Mr. Tony Rautava reports

PENDER GROWTH FUND PROVIDES FINANCIAL HIGHLIGHTS AND COMPANY UPDATES

Pender Growth Fund Inc. has released its financial and operational results for the three months and six months ended June 30, 2026.

Financial highlights:

• Net income was $7,241,975 for the three months ended June 30, 2026 (June 30, 2025 -- net income of $8,742,446), due to positive investment performance in the quarter.
• Net income per Class C common share was $1.05 for the three months ended June 30, 2026 (June 30, 2025 -- net income per Share of $1.23).
• The company's total shareholders' equity increased by $5,723,403, from $115,404,324 as at Dec. 31, 2025, to $121,127,727 as at June 30, 2026. This increase was primarily due to a net income of $6,713,853 as a result of positive investment performance, offset by $990,450 of shares repurchased under the company's normal course issuer bid (NCIB):
  • Shareholders' equity was $17.64 per share as at June 30, 2026 (Dec. 31, 2025 -- $16.65).
  • Six million eight hundred sixty-seven thousand six hundred twenty-seven shares were outstanding as at June 30, 2026 (Dec. 31, 2025 -- 6,933,229), representing a decrease of 65,600 shares as a result of share repurchases under the NCIB, which was renewed on Feb. 20, 2026.
  • As at June 30, 2026, 38.3 per cent of the investment portfolio comprised publicly listed companies and 61.7 per cent of private companies. Net assets comprised 38.2 per cent in publicly listed companies, 61.6 per cent in private unlisted companies, and 0.2 per cent in cash and other assets, net of liabilities.
  • The management expense ratio (MER) before performance fees was 2.70 per cent for the quarter ended June 30, 2026, an increase of 0.21 per cent compared with 2.49 per cent in the second quarter of 2025.

Portfolio highlights

During the second quarter, Pender Growth Fund continued to execute its long-term, value-oriented investment strategy, emphasizing concentrated, high-conviction opportunities across both public and private markets.

Public equity markets in Q2 (second quarter) 2026 rebounded sharply, driven by robust corporate earnings, continued investment in the AI (artificial intelligence) supply chain and recovery from the geopolitical shocks of earlier in the year. Still, volatility has defined 2026, rooted in three overlapping pressures: an energy supply shock; reaccelerating inflation; and a higher-for-longer monetary policy regime. All three suggest volatility is likely to carry into Q3 (third quarter).

Throughout the quarter, the company maintained an active approach to portfolio management, continuing to support private investments while closely monitoring valuations and company-specific catalysts within the public equity portfolio.

Turning to the M&A (merger and acquisition) environment, the company continues to see activity pick up across small- and mid-cap names. The company views this as an important signal: Private markets are beginning to recognize value in the public small- and mid-cap space, where valuations have remained disconnected from long-term fundamentals. This backdrop represents a meaningful tailwind, with the potential to surface and unlock value in underappreciated portfolio companies.

One notable example was Kneat's June 8, 2026, announcement that it had entered into a definitive agreement to be acquired by Thoma Bravo for $6.50 per share in cash, representing a premium of approximately 20 per cent to the previous closing price and 40 per cent to the unaffected share price prior to the commencement of its strategic review process. The company believes this transaction underscores two key themes: the continued undervaluation of small-cap technology companies and the strong level of M&A activity across the sector.

For the six months ended June 30, 2026, the company recorded a net increase in unrealized appreciation of $4,717,870, of which $4,062,454 was attributable to its investment in Kneat. Subsequent to the quarter-end, the acquisition was completed and the company fully exited its position, realizing a gain of approximately $4-million. As of the date of this news release, approximately 7 per cent of the company's net assets are held in cash, providing flexibility to capitalize on future investment opportunities.

The company remained actively engaged with key portfolio companies during the quarter, including General Fusion Inc., a long-standing private holding. On July 10, General Fusion completed its business combination with Spring Valley Acquisition Corp. III, and the combined entity was renamed General Fusion Group Ltd., with shares and warrants commencing trading on the Nasdaq Stock Market on July 13 under GFUZ and GFUZW, respectively. The listing marks General Fusion's transition from a long-held private position to a publicly traded holding, and comes on the heels of the company's 8.4 million C plasma heating milestone announced the prior month, a step the company views as meaningful validation of fusion's path toward commercial relevance amid accelerating electricity demand from AI and electrification. This development represents and highlights the company's ability to identify, support and patiently hold transformational private companies as they advance toward corporate milestones.

Other highlights

The company continued to acquire its shares in the market under its NCIB because management believes the shares are trading at a discount to intrinsic value. On Feb. 20, 2026, the company launched a new NCIB, under which the company may purchase a maximum of 585,681 shares, representing 10 per cent of the company's public float as of the launch date, during the one-year period ending Feb. 19, 2027.

Readers are encouraged to refer to the company's MD&A (management's discussion and analysis) and quarterly unaudited financial statements for June 30, 2026, the annual audited financial statements for the year ended Dec. 31, 2025, and other disclosures available under the company's profile on SEDAR+ for additional information.

About Pender Growth Fund Inc.

Pender Growth Fund is an investment firm. Its investment objective is to achieve long-term capital growth. The company utilizes its small capital base and long-term horizon to invest in unique situations, primarily small-cap, special situations, and illiquid public and private companies. The firm invests in public and private companies principally in the technology sector. It trades on the TSX Venture Exchange under the symbol PTF and posts its NAV (net asset value) on its website, generally within five business days of each month-end.

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