Quarterly Report - September 2023
The first quarter of the FY24 financial year has commenced with challenging market conditions across our beef and lamb supply chains, particularly in Northern Australia.
The deterioration in livestock indices across multiple categories in addition to market access and supply chain restrictions to core Indonesian supply channels, has had both a negative impact on forecast distributions for the quarter and the biological livestock carrying values in unit price calculations across multiple Funds.
These market pressures highlight the need to complete the supply chain integration strategy on a national basis so that farm gate price fluctuations have less short-term impact on distributions and portfolio carrying values.
AAM’s management team have remained active and agile in developing and expanding our strategies for integrated supply chains in which we operate, in line with our foundational philosophy of holistic diversification.
Southern Cross Poultry Fund (SCPF)
Assets Under Management: $150m
Unit Price: $1.27
Distributions: Quarterly
Current Distribution: 1.83cpu
Gearing: 36.4%
As at 30 September 2023
Financial commentary
The September 2023 distribution from our poultry portfolio has marginally improved from the previous quarter but remains below the long-term historical levels as a result of the ongoing supply chain challenges experienced by our offtake partner Ingham’s.
Pastoral Development Trust (PDT)
Assets Under Management: $141m
Unit Price: $1.42
Distributions: Annual
Current Distribution: 0.00cpu
Gearing: 45.5%
As at 30 September 2023
Financial commentary
During the quarter, PDT received a revised external valuation, which indicated an increase of ~$1.9m in the real assets within the portfolio over the past 12 months. In line with our livestock valuation policy, trading cattle need to be marked to market by an independent valuation, which in a market with suppressed prices, lowers the carrying value of biological (livestock) assets even if the price reduction is not realised in the short term.
Sustainable Softwood Trust (SST)
Assets Under Management: $31m
Unit Price $1.49
Distributions: Semi-Annual
Current Distribution: 0.00cpu
Gearing: 7.3%
As at 30 September 2023
Financial Commentary
AAM Timbers’ active strategy to expand and grow within the renewable softwood timber industry has been to focus on landscaping, pallet, outdoor and speciality high-value niche products including value add treatment infrastructure at its facilities.
AAM Diversified Agriculture Fund (ADAF)
Assets Under Management: $705m
Unit Price: $1.23
Distributions: Quarterly
Current Distribution: 0.29cpu
Gearing: 40.9%
As at 30 September 2023
Financial commentary
A reduced distribution of 0.29cpu for the September 2023 quarter has been declared. This distribution is less than previous expectations as a result of the need for ADAF to invest further in building robustness in its supply chains.
Forests, Plantations, Wood Products and Australia’s Carbon Balance
During the quarter, Forest and Wood Products Australia released a publication called Forests, Plantations, Wood Products & Australia’s Carbon Balance as a guide to demonstrate how plantations and other commercial forests, as well as the subsequent wood products, contribute to Australia’s carbon balance and mitigating climate change.
The publication contains a range of current data and information and explores opportunities for the sector to improve the industry even further.
LAAM
As we approach the holiday season, our Project LAAM initiative will be rolled out and available to investors again.
Introduced in 2022, Project LAAM was created to provide our investors with the opportunity to experience first-hand the farm to fork journey through gaining access to prime, sustainably produced Dorper lamb from Australian Livestock Company’s Western Queensland assets.
The pricing of the Project LAAM half-boxes this year will demonstrate the exceptional value of lamb when sourced directly from the producer.
If you are interested, in participating in this experience, additional communications will be sent in the next few weeks.
Livewire
Making an effort to bring exposure to a wider audience about investment in agricultural and primary production industry supply chains and the many opportunities available to invest in sustainable business and essential food production in regional Australia is something is important to AAM.
Recently, AAM’s Managing Director sat down with Livewire to share his views and the abundance of opportunities across the sector.
AAM Investment Group Pty Ltd (AAM) ABN 28 612 701 274 is an authorised representative (CAR No. 001279434) of AAM Licensees Pty Ltd (AAML) ACN 169 645 416 AFSL 458978. AAML is the trustee of the Southern Cross Poultry Fund comprising of Southern Cross Poultry Investment Trust ABN 98 971 102 645 and Southern Cross Poultry Operating Trust ABN 91 348 989 830, the Pastoral Development Trust comprising of the Pastoral Development Property Trust ABN 16 472 041 766 and the Pastoral Development Cattle Trust ABN 46 156 756 734, the Sustainable Softwood Trust ABN 21 446 674 754 and the AAM Diversified Agriculture Fund comprising of AAM Diversified Agriculture Real Asset Trust ABN 66 105 484 925 and AAM Diversified Agriculture Operating Trust ABN 82 620 396 937. Information in this document is of a general nature only and has been prepared without considering your objectives, financial situation or needs. AAM does not assume any contractual obligation or commitment by providing this document. Before making any investment decision, you should seek professional advice. Past performance is not a reliable indicator of future performance, and AAM does not guarantee repayment of capital or any rate of return from any of its managed investments. Any franking credit and tax calculations are based on our interpretation of law current as at the date of this document and should not be taken as legal or tax advice. This document may contain certain forward-looking statements which do not guarantee future performance. They involve known and unknown risks, uncertainties, and other factors, many of which are beyond AAM’s control, and should not thus be relied upon in making investment decisions. To the maximum extent permitted by law, AAM disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered because of any undue reliance upon those statements. This document is not intended for distribution to, or use by any person in, any jurisdiction where such distribution or use would be contrary to local law or regulation. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this document is prohibited.