Hygrovest : HGV Investment Portfolio Report February 2022

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 to long 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.

onlyHygrovest 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 to long term from investments in listed and unlisted equities and other financial assets.

About Hygrovest

useInvestments are managed by Parallax Ventures Inc., a specialist management company in Canada, under a long- term strategic partnership.

Since 2015, Hygrovest has created a significant number of investment opportunities from its connections in Canada and Australia in the private investment sector and realised exits to the benefit of Hygrovest and its shareholders:

Hygrovest Investment Performance2

1. info@hygrovest.com.au Automic Registry Services

For

Investment Portfolio Report

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

Performance Update

Net Tangible Asset Value Per Share Before Tax3 as at 28 February 2022

$0.1516

Net Asset Value as at 28 February 2022

$33m

Discount of HGV share price to Net Asset Value as at 28 February 2022

65% p.a.

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 its next live audio webinar of the Investor Conference Call on 16 March 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 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.

For personal use only

Investment Portfolio Report

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

HYGROVEST NEWS

Performance of Hygrovest Portfolio February 2022

During the month of February 2022, HGV's Net Asset Value (before provision for deferred tax) remains unchanged. HGV produced a loss of 20% for the financial year to 28 February 2022 compared to the 63% loss in the listed Canadian cannabis index. The poor performance of listed cannabis securities has underlined the merits of the decision of HGV shareholders to remove the cap on non-cannabis investments in December 2021 and focus on new investments in sectors other than cannabis.

HGV financial results for half year ended 31 December 2021

HGV released its audited financial statements for the half year ended 31 December 2021 on 23 February 2022. The net asset value in the audited financial statements was unchanged from that released to the ASX on 13 January 2022.

Follow on investment in Weed Me

HGV completed a follow-on investment of CAD1m in the unlisted company, Weed Me Inc. ("Weed Me") based in Ontario Canada. HGV's investment is in the form of an unsecured convertible note to fund Weed Me's business plan rollout and position Weed Me for a liquidity event (either public listing or sale of the business). The key terms of the convertible note are:

1. a cash yield of 8% per annum;
2. maturity date of 29 April 2023; and
3. conversion at HGV's option4 prior to maturity.

HGV has also been issued a further 230,415 warrants convertible into 230,415 Weed Me shares each at CAD2.17 with an expiry date of 29 October 2024.

The additional CAD1m convertible note was made on the same terms as the CAD1m convertible note advanced by HGV to Weed Me in November 2021.

The investment was made from HGV's existing cash reserves.

Established in 2016, Weed Me is the largest unlisted Canadian licenced producer of cannabis products for the Canadian recreational market.

The Weed Me brand consists of a complete line of dried flower, pre-rolls, vapes, and gummies products, which have significant market shares in its key Canadian provincial markets. Weed Me has successfully expanded its operations with net sales of CAD22.7m in the year ended 31 December 2021 (FY21) compared to FY20 net sales of CAD6.9m and was profitable in FY21. Net sales growth continues with the net sales of CAD25.1m in the twelve months ended 31 January 2022 (representing a 14% increase over the twelve months ended 31 December 2021).

HGV made its initial investment in Weed Me in December 2017.

"The follow-on investment in Weed Me demonstrates HGV's expertise to secure a private negotiated investment in unlisted businesses which are not generally available to Australian retail and institutional investors. The investment in Weed Me will assist the further expansion of Weed Me's sales growth and maximise the value on the ultimate exit of HGV's investment.", said Mr Wall, HGV's Chairman.

Details of HGV's investment in Weed Me may be found in section 6 of Appendix One.

Portfolio Investment Strategy

HGV is seeking to reduce the 65% gap of the share price to NAV (9 cents per HGV share) by:

1. working with HGV's largest investment, Weed Me, to achieve a liquidity event during 2022 (investment value of $15m) to provide HGV with the option of realising a material portion of HGV's investment;