Washington H. Soul Pattinson And Company Limited · ASX:SOL
Washington H. Soul Pattinson And — FY2023 Earnings Presentation
27 slides from Washington H. Soul Pattinson And's earnings presentation, Sep 28, 2023
Slide 1: FY23 Performance
Washington H. Soul Pattinson FY23 Performance for the Full Year ended 31 July 2023 28 September 2023
Slide 2: Presenters
Presenters Todd Barlow – Chief Executive Officer & Managing Director • Group highlights David Grbin – Chief Financial Officer • Group results Brendan O’Dea – Chief Investment Officer • Portfolio results 2 ASX:SOL FY23 Results
Slide 3: Our purpose is to generate enduring success
Our purpose is to generate enduring success $10.8b portfolio value1 12.5% p.a. TSR over 20 years1 23 years of increasing dividends 200+ Investments Multiple asset classes c.59,500 Shareholders1 Investment objectives: Investment philosophy: 1 GROW THE PORTFOLIO Long-Term Commitment Outperform the mar
Slide 4: Performance highlights
Performance highlights • Strong overall performance while ensuring the portfolio is more resilient ✓ INCREASED CASH GENERATION ✓ PORTFOLIO PERFORMANCE ✓ MANAGING INVESTMENT RISK Final dividend (fully franked) of 51 cps Net Asset Value (pre-tax) per share Portfolio repositioning ↑20.8% ↑12.3% $3.1b t
Slide 5: Operational highlights
Operational highlights • Investment in our people and processes to strengthen competitive edge • Active year rebalancing portfolio weightings toward Private Equity, Structured Yield and cash Attracting quality talent: Active year of deal flow: 23 51 $1.4b $0.9b professionals recruited employee headc
Slide 6: Consistent long-term performance
Consistent long-term performance Total Shareholder Return (p.a.) 1 year 5 year 10 year 15 year 20 year WHSP 32.4% 11.3% 12.4% 11.3% 12.5% All Ords Accumulation Index 11.1% 7.7% 8.5% 7.1% 9.0% Outperformance 21.3% 3.6% 3.9% 4.2% 3.5% WHSP +955% Cumulative performance to 31 July 2023 (including reinve
Slide 7: Continued dividend growth
Continued dividend growth • Ordinary dividend increases for 23 consecutive years at a compound annual growth rate of 9.6% • Growth underpinned by high quality, cash-generating investments Final dividend (fully franked) of 51 cents per share 18.5% Total FY23 ordinary dividends of 87 cents per share,
Slide 8: Group results
Group results David Grbin, CFO 8 ASX:SOL FY23 Results
Slide 9: Financial results – profit
Financial results – profit Group Profit FY23 FY22 • Increase in Statutory NPAT reflects non-recurring impairment that impacted prior period (as a result of the impairment of goodwill arising from the Milton merger) Statutory NPAT1 $690.7m $(12.9)m • Decrease in Regular NPAT in FY23, with solid growt
Slide 10: Financial results – regular profit
Financial results – regular profit • Lower contribution from the Strategic Portfolio was partly offset by growth in Emerging and Structured Yield portfolios • Emerging Companies (+$32m) and Structured Yield (+$35m) Portfolios contributed profit growth in addition to net income in Net Working Capital
Slide 11: Financial results – key performance indicators
Financial results – key performance indicators Key Performance FY23 FY22 • Growth in cash flow despite defensive positioning in Indicators equities, with stronger dividends from Strategic Portfolio investments and growth in income from Structured Yield Portfolio Net Cash Flow $424.3m $347.9m • Net A
Slide 12: Portfolio results
Portfolio results Brendan O’Dea, CIO 12 ASX:SOL FY23 Results
Slide 13: Portfolio composition
Portfolio composition • Value of the portfolio increased 8.8% to $10.8 billion with significant repositioning $5.2b Prior year portfolio size • We do not invest to replicate any index $1.2b in sales • We are active and thoughtful investors with an unconstrained mandate $547.1m additional investment
Slide 14: Strategic Investments
Strategic Investments • Significant, long-term investments in largely uncorrelated listed companies that is the core of current cash generation 48% of total portfolio (vs 49% in FY22) 12.8% 39.2% 43.1% FY23 FY22 Portfolio Value $5.2b $4.8b Net Cash Flow From 36.6% 29.6% 25.3% 30.3% $295.9m $168.7m I
Slide 15: Large Caps
Large Caps • Actively managed Australian listed equities generating consistent income and capital growth over the long-term 21% of total portfolio (vs 31% in FY22) Diversified Financials FY23 FY22 Diversified Financials Consumer Discretionary Consumer Discretionary Portfolio Value $2.3b $3.1b Indust
Slide 16: Private Equity
Private Equity • Investments in unlisted companies with attractive growth profiles and strategic M&A opportunities Portfolio is flexible on industry sector, deal structure, 11% of total portfolio (vs 7% in FY22) and geared towards growth FY23 FY22 Portfolio Value $1.2b $654.0m Net Cash Flow From Edu
Slide 17: Private Equity
Private Equity • $288.7 million of acquisitions to accelerate growth across our largest investments Agriculture & Water Holdings • Learn-to-swim programs for babies and • Integrated electrical, electronic and • Provider of best-in-class asset • Horticulture and water assets including children contro
Slide 18: Structured Yield
Structured Yield • Actively managed structured credit investments to achieve strong risk adjusted returns Loan book is widely spread, mostly senior secured, 6% of total portfolio (vs 2.5% in FY22) and diverse by industry FY23 FY22 Materials Portfolio Value $652.4m $250.3m Unsecured Consumer (Bonds)
Slide 19: Emerging Companies
Emerging Companies • Exposure to fast growing companies often benefiting from structural changes and global trends Portfolio actively repositioned towards later-stage 6% of total portfolio (unchanged) businesses and less exposed to cyclicals FY23 FY22 Comm <$50m Energy Portfolio Value $628.7m $612m
Slide 20: Property
Property • Actively managed direct property investments & equity accounted joint ventures 1% of total portfolio (unchanged) FY23 FY22 Portfolio Value $112.6m $226.6m Number of Investments 7 8 Artist impression – Sage by Moransource: Joshua Hill • Retirement development in partnership with Provectus
Slide 21: Net Working Capital
Net Working Capital • Managing portfolio liquidity via cash, interest-bearing liabilities and other assets and liabilities 7% of total portfolio (vs 3% in FY22) We have transformed our financial flexibility to take FY23 FY22 advantage of the best investment opportunities Portfolio Value $744.6m $273
Slide 22: Summary
Summary Todd Barlow, CEO 22 ASX:SOL FY23 Results
Slide 23: Active portfolio management
Active portfolio management • Over $8 billion in transactions (excluding Milton) undertaken over the last 5 years • Increasingly active management of portfolio mix to optimise risk-adjusted returns $2.9b $3.1b Legend Equities Private Equity Structured Yield Property $0.9b A Acquisitions Reallocated
Slide 24: Delivering enduring success
Delivering enduring success • Strong performance in FY23 building on success of FY22 FY23 vs pcp FY22 vs pcp Net Asset Value (pre-tax adjusted for dividends) per share ▲12.3% ▲13.8% Net Cash Flow From Investments per share ▲22.0% ▲28.0% Total Ordinary Dividend cents per share ▲20.8% ▲16.1% • Strong
Slide 25: Questions
Questions
Slide 26: Glossary
Glossary WHSP presents certain Alternative Performance Measures, which are used by management to assess the performance of the business against its principal objective of maximising capital and income returns over the long-term. They are not a substitute for Australian Accounting Standard measures a
Slide 27: Disclaimer
Disclaimer Disclaimer This document has been prepared by Washington H. Soul Pattinson and Company Limited (‘WHSP’). Except as required by law, no representation or warranty, No responsibility is accepted by WHSP or any of their respective express or implied, is made as to the fairness, accuracy, off
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