Rural Funds Group (ASX:RFF) Executive Director, Andrea Lemmon discusses the company’s results for the half year ended 31 December 2015.
Adjusted funds from operations (AFFO)
- Net profit before income tax - $5,182,000
- Change in fair value of investment property - $1,009,000
- Change in fair value of biological assets - ($1,154,000)
- Change in fair value of interest rate swaps - $818,000
- Depreciation and impairments - $339,000
- AFFO - $6,194,000
- AFFO cents per unit - 4.28
Having eliminated fair value adjustments, the adjusted funds from operations (AFFO) effectively represents funds from operations from the property rental business.
At 31 December 2015 the Group held 32 properties as follows:
· 17 poultry farms (303,216 square metres);
· 2 almond orchards (1,814 planted hectares);
· 2 almond orchards under development (2,100 planted hectares);
· 7 vineyards (666 planted hectares)
· 4 properties held for sale (710 hectares).
During the half year ended 31 December 2015, the properties held by the Group recorded a fair value of investment properties decrement of $1,009,000 (31 December 2014: $1,345,000), a change in fair value of biological assets increment of $1,154,000 (31 December 2014: $1,364,000), and an impairment of plant and equipment of $70,000
Matters subsequent to the end of the half year
In January 2016 RFF invested $5,275,000 in Perth Markets Limited (PML). In December 2015, PML was selected by the West Australian government as the preferred bidder for the Market City site located at Canning Vale, WA. PML is an industry-based consortium of wholesalers, growers, Market City tenants and state-based market operators. RFF’s investment represents an interest of approximately 8.96% in PML.
RFM has negotiated an option for RFF to acquire three mature macadamia orchards. The orchards are located near Bundaberg, QLD and comprise 259 hectares of macadamias. Two of the orchards are encumbered by a tax effective managed investment scheme and the purchase of the orchards is conditional on growers in the scheme appointing RFM as responsible entity of the scheme, at a meeting to be held on 24 February 2016. The purchase of the orchards will initially be debt funded and increase RFF’s assets under management by approximately $8,600,000.
No other matter or circumstance has arisen since the end of the half year that has significantly affected or could significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group.