BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Shareholder Meeting (October 2013)
35 slides from BKI Investment's shareholder meeting presentation, Oct 10, 2013
Slide 1: 2013 Annual General Meeting
For personal use only 2013 Annual General Meeting
Slide 2: Chairman's Address
For personal use only 2013 Annual General Meeting Chairman's Address 2
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 individual’s financial circumstances or investment objectives. This is general investment ad
Slide 4: Non Executive Directors
Non Executive Directors For personal use only Robert Millner Chairman of the Board Chairman of the Investment Committee Ch i Chairman off th the N Nomination i ti C Committee itt David Hall Independent Non-Executive Director Chairman of the Audit Committee Alex Payne Non-Executive Director Chairman
Slide 5: Management
Management For personal use only Thomas Millner Chief Executive Officer Investment Committee Jaime Pinto Company Secretary C Corporate t Administration Ad i i t ti S Services i Auditors Martin Bocxe Ruwald & Evans 5
Slide 6: BKI's 10th Annual General Meeting
BKI’s 10th Annual General Meeting For personal use only ¾ BKI Shareholders have grown from 7,832 in FY2004 to 12,350*. ¾ Portfolio Valuation has increased by 358%, from $171m to $784m*. ¾ Organic growth as well as: Acquisitions of PSI Limited and Huntley Investment Company. SPPs, Rights Issues,
Slide 7: FY2013 Highlights
FY2013 Highlights For personal use only ¾ Net Operating Result increased by 8.0%. ¾ Earnings Per Share (EPS) before special dividends increased by 4.7%. ¾ Total Full Year Dividends paid increased by 11 11.7%. 7% ¾ Management Expense Ratio (MER) of 0.19%. ¾ 12 month Total Shareholder Return outperfor
Slide 8: CEO's Address
For personal use only 2013 Annual General Meeting CEO’s Address 8
Slide 9: Net Operating Result
N t Operating Net O ti Result R lt For personal use only FY2004 – FY2013 35 30 25 $ Millions 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net Operating Result 9
Slide 10: Dividends Paid
Dividends Paid For personal use only 2nd Half 2004 – 2nd Half 2013 4.0 3.5 1 0.5 3.0 1 0.5 0.5 2.5 are s per Sha 2.0 3.25 3.4 3.2 3.2 1.5 3 3 3 3 2.5 2.75 3 3 Cents 26 2.6 2.7 25 2.5 25 2.5 2.1 2.2 1.0 2 0.5 0.0 Ordinary Dividends Special Dividends 10
Slide 11: Yield for all Seasons
Yield for all Seasons Dividends + Franking Credits received from a $10,000 investment in BKI at inception V’s For personal use only Bank Quarterly Interest. Highlights the opportunity of receiving a fully franked dividend in a falling interest rate environment. 1,400 1,200 Dollars 1,000 ustralian D
Slide 12: Management Expense Ratio
Management Expense Ratio For personal use only 0.80% 0.71% 0.69% 0.70% 0.60% 0.56% 0.50% 0.46% 0.46% BKI Internally Managed 0.40% 0.31% 0.30% 0.19% 0.18% 0.18% 0.19% 0.20% 0 0.10% 10% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 12
Slide 13: Portfolio Valuation
P tf li Valuation Portfolio V l ti For personal use only As at 30 June 2013 700 600 500 $ Millions s 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Investment Portfolio Cash 13
Slide 14: BKI Performance
BKI Performance P f For personal use only As at 30 June 2013 BKI Performance 1 Year 3 Yrs 5 Yrs 7 Yrs 9 Yrs as at 30 June 2013 (pa) (pa) (pa) (pa) BKI Portfolio S&P/ASX 300 ACC INDEX (XKOAI) 21.9% 8.2% 2.7% 3.5% 8.0% Returns are BKI Total Shareholder Returns 29.4% 13.5% 8.8% 6.1% 9.4% measured aafte
Slide 15: Total Shareholder Returns
T t l Sh Total Shareholder h ld Returns R t For personal use only As at 30 June 2013 29.4% 30.0% Total Shareholder Returns exclude the benefit of franking credits being passed on 25.0% from BKI to Shareholders. 21.9% 20.0% 15.0% 13.5% 8.8% 9.4% 10 0% 10.0% 8 2% 8.2% 8 0% 8.0% 6.1% 5.0% 2.7% 3.5% 0.0
Slide 16: Share Purchase Plan
Sh P Share Purchase h Pl Plan For personal use only October 2012 ¾ SPP offered to all existing shareholders ¾ Opportunity O t it tto ffurther th iinvestt iin BKI att $1 $1.29 29 per share h ¾ New shares ranked equally q y with existingg shares ¾ $19.1m raised through the SPP ¾ Since the offer: ¾ BKI
Slide 17: FY2013 – First Half
FY2013 – First Halff For personal use only ¾ Overall a positive reporting season ¾ Significant Si ifi t costt savings i ffrom A Australian t li C Companies i ¾ Further focus on Balance Sheets,, lower ggearingg levels ¾ Signs of earnings growth ¾ Strong dividend yields ¾ Good investment opportunity -
Slide 18: Portfolio Movements – $20m Invested
Portfolio Movements For personal use only $20m Invested Major Investments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield EPS Growth PE Multiple p ANZ Banking Corporation 5.5% 7.0% 11.7 X Westpac Banking Corp 6.5% 3.0% 12.5 X National Australia Bank 6.7% 6.2% 11.1 X APA Group 6.0% 0.5% 27.4
Slide 19: Portfolio Movements – Divestments
Portfolio Movements For personal use only Divestments Divestments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield EPS Growth PE Multiple p Westpac Pref Shares(WBCPB) 5.2% 0.0% n/a Cl Clover Corporation C ti 4 5% 4.5% 20 6% 20.6% 17 6 X 17.6 Ten Network + (Entitlements) 0.0% -117.0% -205 X S
Slide 20: FY2013 – Second Half
FY2013 – Second S Halff For personal use only ¾ Equity markets continued to be strong; January 2013 – April 2013 S&P/ASX300 Index gained a further 11%. ¾ However the Australian economy showed signs of stalling: ¾ Higher full time unemployment and job security concerns ¾ Lower business confidence ¾ W
Slide 21: FY2013 – Second Half
FY2013 – Second S Halff For personal use only ¾ S&P/ASX300 Index lost 7% over the months of May 2013 and June 2013. ASX down 11% SUN down 7% WOW down 9% WPL down 6% WES down 8% CBA down 5% IAG down 8% TLS down 5% ¾ Australian Dollar fell from US$1.03 US$1 03 to US0.91c US0 91c ¾ Further cut in inter
Slide 22: 1st Quarter FY2014 Update
For personal use only 2013 Annual General Meeting 1st Quarter FY2014 Update 22
Slide 23: 1st Quarter FY2014 Update
1stt Quarter Q FY2014 Update For personal use only ¾ Further cut in interest rates in August to 2.50% 2 50% ¾ Higher business confidence in the lead up to the election ¾ Change of Government ¾ Re-rating of stocks into the July - September reporting season ¾ Better quality companies delivering on con
Slide 24: Value
V l Value For personal use only PE Ratio (X) 25 20 On a Historical PE valuation, 15 Australian equity markets look 10 to be offering reasonable value against the US, UK and 5 2004 2006 2008 2010 2012 2014 European markets. Australia US Euro UK 18 The Australian equity market is now trading above the
Slide 25: Income
Income Income For personal use only Dividend Yield (%) 7% 6% 5% The Australian equity market is 4% offering an attractive dividend 3% yield above global peers. 2% 1% 2004 2006 2008 2010 2012 2014 Franking credits passed on to Australia US Euro UK shareholders by many 7% A t li C Australian Companies
Slide 26: Portfolio Movements – $45m Invested
P tf li Movements Portfolio M t For personal use only $$45m Invested Major Investments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield EPS Growth PE Multiple Primary Healthcare 4.0% 13.0% 15.0 X Woolworths Limited 4.1% 6.0% 17.4 X Insurance Australia 6.1% 5.0% 13.0 X TOLL Holdings 5.0% 3.0%
Slide 27: Portfolio Movements
Portfolio f Movements For personal use only Major Investments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield EPS Growth PE Multiple IOOF Holdings 5.3% 11.0% 16.7 X MaxiTrans Industries 6.1% 6.0% 11.0 X Wesfarmers Limited 5.1% 10.0% 19.1 X Bendigo & Adelaide Bank 6.2% 5.0% 12.8 X Suncorp Li
Slide 28: Portfolio Movements – Divestments
P tf li Movements Portfolio M t For personal use only Divestments Divestments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield EPS Growth PE Multiple p Tabcorp Holdings 5.5% 3.1% 17.0 X QBE Insurance I G Group 2 0% 2.0% 10 0% 10.0% 14 5 X 14.5 S&P/ASX 300 Index 4.2% % 9.0% % 15.6 X Source: B
Slide 29: BKI - Top Investments
BKI - Top 25 Investments % of Total Portfolio Index Weight 1 NAB National Australia Bank 9.5 % 5.7 % 2 CBA C Commonwealth lth Bank B k 91% 9.1 81% 8.1 For personal use only 3 NHC New Hope Corporation 7.3 % 0.0 % 4 WBC Westpac Banking Corp 7.3 % 7.1 % 5 BHP BHP Billiton Limited 6.2 % 8.0 % 6 TLS Tels
Slide 30: 1st Quarter FY2014 Update
1stt Quarter Q FY2014 Update** For personal use only Revenue – Revenue from the Investment Portfolio (excluding Special Dividend Income) is up approx 9% on the previous corresponding period.* Net Operating Result – Net Operating Result (excluding Special Dividend Income) is up approx 10% on the same
Slide 31: 1st Quarter FY2014 Update
1stt Quarter Q FY2014 Update** For personal use only Net Tangible Asset Backing (NTA) - The consolidated unaudited pre tax NTA at 30 September 2013 was $1.61 per share, up 8.3% on 30 June 2013 after adjusting for the $0.034 dividend paid in August 2013. Performance - BKI’s Share Price Performance (i
Slide 32: Placement and Entitlement Offer
For personal use only Placement Pl t andd Entitlement E titl t Offer Off 32
Slide 33: Placement
Placement For personal use only ¾ Placement to sophisticated investors ¾ Issue Price of $1.48 per New Share ¾ Represented a ¾ 6.9% discount to 31 August 2013 pre-tax NTA of $1.59 ¾ 3.9% discount to closing share price on 2 September 20131 ¾ Placement raised $59m ¾ Added approx 600 new shareholders t
Slide 34: 1:15 Entitlement Offer
1:15 Entitlement Offer For personal use only ¾ Offered to all BKI shareholders ¾ Issue Price of $$1.48 pper New Share to raise upp to $$48 million ((before costs).) ¾ $1.48 Represents: ¾ a 66.9% 9% discount to 31 August 2013 pre-tax pre tax NTA ¾ an 8.8% discount to 30 September 2013 pre-tax NTA ¾ T
Slide 35: Objectives of Capital Raising
Objectives of Capital Raising For personal use only ¾ Offer existing shareholders the chance to increase their investment in BKI without paying brokerage and other charges. ¾ Introduce new shareholders to the BKI shareholder register. register ¾ Increase liquidity in BKI shares. ¾ Reduce BKI’s Manag
BKI Investment Company — Shareholder Meeting (October 2013) on 6ix