RIVCO AUSTRALIA LTD — Net Asset Value 2022

Jan 13, 2022

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ASX CODE: D2O
Shares on Issue (December) : 120,112,469
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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.

NET ASSET VALUE PER SHARE Duxton Water’s NAV at 31 December 2021 was $1.79 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 $2.04 per share. The Company’s NAV is primarily the fair value of its 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.

NET ASSET VALUE PER SHARE – SINCE INCEPTION

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1.90 3.6
1.80 NAV 3.4
Dividend Paid
1.70 Dividend Target
3.2
1.60
3.0
1.50
1.40 3.5 2.8
3.4
1.30 3.3
3.2 2.6
3.1
1.20 2.9 3.0
2.8 2.4
2.7
1.10 2.6
2.5
2.4 2.2
1.00 2.3
0.90 2.0
NAV Per Share ($)
Dividends Per Share (c)
Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23
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PERFORMANCE*

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1 Month 3 Months 6 Months 12 Months Inception
0.90% 6.76% 12.37% 16.00% 99.05%
These figures are based on NAV movements and include franked dividends for the period.
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INVESTMENT UPDATE

At 31 December 2021, Duxton Water is invested in approximately $340 million of water assets, with the remainder of the portfolio held in cash and net current assets. This month, Duxton Water entered into a number of permanent water purchase contracts in VIC Murray Zone 7 (HR) and VIC Goulburn 1A (HR). There are a number of transactions in the Company ’s acquisition pipeline.

The 2021 year has seen entitlement pricing continue to strengthen for both high security and general security assets. Irrigators have continued to increase their exposure to high security water in preparation for future water years, and general security assets have drawn interest as allocations are now at 100% on general security in NSW Murray, Murrumbidgee and Lachlan. Permanent entitlement prices have on average increased 16.5% since the start of 2021.

Entitlement Portfolio Value by Region

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13%
13%
3%
<1%
70%
Murray Murrumbidgee
Goulburn Lachlan
Mallee
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Water Portfolio
Diversification
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28%
72%
Unleased Leased
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Water Security Breakdown

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1%
21%
78%
HS GS Bore
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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: D2O
Shares on Issue (December) : 120,112,469
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The Government has taken significant steps to return water to the environment with buy-backs and infrastructure upgrade projects. So far, the Government has removed ~30% of water entitlements on issue from the consumptive pool through these initiatives. This constraint on supply combined with the significant increase in inelastic demand for water from permanent crop producers, has seen the value of permanent water assets continue to increase in 2021.

Murray Darling Basin (MDB) active storage levels are now 42% higher than long term averages. Above average rainfall and inflows to catchments has significantly improved major storages over the last 6-7 months. The Hume dam, one of Murray Goulburn’s main water storages, is at 97% capacity. The MDB authority has continued to manage Hume by releasing water to help mitigate the impacts of further spill events.

On 15 December 2021, the resource manager declared that all VIC Murray HR spillable water accounts were now empty with 100% of water spilt.

The resource manager also awarded a 12% allocation to VIC Murray LR water shares, a first determination to this water share since 2016/17. “Stored resources, plus the statistical inflows used in our two-year allocation cycle, can fully support seasonal determinations against Murray high-reliability water shares in 2022/23” and “We have enough water for a 12 per cent seasonal determination for low-reliability water shares this year". This comes on the back of continued inflows into the Menindee Lakes and Hume dam. Further releases to control the Hume dam level has also aided this announcement.

Entitlement pricing across the southern MDB continued to show a level of strengthening during December 2021, with a weighted average increase of 1%. VIC Lower Murray HR entitlement softened throughout December, from its recent high to $8,000/ML.

Australian irrigators continue to be the greatest beneficiaries from water entitlement price increases, as they collectively own the majority of water entitlements on issue.

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 expected future pricing impacts on allocation markets, due to increased horticulture development and past and future government water recovery initiatives

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

The key findings of this report indicated that with the impact of these structural demand and supply shifts, and a repeat of the last 15 years of resource availability, it is likely the weighted average price of water will be significantly above what has been 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 December 2021:

 5.5% in SA Murray (below choke) HS (11% of portfolio)

 4.3% in VIC Murray (above choke) HR (10% of portfolio)

A low risk of spill declaration will not be made until after January. Releases made from Hume throughout December to manage inflows may also have an effect on any January determinations to VIC Murray LR water shares.

Storage capacity at Burrinjuck and Blowering dams, Murrumbidgee’s main storages, are both at 93% and 94%, with current air space management and supplementary events taking place. A low risk of spill has been declared in the Goulburn system.

Duxton Water has continued to work alongside its farming partners throughout December. The Company has continued to provide its range of water supply products to the market. Duxton Water is committed to supporting irrigators through these conditions by offering long-term water leases, spot allocation sales, forward contracts and carry over products.

ENTITLEMENT MARKET

Duxton Water is engaged in building a targeted portfolio of water entitlements predominantly located across the southern MDB. The Company has invested in both surface and groundwater assets. At 31 December 2021, the Company holds approximately 80GL of water entitlements across 18 different asset types and classes.

 3.8% in VIC Murray (below choke) HS (13% of portfolio)

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DUXTON WATER PORTFOLIO – SMDB EXPOSURE

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

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

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ASX CODE: D2O
Shares on Issue (December) : 120,112,469
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ALLOCATION MARKET

Allocation prices strengthened during December as temperatures increased heading into summer. The La Nina event declared in November has continued to present rainfall episodes across the MDB so far this summer, however the area average rainfall for the MDB was average for the month of December. Allocation pricing traded between $95-$105/ ML in the Lower Murray, $70-$80/ML in the Goulburn and Murrumbidgee, and between $70-$80/ML in the Upper Murray throughout December.

Duxton Water has continued to deliver on forward allocation sale contracts throughout December that were contracted earlier in the 20/21 water year. These forward allocation sale contracts benefit irrigators by providing a guaranteed supply of water at a predetermined price. They also provide Duxton Water with a visible revenue stream that hedges the Company’s unleased portion of the portfolio against future allocation pricing movements.

DIVIDENDS & BUY BACK

The Board of Duxton Water is committed to providing shareholders with a bi-annual dividend. On 29 October 2021, Duxton Water paid its ninth successive and increasing dividend to shareholders of 3.1

cents per share (franked to 100%). The Board of Duxton Water was pleased to see continued support from shareholders who elected to participate the Company’s Dividend Re-investment Plan (DRP).

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 has provided the following fully franked dividend targets:

• 3.2 cents ($0.032) as the final 2021 dividend;

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

• 3.4 cents ($0.034) as the final 2022 dividend.

• 3.5 cents ($0.035) as the interim 2023 dividend.

Dividend targets are to be paid in the following reporting periods.

On 13 October 2021, the Company announced it would commence an on-market share buy back program. As of 31 December 2021, the Company had purchased 115k shares at an average price of $1.46/ share. The Board believes the purchase of the Company’s shares at the current discount to NAV is in the interest of all shareholders.

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
2018-19 2019-20 2020-21 2021-22 Long term average
2016-17 (for comparison to a wet water year)
Murray System Daily Inflows (excl. Snowy Darling, inter-valley trade and environmental inflows) -
5 day rolling average
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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DUXTON WATER LTD DUXTON HOUSE. 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [+61]8 8130 9500

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ASX CODE: D2O
Shares on Issue (December) : 120,112,469
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LEASES

The La Nina event that was established in the tropical Pacific Ocean in November remains active, resulting in the recent rainfall events across the MDB. Climate models suggest the current La Nina event will likely persist until early autumn for the southern hemisphere. A La Nina event typically increases the chance of above average rainfall across much of northern and eastern Australia during summer.

Through long-term leasing arrangements, Duxton Water is able to satisfy the water requirements of its irrigator partners, enabling them to risk manage a key input into their business. Long-term water leases give irrigators a cost-effective way to access water and provide water security as they can be guaranteed a water allocation every year at a fixed cost.

At 31 December 2021, Duxton Water has 72% of its permanent water portfolio leased to Australian farming businesses. This represents 91% of the Company’s high security portfolio.

The Southern Annular Mode (SAM) is currently neutral, however it's forecasted to become positive towards the end of January. A positive SAM during the summer months typically brings wetter weather conditions to the eastern parts of Australia.

The Company is currently in discussions with a number of existing lessees to renew their current leases as well as engaging with new potential lessees looking for long-term water security for their businesses.

The Indian Ocean Dipole (IOD) event that influenced our climate throughout winter and spring is now neutral. The IOD has had little effect towards global climatic conditions since December, with little influence expected to April 2022.

The current weighted average lease expiry (“WALE”) is 1.3 years. Inclusive of renewal options this increases the WALE to 3.5 years. The Company has reached its long term goal of having 70-80% of the portfolio under lease (by value).

As a result, the February to April rainfall outlook suggests wetter than usual conditions for the east of the country, with the active La Nina event largely contributing to this. However drier conditions throughout western Victoria and parts of South Australia can be expected. High streamflows are likely for the eastern mainland from January to March 2022. Daytime temperatures are likely to be warmer than average for much of the country, except for parts of the southeast coast. Warmer than average night time temperatures can be

CHANCE OF ABOVE-AVERAGE RAINFALL

February 2022 – April 2022

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east coast. Warmer than average night time temperatures can be
80
75
70
65 STORAGE LEVELS IN MAJOR DAMS
60
55 Total Murray Goulburn 90%
58%
50
45 Lake Eildon 66% 87%
40 Menindee Lakes 93%
35 20%
30 Lake Victoria 79%
61%
25
20 Hume 97%
63%
Dartmouth 89%
62%
Total Murrumbidgee 81% 94%
Blowering 81% 94%
Burrinjuck 81% 93%
2021 2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chance of exceeding median rainfall (%)
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MARKET UPDATE & OUTLOOK

December rainfall was 6% below average for Australia as a whole, with drier than average conditions in the south but wetter than average conditions in parts of the north and east of Australia. Soil moistures were above average in the east of the country, extending to South Australia and parts of Western Australia. Temperatures were warmer than average across parts of the MDB regions.

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

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 this factsheet or its contents, including for negligence.

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