Australian-listed, specialist investment company Hygrovest Ltd (ASX:HGV, OTC:MMJJF) is encouraged by positive progress made during the 2024 financial year with revenues from ordinary activities up 146% to A$1.199 million and the loss from ordinary activities after tax reduced by 97% to just A$131,000.
The loss for the consolidated entity, after providing for income tax and non-controlling interest, amounted to just A$100,000 compared to the prior corresponding period (pcp) to June 30, 2023, of A$4 million.
Gains from revaluations of Hygrovest’s investments in Delivra Health Brands, Emerging Therapeutics Group (ETG) and Weed Me were offset by the write-off of its investment in Medio Labs after that company informed HGV during the financial period that it was insolvent and was no longer operating.
Overheads reduced
Also providing encouragement for the company were the operating overheads, which were down to A$1.1 million from A$1.6 million in the previous financial period.
Net assets of the consolidated entity decreased from A$19.4 million as at June 30, 2023, to A$19.2 million 12 months later while also during the 12 months, the net tangible asset backing per share decreased from 9.18 cents to 9.1 cents.
Investment strategy
Hygrovest’s primary investment strategy is to provide investors with exposure to a portfolio that primarily seeks to produce capital growth over the medium term from investments in listed and unlisted equities and debt securities, whilst managing risk through a portfolio approach to investing.
The company measures and evaluates the performance of substantially all of its investments on a fair value basis.
HGV operates as an investment entity for financial reporting purposes comprising:
- Revenue and other income – including realised and unrealised gains/losses and interest income from investments.
- Operating expenses – such as the investment management and administration expenses required to operate as an investment company listed on the Australian Securities Exchange.
HGV has funds available to deploy in new investments and seeks to realise existing investments to recycle capital into opportunities that it considers will increase diversification and has better potential for capital growth.
Improving performance
The company is focused on seeking to improve HGV’s performance, via initiatives including:
- maximising the value of HGV’s existing investments;
- revising HGV’s investment approach so that it is more value-focused than it has been historically; and
- reducing HGV’s fixed cost structure.
Steps taken on these fronts include:
- appointing HD Capital Partners Pty Ltd as investment manager of HGV’s investment portfolio; and
- reducing operating costs (excluding base investment management fees), which are forecast to fall from more than A$1.3 million in the year ended June 30, 2023, to around A$700,000 in the year ending June 30, 2025.
It is expected that the proportion of the company’s investment portfolio in non-cannabis securities will increase over the medium term as the company is able to realise some of the cannabis securities.