The Rural Funds Group (ASX: RFF) share price is up today after the company released its results for the 2019 financial year (FY19) to the ASX this morning. RFF shares have opened 3% higher at $2.07 after closing yesterday at $2.03.
What did Rural Funds tell us?
Property revenues for the company increased by 29.95% to $66.39 million – up from $51.09 million in FY18 attributed in part to acquisitions, lease indexation and capital expenditures.
Meanwhile, Total Comprehensive Income (TCI) fell 25% to $33.08 million and earnings per unit also fell 41% from 17.3 cents to 10.1 cents. The company stated that these falls are due to “$18 million non-cash revaluation decrements on interest rate swaps.”
Adjusted Funds From Operations (AFFO) increased from $32.32 million in FY18 to $43.25 million in FY19 – a rise of 34%, while AFFO per unit grew 4.7% to 13.3 cents.
The gearing ratio has declined from 37.7% in FY18 to 31.2% in FY19, which remains in Rural Fund’s ‘target range’ of 305 – 35%.
Distributions rose from 10.03 cents per unit in FY18 to 10.43 cents per unit for FY19 – a rise of 3.98%, whilst the payout ratio for said distributions fell from 79% to 78% year-on-year.
The number of properties owned by Rural Funds has increased from 38 to 50 this financial year, with a weighted average lease expiry of 11.3 years (down from 12.4 years in FY18). Currently, 58% of RFF property leases are CPI linked, whilst 40% have fixed indexation.
Outlook for Rural Funds
In terms of guidance, Rural Funds is expecting that AFFO per unit will rise to 14 cents in FY20, while the distribution per unit will also rise to 10.85 cents (a further 4% rise if executed). Rural Funds expects this to represent a payout ratio in FY20 of 77%.
The company expects that revenue going forward will be divided as follows: 42% from almonds, 27% from cattle, 14% from poultry, 5% from vineyards, 4% from cotton, 2% from macadamias and 6% from other sources.
The company also released the EY (Ernst & Young) report into the ‘short-seller’ allegations made by the Bonitas Group earlier this month. The report categorically refuted all allegations and supported Rural Funds’ positions that were released in response to the allegations. Rural Funds Group also announced the commencement of legal action against Bonitas.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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