RIVCO AUSTRALIA LTD — Net Asset Value 2019

Mar 12, 2019

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ASX CODE (Shares) D20
Shares on Issue (December) 108,576,017
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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 28 February 2019 was $1.50 per share.

The after tax NAV 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. The Company does not expect to trigger these tax provisions through the turnover of these assets and expects to maintain its low entitlement turnover ratio. The NAV excluding tax provisions for unrealised capital gain is $1.64 . NAV is calculated based on an independent monthly portfolio valuation performed by Aither Pty Ltd (“Aither”).

NET ASSET VALUE PER SHARE – SINCE INCEPTION

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NET ASSET VALUE PER SHARE – SINCE INCEPTION
1.550 Dividend 2.5 cents August
@ 75% Franked
1.450 April
Dividend 2.4 cents
November @ 60% Franked
1.350 Dividend 2.3 cents
@ 75% Franked
October November
1.250 7.5 million 10.8 million
Insto Offer Retail Offer
1.150 March May & June16.4 million
1.7 million Options Exercised
1.050 Options Exercised
0.950
PERFORMANCE
1 Month 3 Months 6 Months 12 Months Inception
1.40% 9.73% 14.30% 29.44% 48.89%
These figures are based on NAV movements and include franked dividends for the period.
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INVESTMENT UPDATE

At 28 February 2019, Duxton Water Ltd (‘Duxton Water’) is invested in approximately $227.5 million of water assets with the remainder of the portfolio held in cash and net current assets. The Company currently has approximately 3,916 ML ($14.3 million) of water entitlements in its acquisition pipeline at 28 February 2019.

Sparse rainfall was received throughout the southern Murray Darling Basin ( ' Basin ' ) with conditions tracking 68% below the long-term average. With bone dry catchments, rainfall is having little impact on inflows and total inflows into the Murray continue to be below the long-term average. The volume of water available in active storages within the total Murray Goulburn system of 41% is 22% lower than the same time last year and 31% lower than in February 2017.

The MDBA’s drawdown of Dartmouth has continued through February. The Dartmouth dam acts as the Murray’s reserve storage and has had a further ~121GL of water released to support peak irrigation demand. Lake Eildon and the Hume have also been reduced by a combined ~315GL over the course of the month and are now at capacity of 44% and 28% respectively.

Duxton Water has continued to support its customers through the peak summer irrigation period and as our irrigator customers’ focus turns to 2019/2020, we have entered into a number of new leases and forward water allocation contracts which will assist their risk management and support production into the new water year. Duxton Water is now examining its strategic positioning for the close of this water year and the opening of the new water year.

Entitlement Portfolio Value by Region

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14%
11%
5% 0%
70%
Murray Lachlan
Murrumbidgee Loddon
Goulburn Mallee
Water Portfolio
Diversification
60% 36%
Unleased Leased
Inclusive of contracted leases, commencing
1 July 2019, the leased portfolio is 40%.
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Water Security Breakdown

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1%
28%
71%
HS GS Bore Supp
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DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

ASX CODE (Shares) D20 Shares on Issue (December) 108,576,017

ENTITLEMENT MARKET

Duxton Water 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 28 February 2019 the Company holds over 66,108 ML of entitlement across 20 different asset types and classes.

Further dry conditions throughout the 2018/2019 summer has seen renewed focus for longer term water security such as entitlement ownership and long-term leases. As such, ongoing demand for high security permanent entitlements has seen entitlement prices continue to rise whilst prices for general security permanent entitlements have decreased slightly. Aither Pty Ltd values the Duxton Water portfolio on a monthly basis on a dry (without allocation) equivalent basis. There were multiple notable movements:

SOUTHERN BASIN

•  8.3% VIC Murray 7 High Reliability (13.2% of portfolio)

•  8.3% SA Murray Class 3 High Security (6.7% of portfolio)

•  6.4% VIC Murray 6 High Reliability (11.9% of portfolio)

•  5.4% NSW Murrumbidgee 13 High Security (7.7% of portfolio)

•  2.6% VIC Goulburn High Reliability (10.9% of portfolio)

•  1.9%NSW Murray 11 High Security (20.1% of portfolio)

•  2.6% NSW Murray General Security (17.9% of portfolio)

NORTHERN BASIN

• Lower Lachlan Surface Water General Security  5.3% (6.5% of portfolio)

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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

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 (December) 108,576,017

ALLOCATION MARKET

Cooler temperatures throughout the Basin provided much needed relief for irrigators following the persistent heatwaves in December 2018 and January 2019 which saw large increases in irrigation demand due to heat stress. As such, allocation markets across the Basin eased off from the peak prices observed in January, with the allocation prices closing the month in both the Murray and Murrumbidgee at $460/ML to $480/ML from their January peaks of $550/ML and $700/ML respectively.

Allocation pricing within the Lachlan Valley remained relatively steady and increased from $350/ML to $360/ML.

Duxton Water utilised its entitlement carry over capability to take allocation into the 2018/19 water year. This has enabled the Company to position itself ahead of stronger allocation pricing and to assist our irrigator customers through drier forecast conditions for the year ahead.

LEASES

Duxton Water has entered into further leases which will commence in the new water year (1 July 2019), increasing the proportion of its leased portfolio to 40% (based off current portfolio valuations) with a Weighted Average Lease Expiry of 4.2 years. As new capital has continued to be deployed into the acquisition of further water entitlements, the leased portion of the portfolio has continued to dilute. Increased interest for longer term water supply solutions has seen the yields on leases better align with the Company’s targets against the back-drop of increasing water entitlement values. The Company is currently in discussion with irrigators and expects to enter into further leases commencing 1 July 2019, increasing the proportion of the portfolio under lease to 50% - 55%.

DIVIDENDS

As announced in January, the Company is pleased to announce it will pay a final dividend to its shareholders of 2.6 cents per share payable in Australian dollars. The dividend will be fully franked for Australian taxation purposes. The record date for receiving this dividend is 13 March 2019 and the payment date will be 27 March 2019. The Company’s Dividend Reinvestment Plan will also be in effect. The Company has also flagged its intention to pay a 2.7 cent, fully franked, dividend in September 2019. Full details of this update can be found on the ASX.

DAILY INFLOWS TO THE MDB

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Murray System Daily Inflows (excl. Snowy Darling, inter-valley trade and environmental inflows) - 5 day rolling average
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100,000
80,000
2017-18
60,000
2018-19
40,000
Long term
average
20,000
0
I-Jun I-Jul I-Aug I-Sep I-Oct I-Nov I-Dec I-Jan I-Feb I-Mar I-Apr I-May I-Jun
ML/day
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DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

ASX CODE (Shares) D20 Shares on Issue (December) 108,576,017

STORAGE LEVELS IN MAJOR DAMS

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Total Murray Goulburn 41% 63%
Lake Eildon 44% 68%
Menindee Lakes 2% 18%
Lake Victoria 49% 57%
Hume 28% 53%
Dartmouth 64% 89%
Total Murrumbidgee 30% 43%
Blwering 29% 40%
Burrinjuck 32% 47%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2018 2017
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CHANCE OF ABOVE-AVERAGE RAINFALL MARCH – MAY

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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

The end of February brings an end to the hottest summer on record. The average temperatures experienced throughout the Basin in February provided little reprieve from the record breaking temperatures that occurred in December 2018 and January 2019. Rainfall during this period remained far below average with 32% of average rainfall received. The heavy rainfall and widespread flooding experienced in Queensland is not expected to reach the Murray and will provide no relief to the system.

Persistent dry conditions for the last two years have seen storage levels continue to drop as inflows remain low. Storages within the northern and southern MDB are currently at ~12% and ~40% respectively, compared to ~37% and ~61% this time last year.

Reduced operating losses enabled the VIC resource manager to issue a further 2% of allocation to Goulburn high security entitlements for a total of 96%. NSW general security entitlements received no further allocation with significant inflows required prior to any additional allocation being received.

Next year’s allocation outlooks have been released by the respective resource managers. VIC’s resource manager has stated “a repeat of inflows into the major storages observed in 2018/19 would result in the Goulburn system (allocation) reaching ~65% in February 2020 and the Murray would be ~60%” . This will depend “heavily on flows received…during autumn and winter”.

The NSW resource manager stated that “future improvements through the remainder of this water year must be set aside until high priority needs are assured for 2019-20”.

The latest BoM outlooks forecast a below average chance (20% - 30%) for median rainfall over the next quarter throughout the southern MDB, with the forecasted timing of autumn break rainfall to be average or later than average.

The BoM’s El Niño-Southern Oscillation outlook has been dropped from ‘Alert’ to ‘Watch’, suggesting a 50/50 chance of an El Niño event forming in the coming months. Four of the eight surveyed climate models have El Niño thresholds being exceeded in May. The Indian Ocean dipole is currently neutral with five of the six surveyed climate models forecasting that the neutrality will hold through the Autumn period. El Niño’s typically results in below average rainfall and above average temperatures across eastern Australia. A positive Indian Ocean Dipole event typically reduces spring rainfall in southern Australia and can further exacerbate the effects of an El Niño.

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