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Washington H. Soul Pattinson and Co. Ltd (ASX:SOL) reports its highest ever regular profit

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), the ASX’s version of Warren Buffett’s Berkshire Hathaway, reported a 17% increase in its regular profit to a record $331 million.

Here are the highlights from the company’s announcement:

  • Regular profit after tax of $331.1 million (a 17.4% increase)
  • Statutory net profit after tax of $266.8 million (a 20% decrease)
  • An increase in total dividends (for the 18th consecutive year) to 56 cents per share (a 3.7% increase)
  • Pre-tax Net Asset Value of $5.4 billion (a 21.8% increase)
  • The company sold its head office at 160 Pitt Street, an office it has occupied for 140 years, for $95 million

Statutory profits decreased due to non-cash impairment and deferred tax expenses.

The increase in regular profits was due to the Group’s investments materially increasing contributions including New Hope Corporation Limited (ASX: NHC) (up 75%) and Brickworks Limited (ASX: BKW) (up 8%).

The company also said that the proposed merger between TPG Telecom Ltd (ASX: TPM) and Vodafone Australia had “significant synergy potential” and that it would have a 12.6% shareholding post-merger.

What did management have to say?

Chairman Robert Millner highlighted the company’s distinguished track record as a top performer for shareholders.

He said, “WHSP is a disciplined and patient long-term investor. Its diversified portfolio has again delivered outstanding results for shareholders with a Total Shareholder Return for the year of 27.5% (outperforming the All Ordinaries Accumulation Index by 12.6%).

“Over the past 15 years, an investment in WHSP has increased by more than five times while the index has increased by less than three times. The Company lifted its dividend for the 18th straight year and is one of only two companies in the ASX All Ordinaries Index to achieve that feat”.

Managing Director, Todd Barlow highlighted that the company’s portfolio had performed very well in the context of the current market environment.

He said, “We consider our portfolio to be relatively defensive given the large investments in consumer staples (such as telecommunications) and commodities with lower demand volatility (such as thermal coal). We are therefore really pleased to see such a strong performance in a growth market.”

Foolish Takeaway

Despite the result, Soul Patts shares were down 7% following the announcement. It was perhaps a bit of profit taking given that the company’s shares are up over 40% so far in 2018. Those are not returns that the company can sustain every year but if held patiently, I think this company will do well for shareholders over the long run.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of and has recommended TPG Telecom Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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