NZL - 2022 Annual Report

Monday 19th September 2022

NZL reported a record net profit after tax of $39.7 million for the period ending 30 June 2022.

Net Asset Value per share increased by +18.6% to $1.656 per share.

NZL has paid a final net dividend of 1.60cps bringing the total net dividend to 3.61cps for the year ending 30 June 2022. The dividend was paid on 9 September 2022 (record date 2 September 2022).

Our acquisitions in FY22 showed an increase of +26.2% (+$23.5 million) on purchase price. NZL’s original portfolio (those assets acquired in FY21) increased by +10.3% (+$14.1 million), following on from a +10.8% (+$13.4 million) increase in FY21.

These figures highlight the excellent job our Manager - New Zealand Rural Land Management - has done for NZL since our NZX listing on 21 December 2020.

When we launched the IPO of NZL in Q4 2020 many investors approached said we could not do what we were proposing – purchase quality rural land assets and tenant them at the yields indicated. Accepting skepticism is always part of any new venture I am pleased to report to you that as at 30 June 2022 NZL has acquired $264.9 million of high quality rural land in New Zealand amounting to 11,710 hectares with seven tenants having achieved better than forecast yields and expected returns on capital deployed.

The outlook for NZL remains very positive for future earnings and value growth.

What I believe many investors are failing to appreciate with NZL, and this has been recognised globally, is that quality rural land is an increasingly scarce and critical primary infrastructure asset which serves as one of the best inflationary hedges, with predictable income under long-term leases.

Our results to date suggest to me that shareholders should be happy to back NZL to continue to grow its portfolio over time to become a sizeable rural landowner and NZX listed company.

To facilitate NZL’s future growth the Board and Manager have agreed to the following:

1.Amend NZL’s capital management policy to include the ability to undertake placements as well as pro-rata offers. Currently, our foreign ownership is at ~23.71% (as at 30 June 2022) and the Board and Manager are looking to lift this foreign ownership percentage in the year ahead. This may also include dual listing on another global stock exchange.

2.When NZL was listing, we sought to be very conservative and tabled a target gearing ratio of 30% - now that we have a sizeable and geographically diversified asset base alongside further tenant diversification the Board has amended this target gearing ratio to a maximum 40%. This is in line with Rabobank’s loan-to-value ratio (LVR) limit of 40% on our current lending facilities.

3.The Board of NZL has also resolved to change balance date to 31 December (from 30 June). This shifts our annual result reporting to the end of February each year, well ahead of the season where pastoral farms traditionally trade (May/June) which will further assist the Manager in its negotiations and acquisitions in the future.

These changes are a natural evolution for NZL at this juncture.

I would also like to extend a personal thank you to all our shareholders including the institutional investors that assisted in making NZL a reality and the sizeable landowner it is today.

I have read many times over the years complaints about the lack of listings in New Zealand and the lack of available exposure to the New Zealand agricultural sector. NZL provides the purest exposure to New Zealand rural land, it is also a relatively new listing which has proven its strategy via excellent execution by our Manager in a short period of time. In my mind, this ticks several boxes of what investors seem to be requesting in a new listing – yet many investors still sit on their hands and continue to criticise the NZX.

In NZL, we have created a company in 18 months that provides a unique exposure to New Zealand’s largest and most important industry with $289 million in assets and over $186 million in equity. I am extremely proud of the quality of execution since listing, and I would encourage those investors looking to grow our capital markets to consider not watching from the sidelines and support the future growth of NZL on its journey to becoming what we believe can be a sizeable NZX listed company.

FY22 Annual Report

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