Are people out of the way of the camera there or not? Oh, you're right in front of the camera. Sorry about that. Welcome, ladies and gentlemen, to the Soul Pattinson Presentation. I've got with me today Todd Barlow, David Grbin, and some of you haven't seen Brendan O'Dea before. So welcome, Brendan. Also, we have a couple of directors here, Tom Millner and Josephine and some of our senior staff. So welcome everybody. You've no doubt all seen this morning the Soul Pattinson result. An excellent result mostly driven by thermal coal pricing. Some of you that were here yesterday would have heard me say that 25 months ago, or August 2020, thermal coal was $48 a ton. I think yesterday when I spoke to you it was $435 a ton.
It's over $440 this morning, U.S. We're gonna see continuation of good profits coming out of New Hope in the foreseeable future. Pleasing to report that a lot of our other businesses did very well, as most of you who were here before heard Lindsay talk about the Brickworks presentation, how particularly their property was a highlight. We're very happy with TPG's performance. The team are starting to put a few other businesses together, which Todd and the boys will talk to you about. Overall, it's been an exceptional year, and we've rewarded shareholders with increased final dividend and a special dividend of AUD 0.15. On that, Todd, over to you.
Thank you, Rob, and good afternoon, everybody. Thank you for your interest in watching the latest Soul Pattinson and welcome to everybody who's participating online. I'm pleased to report that the financial year 2022 was a very excellent year for the company. Our aim is to generate above market returns with growing cash flow while managing the risk through appropriate portfolio construction. We had outstanding results in each of these areas of our focus. Firstly, the portfolio significantly outperformed the market. The total portfolio increased in size by 71% to just shy of AUD 10 billion, which includes the merger of Milton's portfolio.
If we look at it on a per share basis, the pre-tax net asset value increased by 13.7% throughout the year, which was an outperformance of over 20% against the market, given the All Ordinaries fell over 6.4%. All divisions of the portfolio performed well against their respective benchmarks or hurdles. The strategic portfolio particularly benefited from the strong growth in New Hope share price, as Rob mentioned. However, it should be noted that the portfolio still would have outperformed by 15% if we completely removed New Hope from the performance metrics. The merger with Milton also provided significant tax benefits, resulting in a 34% uplift in the post-tax net asset value per share.
During the year, we saw a significant shift in interest rates, inflation expectations, and volatile equity markets, and it was particularly pleasing to see all parts of the portfolio manage through this volatility and a rapidly changing macro environment. In order to achieve this, the team has worked extremely hard with over AUD 7 billion in total transaction value of purchases and sales across the portfolio throughout FY'22. As I hope you see from this presentation, WHSP's investment style is well-suited to these kinds of conditions, and we believe that we have the right portfolio settings to manage through this environment. As I mentioned on the previous slide, strong cash flow growth has given the board confidence to materially increase dividends and continue our objective of paying steadily increasing dividends to shareholders. The directors have declared a final dividend of AUD 0.43 per share, fully franked.
That brings total dividends for the year to AUD 0.72 per share, which is 16.1% higher than the previous year. In addition to our regular cash flows from the portfolio, WHSP received special dividend income from New Hope as a result of extremely strong performance amidst high commodity prices. The WHSP board has supplemented the growth in our ordinary dividends with a special dividend of AUD 0.15 per share, fully franked. Over the last 20 years, the dividends have increased every year. We are the only company in the All Ordinaries to have this record. Over that time, the compound annual growth rate has been 8.5%. The table on this slide shows that the total shareholder return for WHSP to shareholders over various investment periods. We are focused on providing better-than-market returns over the medium to long term.
As you can see, there is a solid outperformance over many years. Over 20 years, the TSR for WHSP has been 12.2% per annum, which is 3.4% higher than the index. That outperformance compounding over 20 years means that a WHSP shareholder has seen their investment grow by around 9 times over the last 20 years, which is more than double an equivalent investment in the index. As I said in previous presentations, we believe our investment style is very durable. The company's historical performance has been strong over 40 years, where total shareholder returns have averaged nearly 15%, compounding annually with dividends reinvested. It should be noted that this performance does not include the value of franking credits passed on to shareholders with every dividend.
While our focus has always been on long-term outperformance, the significant reduction in the share price in the last year needs to be addressed. We don't believe the recent share price performance is a fair indicator of the achievements of the business over the last year. On any measure, the business is in a stronger position now than it was this time 12 months ago. We can see on this graph that through FY'22, WHSP share price reduced by 21%. This is much greater than the index, which fell, as I said, 6.4%. This is despite the underlying value of the assets per share increasing 13.7%. This means that the share price diverged from underlying portfolio performance by a total of 35% throughout the year.
Some of this can be explained by a high starting share price, which was leading up to the completion of the Milton merger last year. However, the divergence of share price and portfolio performance resulted in the share price representing a 6.9% discount to net asset value per share at year-end. Our objective is to outperform the market and consistently grow our dividend, and we aim to do this in a way that manages risk. We manage risk by being truly diversified, which means investing in a range of uncorrelated assets rather than merely owning lots of investments which will ultimately revert to mean market performance. We also favor businesses with solid defensible characteristics, businesses with resilient cash generation, defensible market position, and low-cost operations. These are the type of businesses that fare much better in market downturns.
As I mentioned earlier, we conducted AUD 7 billion of activity in the portfolio, which is part of this risk management process to ensure that the portfolio settings are right for the macro environment. We can see the defensive qualities of the portfolio play out if we examine the last 20 years of monthly performance against the market. Over the last 20 years, there's been 81 months where the All Ordinaries has been negative. That's about a third of the time. During each of these months, the average performance of the All Ordinaries was -3.5% per month. In these months, WHSP's shares performed considerably better, only down 1.6%. We believe that WHSP's portfolio is well-positioned for rising interest rates, higher inflation, or continued equity market volatility. I'll invite David Grbin, our Chief Financial Officer, to take us through the financial results.
Thanks, Todd. I want to leave you today with four key points on today's results. First, a strong underlying profit performance that demonstrates what Todd said earlier about our active portfolio management. Second, we've got ample liquidity to take advantage of opportunities with currently over AUD 500 million of cash, modest debt, and listed portfolios that can be liquefied at short notice. Third, we no longer control New Hope and have moved to equity account New Hope as an associate. Now, that's not gonna affect the share of net profit we earn from New Hope, but how we present the investment and its results will change. You'll see that in FY' 23, hopefully making our financial report a little easier to understand.
Finally, the merger of Milton and the deconsolidation of New Hope have both led to non-cash accounting outcomes that I'll explain in a little bit more detail, but importantly, both are non-cash and don't affect the NAV. Moving to the results for this year on our preferred measure of regular NPAT. This waterfall chart shows the major variances in our regular profit or underlying profit over FY'22. It was up AUD 506 million, 154% over last year. The main contributions to that was in the strategic portfolio. In particular, New Hope was up AUD 336 million, Brickworks 161, and TPG up 21 million.
The increase in the large caps portfolio came from the merger with Milton and also increased dividends right across that portfolio. Private equity down a little. That's partly because Round Oak, we only had 11 months contribution, and during the year, we merged that business into Aeris Resources on the first of July, and now Aeris will move into what we call the strategic portfolio. The emerging company's portfolio is down mainly because of mark-to-market losses on the trading portfolio and lower trading income. On the next slide, we'll see the actual reported net profit. This year, you can see the regular profit, just over AUD 506 million increase, was largely soaked up by two non-cash items that I'll just spend a little bit of time.
Firstly, the merger with Milton created goodwill. That was driven as a function of the share price appreciation of Soul's over the period between the merger announcing and completing in early October. The accounting standards required us to book that goodwill based on that share price, and it created a little over AUD 1 billion worth of goodwill with no future economic benefits. In the first half of this year, we decided to impair that down to zero. The second, AUD 178 million, is the gain resulting from the deconsolidation of New Hope, and that's really the difference between the book value of the assets that we had on the balance sheet for our investment in New Hope and stating it back up to its now fair value or equity accounted value.
Overall, those two non-cash items offset the increase in regular profit, and there was a small loss for the year. If I could go to the next slide. I've touched on some of the accounting issues that are latent inside the financial report, and I've touched on New Hope deconsolidation. What that really means, we'll no longer pick up line by line the assets and liabilities in the balance sheet, our balance sheet from New Hope, nor will we pick up the revenue and expenses in cash flow. It'll all come through as one line, equity share of profit, and shown as an equity share of investment in our balance sheet. It will simplify and make our financial results easier to understand and more in line with us as an investment company.
We sold Round Oak. I mentioned that. Touched on the improvement in post-tax NAV, and that's really as a result of being able to step up the market value, tax market values of all the Milton assets to their market value when arising significant deferred tax liabilities. Finally, just touch on our cash levels. You'll see at the end of July we had net cash a bit over AUD 72 million, comprising the cash of AUD 486 million, which we're earning a positive return on, with gross debt of AUD 414 at a current cost of 1.75. There's lots of available liquidity there for those opportunities.
I'll hand over to Brendan.
Thank you, David, and good afternoon, everyone. I'm pleased to present to you today another strong set of results from WHSP, with contributions and outperformance across all portfolios. In the second half of 2022, we have continued to execute on the plan presented to shareholders at the time of the merger with Milton. That plan involved reducing the size of the listed portfolios to invest in other asset classes, improve overall financial flexibility, and generate greater risk-adjusted returns over time. Improved flexibility allows WHSP to invest in future portfolio champions and allows us to react to tactical opportunities presented by market volatility or liquidity events. You can see the allocations to each asset class on this slide. The total portfolio is now just over AUD 9.9 billion, growing by 72% over the 12 months.
The strategic investments now represent 49% of the portfolio as the larger portfolio size, courtesy of the Milton merger, has reduced concentration. Large cap equities are now 31% of the overall portfolio, and we actively reduced this portfolio over the period. The working capital position has increased by AUD 735 million over the twelve months through portfolio sales and strong cash generation. On a net asset value per share basis, the asset backing has increased by 13.8% to 31 July and has outperformed the market materially. We've continued to take a conservative approach to the market and have increased cash holdings in the period, taking advantage of high equity valuations. We expect continued market volatility and slower economic growth as central banks increase interest rates to combat inflation.
WHSP's portfolios are well-positioned to outperform in this environment due to our focus on investments with strong cash flows and defensive business models. I'll now briefly go through each of the portfolios. The strategic portfolio comprises large ownership stakes in publicly listed companies where we have board representation and a close alignment with management. The portfolio includes TPG, Brickworks, New Hope, TUA, Apex, Pengana, and more recently, Aeris. The strategic portfolio was valued at AUD 4.8 billion or 48.6% of the total portfolio at 31 July and generated AUD 168.7 million in cash in the twelve-month period. This sharply higher cash generation was largely due to New Hope Group, which enjoyed very favorable trading conditions. The merger with Milton has reduced the concentration of our strategic investments in the overall portfolio to 49% from 72% in the prior period.
5 of these 7 companies have evolved from private equity investments, and the other 2, Brickworks and Apex, have been in the portfolio for several decades. During the year, we sold our stake in API to Wesfarmers in connection with its acquisition. We also merged our Round Oak investment with Aeris to create a larger scale player in copper. Our major investments are well positioned for future growth, and we note the recent strength in coal prices due to supply constraints, ongoing repositioning of the property portfolio at Brickworks, and opportunities at TPG should the regional roaming announcement with Telstra be approved. A major contributor to the strategic portfolio in 2022 has been our investment in New Hope. Coal prices have risen sharply over the year in response to supply constraints, a reopening of economies globally, and more recently, the Ukraine situation.
You can see the impact that this has had on the New Hope share price on this chart. We expect that coal will continue to play a role globally for many years to come as renewable sources take time to replace existing electricity generation. The New Hope share price will remain highly correlated with the coal price, as will the dividend income from our investment. While it is reasonable to expect volatility in the coal price in future, we remain confident about our investment in New Hope and its future income potential. The large cap portfolio grew significantly through the merger with Milton and is now worth approximately AUD 3.1 billion, representing 31.2% of the overall portfolio. Substantial sales were made in the period with the portfolio net selling AUD 570 million since the merger with Milton in October.
The portfolio remains actively managed, does not replicate any index, is income oriented, and takes a fundamental long-term approach to investing. Post-merger, we are able to more actively rebalance the portfolio without concerns related to tax slippage. We are also able to participate in liquidity events and take opportunities to extract greater income from the portfolio via the use of options. Notwithstanding the reduction in certain investments in 2022, the portfolio outperformed the ASX 200 accumulation index in a volatile period with a total return of -0.6%. The ASX 200 accumulation index had a negative total return of 2.2%, primarily due to the impact of interest rate increases on asset prices. Net cash flow from investments was AUD 116.9 million, an increase of 316% year-over-year.
The large cap portfolio has been rebalanced in the context of our broader asset mix, leaving the portfolio underweight resources, real estate, and telecommunications due to offsetting overweight positions in the strategic portfolio. The portfolio is highly liquid and may provide a source of cash for new investments in other asset classes over time. We are taking a conservative approach to the equity markets at present due to interest rate concerns and note that market valuations are in line with historic norms but are not yet compelling. It has been an active year for the portfolio, both pre and post-merger with Milton. We have made efforts to concentrate the portfolio through sales of smaller investments and have added new investments selectively. In terms of reductions and exits, we are primarily focused on lightening our exposure to the retail banking sector.
We anticipate a slowdown in credit growth and growing margin pressures due to wage inflation and competition, pressuring earnings for the big banks. We also note that credit provisioning is at historically low levels and could represent a drag on bank results should unemployment rise due to an economic slowdown. We have also reduced or exited our investments in the property sector due to concerns over interest rates and property valuations. New investments have been made over the year in IDP Education, which is exposed to the international student market, Domino's, which provides exposure to the growing markets for fast food, and Computershare, which has earnings highly correlated to interest rates. Additions to existing investments were made in JLG and carsales in relation to capital raises. 90.1% of the portfolio is now represented by the top 30 holdings in the portfolio.
We have made concerted efforts in 2022 to concentrate the portfolio, noting that this will result in greater divergence of portfolio performance from public indices. The portfolio at 31 July is underweight exposure to retail banks and materials and is overweight diversified financials, consumer staples, and healthcare. While this appears to be a change from the former Milton portfolio, which was much more likely to track public indices, we remain consistent in our focus on investing in companies that deliver us growing earnings and dividends over the long term, a strong management team that is shareholder friendly, businesses that are best in class, providing pricing power in an inflationary environment, and exposure to positive long-term trends. In our private equity portfolio, we seek to invest in businesses looking for an aligned capital partner. We also look to support their journey to grow their business over the long term.
We are aiming to patiently develop a portfolio of platform assets that can grow with further investment over time. We have identified a number of themes we have particular interest in which include the energy transition, financial services, health and aging, food and agriculture, and education. The current portfolio value is approximately AUD 650 million. The portfolio has generated income of AUD 40 million over 2022. During the year, Round Oak Minerals was merged with Aeris Resources to create a scale player in the Australian copper industry. This moved our investment from the private equity portfolio to the strategic portfolio. Our largest individual asset is a AUD 175 million investment in Ampcontrol. WHSP now own 100% of the company after an increased investment during the year.
Agricultural investments, including water, represent AUD 240 million of the portfolio and remain an area of sustained focus for us. We continue to see a lot of activity and have a pipeline of interesting opportunities which we will approach with our customary discipline. The emerging company's portfolio targets companies outside the S&P/ASX 100 that are exhibiting strong growth. These companies are often positioned to benefit from technological and structural changes. The composition of the portfolio can change significantly during the period, and the investment team have been active in public and pre-IPO placements. The portfolio value at 31 July 2022 was AUD 612 million, and the portfolio outperformed the index by 7.5%, delivering a total return of -3.4%.
The small-cap market had a challenging 2022, as rising interest rates generally tend to impact higher growth companies. Cash flow from investments of AUD 27.6 million was lower in the year due to reduced trading income. While the investments in this portfolio can be volatile, we see the potential for outsized returns over time in these companies, and our ability to invest for the long term represents a competitive advantage for us. The investments also provide us with valuable insights into disruptive forces in the market and the opportunity to back companies on their growth journey. We will continue to apply the same investment disciplines evident in the rest of the portfolios, particularly investing in quality companies while being mindful of our valuation. The emerging company's portfolio has deliberately reduced exposures over the year to technology stocks, increasing investments in materials and financials.
Our activities in the emerging company's portfolio have led to other investment opportunities for the broader portfolio through access to greater flow and the ability to more appropriately scale our best ideas. We expect sector allocation with them, within the portfolio to remain variable, as it can be a function of the available opportunity set, capital raising activities, and our view of the investment environment and valuation levels. Our structured yield portfolio comprises investments in quality companies through instruments that carry a high cash yield to maturity, are downside protected, and can often provide some equity-linked upside. The portfolio leverages our expertise across the capital structure and provides an alternative investment format when equity may not be optimal. We have developed strong connections in this part of the market and see a strong flow of opportunities.
The structured yield market in Australia continues to grow, and we are looking for opportunities to collaborate globally. Each asset is unique and may take the form of a simple loan all the way to a more structured instrument. We have AUD 250 million invested in the portfolio in 11 individual investments across a range of industries. The portfolio produced AUD 19.7 million of cash in the period, up 18.7% on the prior period, and has a yield of approximately 9%. During the year, we moved the convertibles portfolio from structured yield to emerging equities, reflective of the dominant equity theme in those investments. We believe that this asset class will continue to provide the opportunity for strong risk-adjusted returns and plays to WHSP's strengths.
We aim to grow this part of the portfolio as opportunities arise and are pleased to be able to give WHSP shareholders exposure to this asset class. Our direct property portfolio comprises eight assets with a value of around AUD 226 million. We have had strong revaluations in the portfolio, with the portfolio returning 47% over the 2022 financial year. During the year, we have acquired small industrial sites in Kirrawee and Narellan, and we remain opportunistic, looking for transactions that can generate outsized returns through development or repositioning. The property market has been very active with rates low and valuations high over recent years, reducing the number of well-priced opportunities. This has changed with the rapid increase in interest rates, which is expected to be felt in lower valuations in future. This may provide future opportunities for WHSP.
We expect rents to continue to grow, offsetting lower valuations. From a broader portfolio perspective, we are mindful of our look-through exposure to industrial property in Brickworks. Also in the portfolio is our retirement development in partnership with Provectus in Cronulla. Our joint ventures in Ellenbrook and Huntley have performed strongly, with record sales at Huntley over the 2022 financial year. We have worked hard over 2022 to ensure that WHSP has a strong balance sheet, financial flexibility, and minimal debt. We have done so primarily by raising substantial amounts of cash. This solves for two key aims. It allows us to respond to opportunities without the need to borrow or liquidate investments. It also reflects our cautious view on the investing environment at present. The working capital position highlighted above represents the balance of debt, cash, and assets currently available for sale.
At 31 July 2022, WHSP had a net working capital position of AUD 274 million, bolstered by significant portfolio sales over the course of the year. The cost of our debt is low, aided by the convertible bond offering that we conducted at the start of 2021. We have access to further debt should we need it, but have always maintained conservatism when it comes to gearing levels. Finally, this slide shows the transformative effect that the liquidity opportunities from the Milton merger has had on our financial flexibility. Throughout the course of 2022, we have taken the opportunities to selectively reduce our exposure to large cap equities. We have also seen strong income from our investments. This has generated significant amounts of cash, improving our working capital position. Post-merger, we were able to complete these transactions in a tax-effective manner.
Our mandate and financial flexibility has allowed us to manage the portfolio more proactively. You can see that we raised cash in late 2021, increased exposures in January before reducing investment sizes from May as we reassessed market conditions. We continue to raise cash, and indeed have done so post financial year-end, reflective of a continued cautious view on the investment environment. The change in our liquidity position ensures that WHSP has the flexibility to react to public market volatility should we choose to. It also ensures that we can continue to invest in companies and securities outside the public markets that can generate compelling long-term returns for our shareholders. Thank you, and I will now hand back to Todd for his concluding remarks.
Thanks, Brendan. I just wanted to pick up on a few of the points Brendan made about how we position the portfolio given the current market conditions and how we believe that our investment style and portfolio settings are well-suited to the current environment. We've always had a bias to low-cost, high-quality businesses which generate strong cash flows. This adds resilience in more challenging markets. We're also attracted to robust businesses with defensible business models capable of passing on inflationary pressures. The other aspect of our portfolio setting, as Brendan mentioned, is the increased liquidity to take advantage of opportunities that may present themselves in these periods of dislocation. We not only have significant liquidity, but the flexibility to take advantage of structured solutions for growing companies who are seeing more difficulty accessing equity and debt markets.
For example, as IPOs become more difficult to achieve, we are a natural alternative to fund businesses until market conditions change. We can also structure debt-like solutions for companies, and we are seeing some really interesting options in this area as interest rates increase and spreads widen. Our experience is that the competition for capital reduces as markets get increasingly nervous. For investors like us who are willing to take a flexible and long-term approach, we believe there's going to be some very good opportunities that may present themselves. During the year, we completed our merger with Milton and added about 25,000 shareholders to our existing 30,000 shareholders. Since the merger, that number has grown, and we now have around 60,000 shareholders.
As many of our shareholders were once invested in Milton, a listed investment company, I thought it'd be useful to describe the ways that WHSP is different to an LIC, and there are several advantages that we provide. WHSP has a lot more flexibility than an LIC, which has a mandated or legislated restriction on the composition of its investment portfolio. This means that we can invest across a range of asset classes, which provides genuine diversification when compared to a portfolio of 100% Australian equities. Our portfolio has exposure to private equity, direct credit, or structured yield investments, as well as direct property. These alternative assets provide greater options for risk management and enhanced returns. We're also free to invest in high-conviction ideas, allowing us to take strategic stakes in businesses where we see long-term growth.
The diversification and investment in uncorrelated assets has allowed us to reduce downside risks in the portfolio, as I outlined earlier in the presentation. Our focus on resilient, cash-generating businesses tend to perform better than the market in volatile times. Our dividend yield is more predictable and has seen steady growth for more than 20 years. The compound average annual growth rate over the last 20 years, as I said, has been 8.5%. The graph on this slide also shows that WHSP's portfolio has performed better over the last 5 years than any of the large LICs, and is also trading at one of the largest discounts to NTA. Over the last 5 years, our total portfolio return has been 68.3% against the All Ordinaries Index total return of 50%.
Five of the seven large LICs have returned less than the market. On average, these large LICs trade at a premium to their NTAs. Meanwhile, as at 31 July, WHSP was trading at a 6.8% discount to NTA. In conclusion, we believe that WHSP offers a unique investment proposition in the Australian market. Through WHSP, an investor has the opportunity to gain exposure to a range of asset classes and industries, investment strategies that have delivered above-market returns for several decades, steady and growing dividends, and a management team with a strong track record of execution and active stewardship of capital. I wanna thank the board and management for their contribution to the achievements of FY'22. We firmly believe that this hard work of the last twelve months places us in a solid position to continue the long-term success of WHSP.
Thank you all for your time, and very happy to take any questions.
Yeah, if we have any. Yeah.
First question online is from Ross Illingworth, Kingfisher Capital Partners. In dollar terms, what portion of the Milton share portfolio is available for redeployment into the higher ROI strategic opportunities to drive shareholder value for WHSP owners over the medium term?
Well, I mean, in theory, 100% of it is available for liquidity. We don't have a specified proportion of the large cap portfolio that we have identified to sell down. What we will do is constantly try to regenerate the portfolio with better ideas and look at the best way to fund that. Now, that may come from the large cap portfolio, it may come from other aspects of the portfolio, but every time we find something better, we find a way to fund it.
Next question is from Tim. Is it still the intention of WHSP to branch out into international shares as part of the large cap portfolio sell down? Has this been done, and what are the thoughts on international share markets currently?
Yeah. It's a good question, it's one that an area that we identified that was of interest when we merged with Milton. It's the natural next step to fully diversify the portfolio. If you think about you know, a truly diversified portfolio, whether it's a pension fund or a family office or a sovereign wealth fund, there will be an allocation to international equities. We are trying to focus on making sure that we get the portfolio right. The next step will certainly be to develop some international equities expertise. Now, whether that's in-house or outsourced is a matter that we're looking at. We're not going to rush into it. I think you know, the logical next step for us is to have some international exposure.
Next question is from Jack Strudwick. With the increased liquidity following the Milton merger, can we expect greater geographic diversification or will WHSP continue to largely focus on the Australian private and public markets to underwrite the dividend? If it will it invest in both developed and emerging markets?
Yeah. Carrying on from the last question. I mean, I think what we'll see is an allocation to international equities. It will probably be relatively small and then, you know, may grow over time, but our strength is in the Australian market. Our networks, our opportunities come from our relationships in the Australian market, and that's always going to be the primary focus for us. When we look at our equities portfolio, it would make sense for us to have some exposure to, you know, global economies and different markets. I wouldn't say that it's going to be a significant part of our portfolio in the future.
Next question. Will WHSP consider publishing the NAV per share on a more regular basis, i.e., monthly, in line with other LICs? Also, can WHSP reinstate the DRP?
Yeah. On the issue of monthly NTA, I mean, it's something that we need to have a think about. We are and I know today I compared ourselves to the LIC universe in Australia, you know, we are actively trying to differentiate ourselves from LICs. We are not an LIC, you know, in a technical sense, but also in a practical sense. We manage our business in a very different way. You know, we want our shareholders to be long-term. We want them to come on the journey with us to invest in a diversified portfolio that performs over the medium to long term. You know, month-to-month NTA, you know, it really just promotes a little bit of short-term trading.
You know, it's something that we can certainly look at, but the view to date has been that we wanna differentiate ourselves from that kind of practice. On the issue of DRP, it's something that we constantly evaluate. You know, our view is we pay good dividends. We keep increasing the dividend. If you wanna fund that by buying shares on market, there's plenty of liquidity to do so. It's again something that we constantly assess.
Next question is from Arvin. When does the term of the debt at the very favorable rate of 1.75% end? Secondly, any international investments being considered in the future?
I think we've covered off on the international component. In terms of the convertible note debt, yes, it's very cheap. Although we have other sources of debt that are also very cheap. We're in a net cash position at the moment, so the relevance of cheap debt is not as high anymore. Although we're actually paying less on the cost of our debt than what we are putting in term deposits. I think the expiry 2026 is the convertible bond expiry, but there's a potential that that gets shortened.
Next question is from Tim. Does management have any approximate plan on what percentage of the total portfolio value the large cap portfolio might make up in the future? Is there an intention to significantly reduce these holdings further going forward and work backwards having a smaller group of bigger strategic holdings?
Yeah. I think the objective for us would be to I mean, even though we divide up the portfolio into the different portfolios, it's a relatively small investment team. We all work together across the portfolio, and we don't necessarily differentiate as strongly as it might make out between the large cap portfolio, say, and the strategic portfolio. The strategic portfolio is just an extension of what we do in large caps. You know, if we find investments that we really like, we buy a lot of it. If we invest in a private equity business that goes public, we may hold it and it becomes a strategic investment. If we find something in the emerging company portfolio that's small and grows quickly and needs more capital and we invest more, it might become strategic.
All of these different portfolios are very fluid. Yeah, certainly the objective is if we can get businesses getting at the ground floor on businesses that are on a significant growth journey, take up a big chunk of them, and they become big strategic investments, that is exactly what we're trying to do.
Next question. Does WHSP see a continued future in coal, or will the team use this period as an opportunity to exit coal?
Well, I think the best answer to that is to refer people back to the excellent presentation that New Hope put out to market yesterday, which spent a lot of time talking about our collective views of the long-term thematics for coal demand and supply, what that means for pricing, the ongoing cash generation from the business. Yeah, we feel very comfortable with our investment there in the sense of the cash flow supporting current valuation, the cash backing supporting current valuations, and the ongoing demand for coal for some time. Now, that's not forever. There is an energy transition that will take place. We'd love to play a part on the other side of that, and that's really behind our investment in Ampcontrol.
We'd love to be a meaningful player in the energy transition that takes place in terms of the transformation of the grid and increasing renewable energy. All of these things take time. There is a transition, and in the meantime, New Hope is proving to be a very good investment for us.
With the large amount of cash flow from NHC coal companies, do you think it's prudent for them to use some of those proceeds to branch out into other energy sources now?
Well, you know, I mean, I sit on the New Hope board, but it's not really the right forum for me to talk about New Hope's strategy. but you know, certainly our view is that New Hope should do what it's best at. at the moment, that is investing and operating coal businesses. if there's opportunities that present themselves that are on strategy and the management team are capable of executing, we'll certainly look at that. the alternative is you just give cash back to shareholders, and shareholders can choose where they wanna invest those funds.
Next question is from Liam. Would you consider buying some New Hope coal as it is trading at a low valuation compared to revenues despite volatile coal price?
Yeah, well, I agree with the valuation point. You know, whilst we say that we're index unaware, and whilst we say we're happy to take very concentrated investments in things, we do think about the portfolio settings and our allocation across the portfolio not being too concentrated. We have a very meaningful investment in New Hope at the moment. I think you know, at the time of the merger with Milton, New Hope would have been about 7% or 8% of our portfolio. It's now about 15% of our portfolio. We obviously have some constraints around our willingness to meaningfully increase our exposure there. But you know, we
At the end of the day, we are rational and you know, we look at these things all the time.
Next question is from Steven. You mentioned you were looking to continue to allocate capital to expand the private equity portfolio. Understanding that the IPO market has been struggling, is there anything interesting from a sector perspective that WHSP is currently looking at for this portfolio?
We're looking at lots of things. I don't know that I could pigeonhole them into any one particular sector. I think the whole IPO market is significantly challenged at the moment, just the way that, you know, there's just fewer IPOs. That's the reality of it. Every business that had that as part of their growth ambitions is now looking for other types of investment. As I said, there's very few people who can take a meaningful minority position in private companies, and I think that gives us lots of opportunities.
Next question. Can you please advise what plans you have for Ampcontrol going forward now that you hold 100% of the company?
Well, as I said, our interest in Ampcontrol is, it's an electrical engineering business, with a very good reputation, great manufacturing capability and, great technology, know-how. We would like to be able to branch that capability out into the areas where we see huge growth, and that is, as I said, around renewable energy, the energy transition and grid transformation. Lots of money is gonna be spent in those areas in the future and our objective would be for Ampcontrol to be a meaningful player in that.
With a higher share count post Milton, would you consider a buyback to reduce the share count?
Well, I don't think we really mind the share count. What our focus is that the portfolio value per share is increasing, and as I said, it went up 20% above market last year. And that the cash flow generation on a per share basis is increasing. Despite the higher share count, it didn't hold us back in any of those respects. At the moment, it's not a problem for us.
Is WHSP confident in the outlook for TPG? Is the market under-appreciating TPG's outlook?
Well, we think so. I've been pretty vocal in the press around the TPG share price not reflecting its long-term prospects, possibly an overhang weighing on the stock, now that you know, some of the Vodafone shareholders are out of escrow. You know, a bit of short-termism in the market around you know, post-COVID results and things like that. The way we look at it is there's lots of thematically good, attractive reasons to be in TPG. It's infrastructure rich. It's a subscription utility business. It has good technology, good capability, lots of opportunity to grow and we're very comfortable with our position there.
What does the chairman feel of the state of the current market in comparison to historical events over the life of WHSP?
How long have you got?
Any more questions in the?
One.
I might fire one more. We're obviously gonna get an interest rate hike by the Fed tonight. You know, you've been investing a hell of a long time. Are you in the hard landing or soft landing camp? From a value, should we be battening down the hatches?
They feel like an old fool. I think, go back 10 or 12 years, we've been in cycles that if someone said to me 20 years ago that we'd have virtually zero interest rates, we all would have laughed at them. We've just come out of that now, and the cycle's turning again into higher interest rates and inflation. I think energy is gonna be a major drag on the higher costs, particularly of energy and businesses. I made a particular quote at the Brickworks meeting yesterday. We were told that in July, the cost of a wooden pallet was AUD 20-AUD 22. In August, we paid AUD 50. All of a sudden, we lost AUD 400,000 on the masonry business.
I think we've got all these sorts of costs coming through and the boys have sort of indicated shortages of materials and labor, et cetera, et cetera. You know, if history tells itself, we're gonna keep continuing going in a cycle, and I would think we're gonna have to have some sort of a slowdown. It's inevitable, I think. That's why we cashed up. All right. Has anyone got any questions from the floor? All right. What I'd just like to say is because of COVID, some of you have seen Todd before, but David's relatively new to the team, and Brendan, this is his first opportunity with Soul Pattinson. It's not only these guys, but we have a very, very strong team underneath these fellas.
As you can see what we're doing now, the company's in very good hands. Thank you very much for your time.