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  • Rural funds (RFF) has responded to the Bonitas Report by saying the allegations are false
  • The report took the company by surprise
  • Rural funds have engaged with Ernst & Young

Rural funds have responded to the Bonitas Report by saying the allegations are false.

The company said the report took them by surprise and has engaged with Ernst & Young to independently investigate.

Rural has responded to several statements made by Bonitas.

“Evidence suggests that RFF’s reported profitability had included $28+ million of fabricated rental income paid to RFF by its two largest third-party lessees,” Bonitas claimed.

Rural has responded to this claim saying the statement is incorrect.

“The Bonitas reading of the accounts of third-party lessees is mistaken. All rental income recorded in RFF accounts, including that relating to third-party lessees is accurate,” Rural stated.

Bonitas claimed that Rural gave a false finance report. Rural has responded saying all accounts are audited and are an accurate record of the financial performance and position of RFF.

“RFF’s 1H’19 results disclosed that it was owed $14.5 million from an RFM related party macadamia lessee which inexplicably did not appear on the lessee’s balance sheet,” Bonitas believes.

Rural replied saying this was an error from a 2007 Macgrove Project.

“The table incorrectly lists a loan to the 2007 Macgrove Project of $14.463m. The correct figure is $0.008m ($8,000). This error is confined to this table only and does not flow through to, or alter, the accuracy of RFF’s 31 December 2018 Financial Statements,” the company stated.

Rural says that RFM (Rural Funds Management) is the responsible entity of RFF and holds an Australian Financial Services Licence authorising it to operate RFF.

The company says RFF does not have a board of directors and believes this structure is common amongst Australian REITs and other managed investments.

Rural Funds is addressing these allegations seriously and will defend the business in the interest of all its unitholders.

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