12 November 2019 - Monthly Update - October 2019
Duxton Water’s NAV at 31 October 2019 was $1.72 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 $1.95. NAV is calculated based on an independent monthly portfolio valuation performed by Aither Pty Ltd (“Aither”).
At 31 October 2019, Duxton Water Ltd is invested in approximately ~$321.3 million of water assets with the remainder of the portfolio held in cash and net current assets. The Company has approximately 2,032ML ($10.6 million) of water entitlements in its acquisition pipeline at 31 October 2019.
The uplift in the value of the Company’s water assets portfolio is reflective of market pricing flowing through to the independent valuation of the portfolio and a number of strategic entitlement acquisitions through October. Irrigators collectively own the vast majority of entitlements on issue across the SMDB and as such continue to be the greatest beneficiaries of increases seen in water entitlement values.
The Company funded these strategic acquisitions through an extension to its secure loan facility with NAB.
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 and at 31 October 2019, the Company holds approximately 80,642 ML of water entitlements across 20 different asset types and classes. During the month of October, the Company contracted and settled a number of strategic acquisitions including 3,000ML of NSW Murray high security entitlement. Having been previously used for industrial purpose, the acquisition of these assets will support Duxton Water’s capability to deliver further water supply to the Company’s agricultural partners.
Aither Pty Ltd values the Duxton Water Ltd portfolio on a monthly basis on a dry (without allocation) equivalent basis. There were notable movements in values and are shown below:
- Up 19.4% in NSW Murray 11 HS (~20.7% of portfolio)
- Up 7.7% in NSW Murray 10 HS (~6.8% of portfolio)
- Up 7.5% in Vic 6 Murray HR (~11.0% of portfolio)
- Up 7.0% in Vic 1A Goulburn HR (~12.3% of portfolio)
- Up 6.9% in Vic 7 Murray HR (~11.4% of portfolio)
- Up 4.8% in SA 12 Murray HS (~8.2% of portfolio)
There was no change in northern pricing.
DIVIDENDS & BUY BACK
On 10 September 2019, the Company announced a share buyback. As of 31 October 2019, the Company has purchased 762,805 shares at an average price of $1.40/share. The Board believes the purchase of the Company’s shares at the current discount to NAV is in the interest of all shareholders. The Board maintains its commitment to providing our shareholders with a bi-annual dividend and has reaffirmed a target of paying a fully franked final dividend of 2.8 cents ($0.028) in March 2020. With the increase in forward-looking lease revenue, the Company is now targeting a fully franked interim dividend of 2.9 cents ($0.029), payable in September 2020.