Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) released its 2018 financial results to the market today revealing a 17.4% rise in regular net profit and the 18th consecutive year of increases to its dividend.

Soul Patts is an investment conglomerate business that has been operating for over a hundred years. It invests in other businesses like TPG Telecom Ltd (ASX: TPM), Australian Pharmaceutical Industries Ltd (ASX: API) and Brickworks Limited (ASX: BKW).

Soul Patts results:

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Here are some of the highlights from its results:

  • Regular profit after tax up 17.4% to $331.1 million
  • Net profit after tax fell 20% to $266.8 million
  • Pre-tax net asset value rose 21.8% to $5.4 billion
  • Net regular cash from operators up 0.1% to 60 cents per share
  • Dividends per share increased 3.7% to 56 cents

Soul Patts attributed the increase of regular profit after tax to several of its investments growing significantly during the year including New Hope Corporation Limited (ASX: NHC) going up by 74.7%, Apex Healthcare (listed in Malaysia) up by 33.6%, its financial services portfolio rose 19.3% and Brickworks increased by 8%.

The reported net profit fell 20% mainly because of a New Hope impairment of an undeveloped exploration project in Queensland.

Soul Patts Chairman Robert Millner said:

WHSP is a disciplined and patient long-term investor. Its diversified portfolio has again delivered outstanding results for shareholders with a Total Shareholder Return for the year of 27.5% (outperforming the All Ordinaries Accumulation Index by 12.6%.”

Soul Patts also calculated for shareholders that it had delivered a return of 13% per annum over the past 15 years, outperforming the index by 3.6% per annum.

The dividend represents 93% of net regular cash from operations and has grown by a compound annual growth rate of 8.3% per annum over 15 years.

Outlook:

Managing Director Todd Barlow said that in the first month of the new financial year the portfolio grew by 19.8%, or just over $1 billion.

Mr Barlow outlined that whilst selling 160 Pitt Street was difficult because Soul Patts had occupied it for 140 years, it showed the company was pragmatic to sell at the right price, leading to a $68 million after tax gain which will be reported in FY19.

He pointed to key investments making outlook-improving moves such as TPG merging with Vodafone Australia and the acquisition of a further interest in the Bengalla mine by New Hope.

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