Washington H Soul Pattinson and : HY22 Appendix 4D and Financial Report

For personal use only

Appendix 4D

Half Year Financial Report

31 January 2022

ASX Listing Rule 4.2A.3

For personal use only

Results for announcement to the market

		Current period	Prior Period
		January 2022	January 2021	Change
		$'000	$'000	$'000
Revenue from continuing operations	up 117% to	1,277,983	589,219	688,764
(Loss)/Profit After Tax attributable to members	down 1,033% to	(643,091)	68,905	(711,996)
Regular Profit After Tax attributable to members1	up 281% to	343,686	90,237	253,449

Dividends

	Ce nt s	F ranking
	per share	%
This period
Interim dividend	29.0	100
Previous corresponding period
Interim dividend	26.0	100
Record date for determining entitlement to interim dividend:	21 April 2022
Date the interim dividend is payable:	13 May 2022

No dividend reinvestment plan was in operation during the reporting period.

Reporting Period

The reporting period for this report is the half year ending 31 January 2022. The previous corresponding period is the half year ending 31 January 2021.

1 Regular Profit After Tax is a non-statutory profit measure and represents profit before Non-regular items. A reconciliation to statutory profit is included in the section Alternative Performance Measures. Refer to pages 19 to 20.

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Explanation of performance

Consolidated Entity perspective

This Consolidated Half Year Financial Report combines the operating results, financial position and cash flows of Washington H. Soul Pattinson and Company Limited (the Parent Entity, Company, WHSP) and each entity that it controls (subsidiaries), into a single set of financial statements.

A controlling stake in a subsidiary often occurs where the Parent Entity owns less than 100% of the subsidiary. The term 'non- controlling interest' is used to describe that portion not owned by the Parent Entity. The non-controlling interest's share of the consolidated profit and net assets is disclosed separately in the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position and the Consolidated Statement of Changes in Equity.

Investments in which the Parent Entity or a subsidiary has significant influence but does not have control are termed 'associate entities'. Unlike subsidiaries, the individual financial reports of associates are not consolidated. Associates are equity accounted with the Consolidated Entity's share of an associate's result recorded in the Statement of Comprehensive Income. The investment in associates is disclosed as a line item (equity accounted associates) in the Consolidated Statement of Financial Position and is adjusted for the Consolidated Entity's share of the associate's result and decreased by any dividends received. This method treats dividends from associates as if they are a return of capital rather than being recognised in profit or loss.

Please refer to Note 2 of the Half Year Financial Report for an explanation of the new operating segments.

Portfolio perspective

WHSP is a diversified investment entity that manages its investments on a portfolio basis. In contrast to the consolidated financial report, the portfolio information reflects the entity's activities as an 'investor' and provides details of its investments (subsidiaries, associate entities and other investments), together with the cash flows generated by these investments (largely dividend income).

Key performance measures

Consistent with its function as an investment vehicle, WHSP considers the key drivers of its success to be growth in the capital value of the portfolio (Net Asset Value or NAV) and a growing yield, as measured by the Net Cash Flows From Investments. WHSP does not consider its earnings to be a key indicator of its performance.

For a detailed explanation of the year's operating results, please refer to the Chairman's Review and Portfolio Review attached. A summary of the results is set out below.

Net Profit After Tax (including Non-regular items) attributable to members

The Statutory Net Loss After Tax attributable to shareholders was $643.1 million compared to a $68.9 million profit in the previous corresponding period. The decrease in Statutory Net Profit After Tax of $712.0 million was largely due to the goodwill impairment of $954.0 million (refer Note 3(c)) arising from the Milton merger, partly offset by the increase in Regular Profit After Tax attributable to members described below.

Regular Profit After Tax attributable to members

The Regular Profit After Tax attributable to shareholders for the half year ending 31 January 2022 was $343.7 million compared to $90.2 million for the previous corresponding period.

The increase in Regular Profit after Tax was mainly attributable to the following:

Portfolio	$m	% change
Strategic: increased contribution from New Hope driven
by increased thermal coal prices and property profits in	227.9	461%
Brickworks
Large caps: largely higher dividend income arising from	20.1	228%
the Milton acquisition
Private equity: largely improved contribution from Round
Oak on increased commodity prices and lower treatment	11.2	66%
charges
Emerging companies: lower trading income and mark to	(5.5)	(37%)
market of the portfolio
Other portfolios and corporate costs	(0.2)	(179%)
Total	253.5	281%

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Dividends

Interim dividends increased by 12% to 29 cents per share fully franked.

Earnings per share and Net Tangible Assets per share

	Current period	Prior Period
	January 2022	January 2021
	Cents	Cents
Basic earnings per share	( 228. 00)	34.70
Diluted earnings per share1	( 228. 00)	34.70
Regular Profit After Tax2 attributable to members per share	121	. 85	45.45
	Current period	Prior Period
	January 2022	July 2021
		$' s	$' s
Net Tangible Asset backing per ordinary security2	22	. 59	15.90
(based on the Consolidated Statement of Financial Position)
Net asset value (pre-tax) per ordinary security3	25	. 06	24.24
(based on the NAV statement included in the Chairman's Review)

Details of entities over which control has been gained or lost during the period

On 5 October 2021, WHSP completed its acquisition of the remaining 97% (which it did not previously own) of the issued and outstanding equity of Milton Corporation Limited. Refer to Note 5 Business Combinations on page 45 for details of the acquisition and the contribution of Milton Corporation Limited to the operating results of the Consolidated Entity.

Review of operations

For a further explanation of the operating results for this reporting period, please refer to the Chairman's Review and the Portfolio Review commencing from page 5.

Audit

The Half Year Financial Report has been reviewed by WHSP's auditors.

1. Diluted EPS excludes the impact of the convertible bond holders converting into ordinary equity of the parent as the Consolidated Entity recorded a net loss for the reporting period and assumes any long term incentive rights that vest in future reporting periods are expected to be satisfied by purchasing shares on the market.
2. Regular Profit After Tax is a non-statutory profit measure and represents profit before non-regular items. A reconciliation to statutory profit is included in the section Alternative Performance Measures. Refer to page 19. Net Tangible Assets per share is a statutory measure based on the Consolidated Entity's Consolidated Statement of Financial Position.
3. Refer to the Chairman's Review for the market based Net Asset Value of the Consolidated Entity.

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Contents

Results for Announcement to the Market	1
Chairman's Review	5
Portfolio Review	19
Alternative Performance Measures	19
Investment Portfolio Financial Information	21
Directors' Report	23
Auditor's Independence Declaration	25
Financial Report
Consolidated Statement of Comprehensive Income	26
Consolidated Statement of Financial Position	28
Consolidated Statement of Changes in Equity	29
Consolidated Statement of Cash Flows	31
Notes to the Consolidated Financial Statements	32
Directors' Declaration	60
Independent Auditor's Review Report to the Members	61

Reporting Period

The reporting period is the half year ending 31 January 2022. The previous corresponding period is the half year ending 31 January 2021.

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