Earlier today conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) reported its annual results for 2016. Here are some of the key takeaways:
- Revenue down 3.3% to $620.7 million
- Net profit after tax (NPAT) attributable to members up 79.3% to $149.4 million
- Regular profit after tax attributable to members up 9.1% to $177.2 million
- Total fully franked dividends up 4% to 52 cents
The difference between reported NPAT and regular profit after tax is that regular profit after tax excludes non-regular items such as impairment charges, acquisition fees and gains on asset disposals. It is difficult to know if all these items should be totally disregarded as some of them, like acquisition fees, are really a normal part of doing business for an investment company. However, in order to make valid year-on-year comparisons regular profits ought to be used.
Soul Patts has large holdings in TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Australian Pharmaceuticals Industries Ltd (ASX: API). Strong gains by these stocks drove Soul Patts' improved results in 2016 offset by weakness in resources.
Soul Patts trades on a price-to-earnings (PER) ratio of 21 based on 2016 regular profit after tax and has a 3.3% dividend yield. The company has delivered dividend growth of 10.6% per year over the past 15 years and is run with a long-term focus. It listed in 1903 and since then has never missed a dividend payment so it seems unlikely that this will change any time soon.
