RIVCO AUSTRALIA LTD — Net Asset Value 2021

Mar 15, 2021

ASX CODE (Shares) D20 Shares on Issue ( F e b ruary) 119,597,578

The primary investment objective of Duxton Water (“the Company”) is to build a portfolio of permanent water entitlements and utilise this portfolio to provide flexible water supply solutions to our Australian farming partners. The Company generates a return by offering Irrigators a range of supply solutions including long-term entitlement leases, forward allocation contracts and spot allocation supply.

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NET ASSET VALUE PER SHARE Entitlement Portfolio
Value by Region
Duxton Water’s NAV at 28 F ebruary 2021 was $1.60 per share.
The after-tax NAV figure takes into account the provision for deferred tax on set-up costs and 14%
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 $1.76 per share. The Company’s NAV is primarily the fair value of its 3%
water asset portfolio at the stated date. The Company uses an independent Fair Market Unit Value for
entitlement and allocations provided by Aither Pty Ltd ( " Aither”) to undertake the NAV assessment. 68%
NET ASSET VALUE PER SHARE – SINCE INCEPTION
Murray Goulburn
Murrumbidgee Lachlan
1.800 Mallee
1.750
1.700 March
1.650 Dividend 2.6 cents Water Portfolio
1.6001.550 August @100% Franked March Diversification
1.500 Dividend 2.5 cents Dividend 2.8 cents
1.450 @ 75% Franked September @100% Franked October
1.400 Dividend 2.4 cents April Dividend 2.7 cents @100% Franked Dividend 2.9 cents @100% Franked
1.350 @ 60% Franked 10.1 millionApril
1.300 Dividend 2.3 cents November October Placement 35%
1.250 @ 75% Franked 7.5 million
1.200 Insto Offer May
1.0501.1001.150 1.7 million March Options Exercised May & June 16.4 million 10.8 millionNovember 2.45 million shares SPP 65%
1.000 Options Exercised Retail Offer
Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 Feb-21
Unleased Leased
PERFORMANCE Water Security
Breakdown
1 Month 3 Months 6 Months 12 Months Inception
-0.01% -0.53% 2.21% -4.72% 73.28% 2%
These figures are based on NAV movements and include franked dividends for the period. 20%
INVESTMENT UPDATE
78%
At 28 February 2021, Duxton Water is invested in approximately $311 million of water assets with the
remainder of the portfolio held in cash and net current assets. The Company continues to mature and
rebalance the portfolio as opportunities become present. Currently, 176ML ($1.2m) of water
HS GS Bore
entitlements are in the acquisition pipeline at 28 February 2021.
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14%
14%
3%
<1%
68%
Murray Goulburn
Murrumbidgee Lachlan
Mallee
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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 ( F e b ruary) 119,597,578

Since May 2020, entitlement prices have remained relatively stable. This follows a 6% retracement in values from their peak in January 2020. Since January 2014, water entitlement values have increased over 250%, reflective of the long-term structural drivers, rather than short-term climatic conditions. Irrigators have over the last 10 years significantly enhanced their marginal return per megalitre through both more efficient use of water and conversion to higher value commodities. At the same time, we have seen significant steps taken to return water to the environment with Government buy-back purchases of between 20-22% of entitlements that were previously available to the consumptive pool. The combined impact has seen stronger demand for a reducing available water supply and subsequent increased asset prices. Irrigators themselves have been the greatest beneficiaries from this capital appreciation as they collectively own the majority of water entitlements on issue in the market.

February rainfall across the MDB was 26% above the long-term average. The MDB Authority active storage levels are higher than they were 12 months ago, however they are still approximately 23% below long-term averages. Welcomed rainfall throughout February has assisted Irrigators across the basin, however the MDB Authority continues to manage a shortfall risk of water supply meeting water demand. Storages continued to be drawn on through February as Irrigators requirement to irrigate remained present with crops not ripe to harvest. The Murray-Goulburn system is currently at 53% of storage capacity levels; 22% higher than 12 months ago. Northern basin storage levels are currently 27%, 13% higher than 12 months ago.

Duxton Water continues to support its Irrigator partners as they start preparing to finish off one water year and enter into another. This involves the provision of leases to over 70 family farming and corporate businesses. Through June 2020, many Irrigators took advantage of seasonally low allocation pricing and acquired allocation to carry over into the new water year. The Company has further supported Irrigator water risk management through the provision of forward allocation contracts for the 20/21 water year. This provides Irrigators with visibility to water supply and assists Duxton Water in hedging its allocation risk on its unleashed permanent water assets.

The Company actively manages its allocation holding in order to deliver on demand for spot allocation sales, meet its obligations for the provision of forward allocation sales and deliver on new entitlement lease arrangements. In offering these products, the Company supports market liquidity and risk management options for our Irrigator partners.

ENTITLEMENT MARKET

Duxton Water is engaged in building a targeted portfolio of water entitlements predominantly across the southern MDB. The Company has invested in both surface and ground water assets. At 28 February 2021, the Company holds approximately 80.8 GL of water entitlements across 19 different asset types and classes.

Entitlement pricing across the southern Murray Darling Basin has remained relatively stable throughout February 2021, with a weighted increase of 0.04%. The company has continued to benefit from its exposure to general security entitlements which continued to see both increased allocation and capital appreciation with improved resource availability.

On 20 November 2020, the Victorian Government released* a report on water market trends and drivers in the southern MDB. This report delivered further analysis on the future market pricing impacts on allocation prices of both the increased horticulture development as well as past and future Government water recovery. The key findings of this report were that with the impact of these structural demand and supply shifts, and a repeat of the last 15 years resource availability, we are likely to see weighted average pricing significantly above that experienced over the last 15 years. The Company uses an independent Fair Market Unit Value for allocations and dry entitlements (without allocation) provided by Aither to undertake the NAV assessment.

Notable Entitlement pricing movements through February:

• �5.0% in VIC Goulburn (below choke) GS (~0.01% of portfolio)

Interstate Water Trading Zones

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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 – NSW 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

* https://waterregister.vic.gov.au/about/news/330-new-analysis-on-trends-anddrivers-of-marker-prices-for-allocation

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

ASX CODE (Shares) D20 Shares on Issue ( F e b ruary) 119,597,578

ALLOCATION MARKET

LEASES

Allocation prices eased throughout February with trades in the lower Murray occurring between $100 -110/ML. In the Goulburn, prices traded between $95-100/ML, while in the Murrumbidgee allocation traded around $50-60/ML. Easing in the market was a result of an increased supply of available resource into the Murray from the Murrumbidgee inter-valley trade opening in January and the peak irrigation season (summer) coming to and end. February is typically a quieter month as many Irrigators work through the Harvest season and bank on rainfall delivery through autumn.

The leased portion of the water entitlement portfolio is 65%. This represents 78% of the Company’s High Security Entitlement holding. The Company is working with a number of Irrigators ahead of the 21/22 water year on new leasing arrangements.

The current weighted average lease expiry (WALE) is 2.1 years. Inclusive of renewal options this increases the WALE to 4.3 years. The Company continues to work towards its long-term goal of having 70-80% of the portfolio under lease.

Irrigators are beginning to shift their focus to the 21/22 water year. In mid-February the Victorian Resource Manager provided first outlooks for the 21/22 season. It is noted that without average flows into major storages by the end of June 2021, opening allocations will be less than 25% for the Murray and Goulburn systems.

DIVIDENDS

The Company paid a fully franked dividend of 2.9 cents on 30 October 2020, with 222k shares issued under the Dividend Reinvestment Plan at a VWAP of $1.3401/Share.

Further outlooks for Victoria will be provided on 17 May 2021, while NSW will release preliminary outlooks on water availability for the new water year in mid-March. This will assist Irrigators in making final decisions around water security heading into the next water year.

The Board maintains its commitment to providing shareholders with a bi-annual dividend franked to the maximum extent possible. With the Company’s high percentage of leased entitlements, the Directors reaffirm its target for the next four dividends.

DAILY INFLOWS TO THE MDB

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260,000
240,000
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2016-17 2018-19 2019-20 2020-21 Long term average
for comparison to a wet water year
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
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Murray System Daily Inflows (excl. Snowy Darling, inter-valley trade and environmental inflows) - 5 day rolling average

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 ( F e b ruary) 119,597,578
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The Company has targeted fully franked payments of:

• 3.0 cents ($0.030) as the final 2020 dividend;

• 3.1 cents ($0.031) as the interim 2021 dividend; • 3.2 cents ($0.032) as the final 2021 dividend; and

• 3.3 cents ($0.033) as the interim 2022 dividend.

The dividend targets are to be paid in the following reporting periods.

CHANCE OF ABOVE-AVERAGE RAINFALL A P R IL - JUNE 2021

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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 BOM confirm that the La Nina event is working back to a neutral state, with some ocean indices having already returned to neutral in recent weeks. February rainfall has been very welcomed, with La Nina conditions remaining in the atmosphere. This may result in La Nina conditions continuing in the coming weeks. The March to April rainfall outlook is looking to be wetter than average, however as the La Nina transitions back to neutral, expected rainfall is likely to decline.

Rainfall for the MDB for February was 26% above the long-term average. Day and night-time temperatures are expected to be average to warmer than average for eastern parts of Australia. In the northern and southern MDB, storages are now at 27% and 53%, compared to 14% and 30% this time last year.

VALUATION METHODOLOGY

The Company uses an independent Fair Market Unit Value for entitlement and allocation provided by Aither Pty Ltd (‘Aither”) to undertake the NAV assessment. Aither’s definition of fair market value is consistent with the principles of the Australian Accounting Standards Board (AASB) 13 Fair Value Measurement. It is a non IFRS measure that is not reviewed or audited by the Company’s auditor. Further information can be found at www.duxtonwater.com.au

STORAGE LEVELS IN MAJOR DAMS

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Total Murray Goulburn 30% 53%
Lake Eildon 37% 63%
Menindee Lakes 0% 18%
Lake Victoria 39%36%
Hume 16% 53%
Dartmouth 46% 63%
Total Murrumbidgee 37% 72%
Blowering 39% 77%
Burrinjuck 33% 65%
2021 2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
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ACCC

On 30 July 2020, the ACCC released the interim report into the Southern Murray Darling Basin Water Market.

The ACCC has spent almost a year reviewing the markets operation and engaging with key stakeholders. The Commission has had an ongoing role in monitoring the Australian Water Markets, having issued reports on its operation since 2012. Whilst the Company will review the in-depth report, on a first read we believe it is a thorough and well-balanced report.

We note the ACCC has stated that:

“Water trading has brought substantial benefits to water users across the Basin. Water markets allow Irrigators to increase their water supplies, to earn income by selling their water rights when they are more valuable to someone else, to expand production, or to release capital for investment in their businesses. The benefit of water markets is demonstrated by the fact that, despite tough and volatile climatic conditions, the value of production from irrigated agriculture in the Southern Basin has trended upwards in real terms since 2010-11.”

“Water investors, meanwhile, can help Irrigators free up capital by buying and leasing out water; they can increase water market liquidity; and they can help Irrigators manage water-supply risks, by providing water products such as leases and forward contracts.”

We note the report has identified opportunities to improve governance, regulatory and operational frameworks that support Australian water markets. We believe that a focus in these areas will benefit all stakeholders and Duxton will actively engage in that process.

The interim report can be found at:

https://www.accc.gov.au/focus-areas/inquiries-ongoing/murray-darlingbasin-water-markets-inquiry/interim-report

This announcement has been authorised for release by the Board of Duxton Water Limited.

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