What: Investment conglomerate and pharmaceutical retailer Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) today announced a full-year net profit of $131.7 million, an increase of 25% over the $105.4 million reported in FY 2013.
However, profit from continuing operations (excluding non-regular items) was down 23.3% to $123.2 million as the company's exposure to areas of the resources sector took its toll on earnings.
Shares were flat at $14.25 on the news.
So what: Soul Patts controlled $4.47 billion worth of listed equities as at 31 July 2014 and the equities' mixed performance is what delivered a mixed result.
Top of the class was the company's holdings in telco phenomenon TPG Telecom Ltd (ASX: TPM), it sure turned it on for Soul Patts, with a net profit contribution of $46.2 million towards the group's results.
In owning more than a quarter of TPG's issued equity Soul Patts has bought itself a front row ticket to the fibre-optic future of the internet and shareholders look set to be handsomely rewarded as a result. Notably, TPG shares have climbed a further 30% since Soul Patts ruled off its books on July 31, 2014.
Brickworks Limited (ASX: BKW) was another strong performer contributing $23.3 million to group profit, up from just $13.6 million in the prior year.
At the other end of the scale was Soul Patts' poorly performing investments in coal miner New Hope Corporation Limited (ASX: NHC), which contributed profit of $34.9 million, down around 25% on the prior year. The group's copper mining subsidiary, CopperChem Limited, also shocked with a net loss of $38.7 million, almost double the prior year's loss.
Other listed businesses the group owns stakes in include Ruralco Holdings Ltd (ASX: RHL) and Clover Corporation Limited (ASX: CLV).
What of the outlook: Given that New Hope, TPG and Brickworks are the three main drivers of group earnings it seems reasonable to assume that Soul Patts retains a generally positive outlook. The potential fly in the ointment is the weak outlook for coal prices, although New Hope remains profitable with leverage to a falling Aussie dollar.
The TPG Telecom holding remains the ace in the pack and allowing this winner to run is an exciting prospect for shareholders in Soul Patts.
A final dividend of 29 cents per share was announced, taking full-year dividends to 48 cents per share, up 4.3% on the prior year.
Due to its conservative investment style, strong balance sheet, respected management, and relentless focus on long-term shareholder returns Soul Patts is often described as Australia's answer to Warren Buffett's investment conglomerate Berkshire Hathaway.
Buffett is famous for picking quality stocks on great valuations and luckily The Motley Fool has found two he might like right now! If you're interested in reading up on them just enter your email below and we'll email you the report for FREE straightaway!
