BKI Investment Co. Ltd. · ASX:BKI
BKI Investment — FY2013 Earnings Presentation
34 slides from BKI Investment's earnings presentation, Jul 24, 2013
Slide 1: Presentation to Investors FY2013 Results
For personal use only Presentation to Investors FY2013 Results July 2013
Slide 2: 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 3: FY2013 Results
For personal use only FY2013 Results
Slide 4: BKI Result Highlights
BKI Result Highlights For personal use only FY 2013 FY2012 Growth Ordinary Dividend Income $32.0m $29.8m 7.4% Net Operating Result* $29.9m $27.7m 8.0% Net Operating Profit $33.6m $30.0m 12.1% Earnings Per Share (excluding Special Dividends) 6.81cps 6.51cps 4.7% Earnings Per Share (including Special
Slide 5: Net Operating Result FY2004 – FY2013
Net Operating Result use only FY2004 – FY2013 35 30 25 For personal $ Millions 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net Operating Result 5
Slide 6: 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% 0.10% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 6
Slide 7: Dividends Paid 2H 2004 – 2H 2013
Dividends Paid 2H 2004 – 2H 2013 use only 4.0 3.5 1 0.5 3.0 1 0.5 0.5 For personal 2.5 Cents per Share 2.0 3.25 3.4 3.2 3.2 1.5 3 3 3 3 2.5 2.75 3 3 2.6 2.7 2.5 2.5 2.1 2.2 1.0 2 0.5 0.0 Ordinary Dividends Special Dividends 7
Slide 8: Portfolio Valuation
Portfolio Valuation use only As at 30 June 2013 700 600 500 For personal $ Millions 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Investment Portfolio Cash 8
Slide 9: Dividends
For personal use only Dividends
Slide 10: Dividends Paid 2H 2004 – 2H 2013
Dividends Paid 2H 2004 – 2H 2013 use only 4.0 3.5 1 0.5 3.0 1 0.5 0.5 For personal 2.5 Cents per Share 2.0 3.25 3.4 3.2 3.2 1.5 3 3 3 3 2.5 2.75 3 3 2.6 2.7 2.5 2.5 2.1 2.2 1.0 2 0.5 0.0 Ordinary Dividends Special Dividends 10
Slide 11: Dividends + Franking Credits from a $10,000 Investment
Dividends + Franking Credits received from a $10,000 Investment in BKI at inception V’s Bank Quarterly Interest. use only 1,600 1,400 $ Australian Dollars 1,200 1,000 800 For personal 600 400 200 0 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 BKI Dividend BKI Franking Interest Hi
Slide 12: Historical Grossed up Yield
Historical Grossed up Yield Assumes tax rate of 30% For personal use only 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% BKI Grossed Up Dividend Yield 90 Day Bank Bill Source: BKI Investment Company Limited; IRESS. Based on a closing share price of $1.56 on 23 July 2013, BKI’s fully franked dividend yield
Slide 13: Performance
For personal use only Performance
Slide 14: BKI Performance
BKI Performance 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 measured BKI Total Shareholder Returns 29.4% 13.5% 8.8% 6.1% 9.4% after BKI
Slide 15: Total Shareholder Returns
Total Shareholder Returns For personal use only As at 30 June 2013 30.0% 29.4% 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% 8.2% 8.0% 6.1% 5.0% 2.7% 3.5% 0.0% 1 Year 3 Years (pa) 5 Years (pa)
Slide 16: Portfolio Performance
Portfolio Performance For personal use only As at 30 June 2013 25.0% 22.2% 21.9% BKI Portfolio Performance is measured after all operating expenses, provision and 20.0% payment of income and capital gains tax. 15.0% 9.9% 10.0% 8.2% 8.5% 8.0% 5.6% 4.8% 5.0% 3.5% 2.7% 0.0% 1 Year 3 Years (pa) 5 Years
Slide 17: Equity Markets
For personal use only Equity Markets
Slide 18: Global Equity Markets
Global Equity Markets For personal use only • Europe A critical improvement although most economies remain under pressure. Continual EPS downgrades across most equity markets. Stabilization of the Euro is encouraging. France and Spain slowly improving. • Japan Longer term economic situatio
Slide 19: Two Economic Superpowers
Two Economic Superpowers For personal use only • China New leadership has seen China’s economy stabalise. Fiscal stimulus to be reduced significantly. Tax structure to be revised to encourage job growth. Interest rate deregulation encouraging, but private sector spending needs to improve. •
Slide 20: Yield Bubble…?
Yield Bubble…? For personal use only Equities S&P/ASX 300 Capital Growth Dividend Yield 4.40% Panic Franking Credits Protect Dividends Safety Fixed Income Term Deposits Reference Rate RBA Cash Rate 2.75% 90 Day BBSW 2.74% Preserve Capital Defend Wealth 20
Slide 21: Yield Bubble…?
Yield Bubble…? For personal use only 28 PE Ratios (X) 24 On a 20 Year Historical 20 PE valuation, Australian 16 equity markets look to be 12 offering reasonable value 8 against the US, UK and 4 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 European markets. Australia US Euro UK 7% Dividend
Slide 22: Yield Bubble…? PE Ratio and Dividend Yield
Yield Bubble…? 20 PE Ratio (X) For personal use only 18 16 PE Ratio (X) 14 Australian equity market 12 trading below 20 Year 10 Historical PE valuation 8 average 6 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Australia Average +/- 1 S.D. 7% Dividend Yield (%) Dividend Yield (%) 6% Australi
Slide 23: Australian Economy
Australian Economy For personal use only Overall economy showing signs of stalling: Higher full time unemployment and job security concerns Lower business confidence and retail spending Robust Australian Dollar Unstable federal government Industrial Sector – Dividend Yield and stability
Slide 24: FY 2013 Reporting Season
FY 2013 Reporting Season For personal use only Main topics of interest: Dividend Yield A company’s ability to deliver a sustainable and growing dividend stream. Franking Credits Current balance and impact of offshore earnings. Reduced Costs Management’s ongoing ability to control costs. Bala
Slide 25: BKI Portfolio
For personal use only BKI Portfolio
Slide 26: Investment Process
Investment Process For personal use only BKI is a research driven, active equities manager investing for the long term in profitable, high yielding, well managed companies. Stock selection is bottom up, focusing on the merits of individual companies rather than market and economic trends. BKI is foc
Slide 27: Top 20 Shareholdings
BKI Investment Company Limited Index 1 CBA Commonwealth Bank 9.7% 8.6% 2 NAB National Australia Bank 9.5% 5.4% 3 NHC New Hope Corporation 7.8% 0.0% For personal use only Top 20 Shareholdings 4 WBC Westpac Banking Corp 7.4% 6.9% As at 30 June 2013 5 BHP BHP Billiton Limited 6.3% 7.8% 6 TLS Telstra Co
Slide 28: Portfolio Movements: Major Investments
Portfolio Movements For personal use only Major Investments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield (%) EPS Growth (%) PE Multiple (X) ANZ Banking Corporation 5.5 7.0 11.7 Westpac Banking Corp 6.5 3.0 12.5 National Australia Bank 6.7 6.2 11.1 APA Group 6.0 0.5 27.4 Transurban Group
Slide 29: Portfolio Movements: Divestments
Portfolio Movements For personal use only Divestments FY14 Forecast FY14 Forecast FY14 Forecast Dividend Yield (%) EPS Growth (%) PE Multiple (X) Westpac Pref Shares(WBCPB) 5.2 0.0 n/a Clover Corporation 4.5 20.6 17.6 Ten Network + (Entitlements) 0.0 -117.0 -205 Seven West Media (Entitlements) 5.5 -
Slide 30: Sector Performance Months to June 2013
30 Sector Performance 12 Months to 30 June 2013 For personal use only (BKI Top 20 V’s S&P/ASX300 Accumulation Indexes) 105% 95% 85% 75% 65% BKI 55% Investment Company 45% (BKI.ASX) 35% 25% 15% S&P/ASX 5% -5% -15% Telco Financials Consumer Consumer XKOAI Industrials Energy Materials Services Disc. St
Slide 31: Sector Performance Months to June 2013
31 Sector Performance 12 Months to 30 June 2013 For personal use only (BKI.ASX Top 20 V’s S&P/ASX300 Accumulation Indexes) 105% TPM 95% 85% 75% 65% 55% WBC 45% CBA IVC TLS ANZ WES 35% BKI NAB WOW ARP APA 25% MLT QBE MTS WPL 15% S&P/ASX 5% 300 CCL AGK BHP -5% ALQ NHC -15% Telco Financials Consumer Co
Slide 32: Benefits of Investing in BKI.ASX
Benefits of Investing in BKI.ASX For personal use only In 8 years BKI has increased Predictable and growing fully franked Ordinary dividends paid to Dividends income stream. shareholders by 55% Plus 5 Special Dividends 30% tax rate already paid on All Dividends Fully Franked Franking Credits dividen
Slide 33: Benefits of Investing in BKI.ASX
Benefits of Investing in BKI.ASX For personal use only Diversified market exposure Administration Easy monitoring of one shareholding All through BKI.ASX Simplicity Two dividend statements per annum BKI is a closed end LIC (Company), Not a forced seller in bear markets unlike an open ended fund mana
Slide 34: BKI Fact Sheet
34 BKI Fact Sheet www.bkilimited.com.au For personal use only ASX Code BKI.ASX Research Coverage Morningstar Listing Date December 2003 Morgan Stanley Mandate Aust Listed Equities Bell Potter Investment Sectors Diversified Evans and Partners S&P/ASX 300 Baillieu/Holst Benchmark Acc Index Approved Pr
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