BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — Dixon Advisory SMSF & Investment Seminar (October 2010)
29 slides from BKI Investment's conference presentation, Oct 11, 2010
Slide 1: Investor Presentation cover letter
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 11 October 2010 The Manager Company Announcements Australian Stock Exchange Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 Dear Sirs Re: Investor Presentation Please fin
Slide 2: Dixon Advisory SMSF & Investment Seminar
For personal use only Dixon Advisory SMSF & Investment Seminar 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: Board and Management
Board and Management For personal use only Directors Robert Millner Chairman of Directors David Hall Director, Chairman of Audit Committee Alexander Payne Director, Chairman of Remuneration Committee Ian Huntley Director Chief Executive Officer Investment Committee Thomas Millner Robert Millner Alex
Slide 5: Background
Background For personal use only 2008 BKI becomes 1980’s internally 2004 managed BKW BKI merges Establishes Share with PSI BKI takes Portfolio over HIC 2003 2007 2009 BKI acquires BKI BKI SPP BKW’s Share Renounceable Raises Portfolio Rights Issue $24.1m raises $57.0m BKI Lists on the ASX BKI Placeme
Slide 6: Background
Background For personal use only BKI’s investment portfolio has been built on a philosophy of long term investment with a focus on Australian equities. It primarily seeks to invest in well-managed businesses with a profitable history and with the expectation of sound dividend and distribution growth
Slide 7: BKI's Key Objective
BKI’s Key Objective For personal use only BKI’s key objective is 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 2010 was 5.3%. This is very competitive within the LIC sector. 6
Slide 8: Revenues
Revenues 40,000 For personal use only 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2004 2005 2006 2007 2008 2009 2010 Total Income including dividend and trust distributions, special dividends, interest and gains/losses on the trading portfolio was $35.
Slide 9: Operating Profits
Operating Profits 25,000 For personal use only 20,000 15,000 10,000 5,000 0 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2004 2005 2006 2007 2008 2009 2010 Net operating profit before special dividend income, realised and unrealised losses on investment portfolio was up 8.4% to $22.4m. 8
Slide 10: Net Profits
Net Profits 35,000 For personal use only 30,000 25,000 20,000 15,000 10,000 5,000 0 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2004 2005 2006 2007 2008 2009 2010 Net profit after tax attributable to shareholders was $31.2m up 34.8% on the previous corresponding period. 9
Slide 11: Earnings Per Share
Earnings Per Share 9.0 For personal use only 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2004 2005 2006 2007 2008 2009 2010 Basic Earnings Per Share after special dividend income and realised gains on investment portfolio was up 14.1% to 7.57cps. 10
Slide 12: Portfolio Valuation
Portfolio Valuation For personal use only 600,000 500,000 400,000 300,000 200,000 100,000 0 $'000 $'000 $'000 $'000 $'000 $'000 $'000 2004 2005 2006 2007 2008 2009 2010 Investment Portfolio Cash Total Portfolio value has increased 15.2% to $551.0m. This is comprised of the Investment Portfolio total
Slide 13: Net Tangible Assets
Net Tangible Assets $1.75 For personal use only $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $0.00 2004 2005 2006 2007 2008 2009 2010 NTA per share before tax NTA per share after tax The consolidated net asset backing before tax of the company’s shares at 30 June 2010 was $1.32 per share. Up 8.2% on the prev
Slide 14: Dividends Paid
Dividends Paid $0.07 For personal use only $0.06 $0.05 $0.04 $0.03 $0.02 $0.01 $0.00 2004 2005 2006 2007 2008 2009 2010 INTERIM FINAL SPECIAL The Final Dividend consisted of a 2.75cps Ordinary Dividend and a 0.5cps Special Dividend, both fully franked. Total Dividends for FY2010 were 6.25cps, up 4.2
Slide 15: Management Expense Ratio
Management Expense Ratio 0.80% For personal use only 0.69% 0.71% 0.70% 0.56% 0.60% 0.46% 0.46% 0.50% 0.40% 0.31% 0.30% 0.19% 0.20% 0.10% 2004 2005 2006 2007 2008 2009 2010 Operating Expenses were $1.0m as at 30 June 2010, a reduction of 29.3% on the corresponding period. BKI’s Management Expense Rat
Slide 16: Portfolio Performance
Portfolio Performance as at 30 June 2010 For personal use only BKI S&P/ASX 300 ACC INDEX 15.0% 13.4% 13.1% 7.8% 7.8% 5.0% 4.5% 5.0% 2.6% 0.1% -2.2% -5.0% -3.7% -5.1% -7.0% -8.0% -10.1% -15.0% 6 Mths 1 Year 2 Years (pa) 3 Years (pa) 4 Years (pa) 5 Years (pa) 6 Years (pa) Source: BKI Investment Compan
Slide 17: Share Price Performance
Share Price Performance as at 30 June 2010 For personal use only BKI S&P/ASX 300 ACC INDEX 15.0% 14.4% 13.1% 7.4% 7.8% 5.9% 4.5% 5.0% 2.1% 0.9% 0.1% -5.0% -5.1% -4.5% -8.0% -9.1% -10.1% -15.0% 6 Mths 1 Year 2 Years (pa) 3 Years (pa) 4 Years (pa) 5 Years (pa) 6 Years (pa) 16 Source: BKI Investment Co
Slide 18: Portfolio Movements
Portfolio Movements For personal use only During FY2010 BKI invested some $36.2m into the market including the full $24.1m that was raised through the Share Purchase Plan in September 2009. Major investments included: ANZ Banking Group Woolworths Limited Metcash Limited UGL Limited Telstra Corporati
Slide 19: Portfolio Movements
Portfolio Movements For personal use only Major divestments from the BKI Investment Portfolio included: Macquarie Group (50% of holding) Alumina Limited Qantas Airways BKI is a long term investor with a buy and hold strategy, however if companies significantly reduce dividend payments or there is un
Slide 20: Stock Selection Criteria
Stock Selection Criteria For personal use only Income - Dividend Yields, Franking, Pay Out Ratios. Principal Activity - Sustainable Business Model, Competitive Advantage. Debt Levels - Gearing Ratios, Net Interest Coverage. Management and Board - Ownership, Board Meeting Attendance, History of creat
Slide 21: 1st Quarter FY2011 Review
For personal use only 1st Quarter FY2011 Review* July 2010 – September 2010 * Figures referred to in the BKI Investment Company Limited 1st Quarter FY2011 Review, July 2010 – September 2010 are unaudited. 20
Slide 22: Market Update
Market Update For personal use only Improvement in companies earnings profiles and balance sheet strength is gradually converting into increased dividend distributions. Growth opportunities throughout Asia has been maintained. Most domestic resource companies in good shape despite a strong $AUD. Con
Slide 23: Net Tangible Assets
Net Tangible Assets $1.80 For personal use only $1.50 $1.20 $0.90 $0.60 $0.30 $0.00 2004 2005 2006 2007 2008 2009 2010 1Qtr 2011 NTA per share before tax NTA per share after tax The consolidated net asset backing before tax of the company’s shares at 30 September 2010 was $1.39 per share. This is 5.
Slide 24: BKI Portfolio Performance
BKI Portfolio Performance As at 30 September 2010 For personal use only 15.0% BKI Portfolio Performance S&P/ASX 300 ACC INDEX 8.5% 8.3% 10.0% 5.5% 4.9% 4.2% 4.5% 3.6% 5.0% 1.4% 1.4% 0.7% 0.0% -1.9% -5.0% -3.2% -3.8% -7.3% -10.0% 6 Mths 1 Year 2 Years (pa) 3 Years (pa) 4 Years (pa) 5 Years (pa) 6 Yea
Slide 25: BKI Share Price Performance
BKI Share Price Performance As at 30 September 2010 For personal use only 20.0% BKI Share Price Performance S&P/ASX 300 ACC INDEX 15.0% 8.4% 8.3% 10.0% 2.7% 2.7% 4.5% 4.9% 4.2% 5.0% 0.7% 2.3% 1.4% 0.0% -1.8% -3.2% -5.0% -3.8% -7.3% -10.0% 6 Mths 1 Year 2 Years (pa) 3 Years (pa) 4 Years (pa) 5 Years
Slide 26: Discount to Pre Tax NTA
Discount to Pre Tax NTA 1.80 30.0% For personal use only 1.70 1.60 20.0% 1.50 1.40 1.30 10.0% 1.20 1.10 1.00 0.0% 0.90 0.80 -10.0% 0.70 0.60 0.50 -20.0% Prem/Disc % Pre Tax NTA BKI Share Price As at 30 September 2010, BKI’s share price was trading at a 13% discount to the Pre Tax NTA. BKI represents
Slide 27: Market Outlook
Market Outlook For personal use only Whilst reduced company distributions have had an impact on the earnings generated by investment companies, BKI is confident that distributions should continue to improve into FY2011 and FY2012. The BKI Investment Portfolio is well positioned for both income and c
Slide 28: BKI Update
BKI Update July 2010 – September 2010 For personal use only Special Dividends expected by 31 December 2010 are approximately $2.3m, comprising of: • New Hope Corporation Special dividend of 14cps. • Tatts Group Limited Special Dividend of 11cps. • Salmat Limited Special Dividend of 10cps. Additional
Slide 29: The Basis for Investment
The Basis for Investment For personal use only 1. Strong dividend payout ability with abundant franking credits. 2. High quality diversified investment portfolio. 3. Experienced Board and conservative investment team. 4. Competitive Management Expense Ratio (MER) of 0.19%. 5. Sound returns - low inv
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