RIVCO AUSTRALIA LTD — Net Asset Value 2019

Aug 14, 2019

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ASX CODE (Shares) D20
Shares on Issue (July) 121,265,761
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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.

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NET ASSET VALUE PER SHARE Entitlement Portfolio
Value by Region
Duxton Water’s NAV as at 31 July 2019 was $1.56 per share.
The after tax NAV figure takes into account the provision for deferred tax on set-up costs and 15%
estimates of net tax provisions that may arise should the entire portfolio be disposed of on the above
date. The Company does not expect to trigger these tax provisions through the turnover of these 14%
assets and expects to maintain its low entitlement turnover ratio. The NAV excluding tax provisions
for unrealised capital gain is $1.72. NAV is calculated based on an independent monthly portfolio <5% <1%
valuation performed by Aither Pty Ltd (“Aither”).
66%
NET ASSET VALUE PER SHARE – SINCE INCEPTION
March
Dividend 2.6 cents
@100% Franked
Murray Lachlan
1.550 Murrumbidgee Mallee
1.500 August Goulburn
Dividend 2.5 cents
1.450
@ 75% Franked
1.400 April April
1.350 November Dividend 2.4 cents @ 60% Franked Placement10.1 million Water Portfolio
1.300 Dividend 2.3 cents Diversification
@ 75% Franked October November
1.250 7.5 million 10.8 million
1.200 May & June Insto Offer Retail Offer May
1.150 March Options Exercised 16.4 million 2.45 million sharesSPP
1.100 1.7 million
1.050 Options Exercised
1.000 34%
0.950
66%
PERFORMANCE Inclusive of contracted leases, commencing Unleased Leased
1 July 2019, the leased portfolio is 41%.
1 Month 3 Months 6 Months 12 Months Inception
1.37% 4.10% 8.22% 21.85% 58.31% Water Security
These figures are based on NAV movements and include franked dividends for the period. Breakdown
INVESTMENT UPDATE
1%
At 31 July 2019, Duxton Water Ltd is invested in approximately ~$262.3 million of water assets with
the remainder of the portfolio held in cash and net current assets. The Company currently has 24%
approximately 415.14 ML ($2.4 million) of water entitlements in its acquisition pipeline at 31 July 2019.
Rainfall was 59% below average levels across the Murray Darling Basin (MDB) throughout July. Inflows
were higher than in recent months but still over 31% lower than the long term average. With the dry
conditions persisting, the Murray Darling Basin Authority (MDBA) have continued the movement of 75%
stored water from Dartmouth Dam through the Murray system in preparation for summer irrigation
demands. The transfer of stored water from the upper storages usually occurs considerably later in
the year and provides an operational insight into the MDBA’s expectations of rainfall and inflows over
the coming months. The current volume of water available within the Murray-Goulburn system is 41% HS GS Bore Supp
of storage capacity levels; 17% lower than 12 months ago. Northern basin storage levels are 10%, 22%
lower than 12 months ago.
30/09/2016 31/11/2016 31/01/2017 31/03/2017 31/05/2017 31/07/201730/09/2017 30/11/207 31/01/2018 31/03/2018 31/05/2018 31/07/201830/09/2018 30/11/2018 31/01/2019 31/03/2019 31/05/201931/07/2019
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DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

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ASX CODE (Shares) D20
Shares on Issue (July) 121,265,761
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With lower storages and current observed inflows, the 19/20 water year is shaping up to be one of collective constrained supply. Even with resource improvements and the potential to see increased allocation in SA and VIC, carry over levels were significantly lower than seen in the 18/19 water year.

Duxton Water continues to support its irrigation farming partners into the 19/20 water year. The wine industry is one of a number of industries to which we provide water supply solutions. In 2019 our water will irrigate ~2600 Ha of vineyards which will produce over 58 million bottles of wine. Through the provision of a range of risk management tools such as water entitlement leases and forward allocation contracts, we provide irrigators an ability to better manage Australia’s climatic variability.

and citrus. Demand for long-term water security such as high security entitlement ownership and long-term leases continues to increase. The Company’s view in this regard has been further supported by a new report released by the Victorian Government ( www.waterregister.vic.gov.au/ ) which indicates that demand by the horticultural industries is estimated to be 55% greater at crop maturity than ABARES have previously estimated*.

Aither Pty Ltd values the Duxton Water Ltd portfolio on a monthly basis on a dry (without allocation) equivalent basis. Register pricing data remained fairly stable through July. There were notable movements in values and are shown below:

SOUTHERN BASIN

•  3% in SA High Security (~8.6% of portfolio)

ENTITLEMENT MARKET

Duxton Water Ltd is engaged in building a targeted portfolio of water entitlements predominantly across the southern Murray-Darling Basin. The Company has invested in both surface and ground water assets. At 31 July 2019 the Company holds approximately 75,150 ML of water entitlement across 20 different asset types and classes.

Ongoing maturity of permanent plantings has seen greater water demand from high value crop industries such as almonds

•  9.5% in SA Parilla Green Groundwater (~0.5% of portfolio)

Whilst register pricing data remained flat, market pricing for a number of high security entitlements saw further uplift, particularly Goulburn High Reliability which the Company expects to be reflected in the valuations in coming months.

NORTHERN BASIN

There was no change in northern pricing.

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Interstate Water Trading Zones
1 – Greater Goulburn
3 – Lower Goulburn
4a – Part Campaspe
4c – Lower Campaspe
5a – Part Loddon
6 – Vic Murray above Barmah Choke
6b – Lower Broken Creek
7 – Vic Murray from Barmah Choke
to SA Border
10 – NEW Murray above Barmah Choke
11 – NSW Murray below Barmah Choke
12 – South Australia Murray
13 – Murrumbidgee
14 –Lower Darling
15 – Lachlan
16 – Lower Lachlan Groundwater
17 – SA Mallee Groundwater
Murray Darling Basin
River
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DUXTON WATER PORTFOLIO – SMDB EXPOSURE

DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

ASX CODE (Shares) D20 Shares on Issue (July) 121,265,761

ALLOCATION MARKET

On the back of low opening allocations and challenging forward looking climatic outlook, July’s allocation market opened between $610-$645/ML, over $100/ML above the June close. Trading limits between zones are already having an impact, with both the Goulburn out-trade and Barmah Choke limits being reached. The Murrumbidgee out trade limit is also heading steadly towards closure. These closures will limit the transfer of any further allocation to the below choke Murray Region reducing the supply pool of available allocation to this region as we come into the Spring and Summer months. The impact of these trade closures are likely to have further impact on price, which may see prices fragment across the different regions due to the trading restrictions.

LEASES

Duxton Water executed 2 further lease agreements through July adding to the 31 that were executed in June. These leases commencing on the 1 July 2019, take the portion leased to ~ 54%.

This represents ~70% of the company’s high security entitlement portfolio (entitlements likely to deliver water under the current dry conditions).

The company is in contractual agreement or final negotiation for the lease of a further 3-4% of the portfolio which would be back dated and commence on the 1 July 2019.

The current weighted average lease expiry is 3.40 years. The company continues to works towards its long-term goal of having 70-80% of the portfolio under lease.

DIVIDENDS

On the 27 March 2019 the company paid its most recent dividend of 2.6 cents (fully franked).

The Company announced on the 9 August 2019 that it will pay an interim dividend of 2.7 cents ($0.027), fully franked, to be paid on the 18 September 2019.

The Board maintains its commitment to providing our shareholders with a bi-annual dividend and has reaffirmed a target of paying a fully franked final dividend of 2.8 cents ($0.028), payable in March 2020.

DAILY INFLOWS TO THE MDB

DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

ASX CODE (Shares) D20 Shares on Issue (July) 121,265,761

STORAGE LEVELS IN MAJOR DAMS

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Total Murray Goulburn 41% 58%
Lake Eildon 40% 57%
Menindee Lakes 1% 11%
Lake Victoria 62%
54%
Hume 36% 46%
Dartmouth 61% 90%
Total Murrumbidgee 42% 60%
Blowering 49% 72%
Burrinjuck 32% 41%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2019 2018
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CHANCE OF ABOVE-AVERAGE RAINFALL AUGUST – OCTOBER

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80
75
70
65
60
55
50
45
40
35
30
25
20
Chance of exceeding median rainfall (%)
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MARKET UPDATE & OUTLOOK

Dry and warmer than average conditions experienced through the start of winter have continued and are likely to for the remainder of winter and into spring. Key agriculture regions through the Basin received below average rainfall with soil moisture remaining as average to below average. Inflows into the MDB storages over the month were 580GL which is 37% below the 10 year average of 927GL. Storages in the northern MDB are now 10% and 43% in the southern, compared to 32% and 59% this time last year.

The respective state natural resource managers have released further allocations through July and early August with SA Murray moving to 50% up from 31%, Victorian Murray HR to 16% and Goulburn HR to 25%, both up from 2% allocation at the start of the water year. NSW Murrumbidgee HS entitlements remain at 95% allocation, while NSW Murray HS remains at 97%. General security entitlements in both NSW Murray and Murrumbidgee valleys look likely to currently deliver little to no allocations for the 19/20 water year.

The BoM’s recent outlook forecast indicates average to drier than average conditions for much of Australia, with a 70-75% chance of not exceeding the median rainfall in August through tp October across the key agricultural regions of the MDB. The temperature outlook is forecasting a 70-80% chance of higher than average daytime temperatures. Stream flow in most catchments in the MDB will likely remain below average. Clear nights and dry soil also raise the risk of frost across many key agricultural regions of the MDB.

The Southern Oscillation (ENSO) moved back to neutral through the first half of 2019 after flirting with El Nino over the last 12 months. Whilst in the last 6 months we have seen better invalley rainfall conditions through Victoria and southern NSW than for the previous 12 to 18 months, rainfall has still tracked well below average. It has also not translated into the type of in catchment rainfall needed to reset the system from a water storage perspective. This may be partly due to the positive Indian Ocean Dipole (IOD) currently being experienced off the Western Australian coast. A positive IOD often results in below average winter–spring rainfall over southern and central Australia. It also typically means warmer than average winter-spring days for the southern two-thirds of Australia. It is likely that this condition will persist across the bulk of the traditional water inflow period.

VALUATION METHODOLOGY

Aither undertake a monthly valuation of the Duxton Water portfolio. Total assets of the Company are valued based on an assessment of fair market value. Aither has adopted the Australian Accounting Standards Board (AASB) 13 Fair Value Measurement definition of fair value. Further information can be found on www.duxtonwater.com.au

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, solicitation 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 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.

DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500