Good morning, and welcome to the financial results presentation for the Rural Funds Group for the half year ended 31 December 2025. Presenting today is David Bryant, Managing Director; Tim Sheridan, Chief Operating Officer; and Daniel Yap, Chief Financial Officer.

After the presentation, we've allowed time to take questions from attendees, who can submit a question by typing into the question box and clicking submit. For those dialling in today to ask a verbal question, please dial *1 when prompted, and I'll now hand over to our first presenter, Tim.

Good morning, everyone. I will present the financial results for the half before handing over to David Bryant.

The first half of FY 2026 has been a positive period for the group. Net property income is up 7%.

Gearing has reduced on a pro forma basis, and FY 2027 capex is significantly lower compared to the past several years. Independent valuations and asset sales continue to confirm RFF's asset values, and both adjusted funds from operations, AFFO, and distributions are on track to achieve full-year guidance.

Now moving on to the financial results in more detail. The first slide of this section details RFF's key earnings drivers for the period.

Net property income from leased assets increased by $3 million to $49 million. The 7% increase is mainly due to additional rent being charged from the development of leased macadamia orchards, as well as annual indexation mechanisms that occur in all of our leases.

Net farming income represented $1.1 million, mainly derived from favourable dryland cropping and cattle results on Kaiuroo. While this result is an improvement on the prior corresponding period, the second half contribution of this segment is forecast to be significantly higher following the harvest of macadamia and cotton crops.

From an expense perspective, fund expenses were in line with the prior period. However, interest on debt increased by $4 million.

This was largely due to a decrease in the interest that is able to be capitalised, reflecting the completion of various asset development programmes. These results provided net cash earnings, or adjusted funds from operations, of $21.5 million or 5.5 cents on a per-unit basis.

Importantly, AFFO is on track to achieve full-year forecast, noting the expected second half skew in farming income. After adding non-cash items, earnings of $44 million or 11.3 cents per unit was generated in first half 2026.

This is compared to $13 million for the prior period. The favourable result driven by positive revaluations on interest rate swaps, as well as the gain on the sale of water entitlements.

Finally on this page, RFF paid two distributions during the half totalling 5.87 cents per unit, which is in line with forecast. Now looking at the balance sheet.

Assets increased marginally during the period as a consequence of development capital expenditure. The adjusted NAV per unit at 31 December was $3.10 per unit, a minor increase of 2 cents per unit reflecting the mark-to-market of interest rate swaps.

Pro forma gearing remained largely unchanged at 39.1% despite $17 million of development capex being deployed during the period. This capex was funded from the sale of two surplus sugarcane properties and excess water entitlements.

These transactions demonstrate RFM's commitment to fund capital expenditure with asset sales and ultimately bring RFF's gearing back towards the target range of 30% to 35%. Further to this, additional asset sales are expected during the balance of this financial year.

This next page provides additional detail of property valuation movements that have occurred within RFF over the past six months. Independent valuations were arranged for 25% of assets, which were in line with book values and consistent with our policy to independently revalue all assets at least every two years.

On the remaining portion of the portfolio, directors' valuations were applied. The movement in this segment mainly reflects depreciation of bearer plants in line with accounting standards.

Further evidence to support asset valuations is the divestment of farms which have occurred at or above book value. Two sugarcane farms were sold for 10% above their book value and water entitlements sold at their adjusted book value.

Water is held at cost in the statutory accounts in line with accounting standards, and therefore this sale provided a substantial gain as they were sold at approximately 2.5 times their purchase price. Looking now at the capital management aspect of the group.

During the period, RFF's core syndicate debt facility went through a scheduled refinance, providing a tenor extension and an improvement in the bank margin. The core facility remains well within all covenants, including the loan-to-value ratio and ICR.

Despite our intention to fund development capital expenditure programme with asset sales, we note that the facility does have sufficient headroom to fund committed capex for FY 2026 and 2027, if necessary. Forecast FY 2027 committed capital expenditure compared to the prior three years is detailed on this page.

It highlights that RFF is now past its peak capex requirement for intensive asset development programmes, with significantly lower forecast capex to occur in FY 2027. The debt facility is 60% hedged, with a reasonable level of hedging locked in through to FY 2029.

The portion of hedging may also increase as asset sales are completed and debt is reduced, positioning the fund well in the event of any future increases in interest rates. I'll now hand over to David.

Thank you.

Good morning, ladies and gentlemen. I'll provide a portfolio and strategy update for the Rural Funds Group.

Starting this section is a photograph of the Queensland property Kaiuroo. Shown in the image are the first-stage developments, which were detailed in the prior results presentation and are now complete, including pumping infrastructure, a water storage, and irrigated cropping area.

Similar developments will be conducted on different locations on Kaiuroo over the next 18 months. Once fully developed, this property will be more profitable and more attractive to potential lessees.

Kaiuroo serves as a useful example of the broader strategy for the Rural Funds Group to generate higher returns through asset developments using RFM's farm development expertise while maintaining a majority of lease income from a diversified portfolio of agricultural assets. The various metrics on this page provide evidence of this approach.

Looking more closely at the leasing revenue of the group as at the 31st of December, 83% of RFF's assets were leased for a weighted average lease expiry of 13.2 years. The largest lessees are shown on the left of this page and include high-quality, institutional-grade counterparts.

Revenue is also diversified by agricultural sector and indexation mechanisms. As noted at the start of this section, the Rural Funds Group seeks higher returns through asset development opportunities.

Assets in this category are presented on this page and include those being held for potential future development, currently under development, and properties for which the developments have been completed. Overall, these assets represent $342 million or 17% of the portfolio.

Importantly, the majority of these assets are able to be operated by RFF and contribute farming income. Two sectors providing a material contribution to farming income in FY 2026 are macadamias and cropping.

Macadamia orchards on two aggregations will be harvested over the coming months, and the harvest of irrigated cotton fields will occur over April and May on Kaiuroo and on Lynora Downs. Turning to additional income-producing opportunities for the Rural Funds Group, RFM will shortly provide documentation for unitholders to approve a further increase to the J&F guarantee.

The guarantee is a security arrangement which supports a cattle finance facility for the Rural Funds Group lessee JBS and has been in place since 2018. As a result of growth in JBS's business, increases to the J&F guarantee have been previously approved by unitholders in 2020 and 2022, shown in the chart in the top left.

Unitholders will be asked to vote on two increases, the second being contingent on asset sales, which ensures that RFF's pro forma LVR does not increase. Importantly, the increases to the J&F guarantee are accretive to RFF, providing up to an additional 1 cent per unit of AFFO on a full-year basis, assuming the approved increases are fully utilised.

Documentation is expected to be provided to unitholders in March 2026, and a separate investor webinar will be held to provide more details on the resolutions. Finally, the last page of this section summarises the sustainability updates which were provided in the FY 2025 annual report, including emissions, which have been disclosed by the group for several years.

Now moving to the outlook and conclusion. In summary, the results presented today represent a business-as-usual set of disclosures.

We've made some progress on asset sales, but intend to do more, as evidenced by our clear statements that capital expenditure programmes will be funded by asset sales. Capital management is ongoing, with appropriate debt headroom and hedging in place.

Finally, guidance is reaffirmed both for AFFO and distributions. Following the retail investor roadshow RFM held last year, we are offering our retail investors the opportunity to participate in an asset tour at a Victorian vineyard in late 2026.

If this is of interest, I encourage you to register via the QR code or directly with our investor services team. Thank you for listening, and I now invite questions from attendees.

Good morning, David and Tim. Thanks for the time.

Just firstly on the $80 mil of asset sales you look to do as part of that J&F guarantee piece, what kind of assets would you be looking to divest there, and what kind of timeline would you be looking to achieve that in?

G'day, Cody. It's Tim speaking.

It's further water sales, we still have some high security water entitlements which haven't been sold, and it's a couple of the lower-yielding cattle properties. Additional asset sales are well progressed.

We're targeting selling approximately $200 million worth of assets over the next, call it, 12 months, and processes are ongoing for those.

That's clear. Thanks.

Then just on the scheduled refinance, could you provide some flavour on where the overall margins were prior to this and where they sit now?

Hi, Cody. It's Daniel here.

We went through the refinance back in November and December last year. We did see some savings in margins compared to the previous tranches.

We're probably seeing about 5 to 10 basis points decreases on those respective margins.

Thanks, Daniel. Maybe just the last one from me on just where yields are sitting across the book and what you're seeing in the way of transaction evidence?

We've offloaded about $65 million worth of assets in the past six months. They've all occurred at or above book values.

We sold a few sugarcane farms which were at about a 10% premium to book value. All the water is transacted at book value, the adjusted book value, because water is held at cost.

Then beyond that, the process we're going through to sell some cattle assets, we're confident that we will achieve book values on those. I think we're not seeing any significant increases in asset values.

We're probably seeing a bit of a plateauing, but it's really supporting our asset values.

Okay. That's great.

That's all for me. Thank you.

Good morning, gents. Thanks for your time today.

Just a follow-up from the first question around the asset divestments associated with the J&F guarantee increase. You've got that $34 million of New South Wales river water contracted to divest in the second half.

Is that included in the 80? I guess if you add on Cobungra, which is on the market, that probably gets you to 80 if those two assets qualify?

Thanks, James. It's Tim speaking.

At the full-year results, we had flagged that we were going to sell $200 million worth of assets. We're now targeting at selling $260 million worth.

We've increased it because we still want to get our gearing back towards the target range of 30% to 35%. We've sold 60 million during the period.

We still have about 20, call it $22 million of high security water that has not yet been sold. We will look to sell that.

Then beyond that, we've got Cobungra, which is on the market, and we have some other cattle assets we're looking at.

Understood. Okay.

Based on those plans, the gearing would reduce to that 30, 35 range?

It'd still be towards the upper end on a pro forma basis, so, call it 35%. Certainly won't get to 30%.

That's on the basis that we do do the J&F increase. Initially that J&F increase that we're proposing, we're only looking to take that to 160 million.

We're seeking approval to go to 200, but that will occur over time.

Okay. Slide 15 with respect to the development portfolio there, what's the implied yield on those assets as it sort of stands within the FY 2026 guidance?

Obviously,

some of those assets would be

[unclear]

no income. Yeah.

That's right. If we look at the one that we're operating, our farming income for the first half was about $1 million.

On a full-year basis, we're expecting that to grow to just over $5 million. The ones that we're operating, we're anticipating to generate $5 million of farming income, and then you can divide that by the asset values to give you the yield.

We're forecasting about a $4 million income from farming in the second half, 1 in the first and then 4 in the second half.

That's helpful. What's the outlook as it stands today, what's the outlook in terms of leasing or divesting some of those assets?

With Kaiuroo, stage one is completed. We've still got to do stage two of the developments.

That will occur over the next call it 18 months, 12 to 18 months depending on wet season and rain. Kaiuroo will then be fully developed at the end of that.

In terms of the macadamias, that 670 ha we're planning it will be fully planted by the end of this financial year, then it's developed and ready to lease out. They're probably the two most significant.

In terms of when they are actually leased out, it depends when we can find the right lessee or the right counterparty at the right rate. That may take more time.

Understood. Then last question from me on the proposed increasing J&F guarantee.

You've previously increased that instrument in the past, and what's interesting from my perspective is we've had some pretty extreme volatility in cattle prices over the past 5 years or so, and I was interested in conversations you've had around the variability in income streams to RFF through that period, what sort of variability you've seen from JBS as the operator through that price volatility period?

It's a good question. Because of the structure of that transaction, we haven't seen any variability in returns.

That guarantee has been providing us about a 10.5% cash yield on it with no variability. It's been very stable, because we simply get paid a fee based on the guarantee amount.

What is happening, because of the increase we're seeing in cattle prices and because of the demand for Australian beef, JBS are simply wishing to feed more cattle, and the purchase price of those cattle is costing them more. That is why they're seeking an additional guarantee amount.

In terms of the counterparty, JBS have been fantastic. It's a highly accretive transaction for RFF with a very strong counterparty.

Yep. Understood.

Thanks, Tim.

Your line is open. Please go ahead.

Morning, Tim and David. Thanks for the presentation.

Just a question on yields in general across the segment. Could you just walk through where you're still finding that's too low and in Australian land you present this in the reports just in terms of those assets you might look to divest outside of that

menu? Slide 29 is what illustrates this best.

Where we've got natural resource assets, these are cattle properties or dryland cropping properties, they have relatively low yield, call it a five We can get about a 5% lease rate. That's against a backdrop of interest rates at call it 5.8%.

Those types of assets at the moment on a fully levered basis are decrective to earnings. Because the gain in cattle land values has been so significant over the last four years, it's hard to see that cap rate of call it 5% increasing, and it's hard to see the capital growth being as significant as it has been.

They're the types of assets we're looking to divest. On the things like the J&F guarantee or the permanent plantings, they all have much higher cap rates and much more long-dated leases, we don't see any variability in those lease rates, and those assets are all accretive based on current interest rates.

Appreciate that. Thanks, Tim.

Just one more question on your hedging profile. It hasn't really changed from the full year.

Can I just get clarification over how you see that going out into the outer years and also the sort of state of your existing facilities and how you're thinking about the headroom?

Yep. It's Daniel here.

We are continuing to monitor the hedging market on a regular basis. At this stage, we are approximately 60% to 70% hedged.

Particularly with asset sales in the pipeline, that could potentially increase. We are looking for opportunities in the mid to long-term sort of period where rates come back to or hopefully come back to levels that we would target.

It is something that we'll continue to monitor as we look to extend our hedging profile.

Thanks, Daniel. Just the last question from me just noting the result from TWE the other week, how are you thinking about the vineyard category?

We don't think about them at all, because we're not investing any more money in them. It's an industry that's probably got 25% overcapacity globally, and that is going to take capacity destruction to reduce the oversupply, and it's going to take time for consumption to increase very slowly.

That industry is going through a very deep cycle. Our vineyards they're performing very well.

We've got the leases that we renewed them last year such that now I think we've got 13-year

That's right.

Yeah, 13-year years to lease expiry. The assets are performing very well for Treasury.

They're a part of their core brands, particularly the high-end brands. We're very relaxed about continuing to own those assets.

There's indexation clauses in them. In 13 years' time, I hope for the sake of everybody in the wine industry that it's through the cycle.

I'll just add, those vineyards only make up 5% of our forecast revenue, it's quite a small segment.

Too easy. Thanks, gents.

Yeah. Hi.

Good morning, David and Tim. Sorry if this has already been addressed, but across the real estate sector, we've seen bank margins come in quite considerably over the last 6 to 12 months.

We've seen sort of 20 to 30 basis points improvement. I appreciate you guys don't have anything expiring for a couple of years, and you probably have done some recently as well, but can you just talk to what margins are doing for you and any opportunity that you have there?

James, it's Daniel here. We have been going through an annual refinancing cycle for each of our tranches.

We just went through a refinance for one of our tranches. As part of that, we did see margins come back.

I previously quoted that margin came back about 5 to 10 basis points from the previous margin, which was two years ago. What we'll see as we look to refinance at the end of this calendar year is hopefully a continuation of the decreasing margins.

Okay. Do you have a feel for what spot is, are you still seeing another 10 basis points or what can you kind of see today?

After your comments, James, we'll try and seek another 30 basis points, I think. Yeah.

Look, it would be good to see another 10 at least on the next refi, but that's 12 months away. Okay.

Thank you.

Thank you. Just a reminder to our unitholders that have dialled into the presentation this morning that we encourage you to submit a question via the question box, which should be able to see at the bottom of your screen, and there's a submit button as well, but sometimes falls outside of the aperture, scroll down and hit submit, and we will answer your question as they come in.

We have had a few questions come in already from our investors, I'll hand over to David Bryant in the first instance to respond to that.

Thanks, James. There's a good questions here.

I'll tell you what, I'll start with the first one, which is why distribute a dividend if the net profit is decreasing? A dividend is driven by our AFFO, the amount of cash that we generate each year, as distinct from profit.

If you go to page 7 in the presentation, the distinction is best drawn by looking at earnings for the half year, which was $44 million, and AFFO for the half year was $21.5 million. You get a big disparity.

What you'll see if you go back through the years, the AFFO has been largely consistent but flat, whilst the earnings have been generally significantly higher than the AFFO. The difference is explained by non-cash items and normally in 90% of the times is the property valuations.

We revalue the property, we experience really strong capital growth over the past 5 years, and that's why the earnings have been high, but it's been moving around because it depends on the valuation cycle, depends on the capital growth, and so forth. The AFFO is really the cash we collect minus the expenses, and that's stayed fairly consistent, but flat largely.

That's the distinction. Now that leads me to the next question, which is a very good question, good, in fact, we had it from three different people so far this morning, and that is when are we going to increase distributions?

One of the questioners made that perhaps increasing distributions would close that gap. When are we going to increase distributions?

The answer is when AFFO increases. When is AFFO going to increase?

It's started to increase. We've got to the point now where our AFFO and our distributions are roughly the same, we're at about 100% payout ratio.

We are achieving growth in income from indexation clauses and a range of other things. We're achieving growth in AFFO.

We would expect continued AFFO growth. Once we get to 95% or below payout ratio, in other words, once we can get our AFFO so it's higher than our distributions, then we'll have room to move with increasing distributions.

Look, I reckon that that's more than 12 months away, but I would hope, it's impossible to be certain because there's a lot of moving parts to this, more than 12 months away, but less than 2 years away. The moving parts that are perhaps obvious to you all, I won't labour the point here, but the moving parts, of course, are interest rates in particular, and then just the various volatility that you have when you're renting things out.

Generally you get the rent, and we would expect that would always be the case, and we would get indexation as well. That's a long answer to four questions, thanks for your patience.

Just one moment. Another question here is if asset development drives growth, how does that reconcile with a marked reduction in capex?

Yes, there's been a marked reduction or there is forecast to be a marked reduction in capex because we have not been acquiring more assets for development, because we have fully utilised the balance sheet capacity. In other words, we've got enough gearing.

We don't want any more gearing or any more debt, particularly with high interest rates and what is prudent. That is what's kept the development pipeline.

However, what you'll see that we're doing is selling some assets to pursue growth by wanting to finance more cattle in feedlots. There's more than one way to skin a cat without getting fur in your mouth, and so we're going to drive growth through a different strategy in this higher-interest-rate environment, and that is by increasing our allocation of capital to the livestock business.

Now, I think that's all of our questions, and so I'll say thank you very much for your attendance and for your interest in the Rural Funds Group, and we look forward to continuing the journey over the coming year. Thank you.