SELL Rural Funds Group: Disingenuous and Possibly Dangerous to Your Wealth

Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

<p>Rural Fund Management (RFM) has recently filed its 2019 accounts with ASIC. They reveal the real quality of the Rural Funds Group (RFF) assets. RFM farms lost money in 3 out of the last 4 years. RFM makes money by paying disproportionately high rents to RFF. These rents boost valuations and so ensure that RFF unitholders pay ever higher fees to RFM.</p><p>RFM then disguises the subterfuge by paying dividends based on revaluation, not cash, profits. This has left RFM highly levered and it would probably collapse without support from RFF.  We think unitholders have no idea about the risk of the J&amp;F debt they underwrote.  The sale of the poultry operations illustrates the lack of care and maintenance investment, undermines recurring cashflow and confirms our valuation concerns.</p>

Rural Fund Management (RFM) has recently filed its 2019 accounts with ASIC. They reveal the real quality of the Rural Funds Group (RFF) assets. RFM farms lost money in 3 out of the last 4 years. RFM makes money by paying disproportionately high rents to RFF. These rents boost valuations and so ensure that RFF unitholders pay ever higher fees to RFM.RFM then disguises the subterfuge by paying dividends based on revaluation, not cash, profits. This has left RFM highly levered and it would probably collapse without support from RFF.  We think unitholders have no idea about the risk of the J&amp;F debt they underwrote.  The sale of the poultry operations illustrates the lack of care and maintenance investment, undermines recurring cashflow and confirms our valuation concerns.

Rural Funds (RFF AU): Milking Their Investors