Investment house Soul Pattinson will book a hefty profit after TPG's merger with Vodafone Australia. Image by Dan Himbrechts/AAP PHOTOS

Financial Services

Soul Pattinson to book TPG-related profit

2020-07-16 11:14:24

Investment house Washington H Soul Pattinson and Company (WHSP) says an accounting change following the merger of TPG Telecom and Vodafone Australia means it will book an after-tax full-year profit in the range of $1.12 billion to $1.17 billion.

That’s because WHSP has concluded it no longer holds significant influence over its investment in TPG, with the merger reducing its holdings in Australia’s third largest telecoms operator from 25.3 per cent to 12.6 per cent and reducing its influence on the now-larger board of directors.

WHSP is no longer applying the equity method of accounting, and instead will carry its investment in TPG as a long-term equity investment, using the last quoted sale price of TPG shares to value it.

Going forward, WHSP will book dividends from TPG as income rather than its equity share of TPG’s net profit after tax.

As an investment house, WHSP said that the key indicators of its success are the growth of the value of its portfolio and growing yield, rather than earnings.

By 1108 AEST, WHSP shares were up 1.2 per cent at $20.43, while TPG shares were unchanged at $8.03 in a strong Australian market.