RIVCO AUSTRALIA LTD — Net Asset Value 2022

Jun 13, 2022

Monthly Update

MAY 2022

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INVESTMENT NAME INVESTMENT MANAGER INVESTMENT UNIVERSE
Duxton Water Limited Duxton Capital (Australia) Pty Ltd Australian Water Entitlements
ASX Code: D2O
NET ASSET VALUE (POST-TAX) SHARES ON ISSUE WATER PORTFOLIO VALUE
$1.89 per share 119,974,629 $370 million
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Duxton Capital Australia Pty Ltd

Monthly Update

MAY 2022

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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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Portfolio Managers’ Update

As we move through the final weeks of another Water Year (WY), irrigators have continued to focus their attention to future water security for the upcoming season. As some irrigators balance water accounts, others have been selling off surplus allocation holdings or acquiring allocation parcels for carryover. Most irrigators are taking this time to pro-actively plan for next season.

On the back of recent price lows for allocation water, some irrigators have been active in the market with a forwardthinking attitude to lock in water supply at lower prices ahead of upcoming water seasons.

The Company’s uncommitted allocation holdings (usable water that comes from the unleased portfolio of water entitlements), were sold down earlier in the irrigation season. This materially reduces the Company’s exposure to the spot allocation price which has continued to fall since the peak irrigation season (summer).

Duxton Water still has a very small residual allocation holding (<200ML) that is not being carried forward or forward sold into next season. This holding will be cleared out in June as irrigators snap up last minute allocation water for carryover purposes or irrigation needs.

Throughout May, we have seen an increased level of buy side pressure within the entitlement market as several water authority’s finish off buying requirements for the 21/22WY.

We have continued to work with our lessees ahead of the end of the 21/22WY as irrigators organise final carryover requirements on their leases or call on any final water deliveries.

We have continued to acquire parcels within those zones and valleys that still we deem as being well priced. We have also looked at other areas that have presented opportunities for parcels that fit our target portfolio composition. Throughout May, we were able to add an additional 4 parcels to the portfolio, with an additional 6 parcels in the entitlement acquisition pipeline, ready for contract execution. These acquisitions will be reflected in the Company’s June portfolio holdings.

We sold a parcel of NSW permanent water earlier this year, however settlement took place in May. This offsets any increase to the portfolio (in terms of ML) for this month.

This sale generated statutory earnings for the Company as well as providing cash that has already been earmarked for redeployment into advantageous zones.

COMPANY PERFORMANCE

We have continued to have discussions with a number of current lessees around the renewal of expiring leases. Conversations with a number of new potential lessees have also been initiated, with the hope to further support more Australian irrigators.

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Lachlan Campbell Portfolio Manager

Lachlan Beech Portfolio Manager

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1 Month	3 months	6 Months	12 Months	Inception
1.50%	3.57%	8.99%	21.29%	112.49%

1 Month	3 months	6 Months	12 Months	Inception
1.50%	3.57%	8.99%	21.29%	112.49%

^These figures are based on NAV movements and include franked dividends for the period.

Dux ton Capital Australia Pty Ltdton Water Limited (ASX:D2O)

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MAY 2022

Monthly Update

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Water Lease Update

At 31 May 2022, Duxton Water had 69% of its permanent water portfolio (by value) leased to Australian farming businesses. This accounts for 89% of the Company’s high security portfolio (by value).

Demand for leasing products remains present within the market, as irrigators consider future water security ahead of new water year. The Company is currently in discussions with a number of existing lessees around the renewal of expiring leases, as well as discussions with a number of potential new lessees.

QUI C K F AC T S S UM M AR Y

QUI C K F AC T S S UM	M AR Y
	April 2022	May 2022
Water Entitlements	83.7GL	83.6GL
Portfolio Diversification (types)	18	18
Leased % of Portfolio	67%	69%
Weighted Average Lease Expiry (WALE)	1.0 years	0.9 years
WALE (incl. renewal options)	3.3 years	3.1 years

The current Weighted Average Lease Expiry (“WALE”) is 0.9 years. Inclusive of renewal options, this increases the WALE to 3.1 years. From 1 July 2022, the Company’s WALE is expected to be 1.7 years or 4.8 years including renewal options. The Company’s forecasted WALE is expected to increase between now and 1 July 2022 as new leases are finalised.

Through long-term leasing arrangements, Duxton Water is able to satisfy the water needs of its customers, enabling them to risk manage a key input into their business. Longterm water leases give irrigators reliable access to water at a fraction of the cost of owning the same water licences outright.

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Irrigated Vegetable Field

Entitlements Market Update

At 31 May 2022, Duxton Water holds approximately 83.6GL of permanent water entitlements across 18 different asset types and classes. An additional 4 parcels of entitlement water were added to the portfolio throughout May, increasing holdings by 331ML. Further to this, there was an additional 6 parcels in the acquisition pipeline ready for contract execution at the end of May. A recent sale of 500ML settled during May, which counteracts any upwards movement in the Company’s holdings.

Permanent water pricing across the southern Murray Darling Basin (MDB) strengthened throughout May, with a weighted average increase of 1.9%. This is a result of the recent buyside pressure that has been present in the market, to the point that Victorian (Below Choke) Murray High Reliability entitlement has exceeded $8,000/ML. The Company continues to sought opportunities that fit within the Company’s buying realm and target portfolio composition.

Allocation Market Update

Allocation pricing has continued to soften as we move through the final months of the 21/22WY. Allocations traded between $15-$20/ML in the Lower Murray, $15-$20/ML in the Goulburn system, $2-$5/ML in the Murrumbidgee, and $4-$10/ML in the Upper Murray throughout May.

WATER LEASE CASE STUDY: GOULBURN

Duxton Water recently finalised a 2,300ML water lease to a family farming business located in the Goulburn region, Victoria. This lessee is a dairy farmer. Through our partnership, this family can continue to grow irrigated pastures as a way of feeding livestock. Irrigated pastures allow farmers to stockpile feed for year-round use, and ahead of future dry periods. By entering a water lease, this family now has fixed cost water for 5 years. This allows them to 1. hedge against allocation pricing movements, 2. have a fixed cost of feed production. It also significantly reduces the cost to produce feed based on having access to the characteristics of these water entitlements at a fraction of the cost of owning them outright.

Through this type of partnership, Duxton Water continues to build a stronger Australian economy by supporting Australian farming businesses.

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Dux ton Capital Australia Pty Ltdton Water Limited (ASX:D2O)

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MAY 2022

Monthly Update

Finance Update

Duxton Water is well placed to deal with future interest rate rises (should they continue to occur). Throughout 20192021, Duxton Water took the opportunity to enter several 5- year and 10-year fixed interest rate swaps at historically low rates. At full debt deployment ($130 million), D2O will have approximately 40% of its debt locked into fixed rate swaps that expire between 2024 and 2031.

The homogenous and liquid nature of water assets mean they can be sold and converted into cash, typically within a 4-6 week period. This means the Company is well placed to pay down part (or all) of its debt facility should the cost of debt become uneconomical. While the Company’s variable interest rate remains well below current leasing rates, debt funding continues to make sense.

At 31 May 2022, the Company’s Net Debt to Water Assets (LVR) is 30%.

Duxton Water’s post-tax NAV increased 3 cents to $1.89 per share during the month of May. The Company’s NAV excluding tax provisions for unrealised capital gain also increased during the month to $2.17 per share.

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Share Buyback

At 31 May 2022, the Company has bought back a total of 620k shares at an average price of $1.53 per share since November 2021. The Board believes buying back shares at the current discount to NAV is in the interest of all shareholders.

Dividends

On 29 April 2022, Duxton Water paid its tenth consecutive and increasing dividend to shareholders of 3.2 cents per share (franked to 100%).

The Board of Duxton Water was pleased to see continued support from shareholders who elected to participate in the Company’s Dividend Re-investment Plan.

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 and visible revenue streams, the Board is pleased to reaffirm targets for the following four dividends:

The Company’s NAV primarily consists of the fair value of its water asset portfolio, cash, and net current assets. The Company uses an independent Fair Market Unit Value for entitlement and allocations provided by Aither Pty Ltd ("Aither") to undertake the NAV assessment on a monthly basis.

NAV (post tax)	NAV (pre tax)
$1.89 per Share	$2.17 per Share

DI V I DEND G U I DA NC E

	Cents Per Share	Franking Target
Interim 2022	3.3 cps	Fully Franked
Final 2022	3.4 cps	Fully Franked
Interim 2023	3.5 cps	Fully Franked
Final 2023	3.6 cps	Fully Franked

NET ASSET VALUE PER SHARE – SINCE INCEPTION

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V A L U A T I O N M E T H O D O L O G Y

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. Itis 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

Dux ton Capital Australia Pty Ltdton Water Limited (ASX:D2O)

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MAY 2022

Monthly Update

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W A T E R P O R T F O L I O W A T E R S E C U R I T Y E N T I T L E M E N T V A L U E
D I V E R S I F I C AT I O N B R E A K D O W N B Y R E G I O N
13%
21%
13%
31%
3% 1%
1% 78%
69% 70%
Murray Murrumbidgee High Security General Security
Leased Unleased
Goulburn Lachlan Groundwater
Mallee
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W A T E R P O R T F O L I O
D I V E R S I F I C AT I O N
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Weather Update

Rainfall throughout May was 40% above average for Australia as a whole. Rainfall was above average for most of Queensland, New South Wales, the far north-west of Victoria and pockets of South Australia. The Murray Darling Basin experienced its wettest autumn since 2010, while New South Wales experienced its wettest autumn since 1990.

A low-pressure trough and a series of cold fronts affected southern and south-eastern parts of Australia towards the end of the month, bringing widespread rainfall to southeastern South Australia, western New South Wales and western Victoria. Rainfall for the MDB area was 59% above the long-term average for May.

National mean maximum and minimum temperatures were above average for May, with the national mean temperatures for May being 1.02˚C warmer than the 19611990 average for Australia as a whole.

C H A NC E O F A B O V E-A V ERA GE RA I NFA LL

J U L Y 2 0 2 2 – S E P T E M B E R 2 0 2 2

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Source: Bureau of Meteorology

RAINFA LL DECILE CHART

The Indian Ocean Dipole (IOD) is currently neutral. However, all model outlooks surveyed suggest a negative IOD is likely to develop in the coming months. The IOD index has been below zero over the past four weeks. A negative IOD typically increases the chances of above average winter- ~~spring rainfall for much of Australia.~~

The La Niña event in the tropical Pacific Ocean remains active, however it is forecast by the Bureau of Meteorology (BOM) that it will likely return to a neutral ENSO by the end of winter.

The Madden-Julian Oscillation (MJO) is currently at moderate strength over the western hemisphere, with a likeliness to strengthen in the coming weeks.

J A N U A R Y 2 0 2 2 – M A Y 2 0 2 2

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Source: Bureau of Meteorology

The Southern Annular Mode (SAM) is currently positive, but it expected to return to neutral and remain so for June.

Dux ton Capital Australia Pty Ltdton Water Limited (ASX:D2O)

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MAY 2022

Monthly Update

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Outlook & Storages

The June to September outlook suggests a wetter than average winter for much of the Country, with parts of central and eastern Australia having a chance of being unusually wet. While it is expected that the La Niña event in the Tropical Pacific Ocean will fade during winter, ocean temperature patterns in the Pacific may still favour cloud and rainfall. To the west of the Country, a negative IOD could likely develop in the coming months.

Streamflow’s are forecast to remain high across eastern Australia until July. Further rainfall onto an already wet landscape, means soil moisture is likely to remain high throughout winter. Cooler days can be expected across a large area of inland Australia. Night temperatures are likely to be warmer than average for most of Australia this winter.

In the northern and southern MDB, storages are now at 98% and 89% respectively, compared to 50% and 55% the same time last year.

STORAGE LEVELS IN MAJOR DAMS

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Total Murray Goulburn 55% 89%
77%
Lake Eildon 55%
Menindee Lakes 100%
58%
Lake Victoria 41% 49%
91%
Hume 45%
94%
Dartmouth 64%
Total Murrumbidgee 92%
85%
Blowering 95%
89%
Burrinjuck 88%
79%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2022 2021
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DAILY INFLOWS TO THE MURRAY DARLING BASIN

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Megalitres (ML)
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Murray System Daily Inflows (excl. Snowy Darling, inter-valley trade and environmental inflows) - 5 day rolling average

This announcement has been authorised for release by the Chairman 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 thisfactsheetor its contents,includingfor negligence.

Dux ton Capital Australia Pty Ltdton Water Limited (ASX:D2O)

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