Rivco Australia (RIV) H1 2024 earnings summary

Executive summary

• Achieved record half-year net profit after tax of $8.3 million, up from $2.8 million in 1HY2023, driven by leasing revenue and capital gains on water entitlement sales.

• Paid 14th consecutive and increasing dividend: 3.6 cents per share in April 2024 and 3.7 cents declared for October 2024, both fully franked.

• Portfolio comprised 87.3GL of water entitlements valued at $354 million as of 30 June 2024, with 61% under lease.

• Reduced drawn debt by $11 million during the period, improving balance sheet flexibility and maintaining a conservative LVR of 29%.

• Water entitlement values softened in H1 2024 due to economic headwinds, but rebounded 3% in July 2024.

Financial highlights

• Net profit after tax rose 196% year-over-year to $8.3 million for HY2024.

• Profit before tax increased 195% to $11.8 million compared to HY2023.

• Earnings per share grew to 5.3 cps from 2.4 cps; dividends per share increased to 3.6 cps.

• Lease revenue up 14% to $4.2 million; 61% of portfolio leased at period end.

• NAV per share at $1.51, down from $1.80 year-over-year, reflecting lower entitlement prices and dilution.

Outlook and guidance

• Warmer than usual temperatures forecast for Spring 2024; rainfall likely below average in key regions.

• Government initiated water buybacks, with a 70 GL tender open until September 2024, targeting the southern Basin.

• Leasing revenue expected to decrease to $5.5 million from July 2024 due to lower leased percentage, but forward contract sales of $1.7 million anticipated.

• Company aims to strengthen leasing percentage as demand recovers, with increased lease demand observed in July/August 2024.

• Management remains confident in the ability to actively manage the diversified portfolio and capitalize on opportunities amid climate variability.