Underwood Capital Limited (ASX: UWC) has reported a half-year profit of $0.6 million, a turnaround from the $0.8 million loss in the previous corresponding period. The company’s improved performance was driven by gains in listed Australian securities and lower operating costs.
The net tangible asset (NTA) backing per share increased from 9.1 cents at 30 June 2024 to 9.4 cents at 31 December 2024, reflecting unrealised gains in its investment portfolio. However, Underwood Capital continues to trade at a 44% discount to its NTA, with a share price of 5.1 cents at the reporting date.
Key Financial Highlights
- Revenue from ordinary activities: $1.29 million (up from a loss of $167,000 in HY24).
- Profit after tax: $601,000 (up 177% from a $779,000 loss).
- Operating expenses: $400,000 (down from $600,000 in HY24).
- Cash and listed investments: $12.4 million.
- Net tangible assets: $19.7 million.
The company’s investment in Weed Me Inc. contributed $515,000 in gains, while its Delivra Health Brands investment resulted in a $911,000 loss after disposal. Listed ASX securities performed strongly, generating $1.7 million in gains.
Strategic Shifts and Portfolio Adjustments
Underwood Capital has undergone a transformation since appointing HD Capital Partners as investment manager, shifting towards a concentrated, long-term value investment approach. The company has divested most of its legacy investments, including Emerging Therapeutics Group ($3.8 million exit) and Delivra Health Brands ($1.19 million exit at 1.9x initial value).
Capital Management and Outlook
During the half-year, Underwood Capital initiated an on-market share buyback of up to 10% of its shares to manage capital and reduce the trading discount to NTA. The company remains focused on growing NTA per share and identifying new investment opportunities.
