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DUXTON WATER LIMITED

IPO PRESENTATION 2016

DISCLAIMER

This presentation is prepared by Duxton Capital (Australia) Pty Ltd [ACN: 164 225 647;

AFSL no. 450218] (“DC Australia”) and is only made available to “professional investors”,

“sophisticated investors” and other persons not requiring a regulated disclosure

document pursuant to Chapter 6D of the Corporations Act 2001 (Cth) (“Act”)

(“Permitted Investors”). DC Australia is the Investment Manager of Duxton Water

Limited [CAN 611 976 517] (“Duxton Water”). The content of this presentation is

intended only as a source of general information for Permitted Investors and is not the

basis for any contract to deal in, or an offer of, any security. Information from this

presentation must not be issued in any jurisdiction where prohibited by law and must

not be used in any way that would be contrary to Australian law or regulation.

Specifically, this presentation shall not be construed as the making of any offer or

invitation to anyone in any jurisdiction in which such offer is not authorised or in which

the person making such offer is not qualified to do so or to anyone to whom it is

unlawful to make such an offer. Particularly, this presentation and the information

contained in it does not constitute an offer to sell, or the solicitation of an offer to buy,

any securities in the United States or to any US person.

This presentation is not intended to contain financial product advice as defined in the

Act. This presentation is a statement of facts and is for general information only. This

presentation is not intended to influence any person in making a decision in relation to

investing in Duxton Water. This presentation does not take into account the investment

objectives, financial situation or needs of any particular investors. No person should

base their decision to invest in Duxton Water solely on the information in this

presentation. Permitted Investors should consider the suitability of an investment in

Duxton Water in view of their financial position and investment objectives and needs

and should consult their professional advisors accordingly.

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 forecasts and/or sensitivity analyses

provided are based upon DC Australia’s opinion of the market as at the date of this

presentation and are subject to change, dependent on future changes in the

market. Any prediction, projection or forecast on the economy, stock market, bond

market, any commodity 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 interests in the securities

discussed in this presentation and any derived income may fall as well as rise. Past

performance or any prediction or forecast is not necessarily indicative of future

performance. Returns are not guaranteed.

The securities of Duxton Water referred to in this presentation are not obligations of,

deposits in, or guaranteed by DC Australia, Duxton Water or any of their respective

affiliates.

All third party data (such as MSCI, S&P and Bloomberg) are copyrighted by and

proprietary to the provider. Although the information was compiled from sources

believed to be reliable, no liability for any error or omission is accepted by DC Australia,

Duxton Water or their respective affiliates or any of their respective directors or

employees. The information and opinions contained in this presentation may also

change.

Copyright protection exists in this presentation. The contents of this presentation are

strictly confidential and it may not be disclosed, reproduced, distributed or

published by any person for any purpose without DC Australia’s written consent. To the

extent permitted by applicable law, none of DC Australia or Duxton Water, their

respective affiliates, or any officer or employee of DC Australia or Duxton Water accepts

any liability whatsoever for any direct or consequential loss arising from any use of this

presentation or its contents, including for negligence.

Advisors

No member of DC Australia or Duxton Water, its respective related bodies corporate,shareholders or affiliates, nor any of their respective officers, directors, employees,affiliates, partners, representatives, agents or advisers (including Taylor Collison Limitedand Morgans Financial Limited and any of their respective affiliates, related bodiescorporate (as that term is defined in the Corporations Act 2001 (Cth) or their respectivedirectors, employees officers and representatives) (each a “Limited Party”) guarantees

or makes any representations or warranties, express or implied, as to or takesresponsibility for, the accuracy, reliability, completeness or fairness of the information,opinions and conclusions contained in this presentation (including by omission). NoLimited Party represents or warrants that this presentation is complete or that itcontains all information about the Fund that a prospective investor or purchaser mayrequire in evaluating a possible investment in the Fund. To the maximum extentpermitted by law, each Limited Party expressly disclaims any and all liability, including,without limitation, any or implied, contained in, arising out of or derived from, or foromissions from, this presentation including, without limitation, any financialinformation, any estimates or projections and any other financial information derivedtherefrom. Readers agree, to the maximum extent permitted by law, that they will notseek or sue or hold the Limited Parties liable, and will not take any action they mayotherwise have against each Limited Party in any respect in connection with thispresentation or its contents and releases each Limited Party from such claims.Furthermore, without limitation to the foregoing, neither the receipt of thispresentation by any reader nor any other matter shall be deemed to created or give riseto a fiduciary, agency or similar relationship between each Limited Party and any reader.

Financial data

All references in this presentation to “$” are to Australian currency, unless otherwisestated. A number or figures, amounts, percentages, estimates, calculations of value andfractions in this presentation are subject to the effect of rounding. Accordingly, theactual calculation of these figures may differ from the figures set out in thepresentation.

Acceptance

The information in this presentation remains subject to change without notice. Noresponsibility or liability is assumed by any member of DC Australia, Duxton Water or itsrespective advisers for updating any information in this presentation or to inform anyreceipt of any new or more accurate information or any errors or mis-descriptions ofwhich any member of DC Australia, Duxton Water or its respective advisers may becomeaware. By accepting, accessing or reviewing this document you acknowledge and agreeto the terms set out above.

|||||||||||||||||| Duxton Water Limited | 2

1 Key IPO Details

2 Investment Thematic

3 Overview of Duxton Water

4 Investment Strategy

5 Appendices


KEY IPO DETAILSKEY INFORMATION

Securities OfferedShares and one free Option for every Share issued

Application Price per Share $1.10 per Share

Total number of Shares and Options available under the Offer

90,000,000 Shares90,000,000 Options

Gross proceeds from the Maximum Offer $99,000,000

Exercise price of each Option$1.10 exercisable on or before 31 May 2018

Total number of Shares and Options on issue on Completion of the Offer*

116,056,680 Shares116,056,680 Options

Market Cap* $127 million (pre options)

Proposed ASX CodeD2O (Shares)D2OO (Options)

Investment Universe** Australian Water Entitlements

Investment Manager Duxton Capital (Australia) Pty Ltd

*Based on Maximum Subscription. Key Offer Statistics for the Minimum, Maximum and Maximum Subscription

with Oversubscriptions are detailed in the Duxton Water Limited Prospectus.

**Duxton Water may hold small land holdings from time to time when the purchase of land is required for the

purchase of the Water Entitlement associated with it.|||||||||||||||||| Duxton Water Limited | 4

USE OF FUNDS

Total funds raised from IPO* $99 million

Anticipated use of funds*

Costs of the Offer $3.9 million

Purchase of Water Entitlements $90.9 million

Repayment of Debt $3.6 million

Working Capital $0.6 million

BOARD MEMBERS

Ed Peter Chairman

Stephen Duerden Director

Dirk Wiedmann Independent Director

Peter Michell Independent Director

MAJOR SHAREHOLDERS PRE IPO POST IPO*

Duxton Vineyards# 100% 22.45%

Existing Holders 26.05m Shares

#Duxton Vineyards owns 100% of the shares in Duxton Vineyards Water.

SUMMARY OF FINANCIALS AND TARGETED RETURNS

KEY OBJECTIVES

The key objectives of Duxton Water are:

• Providing visible revenue streams and dividend streams as high asprudently possible and franked to 100% or the maximum extent possible

• Delivering investors with optimal long terms gains on their investedprincipal

• Achieving reliable yields on behalf of investors

• Establishing a portfolio which is diversified across Water Entitlementtypes, security classes and geographical regions within the MDB

• Maintenance of principal invested

• A long term buy and hold strategy with the purchase and sale of assets asrequired to ensure that the portfolio is positioned to capitalise on growthopportunities

DIVIDENDS AND FEES

Anticipated dividends

• Duxton Water intends to pay dividends twice yearly, with one dividenddeclared within the first 12 months of listing.

• Dividends are intended to be fully franked to 100% or the maximum extentpossible provided the Company has sufficient retained profits and frankingcredits available and it is prudent from a capital position to do so.*

Management fee

• Duxton Capital (Australia) as the Investment Manager, will receive amanagement fee of 0.85% p.a. of the net asset value (NAV) of theCompany.

• A performance fee (subject to a high watermark) of:o 5% p.a. on annual returns above 8%; ando 10% p.a. on annual returns above 12%.

• The Investment Manager will also be paid for reimbursable costs.

*This is not intended to be a forecast; it is merely an investment objective of the Company.

The Company may not be successful in meeting this objective.


INVESTMENT PROPOSITION

AN INVESTMENT WITH A REAL UNDERLYING ASSET

An opportunity to invest in Australian Water Entitlements

VISIBLE REVENUE STREAM Returns are expected to be generated via Water Entitlement leases ranging from 3 to 10 years, and annual licensesentered into with primary producers. Existing leased portfolio of $33.7m returning a yield of 5.9%

TARGET OF ZERO DEBT Duxton Water is expected to have zero debt upon listing

LOW MANAGEMENT FEE STRUCTURE

Managed by Duxton Capital (Australia) with a fee structure that is highly competitive

DIVIDENDS Duxton Water intends to pay dividends to Shareholders that are as high as prudently possible and are franked to100% or the maximum extent possible

LOW CORRELATION Historically, water assets have demonstrated low correlation to stocks and bonds

ESG FOCUSED Duxton Water will assist in the development of Australia’s water markets, assisting water to be appropriately valuedand utilised.


1 Key IPO Details




5 Appendices


WHY WATER?

A growing demand for food caused by such factors as:

- Increasing demand for food, fibre and energy,

- Rising adoption of technology improving competitiveness,

- Developing promotion of water trading, and

- Rising demand for water for urban consumption.

• A constrained supply of food due to such factors as:

- Impacts of climate change,

- Government buybacks of Water Entitlements for environmental purposes (in Australia),

- Increased investment in water infrastructure, and

- Increased investment in alternative water sources.

• The increasing scarcity of water, coupled with the rising demand forit is likely to be a key economic driver underpinning the water market.

• Historically, water as an asset has demonstrated low correlationto traditional asset classes, such as shares and bonds.

• Over the previous four years, Water Entitlements in Australiahave produced an average median yield of 6.62% p.a.


WHY AUSTRALIAN WATER?

Australian AgricultureWater is a finite resource and an essential input cost in Australia's agricultural sector. Agriculturalproduction currently consumes approximately 60% of Australia’s total water consumption

Global Demand Water demand is expected to increase as demand for food grows, underpinned by an increasingglobal population, urbanisation and rising incomes, leading to a shift in diets and increaseddemand for crops for non-food uses.

Water ScarcityFuture water availability is likely to be constrained by a growing global population, the impacts ofclimate change and government buybacks of water entitlements for environmental purposes.

Sophisticated Regulations and Trading

Australia has an established market for water trading through a number of brokers and tradingplatforms.


The increasing scarcity of water, coupled with the rising demand for it, will be the key economic driver underpinning the water asset market.

The MDB is frequently referred to asAustralia’s food bowl, generatingapproximately 39% of the country’sgross value of irrigated agriculturalproduction’ and using 66% of Australia’stotal water used for irrigation.

The water trading zones across theMurray-Darling Basin incorporate SouthAustralia, New South Wales and Victoria.

Due to its interconnected water systems,the southern MDB region accounts forapproximately 80% of Australia’s watermarket trading activity.

Murray Darling Basin Authority, 2006National Water Commission, 2011Australian Bureau of Statistics, 2013

INTERSTATE WATER

TRADING ZONES AUSTRALIA’S

FOOD BOWL

Produced by the Murray-Darling Basin Commission, October 2007

Note: Representation of the Interstate Water Trading Zones are

indicative only.

YIELD

• The graph below demonstrates the yields achieved between August 2012 and April 2016 on water assets in Zone 11 HS, Zone 10 HS, Zone 7 HR and Zone 6 HR.

• Over this period and across the four zones below, yields have averaged 6.62%.

• The asset allocation policy of Duxton Water will have a large focus on Water Entitlements in these four zones.


Annual Yields (Aug 2012 – Apr 2016)

Current Min Median Max

Zone 11 HS 5.09% 1.33% 5.17% 7.23%

Zone 10 HS 5.40% 1.43% 5.46% 7.78%

Zone 7 HR 5.54% 2.07% 6.22% 8.84%

Zone 6 HR 6.46% 2.33% 7.15% 11.60%

Yields (August 2012 – April 2016)

PRICE AND YIELD


• The following charts illustrate the relationship between permanent water prices, temporary water prices and yield for Zone 6 High Reliability water and Zone 11 High Security water for the previous three years.

• Yields on temporary water allocations in Zone 6 HR have averaged 7% throughout this period.

• Yields on temporary water allocations in Zone 11 HS have averaged 6% over this period.

Zone 6 HR Price and Yield Zone 11 HS Price and Yield

AUSTRALIAN WATER SCARCITY


• The Murray-Darling Basin Plan involves the buy back of Water Entitlements for environmental purposes.

The Plan targeted purchasing 2,750 GL of Water Entitlements – of that 791 GL are still available to be purchased.*

• As at 30 June 2015, total water available for trade in the Southern Connected MDB region was approximately 7,700 GL.**

Water Availability in the Southern Connected MDB Water Market

Water Market High Security General Security Supplementary Total

SA Murray 548 GL 548 GL

NSW Murrumbidgee 381 GL 1,892 GL 199 GL 2,472 GL

NSW Murray 192 GL 1,672 GL 253 GL 2,117 GL

VIC Murray 1,200 GL 305 GL 1,505 GL

VIC Goulburn 1,009 GL 444 GL 1,453 GL

TOTAL 3,330 GL 4,313 GL 452 GL 8,095 GL

*As at 30 April 2016

**Excludes Supplementary Water

Source: Ruralco Water; Department of the Environment

THE ECONOMIC VALUE OF AUSTRALIAN WATER


• Trade in water assets within Australia occurs in a well-established market where prices are underpinned by fundamental supply

and demand dynamics.

• Market prices provide a signal for water users to consider the opportunity costs of their water-use decision. As such, water moves from users with a low

economic value of water to users with a high economic value of water.

• As shown in the graph and table below, different agricultural industries have different opportunity costs. Grapes and fruits and nuts have the highest cut-off

water prices* and are also the least responsive to changes in water prices#.

Industry Cut-off Price ($/ML) Elasticity of Demand#

Grapes $1,800 -0.5

Fruits and nuts $3,000 -0.4

Rice $165 -1.9

Cotton $250 -1.3

Dairy $250 -1.3

Other** $250

*The cut-off water price is the price of water ($/ML) such that production for the

given industry is no longer profitable.

Source: Aither, 2016

**Other industries make up 15%-20% of agricultural irrigation in the SMDB. #The price elasticity of demand gives the percentage change in the volume of water demanded in

response to a one per cent increase in the price of water. For example, an elasticity of -1 indicates that

the volume of water demand would fall by approximately 1% in response to a 1% increase in price of

water. As shown, grapes and fruits and nuts are the least responsive to changes in water prices.

KEY FEATURES OF WATER ENTITLEMENTS

KEY FEATURES

Water Entitlements representan annual allocation of water

Permanent Water Entitlements grant the holder access to an annual allocation of a specified volume of waterin perpetuity.

Transferable Water Entitlements and annual Water Allocations can be bought, sold and leased within the geographicallydefined water markets. Water Entitlements and Water Allocations can be transferred via brokers, exchangesand private transactions.

Fungible Water Entitlements can be amalgamated or subdivided within their specified consumptive pool of water.

Readily Ascertainable Value The value of traded Water Entitlements and Water Allocations can be regularly obtained from relevant waterauthorities subsequent to registration. Market participants including water brokers also facilitate access tocurrent market trading of Water Entitlements and Water Allocations.

Transparency Determination of seasonal allocations to Water Entitlements are governed by defined, published processesand calculations based on measurable water availability conditions.

Classified by Reliability Water Entitlements are assigned different levels of reliability, defined as the frequency with which water

allocated under an entitlement can be supplied in full. For example, annual water allocations are made to High

Security/High Reliability Water Entitlements before General Security/Low Reliability Water Entitlements.


WATER TRADING PLATFORMS


The two images show the water trading platforms of Waterfind Australia and Ruralco Water Brokers for Zone 11 Murray High Security Water Entitlements.

Above: Water trading platform of Waterfind Australia.Right: Water trading platform of Ruralco Water Brokers.

1 Key IPO Details




5 Appendices


DUXTON WATER – A UNIQUE INVESTMENT PROPOSITION

WITH DIRECT EXPOSURE TO AUSTRALIAN WATER

ENTITY NAME COMPANY DETAILS WATER EXPOSURE

Webster Limited(ASX: WBA)

Australia’s largest walnut producer, uses waterfor primary production activities.

237 GL of water entitlements held across arange of water systems and classifications as at31 December 15(Source: Half Year Report).

Rural Funds Group (ASX: RFF) A listed agricultural REIT with a portfolio

covering 29 properties, primarily focused on

poultry farms, almond orchards and vineyards.

Uses water in its businesses.

58 GL water entitlement portfolio as at 31

December 2015

(Source: Half Year Report).

Blue Sky Water Partners (unlisted) Open-ended fund with A$50k minimuminvestment, but unlisted. Indirect exposure viaBAF available, but only ~40% of NAV of fund.

Not disclosed.

Duxton Water (ASX: D2O)

ASX listed share, Water Entitlement leasing andportfolio management as sole undertaking.

16.4 GL in initial portfolio, held across a rangeof water systems and classifications. Directwater entitlement exposure, with no otherassets diluting the portfolio.


INVESTMENT MANAGER

DUXTON CAPITAL

(AUSTRALIA) PTY LTD

• Duxton Water’s portfolio of water assets will be managed by DuxtonCapital (Australia), part of the Duxton Group as a wholly ownedsubsidiary of Duxton Capital Pte Ltd. The Group manages over $870million in assets.

• The Duxton Group has been active in water markets and water portfoliomanagement since 2008.

• The Australian Management team will be supported by the DuxtonGroup’s investment team in Singapore

• The Duxton Group’s executive management team has an average of 25years of industry experience.

• The Duxton investment team of 17 staff is based in Singapore andAustralia with an average of 11 years of industry experience inagricultural investments, emerging market private equity, complexassets and listed equities and a total of 181 years of combined industryexperience.

• Duxton Water has access to specialist industry knowledge and keynetworks developed over a combined 72 years in the water industry.

• The Duxton Group is fully owned by Ed Peter, Stephen Duerden andDesmond Sheehy, the Group’s co-founders.

• Duxton is a socially responsible manager, with ESG at the core of itsinvestment process.


TEAM EXPERIENCE


Ed Peter Chairman

Ed Peter, is the co-founder and Chairman ofDuxton Asset Management ("Duxton"). Prior toforming Duxton in 2009, Ed was Head of DeutscheAsset Management Asia Pacific ("DeAM Asia"),Middle East and North Africa. Ed has beenexposed to the Australian water market since1999.

Peter MichellIndependent Director

Peter Michell is Executive Director at MichellWool P/L and was its Managing Director for thedecade following 2004. Peter holds a Bachelorof Management BA (Man) UniSA, FAICD,FGLF2000, and currently sits on the Universityof Adelaide’s Agribusiness Advisory Board.

Stephen Duerden Director

Stephen Duerden is the CEO of DuxtonAsset Management. Stephen has over 26years of experience in investmentmanagement and joined Duxton in May2009. Prior to this, Stephen was the COOand Director for both the Complex AssetsInvestments Team and the Singaporeoperation of DeAM Asia.

Donald Stephens Company Secretary

Donald Stephens is a Chartered Accountantand corporate adviser with over 20 years ofexperience in the accounting industry. MrStephens holds a number of positions as apublic company director and companysecretary as well providing corporate advisoryservices to a wide range of organisations.

Dirk WiedmannIndependent Director

Dirk Wiedmann has 28 years of experience in thefinance industry. Over his career, Dirk has heldsenior global positions with several Banks, includingUBS AG, Bank Julius Baer & Co Ltd and RothschildBank AG. Dirk has been investing in Australianagricultural businesses since 2009.

The Board of Duxton Water has a totalof 47 years of experience in theAustralian water market. The Board ishighly experienced in the agricultureindustry, holding a combined 72 yearsof experience.

DUXTON WATER INVESTMENT MANAGEMENT TEAM


• Duxton Water has no employees.• Duxton Water has outsourced the management of the Company’s investments

to Duxton Capital (Australia).

Management team

Ed Peter Lead Portfolio Manager

Ed Peter is the co-founder of Duxton Asset Management. Ed was previouslyHead of Deutsche Asset Management Asia Pacific, Middle East and NorthAfrica. Ed has been exposed to the Australia water market since 1999

Max Toovey Portfolio Manager

Max Toovey joined Duxton at the start of 2014 and is responsible formonitoring private equity investments in agriculture. Prior to joiningDuxton, Max worked at KPMG Australia

Duxton has a team of 17 funds management professionals spread across twooffices and supported by a team of a further 16 financial professionals and 4 officesupport staff.

Duxton Capital Pte Ltd

Duxton Asset Management Pte Ltd

Duxton Capital (Australia) Pty Ltd

INVESTMENT GUIDELINES

Investment Universe The Company will only invest in Australian Water Entitlements*

Maximum exposure to a single

trading zone

50% of the aggregate volume of Water Entitlements (measured in dollar value) in that trading zone rather

than the initial Water Entitlements portfolio – once fully invested

Expected allocation range to cash 0% - 30% of the portfolio Net Asset Value of the Company – except in the first two years of operation

Water Entitlements available to

purchase or sell

Only Water Entitlements held within a regulated Australian Market can be purchased or sold

Exposure to temporary water

market

20% - 40% of the portfolio by dollar value, once fully invested

Expected allocation to leases20% - 80% of the portfolio by dollar value should be held in leases ranging from 3 to 7 years (once fully

invested)

LeverageGearing to be no greater than 30% of total assets. Short-term increases beyond this level are permitted

with approval from the Board


The Investment Manager will only undertake divestments for cash, unless otherwise approved by the Board. The guidelines may be deviated from with Board approval. Throughout the initial investment period thecash allocation may exceed 30% due to the investment of additional capital not yet deployed. Market movements may cause the portfolio to breach these guidelines in which case the Investment Manager may decidenot to seek corrective trades. The maximum exposure to a single trading zone may exceed 50% until funds are fully invested.*Duxton Water intends to hold only Water Entitlements and no other assets, however it may hold small land holdings from time to time when the purchase of land is required for the purchase of the Water Entitlementassociated with it.

1 Key IPO Details




5 Appendices


INVESTMENT STRATEGY OF THE COMPANYINVESTMENT PROCESS


DUXTON WATER’S WATER ENTITLEMENT PORTFOLIO

• Duxton Water currently holds a portfolio of WaterEntitlements valued at $38 million.

• Of this portfolio:

• $33.7 million has been entered into long-termlease arrangements with primary producers, and

• $4.3 million is being leased at market rates.

• The initial leased portfolio will have a gross initial yield of5.9% based on the terms of the leases.

• The average current yield for these Water Entitlements inthe market is 5.6%.

• The portfolio’s current NAV is $34,594,516.

• Duxton Water will aim to deploy all equity capital raised by31 December 2017

• The chart adjacent demonstrates the diversification ofDuxton Water’s current portfolio by trading zones.

Portfolio Diversification


TIMETABLE

Prospectus Date 28 July 2016

Opening Date For Applications (9.00am) 11 August 2016

Closing Date For Applications (5.00pm) 31 August 2016

Issue and allotment of Shares 7 September 2016

Expected despatch of holding statements 14 September 2016

Expected date of quotation of Shares on the ASX 21 September 2016

Expiry date of Options 31 May 2018


The timetable is subject to change without notice. Any investment in Duxton Water can only bemade after considering the Prospectus in full and by completing the application form attached toor accompanying the Prospectus. Applications received during the exposure period for theProspectus cannot be processed until the exposure period had expired.

CONTACT INFORMATION

DUXTON CAPITAL (AUSTRALIA) PTY LTD

Ed Peter

Chief Executive Officer

E: [email protected]

A: Duxton House, 7 Pomona Road

Stirling, South Australia, 5152

Melissa Randall

Head of Business Development

& Relationship Management, Australia

M: +61 420 307 104


A: Duxton House, 7 Pomona Road

Stirling, South Australia, 5152

TAYLOR COLLISON LTD

Craig Ball

Director


T: (08) 8217 3900


mailto:[email protected]



1 Key IPO Details




5 Appendices


APPENDICES

A Key Risks

B Australian Water Marketing – Overview and Key Trends

C Duxton Water’s Balance Sheet Summary

KEY RISKSGovernment Water Buy-Back Programs

The Commonwealth Government Murray-Darling Basin (MDB) Plan provides for a AUD $3.1 billion water buy-back program in order toaddress the environmental sustainability of the MDB. This buy-back program involves the Commonwealth Government purchasingWater Entitlements from willing sellers in the MDB and directing this purchased water to environmental flows. As at 30 April 2016,1,960 gigalitres of Water Entitlements had been purchased as part of the buy-back plan with 791 gigalitres still available to bepurchased. Although the majority of buy-backs are complete, any further buy-backs by the Commonwealth Government (including as aresult of any change to the MDB Plan) will result in less Water Entitlements on issue, increasing the scarcity of such assets and impactingtheir price. The participation of the Commonwealth Government in the market may also distort market fundamentals temporarily andreduce opportunities for the Company to acquire Water Entitlements at acceptable values.

Annual Water Allocation Risk

Water Allocations are determined by a relevant water authority. As a result of water availability in any given region and for any givensecurity class, annual Water Allocations may be negligible or zero. This would impact the Company’s ability to derive income fromunleased Water Entitlements.

Weather The market price of Water Entitlements and Water Allocations is subject to market fluctuations due to weather. For example too muchrain and flooding would significantly increase the supply of water, driving down prices. As such, negative price movements mayadversely impact the ability to generate revenue from new leases for the Company’s Water Entitlement portfolio or the portfolio valueitself.

Market Size andLiquidity Risk

The turnover of Australian Water Entitlements is relatively small when compared to the aggregate Australian Water Entitlement market,with an average annual turnover of approximately 311 gigalitres (approximately 4% of the entire Entitlements market) valued close to$400 million, during the 2014-15 season. Average annual turnover in Water Allocations over the same period was 5,550 gigalitres. Withlimited market activity, the small market size poses a liquidity risk for the Company, creating pricing and capacity considerations.

Risk of Shares trading below NAV and Options out of the money

The Shares of the Company may trade on the ASX at a discount to the NAV of the Water Entitlements portfolio on a per Share basis andthe performance of the Shares may not be correlated with the performance of Water Entitlements portfolio.The Options may also not have any value, particularly if the Shares trade below the exercise price of $1.10 per Share.

KEY RISKS

Risk of being unable to deploy funds

The ability of the Company to generate attractive yields for investors is dependent on its capacity to deploy funds in the watermarket. For example, if at a certain point in time the Investment Manager did not believe that the purchase of any WaterEntitlements in the market would provide attractive yields to investors, the Investment Manager would not invest.

Key Lessee and Other Lessee Risk

From Completion of the Offer until further leases are entered into, the Company will have approximately 86% of its lease revenuebeing paid by one lessee, Duxton Viticulture. If that lessee defaults, this could adversely affect the revenue generated by theCompany.The Company also anticipates that many of its Water Entitlements will be subject to long-term lease arrangements. If theleaseholder were to default on its obligations, this could result in a loss of revenue for the Company.

Reliance on the Investment Manager

The investment decisions made by the Investment Manager will be key to achieving the Company's investment objectives. Failure todevelop and implement adequate strategies may adversely impact the performance of the Company.

Decline in water prices Water Entitlements have historically generated capital growth. However, past performance of Water Entitlements is not a reliableindicator of the future performance of Water Entitlements. As such, there exists the risk that Water Entitlements may reduce invalue over the investment period.

Vendor Shareholder control

At Minimum Subscription the Vendor Shareholders will have a controlling relevant interest of 56.58% of the Shares. The majority ofthose Vendor Shares will also be subject to voluntary escrow for up to 12 months. This may adversely impact on liquidity of theShares.

Security over Vendor Shares

The Vendor Shares are likely to be mortgaged to the Vendor’s financier, NAB, including those subject to voluntary escrow. If theNAB enforces its rights under the share mortgage, some or all of the Vendor Shares may be sold. At Minimum Subscription theVendor Shares represent a controlling relevant interest in the Company. Therefore any forced sale of those Shares is likely to affectcontrol of the Company.

APPENDICES

A Key Risks



THE AUSTRALIAN WATER MARKET• The Australian water market is based on an unbundled ‘cap and trade’ system. Under this regime, water rights are separated from land

rights.

• Water Entitlements are traded in the permanent market and Annual Water Allocations are traded in the temporary market.

• A water user can only increase their share of a water resource pool by purchasing entitlements from an existing shareholder.

• The price charged for the water is determined in the market by the value placed on water by the market participants.

• Subject to market regulations, water users have the option to use their water rights, buy and sell licences, lease rights and/or carry-over water.

The Cap and Trade approach to establishing water markets


Simplified example of an unbundled entitlement system

WATER PRICE DRIVERS

KEY DRIVER DESCRIPTION OF KEY DRIVER

Weather Weather is one of the most significant drivers of price movement in agriculture. Significant adverse weather patterns impact the

availability of water. For example, droughts reduce the amount of water available for trade which drives up the price of water in the

market.

Environmental Programs The Murray-Darling Basin (MDB) Plan involves an AUD $3.1 billion water buy-back program in order to address the environmental

sustainability of the MDB. This buy-back program involves the Commonwealth Government purchasing Water Entitlements from willing

sellers in the MDB and directing this purchased water to environmental flows. Further buy-backs by the Government would result in

less Water Entitlements on issue, increasing the scarcity of such assets and impacting their price.

Ongoing Investments in

Higher Value Irrigated

Agriculture

Investment in exotic nuts (almonds, hazelnuts) and olive production is expected to rise. Furthermore, the Australian cotton industry has

shifted production south. It is expected that these shifts will increase water use for these sectors, over the next five years by 18% and

65% respectively. If there is another severe drought, such as the millennium drought in 1997 - 2009, these shifts in production could

result in extremely high water prices.

Government Programs In line with environmental programs, the Government is prioritizing water infrastructure programs in order to reach water

sustainability targets. Through increased infrastructure investment, funding can be provided to deliver new on-farm infrastructure and

water efficiency programmes to farms. Commonwealth activity in the market can impact prices.

Investment in Greenfield

Projects

Investment in Australian agriculture has been growing. As investment increases, the demand for water will also rise in order to meet

rising farm production. Water prices may respond by climbing higher.

Commodity Prices Water prices are influenced by product market factors such as agricultural commodity prices. For example, when commodity prices are

high, farmers may decide to produce more of a certain crop, as their opportunity cost of water is higher. As a result, irrigators increase

their demand for water, with the effect of pushing up the price of water in the market.

WATER AS AN INVESTMENT

• Historically, water as an alternative investment has demonstrated low correlation totraditional asset classes.

• Over the period 2004 to 2012, water demonstrated a correlation with stocks of lessthan one and a negative correlation with bonds.

• These results demonstrate that water as an investment should providediversification benefits to an investment portfolio.

• As shown by the Sharpe Ratios, the risk/return profile of water as an investment ismore attractive than that of stocks and bonds.

MSCI World Barclays Global WOWAX

MSCI World 1

Barclays Global -0.32 1

WOWAX 0.72 -0.24 1

Beta 1 -0.11 0.82

MSCI World Barclays Global WOWAX

Full Period: 2004 – 2012 -0.001 -0.015 0.023

Pre-GFC: 2004 – 2008 0.022 -0.047 0.070

GFC: July 2008 – Dec 2008 -0.135 0.101 -0.090

Post GFC: 2009 - 2012 0.017 0.001 0.033

Correlation Analysis, 2004 – 2012

Risk/Return Profile, 2004 – 2012

Roca, E, Li, B, Wong, V, 2013, ‘Water your investment portfolio’, Financial Planning Magazine, December/January 2013, p.36 -37 http://goo.gl/BXsgZbWOWAX is an investable water equities index comprising of 20 global companies involved in the water business. As a group, these companies have worldwide presence in different segments of the water industry. Barclays Global is an index used as a proxy for the bond market. MSCI World is an index used as a proxy for the share market.


Sharpe Ratios

http://goo.gl/BXsgZb

HISTORY OF WATER TRADING IN AUSTRALIA

• Historically, on average, temporary water prices haveexhibited a negative correlation to Australian foodprice indices. This suggests that water trading canprovide a risk management tool for farmers to hedgeagainst risk.

• On average, Australian temporary water prices havedemonstrated a correlation of less than one withAustralian Large Business Borrowing Rates.Permanent water prices, in comparison, haveexhibited a negative correlation with AustralianBorrowing Rates over the same period.

• This demonstrates the diversification benefits ofincluding water assets in an investment portfolio; asbusiness borrowing rates decrease, permanentwater prices increase

Water Prices, Indexed vs. Large Business Borrowing Rates, Indexed (2004 – 2015)

Note: The graph demonstrates the movement of Australian Large Business Borrowing Rates compared to temporary and permanent water prices (indexed) in the Victorian Goulburn High Reliability WaterEntitlement market. The trends exhibited in the above graph are considered to be reflective of those experienced by other classes of Southern Murray-Darling Basin Water Entitlements over the same period.


THE AUSTRALIAN WATER MARKET

• Australia’s water market is the most sophisticated in the world.

• Australia’s unbundled cap and trade regime allows for water rights to be separated from land titles and hence, have the ability to be traded independently.

• Trading is possible in a number of water systems, including groundwater systems, regulated surface water systems and unregulated surface water systems.

• Subject to the market rules and regulations, water users have the option to use the water allocated to their entitlements, buy additional Water Allocations, sell part or all of their allocations, buy or sell entitlements, lease entitlements, and under some circumstances, carry-over water.

Source: Waterfind, National Water Commission 2011|||||||||||||||||| Duxton Water Limited | 37

APPENDICES

A Key Risks



BALANCE SHEET SUMMARY

• Duxton Water will aim todeploy all equity capitalraised prior to theconclusion of 2017.

• The Company will haveno debt at the time oflisting. Should there bean opportunity toacquire high value waterassets the Company maydrawdown debt up to30% of the asset base.

UNAUDITED PRO FORMA

Statements of financial position

As at 20 April 2016Minimum Subscription

$22 million

Maximum Subscription

$99 million

Maximum Subscription

With Oversubscriptions

$149.6 million

$ $ $ $

Current Assets

Cash assets 1 11,480,354 85,470,887 134,100,523

Receivables - 60,000 262,125 394,950

1 11,540,354 85,733,012 134,495,473

Non-Current Assets

Deferred tax asset - 330,107 1,172,309 1,723,571

Intangible assets – Water Entitlements - 38,004,847 38,004,847 38,004,847

- 38,334,954 39,177,156 39,728,418

Total Assets 1 49,875,308 124,910,168 174,223,891

Total Liabilities - - - -

Net Assets 1 49,875,308 124,910,168 174,223,891

Equity

Issued capital 1 50,662,348 127,662,348 178,262,348

Less: Capitalised costs of the Offer - (654,205) (2,675,303) (3,972,851)

Accumulated losses - (132,835) (76,877) (65,606)

Total Equity 1 49,875,308 124,910,168 174,223,891


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