UK listed agribusiness manager Radicle Projects has bought a South Australian winery for $6 million.
The vineyard, Gumeracha in the Adelaide Hills, is a couple of kilometres from the fund manager’s existing vineyard asset.
Between 1998 and 2007, Gumeracha grape sales averaged $1.7 million and in some years were as high as $2.3 million. However, in 2006 revenue fell to just under $400,000 and last year it was $552,000.
Radicle chief executive Tim Bennett said the acquisition was complementary to its program of buying secondary horticultural managed investment schemes.
“The site is practically a neighbour to our existing vineyard, is irrigated by groundwater aquifers and therefore not subject to irrigation water quota reductions based on rainfall and river flows,” he said.
“This makes it a safe asset with which to generate significant cash flow for many years.”
The fund manager estimates this year’s grape harvest will be between 600 and 700 tonnes.
Meanwhile, Radicle has reported a pre-tax loss of $2.34 million for the six months to the end of December last year.
This compares to a loss of $1.22 million for the corresponding period in 2006.
However, the fund manager’s revenue was up from $42,166 in 2006 to $282,235 in the last six months of 2007.
Radicle chairman Michael Finniston said the loss was due to managing more agribusiness investments during the past 12 months, interest payments on convertible notes and costs involved in acquiring a forestry project.
“Radicle has shown continued growth in revenue and income from its investments,” he said. “The group is in a strong position to make investments in suitable projects over the coming period as a result of healthy cash balances from fund raising last year.”
According to the fund manager, its olive and almond investments have suffered due to the drought but its vineyards have produced a healthy crop.
Additionally, Radicle’s investment in Bioforests is being compulsorily purchased by Willmott Forests after a successful takeover bid.
Finniston said while the final terms of the takeover have not been finalised, Radicle expects to lose up to $280,000 from the deal.
Despite this set back, the fund manager is still on the acquisition trail for agribusiness investments.
“We anticipate accelerating our acquisition of secondary MIS interests in the second half of the year,” he said.
