Rural Funds Group posted decent H1FY19 results


On 21st February 2019, Rural Funds Group (ASX: RFF) which is a real estate company having expertise in agricultural and farmlands, had declared its H1FY19 results. The consolidated net profit for H1FY19 stood at $18.4 million, compared to the net profit of $16.7 million in H1FY18. On the revenue front, there was also an increase of $6.55 million or 27% from $24.14 million in H1FY18 to $30.7 million in H1FY19. Capital expenditure and lease indexation have primarily increased the revenue as stated by the company. Out of the entire portfolio, the almond land segment generated the highest revenue of $14.5 million in H1FY19 as compared to $12.77 million in H1FY18.

On the EBITDA front also, there is a healthy growth seen. The company reported EBITDA of $25.3 million for H1FY19 compared to $19.42 million in H1FY18. Property expenses have increased from $0.56 million in H1FY18 to $0.75 million in H1FY19. Other expenses have also increased from $1.3 million in H1FY18 to $2.2 million in H1FY19 due to costs associated with the JBS transaction, and oversight of capital expenditure and developments. 

During the year, the company has acquired many properties and kept on expanding the existing portfolio. Some of the key purchases for year were Comanche, a 7,600-hectare cattle property located in central Queensland for $16.7 million and Dyamberin, a 1,728-hectare cattle property situated in the New England region of New South Wales for $14.1 million. The acquisitions for the H1FY19 stood at $57.9 million, compared to $53.1 million in H2FY18. These acquisitions have increased the frequency of rental reviews as stated by the company.

The company also forecasted the capital expenditure to be made in the coming year. They plan to deploy $65.5 million out of which $14.3 million has already been done in H1FY19, $20.4 million will be deployed in H2FY19 and remaining $30.8 million FY20.

Following the result, the stock closed at A$2.200 which is a decent 2.8% positive closing as on 21st February 2019, compared to the previous day’s closing of A$2.14. Past one-year return of the company is 7.9% with all the gains came in the first half of the year as the last six months return is almost flat at 0.94%.

On 6th February 2019, the management entity of RFF, which is Rural Funds Management (RFM), had declared that it had been contracted to acquire Cobungra, a 6,486-hectare cattle property which is located in Victoria. The purchase price of land was stated to be $35 million which is exclusive of stamp duty and will be funded from RFF’s debt facility. Wagyu producer, Stone Axe Pastoral Company, has entered into a ten-year lease agreement which will be reviewed after five years. The lease rate is in accordance with the existing rates of RFF’s cattle property leases.


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