Washington H. Soul Pattinson (SOL) Investor update summary

Credit strategy and downside protection

• Credit spans senior and junior loans and bonds, direct lending and fund partnerships; contractual interest and lender priority provide protection, while equity absorbs losses first.

• Targets quality borrowers the investment team would consider owning as equity, using bespoke structures; balance-sheet capital allows selective deployment without fund redemptions or pressure to fill a fixed allocation.

• Bilateral, relationship-led lending uses tight covenants, information rights and active monitoring; FY26 originations were AUD 1.1bn, including AUD 635m directly negotiated and structured, while more than 80 deals were declined.

• Underwriting includes individual diligence, in-house ratings and three approval gates, with committee and Board oversight, independent review and external audit testing of provisions.

• The 4.5% ECL provision exceeded the 3.7% capital loss implied by 9.9% defaults and 37% loss given default in the 2009 US speculative-grade downturn.

Performance and direct book

• Direct credit returned 14.3% p.a. since FY22 through 30 Sep 2026; all 23 repaid loans and bonds returned principal in full, with no realized capital losses.

• At 30 Sep 2026, NAV was AUD 1.9bn across 38 positions, 13% of the portfolio; cumulative deployment was AUD 3.7bn and repayments AUD 2.0bn.

• FY26 repayments were AUD 1.2bn against AUD 1.1bn of originations; repayments exceeded deployment for the first time. Five-year fees were AUD 86m.

• Direct book mix and weighted average IRR to maturity: senior secured 74%, 13%; junior secured 19%, 14%; unsecured/structured equity 7%, 18%.

• Senior secured lending earns an average IRR of ~13%; average book tenure is ~3 years, and ~4.5% is provisioned for expected credit losses.

Deal execution and examples

• EOS’s AUD 70m bilateral loan repaid early in late 2025; a new AUD 100m facility was extended in March 2026 for the MARSS acquisition and contract growth.

• Aeris Resources’ AUD 40m secured loan funded mine closure and maintenance, then repaid after an equity raise; a AUD 60m rehabilitation bank guarantee remains in place.

• Star Entertainment’s AUD 200m participation in a AUD 400m syndicated facility was refinanced and repaid in May 2026 at 23% IRR.

• Retailer exit financing is performing in line with expectations, with projected IRR of 13%+ to maturity; revolving credit is secured by receivables and inventory.