BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Investor Presentation (October 2009)
37 slides from BKI Investment's investor presentation, Oct 14, 2009
Slide 1: Cover letter: Investor Presentation
For personal use only ABN: 23 106 719 868 Level 2,160 Pitt Street Sydney NSW 2000 Ph. (02) 9210-7000 Fax. (02) 9210-7099 14th October 2009 The Manager Company Announcements Australian Stock Exchange Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 Dear Sirs Re: Investor Presentation Please f
Slide 2: Presentation to Shareholders October 2009
For personal use only Presentation to Shareholders October 2009 1
Slide 3: Disclaimer
For personal use only Disclaimer This material has been prepared by BKI Investment Company Limited. The information within this document is not intended to provide advice to investors or take into account an individuals financial circumstances or investment objectives. This is general investment adv
Slide 4: BKI Profile
For personal use only BKI Profile • BKI Investment Company Limited (BKI) was formed on the 17th October 2003 to take over the investment portfolio of Brickworks Limited. • BKI’s investment portfolio has been built on a philosophy of long term investment with a focus on Australian equities. It primar
Slide 5: Huntley Investment Company Limited
For personal use only Huntley Investment Company Limited • Huntley Investment Company acquisition was completed under compulsory acquisition on the 23rd January 2009. • Managing Director of Huntley Investment Company, Mr Ian Huntley has since accepted positions on the BKI Board and Investment Commit
Slide 6: Washington H. Soul Pattinson (WHSP)
For personal use only Washington H. Soul Pattinson (WHSP) • Brickworks Limited divested its entire shareholding in BKI on the 17th February 2009. • WHSP acquired 60% of Brickworks Limited’s divestment and has now become the largest shareholder in BKI with a holding of 13.68% (previously 5.85%). • WH
Slide 7: BKI's Key Objective
For personal use only BKI’s Key Objective • To generate an increasing income stream for distribution to its shareholders in the form of fully franked dividends. • BKI’s Historical Dividend Yield as at the 30th June 2009 was 5.7%. This is very competitive within the LIC sector. 6
Slide 8: Board and Management
For personal use only Board and Management Directors Robert Millner Non-Executive Director and Chairman David Hall Non-Executive Director Alexander Payne Non-Executive Director Ian Huntley Non-Executive Director (Appointed 10th February 2009) Chief Executive Officer Thomas Millner (Appointed 1st Dec
Slide 9: Investment Committee
For personal use only Investment Committee BKI is internally managed. Final investment decisions are made by the Investment Committee who meet on a regular basis to review the portfolio. Investment Committee Robert Millner Chairman of the Investment Committee Alexander Payne Ian Huntley Thomas Milln
Slide 10: Revenues
For personal use only Revenues • Revenues from ordinary activities increased 11.2% to $24.5m. • Ordinary Dividend and Distribution income was $19.9m, an increase of 15.5%. • Special Dividend and Distribution income of $1.3m, up 45.2%. • Interest received totaled $2.4m, down 36%. • Realised and un-re
Slide 11: Underlying Profits
For personal use only Underlying Profits • BKI’s operating profit before tax, special dividend income, realised and unrealised losses on investment portfolio and discount on acquisition was up 13.8% to $21.8m. • BKI’s net profit from ordinary activities after tax attributable to shareholders was dow
Slide 12: Dividends Paid
For personal use only Dividends Paid • The Final Dividend has been maintained at 3 cents per share fully franked on the increased share capital resulting from the takeover of Huntley Investment Company Limited during the year. • After allowing for payment of the final, fully franked dividend there a
Slide 13: Earnings Per Share
For personal use only Earnings Per Share • Basic Earnings Per Share after special dividend income and realised gains on investment portfolio was down from 8.01cps to 6.34cps. 12
Slide 14: Total Portfolio Valuation
For personal use only Total Portfolio Valuation • The total portfolio value as at the 30th June 2009 was $480.9m, an increase of 9.4% year on year. • BKI held $38.7m in cash and dividends receivable as at 30th June 2009. This represents 8.0% of the total assets. 13
Slide 15: Management Expense Ratio - MER
For personal use only Management Expense Ratio - MER • Operating Expenses were $1.4m as at 30th June 2009, a reduction of 29% on the corresponding period. • BKI’s Management Expense Ratio (MER) has decreased from 0.46% to 0.31% over the financial year (this includes 5 months of fees from the previou
Slide 16: Net Tangible Assets
For personal use only Net Tangible Assets • The consolidated net asset backing of the company’s shares at 30th June 2009 was $1.22 per share. 15
Slide 17: Discount to Pre Tax NTA
For personal use only Discount to Pre Tax NTA As at 30th June 2009 BKI’s share price was trading at a 14% discount to the Pre Tax NTA. Actively trying to eliminate the discount on which BKI trades to its Pre Tax NTA by: •Offering a more competitive MER •Ceasing of external management fees •Offering
Slide 18: Portfolio Performance as at 30th June 2009
For personal use only Portfolio Performance as as at at 30 th 30th June June 2009 2009 Source: BKI Investment Company Limited, IRESS Portfolio Returns are measured by change in NTA and are after all operating expenses, payment of both income and capital gains tax and the reinvestment of dividends. P
Slide 19: Share Price Performance as at 30th June 2009
For personal use only Share Price Performance as as at at 30 th 30th June June 2009 2009 Source: BKI Investment Company Limited, IRESS Share Price Performance include the reinvestment of dividends. Past performance is not indicative of future performance. 18
Slide 20: Portfolio Movements - Investments
For personal use only Portfolio Movements - Investments • BKI continues to focus on investing for the long term with major investments over the 12 months to 30th June 2009 including: BHP Billiton Telstra Corporation Coca-Cola Amatil Metcash Limited Westpac Banking Corporation SPSII United Group ARB
Slide 21: Portfolio Movements – Capital Raisings
For personal use only Portfolio Movements – Capital Raisings • BKI also participated in numerous capital raisings through Entitlement Offers, Placements and Share Purchase Plans with major investments including: Commonwealth Bank Wesfarmers Limited Alumina Limited Bluescope Steel Limited OneSteel Li
Slide 22: Portfolio Movements - Divestments
For personal use only Portfolio Movements - Divestments • In accordance with BKI’s investment strategy, there is an expectation from companies in which we invest that they continue to pay dividends over the long term. Major divestments from the BKI Investment Portfolio as a result of significantly r
Slide 23: Impairment
For personal use only Impairment • The investment portfolio is continually reviewed by the Investment Committee to determine if any stocks held within it are, in the view of the committee, impaired. This review primarily focuses on the ability of the company to pay dividends over the long term. • If
Slide 24: BKI Main Stock Selection Criteria
For personal use only BKI Main Stock Selection Criteria • Income - Dividend Yields, Franking levels, Pay Out Ratios. • Debt Levels - Gearing Ratios, Net Interest Coverage. • Earnings and Valuations - Earnings profiles, PE Multiples, EV/EBITDA Multiples. • Management and Board – Ownership, Board Meet
Slide 25: Sector Weightings
For personal use only Sector Weightings 24
Slide 26: Top Investments
For personal use only Top 20 Investments 1 New Hope Corporation Limited 11 QBE Insurance Group Limited 2 BHP Billiton Limited 12 Westpac Banking Corporation SPSII 3 National Australia Bank Limited 13 Campbell Brothers Limited 4 Commonwealth Bank 14 Metcash Limited 5 Westpac Banking Corporation 15 AS
Slide 27: 1st Quarter Review July 2009 – September 2009
For personal use only 2009 1st Quarter Review July 2009 – September 2009 26
Slide 28: Market Update
For personal use only Market Update Negatives •Dividend distributions were somewhat disappointing. •Short term reduced dividend income, especially in the LIC sector. •Cyclical V’s Defensive theme continues. Positives •Most companies in the BKI Portfolio reported inline with our expectations. •Macro
Slide 29: New Hope Corporation (NHC)
For personal use only New Hope Corporation (NHC) • NHC’s Earnings from Interest and Operations saw Revenues grow 64% to $521m while EPS grew to 240.3cps up from 11.1cps. • Profits before non regular items were $262.3m which is an increase of 189% above the previous year’s result of $90.7m. • Saleabl
Slide 30: Dividend Reinvestment Plan (DRP) and Share Purchase Plan
For personal use only Dividend Reinvestment Plan (DRP) • The DRP was maintained for the Final Dividend, set at a discount of 2.5%. • The DRP share price for the 2009 Interim dividend payment was $0.80. Whilst the DRP share price for the 2009 Final dividend payment was $1.14. • BKI issued 4,685,246 n
Slide 31: Portfolio Performance as at September 2009
For personal use only Portfolio Performance as as at at September September 2009 2009 Source: BKI Investment Company Limited, IRESS Portfolio Returns are measured by change in NTA and are after all operating expenses, payment of both income and capital gains tax and the reinvestment of dividends. Pa
Slide 32: Share Price Performance as at September 2009
For personal use only Share Price Performance as as at at September September 2009 2009 Source: BKI Investment Company Limited, IRESS Total Shareholder Returns include reinvestment of dividends. Past performance is not indicative of future performance. 31
Slide 33: Total Portfolio Valuation as at 30th September
For personal use only Total Portfolio Valuation as as at at 30 th 30th September September • From the 30th June through to 30th September BKI’s Total Portfolio Valuation has grown to $599.2m from $480.9m. • BKI’s Market Capitalisation as at 30th September 2009 was $516m ($372m as at 30th September 2
Slide 34: Net Tangible Assets
For personal use only Net Tangible Assets • The consolidated pre tax net asset backing of the company’s shares at 30th September 2009 was $1.43 per share. 33
Slide 35: Portfolio Movements since 30th June 2009
For personal use only Portfolio Movements since since 30 th 30th June June 2009 2009 Since 30th June 2009 BKI has continued to invest in the market with investments totalling approximately $10m. As at 30th September 2009 BKI held cash reserves of some $50.6m which once again places the company in a
Slide 36: Update July 2009 – September 2009
For personal use only Update July July 2009 2009 –– September September 2009 2009 • Revenues from the Investment Portfolio as at 30th September 2009 were $6.1m. Up $210k on the previous corresponding period. • Special Dividends as at 30th September 2009 were $114k. Up $105k on the previous correspon
Slide 37: For personal use only
For personal use only Office Level 2, 160 Pitt Street Mall, Sydney NSW 2000 Telephone +61 2 9210 7000 Fax +61 2 9210 7099 Web www.bkilimited.com.au ABN 23 106 719 868 36
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