Washington H. Soul Pattinson And Company Limited · ASX:SOL
Washington H. Soul Pattinson And — FY2022 Earnings Presentation
33 slides from Washington H. Soul Pattinson And's earnings presentation, Sep 21, 2022
Slide 1: Financial Results Full Year FY2022
Financial Results Full Year FY2022
Slide 2: Full Year Performance
Full Year Performance Period ending 31 July 2022 Full Year Results July 2022 2
Slide 3: FY22 highlights
FY22 highlights WHSP is focused on increasing the asset value of the portfolio and generating increasing cash from investments to fund dividends while managing risk through appropriate portfolio construction PORTFOLIO OUTPERFORMANCE INCREASED CASH GENERATION MANAGING RISK Portfolio significantly out
Slide 4: Dividends
Dividends FY22 ordinary dividends up 16.1% to 72 cents per share. Over 20 years of dividend growth Special dividend declared of 15 cents per share, fully franked ▪ Strong operating cashflow permits higher dividends ▪ WHSP has declared an FY22 Final Dividend of 43 cps, fully franked (up 19.4%) ▪ Spec
Slide 5: Total shareholder returns
Total shareholder returns An investment in WHSP over the last 20 years has increased almost 9 times – more than double the Index Annualised TSRs 1 Year 5 Year 10 Year 15 Year 20 Year WHSP (19.6%) 10.5% 10.0% 9.9% 12.2% All Ordinaries Accumulation Index (2.6%) 8.4% 9.6% 5.2% 8.8% +892% Relative perfo
Slide 6: 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 1982 worth $256,434a Compound annual return of 14.9% for 40 years 1982 1987 1992 1997 2002 2007 2012 2017 2022 Source: Capital IQ Cumulative performance to 31 July 2022 (Including re
Slide 7: Recent share price performance
Recent share price performance The share price has not correlated with portfolio performance over the last 12 months 12-Month Performance ▪ During FY22 the growth in pre-tax NAV outperformed the: 20% Pre-tax NAV ‒ All Ords by 20.2%; and 15% 13.8% ‒ SOL share price by 35.1% 10% 5% ▪ Share price as at
Slide 8: Capital protection
Capital protection Challenging and volatile markets will favour profitable assets with robust cash flows Average Average Performance in Performance in ▪ WHSP portfolio focused on investments with strong defensible “Down months” “Up months” cash flows as well as growing earnings and dividends 3.0% 2.
Slide 9: Financial results
Financial results 9
Slide 10: Full year ended 31 July 2022 – Profit After Tax
Full year ended 31 July 2022 – Profit After Tax Group Regular profit excludes one-off events and better reflects underlying performance of major investments Group Regular NPAT significantly increased ▪ Increased commodity prices (New Hope, Round Oak) Group Regular $834.6m ▪ Property profits in Brick
Slide 11: Full year ended 31 July 2022 – Consolidated Regular NPAT
Full year ended 31 July 2022 – Consolidated Regular NPAT + 154.4% FY22 Consolidated Regular NPAT increased by $506.5m (or 154.4%) compared to FY21 Largely due to: ▪ Strategic Portfolio – increased contribution from New Hope and Brickworks ▪ Large Caps Portfolio – contribution from Milton merger and
Slide 12: Full year ended 31 July 2022 – Consolidated Net Profit After Tax
Full year ended 31 July 2022 – Consolidated Net Profit After Tax - 104.7% Consolidated NPAT decreased by $286.1m to a Net (Loss) After Tax of ($12.9m) Principal variations were: ▪ Non-cash impairment of goodwill ($984.6m) arising from the Milton acquisition Partly offset by: ▪ FY22 increase in Conso
Slide 13: FY22 accounting matters
FY22 accounting matters Several significant accounting matters occurred in FY22 New Hope deconsolidated towards end of year ▪ New Hope FY22 results consolidated up to and including 29 July 2022 ▪ From that date WHSP accounts for its share of New Hope NPAT and will no longer consolidate New Hope reve
Slide 14: FY22 accounting matters
FY22 accounting matters Several significant accounting matters occurred in FY22 Sale of Round Oak Minerals ▪ Round Oak sold on 1 July 2022 to Aeris Resources for an after tax gain of $21m ▪ Round Oak shown as a discontinued operation in the FY2022 financial report ▪ WHSP has taken a 30.3% stake in A
Slide 15: Portfolio overview
Portfolio overview 15
Slide 16: Portfolio overview
Portfolio overview Net Asset Value at 31 July 2022 was $10 billion, an increase of 72% over the last 12 months Portfolio Value ($m) ▪ WHSP Strategic portfolio is 48.6% of the total portfolio. Strategic portfolio (1) $4,837m ▪ Large cap portfolio is 31.2% of the total portfolio with material sales La
Slide 17: Strategic portfolio
Strategic portfolio WHSP has a portfolio of cornerstone shareholdings in diversified industries with low correlations Value $4,837 million ▪ WHSP's Round Oak private equity investment merged with Aeris and is a new strategic equity position exposed to the Australian % of portfolio 48.6% copper indus
Slide 18: Strategic portfolio
Strategic portfolio Strong performance from New Hope due to high prices for thermal coal has continued post July year-end 200.0% Newcastle thermal coal price 139.1% 150.0% 137.1% New Hope 100.0% 50.0% - (50.0%) Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-2
Slide 19: Large caps
Large caps Large Caps portfolio aims to generate long-term capital and income growth Value $3,103 million ▪ Portfolio rebalanced in the context of broader WHSP exposures and % of portfolio 31.2% to achieve a more defensive risk profile. Net cash flow $116.9 million ▪ Significant amounts of cash rais
Slide 20: Large caps
Large caps Active period for the portfolio post Milton merger Purchases Purchases Disposals Disposals Add New Reduce Exit Full Year Results July 2022 20
Slide 21: Top Investments
Large caps Top 30 Investments # Stock % of Portfolio # Stock % of Portfolio 1 Macquarie Group Limited 11.7% 16 Coles Group Limited 2.2% 2 Commonwealth Bank of Australia 8.4% 17 Rio Tinto Group 2.1% 3 BHP Group Limited 6.6% 18 Ramsay Health Care Limited 2.0% 4 CSL Limited 6.0% 19 ASX Limited 1.9% 5 W
Slide 22: Private equity
Private equity WHSP has a growing portfolio of private companies which are platforms for further growth Value $654 million ▪ Strong contributions from the Round Oak restructure, Ampcontrol, % of portfolio 6.6% Ironbark and the agricultural portfolios. Net cash flow $40.1 million ▪ Round Oak investme
Slide 23: Emerging companies
Emerging companies WHSP is an active investor and partner in both listed and pre-IPO emerging companies Value $612 million ▪ Delivered a total return of –3.4% over 12 months to 31 July 2022. % of portfolio 6.1% ▪ Outperformed the ASX Small Ordinaries Accumulation Index by 7.5% Net cash flow $27.6 mi
Slide 24: Emerging companies
Emerging companies The emerging companies portfolio takes a dynamic view to exposures Materials 18% Financials 15% Energy 15% Industrials 12% Consumer Discretionary 12% Information Technology 12% Health Care 10% Communication Services 4% Real Estate 2% Consumer Staples 1% Utilities 0% Full Year Resu
Slide 25: Structured yield
Structured yield Investing across the capital structure for improved risk adjusted returns on attractive opportunities Value $250 million ▪ Net cash flow from investments of $19.7m, up 18.7% over pcp. % of portfolio 2.5% ▪ Total return of 17.9% Net cash flow $19.7 million Portfolio Corporate loans o
Slide 26: Property
Property The property portfolio comprises actively managed direct property investments Value $226 million ▪ Strong revaluations in 2022 with portfolio return of +47%. % of portfolio 2.3% ▪ Net cash flow +14.3%. Net cash flow $1.6 million Portfolio Direct property and equity accounted joint ▪ Underwe
Slide 27: Net working capital
Net working capital WHSP has access to significant liquidity for new opportunities Value $274 million ▪ Cash on hand at 31 July of $486 million. % of portfolio 2.8% ▪ $414m of interest-bearing debt with a current average cost of 1.75% Portfolio Cash, interest-bearing liabilities and other compositio
Slide 28: Net working capital
Net working capital Reduced exposures to the equity markets from late 2021 to raise cash in uncertain economic environment 12-Month Net Working Capital $400m $300m 274 $200m $100m $0m ($100m) ($200m) ($300m) ($400m) ($500m) ($600m) Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-2
Slide 29: Strategy and outlook
Strategy and outlook Full Year Results July 2022 29
Slide 30: Portfolio settings
Portfolio settings WHSP’s investment style is well-suited to the current environment Defensive portfolio settings FOCUSED ON COST AND QUALITY FLEXIBLE AND OPPORTUNISTIC ▪ Increasing diversification of uncorrelated assets ▪ Increased cash levels and other liquidity to invest in new opportunities at m
Slide 31: How is WHSP different from listed investment companies?
How is WHSP different from listed investment companies? Increased diversification, steady dividends and greater outperformance WHSP v ASX Listed Investment Companies ▪ Greater diversification and flexibility through investments in (Market Cap >$1bn) listed equities, private equity, direct property a
Slide 32: WHSP is a unique investment strategy in the Australian market
WHSP is a unique investment strategy in the Australian market Through WHSP, an investor has the opportunity to gain exposure to: — A range of asset classes across sectors, including private equity, private credit and property — Investment strategies that have delivered above market returns for decad
Slide 33: 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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