The accountants won the battle at Washington H Soul Pattinson in presenting the investment group’s January half year result, which revealed a whopping statutory $600 million plus loss from a goodwill impairment linked to the takeover of Milton Corporation last October.
But the underlying result saw sharp rise in earnings thanks to the company’s coal miner offshoot New Hope which earlier in the week reported a big leap in revenue and profit because of the coal price boom and a large increase in dividends for the half.
Soul Pattinson reported that its first half earnings plunged to a $643.1 million loss, thanks to the one-off non-cash goodwill impairment as a result of its merger with Milton Corporation.
The Milton takeover created a $954 million goodwill charge for Soul Patts, which resulted in the $643.1 million loss. This compares to profits of $68.9 million a year ago.
Excluding the Milton merger, the company’s regular profit after tax was up 281% to $343.7 million, up from $90.2 million a year earlier thanks mostly to the higher contribution from New Hope of $227 million, up 461%.
Revenue jumped 117% to $1.28 billion compared to $589 million January, 2021 half year
Shareholders get some of the higher earnings in a 12% rise in the interim to 29 cents a share.
The news saw the shares rise 1.27% to $27.
Long-time chairman Robert Millner described the merger with Milton as a “significant highlight” during the half-year.
“One of WHSP’s key advantages is its flexible mandate to make long-term investment decisions and adjust the portfolio by changing the mix of investment classes over time,” he said in the ASX statement.
“WHSP maintains a strong balance sheet with modest gearing and solid liquidity. WHSP also has available profit reserves and franking credit balances,” he said.
The company has investments in New Hope Corp, TPG Telecom, Brickworks, Round Oak Minerals, and some private holdings
Looking to the immediate future Mr Millner welcomed the recent falls in share prices saying that stock market valuations had returned to “long run averages” after the sharp drop in late January.
Before this decline, he said valuations were at “elevated levels” and markets were “susceptible to a pullback”.
“We expect that investors will continue to reallocate from long term bonds to equities and have large cash reserves given the higher-than-average savings rates,” he said.
“This suggests that equity markets will remain supported with a rising rate environment favouring profitable assets with robust cash flows.”
