Washington H. Soul Pattinson And Company Limited · ASX:SOL
Washington H. Soul Pattinson And — FY2021 Earnings Presentation
34 slides from Washington H. Soul Pattinson And's earnings presentation, Sep 23, 2021
Slide 1: Financial Results
Financial Results Year ended 31 July 2021
Slide 2: WHSP is a unique investment product in the Australian market
WHSP is a unique investment product in the Australian market Through WHSP, an investor has the opportunity to gain exposure to: — A range of asset classes, including private equity, private credit and property — Investment strategies that have delivered above market returns for decades — Steady and
Slide 3: Our Investment Philosophy
Our Investment Philosophy DIVERSIFIED UNCONSTRAINED LONG TERM Diverse range of uncorrelated A flexible investment mandate allows Disciplined and value focussed investments across listed equities, WHSP to invest in and support approach to investing through market private equity & venture capital, com
Slide 4: FY21 performance
FY21 performance As at 31 July 2021 Full Year Results July 2021 4
Slide 5: Overview – year ended 31 July 2021
Overview – year ended 31 July 2021 Profit for the year Key performance indicators Net cash from Group Regular NPAT1 Group Statutory NPAT2 WHSP portfolio value investments3 $328m $273m $5.8b $180m up 93% on FY20 down 71% on FY20 up 12% in FY21 down 29% on pcp ▪ Group Regular NPAT improvement due to:
Slide 6: Dividends
Dividends WHSP is the only company in the All Ordinaries Index to have increased its dividend every year since 2000 ▪ WHSP has resolved to pay an FY21 Final 20 year Total Ordinary Dividend history Dividend of 36cps, fully franked ▪ Total dividends for FY21 of 62cps (up 3.3%) ▪ 21st consecutive incre
Slide 7: Portfolio performance
Portfolio performance Net Asset Value of WHSP (pre-tax) as at 31 July 2021 was $5.8 billion Value of 12 month As at 31 July 2021 Holding Movement $m $m % ▪ Pre-tax value of the portfolio increased by Telecommunications Portfolio (1) 1,523 (444) (22.5%) 12.1% over the year Brickworks (1) 1,592 520 48
Slide 8: Total shareholder returns
Total shareholder returns An investment in WHSP over the last 20 years has increased over 1,100% Annualised TSRs 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year +1,140% WHSP 70.4% 17.1% 16.4% 13.0% 13.6% 13.4% All Ordinaries Accumulation 30.4% 10.2% 10.4% 9.9% 7.3% 8.7% Index Relative performance 40.0%
Slide 9: Long-term total shareholder returns
Long-term total shareholder returns WHSP has provided strong equity returns over the last 40 years $1,000 invested in 1981 worth $239,182 a Compound annual return of 14.7% for 50 years 1981 1986 1991 1996 2001 2006 2011 2016 2021 Source: Capital IQ Cumulative performance to 31 July 2021 (Including r
Slide 10: Active management
Active management $2.3 billion of acquisitions and divestments over the last three years ▪ WHSP’s portfolio is actively managed across listed equities, private equity, structured yield and property ▪ $2.3bn of investment acquisitions and divestments Divestments over the last three years $0.9bn Acqui
Slide 11: Portfolio themes
Portfolio themes Full Year Results July 2021 11
Slide 12: TPG Limited
TPG Limited Solid 1H21 earnings impacted by short term headwinds ▪ 1H21 results (to 30 June 2021): — Revenue of $2.63 billion — EBITDA of $886 million ▪ Improved segment trends, driving more on-net: — Increased fixed broadband subscriber base to 2.2 million, 12% increase in on-net subscribers — Mobi
Slide 13: TPG Limited
TPG Limited TPG is a full-service telecommunications business of scale with significant infrastructure assets ▪ 7.5m consumer and business services, and a presence in more than 3.5 million households ▪ Strong brand portfolio including Vodafone, TPG and iiNet ▪ Nationwide mobile network covering more
Slide 14: TPG Limited
TPG Limited Solid top and bottom line growth opportunities near and long term Investment rationale ▪ Telecommunications is an essential service and data consumption continues to grow ▪ Future technologies (such as IoT and driverless cars) will rely heavily on network infrastructure ▪ Low cost compet
Slide 15: Brickworks Limited
Brickworks Limited Strong growth in detached housing across Australia – Brickworks is a leading supplier Full Year Results July 2021 Source: Brickworks 15
Slide 16: Brickworks Limited
Brickworks Limited Solid growth in Single Family construction following Covid-19 disruptions, partly offset by Non-Residential Full Year Results July 2021 Source: Brickworks 16
Slide 17: Brickworks Limited
Brickworks Limited Equity value in the Industrial Property Trusts is now over $900m Significant potential from pre-committed developments and further undeveloped land Source: Brickworks Full Year Results July 2021 17
Slide 18: New Hope Corporation Limited
New Hope Corporation Limited Strong results in second half expected to continue into FY22 Lower volumes and higher costs associated with mining end of Acland Stage 2 resulting in losses 1 1 Source: New Hope Corporation 1. Underlying Earnings before Interest, Tax and Depreciation and Amortisation (EB
Slide 19: New Hope Corporation Limited
New Hope Corporation Limited Coal prices have recovered strongly from the Covid-19 disruptions to energy markets 10 year graph of NEWC Thermal Coal Price NHC FY21 Quarterly Average Realised Price $/tonne A$/tonne 300 140 Half year period FY21 Thermal Coal (USD/t) 250 120 Thermal Coal (AUD/t) 100 200
Slide 20: New Hope Corporation Limited
New Hope Corporation Limited Both of New Hope’s assets remain resilient even under scenarios of accelerated energy transition Global Thermal Coal Cost Curve Lower cost mines will need to continue producing to meet coal demand even under most aggressive AET scenarios New Acland Bengalla Full Year Res
Slide 21: Round Oak Metals
Round Oak Metals ROM has three producing mines and one long-life development asset ▪ ROM copper equivalent production of 40kt and EBITDA of $183m ▪ Diverse production portfolio in Jaguar (WA) and Northwest Queensland ▪ Development project with primary approvals in place at Stockman (Vic). 10 year Li
Slide 22: Round Oak Metals
Round Oak Metals Performance driven by higher production and commodity prices and improved operating efficiency Commodity Performance over FY2021 70% 60% Zinc (USD) Copper (USD) 50% 40% 30% 20% 10% 0% (10%) Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Source: Capital IQ Full Year Results July 2021 Sour
Slide 23: Round Oak Metals
Round Oak Metals Structural tailwinds in supply and demand expected to support strong copper prices Additional copper supply required from new sources with increasing gap to demand emerging post 2025 Source: Round Oak Metals Full Year Results July 2021 23
Slide 24: Other investment portfolios
Other investment portfolios Year ended 31 July 2021 Value of portfolios* $2.2 billion Contribution to WHSP’s regular NPAT $129 million ▪ Value of these portfolios increased 38% during FY21 * At market value, cost or directors’ valuation ▪ Profit contribution increased 87% (including some investment
Slide 25: Other investment portfolios
Other investment portfolios Year ended 31 July 2021 Financial Services portfolio Pharmaceutical and Health portfolio Large Cap portfolio Value of portfolio* $398 million Value of portfolio* $280 million Value of portfolio* $396 million Contribution to NPAT $10.5 million Contribution to NPAT $3.5 mil
Slide 26: Other investment portfolios
Other investment portfolios Year ended 31 July 2021 Small Cap portfolio Private Equity portfolio Property portfolio Value of portfolio* $391 million Value of portfolio* $367 million Value of portfolio* $110 million Contribution to NPAT $77.0 million Contribution to NPAT $12.5 million Contribution to
Slide 27: Other investment portfolios
Other investment portfolios Year ended 31 July 2021 Structured Yield Portfolio by Sector Exposure Structured Yield portfolio Consumer Value of portfolio* $295 million Discretionary Contribution to NPAT $11.0 million Financials Net operating cash $16.9 million Real Estate ▪ Net investment of $148m ov
Slide 28: Outlook
Outlook Integration of Milton Corporation Full Year Results July 2021 28
Slide 29: Milton Corporation merger
Milton Corporation merger Our merger with Milton Corporation is highly strategic and has been approved by Milton shareholders and the Court ▪ The merger is highly strategic and is expected to provide WHSP with: Financial Outcomes –1 Greater portfolio diversification and additional liquidity Net Asse
Slide 30: Increased diversification
Increased diversification The merger with Milton improves liquidity to enable potential future diversification across multiple asset classes WHSP1 (Before) WHSP4 (After) Gross Asset Value: $6.5 billion Gross Asset Value: $9.7 billion Structured Structured Cash Cash Property Yield Property Yield Priv
Slide 31: Expanded management team
Expanded management team Milton employees will join the WHSP team and Brendan O’Dea will become the company’s Chief Investment Officer Complementary philosophy and management team New Chief Investment Officer – Brendan O’Dea ▪ Milton is a long-term investor with a similar ▪ Milton’s CEO & Managing D
Slide 32: Investing strategy
Investing strategy WHSP’s enhanced liquidity position following the merger will allow us to capitalise on investment opportunities arising in our target asset classes and thematics 1 WHSP has significant liquidity available for future investment Milton merger providing > $2b in additional liquidity
Slide 33: Terms and Definitions
Terms and Definitions Regular profit after tax is a non-statutory profit measure and represents profit from continuing operations before non-regular items. A reconciliation to 1 Group Regular NPAT statutory profit is included in the 2021 Full Year Financial Report – Alternative Performance Measures.
Slide 34: Disclaimer
Disclaimer Disclaimer This document has been prepared by Washington H. Soul Pattinson and Company Limited (‘WHSP’). All information contained in this document (including this notice) Any forward looking statements included in the Information This Information does not constitute an offer, invitation,
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