Kiland : Quarterly Activities Report and Appendix 4C June 2022

For personal use only

Kiland Limited

ASX code: KIL

ABN 19 091 247 166

Quarterly Activities Report

and Appendix 4C

For the quarter ended

30 June 2022

Commentary page 1

For personal use only

Quarterly Activities Report

For the quarter ended 30 June 2022

Highlights

Since last Appendix 4C Quarterly Report

• Agricultural estate
• Entitlement offer
• Return of Forestry Development Fund grant
• Pontoon sale completed
• Final insurance settlement
• Carbon removal project

Agricultural estate

Kiland Limited's ("Kiland", "Company") property manager, AAGIM Investment Management Pty Ltd ("AAGIM"), presented the Master Plan to the Board during a two-day offsite on Kangaroo Island in June 2022. The Master Plan includes a multi-year operational plan and detailed funding requirements.

Kiland continues to acquire reversion plant and equipment and total capital spend for the year was $5.1 million. Kiland expects reversion works to commence imminently.

Entitlement offer

On 29 March 2022, Kiland announced a $32.4 million fully underwritten 7 for 11 accelerated non- renounceable entitlement offer at $1.10 per share (the Entitlement Offer), to fund the reversion of Kiland's estate from forestry to agriculture. The Entitlement Offer was split into an Institutional and Retail component.

The Institutional Entitlement Offer was successfully completed on 30 March 2022 and new shares were issued on 4 April 2022 raising $24.7 million.

The Retail Entitlement Offer was successfully completed on 5 May 2022 and new shares were issued on 9 May 2022 raising $7.7 million.

The cost of the capital raising was $0.8m.

Return of Forestry Development Fund grant

Kiland announced it had secured a $5 million Forestry Development Fund grant from the Australian Commonwealth Government on 22 December 2020. The grant was to support development of a biomass pellet mill on Kangaroo Island.

The change in Kiland's strategy to revert its estate to an agricultural enterprise does not include the development of the pellet mill. Given this, the Australian Commonwealth Government informed the Company that its application no longer aligned with the requirements of the grant program and the $2.6m funds received were to be repaid. Kiland repaid the $2.6 million to the Australian Commonwealth Government in April 2022.

Commentary page 2

For personal use only

Quarterly Activities Report

For the quarter ended 30 June 2022

Pontoon sale completed

On 26 April 2022, the Company's wholly owned subsidiary KI Seaport Pty Ltd completed the sale of its pontoon asset for cash proceeds of $6.2 million less costs. In addition to normal transaction costs Kiland incurred approximately A$0.35 million to comply with the requirement by the Vietnamese authorities that the Company relocate the pontoon in order to receive export clearance.

The carrying value of the pontoon asset was AUD$5.8 million at 31 December 2021.

Final insurance settlement

On 11 May 2022 Kiland announced that it had settled the outstanding claim in relation to insurance proceeds from its tree crop and other insurance policies for the damage caused during the 2019-20 wildfires. Kiland and its insurer agreed to a full and final settlement of $3.5 million for the remaining insurance claims. Kiland received the funds in full in the June quarter.

As set out in the Annual Financial Report for the year ended 30 June 2021, Kiland's insurer had retained $5 million in respect of Kiland's insurance claim, of which $1 million related to replanting, which will not proceed due to the reversion strategy, with the remainder retained against the potential for Kiland to obtain a positive margin on salvage timber. These insurance amounts were recorded as contingent assets in the Annual Financial Report for the year ended 30 June 2021.

Carbon removal project

On 16 June 2022 Kiland announced its intention to convert approximately 4.5m tonnes of fire-damaged biomass (standing timber) into approximately 900,000 tonnes of biochar via a pyrolysis process. Any biochar production is expected to be complementary to Kiland's existing land development activities on Kangaroo Island and has the potential to offset the development cost of Kiland's reversion activities, through revenue from biochar sales.

Additionally, the Company believes that biochar production may offer Kiland the opportunity for further revenue via the production and sale of approximately 1.8 million Carbon Removal Certificates (CRCs).

The incremental funding requirement for Kiland's biochar project is currently expected to be approximately $15 million. Kiland believes it has sufficient funding to employ additional staff and acquire the necessary equipment. Notwithstanding this Kiland may seek project funding from external parties. Any such funding is anticipated to be raised at the project level.

Kiland has identified Biocare Projects Pty Ltd (Biocare) as its preferred partner for project design and CRC marketing. Kiland and Biocare are currently in late stages of contract negotiation. Biocare has a unique background in biochar carbon removal projects. Biocare's principals have significant experience in carbon project certification under multiple standards.

Kiland's existing Property Manager, AAGIM Investment Management Pty Ltd ("AAGIM") has also been pivotal to the development of this project. AAGIM's existing Property Management Agreement extends to this project.

Payments to Related Parties

During the quarter ended 30 June 2022, the Company paid $250,976 to related parties of the entity. This amount consisted of executive and non-executive Directors' fees of $117,500 and payments to other key management personnel and their related parties of $133,476.

Commentary page 3

For personal use only

Quarterly Activities Report

For the quarter ended 30 June 2022

Securities on issue

At quarter end and as at the date of this report, the securities on issue included:

Ordinary Shares on issue

	Number of
	Listed Ordinary
	Fully paid
	Shares
As at 31 March 2022	46,275,226
Institutional element of the Entitlement Offer	22,497,165
Retail element of the Entitlement Offer	6,950,947
At 30 June 2022 and at the date of this report	75,723,338
Performance Rights on issue
	Number of
	Unlisted
	Performance
	Rights
As at 31 March 2022, 30 June 2022 and at the date of this report	2,902,500

Appendix 4C

Appendix 4C, as required by Listing Rule 4.7B, for the quarter ended 30 June 2022 is attached to this report.

Cash and cash equivalents

The cash and cash equivalents at 30 June 2022 amounted to $48,300,638.

Loan facilities

At 30 June 2022, the Company had no loan facilities.

Signed on authority of the Board of Kiland Limited

Ms Vicky Allinson

Company Secretary

Date: 29 July 2022

Commentary page 4

For personal use only

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities

subject to Listing Rule 4.7B

Name of entity

KILAND LIMITED

ABN	Quarter ended ("current quarter")
19 091 247 166	30 June 2022

Consolidated statement of cash flows	Current quarter	Year to date
	$A'000	(12 months)
		$A'000

1. Cash flows from operating activities

1.1

Receipts from customers

383

1,593

1.2 Payments for

	(a)	research and development	-	-
	(b)	product manufacturing and operating	(793)	(3,749)
		costs - plantation and harvesting costs
	(c)	advertising and marketing	-	-
	(d)	leased assets	-	-
	(e)	staff costs	(153)	(1,339)
	(f)	administration and corporate costs	(64)	(1,111)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	8	26
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid - R&D Refund	-	-
1.7	Government grants and tax incentives	(2,571)	(1,128)

1.8 Other (provide details if material)

Insurance Proceeds	3,500	3,500
Wharf Development	(1,440)	(2,100)
1.9 Net cash from / (used in) operating	(1,130)	(4,308)
activities

2. Cash flows from investing activities

2.1 Payments to acquire:

(a)	entities	-	-
(b)	businesses	-	-

ASX Listing Rules Appendix 4C (01/12/19)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.