Annual Reports and Related Documents::

2021Annual Report

Washington H. Soul Pattinson and Company Limited

ABN 49 000 002 728  |  ASX Code: SOL

Profile

Washington H. Soul Pattinson and Company Limited (WHSP) was incorporated on 21 January 1903 having previously traded as two separate companies, Pattinson and Co. and Washington H. Soul and Co.

Following a public offering of shares, WHSP was listed on the Sydney Stock Exchange (now the Australian Securities Exchange) on 21 January 1903.

Over 100 years as a listed public company

When Caleb Soul and his son Washington opened their first store at 177 Pitt Street, Sydney, in 1872 neither of them could have envisaged that their single pharmacy would have evolved into a company as prominent and diversified as WHSP.

WHSP is now a significant investment house with a portfolio encompassing many industries including telecommunications, mining, building products, property, financial services and other equity investments.

Calendar

Final Dividend

Record date	22 November 2021
Payment date	14 December 2021

Annual General Meeting

AGM date

10 December 2021

Given the ongoing changes to restrictions to manage COVID-19 and for the safety of shareholders and staff, the AGM

will be held online this year.

To register and join the meeting go to https://web.lumiagm.com

Online registration commences	11am
AGM commences	12 noon

For more information visit our website www.whsp.com.au

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Washington H. Soul Pattinson and Company Limited

Annual Report 2021

Contents

Key Highlights	2
Chairman's Review	3
Review of Group Entities	9
Telecommunications Portfolio	10
Brickworks Limited	12
New Hope Corporation Limited	16
Financial Services Portfolio	18
Pharmaceutical Portfolio	19
Round Oak Minerals Pty Limited	20
Equities Portfolio	22
Private Equity Portfolio	22
Property Portfolio	23
Structured Yield Portfolio	23
Alternative Performance Measures	24
Parent Entity Financial Information	27
Corporate Governance	30
Risk Management	37
Sustainability Report	39

Directors' Report	46
Remuneration Report	54
Auditor's Independence Declaration	72
Financial Report	73
Consolidated Statement of
Comprehensive Income	75
Consolidated Statement of
Financial Position	77
Consolidated Statement of
Changes in Equity	78
Consolidated Statement of Cash Flows	80
Notes to the Financial Statements	81
Directors' Declaration	174
Independent Auditor's Report	175
ASX Additional Information	179

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Key Highlights

Group Regular NPAT
$	1
170328.1m m	93%
Group Statutory NPAT
$	5
273.2m	71%
Pre-tax value of portfolio
$	1
5.8bn	12%
Net cash flow from investments	29%
180.3m
$	5
20 Year TSR	4.7%
13.4 p.a
	Outperforming

%	All Ordinaries
	Index by

Group Regular NPAT

Regular profit after tax attributable to members is the main measure of profitability used by WHSP. Regular profit after tax is a non-statutory profit measure and represents profit from continuing operations before non-regular items. A reconciliation to group statutory profit is included on page 25.

Group Statutory NPAT

Statutory profit attributable to members of WHSP is calculated in accordance with Australian Accounting Standards. The prior year statutory profit incorporated a one-off accounting gain of $1.05 billion arising from TPG's merger with Vodafone. See WHSP's Financial Report for further details.

Pre-tax value of portfolio

The portfolio value is assessed at market value for some investments and at cost or Directors' valuation for others. See page 7 for details of the portfolio valuation.

Net cash flow from investments

Net cash flows from investments are after Parent Entity corporate costs and exclude the effects of non-regular cash inflows and outflows to demonstrate the underlying cash flows generated by the Parent Entity's investment portfolio. The WHSP Board determines dividends having regard to net cash flows from investments.

20 Year TSR

Performance is compared to the All Ordinaries Accumulation Index, which also includes the reinvestment of dividends. WHSP is focused on delivering long term growth above the market.

2	Washington H. Soul Pattinson and Company Limited
Annual Report 2021

Group Regular profit after tax1 increased by

93%

Chairman's Review

Dear Shareholders,

I am pleased to present the 2021 Washington H. Soul Pattinson and Company Limited (WHSP, Company, Parent Entity) Annual Report on behalf of the Board of Directors of the Company.

Key Highlights

	12 months to
Performance for the period	31 July 2021	% Change

Group regular profit after tax1	$328.1 million	+93%
Group statutory profit after tax	$273.2 million	-71%
Key Performance Indicators	2021	% Change
WHSP net asset value (pre-tax)2	$5,803 million	+12%
Net cash flow from investments3	$180.3 million	-29%
2021 dividends per share (fully franked)	62 cents	+3%
Total Dividend growth over 20 years	+8.1%
(ordinary dividend compound annual growth rate)
Total Shareholder Return over 20 years	+13.4%
(to 31 July 2021)	per annum

Overview

WHSP's objective is to provide superior returns to our shareholders by creating capital growth along with steadily increasing dividends over the long term. Despite volatile markets, the Company has again increased its dividend and continued to generate solid cashflows from its investments.

Dividends are paid out of the net cash flows from our investments, which fell by 29% on the prior corresponding period, but increased by 6% over the FY2019 result. This is a robust performance given the significant reduction in the dividends received from New Hope, as well as the large one-off special dividend received from TPG Telecom in the 2020 financial year following the merger with Vodafone.

Solid cash generation from our diversified investment portfolio continued to support another increase to the final dividend making WHSP the only company in the All Ordinaries Index to have increased its dividends every year for over 20 years. WHSP is proud of its history of paying dividends every year since listing in 1903.

WHSP also has a strong track record of delivering outperformance over the long term with its Total Shareholder Returns exceeding the All Ordinaries Accumulation Index over 1, 3, 5, 10 and 20 year periods.

Despite the ongoing impacts of COVID-19, the portfolio continues to perform well with most investments increasing earnings in FY21. This was reflected in the Group regular profit after tax increasing 93% on the previous year.

1 Group regular profit after tax is a non-statutory profit measure and represents profit from continuing operations before non-regular items. In the prior year, TPG was derecognised as an Associate, which means there is no longer an equity accounted regular profit contribution from TPG. In addition, following the merger, TPG changed its balance date to 31 December which impacted the timing of its interim and final dividends. In the current year, there was only one dividend included from TPG recorded in regular profit after tax. A reconciliation to statutory profit is included in Alternative Performance Measures, page 25.

1. Refer to page 7 for details of the portfolio valuation.
2. Refer to Alternative Performance Measures on page 24 for the definition of net cash flow from investments.

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