In morning trade the Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is edging higher following the release of its full year results.
At the time of writing the investment house’s shares are up almost 1% to $23.69.
How did Washington H. Soul Pattinson (WHSP) perform in FY 2020?
For the 12 months ended 31 July 2020, WHSP reported a regular profit after tax of $169.8 million, down 44.7% on the prior corresponding period.
Things were a lot better on a statutory basis, with its statutory profit after tax growing 284.3% to $953 million. Though, this was largely the result of the merger of TPG Telecom Ltd (ASX: TPG) and Vodafone Australia which triggered a significant one-off profit due to the revaluation of its investment to market value.
WHSP’s net cash flows from investments were strong in FY 2020. They came in 48.8% higher year on year at $252.3 million. Once again, this was due to the TPG Telecom-Vodafone Australia merger, which resulted in a special dividend of $121 million.
This allowed the WHSP board to increase its dividend for the 20th year in a row. It lifted its full year dividend by 3.4% to 60 cents per share.
A difficult year.
WHSP’s Chairman, Robert Millner, acknowledged that FY 2020 was a difficult year for the company but was pleased with its result.
He said: “FY20 was a difficult year with significant volatility across the market but I am delighted once again that WHSP’s diversified portfolio delivered another good year where the assets performed better than the market and generated a strong increase in cash flows from dividends and interest income.”
“During the year, TPG was finally able to merge with Vodafone to create a very attractive telecommunications company. That merger resulted in an uplift to the value of our shareholding and facilitated a special dividend of $121 million to WHSP and a demerger of Tuas in which WHSP remains a 25% shareholder,” Mr Millner added.
The company’s Managing Director, Todd Barlow, notes that COVID-19 has resulted in a highly uncertain economic environment.
Nevertheless, the managing director appears optimistic that the company can both ride out the storm and take advantage of this uncertainty.
He commented: “The outlook for the domestic and global economy remains uncertain and volatile. One of WHSP’s key advantages is a flexible mandate to make long-term investment decisions and adjust the portfolio by changing the mix of investment classes over time.”
“While the economic outlook is uncertain, we can be certain there will be some dislocation in a number of asset classes. With dislocation comes opportunity and WHSP is well positioned with adequate liquidity to take advantage of the right investment opportunities,” Mr Barlow added.