Rivco (ASX:RIV), formerly Duxton Water sole purpose is to own government mandated water rights and leases these back to others, mainly agricultural users. It’s business is centred on water rights in the Southern Murray-Darling basin of NSW. A pretty useless business model really that arguably does not add much benefit to society.  Though maybe you could say the same for many real estate landlords, royalty businesses or lots of other stuff we do.

 With changing climate we all know to expect more frequent and more severe droughts.  Roughly speaking, Western NSW has had now four above average rainfall seasons in a row.  You don’t have to believe in the science of climate change, maybe just the seasonality of rainfall to appreciate there is a fair chance there will be another drought.   And of course, less rainfall means the water assets RIV controls are more in demand and more valuable.    

With RIV currently selling at a 10% discount to post-tax NTA with little debt and sending out a fully franked dividend of around 5%, then there must be a lot of seasonality deniers out there.  Unlike climate change deniers, these seasonality deniers have cunningly managed to operate under the social denouncement radar. I have never heard of anyone being publicly ridiculed or condemned by their fellow citizens for being a seasonality denier. Yet they clearly must exist.

There is a lot of crisis out there to choose from: the climate crisis, housing crisis, mental health crisis, obesity crisis - and more crisis’s piling up every month.  Then there is Scoonie’s bank account crisis, which no one seems to care much about.  

Maybe the easiest one to observe is the obesity crisis.  Just take a look around any Westfield shopping centre.   The strange thing is these fulsome people do not appear to be in any form of obvious distress and are clearly not suffering from a calorie deficiency. They all seem pretty content.    Maybe there isn’t an obesity crisis just a lot of fat people around. 

D20 - LIC - Listed Investment Company

Following settlement of entitlement sales during the quarter, the Company repaid $108.0 million of debt. At 30 June 2025, the Company has total debt of $18.0 million, with gearing of 5%.

On 24 April 2025, Duxton Water paid its 16th consecutive and increasing dividend of 3.71 cents per share. The Company was pleased to continue offering is Dividend Reinvestment Plan. During the quarter, the Company secured several new leases with new and existing counterparties to start 1 July 2025.

Lease yields have risen considerably over the past few months, with the Company seeking to achieve lease yields of approximately 5% p.a. Further to this, the Company acquired two small entitlement parcels at below fair market value during the quarter.

Debt Facility During the quarter, $135.2 million of water entitlement sales were settled. These sales were done at a premium to fair value. Sales proceeds of $108.0 million were used to reduce debt, leaving a drawn deb tbalance of $18.0 million at 30 June 2025. The Company has a Net Debt* to Water Ratio (“LVR”) of 5% at 30 June 2025, down from 28% at 31 March 2025.

The Company also lowered its maximum debt facility limit from $130.0 million to $40.0 million during the quarter, to reduce facility fees payable.

Info from June Monthly report -

Noted Dam levels are lower at the moment. Very dry season Jan to May

D20 - Return (inc div)   1yr: 17.36%   3yr: 1.64% pa   5yr: 6.97% pa

A good year.

Some random thoughts:

D20 could be attractive especially if we enter a dry couple of years. NSW/QLD has been wet but SA and VIC have been quite dry.

Bull

Decent discount to NTA and on buyback starting. Decent fully franked dividend. Regal could easily decide to take it over - they're acquiring every other asset manager under the sun at the moment.

"Government plans to recover up to 450 gigalitres of water entitlements. This equates to approximately 5% of water entitlements on issue in the southern Murray Darling Basin. However, this represents a much larger percentage of free float." 

Bear

Dividend needs profits to remain sustainable. Decision to start using forwards to hedge prices could limit any upside from dry conditions and higher water prices (shouldn't they have introduced this a few years ago when prices were high and had been for a while) not now when prices are low.

Do have some concerns about Grant Thornton being appointed as auditor given recent history though.

Last capital raising was a placement to instos only.

Also could be some more tax loss selling into June 30.

Neutral

Received cash from recent TWE call option exercise.

Typical Farming Cashflow problems here.. Tie the gate on with #8 Wire....

No Remuneration in the D20 Report??

Return (inc div)   1yr: -10.35%   3yr: 7.02% pa   5yr: 2.09% pa

Duxton also Farm:

Duxton Farms | Duxton Farms

Treasury Wine Estates (“TWE”) that it is exercising its Call Option to buy back 2,799 megalitres of NSW high security water entitlements from Duxton Water.

Duxton Water reported a net profit after tax of $2.8 million (half-year ended 30 June 2022: $4.4 million) for the half-year ended 30 June 2023. Despite the wettest conditions in 60 years, which resulted in extremely low water allocation prices, the Company’s leasing revenue and realisation of capital gains from rebalancing its permanent portfolio contributed to this positive result.

DUXTON WATER LIMITED (ASX:D2O) - Ann: Half Yearly Report and Accounts, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

****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. 

Liquidity TWE freed up its Assets.

Return (inc div)   1yr: 0.38%   3yr: 10.51% pa   5yr: 7.80% pa

Expected dry season into 2024, so will see how this pans out!

More about D20:

D2O | Duxton Water

and more

Water Market Outlook – April 2023 - DAFF (agriculture.gov.au)

Permanent Entitlement – Live Auction (waterexchange.com.au)

During July, the Company continued to monitor market conditions as entitlement values softened. Entitlement values across the southern Murray Darling Basin (“sMDB”) decreased by 3.8% on average in July 2023.

Many Australian farming businesses are currently dealing with challenging economic conditions (higher interest rates, higher input costs, and in some cases, lower commodity prices).

This has resulted in irrigators selling water entitlements on the market to generate cash to prepare for the upcoming farming season.

Return (inc div)   1yr: -3.66%   3yr: 7.97% pa   5yr: 8.44% pa

Regal Funds Management Pty Ltd and its associates. Votes: 10,936,353 Voting power: *7.18% 

DUXTON WATER LIMITED (ASX:D2O) - Ann: Becoming a substantial holder, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Filling up 'water tanks'

Duxton has recently had some distributions. So has impacted the $shares.

Had some announcements re. renounceable. share offer.ect.

3 July 2023 Bonus Issue of Options to Shareholders • 1:4 Bonus Issue of Options to all Eligible shareholders (at no cost). • $1.92 share strike price with an expiry date of 10 May 2025. • Bonus Option proposed to be quoted and tradable on the ASX under code (ASX:D2OO). • Funds to be used to expand the Company’s portfolio of water entitlements or reduce debt.

Return (inc div)   1yr: -6.77%   3yr: 6.92% pa   5yr: 6.84% pa

from here $1.50 to $1.80 may return 20%