Washington H. Soul Pattinson And Company Limited · ASX:SOL
Washington H. Soul Pattinson And — Shareholder Meeting (November 2003)
60 slides from Washington H. Soul Pattinson And's shareholder meeting presentation, Nov 21, 2003
Slide 1: Washington H. Soul Pattinson and Company Limited
Washington H. Soul Pattinson and Company Limited ABN. 49 000 002 728 Telephone: 02 9232 7166 Head Office: Facsimile: 02 9235 1747 First Floor, Postal Address: 160 Pitt Street Mall G.P.O. Box 479 SYDNEY. NSW. 2000 SYDNEY. NSW. 2007 21 November, 2003. The Manager — Companies, Australian Stock Exchange
Slide 2: Welcome to the 101st Annual General Meeting
ashington H Soul Pattinson Welcome to the 101* Annual General Meeting spr SE) tmomoms Ay coevern | EM
Slide 3: Chairman's Address 2003 Annual General Meeting
ashington H Soul Pattinson Chairman’s Address 2003 Annual General Meeting
Slide 4: Group Performance — Consolidated Profit Results
Group Performance — Consolidated Profit Results Operating Profit After Tax excluding Outside Equity (before non-regular and extraordinary items) 1999 2000 2004 2002 2003 CONSOLIDATED RESULT The Profit of the Group, after tax and before non regular items, attributable to shareholders for the year end
Slide 5: Profit of the Group after tax and non-regular items
The Profit of the Group, after tax and non-regular items, was $88.3 million, an increase of 21.4% over the previous year. During the year the Company sold properties and shares and received a demerger dividend, realising an after tax profit of $9.6 million on those nonregular items.
Slide 6: Group Performance — Earnings per Share
son ington H Soul Pattinson Group Performance — Earnings per Share Earnings per Share after non-regular and before extraordinary items 407 37.0->5 357 30.5 3077 22.2 22.8 23.8 254 207 154 104 §4 of A en 1999 2000 2001 2002 2003 Earnings per share of 37 cents were up 21% on 2002.
Slide 7: Total Dividends
hington H Soul Pattinson Total Dividends Dividend Performance for 2003 up 21.4% on last Cents per Share year 1999 2000 2001 2002 2003 Dividends Directors recommend the payment of a final dividend of 10.0 cents per share in respect of the year ended 31st July 2003 (2002 — 8.0 cents per share). The fi
Slide 8: Group Performance — Benefits to Participating Shareholders
son shington H Soul Pattinson Group Performance Benefits to Participating Shareholders as at 31/07/03 + Performance of WHSP Group Listings - Clover (CLY) - Shares up from LSe te 63¢ -Options up from 6.5c te 37¢ - SP Telecommunications (SOT) - Shares up fram 69%¢e ta $1.08 - Options up from 44c to Si
Slide 9: Shareholder benefits from Clover, SPT and New Hope floats
In addition to increased profits and dividends participating shareholders have benefited from the share performance on the Australian Stock Exchange (ASX) of Clover Corporation Limited (CLV), SP Telecommunications Limited (SOT), and New Hope Coal. WHSP shareholders have had the opportunity of partic
Slide 10: SOT and New Hope share price performance
One SOT share on 1st August 2002 was quoted at 69 cents and an option 44 cents. On 31st July 2003 one SOT share was quoted at $1.08 and an option 80 cents. At the end of October the share price was $1.31 and options $1. New Hope Coal which listed at 40 cents was quoted at 61 cents at the end of Octo
Slide 11: New Hope Coal listing performance
son shington H Soul Pattinson Group Performance Benefits to Participating Shareholders as at 31/07/03 ~~ New Hope Coal (NHC) - Listing at 40¢ - Current Price 61¢ New Hope Coal which listed at 40 cents was quoted at 61 cents at the end of October, the options were .30c
Slide 12: Investments — Share Portfolio
on hington H Soul Pattinson luvestments ¢ Portfolio Return (including unrealised gains) 24.1% (last year 6.8%) ¢ Benchmark S&P / ASX 300 Accum Index 5.9% (last Year — 3.8%) Investments — Share Portfolio The Company's investment portfolio return for the year, including unrealised gains, was 24.1% com
Slide 13: Investments — Sales, Dividend Income and Market Value
ington H Soul Pattinson Investments * Sales totalled $13.6M * Dividend income up 51% to $13.0M + Market Value at 31/07/03 $1.15 Billion (last year $948M) Sales of equities amounted ot $13.6 million and included the sale of shares in Wattyl Ltd, Patrick Corporation and, due to the acceptance of take-
Slide 14: Associated Companies — API
hington H Soul Pattinson Associated Companies API (Australian Pharmaceutical Industries Limited) + Shareholding 22.9% * Revenue up 29.6% to $2.5B + Net profit of $23.6M down 32% 13") r Investments — Associated Entities Australian Pharmaceutical Industries Limited (API) (Group Shareholding 22.9%) Des
Slide 15: API one-off expenses
These expenses relate to costs associated with the proposed merger between API and Sigma, a further provision for stock obsolescence, provisions for the closure of the Northmead warehouse and the PAN product recall, a write-off of goodwill in Hospital Supplies of Australia and the development of a l
Slide 16: API profit contribution and dividends
API (Australian Pharmaceutical Industries Limited) * Profit contribution to WHSP $5.6M ($8.8™ last year) ¢ Total dividends 13 cents per share unchanged £ The Group’s equity accounted profit from API amounted to $5.6 million compared with last year’s result of $8.8 million. Despite a reduction in ear
Slide 17: Brickworks Limited
n ington H Soul Pattinson Brickworks Limited + Net Profit after Tax $72.7M up 40°% on last years Profit of 51.9M * Clay Products Profit wp 29.1% on revenue growth of 20.8% + Final Dividend 13c per share * Total Dividends 20c per share (last year 15.5 cents) eee 56 § £425 mmm Brickworks Limited (Bric
Slide 18: Brickworks dividends and investment portfolio
Directors increased the final dividend to 13 cents per share (2002 - 9 cents per share) taking dividends for the year to 20 cents per share fully franked (2002 — 15.5 cents per share fully franked). The new areas of property development and waste management are now making positive contributions to p
Slide 19: Brickworks long-term returns
son ishington H Soul Pattinson Brickworks Limited ¢ 15 year average compound return for Brickworks Investors 14.7% (ASX All Ords Acewm Index 8.9%) * WHSP Equity Accounted share of Brickworks Profit $22.3M up 66% on last years $13.4M ceremermrnenmerennerne if) fpr Over the past 15 years, an investmen
Slide 20: Clover Corporation
“shington H Soul Pattinson Clover Corporation CL@VER * WHSP share 28.9% + Maiden Profit of $461,000 (ast years loss $5.6) + WHSP Equity Accounted loss (after amortisation of goodwill on acquisition) $105,000 (last years loss $1.8M) Clover Corporation Limited (Clover) (Group Shareholding 28.9%) Clove
Slide 21: Clover equity accounted loss
The Group’s equity accounted loss (after amortisation of goodwill on acquisition) from Clover amounted to $105,000 this year compared with last year’s loss of $1.8 million.
Slide 22: New Hope Group — Coal
shington H Soul Pattinson New Hope Group — Coal * Profit contribution to WHSP $25.4M (up 15.6%) Controlled Entities Coal (New Hope Corporation Limited Group) The Group’s share of profit after tax and outside equity interest of its 69.3% controlled entity New Hope Corporation Limited amounted to $25.
Slide 23: New Hope Group — Coal profit drivers
Weshington H Soul Pattinson New Hope Group — Coal * Profit increase due to a combination of: - Increased coal production - Increased sales (25.3M tonnes up 11.5%) - Operating efficiencies Which offset: - Lower coal prices - Strengthening Australian dollars The profit result was due to both increased
Slide 24: Combined coal production and sales
on hington H Soul Pattinson o1999 @2000 2001 02002 M2003 Combined coal production of New Hope Australia and its associate P T Adaro Indonesia totalled 24.2 million tonnes for the year compared with 21.8 million tonnes in the previous year, an increase of 11.1%. Coal sales increased to 25.3 million t
Slide 25: New Hope Group Australian Operations
mshington H Soul Pattinson New Hope Group Australian Operations * Increased production + Higher sales * Lower costs Australian Operations Commencement of operations at the New Acland mine resulted in increased production and sales volumes and lower costs of production for the group. Coal production
Slide 26: Associated companies QBH and QCE
Associated companies, Queensland Bulk Handling Pty (QBH) (50% owned by New Hope) reported improved profits from increased exports through its Port of Brisbane coal loader, however, Queensland Commodity Exports Pty Ltd (QCE) (33% owned by New Hope) contributed significantly reduced profits due to low
Slide 27: New Hope Group Overseas Operations
On hington H Soul Pattinson New Hope Group Overseas Operations ¢ After Tax Profit contribution of $21.2M ~~ Profit impacted by firm Aussie Dollar ~ Last years profit included abnormal profit from sell down of shareholding in Adaro. Overseas Operations The overseas operations contributed an after tax
Slide 28: Overseas Operations — Adaro production
On hington H Soul Pattinson Overseas Operations ¢ Production 21.4 Million tonnes of saleable coal (last year 20.2 million tonnes) ¢ Bulk Terminal throughput 7.2 Million tonnes During the period under review Adaro produced 21.4 million tonnes of saleable coal, an increase from 20.2 million tonnes in
Slide 29: Media — NBN Television
NBN Television * Profit drop to $5.8M, from $7.5M last year * New Affiliation Agreement signed with Nine Network — increased costs, but long term benefits Media — NBN Limited_(NBN) Due to a decline in its share of market revenue and an increased cost base, NBN’s profit after tax decreased to $5.8 mi
Slide 30: NBN Television Telethons and localism
ington H Soul Pattinson NBN Television ¢ One-off costs from production of six Telethons — an Australian first which raised in excess of $3.5M for organisations working with disadvantaged youth « “Localism” helped achieve local revenue share of over 50%. A significant one-off cost during the year was
Slide 31: SP Telecommunications (SPT)
@shington H Soul Pattinson SP Telecommunications (SPT) SPT ¢ Net Profit After Tax $5.8M — up 161% on last years $2.2M ¢ Earnings per share 3.2 cents — last year 1.2 cents ¢« Maiden dividend of 0.5 cents / share Telecommunications — SP Telecommunications Limited SPT SPT reported a net profit after ta
Slide 32: SPT maiden dividend
Despite only three years of operations, the strong growth in both profitability and cash flow has enabled SPT to declare a maiden final dividend of 0.5 cents per share in respect of the year ended 31st July 2003 payable on 19th November 2003.
Slide 33: SPT broadband network
on hington H Soul Pattinson * SP Telecommunications (SPT) . SPT + Broadband Network now runs from Melbourne to Cairns with over 180 points of presence (POP’s) — Australia’s second largest regional access network ¢ POP’s added with customer contracts, enabling new customer connections with small marg
Slide 34: SPT points of presence and contract wins
SPT hascmultipic Point-Of. Presence in Cities and Towns y Significant contract wins during the year included the NSW Department of Education and Training, with an additional 383 sites in addition to the 786 sites awarded by tender last year. This project represents the largest Private Network ever c
Slide 35: Kooee Joint Venture with WIN Television
Washington H Soul Pattinson SP Telecommunications (SPT) . spi * Kooee Joint Venture with WIN Television commenced May 2003, expanding target population to 7 million people SPT’s retail telephony arm, Kooee, entered into a joint venture agreement with WIN Television in May 2003 creating the opportuni
Slide 36: Cromford Pty Limited
hington H Soul Pattinson Cromford Pty Limited ¢ Cromford manufactures and distributes Polyethylene film for the building industry ~ Profit $843,000 down 16.4% Cromfords The profit after income tax was $843,079 for the year, a decline of 16.3% over the previous corresponding period.
Slide 37: Keith Harris
Washington H Soul Pattinson Keith Harris * Profit $2.7M, down 15% on last years Profit of $3.2M Keith Harris & Co Ltd Keith Harris reported a profit after income tax of $2.7 million for the year ended 31st July 2003. This compares with a profit after income tax of $3.2 million last year, a decline o
Slide 38: Outlook
son shington H Soul Pattinson OUTLOOK
Slide 39: Investment House
son feshington H Soul Pattinson Investment House * Pitt Capital Partners Limited * Souls Funds Management Limited Merchant Banking and Funds Management have been identified as core businesses for the Group and consequently in the last 12 months we made our first investments in this area via Pitt Cap
Slide 40: Pitt Capital Partners (PCP)
Pitt Capital Partners (PCP) + Corporate Financial Advisers * SOL owns 50% PCP are Corporate Financial Advisers. It is a growing business with proven expertise in mergers and acquisitions and capital raisings. During the last 12 months, PCP has acted as investment advisers for the Brickworks Limited
Slide 41: PCP Brickworks Investment Company float
PCP is currently facilitation the float of the Brickworks Investment Company Limited (which closes today and lists on the ASX on 12th December 2003). Unaudited results for the first quarter of the new financial year indicate an excellent result, ahead of expectations.
Slide 42: Souls Funds Management Limited (SFM)
Washington H Soul Pattinson Souls Funds Management Limited (SFM) * Formerly Veritas Funds Management « SOL owns 62% Souls Funds Management Limited (formerly Veritas Funds Manager Limited) specialises in small to medium sized equity funds and is managed by Mr Vince Parrott. SFM was formed from the me
Slide 43: Souls Funds Management small cap performance
on hington H Soul Pattinson Souls Funds Management Limited Small Cap Performances — last 3 years — outperformed the market. ¢ Australian Equity Fund - 16.5% ¢ All Ordinaries Accum Index - 4.7% ¢ Australian Small Companies Fund - 17.9% ¢ Small Industrials Accum Index - 3.8% In the past three years SF
Slide 44: Divestments
Divestments Mashington H Soul Pattinson Divestments ¢ Pharmacies ¢ Properties Since the end of the financial year we have sold a number of assets seen as non-core to our ongoing investment strategy. * Sale of 8 pharmacies realising $10.0 million and a book profit of more than $2.2 million. * Sale of
Slide 45: Investments — Share Portfolio first quarter
lavestments ¢ Share Portfolio ¢ Associated Entities - API - Clover - Brickworks Investments — Share Portfolio « Market Value of share portfolio as at 31 October, 2003 was in excess of $1.5 billion. ¢ 1st Quarter portfolio return, including unrealised gains, was 15.8% compared with the Benchmark S &
Slide 46: API and Clover Corporation update
Australian Pharmaceutical Industries Limited * Subdued growth in the Pharmaceutical Benefits Scheme as Government tries to reign in cost of health. ¢ Self-imposed suspension of TGA Licence closed manufacturing plant for 6 weeks. Licence re-instated end October and manufacturing capacity now starting
Slide 47: Brickworks — Expanded Group
a ington H Soul Pattinson Brickworks — Expanded Group Strong National Position Number 1 in Bricks ~ | billion bricks and pavers pa No | in Floor Tiles ~ 2 million m2? floor tiles per annum Equal second in roof tiles ~ 80 million rool tiles per annum The recent acquisition of Bristile has expanded Br
Slide 48: Western Australia plants
fi ington H Soul Pattinson Western Australia a Metra: Mirtek * Plants CLAY TILES ~ Caversham — clay roof tiles — Armadale #2 — bricks ~ Cardup #2 & #3 - bricks & pavers ~ Malaga — bricks & pavers ~ Bellevue — bricks ~~ Waterloo - bricks In Western Australia we manufacture on six sites with five bric
Slide 49: South Australia — Hallett Brick
Higson shington H Soul Pattinson South Australia Hallett Brick In South Australia we have one brickworks, which trades under the name of Hallett Brick
Slide 50: Victoria and Tasmania plants
+ Scoresby ~ Bricks — Terracotta roof tiles Craigeburn ~ Bricks / pavers + Summerhill ~ Pressed bricks + Dandenong — Masonry — Concrete roof tiles Longford — Tas — bricks . . In Victoria we have six plants, three large brickworks, a terracotta roof tile pant, a concrete roof tile plant and a masonry
Slide 51: New South Wales plants
on H Soul Pattinson New South Wales * Horsley Park — Plant #1 - } sandstocks extruded [ bricks ~ Plant #2 ~ face bricks — Plant #3 - commons face bricks ¢ Bowral - dry press bricks ¢ Eastwood -~ closes today In New South Wales, we have four operating brickworks following the closure of Eastwood toda
Slide 52: Queensland plants
ton H Soul Pattinson Queensland * Plants ~ Rochedale — bricks / pavers — Riverview — bricks / claylink -~ Wacol — concrete roof tiles In Queensland we have two brickworks also trading under the name of Austral and a concrete roof tile plant trading under the Pioneer brand.
Slide 53: Eureka Tiles
Eureka Tiles eurekatiles’ * Plants aa - Punchbowl vitrified terracotta - Ballarat: - Vitrified terracotta § - Glazed terracotta - Glazed vitrified - Bathroom fittings Eureka Tile has two tile plants, one in Punchbowl and one at Ballarat where there is also a bathroom fittings plant.
Slide 54: Brand Names
Washington H Soul Pattinson % Brand Names “australbricks “bristileclaytiles “pioneerrooftiles “bessermasonry: 2 eurekatiles’ AUSTRALEA The new group will trade nationally under the following brands. Austral Bricks for bricks and pavers, Bristile for clay roof tiles, Pioneer Roof Tiles for concrete r
Slide 55: Brickworks Performance First Quarter
son Washington H Soul Pattinson Brickworks Performance First Quarter including 2 months Bristile Sept Sept Quarter 03 | Quarter 02 Var % $ million $ million Sales 108.3 45.4 + 139 Clay Products EBIT 23.4 78 + 200 NPTA 13.4 6.4 + 109 In the first quarter clay products increased sales by 139% to $108
Slide 56: Brickworks first quarter NPAT
In the first quarter the unaudited NPAT approximately doubled to $13.4 million from $6.4 million last year. This result includes $5.1 million from property development compared to $2.1 million last year. However, it does not include either the special dividend received from WHSP of $5.1 million in t
Slide 57: New Hope Corporation Limited first quarter
son Washington H Soul Pattinson New Hope Corporation Limited ¢ Group Net Profit After Tax for the 1‘ Quarter of the 2003 / 2004 financial year was in line with the 1* quarters result last year COAL — New Hope Corporation Limited The unaudited group net profit after tax for the 1st quarter of the 200
Slide 58: NBN Television first quarter
I) ison #shington H Soul Pattinson NBN Television NBN eel 3 cain ¢ Current ratings has seen NBN return w Australia’s Highest Rating Television Station ¢ Market revenue share has grown each month in the October quarter ¢ Unaudited Profit Before Tax up 15% on last year In the last quarter of the finan
Slide 59: SP Telecommunications first quarter
S P Telecommunications . SPT ¢ New 3 year “reseller” Agreement with Primus Telecoms, with higher returns, commenced 1 August 2003. ¢ Unaudited Profit Before Tax for the first quarter of the new financial year is $3.1M — 240% greater than last year. SP Telecommunications has continued its strong grow
Slide 60: Welcome to the 101st Annual General Meeting
itinson Miashington H Soul Pattinson Welcome to the 101* Annual General Meeting
Washington H. Soul Pattinson and Company — Shareholder Meeting (November 2003) on 6ix