General Announcement::2021 Corporate Governance Statement

Corporate Governance Statement

for the year ended 31 July 2021

Washington H. Soul Pattinson and Company Limited

ABN 49 000 002 728  |  ASX Code: SOL

Washington H. Soul Pattinson and Company Limited

ABN: 49 000 002 728

Level 14, 151 Clarence Street, Sydney NSW 2000  |  GPO Box 479, Sydney NSW 2001 

T  [phone]  F  [phone]  www.whsp.com.au

Corporate Governance Statement

for the year ended 31 July 2021

The Board of Washington H. Soul Pattinson and Company Limited (WHSP, the Company) is committed to ensuring the operation of its policies and practices embed good corporate governance in its day to day activities. We recognise that an appropriate culture needs to be sustained for our continued success.

This Corporate Governance Statement has been approved by the Board. It describes WHSP's key governance practices in place as at 31 July 2021 and articulates how decision - making is guided to meet stakeholder expectations of sound corporate governance, acknowledging WHSP's specific and broader responsibilities to its Shareholders, key stakeholders, staff and the communities in which it operates.

WHSP's corporate governance practices have been reviewed against the ASX Corporate Governance Council Corporate Governance Principles and Recommendations - 4th Edition (ASX Principles). Other than as set out in the section below on independence, WHSP's practices were consistent with the ASX Principles as at 31 July 2021.

A summary of the changes made to governance practices during the year is set out below:

Recommendation 3.2

The Board reviewed and approved a revised Code of Conduct and it was disclosed on the Company's website in July 2021.

Recommendation 5.1

The Board reviewed and approved a revised Continuous Disclosure Policy and the policy was disclosed on the Company's website in July 2021.

Recommendation 4.3

The process to verify the integrity of periodic corporate reports is disclosed in this Corporate Governance Statement.

Other FY21 Board governance activities include:

• Enhanced the level of environmental, social and governance (ESG) disclosure and the ESG reporting framework;
• Published WHSP's inaugural Modern Slavery Statement;
• Reviewed the Board and Board Committee Charters;
• Continued Shareholder and proxy advisor engagement;
• Sought audit firm tenders resulting in a change of auditor to EY; and
• Continued Board renewal and succession planning.

Corporate Governance Statement  for the year ended 31 July 2021

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Focus on Sustainable growth and prudent management of risk

WHSP has a track record of providing above market returns and dividend growth to its Shareholders. During the recent COVID-19 pandemic, capital was preserved and the portfolio continued to demonstrate outperformance in both "Down" and "Up" months.

The Board has an ongoing focus on sustainable growth with prudent management of associated risks. In FY19 the Board commissioned an external review of its framework for the oversight of risk, including Environmental, Social and Governance (ESG) risks. The recommendations of the review have largely been implemented and WHSP is committed to continuing to enhance its disclosure. For further detail on the results of this review refer to WHSP's Sustainability Report and Risk Management Report in its 2021 Annual Report.

Corporate Governance - Background and Purpose

WHSP is an investment holding company with investments in diversified portfolios giving it exposure to many industries and asset classes.

Since listing in 1903, WHSP's purpose has been to build a resilient long-term return to our Shareholders by creating capital growth along with steadily increasing dividends through disciplined investing in businesses and assets. The sustainability of industries in which we invest, the quality of the management of our investments and the impact of existing and potential investments on communities, the environment and people are key considerations when making investment and divestment decisions.

WHSP employs a small and diverse team of professionals who understand and are aligned to this purpose. Conduct and culture are set in a highly visible manner by the Board and senior executives, and there is direct monitoring of activities.

Our disciplined assessment of investments takes a long-term view where there is alignment between building a resilient long-term return for shareholders and meeting the broader needs of stakeholders, including the communities where our investee companies operate. Effective risk management, including the management of ESG risks, is embedded in the implementation of WHSP's strategy. This balanced view, integration of strategy with disciplined risk management and fostering an ethical, trusted and respected culture has driven WHSP's long period of profitability and increased dividends. Our corporate governance practices reflect this balance.

Board Oversight

The Board's role is to:

• Provide leadership and strategic guidance to WHSP;
• Oversee the performance and conduct of WHSP; and
• Represent and report to the Shareholders of WHSP.

To fulfil its role, the Board's responsibilities include approving and overseeing Managements' implementation of WHSP's strategy and business plan, as well as approving the Group's Risk Management Framework and Risk Appetite Statement. The Board also reviews the framework of systems, policies and processes by which the Company operates, makes decisions and holds people to account (Corporate Governance Framework).

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Corporate Governance Framework

WHSP's Corporate Governance Framework sets out the roles and responsibilities of the Board and Management and establishes policies, systems and processes for oversight and monitoring of Board and management performance, corporate reporting, disclosure, remuneration, risk management and security holder engagement.

Independent

Assurance

• External auditors
• Legal and other professional advisors

Remuneration

Committee

			Delegation
	Board
Delegation	oversightandAssurance	reportingthrough	Accountability
Managing Director and
			Chief Executive Officer

Board Committees
Nomination		Risk		Audit
Committee		Committee		Committee

WHSP Board and Board Committee Structure

The above diagram shows WHSP's current Corporate Governance Framework, including the current Committees of the Board.

The role and responsibilities of the Board and its Committees are detailed in the Board and each of the Board Committee Charters on WHSP's website at www.whsp.com.au/policies

Culture

The strong principles and values which underpin our approach to corporate governance are designed to promote transparency, fair dealing and the protection of stakeholder interests. WHSP is committed to embedding high standards of corporate governance, which it considers integral to building a sustainable and profitable business.

The Board "sets the tone from the top" in a clear and visible way, and the desired behaviours are demonstrated by senior management and communicated to staff. The Board generally meets 10 times a year and Board Committee meetings take place on the same day, before the Board meeting. All Board members are invited to attend all Board Committee meetings. The Board encourages a culture of open and frank Board discussions, where all views are respectfully considered. In the months when the Board is not scheduled to meet, financial and other reports are provided to the Board to enable ongoing oversight of material business matters. In between meetings, management notifies the Board of material matters as they arise in a timely manner.

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The Board monitors culture by engaging with management and staff in various ways:

• key management are invited to attend Board and Committee meetings, and other members of management and staff regularly attend and present on matters as subject matter experts;
• further information is provided on request, in response to Board questions and particular areas of interest and oversight; and
• informal meetings between the Board, management and staff occur periodically between meetings.

Professional Conduct

WHSP has a Code of Conduct which articulates our values and deals with matters of integrity and ethical standards. The Board recognises the need for the Directors and employees to adhere to the highest standards of behaviour and business ethics.

WHSP expects all Directors and employees to:

• Maintain and further enhance the Company's reputation. This includes:

• Acting in accordance with ethical and professional standards;
• Acting with honesty and integrity in dealings with Shareholders, suppliers, competitors and other stakeholders;
• Protecting the reputation of the Company when dealing with actual or potential conflicts of interest between private and Company matters; and
• Avoiding conflicts where possible.

1 As custodians of shareholder wealth, protect Company assets and confidential information. This includes:

• Complying with the Company's legal and regulatory obligations;
• Following the Company's policies;
• Not accepting unauthorised benefits as a result of their position in the Company; and
• Not engaging in insider trading.

• Create a respectful workplace. This includes:

• Treating everyone with fairness and respect;
• Reporting discrimination, harassment or bullying; and
• Acting in accordance with the highest standards of workplace behaviour.

Material breaches of the Code of Conduct are reported to the Risk Committee.

Standards of behaviour expected of staff are also set out in key, Board approved policies that are intended to instil a culture of acting lawfully, ethically and responsibly.

WHSP has a Share Trading Policy setting out prohibited periods for Director and staff trading in securities of the Company, a Whistleblower Policy to promote a culture of corporate compliance and highly ethical behaviour and an Anti-Briberyand Corruption Policy to articulate our commitment to a culture of zero tolerance to bribery, corruption and facilitation payments. These policies may be viewed on WHSP's website at www.whsp.com.au/policies

Material breaches of these policies are reported to the Risk Committee.

1. See our Sustainability Report and Risk Management Report in the 2021 Annual Report for further information.www.whsp.com.au/financial-reports/

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