Hygrovest : HGV Investment Portfolio Report May 2022

For personal use only

Hygrovest Limited

Suite 5706, Level 57, MLC Centre

19-29 Martin Place

Sydney NSW Australia 2000

www.hygrovest.com.au

[e-mail]

8 June 2022

HGV Investment Portfolio Report May 2022

HGV Limited (ASX: HGV) ("HGV") is an Australian-listed specialist investment company which concentrates on producing capital growth for shareholders over the medium term from investments in listed and unlisted equities and other financial assets.

HGV Investment Portfolio Report - May 2022

HGV is pleased to provide the HGV Investment Portfolio Report for May 2022 which includes the disclosure pursuant to Listing Rule 4.12.

- - - - - - - - - -

Investor and Media Enquiries

Announcement authorised for release to ASX by:

Jim Hallam

Chief Financial Officer and Company Secretary

E: [e-mail]

For personal use only

About HGV

HGV Limited (ASX:HGV) ("HGV") ABN 91 601 236 417 is an Australian-listed specialist investment company which concentrates on producing capital growth for shareholders over the medium term from investments in listed and unlisted equities and other financial assets.

Important Notice

This announcement contains reference to certain intentions, expectations, future plans, strategy and prospects of HGV. Those intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of HGV may be influenced by a number of factors, many of which are outside the control of HGV. No representation or warranty, express or implied, is made by HGV, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. Given the risks and uncertainties that may cause HGV's actual future results, performance or achievements to be materially different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations, future plans, strategy and prospects. HGV does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended. Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in HGV. This document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any "US person" as defined in Regulation S under the US Securities Act of 1993 ("Securities Act"). HGV's shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers.

HGV Limited

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onlyuseInvestment Portfolio Report May 2022

personalForImportant Notice

This announcement contains reference to certain intentions, expectations, future plans, strategy and prospects of HGV. Those intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of HGV may be influenced by a number of factors, many of which are outside the control of HGV. All information is unaudited unless stated otherwise. No representation or warranty, express or implied, is made by HGV, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. Given the risks and uncertainties that may cause HGV's actual future results, performance or achievements to be materially different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations, future plans, strategy and prospects. HGV does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended. Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in HGV. This document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any "US person" as defined in Regulation S under the US Securities Act of 1993 ("Securities Act"). HGV's shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers. The investment returns

onlyAbout Hygrovest

Hygrovest Limited ("Hygrovest") (ASX: HGV) is an Australian- listed, specialist investment company that has traded on the ASX since 2015. Investors in Hygrovest gain exposure to a portfolio which concentrates on producing capital growth for shareholders over the medium term from investments in listed and unlisted equities and other financial assets.

Investments are managed by Parallax Ventures Inc., a pecialist management company in Canada.

	Since 2015, Hygrovest has created a significant number of
	investment opportunities from its connections in Canada and
useAustralia in the private investment sector and realised exits to
	the benefit of Hygrovest and its shareholders:
23		11		4	11
personal		Follow on		Private	Sale of
	Primary
	Acquisitions	investments1	to public	investments
	Hygrovest Investment Performance2
	HGV Historical Performance - period ended			31-May-22
			1 month 3 months	Financial year to	12 months	Since
				date	inception
	Pre tax return (12)%	(18)%		(34)%	(33)%	(19)%
	For Hygrovest's latest investor presentations and news,
	please visitwww.hygrovest.com.au
		General Investor Queries		Share Registry

1. [e-mail] Automic Registry Services

W: hygrovest.com.au	P:	1300 288 664
	W:	automic.com.au

For

Investment Portfolio Report

Hygrovest (ASX: HGV) | ABN 91 601 236 417

Performance Update

Net Tangible Asset Value Per Share Before Tax3 as at 31 May 2022

$0.1243

Net Asset Value as at 31 May 2022

$27m

Discount of HGV share price to Net Asset Value as at 31 May 2022

45% p.a.

Key Metrics as at	31-May-22	AUD
Net Asset Value	m	27
Investee Porfolio (ex cash)	m	30
Cash	m	2
Net Tangible Asset per share -		0.1243
pre-tax (issued pursuant to LR 4.12)
Net Tangible Asset per share -		0.1169
post tax (issued pursuant to LR 4.12)
Net Asset Value per share		0.1173
HGV share price (ASX)		0.065
Market capitalisation	m	15
Number of investments (ex cash)		10
ASX Investment Type		Listed
	Investment
		Company
Initial Public Offering Date (inception date)		22-Jan-15
No. of ordinary shares on issue	m	230

Hygrovest shareholder communications

Webinars and copies of announcements related to Hygrovest's operations may be found on the Hygrovest website: www.hygrovest.com.au. Hygrovest will hold a live audio webinar of the Investor Conference Call in July 2022. In the webinar, Michael Curtis, HGV Non-Executive Director and Managing Partner of Parallax Ventures Inc, the asset manager of Hygrovest's investments, will give an update on Hygrovest's major investments.

1. Includes investments in existing investees.
2. Inception is 30 June 2018 being the date when Hygrovest commenced accounting for investments as an investment entity.

3.Net Tangible Asset Value per share - unaudited, before tax on unrealised gains on investment portfolio. The financial information within this report is unaudited.

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For personal use only

Investment Portfolio Report

Hygrovest (ASX: HGV) | ABN 91 601 236 417

HYGROVEST NEWS

Performance of Hygrovest Portfolio May 2022

During May 2022, HGV's Net Asset Value (before provision for deferred tax) decreased by 12%. HGV has produced a loss of 33% for the financial year to 31 May 2022 which was a significant improvement on the 74% loss in the listed Canadian cannabis index as 73% of HGV's investment portfolio remains held in cannabis companies. HGV's negative performance in NAV in May 2022 was primarily due to:

1. the decline in value of HGVs listed securities with a 19% decrease in the Canadian listed cannabis index;
2. the consequential devaluation of HGV's investment in Weed Me (from $14m to $12m) arising from the impact of loss during May in the listed Canadian cannabis index4 and its negative impact on the valuation multiple5 applied to value HGV's investment in Weed Me6. Weed Me continued to increase its rolling twelve months net revenue; and
3. a devaluation of HGV's investment in Sequoya ($2.7m to $0.9m) following review of the company's business outlook together with the decrease in the valuation multiple applied to its revenue. The valuation multiple had declined by 48% since the last revaluation of Sequoya in March 2022.

These negative events were partially offset by the revaluation of HGV's investment in Entourage Health Corp (ENT) and following the proposal by ENT to redeem its notes at 60% of face value compared to 36% before the announcement of this proposal.

Whilst the volatility in the listed Canadian cannabis securities is disappointing and in particular its short term impact on the valuation of Weed Me, HGV continues to value its investment to reflect material changes in valuation metrics and remains confident of continuing growth in the Weed Me business.

Portfolio Investment Strategy

HGV is seeking to reduce the 44% gap of the share price to NAV (five cents per HGV share) by:

1. working with HGV's largest investment, Weed Me, to achieve a liquidity event during 2022 to provide HGV with the option of realising a material portion of HGV's investment;
2. realising underperforming and or illiquid investments - HGV is expecting to divest its investment in ENT by 30 June 2022 (other investments which fall into this category include BevCanna and Vintage Wines Estates); and
3. invest surplus funds in companies which provide our Shareholders with high capital growth potential either derived from sector specific or company specific growth opportunities.

Funds received from divestments would be applied as dividends7 to HGV Shareholders and/or making investments which the Board considers to be the prospect of higher capital growth and allow HGV to diversify away from the underperforming cannabis sector.

HGV has funds available to deploy in new investments and will also seek to realise existing investments to recycle capital into opportunities which HGV considers having greater potential for capital growth. HGV's current strategy in respect of individual investments is detailed in section 7 of Appendix One. HGV's flexibility in exiting some of its investments remains restricted given the escrow arrangements which will unwind during the next 18 months.

Portfolio Developments

HGV has agreed to support the proposed changes to the terms of the unsecured convertible debentures issued by Entourage Health Corp (ENT or the Company) which would allow HGV to divest its investment in ENT convertible debentures (the Notes).

The release by ENT on 14 May 2022 details the changes proposed by the Company which would allow HGV to complete the divestment of ENT which brings forward the maturity date from 25 September 2022 to 30 June 2022 and reduce the redemption percentage from 100% to 60% of face value (the Note Proposals).

1. There was a similar declines in listed Australian cannabis companies
2. The EV/NR multiple increased from 3 to 2.5 during the month of review based on the sample of listed Canadian companies used by HGV
3. The valuation is periodically reviewed with reference to material changes in net revenue and market valuation multiples
4. Refer HGV's dividend policy in Appendix One of this publication

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