The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price is surging in early afternoon trading amid the company posting its results for FY22.
Shares of the diversified investment house currently trade for $27.17 apiece, 5.23% higher than yesterday's close.
Let's cover the report's highlights.
What did Soul Patts report?
- Group regular profit after tax up 154.4% year over year (yoy) to $834.6 million
- Group loss after tax up 104.7% yoy to $12.9 million
- Net asset value up 71.6% yoy to $9.96 billion
- Net cash flows from investments up 93% yoy to $347.9 million
- Final ordinary dividend of 43 cents per share plus a 15 cents per share special dividend, both fully franked
- 20-year total shareholder return of 12.2% per annum, beating the market by 3.4%
Sol Patts reported a statutory net loss of $12.9 million after tax. It said its group loss reflects a nonrecurring goodwill impairment charge of $984.56 million for the acquisition and merger of listed investment company (LIC) Milton, completed in October last year.
The company's investments did much better than the overall market in the last year. Its net asset value per share increased by 34.9%, while the market fell by 6.4%.
In a rapidly changing economy, the company said its portfolio adjusted for the significant shift in interest rates, inflation expectations, and equity market conditions. In one year, the total value of the portfolio's purchase and sale of assets exceeded $7 billion.
Both the special and final ordinary dividends have a record date of 21 November and an expiry date of 18 November. The payment date for the dividends is 12 December.
What else happened in FY22?
The company's Net Cash Flows From Investments for the year was $347.9 million, an increase of 93% from the previous year. On a per share basis, this increase was 28% to 96 cents per share. The main reason for this was higher dividend income from the company's portfolio, specifically from coal prices and the Milton merger.
Commenting on the growth of the company's dividend, Soul Patts chairman Robert Millner said:
WHSP has an excellent track record of growing dividends year after year. Over the last 20 years, the dividend has increased every year and grown at a compound average growth rate of 8.5%. There is no other company in the All Ordinaries Index with this track record of growing dividends. The Board is also pleased to be able to pay a Special Dividend as a result of the very strong cash generation by New Hope in the current environment.
What did management say?
WHSP managing director Todd Barlow gave the following commentary:
WHSP's strategy of creating an actively managed portfolio of diverse businesses continues to perform well. The Milton merger increased our diversification and flexibility to invest across a range of asset classes and industries. Over the last 20 years, WHSP's annualised TSR has grown by 3.4% more than the market. Over that period, shareholders in WHSP have enjoyed total returns of nearly nine times their original investment which is more than double an investment in the All Ordinaries Accumulation Index.
What's next?
Barlow said the market is still changing significantly and prices for different types of investments are going up and down. But there are still good opportunities to invest money, especially in private companies and in loans.
Overall, the company believes that its portfolio can withstand rising interest rates, inflation, and headwinds from a contracting economy. It also said its portfolio focuses on investing in businesses that have good prospects for the future, that are managed well, and have low costs.
Soul Patts share price snapshot
Even with today's gains, the Soul Patts share price is down 12% in 2022 so far.
That compares with the 11.6% loss in the S&P/ASX 200 Index (ASX: XJO) over the same period.
The company's current market capitalisation is $9.63 billion.
