Announcement PDF DUXTON WATER LIMITED JUNE 2024 HALF-YEAR REPORT PROUDLY SUPPORTING AUSTRALIAN IRRIGATORS AND FARMERS ACN 611 976 517 CONTENTS Key Highlights 6 Directors’ Report 12 Lead Auditor’s Independence Declaration 31 Statement of Profit or Loss and Other Comprehensive Income 32 Statement of Financial Position 33 Statement of Changes in Equity 34 Statement of Cash Flows 35 Condensed Notes to the Financial Statements 36 Directors’ Declaration 47 Independent Auditors Review Report 48 Corporate Directory 50 HALF-YEAR 2024 SNAPSHOT Duxton Water’s Investment Manager operates Australian agricultural businesses in viticulture, dried fruit, nuts, broadacre, bees, dairies, apples and water. In any given year, the Duxton businesses produce 15-20 different commodities and provide jobs for over 500 people living in rural communities. -3.88% $354M TOTAL SHAREHOLDER RETURNS (6 MONTHS) 1 WATER PORTFOLIO VALUE 2 1 Total portfolio return is based on NAV movements and includes franked dividends for the 6 month period to 30 June 2024. 2 Non-statutory value, adjusting for water entitlements held at cost in Financial Statements of $303.9m. At 30 June 2024, the Company’s statutory Post-Tax Net Asset Value is $1.26 per Share. $1.51 PER SHARE NET ASSET VALUE (POST TAX) 2 $1.39 87.3GL 61% TOTAL WATER OWNED LEASED PORTFOLIO PER SHARE SHARE PRICE HALF-YEAR KEY HIGHLIGHTS - Ed Peter Dear Shareholders, Duxton Water Limited (“Duxton Water” or “the Company”) has remained steadfast in its commitment to delivering value to shareholders through consistent dividends and capital growth in our diversified portfolio of Australian water entitlements. Since we listed Duxton Water in September 2016, we are pleased to have generated total post-tax NAV returns of +95% (or +9% annualised). This is a remarkable result considering some of the volatile and unpredictable events the world and Australia have seen over the last 8 years. In the last 6 months, Duxton Water has once again successfully met its dividend target for the period. The Company paid a fully franked dividend of 3.6 cents per share to shareholders in April 2024, marking the Company’s 14th consecutive and increasing dividend paid since November 2017. While the first half of 2024 presented some challenges, it has also highlighted the Company’s resilience. Despite unpredictable weather and ongoing economic pressures in many agricultural sub-sectors, the Company navigated considerable volatility in both the permanent and temporary water markets by actively managing its portfolio with foresight. By continuing to build out more reliable revenue streams, leases and forwards, and rebalancing our permanent water portfolio, the Company is pleased to deliver its strongest half-year net profit after tax of $8.3 million (1HY2023: $2.8 million). BALANCED PORTFOLIO Duxton Water concluded the 2023-2024 water year with 61% of its permanent portfolio under lease. This has helped mitigate exposure to the fluctuations in allocation prices observed in recent months. Significant rainfall during late spring and early summer across key irrigation areas led to a sharp decline in allocation prices at the beginning of 2024. While this impacted the yield of unleased high security entitlements, most of the portfolio was secured into leases and forward contracts, which helped to stabilise revenue streams. As a result, the Company achieved higher operational revenue when compared to the same period in 2023. DEBT Given the current interest rate environment, the Company has been using surplus cash to reduce its drawn debt. This provides the Company with increased flexibility to take advantage of strategic opportunities as they present. Duxton Water remains committed to using debt sensibly and continues to monitor fixed interest rate markets for hedging opportunities. As of June 2024, the Company’s Loan to Value ratio (“LVR”) stands at 29%, well below the Company’s 40% max LVR covenant. The Company successfully renegotiated debt terms during the period, which have remained very competitive due to the nature of the Company’s assets and operating business. PAGE 6 DUXTON WATER LIMITED HALF-YEAR REPORT DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 7 HALF-YEAR KEY HIGHLIGHTS 2024 DIVIDENDS During the period, Duxton Water paid a fully franked dividend of 3.6 cents per share to shareholders on 26 April 2024. This was in line with the previously stated dividend target. We were pleased to once again offer shareholders the opportunity to participate in the Dividend Reinvestment Plan (“DRP”). Under the DRP, shareholders were entitled to receive additional shares at a 5% discount. The Board of Duxton Water is pleased to formally declare a fully franked dividend of 3.7 cents per share, to be paid to shareholders on 25 October 2024. NET ASSET VALUE (NAV) PERFORMANCE Duxton Water’s post-tax NAV declined by 11 cents, from $1.62 per share to $1.51 per share in the six months ending 30 June 2024. When accounting for the 3.6 cents per share fully franked dividend paid to shareholders in April 2024, the NAV return over this period stands at -3.88%. This outcome primarily reflects a decrease in entitlement values within the portfolio. In the six months to 30 June 2024, entitlement values in the southern Murray Darling Basin (“sMDB”) declined by approximately 3%. This decline was largely seen on high security entitlements. Most general security/low reliability entitlements appreciated in value during this period, providing some offset to the overall decrease. Entitlement values have been on a downward trajectory since March 2023, a trend that persisted in the first half of 2024. The agricultural sector has faced numerous challenges in recent years, including unpredictable weather patterns, rising input costs, and high capital costs. Additionally, certain sectors have also been impacted by unfavourable commodity prices. These economic pressures have resulted in a surplus of entitlements being sold on the market, placing downward pressure on prices. SINCE INCEPTION 4.00 Cents per share 3.50 3.00 2.9 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 With that being said, in July 2024, entitlement values rebounded by 3%, as shown by an increase in the Aither Entitlement Index (“AEI”). This marked the most significant monthly gain since February 2022. We believe this recovery was driven by greater certainty around government water buybacks, a return to more normal rainfall patterns, and the commencement of the 2024-2025 water year. Further information can be found in the latest D2O monthly report. At 30 June 2024: • Share Price: $1.39 per share • Non-statutory Post-tax NAV: $1.51 per share 1.50 • Non-statutory Pre-tax NAV: $1.60 per share 1.00 • Statutory Post-tax NAV: $1.28 per share 2.50 2.00 2.3 2.4 2.5 2.6 2.7 2.8 0.50 Dividend paid PAGE 8 DUXTON WATER LIMITED HALF-YEAR REPORT Dec-24 Jun-24 Dec-23 Jun-23 Dec-22 Jun-22 Dec-21 Jun-21 Dec-20 Jun-20 Dec-19 Jun-19 Dec-18 Jun-18 Dec-17 0.00 Dividend announced DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 9 HALF-YEAR KEY HIGHLIGHTS 2024 HALF-YEAR KEY HIGHLIGHTS 2022 OUTLOOK With the start of the 2024-2025 water year on 1 July 2024, we have entered the season with a well-positioned allocation portfolio. In the months leading up to the new water year, we focused on optimising our existing allocation holdings and carefully managed carryover provisions to maximise our position. This strategic preparation ensures that we are well placed to manage climate variability risks and capitalise on opportunities as they arise, providing a strong foundation for the year ahead. Looking forward, I remain confident in our team’s ability to actively manage our diversified portfolio of Australian water entitlements. I want to reaffirm that we have a well-defined strategy in place, positioning us to effectively navigate and capitalise on opportunities in the year ahead. I would like to express my gratitude to our shareholders for their continued support, and to our Board and management team, who have all made significant contributions towards achieving our targets. Kind regards, Ed Peter Chairman PAGE 10 DUXTON WATER LIMITED HALF-YEAR REPORT DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 11 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDING 30 JUNE 2024 The Directors of Duxton Water Limited submit herewith the Directors’ report, the financial report of Duxton Water Limited (“the Company”) or (“Duxton Water”) for the half-year ended 30 June 2024 and the Independent Auditor’s Review Report thereon. In order to comply with provisions of the Corporations Acts 2001, the Directors’ Report as follows: DIRECTORS The names of the Directors of the Company that held office during and since the end of the interim period are: Mr Edouard Peter Mr Stephen Duerden Mr Dirk Wiedmann Mr Dennis Mutton Dr Vivienne Brand Mr Brendan Rinaldi The above named Directors held office since the start of the financial year unless otherwise stated. The office of Company Secretary is held by Mrs Katelyn Adams. PRINCIPAL ACTIVITIES There has been no change in the principal activities of the Company. The Company has continued to acquire and manage a portfolio of Australian water entitlements primarily focused in the southern Murray Darling Basin. Income is derived through the provision of water supply solutions to mainly primary producers through a combination of long-term lease arrangements, and the sale of temporary water allocations to support Australian agricultural production. There were no significant changes in the nature of the activities of the Company during the period. PAGE 12 DUXTON WATER LIMITED HALF-YEAR REPORT DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 13 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 REVIEW OF OPERATIONS OPERATIONAL PERFORMANCE • Duxton Water delivered a half-year net profit after tax of $8.3 million for the period ended 30 June 2024 (1HY2023: $2.8 million). • The Company paid a fully franked dividend of 3.6 cents per share to shareholders in the first half of 2024 (1HY2023: 3.4 cents per share). • As at 30 June 2024, Duxton Water’s portfolio comprised of 87.3 gigalitres of water entitlements, with a fair market value of $354 million. WATER PORTFOLIO DIVERSIFICATION The lease portfolio includes a natural turnover each year as existing leases expire and new leases begin. The Company has been working with current customers on lease renewals and has new leases in the pipeline for the coming year. 39% 61% From 1 July 2024, the Company’s leased percentage has decreased to 39%. This lower leased percentage is a function of continued lower allocation prices and reduced demand for long-term leases from irrigators. The Company aims to strengthen its leasing percentage as weather conditions normalise. Over the last 6 months: HY2024 HY2023 Difference Share Price $1.39 $1.70 -31 cents NAV per share (post-tax) 1 $1.51 $1.80 -29 cents 3.6 cents 3.4 cents +0.2 cents $354m $401m -$47m WATER SECURITY BREAKDOWN Water Owned (GL) 87.3GL 88.8GL -1.5GL 11% Leased % 61% 53% +8% Dividends Paid Water Portfolio Valuation ($m) 1 Leased The Company’s long-term water leases provided a stable revenue stream in another year of high water availability. The Company’s leases continue to provide a hedge against the persistent lower allocation prices. The Company maintained a leased percentage of 61% throughout the first half of the year. By doing so, it has reduced exposure to lower allocation prices. Dam storage levels remain above their long-term averages, and although some areas of the Basin have been drier than usual, variable rainfall continues to be seen across major catchment areas. Unleased 15% 3% The Company has recorded its highest half-year net profit after tax since inception. This result was largely underpinned by an increase in gain on entitlement sales. This increase was primarily due to the sale of 2,799 ML of NSW high security water entitlements to Treasury Wine Estates (“TWE”). As announced previously, TWE exercised its call option over these entitlements in April 2024. Although the cash net profit/loss recorded on this transaction was immaterial, the Company realised a significant accounting profit due to inventory accounting treatment. 69% Murray 2% Murrumbidgee Goulburn Lachlan Mallee 21% 77% HS Looking forward, the Company has locked in a material percentage of its unleased water allocations to forward contracts for delivery in the 2024-2025 water year. Forward allocation contracts provide visibility to income, which assists with offsetting a drop in leasing revenue. From 1 July 2024, Duxton Water’s annualised leasing revenue is expected to start at $5.5 million, compared to $7.6 million at the same time last year. The annualised revenue from forward allocation contracts for the upcoming water year is expected to be approximately $1.7 million, supporting the difference in leasing revenue. Long-term water security has become topical amongst irrigators of late, as weather outlooks remain uncertain and the Federal Government announces updates on buybacks. Proactive irrigators are beginning to think forward with the intention of locking in long-term water security ahead of upcoming water years. The Company continues to emphasise the importance of irrigators having a well-defined water strategy in place as Australia has a variable climate, with the tendency to experience extremes over the course of a climatic cycle (e.g. 10 years). ENTITLEMENT VALUE BY REGION In June 2024, the Company contracted a range of forward allocation sale contracts with irrigators for delivery in the 2024-2025 water year. This strategy allows D2O to hedge against lower spot prices should they present in the year ahead. ACTIVE MANAGEMENT OF LONG-TERM WATER LEASES Duxton Water continued to actively manage its portfolio of water leases. The Company’s leased percentage at 30 June 2024 was 61%, compared to 53% at the same time last year. 2% GS Groundwater 1. Non-statutory value, adjusting for water entitlements held at cost in Financial Statements of $303.9m. At 30 June 2024, the Company’s statutory Post-Tax Net Asset Value is $1.26 per Share. DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 15 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2023 PORTFOLIO SUMMARY AT 30 JUNE 2024 Duxton Water owns and manages a diversified portfolio of Australian water entitlements across 19 different entitlement types and zones. At 30 June 2024, Duxton Water’s portfolio is valued at $354 million1 (30 June 2023: $401 million). The decrease in portfolio valuation is a reflection of two main drivers. Firstly, TWE executed its call option in April 2024 to buy back 2,799ML of NSW Murray high security entitlements valued at approximately $25.2 million. This was part of the acquisition and leaseback that was announced to the market on 3 July 2023. Secondly, water entitlement values across the sMDB softened by approximately 3% (AEI) during the period, leading to a decrease in value of the Company’s water entitlement portfolio. WATER PORTFOLIO CHANGE IN MARKET VALUE (5 YEARS) $450 $400 $71 $21 $354 $350 -$48 $315 $300 $-5 $250 $200 $150 $100 $50 $0 Jun 20 Δ to Jun 21 Δ to June 22 Δ to Jun 23 Δ Jun 23 Jun 24 Note: This chart does not take into account water entitlements purchased or sold, and is solely intended as a representation of the scale of the Company’s activities. 1. Non-statutory value, which adjusts statutory water entitlements held at cost less accumulated impairment of $303.9m in Financial Statements to fair market value of $354m. PAGE 16 DUXTON WATER LIMITED HALF-YEAR REPORT DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 17 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 ENTITLEMENT TYPE HELD 31/12/2023 ML CHANGE 30/06/2024 VIC 1A Goulburn HR 13,564 (450) 13,114 VIC 1A Goulburn LR 1,401 - 1,401 VIC 1B Boort HR 376 - 376 VIC 3 Goulburn HR 421 - 421 VIC 6 Murray HR 5,817 - 5,817 VIC 6 Murray LR 313 - 313 VIC 6B Murray HR 1,344 - 1,344 VIC 7 Murray HR 7,337 - 7,337 NSW Murray 10 HS 3,010 - 3,010 NSW Murray 10 GS 14,491 - 14,491 NSW Murray 11 HS 9,249 (2,599) 6,650 NSW Murray 11 GS 7,225 - 7,225 NSW Murray 11 Supp 83 - 83 NSW Murrumbidgee 13 HS 2,390 - 2,390 NSW Murrumbidgee 13 GS 8,822 (1,500) 7,322 NSW Lachlan Valley – Jemalong Irrigation GS 2,660 - 2,660 NSW Lachlan Valley – GS 4,504 - 4,504 SA Murray HS 4,901 1,348 6,248 SA Mallee Prescribed Wells Area – Parilla Red Zone 500 - 500 SA Mallee Prescribed Wells Area – Parilla Green Zone 846 1,200 2,046 90,453 (3,201) 87,252 Total Breakdown by zone of permanent water entitlements held by the Company at 30 June 2024. PAGE 18 DUXTON WATER LIMITED HALF-YEAR REPORT DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 MARKET OVERVIEW MDBA ACTIVE STORAGES - JUNE 2000 TO PRESENT During the first half of 2024, the sMDB experienced unpredictable weather conditions, resulting in price fluctuations in the allocation market. 9,000 8,000 In January 2024, the Basin saw near-record rainfall, leading to flooding in some areas. Despite the El Niño declaration that was made by the Bureau of Meteorology (“BOM”) in September 2023, the southern Basin had a wet spring and summer, reducing the demand for allocation water during the peak irrigation season. As a result, there was a significant drop in allocation prices in early 2024. 7,000 6,000 5,000 4,000 The BOM confirmed that the El Niño Southern Oscillation (“ENSO”) returned to neutral conditions in April 2024. However, unexpectedly dry and warmer conditions persisted during most of Autumn. This brought some stability to allocation prices in the final months of the 2023-2024 water year. That being said, given demand during this time of year is typically low, these conditions did not have a material impact on prices. 3,000 2,000 The Board of Duxton Water remains confident in the value of water as an investment class. The strong demand and supply dynamics supporting water entitlement prices remain unchanged. Since the Company’s inception in September 2016, water entitlement values have achieved a compound annual growth rate of 10% (AEI). The Company remains committed to actively managing its portfolio of entitlements to deliver long-term value for shareholders. 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2013 Long-term Average 2014 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Maximum Storage The entitlement markets experienced continued volatility over the past six months, extending the downward trend from 2023. This decline likely reflects the economic challenges faced by various agricultural sub-sectors. Market activity has been subdued, with motivated sellers continuing to be present in the market. Anticipation of Government buybacks also influenced market behaviour, with many participants being hesitant to transact until more substantial updates were provided by the Government, which were provided in mid-July 2024. Active Storage DAILY INFLOWS TO THE MURRAY DARLING BASIN 280,000 260,000 240,000 220,000 200,000 180,000 Megalitres (ML) Overall, the entitlement market contracted by approximately 3% from 1 January 2024 to 30 June 2024. However, in July 2024, the market rebounded, largely offsetting the decline of the previous six months. July 2024 saw the largest monthly increase in water entitlement values since February 2022, increasing by 2.6% during the month (AEI). 2001 - The new water year commenced on 1 July 2024. Lower Murray allocation prices began trading the year at $140/ML but then dropped to $100/ML during July, before recovering to $150/ML by early August 2024. Higher allocation prices compared to the same time last year have resulted in an increase in demand for long-term leases. 2000 1,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1 Jun 1 Jul 1 Aug 2020-21 1 Sep 2021-22 1 Oct 1 Nov 2022-23 1 Dec 2023-24 2024-25 1 Jan 1 Feb Long term average SYSTEM INFLOWS AND STORAGE LEVELS At 30 June 2024, dam storage levels in the Murray Darling Basin (“MDB”) remained high, with overall MDB storages closing the water year at 78%. This represents a 16% decrease from the year prior when overall MDB storages closed at 30 June 2023 at 94%. At 30 June 2024, storages in the northern and southern Basins were at 68% and 79% respectively. At the same time last year, the northern and southern Basins at 93% and 94% respectively. Compared to the previous seasons, there has been higher water drawdowns from dam storages due to drier and warm conditions. In addition, there have been multiple months of below average river inflow conditions. DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 21 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 WEATHER OUTLOOK The weather forecast for Spring 2024 suggests warmer than usual temperatures across much of Australia and typical seasonal rainfall for most of eastern and South Australia. Western Australia, the Northern Territory, and parts of Victoria are likely to experience belowaverage rainfall. In the sMDB, rainfall is likely to be close to the mean, and below average across several catchments in Victoria1. The ENSO outlook is currently at La Niña Watch, indicating a 50% chance of a La Niña event developing. The BOM forecasts that ENSO is likely to remain neutral until at least early Spring. Five out of seven international climate models suggest that the ENSO will remain neutral for the remainder of 2024, while two models are suggesting that a La Niña may develop later in 2024. La Niña typically increases the chance of wetter conditions in eastern, central, and northern Australia. The Indian Ocean Dipole (“IOD”) is currently neutral with all seven international climate models predicting the IOD to remain neutral for the remainder of 20242. 55 50 45 40 35 30 25 CHANCE OF EXCEEDING THE MEDIAN RAINFALL FOR SEPTEMBER TO NOVEMBER 2024 20 CHANCE OF EXCEEDING MEDIAN RAINFALL(%) 65 In late 2023, legislation was passed to extend the MDBP’s deadline to 31 December 2027. The extension was put in place given the lack of progress towards this 450 GL target since the Basin Plan was first put in place in 2012. At 30 June 2024, progress towards this target was only 27.5 GL. At the same time as extending the deadline, the Government removed the cap on water purchases, allowing for large-scale water entitlement buybacks to recommence. In January 2024, the federal Government released a draft framework outlining the recovery of the 450 GL, detailing three main programs set to run from 2024 to 2027. These are the Resilient Rivers, Sustainable Communities, and Voluntary Water Purchases programs. The Resilient Rivers program will focus on infrastructure projects, rule changes, and water partnerships. The Sustainable Communities program aims to provide adjustment assistance to communities affected by water buybacks. Lastly, the Voluntary Water Purchases program will involve the Government directly purchasing water entitlements from willing sellers. In July 2024, the Government released the final framework and announced the first round of voluntary water entitlement buybacks. The Government plans to acquire 70 GL of water entitlements through an open tender process. This tender will run from 15 July 2024 to 11 September 2024, with submissions being evaluated between September and November 2024. 80 70 GOVERNMENT WATER BUYBACKS In the first half of 2024, there have been significant developments regarding the Australian Government’s plan to recover 450 GL of water entitlements. This is a key target of the Murray Darling Basin Plan (“MDBP”) aimed at increasing water holdings for environmental purposes. The initial water purchase program will target the southern connected Basin, focusing on the Murrumbidgee, Murray, and Ovens regions. Most of these regions are known for their high concentration of permanent horticulture developments. 70 65 55 50 45 40 35 30 CHANCE OF EXCEEDING THE MAXIMUM TEMPERATURE FOR SEPTEMBER TO NOVEMBER 2024 25 20 CHANCE OF EXCEEDING MEDIAN MAX TEMP. (%) 80 1. Bureau of Meteorology - Long-Range Forecast - Issued 15 August 2024. 2. Bureau of Meteorology - Climate Driver Update - Issued 12 August 2024. DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 23 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 FINANCIAL OVERVIEW During the period ended 30 June 2024, the Company: • Paid a fully franked dividend of 3.6 cents per share in April 2024, in line with previously stated dividend guidance. • Recorded its highest ever half-year net profit after tax of $8.3 million. • Reduced drawn debt during the period by $11 million, enhancing balance sheet flexibility. • Closed the year with a post-tax non-statutory net asset value of $1.51 per share1. Over the last 6 months, water entitlement prices have continued to soften, contributing to a decrease in the Company’s post-tax NAV¹. As of 30 June 2024, the Company’s post-tax NAV¹ based on Fair Market Value was $1.51 per share, compared to $1.62 per share as of 31 December 2023. Despite this, the Company maintained a strategic and proactive approach to managing its portfolio of water entitlements. In the first half of 2024, the Company successfully realised a $15.0 million capital gain from the sale of permanent water entitlements. As of 30 June 2024, the Company is carrying $47 million (or $0.30 per share) in unrealised capital gains on the water portfolio. These unrealised gains are excluded from the statutory financial statements due to the application of Australian Accounting Standards. The statutory NAV of the Company, in accordance with Australian Accounting Standards (which excludes unrealised capital gains), is $1.28 per share at 30 June 2024, up from $1.26 per share at 31 December 2023. VALUATION EXPERT The portfolio continues to be valued on a dry equivalent basis by Aither Pty Ltd (‘Aither’). Aither employs a market valuation approach to determine a Fair Market Value, which draws on publicly available water trade data from the relevant state water registers as well as analysis of trade data obtained from market intermediaries to calculate a dollar per ML volume weighted average price for each entitlement and allocation type. The Fair Market Value is not in accordance with the recognition and measurement requirements of the Australian Accounting Standards in relation to the accounting treatment of water assets (intangible assets). Therefore, increases in the Fair Market Value of water assets are not reported in the statutory accounts. For financial statement reporting purposes, in accordance with the basis of preparation described in Note 2 of the financial statements, the Company’s permanent water entitlements are carried at cost less any accumulated impairment losses. Temporary water allocations related to these entitlements are recognised in the Statement of Financial Position at zero cost initially. Purchased temporary water allocations are recognised at cost when acquired. Presented below is a summary of the Company’s NAV on a Fair Market Value basis compared to the basis of preparation described in Note 2 of the financial statements. 1. Non-statutory value, which adjusts statutory water entitlements held at cost of $303.9m to fair market value of $354m. PAGE 24 DUXTON WATER LIMITED HALF-YEAR REPORT DUXTON WATER LIMITED HALF-YEAR REPORT PAGE 25 DIRECTORS’ REPORT FOR THE HALF-YEAR ENDED 30 JUNE 2024 Company Statement of Financial Position $’000 Fair Market Value* $’000 (non statutory) Variance $’000 Permanent water entitlements 303,874 354,052 50,178 Temporary water entitlements - 37 37 Net current and deferred tax assets 627 (13,377) (14,004) Net other current assets 1,510 1,510 - Net non-current liabilities (105,500) (105,500) - TOTAL NET ASSETS 200,511 236,722 36,211 $1.28 $1.51 $0.23 Company Statement of Financial Position $’000 Fair Market Value* $’000 (non statutory) Variance $’000 Permanent water entitlements 303,210 401,257 98,047 Temporary water entitlements - 8 8 (1,105) (30,521) (29,416) Net other current liabilities (30,068) (30,068) - Net non-current liabilities (128,500) (128,500) - TOTAL NET ASSETS 143,537 212,176 68,639 $1.22 $1.80 $0.58 30 June 2024 ASSETS NET ASSET VALUE PER SHARE 30 June 2023 ASSETS Net current and deferred tax assets NET ASSET VALUE PER SHARE * Fair Market Value is prepared in accordance with the Company’s monthly NAV statement. The water portfolio is evaluated on a monthly basis by the Company’s independent valuer “Aither Pty Ltd”. Fair Market Value is a non-IFRS measure that is not reviewed or audited by the Company’s auditor. Further detail by reported segment is disclosed in Note 5 of the Financial Statements. PAGE 26 DUXTON WATER LIMITED HALF-YEAR REPORT DIVIDENDS Duxton Water paid a fully franked dividend of 3.6 cents per share to shareholders on 26 April 2024. This was the Company’s 14th consecutive dividend paid since November 2017. In addition, all eligible shareholders were given the opportunity to participate in the Company’s DRP. Participants in the DRP were eligible to receive new shares at a 5% discount. On 24 April 2024, Duxton Water entered into an agreement with Petra Capital to underwrite $4.5 million of the DRP shortfall. The Board saw this as an excellent opportunity to broaden the shareholder base and improve balance sheet flexibility. The Board is pleased to formally announce a fully franked dividend of 3.7 cents per share, to be paid on 25 October 2024. The Company will once again offer shareholder