue increased by 33,215,055
Total assets	379,039,000	252,663,000		Change in total assets primarily due
Interest bearing liabilities - Current	3,030,000	657,000		to: – Property revaluations $29.8m
- Non-current	146,500,000	91,451,000		– Kerarbury acquisition and
Derivative financial liabilities	9,190,000	2,048,000		development $56.0m
Other liabilities	12,455,000	6,568,000		– Tocabil development $12.6m
Total liabilities Net assets	171,175,000 207,864,000	100,723,000 151,940,000		– Macadamia acquisition $8.8m
				Total interest bearing liabilities
Units on issue	165,357,290	132,142,235		$149.5m
				Gearing 36.7%

30

FY16 results

==> picture [131 x 51] intentionally omitted <==

Adjusted balance sheet

Adjusted balance sheet
	Statutory		Adjusted		RFF owns significant water entitlements, sufficient for the ongoing
	balance sheet at 30 June	Revaluation of water	balance sheet at 30 June		operation of each key asset
	2016	entitlements	2016		Water entitlements are regularly traded
Assets	$	$	$		in secondary markets and are
Total current assets	12,774,000	-	12,774,000		independently valued by qualified
Total non-current assets	366,265,000	28,415,000	394,680,000		valuers
Total assets	379,039,000	28,415,000	407,454,000		In accordance with accounting
					standards and ASIC guidance, water
Liabilities					entitlements are classified as intangible
Total current liabilities	13,851,000	-	13,851,000		assets and recorded at cost in statutory
Total non-current liabilities	157,324,000	-	157,324,000		accounts resulting in a NAV of $1.26
Total liabilities	171,175,000	-	171,175,000		Additional value in water entitlements of
Net assets	207,864,000	28,415,000	236,279,000		$28.42m resulting in adjusted net
Net asset value per unit	1.26	0.17	1.43		assets of $236.28m and an adjusted
					NAV per unit of $1.43
					As at 30 June 2016 RFF owned 65,604
					ML of water entitlements representing
					24% of total adjusted assets
					The adjusted NAV of $1.43 is presented
					to show the valuations including water
					stated at fair value

31

FY16 results

==> picture [131 x 51] intentionally omitted <==

Property investment reconciliation

==> picture [649 x 34] intentionally omitted <==

	Investment property	Biological assets	Intangible assets1	Financial assets2	Total
	$	$	$	$	$
Balance as at 30 June 2015	142,379,000	67,581,000	28,965,000	520,000	239,445,000
Additions – Macadamias	1,253,000	6,930,000	602,000	-	8,785,000
Additions – Kerarbury	16,317,000	6,263,000	24,097,000	9,334,000	56,011,000
Additions – Tocabil Station	3,159,000	5,937,000	3,537,000	-	12,633,000
Additions net of disposals	2,499,000	-	2,693,000	-	5,192,000
Impairment	-	-	(203,000)	-	(203,000)
Fair value adjustment3	3,343,000	26,495,000	-	(11,000)	29,827,000
Balance as at 30 June 2016	168,950,000	113,206,000	59,691,000	9,843,000	351,690,000

Notes:

1Accounting standards require water entitlements to be recorded as intangible assets, and held at the lower of cost or fair value

2Relates to water entitlements held as part of the investment in Barossa Infrastructure Limited and Coleambally Irrigation Co-operative Limited, which are accounted for as financial assets

3Fair value adjustments as part of 30 June 2016 valuations. Growth of biological assets are based on increases in the value of almond orchards, macadamia orchards and vines

32

Investment case

==> picture [131 x 51] intentionally omitted <==

RFF uses a leasing model in an underserviced domestic agricultural sector

• Observations:

Australian property sectors[1]

• Academic research demonstrates that leasing assets provides capital management benefits and flexibility to lessees, and is linked to higher company returns

• The combined value of Australian commercial real estate is $280 billion of which an average of 70% is leased[2]

• Australian agricultural property represents a figure in the order of $150 billion of investment grade assets (of which an estimated 5% are leased)[3]

• Agricultural property leasing is common in mature agricultural markets such as the US and parts of Europe (approx. 40% of property)[4]

 Conclusions:

==> picture [264 x 224] intentionally omitted <==

----- Start of picture text -----

160
140
120
100
$b 80
60
40
20
-
Agricultural Office Retail Industrial
----- End of picture text -----

• Leasing agricultural property and assets to suitable companies provides a mutual benefit

• The agricultural property leasing sector in Australia is underserviced

• The presence of a REIT in agriculture is a logical development

• RFF provides exposure to the income and capital growth without all the operating risks associated with a direct investment

Notes:

1 The heavily shaded portion denotes proportion of institutional ownership

2 Higgins, Dr D.M. (2013) ‘Australian Commercial Property Investment Market: Styles, Performance and Funding’, RMIT University.

3 RFM estimates

4 Stead, David. (2004) ‘Agricultural Tenures and Tithes’ & USDA Agricultural Resources and Environmental Indicators (2003)

33

Spectrum of investment opportunities

==> picture [131 x 51] intentionally omitted <==

RFF will pursue acquisitions of additional assets to grow the quantum and diversity of its earnings

Spectrum of investment opportunities[1]

==> picture [515 x 259] intentionally omitted <==

• The investment strategy is to invest across the full range of the asset continuum shown below, with the objective of ensuring the asset mix can continue to fund distributions consistent with current levels

• Natural resource predominant assets that offer capital growth will be balanced by infrastructure predominant assets that generate higher initial yields

Note:

1The income and growth figures presented in the figure above have been provided to differentiate the profile of income and growth that can be derived from different assets. They are based on RFM’s experience and observations of agricultural lease transactions and historical rates of growth. They are neither forecasts nor projections of future returns. Past performance is not a guide to future performance.

34

Climatic diversification strategy

==> picture [131 x 51] intentionally omitted <==

• RFM released a discussion paper on climatic diversification to the ASX in June 2016[1]

Climatic zones and RFF assets[2]

• The paper builds on previous internal research conducted by RFM in 2009 and 2012, which supports climatic diversification of the RFF agricultural property portfolio into geographically dispersed climatic regions

• The benefits of climatically diversifying RFF’s portfolio include:

• Moderating the likelihood of multiple lessees experiencing wetter or drier conditions at the same time;

• The introduction of new commodities with different production cycles and commodity prices;

• Reduced exposure to the effects of large scale climatic systems (e.g. El Niño); and

• Moderation of the long-term exposure to possible climate change impacts

==> picture [361 x 229] intentionally omitted <==

• RFF’s recent Queensland cattle property and macadamia orchards acquisitions are examples of assets which add climatic diversification to the portfolio

• The paper is available on the RFM website: www.ruralfunds.com.au

Notes:

• 1 RFM (2016), RFF Climatic diversification discussion paper, see ASX announcements 9 and 20 June 2016

• 2 Source: Australian Bureau of Meteorology. Based on median annual rainfall and seasonal incidence determined from the ratio of the median rainfall November to April and May to October over 100 year period from 1900-1999. RFF property locations are approximate

35

Responsible entity and manager

==> picture [131 x 51] intentionally omitted <==

• Rural Funds Management Limited (RFM) is one of the oldest and most experienced agricultural funds management organisations in Australia

• Established in 1997, RFM operates as an external manager and is currently the responsible entity for seven agricultural investment funds which as at July 2016 had approximately $460m of assets under management in New South Wales, South Australia, Victoria and Queensland, and a combined FY16 turnover of approximately $107m

• David Bryant is the founding director and majority owner (80%) of RFM. Other owners include senior staff and non-executive directors

• Both RFM and David Bryant have investments in each of the listed entities RFM manages

• RFM manages additional operational entities enabling RFF to benefit from shared services

• The RFM management team includes specialist fund managers, finance professionals, horticulturists, livestock managers, and agronomists. This team provides RFM with the specialised skills and experience required to manage the agricultural assets

• RFM employs or directly contracts 35 corporate staff (offices in Canberra and Sydney) and approx. 50 farm/operational staff

• RFM performs an oversight role as a fund and asset manager including:

• Overseeing compliance to the financial, farming and reporting aspect of each lease

• Water management including obtaining approvals, engagement with government

• Management of infrastructure e.g. replacement capex and ongoing development such as bores

• Coordination of annual independent valuations

• Facilitating acquisitions

• Managing lessee/customer relationships

• RFM has a simple and transparent fee structure for managing and administering RFF:

• Fund and Asset Management Fees totalling 1.05% p.a. of gross asset value;

• Reimbursement of all reasonable expenses; and

• Constitution provides for a termination fee of 1.5% of gross asset value in the event RFM is removed as responsible entity

36

RFM board and management team

==> picture [131 x 51] intentionally omitted <==

RFF is externally managed and governed by a highly experienced management team and board

Board of directors

Contacts

==> picture [36 x 45] intentionally omitted <==

Guy Paynter Non-executive Chairman

==> picture [38 x 57] intentionally omitted <==

David Bryant Managing Director

==> picture [36 x 54] intentionally omitted <==

Michael Carroll Non-Executive Director

• Former director of broking firm JBWere with more than 30 years’ experience in corporate finance

• Guy is a former member of the ASX

• Agricultural interests include cattle breeding in the Upper Hunter region in New South Wales

• Established RFM in February 1997

• Responsible for leading the RFM Executive and sourcing and analysing new investment opportunities

• Responsible for over $460m in asset acquisitions across eight Australian agricultural regions, including negotiating the acquisition of more than 35 properties and over 79,000 megalitres of water entitlements

• Serves a range of food and agricultural businesses in a board and advisory capacity, including Tassal Group Ltd, Select Harvests Ltd, Paraway Pastoral Company, Sunny Queen Ltd and the Gardiner Dairy Foundation

• Senior executive experience in a range of companies, including establishing and leading NAB’s Agribusiness division

==> picture [32 x 40] intentionally omitted <==

Stuart Waight Chief Operating Officer

==> picture [36 x 43] intentionally omitted <==

Andrea Lemmon Executive Manager, Funds Management

==> picture [33 x 43] intentionally omitted <==

Dan Edwards Business Manager Rural Funds Group

==> picture [36 x 47] intentionally omitted <==

James Powell Investor Relations and Distribution Manager

• Joined RFM in 2003

• RFM Company Secretary

• Responsible for reviewing and optimising the performance of the RFM funds, and analysing future developments, acquisitions, and investments

• Oversees the Asset Management activities, as well as the Farm Management activities of the National Manager of each of Poultry, Almonds, Cattle and Cropping and Livestock.

• Joined at inception in 1997

• RFM Company Secretary

• Responsible for the development of new products, the continuous improvement of existing products, management of research activities, and the provision of services and communications to investors and advisers

• Joined RFM in 2005

• Manages leases with major counterparts and water resources

• • Responsible for the analysis of RFF financial performance, and the analysis of future development and investment opportunities

• • Responsible for the operational support and day-to-day funds management of RFF

• Joined RFM in 2006

• Responsible for overseeing RFM’s sales and distribution activities, development of key relationships required to increase the awareness of RFM’s investment opportunities and part of the product development division

37

Corporate information

==> picture [131 x 51] intentionally omitted <==

==> picture [131 x 83] intentionally omitted <==

==> picture [130 x 84] intentionally omitted <==

==> picture [119 x 84] intentionally omitted <==

==> picture [121 x 84] intentionally omitted <==

==> picture [123 x 83] intentionally omitted <==

Rural Funds Management Ltd

ACN 077 492 838 AFSL 226701

Canberra Office Level 2, 2 King Street Deakin ACT 2600

Telephone: +61 2 6203 9700 Facsimile: +61 2 6281 5077 Website: www.ruralfunds.com.au

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

38