RIVCO AUSTRALIA LTD — Net Asset Value 2017

Aug 13, 2017

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Duxton Water Limited Monthly Update

31 July 2017

Net Asset Value per Share $1.10

Duxton Water

ASX Code (Shares)	D2O
ASX Code (Options)	D2OO
Shares on Issue	63,965,406
Options Outstanding	63,965,406
Options Exercise Price	$1.10
Options Expiry	31 May 2018

Entitlement Portfolio Value by Region

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Water Portfolio Diversification

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46%
Leased
54% Unleased
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The primary investment objective of Duxton Water is to generate annual income through capitalising on the increasing demand for scarce water resources. Duxton Water derives its income from a diversified portfolio of Australian Water Allocations and Water Entitlements.

Net Asset Value per Share

Duxton Water's NAV as at 31 July 2017 was $1.10 per share.

These figures are not adjusted for any dilution due to the outstanding options which are exercisable at $1.10. The after tax figure takes into account the provision for deferred tax on set-up costs and estimates of net tax provisions that may arise should the entire portfolio be disposed of on the above date.

Net Asset Value per Share - Since Inception

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1.20
1.15
1.10
1.05
1.00
0.95
AUD
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Performance	Gain/Loss
1 Month	0.00%
3 Months	0.92%
6 Months	4.76%
12 Months	N/A
Inception	2.80%

Market Update

Market Summary

Storage levels within the major dams within the Murray Darling Basin (MDB) decreased 0.1% over the past month. Total MDB storage remains 12% higher than July 2016. Very little inflows were recorded across the MDB for the month despite moderate rainfall occurring towards the of end of the month.

Government Water Authorities for Victoria, New South Wales and South Australia announced opening allocations for the 2017/18 water year in early July. Water allocations for Victoria Murray High Reliability, New South Wales Murray High Security and South Australia High Security for the start of July were 66%, 97% and 100%, respectively. An opening allocation of 11% was received for NSW Murray General Security licenses. Including carryover, Duxton Water has approximately 12GL of water allocations available for sale.

Southern Basin

Water Security Breakdown

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1%
10%
HS
GS
BORE
89%
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Total inflows into the Murray system for the month of July were 270GL, compared to the 10-year average of 949GL. The Hume and Dartmouth reservoirs closed the month at 75.1% and 78.2% of capacity, respectively. During the month, the Hume Reservoir received total rainfall of 73.0mm, compared to the long-term average of 76.9mm. However as advised in the June update the Hume received only 7.2mm which equated to the driest June on record. Across the Murray Darling Basin the Bureau of Meteorology reported that rainfall for July was 54% below average, with the month being the 17th driest on record.

Water entitlement prices displayed little movement in the month of July. Price increases were seen in NSW Murray General Security and Victoria Murray water zones, increasing 3.0% and 1.6%, respectively. Victorian Goulburn and New South Wales High Security water zones experienced a decrease in prices 2.3% and 1.3%, respectively.

Since the commencement of the new water year, temporary water prices have increased substantially when compared to prices at the end of the last water year. Dry conditions in June and July have provided upward pressure on allocation prices in the major water zone with prices rising from $90/ML in early July to $150/ML at the end of the month.

Northern Basin

Lachlan Valley water entitlement prices remained the same in July but have increased 30.3% since the start of the year. As noted in a number of our reports, we expected this increase to continue due to strong demand from large cotton growers.

Duxton Capital (Australia) Pty Ltd Duxton House, 7 Pomona Road, Stirling, SA, Australia 5152 T (08) 8130 9500 F (08) 8130 9599

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Duxton Water Limited Monthly Update

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31 July 2017
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Investment Update

Permanent Water Acquisitions and Divestments

No new permanent water acqusitions or divestments occured in July. Duxton Water is currrently invested in $69 million of water entitlements.

Temporary Water Sales

In July, no allocations were sold. YTD allocation sales amount to 14,000ML.

Lease Yield

No new leases were entered into in July. The weighted average yield for long-term leases remains at 6.04% p.a.

Total Yield

Duxton Water’s yield is comprised of two streams of income: leased and unleased income. The leased income is currently at 6.04% (annualised) and the unleased income is 3.13% (running). The weighted average running yield of the two streams is 4.71%, equating to a forecast full year yield of 5.94%.

On 1st July 2017, the new water year commenced, meaning that the allocation balances have now been reset. This will positively impact the unleased component of Duxton Water’s income as we have received additional allocations to sell throughout the remainder of the Company’s financial year (June-December). In addition to the reset allocation balances, the Company has carried over some NSW General Security water into the new water year. Allocations carried over will be sold in the new water year at a higher water prices compared to the 2016/17 water year. As such, we expect the unleased income stream to increase as allocations are sold.

Dividends

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Duxton Water Portfolio SMDB Exposure
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The Company advised in the June update its intention to pay a return of capital. The Board have since decided that the Company intends to pay a partially franked dividend in November 2017. It is the Board’s intention that the dividend will be franked as high as possible. The final amount of this dividend and the franking percentage are yet to be determined by the Board.

Valuation Methodology

Total assets of the Company are valued at fair market value based upon independent valuation, or the weighted average price of the last three applicable trades on or prior to the relevant Valuation Day, received from the respective state register, excluding outliers. Outliers are defined as a trade with greater than 10.0% variance from the last weighted average price and transactions that are less than 10ML (unless there are no applicable transactions greater than 10ML) less the total liabilities of the Company.

Market Outlook

The latest Bureau of Meteorology outlooks are suggestive of further hot and dry conditions over the next three months for the Murray Darling Basin. Models are forecasting a 60%-75% chance of below average rainfall across the Southern Connected Basin ( see chart below ).

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The chance of above median rainfall for August- October Storage Levels
Total Murray Goulburn 54% 72%
Hume 67% 75%
Lake Eildon 45% 60%
Dartmouth 53% 78%
Total Murrumbidgee 70% 77%
Burrinjuck 58% 83%
Blowering 74%78%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Source: Bureau of Meteorology 2016 2017
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Disclaimer

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 Water Limited [ACN 611 976 517] (“Duxton Water”).

This factsheet has been prepared for the purposes of providing general information only and does not constitute an offer, invitation, soliciation or recommendation with respect to the purchase or sale of any securities in Duxton Water. 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 terms of Duxton Water are set out in the prospectus of Duxton Water (“Prospectus”), and should there be any conflict between the terms set out in this factsheet and the Prospectus, the terms in the Prospectus shall prevail.

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 Duxto Group accepts any liability whatsoever for any direct or consequential loss arising from any use of this factsheet or its contents, including for negligence.

Duxton Capital (Australia) Pty Ltd Duxton House, 7 Pomona Road, Stirling, SA, Australia 5152 T (08) 8130 9500 F (08) 8130 9599