BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — FY2019 Earnings Presentation
33 slides from BKI Investment's earnings presentation, Jul 18, 2019
Slide 1: Results for the Year Ended 30 June 2019
BKI INVESTMENT COMPANY LIMITED For personal use only RESULTS FOR THE YEAR ENDED 30 JUNE 2019 BKI is managed by Contact Asset Management AFSL 494045
Slide 2: Disclaimer
DISCLAIMER For personal use only This material has been prepared by Contact Asset Management on behalf of BKI 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 obj
Slide 3: BKI 15 Year Review
BKI 15 YEAR REVIEW During the year, BKI reached the milestone of trading on the ASX for 15 years. For personal use only Liquidity Size & Scale Dividend History* BKI’s Total Assets have BKI has paid out over $640m or BKI’s shareholder base has increased from $171m upon $1.02 per share in Dividends &
Slide 4: Result Highlights
RESULT HIGHLIGHTS Result Excluding Special Investment Income 2019 2018 Growth For personal use only Income from Operating Activities $54.3m $48.1m 13% Net Operating Result $49.2m $44.2m 11% Earnings Per Share 6.75cps 7.10cps -5% Dividend Per Share 7.325cps 7.325cps In Line Result Including Special I
Slide 5: Result Highlights
RESULT HIGHLIGHTS For personal use only Income from Operating Activities Net Operating Profit Earnings Per Share $54.3m $74.7m 10.26 cents* 13% 66% 42% from 2018 from 2018 from 2018 2019 Fully Franked 2019 Fully Franked Current Grossed Up Ordinary Dividends Special Dividends Dividend Yield# 7.325cps
Slide 6: Net Operating Profits
NET OPERATING PROFITS For personal use only • Net Operating Result before special dividend revenue increased 11% from $44.2m to $49.2m. • Net Profit Attributable to Shareholders increased 66% to $74.7m. • Results were driven by higher dividends received from: Woodside Petroleum Transurban Group New
Slide 7: Dividend History of BKI
DIVIDEND HISTORY OF BKI For personal use only During the 2019 Financial Year BKI has paid out the BKI Dividends Paid to Shareholders following fully franked dividends to shareholders: 6.00 • Interim Dividend 3.625cps • Interim Special Dividend 1.500cps 5.00 • Final Dividend 3.700cps 4.00 • Final Spe
Slide 8: Final Dividend Key Dates
FINAL DIVIDEND KEY DATES For personal use only The last trading day to be eligible for BKI’s Final and Special Dividend is Thursday 8th August 2019. The last day to nominate for participation in the Dividend Reinvestment Plan (DRP) is Tuesday 13th August 2019. Key dates for the Dividends are as foll
Slide 9: BKI Performance and Income Since Listing
BKI PERFORMANCE AND INCOME SINCE LISTING Since listing in 2003 BKI’s investment strategy has been, and $3,000 Long Term Dividend Income For personal use only $2,776 will continue to be, focused on research driven, active equities $2,500 management, investing for the long term, in profitable $2,000 c
Slide 10: Total Shareholder Returns
TOTAL SHAREHOLDER RETURNS BKI’s Total Shareholder Return, including franking For personal use only credits, for the year ended 30 June 2019 was 11.6%. BKI’s Net Portfolio Return (after all operating expenses, provision and payment of both income and 18.0% Total Shareholder Returns capital gains tax
Slide 11: BKI Entitlement Offer Returns
BKI ENTITLEMENT OFFER RETURNS Total Return on Entitlement Shares In June 2018, BKI offered a 1:15 Entitlement Offer to shareholders and a Placement to For personal use only New Shareholders. New shares were entitled to Dividends, Special Dividends and 22% Franking Credits. The return on those entitl
Slide 12: Positioning BKI for the Future
POSITIONING BKI FOR THE FUTURE For personal use only ACTIVELY MANAGED PORTFOLIO FOR AN ATTRACTIVE FEE BKI is managed by Contact Asset Management AFSL 494045
Slide 13: Dealing with the Noise
DEALING WITH THE NOISE For personal use only Negative Headwinds Positive Tailwinds • Falling interest rates • Strong global demand for Australian commodities • Falling commodity prices • Population growth • Declines in Australian real-estate values • Significant infrastructure spending in Australia
Slide 14: Macro Concerns
MACRO CONCERNS For personal use only Unemployment Rates GDP Growth Tick up in Australian economic unemployment rates growth is falling - an is beginning easing of the GDP to put pressure on growth figures over an individual’s job the last few months security has been a concern State by State The Wes
Slide 15: Macro Opportunities
MACRO OPPORTUNITIES For personal use only The Search for Yield Re-Rate of the Market S&P/ASX300 - PE Multiple (1yr forward) 19 The recent market The S&P/ASX300 PE 18 rally has meant multiple has 17 16 that dividend yields increased from 13.8x 15 have retreated in 2018 to 16.8x. 14 13 back to 4.6% Th
Slide 16: Yield Curve
YIELD CURVE We focus on the underlying fundamentals of a good quality business, not what some may say about bond rates. For personal use only For example - Transurban Group, Sydney Airports, APA Group 220 200 180 160 140 120 100 80 60 40 20 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 2014 2014 2015 2015 2016 2
Slide 17: Population Growth
POPULATION GROWTH Australia’s population is now expected to grow to 40 million people as early as 2048 For personal use only • 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 17 Source: Macrobusiness, A
Slide 18: 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 19: Funds Growth
FUNDS GROWTH For personal use only The growth in superannuation assets in Australia is going to be substantial. $7.2 trillion $2.6 trillion 19 Source: Challenger 31 December 2017 Investor Presentation
Slide 20: e-commerce Growth
e-commerce Growth Retail, e-commerce and Logistics For personal use only Given the arrival of Amazon.com into the Australian marketplace we have seen shock waves sent through the retail sector, especially those associated with our relatively undeveloped online retail market. Market Capitalisation of
Slide 21: 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 22: Portfolio Positioning
PORTFOLIO POSITIONING For the year to 30 June 2019 For personal use only 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 23: Portfolio Positioning
PORTFOLIO POSITIONING For the year to 30 June 2019 For personal use only 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 24: Portfolio Positioning
PORTFOLIO POSITIONING As at 30 June 2019 For personal use only Major Overweight/Underweight by Stock Overweights Underweights Company Active Weight Company Active Weight New Hope Group 5.1% CSL Limited (4.6)% APA Group 3.5% Rio Tinto Limited (1.9)% TPG Telecom 2.4% BHP Limited (1.7)% National Austra
Slide 25: Top Investments
TOP 25 INVESTMENTS As at 30 June 2019 For personal use only Stock % of Total Portfolio Stock % of Total Portfolio 1 Commonwealth Bank 6.7% 14 Sydney Airport 3.0% 2 National Australia Bank 5.4% 15 Telstra Corporation 2.9% 3 Macquarie Group 5.0% 16 ASX Limited 2.7% 4 Westpac Banking Corporation 4.8% 1
Slide 26: Portfolio Positioning
PORTFOLIO POSITIONING As at 30 June 2019 For personal use only BKI Exposure of Sector – June 2018 BKI Exposure of Sector – June 2019 Bank Hybrids , 1% Real Estate, 2% Bank Hybrids , 0% Real Estate, 2% Health Care, 4% Materials, 4% Banks, 20% Telecommunication Services, 5% Banks, 22% Telecommunicatio
Slide 27: Upcoming Reporting Season
UPCOMING REPORTING SEASON For personal use only Main topics of interest: • Dividend Yield A company’s ability to deliver a sustainable and growing dividend stream. • Reduced Costs Management’s ongoing ability to control costs. • Balance Sheet Financial strength, capacity to re-invest and grow the bu
Slide 28: BKI Fact Sheet
BKI Fact Sheet ASX Code BKI.ASX Investment Manager For personal use only Listing Date December 2003 Contact Asset Management Mandate Australian Listed Equities Level 14 Investment Sectors Diversified 151 Clarence Street Benchmark S&P/ASX 300 Accumulation Index Sydney NSW 2000 Total Assets $1,255m De
Slide 29: Contact Asset Management Update
For personal use only Contact Asset Management Investment Manager for BKI Investment Company Limited Update 29 29
Slide 30: Contact Asset Management
Contact Asset Management For personal use only Our Story In 2016, Contact Asset Management was established as an innovative investment manager, implementing a set of principles honed over many generations. We focus on developing strong relationships with our clients and invest alongside their shareh
Slide 31: BKI – Benefits of the LIC Structure
Contact Asset Management For personal use only BKI – Benefits of the LIC Structure (as at 30 June 2019) • Consistent, Positive Returns • 11.6% p.a. TSR over 10 years – Including franking credits • 10.4% p.a. TSR over 15 years – Including franking credits • Concentrated, High Conviction Portfolio • 4
Slide 32: Our Team
Our Team For personal use only Robert Millner Tom Millner Will Culbert Chairman Director and Portfolio Manager Director and Portfolio Manager FAICD B.Des (Industrial), GDipAppFin, B.Bus, MCom, GDipAppFin, F Fin, GAICD F Fin, GAICD ______________________________________ ______________________________
Slide 33: Our Philosophy
Our Philosophy Contact Asset Management For personal use only Contact is wholly owned by its founders Tom Millner, Will Culbert and Soul Pattinson and together are committed to investing for better outcomes. As a firm we stand by our philosophy: We believe in better. We expect more and focus on bett
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