DUXTON FARMS LTD — Net Asset Value 2018

Dec 17, 2018

Statutory NAV per share: $1.6989 $67,779,599 (at $1.58 per share) MONTHLY UPDATE 30 NOVEMBER 2018

Market Cap (30 November 2018) $67,779,599 (at $1.58 per share)

COMPANY SNAPSHOT

COMPANY NAME INVESTMENT MANAGER PORTFOLIO Duxton Broadacre Farms Limited Duxton Capital (Australia) 4 broadacre aggregations LOCATIONS HECTARES WATER ENTITLEMENTS (ML) Forbes and West Wyalong, NSW 19,465 owned 8,123 owned Naracoorte, SA (contracted) 1,980 contracted 6,798 leased 450 contracted pending settlement

Duxton Broadacre Farms Limited (“DBF”) presents investors with a unique opportunity to participate directly in the Australian grain industry and the possibility to provide shareholders with both ongoing annual operational yield and longer-term capital growth. DBF intends to achieve this through the acquisition and aggregation of land rich parcels into its existing portfolio of diversified high-quality farms, to improve operational efficiencies and the diversification of commodities produced to satisfy the long-term growth in global grain demand.

INVESTMENT AND OPERATIONAL UPDATE

SHARE BUYBACK

The share buy-back continued this month with the on-market acquisition of 23,000 shares. This brings the total number of shares bought under the buyback to 499,033. The Company has the ability to acquire up to 961,067 additional shares. The intent of the buyback is to enable DBF to acquire shares in the event the Board determines shares are trading at a discount to intrinsic value in light of the relatively thin trading volume to date.

IRRIGATION

As part of the ongoing irrigation development program seeking to increase water security in line with the broader risk mitigation strategy, several test bores have been completed. In particular, tests at the Walla Wallah property yielded strong results. An application for developing operational bores has been lodged with the relevant authority while test bore drilling at other properties continues.

WINTER CROPS

Harvesting of the winter crops occurred during the month. Scattered showers during the month caused minor operational delays but it did not impact the quality of the grain. The barley harvest at Timberscombe has been completed during the month. 75% of the winter crop harvest has been completed by the end of November.

SUMMER CROPS

Cotton plantings were completed during the month and the plants have begun to emerge. The first cut of lucerne was completed during the month.

LIVESTOCK

In anticipation of challenging environmental conditions DBF has stockpiled fodder reserves for livestock. This will allow DBF to continue to fatten livestock during the summer months and capitalise on the widened spread between skinny and fat livestock prices observed due to shortages of feed. The scheduled sale of fat stock

DUXTON CAPITAL (AUSTRALIA) PTY LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

Statutory NAV per share: $1.6989 Market Cap (30 November 2018) $67,779,599 (at $1.58 per share)

30 NOVEMBER 2018

has continued during the month as to lower the associated costs with operating livestock already at sale weight ahead of the upcoming summer months.

LOCAL WEATHER

November recorded rainfall of 88.6 mm; the historical average is 47.1 mm. November recorded a monthly mean temperature of 27.7 degrees compared to the long-term average of 29.1. The Bureau of Meteorology has predicted that there is a 75% chance of rainfall between 10-25mm and the temperature has an 70-75% chance of being above the longterm median of 30-33 degrees for December. On the national weather front the Bureau of Meteorology has retained its ENSO outlook to El Niño alert and the positive Indian Ocean Dipole that has been in effect over the past few months has begun to weaken. This weakening of the IOD is in line with the natural life cycle of the event which typically has minimal effects during the Australian summer.

AUSTRALIAN MARKET INSIGHTS

CROP PRICES

Australian grain prices have stabilised at $400-440/tonne during the month as the winter harvest arrives and producers begin to sell their new stock. The Company anticipates that once the influx of new season crop begins to slow down prices will continue to rise. Recent rains in central and northern NSW and southern QLD have resulted in lower grain prices as livestock producers begin to reduce their demand for feed on the back of improved summer crop production prospects. However, with the rainfall only being isolated to a few areas and recent forecasts predicting a dry summer the prospects of a strong summer crop are likely to fade in 2019. It is not anticipated that a strong summer crop will significantly lower grain prices due to the current supply shortfalls around the country.

DOMESTIC GRAIN PRICE CHANGES PAST 12 MONTHS*

CROP	CURRENT PRICE	PRICE 12 MONTHS AGO	PERCENTAGE
Feed Wheat Feed	(per tonne) $440 $410	$258 $254	CHANGE 71% 61%
Barley
Canola Cotton	$597 $589/bale	$525 $540/bale	14% 9%

*** data retrieved from ABARES weekly commodity reports**

COTTON PRICES

Cotton prices were lower during the month, but price support has been found on the back of reduced cotton production levels from the US and India. US production is forecast to reach 18.4m bales while India is forecast for 28m bales, a reduction of 7% and 2% respectively compared to last year. The downward revisions out of the US especially have provided support to the cotton price as previously estimates by analysts were for 19m tonnes. Consumption has risen by 3% from last year. At this rate forecast consumption will outpace production resulting in reduced world stock levels, this will help to support the current price point. Stock levels are forecast to be at their lowest level since 2011/12.

CROP PRODUCTION

Australian crop production forecasts out of ABARES have been released recently with production forecast to decrease by 23% in 2018-19 to 29.3 million tonnes. If the forecast production is accurate this will be lowest harvest since 2007-08 during the millennium drought. Australia crop production has been continued to be impacted by adverse weather conditions in most cropping regions. Rainfall across the country is well below average and significant frost events have impacted crops in NSW, VIC, SA and WA. The potential harvest has also been impacted by high fodder prices which are incentivising producers to cut crops that were planted for grain production for hay. The International Grain Council’s latest report has moved Australia’s forecast production for the 2018-19 season up from 27.2 million tons to 27.4 million tons. If forecast crop production stays at the predicted levels, this will help to support the current elevated prices. The potential for summer crops will be largely dependent on the crops receiving sufficient and timely rainfall as currently there are low levels of soil moisture across the major cropping regions.

DOMESTIC CROP INDICATOR PRICES

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DUXTON CAPITAL (AUSTRALIA) PTY LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

Statutory NAV per share: $1.6989 Market Cap (30 November 2018) $67,779,599 (at $1.58 per share)

30 NOVEMBER 2018

WOOL EASTERN MARKET INDICATOR

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WOOL PRICES

Wool prices continued to fall during the month briefly dipping below $18/kg before making a slight recovery to $18.58/kg by the end of the month. The market entered a correction as buying had remained restrained at the beginning of the month. The recent price correction occurred with even less wool coming onto the market as producers continued to be impacted by drought conditions. The amount of wool available at auction is down approximately 20% from last year. With auction volumes subdued the clearest line of price support in the market will be due to the lack of supply of quality wool. The price recovery at the end of the month coincided with the latest Australian wool production report which updated their forecast for wool production in 2018/19 to 305 million kg, down 10.8% from 2017/18.

LIVESTOCK PRICES

DOMESTIC LIVESTOCK PRICE CHANGES PAST 12 MONTHS*

LIVESTOCK	CURRENT PRICE (per kg)	PRICE 12 MONTHS AGO	PERCENTAGE CHANGE
Beef	$5.28	$5.80	-9%
Lamb	$6.93	$6.16	12%
Wool	$18.58	$16.76	11%

*** data retrieved from ABARES weekly commodity reports**

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The Australian Eastern Young Cattle Indicator saw a slight increase in prices during the month to $5.28/kg. One of the biggest impacts on the recent pricing has been the weather with the market holding out until further information is received. If the weather improves and widespread rains are received it is likely that prices would also see a recovery. On the opposite side there exists some downside risk that prices will soften if the drier weather is forecast for the next 3-6 months. Prices will receive support from the strong export market for Australian beef with export volumes in Japan, Korea and China up 9%, 6% and 184% year-on-year respectively. Finished cattle are still receiving a premium in the market as supply remains thin on the back of difficult operating conditions and a lack of feed. Through the strong foresight of management DBF has been able to continue to finish cattle during the year with the feed on hand and has capitalized on this stronger pricing.

Lamb prices have shown some volatility over the past couple of months. Prices are fluctuating due to the late arrival of new season lambs and the uncertainty around weather conditions. The drought conditions have resulted in new season lambs coming onto the market later than usual which has affected the supply and demand dynamics in the market. Volumes available for sale have been fluctuating throughout the month causing the price volatility that is being observed in the market. Variable weather conditions are also impacting the current market supply with producers having to make the decision between selling lambs now or hoping for rains that will allow them to finish their stock and attract a premium price. The recent rains have not alleviated the supply shortage of finished lambs in the market and these lambs are fetching strong prices above unfinished stock. Prices will continue to fluctuate in the coming months as available stock levels and demand continue to move.

DUXTON CAPITAL (AUSTRALIA) PTY LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

Statutory NAV per share: $1.6989 Market Cap (30 November 2018) $67,779,599 (at $1.58 per share)

30 NOVEMBER 2018

GLOBAL MARKET INSIGHTS

WEATHER

Weather during the month has been generally favourable with some exceptions including continued dry conditions in Australia, northern Europe and northern China impacting crop development. Conditions in the southern hemisphere appear strong for the winter wheat harvest except for Australia. The maize harvest in the northern hemisphere has been nearly completed under favourable conditions and so far, all indications are for the southern hemisphere to be sown into favourable circumstances excluding South Africa which is dealing with dry conditions. Thailand and the Philippines have been impacted by flooding and typhoons respectively which will impact on rice production.

PRODUCTION

Recent projections for the 2018/19 grain season have seen world total grain production revised downwards by 2 million tonnes. The 2018/19 grain season is now projected to produce 2,079 million tonnes of grain, a three-year low. For reference, the average world total grain production for the past 10 years has been 1,960 million tonnes. The downgraded projection is based on reduced production of maize and sorghum from US producers. Overall wheat production is expected to be down year-on-year by 38 million tonnes and barley is forecast to have the smallest harvest in 6 years.

GRAIN PRICES

Grain prices are influenced by several factors including; supply and demand, political risk, global economic conditions, and weather. Global grain and oilseed indexes softened during the month as new season supply started to enter the market. The wheat index was down by 1.6% due to ample supply, strong export competition and weakness in the broader markets. There was some support for wheat stemming from concerns of the impact of adverse weather in Australia, Europe and China. The soybean index was 4.4% lower due to record planting and crop expectations across the major

markets. Some regions received support with US prices improving on the back of improved trade discussions with China. The potential for the Chinese to start reimporting US soybeans caused prices to fall in other major export countries including Brazil and Argentina. The maize index held relatively stable during the month with a slight downwards adjustment of 0.3%.

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Sheep in the yard at Merriment
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This factsheet is prepared by Duxton Capital (Australia) Pty Ltd [ACN: 164 225 647; AFSL no. 450218] (“Duxton Capital (Australia)”). Duxton Capital (Australia) is the Investment Manager of Duxton Broadacre Farms Limited [ACN 129 249 243] (“Duxton Broadacre Farms”). This factsheet has been prepared for the purposes of providing general information only and does not constitute an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any securities in Duxton Broadacre Farms. Information from this factsheet must not be issued in any jurisdiction where prohibited by law and must not be used in any way that would be contrary to local law or regulation. The forecasts provided are based upon our opinion of the market as at this date and are subject to change, dependent on future changes in the market. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. Investments are subject to risks, including possible loss of principal amount invested. The value of shares/ units and their derived income may fall as well as rise. Past performance or any prediction or forecast is not necessarily indicative of future performance. No assurance is given that the investment objective or the targets will be met. This document does not constitute investment, tax, legal or any other form of advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. Investors should study all relevant information and consider whether the investment is appropriate for them. If you require investment or financial advice please contact a regulated financial adviser. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this presentation. The Duxton Group or its affiliates may hold positions in the securities referred. Where stocks are mentioned, it should not be construed that these are recommendations to buy or sell those stocks. You are not authorized to redistribute this document nor qualified to make any offer, representation or contract on behalf of Duxton Capital (Australia) or its affiliates. Although the information was compiled from sources believed to be reliable, no liability for any error or omission is accepted by Duxton Capital (Australia) or its affiliates or any of their directors or employees. The information and opinions contained may also change. Copyright protection exists in this presentation. To the extent permitted by applicable law, none of the Duxton Group, their affiliates, or any officer or employee of the Duxton Group accepts any liability whatsoever for any direct or consequential loss arising from any use of this factsheet or its contents, including for negligence.

Disclaimer for use of ratings only:

The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.

DUXTON CAPITAL (AUSTRALIA) PTY LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500