BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Shareholder Meeting (October 2019)
42 slides from BKI Investment's shareholder meeting presentation, Oct 28, 2019
Slide 1: BKI Investment Company Limited 2019 Annual General Meeting
For personal use only BKI INVESTMENT COMPANY LIMITED 2019 ANNUAL GENERAL MEETING BKI is managed by Contact Asset Management AFSL 494045
Slide 2: Chairman's welcome
For personal use only Good Morning Ladies and Gentlemen I would like to welcome you to the 16th Annual General Meeting of BKI Investment Company Limited and thank you for your attendance. My name is Robert Millner, and I am Chairman of BKI. It is now 11am and as a quorum is present I declare the 201
Slide 3: Disclaimer
DISCLAIMER This material has been prepared by Contact Asset Management on behalf of BK! Investment Company Limited. The information within this document is not intended to provide advice to investors or take into account an individual’s financial circumstances or investment objectives. This is gener
Slide 4: Introduction of Directors
For personal use only Before turning to my Chairman's Address I would like to introduce my fellow Directors: Mr David Hall AM Mr Alex Payne and Mr Ian Huntley 4
Slide 5: Introduction of Portfolio Managers and analysts
For personal use only I would also like to welcome and introduce the Portfolio Managers and analysts from Contact Asset Management Tom, Will, Rod, Jov, Jared, Charlie and Rob. 5
Slide 6: Company Secretary, Financial Controller and Auditor
For personal use only From CAS we have our Company Secretary, Jaime and Financial Controller, Larina. As well as our Auditor from MGI, Mr Clayton Lawrence. 6
Slide 7: 15 years trading on the ASX
For personal use only During FY2019, BKI reached the milestone of trading on the ASX for 15 years. Over that time the company has achieved quite a lot. Shareholder numbers, the size and scale of BKI, as well as the liquidity of shares traded have all increased. This company has grown assets from $17
Slide 8: FY2019 result and market review
For personal use only Investors’ chase for growth has continued, resulting in 2019 being a turbulent year for markets. The S&P/ASX 300 Accumulation Index increased by 11.4% over the year. However, it was a tale of two halves, with the market dropping 7.0% between July and December 2018, before rally
Slide 9: Dividends and special dividends
For personal use only The Board paid an ordinary dividend to shareholders at 7.325 cents per share. This was inline with last year. As I mentioned on the previous slide, BKI received a significant amount of special dividends in FY19. $4.4 million came from special dividends from Telstra, QUBE, IAG,
Slide 10: Entitlement offer share performance
For personal use only As you are all aware, BKI conducted a 1‐for‐15 non‐renounceable pro‐rata Entitlement Offer to eligible shareholders in June 2018 at an offer price of $1.50 per share. The company raised a total of $154 million through the offer. As can be seen on this slide, those shares have p
Slide 11: Handover to Investment Managers
For personal use only I will now hand over to Tom and Will for their Investment Managers Address. Thank you 11
Slide 12: Investment Manager's Address
For personal use only INVESTMENT MANAGER’S ADDRESS 2019 ANNUAL GENERAL MEETING BKI is managed by Contact Asset Management AFSL 494045
Slide 13: Benefits of investing with BKI
BENEFITS OF INVESTING WITH BKI For personal use only As at 30 June 2019 Fully Franked Dividends 6.7% Grossed up dividend yield#. ASX Listed Investment Company A simple, transparent investment vehicle that is readily realisable. Fully Franked 15 year track record. Management Fee Dividend Yield# Low F
Slide 14: Net operating results
NET OPERATING RESULTS For personal use only Net Operating Result before special investment revenue increased from $44.2m to $49.2m, while the Net Operating Profit increased 66% to $74.7m. Net Operating Results Excludes Special Investment Revenue $50m Positive contributors to this result included inc
Slide 15: Long term performance and income
LONG TERM PERFORMANCE AND INCOME For personal use only As at 30 June 2019 $3,000 $2,776 Long Term Dividend Income Since listing in 2003, BKI’s investment strategy has been, and $2,500 will continue to be, focused on research driven, active equities $2,000 management, investing for the long term, in
Slide 16: Premium/discount to NTA
PREMIUM/DISCOUNT TO NTA For personal use only In a market that is proving difficult to find value, BKI currently represents a good opportunity for investors to acquire assets at a discount to the Pre-Tax NTA. $1.90 $1.80 40% $1.70 $1.60 30% $1.50 $1.40 20% $1.30 $1.20 10% $1.10 $1.00 0% $0.90 $0.80
Slide 17: Positioning BKI for the future
For personal use only POSITIONING BKI FOR THE FUTURE ACTIVELY MANAGED PORTFOLIO FOR AN ATTRACTIVE FEE BKI is managed by Contact Asset Management AFSL 494045
Slide 18: Macro threats and opportunities
MACRO THREATS AND OPPORTUNITIES For personal use only Positive Tailwinds Negative Headwinds • A stable Federal Government. • Falling interest rates. • Significant infrastructure spending in Australia. • Rising unemployment has put pressure on job security. • NSW and Victoria unemployment rates are g
Slide 19: Yield curve
YIELD CURVE For personal use only Lower bond rates during 2019 have been positive for high quality, long-term businesses like Transurban Group, Sydney Airport and APA Group. 220 200 180 160 140 120 100 80 60 40 20 2013 2014 2015 2016 2017 2018 2019 10Y Yield APA.ASX SYD.ASX TCL.ASX 18 Source: Factse
Slide 20: Population growth
POPULATION GROWTH For personal use only Australia’s population is now expected to grow to 40 million people as early as 2048; This is: • 6 Years earlier than the ABS high growth scenario set in 2011 • 30 Years earlier than the ABS medium growth scenario set in 2011 30 Years 6 Years 19 Source: Macrob
Slide 21: Infrastructure growth
INFRASTRUCTURE GROWTH For personal use only Infrastructure spend is currently at levels never seen before and will continue for many years. Governments are now set to bring forward further major building projects to boost the economy. Forecast infrastructure work as at 30 June 2018 Forecast infrastr
Slide 22: Funds growth
FUNDS GROWTH For personal use only Growth in superannuation assets in Australia is continuing, with contributions over the medium term to be substantial. $9.5 trillion $2.9 trillion 21
Slide 23: Retail, e-commerce and logistics
RETAIL, E-COMMERCE AND LOGISTICS For personal use only Amazon.com has begun to place pressure on the global retail sector, especially those markets with relatively undeveloped online retail offerings. Market Capitalisation of Amazon.com is over A$1,300 billion. It is not only a retailer, Amazon.com
Slide 24: Positioning BKI for the future
For personal use only POSITIONING BKI FOR THE FUTURE ACTIVELY MANAGED PORTFOLIO FOR AN ATTRACTIVE FEE BKI is managed by Contact Asset Management AFSL 494045
Slide 25: BKI investment process
BKI INVESTMENT PROCESS For personal use only BKI is focused on investing in stocks using the 5 fundamentals below as part of the stock selection process: 1 Income Dividend Yields, Franking Credits, Pay Out Ratios 2 Principal Activity Sustainable Business Model, Competitive Advantage, Barriers to Ent
Slide 26: Lendlease Group (LLC.ASX)
LENDLEASE GROUP (LLC.ASX) For personal use only BKI Criteria Investment Attributes Income Offers a dividend yield of 3.3%. Attractive growing income stream expected over the next 3 years of 22%, 8% and 17%. Conservative payout ratio of 45%. Principal Activity Lendlease was established in Australia 1
Slide 27: Lendlease Group (LLC.ASX)
LENDLEASE GROUP (LLC.ASX) For personal use only 70 65 60 55 51 50 42 40 30 20 10 0 2019 2020 2021 2022 Lendlease Forecast Dividend per share 26
Slide 28: Portfolio positioning: increases
PORTFOLIO POSITIONING For personal use only For the year to 30 June 2019 Investment Portfolio Increases 1. BHP Limited 2. Macquarie Group 3. Woodside Petroleum Limited 4. Ramsay HealthCare 5. Woolworths Group 6. Transurban Group 7. Commonwealth Bank 8. AGL Energy Limited 9. APA Group 10. Regis Healt
Slide 29: Portfolio positioning: new positions and sales
PORTFOLIO POSITIONING For personal use only For the year to 30 June 2019 New Portfolio Positions 1. Coles Group 2. Magellan Financial Group 3. Treasury Wine Estates 4. Platinum Asset Management 5. Stockland Group 6. Reece Group Investment Portfolio Sales 1. Flight Centre 2. IOOF Holdings 3. Perpetua
Slide 30: 1Q FY2020 Update
For personal use only 1Q FY2020 UPDATE 2019 ANNUAL GENERAL MEETING BKI is managed by Contact Asset Management AFSL 494045
Slide 31: Portfolio positioning: quarter to September 2019
PORTFOLIO POSITIONING For personal use only For the quarter to 30 September 2019 Investment Portfolio Increases 1. CIMIC Group 2. BHP Limited 3. Harvey Norman 4. Amcor 5. Treasury Wine Estates 6. Evans Dixon 7. Commonwealth Bank 8. Inghams Group 9. Woodside Petroleum 10. Lendlease Investment Portfol
Slide 32: Portfolio positioning: top holdings
PORTFOLIO POSITIONING For personal use only As at 30 September 2019 Stock % of Total Stock % of Total Portfolio Portfolio 1 Commonwealth Bank 6.8% 14 Ramsay Healthcare 2.7% 2 National Australia Bank 6.1% 15 New Hope Corporation 2.7% 3 Macquarie Group 5.3% 16 Telstra Corporation 2.7% 4 Westpac Bank 5
Slide 33: BKI performance
BKI PERFORMANCE For personal use only As at 30 September 2019 20.0% BKI’s Total Shareholder Return including 15.0% 14.9% franking credits for the year to 30 September 2019 was 14.9%. 10.8% 10.1% 10.6% 10.0% 8.7% 7.7% BKI’s Total Shareholder Return including franking credits for 15 years to 30 5.0% S
Slide 34: FY2020 update
FY2020 UPDATE For personal use only The Income from Operating Activities and Operating Result after Tax (Before Special Investment Revenue) for FY2020 is Company Capital Management Initiatives expected to be in line with last year. Announced or Expected ASX Limited Special Dividend (129cps) Several
Slide 35: BKI Investment Company Limited 2019 Annual General Meeting
For personal use only BKI INVESTMENT COMPANY LIMITED 2019 ANNUAL GENERAL MEETING BKI is managed by Contact Asset Management AFSL 494045
Slide 36: Proxies
For personal use only PROXIES Valid proxies representing approximately 120 million shares or 16% of the Company’s issued capital have been received. 35
Slide 37: Item: Annual Report
For personal use only Item 1 ANNUAL REPORT Receive and consider the Annual Financial Report and the reports of the Directors and of the Auditor for the financial year ended 30 June 2019. This item does not require voting by shareholders. It is intended to provide an opportunity for shareholders as a
Slide 38: Item: Remuneration Report
For personal use only Item 2 REMUNERATION REPORT Resolution 1 To consider and, if thought fit, pass the following resolution as a non- binding ordinary resolution: “That the Remuneration Report for the year ended 30 June 2019 be adopted.” Note: Pursuant to section 250R(3) of the Corporations Act the
Slide 39: Remuneration Report proxy results
For personal use only Item 2 REMUNERATION REPORT Resolution 1 Adopt the Remuneration Report for the year ended 30 June 2019. Proxies received and accepted for Resolution 1 appearing on the Notice of Meeting Remuneration Report For Against Open Abstain Votes 88,455,775 9,143,616 7,057,767 1,744,263 %
Slide 40: Item: Re-election of Director
For personal use only Item 3 RE-ELECTION OF DIRECTOR Resolution 2 To consider and, if thought fit, pass the following resolution as an ordinary resolution: “That Mr AJ Payne, who retires in accordance with the Company’s Constitution Rule 6.3(c) and, being eligible, offers himself for re-election, be
Slide 41: Re-election of Director proxy results
For personal use only Item 3 RE-ELECTION OF DIRECTOR Resolution 2 Re-election of a Director Proxies received and accepted for Resolution 2 appearing on the Notice of Meeting Re-Election of Director For Against Open Abstain Mr AJ Payne Votes 109,806,392 1,016,950 7,331,475 1,535,776 % of Valid Availa
Slide 42: Other matters and conclusion of meeting
For personal use only Item 4 OTHER MATTERS To consider any other matters that may be brought before the meeting in conformity with the Company’s Constitution. CONCLUSION OF THE MEETING I now move to the final part of the meeting and there being no other business of which due notice has been given, I
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