Rural Equities profit surge on rising farm values, resumes dividend
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BUSINESSDESK: Rural Equities, the farming group controlled by the Cushing family, boosted annual profit almost five-fold on rising farm valuations and resumed paying a dividend after taking a year off.
Net profit surged to $15.8 million in the 12 months ended June 30, from $3.3 million a year earlier, the Hasting-based company says in a statement to the Unlisted trading platform.
The bulk of that came from a $14.3 million lift in the value of its rural property portfolio, particularly its 14 farms in the Canterbury region.
"The Canterbury farm valuations increased on average by 14.9% while the remaining farm valuations increased by 2.7%," executive chairman David Cushing says. "This reflects the particularly strong real estate market in that province and resulted in the group's total assets being in excess of $200 million."
The board declared a dividend of 5 cents per share, or $1.9 million, payable on November 28, after pausing last year to invest in its property portfolio.
The shares, which trade on the Unlisted platform, last changed hands at $3 on August 23, valuing the company at $115.2 million.
Rural Equities bought back and cancelled 4.76 million shares from three institutional investors at an average price of $3.19 to improve shareholder equity. The company's net asset value rose to $4.47 as at June 30, from $3.95 a year earlier.
Operating earnings fell to $2.9 million from $5.1 million in the 2011 financial year on "significantly lower prices for milk, sheep and wool", even as six dairy farms achieved record milk production.
"The long-term prospects for quality New Zealand rural properties were excellent due to increasing international demand for food supplies," the company says.
Rural Equities has embarked on a property sale programme after reviewing its portfolio and expects to raise gross proceeds of $17.9 million from four property sales.
The company completed a $1 million irrigation scheme at its Rocklea dairy farm in Canterbury, which is forecast to boost milk production by a quarter over the next two years.
At the start of this year Sir Selwyn Cushing handed over the reins of Rural Equities to his son David, though remained on the company's board. The Cushing's investment vehicle H&G Ltd owns about 55% of Rural Equities.